Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg Weekly
Speaker 1: Markets podcast. I'm Sara pan Zac, a reporter on the
Speaker 1: Cross Asset team, and I'm Mike Reagan, a senior editor
Speaker 1: on the Markets team. This week on the show, the
Speaker 1: FED cut rates for the third straight time, but they
Speaker 1: signaled that's all for now, Plus some of the biggest
Speaker 1: tech names reported earnings. Our guests will help us break
Speaker 1: it all down, and as always, will close out the
Speaker 1: episode with the craziest things we saw in markets this week, Sarah,
Speaker 1: week or two ago? Is awkward where you and I
Speaker 1: both picked the same crazy thing? Was it awkward? I
Speaker 1: thought it was actually pretty great. I'm gonna tell you.
Speaker 1: I am guarantee you did not pick the same one
Speaker 1: as me this week, and I'll tell you why. It
Speaker 1: involves a very nerdy hobby I've gotten into lately, you
Speaker 1: never know, very saying you never know not the nerdiest hobby.
Speaker 1: I'll tell you that. I was telling a friend about it.
Speaker 1: I said, I've just gotten sucked into the nerdiest hobby
Speaker 1: of all time and he goes, oh, are you Are
Speaker 1: you grinding your own telescope lens? Oh? Okay, it was
Speaker 1: so nerdy. I was offended, but but oddly intrigued, so
Speaker 1: I might start grinding my own telescope lenses as well.
Speaker 1: It's a thing, apparently all right, we'll be excited to
Speaker 1: hear it. And remember, we have our very own Bloomberg
Speaker 1: Podcast hotline. So if you guys want to share your
Speaker 1: crazy market statistics or whatever it may be with us,
Speaker 1: give us a call, leave us a message at six
Speaker 1: or six three two four three four nine zero, and
Speaker 1: we may even play it on the show. And of course,
Speaker 1: our guests this week hopefully have some crazy things they
Speaker 1: brought along with us. Uh first time on the show.
Speaker 1: Joining us is Lauren Goodwin. She's an economist and multi
Speaker 1: asset portfolio strategist at New York Life Investments. Lauren, welcome
Speaker 1: to the show. Thanks so much for having me, and
Speaker 1: I'm not gonna put you on the spot, but if
Speaker 1: you do have any really nerdy hobbies, you know you
Speaker 1: feel free to share them with us perfect anything. I'm
Speaker 1: just I love watching monetary policy meetings, does that gal?
Speaker 1: That's and also returning to the show is Bloomberg Opinion
Speaker 1: technology columnist Shira Overday. Sure, I think your nerdiest hobby
Speaker 1: is just reading ten K reports. Yeah, yeah at all though, right,
Speaker 1: I think it's pretty normal for Bloomberg. Yeah right, right,
Speaker 1: that's that's kind of the run of the mill hobby.
Speaker 1: But uh, but learn let's start with you. I was
Speaker 1: reading some of the notes you sent over, and uh,
Speaker 1: one thing popped out at me immediately. You say there's
Speaker 1: a chance U s yields could move into negative territory. Um,
Speaker 1: don't dun't done? That is shocking. Uh, not entirely shocking.
Speaker 1: I guess it's you know, of all the craziest things
Speaker 1: we've seen in markets this year, that probably would not
Speaker 1: be that crazy. But what it intrigued me is you
Speaker 1: also said you think the FED is done after this
Speaker 1: last rate cuts. So what takes what would take your
Speaker 1: fields negative? If not the Feds sort of helping to
Speaker 1: push them down. Well, the Fed's done for now, They're
Speaker 1: not done for forever, but we can talk about that later.
