1 00:00:08,080 --> 00:00:11,760 Speaker 1: Hello, and welcome to another edition of the Odd Thoughts podcast. 2 00:00:11,920 --> 00:00:16,400 Speaker 1: I'm Tracy Allaway. My co host Joe Wisenthal is not 3 00:00:16,680 --> 00:00:20,320 Speaker 1: with me today. Mr Wisenthal has gone off to Washington 4 00:00:20,600 --> 00:00:25,279 Speaker 1: to do some very important Bloomberg related things, which means 5 00:00:25,360 --> 00:00:28,000 Speaker 1: he's going to miss out on an episode that I 6 00:00:28,040 --> 00:00:32,440 Speaker 1: am personally very excited about. Today. We are going to 7 00:00:32,800 --> 00:00:37,440 Speaker 1: talk to one of my all time favorite analysts. And 8 00:00:37,479 --> 00:00:40,159 Speaker 1: the reason he became one of my all time favorite 9 00:00:40,159 --> 00:00:45,120 Speaker 1: analysts is because he wrote some very very interesting research 10 00:00:45,360 --> 00:00:47,800 Speaker 1: in the run up to the financial crisis. You know, 11 00:00:48,200 --> 00:00:50,120 Speaker 1: I think it was a few days or a week 12 00:00:50,200 --> 00:00:53,600 Speaker 1: or two before Lehman Brothers collapsed, he basically wrote a 13 00:00:53,720 --> 00:00:59,040 Speaker 1: note called are the Broker's Broken? Pointing out some weaknesses 14 00:00:59,280 --> 00:01:02,920 Speaker 1: in the fun ending of US financial institutions. And since 15 00:01:03,000 --> 00:01:08,440 Speaker 1: then he's gone on to write more broadly about the markets. Specifically, 16 00:01:08,680 --> 00:01:12,679 Speaker 1: he's written about how markets have been functioning in the 17 00:01:12,800 --> 00:01:16,520 Speaker 1: era of central bank liquidity. And as you all know, 18 00:01:17,440 --> 00:01:20,120 Speaker 1: this is a hot topic because the Federal Reserve is 19 00:01:20,160 --> 00:01:24,000 Speaker 1: in the process of tightening monetary policy reducing its balance sheet, 20 00:01:24,160 --> 00:01:28,080 Speaker 1: which puts a giant question mark over the fate of markets. 21 00:01:28,160 --> 00:01:30,840 Speaker 1: Are they going to be able to stand on their 22 00:01:30,880 --> 00:01:33,600 Speaker 1: own two feet without the support of the FED and 23 00:01:33,720 --> 00:01:37,200 Speaker 1: potentially some other central banks. So I won't keep you 24 00:01:37,240 --> 00:01:40,560 Speaker 1: in suspense for any longer. Let's bring in Matt King. 25 00:01:40,760 --> 00:01:54,120 Speaker 1: He is the global head of credit strategy at City Group. Matt, 26 00:01:54,240 --> 00:01:58,520 Speaker 1: thanks for joining us, my pleasure. What a flattering introduction. Yes, 27 00:01:58,640 --> 00:02:01,120 Speaker 1: I tried. I'm trying to make up for the fact 28 00:02:01,120 --> 00:02:04,840 Speaker 1: that Joe isn't here, So this is my compensation. Let's 29 00:02:04,880 --> 00:02:08,160 Speaker 1: start at the very beginning of how we actually got 30 00:02:08,240 --> 00:02:11,000 Speaker 1: to know each other and how you became one of 31 00:02:11,040 --> 00:02:15,639 Speaker 1: my favorite analysts. Two thousand and eight. You're at City 32 00:02:16,040 --> 00:02:20,840 Speaker 1: I think you are covering the banks. Then I assume, no, oh, 33 00:02:20,880 --> 00:02:24,680 Speaker 1: you weren't. So I was doing credit strategy then, kind 34 00:02:24,720 --> 00:02:27,320 Speaker 1: of similar to what I'm doing now. But I guess 35 00:02:27,360 --> 00:02:29,440 Speaker 1: the approach that we have always taken is to try 36 00:02:29,440 --> 00:02:31,960 Speaker 1: and focus on whatever it is that really seems to 37 00:02:31,960 --> 00:02:35,359 Speaker 1: be driving the market. But what we don't do is say, well, 38 00:02:35,360 --> 00:02:37,959 Speaker 1: here's what the economists say about the outlook, and therefore 39 00:02:37,960 --> 00:02:39,680 Speaker 1: here's what it means for our market. We always try 40 00:02:39,720 --> 00:02:41,880 Speaker 1: and say, what is it really it's really driving the world, 41 00:02:41,919 --> 00:02:43,880 Speaker 1: And so in O seven, I sort of had to. 42 00:02:43,919 --> 00:02:46,280 Speaker 1: You know, we used to look at credit fundamentals of companies, 43 00:02:46,320 --> 00:02:47,959 Speaker 1: but then in O seven we had to drop everything 44 00:02:47,960 --> 00:02:51,079 Speaker 1: and suddenly start looking at sieves and conduits and structure credit. 45 00:02:51,160 --> 00:02:53,200 Speaker 1: And then in two thousand and eight it seemed to 46 00:02:53,240 --> 00:02:56,520 Speaker 1: me that repo financing and broker dealers were a critical issue, 47 00:02:56,560 --> 00:02:58,359 Speaker 1: and so I spent a long time looking at them. 48 00:02:58,680 --> 00:03:00,840 Speaker 1: And then in more recent years it's been things like 49 00:03:00,919 --> 00:03:03,600 Speaker 1: the you know, with the European sovereigns, or it's been 50 00:03:03,639 --> 00:03:08,120 Speaker 1: about China and credit creation more broadly. And then the 51 00:03:08,200 --> 00:03:11,440 Speaker 1: dominant theme more than anything else for us at the moment, 52 00:03:11,480 --> 00:03:14,480 Speaker 1: it's just about central banks and central bank liquidity. So 53 00:03:14,560 --> 00:03:16,560 Speaker 1: I love that in two thousand and eight you managed 54 00:03:16,600 --> 00:03:21,000 Speaker 1: to sort of out analyze the actual banking analysts then, 55 00:03:21,200 --> 00:03:23,200 Speaker 1: and that was one of the things I liked about 56 00:03:23,280 --> 00:03:26,400 Speaker 1: the crisis as a financial journalist is the fact that 57 00:03:26,440 --> 00:03:29,560 Speaker 1: everyone was kind of learning at the same time. You know, 58 00:03:29,600 --> 00:03:32,240 Speaker 1: no one had a really good grasp of the intricacies. 