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Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg weekly

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Speaker 1: market podcast. I'm Sarah Pontzek, a reporter on the Cross

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Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on

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Speaker 1: the Markets Team. This week on the show, you could

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Speaker 1: say it's been quite the comeback. Just weeks after the

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Speaker 1: spreading coronavirus shook financial markets around the globe, US equity

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Speaker 1: markets have found their way back to record highs and

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Speaker 1: risks seems to be back in vogue. Would you say

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Speaker 1: it's justified? Or should investors likely be wary of the rally?

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Speaker 1: And if you only came here for the big reveal

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Speaker 1: of the craziest things we saw in markets this week,

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Speaker 1: don't worry. We will close the show with that tradition. Uh, Sarah,

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Speaker 1: bad news for you again this week coming from once again.

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Speaker 1: I think I got one week of aprieve, one week

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Speaker 1: of you saying that you don't automatically win the title.

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Speaker 1: I'm back to win in again, guarantee. I don't know,

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Speaker 1: maybe our guest, maybe our guests will surprise us with

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Speaker 1: some even crazier things, but that mind, it's pretty good.

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Speaker 1: But joining us for the first time on the show,

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Speaker 1: very happy to have them. Barry gil, head of investments

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Speaker 1: at UBS Asset Management. Barry, Welcome to the show. I

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Speaker 1: would be here with and also joining us from the

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Speaker 1: Bloomberg Consumer team. She's a reporter and editor. Where's many

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Speaker 1: hats is Bloomberg? Sally Bakewall Sally, welcome to the show.

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Speaker 1: Thank you, Barry. Let's start with you. UM. I write

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Speaker 1: to be sort of shocked at how resilient the stock

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Speaker 1: market is given the events going on in China. I

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Speaker 1: guess I'm a little surprised it snapped back as far

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Speaker 1: as quickly as it has, but I think everybody is

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Speaker 1: alert there. They're trying to play the map from stars.

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Speaker 1: Everybody understands how long that took to play out. Says

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Speaker 1: there's a little bit of jumping the gun. But as

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Speaker 1: soon as people anticipated that things were going to move

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Speaker 1: into the second derivative and start to flatten out in

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Speaker 1: terms of new cases getting in ounced, the risk appetite

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Speaker 1: is there. All the fundamentals are pretty broadly bullish, UM,

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Speaker 1: and people have continued to be underinvested in this equity

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Speaker 1: bull market, So in some ways it doesn't surprise me.

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Speaker 1: It's been made pretty clear that sure people like to

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Speaker 1: compare the current coronavirus to the likes of Stars back

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Speaker 1: in late two thousand, two thous three, but the times

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Speaker 1: were very different. But you alluded to the fact that

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Speaker 1: Stars took a much longer time for it to really

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Speaker 1: run its course through financial markets. Do you get the

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Speaker 1: sense that, sure, this is behind us, we don't yet

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Speaker 1: know whether or not the virus has peaked yet, or

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Speaker 1: do you get the sense that, know, the probability is

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Speaker 1: that volatility is going to continue. Big moves don't happen

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Speaker 1: in a vacuum, and we can't completely called the all

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Speaker 1: clear just yet. Look, I think there's a little bit

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Speaker 1: of hope going on that the containment efforts have sort

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Speaker 1: of coulter aize the problem earlier than if you if

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Speaker 1: you go back to Stars, and this is obviously the

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Speaker 1: only event that we can sort of in our investment

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Speaker 1: memory that we can go back to, So we may

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Speaker 1: overplay the analogy. But then there was a cover up

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Speaker 1: going on. There's been pretty much full disclosure taking place

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Speaker 1: this time. The challenge I think coming out of this

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Speaker 1: particular problem is that because the reaction has been as

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Speaker 1: swift as it has, the likely impact on g d

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Speaker 1: P is potentially even greater, um, particularly in agency seeing

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Speaker 1: data points coming out to support that than people that anticipated.

