1 00:00:01,320 --> 00:00:12,920 Speaker 1: Scrap on your parachute. It's time for What Goes Up. Hello, 2 00:00:13,000 --> 00:00:16,239 Speaker 1: and welcome to What Goes Up, a weekly markets podcast. 3 00:00:16,680 --> 00:00:19,840 Speaker 1: I'm Mike Reagan, a senior editor at Bloomberg, and this 4 00:00:19,920 --> 00:00:22,480 Speaker 1: week on the show, we're gonna talk about the reinflation 5 00:00:22,560 --> 00:00:26,160 Speaker 1: report that was heard around the world. In a shocking surprise, 6 00:00:26,239 --> 00:00:29,280 Speaker 1: the U S reported that consumer prices rose four point 7 00:00:29,360 --> 00:00:32,680 Speaker 1: two on a year over year basis in April. That's 8 00:00:32,720 --> 00:00:36,239 Speaker 1: the fastest in almost thirteen years, and if you exclude 9 00:00:36,240 --> 00:00:39,360 Speaker 1: food and energy, the month over month jump in core 10 00:00:39,479 --> 00:00:44,360 Speaker 1: cp I was the biggest since stock market duly freaked 11 00:00:44,360 --> 00:00:46,479 Speaker 1: out about it. It worried that it's a sign that 12 00:00:46,520 --> 00:00:50,360 Speaker 1: the Federal Reserve will have to tighten monetary policy sooner 13 00:00:50,400 --> 00:00:53,360 Speaker 1: than later. We're gonna get into it with a macro 14 00:00:53,520 --> 00:00:57,720 Speaker 1: strategist from a big bank this week, But first, Charlie Pellett, 15 00:00:57,800 --> 00:01:02,480 Speaker 1: let's introduce this week's mystery cohost. This week's mystery co 16 00:01:02,640 --> 00:01:06,680 Speaker 1: host is Joanna awesome erp. Joanna is on Bloomberg's cross 17 00:01:06,720 --> 00:01:10,880 Speaker 1: Aset team in Singapore. She has visited all fifty States, 18 00:01:11,040 --> 00:01:14,200 Speaker 1: has met Gerald Ford and Jimmy Carter, and once bumped 19 00:01:14,200 --> 00:01:20,040 Speaker 1: into Alec Baldwin twice in three days. She loves to travel, 20 00:01:20,280 --> 00:01:23,880 Speaker 1: and she says, for fun, she visits the stock exchanges 21 00:01:24,200 --> 00:01:27,920 Speaker 1: in whatever country she's in, And then it has Reagan 22 00:01:27,959 --> 00:01:33,800 Speaker 1: wondering if she actually knows the definition of the word fun. Joanna. 23 00:01:33,880 --> 00:01:36,880 Speaker 1: Usually Charlie's insult comedy is aimed at me, but I 24 00:01:36,880 --> 00:01:39,000 Speaker 1: guess he knows we we know each other well enough 25 00:01:39,040 --> 00:01:41,240 Speaker 1: that he could give you a dig there with that one. 26 00:01:41,400 --> 00:01:43,920 Speaker 1: But I have to ask, what is the most interesting 27 00:01:43,959 --> 00:01:48,960 Speaker 1: stock exchange you you visited. I enjoyed the Warsaw one 28 00:01:49,280 --> 00:01:55,040 Speaker 1: partially because they had a tank of Piranha's outside the 29 00:01:55,080 --> 00:01:58,040 Speaker 1: c e o S office, and I remember the PR 30 00:01:58,160 --> 00:02:02,160 Speaker 1: person talking about how, oh yeah, sometimes they just kind 31 00:02:02,160 --> 00:02:05,120 Speaker 1: of all gang up and eat one, and it kind 32 00:02:05,160 --> 00:02:08,760 Speaker 1: of seemed like a nice reflection of capitalism in general. 33 00:02:11,320 --> 00:02:14,840 Speaker 1: But I have to say I also loved uh seeing 34 00:02:15,200 --> 00:02:19,400 Speaker 1: c boat with Bill Brodsky, who had this huge collection 35 00:02:19,760 --> 00:02:24,520 Speaker 1: of images of exchanges from around the world historically, from 36 00:02:24,560 --> 00:02:27,040 Speaker 1: centuries past and everything, and gave me this huge tour 37 00:02:27,120 --> 00:02:32,040 Speaker 1: of it. It was that was amazing for an exchange junkie. 38 00:02:32,040 --> 00:02:34,480 Speaker 1: But um, but there are a lot of really interesting 39 00:02:34,480 --> 00:02:37,919 Speaker 1: ones and their beautiful buildings and everything. So yeah, it's 40 00:02:37,960 --> 00:02:41,720 Speaker 1: definitely fun. I promise you know I'm changing my tune 41 00:02:41,760 --> 00:02:44,000 Speaker 1: here that is that does sound pretty fun. The problem 42 00:02:44,040 --> 00:02:46,000 Speaker 1: I did not know about the pranhas. We've got a 43 00:02:46,000 --> 00:02:48,280 Speaker 1: lot of fish tanks at Bloomberg. Maybe we could slip 44 00:02:48,280 --> 00:02:50,880 Speaker 1: a pewn into one of them. I'm kidding. I'm kidding. 45 00:02:51,600 --> 00:02:55,480 Speaker 1: Don't fire me over over that. But but anyway, and 46 00:02:55,720 --> 00:02:58,040 Speaker 1: you know, I'm setting a theme with you, Joanna with 47 00:02:58,160 --> 00:03:01,959 Speaker 1: predatory sea life here. You just returned from Baby Shark 48 00:03:02,040 --> 00:03:05,840 Speaker 1: Live with your two kids. How was that? It was 49 00:03:05,960 --> 00:03:08,799 Speaker 1: kind of horrible for the adults. The kids loved it, 50 00:03:09,040 --> 00:03:12,560 Speaker 1: and of course that's why you go, right, but the 51 00:03:12,680 --> 00:03:16,600 Speaker 1: plot is pretty vapid, and um, I was actually falling 52 00:03:16,600 --> 00:03:21,560 Speaker 1: asleep and the kids were away. But I guess, yeah, 53 00:03:21,600 --> 00:03:23,880 Speaker 1: at least we're able to go now, right. But yeah, 54 00:03:23,880 --> 00:03:26,320 Speaker 1: it's one of those you buy the tickets and you're like, oh, 55 00:03:26,360 --> 00:03:27,920 Speaker 1: this is great, and then it gets to it and 56 00:03:27,919 --> 00:03:30,000 Speaker 1: you say, wait, why did I do this? And then, 57 00:03:32,880 --> 00:03:34,880 Speaker 1: by the way, Joanna is joining us from Singapore, so 58 00:03:34,920 --> 00:03:37,120 Speaker 1: that's kind of an interesting little bit of color on 59 00:03:37,600 --> 00:03:41,440 Speaker 1: the economy. And Singapore reopened enough that you can go 60 00:03:41,520 --> 00:03:44,200 Speaker 1: see a show like that, it's pretty good. Yeah, it's 61 00:03:44,200 --> 00:03:47,680 Speaker 1: been doing okay, although actually they've tightened back a little 62 00:03:47,680 --> 00:03:51,119 Speaker 1: bit because they've had more local cases than they've wanted recently, 63 00:03:51,360 --> 00:03:55,000 Speaker 1: so and they're staying that's stubbornly high. So we'll see 64 00:03:55,000 --> 00:03:56,720 Speaker 1: how things go in the next couple of weeks, because 65 00:03:56,760 --> 00:04:01,600 Speaker 1: they've said it's kind of a it could go either way. 66 00:04:01,640 --> 00:04:06,080 Speaker 1: But yes, for the past year or so, it's been um, well, 67 00:04:06,080 --> 00:04:09,360 Speaker 1: I guess maybe ten months, it's been a little bit open. 68 00:04:09,440 --> 00:04:13,080 Speaker 1: But yeah, masks are mandatory in public and with the 69 00:04:13,160 --> 00:04:17,080 Speaker 1: threat of finds or imprisonment, and um, you definitely have 70 00:04:17,240 --> 00:04:20,040 Speaker 1: to play by the rules here, right right, absolutely, as 71 00:04:20,080 --> 00:04:21,800 Speaker 1: in all things, not just the virus. I guess it's 72 00:04:22,000 --> 00:04:25,880 Speaker 1: exactly reputation goes Let's bring in someone who I think 73 00:04:25,920 --> 00:04:27,680 Speaker 1: plays by the rules. I don't know, we'll find out, 74 00:04:27,760 --> 00:04:30,240 Speaker 1: but we'll get get to that. Market's chat now and 75 00:04:30,480 --> 00:04:33,039 Speaker 1: this guy's by now kind of a frequent flyer on 76 00:04:33,080 --> 00:04:34,960 Speaker 1: the What Goes Up? Show, and we're really happy to 77 00:04:35,000 --> 00:04:36,640 Speaker 1: have him back. It's a good week to have him 78 00:04:37,040 --> 00:04:40,560 Speaker 1: with the FED, with interest rates and inflation all coming 79 00:04:40,600 --> 00:04:44,839 Speaker 1: into focus. He is a macro strategist at Wells, Fargo. 80 00:04:44,960 --> 00:04:47,520 Speaker 1: His name is Zach Griffith's Zach. Welcome back to the show. 81 00:04:48,080 --> 00:04:50,599 Speaker 1: Thanks for having me. Always good to join you guys. Yeah, 82 00:04:50,600 --> 00:04:55,600 Speaker 1: and Zach, you know this inflation print this week, you know, obviously, 83 00:04:55,640 --> 00:04:59,440 Speaker 1: I think it's been interesting how vague the Fed has 84 00:04:59,520 --> 00:05:04,240 Speaker 1: been intentionally vague on exactly how hot they will let 85 00:05:04,320 --> 00:05:07,880 Speaker 1: inflation run above there at least what was a previous 86 00:05:07,960 --> 00:05:11,480 Speaker 1: target of two um, and for how long they'll let 87 00:05:11,480 --> 00:05:14,800 Speaker 1: it run. You know, the the duration of transitory, I 88 00:05:14,839 --> 00:05:17,560 Speaker 1: think is is very much open for debate. You know, 89 00:05:17,600 --> 00:05:21,480 Speaker 1: they've they've said they believe this popping inflation will be transitory. 90 00:05:21,520 --> 00:05:25,960 Speaker 1: I'm not sure how long anyone thinks that is. And 91 00:05:26,080 --> 00:05:28,080 Speaker 1: I'm not sure you know, when we thought of inflation 92 00:05:28,160 --> 00:05:31,440 Speaker 1: running hot, boy a CPI that's more than twice that 93 00:05:31,520 --> 00:05:35,200 Speaker 1: two percent target um, although they target pc but close enough. 