Speaker 1: Hello, and welcome to What Goes Up a Bloomberg Weekly
Speaker 1: Markets podcast. I'm Mike Reagan, a senior editor on the
Speaker 1: market scheme at Bloomberg, and I'm Emily Barrett, and markets
Speaker 1: reporter filling in for Pontec this week, who was on
Speaker 1: vacation at this week. On the show, we'll talk about
Speaker 1: how soothing words from the Federal Reserve Chairman Jerome Palell
Speaker 1: sent the SMP five hundred above three thousand for the
Speaker 1: first time, and this record comes despite a rather dismal
Speaker 1: outlook for corporate earnings. Does profit growth even matter when
Speaker 1: the Fed sounds like it's ready to cut rates? Also,
Speaker 1: remember the Winklevoss twins, the bitcoin billionaires and famous nemesses
Speaker 1: of Facebook's Mark Zuckerberg. We'll catch up with what they've
Speaker 1: been up to with a reporter who spent some time
Speaker 1: with them this week. And don't worry, even though Sarah's off,
Speaker 1: We'll continue the tradition of exchanging the craziest things we
Speaker 1: saw in markets. Of course, we would not give up
Speaker 1: that tradition regardless of vacation schedules. Well, we've got some
Speaker 1: great guests here to walk us through the markets this week.
Speaker 1: Emily but I need to ask you grew up in Australia.
Speaker 1: Did anyone listen to Bruce Springstey in Australia or was
Speaker 1: he considered like the poor Man's Men at work? Well,
Speaker 1: you know, between that and what was it Minato, that
Speaker 1: was really where we focused. But Bruce Springsteen, he had
Speaker 1: a little name little definitely. Well, I've got one of
Speaker 1: his classics, Kitty's Back, the song Kitty's Back in my head.
Speaker 1: But instead of Kitty, I keep hearing the name Tina,
Speaker 1: Tina's Back. And that's because of that famous acronym. You know,
Speaker 1: if you're a stock market pundent, you really need to
Speaker 1: coin an acronym to make a name for yourself. And Tina,
Speaker 1: of course is there is no alternative, which I feel
Speaker 1: like is back this week with all this focus on
Speaker 1: the Federal Reserve and this hypothetical interest rate cut will
Speaker 1: get so hopefully our guests here can shed some light
Speaker 1: on that. Joining the show first off, Bloomberg columnist former
Speaker 1: Big Han show at the Financial Times. I think, um,
Speaker 1: London and England's biggest Red Sox fan there is, is that? Right?
Speaker 1: John Author's welcome to the show. Possibly, thank you very much.
Speaker 1: I thought Tina was went back to Margaret Thatching ran
Speaker 1: my home country throughout my entire youth. Okay, the tina's
Speaker 1: in the eye of the beholders though. John the Red
Speaker 1: Sox just played the first baseball game MLB game in London.
Speaker 1: There were like thirty some runs scored. What happened there
Speaker 1: was the game before a game was it was that
Speaker 1: the metrics system of scoring runs in London what well?
Speaker 1: My best theory. Obviously, it wasn't a huge ground, although
Speaker 1: the dimensions weren't particularly weird. There was a big final
Speaker 1: territory which you would have thought would have diminished runs.
Speaker 1: It would have been easier to catch foul pop ups.
Speaker 1: My best guess is that the organizers followed their instructions
Speaker 1: a little too scrupulously, with the result that the the
Speaker 1: area blacked up behind the pitchers um was bigger and
Speaker 1: blacker than it is in the average um MLB stadium,
Speaker 1: with the result that the the hitters really could see
Speaker 1: the ball much more clearly than they were accustomed to.
Speaker 1: That's my best Yes, it certainly looked much more prominent
Speaker 1: and blacker as far as I could see then it
Speaker 1: normally does in a in a Major League park. That's
Speaker 1: a great theory. I I buy it completely. And John's analysis.
Speaker 1: John's market analysis is even better than his baseball analysis.
Speaker 1: We'll get to We'll get to that soon. But also
Speaker 1: joining the show is another reporter from our markets team,
Speaker 1: Veldana Hirich. She covers all sorts of things, stocks, a
Speaker 1: lot of bitcoin. She's our reporter who who talked to
Speaker 1: the Winklevoss Twins this week, and she's also done a
Speaker 1: lot of reporting on the outlook for earning. So Voldana,
Speaker 1: welcome to the show. Thank you, thanks for having me.
