Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the All Thoughts Podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 3: And I'm Joe. Why isn't thal Joe?
Speaker 2: It is the holiday season. I am very much looking
Speaker 2: forward to it. One reason I'm looking forward to it
Speaker 2: is because we always do an annual ask Us Anything show.
Speaker 3: Yeah, you know, I think I liked it in the podcast.
Speaker 3: You know, it's true not about us. I mean, the
Speaker 3: show is about what we're interested in, but it really
Speaker 3: is about the perfect guests. But every once in a while,
Speaker 3: I suppose it's nice to sort of have the microphone
Speaker 3: turned in the other direction, so to speak. Yeah.
Speaker 2: The other thing I would say is we're already pretty accessible,
Speaker 2: Like there's a whole All Thoughts discord that we're on.
Speaker 2: There's Twitter, obviously, there's instant messages on ib and mostly
Speaker 2: we respond depending on how busy we are, so feel
Speaker 2: free to contact us there too. But we did get
Speaker 2: some pretty interesting questions from a bunch of listeners.
Speaker 3: Yeah, and I like the fact that we can put
Speaker 3: in many cases listeners voices on the air bring back
Speaker 3: some of the old time radio call in shows, the
Speaker 3: likes of which I used to listen to when I
Speaker 3: was a young kid writing in the car.
Speaker 4: With my dad.
Speaker 2: Colin shows are Lindy.
Speaker 3: The Colin shows are definitely Lindy. All right, shall we start, Yeah,
Speaker 3: let's take a listen to some.
Speaker 5: John sorrow A sixty three, Berkeley, California. Sometimes when you
Speaker 5: finish recording an episode, do you look at each other
Speaker 5: and say this doesn't meet our standards and kill the
Speaker 5: episode or is it more like skiing? Once you commit
Speaker 5: to writing the chair lift, you commit to skiing down
Speaker 5: the mountain.
Speaker 2: Well, I can't ski. I'm the only Austrian in the
Speaker 2: world possibly who cannot ski. So I'm we have killed
Speaker 2: episode in the past. In fact, there's kind of a
Speaker 2: funny story where we did an episode it really wasn't
Speaker 2: going very well. The guests seem very nervous and just
Speaker 2: sort of like not at his top performance. And in
Speaker 2: the end, after we recorded, we told him, you know,
Speaker 2: we're just going to kill this episode, and he was
Speaker 2: actually really happy about that because he felt he hadn't
Speaker 2: done his best work either. And then the other thing
Speaker 2: I would say is I actually think journalists should kill
Speaker 2: a lot more stories. We should be more selective and
Speaker 2: if you think about the German word for reductor, reductor,
Speaker 2: it sounds a lot like redact, right, which gives you,
Speaker 2: you know, some sense of what editors are supposed to
Speaker 2: be doing, which is taking away as opposed to adding.
Speaker 3: Yeah, it is very rare we have. I mean, the
Speaker 3: number of episodes that we've fully recorded that we actually
Speaker 3: did not release. I think it's less than you could
Speaker 3: on one hand, Right, it's not that many, but there
Speaker 3: have been a few just for whatever reason I guess
Speaker 3: was not on their game or whatever, it didn't work.
Speaker 3: And I agree. I agree with Tracy. I think we
Speaker 3: should do more in general. I mean, I think journalists
Speaker 3: as a whole should do more. It's like, just release
Speaker 3: the good stuff, you know, just released ones you're you're
Speaker 3: genuinely proud of. I don't want to release anything anywhere
Speaker 3: when I can't say I'm really proud of this work.
Speaker 3: And normally we are proud, but occasionally it's like, no,
Speaker 3: this is this is not awesome. All right, let's go
Speaker 3: on to the next one.
Speaker 6: Thanks Joe, Thanks Tracy. I was really inspired by Joe's
Speaker 6: tweets on Moby Dick, so this question is for him.
Speaker 6: What did you read after Moby Dick. Thanks guys, thanks
Speaker 6: for listening.
Speaker 3: That's a very easy one. Because I was such in
Speaker 3: such a mood to keep after reading Moby Dick, I
Speaker 3: didn't want to read anything besides Moby Dick. I sort
Speaker 3: of just thought about rereading it again, and I probably
Speaker 3: will sometime the next year or two. But because I
Speaker 3: was in that mood, I read a book by the
Speaker 3: historian writer CLR. James, who wrote a book about Moby Dick.