Speaker 1: I'll answer your question about yields, which is two major
Speaker 1: things go into US yields. One of them is expectations
Speaker 1: for the FED funds rate, which could go to zero,
Speaker 1: would go to zero if we're in if we move
Speaker 1: into recession in the US. The other thing is the
Speaker 1: term premium. So that's just what investors expect to get
Speaker 1: for taking the risk of holding a bond over cash
Speaker 1: or any other cash like instrument. So what makes term
Speaker 1: premiums zero or even negative as they've been in the
Speaker 1: US even this year, are things like investor fears um
Speaker 1: some of the concerns that we've seen about global growth,
Speaker 1: trade wars, etcetera. And so if you see the U
Speaker 1: s inch a little bit closer to recession and some
Speaker 1: of these fears take hold, add it together you can
Speaker 1: easily see US negative yields doesn't mean necessarily a negative
Speaker 1: ten year yield. I also think that the the bar
Speaker 1: for the Fed moving policy rates negative is high. That's
Speaker 1: a completely different issue. But yields on this short end
Speaker 1: totally possible. And that's intriating to me because of this
Speaker 1: so much supply uh to fund the depth sit We're
Speaker 1: looking at a potentially another chillion dollar depth sit in
Speaker 1: every foreseeable year. A lot of that on that on
Speaker 1: the short end. But you think, would it sort of
Speaker 1: be that rush to cash money market mutual fund type
Speaker 1: of situation that would that really crush the short end? Yeah,
Speaker 1: you know, you just you can't get positive yield anywhere
Speaker 1: in safe assets, and so it's really there is no
Speaker 1: alternative type of story when you have um as we
Speaker 1: do right now. Japanese insurance companies willing to move into
Speaker 1: an investment grade, which is credit, even if it's if
Speaker 1: it's investment grade credit, instead of being in these super
Speaker 1: safe government securities, then moving into US super safe securities
Speaker 1: makes a lot of sense. That can totally squeeze the frienend.
Speaker 1: Let's back up the truck a little bit. So before
Speaker 1: we were to potentially get to negative interest rates, you
Speaker 1: would imagine that the data would have to worsen, maybe
Speaker 1: the FED would go back to cutting once a again.
Speaker 1: But for now, like you said, the FED is on hold. However,
Speaker 1: the market is still pricing in rate cuts as soon
Speaker 1: as next year. What is it that gets us to
Speaker 1: that point? What brings that disconnect closer together? I think
Speaker 1: it makes sense that the market is pricing in cuts
Speaker 1: next year. We're on the last legs of this expansion.
Speaker 1: The FED has bought us time. Some of the risk
Speaker 1: on behavior, some of the risks that we've seen becoming
Speaker 1: less pronounced also helps buy us a little bit of
Speaker 1: time in investor world, that helps us rebalance our portfolios.
Speaker 1: But we're looking at an economic cycle, and specifically a
Speaker 1: company profit cycle that is just moving closer to recession.
Speaker 1: And so while we're not calling for recession in the
Speaker 1: next twelve months, in the twelve to eighteen um time period,
Speaker 1: that's absolutely a likely scenario from from my perspective, And
Speaker 1: so the Feds on pause for now, saying, look, until
Speaker 1: we see that data deteriorate further, we're fine. They also
Speaker 1: have seen over the course of the year, even before
Speaker 1: they actually started cutting rates, some improvement in interest rates
Speaker 1: sensitive indicators, just because folks expected it to come, um,
Speaker 1: wait and see. But once we see um, the debt
Speaker 1: burdens that companies are facing start to take hold, and
Speaker 1: those profit margins really start to see, um, the pressure
Speaker 1: that they've been under for the past couple of years.
Speaker 1: Then then you start to see the FED getting worried again.
Speaker 1: So uh, safe to describe you is not exactly bullish
Speaker 1: these days that that is that is correct. We're um,
Speaker 1: but but I will say strategically speaking, we're defensive in
Speaker 1: our portfolios, so we invest for the long term. Most
Speaker 1: of our investors are thinking about retirement or institutional clients
Speaker 1: really thinking um in the in terms of years, not months.
Speaker 1: So strategically speaking, we've moved more defensive. I'm glad you
Speaker 1: brought that up by you read my mind. I was
Speaker 1: going to ask you about that. You said, you know,
Speaker 1: contrary to market moves, were holding tight on our defensive
Speaker 1: portfolio positioning. This is a really fascinating topic to me
Speaker 1: because is I've heard a lot of people say this,
Speaker 1: but I'd like to unpack it a little bit what
Speaker 1: you mean by defensive and I pick it up. I
Speaker 1: was fascinated. I looked this week at the Investco Defensive
Speaker 1: e t F, which is really done well is year
Speaker 1: it's up, uh, you know, better than the SMP itself.
Speaker 1: And I was thinking, well, when I think defensive, I think, Okay,
Speaker 1: you're gonna buy Johnson Johnson, you're gonna buy utilities, You're
Speaker 1: gonna buy those sort of state safe consumer staples. This
Speaker 1: CTF is fascinating because, okay, healthcare is ten percent. That's
Speaker 1: kind of uh classic defensive there. But of its other allocations,
Speaker 1: um more than five percent is allocated to software, more
Speaker 1: than five percent to electronics, more than five percent to
Speaker 1: diversified financials, and we're than five percent to banks. So
Speaker 1: more than ten percent of this quote unquote defensive e
Speaker 1: t F is financial firms, which kind of blows my mind.
