Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing
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Speaker 1: YouTube and now also on Bloomberg Quick Take. Let's set
Speaker 1: your business week agenda on this Yeah, it's kind of
Speaker 1: a fed Wednesday. We call it an f O m
Speaker 1: C fed Wednesday because, as Charlie mentioned, definitely market reaction
Speaker 1: yields dipping down a bit, and we are definitely seeing
Speaker 1: a pop up in the equity trait. So let's get
Speaker 1: to it with our markets to Molly Smith is Economics
Speaker 1: editor Bloomberg News. She's on the phone in New York City.
Speaker 1: Creed Gupta and Gred markets correspondent at Bloomberg News and Creed.
Speaker 1: Before we get into a deeper market analysis, just talk
Speaker 1: about the reaction to those fed minutes, if you would. Yeah,
Speaker 1: So the stock market here, and remember we're on extremely
Speaker 1: low volume, down at seventeen from its five day average.
Speaker 1: The stock market has popped on these headlines, about six
Speaker 1: tents of one percent on the SMP five hundred, NASDAC
Speaker 1: now hired by above one percent. I should say it
Speaker 1: was kind of meandering for most of the day, So
Speaker 1: a very strong positive reaction in the equity market, positive
Speaker 1: reaction for the bond market as well. The tenure yield
Speaker 1: three seventy one down at four basis points, and even
Speaker 1: a drop of the vix. We are now at a
Speaker 1: twenty handle on the VIX. We have not seen that
Speaker 1: since this past summer. Um also a little bit of
Speaker 1: weakness in the dollar as well. I'm gonna let Molly
Speaker 1: kind of um go through these headlines here, but to me,
Speaker 1: I think the one that they're most reacting to is
Speaker 1: that several officials said continued rapid tightening risk destabilizing financial markets.
Speaker 1: Destabilizing not a great word. And of course they also
Speaker 1: talked about in light of the termoil in the UK
Speaker 1: um a really precarious situation we're gonna be obsessing about
Speaker 1: this for a while. Molly, come on in on it
Speaker 1: and just break down what jumps out for you in
Speaker 1: terms of those f o MC minutes. Yeah, to me,
Speaker 1: this reads pretty in line with expectations and echoes a
Speaker 1: lot of what we've heard in the time since the
Speaker 1: policy meeting earlier this month, a lot of what Powell
Speaker 1: had said in the press conference of expecting a higher
Speaker 1: peak rate, which which most majority which most most participants
Speaker 1: did agree with in the minutes here. And also, uh,
Speaker 1: you know, the UM a theme of what most of
Speaker 1: the Fed speak in the time since has been in
Speaker 1: the sense of soon being appropriate to slow the pace
Speaker 1: of tightening. So I think that's also pretty positive for
Speaker 1: market drivers here in uh, you know, more solidifying those
Speaker 1: bets around fifty basis points for December. Yeah, Molly, I
Speaker 1: think you're right. You know, it sounds very similar to
Speaker 1: what Rome pal said at the last press conference, UM,
Speaker 1: and it really seems like the market is keying in
Speaker 1: on that notion of slowing the pace of rate hikes
Speaker 1: and sort of ignoring the idea of the terminal rate
Speaker 1: being a little bit higher than what we had thought
Speaker 1: before the last meeting. I mean, is the Feds sort
Speaker 1: of just kind of buying themselves some time with this
Speaker 1: type of st ants, you know, saying, look, we could
Speaker 1: raise rates to ultimately higher than what everyone expected, but
Speaker 1: we're going to do it more slowly. Is that is
Speaker 1: that kind of the takeaway? Do you think it seems? Yeah,
Speaker 1: that seems like a snare assessment. You know, they know
Speaker 1: that they need to be hiking you know, well into
Speaker 1: the first quarter of next year, possibly into the second quarter.
Speaker 1: And that seems like what several Wall Street banks are
Speaker 1: predicting as well. Um, and it's uh, you know, a
Speaker 1: lot of data this morning would also uh support the
Speaker 1: idea of slowing the pace. We saw a few reports
Speaker 1: this morning that generally just pointed toward slowing parts of
Speaker 1: the economy, and most notably with the labor markets starting
Speaker 1: to cool and continuing job was claimed being the real
Speaker 1: uh indicator of that, as in people who are more
Speaker 1: routinely filing for unemployment claims than a sign that people
Speaker 1: are being out of work for longer. Uh. That's being
Speaker 1: that is, you know, obviously not great for the people
Speaker 1: who are applying for undemployment benefits, but in the Fed's
Speaker 1: mission right here to try to cool the Abram market
Speaker 1: and softened demand more broadly, that is a very good indicator.
Speaker 1: Can we call this a pivot? Pretty I'm gonna first
Speaker 1: get your take and then go to Molly. I don't
Speaker 1: think it's a pivote as yet. We're now talking about
Speaker 1: Maybe gave me a very big lecture. He said, you
Speaker 1: can't call it a pivot until they're actively cutting what
Speaker 1: you can do whatever you want down. It's a step down, Mike.
Speaker 1: It's a step down. Pivot, a step down. I'm gonna
Speaker 1: do that before Mike gets gay in trouble. Um, I've
Speaker 1: got to say that to me. I mean, look, I
Speaker 1: completely agree with everything Molly is saying. But I think
Speaker 1: what's really crucial once again is look what they're saying
Speaker 1: here that the risk of leverage and non bank institutions
Speaker 1: could amplify the shocks. That that's kind of some scary stuff.