59 00:03:32,680 --> 00:03:36,120 Speaker 1: Just before we move on to more contemporary topics, I 60 00:03:36,120 --> 00:03:38,520 Speaker 1: want to press you on that note. So you're at 61 00:03:38,640 --> 00:03:42,360 Speaker 1: City in September two eight, What were you feeling when 62 00:03:42,360 --> 00:03:46,320 Speaker 1: you push the button on a research piece that basically said, hey, 63 00:03:46,360 --> 00:03:50,600 Speaker 1: there's a massive funding issue at the U S. Pinks 64 00:03:50,640 --> 00:03:54,920 Speaker 1: and specifically Leaman. I could feel at the time it 65 00:03:55,040 --> 00:03:57,720 Speaker 1: was probably the most significant piece that I had written, 66 00:03:58,400 --> 00:04:03,360 Speaker 1: And while couldn't say we predict that Lehman will go under, 67 00:04:04,000 --> 00:04:06,120 Speaker 1: there was a chart in there that made it pretty obvious, 68 00:04:06,200 --> 00:04:08,240 Speaker 1: and indeed we basically predicted that all of the brokers 69 00:04:08,240 --> 00:04:10,560 Speaker 1: would have to change their models, and you know, and 70 00:04:10,600 --> 00:04:13,120 Speaker 1: then Lehman happened two weeks later. I guess what was 71 00:04:13,200 --> 00:04:15,680 Speaker 1: slightly surprising, and it to take me a long time 72 00:04:15,720 --> 00:04:18,840 Speaker 1: to do, was that there was no particular immediate market reaction, 73 00:04:18,880 --> 00:04:23,120 Speaker 1: in part because Freddie had just been rescued literally that weekend. 74 00:04:23,600 --> 00:04:26,000 Speaker 1: And so while I did get quite a lot of attention, 75 00:04:26,800 --> 00:04:31,159 Speaker 1: most of the attention actually came after Lehman, when people 76 00:04:31,200 --> 00:04:33,360 Speaker 1: like you kind of went back and said, hey, actually 77 00:04:33,360 --> 00:04:35,400 Speaker 1: this was really significant. Look, this guy spotted it at 78 00:04:35,440 --> 00:04:38,039 Speaker 1: the time, so I knew it was important, and I 79 00:04:38,120 --> 00:04:41,240 Speaker 1: made a big song and dance about it internally. But 80 00:04:41,480 --> 00:04:45,279 Speaker 1: even then, you know, we couldn't see all of the repercussions. 81 00:04:45,279 --> 00:04:48,600 Speaker 1: More broadly, Okay, if anyone wants to know more about 82 00:04:48,640 --> 00:04:52,279 Speaker 1: what we're talking about just Google, are the Broker's broken? 83 00:04:52,560 --> 00:04:55,360 Speaker 1: The pdf is still floating around on the Internet. It's 84 00:04:55,400 --> 00:04:58,799 Speaker 1: a really good read, even more than ten years after 85 00:04:59,040 --> 00:05:03,680 Speaker 1: the fact. Now, Matt, you mentioned muted market reaction when 86 00:05:03,760 --> 00:05:07,200 Speaker 1: Lehman Brothers actually went under, and muted has kind of 87 00:05:07,240 --> 00:05:12,240 Speaker 1: come to characterize the markets ever since, let's say, early 88 00:05:12,279 --> 00:05:15,159 Speaker 1: two thousand nine, when the Fed first announced its big 89 00:05:15,600 --> 00:05:20,280 Speaker 1: round of q E. Walk us through what changed in 90 00:05:20,400 --> 00:05:25,320 Speaker 1: two thousand nine, So clearly and correctly at the time, 91 00:05:25,400 --> 00:05:28,920 Speaker 1: the Central Bank stepped in with extraordinary facilities and liquidity, 92 00:05:29,279 --> 00:05:32,120 Speaker 1: and to begin with this was undoubtedly a good thing. 93 00:05:32,400 --> 00:05:34,240 Speaker 1: We needed to be rescued from a sort of self 94 00:05:34,240 --> 00:05:38,000 Speaker 1: fulfilling loot to the to the downside. But gradually, and 95 00:05:38,040 --> 00:05:41,640 Speaker 1: I would say from two thousand and eleven or so onwards, 96 00:05:41,720 --> 00:05:45,680 Speaker 1: what we started finding was we went from rescuing the 97 00:05:45,720 --> 00:05:50,080 Speaker 1: system and helping fundamentals to improve to a point where 98 00:05:50,120 --> 00:05:54,839 Speaker 1: almost all of my favorite fundamental valuation frameworks in credit 99 00:05:54,960 --> 00:05:58,960 Speaker 1: or inequities, or just more broadly basically started breaking down. 100 00:05:59,080 --> 00:06:03,520 Speaker 1: Markets became expensive and carried on getting more expensive when 101 00:06:03,520 --> 00:06:06,720 Speaker 1: previously they would have been reverted, and this prompted lots 102 00:06:06,720 --> 00:06:08,800 Speaker 1: of soul searching on our side as to say, well, 103 00:06:08,839 --> 00:06:12,640 Speaker 1: what's changed, what's driving things? Instead? Uh, and again I 104 00:06:12,680 --> 00:06:14,680 Speaker 1: can take you through these the same At the same time, 105 00:06:14,760 --> 00:06:18,680 Speaker 1: volatility again decoupled from metrics like some of the policy 106 00:06:18,720 --> 00:06:22,240 Speaker 1: uncertainty in disease that are out there um and carried 107 00:06:22,240 --> 00:06:24,040 Speaker 1: on getting lower instead. And so we we had to 108 00:06:24,080 --> 00:06:26,520 Speaker 1: embark on this long hunt for what was driving everything, 109 00:06:26,839 --> 00:06:29,080 Speaker 1: and all lines of inquiry led back to just one place, 110 00:06:29,080 --> 00:06:31,880 Speaker 1: and that's the central banks. Wait, so walk us through 111 00:06:31,920 --> 00:06:35,560 Speaker 1: the specific sort of I guess indicators that you're talking 112 00:06:35,600 --> 00:06:37,880 Speaker 1: about here, What is it exactly that you're looking at 113 00:06:38,000 --> 00:06:41,640 Speaker 1: in terms of something that would give you knowledge of 114 00:06:41,720 --> 00:06:47,520 Speaker 1: valuations or potentially portender correction. So it's basically this is 115 00:06:47,520 --> 00:06:49,000 Speaker 1: really hard to do on a radio show. You know, 116 00:06:49,800 --> 00:06:54,400 Speaker 1: the relationships that we had tracked four years or decades 117 00:06:54,440 --> 00:06:57,560 Speaker 1: which broke down. So, for