1 00:00:13,640 --> 00:00:16,640 Speaker 1: Hello, and welcome to What Goes Up a Bloomberg Weekly 2 00:00:16,720 --> 00:00:20,200 Speaker 1: Markets podcast. I'm Sarah Ponzak, a reporter on the cross 3 00:00:20,239 --> 00:00:23,800 Speaker 1: at that team, and I'm Chris Nag, executive editor for Bloomberg. 4 00:00:23,880 --> 00:00:26,279 Speaker 1: Infor Mike Reagan, who is vacationing and we have no 5 00:00:26,360 --> 00:00:29,320 Speaker 1: further information on his whereabouts. Mike's enjoying himself, will leave 6 00:00:29,400 --> 00:00:31,800 Speaker 1: him out of the episode with Thankfully, Chris is here 7 00:00:32,159 --> 00:00:34,720 Speaker 1: with us to take his place. This week on the show, 8 00:00:34,760 --> 00:00:38,960 Speaker 1: though second quarter earning season has officially started, we'll walk 9 00:00:39,000 --> 00:00:41,720 Speaker 1: through how it's shaping up so far and the Trump 10 00:00:41,720 --> 00:00:46,760 Speaker 1: administration keeps mentioning the idea of dollar devaluation, Could the 11 00:00:46,880 --> 00:00:50,519 Speaker 1: US actually intervene and what would that look like? And 12 00:00:50,560 --> 00:00:52,960 Speaker 1: of course we'll close out the episode with our very 13 00:00:53,040 --> 00:00:56,320 Speaker 1: own tradition, the craziest thing I ever saw in markets 14 00:00:56,760 --> 00:00:59,360 Speaker 1: this week. But thankfully we have some great guests to 15 00:00:59,480 --> 00:01:02,840 Speaker 1: join us this week. First, we have Evan Brown. He 16 00:01:03,040 --> 00:01:06,240 Speaker 1: is the head of multi assets Strategy at UBS Asset 17 00:01:06,319 --> 00:01:09,680 Speaker 1: Management and he was also an associate at the New 18 00:01:09,760 --> 00:01:12,800 Speaker 1: York Federal Reserve back in oh six to oh nine. 19 00:01:12,840 --> 00:01:14,400 Speaker 1: So that means you're gonna tell us exactly what's going 20 00:01:14,440 --> 00:01:18,280 Speaker 1: to happen on U. That's right. I know I can 21 00:01:18,319 --> 00:01:22,200 Speaker 1: read J pals. Yeah, no problem at all. And then 22 00:01:22,240 --> 00:01:25,759 Speaker 1: we also have Lennan new In. Thankfully she covers finance 23 00:01:25,760 --> 00:01:28,520 Speaker 1: and Wall Street for Bloomberg News, so she's here in 24 00:01:28,560 --> 00:01:31,039 Speaker 1: a very busy week that she had. That's right. And 25 00:01:31,120 --> 00:01:32,880 Speaker 1: in my past life I was in markets geek too, 26 00:01:33,000 --> 00:01:37,000 Speaker 1: so she can play in and everything dollar devaluation as well. Evan, 27 00:01:37,120 --> 00:01:39,160 Speaker 1: I do want to start with you. I know we 28 00:01:39,200 --> 00:01:42,119 Speaker 1: are not very far along in the earning season at all, 29 00:01:42,240 --> 00:01:45,920 Speaker 1: very early days, but we came into it very low bar. 30 00:01:46,200 --> 00:01:48,320 Speaker 1: From what we've seen so far. What can we actually 31 00:01:48,320 --> 00:01:52,440 Speaker 1: take away from it? So we've mainly seen earnings come 32 00:01:52,440 --> 00:01:54,920 Speaker 1: out for for the banks, and I actually think the 33 00:01:55,000 --> 00:01:59,200 Speaker 1: news on that front talking about the big banks focused 34 00:01:59,200 --> 00:02:04,080 Speaker 1: on the consumer businesses. It's been recentably good um, seeing 35 00:02:04,600 --> 00:02:09,359 Speaker 1: consumer loan growth, business loan growth, The economy generally looks 36 00:02:10,360 --> 00:02:14,520 Speaker 1: decent um and the guidance has been decent. So, like 37 00:02:14,560 --> 00:02:17,440 Speaker 1: you said, it is early days, but a low bar, 38 00:02:17,600 --> 00:02:21,079 Speaker 1: and and right now earnings are coming in. Okay. Bloomberg 39 00:02:21,160 --> 00:02:23,000 Speaker 1: is a story up right now saying that banks are 40 00:02:23,120 --> 00:02:26,720 Speaker 1: undoubtedly the hugest Wall Street banks, They mean are having 41 00:02:26,720 --> 00:02:30,400 Speaker 1: their worst quarter in some like a decade or something 42 00:02:30,440 --> 00:02:34,000 Speaker 1: for trading. Is that meaningful to anyone but a bunch 43 00:02:34,040 --> 00:02:39,880 Speaker 1: of insanely rich New Yorkers. Well it's not. Uh. I 44 00:02:39,919 --> 00:02:45,040 Speaker 1: think it's more comments of the challenging environment for markets 45 00:02:45,080 --> 00:02:48,040 Speaker 1: and the lack of volatility and the lack of trends 46 00:02:48,160 --> 00:02:50,520 Speaker 1: that we're seeing across markets. Just people are not trading 47 00:02:50,560 --> 00:02:53,280 Speaker 1: that much and conviction is low, especially when you have 48 00:02:53,360 --> 00:02:56,799 Speaker 1: the trade tensions and the Lake. So um, that's more 49 00:02:56,840 --> 00:02:59,799 Speaker 1: of a specific comment on how the markets have been 50 00:03:00,000 --> 00:03:02,480 Speaker 1: as opposed to how the economy. Well, why is that true? 51 00:03:02,480 --> 00:03:05,520 Speaker 1: Though the market I've noticed or doing rather well this year? 52 00:03:05,600 --> 00:03:09,120 Speaker 1: Up we're like halfway through the year. What's the problem. Yeah, 53 00:03:09,280 --> 00:03:13,120 Speaker 1: it's just uh, it's it's too easy. No, it's um 54 00:03:13,919 --> 00:03:16,880 Speaker 1: when when every asset goes up and there's not a 55 00:03:16,919 --> 00:03:21,240 Speaker 1: lot of differentiation and and uh, you're not getting kind 56 00:03:21,240 --> 00:03:24,160 Speaker 1: of also the same kind of conviction. Like just as 57 00:03:24,320 --> 00:03:27,040 Speaker 1: as as much as markets are going up, we're seeing 58 00:03:27,080 --> 00:03:30,120 Speaker 1: outflows from investors and a lot of what's being griven 59 00:03:30,120 --> 00:03:33,040 Speaker 1: as corporate buybacks in the Lake and so the client 60 00:03:33,160 --> 00:03:35,400 Speaker 1: flow that you would see on these trading desks has 61 00:03:35,480 --> 00:03:38,400 Speaker 1: just not been that active. Come in here, because I 62 00:03:38,400 --> 00:03:40,400 Speaker 1: know you've been in very early every single day this 63 00:03:40,480 --> 00:03:43,680 Speaker 1: week ahead of each of the