Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.
Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg.
Speaker 1: I'm Katie Greifeld. I'm a cross asset reporter at Bloomberg,
Speaker 1: and I'm filling in for Bil Donna Hi Rate and
Speaker 1: this week on the show, Well, there's a big disconnect
Speaker 1: going on right now. The job market is red hot,
Speaker 1: economic growth is strong, and the worst of the pandemic
Speaker 1: seems to be behind us. So why is one popular
Speaker 1: measure of consumer sentiment at the lowest in more than
Speaker 1: a decade. And what does it all mean for markets.
Speaker 1: We'll get into it with an expert on confidence and
Speaker 1: the role that confidence plays in decision making. But first, Katie,
Speaker 1: excited to have you back on the show. Here for
Speaker 1: all the vill Donna fans out there. She's fine, She's
Speaker 1: just vacationing in Portugal. So I'm a little jealous, I
Speaker 1: gotta say, And you know she's I was gonna say.
Speaker 1: She is so funny because two or three weeks ago
Speaker 1: she was like complaining about this trip. She was like,
Speaker 1: I don't even want to go on it. I don't
Speaker 1: know if we should. I was like, what are you
Speaker 1: talking about I picture her in Lisbon like reading all
Speaker 1: the analysts notes on her phone and missing all the sites.
Speaker 1: And she was also like, you know. I started salivating
Speaker 1: when she told me she was going to Portugal there
Speaker 1: because I thought back, I had a trip there a
Speaker 1: couple of years ago, and I must be gained ten
Speaker 1: pounds and I was I was like, filt I had
Speaker 1: theres o. The seafood is incredible. I had this incredible
Speaker 1: steak at this one place. And she's like, yeah, I
Speaker 1: don't eat fish, were meat of any kind And I
Speaker 1: was like, well, they have olives. I think maybe you
Speaker 1: could have some olives. I don't know. You know, she
Speaker 1: loves cauliflower. I rest assured that she probably found some
Speaker 1: delicious cauliflower in Portugal. We can only hope, but in
Speaker 1: any case, I look forward to the day when I
Speaker 1: left the country. Haven't been I haven't been outside the
Speaker 1: borders in a while. It we should probably get to
Speaker 1: the guest and yeah, yeah, why do you bring him in?
Speaker 1: I'm very excited about our guests too, and not only
Speaker 1: because he's a blue hen like me, a professor at
Speaker 1: the University of Delaware and Don William and marry another
Speaker 1: fine school, but also because I feel like he covers
Speaker 1: some angles that we don't get into a lot on
Speaker 1: this show, and that's sort of behavioral finance and psychology
Speaker 1: and that sort of thing. And he's I'm also excited.
Speaker 1: He's from my neck of the woods, down in Chester County, Pennsylvania,
Speaker 1: a beautiful corner of the world. So what do you
Speaker 1: bring him in here? Katie? All right, Well, if you
Speaker 1: were wondering what this man's name is, it is Peter Atwater.
Speaker 1: He is the president of Financial Insights, LLC. He's also
Speaker 1: a finest professor at William and Mary and the University
Speaker 1: of Delaware. I know I get the blue hen reference.
Speaker 1: It was a little lost on me, but here we are.
Speaker 1: But in any case, Peter, welcome to the show. It's
Speaker 1: great to have you with us. Thanks, Katie and Mike.
Speaker 1: Glad to be here. Peter. I wanted to start I
Speaker 1: just sort of if you could give us an idea
Speaker 1: of your approach. Like I said, you know, you sort
Speaker 1: of look a lot at more of the behavior real
Speaker 1: type of finance, and I think it's a really important
Speaker 1: time to talk about that, given this last few years
Speaker 1: have just spent unlike anything we've ever seen before. I
Speaker 1: think as far as um investors, psychology, and then the
Speaker 1: whole meme stock Craze walk Us. There's kind of your
Speaker 1: approach to to how you think about these things. Sure,
Speaker 1: so I I look at things in terms of confidence,
Speaker 1: And when I think of confidence, I don't mean the
Speaker 1: theater of confidence, the self confidence that so often gets discussed.
Speaker 1: I'm I'm really talking about the feelings of certainty and
Speaker 1: control that we have in our lives, because those are
Speaker 1: the real factors and the choices we make. When we're confident,
Speaker 1: we think we know what's coming, and even more so,
Speaker 1: we think that we're capable of handling whatever that is.
Speaker 1: And we don't talk about it this way, but the
Speaker 1: the opposite of confidence is vulnerability, when we feel like
Speaker 1: things are uncertain and we feel powerless, sort of like
Speaker 1: we felt and have been feeling a lot for the
Speaker 1: last two years. And so those feelings of vulnerability play
Speaker 1: into a lot of the choices that we make. And so, Peter,
Speaker 1: I mean, it's it's interesting to hear you, you know,
Speaker 1: talk so much about confidence because I mean, just recently
Speaker 1: we got consumer sentiment data that it was just terrible.
