1 00:00:13,880 --> 00:00:17,760 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:18,079 --> 00:00:20,240 Speaker 1: My name is Mike Reagan. I'm a senior editor at 3 00:00:20,239 --> 00:00:23,880 Speaker 1: Bloomberg and I'm Aldana Higher across asset reporter with Bloomberg. 4 00:00:24,480 --> 00:00:27,479 Speaker 1: This week on the show, well, the Federal Reserved just 5 00:00:27,680 --> 00:00:31,040 Speaker 1: isn't messing around anymore. This week, the Central Bank raised 6 00:00:31,080 --> 00:00:34,520 Speaker 1: its benchmark interest rate by three quarters of a percentage point. 7 00:00:35,159 --> 00:00:39,080 Speaker 1: That's the biggest increase since way back when all my 8 00:00:39,120 --> 00:00:40,840 Speaker 1: hair was still browned and I was just a cub 9 00:00:40,920 --> 00:00:44,280 Speaker 1: reporter covering school boards and car crashes out of newspaper. 10 00:00:45,240 --> 00:00:48,720 Speaker 1: And while markets initially reacted positively to the feds aggressive 11 00:00:48,760 --> 00:00:52,920 Speaker 1: inflation fighting efforts after the decision on Wednesday, well something 12 00:00:53,000 --> 00:00:55,600 Speaker 1: resembling a car crash broke out the following day, with 13 00:00:55,640 --> 00:00:59,480 Speaker 1: both stocks and bonds tanking violently. We'll be joined by 14 00:00:59,520 --> 00:01:01,880 Speaker 1: a chief in usmen strategists to the sect what is 15 00:01:01,920 --> 00:01:05,040 Speaker 1: freaking out markets and what it all means going forward. 16 00:01:05,760 --> 00:01:08,680 Speaker 1: But first, Bill Donna, I have to say I think 17 00:01:08,680 --> 00:01:12,679 Speaker 1: regular listeners of the podcast no that I can't resist 18 00:01:12,680 --> 00:01:16,319 Speaker 1: a good gimmick. Yeah, yeah, I know. And and my 19 00:01:16,440 --> 00:01:19,480 Speaker 1: latest gimmick was that if we got more ratings and 20 00:01:19,560 --> 00:01:22,320 Speaker 1: reviews on the show. I think I said if we 21 00:01:22,400 --> 00:01:24,640 Speaker 1: got the three hundred, that we would reveal your your 22 00:01:24,680 --> 00:01:28,959 Speaker 1: high school nickname. Um. What I did not anticipate is 23 00:01:29,040 --> 00:01:33,000 Speaker 1: that in those ratings and reviews you would receive an 24 00:01:33,000 --> 00:01:36,840 Speaker 1: actual marriage proposal. Yeah. I saw them in the in 25 00:01:36,920 --> 00:01:45,440 Speaker 1: the Apple UH podcast reviews. By the way, you accepted, Yeah, 26 00:01:45,680 --> 00:01:48,840 Speaker 1: I didn't accept. I don't know who it is because 27 00:01:48,840 --> 00:01:52,600 Speaker 1: they I think they posted under UH like a user name, 28 00:01:52,720 --> 00:01:56,840 Speaker 1: isn't their name? Yeah. The bad news for that listener is, 29 00:01:56,880 --> 00:01:59,520 Speaker 1: I'm sorry, Bill, Donna has already had happily married and 30 00:01:59,520 --> 00:02:02,800 Speaker 1: and further more, well, Donna will not even allow me 31 00:02:02,840 --> 00:02:06,160 Speaker 1: to join her professional network on LinkedIn. So I don't 32 00:02:06,240 --> 00:02:10,399 Speaker 1: I think your chances of getting a marriage proposal accepted 33 00:02:10,560 --> 00:02:14,400 Speaker 1: through the comments on Apple podcast. While I admire the effort, 34 00:02:14,880 --> 00:02:18,320 Speaker 1: you know, shooters got to take their shot, I do 35 00:02:18,440 --> 00:02:22,280 Speaker 1: not suppose this one will be accepted. I went on 36 00:02:22,320 --> 00:02:25,880 Speaker 1: LinkedIn after you called me out for not accepting you, 37 00:02:26,040 --> 00:02:29,560 Speaker 1: and I had one fifty eight invites, So you're not alone. 38 00:02:30,360 --> 00:02:33,240 Speaker 1: I accepted one of them, like there was somebody I 39 00:02:33,280 --> 00:02:37,839 Speaker 1: really liked. Yeah, this one of them. Okay, another Bloomberg reporter. Yeah, 40 00:02:37,880 --> 00:02:40,799 Speaker 1: you know this is gonna sound like sponsored content from Lincoln. 41 00:02:40,840 --> 00:02:42,920 Speaker 1: I'm not even really a big LinkedIn guy. I just 42 00:02:43,000 --> 00:02:45,560 Speaker 1: checked my my notifications to see if anyone's yelling at 43 00:02:45,560 --> 00:02:47,760 Speaker 1: me or complaining about something they probably I was like, 44 00:02:48,160 --> 00:02:50,600 Speaker 1: I was like someone Tagg Fildata and I go and 45 00:02:50,600 --> 00:02:52,680 Speaker 1: I'm looking at Bill Donna's page. It's like, oh second, 46 00:02:52,720 --> 00:02:55,480 Speaker 1: I'm a second. Yeah, you're not going first. You're not 47 00:02:55,639 --> 00:02:59,280 Speaker 1: like a runner up member of your of your professional network. 48 00:02:59,400 --> 00:03:02,919 Speaker 1: You know who's first in the first year, our guest 49 00:03:03,080 --> 00:03:08,040 Speaker 1: our guests this week. Oh that's great. Yeah, but I 50 00:03:08,080 --> 00:03:10,480 Speaker 1: do want to bring in Anastasia emiro So. She's the 51 00:03:10,560 --> 00:03:14,280 Speaker 1: chief investment strategist at I Capital. Anastasia, thank you for 52 00:03:14,360 --> 00:03:16,760 Speaker 1: joining us again. Good to talk to your with with 53 00:03:16,800 --> 00:03:19,280 Speaker 1: your Modanna and Mike, and Mike I would be happy 54 00:03:19,360 --> 00:03:22,200 Speaker 1: to accept. He was the first connection on my professional network. 55 00:03:22,960 --> 00:03:26,440 Speaker 1: There you can have some friend. That's fantastic. You're one 56 00:03:26,639 --> 00:03:33,400 Speaker 1: one friend. But Anastatia, you've been on the podcast before. 57 00:03:33,800 --> 00:03:36,560 Speaker 1: You actually have changed jobs since the last time you 58 00:03:36,600 --> 00:03:38,680 Speaker 1: were on, so I was hoping you could just sort 59 00:03:38,720 --> 00:03:41,240 Speaker 1: of start out telling us about your new role in 60 00:03:41,240 --> 00:03:45,320 Speaker 1: your new shop. Sure, well, I am a chief investment 61 00:03:45,360 --> 00:03:48,600 Speaker 1: strategist at I Capital, have enjoyed from JP Morgan actually 62 00:03:48,600 --> 00:03:51,920 Speaker 1: about a year ago. And you know, I Capital is 63 00:03:51,960 --> 00:03:55,840 Speaker 1: really the global alternative investment platform, and we are on 64 00:03:55,880 --> 00:03:58,280 Speaker 1: a mission to make it easier for more and more 65 00:03:58,360 --> 00:04:01,640 Speaker 1: investors to access all round of investments. And you know, 66 00:04:01,800 --> 00:04:05,000 Speaker 1: this year in particular has been a case in point white. 67 00:04:05,000 --> 00:04:08,040 Speaker 1: It's so important to think beyond the sixty forty. You know, 68 00:04:08,080 --> 00:04:10,040 Speaker 1: I wrote this outlook in the beginning of the year 69 00:04:10,160 --> 00:04:13,880 Speaker 1: that called for higher kernel rates and lower potential reference 70 00:04:14,320 --> 00:04:16,080 Speaker 1: and I don't think any of us would have guessed 71 00:04:16,080 --> 00:04:18,240 Speaker 1: that the kernel rate was going to end up being 72 00:04:18,279 --> 00:04:20,800 Speaker 1: a point six percent inflation and the returns for the 73 00:04:20,800 --> 00:04:24,360 Speaker 1: sixty forty um, you know, just got dectimated. So this 74 00:04:24,480 --> 00:04:26,680 Speaker 1: is why, and I kept all the focus on things 75 00:04:26,680 --> 00:04:31,160 Speaker 1: like private equity, private credit, real estate and increasingly allocating 76 00:04:31,200 --> 00:04:33,840 Speaker 1: to digital assets as well. So you know, my role 77 00:04:33,920 --> 00:04:36,240 Speaker 1: as a chief investment strategist is really trying just to 78 00:04:36,320 --> 00:04:40,440 Speaker 1: help investors understand what alternatives are the right ones for 79 00:04:40,640 --> 00:04:44,040 Speaker 1: this particular part of the business ycle you know, and 80 00:04:44,080 --> 00:04:46,040 Speaker 1: the stage. I want to get your thoughts on all 81 00:04:46,040 --> 00:04:49,120 Speaker 1: this recent market action. But um, just to follow on 82 00:04:49,279 --> 00:04:51,560 Speaker 1: that notion of of how you're sort of interacting with 83 00:04:51,640 --> 00:04:54,920 Speaker 1: cients these days. I think it was an interesting period 84 00:04:55,680 --> 00:04:59,120 Speaker 1: after the financial crisis, and we just had this almost uninterrupted, 85 00:04:59,680 --> 00:05:03,680 Speaker 1: uh all run in equities. UM. It seemed to be 86 00:05:03,760 --> 00:05:08,200 Speaker 1: almost uh maybe this is over dramatic, but almost an 87 00:05:08,279 --> 00:05:11,599 Speaker 1: existential threat to the hedge fund industry. You know that 88 00:05:11,720 --> 00:05:14,760 Speaker 1: the line just kept going up. UM. All of the 89 00:05:14,839 --> 00:05:17,560 Speaker 1: sort of the best strategies started to become turned into 90 00:05:17,640 --> 00:05:20,400 Speaker 1: factors that you could use in in ETFs and passive 91 00:05:20,520 --> 00:05:24,360 Speaker 1: passive vehicles. But I do feel like this nasty market 92 00:05:24,440 --> 00:05:28,080 Speaker 1: action this year UM sort of flips the switch a 93 00:05:28,120 --> 00:05:32,760 Speaker 1: little bit turn turns the narrative back UM and hedge funds. 