Speaker 1: So that's all a long set up to just kind
Speaker 1: of help us unpack what you mean by defensive m
Speaker 1: A in the stock kid, obviously, but also outside of
Speaker 1: the stock market, you know where sort of in the
Speaker 1: treasury curve would you be looking at that sort of thing. Great,
Speaker 1: you set up an A and B for me. That's
Speaker 1: perfect in uh in in equities, defensive means and this
Speaker 1: is UM. This is a story that's gotten a lot
Speaker 1: of airtime. Frankly, UM it means high quality companies that
Speaker 1: are making consistent earnings and they're consistently giving those earnings
Speaker 1: back to sharedholders. It doesn't necessarily mean only yield, because
Speaker 1: there can be dividend yield traps, but really security by security,
Speaker 1: not even necessarily sector by sector, identifying the companies that
Speaker 1: are going to return that value back to shareholders. From
Speaker 1: an investor perspective, when you're expecting a more volatile environment,
Speaker 1: that's that's safer. When you move outside of UM the
Speaker 1: equity markets, defensive strategies generally include moving up in quality,
Speaker 1: but where you've seen a big shift and move up
Speaker 1: in quality like in high yield for example, you also
Speaker 1: have to go shorter duration um and so those are
Speaker 1: the general types of secure yours. Again, when you're expecting
Speaker 1: um a lot of investor uncertainty, when you're near the
Speaker 1: end of the profits cycle and you have high debtloads
Speaker 1: within companies, you just have to be really uh secure.
Speaker 1: So it's more what companies have the balance sheets with
Speaker 1: standard recession rather than what companies are in industries that
Speaker 1: tend not to be crushed by precisely, and in which
Speaker 1: companies are going to pay you cash in the meantime.
Speaker 1: Even within equities, right, it's not just fixed income, but
Speaker 1: where where can you get a little bit of of
Speaker 1: of carrie while you hold those equities? If, for example,
Speaker 1: you don't think recession is right around the corner, so
Speaker 1: bear with me. Then are we almost seeing a divergence
Speaker 1: in the stock market because as you mentioned, you guys
Speaker 1: are sticking with your defensive positioning. That counter to almost
Speaker 1: what we've been seeing over the past couple of weeks
Speaker 1: where we've started to see cyclicals outperforming, those classic bond
Speaker 1: proxies like staples, like utilities like real estate underperforming, but
Speaker 1: at the same time, it does seem as though all
Speaker 1: of a sudden, investors really care about corporate profits, So
Speaker 1: investor do care about quality to a sense? Do the
Speaker 1: two go counter to one another? Do they actually fit together? Well,
Speaker 1: we're in this part of the cycle that's really uncomfortable
Speaker 1: when the data is mixed, and so, Um, if you
Speaker 1: had a different guest on in ten minutes, they could
Speaker 1: say the exact opposite of what I'm saying, and I
Speaker 1: would think that they were reasonable. Um, what we're seeing is, uh,
Speaker 1: we're laying in the cycle. We've already had two mid
Speaker 1: cycle slowdowns, and so not only are the structural elements
Speaker 1: of the economy we've talked about debt loads and profit margins,
Speaker 1: not only are those creeping closer and closer to recession
Speaker 1: like qualities, but also from a higher position than we've
Speaker 1: been in the other two mid cycle slowdowns, and equity
Speaker 1: prices have moved higher all along, and so you can
Speaker 1: see as an investor short term cyclical opportunities. So, for example,
Speaker 1: um risk has been such a factor in the markets
Speaker 1: across the board this year and last year. When you
Speaker 1: get a little bit of that risk, premium pulled off
Speaker 1: because there's positive rumors about a trade deal, for example,
Speaker 1: you can have a short term cyclical opportunity, and so
Speaker 1: it does. It's not necessarily bifurcating. You're just playing sort
Speaker 1: of a long game short game. And so what we do,
Speaker 1: for example, when we're when we're making these more defensive shifts,
Speaker 1: is um as we moved up in quality, quality gets expensive.
