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Speaker 1: Strap on your parachute. It's time for What Goes Up

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Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to

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Speaker 1: What Goes Up, a Bloomberg weekly markets podcast. I'm Sarah Ponzek,

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Speaker 1: a reporter on the Cross Asset team, and I'm Mike Reagan,

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Speaker 1: a senior editor at Bloomberg. This week on the show,

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Speaker 1: October has brought plenty of surprises. President Trump was diagnosed

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Speaker 1: with COVID nineteen, along with many other in the top

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Speaker 1: ranks of the White House. And on top of that,

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Speaker 1: antitrust regulation is back in the spotlight from mega cap

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Speaker 1: tech companies. Still, the stock market hasn't seemed too bothered,

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Speaker 1: and instead financial markets look to be pricing in reflation

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Speaker 1: once again. But Sarah, the big surprise of the week

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Speaker 1: for our listeners out there is Sarah got yourself a puppy.

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Speaker 1: I did impulsively, I did. I went to get a

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Speaker 1: dog for my parents, and then I ended up buying

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Speaker 1: one of this of links for myself. Um. So I'm

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Speaker 1: really hoping she doesn't wake up in the middle of this,

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Speaker 1: because she's laying on the floor right next to me.

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Speaker 1: I just pooped her out. Um right before we all

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Speaker 1: walked on. I was starting to run her around the

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Speaker 1: apartment as much as possible, okay, but pooped her out.

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Speaker 1: Could could have a couple of meetings. I didn't know

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Speaker 1: which one you're you're using there, I got you. You know,

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Speaker 1: I've made a lot of impulse purchases in my life,

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Speaker 1: but never a golden Doodle. That's a big one. That

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Speaker 1: that's a that's a big impulse purchase. I applaud you though,

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Speaker 1: as a co owner of a golden Doodle. I'm very

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Speaker 1: happy for you. In fact, I showed the picture to

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Speaker 1: my kids and they were like the middle one was like,

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Speaker 1: you should have the two dogs bark at each other

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Speaker 1: on the podcast. And I thought that was a great idea.

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Speaker 1: What do you think? It's a great idea. But I

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Speaker 1: don't know if our guest will be too appreciative of that,

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Speaker 1: or or our producer for a matter of fact, um,

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Speaker 1: but maybe later, Mike. Probably more insightful than the first

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Speaker 1: presidential debate, so I'd be open to it, honestly, very

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Speaker 1: good point and more civil too. All right, sorry, fine,

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Speaker 1: you be the party pooper. No dogs on this podcast

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Speaker 1: sleeping right now? I can't wake her up, alright, alright, fine,

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Speaker 1: that voice you heard, that's our guests first time on

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Speaker 1: the show. We're very happy to have him. His name

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Speaker 1: is Max Gochman. He is the head of asset Allocation

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Speaker 1: at Pacific Life Fund Advisors over in Newport Beach, California. Max,

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Speaker 1: welcome to the show. Thanks for having me. Excited to

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Speaker 1: be here. We end up having a lot of people

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Speaker 1: from Newport Beach, California on the show. Sir, I think

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Speaker 1: we need to get out there and hold a podcast

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Speaker 1: in person in Newport Beach something. It seems like it's

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Speaker 1: either Newport Beach or New Jersey. Yeah. Almost really basically

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Speaker 1: the same thing, the same thing. That's right. No board

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Speaker 1: walks in Newport Beach as far as I know, though,

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Speaker 1: that's a good thing. That's a good thing. You selling

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Speaker 1: me on it. Well, Max, let's let's get started here.

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Speaker 1: Um know. As the head of of ASCID Allocation, I

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Speaker 1: feel like it's it's a tricky time, you know. Bond

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Speaker 1: yields are so super low, equity valuations are super high,

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Speaker 1: at least historically compared to themselves. I guess if you

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Speaker 1: go back and look at those bond yields, they don't

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Speaker 1: look as high as normal how how are you wrapping

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Speaker 1: your head around the valuations in both markets this year?

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Speaker 1: What what do you telling clients? Uh, you know, what's

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Speaker 1: your your basic advice to someone trying to get some

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Speaker 1: kind of real yield in this crazy world? Sure? Um,

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Speaker 1: well it's it's been an interesting time obviously. Uh, just

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Speaker 1: to just start up by saying the most obvious thing. Uh.

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Speaker 1: The other thing is um For us, we've been a

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Speaker 1: bit more dynamic this year, and we actually started the

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Speaker 1: year fairly neutral. We saw that the market was, you know,

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Speaker 1: price to perfection and didn't see a lot of upset opportunities.

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Speaker 1: We actually, uh, in our year beginning outlooks that there's

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Speaker 1: probably gonna be about a ten percent correction that will

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Speaker 1: be a good tactical time to dip back into equities.

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Speaker 1: We were very wrong on the magnitude of that correction,

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Speaker 1: of course, but we did have the right idea. So

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Speaker 1: we want up adding risk into the portfolio right around

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Speaker 1: March twenty and that was really predicated on one of

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Speaker 1: those situations that you really hope to experience as an investor,

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Speaker 1: where everyone is going one way into such an extreme

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Speaker 1: that the contrariuon call suddenly seems very very rational. So

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Speaker 1: when folks are selling treasuries and gold um and just

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Speaker 1: moving into money markets, you know, all else being equal,

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Speaker 1: you would say that's probably a time to take the

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Speaker 1: other side of that. But when you also have a

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Speaker 1: fiscal package that dwarves tarp about to be put through,

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Speaker 1: that you know, really adds a lot of tailor win.