Speaker 1: I mean, if you look at the consumer. They're still
Speaker 1: spending a lot of money, but it looks like they're
Speaker 1: miserable about it. And I'm curious how you take inputs
Speaker 1: such as that, how you think about that in relation
Speaker 1: to confidence and how that feeds into markets. Yeah, so
Speaker 1: I think in a couple of ways. One, I think
Speaker 1: we need to recognize that there is no single level
Speaker 1: of confidence, particularly today, and you know, as the person
Speaker 1: who coined the term the case shaped recovery, to me,
Speaker 1: there there are two extremes to confidence. Those that are
Speaker 1: closest to the financial markets have one level that is
Speaker 1: distinct from those particularly individuals who have worked throughout the
Speaker 1: pandemic out in the real world. And so I think
Speaker 1: what you're seeing is a lot of vulnerability being expressed
Speaker 1: in the consumer sentiment numbers, and and vulnerability from any
Speaker 1: number of factors. It could be economic. It could be
Speaker 1: the fact that they're paying more at the pipe at
Speaker 1: the pump, inflation food prices. But what is also interesting
Speaker 1: is where we see in a lot of these sentiment
Speaker 1: figures the impact of political vulnerability. And so when you
Speaker 1: know after the election, you could see where Republican economic
Speaker 1: confidence fell dramatically while Democrats confidence improved. So I think
Speaker 1: we need to recognize that these measures are picking up
Speaker 1: much more than just how we feel about the economy.
Speaker 1: It's it's really how how vulnerable or confident we feel?
Speaker 1: More broadly, And can we just talk about how good
Speaker 1: of a call that was the case shaped recovery? Could
Speaker 1: you explain just a little bit about that? As I remember,
Speaker 1: it's that, you know, the upper tiers, the upper income
Speaker 1: thresholds of society would recover from the pandemic more quickly.
Speaker 1: Where is the lower income sectors of you know, society?
Speaker 1: They would have a harder time doing that. I bet Peter,
Speaker 1: I bet you wish you could have trademarked to that
Speaker 1: and gotten some royalties on that, because it was everywhere
Speaker 1: there for a while. Yeah, And and to be honest
Speaker 1: with you, it had nothing to do with economic factors.
Speaker 1: To me, those were going to follow. But I could
Speaker 1: immediately see in March when those who worked in the
Speaker 1: service economy quickly pivoted to working from home, and the
Speaker 1: boost and confidence that that gave people relative to the
Speaker 1: doctors and the nurses and the folks who were taking
Speaker 1: care of the supermarket that didn't have that as a choice.
Speaker 1: And so you could see this real stark bifurcation and
Speaker 1: confidence that I felt that ultimately would play through into
Speaker 1: the economy, which is sort of what's happened. Where do
Speaker 1: you suppose we are now in that recovery? I mean,
Speaker 1: have had the has the upstroke and the downstroke of
Speaker 1: that k gotten close together, they're getting further apart. Do
Speaker 1: you think, what what's sort of the status of it?
Speaker 1: So I actually took the view that the real popularity
Speaker 1: of that term marked the extreme of it um. You know,
Speaker 1: as somebody who watches narratives for a living, I've learned
Speaker 1: that that correlations break down the moment everybody's talking about them,
Speaker 1: and I felt that this was just another one. And
Speaker 1: and in many ways we're starting to see that. You're
Speaker 1: seeing those at the bottom becoming much more strident about
Speaker 1: you know, getting wage gains and pressing to unionize. You know,
Speaker 1: you're seeing a lot of activity where folks, you know,
Speaker 1: in the in the lower economics sphere, are are doing
Speaker 1: things to address the vulnerability that they're experiencing. And at
Speaker 1: the same time, you know, beginning a year ago, you
Speaker 1: could start to see sentiment decline within the financial markets themselves,
Speaker 1: and you know, so so I do think that that
Speaker 1: the two lines are beginning to to convert urge. The
Speaker 1: question in my mind is, ultimately, do those at the
Speaker 1: bottom are they lifted? You are more than those at
Speaker 1: the top begin to feel vulnerable. Let's talk a little
Speaker 1: bit more about the financial markets and drill in there.
Speaker 1: Because you sent us a ton of notes. They were
Speaker 1: extremely helpful, so thank you for that. And you send
Speaker 1: in one of your emails that you know you see
Speaker 1: a lady or the tiger potential to markets, and I
Speaker 1: would love to hear exactly what you mean by that.