example, I mentioned the VIX 118 00:06:57,600 --> 00:07:01,040 Speaker 1: against policy uncertainty correlates beautifully until two thousand and two 119 00:07:01,040 --> 00:07:02,760 Speaker 1: thousand and twelve, and then the VIX goes lower and 120 00:07:02,839 --> 00:07:06,320 Speaker 1: uncertainty goes up. Credit spreads against corporate leverage. It used 121 00:07:06,360 --> 00:07:08,159 Speaker 1: to be that when companies have lots of debt, spreads 122 00:07:08,160 --> 00:07:10,200 Speaker 1: were wide and companies had not much debt spreads were 123 00:07:10,200 --> 00:07:13,480 Speaker 1: tight Again works quite nicely over cycles, and then round 124 00:07:13,480 --> 00:07:16,760 Speaker 1: about two thousand and eleven two thousand and twelve, corporates 125 00:07:16,760 --> 00:07:20,560 Speaker 1: globally but especially US corporate started leveraging up, but credit spreads, 126 00:07:20,680 --> 00:07:24,400 Speaker 1: rather than widening out with them, just decoupled and tightened 127 00:07:24,400 --> 00:07:28,200 Speaker 1: in or, to take another one, credit spreads against inflation expectations. 128 00:07:28,200 --> 00:07:31,560 Speaker 1: It used to be when there's a slightly higher inflation expectations, 129 00:07:31,560 --> 00:07:34,440 Speaker 1: it was taken as a sign of kind of cyclical growth. Uh. 130 00:07:34,480 --> 00:07:37,520 Speaker 1: And again that relationship has has sort of continued to track, 131 00:07:37,560 --> 00:07:39,520 Speaker 1: but there's a break in the series in two thousand 132 00:07:39,560 --> 00:07:42,800 Speaker 1: and eleven, two thousand and twelve. Or in equities, my 133 00:07:42,840 --> 00:07:46,480 Speaker 1: favorite relationship was always earnings revisions, so the change in 134 00:07:46,520 --> 00:07:50,040 Speaker 1: consensus earnings expectations, and again in every market we look 135 00:07:50,040 --> 00:07:53,360 Speaker 1: at across multiple cycles, consensus goes up, the market ally's 136 00:07:53,400 --> 00:07:56,640 Speaker 1: consensus goes down, market sells off, and around about two 137 00:07:56,680 --> 00:08:00,280 Speaker 1: thousand eleven two tho twelve, earnings expectations were revised duly 138 00:08:00,320 --> 00:08:03,080 Speaker 1: lower by analysts across the street for basically the next 139 00:08:03,120 --> 00:08:06,360 Speaker 1: five years, and instead of selling off, markets rallied, so 140 00:08:06,520 --> 00:08:08,760 Speaker 1: all of these breakdowns and all of them more or 141 00:08:08,840 --> 00:08:12,400 Speaker 1: less at the same time. So isn't the counter argument 142 00:08:12,640 --> 00:08:16,800 Speaker 1: to that just low interest rates? So, for instance, when 143 00:08:16,800 --> 00:08:21,160 Speaker 1: you have increasing corporate leverage but credit spreads that are 144 00:08:21,160 --> 00:08:25,120 Speaker 1: still tightening. The thing I always hear from analysts, from 145 00:08:25,160 --> 00:08:27,960 Speaker 1: bullish analysts as well, you know, they can be more 146 00:08:28,000 --> 00:08:31,480 Speaker 1: indebted because ultimately the debt burden will be less in 147 00:08:31,520 --> 00:08:36,040 Speaker 1: an era of low rates. So that's a good argument, 148 00:08:36,080 --> 00:08:38,080 Speaker 1: but I think it only gets us so far. So 149 00:08:38,120 --> 00:08:42,200 Speaker 1: specifically on corporates, Yes, there is an argument that maybe 150 00:08:42,200 --> 00:08:44,920 Speaker 1: we should be looking at interest coverage rather than net 151 00:08:44,920 --> 00:08:47,800 Speaker 1: debt to EBITDA. Let's say, even though it was actually 152 00:08:47,880 --> 00:08:51,520 Speaker 1: net debt to EBITDA that always correlated well historically, and yes, 153 00:08:51,600 --> 00:08:55,839 Speaker 1: interest coverage, So firstly, yeah, the better historical correlation is 154 00:08:55,880 --> 00:08:59,000 Speaker 1: with leverage. But secondly, interest coverage, although it did improve 155 00:08:59,040 --> 00:09:02,240 Speaker 1: steadily for several years as interest rates were falling, actually 156 00:09:02,320 --> 00:09:07,160 Speaker 1: that started deteriorating round about two thousand and fifteen. And 157 00:09:07,200 --> 00:09:11,400 Speaker 1: again credit spreads did do some widening then, but it's 158 00:09:11,440 --> 00:09:15,080 Speaker 1: not like that's an obviously better series that that that 159 00:09:15,200 --> 00:09:20,160 Speaker 1: helps explain everything. Or again, if we take volatility for example, 160 00:09:20,679 --> 00:09:23,880 Speaker 1: again it's not obvious why volatility in markets should be 161 00:09:23,920 --> 00:09:28,240 Speaker 1: lower just because interest rates are lower, or again, for me, 162 00:09:28,640 --> 00:09:31,080 Speaker 1: it almost fits with the anecdotal evidence as I go 163 00:09:31,240 --> 00:09:34,000 Speaker 1: round and I visit investors. I mean, the way I 164 00:09:34,000 --> 00:09:36,800 Speaker 1: put it is, frankly, it's been years since I went 165 00:09:36,880 --> 00:09:39,600 Speaker 1: to see any investor in any asset class who was 166 00:09:39,640 --> 00:09:42,560 Speaker 1: buying things because the analyst was telling the portfolio manager, Hey, 167 00:09:42,559 --> 00:09:44,200 Speaker 1: I've got this really cheap asset, we should go and 168 00:09:44,320 --> 00:09:47,079 Speaker 1: buy it. It's always the PM telling the analyst where 169 00:09:47,080 --> 00:09:49,680 Speaker 1: we've got to put the money somewhere, And so for 170 00:09:49,800 --> 00:09:52,160 Speaker 1: me or again, all of those things fit fit together. 