big bank earning releases. Yes, 64 00:03:43,760 --> 00:03:46,680 Speaker 1: I have what you sound so happy about that. What 65 00:03:46,880 --> 00:03:49,760 Speaker 1: have been the big standouts, whether that is a company 66 00:03:49,880 --> 00:03:52,400 Speaker 1: or a certain trend, whatever that may be. So Evan 67 00:03:52,440 --> 00:03:55,960 Speaker 1: summed it up, but it's basically main street good trading bad. Um. 68 00:03:56,080 --> 00:03:58,360 Speaker 1: So we've seen that the big main street banks, the 69 00:03:58,360 --> 00:04:00,480 Speaker 1: ones that have a big presence and then sumer side 70 00:04:00,480 --> 00:04:03,160 Speaker 1: of the market have done really well. Um. The Bank 71 00:04:03,160 --> 00:04:06,040 Speaker 1: of America, the bank that I cover, reach record profits 72 00:04:06,080 --> 00:04:10,200 Speaker 1: for five quarters in a row. Um. So generally banks 73 00:04:10,240 --> 00:04:13,200 Speaker 1: that have a big consumer facing business are doing extremely well. 74 00:04:13,440 --> 00:04:15,440 Speaker 1: The question is when that's going to turn around, when 75 00:04:15,440 --> 00:04:17,440 Speaker 1: the guidance is going to roll over. Um. You know, 76 00:04:17,480 --> 00:04:20,560 Speaker 1: we did hear some warnings about that this week throughout 77 00:04:20,600 --> 00:04:24,719 Speaker 1: the consumer banks, so JP Morgan whilst Fargo City, But 78 00:04:25,160 --> 00:04:28,159 Speaker 1: for the time being they're doing pretty well. One area 79 00:04:28,200 --> 00:04:30,000 Speaker 1: that has been a little bit softer has been net 80 00:04:30,040 --> 00:04:33,680 Speaker 1: interest income net interest margins. JP Diamond came out and 81 00:04:33,720 --> 00:04:36,760 Speaker 1: basically described it as blowing in the way. You can't 82 00:04:36,760 --> 00:04:39,280 Speaker 1: know which way it's going to go right, well, it's 83 00:04:39,279 --> 00:04:42,359 Speaker 1: blowing against them right now, right right. So when you 84 00:04:42,440 --> 00:04:47,120 Speaker 1: actually look at this unit, this entry into the bank's 85 00:04:47,440 --> 00:04:51,000 Speaker 1: balance sheets, how big of an example, how big of 86 00:04:51,040 --> 00:04:53,640 Speaker 1: an effect has it actually been. It's their main revenue driver, 87 00:04:53,839 --> 00:04:56,720 Speaker 1: so it's very, very important, and Jamie Diamond is kind 88 00:04:56,720 --> 00:04:59,120 Speaker 1: of diminishing it's importance. But at the same time, it's 89 00:04:59,120 --> 00:05:01,360 Speaker 1: a key and put people are looking at. And again 90 00:05:01,360 --> 00:05:02,720 Speaker 1: we're gonna have to bring it all back to j 91 00:05:02,880 --> 00:05:05,839 Speaker 1: Powell because if rates are cut on July thirty one, 92 00:05:05,920 --> 00:05:08,159 Speaker 1: and that's going to really squeeze those margins for banks. 93 00:05:08,160 --> 00:05:11,000 Speaker 1: So they're watching that very closely, and analysts ask them 94 00:05:11,040 --> 00:05:13,839 Speaker 1: about this multiple times on every call this week, so 95 00:05:13,880 --> 00:05:16,760 Speaker 1: it's a huge focus. How does the whole calculus work. 96 00:05:16,760 --> 00:05:19,279 Speaker 1: I mean, I get that the profitability of the loans 97 00:05:19,560 --> 00:05:23,160 Speaker 1: goes down, doesn't the volume go up potentially or at 98 00:05:23,200 --> 00:05:26,120 Speaker 1: least to sustained because the lower rates keep the economy 99 00:05:26,200 --> 00:05:29,920 Speaker 1: potentially potentially, And they did make this point as well, 100 00:05:29,960 --> 00:05:32,880 Speaker 1: which is that you know, the even if they're squeezed 101 00:05:32,880 --> 00:05:36,040 Speaker 1: on one side, potentially act activity in the economy goes 102 00:05:36,120 --> 00:05:39,520 Speaker 1: up elsewhere. But I think generally it's not seen as 103 00:05:39,520 --> 00:05:42,919 Speaker 1: a good thing. Interest rates are the input here, and 104 00:05:42,960 --> 00:05:45,560 Speaker 1: that brings us to the FED over at EUB seven. 105 00:05:45,640 --> 00:05:47,600 Speaker 1: What is your guys take on what's going to happen 106 00:05:47,640 --> 00:05:48,840 Speaker 1: at the end of the month that we're gonna get 107 00:05:48,880 --> 00:05:51,640 Speaker 1: a twenty basis point cut fifty basis points are nothing 108 00:05:51,680 --> 00:05:54,000 Speaker 1: at all. I think we will get a cut. That 109 00:05:54,160 --> 00:05:58,360 Speaker 1: seems quite clear after last week's uh Ja Palace testimony 110 00:05:58,600 --> 00:06:02,760 Speaker 1: where he essentially focus st on every potential negative thing 111 00:06:02,839 --> 00:06:05,760 Speaker 1: and downplay at anything positive going on in the economy, 112 00:06:05,800 --> 00:06:09,280 Speaker 1: and so he wants to cut. There will be a cut. So, 113 00:06:09,480 --> 00:06:12,159 Speaker 1: as you say, the question is between twenty basis points 114 00:06:12,160 --> 00:06:16,320 Speaker 1: and fifty basis points, And to be honest, we're really 115 00:06:16,360 --> 00:06:19,360 Speaker 1: not sure at this point. It seems that there there 116 00:06:19,400 --> 00:06:22,200 Speaker 1: are arguments for doing fifty basis points. If you are 117 00:06:22,200 --> 00:06:25,240 Speaker 1: concerned about the economy, why not uh do it in 118 00:06:25,320 --> 00:06:27,760 Speaker 1: one go and and kind of shock the market and 119 00:06:27,760 --> 00:06:30,719 Speaker 1: and uh um try to steep in the yield curve. 