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

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Speaker 1: market podcast. I'm Sarah Pontac, a reporter on the Cross

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Speaker 1: Asset Team and on Mike Reagan, a senior editor on

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Speaker 1: the Markets Team. This week on the show, the risk

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Speaker 1: rebound continues as some countries and states in the United

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Speaker 1: States begin their economic reopenings. The next two weeks become

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Speaker 1: crucial as more data rolls in on the virus and

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Speaker 1: on consumer habits. You could say our guest this week

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Speaker 1: is a little bit skeptical. Not only does he not

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Speaker 1: believe in the risk rally, but he says the stock

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Speaker 1: market is forever changed, with buybacks no longer the fourth

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Speaker 1: they once were. Well, Sarah, one force that will continue

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Speaker 1: to remain is our tradition the craziest thing I saw

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Speaker 1: in markets this week. We will of course finish out

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Speaker 1: the show with that segment, and as always, you see

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Speaker 1: something crazy and markets, give us a call on the

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Speaker 1: podcast hotline at six ft six three to four three

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Speaker 1: four nine oh and leave us a voicemail maybe we'll

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Speaker 1: play it on the show. And you can also tweet

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Speaker 1: to us at Podcasts with the craziest things you saw

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Speaker 1: in the markets this week? I'm gonna go ahead and

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Speaker 1: throw it out there, Mike, my my crazy thing this week.

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Speaker 1: It comes with a potential request from callers. Uh, so

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Speaker 1: we're going to try to get you to keep them

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Speaker 1: rolling in a special request from callers, special because I

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Speaker 1: need help with it, all right. Somehow I feel like

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Speaker 1: I'm gonna be the butt of this joke, but I

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Speaker 1: will not. I'll hear you and Sarah, as you said,

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Speaker 1: our guests this week, Uh, it's a little bit skeptical

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Speaker 1: about this rebound in stocks, and to be quite honest,

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Speaker 1: so so am I. So that's why I'm glad to

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Speaker 1: have him on the show. I'm not above a little

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Speaker 1: bit of confirmation bias. You know, I'm not too proud

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Speaker 1: for that. We all know that by this point. But

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Speaker 1: he's uh reading his notes this week, really insightful, mart stuff,

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Speaker 1: but not only that, hilarious, often hilarious at times. So

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Speaker 1: very happy to have him on the show. His name

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Speaker 1: is Vincent de Luard. He's the director of Global macro

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Speaker 1: Strategy at the brokerage I N T l F C. Stone. Vincent,

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Speaker 1: welcome to the show. Well, thanks for having me. It's

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Speaker 1: a pleasure and I'm a big fan of yours. So, uh,

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Speaker 1: that's one of you guys out there anyway, that's your

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Speaker 1: confirmation bias right off the top of the show. That's right,

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Speaker 1: that's right, that's right, we got one. So uh, you know,

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Speaker 1: if it's it, As as Sarah Um alluded to in

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Speaker 1: the introduction, you are a little skeptical about this rally,

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Speaker 1: walk us through sort of, Um, the main reasons why.

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Speaker 1: I mean, obviously, the bear case frequities right now is

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Speaker 1: pretty obvious, right, But you know, there's the school of

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Speaker 1: thought that you know, you have to sort of believe

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Speaker 1: in the price action and the power of the price

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Speaker 1: action itself. And I think it's it's turning a lot

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Speaker 1: of people into believers in this rally, the fact that, um,

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Speaker 1: it has moved so much off the bottom in a

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Speaker 1: fairly consistent straight line. I mean, there's been some big

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Speaker 1: down days in this rebound, but you know, the volatility

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Speaker 1: has calmed down to some degree. Um, walk us through

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Speaker 1: what you're expecting in the near term. Well, it's usually

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Speaker 1: the best way to look like a fool, but I'm

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Speaker 1: gonna do it anyway. That's what we specialized on. Good

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Speaker 1: good in general. You you know, it's very rare to

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Speaker 1: see such a clear V shaped rebound. I guess you

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Speaker 1: can point back to do somebody two thousand and eighteen.

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Speaker 1: But that's the and maybe that's why it was. There

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Speaker 1: was such an an angst amongst especially retail investors, to

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Speaker 1: to to get back in right, because people, oh, this

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Speaker 1: is the first pullback we had in the last one

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Speaker 1: was so short. You know, it was on Christmas Day.

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Speaker 1: You couldn't do anything. So actually, I think you're Sarah

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Speaker 1: who wrote a piece on this kind of increasing in

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Speaker 1: retail trading, and we findsight right, it was pretty obvious, right,

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Speaker 1: you you lock everybody down, you send them checks. I mean,

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Speaker 1: most people are actually making more money today, even the

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Speaker 1: ones who lost their jobs because in the endempartment benefits

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Speaker 1: have been increased to clost a thousand dollar a week

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Speaker 1: um plus the one thousand dollar a month similar check.

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Speaker 1: Nothing to do. Casinos are closed. Stock marketing its biggest

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Speaker 1: pullback ever. You had all the retail broker runing, our

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Speaker 1: commissioned three trading, so it's kind of a perfect storm.

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Speaker 1: And that again, it would be preposterous for me to

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Speaker 1: you know, get the walls. We know don't don't trade

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Speaker 1: stock at the time to say is one of the

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Speaker 1: shoeshine and gives you a stop tip. Well, you know,

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Speaker 1: obviously the right now, these retail people are up double

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Speaker 1: digit and I look like an idiot sitting on cash.

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Speaker 1: But I think a lot of professional investors are are

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Speaker 1: equally confused by this and are still expecting another wave

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Speaker 1: of of the clients retesting the role, if not taking

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Speaker 1: them bull to be my expectation, Vincent, I love this

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Speaker 1: line that you have in one of your recent reports.

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Speaker 1: You say April's face ripping rally has created a tremendous

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Speaker 1: amount of introspection, self doubt and second guessing among bears.

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Speaker 1: What did I miss that every other investor has seen?

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Speaker 1: How can market action be so disconnected from reality? Does

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Speaker 1: the rest of the world experience a radically different reality

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Speaker 1: from mine? Is the world crazy? Or is it me?

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Speaker 1: And I think to a sense, there are a lot

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Speaker 1: of people, many many people thinking along those lines. And

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Speaker 1: you talked about the retail trading aspect, and I think

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Speaker 1: it's so interesting because there is this subscription, this idea

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Speaker 1: that usually at the lows and a steep sell off,

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Speaker 1: you see retail flee the market because they're so scared.