171 00:09:52,480 --> 00:09:54,840 Speaker 1: In addition, if interest rates have so much to do 172 00:09:54,880 --> 00:09:56,840 Speaker 1: with it, you know, maybe you can make this argument, 173 00:09:56,880 --> 00:10:00,240 Speaker 1: but you know, why aren't pees on Japanese equity so 174 00:10:00,320 --> 00:10:02,360 Speaker 1: much higher than everywhere else in the world, If if 175 00:10:02,360 --> 00:10:04,800 Speaker 1: it's low interest rates that allows us to do a rerating, 176 00:10:05,360 --> 00:10:08,000 Speaker 1: or if Japan is a special case, and you could 177 00:10:08,000 --> 00:10:10,920 Speaker 1: make that argument, why areps in Switzerland much higher than 178 00:10:11,120 --> 00:10:14,080 Speaker 1: everywhere else and so, or why in periods when the 179 00:10:14,200 --> 00:10:15,920 Speaker 1: looks as though we might have broken out from this 180 00:10:16,000 --> 00:10:18,679 Speaker 1: low rate regime and yields have been backing up, has 181 00:10:18,679 --> 00:10:21,360 Speaker 1: that not been associated with a D rating, and so 182 00:10:21,679 --> 00:10:24,760 Speaker 1: again I think that is part of the explanation, but 183 00:10:25,000 --> 00:10:27,320 Speaker 1: relative to some of the other things we look at, 184 00:10:27,800 --> 00:10:31,959 Speaker 1: I find it an unsatisfying explanation. So is the simple 185 00:10:32,600 --> 00:10:40,160 Speaker 1: corollary of this just that valuations don't matter anymore? Well, certainly, 186 00:10:40,200 --> 00:10:42,600 Speaker 1: if you're a professional investor and you're a slave to 187 00:10:42,640 --> 00:10:45,720 Speaker 1: near term performance and you're worried that if you underperform 188 00:10:45,800 --> 00:10:47,720 Speaker 1: then the money will be taken away and given to 189 00:10:47,720 --> 00:10:49,560 Speaker 1: to an e t F, then that seems to be 190 00:10:49,559 --> 00:10:52,160 Speaker 1: the conclusion that people are drawing. And you can see 191 00:10:52,320 --> 00:10:56,080 Speaker 1: David Einhorn and an others you're making references to this, 192 00:10:57,000 --> 00:10:58,760 Speaker 1: and I guess this, for me is one of the 193 00:10:58,880 --> 00:11:03,000 Speaker 1: disturbing thing um from a market's perspective. It's to see 194 00:11:03,040 --> 00:11:06,600 Speaker 1: investors giving up, just capitulating and saying, I know it's expensive, 195 00:11:06,679 --> 00:11:09,120 Speaker 1: but it's all because of the the inflows or or 196 00:11:09,160 --> 00:11:11,920 Speaker 1: the foreign money coming in, or whatever the explanation is, 197 00:11:11,960 --> 00:11:14,400 Speaker 1: and then just capitulating and feeling like they have to 198 00:11:14,440 --> 00:11:17,679 Speaker 1: buy anyway. And I think what we know more broadly 199 00:11:17,840 --> 00:11:21,040 Speaker 1: is that that valuations do matter. They're indeed the most 200 00:11:21,080 --> 00:11:24,120 Speaker 1: important factor, but only over the long term, and it 201 00:11:24,200 --> 00:11:28,080 Speaker 1: often takes some sort of catalyst or or change in 202 00:11:28,160 --> 00:11:32,880 Speaker 1: the technical for investors to return to those valuations um 203 00:11:32,960 --> 00:11:37,160 Speaker 1: and again for me, it's it's this valuation is not mattering. 204 00:11:37,160 --> 00:11:49,680 Speaker 1: You always say that at your peril. So how do 205 00:11:49,720 --> 00:11:53,880 Speaker 1: you think the real economy factors into market behavior right now? 206 00:11:53,960 --> 00:11:57,240 Speaker 1: Because again it's getting late in the year, which means 207 00:11:57,280 --> 00:12:00,440 Speaker 1: we have all the cell side analysts now releasing their 208 00:12:00,440 --> 00:12:03,960 Speaker 1: two thousand eighteen outlooks, and one of the consensus themes 209 00:12:03,960 --> 00:12:07,520 Speaker 1: that is emerging is that we're unlikely to get a 210 00:12:07,559 --> 00:12:11,199 Speaker 1: big market correction unless we really see the economy take 211 00:12:11,200 --> 00:12:13,439 Speaker 1: a hit and we see a recession, and most people 212 00:12:13,960 --> 00:12:18,280 Speaker 1: think that's unlikely. So how are you viewing the actual 213 00:12:18,360 --> 00:12:22,280 Speaker 1: economy at the moment. So it's hard to argue against 214 00:12:22,320 --> 00:12:23,920 Speaker 1: all of the good data that's out there, the upward 215 00:12:23,920 --> 00:12:27,000 Speaker 1: divisions to people's growth expectations. Similarly on the earnings front, 216 00:12:27,240 --> 00:12:30,120 Speaker 1: and so I do sympathize when people say we don't 217 00:12:30,120 --> 00:12:33,559 Speaker 1: see fundamentally whether shop comes from. The natural thing is 218 00:12:33,600 --> 00:12:36,440 Speaker 1: to extrapolate the good performance that we've had this year. 219 00:12:37,400 --> 00:12:39,960 Speaker 1: At the same time, I think you have to think 220 00:12:40,000 --> 00:12:43,199 Speaker 1: back to that the indicators are always at their best, 221 00:12:43,400 --> 00:12:46,400 Speaker 1: just before you hit a down town, whether it's two 222 00:12:46,440 --> 00:12:50,640 Speaker 1: thousand and six sven or whether it and what's more, 223 00:12:50,640 --> 00:12:52,400 Speaker 1: and so that doesn't mean that just because things are good, 224 00:12:52,400 --> 00:12:54,400 Speaker 1: there's gonna be a sudden deterioration. But I think the 225 00:12:54,440 --> 00:12:56,880 Speaker 1: specific way I put it is, are we sure that 226 00:12:56,920 --> 00:12:59,400 Speaker 1: it's the economy which is driving the market rather than 227 00:12:59,400 --> 00:13:02,840 Speaker 1: the market which risks driving the economy. I mean, one 228 00:13:02,880 --> 00:13:05,599 Speaker 1: of the so that the obvious examples are think back to. 229 00:13:06,920 --> 00:13:09,320 Speaker 1: It's not that the economy tanks and drags down the 230 00:13:09,320 --> 00:13:12,280 Speaker 1: equity market. It's the market moving first, economy following later. 