Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg weekly
Speaker 1: market podcast. I'm Sarah Pantzack, markets reporter on the Cross
Speaker 1: Asset Team, and I'm Mike Reagan, a senior editor on
Speaker 1: the Market team. This week, we'll discuss how the Federal
Speaker 1: Reserve signaled it may be ready to lower interest rates.
Speaker 1: That helps send the SMP five hunted to an inter
Speaker 1: day record, but that doesn't necessarily mean that the risks
Speaker 1: are gone. Rather, the G twenty meeting is next week,
Speaker 1: and now there's actually concerns over a real war with
Speaker 1: Iran after our U S drone was shot down. Meanwhile,
Speaker 1: the March of the Unicorns continues with Slack Technologies making
Speaker 1: its triumphant debut on Wall Street, and our guests will
Speaker 1: help us sort all of that out, and of course
Speaker 1: we'll finish with our tradition the craziest thing I ever
Speaker 1: saw in markets this week, Sarah, I'm assuming you're prepared well.
Speaker 1: Our two guests are today. I don't know if you realize,
Speaker 1: but they both remind me of my days over on
Speaker 1: Bloomberg Opinion. What was called gadfly back then, and this
Speaker 1: is back when I was licensed and accredited to actually
Speaker 1: have opinions in this company, I'm you're no longer allowed
Speaker 1: to have opinions, and I'll tell you have an opinions
Speaker 1: is harder than it sounds. I mean, it's one thing
Speaker 1: to call up someone and get his opinions on the market,
Speaker 1: and then if he's wrong, it's it's his problem and
Speaker 1: you can move on. But when you have to have
Speaker 1: him yourself, it's it's actually pretty incimidating. But our first
Speaker 1: guest here, uh Julian Emmanuel of bt I G, the
Speaker 1: chief Equity and Derivative strategist. Welcome to the show. Joints.
Speaker 1: Great to be here. And Julian, Now, when I used
Speaker 1: to have opinions, I can assure you they were all valid,
Speaker 1: serious opinions, except on Fridays when I went off my meds.
Speaker 1: And one week, one week, the story I wrote about
Speaker 1: was a Bloomberg story about how Jay Crew had widened
Speaker 1: neckties by a quitter. And that made me think, we
Speaker 1: have to do a league table of the best dressmen
Speaker 1: on Wall Street to to find out how why their
Speaker 1: their neckties were. And I did, and I did, and
Speaker 1: I'll tell you some of our friends in Bloomberg did
Speaker 1: not perform well in this league table. John Farrow was
Speaker 1: at the bottom at about two and a quarter. Yeah,
Speaker 1: even Lukawa was near the bottom at two and a quarter. Julian,
Speaker 1: I'm proud to say it was right in the middle,
Speaker 1: which I think is where you want to be in
Speaker 1: this particular league table three and a quarter. I gotta
Speaker 1: call you out on that one, Mike, because basically, a
Speaker 1: couple of years ago I was on with Keen and
Speaker 1: Tom looked at me said that is a beautiful So
Speaker 1: I don't know about that. I'm not even sure if
Speaker 1: you voluntarily participated or if I just hijacked you with
Speaker 1: a ruler after he came off TV or something I
Speaker 1: I can't remember. Yeah, how do you even get I'm
Speaker 1: surprised You've got so many people to participates in the middle,
Speaker 1: and I think that is the sweet spot, right at
Speaker 1: near the national benchmark average. You don't want to be
Speaker 1: in the in the tail of this bell curve at all.