120 00:06:30,839 --> 00:06:34,200 Speaker 1: That's that's something that is being discussed at the FED 121 00:06:34,240 --> 00:06:37,400 Speaker 1: and markets in general. Um. On the other hand, you 122 00:06:37,480 --> 00:06:40,760 Speaker 1: do have other members of the FED who do don't 123 00:06:40,760 --> 00:06:43,440 Speaker 1: think there's a case for a ray cut. At all. Um, 124 00:06:43,600 --> 00:06:47,159 Speaker 1: we're we're we're hearing from a few names, uh Kaplan 125 00:06:47,320 --> 00:06:49,560 Speaker 1: and Boss Stitch and in a few of the regional 126 00:06:49,560 --> 00:06:51,960 Speaker 1: FED presidents. And so it's gonna have to be a 127 00:06:51,960 --> 00:06:56,279 Speaker 1: consensus building exercise. And and usually the the the the 128 00:06:56,360 --> 00:06:59,600 Speaker 1: chair is able to to get their their way. Um. 129 00:06:59,680 --> 00:07:02,560 Speaker 1: But but it is notable that you you do have 130 00:07:03,360 --> 00:07:06,280 Speaker 1: people who just don't even think a cut is necessary 131 00:07:06,279 --> 00:07:07,760 Speaker 1: on the FED. Right now, I can sort of see 132 00:07:07,760 --> 00:07:09,360 Speaker 1: where they're coming from. I mean, you can you can 133 00:07:09,520 --> 00:07:12,360 Speaker 1: easily form form arguments on on both sides of the 134 00:07:12,600 --> 00:07:15,120 Speaker 1: on both sides of the art. Um. One thing that 135 00:07:15,160 --> 00:07:17,480 Speaker 1: somebody mentioned to me today, I don't even know how 136 00:07:17,840 --> 00:07:21,560 Speaker 1: legitimate this is, but his point was that what they 137 00:07:21,600 --> 00:07:23,800 Speaker 1: don't want to be what they want to avoid. Ultimately, 138 00:07:23,840 --> 00:07:25,960 Speaker 1: it's not a recession they want to avoid, seeming like 139 00:07:26,000 --> 00:07:28,240 Speaker 1: they were Ben bernankey, like they were sort of fiddling 140 00:07:28,280 --> 00:07:32,560 Speaker 1: as the economy fell into the UH into a hole. 141 00:07:32,800 --> 00:07:35,680 Speaker 1: And only, you know, six months later, did anyone realize 142 00:07:35,680 --> 00:07:39,640 Speaker 1: doesn't have any residents. I think that that certainly this 143 00:07:39,760 --> 00:07:44,920 Speaker 1: is a risk management cut, right. It's a tremendous uncertainty 144 00:07:44,960 --> 00:07:49,600 Speaker 1: we know about about trade tensions and so they acknowledge 145 00:07:49,600 --> 00:07:52,240 Speaker 1: that maybe the economy doesn't look so bad right now, 146 00:07:52,800 --> 00:07:56,120 Speaker 1: but just in case, let's air on the side of 147 00:07:56,120 --> 00:07:59,640 Speaker 1: being a little easier, and uh, you know, we're like, 148 00:07:59,800 --> 00:08:03,560 Speaker 1: we can do that because inflation is relatively low. John Williams, 149 00:08:03,600 --> 00:08:05,920 Speaker 1: New York Fed President, he kind of made his voice 150 00:08:05,960 --> 00:08:07,960 Speaker 1: known this week as well. He put out a speech 151 00:08:08,240 --> 00:08:10,600 Speaker 1: on Thursday and it was called Living Life near the 152 00:08:10,680 --> 00:08:13,880 Speaker 1: zero lower Bound, and my inbox had been flooded with 153 00:08:14,000 --> 00:08:17,440 Speaker 1: analysts and commentary basically saying that now John Williams is 154 00:08:17,440 --> 00:08:19,840 Speaker 1: setting the stage for a rate cut. This is huge 155 00:08:19,880 --> 00:08:21,880 Speaker 1: because he has a lot of influence on the board 156 00:08:21,960 --> 00:08:25,480 Speaker 1: as well. Lynnon coming back to you, if we get 157 00:08:25,960 --> 00:08:29,040 Speaker 1: a fifty basis point rate cut or even twenty five, say, 158 00:08:29,200 --> 00:08:32,440 Speaker 1: is that actually good or bad for the banks? I've 159 00:08:32,440 --> 00:08:34,520 Speaker 1: heard some people make the case, alright, you have lower 160 00:08:34,520 --> 00:08:36,360 Speaker 1: interest rates, that's bad for the banks. But at the 161 00:08:36,400 --> 00:08:39,560 Speaker 1: same time, theoretically you could see the yield curve steep 162 00:08:39,559 --> 00:08:41,720 Speaker 1: in because on the short end you'll have rates go down, 163 00:08:41,960 --> 00:08:45,560 Speaker 1: and then on the long end you could potentially hopefully 164 00:08:45,640 --> 00:08:48,200 Speaker 1: is the inflation pick up a bit? I think generally 165 00:08:48,240 --> 00:08:50,760 Speaker 1: it's being read as a bad thing for banks, But 166 00:08:51,000 --> 00:08:53,760 Speaker 1: again these implications are lumpy. A lot of the banks 167 00:08:53,800 --> 00:08:56,360 Speaker 1: on the earnings calls this week did mention, Okay, if 168 00:08:56,400 --> 00:08:58,520 Speaker 1: we get an x basis point cut, this is how 169 00:08:58,600 --> 00:09:02,240 Speaker 1: much it will affect our new So from a pure 170 00:09:02,320 --> 00:09:06,200 Speaker 1: numbers perspective, that is a downside. However, the banks were 171 00:09:06,200 --> 00:09:08,200 Speaker 1: also talking about the fact that clients have been on 172 00:09:08,240 --> 00:09:10,920 Speaker 1: the sidelines. We heard sidelines like million times this week 173 00:09:10,960 --> 00:09:13,840 Speaker 1: because people are unsure about the interest rate environment. They're 174 00:09:13,880 --> 00:09:16,160 Speaker 1: unsure about how much the FED is going to cut, 175 00:09:16,760 --> 00:09:19,200 Speaker 1: you know, if at all, and so they've been waiting 176 00:09:19,240 --> 00:09:22,760 Speaker 1: for that certainty. So perhaps when certainty comes and when 177 00:09:22,760 --> 00:09:24,960 Speaker 1: the Fed makes it more clear what they're gonna do, 178 00:09:25,400 --> 00:09:28,280 Speaker 1: clients will start to reposition their portfolios and we might 179 00:09:28,320 --> 00:09:30,360 Speaker 1: see some of that activity that's been waiting on the 180 00:09:30,400 --> 00:09:33,640 Speaker 1: sidelines come back into the game. Is things like credit 181 00:09:33,720 --> 00:09:35,560 Speaker 1: quality and stuff like that. Does that is that a 182 00:09:35,559 --> 00:09:37,439 Speaker 1: factor for banks at all at this point or is 183 00:09:37,480 --> 00:09:42,079 Speaker 1: they just just it's just rock solid, it's pristine, it's wonderful. 