94 00:05:35,640 --> 00:05:37,320 Speaker 1: I think it's a shocker for a lot of people. 95 00:05:37,320 --> 00:05:40,320 Speaker 1: But I'm wondering, from your perspective, has it really moved 96 00:05:40,400 --> 00:05:43,600 Speaker 1: the needle at all on you know, when we can 97 00:05:43,680 --> 00:05:46,320 Speaker 1: expect that, you know, the quote unquote punch bowl to 98 00:05:46,440 --> 00:05:48,680 Speaker 1: be drained either, you know, the start of tapering of 99 00:05:48,720 --> 00:05:52,960 Speaker 1: asset purchases or the eventual UH normalization of of interest rates. 100 00:05:53,480 --> 00:05:55,920 Speaker 1: Anything changed from this print in your mind as far 101 00:05:55,960 --> 00:05:59,000 Speaker 1: as what how you're thinking about the FED, I'd say 102 00:05:59,040 --> 00:06:01,800 Speaker 1: that's the million dollar quite sin, and our answer is 103 00:06:01,839 --> 00:06:04,680 Speaker 1: not just yet. I think it was well understood that 104 00:06:04,800 --> 00:06:06,920 Speaker 1: at least on a year over year basis, the c 105 00:06:07,080 --> 00:06:09,600 Speaker 1: p I print would be huge. Now I would point 106 00:06:09,640 --> 00:06:12,160 Speaker 1: to the month over month over month figures, which were 107 00:06:12,200 --> 00:06:15,440 Speaker 1: also very impressive zero eight percent on the headline and 108 00:06:15,520 --> 00:06:17,760 Speaker 1: zero point nine percent on the core, So you can't 109 00:06:17,760 --> 00:06:20,679 Speaker 1: really say that this was all driven by base effects 110 00:06:20,680 --> 00:06:23,680 Speaker 1: are all driven by the volatile food and energy components, 111 00:06:23,720 --> 00:06:27,160 Speaker 1: with core pc I U zero point nine percent. So 112 00:06:27,200 --> 00:06:29,320 Speaker 1: I think it's something that the FED will take into account, 113 00:06:29,440 --> 00:06:33,159 Speaker 1: certainly looking at some of these underlying pressures that are 114 00:06:33,200 --> 00:06:36,919 Speaker 1: not necessarily driven by the reopening of the economy or 115 00:06:37,000 --> 00:06:39,719 Speaker 1: driven by supply pressures, and we saw some of that 116 00:06:39,760 --> 00:06:42,200 Speaker 1: in the subcomponents, so I think it it's something they're 117 00:06:42,240 --> 00:06:44,960 Speaker 1: looking at. But they've really set the stage to dismiss 118 00:06:45,360 --> 00:06:48,800 Speaker 1: at least this print and maybe one more as transitory, 119 00:06:48,880 --> 00:06:50,599 Speaker 1: and from there, I think that's when it gets really 120 00:06:50,640 --> 00:06:52,640 Speaker 1: interesting and the FED is going to have to determine 121 00:06:53,240 --> 00:06:56,280 Speaker 1: if these factors are going to be persistent or if 122 00:06:56,680 --> 00:06:59,000 Speaker 1: inflation does come back, call it in June and July 123 00:06:59,160 --> 00:07:01,320 Speaker 1: and they're able to to stay patient. We think that 124 00:07:01,360 --> 00:07:04,080 Speaker 1: with the shift in their longer run framework, they're going 125 00:07:04,120 --> 00:07:06,400 Speaker 1: to remain patient for much longer than they have in 126 00:07:06,440 --> 00:07:08,680 Speaker 1: the past, and they've at least attempted to make that 127 00:07:08,800 --> 00:07:11,640 Speaker 1: very clear with their communication. So we haven't changed our 128 00:07:11,720 --> 00:07:14,200 Speaker 1: view yet. We think that tapering is likely to be 129 00:07:14,200 --> 00:07:18,440 Speaker 1: announced later this year to commence in early two. That 130 00:07:18,480 --> 00:07:20,840 Speaker 1: could change, but this one print does not change your 131 00:07:20,880 --> 00:07:25,160 Speaker 1: mind at least not not yet. Hey, Zach, so wondering 132 00:07:25,320 --> 00:07:29,320 Speaker 1: if there's a specific factor that you're looking at, like 133 00:07:29,400 --> 00:07:33,600 Speaker 1: are you looking at supply chains to see what what 134 00:07:33,720 --> 00:07:35,800 Speaker 1: the direction of inflation might be, or are you looking 135 00:07:35,840 --> 00:07:38,200 Speaker 1: at wages? Are there are there certain things that you 136 00:07:38,240 --> 00:07:42,120 Speaker 1: think of as a tell for you know whether this 137 00:07:42,200 --> 00:07:45,760 Speaker 1: will be something more So, one of the key measures 138 00:07:45,800 --> 00:07:48,440 Speaker 1: that we've kept an eye on for a long time 139 00:07:48,480 --> 00:07:51,679 Speaker 1: and is really a bell weather for where underlying trend 140 00:07:51,680 --> 00:07:54,320 Speaker 1: inflation is going in our view as shelter costs, and 141 00:07:54,360 --> 00:07:57,679 Speaker 1: you did see shelter costs tick up this past month 142 00:07:57,840 --> 00:08:01,160 Speaker 1: with the overall index rising zero point percent, but that 143 00:08:01,200 --> 00:08:03,520 Speaker 1: was really driven by a big jump in hotel and 144 00:08:03,600 --> 00:08:07,040 Speaker 1: motel lodging, and you know, that's kind of a smaller subcomponent. 145 00:08:07,120 --> 00:08:09,960 Speaker 1: But when you look at owners of equivalent rents, which 146 00:08:10,000 --> 00:08:14,040 Speaker 1: we considered to be a better underlying gauge of shelter costs, 147 00:08:14,040 --> 00:08:16,600 Speaker 1: it was still at zero point two percent, which prior 148 00:08:16,640 --> 00:08:18,960 Speaker 1: to the pandemic, it was really ticking along around zero 149 00:08:19,040 --> 00:08:21,880 Speaker 1: point three percent, which doesn't sound like a huge difference, 150 00:08:21,920 --> 00:08:25,080 Speaker 1: but when gauging these underlying trends, it is something that 151 00:08:25,120 --> 00:08:28,320 Speaker 1: we keep an eye on, and if we don't see 152 00:08:28,640 --> 00:08:32,640 Speaker 1: those types of pressures, then perhaps you see inflation pull 153 00:08:32,720 --> 00:08:35,280 Speaker 1: back and call it June and July and the FEDS 154 00:08:35,280 --> 00:08:38,839 Speaker 1: able to keep this patient mantra. But that remains to 155 00:08:38,880 --> 00:08:41,560 Speaker 1: be seen. And you know, our economists have revised up 156 00:08:41,720 --> 00:08:44,959 Speaker 1: their inflation forecast for quarters further out than just Q 157 00:08:45,160 --> 00:08:47,600 Speaker 1: two and Q three of this year, so I think, 158 00:08:47,880 --> 00:08:50,800 Speaker 1: you know, we are seeing real inflation. But as far 159 00:08:50,840 --> 00:08:53,839 Speaker 1: as this one print goes, it's it's not going to 160 00:08:54,000 --> 00:08:57,400 Speaker 1: change the FEDS outlook or communications in our view, and 161 00:08:57,400 --> 00:09:00,760 Speaker 1: it's going to get increasingly difficult, especially later this summer. 162 00:09:00,800 --> 00:09:03,560 Speaker 1: If inflation remains well above that two percent target. But 163 00:09:03,600 --> 00:09:05,520 Speaker 1: we think that they've really set the stage to wait 164 00:09:05,559 --> 00:09:09,480 Speaker 1: and see and even if we have expectations rising and 165 00:09:10,040 --> 00:09:13,000 Speaker 1: remaining very high, they want to see realized data and 166 00:09:13,240 --> 00:09:17,080 Speaker 1: they've made that very clear recently. Yeah, that rent UH 167 00:09:17,400 --> 00:09:19,640 Speaker 1: or owner's equivalent rent I guess it is in CPI 168 00:09:19,800 --> 00:09:22,040 Speaker 1: is such a such an important thing, you know, big 169 00:09:22,040 --> 00:09:25,080 Speaker 1: waiting in cp I. We had a guest on the 170 00:09:25,160 --> 00:09:28,520 Speaker 1: show last week, vincin Delaware, talking also about how the 171 00:09:29,200 --> 00:09:32,240 Speaker 1: you know, I guess every data set has basically been 172 00:09:32,360 --> 00:09:34,760 Speaker 1: ruined by COVID. You know, it's hard to hard to 173 00:09:34,800 --> 00:09:36,480 Speaker 1: make heads or tails out of any of it. But 174 00:09:36,800 --> 00:09:40,760 Speaker 1: with that eviction moratorium, surely must be playing some kind 175 00:09:40,800 --> 00:09:43,719 Speaker 1: of role in in rent. So I wonder if that's 176 00:09:43,720 --> 00:09:46,120 Speaker 1: something to watch going forward to as well as that, 177 00:09:46,280 --> 00:09:49,320 Speaker 1: you know, on Thursday, after the CPI report, we got 178 00:09:49,760 --> 00:09:53,120 Speaker 1: producer prices the pp I induct core pp I up 179 00:09:53,160 --> 00:09:55,880 Speaker 1: four point six percent. I mean, is it, you know, 180 00:09:56,559 --> 00:09:58,720 Speaker 1: is it possible we haven't even seen the peak of 181 00:09:58,760 --> 00:10:01,439 Speaker 1: inflation yet for this year? Do you think? Yeah, that's 182 00:10:01,440 --> 00:10:03,640 Speaker 1: a great point, especially when you consider what's going on 183 00:10:03,720 --> 00:10:06,559 Speaker 1: with commodity prices, whether it be energy or food. It 184 00:10:06,840 --> 00:10:09,800 Speaker 1: seems like everything is rising. Lumber, that's that's been a 185 00:10:09,880 --> 00:10:12,560 Speaker 1: huge one. So when you look at this pp I