WEBVTT - Wall Street Rally Put on Pause 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:46.800 the Bloomberg Terminal, and the Bloomberg Business app. Our team 0:00:47.000 --> 0:00:50.640 is trying to give you wonderful equity analysis of this 0:00:50.800 --> 0:00:53.519 crazy market. And all I can say is to go 0:00:53.560 --> 0:00:58.560 from Captain Kaminsky of the Massachusetts Institute of Technology to 0:00:58.640 --> 0:01:00.640 Amy Wu Silverman Instant. 0:01:01.000 --> 0:01:02.040 Is what this is about. 0:01:02.080 --> 0:01:08.360 She's with RBC, this interview, this conversation hugely anticipated, Amy Will, 0:01:08.400 --> 0:01:11.959 I'm gonna cut to the chase. Everyone's telling us there's 0:01:12.319 --> 0:01:15.440 massive options speculation. 0:01:15.520 --> 0:01:16.880 On a daily basis. 0:01:17.480 --> 0:01:20.880 Is that like portfolio insurance in nineteen eighty seven, is 0:01:20.920 --> 0:01:21.280 there a. 0:01:21.240 --> 0:01:25.639 Real risk here because of the option roulette that's going on. 0:01:27.480 --> 0:01:30.200 You know you would think so, Tom, But most of 0:01:30.240 --> 0:01:33.720 the activity we see in options right now is not 0:01:33.959 --> 0:01:38.000 for insurance. It's to bet on further upside. It's to 0:01:38.160 --> 0:01:42.280 perpetuate fomo, it's to beget momentum, and it is not 0:01:42.560 --> 0:01:46.560 for hedging. It is really historically out of whack with 0:01:46.600 --> 0:01:49.360 what we would expect from all that empirical data that 0:01:49.720 --> 0:01:50.840 I looked at Princeton. 0:01:50.960 --> 0:01:56.000 This is a special treat Damian Sasawer's wheelhouse. Mister sasawur 0:01:56.520 --> 0:01:58.360 take over the interview and make it smarter. 0:01:58.440 --> 0:02:00.480 Well, Amy, I'm gonna try and throw you ball here 0:02:00.520 --> 0:02:02.240 because you know, I'm an emerging market guy, but an 0:02:02.240 --> 0:02:04.160 emerging market fixed income guy. So I'm going to look 0:02:04.160 --> 0:02:06.080 at emerging market equities here. I'm going to look at 0:02:06.120 --> 0:02:08.960 that big MSCI E M E T F run by 0:02:08.960 --> 0:02:10.440 black Rock, and I'm going to look at the skew, 0:02:10.520 --> 0:02:12.840 all the call buying, all the bullish call buying that's 0:02:12.880 --> 0:02:15.160 been going on. I mean, should we look through that 0:02:15.320 --> 0:02:18.480 and see that as a signal that perhaps, you know, 0:02:18.600 --> 0:02:20.520 em equities are going to go up from here? I mean, 0:02:20.520 --> 0:02:22.360 what do you how do you look at skew? How 0:02:22.360 --> 0:02:24.040 do you look at the options markets on some of 0:02:24.080 --> 0:02:25.000 these large ETFs. 0:02:26.600 --> 0:02:29.119 I think that's a really interesting question. I will tell 0:02:29.160 --> 0:02:31.480 you I was actually in the UK a few weeks 0:02:31.480 --> 0:02:35.560 ago and I just asked investors that kind of point blank, 0:02:35.680 --> 0:02:38.640 you know, why is this call SKU bid. It's actually 0:02:38.720 --> 0:02:42.920 bid in the other ATF's proxies for China like FXI 0:02:43.120 --> 0:02:47.280 as well. And what we have heard from investors is, 0:02:47.919 --> 0:02:50.480 you know, a few years ago, the trade of the 0:02:50.520 --> 0:02:55.160 moment was China rebound. It did not happen. Folks are 0:02:55.200 --> 0:02:57.320 a little bit worried that it may never happen, but 0:02:57.400 --> 0:03:00.080 the right tail is that it could happen. Yes, so 0:03:00.200 --> 0:03:02.520 a lot of this bid is actually a right tail 0:03:02.600 --> 0:03:06.040 hedge to the idea that we have bottomed. So I 0:03:06.080 --> 0:03:09.080 will say investors don't think that that is true, but 0:03:09.200 --> 0:03:11.840 that's certainly they're worried and they're not positioned for it yet. 0:03:11.880 --> 0:03:13.840 I mean, I just have to cut you to our audience. 