Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly
Speaker 1: Markets podcast. I'm Sarah Pontzek, a reporter on the Cross
Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on
Speaker 1: the Markets team. This week on the show, we'll talk
Speaker 1: to one bull who is sticking to his guns. Doubts
Speaker 1: are once again swirling about the prospects for a US
Speaker 1: China trade deal ahead of the upcoming December fifteen tariff deadline,
Speaker 1: but according to a veteran stock market strategist, the signals
Speaker 1: hint that the longest ever bowl market can keep on running.
Speaker 1: And of course we'll close out the episode with our
Speaker 1: tradition the Craziest Thing I saw in Markets this week,
Speaker 1: and Sarah, I'm excited we got another call to the
Speaker 1: What Goes Up hotline with a crazy thing a listener
Speaker 1: Solid Market. We did, and he's actually a second time caller,
Speaker 1: So we'll definitely play that message later on in the show.
Speaker 1: And remember, if you have any crazy things that you've
Speaker 1: seen in markets, you have questions that we want to
Speaker 1: acknowledge on the show, please feel free to give us
Speaker 1: a call. That number is six four six three two
Speaker 1: four three four nine zero and we may even play
Speaker 1: your message on the show. Sorry, I wanted to give
Speaker 1: the listeners a little taste of how people like you
Speaker 1: and I do our our normal day job as UH
Speaker 1: stocks reporters markets reporters. Probably no big secret, but one
Speaker 1: of the first things I do every morning when I
Speaker 1: get in is I look through my emails. They're usually
Speaker 1: about eight hundred that came in overnight, but I always
Speaker 1: search for the words strategy to see what all the
Speaker 1: strategists on Wall Street are writing about. And you know
Speaker 1: the big banks, you might be lucky to get a
Speaker 1: note or two a week. But there's one guy who
Speaker 1: I could count on every morning there and his name
Speaker 1: is Jeff salt Um, and I like reading his notes,
Speaker 1: not only because it's good market analysis and kind of
Speaker 1: a mix of fundamentals and technicals, but also very well
Speaker 1: written stuff, so entertaining to read. So very happy to
Speaker 1: welcome him here to the show. Jeff, welcome to the show.
Speaker 1: You need to raise your standards. We'll see what what
Speaker 1: email he's reading tomorrow morning. All well, maybe we'll raise
Speaker 1: him a little bit with our other guests. One of
Speaker 1: the nicest guys in the building, I think, real mentor
Speaker 1: to me brilliant broadcaster. And that voice you may recognize,
Speaker 1: that's Pim Fox, who's one of our commentators on the
Speaker 1: Markets Live blog here at PIM and a guy who
Speaker 1: sits right behind me. So we we got a lot
Speaker 1: to talk about, Pam. How you know I ask you
Speaker 1: a lot of questions that I can't answer all day long. Well,
Speaker 1: now we'll get to ask you a lot of questions.
Speaker 1: Clearly that's gonna happen. Contradictions abound, all right, Jeff, you
Speaker 1: were with Raymond James for a long time, but you're
Speaker 1: off to a new adventure now. When you tell us
Speaker 1: a little bit about what you've got going on now, Well,
Speaker 1: I tried to retire eight months ago and it basically
Speaker 1: lasted three weeks. I've been writing Sought Strategy report for
Speaker 1: forty eight years, almost forty nine years, and there was
Speaker 1: such a demand for work that we created an LLC
Speaker 1: and had a website built and a soft strategy www.
Speaker 1: Saut strategy dot com is a subscription service um And
Speaker 1: for some reason or another, these people at Capital Wealth
Speaker 1: Planning wanted me to know I'm really a consultant to them,
Speaker 1: because if I was an employee, they would have to
Speaker 1: approve everything I write for Sought Strategy, which you know
Speaker 1: two to three day turnaround is a lifetime in this business.
Speaker 1: So I'm a consultant to them, and I'm helping to
Speaker 1: manage one point seven billion dollars. I'm not not too shabby.
