1 00:00:13,119 --> 00:00:16,320 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg weekly 2 00:00:16,400 --> 00:00:19,760 Speaker 1: market podcast. I'm Sarah Pontzek, or reporter on the Cross 3 00:00:19,760 --> 00:00:22,759 Speaker 1: Asset Team and on Mike Reagan, a senior editor on 4 00:00:22,800 --> 00:00:27,960 Speaker 1: the Market Team and the Garfuncle two. Sarah's Paul Simon. 5 00:00:30,560 --> 00:00:32,800 Speaker 1: I think it's a good one. I like it. We're 6 00:00:32,840 --> 00:00:35,360 Speaker 1: gonna I'm serious, We're gonna see how long we can 7 00:00:35,440 --> 00:00:38,960 Speaker 1: keep us going, prove how creative Mike Reagan really is. 8 00:00:39,040 --> 00:00:41,480 Speaker 1: Updating myself a little bit with these references. I need 9 00:00:41,479 --> 00:00:44,320 Speaker 1: I need some some some millennial reference for the kids 10 00:00:44,320 --> 00:00:48,480 Speaker 1: out there. Come up with some some more recent ones 11 00:00:48,560 --> 00:00:51,879 Speaker 1: for you next time. But anyway, Mike, this week on 12 00:00:51,880 --> 00:00:54,880 Speaker 1: the show, the last time our guests joined us on 13 00:00:54,920 --> 00:00:58,520 Speaker 1: the podcast, we had this lengthy conversation about how could 14 00:00:58,520 --> 00:01:02,720 Speaker 1: stocks be near record when the economic outlook was so uncertain? 15 00:01:03,080 --> 00:01:06,880 Speaker 1: Sound familiar, Well that was actually last summer in two 16 00:01:06,920 --> 00:01:10,120 Speaker 1: thousand and nineteen, and it's just a reminder that the 17 00:01:10,120 --> 00:01:12,520 Speaker 1: stock market and the economy are not one and the same. 18 00:01:12,600 --> 00:01:16,680 Speaker 1: We've had this conversation many times over the last couple 19 00:01:16,720 --> 00:01:19,840 Speaker 1: of weeks. But again he'll tackle the question, but in 20 00:01:19,880 --> 00:01:24,120 Speaker 1: different circumstances, and as always, will close out the episode 21 00:01:24,120 --> 00:01:27,399 Speaker 1: with the craziest thing I saw in markets this week. 22 00:01:27,520 --> 00:01:30,360 Speaker 1: So if you saw something crazy, please do give us 23 00:01:30,360 --> 00:01:34,039 Speaker 1: a call on the Bloomberg Podcast hotline at six four 24 00:01:34,080 --> 00:01:37,800 Speaker 1: or six three two four three four nine. Oh, and 25 00:01:37,880 --> 00:01:40,560 Speaker 1: leave us a voicemail with the craziest thing you saw 26 00:01:40,560 --> 00:01:43,640 Speaker 1: in markets this weekend. Maybe we'll play your crazy thing 27 00:01:43,680 --> 00:01:47,639 Speaker 1: on the air. But Sarah, let's let's introduce that guest. 28 00:01:48,160 --> 00:01:51,840 Speaker 1: Very happy to have him back. His name is Shawn Snyder. 29 00:01:51,920 --> 00:01:57,760 Speaker 1: He's the head of investment strategy at City Personal Wealth Management. Sean, 30 00:01:57,840 --> 00:02:01,600 Speaker 1: welcome to the show, Thank you, glad you back. Great, Um, 31 00:02:01,640 --> 00:02:05,080 Speaker 1: and we got some notes, some talking points of yours 32 00:02:05,200 --> 00:02:10,120 Speaker 1: uh this week. And I'm I'm fascinated with this notion, Um, 33 00:02:10,320 --> 00:02:13,560 Speaker 1: that all that basically matters to a lot of investors 34 00:02:13,639 --> 00:02:16,079 Speaker 1: right now is the Fed's balance sheet. You point out 35 00:02:16,160 --> 00:02:19,600 Speaker 1: that at least for part of the last Bowl market 36 00:02:19,639 --> 00:02:21,840 Speaker 1: there was like a ninety I think it's a percent 37 00:02:21,960 --> 00:02:25,640 Speaker 1: correlation between the size of the balance sheet and what 38 00:02:25,760 --> 00:02:29,000 Speaker 1: the stock market did. Obviously, now the FED is expanding 39 00:02:29,040 --> 00:02:33,640 Speaker 1: that balance sheet again aggressively. Is that really? Is that 40 00:02:33,800 --> 00:02:37,200 Speaker 1: all that matters right now as far as the level 41 00:02:37,240 --> 00:02:39,799 Speaker 1: of the stock market. I mean, I'm looking at valuations, 42 00:02:39,840 --> 00:02:43,320 Speaker 1: and here we are among the highest valuations we've had 43 00:02:43,440 --> 00:02:47,760 Speaker 1: on a forward basis SMP about twenty five times earnings 44 00:02:47,800 --> 00:02:52,880 Speaker 1: forward earnings, NASTAC one hundred, almost thirty times forward earnings. 45 00:02:52,880 --> 00:02:55,120 Speaker 1: Probably that in the at least the top decile, maybe 46 00:02:55,120 --> 00:02:58,880 Speaker 1: even higher than that of this century. But yet, as 47 00:02:58,919 --> 00:03:02,440 Speaker 1: you point out, when the it is in stimulation mode, 48 00:03:02,760 --> 00:03:06,040 Speaker 1: um evaluations really even matter at this point. You know, 49 00:03:06,120 --> 00:03:09,120 Speaker 1: you ask if the Federal Reserve stimulus is all that matters, 50 00:03:09,160 --> 00:03:11,160 Speaker 1: and I think the answer is that it's not all 51 00:03:11,240 --> 00:03:14,560 Speaker 1: that matters. You know, health data is now economic data. 52 00:03:14,840 --> 00:03:18,560 Speaker 1: If you saw a second wave of a coronavirus, then obviously, uh, 53 00:03:18,600 --> 00:03:20,640 Speaker 1: you know, just having that FED stimulus may not be 54 00:03:20,760 --> 00:03:23,400 Speaker 1: enough to keep the market on its pace. So there 55 00:03:23,400 --> 00:03:26,360 Speaker 1: are things that do matter outside of the FED stimulus, 56 00:03:26,400 --> 00:03:30,080 Speaker 1: without a doubt. But one things that I've referenced lately 57 00:03:30,120 --> 00:03:34,160 Speaker 1: is how fast and how powerful the reaction has been 58 00:03:34,200 --> 00:03:37,880 Speaker 1: in terms of stimulus. During the global financial crisis, it 59 00:03:37,920 --> 00:03:41,560 Speaker 1: took the Federal Reserve almost six years to increase their 60 00:03:41,560 --> 00:03:44,480 Speaker 1: balance sheet by three trillion dollars. We've done that in 61 00:03:44,520 --> 00:03:47,360 Speaker 1: just three months. UM, So it hasn't been exactly one 62 00:03:47,360 --> 00:03:49,760 Speaker 1: trillion dollar every month. It's been a little bit less, 63 00:03:49,760 --> 00:03:51,880 Speaker 1: a little bit more, but it's about one trillion dollars 64 00:03:51,880 --> 00:03:55,720 Speaker 1: each month UM. So far balance sheets at about seven 65 00:03:55,760 --> 00:03:59,400 Speaker 1: trillion now projected to go to maybe nine trillion in 66 00:03:59,440 --> 00:04:01,720 Speaker 1: the next few months, and that made me moderate. But 67 00:04:02,040 --> 00:04:04,720 Speaker 1: just the sheer speed at which they operated this time 68 00:04:04,760 --> 00:04:09,040 Speaker 1: around UM I think does volumes for the speed at 69 00:04:09,040 --> 00:04:11,920 Speaker 1: which the stock markets recovered. It's not the only thing 70 00:04:11,920 --> 00:04:15,840 Speaker 1: that matters, but it is really important. Speed has really 71 00:04:15,840 --> 00:04:18,400 Speaker 1: been unbelievable. You kind of mapped out the speed of 72 00:04:18,480 --> 00:04:21,360 Speaker 1: balance sheet growth, but there's a statistic. We just had 73 00:04:21,400 --> 00:04:25,280 Speaker 1: the fastest fifty day rally for the SMP fire ever. 74 00:04:25,480 --> 00:04:27,880 Speaker 1: I mean, pretty unbelievable when you think about that. The 75 00:04:28,000 --> 00:04:32,479 Speaker 1: SMP now up roughly or so off the bottom. We 76 00:04:32,600 --> 00:04:36,480 Speaker 1: actually got a question on Twitter for you, Sean um 77 00:04:36,520 --> 00:04:39,520 Speaker 1: from a listener at tweet view or nine, so I 78 00:04:39,520 --> 00:04:42,360 Speaker 1: wanted to ask the question for him. He said, one, 79 00:04:43,360 --> 00:04:46,400 Speaker 1: when and if FED support will ever be removed? So 80 00:04:46,480 --> 00:04:50,440 Speaker 1: will FED support ever actually be removed? And what is 81 00:04:50,480 --> 00:04:54,160 Speaker 1: the downside if this support actually just goes on indefinitely 82 00:04:54,160 --> 00:04:56,600 Speaker 1: and they can't remove it. I think the most important 83 00:04:56,640 --> 00:04:59,680 Speaker 1: thing is what happens to the unemployment rate, And right 84 00:04:59,720 --> 00:05:02,320 Speaker 1: now you're seeing an unemployment rate that's headed towards the 85 00:05:02,400 --> 00:05:05,760 Speaker 1: highest level we've seen in decades, and one of the 86 00:05:05,800 --> 00:05:09,120 Speaker 1: mandates of the Federal Reserve is to have full employment 87 00:05:09,120 --> 00:05:11,240 Speaker 1: in the country. So I think the notion that they're 88 00:05:11,240 --> 00:05:14,080 Speaker 1: going to back off of stimulus will start to normalize 89 00:05:14,120 --> 00:05:18,760 Speaker 1: it anytime soon is probably not accurate. Even if COVID 90 00:05:18,839 --> 00:05:21,960 Speaker 1: nineteen is come and gone and we're past the worst 91 00:05:22,000 --> 00:05:24,800 Speaker 1: of it, which I'm not necessarily confident about um. But 92 00:05:24,880 --> 00:05:27,120 Speaker 1: if you still have high levels of unemployment, I think 93 00:05:27,120 --> 00:05:30,720 Speaker 1: there's still going to continue to have that policy backstop. 94 00:05:31,440 --> 00:05:34,039 Speaker 1: What is the downside if they remove it? It depends 95 00:05:34,080 --> 00:05:37,440 Speaker 1: on the economic environment we're in. We did see them 96 00:05:37,480 --> 00:05:39,800 Speaker 1: start to remove it two thousand seventeen and two thousand 97 00:05:39,800 --> 00:05:42,479 Speaker 1: and eighteen in the market climbed higher, but it was 98 00:05:42,640 --> 00:05:44,240 Speaker 1: in this case it was on the back of fiscal 99 00:05:44,240 --> 00:05:47,320 Speaker 1: stimulus from Congress, So it really depends on what the 100 00:05:47,400 --> 00:05:49,400 Speaker 1: environment looks like. Then, if we're at the end of 101 00:05:50,160 --> 00:05:53,560 Speaker 1: one and the economy is booming because it's so much 102 00:05:53,560 --> 00:05:57,599 Speaker 1: pent up demand and so much stimulus, well well done. Shot. 103 00:05:57,720 --> 00:06:00,120 Speaker 1: You know, whatever someone preps is a question with I've 104 00:06:00,120 --> 00:06:02,240 Speaker 1: got a question for you from someone on Twitter. I mean, 105 00:06:02,560 --> 00:06:05,039 Speaker 1: that's reason to get nervous right there. So I uh, 106 00:06:05,279 --> 00:06:08,560 Speaker 1: I think i'd be sweating a little bit. This is 107 00:06:08,560 --> 00:06:10,599 Speaker 1: a question like that. You all know where that one's 108 00:06:10,600 --> 00:06:14,440 Speaker 1: gonna go. Next week? Uh, this upcoming week the FED 109 00:06:14,480 --> 00:06:18,400 Speaker 1: will meet uh for the regular meeting. We did have, uh, 110 00:06:18,560 --> 00:06:22,440 Speaker 1: some comments from William Dudley, the former head of the 111 00:06:22,480 --> 00:06:28,359 Speaker 1: New York FED, talking about those old boogeyman words moral hazard, 112 00:06:28,400 --> 00:06:32,840 Speaker 1: you know, worrying that the FED is incentivizing excessive risk 113 00:06:32,960 --> 00:06:38,040 Speaker 1: taking with its latest measures. Now, obviously, I I think, 114 00:06:38,080 --> 00:06:39,880 Speaker 1: as you pointed out, the FED has the mandate to 115 00:06:39,960 --> 00:06:44,839 Speaker 1: keep unemployment low and to keep inflation stable and you know, 116 00:06:44,960 --> 00:06:49,960 Speaker 1: relatively near that that two percent target. I wonder though, 117 00:06:50,000 --> 00:06:52,440 Speaker 1: if they will at least try to try to talk 118 00:06:52,680 --> 00:06:56,120 Speaker 1: the market out of this this sort of phase of exuberance, 119 00:06:56,680 --> 00:06:59,000 Speaker 1: sort of the way Dudley did bringing up that moral 120 00:06:59,080 --> 00:07:01,680 Speaker 1: hazard that sort of thing. Could could you see that 121 00:07:01,720 --> 00:07:06,479 Speaker 1: type of scenario where you know, the FED maybe someone 122 00:07:06,560 --> 00:07:09,600 Speaker 1: uses that irrational exuberant or or or or sort of 123 00:07:09,640 --> 00:07:14,960 Speaker 1: warns about the risk of getting too aggressive in your 124 00:07:14,960 --> 00:07:18,640 Speaker 1: investments at this time of of a cycle. Normally they 125 00:07:18,680 --> 00:07:21,920 Speaker 1: try to stay away from making commentsary about the stock market. 126 00:07:22,520 --> 00:07:25,160 Speaker 1: I have seen a few comments over the last few 127 00:07:25,200 --> 00:07:28,800 Speaker 1: months where they did make reference to the equity markets, 128 00:07:28,800 --> 00:07:32,080 Speaker 1: which is a bit unusual. I don't think that they're 129 00:07:32,080 --> 00:07:35,120 Speaker 1: going to back away or talk down stimulus in the 130 00:07:35,200 --> 00:07:40,000 Speaker 1: current environment with so much uncertainty right now, Um, what 131 00:07:40,080 --> 00:07:42,040 Speaker 1: does it mean for risk assets? What does it mean 132 00:07:42,080 --> 00:07:44,960 Speaker 1: for valuations? I do think you could get to a 133 00:07:45,000 --> 00:07:47,840 Speaker 1: point where the valuations become so stretched that they do 134 00:07:48,000 --> 00:07:51,200 Speaker 1: start to warn about, uh, you know, risk assets being 135 00:07:51,240 --> 00:07:54,080 Speaker 1: in a bubble, like we have heard that before. But 136 00:07:54,200 --> 00:07:57,480 Speaker 1: I think we're ways away from that. Staying on the 137 00:07:57,520 --> 00:08:01,160 Speaker 1: stimulus theme, but kind of shifting over to Washington and 138 00:08:01,240 --> 00:08:04,360 Speaker 1: fiscal stimulus. I mean, I I know that the unemployment 139 00:08:04,360 --> 00:08:06,800 Speaker 1: boost of the Cares Act is supposed to kind of 140 00:08:06,840 --> 00:08:09,640 Speaker 1: fall off and expire at the end of July. There's 141 00:08:09,800 --> 00:08:13,840 Speaker 1: talk of more stimulus in Washington, d C. But it 142 00:08:13,880 --> 00:08:16,880 Speaker 1: makes me wonder. I mean, we look at the Nasdaq 143 00:08:17,000 --> 00:08:20,000 Speaker 1: this past week putting in a record high. We know 144 00:08:20,200 --> 00:08:23,560 Speaker 1: that this administration does like to look at the stock 145 00:08:23,600 --> 00:08:27,480 Speaker 1: market quite often and almost use it as a barometer 146 00:08:27,600 --> 00:08:30,160 Speaker 1: of success