1 00:00:13,320 --> 00:00:16,320 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly 2 00:00:16,360 --> 00:00:20,000 Speaker 1: Markets podcast. I'm Sarah Pontzek, a reporter on the Cross 3 00:00:20,000 --> 00:00:22,759 Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on 4 00:00:22,800 --> 00:00:25,000 Speaker 1: the Markets team. This week on the show, we'll talk 5 00:00:25,040 --> 00:00:27,920 Speaker 1: to one bull who is sticking to his guns. Doubts 6 00:00:27,960 --> 00:00:30,520 Speaker 1: are once again swirling about the prospects for a US 7 00:00:30,600 --> 00:00:34,879 Speaker 1: China trade deal ahead of the upcoming December fifteen tariff deadline, 8 00:00:35,159 --> 00:00:38,800 Speaker 1: but according to a veteran stock market strategist, the signals 9 00:00:38,880 --> 00:00:41,840 Speaker 1: hint that the longest ever bowl market can keep on running. 10 00:00:42,360 --> 00:00:44,639 Speaker 1: And of course we'll close out the episode with our 11 00:00:44,680 --> 00:00:48,400 Speaker 1: tradition the Craziest Thing I saw in Markets this week, 12 00:00:48,560 --> 00:00:50,600 Speaker 1: and Sarah, I'm excited we got another call to the 13 00:00:50,680 --> 00:00:53,080 Speaker 1: What Goes Up hotline with a crazy thing a listener 14 00:00:53,120 --> 00:00:56,080 Speaker 1: Solid Market. We did, and he's actually a second time caller, 15 00:00:56,160 --> 00:00:58,640 Speaker 1: So we'll definitely play that message later on in the show. 16 00:00:58,880 --> 00:01:01,080 Speaker 1: And remember, if you have any crazy things that you've 17 00:01:01,120 --> 00:01:03,440 Speaker 1: seen in markets, you have questions that we want to 18 00:01:03,480 --> 00:01:06,080 Speaker 1: acknowledge on the show, please feel free to give us 19 00:01:06,080 --> 00:01:08,800 Speaker 1: a call. That number is six four six three two 20 00:01:08,959 --> 00:01:12,119 Speaker 1: four three four nine zero and we may even play 21 00:01:12,160 --> 00:01:14,880 Speaker 1: your message on the show. Sorry, I wanted to give 22 00:01:14,920 --> 00:01:17,840 Speaker 1: the listeners a little taste of how people like you 23 00:01:17,880 --> 00:01:20,240 Speaker 1: and I do our our normal day job as UH 24 00:01:20,520 --> 00:01:24,640 Speaker 1: stocks reporters markets reporters. Probably no big secret, but one 25 00:01:24,640 --> 00:01:26,319 Speaker 1: of the first things I do every morning when I 26 00:01:26,319 --> 00:01:28,559 Speaker 1: get in is I look through my emails. They're usually 27 00:01:28,600 --> 00:01:31,240 Speaker 1: about eight hundred that came in overnight, but I always 28 00:01:31,280 --> 00:01:33,399 Speaker 1: search for the words strategy to see what all the 29 00:01:33,400 --> 00:01:36,360 Speaker 1: strategists on Wall Street are writing about. And you know 30 00:01:36,400 --> 00:01:38,160 Speaker 1: the big banks, you might be lucky to get a 31 00:01:38,200 --> 00:01:40,720 Speaker 1: note or two a week. But there's one guy who 32 00:01:40,760 --> 00:01:44,480 Speaker 1: I could count on every morning there and his name 33 00:01:44,560 --> 00:01:47,360 Speaker 1: is Jeff salt Um, and I like reading his notes, 34 00:01:47,400 --> 00:01:51,600 Speaker 1: not only because it's good market analysis and kind of 35 00:01:51,600 --> 00:01:54,960 Speaker 1: a mix of fundamentals and technicals, but also very well 36 00:01:55,040 --> 00:01:58,720 Speaker 1: written stuff, so entertaining to read. So very happy to 37 00:01:58,800 --> 00:02:01,200 Speaker 1: welcome him here to the show. Jeff, welcome to the show. 38 00:02:01,320 --> 00:02:06,080 Speaker 1: You need to raise your standards. We'll see what what 39 00:02:06,160 --> 00:02:08,640 Speaker 1: email he's reading tomorrow morning. All well, maybe we'll raise 40 00:02:08,720 --> 00:02:10,160 Speaker 1: him a little bit with our other guests. One of 41 00:02:10,200 --> 00:02:13,960 Speaker 1: the nicest guys in the building, I think, real mentor 42 00:02:14,040 --> 00:02:22,120 Speaker 1: to me brilliant broadcaster. And that voice you may recognize, 43 00:02:22,160 --> 00:02:25,360 Speaker 1: that's Pim Fox, who's one of our commentators on the 44 00:02:25,360 --> 00:02:28,079 Speaker 1: Markets Live blog here at PIM and a guy who 45 00:02:28,080 --> 00:02:29,960 Speaker 1: sits right behind me. So we we got a lot 46 00:02:30,000 --> 00:02:31,640 Speaker 1: to talk about, Pam. How you know I ask you 47 00:02:31,680 --> 00:02:34,240 Speaker 1: a lot of questions that I can't answer all day long. Well, 48 00:02:34,240 --> 00:02:35,840 Speaker 1: now we'll get to ask you a lot of questions. 49 00:02:35,919 --> 00:02:41,720 Speaker 1: Clearly that's gonna happen. Contradictions abound, all right, Jeff, you 50 00:02:41,760 --> 00:02:44,160 Speaker 1: were with Raymond James for a long time, but you're 51 00:02:44,200 --> 00:02:46,120 Speaker 1: off to a new adventure now. When you tell us 52 00:02:46,120 --> 00:02:48,320 Speaker 1: a little bit about what you've got going on now, Well, 53 00:02:48,320 --> 00:02:51,120 Speaker 1: I tried to retire eight months ago and it basically 54 00:02:51,240 --> 00:02:56,000 Speaker 1: lasted three weeks. I've been writing Sought Strategy report for 55 00:02:56,000 --> 00:02:59,160 Speaker 1: forty eight years, almost forty nine years, and there was 56 00:02:59,200 --> 00:03:01,440 Speaker 1: such a demand for work that we created an LLC 57 00:03:01,600 --> 00:03:04,919 Speaker 1: and had a website built and a soft strategy www. 58 00:03:05,080 --> 00:03:09,760 Speaker 1: Saut strategy dot com is a subscription service um And 59 00:03:09,960 --> 00:03:12,880 Speaker 1: for some reason or another, these people at Capital Wealth 60 00:03:12,919 --> 00:03:17,080 Speaker 1: Planning wanted me to know I'm really a consultant to them, 61 00:03:17,240 --> 00:03:19,000 Speaker 1: because if I was an employee, they would have to 62 00:03:19,000 --> 00:03:22,040 Speaker 1: approve everything I write for Sought Strategy, which you know 63 00:03:22,080 --> 00:03:25,640 Speaker 1: two to three day turnaround is a lifetime in this business. 64 00:03:25,680 --> 00:03:27,799 Speaker 1: So I'm a consultant to them, and I'm helping to 65 00:03:27,840 --> 00:03:31,120 Speaker 1: manage one point seven billion dollars. I'm not not too shabby. 