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Speaker 1: At that point in time, but if you look at

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Speaker 1: the data, I mean, it looks like retail time this

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Speaker 1: just right, there was a boom in accounts opening in March,

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Speaker 1: people getting in trading, this idea that yeah, maybe they're

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Speaker 1: equating it to gambling they have nothing else to do.

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Speaker 1: But it kind of makes me think, then if we

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Speaker 1: do start to see economies start to reopen and we

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Speaker 1: start to see your average your average Joe going back

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Speaker 1: to work, if that is the person who is trading

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Speaker 1: or at least a decent amount of the demand in

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Speaker 1: this market, when that happens, there's is there the possibility

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Speaker 1: that we see a fall off in demand because they

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Speaker 1: don't have that time to sit at home anymore. Well,

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Speaker 1: I mean that would be kind of the you know,

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Speaker 1: sell the opening view right where you know your rally

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Speaker 1: during the lockdowns and then the actual big downdraft will

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Speaker 1: happen when economy because I tend to be on that view,

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Speaker 1: partly because I think the I don't want to get

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Speaker 1: into the medical aspect, but it seems to me that

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Speaker 1: whatever will happen next is going to be very different

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Speaker 1: from from before. When we're still living in this illusion

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Speaker 1: that Okay, well, you know, if we all wear a

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Speaker 1: mask and stay at home and do it for long enough,

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Speaker 1: everything we'll be back to normal. And people have not

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Speaker 1: readjusted to that. But going back to your point on

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Speaker 1: supply and demand, which I thought was interesting, and buy

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Speaker 1: backs especially, I mean that was one of the reasons

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Speaker 1: why I was barished before COVID nineteen UM, was that

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Speaker 1: we were seeing buy back slowing down dramatically. Even in

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Speaker 1: January before COVID hit, the US buy back announcement went

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Speaker 1: down by six to se Now, obviously, I mean COVID

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Speaker 1: is going to flow a ranch on this. Um. You know,

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Speaker 1: buy backs have been the single larger source of equity

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Speaker 1: demand for the stock market for five years now. Uh.

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Speaker 1: You know, we're looking at close to nine billion a

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Speaker 1: year last year. Uh. And if I look at all

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Speaker 1: the other segments possible buyers of stock, you know what

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Speaker 1: the's pension from structural selling for demographic reason. Banks, it's

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Speaker 1: regulatory broken years. You want to, you know, reduce your inventories.

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Speaker 1: Even foreigners used to be by net bias, but since

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Speaker 1: we had the kind of collapse in all prices, obviously

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Speaker 1: stuffering while fronts are a lot more likely to be

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Speaker 1: sellers of uss s and there are to be buias.

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Speaker 1: So that really leaves you a huge gap. And I

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Speaker 1: think you're absolutely right that retail investors feel that gap

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Speaker 1: in April. But as you point out, these flows are

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Speaker 1: traditionally fickle, especially if it is you know, if you

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Speaker 1: think of someone who's opening account just a month ago,

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Speaker 1: I mean, what happens is the stock market drop by

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Speaker 1: ten percent, or what happens is that person goes back

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Speaker 1: to work. As you point out, like I don't think

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Speaker 1: we investage sustainable replacement for the buyback bid. I picture

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Speaker 1: all these new retail traders as the people who were

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Speaker 1: on draft Kings and Fandel a couple of months ago,

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Speaker 1: and now that sports has shut down, they have nothing

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Speaker 1: else to do, and once there's something to gamble on, uh,

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Speaker 1: they'll be They'll be right back on Fandel maybe uh

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Speaker 1: perhaps and oversimplification there, but you know, VI's it. The

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Speaker 1: other the flip side of that coin is okay, it

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Speaker 1: looks like retail got bullish about buying this dip. When

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Speaker 1: you look at sort of the professional end of things, Um,

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Speaker 1: there is a lot of barishness in the positioning. You know,

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Speaker 1: if you look at the cftc UH positioning data, a

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Speaker 1: huge short still exists on SMP five futures. Um, is

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Speaker 1: it kind of sort of both forces acting at once.

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Speaker 1: Possibly like that the market moving against this massive hedge

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Speaker 1: fund short on the index futures and a little bit

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Speaker 1: of retail omp behind it as well. Is that possible? Yeah?

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Speaker 1: I was thinking so. And that's that's also always seeing

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Speaker 1: with our clients. UM. I mean, you could see you

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Speaker 1: had some market this location in March. Um, you know,

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Speaker 1: when we had these big down days when both the

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Speaker 1: treasury market and the stock market was setting off. You

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Speaker 1: had big discounts on several ets. So there was some

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Speaker 1: math and spike of on voting. There was some aspect

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Speaker 1: that made it look like a bottom, and I think

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Speaker 1: we saw a little bit of that institutional pick comeback then.

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Speaker 1: But I would say like since mid April, really, I

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Speaker 1: think is when when most people thought, oh they's gone

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Speaker 1: kind of like you know, you go to the first retracement.

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Speaker 1: I mean, I'm not a technical realist, but the notion

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Speaker 1: that you know, you retraced about six percent of your

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Speaker 1: losses and then you know you there's another down like

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Speaker 1: that hasn't happened. Another thing that worries me since mid

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Speaker 1: April is kind of the divergence between high yeal spreads

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Speaker 1: and stocks um So pretty much since the being of

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Speaker 1: the crisis, you had, at least basically the stock market

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Speaker 1: was taking excuse the trunk market, uh which way, which

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Speaker 1: I've always spreads, he spreads wide done stock strock, he spreads,

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Speaker 1: shrank stocks rules, and then that relation broke down since

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Speaker 1: mid April, where we have seen spreads at least stay

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Speaker 1: the same, if not wide a little bit, and the

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Speaker 1: stock market just keep going up. So of course a

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Speaker 1: big component of the rally is also stimulus, both from

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Speaker 1: the government and then also from the FED. And bear

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Speaker 1: with me because I've heard this floated recently. Uh, maybe

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Speaker 1: a majority of people will think it it's a bit crazy,

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Speaker 1: But in a way, we have seen investors trying to

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Speaker 1: front run the feds purchases of credit by buying credit ets.