sometimes of policy. We saw it with the 147 00:08:30,240 --> 00:08:33,040 Speaker 1: US China trade war in a way when all of 148 00:08:33,080 --> 00:08:34,840 Speaker 1: a sudden, when the stock market would go back up, 149 00:08:34,880 --> 00:08:37,080 Speaker 1: maybe they would get a little bit more aggressive with 150 00:08:37,160 --> 00:08:39,240 Speaker 1: their tactics. I mean, do you do you think it's 151 00:08:39,280 --> 00:08:41,880 Speaker 1: possible at all, though, that what we're seeing happen in 152 00:08:41,880 --> 00:08:45,559 Speaker 1: the stock market could at least bring down the urgency 153 00:08:45,920 --> 00:08:50,559 Speaker 1: of further stimulus measures to help the economy and there 154 00:08:50,600 --> 00:08:52,720 Speaker 1: by the stock market. Albeit they're not in the same 155 00:08:52,840 --> 00:08:55,560 Speaker 1: but still it almost makes you feel if you're only 156 00:08:55,559 --> 00:08:57,720 Speaker 1: looking at the stock market, like there isn't this urgency 157 00:08:57,760 --> 00:09:01,680 Speaker 1: for more help. And understand that theory, but I do 158 00:09:01,720 --> 00:09:03,320 Speaker 1: want to make a couple of points that I think 159 00:09:03,400 --> 00:09:07,720 Speaker 1: go against that notion. Uh this the impact of COVID 160 00:09:07,800 --> 00:09:12,280 Speaker 1: nineteen has been felt very unevenly across the demographics in 161 00:09:12,280 --> 00:09:15,920 Speaker 1: the United States that Fetcher Powell made reference to. At 162 00:09:15,920 --> 00:09:20,960 Speaker 1: one point that of households with income under forty thousand 163 00:09:21,280 --> 00:09:24,079 Speaker 1: had lost jobs. If you look at the unemployment rate 164 00:09:24,080 --> 00:09:27,240 Speaker 1: divided by education, the unemployment rate for those of the 165 00:09:27,280 --> 00:09:30,600 Speaker 1: bachelor's degree to higher is eight point five percent. The 166 00:09:30,640 --> 00:09:33,160 Speaker 1: unemployment rate for someone with a high school degree or 167 00:09:33,280 --> 00:09:39,040 Speaker 1: lower is closer to so really really big divide on 168 00:09:39,120 --> 00:09:43,439 Speaker 1: how it's impacted Americans. So, even though the stock market 169 00:09:43,480 --> 00:09:45,720 Speaker 1: seems to be doing well, if you're working remotely and 170 00:09:45,760 --> 00:09:48,160 Speaker 1: you have that ability, which is maybe say thirty percent 171 00:09:48,160 --> 00:09:50,559 Speaker 1: of the US population, you probably feel okay because it's 172 00:09:50,559 --> 00:09:53,120 Speaker 1: getting sunny out and it feels like the health data 173 00:09:53,120 --> 00:09:55,480 Speaker 1: has gotten better. But for a lot of people, there's 174 00:09:55,520 --> 00:09:58,160 Speaker 1: a lot of uncertainty about will they be able to 175 00:09:58,200 --> 00:10:00,720 Speaker 1: return to a job. And don't think we knew that 176 00:10:00,720 --> 00:10:03,280 Speaker 1: answer yet. So I hope that they keep that in 177 00:10:03,360 --> 00:10:06,360 Speaker 1: mind when they think about the stimulus, and I think 178 00:10:06,400 --> 00:10:08,840 Speaker 1: they'll go through with more. I'm not sure what the 179 00:10:08,920 --> 00:10:11,520 Speaker 1: number will be. I've heard three trillion, I've heard one trillion. 180 00:10:12,200 --> 00:10:14,640 Speaker 1: But I think they'll do it again based on that premise. 181 00:10:30,720 --> 00:10:33,960 Speaker 1: Show on another interesting point you've made in your notes 182 00:10:34,000 --> 00:10:37,040 Speaker 1: here is uh you talk about as the economy reopens, 183 00:10:37,160 --> 00:10:40,199 Speaker 1: investors are kind of rotating out of those stay at 184 00:10:40,240 --> 00:10:44,280 Speaker 1: home stocks you know, your your social networks, your zoom, uh, 185 00:10:44,480 --> 00:10:46,920 Speaker 1: that sort of thing, and into what you call get 186 00:10:46,960 --> 00:10:50,440 Speaker 1: me out stocks, which I like that that. I like 187 00:10:50,559 --> 00:10:53,400 Speaker 1: that everyone else is calling them reopening stocks, but no, 188 00:10:53,559 --> 00:10:55,360 Speaker 1: they're get me out there, get me out. I think 189 00:10:55,400 --> 00:10:57,760 Speaker 1: I think we can all sympathize with that feeling of 190 00:10:57,800 --> 00:11:00,240 Speaker 1: get get me out of here, Sarah there in her 191 00:11:00,240 --> 00:11:02,360 Speaker 1: parents house in Florida. Although you seem to have a 192 00:11:02,440 --> 00:11:06,199 Speaker 1: very happy domestic life with with the folks down in Florida. Look, 193 00:11:06,320 --> 00:11:08,320 Speaker 1: I'm not I'm not complaining. A lot of people have 194 00:11:08,320 --> 00:11:10,120 Speaker 1: it much worse than I do right now, so I'll 195 00:11:10,120 --> 00:11:14,240 Speaker 1: I'll handle any annoyances that I have to do very 196 00:11:14,320 --> 00:11:16,600 Speaker 1: well right now. I think your dad probably listens to 197 00:11:16,640 --> 00:11:19,040 Speaker 1: the show, so you can't. You can't criticize the home 198 00:11:19,080 --> 00:11:21,400 Speaker 1: life too much. I guess right, no, not right now, 199 00:11:22,000 --> 00:11:26,480 Speaker 1: just in private, not publicly over the airwaves. But anyway, Sean, 200 00:11:26,520 --> 00:11:28,319 Speaker 1: you talk about you say you still think it makes 201 00:11:28,320 --> 00:11:30,800 Speaker 1: sense to get in the companies that are sort of 202 00:11:30,840 --> 00:11:34,160 Speaker 1: the future of of America. Look us through kind of 203 00:11:34,160 --> 00:11:36,920 Speaker 1: what you mean by that, because I think that is 204 00:11:37,280 --> 00:11:40,520 Speaker 1: I think that's a wise call. Sure. So, initially the 205 00:11:40,600 --> 00:11:43,440 Speaker 1: concept was the core of America and the future of America. 206 00:11:43,480 --> 00:11:45,760 Speaker 1: And what I meant was the core of America was 207 00:11:45,840 --> 00:11:50,280 Speaker 1: like food and staples, retailing, um, you know, the basics 208 00:11:50,320 --> 00:11:52,440 Speaker 1: of the world that we all need to survive. Right. 209 00:11:52,480 --> 00:11:54,959 Speaker 1: We saw a huge surgeon demand for toilet paper. That's 210 00:11:54,960 --> 00:11:57,320 Speaker 1: an example of something we all needed at one point. 211 00:11:57,400 --> 00:12:00,920 Speaker 1: That's kind of the core the future of America. And 212 00:12:00,960 --> 00:12:02,480 Speaker 1: I think it's always been this way, but it's been 213 00:12:02,520 --> 00:12:06,920 Speaker 1: accelerated by COVID nineteen. UH is rise in demand for 214 00:12:07,000 --> 00:12:11,480 Speaker 1: cloud computing, UM, tele medicine, UH in this case because 215 00:12:11,520 --> 00:12:14,640 Speaker 1: of COVID nineteen, thermal imaging so that you can check temperatures. 