WEBVTT - TINA's Back in Town? 0:00:13.039 --> 0:00:16.120 Hello, and welcome to What Goes Up a Bloomberg Weekly 0:00:16.200 --> 0:00:19.479 Markets podcast. I'm Mike Reagan, a senior editor on the 0:00:19.480 --> 0:00:22.400 market scheme at Bloomberg, and I'm Emily Barrett, and markets 0:00:22.400 --> 0:00:24.960 reporter filling in for Pontec this week, who was on 0:00:25.079 --> 0:00:28.080 vacation at this week. On the show, we'll talk about 0:00:28.160 --> 0:00:31.320 how soothing words from the Federal Reserve Chairman Jerome Palell 0:00:31.720 --> 0:00:34.600 sent the SMP five hundred above three thousand for the 0:00:34.640 --> 0:00:38.200 first time, and this record comes despite a rather dismal 0:00:38.280 --> 0:00:41.959 outlook for corporate earnings. Does profit growth even matter when 0:00:41.960 --> 0:00:45.240 the Fed sounds like it's ready to cut rates? Also, 0:00:45.360 --> 0:00:49.440 remember the Winklevoss twins, the bitcoin billionaires and famous nemesses 0:00:49.520 --> 0:00:53.080 of Facebook's Mark Zuckerberg. We'll catch up with what they've 0:00:53.120 --> 0:00:55.319 been up to with a reporter who spent some time 0:00:55.360 --> 0:00:58.600 with them this week. And don't worry, even though Sarah's off, 0:00:58.680 --> 0:01:01.960 We'll continue the tradition of exchanging the craziest things we 0:01:02.000 --> 0:01:04.360 saw in markets. Of course, we would not give up 0:01:04.400 --> 0:01:08.040 that tradition regardless of vacation schedules. Well, we've got some 0:01:08.120 --> 0:01:11.280 great guests here to walk us through the markets this week. 0:01:11.319 --> 0:01:14.240 Emily but I need to ask you grew up in Australia. 0:01:14.520 --> 0:01:17.160 Did anyone listen to Bruce Springstey in Australia or was 0:01:17.200 --> 0:01:21.040 he considered like the poor Man's Men at work? Well, 0:01:21.080 --> 0:01:23.640 you know, between that and what was it Minato, that 0:01:23.800 --> 0:01:26.360 was really where we focused. But Bruce Springsteen, he had 0:01:26.360 --> 0:01:31.720 a little name little definitely. Well, I've got one of 0:01:31.800 --> 0:01:35.440 his classics, Kitty's Back, the song Kitty's Back in my head. 0:01:35.480 --> 0:01:39.319 But instead of Kitty, I keep hearing the name Tina, 0:01:39.480 --> 0:01:42.840 Tina's Back. And that's because of that famous acronym. You know, 0:01:42.880 --> 0:01:45.399 if you're a stock market pundent, you really need to 0:01:45.560 --> 0:01:48.279 coin an acronym to make a name for yourself. And Tina, 0:01:48.320 --> 0:01:51.240 of course is there is no alternative, which I feel 0:01:51.240 --> 0:01:54.760 like is back this week with all this focus on 0:01:54.800 --> 0:01:58.920 the Federal Reserve and this hypothetical interest rate cut will 0:01:58.920 --> 0:02:02.640 get so hopefully our guests here can shed some light 0:02:02.680 --> 0:02:06.720 on that. Joining the show first off, Bloomberg columnist former 0:02:06.760 --> 0:02:09.880 Big Han show at the Financial Times. I think, um, 0:02:10.560 --> 0:02:14.360 London and England's biggest Red Sox fan there is, is that? Right? 0:02:14.560 --> 0:02:17.160 John Author's welcome to the show. Possibly, thank you very much. 0:02:17.240 --> 0:02:20.880 I thought Tina was went back to Margaret Thatching ran 0:02:21.720 --> 0:02:28.040 my home country throughout my entire youth. Okay, the tina's 0:02:28.040 --> 0:02:30.959 in the eye of the beholders though. John the Red 0:02:31.000 --> 0:02:35.800 Sox just played the first baseball game MLB game in London. 