0:03:13.919 --> 0:03:16.760 You know how valuable that information is the fact that basically, 0:03:16.760 --> 0:03:18.680 I mean the China rebound trade, which you know people 0:03:18.720 --> 0:03:20.880 of poo pood now, I mean it's gone, it's forever gone, 0:03:20.880 --> 0:03:23.040 it's never going to come back. Just to play for 0:03:23.120 --> 0:03:24.959 that tail risk, I mean, makes a lot of sense, 0:03:25.000 --> 0:03:27.080 and to do it with voll at these levels, I mean, Amy, 0:03:27.120 --> 0:03:29.560 I agree completely. But you know, we were talking a 0:03:29.560 --> 0:03:32.440 little bit earlier about which volatility market we should be 0:03:32.440 --> 0:03:34.960 most focused on. Is it equity ball, is it ratefall, 0:03:35.200 --> 0:03:36.960 is it fxfall? What do you think? 0:03:38.680 --> 0:03:40.360 So of course I'm going to be a little biased 0:03:40.360 --> 0:03:43.560 because I'm an equity wall person. But you know, outside 0:03:43.600 --> 0:03:46.440 of rates ball, all the walls kind of look similar. 0:03:46.480 --> 0:03:49.360 It's not like you're getting anything different other than the 0:03:49.440 --> 0:03:52.560 rates ball universe. When you think cross asset, I mean, 0:03:52.600 --> 0:03:56.920 equity wall, especially on the left tail, is incredibly inexpensive. 0:03:57.000 --> 0:03:59.080 So there's only so many times a girl can cry 0:03:59.120 --> 0:04:01.320 wolf right. You know, people don't want to hear it. 0:04:01.360 --> 0:04:03.320 They don't want to be positioned where they're far more 0:04:03.360 --> 0:04:04.960 concerned about the reach. 0:04:05.280 --> 0:04:07.880 I was smarter in September of nineteen ninety eight than 0:04:07.920 --> 0:04:10.480 it was in July of nineteen ninety eight. And it 0:04:10.560 --> 0:04:12.440 had to do with the dreaded l word, Amy wu 0:04:12.520 --> 0:04:13.720 Silverman leverage. 0:04:14.040 --> 0:04:15.000 And you know, we didn't know. 0:04:14.920 --> 0:04:17.000 What fifteen to one or twenty two to one until 0:04:17.040 --> 0:04:19.640 Myron Schulz explained it to us. 0:04:19.680 --> 0:04:22.080 What's the shadow right now? In the market. You can't 0:04:22.120 --> 0:04:24.000 tell me this is a free lunch. 0:04:24.640 --> 0:04:28.080 Is it like a blatant leverage, an implied leverage, or 0:04:28.120 --> 0:04:30.120 is it some other mystery I can't see. 0:04:31.640 --> 0:04:34.400 So, Tom, I'll tell you the hottest topic to debate 0:04:34.520 --> 0:04:38.120 right now and equities. It's just the idea of all 0:04:38.160 --> 0:04:41.919 the short volatility trades that we're seeing folks selling calls 0:04:41.960 --> 0:04:45.800 from harvesting, you know, volatility risk premium. If this some 0:04:45.920 --> 0:04:50.159 way implodes the way we saw from twenty eighteen's Wellmageddon, 0:04:50.600 --> 0:04:52.360 and you know this is going to sound a little 0:04:52.400 --> 0:04:55.120 party pooper, but we don't think so. Is the short answer. 0:04:55.160 --> 0:04:57.360 The kind of leverage in the system and the kind 0:04:57.400 --> 0:05:00.279 of trades that are going on, especially if you include 0:05:00.320 --> 0:05:03.560 that delta from the stock is just dissimilar. It doesn't 0:05:03.600 --> 0:05:06.159 mean it cannot end. It's just not going to end 0:05:06.400 --> 0:05:09.520 necessarily in the same way. And I think that most 0:05:09.640 --> 0:05:12.400 volatile people would say that that is so just given 0:05:12.440 --> 0:05:15.279 the nature of these traits vall mageddon. 0:05:15.320 --> 0:05:17.279 I mean, look, you know, for me, Amy, it's these 0:05:17.320 --> 0:05:19.920 buy right strategies and you know, these ETFs that are 0:05:20.000 --> 0:05:22.400 you know, trying to you know, get investors to you know, 0:05:22.560 --> 0:05:24.040 take advantage of that scream. 