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Speaker 1: So there maybe a little bit of bad news associated

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Speaker 1: with the reporting of that going forward. UM but uh my,

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Speaker 1: my guess is that that everything happens these days and

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Speaker 1: gets priced in a heck of a lot quicker than

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Speaker 1: it would have done fifteen or twenty years ago. And

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Speaker 1: as a result, UM, I think it's just going to

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Speaker 1: play out. It's fine, So sort of a bitter medicine

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Speaker 1: for excuse a really bad pun as far as the

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Speaker 1: economy goes quarantining these cities basically shutting down, it seems

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Speaker 1: like a huge chunk of the consumer economy. UM. And

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Speaker 1: I know reading one of your recent notes, you you

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Speaker 1: sounded pretty bullish about UM, China, especially the consumer in

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Speaker 1: China becoming more affluent, uh more sort of a you know,

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Speaker 1: a domestic focused economy rather than an export focused economy. Um.

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Speaker 1: Does this just delay that sort of progress or is

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Speaker 1: there any chance of any sort of permanent or semi

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Speaker 1: permanent damage to consumer confidence in China? I don't think

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Speaker 1: there is a recipe for that at all. I think

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Speaker 1: the trends taking place in China are inexorable in nature.

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Speaker 1: They're truly structural um, the growing middle class, the focus

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Speaker 1: on the domestic economy, there's a lot of things going on.

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Speaker 1: There's a real break that takes there's a sort of

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Speaker 1: a bifurcation that's taking place in the market there. But

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Speaker 1: I'm bullish both on the consumerization of the of the

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Speaker 1: Chinese economy, the premium ization phenomenon that's taking place there

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Speaker 1: as people get um wealthier, and then whole bunch of

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Speaker 1: disruptive things that are taking place from the technology standpoint

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Speaker 1: over there, and I think that those are going to

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Speaker 1: play out over the next ten or twenty years, and

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Speaker 1: and nothing like this will get in the way. In fact,

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Speaker 1: if anything, you could argue that one of the lessons

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Speaker 1: this and this is not directed directly at the consumer

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Speaker 1: element element of the economy, but when you have an

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Speaker 1: event like this and you have to shut down factories,

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Speaker 1: and what you figure out is, we'll hang on a second.

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Speaker 1: We now have people in these factories, We've now just

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Speaker 1: shut down the productive capacity of a region because of

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Speaker 1: this event. How do we actually figure out how to

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Speaker 1: automate from here? So in some ways it's going to

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Speaker 1: accelerate some trends that are already in place. One stat

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Speaker 1: I saw that was amazing to me Bloomberg Economics. Uh,

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Speaker 1: Tom Orlick, the the head of Bloomberg Economics, kind of

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Speaker 1: lowered his forecast for first quarter GDP growth UM untill

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Speaker 1: about four and a half percent. Was six percent at

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Speaker 1: the end of last year, so slow by uh, you know,

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Speaker 1: China's standards. But it's amazing to me that there could

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Speaker 1: be any growth at all in this economy in this

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Speaker 1: quarter given what we're seeing on TV and yet twice

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Speaker 1: the pace of the US growth. Still, it's just remarkable.

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Speaker 1: It's just a dis engine of growth, regardless of the

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Speaker 1: fact that it's slowing. Well, this goes back to the

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Speaker 1: earlier point that I was making. I think we likely

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Speaker 1: underestimate the severity of the impact in this quarter. So

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Speaker 1: we've had the snap back in the market, then you're

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Speaker 1: going to report on the real data. It's probably a

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Speaker 1: little bit more. It's probably potentially significantly more pronounced um

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Speaker 1: in the first quarter as a result of this, But

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Speaker 1: then the snap back will be equally hard when things stabilize. Right,

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Speaker 1: we haven't yet gotten the economic data that shows the

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Speaker 1: period that encompasses the virus, and as we start to

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Speaker 1: get that through February, we will start to see it

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Speaker 1: say there's a possibility that it comes through worse than expected,

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Speaker 1: we see another bout of volatility shake markets really around

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Speaker 1: the globe because you are bullish on China. Uh, would

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Speaker 1: you say that's an opportunity for you to look for

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Speaker 1: opportunity and where would that actually be in that event? Absolutely,

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Speaker 1: it's very likely that when that reporting takes place of

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Speaker 1: past data, it's actually coinciding with real time data in

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Speaker 1: terms of new cases, etcetera getting announced, and the market

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Speaker 1: is a forward looking mechanism, and it will spend a

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Speaker 1: lot more time focused on that second derivative kicking in

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Speaker 1: rather than the reporting of the bad data. In fact,

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Speaker 1: once you get over the data um it really gives

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Speaker 1: the all clear to the market because we can't really

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Speaker 1: see any other major hiccups that could affect it from there,