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Speaker 1: You've seen massive flows into some of those funds. What

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Speaker 1: about the idea, and call me crazy, but what about

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Speaker 1: the idea that maybe you have some investors out there

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Speaker 1: thinking that we will get to the point where the

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Speaker 1: Fed's going to have to come out and say that

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Speaker 1: they're buying equities in some form of another, and they're

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Speaker 1: trying to front run that as well. No, no, no,

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Speaker 1: I I don't think that's crazy at all. I'm am

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Speaker 1: in that camp. I think this is how this ends

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Speaker 1: this and again because of that supply and demand factor,

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Speaker 1: right you have, I mean I will there will be

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Speaker 1: some buybacks less right, maybe like Microsoft or the companies

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Speaker 1: will buy backs, but buying large buybacks as the main

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Speaker 1: marginal bios stock is a story of the two thousand

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Speaker 1: tents um and that will leave a permanent five billion

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Speaker 1: plus gap in the equity supply and demand picture. And

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Speaker 1: I think that's, by the way, something that you see

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Speaker 1: across every de block market, and it's demography. At the

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Speaker 1: end of the day, as society's age, people need to

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Speaker 1: sell stock to bi bones and eventually they need to

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Speaker 1: sell bonds to go into cash. That's what That's why

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Speaker 1: the stock markets have gone nowhere in Japan, in Europe,

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Speaker 1: the US really has been the exception, and I think

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Speaker 1: it has been the exception because the US as such

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Speaker 1: an unusual amount of buyback activity, so as you remove that,

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Speaker 1: you will need to fit it. Like I said, I

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Speaker 1: don't think the retail did. This is a cute story,

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Speaker 1: it's wonderful. I'm black people are making money. But I

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Speaker 1: don't think it's a it's's sustainable, so something that I

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Speaker 1: only see one possible actor, and that's the FED. But

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Speaker 1: and I mean, you know you've seen the Bank of

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Speaker 1: Japan do it before. It's certainly been floated before. I

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Speaker 1: think it was Bernanki and Ye and actually suggested buying

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Speaker 1: buying mets at some point. So I'm sure it's there,

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Speaker 1: but it's there, I think at a lower price point.

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Speaker 1: I mean, it nothing surprised me anymore, but it would

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Speaker 1: surprise me if at ten percent, you know, the all

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Speaker 1: time high, the FED say okay, you know what I've

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Speaker 1: gotta do, buy stocks. Yeah, at that point about the

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Speaker 1: retail uh commission free trading, you know, it's it's commission

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Speaker 1: free to buy, it's commisition free to sell as well.

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Speaker 1: So I do wonder if that is ultimately a source

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Speaker 1: of more of altility. Um So, Sarah, I, I didn't

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Speaker 1: think that was a crazy question. It was borderline. It

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Speaker 1: was borderline, all right. I'll take borderline. Borderline porderline is

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Speaker 1: a success. It's victory in my book. But Vicent seems

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Speaker 1: to specialize in crazy things, which is a good guest

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Speaker 1: for us. So I'm gonna read one of the titles

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Speaker 1: of a recent report from you, Vincent, A crazy but

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Speaker 1: logical call for stag inflation. Um, this one's really interesting

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Speaker 1: to me. And you talk about sort of this. You know,

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Speaker 1: we've we've hear a lot about the wealth divide in

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Speaker 1: the US. You also talk about the generational divide. How

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Speaker 1: the younger generation um, us younger generation, right, Sarah, all

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Speaker 1: us young people wink wink um are obviously being forced

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Speaker 1: to shoulder the burden of the sacrifice in this situation.

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Speaker 1: You know, Um, younger people obviously are much lower risk

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Speaker 1: uh to death from the virus. There at a sort

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Speaker 1: of more i don't know, precarious point in their careers

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Speaker 1: where maybe perhaps more vulnerable to layoff or in the

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Speaker 1: type of service job that is more vulnerable to layoff

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Speaker 1: in this environment. So that's it's just just walk us

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Speaker 1: through this crazy but logical call for stagflation. How do

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Speaker 1: you see the potential first stagflation as we get through

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Speaker 1: sort of the reopening and what comes next? Right? Well,

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Speaker 1: I mean, first start with the generational aspect, because I

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Speaker 1: think it is the ultimate driver for the call for

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Speaker 1: for staculation. So, yeah, as you pointed, out. You know,

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Speaker 1: before going into COVID, we have this all debate about

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Speaker 1: inequality and it's almost hilarious. You see, all these billionaires

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Speaker 1: are doubles, you know, like talking about inequalities. Uh. And

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Speaker 1: you know all these field of studies like oh, the

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Speaker 1: gender pay gap and the race and these are all true.

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Speaker 1: I'm not I'm not not making a case. But by

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Speaker 1: and large, the single best predictive of how wealthy you are,

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Speaker 1: it's how old you are, and and you could be

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Speaker 1: you could say, well less normal. It takes time to

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Speaker 1: build wealth, but not across time. We've seen the relative

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Speaker 1: position of the it's sixty press cohort versus the and

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Speaker 1: the third cohort has it's been going in opposite directions,

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Speaker 1: partly because of programs which just as medicare, such as

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Speaker 1: Social Security, which that are effective transfer from one generation

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Speaker 1: to the other. And also I think the from downtall

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Speaker 1: reason for it is the rising asset prices relative to wages.

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Speaker 1: But at the end of the day, when you're young,

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Speaker 1: you don't have assets. Your your asset is the human capital.

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Speaker 1: If wages don't go up, well that asset doesn't go up. Conversely,

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Speaker 1: when asset prices go up and you're an old person,

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Speaker 1: usually your own assets so you can buy more work,

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Speaker 1: more labor with your capital. I mean, one stantard I

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Speaker 1: love is that the you had to work for four

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Speaker 1: days and the federal minimum wage to buy one sharing

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Speaker 1: is and five two days around two months. That is yeah,

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Speaker 1: that's on the basic star, right. So we had that

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Speaker 1: building in right, and you could see it in the

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Speaker 1: okay boomer memes, right, I mean there was this this

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Speaker 1: feeling and it was poorly expressed because our generation is

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Speaker 1: not very self aware, and you know, but that, okay,

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Speaker 1: something we're wrong, like always boomers with the Social Security

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Speaker 1: and just to work harder, like than eating, pay for college,

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Speaker 1: stop extra like that ang among the millennial gen z

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Speaker 1: was building up. And then on top of that you

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Speaker 1: add in the COVID crisis, and the COVID crisis is

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Speaker 1: it's I mean, it's been designed by a demographer or

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Speaker 1: an economist. I mean basically, the disease sematically kills the old,

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Speaker 1: spares the young, and then the cure hurts the young

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Speaker 1: to save the old. So we've asked for another one

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Speaker 1: of these transfers, like please, young generation, screw up the economy,

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Speaker 1: don't go to work, try to juggle raising kids that

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Speaker 1: I'm not at school with zoom meetings. Think about the

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Speaker 1: people who are driving the Amazon trucks. The nerves is

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Speaker 1: so that the old people can be safe. And maybe

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Speaker 1: it was the ethical thing to do, I certainly believe.