Speaker 1: Absolutely great of you. Now, John, let's let's start with you. Um. Obviously,
Speaker 1: the entire equity markets fixation has returned to the Federal Reserve,
Speaker 1: this notion that we're going to get an interest rate cut. Um,
Speaker 1: and you had an interesting column out recently and basically
Speaker 1: discussing the way you can't really look at equity valuations
Speaker 1: in isolation. You all have to also consider the level
Speaker 1: of interest Race, and you, especially you, you looked at
Speaker 1: the famous Schiller cape ratio, which values stocks based on
Speaker 1: trailing ten years earnings rather than just uh one year's
Speaker 1: forward or backwards. So tell us how you're thinking about
Speaker 1: the equity market now, particularly with these really elevated UH
Speaker 1: Schiller Cape valuations as they're called UH. Juxtaposed to this,
Speaker 1: this idea that rates are are going to be rock
Speaker 1: bottom going forward longer than we perhaps thought at the
Speaker 1: beginning of the year. Well thanks, Yes, I am in
Speaker 1: the very long term, very long suffering supporter of the
Speaker 1: Schiller Cape. I do actually think it makes a lot
Speaker 1: of sense, even though it has suggested that the markets
Speaker 1: are very expensive for a very long time, even as
Speaker 1: the markets have continued to rise. Now, what is important,
Speaker 1: I don't think anybody has ever said about anything that
Speaker 1: it is a silver bullet. Plenty of people make the
Speaker 1: point correctly that the CAPE isn't a silver bullet. Schiller himself,
Speaker 1: on his website presents his calculation for CAPE, along with
Speaker 1: his measure of long term interest rates these days is
Speaker 1: a simple tenure treasury yield, and he does some very
Speaker 1: clever historical numbers to come up with long term interest
Speaker 1: rates that cohered in eighteen seventy um. He's got continuous
Speaker 1: data series for both ever since then. What I think
Speaker 1: is important about the CAPE is that many people have
Speaker 1: said it we can ignore it, and their argument for
Speaker 1: saying that they can ignore it is that there was
Speaker 1: this epic earnings recession in two thousand and seven, two
Speaker 1: and nine, which means that the the denominator the earnings
Speaker 1: is artificially reduced, meaning that the cape looks artificially high.
Speaker 1: So sorry, John, what's brought us back to this idea
Speaker 1: that this is now a really good measure to consider
Speaker 1: what's brought the renaissance? Now? I think, well, the Renaissance
Speaker 1: in my mind, I'm trying to I'm trying to spark
Speaker 1: a renaissance. Yeah, Johnny created the Renaissance. Yes, exactly as
Speaker 1: we say Renaissance and Renaissance Australian English upbringings. They have
Speaker 1: terrible effects on your on your fronance station. Um. Basically,
Speaker 1: the big criticism has been that the ten years of
Speaker 1: earnings that you are comparing prices to include earnings from
Speaker 1: the Great earnings recession that accompanied the Lehman Crisis, the
Speaker 1: Great Recession, and therefore the argument was that once those
Speaker 1: numbers started to drop out of the ten year number,
Speaker 1: you would see the cape begin to reduce, because the
Speaker 1: earnings rose a lot for no good reason other than
Speaker 1: that those numbers were dropping out from ten years ago.
Speaker 1: Now we are are now just past the point past
Speaker 1: just we've just passed the tenth anniversary of the bottom
Speaker 1: of that earnings recession. So all the earnings as we
Speaker 1: went from top to bottom have now dropped out of
Speaker 1: the calculation and low and behold, the CAPE is actually
Speaker 1: higher than it was at the tenth anniversary of the
Speaker 1: peak before the recession started. Also, quite remarkably, it has
Speaker 1: actually risen more over that time than the prospective pe has.
Speaker 1: So the idea that this would show itself to be
Speaker 1: a pointless indicator that was obviously not relevant has actually
Speaker 1: been disproved. Now. I don't think that should be too
Speaker 1: surprising if you stop to think about it, because earnings
Speaker 1: were artificially inflated by the by artificially cheap credit before
Speaker 1: the crash. Everybody knows about kitchen sinking by companies, They
Speaker 1: were artificially low at the bottom, and then the recovery
Speaker 1: again involved artificially manipulating the Cruel's accounting to make them
Speaker 1: look good over ten years. It's actually quite difficult to
Speaker 1: manipulate a Cruels accounting. You really got to create commit
Speaker 1: pretty serious fraud for the ten year number not to
Speaker 1: be a fairly good number. And over ten years, basically
Speaker 1: the trend has been remarkably steady. There was the biggest
Speaker 1: blip we've had since the war for the earnings recession,
Speaker 1: but beyond that, the trend has continued, absolutely enforced. That's
Speaker 1: what people could tell when they were making their numbers.