print, 186 00:10:12,559 --> 00:10:16,480 Speaker 1: which again well above consensus expectations, that would suggest that 187 00:10:16,559 --> 00:10:22,600 Speaker 1: price pressures, consumer price pressures could remain very high further 188 00:10:22,640 --> 00:10:25,160 Speaker 1: down the road. And again that's that's going to be 189 00:10:25,240 --> 00:10:28,920 Speaker 1: what we think shifts the FEDS at last rhetoric or 190 00:10:28,960 --> 00:10:32,280 Speaker 1: perhaps policy if if you do get that later this year. 191 00:10:32,320 --> 00:10:34,080 Speaker 1: So I think that's definitely something to keep an eye on. 192 00:10:34,120 --> 00:10:36,360 Speaker 1: And you make a good point, Mike. I mean, if 193 00:10:36,360 --> 00:10:39,840 Speaker 1: you talk about the non farm payrolls report for April 194 00:10:39,960 --> 00:10:44,319 Speaker 1: that fell below all economists expectations, We had a one 195 00:10:44,320 --> 00:10:48,400 Speaker 1: point four million job range on economists forecast, we were 196 00:10:48,440 --> 00:10:50,640 Speaker 1: below all of those and as far as cp I, 197 00:10:50,679 --> 00:10:52,720 Speaker 1: and I can't say for sure, but I think pp 198 00:10:52,800 --> 00:10:56,320 Speaker 1: I probably came above all of those expectations. So we've 199 00:10:56,320 --> 00:10:59,160 Speaker 1: been really pointing out that economic data is extremely difficult 200 00:10:59,240 --> 00:11:01,840 Speaker 1: to predict at this point, and the market reactions have 201 00:11:01,960 --> 00:11:05,560 Speaker 1: also not really been consistent with what you'd expect, either 202 00:11:05,600 --> 00:11:08,199 Speaker 1: on the downside or upside, at least looking at treasury yields. 203 00:11:08,200 --> 00:11:09,840 Speaker 1: And I think you can make that our argument for 204 00:11:09,880 --> 00:11:12,439 Speaker 1: equities as well. So it's it's interesting. There's a lot 205 00:11:12,480 --> 00:11:14,560 Speaker 1: to keep an eye on. It's very difficult to predict, 206 00:11:14,600 --> 00:11:17,600 Speaker 1: and not only are the numbers themselves difficult to predict, 207 00:11:17,600 --> 00:11:20,120 Speaker 1: but the market reaction also seems to be out of 208 00:11:20,160 --> 00:11:24,400 Speaker 1: whack with what would be considered historical norms. Yeah, so, Zach, Actually, 209 00:11:24,400 --> 00:11:26,959 Speaker 1: since you brought up the payrolls report, it seems like 210 00:11:27,480 --> 00:11:31,520 Speaker 1: a lot of strategists are really looking at you know, 211 00:11:31,559 --> 00:11:34,240 Speaker 1: they're kind of revising what they thought of it. You know, 212 00:11:34,320 --> 00:11:36,520 Speaker 1: there was the initial take on Friday, and people are 213 00:11:36,520 --> 00:11:40,320 Speaker 1: still chewing it over because it was just so surprising 214 00:11:40,360 --> 00:11:43,880 Speaker 1: and complicated. So at this point, what's your take on it? 215 00:11:44,040 --> 00:11:46,280 Speaker 1: Do you what do you think about it? Just kind 216 00:11:46,280 --> 00:11:49,760 Speaker 1: of a big picture. Yeah, our economists have done some 217 00:11:49,880 --> 00:11:52,280 Speaker 1: great work on this, and I think the big takeaway 218 00:11:52,360 --> 00:11:55,360 Speaker 1: is that the issue is on the supply side and 219 00:11:55,440 --> 00:11:58,559 Speaker 1: not on the demand side. And what I mean by 220 00:11:58,600 --> 00:12:02,040 Speaker 1: that is, you know, you have the is unemployment benefits 221 00:12:02,080 --> 00:12:05,240 Speaker 1: that are set to expire not for another three or 222 00:12:05,280 --> 00:12:08,360 Speaker 1: four months down the road from from the latest COVID 223 00:12:08,400 --> 00:12:13,160 Speaker 1: relief package, and you have job openings at at record high, 224 00:12:13,320 --> 00:12:16,200 Speaker 1: so we don't see the you know, it's not a 225 00:12:16,280 --> 00:12:20,000 Speaker 1: demand problem, um the supply of labor. We think people 226 00:12:20,000 --> 00:12:23,160 Speaker 1: are probably on the sidelines more as a result of 227 00:12:23,160 --> 00:12:26,160 Speaker 1: of the fiscal backdrop, and and maybe that that changes. 228 00:12:26,240 --> 00:12:29,040 Speaker 1: But I guess as far as the outlook for the 229 00:12:29,080 --> 00:12:32,160 Speaker 1: economy goes, it's it's not overly concerning in the sense 230 00:12:32,240 --> 00:12:34,680 Speaker 1: that the economy has all of a sudden slowing down 231 00:12:34,720 --> 00:12:36,600 Speaker 1: and doesn't need to hire more workers. I think it's 232 00:12:36,640 --> 00:12:39,000 Speaker 1: really just the opposite. It will be interesting to see 233 00:12:39,000 --> 00:12:42,320 Speaker 1: how that very low data point is smoothed over in 234 00:12:42,360 --> 00:12:45,520 Speaker 1: the next month and months ahead, as expectations are for 235 00:12:46,160 --> 00:12:48,360 Speaker 1: job gains of a million per month for the next 236 00:12:48,360 --> 00:12:51,200 Speaker 1: several months, and if we have a big paybacks, you know, 237 00:12:51,400 --> 00:12:54,480 Speaker 1: something like closer to two million and in May than 238 00:12:54,559 --> 00:12:56,839 Speaker 1: I think, you know, it kind of washes out and 239 00:12:57,120 --> 00:13:01,120 Speaker 1: the trend is still what was expected prior to the 240 00:13:01,160 --> 00:13:04,040 Speaker 1: print in April. You know, Zack, I'm still uh. My 241 00:13:04,160 --> 00:13:08,400 Speaker 1: background UH is as a stock market reporter and editor. 242 00:13:08,480 --> 00:13:10,480 Speaker 1: You know it think of me is like the equities 243 00:13:10,520 --> 00:13:13,800 Speaker 1: in Dallas, type of type of knuckle head uh, equities 244 00:13:13,840 --> 00:13:15,800 Speaker 1: in the touch of New Jersey. I guess in this 245 00:13:15,920 --> 00:13:18,920 Speaker 1: in this case, like the Dallas of New Jersey. I guess, 246 00:13:18,920 --> 00:13:23,920 Speaker 1: but I gotta say whatever. I try to wrap my 247 00:13:24,040 --> 00:13:27,680 Speaker 1: head around the narrative that's moving the dollar at any 248 00:13:27,720 --> 00:13:31,800 Speaker 1: given time, I my head just starts spinning, and I'm 249 00:13:32,000 --> 00:13:35,160 Speaker 1: I I get so confused about what the main drivers. 250 00:13:35,280 --> 00:13:38,320 Speaker 1: I think you touched a little bit on this in 251 00:13:38,559 --> 00:13:41,400 Speaker 1: UH in a note recently after the c P. I 252 00:13:41,600 --> 00:13:45,080 Speaker 1: you know that initially we saw this dollar strength. Now 253 00:13:45,600 --> 00:13:48,640 Speaker 1: to me, when I think of high super high inflation 254 00:13:48,840 --> 00:13:51,680 Speaker 1: or higher than expected inflation, I think, okay, weaker dollar 255 00:13:52,040 --> 00:13:54,600 Speaker 1: is is sort of the knee jerk response. But then 256 00:13:54,640 --> 00:13:57,160 Speaker 1: you you think, well, is it going to cause higher 257 00:13:57,280 --> 00:14:01,920 Speaker 1: interest rates? Okay, stronger dollar in that sense? How do 258 00:14:01,960 --> 00:14:05,240 Speaker 1: you view the balance between those two sort of classic 259 00:14:05,360 --> 00:14:09,760 Speaker 1: dollar catalysts here, um, especially in light of I mean, 260 00:14:09,920 --> 00:14:14,040 Speaker 1: so many people have died on the hill of being 261 00:14:14,080 --> 00:14:18,720 Speaker 1: barished the dollar uh in recent years. UH, this point 262 00:14:18,760 --> 00:14:21,120 Speaker 1: in time being where you do want to stick out 263 00:14:21,120 --> 00:14:23,040 Speaker 1: of position on that hill and be a dollar bear, 264 00:14:23,200 --> 00:14:25,600 Speaker 1: I would think, But I'm just curious how you're walking 265 00:14:25,600 --> 00:14:29,360 Speaker 1: through the cross currents of the of the currency markets. UH. 266 00:14:29,440 --> 00:14:31,720 Speaker 1: You know which is more important to the dollar right now? 267 00:14:31,800 --> 00:14:34,800 Speaker 1: Is it this high inflation or is it the prospect 268 00:14:34,800 --> 00:14:38,040 Speaker 1: of higher yields. Yeah, there's a lot to balance there, 269 00:14:38,040 --> 00:14:40,520 Speaker 1: and we've recently changed our view on the dollar to 270 00:14:40,520 --> 00:14:42,960 Speaker 1: to bearish, and that's a near term view. And the 271 00:14:42,960 --> 00:14:45,720 Speaker 1: big thing that we're focused on, or a few things 272 00:14:45,720 --> 00:14:49,160 Speaker 1: that we're focused on, are sort of the US exceptionalism 273 00:14:49,880 --> 00:14:52,800 Speaker 1: theme is is waning, we think, and that comes from 274 00:14:52,840 --> 00:14:57,040 Speaker 1: both economic data but also vaccination. I think early on 275 00:14:57,120 --> 00:15:00,120 Speaker 1: the UK and the US we're really leading the or 276 00:15:00,440 --> 00:15:03,600 Speaker 1: major nations in Europe and Canada and that gap has closed, 277 00:15:03,600 --> 00:15:05,800 Speaker 1: So we think that's going to be a key driver. 