Speaker 1: Strap on your parachute. It's time for What Goes Up
Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to
Speaker 1: What Goes Up, a Bloomberg weekly markets podcast. I'm Sarah Ponzek,
Speaker 1: a reporter on the Cross Asset team, and I'm Mike Reagan,
Speaker 1: a senior editor at Bloomberg. This week on the show,
Speaker 1: October has brought plenty of surprises. President Trump was diagnosed
Speaker 1: with COVID nineteen, along with many other in the top
Speaker 1: ranks of the White House. And on top of that,
Speaker 1: antitrust regulation is back in the spotlight from mega cap
Speaker 1: tech companies. Still, the stock market hasn't seemed too bothered,
Speaker 1: and instead financial markets look to be pricing in reflation
Speaker 1: once again. But Sarah, the big surprise of the week
Speaker 1: for our listeners out there is Sarah got yourself a puppy.
Speaker 1: I did impulsively, I did. I went to get a
Speaker 1: dog for my parents, and then I ended up buying
Speaker 1: one of this of links for myself. Um. So I'm
Speaker 1: really hoping she doesn't wake up in the middle of this,
Speaker 1: because she's laying on the floor right next to me.
Speaker 1: I just pooped her out. Um right before we all
Speaker 1: walked on. I was starting to run her around the
Speaker 1: apartment as much as possible, okay, but pooped her out.
Speaker 1: Could could have a couple of meetings. I didn't know
Speaker 1: which one you're you're using there, I got you. You know,
Speaker 1: I've made a lot of impulse purchases in my life,
Speaker 1: but never a golden Doodle. That's a big one. That
Speaker 1: that's a that's a big impulse purchase. I applaud you though,
Speaker 1: as a co owner of a golden Doodle. I'm very
Speaker 1: happy for you. In fact, I showed the picture to
Speaker 1: my kids and they were like the middle one was like,
Speaker 1: you should have the two dogs bark at each other
Speaker 1: on the podcast. And I thought that was a great idea.
Speaker 1: What do you think? It's a great idea. But I
Speaker 1: don't know if our guest will be too appreciative of that,
Speaker 1: or or our producer for a matter of fact, um,
Speaker 1: but maybe later, Mike. Probably more insightful than the first
Speaker 1: presidential debate, so I'd be open to it, honestly, very
Speaker 1: good point and more civil too. All right, sorry, fine,
Speaker 1: you be the party pooper. No dogs on this podcast
Speaker 1: sleeping right now? I can't wake her up, alright, alright, fine,
Speaker 1: that voice you heard, that's our guests first time on
Speaker 1: the show. We're very happy to have him. His name
Speaker 1: is Max Gochman. He is the head of asset Allocation
Speaker 1: at Pacific Life Fund Advisors over in Newport Beach, California. Max,
Speaker 1: welcome to the show. Thanks for having me. Excited to
Speaker 1: be here. We end up having a lot of people
Speaker 1: from Newport Beach, California on the show. Sir, I think
Speaker 1: we need to get out there and hold a podcast
Speaker 1: in person in Newport Beach something. It seems like it's
Speaker 1: either Newport Beach or New Jersey. Yeah. Almost really basically
Speaker 1: the same thing, the same thing. That's right. No board
Speaker 1: walks in Newport Beach as far as I know, though,
Speaker 1: that's a good thing. That's a good thing. You selling
Speaker 1: me on it. Well, Max, let's let's get started here.
Speaker 1: Um know. As the head of of ASCID Allocation, I
Speaker 1: feel like it's it's a tricky time, you know. Bond
Speaker 1: yields are so super low, equity valuations are super high,
Speaker 1: at least historically compared to themselves. I guess if you
Speaker 1: go back and look at those bond yields, they don't
Speaker 1: look as high as normal how how are you wrapping
Speaker 1: your head around the valuations in both markets this year?
Speaker 1: What what do you telling clients? Uh, you know, what's
Speaker 1: your your basic advice to someone trying to get some
Speaker 1: kind of real yield in this crazy world? Sure? Um,
Speaker 1: well it's it's been an interesting time obviously. Uh, just
Speaker 1: to just start up by saying the most obvious thing. Uh.