231 00:13:12,480 --> 00:13:14,120 Speaker 1: Same thing in No. Seven oh eight. It's not the 232 00:13:14,160 --> 00:13:16,360 Speaker 1: economy driving the real estate market. It's the real estate 233 00:13:16,400 --> 00:13:19,680 Speaker 1: market driving the economy. And even with the more recent 234 00:13:19,840 --> 00:13:23,679 Speaker 1: wobbles from European sovereign debt or emerging markets and oil 235 00:13:23,760 --> 00:13:28,120 Speaker 1: in again, one of the striking things is that market 236 00:13:28,200 --> 00:13:31,800 Speaker 1: movements which at least in theory should not have been destabilizing, 237 00:13:31,840 --> 00:13:34,960 Speaker 1: did turn out to be destabilizing. Now that still doesn't 238 00:13:34,960 --> 00:13:38,160 Speaker 1: necessarily pin down the exact timing of this, but I'm 239 00:13:38,280 --> 00:13:41,840 Speaker 1: much given again these expensive valuations across the board and 240 00:13:41,840 --> 00:13:44,840 Speaker 1: what we think are driving them, I'm much more cautious 241 00:13:44,840 --> 00:13:47,600 Speaker 1: than most people are from simply extrapolating this economic strength 242 00:13:47,640 --> 00:13:50,079 Speaker 1: and then and saying okay, and therefore we're bullish on 243 00:13:50,120 --> 00:13:52,680 Speaker 1: markets even if they look a bit expensive. I feel 244 00:13:52,720 --> 00:13:56,600 Speaker 1: like this is a really fundamental thing that we should 245 00:13:56,679 --> 00:13:59,800 Speaker 1: know at this point, like our markets following the economy, 246 00:13:59,880 --> 00:14:03,360 Speaker 1: or does the economy follow markets? Why? Why is there 247 00:14:03,400 --> 00:14:06,880 Speaker 1: even a question mark over that? It's always hard to disentangle, 248 00:14:06,920 --> 00:14:09,760 Speaker 1: and especially at the moment. I can see why people 249 00:14:09,800 --> 00:14:13,120 Speaker 1: will make a case for the fundamentals driving markets because 250 00:14:13,160 --> 00:14:15,080 Speaker 1: you can see all this good data across the board. 251 00:14:15,400 --> 00:14:18,120 Speaker 1: It's almost it's more in twenty eleven to sixteen, when 252 00:14:18,160 --> 00:14:21,240 Speaker 1: earnings growth was much weaker and when GDP growth was 253 00:14:21,320 --> 00:14:24,720 Speaker 1: much weaker and markets were rallying anyway, that some of 254 00:14:24,760 --> 00:14:28,000 Speaker 1: the other relationships that I look at do a better 255 00:14:28,080 --> 00:14:31,840 Speaker 1: job effectively or are more obviously the only driver. So 256 00:14:32,120 --> 00:14:37,000 Speaker 1: for me, the main reasons why again I'm so convinced 257 00:14:37,000 --> 00:14:41,080 Speaker 1: about central bank related distortions driving things is because it's 258 00:14:41,080 --> 00:14:43,720 Speaker 1: not that there's no improvement in the fundamentals, but when 259 00:14:43,760 --> 00:14:46,400 Speaker 1: we look at when we look at the patterns of 260 00:14:46,400 --> 00:14:49,000 Speaker 1: market movements, it's a bit less that we're following the 261 00:14:49,040 --> 00:14:51,920 Speaker 1: areas where earnings expectations are being revised upwards, and it's 262 00:14:51,960 --> 00:14:54,760 Speaker 1: a bit more like an indiscriminate rally and everything. And 263 00:14:54,800 --> 00:14:58,440 Speaker 1: what's more, when we do actually almost embarrassingly simple things 264 00:14:58,520 --> 00:15:01,000 Speaker 1: like just plotting what the global central banks are buying 265 00:15:01,040 --> 00:15:03,720 Speaker 1: each month and plotting that against the change in equity 266 00:15:03,720 --> 00:15:06,080 Speaker 1: prices or the change in credit spreads, we come out 267 00:15:06,120 --> 00:15:08,960 Speaker 1: with these really really good relationships without looking at any 268 00:15:08,960 --> 00:15:12,360 Speaker 1: fundamentals whatsoever. And so especially in the year like this, 269 00:15:12,480 --> 00:15:14,640 Speaker 1: it's hard to tell, but at a minimum, I think 270 00:15:15,080 --> 00:15:17,560 Speaker 1: this year, both the fundamentals and the central bank purchases 271 00:15:17,600 --> 00:15:20,720 Speaker 1: have been a big driver of markets. And next year 272 00:15:21,240 --> 00:15:24,320 Speaker 1: the central banks are significantly pulling back and the fundamentals 273 00:15:24,440 --> 00:15:27,280 Speaker 1: really have to stand on their own. Yeah, so I 274 00:15:27,320 --> 00:15:31,200 Speaker 1: wanted to press you on this point. Um. A lot 275 00:15:31,200 --> 00:15:34,160 Speaker 1: of people are talking about Janet Yellen's legacy now that 276 00:15:34,320 --> 00:15:36,640 Speaker 1: she's set to depart from the FED, and one thing 277 00:15:36,680 --> 00:15:39,320 Speaker 1: that keeps coming up as well, Actually, she's done a 278 00:15:39,320 --> 00:15:43,120 Speaker 1: pretty good job of beginning the navigation of the exit. 279 00:15:43,240 --> 00:15:46,400 Speaker 1: She's raised interest rates, and the Fed has embarked on 280 00:15:46,640 --> 00:15:50,480 Speaker 1: its tightening of its balance sheet or the reduction of 281 00:15:50,520 --> 00:15:55,000 Speaker 1: the balance sheet. Are you implying that this is nothing 282 00:15:55,080 --> 00:15:57,680 Speaker 1: and that the real test is going to be um 283 00:15:57,800 --> 00:16:00,560 Speaker 1: later on, maybe when we start to see places like 284 00:16:00,600 --> 00:16:02,640 Speaker 1: the e c B or the b o J actually 285 00:16:03,360 --> 00:16:08,280 Speaker 1: withdrawal liquidity. So firstly, full credit to her. It's not nothing. 