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Speaker 1: So that's how we got risk on uh late March,

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Speaker 1: and then over the last quarter we really put all

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Speaker 1: our bolts back in the pen um and Sarah, you

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Speaker 1: you're not spoken about that a couple of times, but

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Speaker 1: you know, the market was making new record highs, but

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Speaker 1: the recovery actually started decelerating, and we think that permables

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Speaker 1: may wind up running off the fiscal cliff before the

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Speaker 1: year is out this year. So what do we do now?

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Speaker 1: If you're looking for real yield, I would say dividends

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Speaker 1: are not a bad way to go. I think more

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Speaker 1: defensive place within that space, like utilities are actually going

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Speaker 1: to give you a decent yield. We think that high

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Speaker 1: yield credit is also remains attractive. Spreads can tightened a

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Speaker 1: bit more. The FED has that massive backstop and high

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Speaker 1: yield is the biggest beneficiary of that. So for investors

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Speaker 1: looking to to find yield in a desert observe, that

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Speaker 1: would be what we'd say. So if we are seeing

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Speaker 1: deceleration in the economy, at least from that very strong

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Speaker 1: recovery that we had seen coming off the bottoms since March,

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Speaker 1: and at the same time, there is concern over will

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Speaker 1: or will we not get another fiscal package, as you mentioned,

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Speaker 1: we might fall off that fiscal cliff. Why is it

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Speaker 1: that we are seeing this reflation trade resume. I mean,

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Speaker 1: we look at ten year thirty year treasury yields now

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Speaker 1: at the highest since early June. We're seeing small caps,

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Speaker 1: value cyclical start to outperform. How is it possible that

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Speaker 1: this is happening when so many of those concerns still exist.

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Speaker 1: So that's a really good question. And I think there's

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Speaker 1: two possibilities, right because I never want to say, well,

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Speaker 1: this is what investors are thinking. Some I'm only one investor,

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Speaker 1: but one is, uh, there's and this is what I

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Speaker 1: would say is most likely, is that there's an understanding

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Speaker 1: that we're going to see much more physical stimulus, that

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Speaker 1: fiscal stimulus is going to have to have, you know,

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Speaker 1: by Newton's storage law. Firm dynamics and equal and opposite reaction.

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Speaker 1: That's going to be massive treasury issues. So if we're

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Speaker 1: issuing a lot more treasuries, to curve is going to

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Speaker 1: steep on that longer end, and I think that's why

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Speaker 1: yield are going up. The other and related reason is

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Speaker 1: if the FED does go into yield curve control mode,

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Speaker 1: then that I don't know itself, will will be inflation

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Speaker 1: area as well. So how would you envision the yield

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Speaker 1: curve control? Would it be to allow sort of a

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Speaker 1: gradual steepening but not a really sort of sharp move

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Speaker 1: one way or the others? That is that kind of

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Speaker 1: the safest bet do you think. I think it would

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Speaker 1: be gradual, and certainly the FED would intend for it

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Speaker 1: to be gradual. But one problem with y c C

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Speaker 1: is that it's very open ended and market dependent. So um,

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Speaker 1: you know, let's look at Japan for example, in they

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Speaker 1: announced yield curve control and they actually had to buy

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Speaker 1: a lot less g gbs. Since then, we may get

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Speaker 1: a very different experiment result in the US, and that's

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Speaker 1: where the curve could move quicker. I think the FED

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Speaker 1: would try to slowly phase it in and be very

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Speaker 1: very clear about that. Powells I think learned the importance

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Speaker 1: of being very predictable as FED chair. So most likely

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Speaker 1: we good allow for a gradual steepening, but still steepening

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Speaker 1: to a level where it's advantageous for for a treasury.

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Speaker 1: So if we have inflation go up at the same

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Speaker 1: time as yields are kept at a low rate, then

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Speaker 1: you're actually are issuing negative real rate debt. And if

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Speaker 1: you look at CBO forecast and do a little bit

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Speaker 1: of arithmetic, you can actually see that that's what they

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Speaker 1: expect through seven. They're actually expecting that the average real

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Speaker 1: yield of new treasury debt is going to be negative.

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Speaker 1: So you have a real yield of treasuries that's going

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Speaker 1: to be negative. Is this almost the perfect coalescence of

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Speaker 1: a Bolish environment? I mean, okay, you have COVID nineteen

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Speaker 1: in the picture, still very much with us. But if

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Speaker 1: we get more fiscal stimulus, yield start rising at forces

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Speaker 1: the FED to start doing more asset purchases on the

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Speaker 1: long end to keep them suppressed. All of a sudden,

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Speaker 1: you have plenty of liquidity in the system and you

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Speaker 1: have extremely extremely low yields. Even an environment where we're

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Speaker 1: still coming back from a recession. Yeah, I I would

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Speaker 1: say as we look into we are seeing the potential

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Speaker 1: for for growth to really come back. In fact, one

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Speaker 1: of the reasons we've more recently tilted into value stocks

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Speaker 1: and away from growth stocks, even as we've again you know,

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Speaker 1: more near term scaled down our our risk to be

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Speaker 1: fully neutral is because we do anticipate that growth full

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Speaker 1: pick up and above trend growth is exactly what value

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Speaker 1: needs and hasn't had in the last fourteen years to accelerate.