Speaker 1: The other thing is um For us, we've been a
Speaker 1: bit more dynamic this year, and we actually started the
Speaker 1: year fairly neutral. We saw that the market was, you know,
Speaker 1: price to perfection and didn't see a lot of upset opportunities.
Speaker 1: We actually, uh, in our year beginning outlooks that there's
Speaker 1: probably gonna be about a ten percent correction that will
Speaker 1: be a good tactical time to dip back into equities.
Speaker 1: We were very wrong on the magnitude of that correction,
Speaker 1: of course, but we did have the right idea. So
Speaker 1: we want up adding risk into the portfolio right around
Speaker 1: March twenty and that was really predicated on one of
Speaker 1: those situations that you really hope to experience as an investor,
Speaker 1: where everyone is going one way into such an extreme
Speaker 1: that the contrariuon call suddenly seems very very rational. So
Speaker 1: when folks are selling treasuries and gold um and just
Speaker 1: moving into money markets, you know, all else being equal,
Speaker 1: you would say that's probably a time to take the
Speaker 1: other side of that. But when you also have a
Speaker 1: fiscal package that dwarves tarp about to be put through,
Speaker 1: that you know, really adds a lot of tailor win.
Speaker 1: So that's how we got risk on uh late March,
Speaker 1: and then over the last quarter we really put all
Speaker 1: our bolts back in the pen um and Sarah, you
Speaker 1: you're not spoken about that a couple of times, but
Speaker 1: you know, the market was making new record highs, but
Speaker 1: the recovery actually started decelerating, and we think that permables
Speaker 1: may wind up running off the fiscal cliff before the
Speaker 1: year is out this year. So what do we do now?
Speaker 1: If you're looking for real yield, I would say dividends
Speaker 1: are not a bad way to go. I think more
Speaker 1: defensive place within that space, like utilities are actually going
Speaker 1: to give you a decent yield. We think that high
Speaker 1: yield credit is also remains attractive. Spreads can tightened a
Speaker 1: bit more. The FED has that massive backstop and high
Speaker 1: yield is the biggest beneficiary of that. So for investors
Speaker 1: looking to to find yield in a desert observe, that
Speaker 1: would be what we'd say. So if we are seeing
Speaker 1: deceleration in the economy, at least from that very strong
Speaker 1: recovery that we had seen coming off the bottoms since March,
Speaker 1: and at the same time, there is concern over will
Speaker 1: or will we not get another fiscal package, as you mentioned,
Speaker 1: we might fall off that fiscal cliff. Why is it
Speaker 1: that we are seeing this reflation trade resume. I mean,
Speaker 1: we look at ten year thirty year treasury yields now
Speaker 1: at the highest since early June. We're seeing small caps,
Speaker 1: value cyclical start to outperform. How is it possible that
Speaker 1: this is happening when so many of those concerns still exist.
Speaker 1: So that's a really good question. And I think there's
Speaker 1: two possibilities, right because I never want to say, well,
Speaker 1: this is what investors are thinking. Some I'm only one investor,
Speaker 1: but one is, uh, there's and this is what I
Speaker 1: would say is most likely, is that there's an understanding
Speaker 1: that we're going to see much more physical stimulus, that
Speaker 1: fiscal stimulus is going to have to have, you know,
Speaker 1: by Newton's storage law. Firm dynamics and equal and opposite reaction.
Speaker 1: That's going to be massive treasury issues. So if we're
Speaker 1: issuing a lot more treasuries, to curve is going to
Speaker 1: steep on that longer end, and I think that's why
Speaker 1: yield are going up. The other and related reason is
Speaker 1: if the FED does go into yield curve control mode,
Speaker 1: then that I don't know itself, will will be inflation
Speaker 1: area as well. So how would you envision the yield
Speaker 1: curve control? Would it be to allow sort of a
Speaker 1: gradual steepening but not a really sort of sharp move
Speaker 1: one way or the others? That is that kind of
Speaker 1: the safest bet do you think. I think it would
Speaker 1: be gradual, and certainly the FED would intend for it
Speaker 1: to be gradual. But one problem with y c C
Speaker 1: is that it's very open ended and market dependent. So um,
Speaker 1: you know, let's look at Japan for example, in they
Speaker 1: announced yield curve control and they actually had to buy
Speaker 1: a lot less g gbs. Since then, we may get
Speaker 1: a very different experiment result in the US, and that's
Speaker 1: where the curve could move quicker. I think the FED
Speaker 1: would try to slowly phase it in and be very
Speaker 1: very clear about that. Powells I think learned the importance
Speaker 1: of being very predictable as FED chair. So most likely
Speaker 1: we good allow for a gradual steepening, but still steepening
Speaker 1: to a level where it's advantageous for for a treasury.