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Speaker 1: I mean, if I think of my parents, obviously I

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Speaker 1: would have done that. But it's a transfer. It's a

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Speaker 1: transfer on top of a situation that was very unequal,

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Speaker 1: and I think as we as we reopened, will have

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Speaker 1: to address that concern and many of the things that

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Speaker 1: the younger genda, if you will, UH, the ideas like

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Speaker 1: medicare full beause, like universal basic income, student land force,

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Speaker 1: student let known forgiveness. All these things will have to

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Speaker 1: be on the table and that will be the drive

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Speaker 1: for kind of infacionary bodies for the next decade. You know,

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Speaker 1: we've talked on the show about how this event could

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Speaker 1: be sort of a tipping point for so many different

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Speaker 1: aspects of the world in the economy, I wonder if

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Speaker 1: this is one of them. If the sort of policy

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Speaker 1: on the other end of this UH starts paying attention

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Speaker 1: to those younger voters a little bit more, maybe we

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Speaker 1: get some sort of student loan forgiveness something, some kind

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Speaker 1: of bailout for the millennials my generation generation next, we're

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Speaker 1: we're screwed, no matter what. I mean, we're just yeah,

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Speaker 1: we're just you know, Vincent, Vincent, just going along with you,

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Speaker 1: just yes, absolutely absolutely. But I consider myself an honorary millennial,

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Speaker 1: So maybe maybe somehow I'll get it on the gravy train.

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Speaker 1: But does do you think that's right? I mean, could

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Speaker 1: this sort of shift the whole dialogue a little bit

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Speaker 1: left on the political spectrum to a sort of kinder

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Speaker 1: and gentler policies towards especially the younger generation that, as

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Speaker 1: you point out, um, have struggled to gather wealth, uh

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Speaker 1: and and influence in this economy. Um. You know, people

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Speaker 1: that graduated in the global financial crisis, maybe just at

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Speaker 1: the point where you know, they have the down payment

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Speaker 1: for a house and now all of a sudden they're

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Speaker 1: hit with this um. You know, is that is that

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Speaker 1: a tipping point? Do you think? Yeah? I think so.

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Speaker 1: And and by the way, it's hard to see it

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Speaker 1: now because it's Katy, the boomer class is still very

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Speaker 1: much in control. I mean, just look at you know,

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Speaker 1: Joe Biden versus Trump or Nancy Broozian trum. But anytime

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Speaker 1: I see these people on on TV, I keep thinking

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Speaker 1: about the amount of a physical decay. They are the

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Speaker 1: very embodiment of that. And and you know the the

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Speaker 1: quarter part Haming way, how do you go bankrupt? You know,

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Speaker 1: first slowly and then all at once. As far as

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Speaker 1: the boomer generation, you can certainly see with with someone

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Speaker 1: like like Pelosi or or tro Biden, like the decade

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Speaker 1: is not happening all at once. And if you look

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Speaker 1: at Congress, I mean, how many of the these people

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Speaker 1: are going to be alive in five years? I mean

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Speaker 1: the death ray. Really, you know, for for a long

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Speaker 1: time it's nothing, and then you get to a seventy

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Speaker 1: five boom and you know, by age ninety, everybody's dead.

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Speaker 1: So we are getting into that boomer generation is getting

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Speaker 1: into into that that high death zone, which would be

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Speaker 1: consistent with the steeping point idea. As far as like inflation,

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Speaker 1: I think at the end of the day, it is

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Speaker 1: the most convenient way to address this problem. What do

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Speaker 1: we need in order to fix this? Where we need

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Speaker 1: lower serprices so that young people can buy a house

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Speaker 1: and start making babies, uh, and then we need higher

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Speaker 1: wages uh. And then we need inflation so that the

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Speaker 1: debt gets I mean, because yeah, there are also equid

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Speaker 1: issues like if we can so also a little dead,

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Speaker 1: Well what about the people who paid back on this

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Speaker 1: food to meets a lot easier to have like ten

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Speaker 1: years of infacion at seven percent By the end, everybody

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Speaker 1: is paid off. But we haven't done any of the

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Speaker 1: hard things. And that's that's the most politically satisfying way

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Speaker 1: to solve the crisis. So, say we were to get

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Speaker 1: to that point and we do see a big pickup

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Speaker 1: in an inflation to deal with what we're seeing, Now,

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Speaker 1: what does that mean for portfolios? Then? I mean, how

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Speaker 1: do you even think about going about investing at that

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Speaker 1: point in time? Get the heck out of bonds? I

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Speaker 1: guess for one thing? Yeah, not now, but yeah, yeah,

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Speaker 1: I think so. Um, I think, well, first of all,

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Speaker 1: it's helpful because the hardest position of being a bear

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Speaker 1: for the past two years, which is my case, is

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Speaker 1: being well what do you do your money? And I go,

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Speaker 1: you think stocks are expensive, you're gonna buy bombs? Okay,

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Speaker 1: Well nothing cheap, right? Well no, actually, there's one thing

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Speaker 1: that's cheap, and that's infacion sensitive. That'st so in facier

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Speaker 1: in general, I mean you can buy you can actually

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Speaker 1: get paid to get into infasition swap meaning like you know,

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Speaker 1: every like if you look at Europe or Jepan, the

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Speaker 1: market sproceing inflation, even the US break even where negative

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Speaker 1: I think all the way to five years now it's

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Speaker 1: gone back to two. So it is truly I think

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Speaker 1: the only asset that is fromamentally cheap um. So that's

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Speaker 1: that's what I would be looking at now. It's probably

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Speaker 1: not an immediate thing because right now, you know, you

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Speaker 1: cannot have inflation if people cannot buy anything. Like the

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Speaker 1: CPI at this point is the consumer basket is a

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Speaker 1: is a unicorn, It's a fictional creature. I mean you

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Speaker 1: come by right. So I think it will hit more

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Speaker 1: towards maybe the end of the year than today, but

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Speaker 1: you will have like a secular opportunity. I mean, if

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Speaker 1: you think of things like like Brazilian stocks, like materials,

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Speaker 1: like energy, like these are the sectors where you could

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Speaker 1: see like a hundred percent game month after month after month. Alright,

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Speaker 1: So so maybe not today, but at the end of

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Speaker 1: the year, once we see how this crisis does evolve.