278 00:15:05,960 --> 00:15:09,360 Speaker 1: And when you think about this inflation report, we're seeing 279 00:15:09,840 --> 00:15:13,240 Speaker 1: big wage pressures, big price pressures for consumers. That's that's 280 00:15:13,280 --> 00:15:15,760 Speaker 1: dollar negative in our view. And I think the other 281 00:15:15,840 --> 00:15:18,920 Speaker 1: key component that comes into play here is the FED 282 00:15:19,640 --> 00:15:23,640 Speaker 1: has been resolutely more dubbish than even some other major 283 00:15:23,680 --> 00:15:25,840 Speaker 1: central banks such as the Bank of Canada and the 284 00:15:25,880 --> 00:15:28,640 Speaker 1: Bank of England that have started tapering. The Nords Bank 285 00:15:28,680 --> 00:15:30,520 Speaker 1: could be raising rates by the end of this year. 286 00:15:30,920 --> 00:15:34,560 Speaker 1: So I think that last component, with the FED remaining dubbish, 287 00:15:34,680 --> 00:15:38,440 Speaker 1: remaining patient even in the face of higher inflation, is 288 00:15:38,480 --> 00:15:41,760 Speaker 1: what really shifted our view on the dollar to to barish. 289 00:15:41,840 --> 00:15:55,760 Speaker 1: Over the next one to two months or so. So, Zack, 290 00:15:55,840 --> 00:15:59,080 Speaker 1: since you're talking about the central banks that have gotten 291 00:15:59,600 --> 00:16:02,920 Speaker 1: a little less of it, do you think that bodes 292 00:16:03,000 --> 00:16:06,120 Speaker 1: well for other central banks, like the FED, to be 293 00:16:06,160 --> 00:16:07,760 Speaker 1: able to rein it in or is this sort of 294 00:16:07,800 --> 00:16:11,080 Speaker 1: like the FED is really just as long as the 295 00:16:11,120 --> 00:16:14,840 Speaker 1: FED is out there providing the stimulus that it doesn't 296 00:16:14,920 --> 00:16:17,280 Speaker 1: really matter say what the Bank of Canada does. And 297 00:16:17,320 --> 00:16:21,760 Speaker 1: I apologize to any Canadians about that question. Yeah, that's 298 00:16:21,760 --> 00:16:24,760 Speaker 1: a great question. I think that perhaps it does give 299 00:16:24,800 --> 00:16:29,360 Speaker 1: the FED some room to shift, but I don't think 300 00:16:29,440 --> 00:16:32,400 Speaker 1: any of these other major central banks have had this 301 00:16:32,520 --> 00:16:35,400 Speaker 1: codified shift in their long run framework that we got 302 00:16:35,400 --> 00:16:38,000 Speaker 1: from the FED in August of last year. So they've 303 00:16:38,000 --> 00:16:40,920 Speaker 1: really went beyond just saying that they're going to be 304 00:16:40,960 --> 00:16:43,600 Speaker 1: more patients. They're going to focus on shortfalls from maximum 305 00:16:43,600 --> 00:16:47,600 Speaker 1: employment instead of deviations from maximum employment and this flexible 306 00:16:47,640 --> 00:16:50,480 Speaker 1: average inflation targeting. So I think the FED is is 307 00:16:50,560 --> 00:16:53,200 Speaker 1: kind of on its own. And while I'm sure they 308 00:16:53,200 --> 00:16:55,360 Speaker 1: will take into account what's going on in the rest 309 00:16:55,400 --> 00:16:57,840 Speaker 1: of the world, what other central banks are doing, they 310 00:16:57,840 --> 00:17:01,840 Speaker 1: have a clear mandate of pray stability and maximum employment, 311 00:17:01,840 --> 00:17:04,119 Speaker 1: and I think that the big shift and focus on 312 00:17:04,240 --> 00:17:08,720 Speaker 1: maximum employment is what they've been saying for almost a 313 00:17:08,800 --> 00:17:10,959 Speaker 1: year now and what they've been focusing on, and that 314 00:17:11,040 --> 00:17:14,199 Speaker 1: gives them the headroom to remain more patient and not 315 00:17:14,280 --> 00:17:17,119 Speaker 1: necessarily feel pressure from these other central banks to change 316 00:17:17,160 --> 00:17:19,640 Speaker 1: tax just because they have you know, z that It's 317 00:17:19,680 --> 00:17:23,159 Speaker 1: interesting you bring up the the vaccination rates. Europe is 318 00:17:23,200 --> 00:17:26,920 Speaker 1: catching up with you with us, um. They seem to me, like, 319 00:17:27,080 --> 00:17:29,720 Speaker 1: you know, we've all become obsessed with all data related 320 00:17:29,760 --> 00:17:31,880 Speaker 1: to the pandemic. You know, first it was the number 321 00:17:31,880 --> 00:17:34,760 Speaker 1: of cases, number of hospitalizations, number of deaths, that sort 322 00:17:34,760 --> 00:17:37,480 Speaker 1: of thing. Now it's really the focus on is on vaccination. 323 00:17:38,040 --> 00:17:41,040 Speaker 1: I feel like we're getting close to a point where 324 00:17:41,080 --> 00:17:44,159 Speaker 1: all of that is is not gonna matter anymore. We're 325 00:17:44,160 --> 00:17:47,280 Speaker 1: gonna sort of move back to, you know, the real 326 00:17:47,520 --> 00:17:51,639 Speaker 1: fundamentals of national economies. And I'm kind of fascinated with 327 00:17:51,640 --> 00:17:54,440 Speaker 1: with Europe right now. I mean that German tenure yield 328 00:17:54,480 --> 00:17:57,720 Speaker 1: that everyone watches. It's almost back in a positive territory. 329 00:17:57,760 --> 00:18:00,480 Speaker 1: Who would have ever thought we'd see positive fields in 330 00:18:00,560 --> 00:18:04,560 Speaker 1: Germany in our lifetime. Craziest thing I've seen in this week. 331 00:18:05,320 --> 00:18:08,679 Speaker 1: But I'm curious how you're thinking about Europe because to me, 332 00:18:09,560 --> 00:18:14,600 Speaker 1: you know, once we get through this fixation on the 333 00:18:15,040 --> 00:18:17,920 Speaker 1: case rates and and the vaccination rates, and I kind 334 00:18:17,960 --> 00:18:20,800 Speaker 1: of feeling like we're getting close to the light at 335 00:18:20,800 --> 00:18:22,600 Speaker 1: the end of that tunnel where Okay, enough people are 336 00:18:22,600 --> 00:18:26,119 Speaker 1: gonna be vaccinated, and all all the developed economies, that 337 00:18:26,280 --> 00:18:29,080 Speaker 1: sort of advantage of who's doing better in that is 338 00:18:29,400 --> 00:18:32,120 Speaker 1: not gonna matter, say maybe by the end of the year, 339 00:18:32,160 --> 00:18:34,560 Speaker 1: even by the end of the summer, I would guess, 340 00:18:35,359 --> 00:18:37,959 Speaker 1: And then you know, we start thinking about the old 341 00:18:38,000 --> 00:18:41,280 Speaker 1: all the old issues in Europe that we had before 342 00:18:41,320 --> 00:18:44,240 Speaker 1: the pandemic. I'm just curious what Europe is gonna look 343 00:18:44,240 --> 00:18:46,080 Speaker 1: like at the other side of this. I mean, is 344 00:18:46,080 --> 00:18:49,600 Speaker 1: that notion of European austerity that had really played such 345 00:18:49,640 --> 00:18:53,399 Speaker 1: a big role in markets, is that is that notion dead? 346 00:18:53,520 --> 00:18:57,600 Speaker 1: I mean, the pandemic basically kill the the European fixation 347 00:18:57,640 --> 00:19:01,280 Speaker 1: on austerity and all the sub a point repples that 348 00:19:01,359 --> 00:19:04,359 Speaker 1: has in markets. I'd say it seems to have at 349 00:19:04,440 --> 00:19:06,920 Speaker 1: least pushed it to the back burner, and that's probably 350 00:19:06,920 --> 00:19:08,960 Speaker 1: going to remain the case for a while. I think 351 00:19:09,000 --> 00:19:11,320 Speaker 1: you're right that we are starting to approach a point 352 00:19:11,320 --> 00:19:15,560 Speaker 1: where maybe the focus shifts back more to traditional economic 353 00:19:15,640 --> 00:19:18,640 Speaker 1: data and after a couple of months from now, perhaps 354 00:19:18,680 --> 00:19:21,280 Speaker 1: you're getting a more true reading on what the underlying 355 00:19:21,280 --> 00:19:23,560 Speaker 1: economy is doing here in the US and in Europe. 356 00:19:23,600 --> 00:19:25,879 Speaker 1: I think you started to see some more encouraging signs 357 00:19:25,920 --> 00:19:29,400 Speaker 1: there finally in some of the more recent data. I think, 358 00:19:29,480 --> 00:19:31,639 Speaker 1: you know, Q one as a whole was was not great, 359 00:19:31,680 --> 00:19:33,439 Speaker 1: so they have a ways to go. But I do 360 00:19:33,560 --> 00:19:37,960 Speaker 1: think that the austerity focus and obsession has probably taken 361 00:19:38,000 --> 00:19:40,680 Speaker 1: a hit, and it's going to be a longer term one. 362 00:19:40,880 --> 00:19:43,960 Speaker 1: You know, defining longer term might be difficult, just because 363 00:19:43,960 --> 00:19:47,440 Speaker 1: we really are there's still plenty of uncertainty and things 364 00:19:47,440 --> 00:19:50,199 Speaker 1: are looking up, but you know, you can't dismiss a 365 00:19:50,240 --> 00:19:53,719 Speaker 1: step in the wrong direction with a particularly virulent strain, 366 00:19:54,000 --> 00:19:57,639 Speaker 1: or you know, you're reminded of how things can go 367 00:19:57,880 --> 00:20:00,520 Speaker 1: in places like India where it's it's been really unfortunate, 368 00:20:00,600 --> 00:20:03,240 Speaker 1: seemed like they had things well under control and you 369 00:20:03,280 --> 00:20:05,239 Speaker 1: sort of take your foot off the gas of of 370 00:20:05,240 --> 00:20:09,840 Speaker 1: taking precautionary measures, and very bad things can still happen. 