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Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg weekly

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Speaker 1: market podcast. I'm Sarah Pantzack, markets reporter on the Cross

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Speaker 1: Asset Team, and I'm Mike Reagan, a senior editor on

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Speaker 1: the Market team. This week, we'll discuss how the Federal

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Speaker 1: Reserve signaled it may be ready to lower interest rates.

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Speaker 1: That helps send the SMP five hunted to an inter

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Speaker 1: day record, but that doesn't necessarily mean that the risks

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Speaker 1: are gone. Rather, the G twenty meeting is next week,

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Speaker 1: and now there's actually concerns over a real war with

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Speaker 1: Iran after our U S drone was shot down. Meanwhile,

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Speaker 1: the March of the Unicorns continues with Slack Technologies making

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Speaker 1: its triumphant debut on Wall Street, and our guests will

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Speaker 1: help us sort all of that out, and of course

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Speaker 1: we'll finish with our tradition the craziest thing I ever

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Speaker 1: saw in markets this week, Sarah, I'm assuming you're prepared well.

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Speaker 1: Our two guests are today. I don't know if you realize,

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Speaker 1: but they both remind me of my days over on

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Speaker 1: Bloomberg Opinion. What was called gadfly back then, and this

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Speaker 1: is back when I was licensed and accredited to actually

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Speaker 1: have opinions in this company, I'm you're no longer allowed

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Speaker 1: to have opinions, and I'll tell you have an opinions

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Speaker 1: is harder than it sounds. I mean, it's one thing

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Speaker 1: to call up someone and get his opinions on the market,

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Speaker 1: and then if he's wrong, it's it's his problem and

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Speaker 1: you can move on. But when you have to have

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Speaker 1: him yourself, it's it's actually pretty incimidating. But our first

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Speaker 1: guest here, uh Julian Emmanuel of bt I G, the

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Speaker 1: chief Equity and Derivative strategist. Welcome to the show. Joints.

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Speaker 1: Great to be here. And Julian, Now, when I used

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Speaker 1: to have opinions, I can assure you they were all valid,

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Speaker 1: serious opinions, except on Fridays when I went off my meds.

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Speaker 1: And one week, one week, the story I wrote about

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Speaker 1: was a Bloomberg story about how Jay Crew had widened

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Speaker 1: neckties by a quitter. And that made me think, we

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Speaker 1: have to do a league table of the best dressmen

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Speaker 1: on Wall Street to to find out how why their

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Speaker 1: their neckties were. And I did, and I did, and

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Speaker 1: I'll tell you some of our friends in Bloomberg did

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Speaker 1: not perform well in this league table. John Farrow was

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Speaker 1: at the bottom at about two and a quarter. Yeah,

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Speaker 1: even Lukawa was near the bottom at two and a quarter. Julian,

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Speaker 1: I'm proud to say it was right in the middle,

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Speaker 1: which I think is where you want to be in

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Speaker 1: this particular league table three and a quarter. I gotta

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Speaker 1: call you out on that one, Mike, because basically, a

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Speaker 1: couple of years ago I was on with Keen and

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Speaker 1: Tom looked at me said that is a beautiful So

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Speaker 1: I don't know about that. I'm not even sure if

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Speaker 1: you voluntarily participated or if I just hijacked you with

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Speaker 1: a ruler after he came off TV or something I

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Speaker 1: I can't remember. Yeah, how do you even get I'm

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Speaker 1: surprised You've got so many people to participates in the middle,

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Speaker 1: and I think that is the sweet spot, right at

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Speaker 1: near the national benchmark average. You don't want to be

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Speaker 1: in the in the tail of this bell curve at all.

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Speaker 1: But also from Bloomberg opinion, my old pal Shira over Day,

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Speaker 1: who covers all things technology and whatnot, sure can probably

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Speaker 1: explain that maybe that necktie story is why I'm no

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Speaker 1: longer allowed to have opinions disagree. We need more necktie

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Speaker 1: content on Bloomberg Opinion. I was hoping someone would refresh

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Speaker 1: that league table once a year, but no luck. Can

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Speaker 1: you imagine if they assigned it to an intern or

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Speaker 1: someone new, make sure that they track every single person

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Speaker 1: down and measure their necktime. I have to admit that

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Speaker 1: I am looking at your necktie right now, Mike, to

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Speaker 1: see how wide it is. Little, but anyway, from neckties

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Speaker 1: to FED, I don't really know how to make that

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Speaker 1: it's truly smooth transition. If everyone has ideas, shout let

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Speaker 1: me know. But Julie and I want to come to you,

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Speaker 1: because everyone was talking about before the FED meeting on Wednesday,

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Speaker 1: the statement that it was going to be so difficult

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Speaker 1: for them to truly out of the markets, but it

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Speaker 1: seems likely. Did I mean, is that truly what happened here?