Speaker 1: But the setup is this. We we've had a year
Speaker 1: in which the most abstract, wild and crazy stocks have
Speaker 1: really suffered, and at the same time we have sentiment,
Speaker 1: consumer sentiment that's really lousy. Consumer sentiment is so bad
Speaker 1: that you go back to October two thousand and eleven
Speaker 1: and and what do you see While you saw occupy
Speaker 1: wal Street, you saw riots in London. Um. So, so
Speaker 1: we know that when sentiment is this low, we behave
Speaker 1: badly as as people, and not surprising, you're seeing things
Speaker 1: like the trucker's strike up in Canada. So so we
Speaker 1: express our shared vulnerability in a in an active social way,
Speaker 1: and so part of me says, well, if this is
Speaker 1: like two thousand and eleven, this is a low, this
Speaker 1: is a meaningful load that we should bounce from. And
Speaker 1: that's the lady scenario that the powder puff, as I
Speaker 1: call it, where where you start people start to feel better,
Speaker 1: Inflation comes down, the bond market eases, equities rise, um,
Speaker 1: you could see popularity of Joe Biden begin to improve.
Speaker 1: Because presidents are only as good as we feel. So
Speaker 1: there are a lot of things that in this moment,
Speaker 1: I feel like they have the makings of a of
Speaker 1: a major sentiment up. That's challenged a little bit in
Speaker 1: terms of equity valuations. That valuations are nothing like they
Speaker 1: did in two thousand eleven, but but okay, I'll live
Speaker 1: with that. The downside is the more troubling one to me,
Speaker 1: which is to say, if this isn't a low and
Speaker 1: sentiment really deteriorates, well, then you're getting into Lehman Brothers
Speaker 1: like moments where trust broad trust issues become a disconcerting
Speaker 1: factor to people. And so I think we need to
Speaker 1: be cognizant of those two potential scenarios, not wishing for trouble,
Speaker 1: but I know that as somebody who's focuses on confidence.
Speaker 1: If confidence really drops further, we're gonna become much more
Speaker 1: aggressive about addressing the vulnerability we feel. And Katie, this
Speaker 1: isn't a political statement, but Joe Biden another Blue Hen,
Speaker 1: I don't know, if you know that a lot of
Speaker 1: us out there, well, it seems like a tough time
Speaker 1: for Blue Hens. Then I don't know, like administration is
Speaker 1: really worried about inflation. I mean kind of to that point.
Speaker 1: I mean to think about what could bring confidence lower.
Speaker 1: I mean, would it be inflation or what else do
Speaker 1: you have in mind? So it could be inflation. I
Speaker 1: tend to think that things like gas prices become a
Speaker 1: really important test to to consumer sentiment at this point,
Speaker 1: the same thing with food prices, the things that you
Speaker 1: you can't control the quantity that you buy. So I
Speaker 1: I I do think that some of the the the
Speaker 1: basics could be factors. But you know, don't forget we
Speaker 1: have in the backdrop to your political risk in Europe.
Speaker 1: I tend to look less at the specific triggers then
Speaker 1: our vulnerability to them, how we're how we would be
Speaker 1: likely to react. I mean put it this way. You know,
Speaker 1: if you had said to the crowd that Tom Hanks
Speaker 1: getting COVID would create a collapse and sentiment. We we'd
Speaker 1: all laugh. But that just happened to be the tipping
Speaker 1: point that coalesced the vulnerability that we were feeling. And
Speaker 1: so I think that's that's the kind of risk that
Speaker 1: we face here today. But to me, Peter, it sounds
Speaker 1: like your base case is more sort of the lady
Speaker 1: of in the analogy, that that we have kind of
Speaker 1: reached the bottom in in sentiment and it's bound to
Speaker 1: perk up, and that you know, a deterioration is more
Speaker 1: of a maybe not quite a te risk, but but
Speaker 1: not quite the base cases that that sound right well,
Speaker 1: I think broadly speaking, as I said, I think consumer
Speaker 1: sentiment is a low, but I think it's also important
Speaker 1: like to recognize how bifurcated that is, and so you
Speaker 1: could see those at the bottom begin to feel much
Speaker 1: better at the expense of those at the top. It
Speaker 1: would be reflect did in higher overall consumer sentiment just
Speaker 1: based on the numbers and how how extraordinarily concentrated wealth
Speaker 1: is today, but you could see where confidence would rise
Speaker 1: and in a situation where the markets are not happy
Speaker 1: about that because it means that the pendulum has swung
Speaker 1: from owners of capital two employees. And in this conversation,
Speaker 1: I'm curious where you see the fixed income markets factoring in,
Speaker 1: because if I look at the yield on a ten
Speaker 1: year treasury right now, I mean, give or take, it's
Speaker 1: around two per cent, which we haven't seen in a while.
Speaker 1: You haven't really seen that overall haven bid for treasuries
Speaker 1: that you know, one might expect to see listening to
Speaker 1: this conversation. Yeah, and I think that's what's so weird
Speaker 1: about the past year. Um. You know, one of the
Speaker 1: things that I noticed was at the same time, you
Speaker 1: had meme stocks soaring, but we had negative yielding sovereign
Speaker 1: debts it and so you would say that's not a
Speaker 1: combination that I think goes hand in hand. You know.