Speaker 1: Does that mean that the stock market should not be
Speaker 1: this high? No, because interest rates, as Chilla himself and
Speaker 1: everybody else are knowledges, are very important to the valuation
Speaker 1: you put on stocks. Does it mean, however, that without that,
Speaker 1: if interest rates did what everybody was expecting until a
Speaker 1: few months ago and rise, plainly, the cape is a
Speaker 1: clear indicator that stocks have a long way to fall
Speaker 1: should rates rise. We are utterly dependent at this point,
Speaker 1: particularly with anxiety about where endings are going in the future.
Speaker 1: We are utterly dependent on low interest rates. And you know,
Speaker 1: you make a great point there in that we came
Speaker 1: into this year everyone expecting higher rates all year, higher
Speaker 1: rates from the Fed. The knock on effect of higher
Speaker 1: treasury rates, Emily, is everyone assuming now that it's it's
Speaker 1: lower forever? Now? You know, you talked to a lot
Speaker 1: of fixed income by bond market people. Is there a
Speaker 1: consensus towards that way, and is there a danger that whoops,
Speaker 1: they they the consensus might be wrong again. Yeah, it's
Speaker 1: really hard to see at this point anyone who actually
Speaker 1: thinks that a hike is coming any time really, for
Speaker 1: as far as the Ken see. I mean, it seems
Speaker 1: like the debate we're now having, which is actually different
Speaker 1: to what we had yesterday, is whether or not we
Speaker 1: get a fifty basis point or a twenty five basis
Speaker 1: point cut, rather than whether the Fed will actually cut
Speaker 1: rates at all in July. So we it seems as
Speaker 1: if you know, market expectations are ramping back up again.
Speaker 1: We've got We've definitely got that fifty basis points back
Speaker 1: on the table. It's just a matter of whether or
Speaker 1: not the Fed takes that kind of action. And I
Speaker 1: guess in a way that the rates outlook goes hand
Speaker 1: in hand with the earnings outlook, which is l DONA
Speaker 1: is pretty dismal right now, um, along with some of
Speaker 1: the softer economic data we've seen. So you've done a
Speaker 1: lot of reporting on what we can expect for the
Speaker 1: upcom coming earning season. I talked to a lot of investors,
Speaker 1: looked at the data. What are you expecting basically, and
Speaker 1: how our investors sort of bracing for this earning season. Yeah, well,
Speaker 1: like you mentioned, there is just so much uncertainty out there,
Speaker 1: which has been around for all year basically when it
Speaker 1: comes to trade and higher dollar and higher input costs
Speaker 1: and all those things. But expectations for the second quarter
Speaker 1: are negative to negative three percent in terms of earnings
Speaker 1: and flat for the third quarter, and then we're supposed
Speaker 1: to see a pick up again and later in the
Speaker 1: year in the fourth quarter. But out of all the
Speaker 1: companies that have been revising UM guidance either higher or lower,
Speaker 1: are actually revising lower. And we had Gina Martin Adams
Speaker 1: of Bloomberg Intelligence, who I know is um has been
Speaker 1: on the show before. She said, um two que expectations
Speaker 1: companies are cutting them to the bone, and when it
Speaker 1: comes to forecasts, they might not actually be cutting enough.
Speaker 1: So how much Filana is the actual macro backdrop factoring
Speaker 1: into this, I mean a trade concerns, the things that
Speaker 1: people are assigning when they're talking about lower expectations. Does
Speaker 1: FED policy playing into kind of any hopes there of
Speaker 1: improvemental Yeah, well, we'll see what happens now that we
Speaker 1: have a bit more clarity from what we can expect
Speaker 1: from the FED, but certainly trade has played a part
Speaker 1: in us We we've seen a lot of reports on
Speaker 1: companies that have been citing trade. We had B A.
Speaker 1: S F earlier in the week saying it's it's due
Speaker 1: to trade that we have to cut our profit um
Speaker 1: forecasts by thirty percent. So it really it does seem
Speaker 1: to be making its way into what companies are saying. Yeah,
Speaker 1: that B A. S F was a lot bigger cut
Speaker 1: than than I think people were expecting. John, what do
Speaker 1: you think is this? Is this a risky setup that
Speaker 1: we're in right now going into this sarning season, or
Speaker 1: I wonder if it with rates so low, it'll be
Speaker 1: the type of situation where, uh, you might see some
Speaker 1: rotation in and out of different sectors and companies that
Speaker 1: are at risk uh to trade, but not really a
Speaker 1: full on abandonment of the stock market as a whole.