0:05:24.279 --> 0:05:26.760 You have to be mortals listening. Okay, please, this is 0:05:26.800 --> 0:05:30.360 a third rail for me. You buy the asset and 0:05:30.440 --> 0:05:33.240 you write the option against it to bring in. 0:05:33.160 --> 0:05:37.680 A further income. That's correct until it works. Continue exactly 0:05:37.800 --> 0:05:39.799 right now. They have ETFs that are supposed to mimic 0:05:39.800 --> 0:05:41.960 that type of a strategy. Amy, how convinced are you 0:05:42.040 --> 0:05:44.720 that that ETF is going to deliver that type of 0:05:44.800 --> 0:05:46.400 performance at the end of the day. 0:05:48.000 --> 0:05:50.760 So it's interesting in some ways this is like one 0:05:50.800 --> 0:05:54.360 of the most bread and butter traits of the derivatives world. 0:05:54.400 --> 0:05:56.440 That's kind of for a market where you don't see 0:05:56.480 --> 0:05:59.960 substantial upside, that's another way to get a little yielded 0:06:00.120 --> 0:06:02.640 a world where rates don't give you that much yield. 0:06:02.720 --> 0:06:05.000 What I think is interesting about the success of these 0:06:05.040 --> 0:06:08.480 products is we actually had a relatively high rate yield environment, 0:06:08.560 --> 0:06:11.360 especially compared to history, and then we've obviously had a 0:06:11.400 --> 0:06:14.800 market with certain stocks have absolutely ripped. So it works 0:06:14.800 --> 0:06:17.440 for some things, it doesn't necessarily work for others. It 0:06:17.480 --> 0:06:19.760 really depends on your underlier, right, it depends where that 0:06:19.839 --> 0:06:22.640 delta is coming from. But look, these are actually very 0:06:22.680 --> 0:06:24.880 bread and butter trades where if you have the underlying 0:06:24.920 --> 0:06:27.560 and you get stopped out. It's not really that big 0:06:27.600 --> 0:06:27.920 a deal. 0:06:27.960 --> 0:06:30.120 We're to go mathe here right now, folks, stay with me, 0:06:30.160 --> 0:06:32.400 and we're going to do the conceit of a global 0:06:32.400 --> 0:06:35.240 Wall Street audience again with the Amy wou Silverman of 0:06:35.360 --> 0:06:38.880 RBC Capital Markets. Amy, Well, if I haven't implied log 0:06:38.960 --> 0:06:42.760 normal distribution where I go up on a slope that's 0:06:42.839 --> 0:06:46.520 not as harsh is the slope that I go down, 0:06:47.200 --> 0:06:49.400 And if I have all the different leverage, the bets 0:06:49.400 --> 0:06:53.520 and the setups within the system where we are right now, 0:06:53.600 --> 0:06:57.800 I have parabolic charts, I got a squared function. It's 0:06:57.920 --> 0:07:01.960 incalculable in Nvidia, but particularly in something away from you. 0:07:02.080 --> 0:07:06.400 In bitcoin, do they track a log normal distribution on 0:07:06.440 --> 0:07:11.440 the way down? If Bitcoin goes down, if Nvidia goes down, 0:07:11.880 --> 0:07:13.520 in what way do they go down? 0:07:15.280 --> 0:07:17.720 So look, Tom, this goes back to the what is 0:07:17.760 --> 0:07:20.560 it an escalator up and then an elevator down? Right? 0:07:21.440 --> 0:07:23.400 And I do think you know, this is part of 0:07:23.440 --> 0:07:25.440 the concern. That's part of the concern with what I 0:07:25.520 --> 0:07:28.600 mentioned with these short wall trades. The really interesting thing 0:07:28.640 --> 0:07:31.200 I would say about bitcoin, because you know, you can't 0:07:31.240 --> 0:07:34.720 dabble in volatility without dabbling and crypto a little, is 0:07:35.160 --> 0:07:38.400 that this has historically been a risk acid correlation that's 0:07:38.400 --> 0:07:41.200 actually been positive, even though it's been made out not 0:07:41.360 --> 0:07:44.360 to be. However, we are actually seeing that correlation decline. 