Speaker 1: Now those are those who would say, well, free money
Speaker 1: pumping the market, you know, But but let's get away
Speaker 1: from those issues. I think that the broader question is,
Speaker 1: you know, what does it mean if we've seen bond
Speaker 1: prices and stock prices peak simultaneously and and there I
Speaker 1: think that the nineteen seventies are an interesting parallel because
Speaker 1: you saw the end of a low interest rate environment
Speaker 1: simultaneous to a peaking in the in the equity market
Speaker 1: and the consequences of rising bond yields and and rising
Speaker 1: stock yields or stock prices or falling stock prices. One
Speaker 1: of the things that we also saw in that environment,
Speaker 1: we're concerns about systemic stability, trust in the system, you know,
Speaker 1: whether it's watergate, so were the changing the dramatic changing
Speaker 1: of the guard at the FED. You know that the
Speaker 1: question will be how to investors interpret what this rise
Speaker 1: in rates signifies. Right now, it's pretty clear we're associating
Speaker 1: with inflation, but it becomes a very different story if
Speaker 1: the signal means something different to the crowd. I'm glad
Speaker 1: you brought up meme stocks, Peter. I know you've you've
Speaker 1: thought about them a lot. That whole phenomenon we saw,
Speaker 1: and I think it's especially interesting from your perspective as
Speaker 1: a university professor. You know, I I just pictured all
Speaker 1: your students coming up to you like you know, shot
Speaker 1: by game stop or Shebau or what it seems to
Speaker 1: me almost like nothing we've ever seen before, that that mania.
Speaker 1: What was it like as a professor? I mean, is
Speaker 1: it was everyone trading on Robin Hood in the middle
Speaker 1: of class, and what's kind of the climate there now?
Speaker 1: Is it all worn off as the fever broke. It
Speaker 1: seems like it has based on the prices. But yeah,
Speaker 1: they were trading in class and they were trading, you know,
Speaker 1: initially the stocks, and they were moving into options. You know,
Speaker 1: my my head just about exploded when students came up
Speaker 1: to me and said, professor, I'm not making enough in
Speaker 1: call options. What do you think about futures? And it's like, okay,
Speaker 1: I think we're It's it's pretty clear that everybody is in.
Speaker 1: Who's who's going to get in? And they were They
Speaker 1: were unconvincible that they were wrong, which is another behavioral
Speaker 1: trait that I that I always look for, is the
Speaker 1: inability to consider the other side. No sentiment is clearly changed,
Speaker 1: you know. I think there is still a sub segment
Speaker 1: of the population that is fixated on the movement in
Speaker 1: cryptocurrencies and n f t s, But the mania stage
Speaker 1: is gone. And I think the moment Elon Musk get
Speaker 1: walked onto the stage of Saturday Night Live, we sort
Speaker 1: of saw the simultaneous peaking and culture and finance that
Speaker 1: that marked the top. That was definitely the top of
Speaker 1: so many things in our society, so many things that
Speaker 1: we don't even know yet. But I'm curious to hear
Speaker 1: a little bit more about your perspective as a professor,
Speaker 1: because something I wonder about, and I've talked about a
Speaker 1: little bit with various people, is that, you know, on
Speaker 1: the on the the tail end of this roller coaster
Speaker 1: of me Mania, coming down from those highs, you know,
Speaker 1: a lot of people probably lost a lot of money,
Speaker 1: probably a lot of people who were completely new to
Speaker 1: markets and new to investing. And I mean the hope
Speaker 1: is that, you know, perhaps I mean the optimistic view
Speaker 1: is that perhaps they got involved in investing in trading
Speaker 1: with me Mania, and they graduated onto maybe some more
Speaker 1: types of wealth building. You know, maybe hopefully they bought
Speaker 1: some index funds and put some cash there. But then
Speaker 1: the more pessimistic view was, you know, perhaps a lot
Speaker 1: of these people were burned and they've become a little
Speaker 1: bit disenchanted with the stock market, with investing. I would
Speaker 1: love to hear your perspective on that, especially someone who
Speaker 1: you know, probably talks to a lot of people who
Speaker 1: did get involved during one. Yeah, I think that the
Speaker 1: novice and naive are always the last of the party,
Speaker 1: and it's a it's a trend that I it's a
Speaker 1: pattern I look for, um just in terms of broad
Speaker 1: measures of sentiment. I worry about the migration that we've seen,
Speaker 1: particularly among young people, is out of the stock market
Speaker 1: and into online gambling. That the gamification that we saw
Speaker 1: taking place in in online stock trading platforms has moved
Speaker 1: to an environment that's even more familiar to young people,
Speaker 1: more resonant with young people. And you know, you just
Speaker 1: cannot talk to population of young people, particularly young men,
Speaker 1: without quickly getting swept up into what are you what
Speaker 1: are you betting on? You know this week? In whatever
Speaker 1: the gamer event is. Yeah, that's interesting. There is such
Speaker 1: an overlap, it seems like, you know, between the the
Speaker 1: risk taking in in the meme stocks and gambling. It's
Speaker 1: it's you can see people flipping between the same apps
Speaker 1: and every day. I would imagine and think back, I
Speaker 1: mean to the start of it and the whole the
Speaker 1: whole reason that we were given for why we saw
Speaker 1: such a flood into robin Hood and other apps is
Speaker 1: because there weren't any live sports that people are looking
Speaker 1: for an outlet. That's true. Yeah, I mean we we've
Speaker 1: sort of merged Wall Street, Las Vegas, the metaverse, and
Speaker 1: social media into this phenomenon of betting on everything, and
Speaker 1: and some of that I think you can attribute to
Speaker 1: sort of the pandemic nihilism that that we've seen elsewhere.