Speaker 3: Is a book called Mirrorer's Renegades and Castaways by CLR. James,
Speaker 3: and it basically made the argument that Herman Melville, with
Speaker 3: the Ahab character, specifically anticipated many of the pathologies of
Speaker 3: the twentieth century, the rise of fascism, dictators, and so forth,
Speaker 3: all of the crises of sort of Western civilization that
Speaker 3: we experienced in the twentieth century. Fantastic book, almost as
Speaker 3: good as Moby Dick itself.
Speaker 2: Also, I've been recommending two books to you. One of
Speaker 2: them is The Heart of the Sea, which is about
Speaker 2: the whale ship Essex, which is the ship that mobi
Speaker 2: that actually inspired Moby Dick. And then there's another one
Speaker 2: I'm reading just now called A Marriage at Sea, and
Speaker 2: it's about a couple who are out, you know, sailing
Speaker 2: around the world, and their ship gets destroyed by a
Speaker 2: whale and they have to survive on like a little raft.
Speaker 2: I actually don't know if they survive yet, so I
Speaker 2: guess we'll find out.
Speaker 3: I promise I will read both of those.
Speaker 2: Both of them are excellent.
Speaker 3: I promise I'll read both. Let's hear the next question.
Speaker 7: Hi Yang, longtime listener here. My name is Sturm. I'm
Speaker 7: thirty two and I live in Puerto Rico, and I
Speaker 7: have a question for Joe. I know you're an efficient
Speaker 7: markets guy, but if EMH is true, how have portfolio
Speaker 7: managers accumulated such vast wealth.
Speaker 3: There's a really good question. I wonder about why the
Speaker 3: financial system overall exists. Why are people putting targets on prices,
Speaker 3: and why are their pundits on TV? And why is
Speaker 3: their financial TV? And why is their trading and so forth.
Speaker 3: I still don't really know why the answer of why
Speaker 3: anyone has made any money. But my guess is that
Speaker 3: there are other services that people on finance provide other
Speaker 3: than high quality security selection that whether it's like okay,
Speaker 3: I don't really know how to manage risk or whatever
Speaker 3: it is, or I'm anxious about the thought of investing
Speaker 3: all kinds of things. I guess, you know, there probably
Speaker 3: are people who are able to obtain information that maybe
Speaker 3: counts as alpha probably exists. I don't know. I remain unsatisfied.
Speaker 3: I've asked this question myself. I don't fully know the answer,
Speaker 3: but my guests, my best guess, intuitively is that within
Speaker 3: this world that we call finance, there are things that
Speaker 3: produce value other than sort of you know, making good
Speaker 3: trades and so forth, that maybe are harder to articulate
Speaker 3: and so forth, and thus they are providing a valuable
Speaker 3: service at that front.
Speaker 2: But imling your customers.
Speaker 3: You're counseling something.
Speaker 2: I don't know, but I mean, I would just add
Speaker 2: on to that, like it it seems just on the
Speaker 2: EMH stuff, it seems on a simplistic level, if EMH
Speaker 2: was real, you would never get.
Speaker 8: A bubble, right, this is what?
Speaker 1: Yeah.
Speaker 2: And in fact, one of my favorite moments on the
Speaker 2: podcast was when we interviewed Eugene Fama, the father of
Speaker 2: the EMH I and I think I got him to
Speaker 2: say that like bubbles exist, right, which I was surprised.
Speaker 3: Yeah, I know, they hate like they really wrestle with it,
Speaker 3: like this is there one thing they hate this phenomenon,
Speaker 3: so they come up with all this stuff. But yeah,
Speaker 3: we will continue asking the question of why why do
Speaker 3: we exist? Why does financial media and coverage in pundits
Speaker 3: and all this stuff exist. We will continue answering this question.
Speaker 3: In twenty twenty six, maybe we'll have an answer.
Speaker 2: Only the big questions why are we here?
Speaker 3: Why are we here?
Speaker 2: All right, let's listen to the next question.
Speaker 8: Hi, I'm Max Niederman. I'm nineteen and I live in
Speaker 8: San Francisco. Supposing that AI does end up being as
Speaker 8: transformative as people claim, where do you think the value
Speaker 8: that that creates will accrue? From their valuations and how
Speaker 8: people talk about it, At least in SF, it seems
Speaker 8: people expect the labs to capture a massive chunk of
Speaker 8: that value. On the other hand, the have never been profitable,
Speaker 8: and even then, hardware companies like Navidia and TSMC seem
Speaker 8: to trade at lower multiples despite being near monopolies with
Speaker 8: very good margins. So my question is this, when all
Speaker 8: things are sudden done, which parts of the supply chain
Speaker 8: will be commoditized and which will capture all the value.
Speaker 2: Yeah, I think that's a very fair question. And I think,
Speaker 2: you know, it's difficult to predict if tech at some
Speaker 2: point is going to produce the or invent the proverbial
Speaker 2: AI god, like this thing that solves all of our problems.