0:07:44.680 --> 0:07:47.400 So if you look three years ago, the correlation between 0:07:47.440 --> 0:07:50.720 just the simple equity market and bitcoin was fairly positive 0:07:50.760 --> 0:07:53.000 and it is still positive, to be clear, but it's 0:07:53.040 --> 0:07:55.760 actually come in a lot, and so it may actually 0:07:55.840 --> 0:08:00.400 begin to be behaving in the inflation head slash, you know, 0:08:00.480 --> 0:08:03.120 equity hedge that it was purported to be in the beginning. 0:08:03.680 --> 0:08:04.880 That's a critical sting. 0:08:04.960 --> 0:08:06.960 And I mean for Global Wall Street, what she just 0:08:07.000 --> 0:08:09.200 said is a huge deal. 0:08:09.120 --> 0:08:11.120 You know. And now I'm gonna just say ask the 0:08:11.200 --> 0:08:13.760 dumbest question, Amy. I mean, I'm looking at put call 0:08:13.840 --> 0:08:17.600 open interest on Nvidia. I mean, wow, I mean, talk 0:08:17.640 --> 0:08:20.920 to us about what your takeaway is from the options 0:08:20.960 --> 0:08:23.720 market on what is arguably the highest of high flying 0:08:23.760 --> 0:08:25.400 stocks in the US equity market. 0:08:27.120 --> 0:08:29.880 So I'll tell you, I think there's peak fomo when 0:08:29.920 --> 0:08:32.960 derivative strategists sit back and say wish I had an 0:08:33.040 --> 0:08:36.400 Nvidia all that's kind of how I felt after watching 0:08:36.440 --> 0:08:39.000 this thing, and watching this thing, Wow, what's interesting is 0:08:39.280 --> 0:08:41.520 after the recent selloff and in Nvidia, you know it's 0:08:41.559 --> 0:08:44.960 first one after a while, those calls didn't move, so 0:08:45.120 --> 0:08:48.000 meaning people weren't worried about the momentum. They went right 0:08:48.040 --> 0:08:50.520 back into it and those call skews are store at 0:08:51.000 --> 0:08:55.000 historic level, still saying incredibly bush things. March eighteenth, there 0:08:55.040 --> 0:08:57.080 is an AI conference with Nvidia that a lot of 0:08:57.080 --> 0:08:59.280 folks that we speak to are looking to play. 0:08:59.360 --> 0:09:02.880 Amy the Epsilon be with you, Emmy was Silverman there, folks. 0:09:02.960 --> 0:09:05.520 That was just a great call that will be feature 0:09:05.600 --> 0:09:09.360 today on our single Best Idea podcast. 0:09:20.400 --> 0:09:23.160 All of us checked out a math class. What we 0:09:23.200 --> 0:09:26.640 did Lee Squares. Katie Kaminski kept going, We're thrilled. She 0:09:26.720 --> 0:09:29.320 joins us this morning with Alpha Simplex as well. 0:09:29.400 --> 0:09:33.439 It's about trend, Yes, Is this bull market in equities 0:09:33.559 --> 0:09:36.560 trending normal? If you look at your work with Andrew 0:09:36.600 --> 0:09:40.000 Low at MIT back to the great trend followers, I 0:09:40.000 --> 0:09:42.680 think of Monroe, Trout and others, and quite frankly back 0:09:42.720 --> 0:09:44.600 to Gaus, is this a normal market? 0:09:45.120 --> 0:09:47.440 Well, I think that's a great question because if you 0:09:47.520 --> 0:09:51.640 look at trend signals across asset classes, equities is one 0:09:51.720 --> 0:09:55.520 of the weaker signals in general from a time serious perspective, 0:09:56.000 --> 0:09:58.840 but right now we're seeing something like we haven't seen 0:09:58.880 --> 0:10:02.120 since twenty seventeen in terms of the strength of those trends. 0:10:02.320 --> 0:10:05.520 When you look at the X axis, do you have 0:10:05.559 --> 0:10:08.560 a conviction and your setups, your trades, your belief in 0:10:08.760 --> 0:10:12.079 how you're going to deploy capital? On the X axis, 0:10:12.120 --> 0:10:14.880 are you thinking in minutes, days, weeks? 0:10:15.320 --> 0:10:17.200 Do you have the courage to make a bet out 0:10:17.200 --> 0:10:18.920 a month or six months? 