371 00:20:09,880 --> 00:20:12,520 Speaker 1: So I think to your point, yes, it's taken a 372 00:20:12,600 --> 00:20:15,159 Speaker 1: hit and probably moved to the back burner. Whether or 373 00:20:15,160 --> 00:20:18,200 Speaker 1: not it comes back into focus down the line remains 374 00:20:18,240 --> 00:20:19,720 Speaker 1: to be seen, but I think it's it's going to 375 00:20:19,800 --> 00:20:22,800 Speaker 1: be a while until focus can shift back to that 376 00:20:22,920 --> 00:20:25,760 Speaker 1: austerity that that was really a huge focus part of 377 00:20:25,760 --> 00:20:29,440 Speaker 1: the pandemic. Okay, and Zac sins. We're starting to talk 378 00:20:29,480 --> 00:20:31,480 Speaker 1: about the rest of the world a little bit, and 379 00:20:31,480 --> 00:20:34,400 Speaker 1: you mentioned you think US out performance may be fading. 380 00:20:34,800 --> 00:20:38,280 Speaker 1: Where do you think the next out performance will come from? 381 00:20:38,720 --> 00:20:42,320 Speaker 1: Just regionally, I think it could come from the UK, 382 00:20:42,520 --> 00:20:45,639 Speaker 1: which has has done fairly well with with vaccination and 383 00:20:45,920 --> 00:20:49,200 Speaker 1: seems to be moving perhaps a bit more briskly through 384 00:20:49,240 --> 00:20:52,240 Speaker 1: a to a broad reopening. And I think I recall 385 00:20:52,320 --> 00:20:57,200 Speaker 1: correctly early June is when Prime Minister Johnson had targeted 386 00:20:57,240 --> 00:20:59,439 Speaker 1: for a big reopening. So I think that that kind 387 00:20:59,480 --> 00:21:04,439 Speaker 1: of sets up a decent backdrop for for economic growth 388 00:21:04,560 --> 00:21:06,280 Speaker 1: in the UK. And as I know it earlier, starting 389 00:21:06,280 --> 00:21:08,920 Speaker 1: to see in some of these more high frequency monthly 390 00:21:09,359 --> 00:21:12,399 Speaker 1: prints for for Eurozone as a whole. As you know, 391 00:21:12,640 --> 00:21:16,159 Speaker 1: that's a decent proxy for for what's going on, you know, 392 00:21:16,160 --> 00:21:17,960 Speaker 1: whether it be the p M I S or otherwise. 393 00:21:17,960 --> 00:21:20,880 Speaker 1: So you're seeing some encouraging signs there. So I think, 394 00:21:21,000 --> 00:21:23,480 Speaker 1: you know, both in in the U k and and 395 00:21:23,520 --> 00:21:25,400 Speaker 1: the EU are are possible. And you know, the Bank 396 00:21:25,440 --> 00:21:29,280 Speaker 1: of Canada has has moved to to tapering asset purchases, 397 00:21:29,320 --> 00:21:32,399 Speaker 1: so clearly there's been some strong economic growth there. So 398 00:21:32,440 --> 00:21:33,800 Speaker 1: I think you're you're getting it from a lot of 399 00:21:33,800 --> 00:21:36,399 Speaker 1: different places where the US is not going to be 400 00:21:36,880 --> 00:21:39,840 Speaker 1: as much of a standout relative to sort of a 401 00:21:39,880 --> 00:21:44,359 Speaker 1: broader swath of of major economies than uh going forward. 402 00:21:44,760 --> 00:21:48,160 Speaker 1: So the basic trade I guess there would be by 403 00:21:48,400 --> 00:21:52,760 Speaker 1: British and europe risk assets like stocks, by the currencies, 404 00:21:52,800 --> 00:21:56,440 Speaker 1: and and sell the bonds. I mean, that's the that's 405 00:21:56,480 --> 00:21:59,320 Speaker 1: the traditional approach. But you know, as far as we're 406 00:21:59,359 --> 00:22:03,720 Speaker 1: concerned from the perspective of, you know, relative value between 407 00:22:03,800 --> 00:22:06,720 Speaker 1: the US and other nations, we I mean, if you 408 00:22:06,760 --> 00:22:09,480 Speaker 1: look at yields in the US, they're they're still more 409 00:22:09,520 --> 00:22:12,960 Speaker 1: attractive than anywhere else. And when we consider where things 410 00:22:12,960 --> 00:22:15,359 Speaker 1: are going from here, we do expect US yields to 411 00:22:15,359 --> 00:22:18,640 Speaker 1: to continue to rise, but perhaps that takes government bond 412 00:22:18,720 --> 00:22:22,440 Speaker 1: yields across developed nations with it, and that's kind of 413 00:22:22,480 --> 00:22:24,840 Speaker 1: been a big story. We think yields will rise. There's 414 00:22:24,840 --> 00:22:27,879 Speaker 1: a huge supply story treasury supply story in the US, 415 00:22:27,960 --> 00:22:31,840 Speaker 1: but you're seeing that elsewhere and having a globally coordinated 416 00:22:31,880 --> 00:22:35,760 Speaker 1: economic reopening is not something that we've seen in recent history. 417 00:22:35,840 --> 00:22:38,399 Speaker 1: So yeah, we we think yields will rise, and if 418 00:22:38,480 --> 00:22:41,760 Speaker 1: you do get this globally coordinated reopening, it should should 419 00:22:41,800 --> 00:22:44,159 Speaker 1: be more positive for risk assets, and to the extent 420 00:22:44,240 --> 00:22:46,919 Speaker 1: that risk assets and other nations have lagged, perhaps they 421 00:22:46,960 --> 00:22:49,240 Speaker 1: do begin to catch up as that narrative really takes 422 00:22:49,280 --> 00:22:53,000 Speaker 1: hold this summer and into the fall. Okay, so Zach, 423 00:22:53,119 --> 00:22:56,919 Speaker 1: what's your outlook for volatility? I'm a huge volatility nerds, 424 00:22:56,960 --> 00:22:59,560 Speaker 1: so I have to ask this question. So if you 425 00:22:59,600 --> 00:23:02,679 Speaker 1: see a background for risk assets, do you think volatility 426 00:23:02,720 --> 00:23:04,800 Speaker 1: is going to decline as we start to come out 427 00:23:04,800 --> 00:23:08,200 Speaker 1: of the pandemic hopefully, or do you think it's gonna 428 00:23:08,240 --> 00:23:12,639 Speaker 1: be pretty bumpy still as we work through everything. So, 429 00:23:12,680 --> 00:23:15,040 Speaker 1: at least with respect to the US, we think that 430 00:23:15,160 --> 00:23:18,600 Speaker 1: volatility could pick up over the coming months, which would 431 00:23:18,640 --> 00:23:22,720 Speaker 1: be inconsistent with a risk on general risk on sentiment. 432 00:23:22,760 --> 00:23:25,640 Speaker 1: But what we think you're going to see is sort 433 00:23:25,640 --> 00:23:28,479 Speaker 1: of a battle between the market and the Fed. We 434 00:23:28,520 --> 00:23:31,359 Speaker 1: think that if you get another very high inflation print, 435 00:23:31,480 --> 00:23:33,919 Speaker 1: even better economic data, the market's going to start to 436 00:23:33,960 --> 00:23:37,400 Speaker 1: price in aggressive hikes by the Fed. You know, perhaps 437 00:23:37,400 --> 00:23:41,840 Speaker 1: not in or even necessarily too much, but kind of 438 00:23:41,880 --> 00:23:44,840 Speaker 1: looking at a longer term measure, looking at call it 439 00:23:44,920 --> 00:23:49,320 Speaker 1: December euro dollars, if we've seen that come up quite 440 00:23:49,359 --> 00:23:51,880 Speaker 1: a bit and back down more recently. But if if 441 00:23:51,960 --> 00:23:55,280 Speaker 1: you have market pricing of the Fed getting much more 442 00:23:55,280 --> 00:23:58,159 Speaker 1: aggressive than what they've signaled, we think that's going to 443 00:23:58,240 --> 00:24:00,439 Speaker 1: put a lot of pressure on them to really tailor 444 00:24:00,480 --> 00:24:02,800 Speaker 1: this message that they're on hold for now. But they 445 00:24:02,840 --> 00:24:05,119 Speaker 1: can change tech when they need to, and it's going 446 00:24:05,200 --> 00:24:08,480 Speaker 1: to be a really difficult needle to thread in the 447 00:24:08,560 --> 00:24:12,399 Speaker 1: sense that they want to be patient, but if the 448 00:24:12,440 --> 00:24:15,840 Speaker 1: market is telling them and suggesting that they need to tighten, 449 00:24:15,880 --> 00:24:19,200 Speaker 1: they're gonna have to taylor this message. That's been very difficult. 