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Speaker 1: That is definitely part of it. And I have to say,

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Speaker 1: I'll give you the trade transition here. Chair Pal's necktie

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Speaker 1: at the press conference was about as tight as it

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Speaker 1: could possibly have been given the tweets of the previous

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Speaker 1: forty eight hours. Um. You know, from from our point

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Speaker 1: of view, we actually expected that the FED might disappoint

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Speaker 1: given the debvish expectations. But Chair Powell really did come

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Speaker 1: through UM, and you can see it in the market

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Speaker 1: pricing in a really a hundred percent chance of a

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Speaker 1: twenty five basis point cut at the July meeting, and

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Speaker 1: actually almost a chance of a fifty basis point cut. Uh.

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Speaker 1: So the markets definitely did like it, but importantly the

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Speaker 1: Fed like the market's reaction to what it said. Right.

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Speaker 1: But last I read from you, you're actually thinking it

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Speaker 1: won't come until September, that that first cut and then

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Speaker 1: maybe another in December. Is that still you're thinking after

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Speaker 1: this week's performance, we're sticking with that, although clearly the

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Speaker 1: the odds of skewed of the potential for July. But

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Speaker 1: if you think about the sort of quandary that the

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Speaker 1: FED chair is in if you wait till September, particularly

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Speaker 1: given the markets positive reaction over the last several days

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Speaker 1: UM and what we think could be positive news coming

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Speaker 1: out of G twenty UH in the next week and

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Speaker 1: a half or so UM, the asset markets are perhaps

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Speaker 1: giving the Fed the time to wait. And if you

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Speaker 1: think about it again, from this challenge of the tight

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Speaker 1: necktie with regard to political independence, waiting past July sends

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Speaker 1: a message that the FED is independent of of the

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Speaker 1: White House number one, and importantly actually is independent of

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Speaker 1: what the market is trying to force them to do

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Speaker 1: with the knowledge that you could still go in September

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Speaker 1: and continue apace. So there are many people who say

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Speaker 1: that if we don't get a rate cut now in July,

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Speaker 1: because it is so highly expected that we are going

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Speaker 1: to see pretty much a fit from the market. Well,

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Speaker 1: your guys, price target, I know for your end is

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Speaker 1: still around three thousand. How is it that you guys

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Speaker 1: see the potential for the FED to not cut in July.

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Speaker 1: But stocks are really still hang in there and potentially

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Speaker 1: moved much higher. Well, you know, setting a new all

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Speaker 1: time high uh this week at least on an intra

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Speaker 1: day basis, as we have, um, we're pretty darned close

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Speaker 1: to that three uh So, you know, happily so of course,

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Speaker 1: But in that respect, it really is a case of

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Speaker 1: you know, whether you measure it in terms of financial conditions.

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Speaker 1: In the Bloomberg Financial Conditions Index is really a very

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Speaker 1: valuable tool, and that is reasonably loose compared to the

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Speaker 1: last year and a half or so. UM, the FED

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Speaker 1: actually has the leeway and if the market walks back

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Speaker 1: its own expectations, particularly if you get good news from

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Speaker 1: Trump and G And remember we've also got earning season

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Speaker 1: reporting starting in the middle of July, which tends to

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Speaker 1: be a tale when for stocks in general you still

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Speaker 1: get the three thousand. Now, what does good news at

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Speaker 1: the G twenty look like? Is it a handshake and

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Speaker 1: a letter to keep talking? Uh? Is it? I mean

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Speaker 1: obviously they're not gonna presumably have a deal signed, sealed

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Speaker 1: and delivered between the US and China. There what what

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Speaker 1: would sort of you know, define good news to you

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Speaker 1: at the well? I think it smiles after the steak dinner,

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Speaker 1: red wine for G and the diet coke for President Trumps,

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Speaker 1: as appears to be the case. But for US, if

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Speaker 1: you look at financial markets over the last several years,

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Speaker 1: whatever the quandary has been, bregsit, debt, ceiling, China, whatever

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Speaker 1: it is, if you're able to successfully call it, kick

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Speaker 1: the can down the road and leave markets optimistic that

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Speaker 1: you're gonna get an eventual the solution to whatever it is,

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Speaker 1: that's gonna be enough. And we think that's the case here,

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Speaker 1: particularly since in the last forty eight hours it's very

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Speaker 1: clear that North Korea is on the table as well