Speaker 1: But also from Bloomberg opinion, my old pal Shira over Day,
Speaker 1: who covers all things technology and whatnot, sure can probably
Speaker 1: explain that maybe that necktie story is why I'm no
Speaker 1: longer allowed to have opinions disagree. We need more necktie
Speaker 1: content on Bloomberg Opinion. I was hoping someone would refresh
Speaker 1: that league table once a year, but no luck. Can
Speaker 1: you imagine if they assigned it to an intern or
Speaker 1: someone new, make sure that they track every single person
Speaker 1: down and measure their necktime. I have to admit that
Speaker 1: I am looking at your necktie right now, Mike, to
Speaker 1: see how wide it is. Little, but anyway, from neckties
Speaker 1: to FED, I don't really know how to make that
Speaker 1: it's truly smooth transition. If everyone has ideas, shout let
Speaker 1: me know. But Julie and I want to come to you,
Speaker 1: because everyone was talking about before the FED meeting on Wednesday,
Speaker 1: the statement that it was going to be so difficult
Speaker 1: for them to truly out of the markets, but it
Speaker 1: seems likely. Did I mean, is that truly what happened here?
Speaker 1: That is definitely part of it. And I have to say,
Speaker 1: I'll give you the trade transition here. Chair Pal's necktie
Speaker 1: at the press conference was about as tight as it
Speaker 1: could possibly have been given the tweets of the previous
Speaker 1: forty eight hours. Um. You know, from from our point
Speaker 1: of view, we actually expected that the FED might disappoint
Speaker 1: given the debvish expectations. But Chair Powell really did come
Speaker 1: through UM, and you can see it in the market
Speaker 1: pricing in a really a hundred percent chance of a
Speaker 1: twenty five basis point cut at the July meeting, and
Speaker 1: actually almost a chance of a fifty basis point cut. Uh.
Speaker 1: So the markets definitely did like it, but importantly the
Speaker 1: Fed like the market's reaction to what it said. Right.
Speaker 1: But last I read from you, you're actually thinking it
Speaker 1: won't come until September, that that first cut and then
Speaker 1: maybe another in December. Is that still you're thinking after
Speaker 1: this week's performance, we're sticking with that, although clearly the
Speaker 1: the odds of skewed of the potential for July. But
Speaker 1: if you think about the sort of quandary that the
Speaker 1: FED chair is in if you wait till September, particularly
Speaker 1: given the markets positive reaction over the last several days
Speaker 1: UM and what we think could be positive news coming
Speaker 1: out of G twenty UH in the next week and
Speaker 1: a half or so UM, the asset markets are perhaps
Speaker 1: giving the Fed the time to wait. And if you
Speaker 1: think about it again, from this challenge of the tight
Speaker 1: necktie with regard to political independence, waiting past July sends
Speaker 1: a message that the FED is independent of of the
Speaker 1: White House number one, and importantly actually is independent of
Speaker 1: what the market is trying to force them to do
Speaker 1: with the knowledge that you could still go in September
Speaker 1: and continue apace. So there are many people who say
Speaker 1: that if we don't get a rate cut now in July,
Speaker 1: because it is so highly expected that we are going
Speaker 1: to see pretty much a fit from the market. Well,
Speaker 1: your guys, price target, I know for your end is
Speaker 1: still around three thousand. How is it that you guys
Speaker 1: see the potential for the FED to not cut in July.
Speaker 1: But stocks are really still hang in there and potentially
Speaker 1: moved much higher. Well, you know, setting a new all
Speaker 1: time high uh this week at least on an intra
Speaker 1: day basis, as we have, um, we're pretty darned close
Speaker 1: to that three uh So, you know, happily so of course,
Speaker 1: But in that respect, it really is a case of
Speaker 1: you know, whether you measure it in terms of financial conditions.