Speaker 2: I would be a little bit skeptical of that. It
Speaker 2: seems to me like it's going to be a productivity improvement,
Speaker 2: kind of at the margin for now. So maybe you
Speaker 2: use it instead of Google Search. You can use it
Speaker 2: to explain certain terms much more quickly. Some industries are
Speaker 2: probably going to use it to design new products. I
Speaker 2: know there's a lot of excitement around medicine, but where
Speaker 2: the value will accrue. I mean, some of the big
Speaker 2: tech companies are so expensive right now in the US.
Speaker 2: I keep describing this as the coffee pod theory of AI,
Speaker 2: which is, some tech companies are choosing to basically produce
Speaker 2: the world's most expensive, sophisticated cappuccino machine, and they're saying that,
Speaker 2: you know, it produces the best coffee that you've ever had.
Speaker 2: And crucially, what they're doing is targeting a market for
Speaker 2: this machine. Let's say it costs like two thousand dollars.
Speaker 2: That's basically the entire world, and I'm not sure that
Speaker 2: approach works. And then you know, some other companies are
Speaker 2: taking a very different strategy, and they're producing something that's
Speaker 2: relatively cheap and standardized, sort of like a coffee pod
Speaker 2: coffee maker, and it's much cheaper and again targeting the
Speaker 2: total market of the world. And you know, if you
Speaker 2: think about it that way, I kind of have a
Speaker 2: sense of where it's going.
Speaker 3: I really have no idea, you know. The one thing
Speaker 3: I'll say is, I think there is this view that
Speaker 3: okay Ai can replace human labor, and therefore lots of
Speaker 3: workers are very vulnerable, and therefore there is gonna be
Speaker 3: this tremendous like it'll be this very a force of inequality,
Speaker 3: so to speak. Right, So it's gonna be there's gonna
Speaker 3: be the model makers. And I think in this vision
Speaker 3: that you're asking about these model makers and they're gonna
Speaker 3: make a fortune and the rest of us are going
Speaker 3: to have to get by on Ubi or whatever because
Speaker 3: they've put us all the models have put us all
Speaker 3: out of work, and look, I think that's possible. The
Speaker 3: one thing I'll say, though, is that like the tech
Speaker 3: is a force for like financial inequality, that's already been
Speaker 3: the story. We don't even need to talk about AI.
Speaker 3: With the existing tech giants that we've seen that have
Speaker 3: built over the last fifteen twenty years out of San Francisco,
Speaker 3: we've already seen this incredible rush of sort of wealth
Speaker 3: and income, et cetera to this fairly like small, you know,
Speaker 3: this one industry. This is very like, you know, very small,
Speaker 3: fairly small concentration of software engineers and executives and vcs
Speaker 3: and so forth. And as such, I do wonder, like,
Speaker 3: could it be that somehow it's like totally the opposite,
Speaker 3: that it goes in the other trajectory, and that really
Speaker 3: it's sort of like a force free quality or something,
Speaker 3: and that it ends up being a situation in which
Speaker 3: people were like, capital itself is not as valuable as
Speaker 3: it used to be. I don't know. I just think
Speaker 3: we should possibly consider the idea that what people are
Speaker 3: predicting that will happen with AI is that what is
Speaker 3: literally just an extension of what we've already seen, and
Speaker 3: that to the extent that AI is something new, maybe
Speaker 3: that'll put us on a new trajector. All right, let's
Speaker 3: take another question.
Speaker 4: Hi, Tracy and Joe, this is Jennifer thirty calling from Seattle,
Speaker 4: long time, first time. This question is for Joe. Joe,
Speaker 4: what drew you to your interest in Chinese history, particularly
Speaker 4: it's modern era. Have you ever considered going more back
Speaker 4: in time? I asked, because I'm Chinese American with parents
Speaker 4: who said very little about their lives during the Cultural
Speaker 4: Revolution and the eighties when the country started opening up.
Speaker 4: So I often learned through Joe's tweets and book recommendations.
Speaker 4: But I had also noticed in my last trip to
Speaker 4: China that the one historical figure cities pay the most
Speaker 4: homage to is not Mao or Dungchowping, but actually Sonyette Sen,
Speaker 4: who was a precursor to these leaders. Thanks love the
Speaker 4: show as.