Speaker 1: There's some pretty scary language in here. Destabilize by non
Speaker 1: bank institutions specifically. I think, so this is like anyone
Speaker 1: that's not your your market makers, your GP mortgage, your Goldman's,
Speaker 1: your Yeah, I'm just gonna say crypto, anybody that won't
Speaker 1: be at the Thanksgiving table, although I bet they'll be
Speaker 1: discussion among family members. Molly, is this a pivot? I'm
Speaker 1: gonna stick with Creaty's assessment here and my good friend
Speaker 1: Mike McKee, Oh, come on, you guys are checking. No
Speaker 1: one ever wants to argue with McKey. You can't agree.
Speaker 1: I think you know, if I, if any of us
Speaker 1: start saying it's a pivot, then STP is really going
Speaker 1: to go through the roof today. So I'm not going
Speaker 1: to call it a pivot for risk of the stabilizing
Speaker 1: the market. But there's definitely a change, significant change. Could
Speaker 1: we call it a pivot in the tone of what
Speaker 1: the FETE is saying? Molly, I like downshift, I really do. Um.
Speaker 1: I think you know. And the thing for me is
Speaker 1: what pivot implies is that like it's that, you know,
Speaker 1: a start, like a start turn away from what they've
Speaker 1: been communicating. And to me, this has been what they've
Speaker 1: been communicating. This is like very much in line with
Speaker 1: what we heard at the meeting earlier this month and
Speaker 1: what several feed speakers have been communicating to us. All Right,
Speaker 1: we gotta go, all right, we can continue to beat
Speaker 1: this um. In the meantime, do my Twitter Paul on
Speaker 1: your favorite pipe for Thanksgiving. Molly Smith, economics ceterer, a
Speaker 1: Bloomberg created give to anchor and markets correspondent at Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. The minutes from
Speaker 1: the last FED meeting as you just turned there out
Speaker 1: just about eighteen minutes ago, and I feel like the
Speaker 1: big takeaway for me was that the FED did see
Speaker 1: officials talking about a slower pace of hikes appropriate soon,
Speaker 1: but they also talked about a somewhat higher than uh
Speaker 1: FED than they had previously discussed federal funds rate, the
Speaker 1: ultimate level of the FED funds. So I feel like
Speaker 1: there's something for everyone in this report. Let's bring in
Speaker 1: Steve Skanky's chief economic advisor ever at keel Point. He
Speaker 1: is a former U. S Treasury and White House National
Speaker 1: Security Council staff member. He is based in Washington, d C.
Speaker 1: And that's where we find him via zoom Steve Skanky,
Speaker 1: So nice to have you here with Mike Reagan and myself. Um,
Speaker 1: is it true that there's maybe a little bit of
Speaker 1: everything or something in in this report for everyone? A
Speaker 1: little bit. I think that's a good assessment, Carol. Uh,
Speaker 1: there's there there's nothing that's really surprised scene here. Uh.
Speaker 1: We had a dovish statement at the end of the
Speaker 1: November meetings, and then we had a somewhat hawkish UH
Speaker 1: commentary from cherre Poul and his press conference which was
Speaker 1: delivering the the the notion that they may have to
Speaker 1: raise above the four and a half to four and
Speaker 1: three quarters percentage points UH as the top rate of
Speaker 1: FED funds that was indicated in their September Summary of
Speaker 1: Economic um outlook. So yes, a little bit devish, a
Speaker 1: little bit hawkish, no big surprises for what we've been
Speaker 1: hearing already, you know, Steve, when I look at the
Speaker 1: stock market react the way it did to this UH
Speaker 1: these minutes, you know, smps up about half a percentage point,
Speaker 1: and we have the end of the year coming. A
Speaker 1: lot of investors sort of assumed there'll be some sort
Speaker 1: of seasonality that leads to a year end rallying in stocks.
Speaker 1: Does that do you think influence the Fed? Uh the
Speaker 1: next time they go out on the speaking circuit to
Speaker 1: the point where they might walk some of this debbishness
Speaker 1: back a little bit. If they're afraid that financial conditions
Speaker 1: are are loosening up to two aggressively. Oh no, they
Speaker 1: never talk it back, They never Mike, Mike, that's a
Speaker 1: that's that's a great point. Um. What's what's interesting is
Speaker 1: that there was enough devilishness in it, UH in their
Speaker 1: policy statement and even in share Paul's press conference. And
Speaker 1: then we got this great inflation news UH the October
Speaker 1: cp I, the p p I last week, and UH
Speaker 1: markets just started to u basically rejoice in what was
Speaker 1: good news that that the fat actions were working. They
Speaker 1: could lighten up the things that they said about what
Speaker 1: was it a slower pace in these circumstances would allow
Speaker 1: the committee to assess progress towards its goals of maximum
Speaker 1: employment and price stability. It seemed like that UH, that
Speaker 1: was being achieved, and of course the the f MC
Speaker 1: members got unnerved about that, and so last week and
Speaker 1: even earlier this week you heard a lot of pushback
Speaker 1: on that. They certainly don't want irrational exuberance to set in,
Speaker 1: But at the same time, a good number of them
Speaker 1: recognize that they've done a lot pretty quickly and they
Speaker 1: really need to take time to reflect to see how
Speaker 1: that's working out so that they don't overdo it. So
Speaker 1: do you feel like when you look at the subsequent
Speaker 1: data points that we're getting, as you mentioned the inflation print,
Speaker 1: but even like the weekly jobless claims today right um
Speaker 1: week are than expected, showing some slowing down of the
Speaker 1: labor markets, still very high historically in terms of the
Speaker 1: strength that we're seeing. But that's a good sign at
Speaker 1: least from the FEDS perspect ative. That is a good
Speaker 1: sign from the FET's perspective. And the job's number that
Speaker 1: we expect for November at the end of next week
Speaker 1: also looks like it's going to be below two hundred thousand,
Speaker 1: more in the range of a hundred and seventy five thousand.