Speaker 1: So if we have inflation go up at the same
Speaker 1: time as yields are kept at a low rate, then
Speaker 1: you're actually are issuing negative real rate debt. And if
Speaker 1: you look at CBO forecast and do a little bit
Speaker 1: of arithmetic, you can actually see that that's what they
Speaker 1: expect through seven. They're actually expecting that the average real
Speaker 1: yield of new treasury debt is going to be negative.
Speaker 1: So you have a real yield of treasuries that's going
Speaker 1: to be negative. Is this almost the perfect coalescence of
Speaker 1: a Bolish environment? I mean, okay, you have COVID nineteen
Speaker 1: in the picture, still very much with us. But if
Speaker 1: we get more fiscal stimulus, yield start rising at forces
Speaker 1: the FED to start doing more asset purchases on the
Speaker 1: long end to keep them suppressed. All of a sudden,
Speaker 1: you have plenty of liquidity in the system and you
Speaker 1: have extremely extremely low yields. Even an environment where we're
Speaker 1: still coming back from a recession. Yeah, I I would
Speaker 1: say as we look into we are seeing the potential
Speaker 1: for for growth to really come back. In fact, one
Speaker 1: of the reasons we've more recently tilted into value stocks
Speaker 1: and away from growth stocks, even as we've again you know,
Speaker 1: more near term scaled down our our risk to be
Speaker 1: fully neutral is because we do anticipate that growth full
Speaker 1: pick up and above trend growth is exactly what value
Speaker 1: needs and hasn't had in the last fourteen years to accelerate.
Speaker 1: So so yeah, it's uh, it's could be that perfect
Speaker 1: storm in that regard Sarah that much. Do you think
Speaker 1: a steepening of the curve? You know, like I said
Speaker 1: at the beginning, a sort of the case for equities
Speaker 1: is that, yes, valuations are are high, but you know,
Speaker 1: with bond yields near historically low, especially you know, ten
Speaker 1: of ten of thirty years space, you know, from that
Speaker 1: valuation metrics, equities still don't look too frothy. Um, what
Speaker 1: would that gradual steepening of the yield curve do for valuations?
Speaker 1: Is there enough earnings potential next year to keep this
Speaker 1: rally going or will we see some sort of compression
Speaker 1: evaluations if that curve steepens and and maybe a rocky
Speaker 1: road for equities. So I think it depends on where
Speaker 1: you look within the equity market. When we look at tech,
Speaker 1: which has obviously been both interestingly momentum and a defensive
Speaker 1: play this year, we have seen earnings run up so
Speaker 1: much that those valuations are going to be tricky to justify.
Speaker 1: So I think that's where you're gonna have some some issues.
Speaker 1: I think there's a saturation even if we think of
Speaker 1: like the work from a home theme. Right, we've all
Speaker 1: bought fancy microphones and cameras, and we've all added Disney
Speaker 1: Plus and Hulu and Netflix, but our zoom premium packages.
Speaker 1: So there is that saturation that that's there. I don't
Speaker 1: see that expectation in the earnings revisions, which have only
Speaker 1: gotten higher and higher, so eventually you know, you're you're
Speaker 1: going into the shed and taken out a pole vault
Speaker 1: to get over that bar just to you know, meet expectations.
Speaker 1: I think that's where it's gonna be a little trickier. Conversely,
Speaker 1: there's gonna be more downtrodden sectors h and again I'll
Speaker 1: point to value, where investors have been, you know, largely
Speaker 1: ignoring it. And it still remains well well behind growth.