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Speaker 1: when it comes to a trade deal versus a FED cut,

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Speaker 1: So you can only get one or another, which is

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Speaker 1: actually more valuable for the stock market. I mean, in

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Speaker 1: a way, can you make the case that maybe a

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Speaker 1: deal of the G twenty or really a positive outcome

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Speaker 1: there isn't the greatest outcome because then maybe the FED

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Speaker 1: takes that away and they start to see economic data turnaround,

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Speaker 1: really start to tighten up, toughen up, and the FED

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Speaker 1: decides that they're not going to cut the data doesn't

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Speaker 1: imply it well. So we give Chairman Pal a lot

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Speaker 1: of credit for pivoting as quickly as he did in

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Speaker 1: January from cut from tightening to neutral. But the way

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Speaker 1: this week is sorted itself out, we are in easing mode,

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Speaker 1: whether we actually get the cuts where they're delayed, and

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Speaker 1: so you know, we don't expect a repivot back to

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Speaker 1: neutral or tightening in that respect. The trade deal is

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Speaker 1: really very important because if you look at the last

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Speaker 1: year and the cause of the Fed's concerned, it's been

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Speaker 1: inflation being too low. And one of the mistakes the

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Speaker 1: FED made last year in tightening what we think they

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Speaker 1: overtightened and shouldn't have tightened in December, was in assuming

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Speaker 1: that a trade war was going to be inflationary, and

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Speaker 1: in fact it's proven to be disinflationary by by leaps

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Speaker 1: and bounds. Now, Julian, your business card says chief Equity

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Speaker 1: and Derivative Strategists. So I want to I want to

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Speaker 1: ask you about the derivatives end a little bit. You know,

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Speaker 1: I've noticed the VIX has sort of flattened out here

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Speaker 1: at about fifteen or so during June. We're not getting

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Speaker 1: back to those single digit readings on implied volatility as

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Speaker 1: far as the VIX goes, Um, is there any information

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Speaker 1: in that to you? I mean, is it just sort

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Speaker 1: of uh embedded nervousness until all these issues are resolved,

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Speaker 1: or or what I mean, are those days of single

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Speaker 1: digit VIX just just gone forever gone, forget about them.

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Speaker 1: That we traded below nine at the end of two

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Speaker 1: thousand and seventeen and and when we began our coverage

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Speaker 1: would be t i G in January of eighteen, we

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Speaker 1: may the point that that was a turning point in

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Speaker 1: what we saw as a six year cyclical regime change

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Speaker 1: in volatility. And so obviously the spikes that we saw

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Speaker 1: throughout two thousand and eighteen and then again in uh

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Speaker 1: in early this year. UM to us makes sense. They're logical,

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Speaker 1: and when you think about it with respect to the

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Speaker 1: political risks that are building as the world really redraws

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Speaker 1: itself in terms of trade and relationships and so on,

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Speaker 1: it makes a lot of sense. And what it also

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Speaker 1: tells you, it's a reminder that while things seem good now,

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Speaker 1: and and we do think that there is enough good

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Speaker 1: news out there to potentially take carry markets perhaps even

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Speaker 1: beyond three thousand, we're still going to have to deal

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Speaker 1: with the debt ceiling and a budget battle in the fall,

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Speaker 1: and Brexit. The thing, the gift that keeps on giving

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Speaker 1: is going to be there waiting for Halloween exactly. What

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Speaker 1: about the divergence that we've seen though between volatility in

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Speaker 1: the bond market and volatility in the stock market, because

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Speaker 1: I know, if you use the move Index from Bank

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Speaker 1: of America as a sort of benchmark for bond market volatility,

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Speaker 1: we have seen such a spike in recent weeks, and

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Speaker 1: now we have the ten year dipping below two percent

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Speaker 1: for the first time in yet the VIX is still

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Speaker 1: very muted. I mean, do you make the case that

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Speaker 1: we will have to see a convergence that two come together.

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Speaker 1: And if so, I mean, does the VIX move higher

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Speaker 1: or does bond volatility finally start to settle down a little.