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Speaker 1: But like I've got to say. I think we've said

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Speaker 1: the word crazy in this podcast more than we have

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Speaker 1: said in any other episode to date, which I think

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Speaker 1: is also a victory on our part. But we're going

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Speaker 1: to say it a few times more. Right, Absolutely, absolutely,

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Speaker 1: that's they worry about our gimmickure, the craziest thing we

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Speaker 1: saw on markets this weet. Yeah, I've listened to you before, right,

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Speaker 1: I know your tricks. You know, you know all the tricks.

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Speaker 1: All right, we'll start with you. We'll give you the

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Speaker 1: honor of being the craziest. I also know that you

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Speaker 1: will not be as good as as you or sorrow,

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Speaker 1: so we'll see about that. I have right hopes for you.

427
00:22:35,119 --> 00:22:38,680
Speaker 1: It's got to come in with the right expectations. That's no.

428
00:22:38,960 --> 00:22:42,440
Speaker 1: So I just I'm gonna go with Paton, And there

429
00:22:42,440 --> 00:22:44,880
Speaker 1: are many ways you can you can go at it, right,

430
00:22:44,920 --> 00:22:47,639
Speaker 1: I mean, you can go that. It's crazy that he's

431
00:22:47,680 --> 00:22:49,399
Speaker 1: gone up so much. It's crazy that they have so

432
00:22:49,480 --> 00:22:52,240
Speaker 1: much revenue. It's crazy that despite having so much revenue

433
00:22:52,240 --> 00:22:54,680
Speaker 1: and setting bikes for two thousand dollar pub they still

434
00:22:54,720 --> 00:22:58,520
Speaker 1: lose money, which is like blowing my mind. But the

435
00:22:59,400 --> 00:23:03,440
Speaker 1: angle I want to take is on their latest earning school.

436
00:23:03,480 --> 00:23:06,879
Speaker 1: They mentioned that half of their new subscribers this quarter

437
00:23:07,040 --> 00:23:10,160
Speaker 1: where people with earning it as than a hundred thousand dollars.

438
00:23:10,200 --> 00:23:12,480
Speaker 1: So these are effectively the people who are getting the

439
00:23:12,560 --> 00:23:15,920
Speaker 1: checks from the government. Uh. And if you add two

440
00:23:15,920 --> 00:23:18,520
Speaker 1: of these checks, I thinks one thousand, two hundred, you

441
00:23:18,680 --> 00:23:20,880
Speaker 1: just have the right amount to buy a Pelaton bike.

442
00:23:21,520 --> 00:23:24,560
Speaker 1: So your couple and and so what that means from

443
00:23:24,560 --> 00:23:27,919
Speaker 1: a macroeconomic perspective is that the federal government in the

444
00:23:27,960 --> 00:23:31,200
Speaker 1: I R S has effectively financed the purchase of Peloton

445
00:23:31,240 --> 00:23:33,640
Speaker 1: bikes across America. And it gives us a whole new

446
00:23:33,720 --> 00:23:36,959
Speaker 1: perspective on on what the depression means. I do think

447
00:23:37,000 --> 00:23:40,000
Speaker 1: we're going through the depression, but we'll be biking our

448
00:23:40,040 --> 00:23:43,600
Speaker 1: way through this depression. So really, what these stimulus checks

449
00:23:43,600 --> 00:23:45,960
Speaker 1: are being used for is to gamble one in the

450
00:23:46,000 --> 00:23:49,159
Speaker 1: stock market and to to buy Peloton bikes. That's the

451
00:23:50,240 --> 00:23:52,919
Speaker 1: It's like the troubled Asset relief program back in the

452
00:23:52,960 --> 00:23:56,120
Speaker 1: financial crisis. Pelton was the troubled asset there and they've

453
00:23:56,160 --> 00:23:58,480
Speaker 1: failed amount. I like it. I like that one. I

454
00:23:59,640 --> 00:24:01,880
Speaker 1: think you're onto something there. It is, You're right. It's

455
00:24:01,960 --> 00:24:04,920
Speaker 1: roughly the the purchase price of a peloton in a

456
00:24:05,080 --> 00:24:07,919
Speaker 1: for a couple. That's that. I think, I think you're

457
00:24:07,920 --> 00:24:14,080
Speaker 1: out of something there. Let's we'll save Sara's for less

458
00:24:14,080 --> 00:24:16,240
Speaker 1: because she hyped it up a little bit. Um, so

459
00:24:16,280 --> 00:24:19,520
Speaker 1: I'll give you mine. Uh. You know. This weekend was

460
00:24:19,960 --> 00:24:26,280
Speaker 1: the Berkshire Hathaway Annual Shareholder Meeting. Obviously a huge event

461
00:24:26,400 --> 00:24:29,400
Speaker 1: every year for the Buffetologists out there who want to

462
00:24:29,760 --> 00:24:33,359
Speaker 1: sort of hear what Warren's thinking about the state of

463
00:24:33,480 --> 00:24:36,399
Speaker 1: not just his company obviously, but just the state of

464
00:24:36,400 --> 00:24:39,240
Speaker 1: the economy and the markets and point. It was a

465
00:24:39,400 --> 00:24:41,600
Speaker 1: surreal one this year. I don't know if you guys

466
00:24:41,640 --> 00:24:45,280
Speaker 1: watched it at all, but he set up, um, you know,

467
00:24:45,480 --> 00:24:48,720
Speaker 1: it was your typical sort of zoom virtual meeting, but

468
00:24:48,840 --> 00:24:51,680
Speaker 1: instead of being in his basement, he was actually in

469
00:24:51,800 --> 00:24:55,520
Speaker 1: the Omaha arena that they always do the meeting. But