Speaker 1: In fact, it's still down a year to date, where
Speaker 1: I think valuations are a lot more reasonable, and at
Speaker 1: the same time, as is typically the case when the
Speaker 1: economy is roaring, investors stopped being a higher premium. So
Speaker 1: I think all that is going to call us into
Speaker 1: a really good situation for against certain value sectors. Will
Speaker 1: probably be a lot more tricky for tech. And we
Speaker 1: haven't even touched on the prospects of you know, tech regulation. Max.
Speaker 1: I think you just dropped a hint for us to
Speaker 1: point out how great your audio is. Because Max was
Speaker 1: one of those who went out and bought himself a
Speaker 1: fancy microphone. He has I think a fancier one than
Speaker 1: both Mike and I, so he was prepared for this.
Speaker 1: But Max, you you bring up tech regulation, and I
Speaker 1: do want to ask you about this because this past
Speaker 1: week we did here once again from members of Congress
Speaker 1: and those on Capitol Hill talking about anti trust regulation
Speaker 1: for these very very large, mega cap tech companies that
Speaker 1: have just been leaders for so long and have just
Speaker 1: grown into almost monopolies. And this has been discussed for
Speaker 1: a while, but it did seem like this report that
Speaker 1: was released had a little bit more meat on its bones. However,
Speaker 1: at the same time, it didn't seem like any of
Speaker 1: these companies in the stock market seem to care. Sure,
Speaker 1: we might be seeing a rotation out of tech a
Speaker 1: bit um over the past five days, Tech is one
Speaker 1: of the worst performing sectors. Is anything different this time?
Speaker 1: Is there any reason to really believe that we are
Speaker 1: going to see politicians policymakers go ahead and actually implement
Speaker 1: this policy and make some changes. I believe there is,
Speaker 1: And I also believe the fact that the market doesn't
Speaker 1: seem to care is exactly what makes being underweight tech
Speaker 1: on attractive trade because you kind of want to be
Speaker 1: a contrarian on on regulatory arbitrage. So the reason why
Speaker 1: I think it's different this time is because tech regulation
Speaker 1: is by partisan the reason for regulating tech are different. So,
Speaker 1: you know, if we fast forward past November December, whenever
Speaker 1: we you know, find out the result of the election,
Speaker 1: and we have a new president in Congress, then if
Speaker 1: it's a Republican controlled Congress and White House, then they'll
Speaker 1: focus on perceived anti conservative bias as a reason to
Speaker 1: really suppress social media companies and alphabet If it is
Speaker 1: a more Democrat controlled Congress. Well, I think, you know,
Speaker 1: really we've been talking about a blue wave a lot,
Speaker 1: and I think a blue wave is really gonna be
Speaker 1: at tsunami that drowns detect giants because the antitrust find
Speaker 1: things that have been found by that panel, which is
Speaker 1: largely uh, you know, democrat controlled, because it's in the House.
Speaker 1: I think they're pretty substantial and there, and and it's
Speaker 1: gonna be hard to for Amazon, for Apple, for Google
Speaker 1: to say that their marketplaces really are not infringing on companies.
Speaker 1: I mean, there's been so much more momentum, and there's
Speaker 1: also been a much more momentum within the public, within
Speaker 1: the electorate to say, yeah, we have concerns about privacy. Yeah,
Speaker 1: we are hearing from small businesses who are getting pressured
Speaker 1: by Amazon. There's a lot of developer is who complain
Speaker 1: about Apple's uh, you know, control of the app store.
Speaker 1: So all those things created a very different environment than
Speaker 1: what we saw in uh in years prior, and so
Speaker 1: regardless of November's outcome, it just doesn't look good for tech.
Speaker 1: I don't think it's going to be an overnight thing.
Speaker 1: I don't think this is something where, you know, end
Speaker 1: of Q one, we have massive antitrust regulation going through
Speaker 1: for for tech, but it's going to be a structural
Speaker 1: theme and eventually investors are going to have to care
Speaker 1: when those proceedings are really gaining steam. All right, Max,
Speaker 1: I've been looking thinking about the anti trust issue from
Speaker 1: a different angle, and I'm not sure if it makes
Speaker 1: me a contrarian or just a deluded idiot. So so
Speaker 1: let me let me know what you think. But you know,
Speaker 1: if I'm an investor, say in Facebook or Amazon, and
Speaker 1: Cagar says comes in and says you have to break
Speaker 1: up these companies, well, how it's done I think is important.