94 00:05:33,320 --> 00:05:35,839 Speaker 1: You know, while we certainly see a lot of headlines 95 00:05:35,880 --> 00:05:39,800 Speaker 1: about some that are struggling, uh in aggregate I I 96 00:05:40,279 --> 00:05:42,560 Speaker 1: you know, the indexes I looked at, they are outperforming 97 00:05:42,560 --> 00:05:45,960 Speaker 1: pretty significantly, still not you know, up a lot for 98 00:05:46,000 --> 00:05:48,560 Speaker 1: the year, but losing less from from a sort of 99 00:05:48,560 --> 00:05:53,000 Speaker 1: an aggregate index level. Has it sort of revived the 100 00:05:53,080 --> 00:05:56,640 Speaker 1: demand for for hedge funds, particularly based on on what 101 00:05:56,680 --> 00:06:00,320 Speaker 1: you talked with with your clients. Absolutely, how is Mike? 102 00:06:00,480 --> 00:06:02,400 Speaker 1: And this was part of our outlook as well as 103 00:06:02,400 --> 00:06:05,480 Speaker 1: we anticipated this being a much much better environment for 104 00:06:05,680 --> 00:06:08,479 Speaker 1: hedge funds that we get clients interested. And the reason 105 00:06:08,560 --> 00:06:10,520 Speaker 1: for that, I mean, you said it's spot on for 106 00:06:10,560 --> 00:06:13,080 Speaker 1: the last ten years. I mean, really, all you had 107 00:06:13,120 --> 00:06:14,800 Speaker 1: to be is risk on for the most part, with 108 00:06:14,880 --> 00:06:17,000 Speaker 1: a few exceptions, and you buy the dip along the way, 109 00:06:17,000 --> 00:06:19,880 Speaker 1: but mostly if you're invested in stocks and hi yield bonds, 110 00:06:19,880 --> 00:06:22,680 Speaker 1: he probably did just find so he didn't actually need 111 00:06:22,839 --> 00:06:25,760 Speaker 1: hedge dequity and portfolio and you didn't really need you know, 112 00:06:25,800 --> 00:06:29,400 Speaker 1: relative value trade and so forth. But that changed dramatically 113 00:06:29,440 --> 00:06:32,400 Speaker 1: this year, and we anticipated this year to be a 114 00:06:32,480 --> 00:06:35,600 Speaker 1: year of higher velocity and higher volatility and void do 115 00:06:35,720 --> 00:06:38,000 Speaker 1: we get it? And so that's what I think has 116 00:06:38,040 --> 00:06:40,520 Speaker 1: been so narrative changing for hedge funds is all of 117 00:06:40,600 --> 00:06:43,640 Speaker 1: a sudden, there's equity volatility to trade, there is the 118 00:06:43,640 --> 00:06:46,920 Speaker 1: ext income volatility to trade. There's a lot of macro 119 00:06:47,120 --> 00:06:49,480 Speaker 1: factors are in the driver's seat. So if you look 120 00:06:49,520 --> 00:06:51,760 Speaker 1: at the hedge fund performance, Mike, you said it, but 121 00:06:51,839 --> 00:06:55,400 Speaker 1: the overall hedge fund h f R I industries, for example, 122 00:06:55,440 --> 00:06:58,000 Speaker 1: they're out performing the market nicely. But even if you 123 00:06:58,200 --> 00:07:02,359 Speaker 1: further dissect within that the global macro funds are doing 124 00:07:02,440 --> 00:07:05,240 Speaker 1: really well. And within that, you know, you have some 125 00:07:05,440 --> 00:07:08,880 Speaker 1: really top core child winners that are really attracting client interest. 126 00:07:09,200 --> 00:07:13,360 Speaker 1: If you look at relative value hedge funds, arbitrage strategies, um, 127 00:07:13,480 --> 00:07:17,560 Speaker 1: all of those are delivering above market returns. And also 128 00:07:17,680 --> 00:07:20,360 Speaker 1: quant quant is actually working this year as well. So 129 00:07:20,960 --> 00:07:24,080 Speaker 1: I do think in this environment where nothing seems to 130 00:07:24,080 --> 00:07:27,080 Speaker 1: be working, investors are looking for something that is and 131 00:07:27,200 --> 00:07:30,440 Speaker 1: right now that is in the hedge fund space. And Anastasia, 132 00:07:30,520 --> 00:07:32,960 Speaker 1: just to bring us back to the big event this week, 133 00:07:33,000 --> 00:07:36,280 Speaker 1: which obviously was the FED, actually was super excited for 134 00:07:37,080 --> 00:07:40,360 Speaker 1: the Wednesday pressor because you know, we were all having 135 00:07:40,440 --> 00:07:42,080 Speaker 1: this debate about whether or not we were going to 136 00:07:42,160 --> 00:07:44,520 Speaker 1: get fifty or seventy five, and we had some people 137 00:07:44,560 --> 00:07:48,240 Speaker 1: calling for a hundred basis point hike. So can you 138 00:07:48,280 --> 00:07:50,680 Speaker 1: just lay out for our audience what exactly happened with 139 00:07:50,680 --> 00:07:54,400 Speaker 1: the FED this week, what we heard from j Powell. Yeah, well, 140 00:07:54,440 --> 00:07:56,480 Speaker 1: even what happened earlier in the week, because we got 141 00:07:56,480 --> 00:07:59,560 Speaker 1: a massive pivot from the fedt during the time when 142 00:07:59,600 --> 00:08:02,280 Speaker 1: this was supposed to be a no communication and time frame, 143 00:08:02,360 --> 00:08:04,600 Speaker 1: and we got a pretty strong hand that they're going 144 00:08:04,640 --> 00:08:07,280 Speaker 1: to go for seventy five basis points, and you know, 145 00:08:07,320 --> 00:08:10,640 Speaker 1: in retrospect, it makes a lot of sense because the 146 00:08:10,680 --> 00:08:13,120 Speaker 1: problem with inflation for the Fed right now is they 147 00:08:13,200 --> 00:08:16,320 Speaker 1: can't just focus on the core because the headline inflation, 148 00:08:16,440 --> 00:08:19,800 Speaker 1: the higher gas to lead prices, the higher food prices, 149 00:08:19,840 --> 00:08:23,360 Speaker 1: that's was driving consumer sentiment, and that's was driving consumers 150 00:08:23,360 --> 00:08:28,000 Speaker 1: and expectations of future inflations. So as those expectations surge, 151 00:08:28,160 --> 00:08:31,160 Speaker 1: the FED had to react to it. So here's my 152 00:08:31,680 --> 00:08:35,080 Speaker 1: couple of takes on you know, what do we think 153 00:08:35,080 --> 00:08:38,400 Speaker 1: now that they have hike seventy five basis points. You know, 154 00:08:38,440 --> 00:08:40,840 Speaker 1: first of all, we did anticipate this meeting to be 155 00:08:41,040 --> 00:08:44,360 Speaker 1: a howkish one, and it definitely definitely was. But I 156 00:08:44,360 --> 00:08:46,280 Speaker 1: don't think we can say that it was a hawkish 157 00:08:46,280 --> 00:08:49,600 Speaker 1: surprise to the markets, and you saw how the markets 158 00:08:49,600 --> 00:08:53,240 Speaker 1: initially reacted to the path of increases. The reason I 159 00:08:53,280 --> 00:08:56,000 Speaker 1: say that is a lot of the pricing market price 160 00:08:56,040 --> 00:08:59,920 Speaker 1: saying was already in place before that meeting. And if 161 00:09:00,040 --> 00:09:02,840 Speaker 1: you think about what the markets have been pricing in 162 00:09:02,960 --> 00:09:07,600 Speaker 1: through February, it's close to four percent UH in the 163 00:09:07,679 --> 00:09:09,960 Speaker 1: FED funds rate, So I think a lot of that 164 00:09:10,559 --> 00:09:13,680 Speaker 1: rate increases was already baked in, and that's perhaps why 165 00:09:13,720 --> 00:09:16,640 Speaker 1: the FED was emboldened to do this. But my other 166 00:09:16,720 --> 00:09:20,640 Speaker 1: takeaway not a Hawker surprise, but I think a significant 167 00:09:20,840 --> 00:09:24,160 Speaker 1: move towards restoring the Fed's credibility. I mean, if when 168 00:09:24,200 --> 00:09:27,160 Speaker 1: you look at eight point six percent inflation or six 169 00:09:27,200 --> 00:09:29,719 Speaker 1: percent core inflation, and you'll if you look at the 170 00:09:29,760 --> 00:09:32,199 Speaker 1: FED funds rate, we were far far forward, too low, 171 00:09:32,640 --> 00:09:35,280 Speaker 1: and the FED needed to catch off very badly. So 172 00:09:35,320 --> 00:09:37,760 Speaker 1: I think the fact they're acknowledging it, they're doing it, 173 00:09:37,800 --> 00:09:41,000 Speaker 1: they're moving it is actually a positive for markets because 174 00:09:41,040 --> 00:09:44,040 Speaker 1: we feel like the FED has maybe regaining some control. 175 00:09:44,520 --> 00:09:48,800 Speaker 1: And then the last thing I'll say about this, the 176 00:09:48,880 --> 00:09:51,240 Speaker 1: reason why the equiting markets have been so tough this 177 00:09:51,320 --> 00:09:54,840 Speaker 1: year is because it was really hard to gauge the 178 00:09:54,840 --> 00:09:57,960 Speaker 1: FED reaction function. They say they're trying to be balanced 179 00:09:58,000 --> 00:09:59,599 Speaker 1: one week, and then they say, oh, we're going for 180 00:09:59,679 --> 00:10:02,079 Speaker 1: fifty base once. Now we go for seventy five basis points. 181 00:10:02,080 --> 00:10:05,440 Speaker 1: So you've got whips thought by this FED communication. But 182 00:10:05,559 --> 00:10:09,360 Speaker 1: it seems like they're giving us a more explicit reaction function. 183 00:10:09,600 --> 00:10:13,599 Speaker 1: The focus now is on headline inflation. If it's surprises 184 00:10:13,600 --> 00:10:16,560 Speaker 1: to the upside, should expect a more aggressive path of 185 00:10:16,679 --> 00:10:19,320 Speaker 1: rate hikes, and if it doesn't, perhaps they can pause. 