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Speaker 1: We think there will be a convergence, probably in the

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Speaker 1: in the guys of bond market volatility coming in and

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Speaker 1: and the VIX rising um. Essentially, a lot of the

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Speaker 1: activity and financial markets over the last year has been

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Speaker 1: about positioning. So when we got to the end of

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Speaker 1: March and German yields first went back to the negative bound,

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Speaker 1: which you know, to all of US financial professionals with

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Speaker 1: any gray hair, is almost completely inconceivable, there was a

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Speaker 1: a an initial panic. But then in in April, as

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Speaker 1: markets sort of turned better and yield stabilized, there was

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Speaker 1: a thought that you wouldn't have the US ten uere

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Speaker 1: yield go back to two percent. Well, that sort of

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Speaker 1: went out the window of the last few weeks. I mean, honestly,

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Speaker 1: we didn't see yields plunging to this depth, but then

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Speaker 1: again we didn't see German yields trading to minus thirty

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Speaker 1: basis points, and that caused what we call in the

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Speaker 1: options market a short gamma squeeze. Basically people had been

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Speaker 1: selling sort of those downside strikes and and really short

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Speaker 1: exposure in that area, and once you got to around two,

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Speaker 1: the vall started to build. We think ultimately, in fact,

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Speaker 1: as the Fed UH loosens policy at the short end

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Speaker 1: builds inflation expectations, that you actually have a rise in

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Speaker 1: the long end i e. Is steepening yield curve. And

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Speaker 1: that's part of the happiness of the last several days

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Speaker 1: if you're j Powell, because inflation expectations were the first

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Speaker 1: thing to ratchet higher UH post the f o MC conference. Now,

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Speaker 1: given what you're expecting some good news at the G

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Speaker 1: twenty and eventual monetary easing later in the year. What

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Speaker 1: sort of sectors stocks would it be? Your your traditional

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Speaker 1: cyclical industrial semiconductors or you know, our tech columnists here, Shara,

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Speaker 1: should she uh start writing about utilities instead? What you know?

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Speaker 1: How how should we position? Yeah, it's having been doing

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Speaker 1: this for quite some time, I never thought I'd use

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Speaker 1: the phrase momentum Darling when referring to utilities. I mean, again,

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Speaker 1: going back to the nineties and and and trading technology

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Speaker 1: on the way up, it's absolutely extraordinary um from our

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Speaker 1: point of view, this is the part of the cycle,

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Speaker 1: particularly given our view that the yield curve is going

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Speaker 1: to steep in um that you want to lean a

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Speaker 1: bit more cyclically oriented, and that means financials which have

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Speaker 1: been suppressed because again German yields and the yield curve

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Speaker 1: being as flat as it's been. Also energy, obviously energy

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Speaker 1: is has a geopolitical backstop at this point given the

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Speaker 1: tension in Iran, but it's also sunk to less than

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Speaker 1: five percent of the way to the SMP. And we

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Speaker 1: are true believers in autonomous driving and electric vehicles and

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Speaker 1: all that, but energy is still a story that in

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Speaker 1: the medium term looks very interesting to us, and it's

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Speaker 1: a sector that's poise for consolidation. Cherre, I want to

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Speaker 1: come to you because we did have a new I

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Speaker 1: p O or direct listing as we could call it,

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Speaker 1: this week. But start a little broader on the tech front,

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Speaker 1: because software companies are just trading at such high valuations.

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Speaker 1: I know software is the best performing industry in the

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Speaker 1: SMP five hundred. What is it about this market right

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Speaker 1: now that is just making investors so interested in the

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Speaker 1: software space. I think it's a particular type of software

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Speaker 1: companies that investors are really excited about these sort of

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Speaker 1: software as a service or B two B software cloud

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Speaker 1: software companies, however you want to describe them. But these

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Speaker 1: are companies that investors have fallen in love with, kind

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Speaker 1: of to the point of mania. We're talking about companies

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Speaker 1: like Workday or Salesforce or Viva Systems, which makes pharmaceutical software.

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Speaker 1: And I think the appeal here is these companies sell

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Speaker 1: an understood product. They sell software for money to companies

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Speaker 1: that have money, and there's kind of a repeat business, right,

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Speaker 1: It's a subscription basis. You're the companies are paying you know,

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Speaker 1: monthly or on an annual basis, and it's sort of

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Speaker 1: fairly easy to model out what the revenue model and

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Speaker 1: what the financial model looks like long term once you

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Speaker 1: get companies paying kind of a recurring subs dryption for software.

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Speaker 1: And so what you've seen is these companies have, you know,

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Speaker 1: for the most part, do not have profits, but they

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Speaker 1: do have revenue and free cash flow in some cases

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Speaker 1: and are trading at very very high multiples to revenue.