Speaker 1: You know, if if Facebook were to say spinle and
Speaker 1: I'm just making up these possible ways they could be
Speaker 1: broken off, who knows how it could really beat one.
Speaker 1: But say Facebook spins Instagram off two shareholders, or Amazon
Speaker 1: spins off Amazon Web services, their cloud business off the shareholders,
Speaker 1: or Apple spins off the app store two shareholders. Is
Speaker 1: that necessarily a barish thing for these stocks in the
Speaker 1: long run? Um, You know, to those business synergies kind
Speaker 1: of outweigh the potential benefits share shareholders could get in
Speaker 1: a breakup. If shareholders end up getting cash or or
Speaker 1: stock in one of the units that spun off. Yeah,
Speaker 1: that's that's a really fair question, actually, and I think
Speaker 1: the answer lies in the margins that you see tech
Speaker 1: companies have enjoyed, which are really actually one of the
Speaker 1: reasons we can justify their valuations to a certain extent,
Speaker 1: and why we were fine owning them as an overweight
Speaker 1: earlier in the year before the most recent run ups.
Speaker 1: Once you spin off a division, you reduce your margin
Speaker 1: because you're just gonna have more of the same departments duplicated, right,
Speaker 1: so there's gonna be a lot of additional hiring that
Speaker 1: will need to happen. There won't be as much scale
Speaker 1: and cross selling by definition, right, so Instagram can't cross
Speaker 1: sell to Facebook, etcetera. First of all, the it's still
Speaker 1: be large businesses, right. Instagram on its own is a
Speaker 1: very large company, um, But without Facebook as its parent,
Speaker 1: it's going to definitely find a tougher time on expanding
Speaker 1: and growing and doing so at at a low cost.
Speaker 1: And similarly, Facebook will lose one of its biggest growth
Speaker 1: engines because obviously, as although Facebook exects one like talking
Speaker 1: about this too much, Instagram has really been the reason
Speaker 1: why Facebook has done so well. So, so I think
Speaker 1: long term it'll be interesting to see how these companies,
Speaker 1: once they're independent, in whatever scenario that ultimately comes through,
Speaker 1: can really make a go of it themselves. But they
Speaker 1: are going to be competing with each other, and I
Speaker 1: don't think that's gonna be a medium term certainly not
Speaker 1: a near term bullish catalyst. Longer term, we'll we'll have
Speaker 1: to revaluate pricing power goes down a lot, I guess,
Speaker 1: and that's the point of anti rust, increased competition. Um.
Speaker 1: But speaking of competition, Mike, I I believe that it's
Speaker 1: that time. Oh boy, it's that time to someone warned
Speaker 1: Max about our gimmick. Oh he's prepared, aren't you. Oh yeah,
Speaker 1: I'm ready stand clear of the craziest things we saw
Speaker 1: in markets this week? All right, Sara, let's start with you.
Speaker 1: What's the craziest thing you saw in markets this week?
Speaker 1: All right? So I will I'm gonna come clean completely
Speaker 1: admit I had help from our crazy things correspondent this week.
Speaker 1: But it is a really, really good one. So this
Speaker 1: is a story in the Financial Times. Just from the
Speaker 1: headline the start of it, it reads, Vatican used charity
Speaker 1: funds to bet on Hurts credit derivatives. I love that story. Unbelievable.
Speaker 1: So essentially I'll just read you, read you a bit
Speaker 1: from the story from the FT. The Vatican invested some
Speaker 1: donations for the poor and needy and derivatives that bet
Speaker 1: on the credit worthiness of Hurts, the US car rental
Speaker 1: company that defaulted on its debts earlier this year, according
Speaker 1: to documents seen by the Ft and it goes on
Speaker 1: and it says put Frances said credit default swaps quote
Speaker 1: encouraged the growth of a finance of chance and of
Speaker 1: gambling on the failure of others, which is unacceptable from
Speaker 1: the ethical point of view. But the instruments, he said,
Speaker 1: we're a ticking time bomb. Meanwhile, you have this going
Speaker 1: on and Hurt supposedly, um so who are we dealing
Speaker 1: with the Vatican? Robin Hood not really sure. What's really
Speaker 1: interesting about that, Sarah, is it gives credence to what
Speaker 1: Lloyd Blankfin, the former chairman of Golden Sex said when
Speaker 1: you mentioned they were doing work. So I guess they
Speaker 1: actually are. That's a good one, truly. I'd love to
Speaker 1: see the Vaticans pan l though it's you know, they
Speaker 1: have a pretty they have an Investment Arm of the Vatican.