184 00:09:42,160 --> 00:09:44,120 Speaker 1: Right now, no one has said anything bad about credit 185 00:09:44,200 --> 00:09:46,520 Speaker 1: quality this week. In fact, Bank of America actually made 186 00:09:46,559 --> 00:09:51,240 Speaker 1: fewer provisions for loan losses this quarter, so right now 187 00:09:51,320 --> 00:09:53,599 Speaker 1: it's just looking pretty good. Another thing that could potentially 188 00:09:53,880 --> 00:09:56,160 Speaker 1: gave cover for more rate cuts. You love to hear 189 00:09:56,240 --> 00:10:15,000 Speaker 1: pristine than when it comes to credit quality from Ladan Evan. 190 00:10:15,080 --> 00:10:17,280 Speaker 1: I know over at U b S, you guys brought 191 00:10:17,320 --> 00:10:20,959 Speaker 1: down your recommendation, brought down your rating on US equities 192 00:10:21,000 --> 00:10:23,920 Speaker 1: to neutral. What's really the reasoning behind this? Is it 193 00:10:24,080 --> 00:10:26,320 Speaker 1: just the fact that we've seen such a crazy gain 194 00:10:26,400 --> 00:10:28,200 Speaker 1: already this year and you might as well wait and 195 00:10:28,200 --> 00:10:31,920 Speaker 1: see what happens. So we took our exposure to equities 196 00:10:31,960 --> 00:10:34,280 Speaker 1: down mainly because we just think a lot of the 197 00:10:34,280 --> 00:10:36,640 Speaker 1: good news is in the price we've we've seen. It's 198 00:10:36,640 --> 00:10:39,400 Speaker 1: not so much that we've had such a great year 199 00:10:39,400 --> 00:10:42,920 Speaker 1: of equities, it's that the year and equities has all 200 00:10:42,960 --> 00:10:46,920 Speaker 1: been driven by a multiple expansion as opposed to expectations 201 00:10:46,920 --> 00:10:49,520 Speaker 1: of earnings rising. And so a lot of that is 202 00:10:49,559 --> 00:10:52,160 Speaker 1: based on a more devish fed and we think that's 203 00:10:52,520 --> 00:10:55,960 Speaker 1: in large part priced in at this point. Uh And 204 00:10:55,960 --> 00:10:59,440 Speaker 1: and we think that, you know, the global environment is 205 00:11:00,040 --> 00:11:03,360 Speaker 1: still a little bit murky. We we do. And we 206 00:11:03,440 --> 00:11:05,760 Speaker 1: came out of the G twenty, and there was euphoria 207 00:11:05,920 --> 00:11:07,720 Speaker 1: out of the out of the G twenty that we 208 00:11:07,720 --> 00:11:10,840 Speaker 1: we didn't get fresh teriffs. But when you look around, 209 00:11:11,320 --> 00:11:14,800 Speaker 1: not much has has changed. I mean, maybe there's a 210 00:11:14,840 --> 00:11:18,120 Speaker 1: cease fire, but uh, there doesn't seem to be at 211 00:11:18,120 --> 00:11:20,880 Speaker 1: this point clear signs of dialogue or any kind of 212 00:11:20,880 --> 00:11:24,840 Speaker 1: movement towards towards any kind of deal at this point. 213 00:11:24,840 --> 00:11:27,199 Speaker 1: And so I think there's some downside risk to to 214 00:11:27,320 --> 00:11:32,600 Speaker 1: business investment. Uh and and UH still China, Europe, some 215 00:11:32,679 --> 00:11:34,720 Speaker 1: of the data is a little bit a little bit murky. 216 00:11:34,880 --> 00:11:38,760 Speaker 1: So UM, in general equities, we've we've taken down a 217 00:11:38,760 --> 00:11:41,320 Speaker 1: little bit, having been overweight for most of this year. 218 00:11:41,880 --> 00:11:44,439 Speaker 1: It's true that we're up a ton in two thousand nineteen. 219 00:11:44,480 --> 00:11:46,600 Speaker 1: I saw someone else saying a couple of days ago 220 00:11:46,640 --> 00:11:48,600 Speaker 1: that if you sort of annualize it over the last 221 00:11:48,600 --> 00:11:51,240 Speaker 1: two years, it's not that huge Martin. We're basically about 222 00:11:51,280 --> 00:11:53,400 Speaker 1: where we were, well maybe a little few percentage point 223 00:11:53,440 --> 00:11:55,840 Speaker 1: above where we were at the beginning of two thousand 224 00:11:55,880 --> 00:11:58,000 Speaker 1: and eighteen. Isn't that strange given that we just had 225 00:11:58,080 --> 00:12:00,280 Speaker 1: the biggest tax cut in the history of America. I mean, 226 00:12:00,280 --> 00:12:01,880 Speaker 1: you would think that earnings would have driven something a 227 00:12:01,880 --> 00:12:04,959 Speaker 1: little bit more significant than that by now. So it's 228 00:12:04,960 --> 00:12:07,960 Speaker 1: a great question I think what the point is is 229 00:12:08,040 --> 00:12:11,400 Speaker 1: that the tax cut, which took effect in two thousand eighteen, 230 00:12:12,160 --> 00:12:15,760 Speaker 1: really got priced into markets in two thousand seventeen, such 231 00:12:15,840 --> 00:12:20,079 Speaker 1: that you you come into the start of two thousand 232 00:12:20,160 --> 00:12:23,080 Speaker 1: eighteen and it's basically priced in at that point, and 233 00:12:23,120 --> 00:12:26,240 Speaker 1: then President Trump starts the trade wars, right and so 234 00:12:26,720 --> 00:12:29,800 Speaker 1: uh Ever, since the trade wars started, we've basically been 235 00:12:29,840 --> 00:12:33,000 Speaker 1: flat in the smp um. You know, maybe a little 236 00:12:33,000 --> 00:12:35,640 Speaker 1: bit higher, but but that gives some contact. It's interesting 237 00:12:35,679 --> 00:12:37,720 Speaker 1: what the turn of the year does to people's opinion 238 00:12:37,720 --> 00:12:39,520 Speaker 1: of the market. Everyone's walking around like we're having this 239 00:12:39,600 --> 00:12:41,880 Speaker 1: drake energy better than here, and we're not that far 240 00:12:41,920 --> 00:12:45,240 Speaker 1: above where we began in the beginning of what fourth quarters. 241 00:12:45,800 --> 00:12:49,640 Speaker 1: You go from one government policy, though the tax plan, 242 00:12:49,840 --> 00:12:55,200 Speaker 1: to another, and that is potentially currency manipulation at this point. 243 00:12:55,320 --> 00:12:59,959 Speaker 1: President Chump tweeted earlier this month about Europe and China 244 00:13:00,080 --> 00:13:02,559 Speaker 1: how they have been manipulating their currency and saying that 245 00:13:02,600 --> 00:13:05,120 Speaker 1: the US should match it, and Evan, I know you've 246 00:13:05,160 --> 00:13:08,760 Speaker 1: been looking a lot into this. Is this even possible 247 00:13:08,800 --> 00:13:11,480 Speaker 1: if the US were to come in and manipulate the dollar, 248 00:13:11,559 --> 00:13:14,640 Speaker 1: what would that actually look like? Well, manipulate as a 249 00:13:14,679 --> 00:13:20,560 Speaker 1: strong word, I think someone else's words when I just 250 00:13:20,679 --> 00:13:25,600 Speaker 1: use the President can authorize the Treasury to intervene in 251 00:13:25,600 --> 00:13:29,560 Speaker 1: foreign exchange markets. It's a Treasury department that does own 252 00:13:30,400 --> 00:13:34,520 Speaker 1: foreign exchange policy. And if you add up UH dollar 253 00:13:34,640 --> 00:13:37,679 Speaker 1: liquidity SDRs which can be converted into dollars, and then 254 00:13:38,000 --> 00:13:40,480 Speaker 1: for an exchange reserves that can be swapped into dollars, 255 00:13:40,720 --> 00:13:44,240 Speaker 1: it's about billion dollars worth of mm oh. They have 256 00:13:44,360 --> 00:13:47,800 Speaker 1: to intervene in foreign exchange markets, and then the treasure 257 00:13:47,840 --> 00:13:51,200 Speaker 1: the FED actually has the same amount, and traditionally on 258 00:13:51,200 --> 00:13:54,080 Speaker 1: on its own balance sheet, the SOMMA balance sheet. Traditionally 259 00:13:54,520 --> 00:13:58,800 Speaker 1: the Treasury and the Fed have acted in concert to intervene. 