Speaker 1: It's difficult to see how I mean, cards on the table.
Speaker 1: I've I've been a long term bear for quite a while.
Speaker 1: I'm very I find the current valuations very hard to justify.
Speaker 1: In the short term. It's difficult to see how anything
Speaker 1: too bad can happen to the stock market. I think
Speaker 1: the likelihood that companies that managed to play the earnings
Speaker 1: management game well and deliver a beat in heavily and
Speaker 1: inverted commas gets rewarded with much of a pop in
Speaker 1: the share price that day, that that's pretty low, And
Speaker 1: I suspect anybody with a truly bad surprise is really
Speaker 1: going to get punished. That's been, in fact pattern we've
Speaker 1: seen in quite a number of earning season seasons over
Speaker 1: the last year or two. But while we have a
Speaker 1: situation where it looks as though the FED is heading
Speaker 1: lower and people are still merrily discounting four or five
Speaker 1: rate cuts between now and the end of next year,
Speaker 1: which is what they are, and while the ECB appears
Speaker 1: to be locked down, and obviously the poor old Bank
Speaker 1: of England has to contend with the prospect of a
Speaker 1: no deal Brexit and really can't do anything hawkish, whether
Speaker 1: it wants to or not. While we're in that minds
Speaker 1: of locked forced dubbish stance, it's difficult to see how
Speaker 1: we can get a major market break. We've had major
Speaker 1: market brakes. Well, we had two major market breakes last year,
Speaker 1: both of which one one of which was prompted by
Speaker 1: a very sharp rise in the bond market, and one
Speaker 1: was prompted by a very sharp rise in perceptions of
Speaker 1: Fed hawkishness. I doubt that is what we need in
Speaker 1: this this day and age to get a market break,
Speaker 1: and at the moment that looks unlikely. So does this
Speaker 1: put the Tina point front and center? Then that we're
Speaker 1: not really getting anywhere away from the US at this
Speaker 1: point is does anything globally in terms of emerging markets
Speaker 1: start to look more attractive at that point or in general,
Speaker 1: if you look back to seen, which was one of
Speaker 1: the you know, the most least volatile, calmest years if
Speaker 1: you go by sharp ratios, it was possibly the best
Speaker 1: year for world stock markets ever because it was so
Speaker 1: calm on the way upwards. That was a year when
Speaker 1: the US did actually lose to the rest of the
Speaker 1: world and emerging markets did somewhat better than developed and
Speaker 1: logically you would expect something similar to that. Again, I
Speaker 1: suppose the one wild card there is also trade. If
Speaker 1: what's bad for China on trade will also be bad
Speaker 1: for a lot of the emerging world. But in essence,
Speaker 1: if we are looking at a weakening dollar and lower
Speaker 1: US rates, that relieves pressure on some very cheap emerging markets. Interesting,
Speaker 1: they might actually be the performer in this environment. Logically
Speaker 1: they really ought to be. Now you mentioned John being
Speaker 1: a long term bear. Looking at the fun flows this year,
Speaker 1: I don't think you're a loan. I mean there's been
Speaker 1: this exodus of cash from equity funds, a massive impouring
Speaker 1: in the in the fixed income funds. Phildano, you talked
Speaker 1: to a lot of investors every day. I mean this,
Speaker 1: do you get sort of a consensus? Are people UM
Speaker 1: leaning towards the bearers side even though we keep seeing
Speaker 1: these these new highs or you know what are the
Speaker 1: people you you talked to really focusing on right now? Yeah,
Speaker 1: they certainly are. UM. If you look at all of
Speaker 1: the strategies that that Bloomberg tracks, Um, the majority of
Speaker 1: them are saying that the SMP will end the year
Speaker 1: at a lower point than where we are. Where we
Speaker 1: are now, and I mean we did see the SMP
Speaker 1: across the three thousand mark for the very first time
Speaker 1: this week, and um, it's again going back to actually
Speaker 1: a few factors. One the uncertainty and trade is what
Speaker 1: a lot of people are citing. So even after we
Speaker 1: had the trade truths from UM from the g twenty meeting,
Speaker 1: we strategies at RBC coming out and saying this doesn't
Speaker 1: really change the game for us. It's it's we're reiterating
Speaker 1: our SMP target of UM similarly at a few other shops.