Speaker 1: So when you start taking off a little bit of
Speaker 1: high beta exposure at market highs, for example, or in
Speaker 1: asset classes that we don't like as much, like high
Speaker 1: yield or bankloads, you can use that cash to take
Speaker 1: advantage of those short term cyclical opportunities without completely abandoning
Speaker 1: your long term story, which is what which is, which
Speaker 1: is where we're positioned right now. Sure, let's bring you
Speaker 1: in here and switch gears from defensive to companies that
Speaker 1: are perhaps offensive for various reasons. And and I'm thinking
Speaker 1: of the facebooks, the alphabets, the twitters. We had a
Speaker 1: whole lot of quote unquote fang type of companies report
Speaker 1: over the last week or so. Is are there any
Speaker 1: sort of common themes, common takeaways from the whole sort
Speaker 1: of communications and tech sector earning season. I mean, it's
Speaker 1: it's a little bit hard to draw generalities about the
Speaker 1: tech sector in general because I think the big tech
Speaker 1: companies that you mentioned, the sort of fangs or famis
Speaker 1: whatever people call them, the Facebook fam, which is includes Microsoft.
Speaker 1: I think that's the right fam um. So those large
Speaker 1: five or six technology companies seem to be doing very well.
Speaker 1: That growth for the most part has um continued at
Speaker 1: a pretty good rate, albeit um has come down for
Speaker 1: many of those companies. Again, the profit margins have come down,
Speaker 1: but it's all relative, right. So Facebook this week reported earnings.
Speaker 1: They are spending a lot more money. The growth rates
Speaker 1: have come down, but we're still talking out growth um
Speaker 1: year over year, and they're operating profit margins are about
Speaker 1: So if you're talking about, you know, defensive kind of companies,
Speaker 1: those giant tech companies start to look a little bit
Speaker 1: more safe, I guess. But on the other hand, you
Speaker 1: have these younger companies that are valued almost entirely on
Speaker 1: their growth rates, and there it's a little bit of
Speaker 1: a mixed bag. So again, we had grub Hub this
Speaker 1: week that absolutely terrible and to me, the scary thing
Speaker 1: about what grub Hub said was they feel like the
Speaker 1: promise of that industry of kind of food delivery, the
Speaker 1: on demand you push a button on an app and
Speaker 1: get anything delivered to your home at almost no cost.
Speaker 1: That they really think that that string is playing out,
Speaker 1: that there is no way economically that there can be
Speaker 1: multiple companies fighting each other to get something to your
Speaker 1: house as fast and cheap as they possibly can. And
Speaker 1: at the same time they feel like, um, the hyper
Speaker 1: growth phase of that industry is pretty much over um,
Speaker 1: which is kind of a scary one to punch. Is
Speaker 1: it a word of attrition at this point in that space?
Speaker 1: And that's what grubub thinks. And look, they're not wrong
Speaker 1: that in the United States. I'll leave the overseas market
Speaker 1: out of this, but in the United States you have
Speaker 1: a number of companies that are all chasing the same restaurants,
Speaker 1: the same diners, right, Uber Eats, Grubhub, door Dash, Postmates,
Speaker 1: you can go on down the list and so um. Yeah,
Speaker 1: there is a little bit of a of a war
Speaker 1: of attrition going on. Lauren, I want to touch on
Speaker 1: something that Shira said, and that's that somehow these big
Speaker 1: tech companies start to look safer. Is this something that
Speaker 1: comes up in discussion with you and your team. I mean,
Speaker 1: I can say, I've heard many investors say to me
Speaker 1: this year, oh well, now tech is defensive. It makes
Speaker 1: a lot of sense to me. And if you think
Speaker 1: even just in traditional economic terms, to say that the
Speaker 1: model of not only economic growth but also company growth
Speaker 1: and sustainable growth has changed from you know, when we're
Speaker 1: more industrial or manufacturing focused, for example, so when we
Speaker 1: were a year ago we were really holding out on
Speaker 1: productivity in the US, that that we would that that
Speaker 1: this would be what saved the economic cycle, and that
Speaker 1: that we'd see investment translated into productivity. We haven't seen that.