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Speaker 1: at least over the next few months. You know, Sally,

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Speaker 1: when it comes to us consumer companies that are your focus,

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Speaker 1: it's hard to even think of a company that is

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Speaker 1: not somehow exposed to China, either as a supplier or

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Speaker 1: as a customer. Uh. And I know you've you've just

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Speaker 1: been typing your fingers this week with trying to cover

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Speaker 1: it all. But what are some of the highlights of

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Speaker 1: what the consumer companies are saying about the virus? Yeah,

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Speaker 1: I have no fingers less um. Well, I think it's

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Speaker 1: been a really interesting week because US companies have now

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Speaker 1: had a bit of time to digest and see how

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Speaker 1: it's going to play out, and that corresponded with a

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Speaker 1: busy week for earnings where they have had to talk

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Speaker 1: about the impact because they can't really get away with

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Speaker 1: not um. Enough time has passed for them to need

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Speaker 1: to be able to show they can do that. And

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Speaker 1: so we have had companies like Capri which is the

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Speaker 1: owner of Jimmy Chiu Vasachi Um Tapestry which owns Coach

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Speaker 1: and Kate Spade and State lawder is another one, and

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Speaker 1: they have started to say how it is going to

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Speaker 1: impact their sales and profit this year. A few of

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Speaker 1: them have reduced their guidance for revenue their profit profit

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Speaker 1: forecast for this year um and that for a lot

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Speaker 1: of them. Actually, their China business isn't huge, but they

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Speaker 1: have invested significantly into the country because, as you mentioned,

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Speaker 1: you know, it's got this rising middle class and they

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Speaker 1: want to make sure they can capture that opportunity, and

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Speaker 1: so that I think is why it's a big, big

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Speaker 1: deal for these companies and why they are expressly seeing

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Speaker 1: a dent. When companies have come out and given a

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Speaker 1: forecast for the future, have they been relatively open ended?

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Speaker 1: I think of Apple, for example, when they reported earnings,

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Speaker 1: they just gave a wider range than expected because it's

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Speaker 1: very difficult to actually estimate at this point in time

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Speaker 1: what the true fallout was going to be. I know

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Speaker 1: Starbucks has made clear how many stores are closed, and

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Speaker 1: Nike said they will feel a material impact from the coronavirus.

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Speaker 1: But do we actually have a sense yet of what

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Speaker 1: the numerical impact could be to a couple or many

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Speaker 1: of these companies, bottoms, lines, and what that might mean

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Speaker 1: across the board. Yes, some have given specific amounts of

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Speaker 1: profit impact. Others like Starbucks you mentioned, have said we

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Speaker 1: are not going to we don't know the impact and

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Speaker 1: we can't assess it, so we're not going to incorporate

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Speaker 1: in our guidance. So have our guidance as as it

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Speaker 1: should have been and as it was, and that obviously

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Speaker 1: makes it difficult for investors, and perhaps it's why we

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Speaker 1: we saw with the companies that I mentioned earlier, you know,

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Speaker 1: capri Esday Lawder, Tapestry, they all saw their shares lift

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Speaker 1: because they had otherwise good news or relatively decent good

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Speaker 1: decent news um but this great unknown and this threat

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Speaker 1: which they tried to address. I mean they all mentioned

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Speaker 1: that there might be an impact that didn't seem to

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Speaker 1: really hit the share price at all. That was almost

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Speaker 1: one of my craziest things I saw this week story

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Speaker 1: story work. But you basically said this company, that company

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Speaker 1: in this company all came out and said this is

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Speaker 1: going to have a material impact on earnings, and their

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Speaker 1: stocks all rallied after they were honest, truthful. So I

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Speaker 1: can almost imagine, you know, when the first quarter numbers

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Speaker 1: come out, you could imagine some sort of earning Zex

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Speaker 1: coronavirus impact being reported. I mean, is it going to

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Speaker 1: be as simple as that, Barry? I mean, is the

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Speaker 1: market going to accept that take, you know, basically ignore

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Speaker 1: some bad numbers for a quarter, whether it be the

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Speaker 1: economic data and earnings or could it caused a little

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Speaker 1: bit of jitters. The market is pretty good at separating

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Speaker 1: what's an exceptional event from what's a structural change the dynamic.