286 00:16:08,400 --> 00:16:11,840 Speaker 1: She's already got significantly further than I previously thought would 287 00:16:11,840 --> 00:16:17,000 Speaker 1: be possible. But I think there is it's it's absolutely 288 00:16:17,000 --> 00:16:20,000 Speaker 1: it's maybe unsurprising that there still disagreement about how QUI 289 00:16:20,080 --> 00:16:24,520 Speaker 1: affects the economy. What's amazing to me is that after 290 00:16:25,720 --> 00:16:30,840 Speaker 1: eight years into the crisis, there's still so much disagreement 291 00:16:30,880 --> 00:16:34,560 Speaker 1: about how quee affects markets. And for me, a lot 292 00:16:34,560 --> 00:16:35,920 Speaker 1: of the reason the FED has been able to get 293 00:16:35,960 --> 00:16:38,600 Speaker 1: this far is because of the e c B and 294 00:16:38,640 --> 00:16:42,320 Speaker 1: the b o J having ramped up their purchases and 295 00:16:42,320 --> 00:16:44,760 Speaker 1: and so this is one of the sources of disagreement. 296 00:16:44,880 --> 00:16:47,320 Speaker 1: It's is are the effects local as the central banks 297 00:16:47,360 --> 00:16:49,280 Speaker 1: like to think, if only because it's convenient for them, 298 00:16:49,600 --> 00:16:52,400 Speaker 1: or are they global? Which is what all the correlations 299 00:16:52,400 --> 00:16:54,960 Speaker 1: in markets that we find point to. We get much 300 00:16:55,040 --> 00:16:57,400 Speaker 1: better explanations for US credit spreads or U S equities 301 00:16:57,400 --> 00:16:59,440 Speaker 1: if we look at global que and same thing when 302 00:16:59,480 --> 00:17:02,400 Speaker 1: we're looking at European credit spreads in European equities. It's 303 00:17:02,440 --> 00:17:05,439 Speaker 1: that global pattern that fits, and that in a in 304 00:17:05,440 --> 00:17:08,280 Speaker 1: a funny sense, is actually the smallest of disagreements. The 305 00:17:08,400 --> 00:17:11,520 Speaker 1: bigger disagreement is between whether there are a couple more. 306 00:17:11,520 --> 00:17:13,600 Speaker 1: But but is it flow or is it stock? The 307 00:17:13,760 --> 00:17:18,119 Speaker 1: central bank the central banks think that markets should not 308 00:17:18,160 --> 00:17:22,040 Speaker 1: be destabilized because their policies are still super accommodative, and 309 00:17:22,080 --> 00:17:24,919 Speaker 1: because in the Fed's case, it would argue the market 310 00:17:24,960 --> 00:17:28,960 Speaker 1: has discounted things ahead of time because markets are reasonably efficient, 311 00:17:28,960 --> 00:17:30,959 Speaker 1: and therefore they've told us about the balance sheet reduction, 312 00:17:31,000 --> 00:17:33,520 Speaker 1: and that's why it can run in the background as 313 00:17:33,600 --> 00:17:36,479 Speaker 1: just a little technical detail that nobody needs to to 314 00:17:36,480 --> 00:17:40,320 Speaker 1: worry about. Again, though, as we look at what has 315 00:17:40,400 --> 00:17:43,920 Speaker 1: correlated in the past, what we find is that actually 316 00:17:43,920 --> 00:17:46,399 Speaker 1: it's very clearly the flow that matters are not the stock, 317 00:17:46,920 --> 00:17:49,640 Speaker 1: and that even if the e c B is reducing 318 00:17:49,680 --> 00:17:53,040 Speaker 1: its purchases, into its mind, is still easing. Nevertheless, that 319 00:17:53,080 --> 00:17:55,440 Speaker 1: reduction in the flow, at least at a global level, 320 00:17:55,520 --> 00:17:59,160 Speaker 1: has historically been associated with periods of weakness in risk assets, 321 00:17:59,400 --> 00:18:01,560 Speaker 1: and so again for us, what significant is Bank of 322 00:18:01,640 --> 00:18:04,639 Speaker 1: Japan purchases have already harved with the shift away from 323 00:18:04,760 --> 00:18:07,680 Speaker 1: QUEI or pure que to yield targeting, and so you've 324 00:18:07,680 --> 00:18:09,399 Speaker 1: got the B O J kind of having moved, and 325 00:18:09,440 --> 00:18:11,119 Speaker 1: then you've got the E C B moving and the 326 00:18:11,160 --> 00:18:14,760 Speaker 1: FED moving all at the same time. And it's that combination, 327 00:18:15,119 --> 00:18:19,760 Speaker 1: which again we think is potentially destabilizing or at a 328 00:18:19,800 --> 00:18:22,280 Speaker 1: minimum makes it much harder than the FED would have 329 00:18:22,280 --> 00:18:25,880 Speaker 1: thought from just looking at history in the U S alone. Okay, 330 00:18:25,920 --> 00:18:29,200 Speaker 1: but here's my other question. If it is so easy 331 00:18:29,280 --> 00:18:31,639 Speaker 1: to show that it's all about the flow of that 332 00:18:31,760 --> 00:18:37,240 Speaker 1: liquidity rather than the absolute level, then why don't central 333 00:18:37,240 --> 00:18:41,120 Speaker 1: bankers realize that? Why are you the only one sort 334 00:18:41,160 --> 00:18:43,400 Speaker 1: of pounding the table on this, Because while you are 335 00:18:43,440 --> 00:18:48,040 Speaker 1: one of my favorite analysts, I'm sure people like Janet 336 00:18:48,080 --> 00:18:51,240 Speaker 1: Yellen or Mario Droggy have a whole team of smart 337 00:18:51,320 --> 00:18:54,440 Speaker 1: people who are examining exactly this kind of thing. Why 338 00:18:54,440 --> 00:18:56,880 Speaker 1: aren't they coming up with the same conclusions that you are. 339 00:18:58,200 --> 00:19:00,800 Speaker 1: So I don't think I'm the only Lots of people 340 00:19:00,800 --> 00:19:02,399 Speaker 1: in the market will tell you it's the flow, and 341 00:19:02,440 --> 00:19:04,040 Speaker 1: it's kind of obvious to them that it's the flow, 342 00:19:04,040 --> 00:19:08,080 Speaker 1: and it's obvious that it's dominating. But it's almost embarrassing 343 00:19:08,080 --> 00:19:09,359 Speaker 1: to say, because we do say the same thing to 344 00:19:09,400 --> 00:19:11,600 Speaker 1: the central banks, but to quote one of them that 345 00:19:11,640 --> 00:19:17,159 Speaker 1: I met recently, the somehow they look at the correlations, 346 00:19:17,240 --> 00:19:19,600 Speaker 1: but then they're dismissive of them. And the reason they're 347 00:19:19,600 --> 00:19:22,959 Speaker 1: dismissive is because it doesn't