Speaker 3: Always, so obviously we do a lot of contemporary China episodes,
Speaker 3: and it sort of seemed like, you know, I should
Speaker 3: probably understand a little bit more about the history. I
Speaker 3: started with the ancient stuff. I was like, oh, I'm
Speaker 3: just going to I'm just going to go back and
Speaker 3: I'm going to read about the old dynasties and then
Speaker 3: I'll get to the present. And I sort of like,
Speaker 3: I found it a little bit hard. It wasn't grabbing
Speaker 3: my attention to ancient stuff. But then I remembered a
Speaker 3: couple of years ago. We did an episode with Adam
Speaker 3: Posen at the Peterson Institute a couple of years ago
Speaker 3: at Jackson Hall, and he had just sort of mentioned
Speaker 3: offhand that he had read asra Vogel's biography of Don Chopeg,
Speaker 3: and I was like, oh, maybe I'll just start there.
Speaker 3: That seems like more recent and tractable and I could
Speaker 3: sort of slot that into my head into something. And
Speaker 3: I read that and I found it very very compelling,
Speaker 3: as Adam suggested, and I think that sort of set
Speaker 3: off like it. I think reading twentieth century Chinese history
Speaker 3: helps me to some extent understand the present day. I've
Speaker 3: never read a Sunyatsen biography, but I'm very interested in him.
Speaker 3: One of the rare figures who sort of revered in
Speaker 3: both Taiwan and Mainland, and so therefore someone who is
Speaker 3: an inspiration to both the nationalists and the communists, which
Speaker 3: is kind of weird. And he was like sort of
Speaker 3: a for you know, a an early pioneer of land
Speaker 3: reform and so forth. So I think maybe that'll be
Speaker 3: another thing I aim to read in twenty twenty six
Speaker 3: A good signette symbiography.
Speaker 2: I really like the older Chinese history. I read a
Speaker 2: really good book. I can't remember the title now, but
Speaker 2: it was all about the Chinese bureaucracy and government system
Speaker 2: how it used to be, and you know, one of
Speaker 2: the most rigorous systems in the world. Arguably you had
Speaker 2: to take this insane test to get the position. And
Speaker 2: I remember I also did a bunch of research around
Speaker 2: the sort of late eighteen hundred's, early nineteen hundreds, the
Speaker 2: fall of the Imperial family and what it means for
Speaker 2: debt markets. That was a really fun story.
Speaker 3: Yeah, I should go back and read read the ancient
Speaker 3: stuff as well. I'm going to add that to the
Speaker 3: twenty twenty six list.
Speaker 2: Okay, let's take another question.
Speaker 7: I joined Tracy. My name is Danny Bessov. I'm twenty
Speaker 7: six years old and currently based in New York where
Speaker 7: I'm doing my masses at Columbian Financial Economics. I'm a
Speaker 7: huge fan of the pot and Spotify told me in
Speaker 7: the last year I was in the top half percent
Speaker 7: of listeners and maybe now the first time caller as well.
Speaker 7: My question is this, you have such a wide range
Speaker 7: of guests with very different backgrounds, and you cover an
Speaker 7: enormous amount of information. How much of that are you
Speaker 7: able to retain and not really call back in everyday
Speaker 7: conversations or when you do follow up episodes? And how
Speaker 7: much do you rely on not taking or revisiting past
Speaker 7: episodes to connect your ideas over time?
Speaker 2: This is a really good question. This is a sort
Speaker 2: of journalistic process question. By the way, thank you for
Speaker 2: being in the top top percentage of Odd Lots listeners.
Speaker 2: We appreciate that.
Speaker 3: It's good coffee sometime.
Speaker 2: But going back to the question, you know it kind
Speaker 2: of this is obvious, but it kind of depends on
Speaker 2: the guest, and if the guest says something memorable or
Speaker 2: something that you really think is insightful. I think we
Speaker 2: do retain some of that information. I used to retain
Speaker 2: a lot more when we were editing our own transcripts
Speaker 2: and publishing them. I really value transcripts, but it was
Speaker 2: just so much work and took forever, so we stopped
Speaker 2: doing it. We're hoping to come up with some sort
Speaker 2: of solution soon. And the biggest compliment I can pay
Speaker 2: a guest is saying that, like, I'm going to go
Speaker 2: back and read the transcript because there's so much knowledge, there,
Speaker 2: so much information. I just have to absorb all of it.
