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Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly

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Speaker 1: Markets podcast. I'm Sara pan Zac, a reporter on the

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Speaker 1: Cross Asset team, and I'm Mike Reagan, a senior editor

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Speaker 1: on the Markets team. This week on the show, the

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Speaker 1: FED cut rates for the third straight time, but they

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Speaker 1: signaled that's all for now, Plus some of the biggest

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Speaker 1: tech names reported earnings. Our guests will help us break

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Speaker 1: it all down, and as always, will close out the

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Speaker 1: episode with the craziest things we saw in markets this week, Sarah,

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Speaker 1: week or two ago? Is awkward where you and I

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Speaker 1: both picked the same crazy thing? Was it awkward? I

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Speaker 1: thought it was actually pretty great. I'm gonna tell you.

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Speaker 1: I am guarantee you did not pick the same one

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Speaker 1: as me this week, and I'll tell you why. It

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Speaker 1: involves a very nerdy hobby I've gotten into lately, you

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Speaker 1: never know, very saying you never know not the nerdiest hobby.

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Speaker 1: I'll tell you that. I was telling a friend about it.

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Speaker 1: I said, I've just gotten sucked into the nerdiest hobby

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Speaker 1: of all time and he goes, oh, are you Are

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Speaker 1: you grinding your own telescope lens? Oh? Okay, it was

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Speaker 1: so nerdy. I was offended, but but oddly intrigued, so

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Speaker 1: I might start grinding my own telescope lenses as well.

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Speaker 1: It's a thing, apparently all right, we'll be excited to

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Speaker 1: hear it. And remember, we have our very own Bloomberg

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Speaker 1: Podcast hotline. So if you guys want to share your

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Speaker 1: crazy market statistics or whatever it may be with us,

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Speaker 1: give us a call, leave us a message at six

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Speaker 1: or six three two four three four nine zero, and

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Speaker 1: we may even play it on the show. And of course,

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Speaker 1: our guests this week hopefully have some crazy things they

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Speaker 1: brought along with us. Uh first time on the show.

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Speaker 1: Joining us is Lauren Goodwin. She's an economist and multi

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Speaker 1: asset portfolio strategist at New York Life Investments. Lauren, welcome

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Speaker 1: to the show. Thanks so much for having me, and

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Speaker 1: I'm not gonna put you on the spot, but if

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Speaker 1: you do have any really nerdy hobbies, you know you

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Speaker 1: feel free to share them with us perfect anything. I'm

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Speaker 1: just I love watching monetary policy meetings, does that gal?

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Speaker 1: That's and also returning to the show is Bloomberg Opinion

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Speaker 1: technology columnist Shira Overday. Sure, I think your nerdiest hobby

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Speaker 1: is just reading ten K reports. Yeah, yeah at all though, right,

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Speaker 1: I think it's pretty normal for Bloomberg. Yeah right, right,

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Speaker 1: that's that's kind of the run of the mill hobby.

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Speaker 1: But uh, but learn let's start with you. I was

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Speaker 1: reading some of the notes you sent over, and uh,

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Speaker 1: one thing popped out at me immediately. You say there's

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Speaker 1: a chance U s yields could move into negative territory. Um,

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Speaker 1: don't dun't done? That is shocking. Uh, not entirely shocking.

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Speaker 1: I guess it's you know, of all the craziest things

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Speaker 1: we've seen in markets this year, that probably would not

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Speaker 1: be that crazy. But what it intrigued me is you

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Speaker 1: also said you think the FED is done after this

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Speaker 1: last rate cuts. So what takes what would take your

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Speaker 1: fields negative? If not the Feds sort of helping to

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Speaker 1: push them down. Well, the Fed's done for now, They're

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Speaker 1: not done for forever, but we can talk about that later.

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Speaker 1: I'll answer your question about yields, which is two major

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Speaker 1: things go into US yields. One of them is expectations

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Speaker 1: for the FED funds rate, which could go to zero,

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Speaker 1: would go to zero if we're in if we move

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Speaker 1: into recession in the US. The other thing is the

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Speaker 1: term premium. So that's just what investors expect to get

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Speaker 1: for taking the risk of holding a bond over cash

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Speaker 1: or any other cash like instrument. So what makes term

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Speaker 1: premiums zero or even negative as they've been in the

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Speaker 1: US even this year, are things like investor fears um

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Speaker 1: some of the concerns that we've seen about global growth,

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Speaker 1: trade wars, etcetera. And so if you see the U

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Speaker 1: s inch a little bit closer to recession and some

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Speaker 1: of these fears take hold, add it together you can

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Speaker 1: easily see US negative yields doesn't mean necessarily a negative

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Speaker 1: ten year yield. I also think that the the bar

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Speaker 1: for the Fed moving policy rates negative is high. That's

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Speaker 1: a completely different issue. But yields on this short end

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Speaker 1: totally possible. And that's intriating to me because of this

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Speaker 1: so much supply uh to fund the depth sit We're

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Speaker 1: looking at a potentially another chillion dollar depth sit in

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Speaker 1: every foreseeable year. A lot of that on that on

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Speaker 1: the short end. But you think, would it sort of

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Speaker 1: be that rush to cash money market mutual fund type

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Speaker 1: of situation that would that really crush the short end? Yeah,

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Speaker 1: you know, you just you can't get positive yield anywhere

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Speaker 1: in safe assets, and so it's really there is no

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Speaker 1: alternative type of story when you have um as we

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Speaker 1: do right now. Japanese insurance companies willing to move into

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Speaker 1: an investment grade, which is credit, even if it's if

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Speaker 1: it's investment grade credit, instead of being in these super

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Speaker 1: safe government securities, then moving into US super safe securities

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Speaker 1: makes a lot of sense. That can totally squeeze the frienend.