Speaker 1: But but it's to me, it's a really troubling intersection
Speaker 1: because of it what it all of the iconic figures
Speaker 1: that have now been swept up into it, from sports
Speaker 1: figures to Hollywood figures to political figures. We we've monetized
Speaker 1: celebrity is such an extreme that there's there's a lot
Speaker 1: more riding on this than just you know, housing prices.
Speaker 1: We're in two thousand and five. This is this is
Speaker 1: a big cultural phenomenon that transcends the markets and cuts
Speaker 1: across all of American in many ways. I don't think
Speaker 1: we yet understand, you know, Piterre, One thing I wanted
Speaker 1: to unpack a little bit you You had a great
Speaker 1: point in your email to us before the show about
Speaker 1: how you're watching gold and I just want to read
Speaker 1: a little bit of your email because I thought it
Speaker 1: was a good line. He said. Even with the recent
Speaker 1: rallying commodities, if you have found a reason to buy
Speaker 1: precious metals. It's the buick in a sea of e vs.
Speaker 1: Which I took my hat. That's a good line, But
Speaker 1: I wonder what's going on there. I mean, obviously crypto
Speaker 1: has been pitched as sort of digital gold. Um, it's
Speaker 1: debatable whether it plays the same sort of role as
Speaker 1: gold would in a portfolio, but I do think a
Speaker 1: lot of people are subscribing to that idea. Is that
Speaker 1: is that part of what's going on with gold, do
Speaker 1: you think? Or is it? Is it something else? Yeah,
Speaker 1: And just to be clear to listeners, I am not
Speaker 1: a goldbug. I am not a you know, I'm a
Speaker 1: pretty agnostic observer of things. And and what's been so
Speaker 1: startling to me is that you look at the commodity space,
Speaker 1: and you know, from from lumber to oil to iron
Speaker 1: arts and you you name it, those commodity prices have exploded.
Speaker 1: So this is this is a a product, an investment
Speaker 1: that has been left out of every every mania we've
Speaker 1: seen in the last three or four years. And and
Speaker 1: we can attribute it to its old. It's stodgy, it's
Speaker 1: the antithesis of cool. And until it reacts, people don't
Speaker 1: know what to make of it. And and It's been
Speaker 1: a fascinating thing to watch because we've had this enormous
Speaker 1: multi year coil in gold. You know, I don't know
Speaker 1: if it will resolve up or down, but what I've
Speaker 1: learned avior release coils are like an enormous tug of
Speaker 1: war where energy is expanded in vast amounts between the
Speaker 1: bulls and the bears until one side finally let slots.
Speaker 1: And so, as I said, I don't know which direction
Speaker 1: it's going to be, but gold is going to give
Speaker 1: us some science as to what is happening. As far
Speaker 1: as sentiment, Peter, I wanted to quickly also go back to,
Speaker 1: you know, a point you made that this could be
Speaker 1: like the nineteen seventies and we might see, you know,
Speaker 1: stock and bond prices peak at the same time. And
Speaker 1: I have to admit I wasn't close to alive in
Speaker 1: the nineteen seventies, so I'd love to hear you know,
Speaker 1: where was the hiding place? Then what was the haven asset? Then?
Speaker 1: So the haven asset was gold, behaving asset were real assets,
Speaker 1: and I think that's real assets. I think of as
Speaker 1: a as a counter point to all of the abstraction
Speaker 1: that we have. So eagerly embraced in this cycle. And
Speaker 1: and that abstraction is in many ways a mirror of
Speaker 1: the kinds of abstractions we saw in the in the
Speaker 1: nineteen sixties. You know, we've got space again, We've got
Speaker 1: you know, in this case, it's social media, not television,
Speaker 1: and and you know, the internet, not you know, telephone.
Speaker 1: But there's a clear series of behavioral parallels leading up
Speaker 1: to what's happening now that we saw in the nineteen sixties.
Speaker 1: And and you know, again not surprising to see the
Speaker 1: same kinds of social tensions political tensions playing out now
Speaker 1: because we're we're feeling the same way from a confidence perspective, right, Katie,
Speaker 1: I'm glad he brought up space. That's a good teaser
Speaker 1: for my craziest thing of the week. But we're not
Speaker 1: there yet, because I do want to I do want
Speaker 1: to rewind a little bit, Peter and ask you um
Speaker 1: to elaborate on a little something you just mentioned about
Speaker 1: sort of this uneasiness that especially the political nature of confidence.