Speaker 1: Wage growth also seems to be slowing. All good things
Speaker 1: because one of the recurring themes in their minutes as
Speaker 1: we just look through them, is thanks to concern about
Speaker 1: tightness in the labor market, and and so some of
Speaker 1: the labor information out today, out earlier this week indicates
Speaker 1: that it's it's becoming less tight. Uh, it is slowing.
Speaker 1: That's helpful as an early indicator of avoiding what the
Speaker 1: fet IS is afraid about, and that is that inflation
Speaker 1: just gets built into the labor market and very hard
Speaker 1: to root out. Steve. The other big takeaway from these
Speaker 1: minutes is as the Fed is sort of laying the
Speaker 1: groundwork for less aggressive rate hikes going forward, their simultaneously
Speaker 1: sort of you know, prepping the market for a higher
Speaker 1: terminal rate, you know, the higher peak rate in the
Speaker 1: Fed funds rate. I'm I'm looking at the uh what
Speaker 1: the Fed fund futures are implying, and they're pricing in
Speaker 1: basically about a five percent peak in the Fed funds
Speaker 1: rate towards the middle of the next year. Does that
Speaker 1: sound about right to you? That sounds about right. And
Speaker 1: right after the meeting, Mike, uh Uh, Fed funds futures
Speaker 1: were up at five ten and change, which was which
Speaker 1: was where the Fed I think was was pointing them.
Speaker 1: And then of course, with a good inflation numbers, uh,
Speaker 1: that dropped back to you know, four point eight Uh.
Speaker 1: And now it's as you say, it's back up about
Speaker 1: five percent um. It's also a bit of a race
Speaker 1: as to which gets to five percent first, the FED
Speaker 1: funch rate or inflation um Shure. Powell implied that we
Speaker 1: didn't say it explicitly it as press conference a couple
Speaker 1: of weeks ago that that they sort of see five
Speaker 1: ten as, which was of course their sep uh inflation
Speaker 1: rate by their their there person consumption expenditures inflation metric
Speaker 1: that they were going to get there, got it and accordingly.
Speaker 1: But but you know, inflation coming down more quickly than
Speaker 1: than they had fought. Steve, we gotta run. Have a
Speaker 1: good Thanksgiving, Steve, stinky over at kill point. This is Bloomberg.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, this
Speaker 1: story definitely jumped out at me reading in this morning.
Speaker 1: It's a Bloomberg opinion piece. It's about the real reasons
Speaker 1: your family is sick right now, and basically it's about
Speaker 1: how we're masks. For more than two years, drove down
Speaker 1: the incidents of colds and flus, the viruses that causes that,
Speaker 1: and as a result, we lost immunity, something that the
Speaker 1: popular press Mike has dubbed immunity debt. Immunity debt. I
Speaker 1: guess it's into our world. What if there's credit the
Speaker 1: fault swaps on the immunity. It feels like a new
Speaker 1: asset class. All right, so let's get to our next guest.
Speaker 1: See what he has to say. He's a friend of
Speaker 1: the program, Dr Ian LUs Bade, our clinical professor of
Speaker 1: Medicine at n y U Land Going. He's on the
Speaker 1: phone in New York City. Ian, good to have you
Speaker 1: here with Mike and myself. I gotta say this is
Speaker 1: why I continued to wear a mask on subways in
Speaker 1: public places while flying. Um tell us about all the
Speaker 1: stuff that's coming at us right now. Absolutely. First of all,
Speaker 1: Happy Thanksgiving, Carol and Mike and uh, I hope it's
Speaker 1: a good holiday. So yeah. So though many people enjoy
Speaker 1: the holidays and feel very positive, there are both emotional
Speaker 1: and health risks to it. A lot of people feel
Speaker 1: somewhat isolated, depressed, anxious, but in addition to that, they're
Speaker 1: worried about potential risks. From what we're seeing now are
Speaker 1: multiply infected people, both kids and adults with a combination
Speaker 1: of influenza. And for that, we do have a vaccine,
Speaker 1: so it makes sense to get your flu shot, even
Speaker 1: though it's not a hundred percent effective because of mutations
Speaker 1: that usually provide some protection. So influenza rsp RS v
Speaker 1: as you said, respiratory sinsicial virus, which we tend to
Speaker 1: see more in kids, but you can also see in adults,
Speaker 1: and of course based on age, can have more complications. COVID,
Speaker 1: which hasn't gone away, although it does seem to be
Speaker 1: a little less serious. So we're seeing patients often with
Speaker 1: a combination of all of these and even other viruses
Speaker 1: like rhinovirus and ad no virus. So we are in
Speaker 1: this kind of soup of viruses and even kids going
Speaker 1: into the hospital. Friends of mine who are in the
Speaker 1: ICU UM out in Long Island say when they test
Speaker 1: kids with these pathogens this nasal swab, often they come
Speaker 1: up positive on a multitude of these viruses. So you know,
Speaker 1: what do you do? Do you invite everyone over? Do
Speaker 1: you wear you know, how can you wear a mask
Speaker 1: when you're all sitting down? So a mass certainly can
Speaker 1: help a debt, but obviously not practical and you really
Speaker 1: have to evaluate your risk, you know, if you're older,
Speaker 1: if you have diabetes, if you have lung disease, you know,
Speaker 1: maybe sit it out this year, Maybe make your guests
Speaker 1: take a COVID swab before they come in. You know,
Speaker 1: there be smart about it and emotionally prepare. In other words,
Speaker 1: try not to take things too seriously, be relaxed, but
Speaker 1: make sure your guests are healthy before they show up. Doctor.