470
00:24:55,560 --> 00:24:58,679
Speaker 1: it was completely empty and it was Buffett and another

471
00:24:58,720 --> 00:25:02,719
Speaker 1: executive on this stage. It was really weird, and he

472
00:25:02,720 --> 00:25:05,040
Speaker 1: he sort of went into this long monologue about the

473
00:25:05,040 --> 00:25:08,199
Speaker 1: Great Depression, which, um, not really what you want to

474
00:25:08,200 --> 00:25:11,040
Speaker 1: hear from Buffett, uh, when you're wondering where the economy

475
00:25:11,119 --> 00:25:14,000
Speaker 1: is going. But the crazy part, Sarah is when they

476
00:25:14,000 --> 00:25:19,000
Speaker 1: started taking calls from shareholders. Uh. One of the shareholders

477
00:25:19,160 --> 00:25:22,159
Speaker 1: was none other than the actor Bill Murray, who I

478
00:25:22,160 --> 00:25:26,119
Speaker 1: get apparently owns a few shares in Berkshire. And I

479
00:25:26,440 --> 00:25:29,280
Speaker 1: find it ironic because so many people have talked about

480
00:25:29,320 --> 00:25:32,200
Speaker 1: this lockdown being sort of like roundhog Day, the same

481
00:25:32,240 --> 00:25:34,720
Speaker 1: thing over and over again. So here's here's Bill Murray,

482
00:25:34,720 --> 00:25:38,240
Speaker 1: and I'll just read you his his question for Warren Buffett,

483
00:25:38,480 --> 00:25:41,720
Speaker 1: courtesy of The New York Post reporting on it. He said,

484
00:25:41,880 --> 00:25:46,040
Speaker 1: the pandemic will graduate a new class of war veterans, healthcare,

485
00:25:46,240 --> 00:25:51,000
Speaker 1: food supply deliveries, community services, so many, oh so much,

486
00:25:51,240 --> 00:25:54,920
Speaker 1: too so few. How might this great country take our

487
00:25:55,040 --> 00:25:59,160
Speaker 1: turn and care for them all? And Buffet was pretty

488
00:25:59,160 --> 00:26:01,360
Speaker 1: honest about he said, we won't be able to pay. Actually,

489
00:26:01,840 --> 00:26:05,000
Speaker 1: it's like the people that landed at Normandy. They're contributing

490
00:26:05,000 --> 00:26:06,720
Speaker 1: a whole lot more than some of the people that

491
00:26:06,800 --> 00:26:09,080
Speaker 1: came out of the right room womb or got lucky

492
00:26:09,119 --> 00:26:12,119
Speaker 1: in things or know how to arbitrage bonds or whatever

493
00:26:12,160 --> 00:26:14,520
Speaker 1: it may be. In a large part, I'm one of

494
00:26:14,560 --> 00:26:18,720
Speaker 1: those guys. So pretty honest, uh answer from Buffett. But

495
00:26:19,359 --> 00:26:22,000
Speaker 1: so it kind of gets to the whole point about

496
00:26:22,040 --> 00:26:27,560
Speaker 1: this generational and wealth inequality divide. I mean it, um,

497
00:26:27,880 --> 00:26:33,960
Speaker 1: it's amazing to think, uh, you know, how things could

498
00:26:34,119 --> 00:26:36,520
Speaker 1: potentially be changed for the better. At the other end

499
00:26:36,520 --> 00:26:38,439
Speaker 1: of this, I guess is is if you're looking for

500
00:26:38,480 --> 00:26:40,480
Speaker 1: sort of the silver lining in this cloud, maybe that's it,

501
00:26:41,200 --> 00:26:44,640
Speaker 1: right And no, I had had funny I watched that thing,

502
00:26:44,680 --> 00:26:48,240
Speaker 1: and as I was watching this really dull bob current

503
00:26:48,320 --> 00:26:51,000
Speaker 1: in this empty room, I had a it looks like

504
00:26:51,400 --> 00:26:54,560
Speaker 1: a eulogy for an American era that was gone. You know,

505
00:26:54,600 --> 00:26:58,399
Speaker 1: there was something very very depressing, especially comparing to what

506
00:26:58,640 --> 00:27:00,919
Speaker 1: all the some mates when he is like the folks,

507
00:27:00,920 --> 00:27:04,199
Speaker 1: the tradition, and you know, by I buy America today,

508
00:27:04,440 --> 00:27:10,560
Speaker 1: like yes, yes, all these folksy stuff that Buffett does it,

509
00:27:10,560 --> 00:27:14,760
Speaker 1: It just it was not there. And I thought the

510
00:27:14,800 --> 00:27:17,600
Speaker 1: exact same thing now. I as far as the civil lining,

511
00:27:17,800 --> 00:27:22,639
Speaker 1: I I think we don't see it now, but you know,

512
00:27:22,760 --> 00:27:25,960
Speaker 1: now we see the decay of of what what's past.

513
00:27:26,080 --> 00:27:29,280
Speaker 1: We don't see what's birthing, what's being born again, but

514
00:27:29,480 --> 00:27:31,560
Speaker 1: it usually is. I mean the quote you know it's

515
00:27:31,560 --> 00:27:33,920
Speaker 1: always darkest before the dawn, like it is in moment

516
00:27:34,000 --> 00:27:38,160
Speaker 1: of national crisis that you actually, uh you know, fixed

517
00:27:38,200 --> 00:27:41,560
Speaker 1: thing and and reshuffle the social order in a new way.

518
00:27:41,600 --> 00:27:43,000
Speaker 1: You know, it's at that that that for the Great

519
00:27:43,000 --> 00:27:45,719
Speaker 1: Depression that you've got the new deal and eventually social

520
00:27:45,760 --> 00:27:48,720
Speaker 1: security or if I think about France, the you know,

521
00:27:48,800 --> 00:27:51,840
Speaker 1: the social program of the resistance, Like France was occupied

522
00:27:51,880 --> 00:27:54,960
Speaker 1: by Germany. It was a complete disaster and they're nighting

523
00:27:55,040 --> 00:27:56,720
Speaker 1: for we two these people go to go around the

524
00:27:56,760 --> 00:27:59,359
Speaker 1: table and set up the stage for you know, what

525
00:27:59,480 --> 00:28:02,919
Speaker 1: would be the the prosperity of thirty years of of

526
00:28:02,920 --> 00:28:06,240
Speaker 1: of recovery after that. So I think eventually that will come.