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Speaker 1: So so yeah, it's uh, it's could be that perfect

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Speaker 1: storm in that regard Sarah that much. Do you think

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Speaker 1: a steepening of the curve? You know, like I said

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Speaker 1: at the beginning, a sort of the case for equities

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Speaker 1: is that, yes, valuations are are high, but you know,

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Speaker 1: with bond yields near historically low, especially you know, ten

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Speaker 1: of ten of thirty years space, you know, from that

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Speaker 1: valuation metrics, equities still don't look too frothy. Um, what

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Speaker 1: would that gradual steepening of the yield curve do for valuations?

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Speaker 1: Is there enough earnings potential next year to keep this

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Speaker 1: rally going or will we see some sort of compression

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Speaker 1: evaluations if that curve steepens and and maybe a rocky

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Speaker 1: road for equities. So I think it depends on where

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Speaker 1: you look within the equity market. When we look at tech,

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Speaker 1: which has obviously been both interestingly momentum and a defensive

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Speaker 1: play this year, we have seen earnings run up so

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Speaker 1: much that those valuations are going to be tricky to justify.

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Speaker 1: So I think that's where you're gonna have some some issues.

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Speaker 1: I think there's a saturation even if we think of

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Speaker 1: like the work from a home theme. Right, we've all

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Speaker 1: bought fancy microphones and cameras, and we've all added Disney

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Speaker 1: Plus and Hulu and Netflix, but our zoom premium packages.

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Speaker 1: So there is that saturation that that's there. I don't

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Speaker 1: see that expectation in the earnings revisions, which have only

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Speaker 1: gotten higher and higher, so eventually you know, you're you're

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Speaker 1: going into the shed and taken out a pole vault

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Speaker 1: to get over that bar just to you know, meet expectations.

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Speaker 1: I think that's where it's gonna be a little trickier. Conversely,

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Speaker 1: there's gonna be more downtrodden sectors h and again I'll

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Speaker 1: point to value, where investors have been, you know, largely

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Speaker 1: ignoring it. And it still remains well well behind growth.

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Speaker 1: In fact, it's still down a year to date, where

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Speaker 1: I think valuations are a lot more reasonable, and at

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Speaker 1: the same time, as is typically the case when the

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Speaker 1: economy is roaring, investors stopped being a higher premium. So

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Speaker 1: I think all that is going to call us into

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Speaker 1: a really good situation for against certain value sectors. Will

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Speaker 1: probably be a lot more tricky for tech. And we

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Speaker 1: haven't even touched on the prospects of you know, tech regulation. Max.

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Speaker 1: I think you just dropped a hint for us to

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Speaker 1: point out how great your audio is. Because Max was

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Speaker 1: one of those who went out and bought himself a

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Speaker 1: fancy microphone. He has I think a fancier one than

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Speaker 1: both Mike and I, so he was prepared for this.

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Speaker 1: But Max, you you bring up tech regulation, and I

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Speaker 1: do want to ask you about this because this past

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Speaker 1: week we did here once again from members of Congress

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Speaker 1: and those on Capitol Hill talking about anti trust regulation

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Speaker 1: for these very very large, mega cap tech companies that

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Speaker 1: have just been leaders for so long and have just

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Speaker 1: grown into almost monopolies. And this has been discussed for

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Speaker 1: a while, but it did seem like this report that

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Speaker 1: was released had a little bit more meat on its bones. However,

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Speaker 1: at the same time, it didn't seem like any of

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Speaker 1: these companies in the stock market seem to care. Sure,

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Speaker 1: we might be seeing a rotation out of tech a

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Speaker 1: bit um over the past five days, Tech is one

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Speaker 1: of the worst performing sectors. Is anything different this time?

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Speaker 1: Is there any reason to really believe that we are

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Speaker 1: going to see politicians policymakers go ahead and actually implement

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Speaker 1: this policy and make some changes. I believe there is,

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Speaker 1: And I also believe the fact that the market doesn't

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Speaker 1: seem to care is exactly what makes being underweight tech

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Speaker 1: on attractive trade because you kind of want to be

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Speaker 1: a contrarian on on regulatory arbitrage. So the reason why

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Speaker 1: I think it's different this time is because tech regulation

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Speaker 1: is by partisan the reason for regulating tech are different. So,

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Speaker 1: you know, if we fast forward past November December, whenever

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Speaker 1: we you know, find out the result of the election,

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Speaker 1: and we have a new president in Congress, then if

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Speaker 1: it's a Republican controlled Congress and White House, then they'll

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Speaker 1: focus on perceived anti conservative bias as a reason to

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Speaker 1: really suppress social media companies and alphabet If it is

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Speaker 1: a more Democrat controlled Congress. Well, I think, you know,

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Speaker 1: really we've been talking about a blue wave a lot,

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Speaker 1: and I think a blue wave is really gonna be

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Speaker 1: at tsunami that drowns detect giants because the antitrust find

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Speaker 1: things that have been found by that panel, which is

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Speaker 1: largely uh, you know, democrat controlled, because it's in the House.