260 00:13:59,240 --> 00:14:02,320 Speaker 1: The big question right now is well, if the Treasury 261 00:14:02,400 --> 00:14:05,560 Speaker 1: does decide to intervene, will the Fed necessarily follow Because 262 00:14:05,559 --> 00:14:10,440 Speaker 1: typically to justify intervention, it's it's based on disorderly markets, 263 00:14:10,600 --> 00:14:13,480 Speaker 1: and it's hard to argue that FX is disorderly at 264 00:14:13,480 --> 00:14:16,079 Speaker 1: this point. In fact, it's barely moving, so calm, everyone's 265 00:14:16,120 --> 00:14:21,160 Speaker 1: complaining about how common actually is. So if somehow the 266 00:14:21,200 --> 00:14:23,160 Speaker 1: Treasury Department did decide that they were going to move 267 00:14:23,160 --> 00:14:26,800 Speaker 1: on this, and in a hypothetical scenario in a hypothetical world, 268 00:14:27,120 --> 00:14:31,040 Speaker 1: the FEDS said, okay, we'll match it. Does this pose 269 00:14:31,080 --> 00:14:33,840 Speaker 1: any risks? I mean, what would be the fallout from this? 270 00:14:34,640 --> 00:14:38,480 Speaker 1: I do think markets would initially be unsettled. Um, you know, 271 00:14:38,520 --> 00:14:42,400 Speaker 1: we've had a long time, about twenty five years of 272 00:14:42,440 --> 00:14:44,960 Speaker 1: a strong dollar policy, or at least a las fair 273 00:14:45,040 --> 00:14:47,840 Speaker 1: dollar policy, and then all of a sudden that's changing, 274 00:14:47,920 --> 00:14:52,560 Speaker 1: and that will shake markets a bit. I do think 275 00:14:52,560 --> 00:14:56,600 Speaker 1: that once the dust settles, maybe a slightly weaker dollar, 276 00:14:56,640 --> 00:14:58,520 Speaker 1: it's gonna be good for US equities, it's gonna be 277 00:14:58,520 --> 00:15:02,680 Speaker 1: good for emerging markets, and and you go from there. Um, 278 00:15:02,720 --> 00:15:05,680 Speaker 1: what I think would be really interesting, and something we're 279 00:15:05,680 --> 00:15:10,400 Speaker 1: talking about, is if there's not just intervention, which there's 280 00:15:10,480 --> 00:15:12,760 Speaker 1: more or less two hundred billion of AMMO, which is 281 00:15:14,280 --> 00:15:18,120 Speaker 1: decent but but not huge given the size of foreign 282 00:15:18,120 --> 00:15:21,480 Speaker 1: exchange markets five trillion dollars exchange during during a given day. 283 00:15:22,200 --> 00:15:26,560 Speaker 1: But if the Treasury starts moving in a direction of 284 00:15:26,680 --> 00:15:29,840 Speaker 1: a strategic recalibration of its reserves, if they say, hey, 285 00:15:29,840 --> 00:15:33,400 Speaker 1: we've only got forty billion dollars worth of foreign exchange 286 00:15:33,400 --> 00:15:37,600 Speaker 1: reserves and Europe has three fifty billion dollars in Japan 287 00:15:37,720 --> 00:15:40,640 Speaker 1: has over a trillion dollars. We should have more foreign 288 00:15:40,680 --> 00:15:43,800 Speaker 1: exchange reserves. We're gonna make that argument. It's only fair, 289 00:15:43,800 --> 00:15:47,480 Speaker 1: it's only it makes sense to modernize our our for 290 00:15:47,560 --> 00:15:52,360 Speaker 1: an for an exchange portfolio, and that sends a very 291 00:15:52,400 --> 00:15:55,840 Speaker 1: powerful signal to the market that that the Treasury is 292 00:15:55,960 --> 00:15:59,479 Speaker 1: looking to UH to weaken the dollar over the medium term. 293 00:15:59,680 --> 00:16:01,720 Speaker 1: Is this a thing that you actually take into account 294 00:16:01,760 --> 00:16:04,280 Speaker 1: the idea that this could be possible going forwards when 295 00:16:04,280 --> 00:16:06,080 Speaker 1: you try to come up with the target for the 296 00:16:06,080 --> 00:16:08,560 Speaker 1: dollar and other currencies. I think what you have to 297 00:16:08,600 --> 00:16:13,360 Speaker 1: do is is probability weighted? So is it our base 298 00:16:13,400 --> 00:16:16,440 Speaker 1: case that there's going to be intervention? No, we think 299 00:16:16,760 --> 00:16:22,320 Speaker 1: ultimately probably UH Secretary Minution and others are successful and 300 00:16:23,040 --> 00:16:25,960 Speaker 1: advising the President not to to move in that in 301 00:16:26,280 --> 00:16:31,920 Speaker 1: that direction. But I would say there's given that President 302 00:16:31,920 --> 00:16:34,360 Speaker 1: Trump has been tweeting about this, given that there was 303 00:16:34,360 --> 00:16:37,360 Speaker 1: a report that he had actually tasked AIDS to look 304 00:16:37,400 --> 00:16:39,600 Speaker 1: into how to weaken the dollar, we have to take 305 00:16:39,640 --> 00:16:44,120 Speaker 1: it seriously. So maybe there's a twenty risk of it 306 00:16:44,240 --> 00:16:47,240 Speaker 1: of it happening, and so we have to embed that 307 00:16:47,280 --> 00:16:50,440 Speaker 1: into our our our views and way that when we 308 00:16:50,480 --> 00:16:54,360 Speaker 1: consider going long dollars and in an FX portfolio. Bloomberg 309 00:16:54,400 --> 00:16:57,680 Speaker 1: has had some reports out saying that behind the scenes, 310 00:16:58,040 --> 00:17:01,280 Speaker 1: when President Trump has been interviewing potential FED candidates, but 311 00:17:01,320 --> 00:17:03,640 Speaker 1: he's been asking them about what they think about the 312 00:17:03,640 --> 00:17:07,840 Speaker 1: dollar as well. So that's pretty interesting. But even besides, 313 00:17:07,880 --> 00:17:13,639 Speaker 1: you put manipulation that strong word aside, intervention aside. Is 314 00:17:13,680 --> 00:17:17,320 Speaker 1: the path of least resistance still down for the dollar? 