Speaker 1: Three weeks is a pretty short retirement. You got that
Speaker 1: right back very quickly, so, Jeff is Sarah had pointed out, Um,
Speaker 1: your last note, Uh, you're remaining pretty bullish about this
Speaker 1: market now. I know you like to look at it
Speaker 1: sort of a mix of technicals and fundamentals. Walk us
Speaker 1: three your thinking on. You know, we've had this tremendous
Speaker 1: rally uh in the stock market. At same time the
Speaker 1: economic data got a little soft there. Maybe it's bottoming,
Speaker 1: maybe maybe not, it has bottomed, Yeah, you think so? So?
Speaker 1: So is that is that the reason to bolish basically?
Speaker 1: I mean, obviously it would would be a good reason
Speaker 1: to be bullish. Well, Ron Barron. A few years ago,
Speaker 1: I was coming back from being on a panel at
Speaker 1: Tiberon down at the RITZ Carlton downtown and he gave
Speaker 1: me a ride up to the the FDR because I was
Speaker 1: going to the GM building, which is where Barren Capital
Speaker 1: is and he put his hand on my shoulder halfway
Speaker 1: through it, and he said, you know, there's not many
Speaker 1: of us left, and I went, excuse me. He said,
Speaker 1: there's not many of his left that have seen a
Speaker 1: secular bull market. So the people that say this is
Speaker 1: the longest bull market in history don't know market history,
Speaker 1: because the nineteen forty nine to nineteen sixty six secular
Speaker 1: bull market had a number of twenty and decline doesn't
Speaker 1: end the secular bull market. You had the Jack Kennedy
Speaker 1: uh Steel crisis in nineteen sixty two, where the steel
Speaker 1: companies raised prices and the president said, no, you gotta
Speaker 1: put him back down, and the markets didn't like that
Speaker 1: and they got hit for thirty percent, but the secular
Speaker 1: bull market went on for another four years. In the
Speaker 1: eighty two to two thousand secular bull market, you had
Speaker 1: the eighty seven crash, which I was actually in Barren
Speaker 1: on September eighty seven saying the utilities peaked in the spring,
Speaker 1: the trentees peaked in the summer, and we're gonna get
Speaker 1: a waterfall decline. I didn't know to call it a
Speaker 1: crash because I ain't never seen a crash. I have
Speaker 1: now and Um, you know, you had the crash twenty
Speaker 1: two point six per cent in a day, but the
Speaker 1: secular bull market went on for another thirteen years. So
Speaker 1: I think we're in secular bull market the last fifteen
Speaker 1: to twenty years, and there's not many of us left
Speaker 1: around that have seen one. So for those people who
Speaker 1: are out there saying that we're late cycle and maybe
Speaker 1: have been saying that we're late cycle for years, what
Speaker 1: would be your rebuttal back to them? My rebuttal back
Speaker 1: to that is the downturn was so severe and the
Speaker 1: recovery so muted that what you've done is elongate mid cycle.
Speaker 1: We're still in mid cycle in my opinion. We're not
Speaker 1: late cycle, and if you look at the stocks that
Speaker 1: are performing, it will tell you we're not late cycle.
Speaker 1: So what would uh, what sort of signals would make
Speaker 1: you start thinking the cycle is getting late? Well, my dad,
Speaker 1: my dad was in the business, and he to tell me, son,
Speaker 1: if you think it's going up, be bullish. If you
Speaker 1: think it's going down, be barished. But for gosh sakes,
Speaker 1: make a call. Because there's so many people in this
Speaker 1: business that talk out of both sides of their mouths,
Speaker 1: so that no matter what the markets do. They can say, see,
Speaker 1: I told you so, And if you make calls, you're
Speaker 1: gonna be wrong, and you're gonna be wrong more often
Speaker 1: than you think. And the trick in this business is
Speaker 1: to be wrong quickly for the minimus loss of capital.
Speaker 1: I got no problem at seventy years of age saying, hey,
Speaker 1: that was a bad call. I'm reversing, reversing my so.
Speaker 1: I'm not a broken clock bull. There was a there's
Speaker 1: very few people. My friend Dick Russell passed away a
Speaker 1: number of years ago. He was the last great keeper
Speaker 1: of dow theory, and I down theory is not always right.
Speaker 1: It's subject to interpretation. But there was a down theory
Speaker 1: cell signal in September. I wrote about it ras cash.