450 00:24:19,320 --> 00:24:22,639 Speaker 1: Everyone refers to the taper tantrum back in. The FED 451 00:24:23,160 --> 00:24:26,280 Speaker 1: really wants to avoid anything like that happening again. But 452 00:24:26,359 --> 00:24:29,080 Speaker 1: we think it's going to be difficult, and you know, 453 00:24:29,240 --> 00:24:31,160 Speaker 1: our our view is they're going to take the approach 454 00:24:31,160 --> 00:24:33,280 Speaker 1: that they want to have as little lead time between 455 00:24:33,760 --> 00:24:36,600 Speaker 1: announcing a taper and actually commencing the taper, which is 456 00:24:36,600 --> 00:24:38,600 Speaker 1: why we think you would see it maybe in December 457 00:24:38,640 --> 00:24:42,400 Speaker 1: of this year to begin in early So that kind 458 00:24:42,440 --> 00:24:44,399 Speaker 1: of push pull from the market and the FED, we 459 00:24:44,440 --> 00:24:46,800 Speaker 1: think is going to create more uncertainty. And if you 460 00:24:46,800 --> 00:24:49,560 Speaker 1: look at the valve service at least in US swaps 461 00:24:49,600 --> 00:24:51,960 Speaker 1: here in the US, you kind of see that that 462 00:24:52,600 --> 00:24:56,760 Speaker 1: peak of uncertainty, at least implied by recent data, is 463 00:24:56,800 --> 00:24:59,240 Speaker 1: around the two to five year period. And that's when 464 00:24:59,280 --> 00:25:01,480 Speaker 1: you really, how is the FED going to come out 465 00:25:01,480 --> 00:25:02,879 Speaker 1: of this? How are they you know, are they going 466 00:25:02,960 --> 00:25:05,359 Speaker 1: to have to raise rates aggressively? Can they really stay 467 00:25:05,400 --> 00:25:08,399 Speaker 1: on hold for a long time after tapering? And we 468 00:25:08,440 --> 00:25:12,200 Speaker 1: think that does result in more volatility down the road. Zack, 469 00:25:12,240 --> 00:25:15,840 Speaker 1: I like talking to a guy like you, because in 470 00:25:15,880 --> 00:25:19,080 Speaker 1: my view, there's there's three types of people in the market. Okay, 471 00:25:19,080 --> 00:25:23,359 Speaker 1: there's there's those that read every speech by every f 472 00:25:23,480 --> 00:25:26,800 Speaker 1: O m C member and every governor, even if they're 473 00:25:26,880 --> 00:25:30,199 Speaker 1: voting or not. Then there's a second type who just 474 00:25:30,280 --> 00:25:33,400 Speaker 1: read the headlines, maybe the first paragraph of the story 475 00:25:33,440 --> 00:25:36,320 Speaker 1: about these speeches. I confess I'm in that category. I've 476 00:25:36,560 --> 00:25:39,480 Speaker 1: got a stack of FED speeches that I plan to 477 00:25:39,520 --> 00:25:42,280 Speaker 1: read one day. They're they're they're on my nightstand, right 478 00:25:42,320 --> 00:25:44,600 Speaker 1: next to the books. Yeah, right next to the books 479 00:25:44,640 --> 00:25:47,000 Speaker 1: of all that all my friends have written that I'm 480 00:25:47,000 --> 00:25:50,240 Speaker 1: I swear I'm going to read it happen. Right. But 481 00:25:50,280 --> 00:25:51,960 Speaker 1: then the third type is a guy like you, and 482 00:25:52,000 --> 00:25:53,800 Speaker 1: you read speeches that I think the rest of us 483 00:25:53,800 --> 00:25:56,240 Speaker 1: didn't even know happen, you know. And I'll give you 484 00:25:56,240 --> 00:25:59,520 Speaker 1: an example. You you mentioned a speech by the FED 485 00:25:59,600 --> 00:26:03,359 Speaker 1: Soma manager Lorie Logan, and she hinted UH in the 486 00:26:03,400 --> 00:26:07,480 Speaker 1: speech that the FED might reduce their purchases of tips. 487 00:26:08,359 --> 00:26:10,440 Speaker 1: And I think this is this is such a huge 488 00:26:10,480 --> 00:26:13,080 Speaker 1: important topic, especially when you talk about, you know, the 489 00:26:13,400 --> 00:26:16,639 Speaker 1: supply of treasuries coming. So I'm gonna ask you one 490 00:26:16,640 --> 00:26:20,600 Speaker 1: of my famous multipart questions here about this. I'm trying 491 00:26:20,640 --> 00:26:24,760 Speaker 1: to think of the motivation behind UH reducing the purchases 492 00:26:24,920 --> 00:26:27,800 Speaker 1: of tips. You know, my guests would be and maybe 493 00:26:27,800 --> 00:26:29,359 Speaker 1: they don't want to say this come out and say this, 494 00:26:29,440 --> 00:26:31,760 Speaker 1: but they want to have some influence on the break 495 00:26:31,800 --> 00:26:34,800 Speaker 1: even inflation rates in the market. Um, whether or not 496 00:26:34,920 --> 00:26:37,159 Speaker 1: that be their prime motivation, it certainly could play a 497 00:26:37,280 --> 00:26:39,520 Speaker 1: role in that and sort of bring down these break 498 00:26:39,600 --> 00:26:43,600 Speaker 1: evens that everyone is so fixated on because they look 499 00:26:43,680 --> 00:26:46,520 Speaker 1: like such hot inflation for the next five, five or 500 00:26:46,560 --> 00:26:49,639 Speaker 1: even ten years. So I'm curious if you think it is. 501 00:26:49,840 --> 00:26:52,320 Speaker 1: Would that be part of the motivation at least the 502 00:26:52,400 --> 00:26:57,880 Speaker 1: unspoken motivation of reducing TIPS purchases, were messing with the 503 00:26:57,880 --> 00:27:02,520 Speaker 1: the amount of TIPS purchases at all? And also, how 504 00:27:02,560 --> 00:27:06,879 Speaker 1: are you thinking about sort of the match between the 505 00:27:07,000 --> 00:27:09,960 Speaker 1: different types of duration we can expect the Treasury to 506 00:27:10,000 --> 00:27:12,760 Speaker 1: sell and what the Fed then in turn will buy 507 00:27:13,200 --> 00:27:16,640 Speaker 1: as part of its asset purchases. Yeah, Mike, that's certainly 508 00:27:16,640 --> 00:27:19,639 Speaker 1: going to be an interesting announcement that that will get 509 00:27:19,680 --> 00:27:23,720 Speaker 1: here soon. And with respect to tips, the speech from 510 00:27:23,760 --> 00:27:26,760 Speaker 1: back in April really alluded to the fact that as 511 00:27:27,280 --> 00:27:32,440 Speaker 1: Treasury increased nominal coupons drastically in finance the Cares Act 512 00:27:32,480 --> 00:27:36,880 Speaker 1: and follow on COVID relief packages, tips issuance wasn't increased 513 00:27:36,880 --> 00:27:39,320 Speaker 1: as much. So what they want to do, what the 514 00:27:39,320 --> 00:27:43,280 Speaker 1: FED wants to do, is to better align their current 515 00:27:43,280 --> 00:27:47,760 Speaker 1: state of purchases with what Treasury has been issuing. So 516 00:27:47,880 --> 00:27:50,439 Speaker 1: Treasury has been issuing less and tips as a percent 517 00:27:50,480 --> 00:27:53,879 Speaker 1: of overall issuance just because they didn't boost those auctions 518 00:27:53,920 --> 00:27:55,960 Speaker 1: the same way they did that the nominal auctions in 519 00:27:57,080 --> 00:27:59,040 Speaker 1: The other big thing that we think they want to 520 00:27:59,080 --> 00:28:03,520 Speaker 1: address is have this bucket of purchases between seven and 521 00:28:03,560 --> 00:28:06,040 Speaker 1: twenty years. And that was fine before there was a 522 00:28:06,080 --> 00:28:09,920 Speaker 1: twenty year security because that really captured either very rolled 523 00:28:09,920 --> 00:28:12,480 Speaker 1: down thirty year issuance or or the ten year sector, 524 00:28:12,520 --> 00:28:15,240 Speaker 1: which is where they were focusing those purchases. Now it's 525 00:28:15,320 --> 00:28:17,639 Speaker 1: unclear when they do these operations if they're going to 526 00:28:17,720 --> 00:28:20,439 Speaker 1: focus on the ten year sector or the twenty year sector, 527 00:28:20,480 --> 00:28:23,880 Speaker 1: which has notoriously suffered worst liquidity in the twenty year 528 00:28:24,080 --> 00:28:26,199 Speaker 1: bond has cheapened quite a bit, so we expect them 529 00:28:26,240 --> 00:28:30,000 Speaker 1: to really address that and perhaps breaking into a seven 530 00:28:30,040 --> 00:28:33,080 Speaker 1: to fifteen year sector and then a fifteen to twenty 531 00:28:33,080 --> 00:28:35,439 Speaker 1: five year sector, leaving twenty five to thirty year to 532 00:28:35,480 --> 00:28:37,119 Speaker 1: cover the back end. So we think that's going to 533 00:28:37,200 --> 00:28:41,200 Speaker 1: be the big focus in the next month of FED purchases, 534 00:28:42,040 --> 00:28:45,240 Speaker 1: and that's also important when considering, like you mentioned that 535 00:28:45,280 --> 00:28:48,640 Speaker 1: the supply of duration to the market and the biggest 536 00:28:48,760 --> 00:28:51,960 Speaker 1: increases on an annual basis per ten or have been 537 00:28:51,960 --> 00:28:54,320 Speaker 1: in the seven year and twenty year bucket. For the 538 00:28:54,360 --> 00:28:58,880 Speaker 1: twenty year it's really focused on increases to to the 539 00:28:58,920 --> 00:29:01,040 Speaker 1: auction sizes, but also we just have a full year 540 00:29:01,040 --> 00:29:04,160 Speaker 1: of auctions, whereas the twenty year was reintroduced in May 541 00:29:04,200 --> 00:29:07,000 Speaker 1: of last year, and you've seen problems in both of 542 00:29:07,040 --> 00:29:11,240 Speaker 1: those tenors. So I think that the duration story really 543 00:29:11,280 --> 00:29:13,680 Speaker 1: came into focus in February when you had the seven 544 00:29:13,760 --> 00:29:16,000 Speaker 1: year auction with some of the worst stats we've seen 545 00:29:16,000 --> 00:29:18,600 Speaker 1: in over a decade, and that really pushed the whole 546 00:29:19,040 --> 00:29:22,720 Speaker 1: curve higher and steeper. And and the twenty years, as 547 00:29:22,760 --> 00:29:26,400 Speaker 1: I noted earlier, has been notoriously cheap recently and and 548 00:29:26,480 --> 00:29:29,760 Speaker 1: maybe richened up a bit. But we think that the 549 00:29:29,800 --> 00:29:32,960 Speaker 1: supply of duration is going to be huge, and and 550 00:29:33,120 --> 00:29:34,920 Speaker 1: you've seen that in the first quarter, and that's going 551 00:29:34,960 --> 00:29:37,440 Speaker 1: to be a story that persists through the remainder of 552 00:29:37,440 --> 00:29:39,160 Speaker 1: the year. While at the same time, and even if 553 00:29:39,160 --> 00:29:41,760 Speaker 1: the FED remains on hold with its eighty billion per 554 00:29:41,800 --> 00:29:44,720 Speaker 1: month and purchases as we