Speaker 1: You know, you mentioned the Republican confidence sank, Democratic confidence
Speaker 1: uh went higher after the auction, and that's not you know,
Speaker 1: I I've looked at the University of Michigan Partisan Confidence Indexes.
Speaker 1: It's not any unusual thing for that to happen, but
Speaker 1: the extent that had happened, I think he's off the charts,
Speaker 1: like like nothing, nothing we've ever seen. And you know,
Speaker 1: all of a sudden, you see protesters from the right
Speaker 1: side of the aisle, you know, January six and the
Speaker 1: and the truckers protests in Canada. You know, something new
Speaker 1: that we You know, I've never remember anything like this
Speaker 1: in my lifetime, you know, I don't. I don't remember
Speaker 1: anyone hitting the streets after Bill Clinton was elected or
Speaker 1: anything like that. But I'm serious. What you think two things?
Speaker 1: What do you think's driving that? I mean, to me,
Speaker 1: as from my perspective in the media, it seems like
Speaker 1: this this really bifurcated media atmosphere we have with you know,
Speaker 1: right wing news and left wing news and really seems
Speaker 1: to be you know, getting further and further apart and suckily.
Speaker 1: I like, how does this resolve itself in markets? Is
Speaker 1: it is it at play as as a sort of
Speaker 1: driver of anything in markets, do you think? Or is
Speaker 1: it just a sideshow? So a couple of things, you know,
Speaker 1: the way I think of politics and confidence relates to
Speaker 1: a broader thought, which is, when I don't have confidence,
Speaker 1: the only thing I care about is me here now.
Speaker 1: You know, if I'm vulnerable, if I'm under attack, I
Speaker 1: don't care about you or anywhere else or any time
Speaker 1: in the future. On the other hand, when I'm really confident,
Speaker 1: it's about us. It's about you know, a broad you know,
Speaker 1: expansive world and will into the future. We can we
Speaker 1: can afford to be generous. And so what we've seen
Speaker 1: is an environment of extraordinary political generosity in the United States,
Speaker 1: in Europe, you know, the coming together of the Eurozone.
Speaker 1: You know, Bill Clinton being all but indistinguishable from Georgie W. Bush.
Speaker 1: I mean, we we had and an environment of us
Speaker 1: everywhere forever politics, and there's a great Time magazine cover,
Speaker 1: you know, from a couple of years ago, you know,
Speaker 1: the center of the place to be, which is hard
Speaker 1: to imagine today. And as confidence falls, we naturally come apart,
Speaker 1: We balkanize, We become about the people that are most
Speaker 1: familiar to me, that feel the same way that I do.
Speaker 1: You know, the the is m ng of of the population.
Speaker 1: And I think that's one of the things that confuses
Speaker 1: people is we want to be very clear that it's
Speaker 1: left versus right or up versus down, and and that's
Speaker 1: not how we skis them. It's never a clean break
Speaker 1: like that, and we it becomes more of my enemies
Speaker 1: my enemy sort of a mindset. And so if I
Speaker 1: think about politics in its current version, which you know
Speaker 1: we would think of as left versus right, a more
Speaker 1: capitalist versus a more socialists market environment, and I think
Speaker 1: that we could see things play out that way. I'm
Speaker 1: more interested not left and right, but how to up
Speaker 1: and down resolve because that's that, to me, is where
Speaker 1: the greatest differences in American culture today. You know, there's
Speaker 1: a lot that potentially could unify and coalesce those at
Speaker 1: the bottom, that that is underappreciated today, that that would
Speaker 1: make those at the top feel far more vulnerable. I
Speaker 1: tend to look at where do we see small groups
Speaker 1: coming together, because what's likely to happen is you'll see
Speaker 1: these big goliaths being upended by small, grassroots groups that resonate.
Speaker 1: We saw that eighteen months ago with the Black Lives
Speaker 1: Matter movement. You know, there was no centralized figger, but
Speaker 1: there was this spontaneous feeling of shared voicelessness and vulnerability
Speaker 1: that all of a sudden spread across city after city.
Speaker 1: And I mean, while we're on the subject of politics,
Speaker 1: I feel like we have to mention the fact that,
Speaker 1: you know, you do have mid term elections coming up somehow.