Speaker 1: There was a down theory by signal in June of
Speaker 1: oh three. There was a down theory cell signal in
Speaker 1: November of oh seven, and then the majority of stocks
Speaker 1: bottomed on October t of oh eight. Two point six
Speaker 1: percent of stocks trade and made new annual os on October.
Speaker 1: I've never seen that. That's a seven or eight standard
Speaker 1: deviation event. It is not supposed to happen in your lifetime.
Speaker 1: And I'm in print after being barished from November of
Speaker 1: oh seven. I'm saying the bottoming process is started. And
Speaker 1: on March two, I'm on Bloomberg with Barton Biggs March
Speaker 1: second of oh nine, saying the bottoming process that started
Speaker 1: in October of last year is complete this week and
Speaker 1: we're all in. So I know Dow theory involves the
Speaker 1: transportation average. Uh sort of have to conf you know,
Speaker 1: confirm the down confirming the dow. So, um, how are
Speaker 1: you looking at that now? I mean, uh, is Cheney's
Speaker 1: aren't out a record right now? The the No, they're not,
Speaker 1: but they did make a new reaction high. And according
Speaker 1: to down theory, the primary trend of the market is up.
Speaker 1: And the most important thing in analyzing markets is what
Speaker 1: is the primary trend? Is it up or down? Well,
Speaker 1: the primary trend is up. So alongside transports, some other
Speaker 1: areas of the market that I've heard other strategists investors
Speaker 1: talk about is needing to confirm the market size have
Speaker 1: been the likes of small caps. And I know a
Speaker 1: couple of weeks ago, back in November, you did write
Speaker 1: about a so called golden cross in the Russell two thousands.
Speaker 1: So I was hoping that you could explain to our
Speaker 1: listeners what exactly it is and what actually that means.
Speaker 1: Does that mean we could see more future gains or
Speaker 1: even uh small caps leading going forward? On November five,
Speaker 1: you had and the golden cross is not as predictive
Speaker 1: for the S and P as it is for the Russell.
Speaker 1: It's much more predictive for the Russell two thousand, and
Speaker 1: it occurred on November five, and it's when the fifty
Speaker 1: day moving average crosses above the two hundred day moving average,
Speaker 1: and the and the small caps have performed pretty well
Speaker 1: since then. And it's not just the US. The European
Speaker 1: small cap induseries had a golden cross on October. So
Speaker 1: it's kind of this concerted move by the small caps,
Speaker 1: which have lagged by the way they've lagged for all
Speaker 1: this year, and now they're coming to the four uh PEP.
Speaker 1: I want to bring you in on this a little
Speaker 1: bit too. Um. Obviously it was going to be contrary
Speaker 1: and all this I was gonna say, asked Jeff of
Speaker 1: those small caps in the Russell two thousand, how many
Speaker 1: of them are actually profitable? I don't know the answer,
Speaker 1: not many, not many. And the reason I asked it
Speaker 1: in that format is because I was under the impression
Speaker 1: that earnings and economic performance would eventually drive stock prices.
Speaker 1: I agree with that, So why do we have such
Speaker 1: a tepid economy. We got great numbers for employment, We
Speaker 1: got great numbers if you want to borrow money, but
Speaker 1: the economy is not growing. And in fact, you know,
Speaker 1: if you take a look at real inflation what people
Speaker 1: really have to pay for things, you know, we are
Speaker 1: at a negative real rate of return for let's say treasuries.
Speaker 1: So is that what drives people putting money into equities?
Speaker 1: What undepends the market strength? I would argue that the
Speaker 1: individual investors, for the most part, are not putting money
Speaker 1: in equities. They're not just cautious, they're scared to differ. Yeah,
Speaker 1: which I think is a bad trade. By the way,
Speaker 1: I think there's a ton of money on the sidelines.
Speaker 1: I think before it's over, this is not the way
Speaker 1: bullmarkets end you've been around. But I'm not talking about
Speaker 1: but necessarily a bullmarket. I'm trying to look at the
Speaker 1: connection between the performance of the economy and the global
Speaker 1: economy if you want to add to it, and the
Speaker 1: performance of equities, because this seems to be the most
Speaker 1: unloved bull market I can remember, we have stocks. Total
Speaker 1: return for the SMP five hundred year to date is
Speaker 1: twenty six and a half percent as total return, so
Speaker 1: it's got dividends and so on. Why don't people why
Speaker 1: why aren't you seeing anybody happy? It's it's just it's
Speaker 1: sort of bullies the actual performance of their portfolios. And
Speaker 1: that's why you should continue to be bullish. If you
Speaker 1: remember ninety nine and the spring of two thousand, everybody
Speaker 1: was happy. So the wall of warrior still exists absolutely,
Speaker 1: And I would say that the anticipation of future earnings.