Speaker 1: I'd love to see, uh, see what their pan l is.
Speaker 1: That's pretty good move going along hurt CDs. I think
Speaker 1: a lot of a lot of fun managers probably wish
Speaker 1: they they had found religion on that issue there in hindsight, yeah,
Speaker 1: in hindsight. Um, we also had one. We had someone
Speaker 1: tweet that I wanted to make sure I mentioned as well, Mike,
Speaker 1: also because they've gave me a little props, which of
Speaker 1: course I have to play up if I have the chance.
Speaker 1: So so this comes from I apologize if I'm pronouncing
Speaker 1: your name wrong, but Karen Verdi at k vora and
Speaker 1: uh he said. As it relates to Justin Bieber posting
Speaker 1: that picture of crocsend in croc share storing, he said,
Speaker 1: definitely to be mentioned in podcast for Crazy Things this week,
Speaker 1: and then he said, Mike in habit for next time,
Speaker 1: he's been lagging behind so far. So you hear that
Speaker 1: you've been lagging behind so far, Mike. I don't know
Speaker 1: what podcast this guy has been listening to. I don't
Speaker 1: know about that one. That is a good thing that
Speaker 1: we thank him for. That contribution to Justin Bieber. Also
Speaker 1: one from Ben Emmons, who's been on the show, the
Speaker 1: strategist at Medley Global Advisors, pointing out the guy, the
Speaker 1: programmer at City Group who was moonlighting as the head
Speaker 1: of a q and on conspiracy theory website. And they
Speaker 1: managed to fire that guy. I was wondering, Sarah, you
Speaker 1: know in his employment agreement, what exactly they could fire
Speaker 1: this guy for. I mean, I guess there's a lot
Speaker 1: of material there they can work with, so they ended
Speaker 1: up getting rid of them. It is a little bit surprising. Uh.
Speaker 1: It makes me think about who who were surrounded up
Speaker 1: with at work, if anyone's acy theorist. It's kind of
Speaker 1: dangerous though, you know who there could be a City
Speaker 1: Group conspiracy theory website up now next you know, they
Speaker 1: might be playing with fire a bit now Mike is
Speaker 1: starting his own conspiracy theories. All right, Max, what do
Speaker 1: you got for us? Well, I've got a three course
Speaker 1: meal of madness for you guys. Um, we love that
Speaker 1: so so first first courses, fish and chips, and uh,
Speaker 1: I was just I'm kind of amazed with Brexit hinging on.
Speaker 1: Basically Johnson and McCrone agreeing on letting Frenchmen keep fishing
Speaker 1: in British waters, So fishing rights are point one percent
Speaker 1: of the British economy. Yet that is actually what's holding
Speaker 1: a brexit right now. And Johnson went so far as
Speaker 1: to say, if we don't get a deal by middle
Speaker 1: of next next week or you know, October fifteen, then uh,
Speaker 1: we're we're walking. So pretty incredible are the fist fresher
Speaker 1: and certain bodies of water than others. So apparently fish
Speaker 1: in the British waters are very dominant, and it's actually
Speaker 1: really important to uh to the French as well as
Speaker 1: other EU members to keep fishing there without restriction. But
Speaker 1: aside from those fishermen, I don't think it's really a
Speaker 1: reason to plunge both economies into a deeper recession. But
Speaker 1: you know, the eu is is never never stopped short
Speaker 1: of arguing over miniscule points. Um So, so next course,
Speaker 1: after our fish course, we're going to go to steak.