0:02:36.200 --> 0:02:39.400 There were like thirty some runs scored. What happened there 0:02:39.440 --> 0:02:41.440 was the game before a game was it was that 0:02:41.520 --> 0:02:45.079 the metrics system of scoring runs in London what well? 0:02:45.600 --> 0:02:48.920 My best theory. Obviously, it wasn't a huge ground, although 0:02:48.960 --> 0:02:52.639 the dimensions weren't particularly weird. There was a big final 0:02:52.720 --> 0:02:54.959 territory which you would have thought would have diminished runs. 0:02:54.960 --> 0:02:57.360 It would have been easier to catch foul pop ups. 0:02:57.400 --> 0:03:02.519 My best guess is that the organizers followed their instructions 0:03:02.520 --> 0:03:05.160 a little too scrupulously, with the result that the the 0:03:05.360 --> 0:03:10.120 area blacked up behind the pitchers um was bigger and 0:03:10.360 --> 0:03:14.480 blacker than it is in the average um MLB stadium, 0:03:14.480 --> 0:03:17.080 with the result that the the hitters really could see 0:03:17.520 --> 0:03:19.880 the ball much more clearly than they were accustomed to. 0:03:19.960 --> 0:03:24.720 That's my best Yes, it certainly looked much more prominent 0:03:24.840 --> 0:03:26.840 and blacker as far as I could see then it 0:03:26.919 --> 0:03:30.399 normally does in a in a Major League park. That's 0:03:30.400 --> 0:03:34.720 a great theory. I I buy it completely. And John's analysis. 0:03:35.880 --> 0:03:38.640 John's market analysis is even better than his baseball analysis. 0:03:38.720 --> 0:03:40.680 We'll get to We'll get to that soon. But also 0:03:40.760 --> 0:03:44.040 joining the show is another reporter from our markets team, 0:03:44.200 --> 0:03:48.640 Veldana Hirich. She covers all sorts of things, stocks, a 0:03:48.680 --> 0:03:51.160 lot of bitcoin. She's our reporter who who talked to 0:03:51.200 --> 0:03:53.880 the Winklevoss Twins this week, and she's also done a 0:03:53.920 --> 0:03:57.080 lot of reporting on the outlook for earning. So Voldana, 0:03:57.120 --> 0:03:58.880 welcome to the show. Thank you, thanks for having me. 0:03:59.040 --> 0:04:04.160 Absolutely great of you. Now, John, let's let's start with you. Um. Obviously, 0:04:04.840 --> 0:04:09.080 the entire equity markets fixation has returned to the Federal Reserve, 0:04:09.160 --> 0:04:12.600 this notion that we're going to get an interest rate cut. Um, 0:04:12.640 --> 0:04:16.240 and you had an interesting column out recently and basically 0:04:16.279 --> 0:04:21.000 discussing the way you can't really look at equity valuations 0:04:21.040 --> 0:04:23.640 in isolation. You all have to also consider the level 0:04:23.680 --> 0:04:26.400 of interest Race, and you, especially you, you looked at 0:04:26.440 --> 0:04:31.080 the famous Schiller cape ratio, which values stocks based on 0:04:31.160 --> 0:04:35.040 trailing ten years earnings rather than just uh one year's 0:04:35.360 --> 0:04:39.560 forward or backwards. So tell us how you're thinking about 0:04:39.920 --> 0:04:44.200 the equity market now, particularly with these really elevated UH 0:04:44.320 --> 0:04:49.360 Schiller Cape valuations as they're called UH. Juxtaposed to this, 0:04:49.880 --> 0:04:52.840 this idea that rates are are going to be rock 0:04:52.880 --> 0:04:56.359 bottom going forward longer than we perhaps thought at the 0:04:56.400 --> 0:04:59.240 beginning of the year. Well thanks, Yes, I am in 0:04:59.360 --> 0:05:04.240 the very long term, very long suffering supporter of the 0:05:04.279 --> 0:05:07.280 Schiller Cape. I do actually think it makes a lot 0:05:07.360 --> 0:05:11.400 of sense, even though it has suggested that the markets 0:05:11.440 --> 0:05:14.360 are very expensive for a very long time, even as 0:05:14.400 --> 0:05:18.680 the markets have continued to rise. Now, what is important, 0:05:18.760 --> 0:05:21.800 I don't think anybody has ever said about anything that 0:05:21.920 --> 0:05:24.320 it is a silver bullet. Plenty of people make the 0:05:24.360 --> 0:05:29.160 point correctly that the CAPE isn't a silver bullet. Schiller himself, 0:05:29.560 --> 0:05:34.200 on his website presents his calculation for CAPE, along with 0:05:34.440 --> 0:05:38.320 his measure of long term interest rates these days is 0:05:38.360 --> 0:05:41.479 a simple tenure treasury yield, and he does some very 0:05:41.480 --> 0:05:44.119 clever historical numbers to come up with long term interest 0:05:44.200 --> 0:05:48.080 rates that cohered in eighteen seventy um. He's got continuous 0:05:48.200 --> 0:05:52.080 data series for both ever since then. What I think 0:05:52.560 --> 0:05:54.919 is important about the CAPE is that many people have 0:05:54.960 --> 0:05:58.440 said it we can ignore it, and their argument for 0:05:58.480 --> 0:06:00.279 saying