527
00:28:06,240 --> 00:28:08,359
Speaker 1: And that's something I meant to say about the generational

528
00:28:08,480 --> 00:28:10,840
Speaker 1: warfare stuff. I mean, it's fun to do, like okay,

529
00:28:10,840 --> 00:28:13,880
Speaker 1: boomer gency, millennial whatever, but at the end of the day,

530
00:28:13,960 --> 00:28:16,000
Speaker 1: and I think that's that's the reason why it gets solved.

531
00:28:16,000 --> 00:28:18,680
Speaker 1: It's it's some versus father's daughters versus mothers. I mean,

532
00:28:19,240 --> 00:28:21,960
Speaker 1: there is there are the bonds of love and and

533
00:28:21,960 --> 00:28:25,560
Speaker 1: and mutual need that ensures that these conflicts eventually get solved.

534
00:28:25,560 --> 00:28:27,399
Speaker 1: And I believe this is a story that has been

535
00:28:27,440 --> 00:28:31,760
Speaker 1: repeated through history, and eventually every generation finds a way

536
00:28:31,840 --> 00:28:35,480
Speaker 1: to fix the system. All right, Sarah, you hyped it up.

537
00:28:35,520 --> 00:28:37,680
Speaker 1: What do you have for us? Well, well, first, you

538
00:28:37,720 --> 00:28:40,280
Speaker 1: guys made me think of one that I actually didn't bring,

539
00:28:40,400 --> 00:28:42,680
Speaker 1: so I'll keep that second. But one is speaking of

540
00:28:42,720 --> 00:28:46,040
Speaker 1: the generational divide and Warren Buffett, something that was really

541
00:28:46,280 --> 00:28:48,320
Speaker 1: a little bit crazy this past week. I mean, Warren

542
00:28:48,320 --> 00:28:51,200
Speaker 1: Buffett talks at length about how he sold all his

543
00:28:51,240 --> 00:28:54,239
Speaker 1: airline shares. Then all of a sudden this week, if

544
00:28:54,280 --> 00:28:56,800
Speaker 1: you look, there's an e t F that tracks airlines

545
00:28:57,320 --> 00:29:01,960
Speaker 1: booms and popularity on robin Hood there's massive flows uh

546
00:29:02,040 --> 00:29:05,480
Speaker 1: into the fund. A colleague on my team, they obviously

547
00:29:05,480 --> 00:29:07,840
Speaker 1: didn't end up running it, but they were floating a

548
00:29:07,920 --> 00:29:10,960
Speaker 1: joke headline saying millennials think they're smarter than Warren Buffett

549
00:29:11,680 --> 00:29:14,040
Speaker 1: because Warren Buffetts had cell airlines, and all of a sudden,

550
00:29:14,040 --> 00:29:16,760
Speaker 1: you've got all your robin Hood traders flying over to

551
00:29:16,840 --> 00:29:19,480
Speaker 1: this jet CTF. I would have ran. I would have

552
00:29:19,560 --> 00:29:23,040
Speaker 1: ran that headline. Yeah, I wish we could have. You

553
00:29:23,080 --> 00:29:28,680
Speaker 1: guys got to stop with putting millennial run this. It

554
00:29:28,680 --> 00:29:33,920
Speaker 1: gets red, okay, But my actual thing that I came with,

555
00:29:34,040 --> 00:29:36,200
Speaker 1: and it wasn't so much hyping it up. I truly

556
00:29:36,280 --> 00:29:39,480
Speaker 1: just want input from listeners on how they think this

557
00:29:39,560 --> 00:29:42,239
Speaker 1: is pronounced. Obviously, there's been a lot going on with

558
00:29:42,320 --> 00:29:45,640
Speaker 1: Elon Musk lately and miss Tesla. But his son was

559
00:29:45,680 --> 00:29:48,840
Speaker 1: born this past week and I cannot, for the life

560
00:29:48,880 --> 00:29:52,440
Speaker 1: of me, figure out how to pronounce his son's name.

561
00:29:54,040 --> 00:29:56,880
Speaker 1: It's X the symbol with the A and the combined

562
00:29:57,400 --> 00:30:02,080
Speaker 1: A dash twelve Musk. So if anyone listening thinks that

563
00:30:02,160 --> 00:30:05,000
Speaker 1: they know how to correctly pronounce the name, I would

564
00:30:05,000 --> 00:30:08,120
Speaker 1: love for you to call in and pronounce it for us,

565
00:30:08,720 --> 00:30:10,440
Speaker 1: that we have a better act Like there wasn't there

566
00:30:10,440 --> 00:30:13,560
Speaker 1: a tweet that explained the meaning of There was no

567
00:30:13,720 --> 00:30:17,560
Speaker 1: ordeal on that. The mother she yeah, she tweeted out

568
00:30:17,600 --> 00:30:21,960
Speaker 1: the meaning of of the name. Um, she tried to

569
00:30:22,000 --> 00:30:25,400
Speaker 1: explain it. She did so, so he shows up. He's like, Hi,

570
00:30:25,480 --> 00:30:28,760
Speaker 1: I'm Ellen. This is my wife Crimes, her girlfriend Grimes,

571
00:30:28,800 --> 00:30:31,120
Speaker 1: and and my son A what is it? A seven?

572
00:30:31,240 --> 00:30:37,160
Speaker 1: A twelve and my son are two D two? Um,

573
00:30:37,200 --> 00:30:38,880
Speaker 1: I don't know. I'm just so curious how people think

574
00:30:38,880 --> 00:30:43,920
Speaker 1: it's pronounced. One call that hotline. I don't have the number, handy,

575
00:30:44,000 --> 00:30:47,920
Speaker 1: but uh I do. For my point on on growth

576
00:30:47,960 --> 00:30:52,440
Speaker 1: and hassle, formation and and generation, regardless of how stupid

577
00:30:52,440 --> 00:30:55,440
Speaker 1: the names that come on in I'm us for having babies.