315 00:17:17,400 --> 00:17:19,240 Speaker 1: It seems like people have been talking about that for 316 00:17:19,280 --> 00:17:22,160 Speaker 1: a while, but now we're in this holding pattern. Yes, 317 00:17:22,640 --> 00:17:25,719 Speaker 1: we think so, we think. We think it's it's not 318 00:17:25,800 --> 00:17:29,920 Speaker 1: just based on potential intervention, it's based on the US 319 00:17:29,960 --> 00:17:33,360 Speaker 1: economy catching down to to the rest of the world. Right. 320 00:17:33,400 --> 00:17:36,439 Speaker 1: We remember we had that big fiscal stimulus which is 321 00:17:36,520 --> 00:17:41,520 Speaker 1: really rolling off as we speak right now, and the 322 00:17:41,920 --> 00:17:45,360 Speaker 1: rest of the world is is hanging in US economy 323 00:17:45,400 --> 00:17:49,399 Speaker 1: decelerating FED cutting over time that should lead to to 324 00:17:49,760 --> 00:17:52,240 Speaker 1: a week er dollar. But you guys are positive on 325 00:17:52,520 --> 00:17:57,080 Speaker 1: European equities, correct, We we actually we yes, we we 326 00:17:57,160 --> 00:18:00,600 Speaker 1: like European equities. Um, we think is just too much 327 00:18:00,640 --> 00:18:03,359 Speaker 1: negativity on Europe. You're the only person I've heard was 328 00:18:03,400 --> 00:18:08,360 Speaker 1: actually Bullis on European thoughts. Yeah, I mean, any anything 329 00:18:08,440 --> 00:18:11,600 Speaker 1: you read about Europe, it's always very negative about the 330 00:18:11,600 --> 00:18:15,720 Speaker 1: economy and and and the outlook. And I don't mean 331 00:18:15,760 --> 00:18:19,119 Speaker 1: to downplay there's plenty of structural and political issues that 332 00:18:19,119 --> 00:18:22,000 Speaker 1: that always seemed to come up in Europe. But when 333 00:18:22,040 --> 00:18:24,280 Speaker 1: you look at the economic data, it's just not that bad. 334 00:18:24,560 --> 00:18:27,280 Speaker 1: You know, the consumer has held in well. You would 335 00:18:27,560 --> 00:18:31,119 Speaker 1: have expected investment to take a much bigger hit given 336 00:18:31,240 --> 00:18:36,600 Speaker 1: the trade tensions, and investments has held up well too. So, um, 337 00:18:36,760 --> 00:18:38,119 Speaker 1: we think a lot of the bad news is in 338 00:18:38,160 --> 00:18:41,440 Speaker 1: the price and the European economy is actually in reasonably 339 00:18:41,480 --> 00:18:44,399 Speaker 1: good shape and you can see some outperformance there. They 340 00:18:44,400 --> 00:18:47,840 Speaker 1: should be benefiting from some stimulus, one would argue, it 341 00:18:47,880 --> 00:18:50,320 Speaker 1: seems like it seems like they actually pull that off 342 00:18:50,320 --> 00:18:52,720 Speaker 1: fairly well over there at the moment. Yea, So we've 343 00:18:52,720 --> 00:18:55,879 Speaker 1: got likely some monetary stimulus coming from the e C 344 00:18:56,000 --> 00:18:58,880 Speaker 1: b uh, and we have a little bit of fiscal 345 00:18:58,880 --> 00:19:03,520 Speaker 1: stimulus happening, and in Europe at least not fiscal restraints. 346 00:19:04,320 --> 00:19:07,360 Speaker 1: You know, for the first time in a while, Italy, 347 00:19:07,760 --> 00:19:11,760 Speaker 1: France expanding fiscal and even Germany doing a little bit 348 00:19:12,280 --> 00:19:14,720 Speaker 1: uh here. So, so there is some policy support there 349 00:19:14,720 --> 00:19:17,840 Speaker 1: in Europe. As well. With that said, Chris, uh, you 350 00:19:17,880 --> 00:19:20,159 Speaker 1: know what time it is? Though in the podcast, I 351 00:19:20,200 --> 00:19:22,800 Speaker 1: believe I do, but remind me what we call it 352 00:19:23,040 --> 00:19:25,640 Speaker 1: the craziest thing I ever saw in markets this week. 353 00:19:25,680 --> 00:19:29,639 Speaker 1: I'm so excited taking Mike always brings it. So I 354 00:19:29,680 --> 00:19:31,920 Speaker 1: really hope that you're gonna step up to Matt. I 355 00:19:32,520 --> 00:19:36,720 Speaker 1: would have to bring anything. Like we said, every week 356 00:19:36,920 --> 00:19:39,720 Speaker 1: we reach out on Twitter, we ask around see what 357 00:19:39,800 --> 00:19:43,159 Speaker 1: people are noticing. So I'll start with a couple of 358 00:19:43,200 --> 00:19:46,520 Speaker 1: the things that we have seen out in the Twitter sphere. 359 00:19:46,960 --> 00:19:50,159 Speaker 1: I'll say, this isn't breaking the rules. Bloomer's own Dave Wilson, 360 00:19:50,240 --> 00:19:54,680 Speaker 1: he's a stock market columnists, very frequent person who appears 361 00:19:54,720 --> 00:19:57,520 Speaker 1: on radio on TV. He tweeted it and he said, 362 00:19:57,560 --> 00:19:59,560 Speaker 1: maybe I'm not eligible, but I said, there's no rules here. 363 00:19:59,560 --> 00:20:01,440 Speaker 1: It's the crazy this thing. Iri was on markets this week, 364 00:20:01,600 --> 00:20:05,359 Speaker 1: So he said, trucking stocks rise one day because JB. 365 00:20:05,480 --> 00:20:10,000 Speaker 1: Hunt's results go over well, and then railroad shares decline 366 00:20:10,040 --> 00:20:13,800 Speaker 1: the next day because cs x's figures are disappointing. That's 367 00:20:13,840 --> 00:20:17,119 Speaker 1: some contrast is supposed to do when that happen? What 368 00:20:17,160 --> 00:20:19,000 Speaker 1: are you supposed to do? Normally? Such a license to 369 00:20:19,000 --> 00:20:22,480 Speaker 1: print money down theory, Evan, when it comes to you guys, 370 00:20:22,520 --> 00:20:26,359 Speaker 1: how you guys actually go about evaluating the economy. How 371 00:20:26,480 --> 00:20:29,040 Speaker 1: much do you guys actually take into account earnings reports 372 00:20:29,080 --> 00:20:31,960 Speaker 1: from some of these big transport names. We definitely look 373 00:20:31,960 --> 00:20:34,760 Speaker 1: at them, and we look at the certainly look at 374 00:20:34,800 --> 00:20:37,399 Speaker 1: the guidance. And you know, one thing in particular that 375 00:20:37,440 --> 00:20:41,240 Speaker 1: we like to do is we're using natural language processing 376 00:20:41,280 --> 00:20:44,520 Speaker 1: to to dive into the qualitative comments of all these 377 00:20:44,520 --> 00:20:47,960 Speaker 1: earnings reports, and so we can we can really detect 378 00:20:47,960 --> 00:20:50,880 Speaker 1: and see how the language is is shifting, and that 379 00:20:50,960 --> 00:20:53,760 Speaker 1: in many ways can be actually more useful because it's 380 00:20:53,760 --> 00:20:57,080 Speaker 1: more forward looking than the than the backward looking earnings reports. 