Speaker 1: And then the other part of it is that we're
Speaker 1: up for the year. Half halfway through a year, we're up.
Speaker 1: That's pretty good. So it's sort of a conundrum where
Speaker 1: where investors are thinking about, well, what happens next, what
Speaker 1: happens for the next six months, considering that we've been
Speaker 1: up so much. I think I think a lot of
Speaker 1: that is the base effect that we had a screeching
Speaker 1: correction that came to a that came to to finale
Speaker 1: on Christmas Eve, so once we're still not much above
Speaker 1: the peak from October. It's it's just an example of
Speaker 1: the willow willow the whisper. If you can tactically time
Speaker 1: market moves like this, you would be very very rich, indeed,
Speaker 1: But if you're on a on a more realistic way
Speaker 1: where we're not just looking at the calendar this this
Speaker 1: is an unusual point where the calendar year really makes
Speaker 1: the returns, really flatters the returns, and we're flat for
Speaker 1: the past eighteen months, right, Ever since that melt up
Speaker 1: at the beginning of two thousand eighteen, we're not much
Speaker 1: higher than that, So I guess a correction can occur
Speaker 1: over time as well as price more or less. I'm
Speaker 1: thinking about that comment that you made about conundrum the Vilvanna.
Speaker 1: It does raise sort of concerns about, you know, where
Speaker 1: do we start to get worried about where surprises are headed?
Speaker 1: Right right? But I guess that's something in the dead
Speaker 1: markets that people are thinking about all the time, financial
Speaker 1: stability being a part of the Fed mandate. Well, I
Speaker 1: had to mention one of the one of the maddest,
Speaker 1: one of the candidates I considered for my maddest thing
Speaker 1: I saw in the market this week is that there
Speaker 1: is there is such a thing in Europe now as
Speaker 1: a negative yielding high yielding bonds, which he is. I'm
Speaker 1: crest falling out because I worked so hard to think
Speaker 1: of spoiler spoiler alert. I've got a few where I
Speaker 1: can lend you later on. But but but but that
Speaker 1: that would be one of the that would be one
Speaker 1: sign that perhaps perhaps the the rate story has been
Speaker 1: taking the tats too far. All right, If you ask
Speaker 1: me British on the statements. I think clearly everyone is
Speaker 1: itching to get to that craziest thing they saw this week.
Speaker 1: In fact, Vildanna, my sources tell me you're you're very
Speaker 1: much a connoisseur of crazy things you've seen in markets. Okay,
Speaker 1: but first I we have to talk about the Winkle Boss,
Speaker 1: because I'm I'm fascinated with these two guys. Um. Obviously,
Speaker 1: they won a settlement against Mark Zuckerberg years ago for
Speaker 1: their role in basically creating Facebook. Then they went on
Speaker 1: to become sort of the biggest cheerleaders for bitcoin out there.
Speaker 1: They're trying to create a bitcoin ETF. What are they
Speaker 1: up to now? What's the latest in sort of the
Speaker 1: the Winkel Boss soap opera? After after your meeting with them,
Speaker 1: that's a that's a good way to predict. Um. Yeah,
Speaker 1: I met them um earlier this week. And and so
Speaker 1: again this is another interesting thing that's happening where a
Speaker 1: lot of people are saying, well, Zuckerberg came in and
Speaker 1: sort of bested them at Facebook. They were early bitcoin backers.