Speaker 1: And this was just a really great story that that
Speaker 1: I that I saw. Actually as I was I was like,
Speaker 1: I wonder what I'm gonna say for you know, craziest
Speaker 1: thing in the markets, And all of a sudden they
Speaker 1: get across my terminal salt Bay looking to delay payments
Speaker 1: on two point seven billion dollars of debt. So I
Speaker 1: guess the the Salt Bay experience doesn't translate well into
Speaker 1: take out. Well, you know, Max, I was actually I
Speaker 1: was walking by the Salt Bay restaurant the other day
Speaker 1: in Manhattan and I was thinking, you know, I mean
Speaker 1: it opened right before this all began, and I was thinking,
Speaker 1: you know, this can't possibly be going well, I would imagine,
Speaker 1: apparently not, and it's it's it's their parent company, which
Speaker 1: I was actually shocked, like, how does Seal Bay have
Speaker 1: three billion dollars of debt restructure? So once you once
Speaker 1: you repass the headline, it's actually they're holding company, but
Speaker 1: they are a Turkish holding company owning a lot of
Speaker 1: hospitality and restaurant assets. So m looking looking pretty tough
Speaker 1: there from the geopolitical and the sector stance. So hopefully, hopefully,
Speaker 1: I don't know, maybe they'll have Salt Bay go to
Speaker 1: the investor meetings and you know, but I guess you
Speaker 1: can't because of COVID. So so really I don't know
Speaker 1: how we're gonna dig themselves out of people would watch
Speaker 1: thought they oversoom that's uh, it'll be interesting see and
Speaker 1: for my final course, we're gonna go to chicken and
Speaker 1: this is just that big story on Tyson and the
Speaker 1: other poultry companies fixing chicken prices from nineteen. The craziest
Speaker 1: thing about it to me is that actually Pilgrim's Pride
Speaker 1: was up on on the day and Tyson didn't really
Speaker 1: move that much. So I don't really know how this
Speaker 1: doesn't send stocks down a little bit more. You think
Speaker 1: that a forthcoming indictment should should have more of an impact,
Speaker 1: but uh, I guess everyone believes that we'll just keep
Speaker 1: eating chicken nuggets. Wow, Sarah, this guy is good. That's
Speaker 1: that's three solid crazy things right there, three solid ones.
Speaker 1: But Max, I was hoping for some dessert too, so
Speaker 1: next time, you know, I was gonna leave him wanting more,
Speaker 1: so I'll keep working on my menu for next time.
Speaker 1: That's pretty good, all right. Well, of course I'm going
Speaker 1: back to the well of the alternative investment space. Sarah.
Speaker 1: I also have a three three part crazy thing. I
Speaker 1: don't know what it is, but I guess the in
Speaker 1: the fall, this time of year, the art auctions really
Speaker 1: pick up steam. Everyone's back from the Hampton's and wherever
Speaker 1: they go in California. I guess. I guess it's always
Speaker 1: summer in California, so maybe it doesn't matter. But first
Speaker 1: one in art auction news, this is nuts. I did
Speaker 1: not realize. Deutsche Bank is apparently one of the world's
Speaker 1: biggest owners of fine art. They have something like fifty
Speaker 1: thousand pieces of art in the Deutsche Bank collection. Uh,
Speaker 1: and they're gonna sell about two d of those going forward. Um,
Speaker 1: so that's the appetizer. The other one is it all
Speaker 1: a big art auction at Christie's, but sprinkled in with
Speaker 1: the art they were selling a full sized t rex skeleton.
Speaker 1: So someone dug up a Tarannosaurus rex skeleton the whole thing. Um.
Speaker 1: And apparently that's very rare. I think the ones you
Speaker 1: see in museums usually are fakes. You know, they just
Speaker 1: recreate it full length, full size t rex skeleton. Sarah,
Speaker 1: you know what time it is. It's prices right, What
Speaker 1: would you think I knew this was kind of size
Speaker 1: t rex skeleton. Oh gosh, I'm gonna I'm gonna go
Speaker 1: way up there this time, because I do know someone
Speaker 1: who once dug up a wooly mammoth vertebrae, and I
Speaker 1: know that went for her good amount, So I would
Speaker 1: imagine t Rex full skeleton, say fifty million, really good?
Speaker 1: Bringing it up? What First of all, we're gonna have
Speaker 1: to talk about your friend who dug up a wooly
Speaker 1: mammoth another time. Another time we'll say that. Keep the
Speaker 1: listeners guessing, because that's a that's the story. I gotta hear. Max,
Speaker 1: what's your bid for a full size t Rex skelet?