expect, is taking down much 555 00:29:44,800 --> 00:29:47,040 Speaker 1: less duration this year than last year, So that big 556 00:29:47,080 --> 00:29:49,960 Speaker 1: mismatch leaves a glut of duration for the market to 557 00:29:50,000 --> 00:29:52,840 Speaker 1: take down, and we think that's what gradually pushes yield 558 00:29:52,920 --> 00:29:56,560 Speaker 1: higher along with this global reopening and higher inflation for 559 00:29:56,600 --> 00:30:15,200 Speaker 1: the remainder of the year. Okay, so Zach, what are 560 00:30:15,240 --> 00:30:18,760 Speaker 1: you thinking of most in terms of US policy going 561 00:30:18,840 --> 00:30:22,680 Speaker 1: forward or potential legislation. What are you focused on, And 562 00:30:22,840 --> 00:30:26,080 Speaker 1: especially if there's something where you think the market is 563 00:30:26,120 --> 00:30:32,320 Speaker 1: really missing something or under pricing something that there's potential for, 564 00:30:32,560 --> 00:30:35,239 Speaker 1: say later in the year, that's a great question. I 565 00:30:35,280 --> 00:30:39,200 Speaker 1: think with the packages that the Biden administration is introduced, 566 00:30:39,240 --> 00:30:43,480 Speaker 1: there's almost four trillion and perhaps additional spending out there 567 00:30:43,520 --> 00:30:45,720 Speaker 1: with you know, at least a chunk of that offset 568 00:30:45,760 --> 00:30:47,960 Speaker 1: by tax hikes. So I think if if I had 569 00:30:48,000 --> 00:30:52,680 Speaker 1: to guess what might be miss priced or hasn't gotten 570 00:30:52,720 --> 00:30:55,440 Speaker 1: as much focused that that could disrupt markets are our 571 00:30:55,560 --> 00:30:58,400 Speaker 1: tax hikes if it becomes clear that that those are 572 00:30:58,400 --> 00:31:01,200 Speaker 1: going to get enacted. You mean, equity markets are still 573 00:31:01,240 --> 00:31:03,920 Speaker 1: near all time highs. They've come off a bit recently, 574 00:31:03,960 --> 00:31:06,480 Speaker 1: but I don't think the tax hike narrative has really 575 00:31:06,520 --> 00:31:09,640 Speaker 1: taken hold yet. So that's a risk. And just with 576 00:31:09,720 --> 00:31:12,760 Speaker 1: respect to additional spending broadly and what it means for 577 00:31:12,800 --> 00:31:16,000 Speaker 1: the treasury market, our economists don't think that both of 578 00:31:16,000 --> 00:31:19,680 Speaker 1: these packages and full can get past, but something maybe 579 00:31:19,680 --> 00:31:22,760 Speaker 1: on the magnitude of one to two trillion could get past, 580 00:31:22,920 --> 00:31:26,760 Speaker 1: and just considering bills like the ones that they're considering 581 00:31:26,760 --> 00:31:28,600 Speaker 1: for the second half of this year. They're much different 582 00:31:28,600 --> 00:31:31,640 Speaker 1: than these cod relief bills that were depths of finance, 583 00:31:31,720 --> 00:31:33,760 Speaker 1: and we're cash out the door very quickly, so the 584 00:31:33,800 --> 00:31:37,320 Speaker 1: impact on the economy and importantly Treasury assurance will be 585 00:31:37,440 --> 00:31:40,520 Speaker 1: much more minimal, even if we do get another one 586 00:31:40,560 --> 00:31:42,520 Speaker 1: to two trillion this year. So that's something that we've 587 00:31:42,520 --> 00:31:44,880 Speaker 1: been making sure people focus on. You look at the 588 00:31:44,880 --> 00:31:47,080 Speaker 1: headline number and it looks similar to what we got 589 00:31:47,120 --> 00:31:50,720 Speaker 1: with the American Rescue Plan, but the economic impact and 590 00:31:50,720 --> 00:31:52,719 Speaker 1: the depths of impact are going to be much different, 591 00:31:52,840 --> 00:31:56,600 Speaker 1: much more prolonged, and even partially offset by tax hikes, 592 00:31:56,640 --> 00:31:59,080 Speaker 1: So really a whole different ball game, and not as 593 00:31:59,520 --> 00:32:01,760 Speaker 1: impact it's full in the near term, more of a 594 00:32:01,840 --> 00:32:05,160 Speaker 1: longer term story with any of those types of legislation, Zach, 595 00:32:05,200 --> 00:32:08,080 Speaker 1: I think that is a wise thing for your clients 596 00:32:08,120 --> 00:32:11,320 Speaker 1: to focus on. I'll tell you what our listeners focus on, though, 597 00:32:11,320 --> 00:32:14,280 Speaker 1: and that's the craziest things we've seen in markets this week. 598 00:32:14,680 --> 00:32:18,440 Speaker 1: Tiden up your straight jackets. It's time for the craziest 599 00:32:18,480 --> 00:32:22,000 Speaker 1: things we saw in markets this week. I know you 600 00:32:22,040 --> 00:32:24,640 Speaker 1: can't prepared. I know you can't prepared, Joanna. I have 601 00:32:24,760 --> 00:32:28,200 Speaker 1: high hopes for you in this this segment. I know you. 602 00:32:28,600 --> 00:32:30,840 Speaker 1: I have a feeling you can you can spot a good, crazy, 603 00:32:30,960 --> 00:32:33,360 Speaker 1: crazy thing when you see it. So let's let's start 604 00:32:33,360 --> 00:32:35,480 Speaker 1: with you. What's the craziest thing you saw in markets? 605 00:32:35,720 --> 00:32:38,440 Speaker 1: I have to say, I mean doing crypto stuff. I'm 606 00:32:38,440 --> 00:32:41,800 Speaker 1: gonna go with the the easiest one here, which is 607 00:32:42,280 --> 00:32:46,600 Speaker 1: Elon Musk saying that Tesla isn't gonna take bitcoin anymore 608 00:32:46,720 --> 00:32:49,800 Speaker 1: and saying he's concerned about the energy usage. I mean, 609 00:32:50,560 --> 00:32:53,920 Speaker 1: just a few weeks ago when Cathy Woods are put 610 00:32:53,960 --> 00:32:58,280 Speaker 1: out a paper saying that bitcoin actually could help with 611 00:32:58,280 --> 00:33:02,200 Speaker 1: renewable energy, must responded to a threat about it, saying 612 00:33:02,240 --> 00:33:05,640 Speaker 1: true about bitcoin being good for this stuff. So he's 613 00:33:06,000 --> 00:33:07,760 Speaker 1: we know he's been watching it. But all of a 614 00:33:07,800 --> 00:33:14,120 Speaker 1: sudden something happened, and you know, Bitcoin tanked somewhat, and 615 00:33:14,320 --> 00:33:17,960 Speaker 1: the rest of crypto tanked. Even Dogecoin tanks, though the 616 00:33:18,880 --> 00:33:22,800 Speaker 1: one of the co creators did make a case to 617 00:33:23,360 --> 00:33:27,960 Speaker 1: Ellen to take dogecoin, and Ellen has told people about 618 00:33:27,960 --> 00:33:32,760 Speaker 1: whether Tesla should take dogecoin. Um, I think Tesla's stock 619 00:33:32,880 --> 00:33:36,400 Speaker 1: may have risen actually after this announcement, which is kind 620 00:33:36,440 --> 00:33:40,080 Speaker 1: of funny too, but that that was just pretty crazy. 621 00:33:40,120 --> 00:33:44,360 Speaker 1: I mean, Crypto covering this stuff. I feel like it's 622 00:33:44,400 --> 00:33:48,000 Speaker 1: it's sort of like the Trump administration where you think, wow, things, 623 00:33:48,560 --> 00:33:50,960 Speaker 1: this is about as amazing as it can get, and 624 00:33:50,960 --> 00:33:54,960 Speaker 1: then something even more amazing happens. You know. I feel 625 00:33:55,000 --> 00:34:00,000 Speaker 1: like this was definitely a pretty interesting twenty four hours. 626 00:34:00,160 --> 00:34:02,960 Speaker 1: I agree, that's a great one. Elon Musk is sort 627 00:34:02,960 --> 00:34:04,920 Speaker 1: of in the Crazy Things Hall of Fame. I think 628 00:34:04,960 --> 00:34:07,160 Speaker 1: I think we get him in there about once a week. 629 00:34:07,640 --> 00:34:11,879 Speaker 1: But yeah, it's just amazing that he's after investing how 630 00:34:12,360 --> 00:34:16,240 Speaker 1: over a billion of Tesla's uh at one point five billion, 631 00:34:16,440 --> 00:34:20,000 Speaker 1: he then later found out about the energy issues. I 632 00:34:20,000 --> 00:34:23,960 Speaker 1: don't know, it sounds he could sell a lot of 633 00:34:23,960 --> 00:34:26,600 Speaker 1: Tesla batteries. I think to these minors. Maybe that's where 634 00:34:26,600 --> 00:34:31,080 Speaker 1: this Yeah, well but you see, like there are so 635 00:34:31,120 --> 00:34:33,359 Speaker 1: many people who just have all his faith in him, 636 00:34:33,400 --> 00:34:37,080 Speaker 1: Like you look at the memes online, there's like him 637 00:34:37,200 --> 00:34:41,319 Speaker 1: as a saint protecting the baby doge and stuff. I mean, 638 00:34:41,480 --> 00:34:45,160 Speaker 1: it's really incredible. Yeah, there's a lot of role within Crypto, 639 00:34:45,239 --> 00:34:48,240 Speaker 1: but Ellen has definitely made it a lot more interesting, 640 00:34:48,320 --> 00:34:51,520 Speaker 1: but not not not even to mention the SNL appearance. This. 641 00:34:51,680 --> 00:34:53,920 Speaker 1: I know you were, you were watching the SNL appearance. 