Speaker 1: Is there anything we can do about this quote unquote
Speaker 1: immunity debt? You know, if if our immune systems are
Speaker 1: are sort of weaker now than they were before, COVID
Speaker 1: is the old you know, taking vitamin C or drinking
Speaker 1: our institutes? Is there anything to that? Is that worthwhile
Speaker 1: precaution at this definitely? Definitely Vitamin D plays a big role.
Speaker 1: And most people are vitamin D deficient, so definitely most people.
Speaker 1: And you can check your levels and see where you are,
Speaker 1: although there is a big range. I think vitamin D
Speaker 1: supplementation makes sense to some degree. Zinc prevents attachment of viruses,
Speaker 1: so being in good health in general, losing weight, exercising, um,
Speaker 1: so all of that makes sense. It is less clear
Speaker 1: that the fact that we haven't had as bad a
Speaker 1: flu outbreak makes you more vulnerable to the flu next time.
Speaker 1: I think that's a little unclear, right, because if you're
Speaker 1: taking a vaccine or you're wearing a mask, are you
Speaker 1: doing yourself a favor or not? If the next round
Speaker 1: of flu you're more susceptible to. I would say that
Speaker 1: it does make sense to take precautions. There's some evidence
Speaker 1: that the shot helps UM. I don't think that it
Speaker 1: makes sense that that if you haven't had some illnesses
Speaker 1: that you're necessarily more at risk. Most of us have
Speaker 1: had RSV growing up. Most of us see a lot
Speaker 1: of viruses, but they mutate from year to year. It's
Speaker 1: I think vitamin D carroll is best achieved through the sun, right, Dr.
Speaker 1: So I'm going to take this prescription that we should
Speaker 1: be in the Caribbean for the holidays. Here here, it's good,
Speaker 1: but you can't. You can't live there and in New
Speaker 1: York because you're in a northern climate, the sun is
Speaker 1: at a very shallow angle. So somewhat sun exposure is
Speaker 1: good also for the mood, because we know that increases
Speaker 1: mood people there. There's seasonal effective disorder. When it gets
Speaker 1: dark early, people get depressed. In addition, probably one of
Speaker 1: the reason the holidays you're stressful. Dr les Prick, right exactly.
Speaker 1: We're all getting ready for that stress that comes with
Speaker 1: the holidays. Maybe we'll talk about that next time. Ian B.
Speaker 1: Well Over at Dr leon Ian LUs Over at n
Speaker 1: y u landgoing Medical Center. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Bloomberg Quick Takes Tim Steno on
Speaker 1: Bloomberg Radio. Right now, we want to talk a little
Speaker 1: bit more about the crypto crash, something we talked about
Speaker 1: a lot. Uh yesterday we did that with ars Kathy
Speaker 1: would Which. If you miss that conversation, check out our
Speaker 1: podcast feed. It's also on the Bloomberg Terminal. I have
Speaker 1: to say, though, when it comes Mike to the crypto
Speaker 1: crash continues to evolve and play out every day. One
Speaker 1: angle I'm not sure if you caught it is about
Speaker 1: how cryptos crash is actually helping couples rekindle their relationships.
Speaker 1: Who knew? Yeah, and not true of the journalists and
Speaker 1: editors covering this FTX collapse. I will say, I think
Speaker 1: my wife's tired of hearing about all this. It's kind
Speaker 1: of been nonst the late nights. But at least someone
Speaker 1: is happy ending for something. No more SBF, no more SPI. Alright,
Speaker 1: so let's get to this story, which you can find
Speaker 1: online at Bloomberg dot com Slash business Week. It's also
Speaker 1: on the Bloomberg Terminal. Let's bring in Bloomberg Business Week
Speaker 1: contributor Joel Stein. He is on the phone in Los Angeles,
Speaker 1: and Pat Ragnew York Markets and Finance out a Bloomberg
Speaker 1: Business Week via zoom from New York City. Pat, I
Speaker 1: gotta say, in all of our crypto coverage, I kind
Speaker 1: of missed this one. I'm so glad you guys are
Speaker 1: on it. How did it come to your tension? Pat? Well,
Speaker 1: you know, I think I'll what Joel talk a little
Speaker 1: bit about the people he knows, but I think all
Speaker 1: of us who spent any time reporting on crypto got
Speaker 1: to know people for whom crypto became kind of a
Speaker 1: defining part of their lives. I mean, you know, a
Speaker 1: lot of people listening to this are just ordinary finance
Speaker 1: workaholics who have a hard enough time sort of paying
Speaker 1: attention to this stuff. Um. You know, when the markets
Speaker 1: are open to crypto has this quality of never being closed,
Speaker 1: even on the weekends, and bringing a lot of things
Speaker 1: outside of people's peripheral vision. And UM, I think a
Speaker 1: lot of people have had a hard time kind of
Speaker 1: emotionally managing that. And um, the side effect of that
Speaker 1: is that it's hard on people's relationships. But um, Joel
Speaker 1: tell me how you kind of came came onto this. Uh,
Speaker 1: these were some people you knew. Yeah, my friend Igor Hiller,
Speaker 1: who's in the piece, And he was a guy I
Speaker 1: always called when I ever got assigned a crypto story
Speaker 1: to ask him like the basics of like what the
Speaker 1: hell this is all about? And he was over for