Speaker 1: In the Bloomberg Financial Conditions Index is really a very
Speaker 1: valuable tool, and that is reasonably loose compared to the
Speaker 1: last year and a half or so. UM, the FED
Speaker 1: actually has the leeway and if the market walks back
Speaker 1: its own expectations, particularly if you get good news from
Speaker 1: Trump and G And remember we've also got earning season
Speaker 1: reporting starting in the middle of July, which tends to
Speaker 1: be a tale when for stocks in general you still
Speaker 1: get the three thousand. Now, what does good news at
Speaker 1: the G twenty look like? Is it a handshake and
Speaker 1: a letter to keep talking? Uh? Is it? I mean
Speaker 1: obviously they're not gonna presumably have a deal signed, sealed
Speaker 1: and delivered between the US and China. There what what
Speaker 1: would sort of you know, define good news to you
Speaker 1: at the well? I think it smiles after the steak dinner,
Speaker 1: red wine for G and the diet coke for President Trumps,
Speaker 1: as appears to be the case. But for US, if
Speaker 1: you look at financial markets over the last several years,
Speaker 1: whatever the quandary has been, bregsit, debt, ceiling, China, whatever
Speaker 1: it is, if you're able to successfully call it, kick
Speaker 1: the can down the road and leave markets optimistic that
Speaker 1: you're gonna get an eventual the solution to whatever it is,
Speaker 1: that's gonna be enough. And we think that's the case here,
Speaker 1: particularly since in the last forty eight hours it's very
Speaker 1: clear that North Korea is on the table as well
Speaker 1: when it comes to a trade deal versus a FED cut,
Speaker 1: So you can only get one or another, which is
Speaker 1: actually more valuable for the stock market. I mean, in
Speaker 1: a way, can you make the case that maybe a
Speaker 1: deal of the G twenty or really a positive outcome
Speaker 1: there isn't the greatest outcome because then maybe the FED
Speaker 1: takes that away and they start to see economic data turnaround,
Speaker 1: really start to tighten up, toughen up, and the FED
Speaker 1: decides that they're not going to cut the data doesn't
Speaker 1: imply it well. So we give Chairman Pal a lot
Speaker 1: of credit for pivoting as quickly as he did in
Speaker 1: January from cut from tightening to neutral. But the way
Speaker 1: this week is sorted itself out, we are in easing mode,
Speaker 1: whether we actually get the cuts where they're delayed, and
Speaker 1: so you know, we don't expect a repivot back to
Speaker 1: neutral or tightening in that respect. The trade deal is
Speaker 1: really very important because if you look at the last
Speaker 1: year and the cause of the Fed's concerned, it's been
Speaker 1: inflation being too low. And one of the mistakes the
Speaker 1: FED made last year in tightening what we think they
Speaker 1: overtightened and shouldn't have tightened in December, was in assuming
Speaker 1: that a trade war was going to be inflationary, and
Speaker 1: in fact it's proven to be disinflationary by by leaps
Speaker 1: and bounds. Now, Julian, your business card says chief Equity
Speaker 1: and Derivative Strategists. So I want to I want to
Speaker 1: ask you about the derivatives end a little bit. You know,
Speaker 1: I've noticed the VIX has sort of flattened out here
Speaker 1: at about fifteen or so during June. We're not getting
Speaker 1: back to those single digit readings on implied volatility as
Speaker 1: far as the VIX goes, Um, is there any information
Speaker 1: in that to you? I mean, is it just sort
Speaker 1: of uh embedded nervousness until all these issues are resolved,
Speaker 1: or or what I mean, are those days of single
Speaker 1: digit VIX just just gone forever gone, forget about them.