0:10:19.440 --> 0:10:22.920 So we generally look at signals across multiple horizons, and 0:10:23.160 --> 0:10:25.880 when you look right now at where equities have moved, 0:10:26.360 --> 0:10:29.679 the turning point was in October and it's been I mean, 0:10:29.720 --> 0:10:32.319 look at S and P it's up almost twenty five 0:10:32.360 --> 0:10:36.040 percent since October. So pretty much over any window where 0:10:36.080 --> 0:10:38.440 you measure the strength of the trend, you're seeing a 0:10:38.480 --> 0:10:41.320 pretty strong signal that we're going straight to the moon. 0:10:42.160 --> 0:10:46.040 And so I think that's where you know, I'm surprised 0:10:46.040 --> 0:10:50.320 at how incredibly resilient this market has been. If you 0:10:50.400 --> 0:10:52.800 told me in January that February is going to be 0:10:52.800 --> 0:10:55.400 as amazing as it was, I would have not believed you. 0:10:56.360 --> 0:10:59.920 I don't know about you, guys, but it's it's pretty 0:11:00.000 --> 0:11:02.360 incredible the strength that we see in terms of trend 0:11:02.400 --> 0:11:03.960 signals at this point in equities. 0:11:04.360 --> 0:11:05.240 I got to ask you that. 0:11:05.520 --> 0:11:06.080 Oh I. 0:11:07.880 --> 0:11:08.800 Was on it wasn't Smith. 0:11:08.840 --> 0:11:10.960 That's it. I'm done. You're not here tomorrow, Katie. 0:11:10.960 --> 0:11:12.760 I got to ask you about for an exchange volatility here, 0:11:12.800 --> 0:11:15.319 I'm talking AUC dollar ball, Euro dollar ball, and the 0:11:15.440 --> 0:11:18.240 Stirling ball. I mean, we're talking lows to twenty twenty 0:11:18.320 --> 0:11:20.520 one lows right now, you know so. I mean yesterday 0:11:20.520 --> 0:11:22.760 we had people on here talking picking up pennies in 0:11:22.760 --> 0:11:24.360 front of a steamroll or tom I know you know 0:11:24.400 --> 0:11:26.400 what I'm talking about here, But talk to me about 0:11:26.440 --> 0:11:29.080 shorting ball and an environment like this, I mean, is 0:11:29.120 --> 0:11:31.320 that the right player? Should? You know? Investors be looking 0:11:31.360 --> 0:11:34.640 for opportunities to get long volatility, especially in lieu of 0:11:34.640 --> 0:11:36.360 some of the data releases we're seeing over the next 0:11:36.440 --> 0:11:37.000 few weeks. 0:11:37.120 --> 0:11:40.360 So looking at currencies, the weakest signals that we're seeing 0:11:40.480 --> 0:11:43.160 is in the currency sector, and there's a few exceptions, 0:11:43.160 --> 0:11:49.959 obviously the end is but if you look at currencies, 0:11:50.120 --> 0:11:52.920 they really have been consolidating a lot, and there's not 0:11:53.040 --> 0:11:55.680 been a clear picture because there's this wait and see 0:11:55.760 --> 0:11:58.360 narrative to see what policy is going to do. So 0:11:58.400 --> 0:12:01.560 when you look at the technical sign they've really rained in, 0:12:02.040 --> 0:12:04.320 there's very little direction and there's not a lot of 0:12:04.360 --> 0:12:06.160 P and L in that direction either, so there's just 0:12:06.200 --> 0:12:08.280 not a lot of movement. So it's not maybe the 0:12:08.320 --> 0:12:10.920 place to be looking yet unless you have a really 0:12:10.960 --> 0:12:11.600 strong view. 0:12:11.640 --> 0:12:13.880 Okay, I think you're about a big direction. You make 0:12:13.920 --> 0:12:16.160 a great point. You're making the point I think. I 0:12:16.200 --> 0:12:19.160 think that FX fall is following rateball, and that rate 0:12:19.240 --> 0:12:21.240 ball is the center of the universe. Now I don't 0:12:21.240 --> 0:12:23.120 know if that's true. I mean, is equity of all 0:12:23.160 --> 0:12:25.240 the center of the universe. I mean, I've been trained, 0:12:25.600 --> 0:12:27.120 you know, in my career to think, you know, it's 0:12:27.120 --> 0:12:28.840 the VIX. It's all about the VIX and everything m 0:12:28.840 --> 0:12:30.760 andate's from the VIX. But you know, is it rate ball? 0:12:30.880 --> 0:12:32.840 Is it policy that's going to drive you know, markets 0:12:32.880 --> 0:12:34.000 over the next few weeks. 