Speaker 1: I'm along a company called zyme Works z y m
Speaker 1: E at twenty and twenty four and they may have
Speaker 1: the magic bullet for cancer, and the stock has gone
Speaker 1: from twenty bucks to forty four bucks in six months
Speaker 1: and they're not making any money. Yeah, but that you
Speaker 1: can make the argument, right, I mean, if you Sarah
Speaker 1: and Mike, you've written about this kind of stuff before,
Speaker 1: where you have binary events, specifically with the pharmaceutical industry, right,
Speaker 1: I mean a drug gets approved or you know, it
Speaker 1: doesn't perform, and then yeah, I think there's a million
Speaker 1: of them in the small cap well, there's a huge
Speaker 1: number of y We have a FED meeting come next week.
Speaker 1: Most people don't really expect the Federal Reserve to do
Speaker 1: all of that much change anything. But Jeff, when you
Speaker 1: look at asset prices across the board and you try
Speaker 1: to conduct your analysis, how much do you take into
Speaker 1: account what the FED is actually doing well? I think
Speaker 1: I think the FED has been one of the drivers
Speaker 1: of of stocks. And I don't think interest rates are
Speaker 1: going up in the near term. I think they're gonna
Speaker 1: stay lower for longer than people think. And uh, my
Speaker 1: work suggests that a fair market multiple in this interest
Speaker 1: rate environment on the SMP is somewhere between nineteen and
Speaker 1: twenty times earnings. And if you want to use at
Speaker 1: your denties hundred and seventy seven dollars from next year
Speaker 1: and put her twenty multiple on that, talking thirty on
Speaker 1: the SMP. You know, when you talk about the FED
Speaker 1: and the balance sheets, I mean, obviously, what are they buying?
Speaker 1: The FED downs The Fed's buying almost you know, any name,
Speaker 1: a name, a debt instrument that that a central bank
Speaker 1: around the world is not buying. And you look at
Speaker 1: the bank in Japan, they're buying ets well, well, I
Speaker 1: mean all they're all, that's that's all on their balance sheet.
Speaker 1: The Fed. What it's really buying now is the short
Speaker 1: end of the treasury curve. Because we have this trillion
Speaker 1: dollar deficit, We've got massive issuance of of treasuries, same
Speaker 1: story next year for the foreseeable future. Is that ever
Speaker 1: gonna turn around and bite us, Jeff, I don't think so.
Speaker 1: I say said I think interest rates are gonna stay
Speaker 1: over for longer than people think. And I think that
Speaker 1: with the so the the millennials are doing in their
Speaker 1: thirties what the boomers did in their twenties, and they're
Speaker 1: buying homes and they're eventually gonna shove money at equities,
Speaker 1: which they haven't really done yet, but it's coming. It's coming,
Speaker 1: and that's gonna be a huge tale win for the
Speaker 1: equity markets as well. We've gotten through this conversation the
Speaker 1: bulk of it without mentioning US and China trade negotiations,
Speaker 1: which I must say I really respect, but him, I know,
Speaker 1: even paying a lot of attention this week, you can't
Speaker 1: you can't write it. So why don't you It's a
Speaker 1: whiplash market, right because you know you you sit looking
Speaker 1: at the screen, and you can basically tell when a
Speaker 1: tweet has been put out there by the president or
Speaker 1: by member of his administration talking about trade one way
Speaker 1: or another, and so goes the market supposedly. But what
Speaker 1: I did was I took a look at the SMP.