fit with theory. It's not 348 00:19:23,000 --> 00:19:25,600 Speaker 1: it doesn't fit their model of how the world is 349 00:19:25,600 --> 00:19:28,320 Speaker 1: supposed to work. And one of my colleagues cheekily said, 350 00:19:28,359 --> 00:19:30,119 Speaker 1: these are doubtless the same models that have have been protecting 351 00:19:30,160 --> 00:19:32,080 Speaker 1: inflation would pick up for several years now, and we're 352 00:19:32,119 --> 00:19:36,720 Speaker 1: predicting that wage goes would be much higher. That's really harsh, 353 00:19:37,160 --> 00:19:41,000 Speaker 1: but I think there is this. It's it's I've always 354 00:19:41,119 --> 00:19:44,280 Speaker 1: I'm a strategist, not an economist, and so I don't 355 00:19:44,400 --> 00:19:46,880 Speaker 1: start from the theory. I just start from what correlates 356 00:19:46,880 --> 00:19:49,600 Speaker 1: in the market, and then I see if there's a 357 00:19:49,600 --> 00:19:53,880 Speaker 1: plausible explanation. And when we get a these staggeringly good 358 00:19:53,880 --> 00:19:57,600 Speaker 1: correlations with the flow and be there's an associated plausible explanation, 359 00:19:57,680 --> 00:19:59,960 Speaker 1: which is look at the net supply number. Central bank 360 00:20:00,080 --> 00:20:02,639 Speaker 1: have basically bought all of the available net supply of 361 00:20:02,680 --> 00:20:07,920 Speaker 1: securities across global markets. In seventeen, which is a big 362 00:20:07,960 --> 00:20:10,280 Speaker 1: difference from say, two thousand and six, two thousand and seven, 363 00:20:10,480 --> 00:20:12,879 Speaker 1: and that creates an imbalance where people are still saving, 364 00:20:12,920 --> 00:20:14,840 Speaker 1: there's still demand, but there's no supply, and so what 365 00:20:14,880 --> 00:20:17,159 Speaker 1: do you get, But you get markets where prices go up. 366 00:20:17,200 --> 00:20:19,359 Speaker 1: And that's exactly what we've had in every asset class 367 00:20:19,359 --> 00:20:21,480 Speaker 1: on any given week. Unless there's something to panic about, 368 00:20:21,680 --> 00:20:24,000 Speaker 1: the price has been going up. Next year that doesn't 369 00:20:24,000 --> 00:20:29,159 Speaker 1: fall apart entirely the the as the ECB and the 370 00:20:29,480 --> 00:20:31,440 Speaker 1: and the and the FED pool back, there's about a 371 00:20:31,480 --> 00:20:34,240 Speaker 1: trillion dollars more of global net supply, and we think 372 00:20:34,280 --> 00:20:37,000 Speaker 1: that will make for more balanced markets. So in one sense, 373 00:20:37,200 --> 00:20:39,520 Speaker 1: they should be looking more closely, and it's it's their 374 00:20:39,520 --> 00:20:42,040 Speaker 1: own effect, it's the portfolio balance effect, and it's just 375 00:20:42,080 --> 00:20:46,600 Speaker 1: worked way more strongly than than they imagined. But in 376 00:20:46,640 --> 00:20:49,639 Speaker 1: another sense, yes, I think they're almost completely blind to 377 00:20:49,720 --> 00:20:53,399 Speaker 1: it because it's just convenient for them to continue to 378 00:20:53,400 --> 00:20:55,439 Speaker 1: toe out the same theory and and it's just in 379 00:20:55,480 --> 00:20:57,199 Speaker 1: the same way as they think that the super low 380 00:20:57,280 --> 00:20:59,800 Speaker 1: level of rates should have been really really similated for 381 00:20:59,840 --> 00:21:02,600 Speaker 1: a time now, and then every so often they're confronted 382 00:21:02,600 --> 00:21:05,919 Speaker 1: by how markets actually behave, and and they're disappointed that 383 00:21:06,280 --> 00:21:10,600 Speaker 1: relatively minor changes on their part produce outsize movements in markets. 384 00:21:10,640 --> 00:21:13,840 Speaker 1: And I think there's at a minimum significant risk that 385 00:21:13,840 --> 00:21:16,840 Speaker 1: that is what we get again, and the outlook is 386 00:21:16,840 --> 00:21:20,080 Speaker 1: not nearly so straightforward as as they would like to think. Okay, 387 00:21:20,119 --> 00:21:22,600 Speaker 1: on the outlook point, we did see a sell off 388 00:21:22,640 --> 00:21:26,640 Speaker 1: in markets this month in November. It got a lot 389 00:21:26,680 --> 00:21:28,520 Speaker 1: of attention, but in the end, I think it only 390 00:21:28,640 --> 00:21:31,960 Speaker 1: ended up being like one five percent or something like that, 391 00:21:32,040 --> 00:21:35,320 Speaker 1: which historically, you know, before the crisis, would have been 392 00:21:35,320 --> 00:21:38,440 Speaker 1: relatively muted. Are we just going to have to get 393 00:21:38,560 --> 00:21:42,959 Speaker 1: used to the return of volatility and the idea that 394 00:21:43,040 --> 00:21:45,720 Speaker 1: asset prices can go down as well as up. Is 395 00:21:45,760 --> 00:21:49,760 Speaker 1: that in our near future? I certainly hope so, because 396 00:21:49,800 --> 00:21:52,200 Speaker 1: I think a more balanced market is a much more 397 00:21:53,200 --> 00:21:56,479 Speaker 1: resilient market. And I do worry that what's happened at 398 00:21:56,480 --> 00:22:00,679 Speaker 1: the moment is that we the central banks have effectively 399 00:22:00,680 --> 00:22:03,960 Speaker 1: created one way markets that grind higher with very low 400 00:22:04,040 --> 00:22:06,840 Speaker 1: volatility and then are at risk of of large amounts 401 00:22:06,840 --> 00:22:08,399 Speaker 1: of volatility. I mean, one of the other topics I've 402 00:22:08,440 --> 00:22:10,320 Speaker 1: done work on over the years is liquidity, and we've 403 00:22:10,640 --> 00:22:13,639 Speaker 1: always said, and it's actually Kevin Walsh's definition, but a 404 00:22:14,160 --> 00:22:18,199 Speaker 1: liquid market is one with a myriad set of participants 405 00:22:18,200 --> 00:22:20,760 Speaker 1: looking at different