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Speaker 1: In particular. Now, sure, let's uh, let's pretend I'm not

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Speaker 1: the young, hipster, tech savvy guy that I am, because

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Speaker 1: we all know you are. Just imagine I don't. I

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Speaker 1: don't know. I'm a middle aged dad talking about the

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Speaker 1: width of your necktime. Hypothetical hypothetical situation. Let's say hypothetically,

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Speaker 1: I've never heard of this Slack Technologies. I'm not quite

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Speaker 1: sure what they do, but I do know they lost

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Speaker 1: a hundred and thirty nine million dollars last year on

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Speaker 1: sales of about four hundred million. Just walk us through

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Speaker 1: what Slack is and why investors seem to be excited

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Speaker 1: to buy a company that's that's losing more than a

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Speaker 1: quarter of their sales. I will tell you that my

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Speaker 1: tech journalist brain is now broken. Where I see a

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Speaker 1: company that's like, oh, they're only bleeding a hundred million

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Speaker 1: dollars in cash everywhere, sounds great. Signed me up. So

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Speaker 1: the basic explanation of Slack is it's instant messaging designed

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Speaker 1: for the workplace, and I think that under sells it

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Speaker 1: a little bit. And Slack, I think has this issue

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Speaker 1: where it is a little bit difficult to describe their

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Speaker 1: software until you really use it. But again, it's instant messaging,

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Speaker 1: and the idea is it kind of collects, You're able

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Speaker 1: to kind of organize multiple people's in boxes essentially in

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Speaker 1: a semi public way that you can organize groups or teams,

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Speaker 1: and then everything that's related to let's say some marketing

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Speaker 1: project that a team is working on will go into

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Speaker 1: one channel, as Slack calls it, and only the people

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Speaker 1: who are on that channel need to see it. So

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Speaker 1: it avoids the sort of reply all pain that we

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Speaker 1: have sometimes felt inside of companies. And you know, it

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Speaker 1: also does a good job of kind of connecting to

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Speaker 1: others them. So I know companies, for example, that all

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Speaker 1: of the customer service requests or complaints, no matter what

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Speaker 1: channel it's coming from. If it's like an angry tweet

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Speaker 1: or an instant message that a customer might send through

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Speaker 1: a company's website, it all gets sent and and kind

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Speaker 1: of distributed through Slack, so that people on the East Coast,

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Speaker 1: let's say, we'll see all of the messages no matter

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Speaker 1: where it's coming from, customer service complaints from the coast

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Speaker 1: that they live on. So it is a clever piece

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Speaker 1: of software. I think there are open questions about whether

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Speaker 1: it is a kind of nice to have software for

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Speaker 1: companies or whether it becomes an essential tool inside of

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Speaker 1: a modern office. But definitely it's good software that now

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Speaker 1: investors are over the moon about and on that subscription basis.

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Speaker 1: On that subscription basis, yes, and they have they say

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Speaker 1: they have ten million people who use it on a

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Speaker 1: daily basis inside of organizations and something like six kind

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Speaker 1: of paying customers, paying organizations. How can you print out

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Speaker 1: all these chats and given them a guy like me

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Speaker 1: to interesting, I've never noticed. If they're there's probably a

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Speaker 1: print option. Um, do not do that. However, do not

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Speaker 1: print your slack chats. But so you talk about the

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Speaker 1: subscription model, but how are investors actually going about valuing

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Speaker 1: a company of this sort, especially if, like you said,

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Speaker 1: they are losing money like many of the other tech

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Speaker 1: ideas that we've seen lately. I mean, I think the

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Speaker 1: metrics that have become important are looking at sort of

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Speaker 1: recurring revenue sort of you know, how much money is

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Speaker 1: repeatable business, and also looking ahead at at billing so

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Speaker 1: basically booked business that is not yet paid. So really

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Speaker 1: growth and revenue and kind of retention rates of existing customers.

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Speaker 1: Those are the metrics that people look at in the

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Speaker 1: absence of you know, conventional gap profits. Another column you

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Speaker 1: had that caught my eye. The headline was something like

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Speaker 1: who knows what lurks in the emails of tech executives.

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Speaker 1: You know, obviously, with the anti trust scrutiny coming up

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Speaker 1: on Facebook, Amazon, Google, is this the right time for

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Speaker 1: Facebook to be trying to revolutionize the payments system with

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Speaker 1: its own cryptocurrency. You're saying this is not a time

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Speaker 1: they will want to attract more attention from regulators. Yeah,

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Speaker 1: fair enough. Look, I've heard Mark Zuckerberg say a few

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Speaker 1: times now in the last couple of years that they

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Speaker 1: can't stop running the company and they can't stop coming

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Speaker 1: out with new products and ideas because of the scrutiny

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Speaker 1: they're under, which I think is true and also not true. Right,

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Speaker 1: they obviously want to be a little bit more cautious

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Speaker 1: and careful than they would have been prior to two

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Speaker 1: thousands six or but they you know, you've got to

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Speaker 1: keep innovating. That's the role of a tech company. Julian,

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Speaker 1: How do you think about this regulatory risk with a

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Speaker 1: group as important as the Fang stocks? I mean, is

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Speaker 1: it make you sort of want to look elsewhere in

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Speaker 1: the market or these still going to be the stocks

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Speaker 1: that that lead us highre Well, when we're looking at

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Speaker 1: over the balance of this year and into an election

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Speaker 1: year next year. Uh, we're neutral on the group, but

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Speaker 1: you know, if you look at the last ten twenty

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Speaker 1: thirty years, it's very clear the technology is the bowl market.