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Speaker 1: I think they're pretty substantial and there, and and it's

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Speaker 1: gonna be hard to for Amazon, for Apple, for Google

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Speaker 1: to say that their marketplaces really are not infringing on companies.

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Speaker 1: I mean, there's been so much more momentum, and there's

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Speaker 1: also been a much more momentum within the public, within

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Speaker 1: the electorate to say, yeah, we have concerns about privacy. Yeah,

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Speaker 1: we are hearing from small businesses who are getting pressured

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Speaker 1: by Amazon. There's a lot of developer is who complain

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Speaker 1: about Apple's uh, you know, control of the app store.

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Speaker 1: So all those things created a very different environment than

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Speaker 1: what we saw in uh in years prior, and so

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Speaker 1: regardless of November's outcome, it just doesn't look good for tech.

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Speaker 1: I don't think it's going to be an overnight thing.

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Speaker 1: I don't think this is something where, you know, end

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Speaker 1: of Q one, we have massive antitrust regulation going through

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Speaker 1: for for tech, but it's going to be a structural

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Speaker 1: theme and eventually investors are going to have to care

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Speaker 1: when those proceedings are really gaining steam. All right, Max,

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Speaker 1: I've been looking thinking about the anti trust issue from

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Speaker 1: a different angle, and I'm not sure if it makes

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Speaker 1: me a contrarian or just a deluded idiot. So so

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Speaker 1: let me let me know what you think. But you know,

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Speaker 1: if I'm an investor, say in Facebook or Amazon, and

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Speaker 1: Cagar says comes in and says you have to break

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Speaker 1: up these companies, well, how it's done I think is important.

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Speaker 1: You know, if if Facebook were to say spinle and

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Speaker 1: I'm just making up these possible ways they could be

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Speaker 1: broken off, who knows how it could really beat one.

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Speaker 1: But say Facebook spins Instagram off two shareholders, or Amazon

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Speaker 1: spins off Amazon Web services, their cloud business off the shareholders,

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Speaker 1: or Apple spins off the app store two shareholders. Is

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Speaker 1: that necessarily a barish thing for these stocks in the

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Speaker 1: long run? Um, You know, to those business synergies kind

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Speaker 1: of outweigh the potential benefits share shareholders could get in

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Speaker 1: a breakup. If shareholders end up getting cash or or

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Speaker 1: stock in one of the units that spun off. Yeah,

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Speaker 1: that's that's a really fair question, actually, and I think

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Speaker 1: the answer lies in the margins that you see tech

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Speaker 1: companies have enjoyed, which are really actually one of the

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Speaker 1: reasons we can justify their valuations to a certain extent,

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Speaker 1: and why we were fine owning them as an overweight

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Speaker 1: earlier in the year before the most recent run ups.

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Speaker 1: Once you spin off a division, you reduce your margin

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Speaker 1: because you're just gonna have more of the same departments duplicated, right,

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Speaker 1: so there's gonna be a lot of additional hiring that

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Speaker 1: will need to happen. There won't be as much scale

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Speaker 1: and cross selling by definition, right, so Instagram can't cross

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Speaker 1: sell to Facebook, etcetera. First of all, the it's still

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Speaker 1: be large businesses, right. Instagram on its own is a

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Speaker 1: very large company, um, But without Facebook as its parent,

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Speaker 1: it's going to definitely find a tougher time on expanding

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Speaker 1: and growing and doing so at at a low cost.

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Speaker 1: And similarly, Facebook will lose one of its biggest growth

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Speaker 1: engines because obviously, as although Facebook exects one like talking

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Speaker 1: about this too much, Instagram has really been the reason

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Speaker 1: why Facebook has done so well. So, so I think

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Speaker 1: long term it'll be interesting to see how these companies,

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Speaker 1: once they're independent, in whatever scenario that ultimately comes through,

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Speaker 1: can really make a go of it themselves. But they

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Speaker 1: are going to be competing with each other, and I

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Speaker 1: don't think that's gonna be a medium term certainly not

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Speaker 1: a near term bullish catalyst. Longer term, we'll we'll have

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Speaker 1: to revaluate pricing power goes down a lot, I guess,

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Speaker 1: and that's the point of anti rust, increased competition. Um.

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Speaker 1: But speaking of competition, Mike, I I believe that it's

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Speaker 1: that time. Oh boy, it's that time to someone warned

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Speaker 1: Max about our gimmick. Oh he's prepared, aren't you. Oh yeah,

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Speaker 1: I'm ready stand clear of the craziest things we saw

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Speaker 1: in markets this week? All right, Sara, let's start with you.

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Speaker 1: What's the craziest thing you saw in markets this week?

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Speaker 1: All right? So I will I'm gonna come clean completely

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Speaker 1: admit I had help from our crazy things correspondent this week.