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Speaker 1: I'll tell you, if there's a re acceleration in cases

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Speaker 1: or something like that, then and this looks starts to

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Speaker 1: look like a Q two phenomenon, then people will start

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Speaker 1: to think about it very, very differently. But I think

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Speaker 1: for the moment, given the the risk appetite in the market,

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Speaker 1: people are going to just look right through it. You

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Speaker 1: mentioned earlier on that the fundamentals are moving to the upside,

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Speaker 1: And something that's really stood out to me through this

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Speaker 1: earning season is the fact that if you look at

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Speaker 1: forecast ADPs, it's pretty much hung in there at eight

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Speaker 1: and a half percent. We haven't really seen the deterioration

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Speaker 1: that you typically see when you enter a new year.

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Speaker 1: So can you give us a sense, Sure, maybe profits

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Speaker 1: are hanging in there even amid all these worries considering

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Speaker 1: the corona of virus. But what is it um that

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Speaker 1: does cause you to be so bullish as it relates

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Speaker 1: to fundamentals across the board? Oh? Look, I mean, we

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Speaker 1: discounted a lot of stuff in in snapped back from

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Speaker 1: a very low level really at the end of twenty eighteen.

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Speaker 1: But a lot of the things that people were really

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Speaker 1: worried about in twenty eighteen, you know, kind of come,

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Speaker 1: they've kind of passed, right, And if if anything, I

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Speaker 1: would say, sitting here looking at things like the recession

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Speaker 1: risk that people were fearful of, it's a lower probability

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Speaker 1: in twenty now than it was maybe in You've had

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Speaker 1: the loosening of financial policy by the Fed and really

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Speaker 1: across the board for central banks, So that takes time

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Speaker 1: to flow into um into the broad economy as well.

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Speaker 1: Called it a six to nine month lag, so that's

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Speaker 1: feeding into as well. And then think about all the

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Speaker 1: things that we're going on in the manufacturing economy associated

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Speaker 1: with trade UH last year and and for parts of eighteen,

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Speaker 1: and we've had at least a Step one resolution, which

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Speaker 1: gives companies the ability to plan a little bit further.

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Speaker 1: So all of the manufacturing markers were really started bottoming

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Speaker 1: out and starting to tip tap up. For me, the

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Speaker 1: big shock has has been the impact. I mean, we

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Speaker 1: really thought that we were gonna have an acceleration in growth,

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Speaker 1: and the coronavirus, amongst other things, has has primarily the

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Speaker 1: virus has really um held everything back. And so the

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Speaker 1: move in the tenure has been dramatic. The initial move

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Speaker 1: in the equity markets has been dramatic, but those underlying

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Speaker 1: cyclical dynamics will play out over the course of the year,

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Speaker 1: and as long as this is a one off event,

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Speaker 1: they should be the dominant the dominant factor for the

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Speaker 1: subsequent three quarters. And that's why, UM, I don't think

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Speaker 1: you see a lot of move in the earnings estimates

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Speaker 1: at the moment, because you can kind of once people

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Speaker 1: ring fence that there are so many other variables going on,

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Speaker 1: and people were easily conservative. Um, you should be okay

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Speaker 1: hitting those numbers by the end of the year. You know,

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Speaker 1: you mentioned the tenure yield UM and obviously you did

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Speaker 1: a great job of explaining why the equity market might

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Speaker 1: be able to look past this. Some of the other

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Speaker 1: markets still seem a little cautious oil obviously, I mean,

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Speaker 1: they have to contend with just the obvious supplying demand

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Speaker 1: issues going on because of this. But that tenure yield

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Speaker 1: is still sort of closer to the lower end of

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Speaker 1: the range we've seen, I mean, is something like, uh,

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Speaker 1: you know, closer to two towards the end of the year.