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Speaker 1: You you you know, we've done a lot of work

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Speaker 1: that says markets can continue to go up, but technology

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Speaker 1: can only underperformed by a certain amount. So from our

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Speaker 1: point of view, it's something we'd like to see it

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Speaker 1: get further along in the election cycle. UM valuations are

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Speaker 1: reasonable broadly, and I would say, you know, again, when

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Speaker 1: you're thinking about software in particular, it's that that phrase

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Speaker 1: recurring revenue that is literally music to the streets ears

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Speaker 1: And if you think about it like we do from

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Speaker 1: an options perspective, if you have a company with recurring revenue,

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Speaker 1: you can actually there's like less volatility to its streams,

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Speaker 1: so you can in fact pay more for that company.

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Speaker 1: What about the I P O market this year? I know,

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Speaker 1: if you look at the I P O E T

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Speaker 1: F it's having its best first half of the year

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Speaker 1: pretty much. Ever, so is this something that you guys

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Speaker 1: actually think about participating in or is it just very

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Speaker 1: risky and you need to wait until things kind of

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Speaker 1: die down? A little well, B T I. G. S.

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Speaker 1: Capital Markets at desk has been very, very busy, which

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Speaker 1: is a great thing. And and you know, we look

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Speaker 1: at that to try and gauge signs of of froth.

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Speaker 1: We're nowhere near the excesses that we saw in and

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Speaker 1: two thousands. And if you think about it, part of

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Speaker 1: the reason that the optics of it over the last

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Speaker 1: several months have been as busy as they've been is

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Speaker 1: because you actually had a delay for the first several

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Speaker 1: months of the year and getting the paperwork through because

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Speaker 1: of the government shutdown. So it will be interesting to

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Speaker 1: see as we get into the heart of the summer

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Speaker 1: whether there's going to be a slowdown or not that

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Speaker 1: that that will be an important sign slowdown in issuance

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Speaker 1: or slowdown into the price appreciation slowdown in issuance. And

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Speaker 1: if you look at it in terms of the price,

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Speaker 1: there have been winners and losers. It's not all straight winners. Um,

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Speaker 1: you know, it's uh and and and they differentiated. And

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Speaker 1: it isn't necessarily technology only that's captured people's imaginations. Well, sorry,

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Speaker 1: I'm looking at your stop what Sarah keeps a stopwatch

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Speaker 1: running very intimidating a little bit that we don't go

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Speaker 1: on for too long, but that's our que to get

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Speaker 1: to the really the most important part of the podcast,

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Speaker 1: which is the craziest thing I've seen in markets ever,

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Speaker 1: or at least this week, Prince Jasons. We really haven't

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Speaker 1: finalized that title of it yet, Julian. Did they warny

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Speaker 1: about this about this sec They absolutely did. We try

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Speaker 1: We try so, so from our point of view, this

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Speaker 1: week has been a great example of artificial intelligence run wild.

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Speaker 1: And as you know, part of the reason that you

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Speaker 1: brought me here to join you it was is to

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Speaker 1: talk about the fed an interest greats very important in

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Speaker 1: terms of thinking about stock prices. Well, what we noticed

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Speaker 1: was if you did a search for stories with the

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Speaker 1: keyword yield curve into and through the f o m

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Speaker 1: C press conference this week, we saw a massive spike

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Speaker 1: in that story count, and from our point of view,

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Speaker 1: it really is a big justification for why the yield

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Speaker 1: curve steep and nine basis points that may not sound

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Speaker 1: like a lot, but on something that was trading at

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Speaker 1: nineteen to go from nineteen to twenty eight, that's a

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Speaker 1: huge move. So we don't know whether it was, you know,

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Speaker 1: revenge of the nerds or return of the bond vigilantes.