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Speaker 1: But it is a really, really good one. So this

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Speaker 1: is a story in the Financial Times. Just from the

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Speaker 1: headline the start of it, it reads, Vatican used charity

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Speaker 1: funds to bet on Hurts credit derivatives. I love that story. Unbelievable.

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Speaker 1: So essentially I'll just read you, read you a bit

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Speaker 1: from the story from the FT. The Vatican invested some

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Speaker 1: donations for the poor and needy and derivatives that bet

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Speaker 1: on the credit worthiness of Hurts, the US car rental

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Speaker 1: company that defaulted on its debts earlier this year, according

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Speaker 1: to documents seen by the Ft and it goes on

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Speaker 1: and it says put Frances said credit default swaps quote

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Speaker 1: encouraged the growth of a finance of chance and of

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Speaker 1: gambling on the failure of others, which is unacceptable from

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Speaker 1: the ethical point of view. But the instruments, he said,

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Speaker 1: we're a ticking time bomb. Meanwhile, you have this going

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Speaker 1: on and Hurt supposedly, um so who are we dealing

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Speaker 1: with the Vatican? Robin Hood not really sure. What's really

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Speaker 1: interesting about that, Sarah, is it gives credence to what

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Speaker 1: Lloyd Blankfin, the former chairman of Golden Sex said when

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Speaker 1: you mentioned they were doing work. So I guess they

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Speaker 1: actually are. That's a good one, truly. I'd love to

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Speaker 1: see the Vaticans pan l though it's you know, they

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Speaker 1: have a pretty they have an Investment Arm of the Vatican.

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Speaker 1: I'd love to see, uh, see what their pan l is.

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Speaker 1: That's pretty good move going along hurt CDs. I think

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Speaker 1: a lot of a lot of fun managers probably wish

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Speaker 1: they they had found religion on that issue there in hindsight, yeah,

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Speaker 1: in hindsight. Um, we also had one. We had someone

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Speaker 1: tweet that I wanted to make sure I mentioned as well, Mike,

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Speaker 1: also because they've gave me a little props, which of

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Speaker 1: course I have to play up if I have the chance.

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Speaker 1: So so this comes from I apologize if I'm pronouncing

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Speaker 1: your name wrong, but Karen Verdi at k vora and

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Speaker 1: uh he said. As it relates to Justin Bieber posting

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Speaker 1: that picture of crocsend in croc share storing, he said,

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Speaker 1: definitely to be mentioned in podcast for Crazy Things this week,

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Speaker 1: and then he said, Mike in habit for next time,

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Speaker 1: he's been lagging behind so far. So you hear that

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Speaker 1: you've been lagging behind so far, Mike. I don't know

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Speaker 1: what podcast this guy has been listening to. I don't

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Speaker 1: know about that one. That is a good thing that

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Speaker 1: we thank him for. That contribution to Justin Bieber. Also

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Speaker 1: one from Ben Emmons, who's been on the show, the

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Speaker 1: strategist at Medley Global Advisors, pointing out the guy, the

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Speaker 1: programmer at City Group who was moonlighting as the head

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Speaker 1: of a q and on conspiracy theory website. And they

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Speaker 1: managed to fire that guy. I was wondering, Sarah, you

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Speaker 1: know in his employment agreement, what exactly they could fire

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Speaker 1: this guy for. I mean, I guess there's a lot

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Speaker 1: of material there they can work with, so they ended

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Speaker 1: up getting rid of them. It is a little bit surprising. Uh.

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Speaker 1: It makes me think about who who were surrounded up

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Speaker 1: with at work, if anyone's acy theorist. It's kind of

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Speaker 1: dangerous though, you know who there could be a City

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Speaker 1: Group conspiracy theory website up now next you know, they

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Speaker 1: might be playing with fire a bit now Mike is

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Speaker 1: starting his own conspiracy theories. All right, Max, what do

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Speaker 1: you got for us? Well, I've got a three course

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Speaker 1: meal of madness for you guys. Um, we love that

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Speaker 1: so so first first courses, fish and chips, and uh,

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Speaker 1: I was just I'm kind of amazed with Brexit hinging on.

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Speaker 1: Basically Johnson and McCrone agreeing on letting Frenchmen keep fishing

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Speaker 1: in British waters, So fishing rights are point one percent

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Speaker 1: of the British economy. Yet that is actually what's holding

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Speaker 1: a brexit right now. And Johnson went so far as

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Speaker 1: to say, if we don't get a deal by middle

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Speaker 1: of next next week or you know, October fifteen, then uh,

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Speaker 1: we're we're walking. So pretty incredible are the fist fresher

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Speaker 1: and certain bodies of water than others. So apparently fish

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Speaker 1: in the British waters are very dominant, and it's actually

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Speaker 1: really important to uh to the French as well as

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Speaker 1: other EU members to keep fishing there without restriction. But

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Speaker 1: aside from those fishermen, I don't think it's really a

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Speaker 1: reason to plunge both economies into a deeper recession. But

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Speaker 1: you know, the eu is is never never stopped short

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Speaker 1: of arguing over miniscule points. Um So, so next course,

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Speaker 1: after our fish course, we're going to go to steak.