66 00:03:31,200 --> 00:03:33,320 Speaker 1: Three weeks is a pretty short retirement. You got that 67 00:03:33,400 --> 00:03:37,400 Speaker 1: right back very quickly, so, Jeff is Sarah had pointed out, Um, 68 00:03:37,560 --> 00:03:41,360 Speaker 1: your last note, Uh, you're remaining pretty bullish about this 69 00:03:41,400 --> 00:03:42,920 Speaker 1: market now. I know you like to look at it 70 00:03:42,960 --> 00:03:45,840 Speaker 1: sort of a mix of technicals and fundamentals. Walk us 71 00:03:45,880 --> 00:03:48,800 Speaker 1: three your thinking on. You know, we've had this tremendous 72 00:03:48,920 --> 00:03:52,240 Speaker 1: rally uh in the stock market. At same time the 73 00:03:52,320 --> 00:03:55,520 Speaker 1: economic data got a little soft there. Maybe it's bottoming, 74 00:03:55,560 --> 00:03:58,480 Speaker 1: maybe maybe not, it has bottomed, Yeah, you think so? So? 75 00:03:58,480 --> 00:04:00,760 Speaker 1: So is that is that the reason to bolish basically? 76 00:04:00,760 --> 00:04:02,240 Speaker 1: I mean, obviously it would would be a good reason 77 00:04:02,240 --> 00:04:04,480 Speaker 1: to be bullish. Well, Ron Barron. A few years ago, 78 00:04:04,920 --> 00:04:07,000 Speaker 1: I was coming back from being on a panel at 79 00:04:07,000 --> 00:04:09,600 Speaker 1: Tiberon down at the RITZ Carlton downtown and he gave 80 00:04:09,600 --> 00:04:12,360 Speaker 1: me a ride up to the the FDR because I was 81 00:04:12,400 --> 00:04:14,960 Speaker 1: going to the GM building, which is where Barren Capital 82 00:04:15,040 --> 00:04:17,800 Speaker 1: is and he put his hand on my shoulder halfway 83 00:04:17,800 --> 00:04:19,120 Speaker 1: through it, and he said, you know, there's not many 84 00:04:19,160 --> 00:04:21,840 Speaker 1: of us left, and I went, excuse me. He said, 85 00:04:21,880 --> 00:04:24,000 Speaker 1: there's not many of his left that have seen a 86 00:04:24,080 --> 00:04:27,400 Speaker 1: secular bull market. So the people that say this is 87 00:04:27,440 --> 00:04:30,320 Speaker 1: the longest bull market in history don't know market history, 88 00:04:30,480 --> 00:04:34,320 Speaker 1: because the nineteen forty nine to nineteen sixty six secular 89 00:04:34,360 --> 00:04:38,279 Speaker 1: bull market had a number of twenty and decline doesn't 90 00:04:38,360 --> 00:04:41,719 Speaker 1: end the secular bull market. You had the Jack Kennedy 91 00:04:41,880 --> 00:04:45,320 Speaker 1: uh Steel crisis in nineteen sixty two, where the steel 92 00:04:45,320 --> 00:04:47,640 Speaker 1: companies raised prices and the president said, no, you gotta 93 00:04:47,640 --> 00:04:49,520 Speaker 1: put him back down, and the markets didn't like that 94 00:04:49,560 --> 00:04:52,200 Speaker 1: and they got hit for thirty percent, but the secular 95 00:04:52,240 --> 00:04:54,760 Speaker 1: bull market went on for another four years. In the 96 00:04:54,800 --> 00:04:57,520 Speaker 1: eighty two to two thousand secular bull market, you had 97 00:04:57,560 --> 00:05:00,000 Speaker 1: the eighty seven crash, which I was actually in Barren 98 00:05:00,720 --> 00:05:05,119 Speaker 1: on September eighty seven saying the utilities peaked in the spring, 99 00:05:05,200 --> 00:05:07,240 Speaker 1: the trentees peaked in the summer, and we're gonna get 100 00:05:07,240 --> 00:05:09,120 Speaker 1: a waterfall decline. I didn't know to call it a 101 00:05:09,160 --> 00:05:11,440 Speaker 1: crash because I ain't never seen a crash. I have 102 00:05:11,600 --> 00:05:15,240 Speaker 1: now and Um, you know, you had the crash twenty 103 00:05:15,240 --> 00:05:17,479 Speaker 1: two point six per cent in a day, but the 104 00:05:17,520 --> 00:05:21,480 Speaker 1: secular bull market went on for another thirteen years. So 105 00:05:21,600 --> 00:05:23,960 Speaker 1: I think we're in secular bull market the last fifteen 106 00:05:24,000 --> 00:05:26,000 Speaker 1: to twenty years, and there's not many of us left 107 00:05:26,000 --> 00:05:28,640 Speaker 1: around that have seen one. So for those people who 108 00:05:28,680 --> 00:05:30,559 Speaker 1: are out there saying that we're late cycle and maybe 109 00:05:30,560 --> 00:05:32,880 Speaker 1: have been saying that we're late cycle for years, what 110 00:05:33,040 --> 00:05:35,719 Speaker 1: would be your rebuttal back to them? My rebuttal back 111 00:05:35,760 --> 00:05:39,680 Speaker 1: to that is the downturn was so severe and the 112 00:05:39,800 --> 00:05:43,960 Speaker 1: recovery so muted that what you've done is elongate mid cycle. 113 00:05:44,720 --> 00:05:46,560 Speaker 1: We're still in mid cycle in my opinion. We're not 114 00:05:46,640 --> 00:05:48,760 Speaker 1: late cycle, and if you look at the stocks that 115 00:05:48,800 --> 00:05:51,000 Speaker 1: are performing, it will tell you we're not late cycle. 116 00:05:52,080 --> 00:05:54,720 Speaker 1: So what would uh, what sort of signals would make 117 00:05:54,760 --> 00:05:57,960 Speaker 1: you start thinking the cycle is getting late? Well, my dad, 118 00:05:58,279 --> 00:06:00,720 Speaker 1: my dad was in the business, and he to tell me, son, 119 00:06:00,760 --> 00:06:02,400 Speaker 1: if you think it's going up, be bullish. If you 120 00:06:02,400 --> 00:06:04,640 Speaker 1: think it's going down, be barished. But for gosh sakes, 121 00:06:04,640 --> 00:06:07,160 Speaker 1: make a call. Because there's so many people in this 122 00:06:07,240 --> 00:06:09,400 Speaker 1: business that talk out of both sides of their mouths, 123 00:06:09,400 --> 00:06:11,479 Speaker 1: so that no matter what the markets do. They can say, see, 124 00:06:11,480 --> 00:06:13,920 Speaker 1: I told you so, And if you make calls, you're 125 00:06:13,920 --> 00:06:16,280 Speaker 1: gonna be wrong, and you're gonna be wrong more often 126 00:06:16,320 --> 00:06:18,719 Speaker 1: than you think. And the trick in this business is 127 00:06:18,760 --> 00:06:21,480 Speaker 1: to be wrong quickly for the minimus loss of capital. 128 00:06:21,520 --> 00:06:23,920 Speaker 1: I got no problem at seventy years of age saying, hey, 129 00:06:23,960 --> 00:06:28,200 Speaker 1: that was a bad call. I'm reversing, reversing my so. 130 00:06:28,360 --> 00:06:30,400 Speaker 1: I'm not a broken clock bull. There was a there's 131 00:06:30,480 --> 00:06:32,800 Speaker 1: very few people. My friend Dick Russell passed away a 132 00:06:32,880 --> 00:06:34,960 Speaker 1: number of years ago. He was the last great keeper 133 00:06:35,000 --> 00:06:38,960 Speaker 1: of dow theory, and I down theory is not always right. 134 00:06:39,120 --> 00:06:42,200 Speaker 1: It's subject to interpretation. But there was a down theory 135 00:06:42,240 --> 00:06:47,360 Speaker 1: cell signal in September. I wrote about it ras cash. 136 00:06:48,000 --> 00:06:50,000 Speaker 1: There was a down theory by signal in June of 137 00:06:50,040 --> 00:06:53,000 Speaker 1: oh three. There was a down theory cell signal in 138 00:06:53,080 --> 00:06:56,760 Speaker 1: November of oh seven, and then the majority of stocks 139 00:06:56,839 --> 00:07:01,680 Speaker 1: bottomed on October t of oh eight. Two point six 140 00:07:01,720 --> 00:07:04,719 Speaker 1: percent of stocks trade and made new annual os on October. 