Speaker 1: You know, a lot of predictions are for a divided
Speaker 1: Congress coming out of those elections. What do you think
Speaker 1: that would do to you know, confidence and sentiment and
Speaker 1: the markets largely. So, I think election outcomes are a
Speaker 1: reflection of it rather than a contributor to it. So
Speaker 1: I what what we tend to find is that it's
Speaker 1: the mood going into the polls that matters, not the
Speaker 1: mood coming out of the polls. So I tend to
Speaker 1: think that a lot of what we think of as
Speaker 1: being causal conditions are really consequences of how we felt
Speaker 1: leading up to them. For example, you know, we think
Speaker 1: of nine eleven is causing American confidence to fall. Well,
Speaker 1: if you look at the confidence across the Middle East
Speaker 1: in that moment, it becomes pretty clear that that would
Speaker 1: be a contributor to terrorist attacks, you know, the the
Speaker 1: food inflation contributing to the the Arab spring. You know,
Speaker 1: a couple of years later, so I tend to look
Speaker 1: at a lot of social behavior as a consequence of
Speaker 1: the feelings that then just gets reported on a on
Speaker 1: a tally board. So if we see confidence rise between
Speaker 1: now and November, you should expect incumbents and those on
Speaker 1: the left doing better. If confidence were to fall, then
Speaker 1: that's an environment where we are where the view out,
Speaker 1: the incumbents, get rid of the people in office give
Speaker 1: we vote people out when confidence is low. We don't
Speaker 1: care who we vote in. It's it's the action of
Speaker 1: of destruction and elimination that that we become fixated on.
Speaker 1: That's that's when we I guess we should get ready
Speaker 1: for truckers to show up in the Holland Tunnel or something,
Speaker 1: or you know, in the beltway around d C. Yeah. That,
Speaker 1: and and social protest is a great indicator of where
Speaker 1: mood is going well, whether it's you know, the yellow
Speaker 1: vests in France or the Arab springer, the trucker striking
Speaker 1: in Canada today. Fascinating stuff, Peter. You know Katie as
Speaker 1: the father of our prospective college student. I gotta tell you,
Speaker 1: normally you have to spend a fortune for insights like
Speaker 1: this from a from a good professor like this, so
Speaker 1: we we we appreciate it. The twih and free uh
Speaker 1: download from Peter this week really interesting. Hopefully a lot
Speaker 1: of college students are listening to this podcast right now. Yeah,
Speaker 1: they got a free one. It tiden up your straight jackets.
Speaker 1: It's time for the craziest things we saw in markets
Speaker 1: this week. Before we let them go, we have to
Speaker 1: uh continue one with our tradition of the craziest things
Speaker 1: we saw this week. Katie. I always have high hopes
Speaker 1: for you. I know, you come with something good for
Speaker 1: the craziest thing you're You're grimacing there a little bit.
Speaker 1: You might be under prepared this week. I don't know.
Speaker 1: Bill Doota will let you know. We'll let you hear
Speaker 1: about it if you do not deliver. I know, I know, well,
Speaker 1: I I do feel like I'm flying a little bit
Speaker 1: by the seat of my pants when it comes to
Speaker 1: the crazy thing this market. But I'm gonna go straight
Speaker 1: to a story from Joe wisen Vall. The headline says
Speaker 1: it all. Hilton has now nearly outperformed Zoom Video since
Speaker 1: the pandemic hit. Both of those docks are up about
Speaker 1: a hundred and forty percent since the depths of March,
Speaker 1: which I just think is a really neat encapsulation of
Speaker 1: you know, you know, all of the steam that has
Speaker 1: come out of some of these pandemic favorites. I mean,
Speaker 1: you saw that with Shopify and Roadblocks earnings just this week.
Speaker 1: That signal anything to you, Peter? Are people gaining confidence
Speaker 1: that this pandemics the worst is behind us? Well? You know,
Speaker 1: I for a long time I've been using Carnival Cruise
Speaker 1: lines as my main street sentiment indicator, and you know
Speaker 1: that one still leaves me thinking that we're we're still unresolved,
Speaker 1: that that there is a there's a coil of of
Speaker 1: tension between you know, can we believe this to be true,
Speaker 1: that the worst is behind us? Or do we still
Speaker 1: feel like we have one foot on the banana? Yeah? Interesting?