Speaker 1: In fact, it's been reported that they own about one
Speaker 1: percent of all the bitcoins that are out there, which
Speaker 1: is a huge sum by today's UM dollars. But then
Speaker 1: we had Facebook come out and with its own cryptocurrency,
Speaker 1: Libra project, and given how many users Facebook has and um,
Speaker 1: just how much hype there's been around Facebook's Libre project,
Speaker 1: a lot of people are asking, well, is Zuckerberg sort
Speaker 1: of swooping in again and taking the spotlight even though
Speaker 1: you guys have been around for uh in the cryptosphere
Speaker 1: for a much longer time. Yeah, is that you think
Speaker 1: there's any credence that? I mean, obviously Zuckerberg might have
Speaker 1: completely unrelayed motivations to get into crypto, But I love
Speaker 1: the conspiracy theory element of it, is that you think
Speaker 1: the tensions between those you're so so bad that Zuckerberg
Speaker 1: might be uh looking for revenge. UM. So they they
Speaker 1: spoke on a panel in New York earlier this week
Speaker 1: and the moderator asked them what would you say to
Speaker 1: Zuckerberg if you were to see him at a party,
Speaker 1: and they said, we'd say, welcome to the party. What
Speaker 1: took you so long to get here? So? And did
Speaker 1: did they have any update on the ETF is that's
Speaker 1: that's still in limbo. I guess it is in limbo
Speaker 1: for a few of the other UM companies that have
Speaker 1: been trying to issue one. I think we're supposed to
Speaker 1: be hearing from the SEC soon again, and for those,
Speaker 1: but not not for theirs. Uh, there's was rejected a
Speaker 1: little while right, right right, that was officially rejected. I
Speaker 1: think so, yeah, I am thinking this. This sounds almost
Speaker 1: like the Hunt Brothers and silver. Imagine somebody getting cornery
Speaker 1: one per cent of all the available gold or silver
Speaker 1: on the planet. There are people who really got big
Speaker 1: point is a similar kind of resources like something I
Speaker 1: think Mr t did that in the eighties and Neck
Speaker 1: the twins were the first bitcoin billionaires, are reportedly one
Speaker 1: of the first bitcoin billionaires, which is what's gained them
Speaker 1: some more fame again recently with with bitcoins renaissance renaissance, John,
Speaker 1: do you follow the crypto? We're all at all? I
Speaker 1: mean that does this? Uh? Is this another world compared
Speaker 1: with what we grew up trying to think of investment
Speaker 1: as I have a line on this. My my own
Speaker 1: opinion on this is is, I'm afraid to say, somewhat
Speaker 1: close to consensus, which is that blockchain per se might
Speaker 1: be a bit overhyped, but there is plainly something there
Speaker 1: the same way as the laser and the Internet came out,
Speaker 1: and at first everybody could see they were wonderful, but
Speaker 1: weren't quite sure how they were going to use them. Similarly,
Speaker 1: blockchain and the concept of cryptocurrencies will have great use,
Speaker 1: particularly once they've worked out ways not to use quite
Speaker 1: so much computing para electricity to to operate them. Bitcoin,
Speaker 1: per se, and particularly all the me too digital currencies
Speaker 1: seem very alarmingly to me like a classic speculative bubble. Okay,
Speaker 1: they've had several speculative bubbles. If you look at bitcoin
Speaker 1: on a lock scale, it's quite startling. I still don't
Speaker 1: really see how it can function as a currency while
Speaker 1: its value is so variable. It's just it just cannot
Speaker 1: be this store of value, this speculative mine if it's
Speaker 1: also going to try to be a means of exchange,
Speaker 1: and those are the those are the critical things the
Speaker 1: currency can do it If it achieves one, it fails
Speaker 1: the other. At this point, right, I would go out
Speaker 1: on all them, will say, bitcoins the craziest thing I've
Speaker 1: ever seen in my career. Possibly, And we had Powell
Speaker 1: getting questions about Libra during the testimony. Yeah, what did
Speaker 1: I miss that. What did he What did he answer? Well,
Speaker 1: he said that we really need to be cautious. It
Speaker 1: can't be a sprint forward, and that there's a lot
Speaker 1: of concerns money wandering a little less hip than Connie
Speaker 1: was when people started talking about bitcoin a while ago.
Speaker 1: It sounds like the Bank of England government was kind
Speaker 1: of out there and trying to show his cred failure
Speaker 1: early on. But uh, well, those Brits are always hipper
Speaker 1: than us. I mean it's we're we've grown, We've we've
Speaker 1: gotten used to that. Anyway, go from the craziest thing
Speaker 1: I've ever seen in my career, Uh, let's go to
Speaker 1: the craziest thing we've seen this week. And I have
Speaker 1: to warrant you three, there's some tough competition from Twitter.
Speaker 1: We've asked Twitter to to weigh in on the craziest
Speaker 1: thing they've seen this week. And let me just say,
Speaker 1: Twitter see some crazy stuff, as we all know. I'm
Speaker 1: gonna quote someone named Twiggy Sunday on Twitter. I'm assuming
Speaker 1: that's a real name. Twiggy Sunday gotta be right, and
Speaker 1: he's saying the craziest thing he's ever seen, and he
Speaker 1: refers to a treat a tweet by at Gregor Hunter,
Speaker 1: who points out, John, I think you'll like this one.
Speaker 1: The Argentinian yield curve has inverted. But not just any curve.