Speaker 1: I looked at all the companies in there, and I
Speaker 1: put together a model portfolio of twelve companies. They're all
Speaker 1: in the tech sector. And these twelve companies have between
Speaker 1: thirty and sixty five percent of their revenue in China. Right,
Speaker 1: we've heard all about, as you said, trade wars. So
Speaker 1: what I did was I tried to see, Okay, so
Speaker 1: I how did these stocks actually perform? Well, if you
Speaker 1: had bought them at the beginning of the year, you
Speaker 1: would have made on your money. So compare that to
Speaker 1: the SMP six and a half percent you would have
Speaker 1: made investing in these twelve companies. So then I went
Speaker 1: back and I said, okay, so maybe this is just
Speaker 1: an anomaly because it's just one year. I went back
Speaker 1: to the end of sixteen after the election. Because the
Speaker 1: rhetoric from candidate Trump is pretty much the same as
Speaker 1: the rhetoric and the action of President Trump. You would
Speaker 1: have made even more. You would have made about eighty
Speaker 1: five percent on your money. And the reason that I
Speaker 1: came up with is because it's not about trade. This
Speaker 1: trade wide believe is going to be a footnote. It's
Speaker 1: a about the big pattern changes in trade having to
Speaker 1: do with Asia. You're looking at four point eight billion
Speaker 1: people in Asia, so you've got four point the US economy.
Speaker 1: It's still gonna be big, still going to be important,
Speaker 1: but it is a decreasing importance in global capital. So
Speaker 1: that was my take on trade. Ask you to name
Speaker 1: a few of the companies that are in that portfolio.
Speaker 1: Oh yeah, um, A M D for example, Uh, probably
Speaker 1: the chip makers. Um. Also small companies. I looked, for
Speaker 1: example at Skywork Solutions, not one of the twelve I
Speaker 1: looked at, but I mean they've got over twenty of
Speaker 1: their revenue coming from China. I think it just got
Speaker 1: an upgrade on Thursday and the stock has really outperformed.
Speaker 1: In one of your notes, you did say we expect
Speaker 1: earnings to rebound just like the economy. How much of
Speaker 1: a rebound is actually possible though, I think you're gonna
Speaker 1: accelerate by the end of GDP growth, and I think
Speaker 1: earnings are gonna follow along with that. And again, earnings
Speaker 1: are the mother's milk of secular bull markets. And you know,
Speaker 1: it was Warren Buffett that said, in the short run,
Speaker 1: the stock market is a beauty contest, but in the
Speaker 1: long run, it's all about earnings, and that's absolutely correct.
Speaker 1: I just want to ask you having to do with that, uh,
Speaker 1: with that point, do you think that this is also
Speaker 1: going to raise commodity prices? Because if you have GDP
Speaker 1: growth that is around three percent, will that pull commodities
Speaker 1: higher as well? Yeah? I think I think commodities are
Speaker 1: going to trade higher. I think they've suppressed the price
Speaker 1: accrued oil too long. I did see where Saudi Arabia
Speaker 1: is talking about four dred thousand barrel hut um. But
Speaker 1: I mean if you if you go to China, like
Speaker 1: twenty years ago, you went to China, all you saw
Speaker 1: was bicycles. Now you see his cars and a lot
Speaker 1: of re buicks, which I don't understand, but it's it's
Speaker 1: the demand that's going up in India and China for
Speaker 1: gasoline and energy is immense. Well, that's a nice segue
Speaker 1: into another topic you uh touched on recently, and that's MLPs.
Speaker 1: The Semester Limited Partnerships. Mainly it's it's usually wheel pipelines
Speaker 1: that convert to an MLP to get that that preferential
Speaker 1: tax treatment. These stocks amaze me because every now and
Speaker 1: then you'll see one with a with a dividend yield
Speaker 1: or distribution yield of like not twenty but double digits
Speaker 1: for Hillari and de Hilarian Index yields between eight and nine.
Speaker 1: But yet, you know, when you buy a dividend stock,
Speaker 1: you tend to like that safety. You expect that dividend
Speaker 1: to be stable if not grow MLPs it's a it's
Speaker 1: a whole another situations. So walk us through how you
Speaker 1: think about MLPs uh specific there's a big distinction between
Speaker 1: upstream MLPs and midstream MLPs. The best MLP portfolio manager
Speaker 1: I know is Eric Kaufman at V Capital, and he
Speaker 1: told me eight years ago, you don't want to own
Speaker 1: the upstreams they have too much price sensitivity to crude oil,
Speaker 1: but the mid streams. Because everybody, all the upstreams went
Speaker 1: bankrupt and because of that they sold the mid streams down.