Speaker 1: But the main sort of core tenant of that argument
Speaker 1: I think is absolutely still true, which is that these
Speaker 1: big tech companies are the only ones investing in themselves
Speaker 1: and so um an interesting thing to think about is
Speaker 1: what is the next step? What is the investment strategy
Speaker 1: of the future look like? And something I think is
Speaker 1: really compelling there is companies that are investing not through
Speaker 1: CAPEX or some of these indicators that we're used to
Speaker 1: looking at, but op X. What are the logistics companies
Speaker 1: that are investing in you know, next generation software to
Speaker 1: make sure that the supply chains disruptions with China or
Speaker 1: or EU up are are not an issue for their
Speaker 1: for their profits. That's really interesting. That's a really interesting
Speaker 1: type of sort of secure safe investment. I think that
Speaker 1: this growth versus value, cyclical versus defensive sort of general
Speaker 1: named indicasar are starting to break down. So I completely
Speaker 1: agree with Serra, And just to say something a little
Speaker 1: bit scary though, I will just point out that of
Speaker 1: the giant tech companies that now seem a little bit safe,
Speaker 1: almost without exception, and Microsoft is the exception. Um, those
Speaker 1: companies haven't really lived through a recession, at least not
Speaker 1: in their kind of current giant company status. So I
Speaker 1: don't think we really know what Amazon looks like, for example,
Speaker 1: in a recessionary period. And again, obviously they were around
Speaker 1: in two thousand nine, two thousand ten, but they were
Speaker 1: significantly smaller company, less sprawling, um e commerce was kind
Speaker 1: of a significantly smaller share of US spending. So I
Speaker 1: just I do not know what happens even to the biggest, safest,
Speaker 1: most profitable giant tech companies in a recessionary environment. Well,
Speaker 1: and you add the one more giant spooky element in
Speaker 1: the room, which is the potential for regulation. And so
Speaker 1: when we're talking about these specific big tech companies. Um,
Speaker 1: the risks are are pronounced when it comes to um not.
Speaker 1: This isn't just a political issue. This is a substantial
Speaker 1: structural issue around inequality and data protection and really big
Speaker 1: questions that I think are here to stay. And so
Speaker 1: when we talk about these specific companies, they are surely
Speaker 1: risks in the coming years. Um. When you're looking though
Speaker 1: at at an investment, that's a that's a compelling story, Lauren.
Speaker 1: I think you stole my notes because I was that
Speaker 1: was my next segue, and I was going to give
Speaker 1: a gratuitous plug to a story that Sarah worked on
Speaker 1: this week about it's kind of becoming the big buzzy
Speaker 1: zeitgeist on Wall Street now is the specter of possible
Speaker 1: Elizabeth Warren presidency. I was like, which story are you
Speaker 1: talking about? Remember you work? But and I wrote about
Speaker 1: it to another gratuitous plug a couple of weeks ago.
Speaker 1: But um, obviously Elizabeth Warren has everyone on Wall Street
Speaker 1: freaked out and many people predicting this big bear market
Speaker 1: if she should sort of ascend in the polls any further. Sure,
Speaker 1: let's start with you, though I'm curious if her name
Speaker 1: came up at all on any of the conference calls
Speaker 1: or any of the analyst notes UM and Part B,
Speaker 1: since if you guys will both accept A and B questions.
Speaker 1: Part B, I'm just curious, how would you go about
Speaker 1: breaking up, say a Facebook, an Alphabet, and an Amazon.
Speaker 1: Um and would that necessarily be a negative for shareholders
Speaker 1: in this company? You know? I'm thinking, wouldn't the SMPB
Speaker 1: better off if it had a Google and uh, a
Speaker 1: YouTube and an Instagram and an Amazon Cloud and an
Speaker 1: Amazon retail I mean, you're talking about a lot of
Speaker 1: sort of interesting businesses that would suddenly be their own companies?
Speaker 1: What is what's the thinking on this from your world? Okay,
Speaker 1: so now I have to do A and B. A. UM, Yes,
Speaker 1: I think the regulation obviously is now I think a
Speaker 1: regular part of reality for these companies. The sort of
Speaker 1: difficult thing I think, both for the companies and for
Speaker 1: investors honestly, is just it's impossible to know how this
Speaker 1: plays out and how long it takes. Right, you're talking
Speaker 1: about a federal, federal and state now antitrust investigations involving
Speaker 1: basically all the giant tech companies with the exception of Microsoft,
Speaker 1: And what if it takes ten years I don't know.