Speaker 1: It's the nine year ninety eight year yield curve in
Speaker 1: the Argentinian depth market family. Uh. You know, classically the
Speaker 1: YELD curve inversion three months, five year or three month
Speaker 1: ten year, uh, foreshadows a recession. What does this foreshadow? Like?
Speaker 1: An alien invasion? Yeah, I mean it's a little hard
Speaker 1: to call it for Argentina really, they've been so stable
Speaker 1: for so long. Um. Yeah, I think basically an alien
Speaker 1: invasion is probably the best way to put that, hopefully
Speaker 1: hopefully not too soon. And I think it's implying that
Speaker 1: the pampases will still be there and the herds of
Speaker 1: cattle will be still still be there ninety eight years
Speaker 1: from now. But Lord alone knows what's going to happen
Speaker 1: in the next few Maybe that maybe that off the
Speaker 1: top of my head, I've never ever thought of the
Speaker 1: dynamics of nine versus before. So all right, well, John,
Speaker 1: no press, but can you top Twiggy Sunday with the
Speaker 1: medest thing? Um? Okay to from Europe Both intimately linked
Speaker 1: to politics. One is Greece elected a new prime minister
Speaker 1: this weekend, the third Greek prime minister this century, who
Speaker 1: is the son of a previous Greek prime minister. The
Speaker 1: country that gave the whole world the concept of democracy
Speaker 1: seems to be quite keen on heredity when it comes
Speaker 1: to choosing their prime ministers. Anyway, in the response to that,
Speaker 1: the yields on ten year Greek bonds briefly dropped below
Speaker 1: the yields on tenure treasuries. That is pretty amazing. That's
Speaker 1: pretty amazing. And then just because I feel like although
Speaker 1: every everybody and Emily cracked me up, I'm wrong, everyone
Speaker 1: will lecture that, well, you can't compare yields on bonds
Speaker 1: and different currencies. You have to look at the swapouts.
Speaker 1: And then just stop the need to be that guy
Speaker 1: someone doesn't win along cruel history at school, where you've
Speaker 1: been that guy who makes that. Okay, that is a
Speaker 1: little competitive with the I can say. You can see
Speaker 1: now that the other point which I don't think, which
Speaker 1: I think is not crazy in one level but is
Speaker 1: utterly nuts at another level, is if you look at
Speaker 1: the predicted market, the chances if you want to get
Speaker 1: a Boris Johnson to be UK Prime Minister by the
Speaker 1: end of next month future, you will have to pay
Speaker 1: ninety nine cents on the dollar. It is rating him
Speaker 1: as a certain to be the next Prime Minister of Britain.
Speaker 1: I actually think the prediction market is roughly accurate in
Speaker 1: its odds. I find the fact that there is a
Speaker 1: chance that Boris Johnson will shortly be my prime minister
Speaker 1: is the craziest thing I have seen in markets in
Speaker 1: a long time. Are you applying for financialization now so
Speaker 1: that I can come somewhere with a really sensible choice
Speaker 1: of presidents with somebody, somebody who has a really good
Speaker 1: haircuts the certainly the craziest hair we've seen in markets.
Speaker 1: I think it probably means we all have to emigrate
Speaker 1: to New Zealand if we're going to go with with
Speaker 1: prime ministers who have a certain degree of cachet. But anyway, alright, headily,
Speaker 1: Unfortunately John front ran your craziest thing. You were looking
Speaker 1: at negative yielding corporate that now well, yeah, so I
Speaker 1: actually got some figures on this, Thanks John. I was
Speaker 1: going to dig into it right now, but we now
Speaker 1: have I can actually put the details around his beautifully
Speaker 1: pitched point, which was we went from zero to fourteen
Speaker 1: high yield European bonds and now traveling like below zero
Speaker 1: in terms of yield, which is pretty horrific in many ways.
Speaker 1: Now people will pay a high yield issuer to look
Speaker 1: after their money for them. Is it? Is it really
Speaker 1: quote unquote high yield? When we need a new name
Speaker 1: for this stuff? All right, well I'll give you mine
Speaker 1: because I think I think Vildan is going to really
Speaker 1: bring it. I'm gonna save her for last. I think
Speaker 1: she's pressure. I think she's going to bring it with
Speaker 1: the crazy thing. Even though I started off saying there's
Speaker 1: no alternative, I'm gonna once again look into the alternative
Speaker 1: asset markets for my craziest thing. So the baseball gloves
Speaker 1: used to record the final out in Game seven of
Speaker 1: the Chicago Cubs two thousand and sixteen World Series. They're
Speaker 1: up for auction, John Without without looking at my notes here,
Speaker 1: what would you guess the the bottom wrong prices in
Speaker 1: that auction for the two gloves used to record the
Speaker 1: final out in the two thousand and sixteen World I
Speaker 1: don't remember it was so this was from the picture
Speaker 1: to first or was there these infield gloves or the
Speaker 1: nice big outfield gloves. It was it was used third basement.