that they can ignore it is that there was 0:06:00.320 --> 0:06:04.920 this epic earnings recession in two thousand and seven, two 0:06:05.279 --> 0:06:10.440 and nine, which means that the the denominator the earnings 0:06:10.560 --> 0:06:14.800 is artificially reduced, meaning that the cape looks artificially high. 0:06:15.279 --> 0:06:17.800 So sorry, John, what's brought us back to this idea 0:06:17.880 --> 0:06:21.320 that this is now a really good measure to consider 0:06:21.400 --> 0:06:24.880 what's brought the renaissance? Now? I think, well, the Renaissance 0:06:24.880 --> 0:06:27.359 in my mind, I'm trying to I'm trying to spark 0:06:27.400 --> 0:06:31.800 a renaissance. Yeah, Johnny created the Renaissance. Yes, exactly as 0:06:31.839 --> 0:06:37.800 we say Renaissance and Renaissance Australian English upbringings. They have 0:06:37.960 --> 0:06:42.720 terrible effects on your on your fronance station. Um. Basically, 0:06:42.760 --> 0:06:46.719 the big criticism has been that the ten years of 0:06:46.800 --> 0:06:51.960 earnings that you are comparing prices to include earnings from 0:06:52.279 --> 0:06:55.479 the Great earnings recession that accompanied the Lehman Crisis, the 0:06:55.480 --> 0:07:00.520 Great Recession, and therefore the argument was that once those 0:07:00.600 --> 0:07:04.920 numbers started to drop out of the ten year number, 0:07:05.520 --> 0:07:10.120 you would see the cape begin to reduce, because the 0:07:10.200 --> 0:07:13.480 earnings rose a lot for no good reason other than 0:07:13.480 --> 0:07:15.840 that those numbers were dropping out from ten years ago. 0:07:16.440 --> 0:07:21.280 Now we are are now just past the point past 0:07:21.360 --> 0:07:24.000 just we've just passed the tenth anniversary of the bottom 0:07:24.080 --> 0:07:28.360 of that earnings recession. So all the earnings as we 0:07:28.400 --> 0:07:31.200 went from top to bottom have now dropped out of 0:07:31.240 --> 0:07:34.280 the calculation and low and behold, the CAPE is actually 0:07:34.360 --> 0:07:38.280 higher than it was at the tenth anniversary of the 0:07:38.320 --> 0:07:42.640 peak before the recession started. Also, quite remarkably, it has 0:07:42.680 --> 0:07:48.360 actually risen more over that time than the prospective pe has. 0:07:48.440 --> 0:07:51.800 So the idea that this would show itself to be 0:07:52.280 --> 0:07:57.040 a pointless indicator that was obviously not relevant has actually 0:07:57.080 --> 0:08:00.840 been disproved. Now. I don't think that should be too 0:08:00.880 --> 0:08:03.760 surprising if you stop to think about it, because earnings 0:08:03.760 --> 0:08:09.080 were artificially inflated by the by artificially cheap credit before 0:08:09.120 --> 0:08:12.960 the crash. Everybody knows about kitchen sinking by companies, They 0:08:12.960 --> 0:08:17.160 were artificially low at the bottom, and then the recovery 0:08:17.200 --> 0:08:21.320 again involved artificially manipulating the Cruel's accounting to make them 0:08:21.360 --> 0:08:24.160 look good over ten years. It's actually quite difficult to 0:08:24.280 --> 0:08:27.360 manipulate a Cruels accounting. You really got to create commit 0:08:27.560 --> 0:08:30.880 pretty serious fraud for the ten year number not to 0:08:30.920 --> 0:08:34.880 be a fairly good number. And over ten years, basically 0:08:35.120 --> 0:08:37.800 the trend has been remarkably steady. There was the biggest 0:08:37.840 --> 0:08:40.520 blip we've had since the war for the earnings recession, 0:08:40.640 --> 0:08:45.280 but beyond that, the trend has continued, absolutely enforced. That's 0:08:45.320 --> 0:08:47.400 what people could tell when they were making their numbers. 0:08:48.120 --> 0:08:51.320 Does that mean that the stock market should not be 0:08:51.600 --> 0:08:56.200 this high? No, because interest rates, as Chilla himself and 0:08:56.200 --> 0:08:59.960 everybody else are knowledges, are very important to the valuation 0:09:00.040 --> 0:09:02.960 you put on stocks. Does it mean, however, that without that, 0:09:03.040 --> 0:09:05.680 if interest rates did what everybody was expecting until a 0:09:05.679 --> 0:09:09.280 few months ago and rise, plainly, the cape is a 0:09:09.320 --> 0:09:13.079 clear indicator that stocks have a long way to fall 0:09:13.600 --> 0:09:18.120 should rates rise. We are utterly dependent at this point, 0:09:18.559 --> 0:09:22.040 particularly with anxiety about where endings are going in the future. 