Speaker 3: It was funny. I was a dinner the other night
Speaker 3: with someone and I said to them, have you ever
Speaker 3: actually learned anything from listening to a podcast? Because I
Speaker 3: do sometimes wonder if I ever remember anything. No, that's
Speaker 3: not totally true. I do, but I also sometimes wonder
Speaker 3: setting a side podcasts and recall the specific facts. I
Speaker 3: also have the same thing with books. You know, we
Speaker 3: were just talking about that Dunk Show Pang biography. And
Speaker 3: if someone's like, oh, Joe, you just spent three weeks
Speaker 3: of your life reading a biography of Dunk Shopang, what
Speaker 3: did you learn? And I'd be like, uh, he sort
Speaker 3: of opened up and for a while he was sent
Speaker 3: down to work on a tractor factory, and then he
Speaker 3: opened up, and I would be like, you know, there's
Speaker 3: like I was like, oh, did I really need to
Speaker 3: spend three weeks of my life to be able to
Speaker 3: recall four basic facts. I suppose that there are things
Speaker 3: that I don't know that I remember, and like my
Speaker 3: deep storage part of my memory that would be you know,
Speaker 3: that would come out in a conversation. But I do
Speaker 3: going back to questions of like why are we all
Speaker 3: here and so forth. I do sometimes have these thoughts
Speaker 3: of like do you know how much? How much do
Speaker 3: we really learn and internalize? And how much is it
Speaker 3: just fun to have these conversations.
Speaker 2: Sometimes we surprise ourselves, yeah, right, Like sometimes we come
Speaker 2: up with some random fact that's kind of interesting that
Speaker 2: we learned from somewhere. Just on the note taking part
Speaker 2: of the question. We generally don't take notes in the interview.
Speaker 2: We might jot down like a word or two just
Speaker 2: to remember to come back and ask a follow up question.
Speaker 2: But yeah, it's a genuine conversation between three people, and
Speaker 2: we try to keep it as natural as possible.
Speaker 9: Hey, Joe and Tracy aj Toss here. I'm thirty seven
Speaker 9: years old and I'm from Lafayette, Louisiana.
Speaker 5: Go Cajun's.
Speaker 9: I have a question for you about bitcoin. You guys
Speaker 9: have spoken about how the narrative around bitcoin changes every cycle,
Speaker 9: and so I'd actually like to ask you to make
Speaker 9: a prediction whether you think there will be another cycle
Speaker 9: for bitcoin where it way out performs everything else, and
Speaker 9: assuming that it does, what would the narrative be this time?
Speaker 5: Thanks guys.
Speaker 2: That is a really good question. So the narrative theory
Speaker 2: of bitcoin is this idea that because bitcoin is essentially nothing,
Speaker 2: it is able to transform itself into anything. So we've
Speaker 2: seen it go through these various cycles of transformation, reinventing itself.
Speaker 2: You know, in the beginning, it was supposed to be
Speaker 2: just a digital payment system. And there's the famous incident
Speaker 2: of the guy that bought a pizza and lost a
Speaker 2: lot of money that he otherwise would have gained. And
Speaker 2: then it kind of, you know, it turned into an
Speaker 2: inflation hedge. More recently, it's turned into a Trump vehicle.
Speaker 2: I actually had it. I had an idea for a
Speaker 2: narrative that comes next. But I'm blanking out on it totally.
Speaker 2: I feel really bad.
Speaker 3: You'll tweet it if yeah, I'll tweet it.
Speaker 2: It was like two days ago, oh man, and I
Speaker 2: had this idea and sorry, I'm very tired.
Speaker 3: It'll come back to it.
Speaker 2: It's the end of a busy season.
Speaker 3: It's it's been a busy season, busy year. Look, I
Speaker 3: have no you know. I was like, oh, now I'm
Speaker 3: going to give the official odd lots for Bitcoin price
Speaker 3: target for twenty twenty six. No, I really have no idea.
Speaker 3: I don't have any idea of it'll outperform again. You know,
Speaker 3: of course it has been pronounced dead several times many
Speaker 3: times over the years, so perhaps that's always the reason
Speaker 3: to disc out the idea of okay, this time is dead.
Speaker 3: That being said, you know, look like the I thought
Speaker 3: one of the most compelling arguments that had of the
Speaker 3: various narratives over time, I thought one of the most
Speaker 3: compelling ones had been that it would be sort of
Speaker 3: this you know, post sovereign money and therefore kind of
Speaker 3: like a digital gold safe haven. It has not been
Speaker 3: behaving like one in twenty twenty five. I mean, this
Speaker 3: is one of the most volatile years on memory. From
Speaker 3: like a de globalization and geopolitical standpoint. If you'd think
Speaker 3: there'd be one year where it's like, okay, people want
Speaker 3: some sort of money that is disconnected from governments, maybe
Speaker 3: this would be the year. Maybe they do, but they're
Speaker 3: choosing for gold. They're choosing the actual safe haven. Bitcoin meanwhile,
Speaker 3: has underperformed US treasuries. So the US treasuries yet another
Speaker 3: safe haven that is outperforming Bitcoin in twenty twenty five.