0:12:34.120 --> 0:12:37.040 So I love this question because we've seen some very 0:12:37.120 --> 0:12:41.000 different dynamics in market prices since twenty twenty two, and 0:12:41.040 --> 0:12:43.959 the number one most important difference you're seeing is that 0:12:44.160 --> 0:12:48.200 ratefall and fixed income ball is still elevated, while currency 0:12:48.240 --> 0:12:51.160 ball has actually been dropping significantly. So you're seeing this 0:12:51.280 --> 0:12:54.920 dichotomy of there's a lot of volatility in fixed income 0:12:55.200 --> 0:12:59.360 and the stockbonk correlation is high, so AKA inflation matters right? 0:12:59.360 --> 0:13:03.000 Good morning, YouTube and out on YouTube search Bloomberg Podcast. 0:13:03.040 --> 0:13:05.800 Peter from Chapel Hill, Thank you so much for listening. 0:13:05.840 --> 0:13:08.200 First time I ever met Peter. He set of moving averages. 0:13:08.240 --> 0:13:11.360 What a bount of hot air. I use Klimman moving 0:13:11.400 --> 0:13:15.360 averages from the legendary George Climban at marilynch a million 0:13:15.440 --> 0:13:18.480 years ago, or run an exponential How do you use 0:13:18.679 --> 0:13:22.240 moving averages is I look at the financial media misusing 0:13:22.280 --> 0:13:23.440 them every day. 0:13:24.040 --> 0:13:27.600 So what's exciting about trend falling systems is their goal 0:13:27.720 --> 0:13:31.160 is really to measure where market is moving. So using 0:13:31.440 --> 0:13:35.040 classic tools like moving averages can actually be a very 0:13:35.080 --> 0:13:39.160 simple way to understand the direction of markets, particularly when 0:13:39.240 --> 0:13:43.000 markets are moving in directions that people don't like. So 0:13:43.320 --> 0:13:46.600 that's when trend works the best is when a simple 0:13:46.840 --> 0:13:49.240 strategy of making decisions based. 0:13:49.000 --> 0:13:50.520 On how many moving averages you use. 0:13:50.559 --> 0:13:53.560 I use three off climate as well. I use two 0:13:54.679 --> 0:13:58.719 nine and two nine and thirty I think is what no? 0:13:59.000 --> 0:14:00.640 Two eleven and thirty. 0:14:01.160 --> 0:14:05.120 So we use many, many different types of strategies for 0:14:05.240 --> 0:14:07.720 trading trend One of which that you could use is 0:14:07.840 --> 0:14:12.240 moving average, and we tend to use a wide range well, 0:14:12.280 --> 0:14:14.240 we'll tend to use a wide range of depending. 0:14:13.920 --> 0:14:16.079 On how look back windows. Tom, it's all about look 0:14:16.120 --> 0:14:16.800 back windows. 0:14:16.920 --> 0:14:17.600 Yeah, it is no. 0:14:17.720 --> 0:14:20.480 And then on the Bloomberg terminal, folks, there's a phenomenal 0:14:20.920 --> 0:14:22.720 look back test function, Damian. 0:14:22.720 --> 0:14:24.760 One more questionnaire is a delightful. 0:14:24.360 --> 0:14:26.680 I want to talk about the distribution of probabilities around 0:14:26.720 --> 0:14:29.560 the d sois figure right? I mean what I've been 0:14:29.600 --> 0:14:31.720 told is okay, fine. You know, the markets are pricing 0:14:31.760 --> 0:14:34.360 in you know, three cuts in an eighty percent or 0:14:34.360 --> 0:14:37.680 fifty percent probability of a fourth, but the dispersion around 0:14:37.760 --> 0:14:40.240 what might actually happen, it could be as much as 0:14:40.280 --> 0:14:42.440 five cuts. It could be a hike. You know, talk 0:14:42.480 --> 0:14:44.560 to us a little bit about how you how you 0:14:44.600 --> 0:14:46.880 how that factors into your equation and it's your models. 