Speaker 1: I don't know what happens. So it's one of these
Speaker 1: kind of storm clouds, but it's unclear exactly how it
Speaker 1: ends or how exactly to to play for it. Am
Speaker 1: I the only one who finds it funny that Microsoft
Speaker 1: is the one they're not talking about. Yes, it is
Speaker 1: extremely I think if you had told like two thousand
Speaker 1: ten Shia that there would be anti trust investigations and
Speaker 1: Microsoft would be completely uninvolved, that they look like the
Speaker 1: white hats and all this, it would seem preposterous spying
Speaker 1: under the there we haven't such a part about actually
Speaker 1: breaking these com plain about part B. I definitely have
Speaker 1: seen the sell side analysts talking about, you know, we
Speaker 1: think Facebook or would be more valuable or Google would
Speaker 1: be more valuable if it were split in pieces. I
Speaker 1: think that is nuts. Um that I mean, I can
Speaker 1: go company by company, but if you think about a
Speaker 1: company like Facebook, and I think the Elizabeth Warren types
Speaker 1: who were talking about Facebook and antitrust, what they're talking
Speaker 1: about largely is pulling out the companies that Facebook acquired
Speaker 1: in the last ten years, so that's primarily Instagram and
Speaker 1: WhatsApp and uh to say that Facebook is more valuable.
Speaker 1: If you pull out those two companies is just bad.
Speaker 1: It is wrong that, particularly on the usage side right um,
Speaker 1: Instagram is the growth story for Facebook right now. It's
Speaker 1: important with younger people, it's important with advertisers who want
Speaker 1: to reach younger people. And what's app is also an
Speaker 1: important element of Facebook's growth outside of North America in
Speaker 1: countries like India, like the Middle East where what's app
Speaker 1: is extremely popular. And look, Facebook hasn't successfully figured out
Speaker 1: how to make money from what'sapp, but that's an asset
Speaker 1: that has um more and we don't know exactly how many,
Speaker 1: but more than a billion users worldwide, and that is
Speaker 1: extremely valuable to Facebook and that's an extremely important part
Speaker 1: of the investment thesis for Facebook. Lauren, what about your
Speaker 1: guys take not on just the regulatory aspect and the
Speaker 1: risks that poses not even just to the tech companies
Speaker 1: but the market at large, but also just everything going
Speaker 1: on in politics right now, whether it is impeachment, press eatings,
Speaker 1: are looking forwards to the election. When you have the
Speaker 1: likes of Paul Tutor Jones for example this past week
Speaker 1: coming out and saying if it's if Elizabeth Warren wins
Speaker 1: the SMP will drop. I mean, how can you even
Speaker 1: go about making predictions like this or trying to at
Speaker 1: least take these ideas and inform your investments. I'll make
Speaker 1: a shameless plug for myself and that we UH wrote
Speaker 1: a piece on political and geopolitical risk and portfolio management
Speaker 1: and found that not only do investors UM and again
Speaker 1: I'm I'm thinking investors for the medium or longer term
Speaker 1: tend not to pay very close attention but probably shouldn't. Um,
Speaker 1: we may maybe we get a sell off if Elizabeth
Speaker 1: Warren gets the nomination or wins the election. We thought
Speaker 1: the same thing about Donald Trump. UM, we don't know,
Speaker 1: but and maybe we do. But the really what this
Speaker 1: is about is looking past politics and towards policy, and
Speaker 1: when it comes to the pace and likelihood that some
Speaker 1: of these suggestions would be implemented, we know it's really
Speaker 1: challenging to share his point. Maybe it takes ten years,
Speaker 1: and so we have the enormous luxury of keeping a
Speaker 1: pulse on things but not letting it impact our portfolio
Speaker 1: management decisions until that policy again not politics, but policy
Speaker 1: change actually should impact our portfolios. So in that sense,
Speaker 1: UM trade even a year and a half ago, UH
Speaker 1: flipped into our radar is something that we need to
Speaker 1: monitor on an ongoing basis because it threatened companies and
Speaker 1: it threatened the consumer. Right now, this the political situation,
Speaker 1: whether it's the election or impeachment, etcetera in the US
Speaker 1: doesn't impact companies, and so we we treat it as such.
Speaker 1: Al Right, well, I think it's that time. I'm really
Speaker 1: excited for years, Mike. I want to know what a
Speaker 1: new nerdy thing. You're interesting nerdything. All right, well, let's
Speaker 1: save mindful us. I want to build up the suspense. Sure,
Speaker 1: let's start with you. I think you brought a crazy
Speaker 1: thing along. Well. I was very surprised this week there
Speaker 1: were news stories about Apple making a you know, a
Speaker 1: pretty significant change in its UM strategy to one of
Speaker 1: its important products. UM. So it emerged this week that
Speaker 1: Apple is tiptoeing and what's been called kind of a
Speaker 1: bundling strategy for its internet services that at least for students,
Speaker 1: it's going to offer for five dollars a month UM.