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Speaker 1: And this was just a really great story that that

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Speaker 1: I that I saw. Actually as I was I was like,

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Speaker 1: I wonder what I'm gonna say for you know, craziest

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Speaker 1: thing in the markets, And all of a sudden they

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Speaker 1: get across my terminal salt Bay looking to delay payments

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Speaker 1: on two point seven billion dollars of debt. So I

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Speaker 1: guess the the Salt Bay experience doesn't translate well into

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Speaker 1: take out. Well, you know, Max, I was actually I

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Speaker 1: was walking by the Salt Bay restaurant the other day

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Speaker 1: in Manhattan and I was thinking, you know, I mean

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Speaker 1: it opened right before this all began, and I was thinking,

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Speaker 1: you know, this can't possibly be going well, I would imagine,

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Speaker 1: apparently not, and it's it's it's their parent company, which

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Speaker 1: I was actually shocked, like, how does Seal Bay have

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Speaker 1: three billion dollars of debt restructure? So once you once

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Speaker 1: you repass the headline, it's actually they're holding company, but

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Speaker 1: they are a Turkish holding company owning a lot of

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Speaker 1: hospitality and restaurant assets. So m looking looking pretty tough

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Speaker 1: there from the geopolitical and the sector stance. So hopefully, hopefully,

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Speaker 1: I don't know, maybe they'll have Salt Bay go to

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Speaker 1: the investor meetings and you know, but I guess you

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Speaker 1: can't because of COVID. So so really I don't know

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Speaker 1: how we're gonna dig themselves out of people would watch

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Speaker 1: thought they oversoom that's uh, it'll be interesting see and

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Speaker 1: for my final course, we're gonna go to chicken and

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Speaker 1: this is just that big story on Tyson and the

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Speaker 1: other poultry companies fixing chicken prices from nineteen. The craziest

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Speaker 1: thing about it to me is that actually Pilgrim's Pride

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Speaker 1: was up on on the day and Tyson didn't really

427
00:25:04,080 --> 00:25:07,600
Speaker 1: move that much. So I don't really know how this

428
00:25:08,640 --> 00:25:12,400
Speaker 1: doesn't send stocks down a little bit more. You think

429
00:25:12,480 --> 00:25:16,400
Speaker 1: that a forthcoming indictment should should have more of an impact,

430
00:25:16,440 --> 00:25:19,920
Speaker 1: but uh, I guess everyone believes that we'll just keep

431
00:25:19,920 --> 00:25:24,520
Speaker 1: eating chicken nuggets. Wow, Sarah, this guy is good. That's

432
00:25:24,640 --> 00:25:27,520
Speaker 1: that's three solid crazy things right there, three solid ones.

433
00:25:27,560 --> 00:25:30,600
Speaker 1: But Max, I was hoping for some dessert too, so

434
00:25:31,200 --> 00:25:34,240
Speaker 1: next time, you know, I was gonna leave him wanting more,

435
00:25:34,440 --> 00:25:37,360
Speaker 1: so I'll keep working on my menu for next time.

436
00:25:39,160 --> 00:25:43,359
Speaker 1: That's pretty good, all right. Well, of course I'm going

437
00:25:43,640 --> 00:25:47,280
Speaker 1: back to the well of the alternative investment space. Sarah.

438
00:25:47,280 --> 00:25:50,080
Speaker 1: I also have a three three part crazy thing. I

439
00:25:50,119 --> 00:25:51,600
Speaker 1: don't know what it is, but I guess the in

440
00:25:51,880 --> 00:25:54,320
Speaker 1: the fall, this time of year, the art auctions really

441
00:25:54,760 --> 00:25:59,320
Speaker 1: pick up steam. Everyone's back from the Hampton's and wherever

442
00:25:59,560 --> 00:26:02,639
Speaker 1: they go in California. I guess. I guess it's always

443
00:26:02,640 --> 00:26:05,919
Speaker 1: summer in California, so maybe it doesn't matter. But first

444
00:26:05,920 --> 00:26:09,760
Speaker 1: one in art auction news, this is nuts. I did

445
00:26:09,800 --> 00:26:13,600
Speaker 1: not realize. Deutsche Bank is apparently one of the world's

446
00:26:13,800 --> 00:26:17,560
Speaker 1: biggest owners of fine art. They have something like fifty

447
00:26:17,640 --> 00:26:21,720
Speaker 1: thousand pieces of art in the Deutsche Bank collection. Uh,

448
00:26:21,760 --> 00:26:25,960
Speaker 1: and they're gonna sell about two d of those going forward. Um,

449
00:26:26,040 --> 00:26:30,199
Speaker 1: so that's the appetizer. The other one is it all

450
00:26:30,320 --> 00:26:33,760
Speaker 1: a big art auction at Christie's, but sprinkled in with

451
00:26:33,800 --> 00:26:38,960
Speaker 1: the art they were selling a full sized t rex skeleton.

452
00:26:39,520 --> 00:26:44,080
Speaker 1: So someone dug up a Tarannosaurus rex skeleton the whole thing. Um.