381 00:20:57,080 --> 00:20:59,160 Speaker 1: So it's a little bit early for us to make 382 00:20:59,200 --> 00:21:01,720 Speaker 1: a strong judge tamens right now on that. But but 383 00:21:01,960 --> 00:21:03,720 Speaker 1: that's what we'll be doing over the course of this 384 00:21:03,800 --> 00:21:08,199 Speaker 1: earning season alright, Lenan, I think you're up. So initially 385 00:21:08,240 --> 00:21:10,040 Speaker 1: I was going to talk about the dollar and the 386 00:21:10,119 --> 00:21:13,080 Speaker 1: prospects of dollar intervention, but we have covered that that 387 00:21:13,080 --> 00:21:17,120 Speaker 1: that is actually something crazy that started last August with 388 00:21:17,240 --> 00:21:20,240 Speaker 1: the note by Michael Thoroli from JP Morgan and it 389 00:21:20,359 --> 00:21:22,480 Speaker 1: made a big splash at the time because everyone thought 390 00:21:22,520 --> 00:21:25,160 Speaker 1: this is crazy town. It's now part of the mainstream 391 00:21:25,240 --> 00:21:28,399 Speaker 1: lexicon and part of people's thinking. Obviously I haven't looking 392 00:21:28,400 --> 00:21:30,960 Speaker 1: into it and everyone is thinking about it, so that's wild. 393 00:21:31,200 --> 00:21:34,240 Speaker 1: But secondly, because we've already discussed that, I wanted to 394 00:21:34,320 --> 00:21:37,760 Speaker 1: raise a report that our colleague Natasha Doff in London 395 00:21:38,080 --> 00:21:42,119 Speaker 1: wrote about, which was intelligent dictators are more attractive to 396 00:21:42,200 --> 00:21:46,840 Speaker 1: foreign investors. So this this is a report that basically 397 00:21:46,880 --> 00:21:51,560 Speaker 1: says that dictators or authoritarian rulers who are well educated, 398 00:21:51,600 --> 00:21:56,000 Speaker 1: who maybe worked in business, are viewed favorably by investors. 399 00:21:56,040 --> 00:21:58,280 Speaker 1: I guess because they'll kind of keep things on and 400 00:21:58,320 --> 00:22:01,240 Speaker 1: even keel. Things are calm, Yeah, people are happy, yeah, 401 00:22:01,240 --> 00:22:03,800 Speaker 1: which we've seen in markets. Sometimes there are people in 402 00:22:03,840 --> 00:22:06,920 Speaker 1: certain regimes, you know, maybe Evan can cite something who 403 00:22:06,920 --> 00:22:09,720 Speaker 1: are um you know, maybe you'r you don't agree with 404 00:22:09,760 --> 00:22:12,360 Speaker 1: them in terms of their politics, but because they have 405 00:22:12,359 --> 00:22:15,760 Speaker 1: have a strong hand, it keeps the nation fairly stable, 406 00:22:15,920 --> 00:22:18,840 Speaker 1: means that you can invest there. Who knew. Maybe it's 407 00:22:18,840 --> 00:22:21,360 Speaker 1: just come across well on TV. It almost doesn't matter 408 00:22:21,400 --> 00:22:25,679 Speaker 1: how unbelievably evil you are. At this point, unbelievably evil 409 00:22:25,800 --> 00:22:29,280 Speaker 1: you are. Christy got uh so this isn't that weird. 410 00:22:29,359 --> 00:22:33,240 Speaker 1: But there was a story in a rival publication pointing 411 00:22:33,240 --> 00:22:36,280 Speaker 1: out that right now the SMP is a couple points away, 412 00:22:36,560 --> 00:22:40,480 Speaker 1: a couple of percentage points away from doubling from its 413 00:22:40,760 --> 00:22:43,840 Speaker 1: high of the last Bowl market. So that's October of 414 00:22:43,840 --> 00:22:46,400 Speaker 1: two thousand seven. So in other words, if you bought 415 00:22:46,400 --> 00:22:49,399 Speaker 1: stocks at absolutely the worst time you could pick with 416 00:22:49,520 --> 00:22:53,480 Speaker 1: hindsight over the last twenty years, you're now up about 417 00:22:53,560 --> 00:22:59,160 Speaker 1: nine annualized. So it's kind of a stock stock journalists 418 00:22:59,560 --> 00:23:02,840 Speaker 1: geek out because this is what happens at all virtually 419 00:23:02,880 --> 00:23:07,760 Speaker 1: any longer horizon that you get to about nine eventually 420 00:23:08,200 --> 00:23:10,600 Speaker 1: when you even it all out, except for one period, 421 00:23:10,600 --> 00:23:12,639 Speaker 1: which is this is really interesting. If you bought at 422 00:23:12,680 --> 00:23:14,840 Speaker 1: the top of the Internet bubble, if you made the 423 00:23:14,880 --> 00:23:18,560 Speaker 1: mistake of buying in March of two thousand, your annualize 424 00:23:18,640 --> 00:23:21,080 Speaker 1: gain is five percent at this point. It's like one 425 00:23:21,080 --> 00:23:24,160 Speaker 1: of the big anomalies of that entire series going back 426 00:23:24,160 --> 00:23:26,440 Speaker 1: a hundred years, that that long of a period would 427 00:23:26,440 --> 00:23:31,080 Speaker 1: have that poor return. And just as we've discussed sendlessly 428 00:23:31,160 --> 00:23:33,720 Speaker 1: or I have basically forced everyone to discuss our team, 429 00:23:33,920 --> 00:23:36,439 Speaker 1: markets go up, Yeah, markets go up constantly, but the 430 00:23:36,480 --> 00:23:39,000 Speaker 1: dot com bubble is really the big artifact of the 431 00:23:39,040 --> 00:23:42,920 Speaker 1: stock market over the last half century. Everything, Evan, I 432 00:23:43,240 --> 00:23:47,120 Speaker 1: think that means it's your turn. So the craziest thing 433 00:23:47,359 --> 00:23:52,400 Speaker 1: that I've seen this week Thursday morning, Treasury Secretary Minution 434 00:23:52,720 --> 00:23:56,560 Speaker 1: coming in and saying that the dollar policy of the 435 00:23:56,600 --> 00:23:59,720 Speaker 