141 00:07:04,720 --> 00:07:06,719 Speaker 1: I've never seen that. That's a seven or eight standard 142 00:07:06,760 --> 00:07:09,720 Speaker 1: deviation event. It is not supposed to happen in your lifetime. 143 00:07:09,960 --> 00:07:12,640 Speaker 1: And I'm in print after being barished from November of 144 00:07:12,680 --> 00:07:16,080 Speaker 1: oh seven. I'm saying the bottoming process is started. And 145 00:07:16,160 --> 00:07:19,160 Speaker 1: on March two, I'm on Bloomberg with Barton Biggs March 146 00:07:19,240 --> 00:07:22,280 Speaker 1: second of oh nine, saying the bottoming process that started 147 00:07:22,280 --> 00:07:24,880 Speaker 1: in October of last year is complete this week and 148 00:07:24,920 --> 00:07:27,920 Speaker 1: we're all in. So I know Dow theory involves the 149 00:07:27,920 --> 00:07:31,240 Speaker 1: transportation average. Uh sort of have to conf you know, 150 00:07:31,280 --> 00:07:36,360 Speaker 1: confirm the down confirming the dow. So, um, how are 151 00:07:36,360 --> 00:07:39,640 Speaker 1: you looking at that now? I mean, uh, is Cheney's 152 00:07:39,680 --> 00:07:42,880 Speaker 1: aren't out a record right now? The the No, they're not, 153 00:07:43,600 --> 00:07:46,440 Speaker 1: but they did make a new reaction high. And according 154 00:07:46,480 --> 00:07:48,920 Speaker 1: to down theory, the primary trend of the market is up. 155 00:07:48,960 --> 00:07:51,800 Speaker 1: And the most important thing in analyzing markets is what 156 00:07:52,000 --> 00:07:54,640 Speaker 1: is the primary trend? Is it up or down? Well, 157 00:07:54,680 --> 00:07:58,360 Speaker 1: the primary trend is up. So alongside transports, some other 158 00:07:58,400 --> 00:08:01,480 Speaker 1: areas of the market that I've heard other strategists investors 159 00:08:01,480 --> 00:08:04,040 Speaker 1: talk about is needing to confirm the market size have 160 00:08:04,160 --> 00:08:05,920 Speaker 1: been the likes of small caps. And I know a 161 00:08:05,960 --> 00:08:08,240 Speaker 1: couple of weeks ago, back in November, you did write 162 00:08:08,280 --> 00:08:11,520 Speaker 1: about a so called golden cross in the Russell two thousands. 163 00:08:11,560 --> 00:08:13,560 Speaker 1: So I was hoping that you could explain to our 164 00:08:13,600 --> 00:08:16,720 Speaker 1: listeners what exactly it is and what actually that means. 165 00:08:16,800 --> 00:08:19,440 Speaker 1: Does that mean we could see more future gains or 166 00:08:19,480 --> 00:08:22,880 Speaker 1: even uh small caps leading going forward? On November five, 167 00:08:23,080 --> 00:08:25,920 Speaker 1: you had and the golden cross is not as predictive 168 00:08:26,000 --> 00:08:27,760 Speaker 1: for the S and P as it is for the Russell. 169 00:08:27,840 --> 00:08:31,040 Speaker 1: It's much more predictive for the Russell two thousand, and 170 00:08:31,680 --> 00:08:35,280 Speaker 1: it occurred on November five, and it's when the fifty 171 00:08:35,360 --> 00:08:39,000 Speaker 1: day moving average crosses above the two hundred day moving average, 172 00:08:39,480 --> 00:08:41,960 Speaker 1: and the and the small caps have performed pretty well 173 00:08:42,080 --> 00:08:45,640 Speaker 1: since then. And it's not just the US. The European 174 00:08:45,720 --> 00:08:51,120 Speaker 1: small cap induseries had a golden cross on October. So 175 00:08:51,160 --> 00:08:55,120 Speaker 1: it's kind of this concerted move by the small caps, 176 00:08:55,120 --> 00:08:57,280 Speaker 1: which have lagged by the way they've lagged for all 177 00:08:57,280 --> 00:09:00,760 Speaker 1: this year, and now they're coming to the four uh PEP. 178 00:09:00,800 --> 00:09:02,120 Speaker 1: I want to bring you in on this a little 179 00:09:02,120 --> 00:09:04,599 Speaker 1: bit too. Um. Obviously it was going to be contrary 180 00:09:04,600 --> 00:09:07,440 Speaker 1: and all this I was gonna say, asked Jeff of 181 00:09:07,520 --> 00:09:10,320 Speaker 1: those small caps in the Russell two thousand, how many 182 00:09:10,320 --> 00:09:13,640 Speaker 1: of them are actually profitable? I don't know the answer, 183 00:09:15,000 --> 00:09:18,360 Speaker 1: not many, not many. And the reason I asked it 184 00:09:18,400 --> 00:09:21,120 Speaker 1: in that format is because I was under the impression 185 00:09:21,160 --> 00:09:25,720 Speaker 1: that earnings and economic performance would eventually drive stock prices. 186 00:09:26,080 --> 00:09:28,800 Speaker 1: I agree with that, So why do we have such 187 00:09:28,840 --> 00:09:34,280 Speaker 1: a tepid economy. We got great numbers for employment, We 188 00:09:34,400 --> 00:09:37,360 Speaker 1: got great numbers if you want to borrow money, but 189 00:09:37,600 --> 00:09:41,440 Speaker 1: the economy is not growing. And in fact, you know, 190 00:09:41,480 --> 00:09:43,720 Speaker 1: if you take a look at real inflation what people 191 00:09:43,760 --> 00:09:47,080 Speaker 1: really have to pay for things, you know, we are 192 00:09:47,320 --> 00:09:51,080 Speaker 1: at a negative real rate of return for let's say treasuries. 193 00:09:51,400 --> 00:09:54,679 Speaker 1: So is that what drives people putting money into equities? 194 00:09:54,840 --> 00:09:58,680 Speaker 1: What undepends the market strength? I would argue that the 195 00:09:58,720 --> 00:10:01,640 Speaker 1: individual investors, for the most part, are not putting money 196 00:10:01,640 --> 00:10:05,560 Speaker 1: in equities. They're not just cautious, they're scared to differ. Yeah, 197 00:10:05,840 --> 00:10:08,440 Speaker 1: which I think is a bad trade. By the way, 198 00:10:09,120 --> 00:10:11,080 Speaker 1: I think there's a ton of money on the sidelines. 199 00:10:11,160 --> 00:10:12,880 Speaker 1: I think before it's over, this is not the way 200 00:10:12,920 --> 00:10:15,440 Speaker 1: bullmarkets end you've been around. But I'm not talking about 201 00:10:15,559 --> 00:10:17,720 Speaker 1: but necessarily a bullmarket. I'm trying to look at the 202 00:10:17,720 --> 00:10:21,120 Speaker 1: connection between the performance of the economy and the global 203 00:10:21,160 --> 00:10:23,680 Speaker 1: economy if you want to add to it, and the 204 00:10:23,800 --> 00:10:26,240 Speaker 1: performance of equities, because this seems to be the most 205 00:10:26,360 --> 00:10:30,840 Speaker 1: unloved bull market I can remember, we have stocks. Total 206 00:10:30,920 --> 00:10:33,880 Speaker 1: return for the SMP five hundred year to date is 207 00:10:34,000 --> 00:10:36,920 Speaker 1: twenty six and a half percent as total return, so 208 00:10:36,960 --> 00:10:41,800 Speaker 1: it's got dividends and so on. Why don't people why 209 00:10:41,800 --> 00:10:45,199 Speaker 1: why aren't you seeing anybody happy? It's it's just it's 210 00:10:45,240 --> 00:10:48,840 Speaker 1: sort of bullies the actual performance of their portfolios. And 211 00:10:48,880 --> 00:10:51,240 Speaker 1: that's why you should continue to be bullish. If you 212 00:10:51,320 --> 00:10:55,000 Speaker 1: remember ninety nine and the spring of two thousand, everybody 213 00:10:55,120 --> 00:10:58,880 Speaker 1: was happy. So the wall of warrior still exists absolutely, 214 00:10:58,920 --> 00:11:01,880 Speaker 1: And I would say that the anticipation of future earnings. 