432
00:24:41,920 --> 00:24:44,560
Speaker 1: But we do know it's a big deal. Sorry, it's

433
00:24:44,600 --> 00:24:47,080
Speaker 1: it's illuminating how guys on the street use our work

434
00:24:47,080 --> 00:24:49,680
Speaker 1: product here we think they're they're they're reading our stores

435
00:24:49,800 --> 00:24:58,680
Speaker 1: and you're really getting to the bottom. It's we start

436
00:24:58,760 --> 00:25:00,439
Speaker 1: messing with it. I'm just gonna write as that just

437
00:25:00,480 --> 00:25:04,800
Speaker 1: goes you have really mess with you. I'm not really

438
00:25:04,840 --> 00:25:07,720
Speaker 1: gonna do that, Sarah. Have you seen any crazy market

439
00:25:07,960 --> 00:25:10,359
Speaker 1: things this week? So something I thought was interesting was

440
00:25:10,600 --> 00:25:14,960
Speaker 1: in the aftermath of the Jerome pal pressor, we saw

441
00:25:15,480 --> 00:25:18,680
Speaker 1: stocks rally, we saw bonds rally, we saw gold's rally,

442
00:25:18,880 --> 00:25:21,359
Speaker 1: and we saw oil rally altogether, and I thought it

443
00:25:21,400 --> 00:25:24,600
Speaker 1: was kind of funny. Macro risk advisors called it as

444
00:25:25,200 --> 00:25:28,840
Speaker 1: cats and dogs playing together, basically because on the one end,

445
00:25:28,880 --> 00:25:31,720
Speaker 1: you think of bonds and gold being the safe havens,

446
00:25:31,760 --> 00:25:34,760
Speaker 1: and then you think of stocks and oil being risk assets.

447
00:25:34,800 --> 00:25:38,040
Speaker 1: But the reality is that now we have low interest rates,

448
00:25:38,080 --> 00:25:41,600
Speaker 1: we also see the dollar falling at last um, so

449
00:25:41,640 --> 00:25:44,280
Speaker 1: we're just seeing pretty much a bid to everything, which

450
00:25:44,320 --> 00:25:46,800
Speaker 1: is I thought it was pretty pretty crazy. Everything that's

451
00:25:46,800 --> 00:25:48,600
Speaker 1: an old Steve Martin reference, isn't that? The cats and

452
00:25:48,640 --> 00:25:52,800
Speaker 1: dogs living together. Sure have we warned you about this

453
00:25:52,840 --> 00:25:55,359
Speaker 1: gimmick we have here? You did? I may I may

454
00:25:55,400 --> 00:25:58,359
Speaker 1: have done it wrong. However, so I read there was

455
00:25:58,400 --> 00:26:01,320
Speaker 1: a story in the woll Street Journal this week about Venezuela,

456
00:26:01,760 --> 00:26:06,240
Speaker 1: the Venezuelan Central Bank basically smuggling seven or eight tons

457
00:26:06,280 --> 00:26:10,280
Speaker 1: of gold to be melted down in Uganda and then

458
00:26:10,600 --> 00:26:15,120
Speaker 1: resold secretly in the Middle East. Which is I mean,

459
00:26:15,119 --> 00:26:18,800
Speaker 1: it's it's it hasn't everything right, It's got just imagining

460
00:26:19,520 --> 00:26:24,280
Speaker 1: eight tons of gold on these Russian cargo planes being

461
00:26:24,320 --> 00:26:26,439
Speaker 1: flown to Uganda in the middle of the night and

462
00:26:26,440 --> 00:26:31,200
Speaker 1: then being trucked to some refinery and melted down. So

463
00:26:31,359 --> 00:26:34,679
Speaker 1: they concluded that it was that's what the Ugandan authorities

464
00:26:34,720 --> 00:26:36,919
Speaker 1: said that they believe that is what happened. That's a

465
00:26:36,960 --> 00:26:41,320
Speaker 1: way of Venezuela basically getting cash by going around US sanctions.

466
00:26:41,680 --> 00:26:44,120
Speaker 1: Didn't someone tell them they were probably better off trying

467
00:26:44,160 --> 00:26:48,480
Speaker 1: to smuggle in et F much less and then you

468
00:26:48,520 --> 00:26:50,560
Speaker 1: redeem it afterwards and they have to find the vault

469
00:26:50,560 --> 00:26:52,520
Speaker 1: where your gold is. At least suggest that to the

470
00:26:52,560 --> 00:26:56,880
Speaker 1: Maduro government. All right, well, mine, I'm stretching the definition

471
00:26:56,920 --> 00:26:59,040
Speaker 1: of markets here a little bit which I've got to do.