453
00:26:44,119 --> 00:26:45,879
Speaker 1: And apparently that's very rare. I think the ones you

454
00:26:45,920 --> 00:26:48,320
Speaker 1: see in museums usually are fakes. You know, they just

455
00:26:48,440 --> 00:26:55,960
Speaker 1: recreate it full length, full size t rex skeleton. Sarah,

456
00:26:56,040 --> 00:26:58,240
Speaker 1: you know what time it is. It's prices right, What

457
00:26:58,280 --> 00:27:00,879
Speaker 1: would you think I knew this was kind of size

458
00:27:00,920 --> 00:27:05,919
Speaker 1: t rex skeleton. Oh gosh, I'm gonna I'm gonna go

459
00:27:06,000 --> 00:27:08,639
Speaker 1: way up there this time, because I do know someone

460
00:27:08,640 --> 00:27:11,560
Speaker 1: who once dug up a wooly mammoth vertebrae, and I

461
00:27:11,600 --> 00:27:13,680
Speaker 1: know that went for her good amount, So I would

462
00:27:13,680 --> 00:27:24,960
Speaker 1: imagine t Rex full skeleton, say fifty million, really good?

463
00:27:25,320 --> 00:27:29,159
Speaker 1: Bringing it up? What First of all, we're gonna have

464
00:27:29,200 --> 00:27:31,040
Speaker 1: to talk about your friend who dug up a wooly

465
00:27:31,080 --> 00:27:35,520
Speaker 1: mammoth another time. Another time we'll say that. Keep the

466
00:27:35,880 --> 00:27:39,920
Speaker 1: listeners guessing, because that's a that's the story. I gotta hear. Max,

467
00:27:39,960 --> 00:27:42,919
Speaker 1: what's your bid for a full size t Rex skelet?

468
00:27:43,080 --> 00:27:45,480
Speaker 1: I gotta come in a little bit higher than van Sarah.

469
00:27:45,560 --> 00:27:51,560
Speaker 1: On on that, I would say seventy million, seventy million,

470
00:27:51,560 --> 00:27:53,080
Speaker 1: both are pretty good bits. I gotta say. If I

471
00:27:53,119 --> 00:27:55,120
Speaker 1: ever started auction house, you two are going to be

472
00:27:55,640 --> 00:27:58,480
Speaker 1: my first points of contact. I'm getting you in on

473
00:27:58,520 --> 00:28:01,520
Speaker 1: every bid I think it was, and I apologize I don't.

474
00:28:01,560 --> 00:28:04,120
Speaker 1: I can't remember the exact number because my computer just

475
00:28:04,359 --> 00:28:06,200
Speaker 1: died on me, but I believe it was thirty two

476
00:28:06,200 --> 00:28:12,040
Speaker 1: million full size. Yeah, hopefully whoever bought it as listening

477
00:28:12,080 --> 00:28:13,960
Speaker 1: because the law fer to Sarah. I think next and

478
00:28:14,240 --> 00:28:16,760
Speaker 1: Max get to get a bidding where Yeah, I'm gonna

479
00:28:16,800 --> 00:28:19,280
Speaker 1: throw a t Rex skeleton in my apartment with all

480
00:28:19,280 --> 00:28:24,520
Speaker 1: the all the room that I have currently. All right,

481
00:28:24,880 --> 00:28:28,920
Speaker 1: but that's not the craziest auction of the week. Someone, Um,

482
00:28:28,960 --> 00:28:34,760
Speaker 1: there's this art project in London that for some reason,

483
00:28:34,880 --> 00:28:38,480
Speaker 1: it's dedicated to promoting bitcoin. Because there's not enough people

484
00:28:38,560 --> 00:28:41,640
Speaker 1: Sarah out there promoting bitcoin, they needed to get some

485
00:28:41,760 --> 00:28:44,960
Speaker 1: artists involved. So what they did is they took all

486
00:28:44,960 --> 00:28:48,840
Speaker 1: of the original code from it was the guy Satashi

487
00:28:49,080 --> 00:28:52,280
Speaker 1: uh I forgot his last name, Satashi, the guy which

488
00:28:52,520 --> 00:28:54,600
Speaker 1: by the way, it was not even his real name whatever, whoever,

489
00:28:54,640 --> 00:28:58,160
Speaker 1: the guy that originally coded bitcoin. They took that original

490
00:28:58,200 --> 00:29:02,920
Speaker 1: code and they cut it up into forty pieces and

491
00:29:03,040 --> 00:29:06,480
Speaker 1: they printed each one out on this big round disc

492
00:29:07,120 --> 00:29:10,040
Speaker 1: to look like a coin, and they're starting to sell

493
00:29:10,080 --> 00:29:13,120
Speaker 1: them off one by one. Uh. Included in that disc

494
00:29:13,440 --> 00:29:17,160
Speaker 1: is a a token they called a non fungible token.