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Speaker 1: Let's back up the truck a little bit. So before

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Speaker 1: we were to potentially get to negative interest rates, you

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Speaker 1: would imagine that the data would have to worsen, maybe

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Speaker 1: the FED would go back to cutting once a again.

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Speaker 1: But for now, like you said, the FED is on hold. However,

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Speaker 1: the market is still pricing in rate cuts as soon

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Speaker 1: as next year. What is it that gets us to

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Speaker 1: that point? What brings that disconnect closer together? I think

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Speaker 1: it makes sense that the market is pricing in cuts

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Speaker 1: next year. We're on the last legs of this expansion.

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Speaker 1: The FED has bought us time. Some of the risk

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Speaker 1: on behavior, some of the risks that we've seen becoming

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Speaker 1: less pronounced also helps buy us a little bit of

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Speaker 1: time in investor world, that helps us rebalance our portfolios.

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Speaker 1: But we're looking at an economic cycle, and specifically a

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Speaker 1: company profit cycle that is just moving closer to recession.

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Speaker 1: And so while we're not calling for recession in the

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Speaker 1: next twelve months, in the twelve to eighteen um time period,

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Speaker 1: that's absolutely a likely scenario from from my perspective, And

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Speaker 1: so the Feds on pause for now, saying, look, until

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Speaker 1: we see that data deteriorate further, we're fine. They also

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Speaker 1: have seen over the course of the year, even before

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Speaker 1: they actually started cutting rates, some improvement in interest rates

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Speaker 1: sensitive indicators, just because folks expected it to come, um,

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Speaker 1: wait and see. But once we see um, the debt

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Speaker 1: burdens that companies are facing start to take hold, and

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Speaker 1: those profit margins really start to see, um, the pressure

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Speaker 1: that they've been under for the past couple of years.

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Speaker 1: Then then you start to see the FED getting worried again.

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Speaker 1: So uh, safe to describe you is not exactly bullish

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Speaker 1: these days that that is that is correct. We're um,

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Speaker 1: but but I will say strategically speaking, we're defensive in

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Speaker 1: our portfolios, so we invest for the long term. Most

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Speaker 1: of our investors are thinking about retirement or institutional clients

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Speaker 1: really thinking um in the in terms of years, not months.

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Speaker 1: So strategically speaking, we've moved more defensive. I'm glad you

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Speaker 1: brought that up by you read my mind. I was

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Speaker 1: going to ask you about that. You said, you know,

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Speaker 1: contrary to market moves, were holding tight on our defensive

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Speaker 1: portfolio positioning. This is a really fascinating topic to me

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Speaker 1: because is I've heard a lot of people say this,

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Speaker 1: but I'd like to unpack it a little bit what

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Speaker 1: you mean by defensive and I pick it up. I

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Speaker 1: was fascinated. I looked this week at the Investco Defensive

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Speaker 1: e t F, which is really done well is year

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Speaker 1: it's up, uh, you know, better than the SMP itself.

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Speaker 1: And I was thinking, well, when I think defensive, I think, Okay,

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Speaker 1: you're gonna buy Johnson Johnson, you're gonna buy utilities, You're

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Speaker 1: gonna buy those sort of state safe consumer staples. This

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Speaker 1: CTF is fascinating because, okay, healthcare is ten percent. That's

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Speaker 1: kind of uh classic defensive there. But of its other allocations,

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Speaker 1: um more than five percent is allocated to software, more

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Speaker 1: than five percent to electronics, more than five percent to

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Speaker 1: diversified financials, and we're than five percent to banks. So

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Speaker 1: more than ten percent of this quote unquote defensive e

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Speaker 1: t F is financial firms, which kind of blows my mind.

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Speaker 1: So that's all a long set up to just kind

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Speaker 1: of help us unpack what you mean by defensive m

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Speaker 1: A in the stock kid, obviously, but also outside of

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Speaker 1: the stock market, you know where sort of in the

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Speaker 1: treasury curve would you be looking at that sort of thing. Great,

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Speaker 1: you set up an A and B for me. That's

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Speaker 1: perfect in uh in in equities, defensive means and this

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Speaker 1: is UM. This is a story that's gotten a lot

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Speaker 1: of airtime. Frankly, UM it means high quality companies that

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Speaker 1: are making consistent earnings and they're consistently giving those earnings

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Speaker 1: back to sharedholders. It doesn't necessarily mean only yield, because

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Speaker 1: there can be dividend yield traps, but really security by security,

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Speaker 1: not even necessarily sector by sector, identifying the companies that

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Speaker 1: are going to return that value back to shareholders. From

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Speaker 1: an investor perspective, when you're expecting a more volatile environment,

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Speaker 1: that's that's safer. When you move outside of UM the

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Speaker 1: equity markets, defensive strategies generally include moving up in quality,

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Speaker 1: but where you've seen a big shift and move up

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Speaker 1: in quality like in high yield for example, you also

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Speaker 1: have to go shorter duration um and so those are

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Speaker 1: the general types of secure yours. Again, when you're expecting

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Speaker 1: um a lot of investor uncertainty, when you're near the

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Speaker 1: end of the profits cycle and you have high debtloads

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Speaker 1: within companies, you just have to be really uh secure.