216 00:12:15,080 --> 00:12:18,559 Speaker 1: Those things have really done well, including in home entertainment, 217 00:12:18,600 --> 00:12:20,680 Speaker 1: the more popular names that we tend to think about, 218 00:12:21,000 --> 00:12:23,920 Speaker 1: they actually have positive returns year to date, whereas the 219 00:12:24,200 --> 00:12:28,840 Speaker 1: get me out stocks are still quite depressed, but they're improving. UH. 220 00:12:28,840 --> 00:12:31,160 Speaker 1: And there's several data points that I can walk through 221 00:12:31,200 --> 00:12:34,360 Speaker 1: if you'd like, that point towards Americans actually getting out 222 00:12:34,360 --> 00:12:37,040 Speaker 1: of their house. UH. There's several things that t s 223 00:12:37,080 --> 00:12:39,719 Speaker 1: A is reported for seven consecutive weeks. The number of 224 00:12:39,720 --> 00:12:42,640 Speaker 1: flyers are picking up, still quite depressed, but you know, 225 00:12:42,679 --> 00:12:45,679 Speaker 1: we saw a large airline announced today that they're actually 226 00:12:45,720 --> 00:12:49,760 Speaker 1: adding flights according to routing requests for directions. More people 227 00:12:49,760 --> 00:12:52,320 Speaker 1: are driving, and if you look at open table data, 228 00:12:52,320 --> 00:12:54,960 Speaker 1: and more people are dining. UH, not just in the US, 229 00:12:55,000 --> 00:12:58,160 Speaker 1: but also in Germany and other countries, and they're reduced capacities, 230 00:12:58,200 --> 00:13:01,479 Speaker 1: but in many cases are actually hitting those reduced capacities. 231 00:13:02,360 --> 00:13:04,280 Speaker 1: Do you think that what you see in that data, 232 00:13:04,360 --> 00:13:07,320 Speaker 1: this like high frequency data that shows people getting out 233 00:13:07,360 --> 00:13:10,839 Speaker 1: and about finally leaving their homes, does it show enough 234 00:13:11,080 --> 00:13:14,760 Speaker 1: pent up demand almost to justify this run that we've 235 00:13:14,800 --> 00:13:16,640 Speaker 1: seen in the markets. I mean, something that was really 236 00:13:16,640 --> 00:13:19,000 Speaker 1: interesting about this past week was not just that we 237 00:13:19,080 --> 00:13:22,560 Speaker 1: saw continuation in the stock market rally, but it almost 238 00:13:22,600 --> 00:13:25,120 Speaker 1: seemed as though we started to see the bond market 239 00:13:25,320 --> 00:13:28,120 Speaker 1: giving as well. I mean, we saw a nice shoot 240 00:13:28,200 --> 00:13:31,600 Speaker 1: up in bond yields almost this capitulation what you look 241 00:13:31,840 --> 00:13:35,240 Speaker 1: at in the data of this reopening, does it actually 242 00:13:35,280 --> 00:13:39,280 Speaker 1: justify this right now? Possibly, but we don't know yet. 243 00:13:39,760 --> 00:13:42,199 Speaker 1: We don't know yet. So it's what you would call 244 00:13:42,320 --> 00:13:44,840 Speaker 1: it if you're an economicy called green shoots. Right, there's 245 00:13:44,880 --> 00:13:47,680 Speaker 1: signs of recovery. You know, there are going to be 246 00:13:47,760 --> 00:13:49,760 Speaker 1: people that need to fly on a plane because they 247 00:13:49,800 --> 00:13:51,559 Speaker 1: went and moved in with their parents in Florida and 248 00:13:51,559 --> 00:13:53,959 Speaker 1: they need to get back to New York. I drove, 249 00:13:55,440 --> 00:13:58,319 Speaker 1: but I would be requesting Apple maps direct. Yeah, those 250 00:13:58,520 --> 00:14:00,440 Speaker 1: are the people that might be flying my that could 251 00:14:00,440 --> 00:14:02,720 Speaker 1: be some of that, but I would say something that 252 00:14:02,800 --> 00:14:05,920 Speaker 1: supports it more than just those things I mentioned earlier 253 00:14:06,000 --> 00:14:10,080 Speaker 1: is continuing claims, which is a component of the unemployment 254 00:14:10,080 --> 00:14:13,960 Speaker 1: insurance claims we see each week on Thursdays. UH, continuing 255 00:14:14,000 --> 00:14:16,160 Speaker 1: claims look like they have peaked and they're starting to 256 00:14:16,200 --> 00:14:19,160 Speaker 1: calm down. That means people are going back to work. 257 00:14:19,160 --> 00:14:22,640 Speaker 1: And traditionally, when you see a decline in continuing claims, 258 00:14:22,680 --> 00:14:24,920 Speaker 1: that tends to kind of happen around the time when 259 00:14:24,920 --> 00:14:28,440 Speaker 1: the economy bottles and starts to recover. So it's not 260 00:14:28,480 --> 00:14:30,720 Speaker 1: it's not just these anecdotal things about people going out 261 00:14:30,720 --> 00:14:33,680 Speaker 1: of their house. It's also labor market data. So I 262 00:14:33,720 --> 00:14:37,160 Speaker 1: think it's real, but it's really early sean. Obviously. The 263 00:14:37,240 --> 00:14:39,840 Speaker 1: other big news in the past week or so has 264 00:14:39,960 --> 00:14:44,480 Speaker 1: been this uh massive civil unrest with you know, protests 265 00:14:44,480 --> 00:14:48,120 Speaker 1: and looting and riots across the country. I was a 266 00:14:48,120 --> 00:14:50,680 Speaker 1: bit surprised that we didn't see a little bit of 267 00:14:50,680 --> 00:14:52,800 Speaker 1: a risk off reaction to that. I mean, I guess 268 00:14:52,840 --> 00:14:54,360 Speaker 1: I guess you shouldn't be. If you go back in 269 00:14:54,760 --> 00:14:56,760 Speaker 1: history and look at the sixties riots and that sort 270 00:14:56,800 --> 00:14:59,760 Speaker 1: of thing, it never seemed to put much of a 271 00:15:00,200 --> 00:15:04,360 Speaker 1: in the market. But I'm wondering if these events are 272 00:15:04,400 --> 00:15:09,080 Speaker 1: influencing your thinking at all about the economy, about markets, 273 00:15:09,560 --> 00:15:13,160 Speaker 1: and specifically we're kind of all waiting for this next 274 00:15:13,200 --> 00:15:16,600 Speaker 1: batch of fiscal stimulus from the government, and whether this 275 00:15:16,640 --> 00:15:20,600 Speaker 1: could kind of maybe reshape what that looks like. A 276 00:15:20,640 --> 00:15:23,080 Speaker 1: little bit less help for the corporation, is a little 277 00:15:23,120 --> 00:15:26,320 Speaker 1: bit more help for the individuals, perhaps you know, something 278 00:15:26,360 --> 00:15:29,400 Speaker 1: to to try to sort of soothe the masses here. 279 00:15:29,520 --> 00:15:33,320 Speaker 1: Um is that you know, is is this working its 280 00:15:33,320 --> 00:15:36,320 Speaker 1: way into your your thought process at all when you 281 00:15:36,440 --> 00:15:39,240 Speaker 1: try to figure out where the market's going next? It is? 282 00:15:39,360 --> 00:15:41,080 Speaker 1: It is? And and I'll get to my point in 283 00:15:41,080 --> 00:15:44,560 Speaker 1: a second. I mean, I think has been a difficult 284 00:15:44,640 --> 00:15:46,720 Speaker 1: year for many people, for us to be at COVID nineteen. 285 00:15:47,280 --> 00:15:49,920 Speaker 1: You know, now we have the protests acrostination, and you know, 286 00:15:49,960 --> 00:15:52,920 Speaker 1: I think at this time we'd all probably benefit from 287 00:15:52,920 --> 00:15:54,840 Speaker 1: being kinded in one another mower form. That is, so 288 00:15:54,880 --> 00:15:57,600 Speaker 1: I hope that's, you know, the way we had with things. 