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Speaker 1: UM started rolling over even before the coronavirus got about

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Speaker 1: one and a half. It's now about one. Is that

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Speaker 1: just the nature of the bond market to to be

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Speaker 1: a little bit more pessimistic about the future, or is

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Speaker 1: that a cause a concern for for an equity outlook. Look,

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Speaker 1: this is a question that I sort of grapple with

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Speaker 1: on an ongoing basis, because all of the things cyclically

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Speaker 1: seem to be pointing towards more labor bargaining power, tighter

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Speaker 1: labor capacity, slightly more optimism. All of these things are

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Speaker 1: a recipe for increased inflation across the broad economy. The

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Speaker 1: Phillips curves not dead, not dead, that's the term kinked,

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Speaker 1: not dead. Um. And I do think that's that that

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Speaker 1: is one of those things is that you don't see

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Speaker 1: any change for a long time, and then you see

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Speaker 1: a lot of change very very quickly. Um. But I

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Speaker 1: think there's this structural bias. The low rate or the

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Speaker 1: lower for longer phenomenon has been with us for so

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Speaker 1: long that every time you get a hiccup like we've

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Speaker 1: just had, it sucks people back into that story. And

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Speaker 1: there are very I mean, there's a powerful secular argument

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Speaker 1: around low rates, which would be in simple terms, forget

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Speaker 1: about the low growth story. But in simple terms, the

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Speaker 1: internet disintermediate or really the Internet being a deflator on

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Speaker 1: the services economy, which is obviously sev GDP. But that's

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Speaker 1: a really, really long term phenomenon um. In the medium term,

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Speaker 1: these major cyclical factors that I've talked about really should

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Speaker 1: be the things that that that play out. But there

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Speaker 1: is momentum to that legacy story, and I think it's

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Speaker 1: going to take some real optimism and a real broad

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Speaker 1: cyclical uplift to sort of break the back of that.

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Speaker 1: But frankly, I'm stunned at where the tenure is at

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Speaker 1: this point. All Right, I think it's that time, Sarah,

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Speaker 1: It is that time, all right. I know you've got

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Speaker 1: a crazy thing from a listener of the show. Why

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Speaker 1: don't you start with that? We did so. We actually

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Speaker 1: had a terminal client reach out. He goes by the

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Speaker 1: name of David Back. He's a credit analyst in Virginia

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Speaker 1: UM and what he said was it's rare to see

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Speaker 1: a firm reorganized under Chapter eleven and re emerge in

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Speaker 1: a completely different line of business. Children's clothing retailer Jim

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Speaker 1: Boree announced plans to exit bankruptcy protection and begin anew

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Speaker 1: as anyone have a guess, I'm gonna say, a blockchain

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Speaker 1: biotechnology company focused on coronavirus vaccines. It's a very good guess,

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Speaker 1: but unfortunately wrong. No, you're very wrong. Um. But as

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Speaker 1: an artwork authentication service. Uh so of course, yeah, of course,

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Speaker 1: why not? Why not? Right, there's a natural connection between

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Speaker 1: children's clothing and artwork authentication. But it was a really

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Speaker 1: good example, uh and just very interesting. Uh, trying to

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Speaker 1: give you insight into how companies try to reorganize themselves

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Speaker 1: to stay relevant, stay alive. That's pretty good. I encourage

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Speaker 1: that kind of to reach out to us again, to rethink.

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Speaker 1: Now I still want Yeah, we'll see about that. So

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Speaker 1: did they tell us? I know, I told you about

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Speaker 1: our our gimmick here the craziest thing. What do you

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Speaker 1: have for UM? I wondered if you would mind if

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Speaker 1: I substituted the word crazy with beautiful, cra beautiful, all

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Speaker 1: crazy beautiful. So we had Peloton announcing its second quarter

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Speaker 1: results this week UM and guidance for its next quarter

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Speaker 1: missed estimates and the chares slid. But some analysts, who

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Speaker 1: I think must all own Pelotons, got really quite poetic

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Speaker 1: with their notes, and one of them wrote that the

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Speaker 1: company was climbing the hills of worry with a steady

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Speaker 1: cadence in reference to its stationary bicycles. And then another

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Speaker 1: who wrote that upside in the second quarter was in

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Speaker 1: part at the expense of the third quarter is faster

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Speaker 1: ordered to delivery time shifted units forward. However, the endless

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Speaker 1: said not to sweat the ship. Yeah, too much time.