Speaker 1: dinner with his longtime girlfriend. They've been together for like
Speaker 1: four years, and they told us that kind of like
Speaker 1: what started as a really funny story and turned really
Speaker 1: kind of sad and serious where they almost broke up
Speaker 1: because he wasn't paying any attention to the relationship because
Speaker 1: he was so obsessed with his cryptope and hanging out
Speaker 1: with them and just checking his phone constantly and waiting
Speaker 1: for n f T drops and just like you know,
Speaker 1: degenerate gambler maybe if you'd call it d Jenning when
Speaker 1: he went into these kind of phases and uh, and
Speaker 1: she kind of gave him an ultimatum that was either
Speaker 1: crypto or her. But you know, Joey, you mentioned those
Speaker 1: n f T drops And I get the impression reading
Speaker 1: this that, uh, n f T is almost really worse
Speaker 1: in this situation because you're stuck there waiting for these
Speaker 1: things to drop and they can be delayed. Did you
Speaker 1: get that sense to that? You know, the the addiction
Speaker 1: was almost worse when it came to n f t s,
Speaker 1: both because of the time consumption and also sort of
Speaker 1: the potential upside and those as an investments, at least
Speaker 1: for a hot minute. There, for a hot minute, n
Speaker 1: f t s were. But throughout the entire you know,
Speaker 1: crypto cycle, there was always a different thing that could
Speaker 1: occupy you twenty four hours a day because crypto markets
Speaker 1: don't close. So during the D five farming phase, there
Speaker 1: was always some new farm that was opening up that
Speaker 1: you had to get involved and get their coin real quick,
Speaker 1: or there'd be a coin drop, right like, people were
Speaker 1: creating new coins all the time, and Elon Musk or
Speaker 1: someone else would tell you that this was a hot
Speaker 1: coin you had to get and you had to get it,
Speaker 1: you know, when it was minted. So I don't think
Speaker 1: it was just n f t s. There were there
Speaker 1: was always some new craze that you had to get
Speaker 1: involved in, and you know, maybe you had to simp
Speaker 1: some star in order to get involved in that, you know,
Speaker 1: um in that discord channel and by I guess those
Speaker 1: are often n f T s. But yeah, there was
Speaker 1: always a new craze and even if you kept up
Speaker 1: with one of them, there'd be a new one that
Speaker 1: popped up. Pat, come on back in on the conversation. Yeah.
Speaker 1: You know, one of the things I'm thinking about a
Speaker 1: lot with all of the really serious stuff having happening now,
Speaker 1: is that, um. You know, Um, we've learned that markets
Speaker 1: can grow up faster than you can teach yourself how
Speaker 1: to think about them, and I think also faster than
Speaker 1: you can teach yourself how to emotionally handle them. Um.
Speaker 1: You know, in the last two years in crypto, even
Speaker 1: for people who aren't investing in it, um, it's been uh,
Speaker 1: something that has moved so fast that it just keeps
Speaker 1: you kind of like mentally and emotionally agitated. Um. But
Speaker 1: you know, I mean I also kind of want to
Speaker 1: talk a little bit about sort of, you know, the
Speaker 1: people who are the partners in these situations, and Joel's
Speaker 1: sort of like what they felt like they had to
Speaker 1: do to kind of get ahold of their relationships and
Speaker 1: really like bring their partners back from the brink. Yeah,
Speaker 1: and almost every case there was a guy, and it
Speaker 1: was almost always a young it was always fat. We
Speaker 1: were looking all around all we could find with young men,
Speaker 1: uh and and the and the numbers, IM polls and
Speaker 1: and kind of play this out. There's a bunch of
Speaker 1: young men and they get so wrapped up in this
Speaker 1: and they think it's going to be a life changing
Speaker 1: moment that they can't miss out on. It's all fomo,
Speaker 1: and that there's going to be generational wealth created for
Speaker 1: their grandchildren if they just stick to this one thing.
Speaker 1: And they all kind of we're able to get their
Speaker 1: spouse or more like with their girlfriend involved to an extent,
Speaker 1: but um, not as much as they would have liked.
Speaker 1: And then there their relationships started to wither because they
Speaker 1: were so devoted to this one thing. Yeah, Juel, I
Speaker 1: wonder if you know, if these guys really are creating
Speaker 1: wealth through this, if that sort of changes the equation
Speaker 1: with the wise and girlfriends a little bit too. Were
Speaker 1: any of these guys actually you know, doing well with
Speaker 1: their trading enough to you know, sort of uh, get
Speaker 1: the get the day passed from their wives and girlfriends. Sure,
Speaker 1: I mean some of these guys, you know, on a
Speaker 1: exciting day could make ten dollars. The guys I was
Speaker 1: talking to at least and that that goes, you know,
Speaker 1: a long way and convincing your girlfriend that it's okay
Speaker 1: you didn't go out with her this weekend. But you know,
Speaker 1: those days were few and far between, especially as the
Speaker 1: markets started to dry up at the beginning of this year.
Speaker 1: I have to say I loved I didn't love that.