495
00:29:17,200 --> 00:29:20,240
Speaker 1: So you get a bitcoin token in this, but you know,

496
00:29:20,320 --> 00:29:23,160
Speaker 1: you can't go trade it like you could any any

497
00:29:23,160 --> 00:29:28,600
Speaker 1: other bitcoin token. So I believe what Christie's uh the

498
00:29:28,600 --> 00:29:32,280
Speaker 1: auction house wanted for this thing was between I think

499
00:29:32,320 --> 00:29:35,920
Speaker 1: twelve and eighteen thousand. Once again prices right, what are

500
00:29:35,920 --> 00:29:40,680
Speaker 1: you bidding max for this bitcoin token printed out? I

501
00:29:40,680 --> 00:29:44,600
Speaker 1: think it's the first three hundreds and some thousand digits

502
00:29:44,640 --> 00:29:56,960
Speaker 1: of the code. UM I would bid maybe thousand and

503
00:29:57,040 --> 00:29:59,600
Speaker 1: the low ball, I would I would low ball to

504
00:29:59,760 --> 00:30:01,840
Speaker 1: my off I would, I would, I would low balld it.

505
00:30:01,840 --> 00:30:05,400
Speaker 1: It's not a very pleasant looking piece of artwork per se.

506
00:30:05,880 --> 00:30:07,320
Speaker 1: T Rex. On the other hand, if I could put

507
00:30:07,360 --> 00:30:09,920
Speaker 1: a t Rex in my backyard, I'd bet that thing

508
00:30:09,960 --> 00:30:12,720
Speaker 1: up alright, the rex um So if you said ten

509
00:30:12,720 --> 00:30:15,920
Speaker 1: thousand was low balling it, I'll go for fifty k.

510
00:30:17,680 --> 00:30:21,440
Speaker 1: It was something like a hundred and fifty k. So, uh,

511
00:30:21,480 --> 00:30:28,560
Speaker 1: you know we're completely from both. Yeah. Yeah. In Fiat money,

512
00:30:28,600 --> 00:30:32,440
Speaker 1: they as the daily Bitcoin website Fiat Money. So what

513
00:30:32,560 --> 00:30:35,280
Speaker 1: we need to do here is print the bitcoin code

514
00:30:35,440 --> 00:30:38,720
Speaker 1: on a t Rex and now then we can go

515
00:30:38,760 --> 00:30:43,280
Speaker 1: into a hundred million rates. That's that's the plan that Sarah,

516
00:30:43,360 --> 00:30:45,440
Speaker 1: and that that is why Max is the head of

517
00:30:45,480 --> 00:30:48,800
Speaker 1: asset allocations. He has the guy knows how to put

518
00:30:48,840 --> 00:30:51,720
Speaker 1: a portfolio together. He's got the creativity that you need.

519
00:30:52,960 --> 00:30:54,440
Speaker 1: All right, We I do think we're going to have

520
00:30:54,480 --> 00:30:56,320
Speaker 1: to leave it there, though, Remember you can always give

521
00:30:56,400 --> 00:30:58,880
Speaker 1: us a call at our very own Bloomberg Podcast hot line.

522
00:30:59,240 --> 00:31:03,120
Speaker 1: That number is export six three two four three four

523
00:31:03,520 --> 00:31:06,520
Speaker 1: nine zero. If you call us, leave us a message,

524
00:31:06,560 --> 00:31:08,960
Speaker 1: we may even play it on the show, but Max Skafman,

525
00:31:09,080 --> 00:31:10,640
Speaker 1: thanks so much for joining us this week. We really

526
00:31:10,680 --> 00:31:14,920
Speaker 1: appreciate it. This is great. Thanks guys, and I'm gonna

527
00:31:14,960 --> 00:31:18,160
Speaker 1: I'm gonna name match the winner with the British fish

528
00:31:18,480 --> 00:31:21,360
Speaker 1: saying that wins the week. I'm gonna I'm gonna give

529
00:31:21,400 --> 00:31:23,800
Speaker 1: it to you. Thank you. As painful as as it

530
00:31:23,880 --> 00:31:25,520
Speaker 1: is for me to admit defeat, I gotta I get

531
00:31:25,560 --> 00:31:27,200
Speaker 1: a hand it to him on that one. Thanks fact

532
00:31:28,720 --> 00:31:36,320
Speaker 1: What Goes Up. We'll be back next week. Until then,

533
00:31:36,520 --> 00:31:39,040
Speaker 1: you can find us on the Bloomberg Terminal website and

534
00:31:39,120 --> 00:31:42,560
Speaker 1: app or wherever you get your podcasts. We'd love it

535
00:31:42,600 --> 00:31:44,440
Speaker 1: if you took the time to rate and review the

536
00:31:44,480 --> 00:31:47,480
Speaker 1: show on Apple Podcasts so more listeners can find us.

537
00:31:47,880 --> 00:31:50,280
Speaker 1: And you can find us on Twitter, follow me at

538
00:31:50,680 --> 00:31:53,920
Speaker 1: Sara pant Sack, Mike is that reag Anonymous, and you

539
00:31:53,960 --> 00:31:58,400
Speaker 1: can also follow Bloomberg Podcasts at Podcasts. Also, thank you

540
00:31:58,440 --> 00:32:00,840
Speaker 1: to Charlie Pellett of Bloomberg Radio and the voice of

541
00:32:00,840 --> 00:32:03,760
Speaker 1: the New York City Subway System. What Goes Up is

542
00:32:03,800 --> 00:32:06,960
Speaker 1: produced by Jordan Gospore. The head of Bloomberg podcast is

543
00:32:07,000 --> 00:32:10,080
Speaker 1: Francesco Levie. Thanks for listening. See you next time