472
00:26:59,119 --> 00:27:03,840
Speaker 1: You go to our are you jewelry? This week? I'm going, yeah,

473
00:27:03,840 --> 00:27:06,520
Speaker 1: that was you. This week, I'm going to the gambling market.

474
00:27:06,560 --> 00:27:09,359
Speaker 1: That's a real market. Julian, right, absolutely, sports, it's legal

475
00:27:09,359 --> 00:27:12,400
Speaker 1: now sports spouting in Jersey. I can't believe. I still

476
00:27:12,400 --> 00:27:15,800
Speaker 1: can't believe it when I read this, but so I'll

477
00:27:15,840 --> 00:27:17,720
Speaker 1: just read the story. The lead of the story here

478
00:27:17,760 --> 00:27:22,600
Speaker 1: from Evan Novie Williams here at Bloomberg. National Basketball Association

479
00:27:22,600 --> 00:27:24,800
Speaker 1: has come up with a way for fans to gamble

480
00:27:24,920 --> 00:27:28,159
Speaker 1: real money on fake games. Have you guys seen this story?

481
00:27:28,320 --> 00:27:32,200
Speaker 1: So what happens is they basically spliced together a bunch

482
00:27:32,240 --> 00:27:35,720
Speaker 1: of clips from different basketball games and create a fake

483
00:27:35,760 --> 00:27:38,080
Speaker 1: game out of it. I'll read you the sort of

484
00:27:38,080 --> 00:27:40,679
Speaker 1: the nutcraft here. Vetters will be dropped into the final

485
00:27:40,800 --> 00:27:44,120
Speaker 1: nineties seconds of a virtual matchup between two NBA teams.

486
00:27:44,480 --> 00:27:47,560
Speaker 1: The game will then splice together random possessions from various

487
00:27:47,640 --> 00:27:50,320
Speaker 1: nets Lakers games. In reason, do we not have enough

488
00:27:50,359 --> 00:27:53,639
Speaker 1: things to gamble on? Julian to my avatar is backing

489
00:27:53,680 --> 00:27:57,359
Speaker 1: away from that very I'll tell you one thing, with

490
00:27:57,440 --> 00:27:59,880
Speaker 1: the exception of the last several weeks, you don't want

491
00:28:00,040 --> 00:28:05,439
Speaker 1: bet against Steph Curry. The editors of that. Whatever they

492
00:28:05,440 --> 00:28:07,639
Speaker 1: are doing is placing together different possessions, they've got to

493
00:28:07,640 --> 00:28:10,800
Speaker 1: be talented mess them up. Yeah. Well, you know, I

494
00:28:10,800 --> 00:28:12,800
Speaker 1: think it's kind of done randomly. It almost sounds like

495
00:28:12,880 --> 00:28:16,840
Speaker 1: it's just a computer program that takes various possessions artificial intelligence.

496
00:28:16,920 --> 00:28:18,960
Speaker 1: I don't know. We'll find something better to gamble on

497
00:28:19,040 --> 00:28:22,080
Speaker 1: than that. That's pretty crazy. I'll give it you absolutely.

498
00:28:23,280 --> 00:28:26,600
Speaker 1: But with that said, Julian Emmanuel Sierra Obi Day, thanks

499
00:28:26,600 --> 00:28:35,760
Speaker 1: so much for joining us today. Thank you, Thanks what

500
00:28:35,920 --> 00:28:38,560
Speaker 1: those out will be back next week. Until then, you

501
00:28:38,600 --> 00:28:41,200
Speaker 1: can find us on the Bloomberg Terminal, website and app

502
00:28:41,520 --> 00:28:44,200
Speaker 1: or wherever you get your podcasts. We love it if

503
00:28:44,240 --> 00:28:46,280
Speaker 1: you took the time to rate interview the show on

504
00:28:46,360 --> 00:28:50,160
Speaker 1: Apple Podcasts so more listeners can find us, and you

505
00:28:50,160 --> 00:28:53,760
Speaker 1: can find us on Twitter. Follow me at at Sarah Pontzack,

506
00:28:54,200 --> 00:28:57,480
Speaker 1: Mike is at reag Anonymous. Our guest, Sierra Obi Day

507
00:28:57,520 --> 00:29:00,600
Speaker 1: is at Shira ob Day, and Bloomberg pot Cast is

508
00:29:00,680 --> 00:29:04,240
Speaker 1: at Podcasts. What Goes Up is produced by sober Forehead.

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00:29:04,400 --> 00:29:07,680
Speaker 1: The head of bloomber podcast is Francesco Levie. Thanks for listening.

510
00:29:07,840 --> 00:29:08,680
Speaker 1: See you next time,