Speaker 1: I gotta come in a little bit higher than van Sarah.
Speaker 1: On on that, I would say seventy million, seventy million,
Speaker 1: both are pretty good bits. I gotta say. If I
Speaker 1: ever started auction house, you two are going to be
Speaker 1: my first points of contact. I'm getting you in on
Speaker 1: every bid I think it was, and I apologize I don't.
Speaker 1: I can't remember the exact number because my computer just
Speaker 1: died on me, but I believe it was thirty two
Speaker 1: million full size. Yeah, hopefully whoever bought it as listening
Speaker 1: because the law fer to Sarah. I think next and
Speaker 1: Max get to get a bidding where Yeah, I'm gonna
Speaker 1: throw a t Rex skeleton in my apartment with all
Speaker 1: the all the room that I have currently. All right,
Speaker 1: but that's not the craziest auction of the week. Someone, Um,
Speaker 1: there's this art project in London that for some reason,
Speaker 1: it's dedicated to promoting bitcoin. Because there's not enough people
Speaker 1: Sarah out there promoting bitcoin, they needed to get some
Speaker 1: artists involved. So what they did is they took all
Speaker 1: of the original code from it was the guy Satashi
Speaker 1: uh I forgot his last name, Satashi, the guy which
Speaker 1: by the way, it was not even his real name whatever, whoever,
Speaker 1: the guy that originally coded bitcoin. They took that original
Speaker 1: code and they cut it up into forty pieces and
Speaker 1: they printed each one out on this big round disc
Speaker 1: to look like a coin, and they're starting to sell
Speaker 1: them off one by one. Uh. Included in that disc
Speaker 1: is a a token they called a non fungible token.
Speaker 1: So you get a bitcoin token in this, but you know,
Speaker 1: you can't go trade it like you could any any
Speaker 1: other bitcoin token. So I believe what Christie's uh the
Speaker 1: auction house wanted for this thing was between I think
Speaker 1: twelve and eighteen thousand. Once again prices right, what are
Speaker 1: you bidding max for this bitcoin token printed out? I
Speaker 1: think it's the first three hundreds and some thousand digits
Speaker 1: of the code. UM I would bid maybe thousand and
Speaker 1: the low ball, I would I would low ball to
Speaker 1: my off I would, I would, I would low balld it.
Speaker 1: It's not a very pleasant looking piece of artwork per se.
Speaker 1: T Rex. On the other hand, if I could put
Speaker 1: a t Rex in my backyard, I'd bet that thing
Speaker 1: up alright, the rex um So if you said ten
Speaker 1: thousand was low balling it, I'll go for fifty k.
Speaker 1: It was something like a hundred and fifty k. So, uh,
Speaker 1: you know we're completely from both. Yeah. Yeah. In Fiat money,
Speaker 1: they as the daily Bitcoin website Fiat Money. So what
Speaker 1: we need to do here is print the bitcoin code
Speaker 1: on a t Rex and now then we can go
Speaker 1: into a hundred million rates. That's that's the plan that Sarah,
Speaker 1: and that that is why Max is the head of
Speaker 1: asset allocations. He has the guy knows how to put
Speaker 1: a portfolio together. He's got the creativity that you need.
Speaker 1: All right, We I do think we're going to have
Speaker 1: to leave it there, though, Remember you can always give
Speaker 1: us a call at our very own Bloomberg Podcast hot line.
Speaker 1: That number is export six three two four three four
Speaker 1: nine zero. If you call us, leave us a message,
Speaker 1: we may even play it on the show, but Max Skafman,
Speaker 1: thanks so much for joining us this week. We really
Speaker 1: appreciate it. This is great. Thanks guys, and I'm gonna
Speaker 1: I'm gonna name match the winner with the British fish
Speaker 1: saying that wins the week. I'm gonna I'm gonna give
Speaker 1: it to you. Thank you. As painful as as it
Speaker 1: is for me to admit defeat, I gotta I get
Speaker 1: a hand it to him on that one. Thanks fact
Speaker 1: What Goes Up. We'll be back next week. Until then,
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Speaker 1: Francesco Levie. Thanks for listening. See you next time