Speaker 1: Now you can think of midstream MLPs Master Limited Partnerships
Speaker 1: as a transportation company without wheels. Because you're exactly right, Mike.
Speaker 1: They own they own the pipes, and they own the
Speaker 1: storage facilities, and they have long term contracts with people
Speaker 1: like Chevron Exxon, and they have distributions that the good
Speaker 1: ones have distributions anywhere from six percent to eight percent,
Speaker 1: and the two best in the business or ep D
Speaker 1: and et extraterrestrial. You like that. You like the midstream
Speaker 1: because they're sort of less sensitive to the price of
Speaker 1: They basically have no price sensitive They're they're sensitive to volumes,
Speaker 1: how much volume is coming through the pipes. And what
Speaker 1: your listeners should know is that somewhere between seventy and
Speaker 1: eight of that distribution is tax deferred. So if you're
Speaker 1: my age and you're looking for income, it makes a
Speaker 1: lot more sense to buy the mid streams. And they're cheap,
Speaker 1: the cheapest they've been in twenty years. And my daddy
Speaker 1: used to tell me some good things tend to happen
Speaker 1: to cheap stocks. Right, So it doesn't matter what the
Speaker 1: price of oil is, because if you need to transport it,
Speaker 1: you have to transport it somehow. You can't lie it
Speaker 1: sitting around. It's correct. But speaking of the price of oil, PIM,
Speaker 1: I know you've you've done some work. I don't want
Speaker 1: to give any spoilers out, but you've got an outlone.
Speaker 1: It's fine. It has to well, basically, it just has
Speaker 1: to do with we've got a lot of crude oil
Speaker 1: and you know Jeff mentioning the pipeline system for example,
Speaker 1: it has basically been reversed. Right. There used to be
Speaker 1: that we would import oil, we would process it down
Speaker 1: in the gall Coast, and then it would be shipped
Speaker 1: northeast west wherever two consumers in the United States. Well,
Speaker 1: there's so much oil in the United States, those pipelines
Speaker 1: have had to be reversed, and now the oil is
Speaker 1: going down to the Gulf Coast and it's being exported
Speaker 1: now it's not and being exported in the form of
Speaker 1: crew but also in the form of l n G
Speaker 1: liquefied natural gas, and that is proven to be a
Speaker 1: big market. But like any big capital intensive industry, you
Speaker 1: gotta be aware because what happens is there's demand. People
Speaker 1: see it. So what do they do. They build huge
Speaker 1: supply opportunities, right, whether that is at a liquefaction plant
Speaker 1: or building more pipelines or building too many ships. And
Speaker 1: it's just what happens in the mining industry. That's why
Speaker 1: I was interested in what happens to the commodity complex,
Speaker 1: because unless you get commodity prices to move higher, a
Speaker 1: lot of these projects, they are very expensive. First of all,
Speaker 1: they are not going to be profitable, and you're seeing
Speaker 1: that with some attempts to shut in production in the
Speaker 1: Permian and in various shale places in the United States
Speaker 1: because they can't get it to a market that can
Speaker 1: pay for it. In fact, I think there was a
Speaker 1: story that natural gas was actually the producers were actually
Speaker 1: paying people to take the natural gas away because they
Speaker 1: couldn't flare it and they couldn't sell it. So the
Speaker 1: Henry hubb the Henry Hubbs full correct, exactly, it's full.
Speaker 1: And so you know, when you look at oil, as
Speaker 1: Jeff alluded to, you have the OPEC oil cartel, which
Speaker 1: is trying to manage price by decreasing production. The only
Speaker 1: problem with that is you have countries like Russia, like
Speaker 1: Nigeria who need the oil. I mean they need the revenue, right,
Speaker 1: that's hard currency for them. Well, what else are you
Speaker 1: going to sell? So I think that push pull is
Speaker 1: going to continue. Good. So we've had this range. Yeah, maybe,
Speaker 1: which is for the foreseeable future. I would think so.
Speaker 1: I would think that, you know, it's pretty arranged bound
Speaker 1: because anytime the price starts to go up, what you're
Speaker 1: gonna do is you're gonna see producers in the United
Speaker 1: States who have got big debt on their balance sheet,
Speaker 1: They're going to start to produce as much as possible.