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Speaker 1: I think they they're just fishing to get the headline

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Speaker 1: one of our in one of our headlines. They just

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Speaker 1: got it. That's right, right. Was there any impact from

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Speaker 1: that very controversial commercial for Peloton on on sales. I

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Speaker 1: think the main impact was on my productivity and the

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Speaker 1: productivity of my colleagues. Were discussed it at length. The

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Speaker 1: amount of memes are gifts that I saw over the

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Speaker 1: past week. Examt for Peloton did report earnings um with

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Speaker 1: the woman from the commercials all publicity is good for

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Speaker 1: That's very true, especially for that woman. She got all

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Speaker 1: sorts of yes, she did for that so and probably

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Speaker 1: got a free bike out of it. I imagine, all right,

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Speaker 1: very pretty stiff competition, and we haven't even gotten the

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Speaker 1: mind yet. I can't I can't go down the beautiful

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Speaker 1: I guess, like I mean it's kind of the uh uh,

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Speaker 1: the elevent in the room the I've been One of

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Speaker 1: the arguments that I've been using when I've been thinking

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Speaker 1: about the equity markets in particular, is that we've never

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Speaker 1: had a real period of speculation and optimism UM in

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Speaker 1: the market. There's been isolated pockets of it right where things,

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Speaker 1: and certainly twenty seventeen was a period of a lot

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Speaker 1: of multiple expansion. But I would say the dynamic in

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Speaker 1: Tesla's stock in the last few days UM for a

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Speaker 1: very large cap company is one of the strangest things

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Speaker 1: that I've seen, and it's certainly for somebody who's sort

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Speaker 1: of been structurally bullish, and I'm very very much the

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Speaker 1: cycle I've been wanted to buy that we want to

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Speaker 1: buy the dips, and you want to stay invested until

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Speaker 1: you see the same levels of commitment and optimism that

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Speaker 1: you see typically the end of other cycles. When you

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Speaker 1: see events like that, you either ask is their market

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Speaker 1: structure issue going on, or is there some sort of

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Speaker 1: level of speculation that I haven't picked up broadly, And

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Speaker 1: so you you watched situations like that to figure out

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Speaker 1: if they're sort of signal in the noise, and I

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Speaker 1: can't parse it at the moment, but it was certainly odd.

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Speaker 1: I agree that that was bizarre. It's the type of

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Speaker 1: thing you see in like a penny stock where it

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Speaker 1: only takes a few thousand bucks to move. Unbelievable. I mean,

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Speaker 1: I heard comparison thrown out there a few times this week,

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Speaker 1: but I think anytime you see a stock jumped that much,

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Speaker 1: especially the likes of Tesla, which was an extremely heavily

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Speaker 1: shorted company, very polarizing, it definitely captured everyone. Let me

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Speaker 1: be very clear, this is nothing like yeah, but the

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Speaker 1: fact that this is what at least spurred comparisons. Um,

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Speaker 1: but yeah, very still different, right right, All right, Well

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Speaker 1: I've got I've got two crazy things, a bonus one.

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Speaker 1: I'm allowed to bonus crazy thing, right, do I get

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Speaker 1: to Oh, you go first. I'm just because I'm tacking

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Speaker 1: on to Barry as well. So sure, Tesla shares did surge,

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Speaker 1: but Luke Kawa, our colleague, point it out and looked

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Speaker 1: into the options market, and if you had bought calls

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Speaker 1: on Tesla that paid out at one thousand dollars, then

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Speaker 1: your investment would have risen nine thousand, eight hundred percent

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Speaker 1: through that would be good, which would be good. Um.

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Speaker 1: I I saw a couple reddits um about Tesla with

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Speaker 1: people posting how much they had made by buying call

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Speaker 1: options on Tesla. Uh, call it luck, call it whatever

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Speaker 1: you want to um, but some serious money was made.

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Speaker 1: I wonder if they on the way down after or

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Speaker 1: if they lost it all because they were they were

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Speaker 1: too stubborn. Well that's pretty good, all right. Well let

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Speaker 1: me give you one my bonus crazy thing. It's that guy,

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Speaker 1: the junk bond trader at City Group in London. Guy

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Speaker 1: makes a million pounds a year. Uh. They called him

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Speaker 1: stealing snacks from the from the cafeteria, so they suspended

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Speaker 1: a million dollars year, a million pounds a year junk

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Speaker 1: bond trader for stealing snacks. So that was pretty good.

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Speaker 1: But that is not the craziest thing. The craziest thing, actually,

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Speaker 1: I I have to I'm kind of cheating because I

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Speaker 1: got this from Cameron Christ, our columnist, but I added

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Speaker 1: him so I feel like I can kind of claim

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Speaker 1: his his crazy things. And it's about the Baltic Dry Index.

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Speaker 1: You know, it's the index of prices for cargo ships.