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Speaker 1: So it's more what companies have the balance sheets with

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Speaker 1: standard recession rather than what companies are in industries that

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Speaker 1: tend not to be crushed by precisely, and in which

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Speaker 1: companies are going to pay you cash in the meantime.

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Speaker 1: Even within equities, right, it's not just fixed income, but

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Speaker 1: where where can you get a little bit of of

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Speaker 1: of carrie while you hold those equities? If, for example,

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Speaker 1: you don't think recession is right around the corner, so

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Speaker 1: bear with me. Then are we almost seeing a divergence

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Speaker 1: in the stock market because as you mentioned, you guys

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Speaker 1: are sticking with your defensive positioning. That counter to almost

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Speaker 1: what we've been seeing over the past couple of weeks

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Speaker 1: where we've started to see cyclicals outperforming, those classic bond

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Speaker 1: proxies like staples, like utilities like real estate underperforming, but

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Speaker 1: at the same time, it does seem as though all

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Speaker 1: of a sudden, investors really care about corporate profits, So

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Speaker 1: investor do care about quality to a sense? Do the

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Speaker 1: two go counter to one another? Do they actually fit together? Well,

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Speaker 1: we're in this part of the cycle that's really uncomfortable

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Speaker 1: when the data is mixed, and so, Um, if you

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Speaker 1: had a different guest on in ten minutes, they could

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Speaker 1: say the exact opposite of what I'm saying, and I

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Speaker 1: would think that they were reasonable. Um, what we're seeing is, uh,

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Speaker 1: we're laying in the cycle. We've already had two mid

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Speaker 1: cycle slowdowns, and so not only are the structural elements

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Speaker 1: of the economy we've talked about debt loads and profit margins,

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Speaker 1: not only are those creeping closer and closer to recession

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Speaker 1: like qualities, but also from a higher position than we've

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Speaker 1: been in the other two mid cycle slowdowns, and equity

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Speaker 1: prices have moved higher all along, and so you can

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Speaker 1: see as an investor short term cyclical opportunities. So, for example,

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Speaker 1: um risk has been such a factor in the markets

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Speaker 1: across the board this year and last year. When you

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Speaker 1: get a little bit of that risk, premium pulled off

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Speaker 1: because there's positive rumors about a trade deal, for example,

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Speaker 1: you can have a short term cyclical opportunity, and so

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Speaker 1: it does. It's not necessarily bifurcating. You're just playing sort

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Speaker 1: of a long game short game. And so what we do,

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Speaker 1: for example, when we're when we're making these more defensive shifts,

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Speaker 1: is um as we moved up in quality, quality gets expensive.

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Speaker 1: So when you start taking off a little bit of

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Speaker 1: high beta exposure at market highs, for example, or in

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Speaker 1: asset classes that we don't like as much, like high

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Speaker 1: yield or bankloads, you can use that cash to take

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Speaker 1: advantage of those short term cyclical opportunities without completely abandoning

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Speaker 1: your long term story, which is what which is, which

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Speaker 1: is where we're positioned right now. Sure, let's bring you

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Speaker 1: in here and switch gears from defensive to companies that

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Speaker 1: are perhaps offensive for various reasons. And and I'm thinking

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Speaker 1: of the facebooks, the alphabets, the twitters. We had a

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Speaker 1: whole lot of quote unquote fang type of companies report

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Speaker 1: over the last week or so. Is are there any

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Speaker 1: sort of common themes, common takeaways from the whole sort

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Speaker 1: of communications and tech sector earning season. I mean, it's

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Speaker 1: it's a little bit hard to draw generalities about the

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Speaker 1: tech sector in general because I think the big tech

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Speaker 1: companies that you mentioned, the sort of fangs or famis

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Speaker 1: whatever people call them, the Facebook fam, which is includes Microsoft.

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Speaker 1: I think that's the right fam um. So those large

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Speaker 1: five or six technology companies seem to be doing very well.

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Speaker 1: That growth for the most part has um continued at

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Speaker 1: a pretty good rate, albeit um has come down for

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Speaker 1: many of those companies. Again, the profit margins have come down,

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Speaker 1: but it's all relative, right. So Facebook this week reported earnings.

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Speaker 1: They are spending a lot more money. The growth rates

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Speaker 1: have come down, but we're still talking out growth um

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Speaker 1: year over year, and they're operating profit margins are about

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Speaker 1: So if you're talking about, you know, defensive kind of companies,

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Speaker 1: those giant tech companies start to look a little bit

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Speaker 1: more safe, I guess. But on the other hand, you

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Speaker 1: have these younger companies that are valued almost entirely on

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Speaker 1: their growth rates, and there it's a little bit of

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Speaker 1: a mixed bag. So again, we had grub Hub this

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Speaker 1: week that absolutely terrible and to me, the scary thing

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Speaker 1: about what grub Hub said was they feel like the

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Speaker 1: promise of that industry of kind of food delivery, the

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Speaker 1: on demand you push a button on an app and

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Speaker 1: get anything delivered to your home at almost no cost.

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Speaker 1: That they really think that that string is playing out,

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Speaker 1: that there is no way economically that there can be

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Speaker 1: multiple companies fighting each other to get something to your

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Speaker 1: house as fast and cheap as they possibly can. And

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Speaker 1: at the same time they feel like, um, the hyper

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Speaker 1: growth phase of that industry is pretty much over um,

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Speaker 1: which is kind of a scary one to punch. Is

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Speaker 1: it a word of attrition at this point in that space?