0:09:22.280 --> 0:09:27.160 We are utterly dependent on low interest rates. And you know, 0:09:27.240 --> 0:09:29.880 you make a great point there in that we came 0:09:29.880 --> 0:09:33.520 into this year everyone expecting higher rates all year, higher 0:09:33.600 --> 0:09:36.319 rates from the Fed. The knock on effect of higher 0:09:36.360 --> 0:09:41.480 treasury rates, Emily, is everyone assuming now that it's it's 0:09:41.520 --> 0:09:43.679 lower forever? Now? You know, you talked to a lot 0:09:43.720 --> 0:09:47.040 of fixed income by bond market people. Is there a 0:09:47.080 --> 0:09:49.840 consensus towards that way, and is there a danger that whoops, 0:09:49.880 --> 0:09:52.400 they they the consensus might be wrong again. Yeah, it's 0:09:52.440 --> 0:09:54.959 really hard to see at this point anyone who actually 0:09:55.000 --> 0:09:58.880 thinks that a hike is coming any time really, for 0:09:59.040 --> 0:10:01.440 as far as the Ken see. I mean, it seems 0:10:01.480 --> 0:10:04.160 like the debate we're now having, which is actually different 0:10:04.160 --> 0:10:06.400 to what we had yesterday, is whether or not we 0:10:06.440 --> 0:10:08.560 get a fifty basis point or a twenty five basis 0:10:08.559 --> 0:10:10.920 point cut, rather than whether the Fed will actually cut 0:10:11.000 --> 0:10:13.920 rates at all in July. So we it seems as 0:10:13.920 --> 0:10:16.840 if you know, market expectations are ramping back up again. 0:10:17.280 --> 0:10:19.960 We've got We've definitely got that fifty basis points back 0:10:20.000 --> 0:10:21.920 on the table. It's just a matter of whether or 0:10:21.920 --> 0:10:24.400 not the Fed takes that kind of action. And I 0:10:24.400 --> 0:10:27.120 guess in a way that the rates outlook goes hand 0:10:27.160 --> 0:10:29.560 in hand with the earnings outlook, which is l DONA 0:10:29.640 --> 0:10:32.520 is pretty dismal right now, um, along with some of 0:10:32.559 --> 0:10:35.560 the softer economic data we've seen. So you've done a 0:10:35.559 --> 0:10:39.120 lot of reporting on what we can expect for the 0:10:39.200 --> 0:10:42.480 upcom coming earning season. I talked to a lot of investors, 0:10:42.480 --> 0:10:45.320 looked at the data. What are you expecting basically, and 0:10:45.360 --> 0:10:48.719 how our investors sort of bracing for this earning season. Yeah, well, 0:10:48.720 --> 0:10:51.840 like you mentioned, there is just so much uncertainty out there, 0:10:52.000 --> 0:10:55.240 which has been around for all year basically when it 0:10:55.240 --> 0:10:58.720 comes to trade and higher dollar and higher input costs 0:10:58.720 --> 0:11:01.440 and all those things. But expectations for the second quarter 0:11:01.480 --> 0:11:05.480 are negative to negative three percent in terms of earnings 0:11:05.480 --> 0:11:09.480 and flat for the third quarter, and then we're supposed 0:11:09.520 --> 0:11:11.319 to see a pick up again and later in the 0:11:11.400 --> 0:11:13.199 year in the fourth quarter. But out of all the 0:11:13.240 --> 0:11:17.800 companies that have been revising UM guidance either higher or lower, 0:11:18.040 --> 0:11:21.800 are actually revising lower. And we had Gina Martin Adams 0:11:21.840 --> 0:11:24.560 of Bloomberg Intelligence, who I know is um has been 0:11:24.600 --> 0:11:28.559 on the show before. She said, um two que expectations 0:11:29.000 --> 0:11:32.240 companies are cutting them to the bone, and when it 0:11:32.280 --> 0:11:36.400 comes to forecasts, they might not actually be cutting enough. 