Speaker 1: That we traded below nine at the end of two
Speaker 1: thousand and seventeen and and when we began our coverage
Speaker 1: would be t i G in January of eighteen, we
Speaker 1: may the point that that was a turning point in
Speaker 1: what we saw as a six year cyclical regime change
Speaker 1: in volatility. And so obviously the spikes that we saw
Speaker 1: throughout two thousand and eighteen and then again in uh
Speaker 1: in early this year. UM to us makes sense. They're logical,
Speaker 1: and when you think about it with respect to the
Speaker 1: political risks that are building as the world really redraws
Speaker 1: itself in terms of trade and relationships and so on,
Speaker 1: it makes a lot of sense. And what it also
Speaker 1: tells you, it's a reminder that while things seem good now,
Speaker 1: and and we do think that there is enough good
Speaker 1: news out there to potentially take carry markets perhaps even
Speaker 1: beyond three thousand, we're still going to have to deal
Speaker 1: with the debt ceiling and a budget battle in the fall,
Speaker 1: and Brexit. The thing, the gift that keeps on giving
Speaker 1: is going to be there waiting for Halloween exactly. What
Speaker 1: about the divergence that we've seen though between volatility in
Speaker 1: the bond market and volatility in the stock market, because
Speaker 1: I know, if you use the move Index from Bank
Speaker 1: of America as a sort of benchmark for bond market volatility,
Speaker 1: we have seen such a spike in recent weeks, and
Speaker 1: now we have the ten year dipping below two percent
Speaker 1: for the first time in yet the VIX is still
Speaker 1: very muted. I mean, do you make the case that
Speaker 1: we will have to see a convergence that two come together.
Speaker 1: And if so, I mean, does the VIX move higher
Speaker 1: or does bond volatility finally start to settle down a little.
Speaker 1: We think there will be a convergence, probably in the
Speaker 1: in the guys of bond market volatility coming in and
Speaker 1: and the VIX rising um. Essentially, a lot of the
Speaker 1: activity and financial markets over the last year has been
Speaker 1: about positioning. So when we got to the end of
Speaker 1: March and German yields first went back to the negative bound,
Speaker 1: which you know, to all of US financial professionals with
Speaker 1: any gray hair, is almost completely inconceivable, there was a
Speaker 1: a an initial panic. But then in in April, as
Speaker 1: markets sort of turned better and yield stabilized, there was
Speaker 1: a thought that you wouldn't have the US ten uere
Speaker 1: yield go back to two percent. Well, that sort of
Speaker 1: went out the window of the last few weeks. I mean, honestly,
Speaker 1: we didn't see yields plunging to this depth, but then
Speaker 1: again we didn't see German yields trading to minus thirty
Speaker 1: basis points, and that caused what we call in the
Speaker 1: options market a short gamma squeeze. Basically people had been
Speaker 1: selling sort of those downside strikes and and really short
Speaker 1: exposure in that area, and once you got to around two,
Speaker 1: the vall started to build. We think ultimately, in fact,
Speaker 1: as the Fed UH loosens policy at the short end
Speaker 1: builds inflation expectations, that you actually have a rise in
Speaker 1: the long end i e. Is steepening yield curve. And
Speaker 1: that's part of the happiness of the last several days
Speaker 1: if you're j Powell, because inflation expectations were the first
Speaker 1: thing to ratchet higher UH post the f o MC conference. Now,
Speaker 1: given what you're expecting some good news at the G
Speaker 1: twenty and eventual monetary easing later in the year. What
Speaker 1: sort of sectors stocks would it be? Your your traditional
Speaker 1: cyclical industrial semiconductors or you know, our tech columnists here, Shara,
Speaker 1: should she uh start writing about utilities instead? What you know?
Speaker 1: How how should we position? Yeah, it's having been doing
Speaker 1: this for quite some time, I never thought I'd use
Speaker 1: the phrase momentum Darling when referring to utilities. I mean, again,
Speaker 1: going back to the nineties and and and trading technology
Speaker 1: on the way up, it's absolutely extraordinary um from our
Speaker 1: point of view, this is the part of the cycle,
Speaker 1: particularly given our view that the yield curve is going
Speaker 1: to steep in um that you want to lean a
Speaker 1: bit more cyclically oriented, and that means financials which have
Speaker 1: been suppressed because again German yields and the yield curve
Speaker 1: being as flat as it's been. Also energy, obviously energy
Speaker 1: is has a geopolitical backstop at this point given the
Speaker 1: tension in Iran, but it's also sunk to less than
Speaker 1: five percent of the way to the SMP. And we
Speaker 1: are true believers in autonomous driving and electric vehicles and
Speaker 1: all that, but energy is still a story that in
Speaker 1: the medium term looks very interesting to us, and it's
Speaker 1: a sector that's poise for consolidation. Cherre, I want to
Speaker 1: come to you because we did have a new I
Speaker 1: p O or direct listing as we could call it,
Speaker 1: this week. But start a little broader on the tech front,
Speaker 1: because software companies are just trading at such high valuations.