186 00:10:19,480 --> 00:10:21,720 Speaker 1: So at least we know that now, and you know, 187 00:10:21,920 --> 00:10:24,520 Speaker 1: perhaps it's little constellation to the markets per se, but 188 00:10:24,840 --> 00:10:28,760 Speaker 1: at least it does restore credibility in fighting inflation. But 189 00:10:29,120 --> 00:10:31,120 Speaker 1: isn't there a big risk that it just doesn't work? 190 00:10:31,280 --> 00:10:35,440 Speaker 1: You know that these supply chain issues continue, and that 191 00:10:35,600 --> 00:10:39,559 Speaker 1: oil continues to climb higher. You know, uh, Russia appears 192 00:10:40,320 --> 00:10:43,880 Speaker 1: nowhere near ready to capitulate in that war. Um, And 193 00:10:44,480 --> 00:10:47,960 Speaker 1: you know what's the risk there if to the Fed's 194 00:10:48,000 --> 00:10:51,600 Speaker 1: credibility and the markets in general, if you know, they 195 00:10:51,679 --> 00:10:55,240 Speaker 1: keep hiking and inflation stays at if not as high 196 00:10:55,240 --> 00:10:59,000 Speaker 1: as it's been, still well above target. Well, Mike, there's plenty, 197 00:10:59,080 --> 00:11:01,800 Speaker 1: plenty of risk, right And you know one of the 198 00:11:01,840 --> 00:11:05,840 Speaker 1: immediate risks is if you look at US gasoline prices, 199 00:11:05,880 --> 00:11:07,880 Speaker 1: you know, the price you pay the pump close to 200 00:11:07,920 --> 00:11:09,840 Speaker 1: five today. I think it goes it could go to 201 00:11:09,960 --> 00:11:13,360 Speaker 1: six over the summertime. And frankly, there's little the FED 202 00:11:13,400 --> 00:11:16,800 Speaker 1: can do about this. There's even little the Biden administration 203 00:11:16,840 --> 00:11:19,720 Speaker 1: can do about this, because the reason why that's happening 204 00:11:19,840 --> 00:11:22,680 Speaker 1: is it's not so much about the oil supply demand 205 00:11:22,679 --> 00:11:25,280 Speaker 1: and balance. But now it's about the lack of refining 206 00:11:25,320 --> 00:11:28,200 Speaker 1: capacity to actually get enough gasoline on the road. So 207 00:11:28,240 --> 00:11:31,600 Speaker 1: the FED can't fix that, and you know, they tighten policy, 208 00:11:31,679 --> 00:11:34,800 Speaker 1: but are people really gonna drive less? Probably not. You know, 209 00:11:34,840 --> 00:11:37,760 Speaker 1: the FED cannot so, so the risk is that oil 210 00:11:37,800 --> 00:11:42,040 Speaker 1: prices and gasoline prices may have to rise higher then lower. 211 00:11:42,800 --> 00:11:44,520 Speaker 1: They have to rise to the point where they start 212 00:11:44,559 --> 00:11:47,320 Speaker 1: to destroy demand and then they subside. You know. The 213 00:11:47,360 --> 00:11:51,200 Speaker 1: other risk is with food supply shortages. Again that is 214 00:11:51,280 --> 00:11:54,400 Speaker 1: not something the FED can fix. We know the bottlenecks 215 00:11:54,400 --> 00:11:57,040 Speaker 1: that are coming out of Russia and Ukraine. So there's 216 00:11:57,120 --> 00:11:59,679 Speaker 1: plenty of risks. But the bottom line, and I think 217 00:11:59,720 --> 00:12:02,480 Speaker 1: that's why the FED has been getting more more aggressive here. 218 00:12:02,840 --> 00:12:06,000 Speaker 1: They're trying to control what they can control, and that 219 00:12:06,240 --> 00:12:09,640 Speaker 1: is the core parts of the inflation. It is wage inflation, 220 00:12:09,720 --> 00:12:12,160 Speaker 1: and it is slowing down the exuberant in the tech 221 00:12:12,240 --> 00:12:15,840 Speaker 1: sector and the crypto sector. Uh, it is about slowing 222 00:12:15,880 --> 00:12:18,760 Speaker 1: down housing and boy was raped you know, close to 223 00:12:18,800 --> 00:12:22,400 Speaker 1: six percent on thirty or mortgagitory. It's probably going to 224 00:12:22,440 --> 00:12:25,560 Speaker 1: do it. So they're focusing on the core side of 225 00:12:25,559 --> 00:12:29,599 Speaker 1: the equation. So perhaps they can counter balance the headline 226 00:12:29,600 --> 00:12:32,959 Speaker 1: that they really can't control. So so if you had 227 00:12:32,960 --> 00:12:35,920 Speaker 1: to sort of handicap the probability of a quote unquote 228 00:12:35,920 --> 00:12:40,160 Speaker 1: soft landing, um, you know, in other words, the Fed 229 00:12:40,240 --> 00:12:46,120 Speaker 1: manages to bring down inflation without triggering a recession. Where 230 00:12:46,160 --> 00:12:47,280 Speaker 1: do you stand on that? What do you what do 231 00:12:47,280 --> 00:12:49,400 Speaker 1: you think they're your odds are of actually being able 232 00:12:49,400 --> 00:12:52,200 Speaker 1: to pull that off. Look, I think we have a chance. 233 00:12:52,280 --> 00:12:54,960 Speaker 1: And perhaps that's a fifty fifty chance at this point. 234 00:12:55,160 --> 00:12:58,200 Speaker 1: And I say that while the markets are really not 235 00:12:58,280 --> 00:13:00,480 Speaker 1: seeing it this way now there right now pricing it 236 00:13:00,640 --> 00:13:04,719 Speaker 1: close to probability of recession based on the SMB five, 237 00:13:05,160 --> 00:13:06,840 Speaker 1: based on the credit spreads, but when you look at 238 00:13:06,840 --> 00:13:09,719 Speaker 1: the economic indicators that the same imply probability of a 239 00:13:09,800 --> 00:13:13,120 Speaker 1: recession is about for you. But I think we have 240 00:13:13,360 --> 00:13:15,800 Speaker 1: to give ourselves a chance here. And I want to 241 00:13:15,880 --> 00:13:19,920 Speaker 1: draw some parallels to nine four that at the seventy 242 00:13:19,960 --> 00:13:23,239 Speaker 1: five basis point rate hike, you know, that had aggressive 243 00:13:23,280 --> 00:13:25,320 Speaker 1: moves hired rates, and yet if you look at the 244 00:13:25,440 --> 00:13:29,880 Speaker 1: gdp UH during that time frame, it didn't actually go negative. 245 00:13:30,120 --> 00:13:34,000 Speaker 1: It slowed down from five percent to two percent. And 246 00:13:34,080 --> 00:13:37,400 Speaker 1: that's sort of what the forecasts are calling for now, 247 00:13:37,840 --> 00:13:40,400 Speaker 1: you know, we're going from two point seven percent GDP 248 00:13:40,520 --> 00:13:43,320 Speaker 1: this quarter or next maybe at one point seven next year. 249 00:13:43,800 --> 00:13:46,240 Speaker 1: Is that a recession or is it a tought landing. 250 00:13:47,000 --> 00:13:49,679 Speaker 1: You know, there, of course many ways to define a recession, 251 00:13:49,679 --> 00:13:51,760 Speaker 1: and you know, some people think of it in terms 252 00:13:51,800 --> 00:13:54,640 Speaker 1: of sequential slow down, but I think a more proper 253 00:13:54,679 --> 00:13:58,480 Speaker 1: way is to say negative GDP growth and several quarters 254 00:13:58,520 --> 00:14:02,320 Speaker 1: of it. And I don't know that that's exactly where 255 00:14:02,320 --> 00:14:06,160 Speaker 1: we're headed, because what really takes to cause a true 256 00:14:06,360 --> 00:14:09,800 Speaker 1: deep recession is a lot of imbalances. I think back 257 00:14:09,800 --> 00:14:12,520 Speaker 1: to the financial crisis. We had the mortgage debt, we 258 00:14:12,559 --> 00:14:14,720 Speaker 1: had the consumer debt, we had the corporate debt. We 259 00:14:15,080 --> 00:14:17,120 Speaker 1: have had the financials levered up, and we had all 260 00:14:17,160 --> 00:14:21,080 Speaker 1: the video squared. And when I think about those counter 261 00:14:21,160 --> 00:14:24,760 Speaker 1: parties today, we don't have the same degree of imbalances. 262 00:14:24,840 --> 00:14:27,360 Speaker 1: So that's why I'm still in a camp of a 263 00:14:27,480 --> 00:14:31,200 Speaker 1: slow down for sure, but perhaps not the inn our recession. 264 00:14:32,280 --> 00:14:34,440 Speaker 1: I know that after the FED meeting, I had read 265 00:14:34,480 --> 00:14:37,600 Speaker 1: a bunch of notes that that we're sort of looking 266 00:14:37,640 --> 00:14:40,680 Speaker 1: through Paul's comments and a lot of the takeaways were 267 00:14:41,120 --> 00:14:44,120 Speaker 1: the some of the stuff he was saying was a 268 00:14:44,160 --> 00:14:48,160 Speaker 1: bit contradictory. So we got the comments about the next meeting, 269 00:14:48,200 --> 00:14:51,640 Speaker 1: the July meeting could be either fifty or could be 270 00:14:51,720 --> 00:14:55,680 Speaker 1: seventy five basis point hikes. So how do you pass 271 00:14:55,760 --> 00:14:57,160 Speaker 1: through this and how do you make sense of it? 272 00:14:57,200 --> 00:14:59,720 Speaker 1: Like what is your your takeaways in terms of some 273 00:14:59,800 --> 00:15:02,160 Speaker 1: of a contradictory things that we did hear from the 274 00:15:02,160 --> 00:15:07,160 Speaker 1: FT this week. It's really tough to admit for anybody, 275 00:15:07,240 --> 00:15:09,840 Speaker 1: for everybody, including a FT your pal, but we don't 276 00:15:09,840 --> 00:15:12,280 Speaker 1: have a crystal ball. The FED does not have the 277 00:15:12,360 --> 00:15:15,200 Speaker 1: crystal ball and inflation, and I think we have all 278 00:15:15,240 --> 00:15:19,080 Speaker 1: collectively as investors, as policy makers, we have capitulated to 279 00:15:19,120 --> 00:15:22,480 Speaker 1: this view that we just don't know what the next 280 00:15:22,520 --> 00:15:25,840 Speaker 1: inflation print is going to look like. We're across our fingers. 