0:11:36.920 --> 0:11:40.160 So how much Filana is the actual macro backdrop factoring 0:11:40.200 --> 0:11:42.280 into this, I mean a trade concerns, the things that 0:11:42.320 --> 0:11:46.320 people are assigning when they're talking about lower expectations. Does 0:11:46.679 --> 0:11:49.160 FED policy playing into kind of any hopes there of 0:11:49.280 --> 0:11:52.320 improvemental Yeah, well, we'll see what happens now that we 0:11:52.400 --> 0:11:56.680 have a bit more clarity from what we can expect 0:11:56.679 --> 0:11:59.600 from the FED, but certainly trade has played a part 0:11:59.679 --> 0:12:02.880 in us We we've seen a lot of reports on 0:12:02.960 --> 0:12:04.839 companies that have been citing trade. We had B A. 0:12:05.040 --> 0:12:08.559 S F earlier in the week saying it's it's due 0:12:08.559 --> 0:12:10.880 to trade that we have to cut our profit um 0:12:11.040 --> 0:12:15.760 forecasts by thirty percent. So it really it does seem 0:12:15.800 --> 0:12:19.640 to be making its way into what companies are saying. Yeah, 0:12:19.640 --> 0:12:22.440 that B A. S F was a lot bigger cut 0:12:22.480 --> 0:12:25.240 than than I think people were expecting. John, what do 0:12:25.280 --> 0:12:27.920 you think is this? Is this a risky setup that 0:12:27.960 --> 0:12:30.560 we're in right now going into this sarning season, or 0:12:30.600 --> 0:12:33.640 I wonder if it with rates so low, it'll be 0:12:33.640 --> 0:12:37.079 the type of situation where, uh, you might see some 0:12:37.559 --> 0:12:41.000 rotation in and out of different sectors and companies that 0:12:41.440 --> 0:12:44.440 are at risk uh to trade, but not really a 0:12:44.440 --> 0:12:47.040 full on abandonment of the stock market as a whole. 0:12:47.440 --> 0:12:51.600 It's difficult to see how I mean, cards on the table. 0:12:51.640 --> 0:12:54.320 I've I've been a long term bear for quite a while. 0:12:54.360 --> 0:12:58.440 I'm very I find the current valuations very hard to justify. 0:12:59.400 --> 0:13:02.360 In the short term. It's difficult to see how anything 0:13:02.520 --> 0:13:04.760 too bad can happen to the stock market. I think 0:13:04.800 --> 0:13:09.520 the likelihood that companies that managed to play the earnings 0:13:09.520 --> 0:13:13.679 management game well and deliver a beat in heavily and 0:13:13.720 --> 0:13:17.959 inverted commas gets rewarded with much of a pop in 0:13:18.000 --> 0:13:19.960 the share price that day, that that's pretty low, And 0:13:19.960 --> 0:13:23.520 I suspect anybody with a truly bad surprise is really 0:13:23.520 --> 0:13:25.959 going to get punished. That's been, in fact pattern we've 0:13:25.960 --> 0:13:28.559 seen in quite a number of earning season seasons over 0:13:28.600 --> 0:13:33.520 the last year or two. But while we have a 0:13:33.600 --> 0:13:38.160 situation where it looks as though the FED is heading 0:13:38.320 --> 0:13:42.120 lower and people are still merrily discounting four or five 0:13:42.480 --> 0:13:44.640 rate cuts between now and the end of next year, 0:13:44.679 --> 0:13:47.880 which is what they are, and while the ECB appears 0:13:47.920 --> 0:13:50.920 to be locked down, and obviously the poor old Bank 0:13:50.960 --> 0:13:54.319 of England has to contend with the prospect of a 0:13:54.360 --> 0:13:57.320 no deal Brexit and really can't do anything hawkish, whether 0:13:57.360 --> 0:14:00.240 it wants to or not. While we're in that minds 0:14:00.280 --> 0:14:06.440 of locked forced dubbish stance, it's difficult to see how 0:14:06.480 --> 0:14:08.959 we can get a major market break. We've had major 0:14:09.000 --> 0:14:12.559 market brakes. Well, we had two major market breakes last year, 0:14:12.720 --> 0:14:15.640 both of which one one of which was prompted by 0:14:15.679 --> 0:14:18.000 a very sharp rise in the bond market, and one 0:14:18.120 --> 0:14:21.680 was prompted by a very sharp rise in perceptions of 0:14:21.840 --> 0:14:25.560 Fed hawkishness. I doubt that is what we need in 0:14:25.600 --> 0:14:27.480 this this day and age to get a market break, 0:14:27.680 --> 0:14:30.400 and at the moment that looks unlikely. So does this 0:14:30.480 --> 0:14:33.320 put the Tina point front and center? Then that we're 0:14:33.360 --> 0:14:35.800 not really getting anywhere away from the US at this 0:14:35.840 --> 0:14:38.920 point is does anything globally in terms of emerging markets 0:14:39.360 --> 0:14:42.160 start to look more attractive at that point or