215 00:11:02,679 --> 00:11:05,800 Speaker 1: I'm along a company called zyme Works z y m 216 00:11:05,800 --> 00:11:08,760 Speaker 1: E at twenty and twenty four and they may have 217 00:11:08,800 --> 00:11:11,880 Speaker 1: the magic bullet for cancer, and the stock has gone 218 00:11:11,880 --> 00:11:14,720 Speaker 1: from twenty bucks to forty four bucks in six months 219 00:11:15,080 --> 00:11:18,080 Speaker 1: and they're not making any money. Yeah, but that you 220 00:11:18,120 --> 00:11:20,560 Speaker 1: can make the argument, right, I mean, if you Sarah 221 00:11:20,559 --> 00:11:23,120 Speaker 1: and Mike, you've written about this kind of stuff before, 222 00:11:23,200 --> 00:11:28,240 Speaker 1: where you have binary events, specifically with the pharmaceutical industry, right, 223 00:11:28,280 --> 00:11:31,120 Speaker 1: I mean a drug gets approved or you know, it 224 00:11:31,160 --> 00:11:34,679 Speaker 1: doesn't perform, and then yeah, I think there's a million 225 00:11:34,679 --> 00:11:37,000 Speaker 1: of them in the small cap well, there's a huge 226 00:11:37,080 --> 00:11:41,240 Speaker 1: number of y We have a FED meeting come next week. 227 00:11:41,360 --> 00:11:44,800 Speaker 1: Most people don't really expect the Federal Reserve to do 228 00:11:44,880 --> 00:11:47,800 Speaker 1: all of that much change anything. But Jeff, when you 229 00:11:47,880 --> 00:11:50,680 Speaker 1: look at asset prices across the board and you try 230 00:11:50,679 --> 00:11:53,080 Speaker 1: to conduct your analysis, how much do you take into 231 00:11:53,120 --> 00:11:56,120 Speaker 1: account what the FED is actually doing well? I think 232 00:11:56,240 --> 00:11:58,559 Speaker 1: I think the FED has been one of the drivers 233 00:11:58,640 --> 00:12:01,480 Speaker 1: of of stocks. And I don't think interest rates are 234 00:12:01,480 --> 00:12:03,160 Speaker 1: going up in the near term. I think they're gonna 235 00:12:03,200 --> 00:12:06,680 Speaker 1: stay lower for longer than people think. And uh, my 236 00:12:06,840 --> 00:12:10,920 Speaker 1: work suggests that a fair market multiple in this interest 237 00:12:11,000 --> 00:12:14,000 Speaker 1: rate environment on the SMP is somewhere between nineteen and 238 00:12:14,040 --> 00:12:17,000 Speaker 1: twenty times earnings. And if you want to use at 239 00:12:17,080 --> 00:12:19,720 Speaker 1: your denties hundred and seventy seven dollars from next year 240 00:12:19,720 --> 00:12:23,720 Speaker 1: and put her twenty multiple on that, talking thirty on 241 00:12:23,760 --> 00:12:26,360 Speaker 1: the SMP. You know, when you talk about the FED 242 00:12:26,400 --> 00:12:28,600 Speaker 1: and the balance sheets, I mean, obviously, what are they buying? 243 00:12:29,480 --> 00:12:32,560 Speaker 1: The FED downs The Fed's buying almost you know, any name, 244 00:12:32,600 --> 00:12:35,360 Speaker 1: a name, a debt instrument that that a central bank 245 00:12:35,400 --> 00:12:37,640 Speaker 1: around the world is not buying. And you look at 246 00:12:37,640 --> 00:12:39,760 Speaker 1: the bank in Japan, they're buying ets well, well, I 247 00:12:39,800 --> 00:12:42,560 Speaker 1: mean all they're all, that's that's all on their balance sheet. 248 00:12:42,600 --> 00:12:44,320 Speaker 1: The Fed. What it's really buying now is the short 249 00:12:44,440 --> 00:12:47,680 Speaker 1: end of the treasury curve. Because we have this trillion 250 00:12:47,679 --> 00:12:52,040 Speaker 1: dollar deficit, We've got massive issuance of of treasuries, same 251 00:12:52,080 --> 00:12:54,839 Speaker 1: story next year for the foreseeable future. Is that ever 252 00:12:54,920 --> 00:12:57,840 Speaker 1: gonna turn around and bite us, Jeff, I don't think so. 253 00:12:58,120 --> 00:12:59,920 Speaker 1: I say said I think interest rates are gonna stay 254 00:13:00,000 --> 00:13:03,000 Speaker 1: over for longer than people think. And I think that 255 00:13:03,240 --> 00:13:06,200 Speaker 1: with the so the the millennials are doing in their 256 00:13:06,240 --> 00:13:09,080 Speaker 1: thirties what the boomers did in their twenties, and they're 257 00:13:09,120 --> 00:13:12,560 Speaker 1: buying homes and they're eventually gonna shove money at equities, 258 00:13:12,880 --> 00:13:15,920 Speaker 1: which they haven't really done yet, but it's coming. It's coming, 259 00:13:16,000 --> 00:13:17,560 Speaker 1: and that's gonna be a huge tale win for the 260 00:13:17,559 --> 00:13:20,360 Speaker 1: equity markets as well. We've gotten through this conversation the 261 00:13:20,360 --> 00:13:24,160 Speaker 1: bulk of it without mentioning US and China trade negotiations, 262 00:13:24,400 --> 00:13:27,760 Speaker 1: which I must say I really respect, but him, I know, 263 00:13:27,840 --> 00:13:31,400 Speaker 1: even paying a lot of attention this week, you can't 264 00:13:31,440 --> 00:13:35,440 Speaker 1: you can't write it. So why don't you It's a 265 00:13:35,440 --> 00:13:38,120 Speaker 1: whiplash market, right because you know you you sit looking 266 00:13:38,160 --> 00:13:40,920 Speaker 1: at the screen, and you can basically tell when a 267 00:13:40,960 --> 00:13:44,800 Speaker 1: tweet has been put out there by the president or 268 00:13:44,800 --> 00:13:48,520 Speaker 1: by member of his administration talking about trade one way 269 00:13:48,679 --> 00:13:52,640 Speaker 1: or another, and so goes the market supposedly. But what 270 00:13:52,760 --> 00:13:54,400 Speaker 1: I did was I took a look at the SMP. 271 00:13:55,240 --> 00:13:57,040 Speaker 1: I looked at all the companies in there, and I 272 00:13:57,120 --> 00:14:00,800 Speaker 1: put together a model portfolio of twelve companies. They're all 273 00:14:00,800 --> 00:14:04,600 Speaker 1: in the tech sector. And these twelve companies have between 274 00:14:04,679 --> 00:14:08,280 Speaker 1: thirty and sixty five percent of their revenue in China. Right, 275 00:14:08,320 --> 00:14:11,200 Speaker 1: we've heard all about, as you said, trade wars. So 276 00:14:11,240 --> 00:14:12,760 Speaker 1: what I did was I tried to see, Okay, so 277 00:14:12,800 --> 00:14:15,960 Speaker 1: I how did these stocks