281 00:15:25,920 --> 00:15:27,880 Speaker 1: We hope it's lower than it was the month before, 282 00:15:27,920 --> 00:15:31,320 Speaker 1: but the reality is we don't know. So the reason why, 283 00:15:31,720 --> 00:15:34,080 Speaker 1: you know, perhaps we have this I mean, I call 284 00:15:34,160 --> 00:15:37,160 Speaker 1: it choppy and a little bit sloppy policy from the 285 00:15:37,200 --> 00:15:41,280 Speaker 1: Fed is because they truly don't know um, but they 286 00:15:41,280 --> 00:15:44,000 Speaker 1: are preparing the markets for you know, the potential for 287 00:15:44,040 --> 00:15:46,960 Speaker 1: seventi five basis points. I think that's constructive because that's 288 00:15:47,000 --> 00:15:51,440 Speaker 1: what's becoming priced in. But here's what I say, voll Donna, 289 00:15:51,600 --> 00:15:53,960 Speaker 1: is when you look at the aquadum markets and you 290 00:15:53,960 --> 00:15:56,440 Speaker 1: have a FED that doesn't have a crystal ball and 291 00:15:56,600 --> 00:15:59,360 Speaker 1: they're having to adjust to the absence blows of inflation, 292 00:15:59,760 --> 00:16:03,240 Speaker 1: that is going to create for this lack of predictability, 293 00:16:03,440 --> 00:16:05,520 Speaker 1: and as you know, that's not good for markets. That's 294 00:16:05,600 --> 00:16:08,560 Speaker 1: an environment in which the markets struggle. And that's why 295 00:16:08,560 --> 00:16:10,920 Speaker 1: it's so hard to make a call on any sort 296 00:16:10,920 --> 00:16:13,320 Speaker 1: of bottom, and it's so hard to make a call 297 00:16:13,360 --> 00:16:15,360 Speaker 1: on any sort of buy the dip for this tactical 298 00:16:15,400 --> 00:16:19,200 Speaker 1: short term rally. It's just not the environment we're in today, 299 00:16:19,520 --> 00:16:21,400 Speaker 1: you know. And it says you mentioned that notion of 300 00:16:21,960 --> 00:16:25,600 Speaker 1: sixty forty being under so much pressure this year, you know, 301 00:16:25,680 --> 00:16:29,160 Speaker 1: both both stocks and bonds just having an awful year. 302 00:16:29,200 --> 00:16:32,520 Speaker 1: I looked at the Bloomberg Treasury Index. I think it's 303 00:16:33,040 --> 00:16:37,360 Speaker 1: basically the worst year the treasury markets ever had. You know. Uh, 304 00:16:37,680 --> 00:16:42,800 Speaker 1: But has this correction or bear market in both asset 305 00:16:42,840 --> 00:16:46,520 Speaker 1: classes sort of made sixty forty look look attractive again? 306 00:16:46,560 --> 00:16:48,760 Speaker 1: Do you think where is there still worth trying to 307 00:16:49,360 --> 00:16:53,000 Speaker 1: to shoehorn in some alternatives into that space. Well, I 308 00:16:53,720 --> 00:16:58,280 Speaker 1: think the answer to the two part question is yes 309 00:16:59,080 --> 00:17:02,800 Speaker 1: to both of those things. I do think that we're 310 00:17:02,840 --> 00:17:06,080 Speaker 1: approaching some interesting levels on both docks and bonds. And 311 00:17:06,119 --> 00:17:09,119 Speaker 1: we're not calling bottoms here, but one thing that we 312 00:17:09,160 --> 00:17:11,359 Speaker 1: can say we're now excited about in this environment, you 313 00:17:11,359 --> 00:17:14,440 Speaker 1: can actually get paid in the safest of assets, which 314 00:17:14,440 --> 00:17:16,320 Speaker 1: is the triple A rate at U S. Treasury. You 315 00:17:16,359 --> 00:17:18,639 Speaker 1: can get paid three point three percent on a two 316 00:17:18,760 --> 00:17:21,200 Speaker 1: year treasury not give or take. You know, if the 317 00:17:21,320 --> 00:17:23,399 Speaker 1: terminal rate does in fact go to zero, you know, 318 00:17:23,440 --> 00:17:26,800 Speaker 1: maybe the yield does inch towards zero. That's exciting. What 319 00:17:27,040 --> 00:17:29,560 Speaker 1: was the last time you could get that safety asset 320 00:17:30,080 --> 00:17:33,320 Speaker 1: um with that sort of yield. So in this environment 321 00:17:33,320 --> 00:17:37,439 Speaker 1: where investors grave certainty, grave safety, I think it's a 322 00:17:37,560 --> 00:17:40,560 Speaker 1: really interesting thing to be adding back to your port 323 00:17:40,560 --> 00:17:45,360 Speaker 1: folio in terms of sporting um. On the equity levels, 324 00:17:45,520 --> 00:17:49,040 Speaker 1: I think at some point you have to wonder if 325 00:17:49,160 --> 00:17:51,840 Speaker 1: enough has been priced in as well. I don't think 326 00:17:51,880 --> 00:17:54,439 Speaker 1: equities are screaming by yet, and I'll explain that in 327 00:17:54,520 --> 00:17:57,760 Speaker 1: just a minute. But if you think about that, of 328 00:17:57,760 --> 00:18:00,840 Speaker 1: the recession probability has already been priced it. So even 329 00:18:00,840 --> 00:18:02,639 Speaker 1: if we do have a recession, we probably stay in 330 00:18:02,720 --> 00:18:05,840 Speaker 1: a pretty good chunk of it, so perhaps you may 331 00:18:05,880 --> 00:18:11,159 Speaker 1: be able to step in and added crementially um for 332 00:18:11,400 --> 00:18:14,359 Speaker 1: in order for it to be a screaming by. I 333 00:18:14,400 --> 00:18:16,639 Speaker 1: think we do have some further room to go in 334 00:18:16,720 --> 00:18:20,000 Speaker 1: terms of multiple correction. You know where sixteen times forward earnings, 335 00:18:20,000 --> 00:18:22,359 Speaker 1: we probably have to step it down to fourteen times 336 00:18:22,400 --> 00:18:25,359 Speaker 1: forward earnings and assuming the earnings whole, two d thirty 337 00:18:25,400 --> 00:18:27,600 Speaker 1: five on the SMP five hunter and that gets you 338 00:18:27,640 --> 00:18:31,399 Speaker 1: to about the SMP so we could still take another 339 00:18:31,680 --> 00:18:35,280 Speaker 1: you know, well thirteen lower like from here, so at 340 00:18:35,320 --> 00:18:37,680 Speaker 1: that point that would be screaming by by the bottom line, 341 00:18:37,720 --> 00:18:40,040 Speaker 1: the answer to the first party of question is we 342 00:18:40,119 --> 00:18:43,400 Speaker 1: are approaching some interesting levels in which you may want 343 00:18:43,440 --> 00:18:46,439 Speaker 1: to add back to the sixty and the forty. But 344 00:18:46,960 --> 00:18:49,560 Speaker 1: the other part of your question is this still a 345 00:18:49,680 --> 00:18:52,159 Speaker 1: good time to be an alternative? I mean, frankly, I 346 00:18:52,200 --> 00:18:54,360 Speaker 1: think it's always a good time to be an alternatives 347 00:18:54,400 --> 00:18:57,680 Speaker 1: because you just have these extra levels to pool um. 348 00:18:57,720 --> 00:19:00,440 Speaker 1: We talked about hedge funds and how they are delivering 349 00:19:00,440 --> 00:19:03,439 Speaker 1: the value in this environment, but think about private credit. 350 00:19:04,040 --> 00:19:06,040 Speaker 1: If you look at private credit, most of that is 351 00:19:06,160 --> 00:19:08,720 Speaker 1: floating rate and an environment where the FED keeps on 352 00:19:08,800 --> 00:19:11,199 Speaker 1: hiking and hiking, that's the place you want to be. 353 00:19:12,080 --> 00:19:15,119 Speaker 1: And then the thing that I really like about credit 354 00:19:15,400 --> 00:19:19,439 Speaker 1: is it's a liquid which means it doesn't trade on 355 00:19:19,560 --> 00:19:23,560 Speaker 1: technical market dynamics. So when dealers pull back the inventory 356 00:19:23,680 --> 00:19:25,640 Speaker 1: and you have a number of cells and high yield 357 00:19:25,640 --> 00:19:28,000 Speaker 1: and leverage loans, that's not the case in private credit. 358 00:19:28,280 --> 00:19:30,840 Speaker 1: So as a result, you end up which a much 359 00:19:31,080 --> 00:19:34,439 Speaker 1: smoother path of returns in private credit versus let's say 360 00:19:34,480 --> 00:19:37,080 Speaker 1: hi yield. So I think that's still a very interesting 361 00:19:37,119 --> 00:19:40,760 Speaker 1: place in private equity, I would say, you know, for 362 00:19:40,840 --> 00:19:43,480 Speaker 1: vintages that have been invested in the last couple of years, 363 00:19:43,480 --> 00:19:45,040 Speaker 1: of course, this is going to be a tough environment 364 00:19:45,080 --> 00:19:48,040 Speaker 1: for returns in the next couple of quarters or maybe 365 00:19:48,040 --> 00:19:51,320 Speaker 1: a couple of years as a valuation subside. But if 366 00:19:51,359 --> 00:19:53,840 Speaker 1: you're a new investor in private equity and if you're 367 00:19:53,840 --> 00:19:56,960 Speaker 1: allocating fresh capital, now, guess what that's going to be 368 00:19:57,040 --> 00:20:00,720 Speaker 1: deployed at lower valuations that were likely see over the 369 00:20:00,760 --> 00:20:03,240 Speaker 1: next couple of quarters for a couple of years. So 370 00:20:03,600 --> 00:20:06,439 Speaker 1: I think a lot of investors should be thinking about 371 00:20:06,520 --> 00:20:10,000 Speaker 1: this as an opportunity to commit that lawn term capital 372 00:20:10,119 --> 00:20:14,159 Speaker 1: now to invest it later those lower valuations. So I 373 00:20:14,240 --> 00:20:18,679 Speaker 1: definitely think there's room for both. Um, you know, not 374 00:20:18,760 --> 00:20:21,520 Speaker 1: quite declaring the market bottom here and not quite saying 375 00:20:21,520 --> 00:20:24,520 Speaker 1: equities are cheap. But I think a combination of all 376 00:20:24,560 --> 00:20:27,359 Speaker 1: of those dogs, bonds and alternatives