in general, 0:14:42.200 --> 0:14:44.640 if you look back to seen, which was one of 0:14:44.680 --> 0:14:49.480 the you know, the most least volatile, calmest years if 0:14:49.480 --> 0:14:52.520 you go by sharp ratios, it was possibly the best 0:14:52.640 --> 0:14:55.960 year for world stock markets ever because it was so 0:14:56.080 --> 0:14:58.600 calm on the way upwards. That was a year when 0:14:58.640 --> 0:15:01.360 the US did actually lose to the rest of the 0:15:01.400 --> 0:15:06.520 world and emerging markets did somewhat better than developed and 0:15:06.640 --> 0:15:09.960 logically you would expect something similar to that. Again, I 0:15:10.000 --> 0:15:13.760 suppose the one wild card there is also trade. If 0:15:14.680 --> 0:15:17.360 what's bad for China on trade will also be bad 0:15:17.400 --> 0:15:20.640 for a lot of the emerging world. But in essence, 0:15:21.200 --> 0:15:24.440 if we are looking at a weakening dollar and lower 0:15:24.640 --> 0:15:31.000 US rates, that relieves pressure on some very cheap emerging markets. Interesting, 0:15:31.080 --> 0:15:35.479 they might actually be the performer in this environment. Logically 0:15:35.560 --> 0:15:55.960 they really ought to be. Now you mentioned John being 0:15:56.160 --> 0:15:59.320 a long term bear. Looking at the fun flows this year, 0:15:59.360 --> 0:16:01.160 I don't think you're a loan. I mean there's been 0:16:01.200 --> 0:16:06.680 this exodus of cash from equity funds, a massive impouring 0:16:06.720 --> 0:16:09.600 in the in the fixed income funds. Phildano, you talked 0:16:09.600 --> 0:16:12.720 to a lot of investors every day. I mean this, 0:16:13.320 --> 0:16:18.640 do you get sort of a consensus? Are people UM 0:16:18.720 --> 0:16:21.000 leaning towards the bearers side even though we keep seeing 0:16:21.040 --> 0:16:23.040 these these new highs or you know what are the 0:16:23.280 --> 0:16:27.240 people you you talked to really focusing on right now? Yeah, 0:16:27.480 --> 0:16:30.320 they certainly are. UM. If you look at all of 0:16:30.360 --> 0:16:34.240 the strategies that that Bloomberg tracks, Um, the majority of 0:16:34.280 --> 0:16:37.320 them are saying that the SMP will end the year 0:16:38.120 --> 0:16:40.360 at a lower point than where we are. Where we 0:16:40.400 --> 0:16:42.800 are now, and I mean we did see the SMP 0:16:42.840 --> 0:16:44.880 across the three thousand mark for the very first time 0:16:44.920 --> 0:16:49.360 this week, and um, it's again going back to actually 0:16:49.480 --> 0:16:52.720 a few factors. One the uncertainty and trade is what 0:16:52.760 --> 0:16:54.960 a lot of people are citing. So even after we 0:16:55.040 --> 0:16:59.440 had the trade truths from UM from the g twenty meeting, 0:16:59.640 --> 0:17:03.040 we strategies at RBC coming out and saying this doesn't 0:17:03.040 --> 0:17:07.119 really change the game for us. It's it's we're reiterating 0:17:07.119 --> 0:17:11.920 our SMP target of UM similarly at a few other shops. 0:17:12.480 --> 0:17:14.240 And then the other part of it is that we're 0:17:14.320 --> 0:17:17.679 up for the year. Half halfway through a year, we're up. 0:17:18.280 --> 0:17:20.640 That's pretty good. So it's sort of a conundrum where 0:17:21.000 --> 0:17:24.840 where investors are thinking about, well, what happens next, what 0:17:24.880 --> 0:17:27.399 happens for the next six months, considering that we've been 0:17:27.480 --> 0:17:29.960 up so much. I think I think a lot of 0:17:30.000 --> 0:17:32.800 that is the base effect that we had a screeching 0:17:32.880 --> 0:17:35.720 correction that came to a that came to to finale 0:17:35.720 --> 0:17:41.080 on Christmas Eve, so once we're still not much above 0:17:41.240 --> 0:17:46.760 the peak from October. It's it's just an example of 0:17:46.760 --> 0:17:50.520 the willow willow the whisper. If you can tactically time 0:17:50.920 --> 0:17:54.400 market moves like this, you would be very very rich, indeed, 0:17:55.520 --> 0:17:57.679 But if you're on a on a more realistic way 0:17:57.720 --> 0:18:00.439 where we're not just looking at the calendar this this 0:18:00.480 --> 0:18:03.760 is an unusual point where the calendar year really makes 0:18:03.800 --> 0:18:07.560 the returns, really flatters the returns, and we're flat for 0:18:07.600 --> 0:18:10.520 the past eighteen months, right, Ever since that melt up 0:18:10.560 --> 0:18:12.320 at the beginning of two thousand eighteen, we're not much 0:18:12.359 --> 0:18:15.200 higher than that, So I guess a correction can occur 0:18:15.640 --> 0:18:19.480 over time as well as price more or less. I'm 0:18:19.480 --> 0:18:22.240 thinking about that comment that you made about conundrum the Vilvanna. 