289 00:15:58,440 --> 00:16:02,800 Speaker 1: My primary thinking about the protests, aside from you know, 290 00:16:02,880 --> 00:16:06,520 Speaker 1: the stuff we all feel strongly about, is what does 291 00:16:06,560 --> 00:16:11,440 Speaker 1: it mean for the coronavirus? We saw very large Memorial 292 00:16:11,560 --> 00:16:14,440 Speaker 1: Day celebrations in the United States and certain regions, and 293 00:16:14,480 --> 00:16:18,360 Speaker 1: now we're seeing very large protests in very emergent, major 294 00:16:18,560 --> 00:16:22,280 Speaker 1: urban areas. Um, if there's gonna be a second wave, 295 00:16:22,400 --> 00:16:26,880 Speaker 1: that seems like a time perfect catalyst to me. I'm 296 00:16:26,920 --> 00:16:29,440 Speaker 1: not saying that's going to happen. I'm not an epidemiologist. 297 00:16:29,520 --> 00:16:31,200 Speaker 1: I have no idea as a strategist. I have to 298 00:16:31,200 --> 00:16:35,800 Speaker 1: say I'm not an epidemiologist because everyone says that clearly 299 00:16:35,800 --> 00:16:38,960 Speaker 1: I am not. I don't know. Maybe it hates sunshine, 300 00:16:38,960 --> 00:16:43,000 Speaker 1: and sunshine kills it great. But if there's any catalyst, uh, 301 00:16:43,040 --> 00:16:44,800 Speaker 1: this seems like an obvious one to me. But you're 302 00:16:44,800 --> 00:16:46,880 Speaker 1: not gonna know for a while. It's gonna take time 303 00:16:47,960 --> 00:16:50,960 Speaker 1: for that to spread. If you look at China, they 304 00:16:50,960 --> 00:16:54,280 Speaker 1: actually re entered a lockdown again and it was about 305 00:16:54,280 --> 00:16:57,080 Speaker 1: a month later. So you know, maybe the market will 306 00:16:57,120 --> 00:16:59,880 Speaker 1: care and maybe there will be some market impact from 307 00:16:59,880 --> 00:17:03,800 Speaker 1: these protests through that form, do you get the sense 308 00:17:03,840 --> 00:17:07,920 Speaker 1: at all through listening to communication maybe from from government 309 00:17:07,920 --> 00:17:11,280 Speaker 1: officials and also taught medical officials that we've been hearing 310 00:17:11,320 --> 00:17:13,320 Speaker 1: from that if there were to be a second wave, 311 00:17:13,880 --> 00:17:17,640 Speaker 1: that we will see a lockdown reminiscent of what we 312 00:17:17,720 --> 00:17:20,640 Speaker 1: have all been going through and facing over the last 313 00:17:20,640 --> 00:17:23,600 Speaker 1: couple of months. I mean, I've been thinking about this. 314 00:17:23,680 --> 00:17:25,240 Speaker 1: We all think, Okay, if we get a second way, 315 00:17:25,280 --> 00:17:27,399 Speaker 1: there's no question that we have to shut down again. 316 00:17:27,920 --> 00:17:30,879 Speaker 1: But is that true? I mean, is that what we 317 00:17:30,960 --> 00:17:33,359 Speaker 1: already saw the destruction that can cost to the economy, Like, 318 00:17:33,640 --> 00:17:35,720 Speaker 1: when you think about it from a strategist point of view, 319 00:17:36,000 --> 00:17:37,680 Speaker 1: do you think that's something we'd have to deal with again. 320 00:17:37,960 --> 00:17:40,600 Speaker 1: This question comes from Sarah's dad, who's wondering if you 321 00:17:40,600 --> 00:17:42,480 Speaker 1: should build a new wing on the house or not 322 00:17:42,760 --> 00:17:46,400 Speaker 1: that right? Oh, that's from my mom who keeps complaining 323 00:17:46,400 --> 00:17:49,160 Speaker 1: that we need a larger house because there's too many 324 00:17:49,200 --> 00:17:52,520 Speaker 1: of us and the other the other siblings are supposedly 325 00:17:52,560 --> 00:17:56,199 Speaker 1: going to show up as well, so everyone needs now 326 00:17:56,400 --> 00:18:01,840 Speaker 1: just build a wing. Right. So, I actually think the 327 00:18:01,880 --> 00:18:06,520 Speaker 1: odds of a second shutdown nationwide at least are relatively low. 328 00:18:06,560 --> 00:18:09,120 Speaker 1: And there's a few reasons I think that. One, I 329 00:18:09,160 --> 00:18:11,720 Speaker 1: think that we've lost some of the political will to 330 00:18:11,840 --> 00:18:16,440 Speaker 1: do so. Um, people have seen high rates of unemployment, 331 00:18:16,520 --> 00:18:19,960 Speaker 1: and at some point, if you're on a balance and 332 00:18:20,119 --> 00:18:25,120 Speaker 1: on each side there's the economic damage or the human damage, 333 00:18:25,640 --> 00:18:27,840 Speaker 1: it starts to tilt the other way, and I think 334 00:18:27,880 --> 00:18:30,359 Speaker 1: that's what we've seen. Uh. The other thing I think 335 00:18:30,440 --> 00:18:34,040 Speaker 1: that's important is shutting down the system and flattening the 336 00:18:34,040 --> 00:18:36,240 Speaker 1: curve is not only designed to save life, but it's 337 00:18:36,320 --> 00:18:40,160 Speaker 1: designed to keep the health care system from being overwhelmed. 338 00:18:40,760 --> 00:18:44,000 Speaker 1: Now we don't have a vaccine yet, we do maybe 339 00:18:44,000 --> 00:18:47,520 Speaker 1: have some treatments. If those treatments are effective in getting 340 00:18:47,520 --> 00:18:51,600 Speaker 1: patients out of the hospital quicker, so instead of fifteen days, 341 00:18:51,680 --> 00:18:54,879 Speaker 1: they're out in eleven days. Even though that might seem minor, 342 00:18:55,480 --> 00:18:57,879 Speaker 1: that reduces the burden on the health care system and 343 00:18:57,920 --> 00:18:59,800 Speaker 1: maybe lowers the odds that we have to lock down 344 00:18:59,800 --> 00:19:02,159 Speaker 1: and and and to me, reduces the odds of a 345 00:19:02,320 --> 00:19:05,320 Speaker 1: W shaped recession. Back to that letter what what is 346 00:19:05,359 --> 00:19:09,320 Speaker 1: the letter shape? Uh? You know, My thinking is that 347 00:19:09,880 --> 00:19:13,359 Speaker 1: they can't we can't do the lockdowns again. The lockdowns 348 00:19:13,359 --> 00:19:15,919 Speaker 1: are over, not because the virus is going away, but 349 00:19:16,040 --> 00:19:19,240 Speaker 1: because it's not going away, and we simply cannot just 350 00:19:19,280 --> 00:19:22,040 Speaker 1: stay locked down forever. We have to sort of, um, 351 00:19:22,320 --> 00:19:24,880 Speaker 1: put the masks on and and try to get back 352 00:19:24,920 --> 00:19:28,040 Speaker 1: to some semblance of life. I'm wondering if that sort 353 00:19:28,040 --> 00:19:32,080 Speaker 1: of goes into your thinking about everyone's favorite letter shape 354 00:19:32,080 --> 00:19:34,879 Speaker 1: of this recovery you called a a V, but a 355 00:19:35,000 --> 00:19:38,480 Speaker 1: lazy V, meaning that that recovery is not quite as 356 00:19:38,560 --> 00:19:43,760 Speaker 1: sharp as the decline at the beginning. UM, but it 357 00:19:43,840 --> 00:19:47,400 Speaker 1: is perhaps if I'm if I'm interpreting the lazy V correctly, 358 00:19:48,000 --> 00:19:51,600 Speaker 1: it is kind of a slow and steady uh grind 359 00:19:51,680 --> 00:19:56,760 Speaker 1: higher and recovery without sort of another nasty dip, sort 360 00:19:56,760 --> 00:19:59,000 Speaker 1: of a double dip before we're all the way back 361 00:19:59,560 --> 00:20:02,439 Speaker 1: to the play as we started at right, So some 362 00:20:02,480 --> 00:20:04,520 Speaker 1: people would call it a squosh. I just think lazy 363 00:20:04,600 --> 00:20:07,520 Speaker 1: be kind of is an easy way to interpret for me. Ironically, 364 00:20:07,560 --> 00:20:10,120 Speaker 1: I actually think, you