actually perform? Well, if you 278 00:14:15,960 --> 00:14:18,880 Speaker 1: had bought them at the beginning of the year, you 279 00:14:18,920 --> 00:14:22,440 Speaker 1: would have made on your money. So compare that to 280 00:14:22,480 --> 00:14:25,480 Speaker 1: the SMP six and a half percent you would have 281 00:14:25,520 --> 00:14:29,680 Speaker 1: made investing in these twelve companies. So then I went 282 00:14:29,680 --> 00:14:31,560 Speaker 1: back and I said, okay, so maybe this is just 283 00:14:31,600 --> 00:14:34,680 Speaker 1: an anomaly because it's just one year. I went back 284 00:14:34,720 --> 00:14:37,760 Speaker 1: to the end of sixteen after the election. Because the 285 00:14:37,840 --> 00:14:42,120 Speaker 1: rhetoric from candidate Trump is pretty much the same as 286 00:14:42,480 --> 00:14:46,720 Speaker 1: the rhetoric and the action of President Trump. You would 287 00:14:46,760 --> 00:14:49,160 Speaker 1: have made even more. You would have made about eighty 288 00:14:49,200 --> 00:14:54,040 Speaker 1: five percent on your money. And the reason that I 289 00:14:54,160 --> 00:14:56,360 Speaker 1: came up with is because it's not about trade. This 290 00:14:56,440 --> 00:14:59,840 Speaker 1: trade wide believe is going to be a footnote. It's 291 00:14:59,840 --> 00:15:03,440 Speaker 1: a about the big pattern changes in trade having to 292 00:15:03,480 --> 00:15:07,320 Speaker 1: do with Asia. You're looking at four point eight billion 293 00:15:07,480 --> 00:15:13,119 Speaker 1: people in Asia, so you've got four point the US economy. 294 00:15:13,400 --> 00:15:15,480 Speaker 1: It's still gonna be big, still going to be important, 295 00:15:15,880 --> 00:15:21,720 Speaker 1: but it is a decreasing importance in global capital. So 296 00:15:21,800 --> 00:15:24,720 Speaker 1: that was my take on trade. Ask you to name 297 00:15:24,720 --> 00:15:26,680 Speaker 1: a few of the companies that are in that portfolio. 298 00:15:26,760 --> 00:15:30,400 Speaker 1: Oh yeah, um, A M D for example, Uh, probably 299 00:15:30,520 --> 00:15:35,440 Speaker 1: the chip makers. Um. Also small companies. I looked, for 300 00:15:35,480 --> 00:15:38,200 Speaker 1: example at Skywork Solutions, not one of the twelve I 301 00:15:38,240 --> 00:15:40,520 Speaker 1: looked at, but I mean they've got over twenty of 302 00:15:40,560 --> 00:15:43,280 Speaker 1: their revenue coming from China. I think it just got 303 00:15:43,320 --> 00:15:48,120 Speaker 1: an upgrade on Thursday and the stock has really outperformed. 304 00:16:03,560 --> 00:16:06,400 Speaker 1: In one of your notes, you did say we expect 305 00:16:06,480 --> 00:16:09,920 Speaker 1: earnings to rebound just like the economy. How much of 306 00:16:09,920 --> 00:16:13,000 Speaker 1: a rebound is actually possible though, I think you're gonna 307 00:16:13,200 --> 00:16:18,080 Speaker 1: accelerate by the end of GDP growth, and I think 308 00:16:18,080 --> 00:16:22,680 Speaker 1: earnings are gonna follow along with that. And again, earnings 309 00:16:22,680 --> 00:16:26,680 Speaker 1: are the mother's milk of secular bull markets. And you know, 310 00:16:27,160 --> 00:16:29,200 Speaker 1: it was Warren Buffett that said, in the short run, 311 00:16:29,480 --> 00:16:32,880 Speaker 1: the stock market is a beauty contest, but in the 312 00:16:32,920 --> 00:16:36,160 Speaker 1: long run, it's all about earnings, and that's absolutely correct. 313 00:16:36,600 --> 00:16:39,840 Speaker 1: I just want to ask you having to do with that, uh, 314 00:16:39,880 --> 00:16:42,400 Speaker 1: with that point, do you think that this is also 315 00:16:42,400 --> 00:16:44,840 Speaker 1: going to raise commodity prices? Because if you have GDP 316 00:16:44,960 --> 00:16:47,880 Speaker 1: growth that is around three percent, will that pull commodities 317 00:16:47,960 --> 00:16:50,880 Speaker 1: higher as well? Yeah? I think I think commodities are 318 00:16:50,960 --> 00:16:54,720 Speaker 1: going to trade higher. I think they've suppressed the price 319 00:16:54,760 --> 00:16:58,080 Speaker 1: accrued oil too long. I did see where Saudi Arabia 320 00:16:58,120 --> 00:17:01,920 Speaker 1: is talking about four dred thousand barrel hut um. But 321 00:17:02,000 --> 00:17:04,159 Speaker 1: I mean if you if you go to China, like 322 00:17:04,160 --> 00:17:06,320 Speaker 1: twenty years ago, you went to China, all you saw 323 00:17:06,400 --> 00:17:09,040 Speaker 1: was bicycles. Now you see his cars and a lot 324 00:17:09,080 --> 00:17:12,920 Speaker 1: of re buicks, which I don't understand, but it's it's 325 00:17:12,960 --> 00:17:16,520 Speaker 1: the demand that's going up in India and China for 326 00:17:16,640 --> 00:17:22,320 Speaker 1: gasoline and energy is immense. Well, that's a nice segue 327 00:17:22,359 --> 00:17:26,399 Speaker 1: into another topic you uh touched on recently, and that's MLPs. 328 00:17:26,480 --> 00:17:30,560 Speaker 1: The Semester Limited Partnerships. Mainly it's it's usually wheel pipelines 329 00:17:30,640 --> 00:17:33,840 Speaker 1: that convert to an MLP to get that that preferential 330 00:17:34,000 --> 00:17:38,240 Speaker 1: tax treatment. These stocks amaze me because every now and 331 00:17:38,240 --> 00:17:41,040 Speaker 1: then you'll see one with a with a dividend yield 332 00:17:41,119 --> 00:17:45,800 Speaker 1: or distribution yield of like not twenty but double digits 333 00:17:45,800 --> 00:17:50,120 Speaker 1: for Hillari and de Hilarian Index yields between eight and nine. 334 00:17:50,600 --> 00:17:53,760 Speaker 1: But yet, you know, when you buy a dividend stock, 335 00:17:53,800 --> 00:17:56,879 Speaker 1: you tend to like that safety. You expect that dividend 336 00:17:56,920 --> 00:17:59,359 Speaker 1: to be stable if not grow MLPs it's a it's 337 00:17:59,400 --> 00:18:02,520 Speaker 1: a whole another situations. So walk us through how you 338 00:18:02,560 --> 00:18:07,520 Speaker 1: think about MLPs uh specific there's a big distinction between 339 00:18:07,840 --> 00:18:13,960 Speaker 1: upstream MLPs and midstream MLPs. The best MLP portfolio manager 340 00:18:14,000 --> 00:18:17,520 Speaker 1: I know is Eric Kaufman at V Capital, and he 341 00:18:17,560 --> 00:18:19,400 Speaker 1: told me eight years ago, you don't want to own 342 00:18:19,440 --> 00:18:22,440 Speaker 1: the upstreams they have too much price sensitivity to crude oil, 343 00:18:23,200 --> 00:18:26,800 Speaker 1: but the mid streams. Because everybody, all the upstreams went 344 00:18:26,840 --> 00:18:30,520 Speaker 1: bankrupt and because of that they sold the mid streams down. 345 00:18:30,600 --> 00:18:34,640 Speaker 1: Now you can think of midstream MLPs Master Limited Partnerships 346 00:18:35,119 --> 