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Speaker 1: People very often bury. I don't know if you've ever

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Speaker 1: done this, but people try to sort of force this

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Speaker 1: sort of macro signal onto it when you really shouldn't

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Speaker 1: because of There'sola Superviolatl and there's sort of you know,

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Speaker 1: supplying demand issues within the shipping industry. Fuel prices are

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Speaker 1: a big deal this year. They're moving to a more

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Speaker 1: environmentally friendly fuel. But if you were to take this

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Speaker 1: as a macro indicator, it would look like the Great

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Speaker 1: Depression right now. The thing is just completely collapsed. One

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Speaker 1: day decline or something. The Baltic Cape size index fell

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Speaker 1: one day. But here's that. That's not even the crazy part.

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Speaker 1: Here's the crazy part is there's this website call Splash

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Speaker 1: two four or seven, I'm sure you read it, Splash

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Speaker 1: two f seven, industry website that checks these things. And

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Speaker 1: they tracked what's called back hall cargo ships and they

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Speaker 1: found that the rates for back hall cargo ships were

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Speaker 1: negative eleven thousand dollars a day. So it's like the

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Speaker 1: the negative yielding bond of the ship in world. In

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Speaker 1: other words, you could charter out your boat to someone

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Speaker 1: and you have to pay them eleven thousand dollars a

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Speaker 1: day to do it. And I was trying to wrap

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Speaker 1: my head around why This possibly could be the idea

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Speaker 1: that people don't want to move into a region that well,

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Speaker 1: go on, go on, move into a region in which

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Speaker 1: you have a virus that is spreading. So if people

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Speaker 1: don't want to go there, you would potentially have to

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Speaker 1: pay them. I think that is a big part of it.

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Speaker 1: It's they call it uh ships repositioning. So I guess

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Speaker 1: the the cargo lines from say l A to Asia

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00:24:59,480 --> 00:25:02,840
Speaker 1: I just been shut down for now, and so these

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00:25:02,840 --> 00:25:06,520
Speaker 1: ships are repositioning from the Pacific to the Atlantic. So

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Speaker 1: for that privilege, the owner has to pay someone eleven

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Speaker 1: eleven grand basically to move him. So if only I

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Speaker 1: knew how to drive a boat, I'd be uh a,

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Speaker 1: you're gonna get into the business. Mike's going to be gone.

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Speaker 1: Next He'll be calling in from a ship in the

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Speaker 1: middle of the ocean. Uh eleven grand to day. I'm

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Speaker 1: gonna go get my I like the London Trader story better. Okay,

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00:25:26,640 --> 00:25:28,720
Speaker 1: they're they're both good. It's pretty good. They're both good.

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Speaker 1: Would you say it's enough for him to win the

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00:25:30,800 --> 00:25:40,280
Speaker 1: definitely not anyone but Mike. Oh, Mike is the judge.

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Speaker 1: Always a little bit of a biased competition. There was

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Speaker 1: never even really supposed to be a competition, but then

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Speaker 1: I just kept paying. Yeah yeah, yeah. But with that said,

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Speaker 1: it said they were all good this week for a

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Speaker 1: way time. Yeah, we'll leave it there for now. Sally Berry,

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Speaker 1: thank you so much for coming on the show this

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Speaker 1: Thank you What Goes Up. We'll be back next week.

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00:26:12,760 --> 00:26:15,040
Speaker 1: Until then, you can find us on the Bloomberg Terminal

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00:26:15,119 --> 00:26:18,560
Speaker 1: website and app, or wherever you get your podcasts. We'd

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00:26:18,600 --> 00:26:20,520
Speaker 1: love it if you took the time to rate interview

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00:26:20,520 --> 00:26:23,439
Speaker 1: the show on Apple podcast so more listeners can find us.

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00:26:23,840 --> 00:26:26,159
Speaker 1: And you can find us on Twitter, follow me at

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00:26:26,359 --> 00:26:29,760
Speaker 1: at therapont seck Mike is that anonymous and you can

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00:26:29,800 --> 00:26:34,320
Speaker 1: also follow Bloomberg Podcasts at podcasts. What Goes Up is

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00:26:34,359 --> 00:26:37,320
Speaker 1: produced by Toper Foreheads. The head of Bloomberg podcast is

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00:26:37,320 --> 00:27:00,800
Speaker 1: princesco Levie. Thanks for listening, See you next time. Fo