that's what makes it 377 00:20:27,440 --> 00:20:35,640 Speaker 1: for better outcome. Well, speaking of the clearing a market 378 00:20:35,680 --> 00:20:37,399 Speaker 1: bottom or not, I know you had sent us some 379 00:20:37,880 --> 00:20:40,400 Speaker 1: notes before we started the podcast, and I just want 380 00:20:40,400 --> 00:20:42,800 Speaker 1: to read one of the quotes that says, at current levels, 381 00:20:42,960 --> 00:20:46,199 Speaker 1: we would not be meaningfully increasing equity allocations until we 382 00:20:46,240 --> 00:20:50,160 Speaker 1: have seen more evidence of inflation slowing and economic slowdown 383 00:20:50,240 --> 00:20:53,639 Speaker 1: flattening out, and importantly the FED shifting it's hawkish tone, 384 00:20:53,800 --> 00:20:56,080 Speaker 1: which to me it struck me as sort of these 385 00:20:56,119 --> 00:20:59,879 Speaker 1: things sort of being a really long time off. So 386 00:21:00,640 --> 00:21:03,680 Speaker 1: if somebody wanted to deploy some some cash right now, 387 00:21:03,720 --> 00:21:06,520 Speaker 1: what would you be telling them in terms of where 388 00:21:06,560 --> 00:21:09,840 Speaker 1: to put it? Yeah? Yeah, So, first of all, I 389 00:21:09,880 --> 00:21:13,440 Speaker 1: mean a long time it's interesting that common is interesting, 390 00:21:13,600 --> 00:21:16,200 Speaker 1: and you know, things tend to move quicker in these 391 00:21:16,200 --> 00:21:18,640 Speaker 1: markets than they have in prior years, So I could 392 00:21:18,680 --> 00:21:22,439 Speaker 1: actually see a scenario that over the next quarter or 393 00:21:22,520 --> 00:21:26,119 Speaker 1: two we could be on that you know, other side 394 00:21:26,240 --> 00:21:28,960 Speaker 1: always slow down, and on the FED that is pausing. 395 00:21:29,280 --> 00:21:31,480 Speaker 1: I mean, if you think about just basic GDP forecast, 396 00:21:31,560 --> 00:21:34,520 Speaker 1: but this quarter, next quarter, we're anticipating two point seven percent. 397 00:21:34,760 --> 00:21:37,440 Speaker 1: By Q four this year, that's going to step it 398 00:21:37,480 --> 00:21:39,639 Speaker 1: down to one point seven percent. And that's sort of 399 00:21:39,640 --> 00:21:41,639 Speaker 1: what the FED expects for next year as well. So 400 00:21:41,680 --> 00:21:44,480 Speaker 1: by Q four we might actually have seen a slow 401 00:21:44,520 --> 00:21:47,440 Speaker 1: down in growth, we might have seen a flattening plateau 402 00:21:47,480 --> 00:21:50,080 Speaker 1: of growth that would cause the FED to carry back 403 00:21:50,119 --> 00:21:54,240 Speaker 1: some of that hawkishness. So you know, I think this 404 00:21:54,320 --> 00:21:57,000 Speaker 1: is a week by week, one by month by month situation, 405 00:21:57,080 --> 00:21:59,240 Speaker 1: and perhaps this is not actually years in the making 406 00:21:59,800 --> 00:22:03,800 Speaker 1: by And I'll also say that the time you want 407 00:22:03,880 --> 00:22:06,879 Speaker 1: to deploy capital is when it feels terrible to do so. 408 00:22:07,400 --> 00:22:09,399 Speaker 1: And if you look at the percentage of you know, 409 00:22:09,440 --> 00:22:12,120 Speaker 1: barious surveys out there, you know that most investors feel 410 00:22:12,160 --> 00:22:15,480 Speaker 1: pretty terrible. Just look at consumer surveys as well, And 411 00:22:16,160 --> 00:22:19,560 Speaker 1: so I think you can step in incrementally. But one 412 00:22:19,560 --> 00:22:21,760 Speaker 1: thing that I really like doing right now is pick 413 00:22:21,800 --> 00:22:24,280 Speaker 1: your favorite ideas in equities. Maybe it's you know, the 414 00:22:24,359 --> 00:22:28,240 Speaker 1: cash flowing, you know, digital transformation type stocks, you know, 415 00:22:28,320 --> 00:22:30,760 Speaker 1: maybe it's some of the winners of decarbonization, where you 416 00:22:30,760 --> 00:22:34,080 Speaker 1: have a clearer path to profitability. Pick your favorite spots 417 00:22:34,119 --> 00:22:37,199 Speaker 1: and see if you can utilize the options market so 418 00:22:37,280 --> 00:22:40,760 Speaker 1: that rather than just going all in and being long 419 00:22:40,840 --> 00:22:43,240 Speaker 1: from day one, you know, maybe you still up pot 420 00:22:43,280 --> 00:22:45,320 Speaker 1: and you collect that premium then gives you a little 421 00:22:45,320 --> 00:22:47,679 Speaker 1: bit of buffer on the downside. You know, maybe you 422 00:22:47,920 --> 00:22:51,000 Speaker 1: use that, you know, put option premium to buy a 423 00:22:51,040 --> 00:22:55,480 Speaker 1: call option. There's really interesting ways to structure different payoffs 424 00:22:55,680 --> 00:22:57,720 Speaker 1: that are not just one to want in the market. 425 00:22:57,800 --> 00:23:01,200 Speaker 1: And I think that's a better risk adjusted way to 426 00:23:01,359 --> 00:23:04,000 Speaker 1: enter some of these positions, given that we still can't 427 00:23:04,080 --> 00:23:08,280 Speaker 1: quite call the market bottom yet. Speaking of interesting way 428 00:23:08,440 --> 00:23:13,320 Speaker 1: to structure payoffs at a stage, I assume you must 429 00:23:13,320 --> 00:23:17,199 Speaker 1: get peppered with questions from clients about crypto and you 430 00:23:17,240 --> 00:23:19,679 Speaker 1: know where that fits into sort of a multi asset 431 00:23:20,000 --> 00:23:24,720 Speaker 1: allocation strategy, uh, that type of thing. You know, how 432 00:23:24,760 --> 00:23:28,239 Speaker 1: are you thinking about crypto these days? Uh, both as 433 00:23:28,280 --> 00:23:30,400 Speaker 1: a and as a class itself, and but also how 434 00:23:30,440 --> 00:23:34,080 Speaker 1: it sort of fits into the larger eco system. You know, 435 00:23:34,240 --> 00:23:37,520 Speaker 1: is some of the weakness in stocks related to crypto? 436 00:23:37,720 --> 00:23:41,120 Speaker 1: Or is the weakness and crypto, you know, related to stocks? 437 00:23:41,600 --> 00:23:44,200 Speaker 1: How are you thinking about you know, where crypto fits 438 00:23:44,200 --> 00:23:48,560 Speaker 1: into sort of uh modern markets? Um, you know, it 439 00:23:48,640 --> 00:23:51,680 Speaker 1: just really feels like a falling knife right now that um, 440 00:23:52,320 --> 00:23:54,520 Speaker 1: you know, the people who warned that it was the 441 00:23:54,600 --> 00:23:58,240 Speaker 1: Dutch tool, the bubble of the of the seventeen hundreds. 442 00:23:58,320 --> 00:24:00,680 Speaker 1: I feel like you're probably taking a big victory lap 443 00:24:00,760 --> 00:24:04,040 Speaker 1: right now. I mean, is it that dire? Was this 444 00:24:04,200 --> 00:24:08,919 Speaker 1: just a manic cheap money bubble? Uh, that's that's going 445 00:24:09,000 --> 00:24:12,040 Speaker 1: to disappear now? Or or what? How are you thinking 446 00:24:12,040 --> 00:24:14,359 Speaker 1: about crypto? I guess is the way to summarize that 447 00:24:14,400 --> 00:24:20,359 Speaker 1: twal party question question just one point. It might be 448 00:24:20,400 --> 00:24:22,760 Speaker 1: a twenty minute answer, because there's just so much to 449 00:24:22,760 --> 00:24:24,760 Speaker 1: say about crypto. I promise it won't be a twenty 450 00:24:24,760 --> 00:24:29,320 Speaker 1: minute answer. But but I will say that for a while, 451 00:24:30,440 --> 00:24:33,080 Speaker 1: Bitcoin a little bit of vert for being an inflation hedge. 452 00:24:33,119 --> 00:24:35,600 Speaker 1: I say that because when inflation was rising and the 453 00:24:35,720 --> 00:24:38,919 Speaker 1: FED was doing nothing about it, of course bitcoin was 454 00:24:39,000 --> 00:24:41,280 Speaker 1: the place that people wanted to go. But now that 455 00:24:41,359 --> 00:24:44,760 Speaker 1: the FED is doing something, doing quite a lot about inflation, 456 00:24:44,880 --> 00:24:48,159 Speaker 1: you can't make that argument about that being inflation hedge anymore. 457 00:24:48,359 --> 00:24:50,800 Speaker 1: So then you refer to the other side of the coin, 458 00:24:51,119 --> 00:24:55,119 Speaker 1: which is that is technology. It is innovative technology, and 459 00:24:55,160 --> 00:24:58,320 Speaker 1: it is unprofitable. So this is why you look at 460 00:24:58,359 --> 00:25:01,800 Speaker 1: how all the crypt ecosystem has been trading. It's been 461 00:25:01,800 --> 00:25:05,080 Speaker 1: trading in lockstep with the NASDAC and specifically with the 462 00:25:05,160 --> 00:25:09,639 Speaker 1: unprofitable tech. And so that's why you're seeing this breakdown 463 00:25:09,800 --> 00:25:13,919 Speaker 1: of momentum to the downside. And until the FED pauses, 464 00:25:14,240 --> 00:25:16,760 Speaker 1: until we have you know, kind of a cap to 465 00:25:16,800 --> 00:25:19,800 Speaker 1: the move higher in rate, you will continue to see 466 00:25:19,840 --> 00:25:23,359 Speaker 1: pressure in crypto. But here's what I also say, And 467 00:25:23,400 --> 00:25:26,760 Speaker 1: I was at the Consensus conference in Austin UM last 468 00:25:26,800 --> 00:25:29,760 Speaker 1: week and one of the quotes from one of the 469 00:25:29,760 --> 00:25:33,560 Speaker 1: panels was that make sure that you're in crypto for 470 00:25:33,960 --> 00:25:37,600 Speaker 1: the mission and not the money. And that really struck 471 00:25:37,640 --> 00:25:41,359 Speaker 1: me because there is so much specular fraud that has 472 00:25:41,400 --> 00:25:44,280 Speaker 1: been accumulated in crypto and I am so so glad 473 00:25:44,359 --> 00:25:47,120 Speaker 1: that that is being flushed out as we speak. That 474 00:25:47,240 --> 00:25:49,720 Speaker 1: needed to break, that needed to be out of the system. 