Speaker 1: And the US is the swing producer. I think the
Speaker 1: US now produces fifteen per cent of the world's oil.
Speaker 1: That is amazing. Imagine that fifty years back, all going
Speaker 1: through Jeff's mid stream MLPs. I guess, as long as
Speaker 1: as long as the tax, as long as the tax
Speaker 1: law stays the same. And that is a footnote just
Speaker 1: to mention with the MLPs, because there was a lot
Speaker 1: of issue having to do with getting rid of that
Speaker 1: sort of real estate investment trust like passed through of income.
Speaker 1: What if Elizabeth Warren comes in and bands fracking, not
Speaker 1: a snowball's chance in hell? Why do you say that?
Speaker 1: Do you hear what Kamala Harris said a week ago?
Speaker 1: She said that, um, when I'm president, of course she's
Speaker 1: out now. But when I'm president, I'm gonna make all
Speaker 1: the pharmaceutical companies roll back drug prices, and if they
Speaker 1: don't do it, we're going to confiscate all their patents
Speaker 1: and the government's going to own I mean, I'm gonna
Speaker 1: excuse me, you're about constitutional law or law in general.
Speaker 1: I was gonna say, how do you go? Long lawyers
Speaker 1: moved to Washington, d c. Well done, well done. Well,
Speaker 1: if we're talking about lawyers, I think it's officially time
Speaker 1: for the Craziest Things segment of the show. Uh, Sarah,
Speaker 1: I believe we got a call to the hotline. What
Speaker 1: we'll tell us about that? We did. We got a
Speaker 1: second time caller. His name is Morgan Hill, and he
Speaker 1: is an investment associate in South Florida. So take a listen.
Speaker 1: Weird of fan that happened. I saw Petra diamonds, which
Speaker 1: are struggling from uh, you know, a lot of debt
Speaker 1: and falling diamond prices, recently sold as twenty carrot blue
Speaker 1: gym essentially for like fifteen million dollars. Never knew that
Speaker 1: twenty carrot diamond couldn't be sold for that much, but
Speaker 1: it happened. So crazy thing that happened in the market recently.
Speaker 1: I gotta say it was a good one, but he
Speaker 1: took a page out of your book from esoteric markets.
Speaker 1: That's true, that's true. Fifteen million dollar blue diamond, Jeff,
Speaker 1: is your wife getting a special present. She's got the
Speaker 1: diamond I gave her fifty years ago when it's just
Speaker 1: like five. Imagine what it would be worth now and right?
Speaker 1: And well that that's what I was going to mention,
Speaker 1: is that just be mindful. What you mentioned is very important.
Speaker 1: It's a blue diamond. Colored diamonds, colored precious stones are
Speaker 1: increasing in value and are rare. On the other hand, sorry, Jeff,
Speaker 1: regular diamonds, on the other hand, they are falling in price.
Speaker 1: And yes, and there are just too many of them,
Speaker 1: and two beers and the old cartel that used to
Speaker 1: control them. That's right, they are losing their grips. That's right.
Speaker 1: All right, Sarah, Can you top a fifteen million million
Speaker 1: blue diamond? I challenge you to top that is the
Speaker 1: craziest thing you saw this week. I will admit offhand
Speaker 1: that this is a bit of a stretch because it's
Speaker 1: not necessarily something that happened in markets, but it does
Speaker 1: pertain to a certain CEO of one company, and that
Speaker 1: is David Solomon. The CEO of Goldman Sacks. So Amazon
Speaker 1: was having one of their big cloud conferences, and it
Speaker 1: turns out that yes, uh, David Solomon is a DJ.
Speaker 1: He often DJs at different events around the country, sometimes
Speaker 1: in the summer at the Hampton's He's DJ before I know,
Speaker 1: Bloomber has covered it before. Uh, but he DJ at
Speaker 1: this Amazon cloud event. But the really crazy part was
Speaker 1: that supposedly a lot of people had no idea who
Speaker 1: he was. They didn't they didn't recognize him to literally,
Speaker 1: who's this guy on stage? DJing? Turns out CEO of
Speaker 1: Goldman sex Hey, look, whatever it takes to get Amazon
Speaker 1: as your your client, I guess. Uh. He came out
Speaker 1: afterwards in a suit and talked about how important a
Speaker 1: WS is to his business. Jeff, did they tell you
Speaker 1: about our gimmick? The craziest thing in markets this week?