Speaker 1: I know software is the best performing industry in the
Speaker 1: SMP five hundred. What is it about this market right
Speaker 1: now that is just making investors so interested in the
Speaker 1: software space. I think it's a particular type of software
Speaker 1: companies that investors are really excited about these sort of
Speaker 1: software as a service or B two B software cloud
Speaker 1: software companies, however you want to describe them. But these
Speaker 1: are companies that investors have fallen in love with, kind
Speaker 1: of to the point of mania. We're talking about companies
Speaker 1: like Workday or Salesforce or Viva Systems, which makes pharmaceutical software.
Speaker 1: And I think the appeal here is these companies sell
Speaker 1: an understood product. They sell software for money to companies
Speaker 1: that have money, and there's kind of a repeat business, right,
Speaker 1: It's a subscription basis. You're the companies are paying you know,
Speaker 1: monthly or on an annual basis, and it's sort of
Speaker 1: fairly easy to model out what the revenue model and
Speaker 1: what the financial model looks like long term once you
Speaker 1: get companies paying kind of a recurring subs dryption for software.
Speaker 1: And so what you've seen is these companies have, you know,
Speaker 1: for the most part, do not have profits, but they
Speaker 1: do have revenue and free cash flow in some cases
Speaker 1: and are trading at very very high multiples to revenue.
Speaker 1: In particular. Now, sure, let's uh, let's pretend I'm not
Speaker 1: the young, hipster, tech savvy guy that I am, because
Speaker 1: we all know you are. Just imagine I don't. I
Speaker 1: don't know. I'm a middle aged dad talking about the
Speaker 1: width of your necktime. Hypothetical hypothetical situation. Let's say hypothetically,
Speaker 1: I've never heard of this Slack Technologies. I'm not quite
Speaker 1: sure what they do, but I do know they lost
Speaker 1: a hundred and thirty nine million dollars last year on
Speaker 1: sales of about four hundred million. Just walk us through
Speaker 1: what Slack is and why investors seem to be excited
Speaker 1: to buy a company that's that's losing more than a
Speaker 1: quarter of their sales. I will tell you that my
Speaker 1: tech journalist brain is now broken. Where I see a
Speaker 1: company that's like, oh, they're only bleeding a hundred million
Speaker 1: dollars in cash everywhere, sounds great. Signed me up. So
Speaker 1: the basic explanation of Slack is it's instant messaging designed
Speaker 1: for the workplace, and I think that under sells it
Speaker 1: a little bit. And Slack, I think has this issue
Speaker 1: where it is a little bit difficult to describe their
Speaker 1: software until you really use it. But again, it's instant messaging,
Speaker 1: and the idea is it kind of collects, You're able
Speaker 1: to kind of organize multiple people's in boxes essentially in
Speaker 1: a semi public way that you can organize groups or teams,
Speaker 1: and then everything that's related to let's say some marketing
Speaker 1: project that a team is working on will go into
Speaker 1: one channel, as Slack calls it, and only the people
Speaker 1: who are on that channel need to see it. So
Speaker 1: it avoids the sort of reply all pain that we
Speaker 1: have sometimes felt inside of companies. And you know, it
Speaker 1: also does a good job of kind of connecting to
Speaker 1: others them. So I know companies, for example, that all
Speaker 1: of the customer service requests or complaints, no matter what
Speaker 1: channel it's coming from. If it's like an angry tweet
Speaker 1: or an instant message that a customer might send through
Speaker 1: a company's website, it all gets sent and and kind
Speaker 1: of distributed through Slack, so that people on the East Coast,
Speaker 1: let's say, we'll see all of the messages no matter
Speaker 1: where it's coming from, customer service complaints from the coast
Speaker 1: that they live on. So it is a clever piece
Speaker 1: of software. I think there are open questions about whether
Speaker 1: it is a kind of nice to have software for
Speaker 1: companies or whether it becomes an essential tool inside of
Speaker 1: a modern office. But definitely it's good software that now
Speaker 1: investors are over the moon about and on that subscription basis.