0:14:47.320 --> 0:14:49.520 So what I think is interesting about being a trend 0:14:49.560 --> 0:14:52.240 follower is we do what the market is doing, not 0:14:52.400 --> 0:14:56.040 what the market should do. And if you ask me 0:14:56.480 --> 0:14:58.640 what the market should do and what we as trend 0:14:58.640 --> 0:15:02.120 followers are concerned about, it's that inflation doesn't go down 0:15:02.120 --> 0:15:04.160 as quickly as people like, because there's a lot of 0:15:04.160 --> 0:15:07.360 hope in financial markets. There's hope that we're gonna have cuts, 0:15:07.760 --> 0:15:10.520 there's wishes. But unfortunately hope isn't a. 0:15:10.520 --> 0:15:12.960 Strategy and it's gonna get solved because Carl Gus is 0:15:13.000 --> 0:15:14.880 going to take over as head of the Boston Fed 0:15:15.560 --> 0:15:17.560 and then you'll get your you know, one over square 0:15:17.640 --> 0:15:20.400 to two pie and all that, you'll get your probability distribution. 0:15:20.480 --> 0:15:21.880 You know, I wish we had more time with Katie. 0:15:21.880 --> 0:15:23.320 I want to ask her about com I want to 0:15:23.560 --> 0:15:25.760 you know, if you're building, you know, trend following book 0:15:25.840 --> 0:15:28.120 is going to be Commandie's gonna be I mean cocoa beans. 0:15:28.640 --> 0:15:31.960 I'm not Steve Roach. I mean Kiminsky walks on water. 0:15:32.440 --> 0:15:34.640 But I'm my good friend Steve Roach. I'm not cancled. 0:15:34.720 --> 0:15:36.480 Can you come back again? Sure? 0:15:36.560 --> 0:15:38.760 It's a long tread from from Boston. 0:15:38.880 --> 0:15:39.280 Boston. 0:15:39.440 --> 0:15:41.240 What do you What do you think of Spring training? 0:15:41.520 --> 0:15:42.640 You know they got any chance. 0:15:44.360 --> 0:15:47.000 Unfortunately I've been watching more of the Ruins and the 0:15:47.080 --> 0:15:49.000 Celtics whose yeah, you. 0:15:48.960 --> 0:15:53.040 Know, they's a boring way. 0:15:53.160 --> 0:16:00.600 Just Kiminski, thank you so much. With Alpha Simplex. This 0:16:00.680 --> 0:16:01.480 is a great pleasure. 0:16:01.840 --> 0:16:05.040 Is I mentioned this with Ellen Zenner of Morgan Stanley. 0:16:05.320 --> 0:16:09.440 When they're young and they're desperate. They write these really 0:16:09.480 --> 0:16:13.240 intelligent economic notes and they have a wheelhouse. You got 0:16:13.280 --> 0:16:15.960 to have an angle to get read. You know, you 0:16:16.040 --> 0:16:19.239 know this, Damien, You've lived it. Ellen Zenner owned the consumer. 0:16:19.880 --> 0:16:25.600 Tom Percelly owned wage growth. He just owned the study 0:16:25.760 --> 0:16:29.040 of what our wages our benefits. You're doing with PGM 0:16:29.120 --> 0:16:31.680 right now joining us, Thomas Percelli, Tom, what have you. 0:16:31.640 --> 0:16:35.160 Learned about our wage growth? Is it ebbing away? Well? 0:16:35.160 --> 0:16:36.800 Good to be with you, Good to be and Damien, 0:16:37.400 --> 0:16:38.760 love that you're sitting there with Tom. 0:16:39.320 --> 0:16:40.880 We'll go there. 0:16:41.480 --> 0:16:42.920 We'll have to talk about that as we're playing golf 0:16:42.960 --> 0:16:43.280 one day. 0:16:44.280 --> 0:16:44.520 Yeah. 0:16:44.600 --> 0:16:48.680 Look, I think that you know, wages, I think are 0:16:48.680 --> 0:16:51.720 going to really take the lead from quits and the 0:16:51.800 --> 0:16:54.400 quit rate it continues to drift lower. That that is 0:16:54.400 --> 0:16:56.880 the reality. I mean, it's it's one of the relationships 0:16:56.880 --> 0:16:59.800 that works incredibly well. And what we know is that 0:16:59.840 --> 0:17:02.600 the quit rate is now below where it was pre COVID, 0:17:03.120 --> 0:17:06.560 and you know, the trend doesn't look very friendly. So 0:17:07.359 --> 0:17:09.679 I think it's very easy to say that the direction 0:17:09.720 --> 0:17:12.400 of travel from a wage perspective is lower from here. 0:17:12.600 --> 0:17:14.320 You know, Tom, I want to ask you about retail 0:17:14.320 --> 0:17:16.760 sales and PP I want to ask you about the 0:17:16.800 --> 0:17:18.639 Dots next week. But before I do any of that, 0:17:18.720 --> 0:17:21.640 I need to ask you about fifty five Locust Avenue, 0:17:22.160 --> 0:17:25.480 Tamarack Country Club in Greenwich, Connecticut. The second hole. They 0:17:25.520 --> 0:17:28.160 pushed the trap back on the left side of the fairway. 