Speaker 1: The craziest thing I saw in the past two weeks
Speaker 1: was Kamala Harris saying she's going to compliscate all the
Speaker 1: patents that Mirk and Fis or have. Did we see
Speaker 1: any of the companies react, I don't remembers, non nonplussed,
Speaker 1: that's why she dropped out. How about you? You You see
Speaker 1: anything crazy. Well, I mean, I don't know if it's
Speaker 1: crazy or not. But if you take a look at
Speaker 1: the socks right, which is the Philadelphia Semiconductor Index, and
Speaker 1: then you also take a look at the Philadelphia Gold
Speaker 1: and Silver Miners Index, you'd think they would diverge, right,
Speaker 1: because you buy gold and silver, talk about diamonds and
Speaker 1: so on. You buy those is a hedge of haven right,
Speaker 1: you stick those. Actually they both outperformed the SMP five.
Speaker 1: And it just you know, the the look at the
Speaker 1: gold miners that moves in lock step opposite lockstep. The
Speaker 1: interest rates has nothing to do with any anything else.
Speaker 1: And so this idea that you have these havens, these divergences,
Speaker 1: I gotta say, it's a new it's a it's a
Speaker 1: different market. Now. It was a crazy year in markets
Speaker 1: in that it was truly in everything rally, the havens rally,
Speaker 1: treasuries go hold everything rallied, I mean E M debt.
Speaker 1: And yet no one seemed to like it. Right, Golden
Speaker 1: t LT both up roughly, the SMP up around. You
Speaker 1: look at oil up an immense amount. Really everything higher.
Speaker 1: The reciprocal of that is in two thousand and eight,
Speaker 1: everything went down there was nowhere to hide except cash,
Speaker 1: right right, quite the difference. Well, and that even the
Speaker 1: reserve fund broke at the book, so so even that
Speaker 1: wasn't a sure But well, I'm gonna talk about from
Speaker 1: my crazy thing a stock that most certainly did not
Speaker 1: rally this week, and that is Peloton. I I don't know,
Speaker 1: I'm sure listeners have probably already heard this, but you're
Speaker 1: going to climb on your bike about that for those
Speaker 1: who haven't. You know, obviously the goal of buying a
Speaker 1: big ad uh placing a big ad budget it in
Speaker 1: the market is to boost sales. Booster stock didn't work
Speaker 1: out so well for Peloton this week, the adverse effect, right.
Speaker 1: So they had this ad where a woman gets a
Speaker 1: Peloton like from her husband for Christmas. She's very excited
Speaker 1: about Sizike exercise, the exercise bike with the program with
Speaker 1: the the basically an iPad attached to it that you
Speaker 1: can watch the classes and and she goes gung ho
Speaker 1: on Peloton for a year and and the internet. I
Speaker 1: think sarah the word these days, as they just canceled
Speaker 1: Peloton over this. They I as as a husband, Um,
Speaker 1: I'm kind of at a loss. I think the only
Speaker 1: solution is not to get your wife anyway. I'll be
Speaker 1: completely honest. I didn't really see the issue and it
Speaker 1: sure you could look at the ad as being I
Speaker 1: don't know, maybe a bit strange, but hey, if someone
Speaker 1: got me a peloton, I would be psyched. I would
Speaker 1: be really happy about it. I don't think I would
Speaker 1: be offended that someone was telling me or hinting at
Speaker 1: my house. It would become a close wrap something on everything.
Speaker 1: I do have a theory that the guy whoever bought
Speaker 1: that fifteen million dollar diamond is a guy who bought
Speaker 1: his wife a Pelton last Christmas. Cuts a good chance
Speaker 1: of that. Very good, very good. You sound like you
Speaker 1: speak from experience conspiracy theories have found from Mike Reagan.
Speaker 1: But with that said, Jeff South Pim Fox, thank you
Speaker 1: so much for coming on the show to day pleasure.
Speaker 1: Great to be here. What goes up? We'll be back
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