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Speaker 1: And that's what grubub thinks. And look, they're not wrong

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Speaker 1: that in the United States. I'll leave the overseas market

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Speaker 1: out of this, but in the United States you have

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Speaker 1: a number of companies that are all chasing the same restaurants,

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Speaker 1: the same diners, right, Uber Eats, Grubhub, door Dash, Postmates,

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Speaker 1: you can go on down the list and so um. Yeah,

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Speaker 1: there is a little bit of a of a war

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Speaker 1: of attrition going on. Lauren, I want to touch on

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Speaker 1: something that Shira said, and that's that somehow these big

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Speaker 1: tech companies start to look safer. Is this something that

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Speaker 1: comes up in discussion with you and your team. I mean,

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Speaker 1: I can say, I've heard many investors say to me

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Speaker 1: this year, oh well, now tech is defensive. It makes

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Speaker 1: a lot of sense to me. And if you think

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Speaker 1: even just in traditional economic terms, to say that the

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Speaker 1: model of not only economic growth but also company growth

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Speaker 1: and sustainable growth has changed from you know, when we're

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Speaker 1: more industrial or manufacturing focused, for example, so when we

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Speaker 1: were a year ago we were really holding out on

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Speaker 1: productivity in the US, that that we would that that

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Speaker 1: this would be what saved the economic cycle, and that

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Speaker 1: that we'd see investment translated into productivity. We haven't seen that.

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Speaker 1: But the main sort of core tenant of that argument

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Speaker 1: I think is absolutely still true, which is that these

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Speaker 1: big tech companies are the only ones investing in themselves

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Speaker 1: and so um an interesting thing to think about is

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Speaker 1: what is the next step? What is the investment strategy

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Speaker 1: of the future look like? And something I think is

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Speaker 1: really compelling there is companies that are investing not through

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Speaker 1: CAPEX or some of these indicators that we're used to

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Speaker 1: looking at, but op X. What are the logistics companies

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Speaker 1: that are investing in you know, next generation software to

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Speaker 1: make sure that the supply chains disruptions with China or

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Speaker 1: or EU up are are not an issue for their

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Speaker 1: for their profits. That's really interesting. That's a really interesting

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Speaker 1: type of sort of secure safe investment. I think that

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Speaker 1: this growth versus value, cyclical versus defensive sort of general

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Speaker 1: named indicasar are starting to break down. So I completely

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Speaker 1: agree with Serra, And just to say something a little

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Speaker 1: bit scary though, I will just point out that of

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Speaker 1: the giant tech companies that now seem a little bit safe,

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Speaker 1: almost without exception, and Microsoft is the exception. Um, those

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Speaker 1: companies haven't really lived through a recession, at least not

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Speaker 1: in their kind of current giant company status. So I

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Speaker 1: don't think we really know what Amazon looks like, for example,

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Speaker 1: in a recessionary period. And again, obviously they were around

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Speaker 1: in two thousand nine, two thousand ten, but they were

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Speaker 1: significantly smaller company, less sprawling, um e commerce was kind

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Speaker 1: of a significantly smaller share of US spending. So I

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Speaker 1: just I do not know what happens even to the biggest, safest,

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Speaker 1: most profitable giant tech companies in a recessionary environment. Well,

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Speaker 1: and you add the one more giant spooky element in

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Speaker 1: the room, which is the potential for regulation. And so

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Speaker 1: when we're talking about these specific big tech companies. Um,

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Speaker 1: the risks are are pronounced when it comes to um not.

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Speaker 1: This isn't just a political issue. This is a substantial

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Speaker 1: structural issue around inequality and data protection and really big

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Speaker 1: questions that I think are here to stay. And so

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Speaker 1: when we talk about these specific companies, they are surely

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Speaker 1: risks in the coming years. Um. When you're looking though

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Speaker 1: at at an investment, that's a that's a compelling story, Lauren.

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Speaker 1: I think you stole my notes because I was that

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Speaker 1: was my next segue, and I was going to give

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Speaker 1: a gratuitous plug to a story that Sarah worked on

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Speaker 1: this week about it's kind of becoming the big buzzy

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Speaker 1: zeitgeist on Wall Street now is the specter of possible

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Speaker 1: Elizabeth Warren presidency. I was like, which story are you

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Speaker 1: talking about? Remember you work? But and I wrote about

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Speaker 1: it to another gratuitous plug a couple of weeks ago.

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Speaker 1: But um, obviously Elizabeth Warren has everyone on Wall Street

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Speaker 1: freaked out and many people predicting this big bear market

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Speaker 1: if she should sort of ascend in the polls any further. Sure,

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Speaker 1: let's start with you, though I'm curious if her name

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Speaker 1: came up at all on any of the conference calls

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Speaker 1: or any of the analyst notes UM and Part B,

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Speaker 1: since if you guys will both accept A and B questions.

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Speaker 1: Part B, I'm just curious, how would you go about

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Speaker 1: breaking up, say a Facebook, an Alphabet, and an Amazon.

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Speaker 1: Um and would that necessarily be a negative for shareholders

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Speaker 1: in this company? You know? I'm thinking, wouldn't the SMPB

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Speaker 1: better off if it had a Google and uh, a

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Speaker 1: YouTube and an Instagram and an Amazon Cloud and an

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Speaker 1: Amazon retail I mean, you're talking about a lot of

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Speaker 1: sort of interesting businesses that would suddenly be their own companies?