know, you make that a hand 365 00:20:10,160 --> 00:20:12,760 Speaker 1: symbol when you're at a restaurant for the check and 366 00:20:12,880 --> 00:20:14,840 Speaker 1: you kind of do a little dip down and a 367 00:20:14,920 --> 00:20:17,440 Speaker 1: longer thing. That's kind of what it looks like to make, 368 00:20:17,560 --> 00:20:20,080 Speaker 1: which is, you know, kind of ironic. In the current environment, 369 00:20:20,520 --> 00:20:25,600 Speaker 1: I think that a lot of the forecasts are probably 370 00:20:26,359 --> 00:20:28,679 Speaker 1: you know, I see more and more economists sort of 371 00:20:28,680 --> 00:20:30,879 Speaker 1: focusing in on that's the shape, what it looks like, 372 00:20:31,040 --> 00:20:33,159 Speaker 1: and I don't disagree. I think you will see a 373 00:20:33,240 --> 00:20:37,399 Speaker 1: rebound in some areas quicker uh and if you have 374 00:20:37,960 --> 00:20:43,480 Speaker 1: manufacturing or automation, or you have simplely the social distance 375 00:20:43,960 --> 00:20:47,960 Speaker 1: that enables you to reopen, they're gonna do. So there's 376 00:20:47,960 --> 00:20:51,280 Speaker 1: gonna be pent up demand. Uh. If you're in industries 377 00:20:51,840 --> 00:20:56,280 Speaker 1: like restaurants, it's less clear. Again, pretty positive news on 378 00:20:56,440 --> 00:20:59,480 Speaker 1: people going back to restaurants, but if you do see 379 00:20:59,480 --> 00:21:01,800 Speaker 1: a second way if then it could be very difficult 380 00:21:01,960 --> 00:21:04,560 Speaker 1: slog for them. So I think it's gonna be a 381 00:21:04,600 --> 00:21:07,080 Speaker 1: long recovery in some sectors. You know, if we think 382 00:21:07,080 --> 00:21:09,920 Speaker 1: in New York City, I believe about a hundred and 383 00:21:09,960 --> 00:21:13,720 Speaker 1: eighty thousand of two hundred and seventy four thousand food 384 00:21:13,760 --> 00:21:17,800 Speaker 1: and beverage workers lost their jobs. About are they all 385 00:21:17,800 --> 00:21:19,480 Speaker 1: going to have a job to go back to because 386 00:21:19,520 --> 00:21:23,400 Speaker 1: they reopened outdoor dining? I doubt it. Uh, And those 387 00:21:23,440 --> 00:21:25,040 Speaker 1: people are going to be misplaced and it's going to 388 00:21:25,160 --> 00:21:28,680 Speaker 1: take time to find a new role for them. It 389 00:21:29,040 --> 00:21:31,159 Speaker 1: really is striking and their questions that none of us 390 00:21:31,359 --> 00:21:33,439 Speaker 1: know the answers too yet. But Sean, I have to 391 00:21:33,440 --> 00:21:36,440 Speaker 1: give it to you for the creative descriptions the lazy 392 00:21:36,520 --> 00:21:39,440 Speaker 1: V get me out stocks. I mean, we hear similar, 393 00:21:39,640 --> 00:21:43,000 Speaker 1: similar descriptions often, but those are two new ones. So 394 00:21:43,560 --> 00:21:46,680 Speaker 1: it's it's refreshing to hear I was sitting at home, 395 00:21:46,760 --> 00:21:49,520 Speaker 1: locked into quarantine when I was just randomly thinking up 396 00:21:49,560 --> 00:21:53,280 Speaker 1: weird terms. You really need to come up with an 397 00:21:53,320 --> 00:21:55,320 Speaker 1: acronym to make it in this business, No Sewan, you know, 398 00:21:55,440 --> 00:21:58,480 Speaker 1: fanger or bricks or something. Do you get working on that? 399 00:22:00,080 --> 00:22:05,280 Speaker 1: They will sean how important is the energy market UM 400 00:22:05,720 --> 00:22:08,960 Speaker 1: in terms of what this recovery looks like, what the 401 00:22:09,000 --> 00:22:12,600 Speaker 1: stock market sort of reacts to UM and and walk 402 00:22:12,640 --> 00:22:14,879 Speaker 1: us through you're thinking on sort of the the geo 403 00:22:14,960 --> 00:22:18,920 Speaker 1: politics between OPEC and the US and and the sort 404 00:22:18,960 --> 00:22:23,800 Speaker 1: of global politics of energy production. Well, we have OPEC 405 00:22:23,840 --> 00:22:27,880 Speaker 1: meeting coming up. UH. There is Saudi Arabia, of course, 406 00:22:27,880 --> 00:22:29,720 Speaker 1: and then there's Russia, and they seem to have very 407 00:22:29,760 --> 00:22:33,160 Speaker 1: different opinions on what they want to do. They implemented 408 00:22:33,160 --> 00:22:37,000 Speaker 1: pretty deep production cuts that were supposed to last through 409 00:22:37,119 --> 00:22:41,160 Speaker 1: Midsummer about temper cent of global capacity or output. UH. 410 00:22:41,200 --> 00:22:43,840 Speaker 1: Saudi Radio wants to keep those cuts in place longer 411 00:22:44,320 --> 00:22:48,240 Speaker 1: UH and Russia wants to return to more regular production levels. 412 00:22:48,240 --> 00:22:50,639 Speaker 1: So it's definitely gonna be a little bit of a 413 00:22:50,640 --> 00:22:53,119 Speaker 1: battle between the two of them. We've seen that before. 414 00:22:53,800 --> 00:22:57,240 Speaker 1: UM not that long ago, several months ago where oil 415 00:22:57,280 --> 00:22:59,679 Speaker 1: prices crashed because the two can come to agreement. So 416 00:22:59,720 --> 00:23:03,960 Speaker 1: I think is gonna be volatility in that arena or commodity. 417 00:23:04,960 --> 00:23:07,879 Speaker 1: That said, I do think it is helpful that people 418 00:23:07,880 --> 00:23:11,600 Speaker 1: are driving more. Uh. If you look at China, for example, 419 00:23:11,680 --> 00:23:15,600 Speaker 1: the number of auto sales actually rebounded pretty strongly after 420 00:23:16,280 --> 00:23:18,480 Speaker 1: UM they dealt with the lockdown of COVID nineteen because 421 00:23:18,520 --> 00:23:22,199 Speaker 1: people didn't want to take public transit. I suspect. I 422 00:23:22,240 --> 00:23:25,200 Speaker 1: suspect you'll see the same thing here in the United States. UM. 423 00:23:25,240 --> 00:23:28,000 Speaker 1: If you look at the Apple Maps routing requests for 424 00:23:28,440 --> 00:23:32,639 Speaker 1: I mentioned driving directions earlier, but they also have public 425 00:23:32,640 --> 00:23:37,600 Speaker 1: transit requests and walking and public transit is flatlined. Hasn't 426 00:23:37,680 --> 00:23:40,840 Speaker 1: changed at all. People do not want to return to 427 00:23:40,880 --> 00:23:43,760 Speaker 1: public transit. And that's not just true in the United States. 428 00:23:43,800 --> 00:23:47,280 Speaker 1: That's also you can look at the data in China, UM, 429 00:23:47,400 --> 00:23:49,640 Speaker 1: other Asia countries that have maybe dealt a little bit. 430 00:23:49,920 --> 00:23:53,200 Speaker 1: I don't know if I shouldn't say necessarily better, but differently, Uh, 431 00:23:53,400 --> 00:23:55,880 Speaker 1: same thing. So I think there will be higher demand, 432 00:23:56,000 --> 00:23:59,320 Speaker 1: least from the driving side. It's it's fascinating the metrics 433 00:23:59,359 --> 00:24:02,720 Speaker 1: that suddenly become important like Apple Apple map requests. You 434 00:24:02,760 --> 00:24:04,960 Speaker 1: know it's It is absolutely fascinating and one one of 435 00:24:05,000 --> 00:24:07,960 Speaker 1: the side effects of this virus will be we will 436 00:24:08,000 --> 00:24:11,639 Speaker 1: now rely on high frequency data to determine when recoveries. 