Speaker 3: So I really don't know, but I do think that
Speaker 3: the poor performance in twenty twenty five should be something
Speaker 3: of a certain Again, people have always said, oh, it's
Speaker 3: a tech stock hitch well, techtocks have had or a
Speaker 3: textdoc proxy textocks have done great this year, So it
Speaker 3: hasn't even it hasn't even satisfied that requirement. And then
Speaker 3: the last thing I'll say is that there's a lot
Speaker 3: of I think legitimate enthusiasm about crypto, particularly in the
Speaker 3: realm of stable coins, getting back to maybe the original idea,
Speaker 3: as Tracy mentioned, of a payments platform, but all that
Speaker 3: is happening on other chains besides Bitcoin, and so even
Speaker 3: if crypto becomes more of a thing in the financial system,
Speaker 3: it's not obvious possible, but it's certainly not obvious that
Speaker 3: Bitcoin would see any benefit from it.
Speaker 2: I do think, though, we shouldn't underestimate bitcoin's ability to
Speaker 2: reinvent itself. And this actually took me a long time
Speaker 2: to realize. And you know, he mentioned the obituaries for crypto.
Speaker 2: I wrote some of those, like I think in twenty twelve,
Speaker 2: I wrote one.
Speaker 3: Yea, so we've all learned our list.
Speaker 2: May I kulpa on that. We'll see what happens.
Speaker 3: All right, let's take another question.
Speaker 10: Hello, Joan Tracy. This is Cynthia from Vancouver, Canada. What
Speaker 10: is something that Marqua seems really confident about that you
Speaker 10: think deserves more questioning or more nuanced discussion.
Speaker 3: You know, first of all, thanks Cynthia for calling in.
Speaker 3: The first thing that comes to my mind is I
Speaker 3: have been I wrote about this recently in the Odd
Speaker 3: Lots newsletter. I am kind of surprised about how well
Speaker 3: anchored market based expectations for inflation have been, because there
Speaker 3: is I think pretty legitimate. There's two things going on.
Speaker 3: One is, you know, the FED hasn't missed its inflation
Speaker 3: target for years, and so there's perhaps reasons to think
Speaker 3: that just already that the FED hasn't been as serious
Speaker 3: about two percent as it had been before. But then
Speaker 3: also I do think there are good reasons to think
Speaker 3: that in the future the FED will not have the
Speaker 3: same capacity to target stable prices the way it used
Speaker 3: to due to politicization, due to the general sort of
Speaker 3: like populist trend in politics, which is not something distinct
Speaker 3: to the Trump administration. That certainly I think the Trump
Speaker 3: administration has accelerated that process with a lot of the
Speaker 3: criticism of the chairman and so forth, and so like,
Speaker 3: I am a bit surprised that if you look at
Speaker 3: various market based measures of future inflation, five year, five
Speaker 3: year break events, and so forth, that it has been
Speaker 3: pretty stable, because that feels disconnected from the way that
Speaker 3: we basically talk about this topic.
Speaker 2: Mine is also related to inflation. I think far more
Speaker 2: people need to figure out how the CPI official numbers
Speaker 2: for inflation are actually calculated and produced. And you know,
Speaker 2: ultimately a lot of it is a series of numbers
Speaker 2: that are estimated. Those are called imputed numbers, and a
Speaker 2: lot of them are actual observations of prices which Bureau
Speaker 2: of Labor Services people go out and collect. It's actually
Speaker 2: a really labor intensive thing to do, and most people,
Speaker 2: you know, they treat them like as a simplistic number,
Speaker 2: and I think it's much more important to look at
Speaker 2: the different components. And actually we're recording this on December eighteenth,
Speaker 2: and we're seeing a really good example of why it's
Speaker 2: important to know how CPI is actually calculated, because you know,
Speaker 2: the number just came out much lower than expected, and
Speaker 2: it's interesting if you start to break it down to
Speaker 2: see what assumptions were made and what's actually moving all.
Speaker 3: Right, for the next question. This one was just written
Speaker 3: as a post on audio note, but it's a really
Speaker 3: fun one where Tracy and I kind of see the
Speaker 3: world a little bit different, so we have a chance
Speaker 3: to get into that. This question comes from Diego Aguilar Cannibell.
Speaker 3: He has where did my intellectual beef with the idea
Speaker 3: of the term premium start? And look, so this is
Speaker 3: something that's come up. People talk about the term premium
Speaker 3: in the in the yield curve, and I'm always like,
Speaker 3: what exactly does that mean? So you know the way,
Speaker 3: like I guess, Tracy, let's tart with you. What is
Speaker 3: the term premium? Don't ask me, I'm not gonna define it.