Speaker 1: It was a Candice who's dating her boyfriend and their
Speaker 1: face timing and she becomes the really small box so
Speaker 1: that he can continue crypto trading. Yeah, they're a long
Speaker 1: distance right now, they're they're getting married soon, but yeah,
Speaker 1: he they face time a lot, and you make her
Speaker 1: really small so that he can check all his his
Speaker 1: crypto stuff, and that would annoy her. But in a
Speaker 1: lot of these cases, eventually, either because of the crash
Speaker 1: or because of ultimatums, the boyfriends somewhat came around and
Speaker 1: people were able to resolve their relationships. And in a
Speaker 1: lot of the cases where I talk to people, So, Joel,
Speaker 1: what do you think happens if the crypto market takes
Speaker 1: off again? Are these guys incorrigible or they they learned
Speaker 1: their lesson with how do you see a planet? I mean,
Speaker 1: do you know any gamblers should be encourageable. Um, you know,
Speaker 1: I think there's there's hope that the lessons were learned,
Speaker 1: but I think it's it's a very powerful draw packet
Speaker 1: Ready for like part two of this story, because I
Speaker 1: have a feeling. Hi, my name is Igor and it's coming.
Speaker 1: It's coming, uh, fund to check in with you, guys.
Speaker 1: Both have a great Thanksgiving, a safe one. Joel Stein,
Speaker 1: contributor to Bloomberg Business Week, joining us on the phone
Speaker 1: from Los Angeles and pat right near these markets and
Speaker 1: finance editor at Bloomberg business Week. This story, by the way,
Speaker 1: online at Bloomberg dot com, Slash business Week, and of
Speaker 1: course always on the Bloomberg terminal. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. We talked about a lot of
Speaker 1: theories when it comes to economics. There's supply side economics,
Speaker 1: there's Kenzie and there's Marxism. There's new growth theory. I mean, Mike,
Speaker 1: there's a lot out there. There's roconomics. Carol, did you
Speaker 1: know about roconomics? How come I did go back to
Speaker 1: school Adrian economics. That wasn't a course option for me.
Speaker 1: All right, So there's lots of theories out there. I'm
Speaker 1: curious if any of you have heard about swift anomics.
Speaker 1: This is, as we said, among the most read on
Speaker 1: the Bloomberg So let's get into it with Bloomberg News
Speaker 1: US economy reporter, um Augusta Surviva. She is US economy reporter.
Speaker 1: As we said here at Bloomberg News, she's joined us,
Speaker 1: joining us in our interactive broker's studio. Augusta, thank you
Speaker 1: so much for having us. Tell us about first of all,
Speaker 1: how this came to be or came to your attention.
Speaker 1: Thank you so much for having me and the reason
Speaker 1: why we decided to do those stories because last week
Speaker 1: I was one of the fourteen million people who hit
Speaker 1: the ticket master. No I did not get tickets, So
Speaker 1: now I'm left to deal with the secondary market and
Speaker 1: maybe try to get tickets forty dollars. So how is
Speaker 1: this like an economic theory, Like, how do you think
Speaker 1: about that and put it into kind of you know,
Speaker 1: economic language. Of course, Well, when you think about economic theory,
Speaker 1: I feel like two of the most basic concepts are
Speaker 1: supply and demand, right, But in swift ponomics, that's completely
Speaker 1: upside down. That's an environment where you have skyrocketing demand,
Speaker 1: you have limited supply. At the same time you have
Speaker 1: monopoly accusations, you have accusations of price gouging. So it's
Speaker 1: a place where economic laws just don't apply, or maybe
Speaker 1: they do apply, but they're just completely um out of
Speaker 1: this role. Yeah, and Carol, for our generation, I think
Speaker 1: we experienced this with bruceonomics earlier in the year when
Speaker 1: when no one could get a Springsteen ticket. But talk
Speaker 1: to me about Augusta. That notion of elasticity of demand.
Speaker 1: You know, the classic economic theory is that is prices
Speaker 1: go higher, uh an elastic good, the demand goes down.
Speaker 1: That doesn't seem to be the case with swift adomics
Speaker 1: here that people are seem to be willing to spend
Speaker 1: any amount of money on a ticket. I mean, is
Speaker 1: is that what's going on in is there sort of
Speaker 1: any amount of their parents money right right? An elastic
Speaker 1: parent old demand. It's a whole different category of economics.
Speaker 1: But but is it's also part of sort of just
Speaker 1: this this bottleneck of people wanting to catch up with
Speaker 1: what they missed over over the pandemic when they're locked inside. Yeah,
Speaker 1: I definitely talked to some Taylor Swift fans who weren't
Speaker 1: able to get tickets last week and now they're willing
Speaker 1: to pay anything. I spoke to to a fan who
Speaker 1: had been saving for ten months. He had a two
Speaker 1: thousand dollar budget and he was telling me if I
Speaker 1: had to spend three thousand, I would I've never seen
Speaker 1: this woman play life. Uh, in my life, I've been
Speaker 1: saving throughout the pandemic. And I feel like that's just
Speaker 1: one example of something, as you mentioned, Bruce Springsteen, Um,
Speaker 1: this is something that we're seeing in the spost pandemic world, right.