00:18:38,760 Speaker 1: as a transportation company without wheels. Because you're exactly right, Mike. 347 00:18:38,800 --> 00:18:41,679 Speaker 1: They own they own the pipes, and they own the 348 00:18:41,720 --> 00:18:44,680 Speaker 1: storage facilities, and they have long term contracts with people 349 00:18:44,720 --> 00:18:49,960 Speaker 1: like Chevron Exxon, and they have distributions that the good 350 00:18:49,960 --> 00:18:52,840 Speaker 1: ones have distributions anywhere from six percent to eight percent, 351 00:18:53,560 --> 00:18:55,679 Speaker 1: and the two best in the business or ep D 352 00:18:55,960 --> 00:19:01,480 Speaker 1: and et extraterrestrial. You like that. You like the midstream 353 00:19:01,520 --> 00:19:03,560 Speaker 1: because they're sort of less sensitive to the price of 354 00:19:03,720 --> 00:19:07,720 Speaker 1: They basically have no price sensitive They're they're sensitive to volumes, 355 00:19:07,720 --> 00:19:10,159 Speaker 1: how much volume is coming through the pipes. And what 356 00:19:10,320 --> 00:19:14,040 Speaker 1: your listeners should know is that somewhere between seventy and 357 00:19:14,119 --> 00:19:19,360 Speaker 1: eight of that distribution is tax deferred. So if you're 358 00:19:19,400 --> 00:19:22,760 Speaker 1: my age and you're looking for income, it makes a 359 00:19:22,800 --> 00:19:25,000 Speaker 1: lot more sense to buy the mid streams. And they're cheap, 360 00:19:25,000 --> 00:19:27,000 Speaker 1: the cheapest they've been in twenty years. And my daddy 361 00:19:27,080 --> 00:19:29,000 Speaker 1: used to tell me some good things tend to happen 362 00:19:29,000 --> 00:19:31,600 Speaker 1: to cheap stocks. Right, So it doesn't matter what the 363 00:19:31,600 --> 00:19:33,520 Speaker 1: price of oil is, because if you need to transport it, 364 00:19:33,800 --> 00:19:35,879 Speaker 1: you have to transport it somehow. You can't lie it 365 00:19:35,960 --> 00:19:39,480 Speaker 1: sitting around. It's correct. But speaking of the price of oil, PIM, 366 00:19:39,520 --> 00:19:41,080 Speaker 1: I know you've you've done some work. I don't want 367 00:19:41,080 --> 00:19:43,640 Speaker 1: to give any spoilers out, but you've got an outlone. 368 00:19:43,840 --> 00:19:48,000 Speaker 1: It's fine. It has to well, basically, it just has 369 00:19:48,040 --> 00:19:49,760 Speaker 1: to do with we've got a lot of crude oil 370 00:19:50,359 --> 00:19:54,080 Speaker 1: and you know Jeff mentioning the pipeline system for example, 371 00:19:54,200 --> 00:19:56,919 Speaker 1: it has basically been reversed. Right. There used to be 372 00:19:57,040 --> 00:19:59,600 Speaker 1: that we would import oil, we would process it down 373 00:19:59,600 --> 00:20:01,639 Speaker 1: in the gall Coast, and then it would be shipped 374 00:20:01,680 --> 00:20:05,280 Speaker 1: northeast west wherever two consumers in the United States. Well, 375 00:20:05,320 --> 00:20:07,440 Speaker 1: there's so much oil in the United States, those pipelines 376 00:20:07,480 --> 00:20:09,040 Speaker 1: have had to be reversed, and now the oil is 377 00:20:09,080 --> 00:20:13,520 Speaker 1: going down to the Gulf Coast and it's being exported 378 00:20:13,560 --> 00:20:15,199 Speaker 1: now it's not and being exported in the form of 379 00:20:15,240 --> 00:20:17,080 Speaker 1: crew but also in the form of l n G 380 00:20:17,680 --> 00:20:20,879 Speaker 1: liquefied natural gas, and that is proven to be a 381 00:20:20,920 --> 00:20:25,080 Speaker 1: big market. But like any big capital intensive industry, you 382 00:20:25,160 --> 00:20:29,040 Speaker 1: gotta be aware because what happens is there's demand. People 383 00:20:29,160 --> 00:20:31,719 Speaker 1: see it. So what do they do. They build huge 384 00:20:32,400 --> 00:20:36,880 Speaker 1: supply opportunities, right, whether that is at a liquefaction plant 385 00:20:37,080 --> 00:20:40,479 Speaker 1: or building more pipelines or building too many ships. And 386 00:20:40,560 --> 00:20:42,600 Speaker 1: it's just what happens in the mining industry. That's why 387 00:20:42,600 --> 00:20:45,280 Speaker 1: I was interested in what happens to the commodity complex, 388 00:20:45,320 --> 00:20:48,879 Speaker 1: because unless you get commodity prices to move higher, a 389 00:20:48,960 --> 00:20:52,560 Speaker 1: lot of these projects, they are very expensive. First of all, 390 00:20:52,720 --> 00:20:55,439 Speaker 1: they are not going to be profitable, and you're seeing 391 00:20:55,520 --> 00:20:58,879 Speaker 1: that with some attempts to shut in production in the 392 00:20:58,920 --> 00:21:01,760 Speaker 1: Permian and in various shale places in the United States 393 00:21:02,080 --> 00:21:05,520 Speaker 1: because they can't get it to a market that can 394 00:21:05,560 --> 00:21:07,560 Speaker 1: pay for it. In fact, I think there was a 395 00:21:07,600 --> 00:21:13,560 Speaker 1: story that natural gas was actually the producers were actually 396 00:21:13,600 --> 00:21:17,520 Speaker 1: paying people to take the natural gas away because they 397 00:21:17,520 --> 00:21:20,399 Speaker 1: couldn't flare it and they couldn't sell it. So the 398 00:21:20,440 --> 00:21:23,280 Speaker 1: Henry hubb the Henry Hubbs full correct, exactly, it's full. 399 00:21:23,320 --> 00:21:25,520 Speaker 1: And so you know, when you look at oil, as 400 00:21:25,600 --> 00:21:30,160 Speaker 1: Jeff alluded to, you have the OPEC oil cartel, which 401 00:21:30,200 --> 00:21:35,080 Speaker 1: is trying to manage price by decreasing production. The only 402 00:21:35,200 --> 00:21:39,040 Speaker 1: problem with that is you have countries like Russia, like 403 00:21:39,280 --> 00:21:43,040 Speaker 1: Nigeria who need the oil. I mean they need the revenue, right, 404 00:21:43,080 --> 00:21:46,720 Speaker 1: that's hard currency for them. Well, what else are you 405 00:21:46,840 --> 00:21:50,440 Speaker 1: going to sell? So I think that push pull is 406 00:21:50,440 --> 00:21:57,359 Speaker 1: going to continue. Good. So we've had this range. Yeah, maybe, 407 00:21:57,520 --> 00:22:00,399 Speaker 1: which is for the foreseeable future. I would think so. 408 00:22:00,640 --> 00:22:02,760 Speaker 1: I would think that, you know, it's pretty arranged bound 409 00:22:02,760 --> 00:22:04,920 Speaker 1: because anytime the price starts to go up, what you're 410 00:22:04,920 --> 00:22:06,960 Speaker 1: gonna do is you're gonna see producers in the United 411 00:22:07,000 --> 00:22:10,320 Speaker 1: States who have got big debt on their balance sheet, 412 00:22:10,760 --> 00:22:13,399 Speaker 1: They're going to start to produce as much as possible. 