437 00:24:11,640 --> 00:24:14,480 Speaker 1: O car. We're not gonna wait for GDP. Third quarter 438 00:24:14,560 --> 00:24:19,760 Speaker 1: GDP is in September. It seems a million miles away. Yeah, 439 00:24:20,040 --> 00:24:23,639 Speaker 1: this new world we're living in, well in a lot 440 00:24:23,720 --> 00:24:26,399 Speaker 1: of this data actually wasn't available before the crisis. This 441 00:24:26,520 --> 00:24:29,080 Speaker 1: healthcare crisis actually made a lot of these private companies 442 00:24:29,080 --> 00:24:32,080 Speaker 1: open up their private data that probably wouldn't have happened 443 00:24:32,119 --> 00:24:43,320 Speaker 1: without COVID nineteen. So, Michael, we were listening to Sean 444 00:24:43,359 --> 00:24:46,199 Speaker 1: speak about the oil market. I had this transition queued up, 445 00:24:46,240 --> 00:24:47,560 Speaker 1: so let me know how, let me know how I 446 00:24:47,600 --> 00:24:53,119 Speaker 1: do here. So we have higher higher demand, likely we 447 00:24:53,200 --> 00:24:56,760 Speaker 1: still have a potential for for muted supply going forward. 448 00:24:56,840 --> 00:24:59,560 Speaker 1: So it's very unlikely that the oil market's gonna get 449 00:24:59,600 --> 00:25:03,720 Speaker 1: anywhere near as crazy as it was in recent history. 450 00:25:03,760 --> 00:25:06,240 Speaker 1: Not bet. I'll give you a be on that transition. 451 00:25:06,600 --> 00:25:09,120 Speaker 1: I'll take. I'll take. Are you know I'm a harsh 452 00:25:09,160 --> 00:25:12,120 Speaker 1: trader though, so I know, I know, honestly, I don't 453 00:25:12,160 --> 00:25:15,600 Speaker 1: even know if I would have given me a beat. Well, 454 00:25:15,640 --> 00:25:17,720 Speaker 1: in that case, you started off, what's the craziest thing 455 00:25:17,760 --> 00:25:21,280 Speaker 1: you saw this week? Something that I found not just 456 00:25:21,359 --> 00:25:25,240 Speaker 1: crazy but interesting this week? Uh comes to the I 457 00:25:25,320 --> 00:25:28,080 Speaker 1: p O market, Uh, when it comes to stock. So, 458 00:25:28,359 --> 00:25:33,040 Speaker 1: Warner Music Group went public on Wednesday with an I 459 00:25:33,160 --> 00:25:35,280 Speaker 1: p O price of about twenty five dollars to share. 460 00:25:35,640 --> 00:25:37,159 Speaker 1: Twenty five dollars to share, that was the I p 461 00:25:37,280 --> 00:25:41,600 Speaker 1: O price. Well, in this market, it surged on the 462 00:25:41,640 --> 00:25:47,560 Speaker 1: first day two over thirty dollars to share. And sure 463 00:25:47,680 --> 00:25:51,400 Speaker 1: this could represent opinions of investors on on what's going 464 00:25:51,480 --> 00:25:54,760 Speaker 1: on in the music industry. But I think it's very 465 00:25:54,840 --> 00:25:58,919 Speaker 1: telling and also just a little bit crazy that seeing 466 00:25:58,960 --> 00:26:02,240 Speaker 1: everything going on the world, what we just saw with 467 00:26:02,480 --> 00:26:06,320 Speaker 1: such a steep and tremendous market collapse, that the I 468 00:26:06,440 --> 00:26:08,600 Speaker 1: p O market, at least when it comes to Warner 469 00:26:08,680 --> 00:26:13,560 Speaker 1: Music Group is thriving. That's pretty surprising given the you know, 470 00:26:13,760 --> 00:26:16,800 Speaker 1: everyone has sort of left the music business for dead there. 471 00:26:16,800 --> 00:26:20,639 Speaker 1: But I guess your Spotify and you're streaming, it's starting 472 00:26:20,720 --> 00:26:23,520 Speaker 1: starting to add up. That's pretty good. I like that one. 473 00:26:24,280 --> 00:26:29,160 Speaker 1: Sean had to give me An a minus on that one. Okay, okay, 474 00:26:29,359 --> 00:26:31,719 Speaker 1: that's better than the transition. Bringing that g p A up. 475 00:26:32,600 --> 00:26:35,280 Speaker 1: That's what we want here, Sean. How about you? Have 476 00:26:35,320 --> 00:26:38,120 Speaker 1: you seen anything crazy in markets this week? Oh, there's 477 00:26:38,119 --> 00:26:39,840 Speaker 1: a lot of crazy stuff going on. But I think 478 00:26:39,880 --> 00:26:41,879 Speaker 1: one of the data points I recently saw, which is 479 00:26:41,920 --> 00:26:45,119 Speaker 1: something I would have never thought about, was box office 480 00:26:45,160 --> 00:26:49,320 Speaker 1: receipts for movies. Uh at below they hit just five 481 00:26:49,440 --> 00:26:54,040 Speaker 1: thousand dollars in sales for box office receipts in the lockdown. 482 00:26:54,600 --> 00:26:59,280 Speaker 1: It is now proudly back up to about three. So 483 00:27:00,080 --> 00:27:02,480 Speaker 1: the five thousand was was drive ins, which I don't 484 00:27:02,520 --> 00:27:05,440 Speaker 1: even know existed anymore, but they're apparently they're in hot 485 00:27:05,480 --> 00:27:09,240 Speaker 1: demand now, big demand. Oh so like some rich guy 486 00:27:09,600 --> 00:27:12,199 Speaker 1: got a movie for his own private home theater or 487 00:27:12,200 --> 00:27:14,600 Speaker 1: something like that. Right, so maybe Kim Young Muton is 488 00:27:14,600 --> 00:27:18,879 Speaker 1: making up for all. I'm pretty sure that in Queens 489 00:27:18,960 --> 00:27:22,400 Speaker 1: they they hosted a drive in, So maybe maybe that, oh, 490 00:27:22,520 --> 00:27:27,719 Speaker 1: drive ins five thousand dollars, I'm pretty sure. Here in Florida, 491 00:27:27,760 --> 00:27:29,840 Speaker 1: I'm not doing anything. I haven't left the house in 492 00:27:29,880 --> 00:27:34,280 Speaker 1: a while, but um mute movie theaters are opening up 493 00:27:34,400 --> 00:27:38,359 Speaker 1: pretty soon. Pretty crazy. I mean, it's as someone who 494 00:27:38,440 --> 00:27:40,440 Speaker 1: lives in New York City or near New York City, 495 00:27:40,440 --> 00:27:42,919 Speaker 1: it's hard to imagine go into a movie theater. But 496 00:27:43,400 --> 00:27:46,919 Speaker 1: I guess not true for other parts of the country. Yeah, 497 00:27:48,040 --> 00:27:50,639 Speaker 1: those are both pretty good. Um Now, I'll give you 498 00:27:50,640 --> 00:27:52,840 Speaker 1: the winning craziest thing of the week. I'm just I'm 499 00:27:52,880 --> 00:27:55,520 Speaker 1: just kidding. I'm not gonna I'm not gonna word myself 500 00:27:55,560 --> 00:27:58,200 Speaker 1: to the win anymore. I'll allow you toward me the 501 00:27:58,240 --> 00:28:01,679 Speaker 1: win after this, Uh sir, But were when you deserve it, 502 00:28:01,720 --> 00:28:06,200 Speaker 1: we get it. This is actually something that happened in 503 00:28:06,040 --> 00:28:08,520 Speaker 1: the nineteen eighties. But it's the craziest thing I read 504 00:28:08,560 --> 00:28:12,160 Speaker 1: at least this week, so it's still counts. I'll allow it. 505 00:28:12,400 --> 00:28:19,120 Speaker 1: But great, great Matt Levine Money Stuff newsletter on Thursday, 506 00:28:19,400 --> 00:28:24,359 Speaker 1: and it's all about the this price fixing scandal in 507 00:28:24,400 --> 00:28:28,440 Speaker 1: the chicken industry, and he goes into detail about how 508 00:28:28,560 --> 00:28:31,840 Speaker 1: chicken prices are set. It's it's really kind of fascinating 509 00:28:31,880 --> 00:28:35,560 Speaker 1: that there is there are like chicken price indexes, right, 510 00:28:36,000 --> 00:28:38,600 Speaker 1: and then a supplier and a buyer will make a 511 00:28:38,640 --> 00:28:41,680 Speaker 1: deal for say the index plus ten cents a pound 512 00:28:41,800 --> 00:28:44,400 Speaker 1: or something like that, and he makes a comparison to library. 