Speaker 1: Students can have a subscription to both Apple Music and
Speaker 1: to Apple's upcoming TV Plus service, which is it's kind
Speaker 1: of its answer to Netflix, a kind of web video
Speaker 1: entertainment service. And the way that this came out was
Speaker 1: not you know, Apple reported earnings and they announced this
Speaker 1: or Tim Cook went on TV to talk about it.
Speaker 1: Sarah No Hayley Steinfeld, who's an actress and singer. Um.
Speaker 1: She put it in an Instagram story that this was
Speaker 1: going to be a new policy change, at least an experiment.
Speaker 1: That was That was the that was the first word
Speaker 1: of this. This is the world we live in now. Yes,
Speaker 1: she is a She's in Dickinson. She plays Emily Dickinson
Speaker 1: in one of Apple's upcoming television series. So I guess
Speaker 1: that's why she was chosen to make this announcement. But yes,
Speaker 1: it's a strategist. Who do I need to follow these days?
Speaker 1: What our investment strategy? I mean, I mean investors don't
Speaker 1: just automatically get alerts for Hailey Steinfeld's Instagram stories. She
Speaker 1: had a big hit on the radio. It wasn't It
Speaker 1: wasn't called me maybe was it? No? No, No, She
Speaker 1: she is a singer. She was in US. She was
Speaker 1: in Bumblebee, the Transformers movie that no one saw in
Speaker 1: the United States. That's pretty good that you're in the
Speaker 1: lead so far. But well, I'm the only maybe Lauren
Speaker 1: the lead, so I have to one is one is boring,
Speaker 1: but real well, it is crazy to me. And this
Speaker 1: is again a little bit of a plug for our perspective,
Speaker 1: but it is crazy to me that recession probabilities are
Speaker 1: reaching new cycle highs and we have equity markets at
Speaker 1: all time highs. I think that's crazy. But I brought
Speaker 1: a fun one because the point is not to be realistic.
Speaker 1: UM In in the New York Life investments world, the
Speaker 1: craziest conversation that happened this week is that UM New
Speaker 1: York band flag raw and we have a lot of conversations.
Speaker 1: One of our one of our portfolio managers is vegan
Speaker 1: and one is a very eater, and so the conversation
Speaker 1: around alternative food companies is robust. And so when we
Speaker 1: saw this this policy change, we we lamented some of
Speaker 1: the fancy New York French restaurants, but also the potential
Speaker 1: for more alternative food companies. On the back of this,
Speaker 1: I will say it's been been a rough week for
Speaker 1: beyond curious. What your actuaries say about at you know,
Speaker 1: is that gonna elongate people's lives that they eat less
Speaker 1: fog gro You can get back close. Do we know
Speaker 1: the reasoning fine behind a law change? I'm just curious. Um,
Speaker 1: it's it's not very nice to geese, is I think?
Speaker 1: So that's funny? This is our second craziest thing involving
Speaker 1: mistreating geese. We had the Canadian Goose company. Apparently they
Speaker 1: were beating their geese to get the feathers off them.
Speaker 1: And there's always protesters in front of that story. Oh yes, always,
Speaker 1: it's hard to be a goose. I guess yes. All right, sir,
Speaker 1: I'm less confident that I'm going to win this week's
Speaker 1: craziest thing. But what do you have? Maybe you can
Speaker 1: talk to these guys. I don't think you really have
Speaker 1: to worry about mines. Like I said, had a long week.
Speaker 1: So what did I do to find my craziest thing?
Speaker 1: I went to find some pharmaceutical company that had a
Speaker 1: really great showing. So um, this company called I veric Bio. Granted,
Speaker 1: even after the jump we saw this week, it's only
Speaker 1: worth like three dollars or something of that sort of share,
Speaker 1: but still they had one of their may main drugs,
Speaker 1: mean one of the trials UH meet its primary endpoint.
Speaker 1: Big deal for the company. Um, and not only did
Speaker 1: we see the stock move eight two percent on Monday?
Speaker 1: Then we saw another roughly jump on Tuesday, and a
Speaker 1: sixty percent jump on Wednesday, So pretty crazy. The stock
Speaker 1: is up somewhere around two this week, but then again
Speaker 1: three dollars to share. So bio Pharma is a great
Speaker 1: place to go looking for crazy. It really is. All right,
Speaker 1: I'll give you mine and mine, which involves my nerdiest hobby.