578
00:30:55,480 --> 00:30:56,800
Speaker 1: I think at the end of the day, you need

579
00:30:56,880 --> 00:30:59,680
Speaker 1: more babies to solve all of that, and you know,

580
00:31:00,000 --> 00:31:04,960
Speaker 1: of them, whatever you want, just keep making them. Give

581
00:31:05,000 --> 00:31:08,280
Speaker 1: us your bonus crazy thing. That was pretty good, Ellen,

582
00:31:08,360 --> 00:31:11,160
Speaker 1: baby is pretty good, But what's your bonus? One? That

583
00:31:11,280 --> 00:31:13,600
Speaker 1: was my? That was it, And then the buying jets

584
00:31:13,760 --> 00:31:15,840
Speaker 1: was before you have one more? If you want to

585
00:31:15,840 --> 00:31:21,400
Speaker 1: hear it? Sure? Why not? Why not? Carnival the cruise

586
00:31:21,440 --> 00:31:26,800
Speaker 1: line announced that they will allow, well not, they will allow,

587
00:31:26,880 --> 00:31:29,720
Speaker 1: but they are now offering a fee, essentially a baseline

588
00:31:29,760 --> 00:31:32,080
Speaker 1: fee to take a cruise on August first, when they're

589
00:31:32,080 --> 00:31:34,600
Speaker 1: gonna start sailing again, at twenty eight dollars, which is

590
00:31:34,640 --> 00:31:37,560
Speaker 1: extremely cheap. But I think now we have negative feeds,

591
00:31:37,600 --> 00:31:40,360
Speaker 1: funds rates, negative oil prices, I think we might as

592
00:31:40,360 --> 00:31:45,040
Speaker 1: well just have negative cruise launching as well. Another subsily

593
00:31:45,240 --> 00:31:47,240
Speaker 1: to boomer by the way, because who's who's going to

594
00:31:47,400 --> 00:31:51,720
Speaker 1: enjoy these cruises? You know? I think you'd have to

595
00:31:51,760 --> 00:31:54,000
Speaker 1: pay me for me to get on a cruise ship

596
00:31:54,080 --> 00:31:56,040
Speaker 1: right now. And hey, I'm right at the port too.

597
00:31:56,120 --> 00:31:59,640
Speaker 1: I could drive over there in five minutes. Maybe it's

598
00:31:59,680 --> 00:32:03,640
Speaker 1: like twenty eight dollars for the cruise uh per night,

599
00:32:03,720 --> 00:32:06,240
Speaker 1: and then a hundred dollars for every lightsoul wipe you

600
00:32:06,280 --> 00:32:09,720
Speaker 1: want to buy from the from the ship store. That's

601
00:32:09,800 --> 00:32:12,960
Speaker 1: that's how they mark it up. Well that's pretty good. Well, um,

602
00:32:13,360 --> 00:32:17,040
Speaker 1: you millennials really ruined this podcast. I gotta say, that's

603
00:32:17,080 --> 00:32:20,400
Speaker 1: that's our goal in life. One more thing, as would say,

604
00:32:20,440 --> 00:32:26,520
Speaker 1: all the headlines another not in ruined. Ay. I like

605
00:32:26,560 --> 00:32:29,200
Speaker 1: the millennials. I'm a big fan of the millennials. Well,

606
00:32:29,200 --> 00:32:31,040
Speaker 1: you said earlier that you kind of want to be

607
00:32:31,080 --> 00:32:35,720
Speaker 1: a millennial. Millennial a millennial right now it's forty. I mean,

608
00:32:35,880 --> 00:32:38,440
Speaker 1: he's some million like me getting close to forty, and

609
00:32:38,480 --> 00:32:40,560
Speaker 1: they have kids that they bring to school. I mean,

610
00:32:41,200 --> 00:32:44,280
Speaker 1: it would be great if if news people who write

611
00:32:44,320 --> 00:32:47,040
Speaker 1: news headlines realize that, you know, what they think of

612
00:32:47,120 --> 00:32:50,240
Speaker 1: as a millennial is actually, you know, twenty years younger

613
00:32:50,320 --> 00:32:53,600
Speaker 1: than what they actually are. I don't like the gen

614
00:32:53,720 --> 00:32:56,600
Speaker 1: Z thing though, because that's it, gen Z, We're done.

615
00:32:56,800 --> 00:32:59,600
Speaker 1: I mean, we should have thought this through before we started.

616
00:33:00,080 --> 00:33:03,560
Speaker 1: Name it's it's the next one's alpha or something like that.

617
00:33:03,960 --> 00:33:07,800
Speaker 1: You restart. That's maybe that's where Ellen's thinking with his

618
00:33:07,840 --> 00:33:11,520
Speaker 1: kid's name. Maybe maybe uh. And just as a reminder,

619
00:33:11,560 --> 00:33:13,640
Speaker 1: you can give us a call at our podcast hot line.

620
00:33:13,680 --> 00:33:17,720
Speaker 1: It is six or six three two four three zero,

621
00:33:18,080 --> 00:33:20,480
Speaker 1: So now that you have the number, we should also say,

622
00:33:20,520 --> 00:33:22,680
Speaker 1: of course, Vincent Delaward, thank you so much for coming

623
00:33:22,680 --> 00:33:25,120
Speaker 1: on the show today, my pleasure, Thank you so much,

624
00:33:33,800 --> 00:33:36,720
Speaker 1: What Goes Up. We'll be back next week. Until then,

625
00:33:36,960 --> 00:33:39,400
Speaker 1: you can find us on the Bloomberg Terminal, website and

626
00:33:39,440 --> 00:33:42,520
Speaker 1: app or wherever you get your podcasts. We love it

627
00:33:42,560 --> 00:33:44,600
Speaker 1: if he took the time to rate interview the show

628
00:33:44,680 --> 00:33:48,120
Speaker 1: on Apple Podcast so more listeners can find us. And

629
00:33:48,280 --> 00:33:51,000
Speaker 1: you can find us on Twitter, follow me at at

630
00:33:51,040 --> 00:33:54,800
Speaker 1: Sarah pont Sack, Mike is at Reaganonymous. Our guest, Vincent

631
00:33:54,880 --> 00:33:58,440
Speaker 1: Delawart is at Vincent Delward and you can also follow

632
00:33:58,520 --> 00:34:02,760
Speaker 1: Bloomberg Podcast at podcasts. What Goes Up as produced by

633
00:34:02,800 --> 00:34:06,400
Speaker 1: Tobra Foreheads. The head of Bloomberg Podcast is Francesco Levie.

634
00:34:06,720 --> 00:34:10,600
Speaker 1: Thanks for listening, See you next time. Thank