0:17:28.440 --> 0:17:30.159 For you long hitters out there, this is going to 0:17:30.160 --> 0:17:32.320 be a big problem. Tom. How are you going to 0:17:32.400 --> 0:17:34.479 approach the second hole of Tamarack this season? 0:17:35.480 --> 0:17:36.840 It's going to make it easier for me. 0:17:37.240 --> 0:17:40.159 I'm I'm not nearly as talented a golfer as you, Damien, 0:17:40.240 --> 0:17:44.760 So to me, that's the pleasant No. 0:17:44.920 --> 0:17:47.120 But seriously, let's talk about next week. Let's talk about 0:17:47.119 --> 0:17:48.679 the FED, let's talk about the Dots. What are your 0:17:48.680 --> 0:17:50.520 expectations there? Is that going to be a market mover? 0:17:51.520 --> 0:17:51.680 Yeah? 0:17:51.720 --> 0:17:53.840 I mean, look, I think pl the spoke, so I 0:17:53.880 --> 0:17:55.880 think it's really hard to make the case that he's 0:17:55.880 --> 0:17:57.520 going to say anything that's sort of, you know, very 0:17:57.520 --> 0:18:00.320 different than what he just said last week. And I 0:18:00.320 --> 0:18:03.760 think you know, the idea of getting closer right that, 0:18:03.960 --> 0:18:06.680 you know, getting closer to cutting that, to me, is. 0:18:08.359 --> 0:18:09.080 We agree with that? 0:18:09.119 --> 0:18:11.200 I mean, we've been on that page for quite some time, 0:18:11.800 --> 0:18:14.720 you know, we've been sort of midyear cut would would 0:18:14.760 --> 0:18:17.200 be ushered in and then we'd see a couple more thereafter. 0:18:17.640 --> 0:18:19.919 So everything that's sort of unfolded thus far has been 0:18:19.960 --> 0:18:23.919 pretty consistent with with our with our broad view. I think, 0:18:24.240 --> 0:18:27.000 you know, if there's anything that I'm wondering about as 0:18:27.000 --> 0:18:29.680 it relates to the dots, it's it's the long run dot. 0:18:29.840 --> 0:18:31.840 I mean, I think that this is probably a very 0:18:32.359 --> 0:18:35.359 big conversation that's happening with within the FED. I think 0:18:35.400 --> 0:18:37.479 most people would agree that two and a half percent 0:18:37.960 --> 0:18:40.400 is not the right not the right median for that, 0:18:40.640 --> 0:18:42.880 it's probably holding a three handle. In fact, I would 0:18:42.880 --> 0:18:45.240 say it's easily holding a three handle. I think it's 0:18:45.280 --> 0:18:47.080 just a question of when does it turn. If you 0:18:47.080 --> 0:18:50.720 look at the average of the top five dots and 0:18:50.760 --> 0:18:53.400 the average of the of the bottom five dots, they're 0:18:53.440 --> 0:18:56.919 they're all turning up. The averages are so it's just 0:18:56.920 --> 0:18:58.760 a it's just a question of time that before the 0:18:58.800 --> 0:18:59.919 median finally shifts. 0:19:00.000 --> 0:19:02.399 And what's important is Okill did a great job of 0:19:02.440 --> 0:19:06.160 extending the course off of the original architecture. You take 0:19:06.240 --> 0:19:08.440 Tamarack back to nineteen twenty nine. 0:19:08.800 --> 0:19:12.879 Have they been successful? Damien had taken Tamarack to a 0:19:12.920 --> 0:19:16.080 new long game. Tom, It's Tom Purcelli's game. 0:19:16.080 --> 0:19:18.520 Tom Porcelli. You know, Tom King made a mistake there. 0:19:18.560 --> 0:19:20.520