Speaker 3: How do you What is the term premium?
Speaker 2: It is basically the extra compensation or premium that investors
Speaker 2: demand to hold debt, you know, out longer term.
Speaker 3: Okay, so here's what I don't get. Why do they
Speaker 3: deserve extra compensation? Why don't they just deserve the appropriate compensation?
Speaker 3: Like I buy stocks?
Speaker 7: Do I?
Speaker 3: Oh, I deserve extra compensation because they're risky. No, I
Speaker 3: deserve appropriate compensation. I deserve to be compensated, I suppose,
Speaker 3: But I hate this idea of like extra compensation. We
Speaker 3: always want extra compensation. But then also, I guess my
Speaker 3: other issue is that, like I think, if you knew,
Speaker 3: if you if you had a crystal ball and you
Speaker 3: knew for sure what the FED was going to do
Speaker 3: in every policy meeting, it would make for the next
Speaker 3: ten years. You know, there's eighty years, so the next
Speaker 3: eighty meetings, if you knew what that was going to be,
Speaker 3: I think you would know the exact price that ten
Speaker 3: year yields should treat it. And so I don't really
Speaker 3: understand why we can't just say that the yield curve
Speaker 3: is the market's expectation of overnight rates for the next
Speaker 3: ten years.
Speaker 2: Well, it's it's in comparison, so the extra premium is
Speaker 2: in comparison to shorter term bonds, and there are some
Speaker 2: calculations that go into that. I think it's it's, you know,
Speaker 2: not the be all and end hall of the market,
Speaker 2: but it's certainly an interesting thing to look at. And
Speaker 2: when we get big moments in the term premium's movement,
Speaker 2: you know, if it flips from positive to negative, it
Speaker 2: kind of tells you a lot about where the market's going.
Speaker 3: Okay, on this point, though, let's just press further there.
Speaker 3: I think there's really key, which is so they're right,
Speaker 3: everyone admits these are unobservable, right, these are models. There's
Speaker 3: are models that indicate what this notional term premium is.
Speaker 3: The fact that it can flip to negative and it
Speaker 3: was negative for much of the twenty tens suggests to
Speaker 3: me like that's another reason, Like I don't understand how
Speaker 3: this idea that there is holders of long term debt
Speaker 3: per se need extra because of extra protection or whatever,
Speaker 3: because apparently they were actually going to a discount on
Speaker 3: it if we go by the model, what the model
Speaker 3: said in the twenty tens. So I just find the
Speaker 3: whole thing. I just find it all very unsatisfying.
Speaker 2: I would also say the term premium beef. We play
Speaker 2: it up a little bit for the show.
Speaker 3: So let up for the show.
Speaker 2: We hope you enjoy. All right, this is going to
Speaker 2: be our final question.
Speaker 8: Again.
Speaker 2: This one was written in rather than a voice note,
Speaker 2: so here we go. It is from Michael Kahn. He
Speaker 2: asks a non markets question, more specifically for me to
Speaker 2: see what was your favorite magic the gathering card and
Speaker 2: what critical function did it serve in your deck? Bonus question,
Speaker 2: if you and Joe were a magic card, which ones
Speaker 2: would you be? That's a very fun question. Okay, so
Speaker 2: my favorite was probably my Chevon Dragon. I like the
Speaker 2: idea of dragons, and it had really nice art and
Speaker 2: at the time it was a really valuable and powerful card.
Speaker 2: By the way, I don't know if I'm pronouncing Chavon right,
Speaker 2: whether it's Chavon or Chyvon. Like, we didn't have a
Speaker 2: lot of pronunciation guides when I was in middle school.
Speaker 2: And I also just don't remember how people were saying
Speaker 2: these things. It was like thirty years ago. And I
Speaker 2: say that just because someone someone on Twitter or read
Speaker 2: it was criticizing me for not knowing that a card
Speaker 2: that Joe mentioned was an actual card. Yeah, I didn't
Speaker 2: know that. I thought you were making it up. I
Speaker 2: mean sounds like, oh, you know, an obvious magic card.
Speaker 3: I know nothing at all about magic. I've never played it.
Speaker 3: I really, I just I don't know how the game works,
Speaker 3: et cetera. All I only remember one fact, which is
Speaker 3: that one of my good friend's brother younger brother in
Speaker 3: high school had a call called Wall of Brambles. Actually,
Speaker 3: this gets to like the question about memorization. Who the
Speaker 3: heck knows how that random fact got stuck in my
Speaker 3: head or what. But this is I hear magic and
Speaker 3: I just remember this card. I just looked it up.