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Speaker 1: What is what's the thinking on this from your world? Okay,

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Speaker 1: so now I have to do A and B. A. UM, Yes,

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Speaker 1: I think the regulation obviously is now I think a

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Speaker 1: regular part of reality for these companies. The sort of

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Speaker 1: difficult thing I think, both for the companies and for

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Speaker 1: investors honestly, is just it's impossible to know how this

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Speaker 1: plays out and how long it takes. Right, you're talking

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Speaker 1: about a federal, federal and state now antitrust investigations involving

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Speaker 1: basically all the giant tech companies with the exception of Microsoft,

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Speaker 1: And what if it takes ten years I don't know.

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Speaker 1: I don't know what happens. So it's one of these

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Speaker 1: kind of storm clouds, but it's unclear exactly how it

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Speaker 1: ends or how exactly to to play for it. Am

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Speaker 1: I the only one who finds it funny that Microsoft

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Speaker 1: is the one they're not talking about. Yes, it is

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Speaker 1: extremely I think if you had told like two thousand

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Speaker 1: ten Shia that there would be anti trust investigations and

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Speaker 1: Microsoft would be completely uninvolved, that they look like the

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Speaker 1: white hats and all this, it would seem preposterous spying

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Speaker 1: under the there we haven't such a part about actually

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Speaker 1: breaking these com plain about part B. I definitely have

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Speaker 1: seen the sell side analysts talking about, you know, we

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Speaker 1: think Facebook or would be more valuable or Google would

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Speaker 1: be more valuable if it were split in pieces. I

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Speaker 1: think that is nuts. Um that I mean, I can

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Speaker 1: go company by company, but if you think about a

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Speaker 1: company like Facebook, and I think the Elizabeth Warren types

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Speaker 1: who were talking about Facebook and antitrust, what they're talking

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Speaker 1: about largely is pulling out the companies that Facebook acquired

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Speaker 1: in the last ten years, so that's primarily Instagram and

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Speaker 1: WhatsApp and uh to say that Facebook is more valuable.

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Speaker 1: If you pull out those two companies is just bad.

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Speaker 1: It is wrong that, particularly on the usage side right um,

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Speaker 1: Instagram is the growth story for Facebook right now. It's

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Speaker 1: important with younger people, it's important with advertisers who want

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Speaker 1: to reach younger people. And what's app is also an

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Speaker 1: important element of Facebook's growth outside of North America in

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Speaker 1: countries like India, like the Middle East where what's app

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Speaker 1: is extremely popular. And look, Facebook hasn't successfully figured out

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Speaker 1: how to make money from what'sapp, but that's an asset

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Speaker 1: that has um more and we don't know exactly how many,

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Speaker 1: but more than a billion users worldwide, and that is

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Speaker 1: extremely valuable to Facebook and that's an extremely important part

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Speaker 1: of the investment thesis for Facebook. Lauren, what about your

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Speaker 1: guys take not on just the regulatory aspect and the

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Speaker 1: risks that poses not even just to the tech companies

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Speaker 1: but the market at large, but also just everything going

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Speaker 1: on in politics right now, whether it is impeachment, press eatings,

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Speaker 1: are looking forwards to the election. When you have the

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Speaker 1: likes of Paul Tutor Jones for example this past week

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Speaker 1: coming out and saying if it's if Elizabeth Warren wins

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Speaker 1: the SMP will drop. I mean, how can you even

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Speaker 1: go about making predictions like this or trying to at

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Speaker 1: least take these ideas and inform your investments. I'll make

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Speaker 1: a shameless plug for myself and that we UH wrote

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Speaker 1: a piece on political and geopolitical risk and portfolio management

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Speaker 1: and found that not only do investors UM and again

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Speaker 1: I'm I'm thinking investors for the medium or longer term

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Speaker 1: tend not to pay very close attention but probably shouldn't. Um,

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Speaker 1: we may maybe we get a sell off if Elizabeth

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Speaker 1: Warren gets the nomination or wins the election. We thought

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Speaker 1: the same thing about Donald Trump. UM, we don't know,

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Speaker 1: but and maybe we do. But the really what this

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Speaker 1: is about is looking past politics and towards policy, and

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Speaker 1: when it comes to the pace and likelihood that some

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Speaker 1: of these suggestions would be implemented, we know it's really

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Speaker 1: challenging to share his point. Maybe it takes ten years,

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Speaker 1: and so we have the enormous luxury of keeping a

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Speaker 1: pulse on things but not letting it impact our portfolio

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Speaker 1: management decisions until that policy again not politics, but policy

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Speaker 1: change actually should impact our portfolios. So in that sense,

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Speaker 1: UM trade even a year and a half ago, UH

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Speaker 1: flipped into our radar is something that we need to

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Speaker 1: monitor on an ongoing basis because it threatened companies and

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Speaker 1: it threatened the consumer. Right now, this the political situation,

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Speaker 1: whether it's the election or impeachment, etcetera in the US

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Speaker 1: doesn't impact companies, and so we we treat it as such.