0:18:22.320 --> 0:18:24.840 It does raise sort of concerns about, you know, where 0:18:24.840 --> 0:18:27.240 do we start to get worried about where surprises are headed? 0:18:27.320 --> 0:18:29.400 Right right? But I guess that's something in the dead 0:18:29.440 --> 0:18:31.520 markets that people are thinking about all the time, financial 0:18:31.520 --> 0:18:34.760 stability being a part of the Fed mandate. Well, I 0:18:34.760 --> 0:18:37.440 had to mention one of the one of the maddest, 0:18:37.840 --> 0:18:40.399 one of the candidates I considered for my maddest thing 0:18:40.440 --> 0:18:42.000 I saw in the market this week is that there 0:18:42.040 --> 0:18:44.800 is there is such a thing in Europe now as 0:18:44.880 --> 0:18:55.280 a negative yielding high yielding bonds, which he is. I'm 0:18:55.280 --> 0:18:57.600 crest falling out because I worked so hard to think 0:18:57.600 --> 0:19:00.200 of spoiler spoiler alert. I've got a few where I 0:19:00.200 --> 0:19:02.760 can lend you later on. But but but but that 0:19:02.760 --> 0:19:05.440 that would be one of the that would be one 0:19:05.600 --> 0:19:09.440 sign that perhaps perhaps the the rate story has been 0:19:09.440 --> 0:19:12.000 taking the tats too far. All right, If you ask 0:19:12.080 --> 0:19:15.159 me British on the statements. I think clearly everyone is 0:19:15.200 --> 0:19:18.520 itching to get to that craziest thing they saw this week. 0:19:18.560 --> 0:19:21.040 In fact, Vildanna, my sources tell me you're you're very 0:19:21.080 --> 0:19:24.760 much a connoisseur of crazy things you've seen in markets. Okay, 0:19:24.800 --> 0:19:26.920 but first I we have to talk about the Winkle Boss, 0:19:26.920 --> 0:19:30.399 because I'm I'm fascinated with these two guys. Um. Obviously, 0:19:30.440 --> 0:19:35.320 they won a settlement against Mark Zuckerberg years ago for 0:19:35.359 --> 0:19:38.719 their role in basically creating Facebook. Then they went on 0:19:38.760 --> 0:19:42.120 to become sort of the biggest cheerleaders for bitcoin out there. 0:19:42.160 --> 0:19:45.479 They're trying to create a bitcoin ETF. What are they 0:19:45.520 --> 0:19:47.600 up to now? What's the latest in sort of the 0:19:47.720 --> 0:19:50.919 the Winkel Boss soap opera? After after your meeting with them, 0:19:51.000 --> 0:19:54.720 that's a that's a good way to predict. Um. Yeah, 0:19:54.720 --> 0:19:58.520 I met them um earlier this week. And and so 0:19:59.200 --> 0:20:02.240 again this is another interesting thing that's happening where a 0:20:02.240 --> 0:20:05.119 lot of people are saying, well, Zuckerberg came in and 0:20:05.119 --> 0:20:10.080 sort of bested them at Facebook. They were early bitcoin backers. 0:20:10.080 --> 0:20:12.640 In fact, it's been reported that they own about one 0:20:12.720 --> 0:20:15.679 percent of all the bitcoins that are out there, which 0:20:15.800 --> 0:20:20.880 is a huge sum by today's UM dollars. But then 0:20:20.880 --> 0:20:24.520 we had Facebook come out and with its own cryptocurrency, 0:20:24.560 --> 0:20:29.320 Libra project, and given how many users Facebook has and um, 0:20:29.359 --> 0:20:34.120 just how much hype there's been around Facebook's Libre project, 0:20:34.600 --> 0:20:37.720 a lot of people are asking, well, is Zuckerberg sort 0:20:37.760 --> 0:20:41.040 of swooping in again and taking the spotlight even though 0:20:41.720 --> 0:20:45.680 you guys have been around for uh in the cryptosphere 0:20:46.000 --> 0:20:48.480 for a much longer time. Yeah, is that you think 0:20:48.480 --> 0:20:51.479 there's any credence that? I mean, obviously