Speaker 1: I mean that talk about ground zero of the COVID
Speaker 1: in the market. That's it. That's pretty good. Alright, good
Speaker 1: one to watch. Yeah, I forgot about them. How about you, Peter,
Speaker 1: you see anything crazy this week? I know that's a
Speaker 1: silly question. We probably should switch it. Have you seen
Speaker 1: seen anything rational this week? But what's what's the craziest
Speaker 1: thing you saw? So so, one of the things that's
Speaker 1: really caught my attention. And this is the former treasure
Speaker 1: in me who's always interested in in mismatches. Is the
Speaker 1: private equity fascination now with with overnight rental, you know,
Speaker 1: whether it's buying homes or vacation properties. And we've gone
Speaker 1: from you know, buying homes to buying homes for for
Speaker 1: long term rentals, to now short term rentals to now
Speaker 1: overnight and and I I struggle with that just because
Speaker 1: you know, the liquidity difference, the mismatch. If we see
Speaker 1: any sort of deflation, it just boggles my mind at
Speaker 1: our our willingness to ignore long term assets that we're
Speaker 1: pricing overnight. It's basically funding a bank with commercial paper
Speaker 1: in my books, which you just never do. I forgot
Speaker 1: about your bank your days. You were bank one, right,
Speaker 1: bank Lie and JP Morgan a long time before the
Speaker 1: roll up. Interesting, Well, that's a banker's instinct. Is probably
Speaker 1: a good way to a good thing to keep in
Speaker 1: mind whenever looking at the market. So that's uh, that's
Speaker 1: a smart way to do it. And I'm gonna give
Speaker 1: you my craziest thing, as I teased it, it is
Speaker 1: space related, Katie Um. And this is courtesy of stories
Speaker 1: both Bloomberg, Forbes, probably some others had it. But apparently
Speaker 1: among the cryptocurrency millionaires out there, another asset class has
Speaker 1: become very popular too. So you spend your crypto millions on,
Speaker 1: and that is meteorites. So Christie's recently had a meteorite
Speaker 1: auction several meteorites and meteorite related items, including and this
Speaker 1: is the craziest one, a doghouse that was hit by
Speaker 1: a meteorite and the meteorite went right through the roof
Speaker 1: of it almost killed the German shepherd named Rokey who's
Speaker 1: sleeping inside. Yeah, as regular listeners will know, it's time
Speaker 1: to play prices right on what Christie's expects. This meteorite
Speaker 1: hit doghouse well self ware at auction, and I will
Speaker 1: tell you it's nothing to brag about this doghouse. I
Speaker 1: saw a picture of it. It was basically made out
Speaker 1: of old shipping palettes and like corrugated sheet metal, but
Speaker 1: obviously pretty starry doghouse. I mean it survived a meteorite strike.
Speaker 1: Does it come with an n f T. It's not,
Speaker 1: it's it's how you hat an n f T. I'm
Speaker 1: sure we'll be soon. What do you think Christie's expected
Speaker 1: price sales price, and it's a range, so you can
Speaker 1: give me a range. I don't know if this helps,
Speaker 1: but the actual meteor right that went through the roof
Speaker 1: of it is only expected to go for sixty. But
Speaker 1: the doghouse is the real star of the auction. So
Speaker 1: I'm maybe given away too much information here, Katie. What's
Speaker 1: your bid on a doghouse with a hole in the
Speaker 1: roof from a meteorite? Keeping in mind that, uh, and
Speaker 1: I'll give you a great quote from the Ford story
Speaker 1: on it. A personal Christie said, last year a lot
Speaker 1: of people were cashing out crypto and going into meteorites.
Speaker 1: So it's a hot asset class right now among the
Speaker 1: laser rides set out there. Okay, so I mean I
Speaker 1: have to knock a couple hundred thousand off because it's
Speaker 1: it's a physical object and it's not in en f
Speaker 1: T that's true n f T four and would probably
Speaker 1: double or triple it for sure, Yeah, exactly, Okay, Okay,
Speaker 1: so it's the range. I'm gonna say eight hundred thousand
Speaker 1: to a million dollars, all right, I'm keeping my poker face. Peter,
Speaker 1: what's your what's your bid on this doghouse. Prices right,
Speaker 1: rules are in effect, so take that for what it's worth.
Speaker 1: So I'm gonna go five hundred to seven fifty. I'm
Speaker 1: gonna I'm gonna go the low end. You know, today,
Speaker 1: anything's possible. I will say Christie's would love to have
Speaker 1: both of you in the audience of this auction. They're
Speaker 1: estimating two hundred to three hundred thousand. I could see
Speaker 1: it going for more, though, I think we'll have to
Speaker 1: check back on this. I think when you guys could
Speaker 1: be could be in the right, that's value stock. You
Speaker 1: should be able to get much more for that. But
Speaker 1: the problem is you you let your dogs sleep in there,
Speaker 1: and it's got a hole in the roof. He's gonna
Speaker 1: get rained on. So I don't know. It's uh. But
Speaker 1: with that said, that is the craziest thing I saw
Speaker 1: this week, and I think that's all we have time for.
Speaker 1: But Peter, great to catch up with you. Fascinating conversation
Speaker 1: and I hope we can have you back someday. And Katie,
Speaker 1: you know, I'll always be coming to when Bilbonna is
Speaker 1: off galvanning around the world whenever she wants to go
Speaker 1: to Portugal, I'm right here eating cauliflower on all the
Speaker 1: world's Thanks Black, Thanks Katie, thanks so much, guys, Thanks peer,
Speaker 1: What Goes Up. We'll be back next week AND's so
Speaker 1: then you can find us on the Bloomberg Terminal website
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Speaker 1: And you can find us on Twitter follow me at Reaganonymous.
Speaker 1: Katie Greifeld is at k Greifeld. You can also follow
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Speaker 1: The head of Bloomberg Podcasts is Francesco Leavie. Thanks for listening,
Speaker 1: See you next time.