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Speaker 1: Al Right, well, I think it's that time. I'm really

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Speaker 1: excited for years, Mike. I want to know what a

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Speaker 1: new nerdy thing. You're interesting nerdything. All right, well, let's

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Speaker 1: save mindful us. I want to build up the suspense. Sure,

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Speaker 1: let's start with you. I think you brought a crazy

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Speaker 1: thing along. Well. I was very surprised this week there

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Speaker 1: were news stories about Apple making a you know, a

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Speaker 1: pretty significant change in its UM strategy to one of

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Speaker 1: its important products. UM. So it emerged this week that

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Speaker 1: Apple is tiptoeing and what's been called kind of a

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Speaker 1: bundling strategy for its internet services that at least for students,

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Speaker 1: it's going to offer for five dollars a month UM.

429
00:24:27,200 --> 00:24:31,320
Speaker 1: Students can have a subscription to both Apple Music and

430
00:24:31,400 --> 00:24:35,680
Speaker 1: to Apple's upcoming TV Plus service, which is it's kind

431
00:24:35,680 --> 00:24:38,560
Speaker 1: of its answer to Netflix, a kind of web video

432
00:24:38,920 --> 00:24:41,679
Speaker 1: entertainment service. And the way that this came out was

433
00:24:41,760 --> 00:24:44,600
Speaker 1: not you know, Apple reported earnings and they announced this

434
00:24:44,720 --> 00:24:46,879
Speaker 1: or Tim Cook went on TV to talk about it.

435
00:24:46,960 --> 00:24:53,440
Speaker 1: Sarah No Hayley Steinfeld, who's an actress and singer. Um.

436
00:24:53,560 --> 00:24:57,679
Speaker 1: She put it in an Instagram story that this was

437
00:24:57,840 --> 00:25:01,800
Speaker 1: going to be a new policy change, at least an experiment.

438
00:25:02,359 --> 00:25:05,320
Speaker 1: That was That was the that was the first word

439
00:25:05,320 --> 00:25:07,280
Speaker 1: of this. This is the world we live in now. Yes,

440
00:25:07,520 --> 00:25:11,240
Speaker 1: she is a She's in Dickinson. She plays Emily Dickinson

441
00:25:11,400 --> 00:25:16,200
Speaker 1: in one of Apple's upcoming television series. So I guess

442
00:25:16,320 --> 00:25:19,119
Speaker 1: that's why she was chosen to make this announcement. But yes,

443
00:25:19,160 --> 00:25:21,600
Speaker 1: it's a strategist. Who do I need to follow these days?

444
00:25:22,560 --> 00:25:25,320
Speaker 1: What our investment strategy? I mean, I mean investors don't

445
00:25:25,359 --> 00:25:29,199
Speaker 1: just automatically get alerts for Hailey Steinfeld's Instagram stories. She

446
00:25:29,280 --> 00:25:31,800
Speaker 1: had a big hit on the radio. It wasn't It

447
00:25:31,880 --> 00:25:34,080
Speaker 1: wasn't called me maybe was it? No? No, No, She

448
00:25:34,280 --> 00:25:39,960
Speaker 1: she is a singer. She was in US. She was

449
00:25:39,960 --> 00:25:44,000
Speaker 1: in Bumblebee, the Transformers movie that no one saw in

450
00:25:44,040 --> 00:25:46,960
Speaker 1: the United States. That's pretty good that you're in the

451
00:25:47,040 --> 00:25:50,120
Speaker 1: lead so far. But well, I'm the only maybe Lauren

452
00:25:50,840 --> 00:25:54,240
Speaker 1: the lead, so I have to one is one is boring,

453
00:25:54,320 --> 00:25:58,240
Speaker 1: but real well, it is crazy to me. And this

454
00:25:58,280 --> 00:26:00,600
Speaker 1: is again a little bit of a plug for our perspective,

455
00:26:00,600 --> 00:26:03,919
Speaker 1: but it is crazy to me that recession probabilities are

456
00:26:03,960 --> 00:26:06,520
Speaker 1: reaching new cycle highs and we have equity markets at

457
00:26:06,520 --> 00:26:09,080
Speaker 1: all time highs. I think that's crazy. But I brought

458
00:26:09,080 --> 00:26:12,120
Speaker 1: a fun one because the point is not to be realistic.

459
00:26:12,680 --> 00:26:17,320
Speaker 1: UM In in the New York Life investments world, the

460
00:26:17,440 --> 00:26:21,120
Speaker 1: craziest conversation that happened this week is that UM New

461
00:26:21,200 --> 00:26:25,360
Speaker 1: York band flag raw and we have a lot of conversations.

462
00:26:25,359 --> 00:26:27,720
Speaker 1: One of our one of our portfolio managers is vegan

463
00:26:27,760 --> 00:26:34,720
Speaker 1: and one is a very eater, and so the conversation

464
00:26:34,760 --> 00:26:38,199
Speaker 1: around alternative food companies is robust. And so when we

465
00:26:38,280 --> 00:26:43,119
Speaker 1: saw this this policy change, we we lamented some of

466
00:26:43,119 --> 00:26:47,080
Speaker 1: the fancy New York French restaurants, but also the potential

467
00:26:47,200 --> 00:26:51,040
Speaker 1: for more alternative food companies. On the back of this,

468
00:26:53,200 --> 00:26:55,280
Speaker 1: I will say it's been been a rough week for

469
00:26:55,320 --> 00:27:00,280
Speaker 1: beyond curious. What your actuaries say about at you know,

470
00:27:00,440 --> 00:27:03,040
Speaker 1: is that gonna elongate people's lives that they eat less

471
00:27:03,119 --> 00:27:05,760
Speaker 1: fog gro You can get back close. Do we know

472
00:27:05,840 --> 00:27:11,040
Speaker 1: the reasoning fine behind a law change? I'm just curious. Um,

473
00:27:11,080 --> 00:27:14,640
Speaker 1: it's it's not very nice to geese, is I think?