Speaker 1: Do you have a lot of pent up demand people who,
Speaker 1: in the case of Taylor Swift fans, they've been waiting
Speaker 1: to see her life for four years now five years
Speaker 1: by the time she goes on tour next year. So
Speaker 1: you just have a lot of pent up demand people
Speaker 1: who haven't been able to go to concerts for a
Speaker 1: long time and now are just eager to go back
Speaker 1: to that life. And we're just Um, Mike and I
Speaker 1: were talking with our TV colleagues on radio and TV
Speaker 1: about consumer debt, and you know, you keep hearing that
Speaker 1: consumer balance sheets are strong. There's lots of money. I
Speaker 1: pulled up something from the New York Fed because remain
Speaker 1: Remaine was kind of pushing back a little bit. He's like,
Speaker 1: I don't understand. You know, we're hearing about rising credit
Speaker 1: card balances year over year, increasing credit card balances is
Speaker 1: the largest and more than twenty years. This is coming
Speaker 1: from the New York Fed. They put out some data
Speaker 1: and release on November fifteen. And you do wonder whether
Speaker 1: the roost will come. You know, Okay, great, I got
Speaker 1: the tickets, but now it's on my credit card, and um,
Speaker 1: you do wonder whether, even though they want to do
Speaker 1: this pent up demand from pandemic, whether you know, later
Speaker 1: on we're going to see it. And rising credit card
Speaker 1: balances continued, rising credit card balances, of course, And I
Speaker 1: did talk to someone who, unfortunately we weren't able to
Speaker 1: include on the story. But this person was able to
Speaker 1: get tickets and the primary market last week, so those
Speaker 1: weren't crazy prices, but still it was outside of this
Speaker 1: person's budget. And they were telling me for the next month,
Speaker 1: I'm only going to be able to buy groceries. Oh
Speaker 1: my god, crazy hashtag crazy. And you know what's fascinating
Speaker 1: is it's not a short tour. It's fifty two dates.
Speaker 1: That's a very long tour. So she seems to be,
Speaker 1: you know, putting herself out there as much as possible.
Speaker 1: Big arenas a lot of dates. Um, any chance do
Speaker 1: you think she'll add some more dates? Well, hopefully that
Speaker 1: would be good for me. But uh, And we sort
Speaker 1: of allude to that in the story that says that
Speaker 1: she's the sort of supply mastermind. At the end of
Speaker 1: the day, everyone's blaming ticket master because of some of
Speaker 1: the issues, but at the end of the day, it's
Speaker 1: the artist who decides how many concerts they're adding, um,
Speaker 1: how many places they're going to, And in this case,
Speaker 1: she's added seventeen um new concerts since the tour was
Speaker 1: first announced at the beginning of the month. So she's
Speaker 1: trying to work on the supply side, but the demand
Speaker 1: is just as I said, at this point, for some
Speaker 1: people it's nearly in the last dax. She's get it
Speaker 1: wiping up a frenzy there. I'm just gonna put that
Speaker 1: out because to survive, I thank you so much. US
Speaker 1: economy reporter at Bloomberg News. Check out her story at
Speaker 1: Bloomberg dot com. Moel Journal. Now, but you let me drive, No,
Speaker 1: no, no no, who's home? I'll do Bridey gravels. I want
Speaker 1: to drive. It's good question. Good drive, this good drive
Speaker 1: to the clube. Well down on Bluebird Radio. All right,
Speaker 1: we've got just about ten minutes, just under ten minutes
Speaker 1: left in today's trading session, getting ready to wrap up
Speaker 1: the trade ahead of the Thanksgiving Day holiday markets. Remember
Speaker 1: equity markets open on Friday again, but UH should say
Speaker 1: a shortened holiday, uh session. Let's get to it though,
Speaker 1: with Jennifer to sister. She's chief investment officer at the
Speaker 1: registered financial advisory firm, Anchor Capital Advisors. They've been managing
Speaker 1: money for nearly forty years. They've got seven point six
Speaker 1: billion in assets under management. Jennifer joining us via zoom
Speaker 1: from Boston. Jennifer, good to have you here with Mike
Speaker 1: and myself. Let's talk about the tone, if you will,
Speaker 1: not the tone of your computer. It happens. It's zoom um,
Speaker 1: but kind of a tone in the trade right now.
Speaker 1: It seems you know that there's an ability for investors,
Speaker 1: even though it's a light trading volume, to continue to
Speaker 1: take on risk. The f O m C minutes does
Speaker 1: that support that trade in your view? No, I think,
Speaker 1: I mean, there's opportunities out there. I think, you know,
Speaker 1: we've seen a pretty steady decline in the markets this year,
Speaker 1: and I think what we're seeing is that, you know,
Speaker 1: the FED is getting closer to the end um, which
Speaker 1: for us is a good sign of an opportunity to
Speaker 1: kind of step in and buy some stocks at this point. Um,
Speaker 1: we think that there's a number of areas in the
Speaker 1: market that are down pretty significantly this year that present
Speaker 1: great opportunities for us to buy. Yeah, Jennifer, I'm wondering,
Speaker 1: you know, the debate all year has been this sort
Speaker 1: of resurgence in the value stocks or the cyclical you know,
Speaker 1: companies really tied to the economy, know, at the expense
Speaker 1: of growth high tech, you know, less profitable sort of
Speaker 1: hopes and dreams type of growth stocks. How are you
Speaker 1: thinking about the leadership for the rest of the year
Speaker 1: and next year's Is it as simple as you know,
Speaker 1: the growth factor versus value factory or are you thinking
Speaker 1: about sectors? You know, how are you sort of positioning
Speaker 1: for what's coming? Yeah, I mean we're you know, we're
Speaker 1: thinking about sectors. Um. I think there's you know, we're
Speaker 1: really kind of seeing this transition UM sort of what
Speaker 1: we saw in the one to oh two time period UM,
Speaker 1: where you know, the technology valuations came down significantly and
Speaker 1: we kind of rotated into this stretch of time for
Speaker 1: value stocks UM and value sectors like energy, industrials, materials,
Speaker 1: and I think because there's been such an under investment
Speaker 1: in that space for the last decade UM, there's a
Speaker 1: real opportunity over the next several years where we're gonna
Speaker 1: see those companies you a lot better. We're also really
Speaker 1: interested in industrial companies that are supporting the you know,
Speaker 1: secular drivers in renewable energy and electric vehicles. UM. We're
Speaker 1: not directly participating in electric vehicles, but UM or you know,
Speaker 1: the the more hyper growth UM plays and renewable energy.