475 00:25:50,080 --> 00:25:54,879 Speaker 1: But what's left is there is a significant utility function 476 00:25:54,960 --> 00:25:58,720 Speaker 1: to blockchain technology. You know, can you build better decentralized 477 00:25:58,720 --> 00:26:02,119 Speaker 1: application for lending, for market making? Uh? You know, for 478 00:26:02,200 --> 00:26:06,840 Speaker 1: transaction settlement, for digital privacy. The answer is you probably can. 479 00:26:07,280 --> 00:26:11,240 Speaker 1: And many innovative technologists are working on this. So there 480 00:26:11,400 --> 00:26:16,000 Speaker 1: is a big mission driven cohort within the crypto ecosystem 481 00:26:16,040 --> 00:26:18,080 Speaker 1: and I think that's what's exciting and that's what's here 482 00:26:18,119 --> 00:26:21,800 Speaker 1: to stay. But I'm glad that we're seeing algorithmic uh 483 00:26:22,240 --> 00:26:25,600 Speaker 1: you know, old coins breaking down. I'm glad that we're 484 00:26:25,640 --> 00:26:31,199 Speaker 1: seeing unsustainable lending schemes breaking down. And I'm hopeful that 485 00:26:31,359 --> 00:26:35,240 Speaker 1: what this ultimately leads to is regulation. The regulators set 486 00:26:35,240 --> 00:26:39,520 Speaker 1: back for ten years, let this speculative bubble inflate. And 487 00:26:39,960 --> 00:26:42,000 Speaker 1: you know how it works. It takes a blow up, 488 00:26:42,080 --> 00:26:44,600 Speaker 1: if it takes a meltdown for us to finally do 489 00:26:44,720 --> 00:26:47,199 Speaker 1: something about it and regulated. So I think that is 490 00:26:47,280 --> 00:26:50,080 Speaker 1: the moment that is ultimately going to be the best 491 00:26:50,080 --> 00:26:52,720 Speaker 1: thing to happen for crypto for years to come. Is 492 00:26:52,720 --> 00:26:56,000 Speaker 1: that regulation. So Mike, Mike mentioned that, you know, probably 493 00:26:56,000 --> 00:26:58,080 Speaker 1: a lot of clients are asking about that. What else 494 00:26:58,080 --> 00:27:00,760 Speaker 1: are clients asking you? Is it mainly inflation in the fetter? 495 00:27:01,119 --> 00:27:03,800 Speaker 1: What else is top of mind for them in terms 496 00:27:03,840 --> 00:27:09,960 Speaker 1: of worries or concerns. Yeah, it's it's obviously inflation. It's 497 00:27:10,119 --> 00:27:13,680 Speaker 1: it's obviously recession hedging, and there is a pretty conservative 498 00:27:13,680 --> 00:27:17,280 Speaker 1: element um to how clients want a position right now. 499 00:27:17,680 --> 00:27:20,400 Speaker 1: If speaking of structure and payoffs, a lot of clients 500 00:27:20,400 --> 00:27:23,679 Speaker 1: are focused on, you know, maybe entering into the equity markets, 501 00:27:23,720 --> 00:27:27,280 Speaker 1: but giving themselves some principal projection when they do. UM, 502 00:27:27,320 --> 00:27:30,240 Speaker 1: A lot of clients are looking to volatize this elevated 503 00:27:30,280 --> 00:27:34,560 Speaker 1: volatility and convert that into sort of a income proxy. 504 00:27:34,680 --> 00:27:36,480 Speaker 1: And once again, if you can sell a put option 505 00:27:36,520 --> 00:27:39,479 Speaker 1: and collect the generous premium, that could give you a 506 00:27:39,520 --> 00:27:43,439 Speaker 1: pretty nice income proxy as well. UM. And then you know, 507 00:27:43,480 --> 00:27:47,160 Speaker 1: the big theme that resonates with clients is that you've 508 00:27:47,200 --> 00:27:49,760 Speaker 1: got to get paid while you wait. I think all 509 00:27:49,760 --> 00:27:52,240 Speaker 1: of us are acknowledged that we are in a difficult 510 00:27:52,520 --> 00:27:55,040 Speaker 1: um time frame. It's gonna take a little while to 511 00:27:55,080 --> 00:27:58,320 Speaker 1: work through this. But where can you get stability working? 512 00:27:58,400 --> 00:28:01,119 Speaker 1: You get income in the portfolio because I mean cash 513 00:28:01,119 --> 00:28:03,399 Speaker 1: and I pay you something, But inflation is still eight 514 00:28:03,400 --> 00:28:05,840 Speaker 1: point three percent, so we're eight point six percent, I 515 00:28:05,880 --> 00:28:07,919 Speaker 1: should say, so how do you keep up with that? 516 00:28:08,040 --> 00:28:11,080 Speaker 1: So that's why ideas in private credit that may be 517 00:28:11,200 --> 00:28:14,879 Speaker 1: yielding eight percent, that's why ideas in real estate resonated 518 00:28:15,160 --> 00:28:19,400 Speaker 1: really well with clients and continue to. So bottom line 519 00:28:19,600 --> 00:28:23,600 Speaker 1: is people want to be comfortable with their allocations right now. 520 00:28:23,760 --> 00:28:26,080 Speaker 1: I mean, none of us feel great about the markets, 521 00:28:26,119 --> 00:28:28,960 Speaker 1: but it doesn't mean that we can't feel comfortable with 522 00:28:28,960 --> 00:28:32,639 Speaker 1: our portfolios. So it's about right sizing the allocation, making 523 00:28:32,640 --> 00:28:34,920 Speaker 1: sure you have staying power, and you know what, making 524 00:28:34,920 --> 00:28:37,439 Speaker 1: sure you have dry powder, because we will have the 525 00:28:37,480 --> 00:28:39,560 Speaker 1: moment in the market where will say this is a 526 00:28:39,600 --> 00:28:42,959 Speaker 1: screaming by and let's do increase our allocations sustainably. So 527 00:28:43,400 --> 00:28:46,720 Speaker 1: um so a combination of those you know, protection strategies, 528 00:28:46,800 --> 00:28:50,440 Speaker 1: yield and having the dry powder. That's you know, uh, 529 00:28:50,480 --> 00:28:53,560 Speaker 1: and says it's funny. Our colleague John Authors writes a 530 00:28:53,640 --> 00:28:56,920 Speaker 1: column at the end of every year You're called Hindsight Capital, 531 00:28:56,960 --> 00:29:00,440 Speaker 1: and it's an imaginary hedge fund that invest with the 532 00:29:00,440 --> 00:29:02,840 Speaker 1: power of hindsight. Uh. You know. In other words, he 533 00:29:02,880 --> 00:29:05,200 Speaker 1: just looks back at the beginning of the year and 534 00:29:05,360 --> 00:29:08,840 Speaker 1: determines what did did the best uh that year? And 535 00:29:09,080 --> 00:29:11,360 Speaker 1: and you know, it's a funny column about how of 536 00:29:11,400 --> 00:29:14,320 Speaker 1: course that's what they invested in. I have a feeling 537 00:29:14,400 --> 00:29:17,880 Speaker 1: Hindsight Capital is going to be like double triple levered 538 00:29:17,920 --> 00:29:22,200 Speaker 1: into commodities this year. So um, I'm curious, you know 539 00:29:23,520 --> 00:29:27,920 Speaker 1: how you're thinking about commodities. Obviously, you know, energy energy 540 00:29:28,200 --> 00:29:33,120 Speaker 1: equities and commodity linked equities were probably one of the 541 00:29:33,120 --> 00:29:35,760 Speaker 1: only places to hide out this year and and uh, 542 00:29:35,840 --> 00:29:39,120 Speaker 1: you know, not lose money. Has that ship sailed? Do 543 00:29:39,120 --> 00:29:43,240 Speaker 1: you think, um or is there still sort of runway 544 00:29:43,280 --> 00:29:46,320 Speaker 1: to get into commodities at this point? Well, you know, 545 00:29:46,360 --> 00:29:49,080 Speaker 1: my there's a big argument to be made that we're 546 00:29:49,120 --> 00:29:52,200 Speaker 1: in a structural deficit of all sorts of commodities. And 547 00:29:52,280 --> 00:29:54,440 Speaker 1: it's true for food, it's through, for weed, it's through 548 00:29:54,560 --> 00:30:00,000 Speaker 1: for um, you know, gasoline, metals, lithium, you name it. Um. 549 00:30:00,000 --> 00:30:03,560 Speaker 1: I think, while that's true, I think the most likely 550 00:30:03,640 --> 00:30:07,240 Speaker 1: path for commodities right now is higher first, perhaps in 551 00:30:07,240 --> 00:30:10,680 Speaker 1: the very near term, and then lower later perhaps I 552 00:30:10,680 --> 00:30:13,239 Speaker 1: mean not to distant future. And I say this in 553 00:30:13,320 --> 00:30:16,920 Speaker 1: order to right size and shift the supply demand and balance. 554 00:30:17,600 --> 00:30:19,200 Speaker 1: What you really have to do is if you can't 555 00:30:19,200 --> 00:30:22,120 Speaker 1: fix the supply side, then the demand has to come down. 556 00:30:22,680 --> 00:30:25,080 Speaker 1: And you know, the FED is obviously trying to bring 557 00:30:25,120 --> 00:30:27,480 Speaker 1: that demand down, and I think the prices and the 558 00:30:27,480 --> 00:30:30,440 Speaker 1: FED is not If the FED is not successful, then 559 00:30:30,440 --> 00:30:33,320 Speaker 1: elevator prices that what has to do this. So for 560 00:30:33,440 --> 00:30:36,040 Speaker 1: oil in particular, I think if oil prices search in 561 00:30:36,120 --> 00:30:39,680 Speaker 1: other twenty barrelers, so that will lead to more pronounced 562 00:30:39,720 --> 00:30:44,040 Speaker 1: demand instruction. And then you know, as economic activity slows down, 563 00:30:44,200 --> 00:30:46,680 Speaker 1: I think you see that demand instruction more and more, 564 00:30:46,760 --> 00:30:49,640 Speaker 1: and so that's what's likely to bring down commodity prices. 