Speaker 1: On that subscription basis, yes, and they have they say
Speaker 1: they have ten million people who use it on a
Speaker 1: daily basis inside of organizations and something like six kind
Speaker 1: of paying customers, paying organizations. How can you print out
Speaker 1: all these chats and given them a guy like me
Speaker 1: to interesting, I've never noticed. If they're there's probably a
Speaker 1: print option. Um, do not do that. However, do not
Speaker 1: print your slack chats. But so you talk about the
Speaker 1: subscription model, but how are investors actually going about valuing
Speaker 1: a company of this sort, especially if, like you said,
Speaker 1: they are losing money like many of the other tech
Speaker 1: ideas that we've seen lately. I mean, I think the
Speaker 1: metrics that have become important are looking at sort of
Speaker 1: recurring revenue sort of you know, how much money is
Speaker 1: repeatable business, and also looking ahead at at billing so
Speaker 1: basically booked business that is not yet paid. So really
Speaker 1: growth and revenue and kind of retention rates of existing customers.
Speaker 1: Those are the metrics that people look at in the
Speaker 1: absence of you know, conventional gap profits. Another column you
Speaker 1: had that caught my eye. The headline was something like
Speaker 1: who knows what lurks in the emails of tech executives.
Speaker 1: You know, obviously, with the anti trust scrutiny coming up
Speaker 1: on Facebook, Amazon, Google, is this the right time for
Speaker 1: Facebook to be trying to revolutionize the payments system with
Speaker 1: its own cryptocurrency. You're saying this is not a time
Speaker 1: they will want to attract more attention from regulators. Yeah,
Speaker 1: fair enough. Look, I've heard Mark Zuckerberg say a few
Speaker 1: times now in the last couple of years that they
Speaker 1: can't stop running the company and they can't stop coming
Speaker 1: out with new products and ideas because of the scrutiny
Speaker 1: they're under, which I think is true and also not true. Right,
Speaker 1: they obviously want to be a little bit more cautious
Speaker 1: and careful than they would have been prior to two
Speaker 1: thousands six or but they you know, you've got to
Speaker 1: keep innovating. That's the role of a tech company. Julian,
Speaker 1: How do you think about this regulatory risk with a
Speaker 1: group as important as the Fang stocks? I mean, is
Speaker 1: it make you sort of want to look elsewhere in
Speaker 1: the market or these still going to be the stocks
Speaker 1: that that lead us highre Well, when we're looking at
Speaker 1: over the balance of this year and into an election
Speaker 1: year next year. Uh, we're neutral on the group, but
Speaker 1: you know, if you look at the last ten twenty
Speaker 1: thirty years, it's very clear the technology is the bowl market.
Speaker 1: You you you know, we've done a lot of work
Speaker 1: that says markets can continue to go up, but technology
Speaker 1: can only underperformed by a certain amount. So from our
Speaker 1: point of view, it's something we'd like to see it
Speaker 1: get further along in the election cycle. UM valuations are
Speaker 1: reasonable broadly, and I would say, you know, again, when
Speaker 1: you're thinking about software in particular, it's that that phrase
Speaker 1: recurring revenue that is literally music to the streets ears
Speaker 1: And if you think about it like we do from
Speaker 1: an options perspective, if you have a company with recurring revenue,
Speaker 1: you can actually there's like less volatility to its streams,
Speaker 1: so you can in fact pay more for that company.