Speaker 1: But there are a number of industrial companies that make
Speaker 1: components and sensors and connectors and UM and substrates and
Speaker 1: that go into UM go into these types of renewable
Speaker 1: energy plays. So we think those are really interesting opportunities UM.
Speaker 1: And we think in the mining and material sector there's
Speaker 1: opportunities as well. UM. We're gonna be needing UM, you know,
Speaker 1: copper and lithium to be put into electric batteries so UM,
Speaker 1: we think that companies in that space who have actually
Speaker 1: done a lot on environmental, UM and and social concerns
Speaker 1: are really set up well for the next several years. UM.
Speaker 1: And I don't know how how much deeper we can
Speaker 1: go in terms of specific names. You are talking sectors,
Speaker 1: but you did talk about all the economy stuff and
Speaker 1: you mentioned industrials. What about something like the agg economy.
Speaker 1: You know, you've got Deer with some outperformance today and
Speaker 1: rallying in a big way. Yeah, I think, UM, you
Speaker 1: know we're going to be set up well in the
Speaker 1: agricultural space. UM. I think, you know, companies like Deer,
Speaker 1: UM as well as UM some of the kind of
Speaker 1: the seed companies we've looked at UM and own in
Speaker 1: our in our portfolios that are doing really well. UM.
Speaker 1: I think the shortage coming out of the Ukraine and
Speaker 1: Russia really puts pressure on the food supplies globally, and
Speaker 1: so I think there's an opportunity there for UM companies
Speaker 1: in the AGG sector to perform well in this environment. Jennifer,
Speaker 1: how about the bond market. You know, obviously we've seen
Speaker 1: this huge increase in yields, both in treasuries and corporates
Speaker 1: this year. Um, is there enough competition now from the
Speaker 1: bond market to sort of, uh make you allocate a
Speaker 1: little bit more heavily to fixed income than you would
Speaker 1: have otherwise. Yeah, I mean we kind of track where
Speaker 1: treasury fields are are at versus the SMP five hundred
Speaker 1: dividend yield, and we're clearly well above that level for
Speaker 1: the tenure treasury at this point UM at three you know,
Speaker 1: over three point seven percent, And so we think the
Speaker 1: ball market is actually a very very attractive levels um
Speaker 1: from a yield perspective. And also you rarely see um
Speaker 1: an instance where you have back to back negative years
Speaker 1: in the bond market. So we think it's really set
Speaker 1: up well for the bond market to kind of rally
Speaker 1: back here and and also get some yield from from
Speaker 1: both treasuries as well as investment grade corporate bonds. Jennifer,
Speaker 1: you mentioned mining and materials. You also you know you
Speaker 1: mentioned you know, renewable energy space, what about you know,
Speaker 1: the old integrated oil energy still your top performer this
Speaker 1: year if you look at the major industry groups in
Speaker 1: the SMP five hundred, that's after our batter year, you know,
Speaker 1: the year before, Like it has just been on a tear.
Speaker 1: We get the reasons. Why would you be committing new
Speaker 1: money to you know, basically fossil fuels at this point,
Speaker 1: I would I think on these pull backs UM that
Speaker 1: we're seeing in the energy space, I'd be adding money.
Speaker 1: I think there's UM. You know a lot of these
Speaker 1: energy companies are have transformed themselves. They become very cash
Speaker 1: flow conscious and UM and very shareholder friendly, which I
Speaker 1: think is a real positive. UM. They aren't drilling as much,
Speaker 1: but they the drilling that they're doing is very profitable.
Speaker 1: And so from stock perspective perspective, we think that the
Speaker 1: energy space, and you know, the integrated oil companies are
Speaker 1: are attractive stocks at this point. You know, Jennifer, I know, uh,
Speaker 1: no one likes to try to time the market. I'm
Speaker 1: sure you don't either, but I'm just curious how you're
Speaker 1: thinking about this tremendous rally we've seen off the lows
Speaker 1: in October, you know, SMP five hundreds up almost from
Speaker 1: that low in October. Was that the quote unquote low
Speaker 1: capital thor or could there be another one to come?
Speaker 1: What do you think? You know, I think we still
Speaker 1: have a little ways to go. UM. Usually when we
Speaker 1: have the inversion of the Guild curve, it signals a
Speaker 1: recession coming at some point. Uh So we're kind of anticipating,
Speaker 1: you know, that this that there will be a point
Speaker 1: early you know, to mid next year that we'll see
Speaker 1: some recession. Um. You know, I think what what we're
Speaker 1: kind of looking at in these short term rallies as
Speaker 1: opportunities to kind of lighten light in areas that have
Speaker 1: really worked well and and kind of set up well
Speaker 1: for have cash to redeploy um when the market does
Speaker 1: ultimately bottom. We just haven't seen kind of earnings really
Speaker 1: come down yet, um, and which really kind of marks
Speaker 1: the bottom of a or marks kind of the recession starting.
Speaker 1: So we're really just being very patient at this point
Speaker 1: and and and just think that we probably have a
Speaker 1: better opportunity um in next year. All Right, we're gonna run. Hey, listen,
Speaker 1: have a great Thanksgiving Jennifer to sister, thank you, Chief
Speaker 1: investment officer at Anchor Capital Advisor, seven point six billion
Speaker 1: in assets under management, joining us via zoom Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com. You can also listen to our
Speaker 1: radio show at two pm Eastern on Bloomberg Radio, or
Speaker 1: watch us live on YouTube and now also on Bloomberg
Speaker 1: Quick Take