513 00:28:44,400 --> 00:28:46,680 Speaker 1: You know, it's it's basically the same thing. Because you 514 00:28:46,760 --> 00:28:50,440 Speaker 1: ask a chicken supplier what their prices, you know they're 515 00:28:50,440 --> 00:28:53,880 Speaker 1: they're probably gonna give you a pretty generous high price. 516 00:28:54,000 --> 00:28:58,120 Speaker 1: Not generous, but you know, obviously there's there's skepticism towards 517 00:28:58,160 --> 00:29:01,040 Speaker 1: these indexes. That's not a crazy part. He goes on 518 00:29:01,160 --> 00:29:05,440 Speaker 1: a tangent and talks about Ray Dalio, the founder of 519 00:29:05,480 --> 00:29:07,920 Speaker 1: Bridgewater UM, one of the obviously one of the biggest 520 00:29:07,920 --> 00:29:09,840 Speaker 1: hedge funds in the world, one of the most famous 521 00:29:09,880 --> 00:29:13,400 Speaker 1: investors in the world. And here's where it gets crazy, Sarah, 522 00:29:13,560 --> 00:29:15,440 Speaker 1: I kind of heard of this before, but I never 523 00:29:15,480 --> 00:29:19,480 Speaker 1: really understood all the details. Do you understand the role 524 00:29:19,760 --> 00:29:24,440 Speaker 1: Ray Dahio played in the Chicken McNugget? I have no idea. 525 00:29:24,440 --> 00:29:27,760 Speaker 1: Have you heard about this so apparently about this san 526 00:29:30,520 --> 00:29:34,680 Speaker 1: So it's it's fascinating. So, you know, Daio started off 527 00:29:34,920 --> 00:29:39,120 Speaker 1: as a basically commodities focused I think he traded credit 528 00:29:39,160 --> 00:29:40,680 Speaker 1: and stuff like that too, but he was very deep 529 00:29:40,720 --> 00:29:45,840 Speaker 1: in the commodities and UM. He became well known for 530 00:29:46,040 --> 00:29:50,280 Speaker 1: his observations, his daily observations research report. Obviously Bridgewater still 531 00:29:50,400 --> 00:29:52,760 Speaker 1: very well known for that UM and one of his 532 00:29:53,040 --> 00:29:57,760 Speaker 1: customers in the eighties was McDonald's. Now McDonald's decided they 533 00:29:57,800 --> 00:30:00,920 Speaker 1: wanted to come out with the chicken McNugget, but they 534 00:30:00,920 --> 00:30:04,080 Speaker 1: were worried that they'd be buying chicken in such large 535 00:30:04,160 --> 00:30:08,240 Speaker 1: scale that they would single handedly raise the price of chickens. 536 00:30:08,360 --> 00:30:12,960 Speaker 1: Right and there was right low. Uh yeah, I guess 537 00:30:12,960 --> 00:30:14,760 Speaker 1: so you know, the FED would off the step step 538 00:30:14,760 --> 00:30:17,800 Speaker 1: in and I don't know, hatch chicken eggs or something. 539 00:30:18,160 --> 00:30:22,240 Speaker 1: But so the problem was there was no chicken futures 540 00:30:22,280 --> 00:30:28,040 Speaker 1: contract that they could hedge with. So Dahlio figured out, basically, well, 541 00:30:28,840 --> 00:30:32,520 Speaker 1: the price of a chicken is basically uh derived from 542 00:30:32,560 --> 00:30:35,920 Speaker 1: the price of the corn and the soy meal that 543 00:30:35,960 --> 00:30:39,000 Speaker 1: the swy being food that you feed it. So he 544 00:30:39,080 --> 00:30:42,880 Speaker 1: came up with a futures contract that was basically based 545 00:30:42,960 --> 00:30:46,840 Speaker 1: on the price of corn and soy meal, which allowed 546 00:30:46,880 --> 00:30:50,800 Speaker 1: McDonald's to hedge their chicken costs by buying that this 547 00:30:51,240 --> 00:30:56,600 Speaker 1: the synthetic derivative of soy and uh and um corn meal. 548 00:30:57,360 --> 00:31:02,160 Speaker 1: And that was what apparently UH allowed McDonald's the confidence 549 00:31:02,480 --> 00:31:05,080 Speaker 1: to go and start selling the chicken McNugget because they 550 00:31:05,080 --> 00:31:08,440 Speaker 1: were worried again about driving those chicken prices up and 551 00:31:08,800 --> 00:31:12,040 Speaker 1: having to either then immediately raised prices or just eat 552 00:31:12,080 --> 00:31:16,160 Speaker 1: it on the margin. Um. So bottom line, I know 553 00:31:16,320 --> 00:31:18,600 Speaker 1: I'll to tell my kids this at dinner time because 554 00:31:18,600 --> 00:31:21,280 Speaker 1: they're big fans of the McNugget. That they can thank 555 00:31:21,680 --> 00:31:24,800 Speaker 1: at least in part, Ray Dalio for the chicken McNugget. 556 00:31:25,600 --> 00:31:28,040 Speaker 1: That is pretty unbelievable. Mike. I'll give it to you 557 00:31:28,200 --> 00:31:31,120 Speaker 1: because it was a story from the eighties. Tamps it 558 00:31:31,200 --> 00:31:33,680 Speaker 1: down a little bit, but it's good enough that I'll 559 00:31:33,680 --> 00:31:37,880 Speaker 1: give you the w Chicken price fixing. I was like, okay, anyway, 560 00:31:40,480 --> 00:31:42,480 Speaker 1: well yeah, that's so. That's that's a whole secretary. And 561 00:31:42,520 --> 00:31:46,440 Speaker 1: it's interesting. I check out Matt Levine's column from this Thursday, 562 00:31:46,520 --> 00:31:50,400 Speaker 1: June fourth, and it it talks all about the chicken 563 00:31:50,400 --> 00:31:54,080 Speaker 1: price fixing scandals. Basically anti trust. You know, different suppliers. 564 00:31:54,120 --> 00:31:56,440 Speaker 1: We're going back and forth and saying, hey, let's set 565 00:31:56,440 --> 00:31:59,600 Speaker 1: the price here and see what you can do. Um, 566 00:31:59,640 --> 00:32:04,480 Speaker 1: but fascinating column by Matt. From a chicken pricing to 567 00:32:04,880 --> 00:32:08,080 Speaker 1: I p o S Two box office tickets. We we 568 00:32:08,160 --> 00:32:11,000 Speaker 1: have quite the roundup this week. Sean Snyder, we really 569 00:32:11,000 --> 00:32:13,440 Speaker 1: appreciate you coming on the show. I hope to see 570 00:32:13,480 --> 00:32:26,520 Speaker 1: you guys in person, saying hopefully thanks Sean, What Goes Up. 571 00:32:26,640 --> 00:32:29,680 Speaker 1: We'll be back next week. Until then, you can find 572 00:32:29,760 --> 00:32:32,920 Speaker 1: us on the Bloomberg Terminal, website and app, or wherever 573 00:32:33,040 --> 00:32:35,520 Speaker 1: you get your podcasts. We'd love it if you took 574 00:32:35,520 --> 00:32:38,200 Speaker 1: the time to rate, interview the show on Apple Podcasts 575 00:32:38,400 --> 00:32:41,240 Speaker 1: so more listeners can find us. And you can find 576 00:32:41,280 --> 00:32:45,120 Speaker 1: us on Twitter, follow me at at Sarah Pontzack, Mike 577 00:32:45,400 --> 00:32:48,800 Speaker 1: is at Reaganonymous, and you can also follow Bloomberg Podcasts 578 00:32:48,960 --> 00:32:53,120 Speaker 1: at podcasts. What Goes Up is produced by Jordan's Gospore 579 00:32:53,520 --> 00:32:56,680 Speaker 1: and the head of Bloomberg podcast is Francesca Leivie. Thanks 580 00:32:56,720 --> 00:33:00,160 Speaker 1: for listening, See you next time. Wh