Speaker 1: What about the I P O market this year? I know,
Speaker 1: if you look at the I P O E T
Speaker 1: F it's having its best first half of the year
Speaker 1: pretty much. Ever, so is this something that you guys
Speaker 1: actually think about participating in or is it just very
Speaker 1: risky and you need to wait until things kind of
Speaker 1: die down? A little well, B T I. G. S.
Speaker 1: Capital Markets at desk has been very, very busy, which
Speaker 1: is a great thing. And and you know, we look
Speaker 1: at that to try and gauge signs of of froth.
Speaker 1: We're nowhere near the excesses that we saw in and
Speaker 1: two thousands. And if you think about it, part of
Speaker 1: the reason that the optics of it over the last
Speaker 1: several months have been as busy as they've been is
Speaker 1: because you actually had a delay for the first several
Speaker 1: months of the year and getting the paperwork through because
Speaker 1: of the government shutdown. So it will be interesting to
Speaker 1: see as we get into the heart of the summer
Speaker 1: whether there's going to be a slowdown or not that
Speaker 1: that that will be an important sign slowdown in issuance
Speaker 1: or slowdown into the price appreciation slowdown in issuance. And
Speaker 1: if you look at it in terms of the price,
Speaker 1: there have been winners and losers. It's not all straight winners. Um,
Speaker 1: you know, it's uh and and and they differentiated. And
Speaker 1: it isn't necessarily technology only that's captured people's imaginations. Well, sorry,
Speaker 1: I'm looking at your stop what Sarah keeps a stopwatch
Speaker 1: running very intimidating a little bit that we don't go
Speaker 1: on for too long, but that's our que to get
Speaker 1: to the really the most important part of the podcast,
Speaker 1: which is the craziest thing I've seen in markets ever,
Speaker 1: or at least this week, Prince Jasons. We really haven't
Speaker 1: finalized that title of it yet, Julian. Did they warny
Speaker 1: about this about this sec They absolutely did. We try
Speaker 1: We try so, so from our point of view, this
Speaker 1: week has been a great example of artificial intelligence run wild.
Speaker 1: And as you know, part of the reason that you
Speaker 1: brought me here to join you it was is to
Speaker 1: talk about the fed an interest greats very important in
Speaker 1: terms of thinking about stock prices. Well, what we noticed
Speaker 1: was if you did a search for stories with the
Speaker 1: keyword yield curve into and through the f o m
Speaker 1: C press conference this week, we saw a massive spike
Speaker 1: in that story count, and from our point of view,
Speaker 1: it really is a big justification for why the yield
Speaker 1: curve steep and nine basis points that may not sound
Speaker 1: like a lot, but on something that was trading at
Speaker 1: nineteen to go from nineteen to twenty eight, that's a
Speaker 1: huge move. So we don't know whether it was, you know,
Speaker 1: revenge of the nerds or return of the bond vigilantes.
Speaker 1: But we do know it's a big deal. Sorry, it's
Speaker 1: it's illuminating how guys on the street use our work
Speaker 1: product here we think they're they're they're reading our stores
Speaker 1: and you're really getting to the bottom. It's we start
Speaker 1: messing with it. I'm just gonna write as that just
Speaker 1: goes you have really mess with you. I'm not really
Speaker 1: gonna do that, Sarah. Have you seen any crazy market
Speaker 1: things this week? So something I thought was interesting was
Speaker 1: in the aftermath of the Jerome pal pressor, we saw
Speaker 1: stocks rally, we saw bonds rally, we saw gold's rally,
Speaker 1: and we saw oil rally altogether, and I thought it
Speaker 1: was kind of funny. Macro risk advisors called it as
Speaker 1: cats and dogs playing together, basically because on the one end,
Speaker 1: you think of bonds and gold being the safe havens,
Speaker 1: and then you think of stocks and oil being risk assets.