factors, having different views, you know, the 406 00:22:20,800 --> 00:22:24,480 Speaker 1: bottom up analysts, the top down portfolio manager, the long term, 407 00:22:24,520 --> 00:22:27,200 Speaker 1: the short term, the value oriented, the momentum or entered, 408 00:22:27,200 --> 00:22:29,679 Speaker 1: and so on. And unfortunately, if you were a bottom 409 00:22:29,760 --> 00:22:33,760 Speaker 1: up fundamental value oriented analyst or manager, you went out 410 00:22:33,760 --> 00:22:35,760 Speaker 1: of business a long time ago as everything got expensive 411 00:22:35,800 --> 00:22:38,080 Speaker 1: and carried on getting more expensive. And so what we 412 00:22:38,200 --> 00:22:41,879 Speaker 1: think has happened today is investors, through a mixture of 413 00:22:42,040 --> 00:22:44,840 Speaker 1: regulation and above all the central bank distortions, have been 414 00:22:44,880 --> 00:22:47,720 Speaker 1: forced into the same sets of trades, forced into buying 415 00:22:47,800 --> 00:22:50,680 Speaker 1: risky assets which they don't really believe the valuations of, 416 00:22:51,240 --> 00:22:53,480 Speaker 1: with a close eye on the global central bags and 417 00:22:53,560 --> 00:22:56,560 Speaker 1: on the other investors in case, actually it's time to 418 00:22:56,640 --> 00:22:58,679 Speaker 1: run for the exits. And and that gives us this. 419 00:22:59,200 --> 00:23:02,959 Speaker 1: It's not just that volatility is low, it's that volatility 420 00:23:02,960 --> 00:23:06,920 Speaker 1: has bifurcated. You get extended periods of very very low volatility. 421 00:23:06,960 --> 00:23:10,560 Speaker 1: But when everyone is the same way around, you're vulnerable 422 00:23:10,600 --> 00:23:12,320 Speaker 1: to a you know, are much more aggressive pull back. 423 00:23:12,320 --> 00:23:14,240 Speaker 1: You don't get one of two standard deviation movements, it 424 00:23:14,280 --> 00:23:17,120 Speaker 1: is either zero or sixteen. Now, on the one hand, 425 00:23:17,160 --> 00:23:19,520 Speaker 1: I am impressed that the little wobble that we had 426 00:23:19,560 --> 00:23:22,320 Speaker 1: last week does look to have stabilized. But on the 427 00:23:22,359 --> 00:23:25,160 Speaker 1: other hand, yes, I do think that the major factor 428 00:23:25,240 --> 00:23:28,320 Speaker 1: driving this has been central bank squashing all of this volatility, 429 00:23:28,480 --> 00:23:33,160 Speaker 1: and that as they pull back, hopefully smoothly, we get 430 00:23:33,359 --> 00:23:36,119 Speaker 1: much more two way markets with yes, significantly higher degrees 431 00:23:36,119 --> 00:23:38,600 Speaker 1: of volatility or day to day volatility than we've been 432 00:23:38,640 --> 00:23:40,879 Speaker 1: having at the moment. And you can see that investors. 433 00:23:40,880 --> 00:23:42,480 Speaker 1: And one of the other reasons why it's not just 434 00:23:42,560 --> 00:23:46,480 Speaker 1: fundamentals is it's while day to day volatility is low, 435 00:23:46,880 --> 00:23:48,760 Speaker 1: skew or or the price of out of the money 436 00:23:48,800 --> 00:23:51,760 Speaker 1: options is actually very high relative to at the money options. 437 00:23:51,720 --> 00:23:53,520 Speaker 1: In fact, it's at all time highs. And so again, 438 00:23:53,560 --> 00:23:56,080 Speaker 1: if it were just a question of fundamental improvement, you 439 00:23:56,119 --> 00:23:58,000 Speaker 1: could you have thought that the skew would have collapsed 440 00:23:58,000 --> 00:24:00,359 Speaker 1: as well, and it simply hasn't. And that against suggest 441 00:24:00,359 --> 00:24:02,880 Speaker 1: to me that the risk of being suppressed rather than 442 00:24:02,920 --> 00:24:05,679 Speaker 1: not being there at all. All Right, we actually managed 443 00:24:05,720 --> 00:24:09,720 Speaker 1: to completely square the circle of our conversation because, of course, 444 00:24:10,240 --> 00:24:13,119 Speaker 1: one of the reasons that liquidity is said to have 445 00:24:13,280 --> 00:24:16,760 Speaker 1: deteriorated in the market is regulation. As you pointed out 446 00:24:16,760 --> 00:24:20,280 Speaker 1: in that regulation came about because we had a bunch 447 00:24:20,359 --> 00:24:24,080 Speaker 1: of banks that sort of teetered near the brink in 448 00:24:24,119 --> 00:24:26,800 Speaker 1: two thousand eight, and of course Lehman Brothers did go 449 00:24:27,000 --> 00:24:30,640 Speaker 1: over the edge, as you rightly predicted in your notes. 450 00:24:30,720 --> 00:24:33,840 Speaker 1: So well done to us for for coming full circle. 451 00:24:33,880 --> 00:24:37,560 Speaker 1: I'm kind of impressed. Matt King, Global head of Credit 452 00:24:37,640 --> 00:24:41,760 Speaker 1: Strategy at City, thank you so much for joining. It's 453 00:24:41,800 --> 00:24:53,879 Speaker 1: been a pleasure. I always feel like we go to 454 00:24:54,200 --> 00:24:58,520 Speaker 1: a more pessimistic place when Joe isn't around, so I'm 455 00:24:58,560 --> 00:25:01,640 Speaker 1: looking forward to having him back next week. But that 456 00:25:01,800 --> 00:25:05,320 Speaker 1: is it for this solo hosted edition of the Odd 457 00:25:05,359 --> 00:25:09,480 Speaker 1: Thoughts podcast. You can follow me on Twitter at Tracy Allaway. 458 00:25:09,880 --> 00:25:12,360 Speaker 1: Matt King is not on Twitter, but if you want 459 00:25:12,400 --> 00:25:14,159 Speaker 1: to take a look at some of his notes, just 460 00:25:14,320 --> 00:25:17,320 Speaker 1: google his name again. That two eight note we were 461 00:25:17,320 --> 00:25:21,359 Speaker 1: talking about is called argue Broker's Broken. And finally, you 462 00:25:21,400 --> 00:25:26,119 Speaker 1: can follow our producer, Sarah Patterson at Sarah pat with 463 00:25:26,280 --> 00:25:27,920 Speaker 1: two t s. Thanks for listening.