Speaker 3: It looks like this card would cost somewhere between twenty
Speaker 3: five and thirty cents, so I'm certainly not memorizing it
Speaker 3: because there's a particularly valuable or important card.
Speaker 2: And then what role did the dragon play in my deck?
Speaker 2: I think I said this on the podcast. I really
Speaker 2: enjoyed the collecting side of magic, the gathering, more than
Speaker 2: I enjoyed actually playing it. You know, there's some gender
Speaker 2: imbalance at the time, and it like sometimes felt weird to,
Speaker 2: you know, go to war with a bunch of guys.
Speaker 2: But I really enjoyed putting together the decks and sort
Speaker 2: of strategizing, and I guess I didn't enjoy testing them
Speaker 2: out that much. What would we be if we were
Speaker 2: a card?
Speaker 3: Tra you got to you gotta answer this then.
Speaker 2: If all thoughts or if us It says if you
Speaker 2: and Joe were a magic card, So give me a second. Okay,
Speaker 2: full disclosure. I just asked chat GPT because this seems
Speaker 2: like a kind of fun question, and the AI generated
Speaker 2: answer is we would be a blue red legendary creature
Speaker 2: that rewards drawing cards, talking about weird market mechanics, and
Speaker 2: turning every small data point into a big compounding advantage.
Speaker 2: I'm not sure how you would incorporate discussions about markets
Speaker 2: into a Magic the Gathering game, but you know, it's
Speaker 2: nice to hear we could be a dragon. I would say, like,
Speaker 2: maybe we would be a Vesuven Doppelganger. And I say
Speaker 2: that partly because I'm sort of biased to the older cards,
Speaker 2: the ice age cards that came out in the mid
Speaker 2: nineties for obvious reasons, and I think the doppelganger, you know,
Speaker 2: they obviously compliment each other, and their actual power in
Speaker 2: the game from what I remember, is they can take
Speaker 2: on the characteristics of any creature that's actually in play,
Speaker 2: or most of the characteristics, And I think that's you know,
Speaker 2: that's kind of what we do. We try to adapt
Speaker 2: that's right to every conversation to get the best result.
Speaker 3: That's right. I also asked you a gpetitas. I didn't
Speaker 3: really understand. I don't I don't even understand it's results.
Speaker 3: But then it said why this works to Joe generates
Speaker 3: flow motion liquidity, and Tracy imposes structure, friction and narrative discipline,
Speaker 3: which I think many listeners would actually sort of agree
Speaker 3: with it sort of. Yeah, it doesn't off, so.
Speaker 2: That's not bad. But it's not a Magic the Gathering.
Speaker 3: No, no, no, I didn't even understand like all this stuff.
Speaker 3: I can't even I don't know too you are legend.
Speaker 3: I don't know what any of this stuff is.
Speaker 4: Oh.
Speaker 2: I do have some good news, which is remember I
Speaker 2: said that I had lost all my Magic the Gathering
Speaker 2: cards and I didn't know where they were. My mom
Speaker 2: actually found them in her basement. They were sort of
Speaker 2: hidden away. The bad news is I really don't have
Speaker 2: any valuable ones. I still have the Shaffon Dragon, and
Speaker 2: I have one that was signed by the artist, but
Speaker 2: that's about it.
Speaker 3: I'm surprised there's not one in there, Like, is there
Speaker 3: like an antiques road show style show for Magic the
Speaker 3: Gathering Cards? Like maybe we could do an episode like
Speaker 3: it's some guy and hear some dealer and like talk
Speaker 3: through the cards or something like that. I would do that.
Speaker 2: Yeah, that would be really So this is the end
Speaker 2: of the AMA. Thank you everyone for sending in all
Speaker 2: these great questions. We had a lot of fun answering them.
Speaker 3: Yeah, and thank you everyone, just for an end of
Speaker 3: your crazy year, great year, So really thank you to
Speaker 3: everyone who everyone who's listened.
Speaker 2: And yeah, we definitely hope you listen in twenty twenty
Speaker 2: six because we have some excellent episodes coming up. So
Speaker 2: shall we leave it there.
Speaker 3: Let's leave it there.
Speaker 2: This has been another episode of the Odd Lots podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 3: I'm Jill Wisenthal. You can follow me at the Stalwart.
Speaker 3: Definitely follow our producers Carmen Rodriguez at Carman Arman dash
Speaker 3: Ol Bennett at Dashbot and kill Brooks at Kilbrooks. For
Speaker 3: more Odd Laws content, gode Bloomberg dot com, slash odd
Speaker 3: Lots were a daily newsletter and all of our episodes,
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