642 00:34:54,120 --> 00:34:57,120 Speaker 1: I was talking to Jenny Paris, one writers, and I 643 00:34:57,160 --> 00:35:00,080 Speaker 1: was like, I don't want to be the one to 644 00:35:00,320 --> 00:35:02,799 Speaker 1: suggest it, but I feel like some reporters should watch 645 00:35:02,920 --> 00:35:05,680 Speaker 1: SNL and write about the reaction. She said, don't worry, 646 00:35:05,840 --> 00:35:10,719 Speaker 1: Joanna is already on it. I said, okay, that's a 647 00:35:10,760 --> 00:35:13,920 Speaker 1: more reasonable time zone for for that sort of coverage 648 00:35:13,920 --> 00:35:17,600 Speaker 1: for you. Yes, it was my morning. Saturday Night Live 649 00:35:17,760 --> 00:35:19,600 Speaker 1: is not the time you want me writing or editing. 650 00:35:19,760 --> 00:35:22,000 Speaker 1: I'll just put I'll just leave it at that. I'll 651 00:35:22,080 --> 00:35:24,479 Speaker 1: leave it at that. Not my best work, but Zach, 652 00:35:24,760 --> 00:35:26,600 Speaker 1: Joanna's had a pretty high bar there. I don't I 653 00:35:26,600 --> 00:35:32,440 Speaker 1: don't know, can you top the Elon musk Uh crypto extravaganza. 654 00:35:32,880 --> 00:35:35,000 Speaker 1: I'm gonna give it my best shot. Here was something 655 00:35:35,080 --> 00:35:38,440 Speaker 1: that's near and dear to home. I didn't see this personally, 656 00:35:38,520 --> 00:35:41,719 Speaker 1: but I saw an article highlighting that gas prices had 657 00:35:41,840 --> 00:35:46,160 Speaker 1: risen to six dollars and cents in certain gas stations 658 00:35:46,280 --> 00:35:50,719 Speaker 1: here in North Carolina with the Colonial Pipeline being shut down. 659 00:35:50,840 --> 00:35:54,040 Speaker 1: And you know, if we want to talk inflation, if 660 00:35:54,080 --> 00:35:56,759 Speaker 1: you got six gas. I'd say that's that's going to 661 00:35:56,840 --> 00:36:00,040 Speaker 1: give another transitory pop to the to the headline cp I. 662 00:36:00,840 --> 00:36:03,799 Speaker 1: But I think things, hopefully are are getting sorted out. 663 00:36:03,880 --> 00:36:06,279 Speaker 1: And you know, the lines at gas stations have been 664 00:36:07,040 --> 00:36:09,320 Speaker 1: crazy here. I think we're supposed to be. You know, 665 00:36:09,480 --> 00:36:11,960 Speaker 1: the pipeline is supposed to open back up this afternoon, 666 00:36:12,040 --> 00:36:14,560 Speaker 1: so hopefully that gets cleared up. But yeah, I got 667 00:36:14,600 --> 00:36:16,719 Speaker 1: a little got a little crazy here for twenty four 668 00:36:16,760 --> 00:36:19,440 Speaker 1: to forty eight hours. Unfortunately, that's right, I forgot. I 669 00:36:19,560 --> 00:36:21,520 Speaker 1: forgot you were in North Carolina. Have you been like 670 00:36:21,600 --> 00:36:25,960 Speaker 1: filling up your tupper wear with with gasoline? Some people have. 671 00:36:26,320 --> 00:36:29,920 Speaker 1: I have not. I'm actually fortunate enough to have my 672 00:36:30,080 --> 00:36:34,680 Speaker 1: old Cadillac in the driveway with a gallon gallon tank 673 00:36:34,800 --> 00:36:38,040 Speaker 1: that I I recently filled up before all this, So 674 00:36:38,120 --> 00:36:40,640 Speaker 1: I think that's gonna be my my reserves for this. 675 00:36:40,760 --> 00:36:43,399 Speaker 1: Hopefully I don't need to tap into it, but I've 676 00:36:43,440 --> 00:36:45,359 Speaker 1: got it there if I need it. Luckily, you've got 677 00:36:45,400 --> 00:36:48,120 Speaker 1: your own strategic petroleum reserve in the in the in 678 00:36:48,160 --> 00:36:51,080 Speaker 1: the drive exactly. That's pretty good. We talk about a 679 00:36:51,160 --> 00:36:53,960 Speaker 1: black swan, uh if ever there was. I mean, when 680 00:36:54,040 --> 00:36:55,440 Speaker 1: you think of how much work. It could have been 681 00:36:55,480 --> 00:36:57,480 Speaker 1: if they shut that thing down permanently. I mean, we'd 682 00:36:57,520 --> 00:37:00,239 Speaker 1: be in kind of mad Max territory right now. Yeah, 683 00:37:00,560 --> 00:37:03,520 Speaker 1: we sure would. So hopefully that's all cleared up. So 684 00:37:03,920 --> 00:37:07,000 Speaker 1: everyone update their north in Nanny or McCaffrey, I don't 685 00:37:07,000 --> 00:37:09,359 Speaker 1: know whichever. Maybe you need something a little more heavy 686 00:37:09,440 --> 00:37:12,600 Speaker 1: duty for the pipeline systems, I don't know. Alright, Well, 687 00:37:12,640 --> 00:37:15,239 Speaker 1: those are both good. It's certainly the crazy things keep 688 00:37:15,320 --> 00:37:18,040 Speaker 1: on giving. In the past year and year. We we uh, 689 00:37:18,160 --> 00:37:20,000 Speaker 1: we have a lot of talk about I want to 690 00:37:20,040 --> 00:37:23,279 Speaker 1: talk about um for mine. You know, we've heard so 691 00:37:23,480 --> 00:37:27,279 Speaker 1: many different people talk about the ways to trade the reopening, 692 00:37:27,640 --> 00:37:29,840 Speaker 1: especially now in Europe as it seems like that was 693 00:37:30,360 --> 00:37:32,880 Speaker 1: a little bit behind the US and as now as 694 00:37:32,960 --> 00:37:38,480 Speaker 1: picking up steam. This, however, is one of my favorite trades, uh, 695 00:37:38,880 --> 00:37:41,680 Speaker 1: for the European reopening. Uh. This is courtesy of a 696 00:37:41,920 --> 00:37:44,680 Speaker 1: charted the Hour on Bloomberg, a little feature we have 697 00:37:45,080 --> 00:37:49,360 Speaker 1: by Joe Easton in London, and it's playing the reopening 698 00:37:50,000 --> 00:37:54,040 Speaker 1: based on dirty laundry. And I love alternative data sets 699 00:37:54,160 --> 00:37:56,160 Speaker 1: like this, like when you look at the volume of 700 00:37:56,280 --> 00:38:00,239 Speaker 1: trash somewhere or I don't know, so he's saying, uh, 701 00:38:00,560 --> 00:38:04,920 Speaker 1: there's a portfolio manager at Rathbone Brothers in England who 702 00:38:05,080 --> 00:38:07,640 Speaker 1: was saying, there's gonna be a lot of dirty laundry 703 00:38:08,360 --> 00:38:11,759 Speaker 1: as the economy reopens. When you think of restaurant, the napkins, 704 00:38:12,000 --> 00:38:17,760 Speaker 1: the linens. So they're they're buying our advising being bullish 705 00:38:17,960 --> 00:38:21,960 Speaker 1: on a company called Johnson Services Group which launders all 706 00:38:22,160 --> 00:38:26,160 Speaker 1: the linens and the napkins and the chef outfits. So 707 00:38:26,560 --> 00:38:29,839 Speaker 1: I like that one. I like the dirty laundry alternative 708 00:38:29,920 --> 00:38:33,440 Speaker 1: data set. I gotta say, if if dirty laundry is 709 00:38:33,480 --> 00:38:36,080 Speaker 1: a sign of a booming economy, it really is the 710 00:38:36,320 --> 00:38:39,040 Speaker 1: roaring twenties in my house right now, I will tell 711 00:38:39,080 --> 00:38:43,680 Speaker 1: you that. So wow. So even came with a stock 712 00:38:43,760 --> 00:38:48,040 Speaker 1: tip there. That's exciting. Yes, yes, yeah, that's interesting. Not me, 713 00:38:48,280 --> 00:38:51,360 Speaker 1: but this is this is courtesy of Alexandra Jackson of 714 00:38:51,760 --> 00:38:54,840 Speaker 1: Rathbone Brothers says her her fund is bought shares of 715 00:38:54,960 --> 00:38:57,480 Speaker 1: of Johnson's Services Group. And I dig it, I dig it. 716 00:38:57,520 --> 00:39:00,319 Speaker 1: I think this was a good, good episode for crazy things. 717 00:39:00,360 --> 00:39:02,239 Speaker 1: I think we all we all brought our a game. 718 00:39:02,360 --> 00:39:07,879 Speaker 1: I'm gonna reward us all first place. Who a three 719 00:39:07,960 --> 00:39:10,400 Speaker 1: a three way time? It alright, well, I think that 720 00:39:10,560 --> 00:39:13,000 Speaker 1: is all the time. We have Joanna Ostnger reporting in 721 00:39:13,120 --> 00:39:17,080 Speaker 1: from Singapore with the fresh report on Baby Shark Live. 722 00:39:17,480 --> 00:39:19,839 Speaker 1: Great to catch up with you and hope to talk 723 00:39:19,840 --> 00:39:23,440 Speaker 1: to you again soon. Zach Griffiths of well Spargo. Always 724 00:39:23,440 --> 00:39:25,640 Speaker 1: a pleasure to catch up with you. Yes, very fun. 725 00:39:25,760 --> 00:39:28,000 Speaker 1: Thanks for having me, and that's it. We'll see you 726 00:39:28,080 --> 00:39:35,520 Speaker 1: all next week. What Goes Up We'll be back next week. 727 00:39:35,800 --> 00:39:37,840 Speaker 1: Until then, you can find us on the Bloomberg Terminal, 728 00:39:37,920 --> 00:39:41,680 Speaker 1: website and app or wherever you get your podcast. We'd 729 00:39:41,719 --> 00:39:43,520 Speaker 1: really love it if you took the time to rate 730 00:39:43,600 --> 00:39:46,800 Speaker 1: and review the show on Apple Podcasts so more listeners 731 00:39:46,840 --> 00:39:49,320 Speaker 1: can find us. And you can find us on Twitter 732 00:39:49,760 --> 00:39:54,680 Speaker 1: follow me at Reaganonymous. Joanna Ostinger is at ossenger. J 733 00:39:55,400 --> 00:39:59,560 Speaker 1: can also follow Bloomberg Podcasts at podcast I. Thank you 734 00:39:59,600 --> 00:40:01,560 Speaker 1: to Charlie Pall, the Bloomberg Radio and the voice of 735 00:40:01,600 --> 00:40:04,480 Speaker 1: the New York City Subway System. What Goes Up is 736 00:40:04,520 --> 00:40:07,840 Speaker 1: produced by Laura Carlson. The head of Bloomberg Podcasts is 737 00:40:07,920 --> 00:40:11,120 Speaker 1: Francesco Levy. Thanks for listening. See you next time.