413 00:22:13,440 --> 00:22:15,600 Speaker 1: And the US is the swing producer. I think the 414 00:22:15,680 --> 00:22:19,879 Speaker 1: US now produces fifteen per cent of the world's oil. 415 00:22:20,000 --> 00:22:24,280 Speaker 1: That is amazing. Imagine that fifty years back, all going 416 00:22:24,320 --> 00:22:28,439 Speaker 1: through Jeff's mid stream MLPs. I guess, as long as 417 00:22:28,480 --> 00:22:30,439 Speaker 1: as long as the tax, as long as the tax 418 00:22:30,600 --> 00:22:34,159 Speaker 1: law stays the same. And that is a footnote just 419 00:22:34,200 --> 00:22:36,120 Speaker 1: to mention with the MLPs, because there was a lot 420 00:22:36,119 --> 00:22:38,200 Speaker 1: of issue having to do with getting rid of that 421 00:22:38,640 --> 00:22:42,680 Speaker 1: sort of real estate investment trust like passed through of income. 422 00:22:42,960 --> 00:22:45,800 Speaker 1: What if Elizabeth Warren comes in and bands fracking, not 423 00:22:46,040 --> 00:22:50,480 Speaker 1: a snowball's chance in hell? Why do you say that? 424 00:22:50,760 --> 00:22:53,600 Speaker 1: Do you hear what Kamala Harris said a week ago? 425 00:22:54,240 --> 00:22:58,000 Speaker 1: She said that, um, when I'm president, of course she's 426 00:22:58,040 --> 00:23:00,960 Speaker 1: out now. But when I'm president, I'm gonna make all 427 00:23:01,000 --> 00:23:04,200 Speaker 1: the pharmaceutical companies roll back drug prices, and if they 428 00:23:04,200 --> 00:23:07,320 Speaker 1: don't do it, we're going to confiscate all their patents 429 00:23:07,680 --> 00:23:09,360 Speaker 1: and the government's going to own I mean, I'm gonna 430 00:23:09,400 --> 00:23:13,720 Speaker 1: excuse me, you're about constitutional law or law in general. 431 00:23:13,760 --> 00:23:16,000 Speaker 1: I was gonna say, how do you go? Long lawyers 432 00:23:18,440 --> 00:23:22,440 Speaker 1: moved to Washington, d c. Well done, well done. Well, 433 00:23:22,480 --> 00:23:24,879 Speaker 1: if we're talking about lawyers, I think it's officially time 434 00:23:24,960 --> 00:23:28,680 Speaker 1: for the Craziest Things segment of the show. Uh, Sarah, 435 00:23:28,800 --> 00:23:31,000 Speaker 1: I believe we got a call to the hotline. What 436 00:23:31,080 --> 00:23:32,960 Speaker 1: we'll tell us about that? We did. We got a 437 00:23:33,040 --> 00:23:35,240 Speaker 1: second time caller. His name is Morgan Hill, and he 438 00:23:35,359 --> 00:23:38,000 Speaker 1: is an investment associate in South Florida. So take a listen. 439 00:23:38,520 --> 00:23:41,120 Speaker 1: Weird of fan that happened. I saw Petra diamonds, which 440 00:23:41,160 --> 00:23:44,840 Speaker 1: are struggling from uh, you know, a lot of debt 441 00:23:45,000 --> 00:23:48,840 Speaker 1: and falling diamond prices, recently sold as twenty carrot blue 442 00:23:48,880 --> 00:23:53,359 Speaker 1: gym essentially for like fifteen million dollars. Never knew that 443 00:23:53,640 --> 00:23:57,760 Speaker 1: twenty carrot diamond couldn't be sold for that much, but 444 00:23:58,280 --> 00:24:02,520 Speaker 1: it happened. So crazy thing that happened in the market recently. 445 00:24:02,920 --> 00:24:04,399 Speaker 1: I gotta say it was a good one, but he 446 00:24:04,400 --> 00:24:06,480 Speaker 1: took a page out of your book from esoteric markets. 447 00:24:06,560 --> 00:24:10,160 Speaker 1: That's true, that's true. Fifteen million dollar blue diamond, Jeff, 448 00:24:10,160 --> 00:24:12,840 Speaker 1: is your wife getting a special present. She's got the 449 00:24:12,880 --> 00:24:15,360 Speaker 1: diamond I gave her fifty years ago when it's just 450 00:24:15,440 --> 00:24:22,240 Speaker 1: like five. Imagine what it would be worth now and right? 451 00:24:22,440 --> 00:24:24,880 Speaker 1: And well that that's what I was going to mention, 452 00:24:25,080 --> 00:24:28,080 Speaker 1: is that just be mindful. What you mentioned is very important. 453 00:24:28,119 --> 00:24:33,840 Speaker 1: It's a blue diamond. Colored diamonds, colored precious stones are 454 00:24:34,000 --> 00:24:39,479 Speaker 1: increasing in value and are rare. On the other hand, sorry, Jeff, 455 00:24:40,080 --> 00:24:44,000 Speaker 1: regular diamonds, on the other hand, they are falling in price. 456 00:24:44,440 --> 00:24:47,120 Speaker 1: And yes, and there are just too many of them, 457 00:24:47,200 --> 00:24:49,919 Speaker 1: and two beers and the old cartel that used to 458 00:24:49,960 --> 00:24:52,919 Speaker 1: control them. That's right, they are losing their grips. That's right. 459 00:24:52,960 --> 00:24:57,600 Speaker 1: All right, Sarah, Can you top a fifteen million million 460 00:24:57,640 --> 00:25:00,440 Speaker 1: blue diamond? I challenge you to top that is the 461 00:25:00,480 --> 00:25:03,119 Speaker 1: craziest thing you saw this week. I will admit offhand 462 00:25:03,480 --> 00:25:05,280 Speaker 1: that this is a bit of a stretch because it's 463 00:25:05,280 --> 00:25:09,560 Speaker 1: not necessarily something that happened in markets, but it does 464 00:25:09,680 --> 00:25:13,080 Speaker 1: pertain to a certain CEO of one company, and that 465 00:25:13,480 --> 00:25:17,359 Speaker 1: is David Solomon. The CEO of Goldman Sacks. So Amazon 466 00:25:17,680 --> 00:25:20,440 Speaker 1: was having one of their big cloud conferences, and it 467 00:25:20,480 --> 00:25:23,600 Speaker 1: turns out that yes, uh, David Solomon is a DJ. 468 00:25:24,160 --> 00:25:28,000 Speaker 1: He often DJs at different events around the country, sometimes 469 00:25:28,040 --> 00:25:31,720 Speaker 1: in the summer at the Hampton's He's DJ before I know, 470 00:25:31,760 --> 00:25:35,280 Speaker 1: Bloomber has covered it before. Uh, but he DJ at 471 00:25:35,359 --> 00:25:39,439 Speaker 1: this Amazon cloud event. But the really crazy part was 472 00:25:39,480 --> 00:25:42,360 Speaker 1: that supposedly a lot of people had no idea who 473 00:25:42,359 --> 00:25:45,240 Speaker 1: he was. They didn't they didn't recognize him to literally, 474 00:25:45,280 --> 00:25:48,240 Speaker 1: who's this guy on stage? DJing? Turns out CEO of 475 00:25:48,240 --> 00:25:50,880 Speaker 1: Goldman sex Hey, look, whatever it takes to get Amazon 476 00:25:50,960 --> 00:25:53,920 Speaker 1: as your your client, I guess. Uh. He came out 477 00:25:53,960 --> 00:25:55,960 Speaker 1: afterwards in a suit and talked about how important a 478 00:25:56,160 --> 00:25:58,520 Speaker 1: WS is to his business. Jeff, did they tell you 479 00:25:58,560 --> 00:26:00,880 Speaker 1: about our gimmick? The craziest thing in markets this week? 480 00:26:01,760 --> 00:26:03,800 Speaker 1: The craziest thing I saw in the past two weeks 481 00:26:03,800 --> 00:26:07,199 Speaker 1: was Kamala Harris saying she's going to compliscate all the 482 00:26:07,240 --> 00:26:10,160 Speaker 