Zuckerberg might have 0:20:52.119 --> 0:20:56.040 completely unrelayed motivations to get into crypto, But I love 0:20:56.119 --> 0:20:58.400 the conspiracy theory element of it, is that you think 0:20:58.440 --> 0:21:01.560 the tensions between those you're so so bad that Zuckerberg 0:21:01.680 --> 0:21:06.560 might be uh looking for revenge. UM. So they they 0:21:06.600 --> 0:21:09.240 spoke on a panel in New York earlier this week 0:21:09.240 --> 0:21:12.240 and the moderator asked them what would you say to 0:21:12.320 --> 0:21:14.760 Zuckerberg if you were to see him at a party, 0:21:14.800 --> 0:21:17.119 and they said, we'd say, welcome to the party. What 0:21:17.359 --> 0:21:20.560 took you so long to get here? So? And did 0:21:20.680 --> 0:21:22.440 did they have any update on the ETF is that's 0:21:22.520 --> 0:21:25.000 that's still in limbo. I guess it is in limbo 0:21:25.080 --> 0:21:27.600 for a few of the other UM companies that have 0:21:27.680 --> 0:21:31.280 been trying to issue one. I think we're supposed to 0:21:31.320 --> 0:21:34.560 be hearing from the SEC soon again, and for those, 0:21:34.640 --> 0:21:37.960 but not not for theirs. Uh, there's was rejected a 0:21:38.000 --> 0:21:40.720 little while right, right right, that was officially rejected. I 0:21:40.760 --> 0:21:43.920 think so, yeah, I am thinking this. This sounds almost 0:21:43.960 --> 0:21:47.080 like the Hunt Brothers and silver. Imagine somebody getting cornery 0:21:47.240 --> 0:21:50.040 one per cent of all the available gold or silver 0:21:50.160 --> 0:21:52.520 on the planet. There are people who really got big 0:21:52.600 --> 0:21:55.800 point is a similar kind of resources like something I 0:21:55.840 --> 0:21:59.840 think Mr t did that in the eighties and Neck 0:22:00.400 --> 0:22:04.160 the twins were the first bitcoin billionaires, are reportedly one 0:22:04.200 --> 0:22:07.240 of the first bitcoin billionaires, which is what's gained them 0:22:07.359 --> 0:22:16.520 some more fame again recently with with bitcoins renaissance renaissance, John, 0:22:16.520 --> 0:22:18.040 do you follow the crypto? We're all at all? I 0:22:18.080 --> 0:22:22.160 mean that does this? Uh? Is this another world compared 0:22:22.200 --> 0:22:24.760 with what we grew up trying to think of investment 0:22:24.760 --> 0:22:29.840 as I have a line on this. My my own 0:22:29.880 --> 0:22:33.160 opinion on this is is, I'm afraid to say, somewhat 0:22:33.200 --> 0:22:36.880 close to consensus, which is that blockchain per se might 0:22:36.920 --> 0:22:40.480 be a bit overhyped, but there is plainly something there 0:22:40.960 --> 0:22:43.120 the same way as the laser and the Internet came out, 0:22:43.160 --> 0:22:45.199 and at first everybody could see they were wonderful, but 0:22:45.240 --> 0:22:48.280 weren't quite sure how they were going to use them. Similarly, 0:22:48.359 --> 0:22:52.960 blockchain and the concept of cryptocurrencies will have great use, 0:22:53.000 --> 0:22:55.560 particularly once they've worked out ways not to use quite 0:22:55.560 --> 0:23:00.919 so much computing para electricity to to operate them. Bitcoin, 0:23:01.040 --> 0:23:05.200 per se, and particularly all the me too digital currencies 0:23:05.960 --> 0:23:12.400 seem very alarmingly to me like a classic speculative bubble. Okay, 0:23:12.440 --> 0:23:15.560 they've had several speculative bubbles. If you look at bitcoin 0:23:15.640 --> 0:23:19.359 on a lock scale, it's quite startling. I still don't 0:23:19.440 --> 0:23:24.840 really see how it can function as a currency while 0:23:25.280 --> 0:23:30.680 its value is so variable. It's just it just cannot 0:23:30.840 --> 0:23:36.200 be this store of value, this speculative mine if it's 0:23:36.240 --> 0:23:39.240 also going to try to be a means of exchange, 0:23:39.400 --> 0:23:41.000 and those are the those are the critical things the 0:23:41.080 --> 0:23:44.399 currency can do it If it achieves one, it fails 0:23:44.440 --> 0:23:47.080 the other. At this point, right, I would go out 0:23:47.119 --> 0:23:50.120 on all them, will say, bitcoins the craziest thing I've 0:23:50.119 --> 0:23:54.600