474
00:27:14,680 --> 00:27:18,720
Speaker 1: So that's funny? This is our second craziest thing involving

475
00:27:19,080 --> 00:27:23,520
Speaker 1: mistreating geese. We had the Canadian Goose company. Apparently they

476
00:27:23,560 --> 00:27:25,880
Speaker 1: were beating their geese to get the feathers off them.

477
00:27:25,880 --> 00:27:29,320
Speaker 1: And there's always protesters in front of that story. Oh yes, always,

478
00:27:29,359 --> 00:27:31,959
Speaker 1: it's hard to be a goose. I guess yes. All right, sir,

479
00:27:32,040 --> 00:27:33,879
Speaker 1: I'm less confident that I'm going to win this week's

480
00:27:33,880 --> 00:27:36,400
Speaker 1: craziest thing. But what do you have? Maybe you can

481
00:27:36,680 --> 00:27:38,399
Speaker 1: talk to these guys. I don't think you really have

482
00:27:38,480 --> 00:27:40,400
Speaker 1: to worry about mines. Like I said, had a long week.

483
00:27:40,480 --> 00:27:42,600
Speaker 1: So what did I do to find my craziest thing?

484
00:27:42,680 --> 00:27:46,000
Speaker 1: I went to find some pharmaceutical company that had a

485
00:27:46,040 --> 00:27:50,840
Speaker 1: really great showing. So um, this company called I veric Bio. Granted,

486
00:27:51,000 --> 00:27:53,560
Speaker 1: even after the jump we saw this week, it's only

487
00:27:53,640 --> 00:27:57,320
Speaker 1: worth like three dollars or something of that sort of share,

488
00:27:57,800 --> 00:28:01,160
Speaker 1: but still they had one of their may main drugs,

489
00:28:01,320 --> 00:28:04,760
Speaker 1: mean one of the trials UH meet its primary endpoint.

490
00:28:04,960 --> 00:28:07,760
Speaker 1: Big deal for the company. Um, and not only did

491
00:28:07,800 --> 00:28:11,520
Speaker 1: we see the stock move eight two percent on Monday?

492
00:28:11,680 --> 00:28:15,520
Speaker 1: Then we saw another roughly jump on Tuesday, and a

493
00:28:15,640 --> 00:28:19,760
Speaker 1: sixty percent jump on Wednesday, So pretty crazy. The stock

494
00:28:19,800 --> 00:28:23,200
Speaker 1: is up somewhere around two this week, but then again

495
00:28:23,640 --> 00:28:27,160
Speaker 1: three dollars to share. So bio Pharma is a great

496
00:28:27,200 --> 00:28:30,080
Speaker 1: place to go looking for crazy. It really is. All right,

497
00:28:30,359 --> 00:28:33,440
Speaker 1: I'll give you mine and mine, which involves my nerdiest hobby.

498
00:28:33,520 --> 00:28:35,320
Speaker 1: I don't know if a lot of listeners realized, but

499
00:28:35,400 --> 00:28:38,120
Speaker 1: at Bloomberg we obviously talk a lot about stocks. We

500
00:28:38,120 --> 00:28:40,120
Speaker 1: don't do a lot of trading of stocks because of

501
00:28:40,200 --> 00:28:42,960
Speaker 1: various rules. You know, if I could talk about any

502
00:28:43,080 --> 00:28:45,520
Speaker 1: stock given stock on any given day, I shouldn't really

503
00:28:45,520 --> 00:28:49,560
Speaker 1: be investing in that stock obviously, But the rules do

504
00:28:49,640 --> 00:28:52,480
Speaker 1: not prevent me from speculating in another market. And that

505
00:28:52,600 --> 00:28:56,360
Speaker 1: Shira is the market for vintage bicycles, which and this

506
00:28:56,440 --> 00:28:58,680
Speaker 1: was apparently a very hipster thing to do, like in

507
00:28:58,720 --> 00:29:01,400
Speaker 1: Brooklyn about a decade ago. So I'm right on time.

508
00:29:01,800 --> 00:29:04,240
Speaker 1: This is my normal timing here to get involved in this.

509
00:29:05,320 --> 00:29:08,720
Speaker 1: It's a very uh, let's say, price discovery is very

510
00:29:08,720 --> 00:29:11,080
Speaker 1: difficult in this market because everyone thinks they're old bike

511
00:29:11,200 --> 00:29:14,320
Speaker 1: is worth a fortune. Um. So you'll see people put

512
00:29:14,440 --> 00:29:17,360
Speaker 1: up an old bike for five dollars and you know

513
00:29:17,440 --> 00:29:21,160
Speaker 1: it sells for a hundred dollars. So I found these Schwin,

514
00:29:21,520 --> 00:29:24,040
Speaker 1: these beautiful Schwin cruisers that I thought were from the

515
00:29:24,120 --> 00:29:28,360
Speaker 1: sixties or so on Facebook marketplace that's the main venue

516
00:29:28,400 --> 00:29:31,840
Speaker 1: for vintage bike nerds like myself. And the guy wanted

517
00:29:31,840 --> 00:29:34,400
Speaker 1: like two hundred for the pair of them. And these

518
00:29:34,400 --> 00:29:36,320
Speaker 1: things might be worth something if you scrub them up

519
00:29:36,320 --> 00:29:38,240
Speaker 1: and you got the rust off and everything, but in

520
00:29:38,280 --> 00:29:39,960
Speaker 1: the condition they were in, I was like, no way.