Speaker 1: But the reality is that now we have low interest rates,
Speaker 1: we also see the dollar falling at last um, so
Speaker 1: we're just seeing pretty much a bid to everything, which
Speaker 1: is I thought it was pretty pretty crazy. Everything that's
Speaker 1: an old Steve Martin reference, isn't that? The cats and
Speaker 1: dogs living together. Sure have we warned you about this
Speaker 1: gimmick we have here? You did? I may I may
Speaker 1: have done it wrong. However, so I read there was
Speaker 1: a story in the woll Street Journal this week about Venezuela,
Speaker 1: the Venezuelan Central Bank basically smuggling seven or eight tons
Speaker 1: of gold to be melted down in Uganda and then
Speaker 1: resold secretly in the Middle East. Which is I mean,
Speaker 1: it's it's it hasn't everything right, It's got just imagining
Speaker 1: eight tons of gold on these Russian cargo planes being
Speaker 1: flown to Uganda in the middle of the night and
Speaker 1: then being trucked to some refinery and melted down. So
Speaker 1: they concluded that it was that's what the Ugandan authorities
Speaker 1: said that they believe that is what happened. That's a
Speaker 1: way of Venezuela basically getting cash by going around US sanctions.
Speaker 1: Didn't someone tell them they were probably better off trying
Speaker 1: to smuggle in et F much less and then you
Speaker 1: redeem it afterwards and they have to find the vault
Speaker 1: where your gold is. At least suggest that to the
Speaker 1: Maduro government. All right, well, mine, I'm stretching the definition
Speaker 1: of markets here a little bit which I've got to do.
Speaker 1: You go to our are you jewelry? This week? I'm going, yeah,
Speaker 1: that was you. This week, I'm going to the gambling market.
Speaker 1: That's a real market. Julian, right, absolutely, sports, it's legal
Speaker 1: now sports spouting in Jersey. I can't believe. I still
Speaker 1: can't believe it when I read this, but so I'll
Speaker 1: just read the story. The lead of the story here
Speaker 1: from Evan Novie Williams here at Bloomberg. National Basketball Association
Speaker 1: has come up with a way for fans to gamble
Speaker 1: real money on fake games. Have you guys seen this story?
Speaker 1: So what happens is they basically spliced together a bunch
Speaker 1: of clips from different basketball games and create a fake
Speaker 1: game out of it. I'll read you the sort of
Speaker 1: the nutcraft here. Vetters will be dropped into the final
Speaker 1: nineties seconds of a virtual matchup between two NBA teams.
Speaker 1: The game will then splice together random possessions from various
Speaker 1: nets Lakers games. In reason, do we not have enough
Speaker 1: things to gamble on? Julian to my avatar is backing
Speaker 1: away from that very I'll tell you one thing, with
Speaker 1: the exception of the last several weeks, you don't want
Speaker 1: bet against Steph Curry. The editors of that. Whatever they
Speaker 1: are doing is placing together different possessions, they've got to
Speaker 1: be talented mess them up. Yeah. Well, you know, I
Speaker 1: think it's kind of done randomly. It almost sounds like
Speaker 1: it's just a computer program that takes various possessions artificial intelligence.
Speaker 1: I don't know. We'll find something better to gamble on
Speaker 1: than that. That's pretty crazy. I'll give it you absolutely.
Speaker 1: But with that said, Julian Emmanuel Sierra Obi Day, thanks
Speaker 1: so much for joining us today. Thank you, Thanks what
Speaker 1: those out will be back next week. Until then, you
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Speaker 1: can find us on Twitter. Follow me at at Sarah Pontzack,
Speaker 1: Mike is at reag Anonymous. Our guest, Sierra Obi Day
Speaker 1: is at Shira ob Day, and Bloomberg pot Cast is
Speaker 1: at Podcasts. What Goes Up is produced by sober Forehead.
Speaker 1: The head of bloomber podcast is Francesco Levie. Thanks for listening.
Speaker 1: See you next time,