1: United States is not going to be changed as of now. 436 00:24:00,240 --> 00:24:02,240 Speaker 1: He did not have to say that, and he said 437 00:24:02,359 --> 00:24:05,120 Speaker 1: even that's something we could consider in the future. All 438 00:24:05,240 --> 00:24:08,000 Speaker 1: things that that did not need to be said, but 439 00:24:08,080 --> 00:24:11,240 Speaker 1: he went ahead and said them. And words matter, and 440 00:24:11,640 --> 00:24:14,960 Speaker 1: central bankers, sovereign wealth funds around the world that that 441 00:24:15,080 --> 00:24:18,520 Speaker 1: are using uh, the dollar as as the main store 442 00:24:18,520 --> 00:24:23,040 Speaker 1: of value and reserve currency. Listening to that, that's really 443 00:24:23,119 --> 00:24:26,600 Speaker 1: really stunning. I do think there has to be some 444 00:24:26,720 --> 00:24:30,879 Speaker 1: risk premier placed in the dollar, given that US dollar 445 00:24:30,960 --> 00:24:33,960 Speaker 1: policy may be changed. Even Lenna are really on the 446 00:24:34,000 --> 00:24:37,320 Speaker 1: same wavelength here, currency geeks. When I say he said no, 447 00:24:37,440 --> 00:24:40,080 Speaker 1: but it was really it is stunning, And I think 448 00:24:40,160 --> 00:24:44,000 Speaker 1: that's um something that really was very very very much 449 00:24:44,040 --> 00:24:46,359 Speaker 1: of an outside chance. And even when I was reporting 450 00:24:46,359 --> 00:24:49,240 Speaker 1: on it last summer, everyone was like, this is crazy. 451 00:24:49,280 --> 00:24:51,359 Speaker 1: But now we're actually having to look at it and 452 00:24:51,400 --> 00:24:54,360 Speaker 1: now everyone is looking at it. So it's um, it's 453 00:24:54,359 --> 00:24:56,960 Speaker 1: a really spectacular change. See what happens in the next 454 00:24:57,160 --> 00:25:00,560 Speaker 1: six months here? Who knows? So Evan and you and 455 00:25:00,640 --> 00:25:03,320 Speaker 1: Lenon are clearly having a connection. Here. While at a 456 00:25:03,320 --> 00:25:07,639 Speaker 1: connection with a Twitter follower of the podcast this week 457 00:25:07,720 --> 00:25:11,639 Speaker 1: and he tweeted his handles J D scotty d Y, 458 00:25:11,680 --> 00:25:14,359 Speaker 1: he said, in a word, Neuralink. Do you guys know 459 00:25:14,400 --> 00:25:19,199 Speaker 1: what this is? So it's one of Elon Musk's startups. 460 00:25:19,280 --> 00:25:23,959 Speaker 1: He is very heavily invested in it and this company, Neuralink, 461 00:25:24,520 --> 00:25:27,680 Speaker 1: they're now saying that they are able to do brain 462 00:25:27,760 --> 00:25:30,080 Speaker 1: surgery and they're approaching the f d A to see 463 00:25:30,080 --> 00:25:32,119 Speaker 1: if they can go in and get approval to do 464 00:25:32,400 --> 00:25:35,200 Speaker 1: surgery on human beings as soon as next year. Now, 465 00:25:35,560 --> 00:25:37,840 Speaker 1: what they do and what they're hoping to do in 466 00:25:37,840 --> 00:25:41,159 Speaker 1: the future is they drill these really really tiny holes 467 00:25:41,160 --> 00:25:43,480 Speaker 1: in your skull, four holes, and then they put these 468 00:25:44,040 --> 00:25:48,240 Speaker 1: extremely small wires that they call threads into your brain 469 00:25:48,320 --> 00:25:51,000 Speaker 1: that have electrodes. And the idea is that they're supposed 470 00:25:51,040 --> 00:25:54,399 Speaker 1: to admit these neurons so that you can communicate with 471 00:25:54,440 --> 00:25:57,639 Speaker 1: the computer without Africa actually having to say anything. All 472 00:25:57,680 --> 00:25:59,680 Speaker 1: you have to do is think so you can think, 473 00:25:59,720 --> 00:26:01,240 Speaker 1: all right, I want to send this text message, I 474 00:26:01,280 --> 00:26:03,359 Speaker 1: want to send this email and it will go. And 475 00:26:03,400 --> 00:26:06,399 Speaker 1: they hope that in the future maybe telepathy will be 476 00:26:06,440 --> 00:26:08,399 Speaker 1: a thing. You can read other people's thoughts, and you 477 00:26:08,400 --> 00:26:10,480 Speaker 1: can also download languages into your brain, and on and 478 00:26:10,520 --> 00:26:15,280 Speaker 1: on and on. It's pretty crazy cats right now. Supposedly 479 00:26:15,560 --> 00:26:19,360 Speaker 1: they've been doing this on rats, and there were rumors 480 00:26:19,400 --> 00:26:21,480 Speaker 1: that they were doing it on primates, and supposedly Elon 481 00:26:21,600 --> 00:26:24,000 Speaker 1: must come out and said, yeah, I'm addressing the quote 482 00:26:24,040 --> 00:26:26,840 Speaker 1: unquote monkey in the room. There's a monkey that's communicated 483 00:26:26,880 --> 00:26:29,480 Speaker 1: with the computer. This does refresh my memory. And apparently 484 00:26:29,520 --> 00:26:32,000 Speaker 1: it's like the same way that you would mount a 485 00:26:32,040 --> 00:26:35,920 Speaker 1: flat panel TV to a wall, is the way to 486 00:26:36,080 --> 00:26:38,600 Speaker 1: stick wires into the brain. I guess it sounds like 487 00:26:38,640 --> 00:26:42,520 Speaker 1: the same thing. Pretty easy, although I would happily volunteered 488 00:26:42,560 --> 00:26:45,639 Speaker 1: for it. At this point's been going we're going to 489 00:26:45,680 --> 00:26:47,600 Speaker 1: the clinical trial next year if they get approve of 490 00:26:48,640 --> 00:26:51,760 Speaker 1: If they do, that would be um pretty crazy. But 491 00:26:51,800 --> 00:26:54,400 Speaker 1: I had never heard something like that, So there we go. 492 00:26:55,280 --> 00:26:57,800 Speaker 1: With that said, though, Evan Brown, Lyn and new and 493 00:26:57,960 --> 00:27:00,359 Speaker 1: thank you so much for coming on, and Chris Angie, 494 00:27:00,520 --> 00:27:03,080 Speaker 1: thanks so much for stepping into film Mike's shoes. Thank you, 495 00:27:03,600 --> 00:27:13,120 Speaker 1: Thanks What Goes Up. We'll be back next week. Until then, 496 00:27:13,320 --> 00:27:16,159 Speaker 1: you can find us on the Bloomberg Terminal, website and app, 497 00:27:16,480 --> 00:27:19,240 Speaker 1: or wherever you get your podcasts. 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