565 00:30:50,000 --> 00:30:52,760 Speaker 1: So I don't know that it's the time to chase 566 00:30:52,840 --> 00:30:58,240 Speaker 1: the upside uh in commodities. UM. I think there are 567 00:30:58,280 --> 00:31:01,640 Speaker 1: probably some places that you can make the case for, 568 00:31:02,080 --> 00:31:04,280 Speaker 1: you know, longer term investment opportunity. If you think of 569 00:31:04,320 --> 00:31:07,000 Speaker 1: something like lithium for example, which by the way, speaking 570 00:31:07,000 --> 00:31:11,160 Speaker 1: of chasing it, it's up over the last year or so. 571 00:31:12,480 --> 00:31:16,800 Speaker 1: But nevertheless, electrically, coal um penetration in the United States 572 00:31:16,920 --> 00:31:19,520 Speaker 1: is very low relative to Europe and China, for example, 573 00:31:19,680 --> 00:31:21,480 Speaker 1: but there's a lot of catching up to do. That's 574 00:31:21,480 --> 00:31:23,560 Speaker 1: where the world is headed. So I think you can 575 00:31:23,680 --> 00:31:26,880 Speaker 1: make the case for some of these commodities, but not 576 00:31:27,000 --> 00:31:31,080 Speaker 1: a blanket statement right now. And speaking of hindsight and 577 00:31:31,280 --> 00:31:34,560 Speaker 1: looking back at the past six months of the year, 578 00:31:34,840 --> 00:31:38,280 Speaker 1: obviously a lot has happened that many people weren't expecting 579 00:31:38,320 --> 00:31:42,360 Speaker 1: to happen. We had prescious invasion of Ukraine, we had persistently, 580 00:31:42,400 --> 00:31:46,120 Speaker 1: persistently persistently high inflation, etcetera, etcetera. I'm wondering what from 581 00:31:46,160 --> 00:31:49,400 Speaker 1: the past six months you're taking with you in the 582 00:31:49,520 --> 00:31:53,400 Speaker 1: for the next six months in terms of like lessons learned, uh, 583 00:31:53,720 --> 00:31:59,160 Speaker 1: and what to expect for the second half of the year. Yeah, 584 00:31:59,200 --> 00:32:04,240 Speaker 1: it's a really eight um question. And I think the 585 00:32:04,280 --> 00:32:08,000 Speaker 1: biggest lesson learned is that over the last six months 586 00:32:08,080 --> 00:32:11,640 Speaker 1: is that we can't apply the playbook of the last 587 00:32:11,680 --> 00:32:15,640 Speaker 1: several years to the next six months or the next years. 588 00:32:16,040 --> 00:32:20,640 Speaker 1: This is truly an unprecedented environment. Um. You know, an 589 00:32:20,640 --> 00:32:24,400 Speaker 1: eight point six percent inflation print, and inflation that's becoming 590 00:32:24,560 --> 00:32:28,920 Speaker 1: entrenched in every single sector where you have supply chain 591 00:32:29,000 --> 00:32:32,000 Speaker 1: challenges not only not related to the pandemic and the 592 00:32:32,120 --> 00:32:34,680 Speaker 1: kind of the overhang of the pandemic, but just related 593 00:32:34,720 --> 00:32:37,120 Speaker 1: to the fact that we have not built enough capacity 594 00:32:37,320 --> 00:32:39,600 Speaker 1: in the refining sector, in the housing sector, and so 595 00:32:39,720 --> 00:32:43,040 Speaker 1: on and so forth. So in that environment where you 596 00:32:43,160 --> 00:32:48,400 Speaker 1: have these imbalances, we can just make blake and statements 597 00:32:48,440 --> 00:32:51,080 Speaker 1: and assume that we're going to go back to exactly 598 00:32:51,120 --> 00:32:54,880 Speaker 1: where we started before COVID, and so it is a 599 00:32:54,960 --> 00:32:57,840 Speaker 1: little bit bimble. It is a little bit more touch 600 00:32:57,920 --> 00:33:02,240 Speaker 1: and go, and it is a more cautious approach until 601 00:33:02,320 --> 00:33:04,840 Speaker 1: we finally see that flapping out and it is delaration 602 00:33:04,880 --> 00:33:09,000 Speaker 1: or inflation. So I guess the takeaway is, don't apply 603 00:33:09,040 --> 00:33:12,720 Speaker 1: the same playbook and you know, don't don't make a 604 00:33:12,800 --> 00:33:16,800 Speaker 1: blanket assumption, but just be more nimble in your portfolios. 605 00:33:17,680 --> 00:33:19,800 Speaker 1: And I think, by the way, that's the takeaway for 606 00:33:19,840 --> 00:33:24,360 Speaker 1: the FED as well. Anastasia Amirosso. It's always such a 607 00:33:24,400 --> 00:33:27,560 Speaker 1: treat to hear your insights, uh and your wisdom. We 608 00:33:27,600 --> 00:33:30,000 Speaker 1: really appreciate your time. I have to say, though, I'm 609 00:33:30,000 --> 00:33:32,560 Speaker 1: from Philadelphia, so every time I see your name, I 610 00:33:32,600 --> 00:33:37,320 Speaker 1: think of the delicious Amirosso Hogi Rolls out of Philadelphia. 611 00:33:37,400 --> 00:33:39,360 Speaker 1: I don't know if there's any relation there, but there's 612 00:33:39,480 --> 00:33:41,840 Speaker 1: no relation, but sounds like we should have that on 613 00:33:41,840 --> 00:33:45,560 Speaker 1: the podcast next time. Yeah, they're they the top of 614 00:33:45,600 --> 00:33:48,480 Speaker 1: the league table of Hogi Rolls in the Philadelphia area. 615 00:33:49,240 --> 00:33:53,120 Speaker 1: So a very very distinguished name from where I come from. Amazing, 616 00:33:55,040 --> 00:33:58,400 Speaker 1: And what else is distinguished? It is not necessarily the 617 00:33:58,440 --> 00:34:02,640 Speaker 1: seguay I'm making, but what the that ship is, but um, 618 00:34:02,960 --> 00:34:06,080 Speaker 1: it's I tried. They're not always going to be good 619 00:34:06,120 --> 00:34:10,200 Speaker 1: home runs. Most of the time, they're sometimes yeah yeah, 620 00:34:10,760 --> 00:34:28,840 Speaker 1: emphasis on some as always filled out. I want to 621 00:34:28,840 --> 00:34:32,040 Speaker 1: start with you because I know if you've spent hours, 622 00:34:32,560 --> 00:34:36,880 Speaker 1: hours upon ours reading financial news in hopes of finding 623 00:34:36,920 --> 00:34:39,680 Speaker 1: the craziest thing in markets for this week, what do 624 00:34:39,760 --> 00:34:41,759 Speaker 1: you do? But everything this week was a little bit 625 00:34:41,880 --> 00:34:43,920 Speaker 1: more on the serious side. So I actually had a 626 00:34:43,920 --> 00:34:47,680 Speaker 1: little bit of trouble. But then I saw this NBC 627 00:34:47,719 --> 00:34:50,200 Speaker 1: News story that really caught my eye. So we know 628 00:34:50,360 --> 00:34:53,320 Speaker 1: that in crypto you have a lot of actually outside 629 00:34:53,320 --> 00:34:56,760 Speaker 1: of CRYPTI have a lot of people calling crypto stuff, 630 00:34:56,880 --> 00:34:59,840 Speaker 1: you know, fraudulent and scammy, etcetera, etcetera. So there's this 631 00:35:00,040 --> 00:35:03,680 Speaker 1: VC news story as it happened. But there's this NBC 632 00:35:03,800 --> 00:35:08,239 Speaker 1: news story about Anna Delvy. Do you know who she is? 633 00:35:10,480 --> 00:35:14,040 Speaker 1: That rings but no, I can't. There's a Netflix series 634 00:35:14,120 --> 00:35:16,680 Speaker 1: based on her where she had been pretending to be 635 00:35:16,760 --> 00:35:20,040 Speaker 1: an heiress, a German heiress, and she defrauded a lot 636 00:35:20,080 --> 00:35:23,440 Speaker 1: of people. And the Netflix series is called Inventing Anna. 637 00:35:23,920 --> 00:35:27,280 Speaker 1: But anyway, NBC spoke with her and she said she'd 638 00:35:27,280 --> 00:35:31,040 Speaker 1: never encourage anybody to follow her footsteps, and at the 639 00:35:31,120 --> 00:35:36,839 Speaker 1: same time, she unveiled an n f T collection, So 640 00:35:37,120 --> 00:35:41,400 Speaker 1: you you NBC said, you know the infamous socialement at 641 00:35:41,440 --> 00:35:44,440 Speaker 1: ten n f T s that will grand holders exclusive 642 00:35:44,520 --> 00:35:50,320 Speaker 1: access to her, including one on one phone calls. So wow, 643 00:35:50,960 --> 00:35:55,239 Speaker 1: I don't know about that. I uh boy one on 644 00:35:55,280 --> 00:35:57,640 Speaker 1: one phone calls and n f T with embedded one 645 00:35:57,640 --> 00:36:01,120 Speaker 1: on one phone call. It's a rave It's a brave 646 00:36:01,160 --> 00:36:03,440 Speaker 1: new world. It's kind of like if you've made a 647 00:36:03,480 --> 00:36:05,400 Speaker 1: cameo into an n f T. I guess you know 648 00:36:05,440 --> 00:36:10,040 Speaker 1: there's cameos. I gotta watch that show. I'm behind all 649 00:36:10,040 --> 00:36:13,320 Speaker 1: my Netflix. I don't know. There's so many shows I've missed. 