Speaker 1: I like how it depends on what they are. John
Speaker 1: would clearly pay more for a a catcher's if it's
Speaker 1: a catcher's mit, you know, obviously that's got more of it.
Speaker 1: Was the throw from third base. Third baseman Chris Bryant
Speaker 1: stilled the ball to Anthony Rizzo on first base. Yeah, um, okay,
Speaker 1: so they're both people we've heard of quite famous. I
Speaker 1: don't know that. Does that mean it's a left and
Speaker 1: right club so you could wear them as a pair. Yes,
Speaker 1: I guess that's true. You look a little ridiculous baseball
Speaker 1: glove on each, John get getting this right. By the way,
Speaker 1: this would maybe ten maybe ten grand each. Two hundred
Speaker 1: and fifty thousand is the nm mum bid. Wow, So
Speaker 1: a hundred thousand for each glove? How much? Does how
Speaker 1: does that compare with Steve Bartman's walkman? That's a good question,
Speaker 1: the previous most important item in in cubs anyway? Carry on, right,
Speaker 1: So what's that? What's that? So that's ten bitcoin each?
Speaker 1: It sounds cheap and bitcoin Actually that's not bad. Good point,
Speaker 1: good point, um, all right, Valdanna show us up here.
Speaker 1: I know you've got something good for us. What's the
Speaker 1: craziest thing you saw in markets? Well, the first thing
Speaker 1: I found, I thought was so strange that I was
Speaker 1: certain one of you would also find it. So I
Speaker 1: found a second thing as well. Backup you would you
Speaker 1: are not messing around, but I didn't because I know
Speaker 1: you crown a winner last week, so I am aiming
Speaker 1: for that this week. Um, but uh, we actually had
Speaker 1: um some reports the Taco Bell has a shortage of
Speaker 1: ten inch tortillas, which are used in Burrito's quesadillas in
Speaker 1: just about everything and a lot of their breakfast items
Speaker 1: as well. And Bank of America came out with a
Speaker 1: note saying, look at this Taco Bell is suffering with
Speaker 1: tortillas shortage. I forget what some people call it on Twitter, tortillas. Yeah,
Speaker 1: but they raised their price target on on Young Brands,
Speaker 1: which is which owns the Taco Bell brand because of
Speaker 1: the shortage of you know, even in spite of it,
Speaker 1: in spite of it is the biggest Mexican tortiam manufacturer
Speaker 1: is called Groom. Right, and they mentioned yeah, they mentioned, uh,
Speaker 1: that's why you should be long then, right that sounds
Speaker 1: like it's a very interesting investment. But couldn't they just
Speaker 1: have trimmed a twelve inch tortilla or use a six
Speaker 1: inch and a four inch? Yea, all right, that's pretty good.
Speaker 1: You're going for gold and silver. Yes. Now in select cities,
Speaker 1: in about forty cities, you can actually request that your
Speaker 1: Uber driver stay silent during your ride, and you have
Speaker 1: to pay about more per ride. Worth it totally. I
Speaker 1: think it's totally worth it worth I don't go to
Speaker 1: talk about it, but this is something I would definitely
Speaker 1: plenty of good journalists would be deprived of stories. Guys.
Speaker 1: I hate to say it, I think I think Theldonna
Speaker 1: tied herself for first place. First. Yeah, first first, We're
Speaker 1: all distant third on that. But I will have to
Speaker 1: get you back for some more crazy market observations in
Speaker 1: the future. Those were really good. But I think that's
Speaker 1: our time for this week. Emily, thank you for filling
Speaker 1: Sarah Shoes, thanks for having me up, and Sarah will
Speaker 1: be back next week. I'll actually be off, but Luke
Speaker 1: Kawa from the Cross SA team will be filling in
Speaker 1: for me, so I'm sure his ratings will be much higher.
Speaker 1: Vil Donna John Thanks so much for joining us this week.
Speaker 1: We hope you come back. Thank you. What Goes Up
Speaker 1: We'll be back next week. Until then, you can find
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