1: patents that Mirk and Fis or have. Did we see 483 00:26:10,160 --> 00:26:14,160 Speaker 1: any of the companies react, I don't remembers, non nonplussed, 484 00:26:15,320 --> 00:26:18,640 Speaker 1: that's why she dropped out. How about you? You You see 485 00:26:18,680 --> 00:26:21,720 Speaker 1: anything crazy. Well, I mean, I don't know if it's 486 00:26:21,760 --> 00:26:24,479 Speaker 1: crazy or not. But if you take a look at 487 00:26:24,480 --> 00:26:28,679 Speaker 1: the socks right, which is the Philadelphia Semiconductor Index, and 488 00:26:28,720 --> 00:26:31,200 Speaker 1: then you also take a look at the Philadelphia Gold 489 00:26:31,240 --> 00:26:34,760 Speaker 1: and Silver Miners Index, you'd think they would diverge, right, 490 00:26:34,800 --> 00:26:37,919 Speaker 1: because you buy gold and silver, talk about diamonds and 491 00:26:37,960 --> 00:26:40,840 Speaker 1: so on. You buy those is a hedge of haven right, 492 00:26:40,920 --> 00:26:46,359 Speaker 1: you stick those. Actually they both outperformed the SMP five. 493 00:26:47,640 --> 00:26:50,520 Speaker 1: And it just you know, the the look at the 494 00:26:50,560 --> 00:26:56,520 Speaker 1: gold miners that moves in lock step opposite lockstep. The 495 00:26:56,680 --> 00:27:00,639 Speaker 1: interest rates has nothing to do with any anything else. 496 00:27:00,880 --> 00:27:04,720 Speaker 1: And so this idea that you have these havens, these divergences, 497 00:27:05,320 --> 00:27:07,119 Speaker 1: I gotta say, it's a new it's a it's a 498 00:27:07,119 --> 00:27:09,480 Speaker 1: different market. Now. It was a crazy year in markets 499 00:27:09,480 --> 00:27:12,159 Speaker 1: in that it was truly in everything rally, the havens rally, 500 00:27:12,280 --> 00:27:15,160 Speaker 1: treasuries go hold everything rallied, I mean E M debt. 501 00:27:15,480 --> 00:27:18,000 Speaker 1: And yet no one seemed to like it. Right, Golden 502 00:27:18,040 --> 00:27:22,600 Speaker 1: t LT both up roughly, the SMP up around. You 503 00:27:22,600 --> 00:27:25,840 Speaker 1: look at oil up an immense amount. Really everything higher. 504 00:27:25,880 --> 00:27:28,320 Speaker 1: The reciprocal of that is in two thousand and eight, 505 00:27:28,440 --> 00:27:31,600 Speaker 1: everything went down there was nowhere to hide except cash, 506 00:27:31,840 --> 00:27:34,080 Speaker 1: right right, quite the difference. Well, and that even the 507 00:27:34,080 --> 00:27:37,399 Speaker 1: reserve fund broke at the book, so so even that 508 00:27:37,520 --> 00:27:40,280 Speaker 1: wasn't a sure But well, I'm gonna talk about from 509 00:27:40,280 --> 00:27:43,320 Speaker 1: my crazy thing a stock that most certainly did not 510 00:27:43,440 --> 00:27:46,680 Speaker 1: rally this week, and that is Peloton. I I don't know, 511 00:27:46,680 --> 00:27:49,280 Speaker 1: I'm sure listeners have probably already heard this, but you're 512 00:27:49,320 --> 00:27:52,480 Speaker 1: going to climb on your bike about that for those 513 00:27:52,520 --> 00:27:57,240 Speaker 1: who haven't. You know, obviously the goal of buying a 514 00:27:57,280 --> 00:28:00,359 Speaker 1: big ad uh placing a big ad budget it in 515 00:28:00,520 --> 00:28:04,280 Speaker 1: the market is to boost sales. Booster stock didn't work 516 00:28:04,280 --> 00:28:08,400 Speaker 1: out so well for Peloton this week, the adverse effect, right. 517 00:28:08,640 --> 00:28:12,040 Speaker 1: So they had this ad where a woman gets a 518 00:28:12,080 --> 00:28:16,159 Speaker 1: Peloton like from her husband for Christmas. She's very excited 519 00:28:16,160 --> 00:28:20,359 Speaker 1: about Sizike exercise, the exercise bike with the program with 520 00:28:20,400 --> 00:28:22,520 Speaker 1: the the basically an iPad attached to it that you 521 00:28:22,560 --> 00:28:25,720 Speaker 1: can watch the classes and and she goes gung ho 522 00:28:25,920 --> 00:28:29,119 Speaker 1: on Peloton for a year and and the internet. I 523 00:28:29,160 --> 00:28:31,520 Speaker 1: think sarah the word these days, as they just canceled 524 00:28:31,560 --> 00:28:36,400 Speaker 1: Peloton over this. They I as as a husband, Um, 525 00:28:36,440 --> 00:28:38,000 Speaker 1: I'm kind of at a loss. I think the only 526 00:28:38,040 --> 00:28:41,040 Speaker 1: solution is not to get your wife anyway. I'll be 527 00:28:41,080 --> 00:28:44,240 Speaker 1: completely honest. I didn't really see the issue and it 528 00:28:44,360 --> 00:28:47,200 Speaker 1: sure you could look at the ad as being I 529 00:28:47,240 --> 00:28:49,840 Speaker 1: don't know, maybe a bit strange, but hey, if someone 530 00:28:49,880 --> 00:28:52,400 Speaker 1: got me a peloton, I would be psyched. I would 531 00:28:52,440 --> 00:28:55,160 Speaker 1: be really happy about it. I don't think I would 532 00:28:55,280 --> 00:28:58,960 Speaker 1: be offended that someone was telling me or hinting at 533 00:28:58,960 --> 00:29:04,200 Speaker 1: my house. It would become a close wrap something on everything. 534 00:29:04,360 --> 00:29:06,720 Speaker 1: I do have a theory that the guy whoever bought 535 00:29:06,760 --> 00:29:09,880 Speaker 1: that fifteen million dollar diamond is a guy who bought 536 00:29:09,880 --> 00:29:13,680 Speaker 1: his wife a Pelton last Christmas. Cuts a good chance 537 00:29:13,680 --> 00:29:17,200 Speaker 1: of that. Very good, very good. You sound like you 538 00:29:17,240 --> 00:29:22,800 Speaker 1: speak from experience conspiracy theories have found from Mike Reagan. 539 00:29:24,040 --> 00:29:26,240 Speaker 1: But with that said, Jeff South Pim Fox, thank you 540 00:29:26,280 --> 00:29:28,160 Speaker 1: so much for coming on the show to day pleasure. 541 00:29:28,360 --> 00:29:38,160 Speaker 1: Great to be here. What goes up? We'll be back 542 00:29:38,240 --> 00:29:40,400 Speaker 1: next week. Until then, you can find us on the 543 00:29:40,400 --> 00:29:44,000 Speaker 1: Bloomberg Terminal website and app or wherever you get your podcasts. 544 00:29:44,400 --> 00:29:46,120 Speaker 1: We love it if you took the time to rate 545 00:29:46,200 --> 00:29:49,120 Speaker 1: interview the show on Apple podcast so more listeners can 546 00:29:49,160 --> 00:29:52,200 Speaker 1: find us. And you can find us on Twitter, follow me, 547 00:29:52,520 --> 00:29:56,360 Speaker 1: at Sara pont Seck, Mike is Reagan Onymous, and pim 548 00:29:56,480 --> 00:29:59,600 Speaker 1: Fox is at pim Fox. You can also follow Bloomberg 549 00:29:59,600 --> 00:30:03,080 Speaker 1: podcast US at podcasts. What Goes Up is produced by 550 00:30:03,080 --> 00:30:06,320 Speaker 1: Tofur Foreheads. The head of Bloomberg Podcast is Francesco Levie. 551 00:30:06,520 --> 00:30:08,200 Speaker 1: Thanks for listening, See you next time.