650 00:36:13,360 --> 00:36:15,480 Speaker 1: I need uh, I need the NBA player your way 651 00:36:15,520 --> 00:36:19,440 Speaker 1: behind if you've never heard of this one? Yeah, all 652 00:36:19,480 --> 00:36:21,839 Speaker 1: these shows you guys talk about, I've never seen one 653 00:36:21,880 --> 00:36:30,080 Speaker 1: of them. I'm thirty years behind. Yeah, how about you 654 00:36:30,120 --> 00:36:32,319 Speaker 1: at the stage? Have you seen anything crazy this week? 655 00:36:33,440 --> 00:36:36,320 Speaker 1: This week, there's been a lot of plenty of crazy 656 00:36:36,320 --> 00:36:39,919 Speaker 1: market movements. But I ain't gonna stick with crypto and 657 00:36:40,160 --> 00:36:42,400 Speaker 1: you know what, vill Donno is mentioning. But you know, 658 00:36:42,480 --> 00:36:45,279 Speaker 1: to me, the crazy thing is we've had the cell 659 00:36:45,360 --> 00:36:49,319 Speaker 1: serious news and you know, any time you get an 660 00:36:49,400 --> 00:36:52,279 Speaker 1: offer to park your cash and earn an eighteen and 661 00:36:52,320 --> 00:36:54,759 Speaker 1: a half percent, you kind of have to stop and 662 00:36:54,800 --> 00:36:57,560 Speaker 1: ponder and think how and why and is it? You know, 663 00:36:57,719 --> 00:37:00,560 Speaker 1: is it solid, is it bulletproof? Is it gonna hay out? 664 00:37:00,600 --> 00:37:02,640 Speaker 1: You know what kind of credit risk you're taking? And 665 00:37:02,680 --> 00:37:05,000 Speaker 1: what's really crazy to me is it's some of the 666 00:37:05,080 --> 00:37:08,600 Speaker 1: stuff that's been built in the crypto ecosystem parkens back 667 00:37:08,680 --> 00:37:11,960 Speaker 1: to the two thousand and eight era, where just one 668 00:37:12,080 --> 00:37:16,719 Speaker 1: assumption goes wrong and then everything goes unwound. So to me, 669 00:37:17,120 --> 00:37:21,280 Speaker 1: that's sort of crazy that we continue to get into 670 00:37:21,320 --> 00:37:23,560 Speaker 1: some of these speculative bubbles even though we've learned the 671 00:37:23,600 --> 00:37:26,000 Speaker 1: lessons from the financial crisis. But perhaps so we haven't. 672 00:37:26,200 --> 00:37:28,279 Speaker 1: But once again, I guess that's what it takes to 673 00:37:28,520 --> 00:37:31,399 Speaker 1: uh for the regulators to step in and to make 674 00:37:31,440 --> 00:37:35,520 Speaker 1: things better in the end. Now they're the the echoes 675 00:37:35,560 --> 00:37:38,800 Speaker 1: of the financial crisis are are all over the place, 676 00:37:38,840 --> 00:37:42,560 Speaker 1: you know, the whole notioner re hypothecation and just counter 677 00:37:42,760 --> 00:37:44,960 Speaker 1: party risk that you don't even realize is there, and 678 00:37:45,280 --> 00:37:49,040 Speaker 1: it's just it's pretty remarkable. Um So that's a good one. 679 00:37:49,080 --> 00:37:51,359 Speaker 1: I like that, and I wonder. You know, I do 680 00:37:51,480 --> 00:37:55,439 Speaker 1: think a lot of people probably piled into these these 681 00:37:55,520 --> 00:37:58,359 Speaker 1: lending schemes without really appreciating the risk. But come on, 682 00:37:58,400 --> 00:38:00,759 Speaker 1: how could you? How could you not? At least the 683 00:38:00,880 --> 00:38:03,640 Speaker 1: sophisticated under the business must have known that this is 684 00:38:03,840 --> 00:38:06,040 Speaker 1: this is kind of a house of cards to some degree. 685 00:38:06,080 --> 00:38:09,680 Speaker 1: But but they still they still chased it. Anyway, I am, 686 00:38:09,760 --> 00:38:12,759 Speaker 1: for once going back to the traditional markets for my 687 00:38:12,840 --> 00:38:16,600 Speaker 1: craziest thing, and it is, uh, the energy market, the 688 00:38:16,640 --> 00:38:21,640 Speaker 1: gasoline market. As we all know, gas prices have famously 689 00:38:22,480 --> 00:38:27,520 Speaker 1: risen above five dollars a gallon for the first time nationwide. California, 690 00:38:27,600 --> 00:38:30,640 Speaker 1: of course, is famous for even higher gas prices uh 691 00:38:30,840 --> 00:38:34,440 Speaker 1: than that. However, what if I were to tell you, Bildonna, 692 00:38:34,760 --> 00:38:39,000 Speaker 1: that you could buy gasoline at one station in California 693 00:38:39,120 --> 00:38:42,840 Speaker 1: for sixty nine cents a gallon? Would that make you 694 00:38:42,840 --> 00:38:44,840 Speaker 1: want to drive all the way out to California to 695 00:38:44,840 --> 00:38:47,120 Speaker 1: fill up your taxes? It sounds too good to be true. 696 00:38:49,400 --> 00:38:52,680 Speaker 1: Well indeed it was, and what happened. It's basically the 697 00:38:52,680 --> 00:38:56,040 Speaker 1: equivalent of a gas station fat finger trade. Uh. The 698 00:38:56,080 --> 00:39:00,480 Speaker 1: manager of the station mensa input a price of six 699 00:39:00,520 --> 00:39:05,000 Speaker 1: dollars and cents, but he got the decimal in the 700 00:39:05,040 --> 00:39:08,200 Speaker 1: wrong place and put it up there for sixty nine 701 00:39:08,280 --> 00:39:11,440 Speaker 1: cents um for whatever reason, and then they don't explain it. 702 00:39:11,480 --> 00:39:14,480 Speaker 1: This is the story courtesy of the website of CBS 703 00:39:14,560 --> 00:39:18,560 Speaker 1: thirteen Sacramento. And it's not quite clear why he didn't 704 00:39:18,600 --> 00:39:21,840 Speaker 1: immediately fix it. But they began selling guests for sixty 705 00:39:21,920 --> 00:39:25,200 Speaker 1: nine cents for social media, but one of this, and 706 00:39:25,280 --> 00:39:30,200 Speaker 1: soon there were lines, uh deep lines at this particular 707 00:39:30,239 --> 00:39:34,040 Speaker 1: gas station. So of course, as you know, you can 708 00:39:34,080 --> 00:39:36,080 Speaker 1: probably guess, I have to turn this into an episode 709 00:39:36,080 --> 00:39:38,200 Speaker 1: of the Prices right right now, So I want you 710 00:39:38,239 --> 00:39:41,399 Speaker 1: both to guess, how much do you think this fat 711 00:39:41,480 --> 00:39:46,680 Speaker 1: fingered guest lean pricing at this station tossed the station 712 00:39:46,840 --> 00:39:50,320 Speaker 1: before they were able to fix it. Should I go first? Okay, 713 00:39:50,400 --> 00:39:53,520 Speaker 1: so there was a deep line. He was losing a 714 00:39:53,520 --> 00:40:00,000 Speaker 1: lot of money he or she I will go with dollars. 715 00:40:01,360 --> 00:40:05,600 Speaker 1: I'm hoping really quickly. But he had to honor all 716 00:40:05,600 --> 00:40:10,600 Speaker 1: the people on the line. That's probably true. Yeah, I 717 00:40:10,640 --> 00:40:13,240 Speaker 1: think maybe that is the big, big problem they faced. 718 00:40:13,320 --> 00:40:14,799 Speaker 1: How about you in a station? How much do you 719 00:40:14,800 --> 00:40:17,919 Speaker 1: think this costs this gas station? Oh? That's so tough. 720 00:40:18,360 --> 00:40:22,720 Speaker 1: I think with the speed of social media. Uh, somebody 721 00:40:22,760 --> 00:40:24,879 Speaker 1: probably caught him pretty quickly, so I'll take the under 722 00:40:25,239 --> 00:40:30,200 Speaker 1: I'll go fifteen pretty good. You guys were both pretty 723 00:40:30,239 --> 00:40:34,720 Speaker 1: pretty close to the markets sixteen tho dollars, Uh wow 724 00:40:36,120 --> 00:40:39,600 Speaker 1: station before they could Finally, he's a pretty good guess. 725 00:40:40,320 --> 00:40:42,600 Speaker 1: They were both pretty good guesses. I don't know what 726 00:40:42,640 --> 00:40:44,759 Speaker 1: I would have guessed, um, which is sort of the 727 00:40:44,800 --> 00:40:47,640 Speaker 1: privilege I have as the host of crazy things. What 728 00:40:47,760 --> 00:40:52,000 Speaker 1: goes up prices right? So they did have to honor 729 00:40:52,360 --> 00:40:56,840 Speaker 1: the people online. They did, and the gas station manager 730 00:40:56,920 --> 00:41:00,239 Speaker 1: got fired, and I guess his families they're worried out 731 00:41:00,440 --> 00:41:03,360 Speaker 1: and getting sued, even even though I guess there's he 732 00:41:03,440 --> 00:41:05,400 Speaker 1: probably won't legally be able to get sued for a 733 00:41:05,480 --> 00:41:07,440 Speaker 1: mistake like this, but they've started to go fund me 734 00:41:07,560 --> 00:41:11,440 Speaker 1: to recoup the sixteen thousand dollars and hopefully get this 735 00:41:11,480 --> 00:41:18,000 Speaker 1: guy's job back. So uh, pretty costly era And anyway, 736 00:41:18,080 --> 00:41:21,960 Speaker 1: some people got gas, so there's there's a silver lining 737 00:41:21,960 --> 00:41:24,640 Speaker 1: to it. Anyway, I think that is all the time 738 00:41:24,680 --> 00:41:28,319 Speaker 1: we have Anastasia amarroso always a pleasure. Hopefully we can 739 00:41:28,760 --> 00:41:31,800 Speaker 1: tricky into coming back and playing prices right again. Sometime. 740 00:41:32,080 --> 00:41:35,440 Speaker 1: Let's play this again. We'll be back. Thank you for 741 00:41:35,520 --> 00:41:45,600 Speaker 1: joining us What Goes Up. We'll be back next week 742 00:41:45,920 --> 00:41:47,880 Speaker 1: and so then you can find us on the Bloomberg Terminal, 743 00:41:47,960 --> 00:41:51,680 Speaker 1: website and app or wherever you get your podcast. We 744 00:41:51,800 --> 00:41:53,359 Speaker 1: love it if you took the time to rate and 745 00:41:53,400 --> 00:41:56,400 Speaker 1: review the show on Apple Podcasts, so more listeners can 746 00:41:56,400 --> 00:41:59,280 Speaker 1: find us. And you can find us on Twitter, follow 747 00:41:59,320 --> 00:42:02,359 Speaker 1: me at we can anymous Well. Donna Hierarch is at 748 00:42:02,400 --> 00:42:06,959 Speaker 1: Bolganna Hierarch. You can also follow Bloomberg Podcasts at Podcasts. 749 00:42:08,120 --> 00:42:10,680 Speaker 1: What Goes Up is produced by Stacy Wang. The head 750 00:42:10,719 --> 00:42:13,719 Speaker 1: of Bloomberg Podcast is francesco Leavie. Thanks for listening. To 751 00:42:13,760 --> 00:42:14,480 Speaker 1: see you next time.