521
00:29:39,960 --> 00:29:42,959
Speaker 1: I said, um, sight on seeing I'll give you seventy

522
00:29:42,960 --> 00:29:46,520
Speaker 1: five for them. And we started haggling back and forth.

523
00:29:46,600 --> 00:29:48,360
Speaker 1: Eventually I said, look, I'll come and see them. If

524
00:29:48,400 --> 00:29:51,280
Speaker 1: I think they're worth more than seventy five, i'll i'll

525
00:29:51,280 --> 00:29:53,040
Speaker 1: give you, know, give it to you. So I get

526
00:29:53,040 --> 00:29:54,560
Speaker 1: there and I'm like, tell you what, I'll give you

527
00:29:54,560 --> 00:29:58,000
Speaker 1: a hundred bucks for two of them, okay, And he goes,

528
00:29:58,040 --> 00:30:00,360
Speaker 1: that's fair, and I said, that's fair, right, So fifty

529
00:30:00,360 --> 00:30:02,920
Speaker 1: dollars a piece I got uh these two bikes. I

530
00:30:02,920 --> 00:30:05,040
Speaker 1: went home and I looked them up. Nineteen sixty three

531
00:30:05,160 --> 00:30:10,040
Speaker 1: twins Uh coaster breaks as a friend of mine said,

532
00:30:10,040 --> 00:30:12,560
Speaker 1: the one looks like pee Wee Herman's bike from Pewee's

533
00:30:12,560 --> 00:30:15,320
Speaker 1: Big Adventure. But Sarah, this is all leading up to

534
00:30:15,320 --> 00:30:18,600
Speaker 1: the This is all leading up to the crazy part. Now,

535
00:30:19,040 --> 00:30:21,600
Speaker 1: remember I spent fifty dollars a piece on these bikes.

536
00:30:21,800 --> 00:30:24,320
Speaker 1: I'm gonna show you a page of the catalog from

537
00:30:24,320 --> 00:30:27,920
Speaker 1: the nineteen sixty three Swin company and look at the

538
00:30:27,960 --> 00:30:30,520
Speaker 1: circled number and and read how much that bike cost

539
00:30:30,560 --> 00:30:37,160
Speaker 1: in nineteen Good deal, and I paid fifty for it.

540
00:30:37,240 --> 00:30:40,440
Speaker 1: So I believe I've discovered the ultimate store of value

541
00:30:40,520 --> 00:30:48,280
Speaker 1: here is in nineteen sixty three is dead. It's pretty unbelievable, exactly.

542
00:30:48,880 --> 00:30:51,880
Speaker 1: Talk about an efficient market. Yeah, you win for narrative

543
00:30:51,960 --> 00:30:57,040
Speaker 1: value for sure. All right, I'll accept that, And you

544
00:30:57,120 --> 00:31:00,760
Speaker 1: got two bikes out of it. Can you write it

545
00:31:00,800 --> 00:31:07,800
Speaker 1: without dying. You're welcome in in Brooklyn anything, as long

546
00:31:07,800 --> 00:31:09,840
Speaker 1: as it's safe. It takes us a while in Jersey

547
00:31:09,840 --> 00:31:12,440
Speaker 1: to get the trends that you guys have in Brooklyn. Snow. Well,

548
00:31:12,480 --> 00:31:14,719
Speaker 1: now you've made it. Even if it's a decade later,

549
00:31:14,760 --> 00:31:17,840
Speaker 1: it's worth it the same price. But anyways, Lauren Goodwin,

550
00:31:17,960 --> 00:31:24,560
Speaker 1: Chierra Ovida, thank you so much. For joining us today

551
00:31:26,280 --> 00:31:29,240
Speaker 1: What Goes Up. We'll be back next week. Until then,

552
00:31:29,400 --> 00:31:32,040
Speaker 1: you can find us on the Bloomberg Terminal, website and app,

553
00:31:32,440 --> 00:31:35,160
Speaker 1: or wherever you get your podcasts. We love it if

554
00:31:35,160 --> 00:31:37,080
Speaker 1: you took the time to rate and review the show

555
00:31:37,120 --> 00:31:40,480
Speaker 1: on Apple Podcasts so more listeners can find us. And

556
00:31:40,640 --> 00:31:43,440
Speaker 1: you can find us on Twitter. Follow me at at

557
00:31:43,480 --> 00:31:47,240
Speaker 1: Sara Pontzack, Mike is at breg Anonymous, Our guest Lauren

558
00:31:47,280 --> 00:31:50,720
Speaker 1: Goodwin is at l E. Goodwin, and schira Ovi Day

559
00:31:50,920 --> 00:31:53,920
Speaker 1: is at schira Ovi Day. You can also follow Bloomberg

560
00:31:53,960 --> 00:31:58,560
Speaker 1: Podcasts at podcasts. What Goes Up is produced by Tofur Foreheads.

561
00:31:58,600 --> 00:32:01,920
Speaker 1: The head of Bloomberg podcast is Francesca Levie. Thanks for listening,

562
00:32:02,040 --> 00:32:02,840
Speaker 1: See you next time.