Speaker 1: I don't know if a lot of listeners realized, but
Speaker 1: at Bloomberg we obviously talk a lot about stocks. We
Speaker 1: don't do a lot of trading of stocks because of
Speaker 1: various rules. You know, if I could talk about any
Speaker 1: stock given stock on any given day, I shouldn't really
Speaker 1: be investing in that stock obviously, But the rules do
Speaker 1: not prevent me from speculating in another market. And that
Speaker 1: Shira is the market for vintage bicycles, which and this
Speaker 1: was apparently a very hipster thing to do, like in
Speaker 1: Brooklyn about a decade ago. So I'm right on time.
Speaker 1: This is my normal timing here to get involved in this.
Speaker 1: It's a very uh, let's say, price discovery is very
Speaker 1: difficult in this market because everyone thinks they're old bike
Speaker 1: is worth a fortune. Um. So you'll see people put
Speaker 1: up an old bike for five dollars and you know
Speaker 1: it sells for a hundred dollars. So I found these Schwin,
Speaker 1: these beautiful Schwin cruisers that I thought were from the
Speaker 1: sixties or so on Facebook marketplace that's the main venue
Speaker 1: for vintage bike nerds like myself. And the guy wanted
Speaker 1: like two hundred for the pair of them. And these
Speaker 1: things might be worth something if you scrub them up
Speaker 1: and you got the rust off and everything, but in
Speaker 1: the condition they were in, I was like, no way.
Speaker 1: I said, um, sight on seeing I'll give you seventy
Speaker 1: five for them. And we started haggling back and forth.
Speaker 1: Eventually I said, look, I'll come and see them. If
Speaker 1: I think they're worth more than seventy five, i'll i'll
Speaker 1: give you, know, give it to you. So I get
Speaker 1: there and I'm like, tell you what, I'll give you
Speaker 1: a hundred bucks for two of them, okay, And he goes,
Speaker 1: that's fair, and I said, that's fair, right, So fifty
Speaker 1: dollars a piece I got uh these two bikes. I
Speaker 1: went home and I looked them up. Nineteen sixty three
Speaker 1: twins Uh coaster breaks as a friend of mine said,
Speaker 1: the one looks like pee Wee Herman's bike from Pewee's
Speaker 1: Big Adventure. But Sarah, this is all leading up to
Speaker 1: the This is all leading up to the crazy part. Now,
Speaker 1: remember I spent fifty dollars a piece on these bikes.
Speaker 1: I'm gonna show you a page of the catalog from
Speaker 1: the nineteen sixty three Swin company and look at the
Speaker 1: circled number and and read how much that bike cost
Speaker 1: in nineteen Good deal, and I paid fifty for it.
Speaker 1: So I believe I've discovered the ultimate store of value
Speaker 1: here is in nineteen sixty three is dead. It's pretty unbelievable, exactly.
Speaker 1: Talk about an efficient market. Yeah, you win for narrative
Speaker 1: value for sure. All right, I'll accept that, And you
Speaker 1: got two bikes out of it. Can you write it
Speaker 1: without dying. You're welcome in in Brooklyn anything, as long
Speaker 1: as it's safe. It takes us a while in Jersey
Speaker 1: to get the trends that you guys have in Brooklyn. Snow. Well,
Speaker 1: now you've made it. Even if it's a decade later,
Speaker 1: it's worth it the same price. But anyways, Lauren Goodwin,
Speaker 1: Chierra Ovida, thank you so much. For joining us today
Speaker 1: What Goes Up. We'll be back next week. Until then,
Speaker 1: you can find us on the Bloomberg Terminal, website and app,
Speaker 1: or wherever you get your podcasts. We love it if
Speaker 1: you took the time to rate and review the show
Speaker 1: on Apple Podcasts so more listeners can find us. And
Speaker 1: you can find us on Twitter. Follow me at at
Speaker 1: Sara Pontzack, Mike is at breg Anonymous, Our guest Lauren
Speaker 1: Goodwin is at l E. Goodwin, and schira Ovi Day
Speaker 1: is at schira Ovi Day. You can also follow Bloomberg
Speaker 1: Podcasts at podcasts. What Goes Up is produced by Tofur Foreheads.
Speaker 1: The head of Bloomberg podcast is Francesca Levie. Thanks for listening,
Speaker 1: See you next time.