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These Are The Most Useless Phrases In Finance: Barry Ritholtz · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
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Speaker 1: with my co host of Bonnie Quinn. Every business day
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Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
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Speaker 1: along with essential market moving news. Find the Bloomberg Markets
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Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. All right, Barry Ridholtz joints
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Speaker 1: this year. Barry is a founder of Rodholts Wealth managed
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Speaker 1: maniage of Bloomberg opinion columnss and host of Masters of Business.
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Speaker 1: And he has a fascinating new column out which I
0:29
Speaker 1: just read the ten most useless phrases in finance. That's
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Speaker 1: the good news. The bad news is I have been
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Speaker 1: guilty of uttering all ten of them. Barry Ridholts, Where
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Speaker 1: did you come up with this list? Because it hit
0:42
Speaker 1: me right between the eyes, so I wrote. I wrote
0:46
Speaker 1: a similar column a year ago, and I wanted to
0:48
Speaker 1: come up with a different run of terrible phrases. And
0:52
Speaker 1: I just keep on running tally of them. But to
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Speaker 1: see if I was wildly off base, I went to
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Speaker 1: Twitter and said, hey, what do your least face of
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Speaker 1: financial phrases? And I was shocked to get a thousand responses, um,
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Speaker 1: many of which I had already written down. We were
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Speaker 1: suggested by the uh the twitterati, and and it's pretty
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Speaker 1: clear that there are a lot of pet peeves amongst
1:16
Speaker 1: financial types about phrases that they really really despise. People
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Speaker 1: are very enthusiastic about critiquing really dumb language. Yeah, but Barry,
1:27
Speaker 1: it's very very important to not get complacent, as they say,
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Speaker 1: don't guess you tell me what's that means? So I'm
1:35
Speaker 1: an investor, I have a portfolio. What does not get
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Speaker 1: complacent means? Should I move to cash? Should I not
1:40
Speaker 1: move to cash? The phrase that you always hear is
1:44
Speaker 1: actionable advice? What is actionable in that other than hey,
1:49
Speaker 1: be on the lookout for something that might be dangerous.
1:52
Speaker 1: But shouldn't investors always be on the lookout for things
1:55
Speaker 1: that might be dangerous? That that that phrases, Hey, hey,
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Speaker 1: you know what, It's great in a in a college
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Speaker 1: graduation speech, but as an investment advice, it's kind of meaningless.
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Speaker 1: The easy money has been made. Boy, I've heard I've
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Speaker 1: uttered that many times. Yeah, that that's classic hindsight by it.
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Speaker 1: If only I knew then what I knew now think
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Speaker 1: about how easy it is look. Investing is never easy.
2:25
Speaker 1: It's always hard. It might look easy after the fact,
2:28
Speaker 1: but you know, hey, go back to March O nine.
2:30
Speaker 1: If only you bought with both fists, go back to March,
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Speaker 1: you should have been a buyer. Well, you say that today,
2:37
Speaker 1: but when everybody was panicking in March, you know, it
2:40
Speaker 1: was much harder to pull the trigger then than it
2:43
Speaker 1: than it is now. With that, we're up sevent higher
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Speaker 1: since then. Barry, there's one that I have I'm not
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Speaker 1: a problem with. I mean, I'm fine with throwing it
2:51
Speaker 1: out and never using it again. But it's already in
2:54
Speaker 1: the price. Why is that such a PV phrase for people?
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Speaker 1: I mean, you know, if you're talking about, say, I
3:02
Speaker 1: don't know election uncertainty or a key man risk or
3:05
Speaker 1: whatever it may be, what's wrong with saying, well, we
3:07
Speaker 1: think it's already priced in, right, so we get to
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Speaker 1: uncertainty later, because that's another peeve. But you know the
3:15
Speaker 1: problem with it's in the price is that, as Eugene
3:20
Speaker 1: Fama has told us, yes, what is known is in
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Speaker 1: the price, and that is reflected by the buys and
3:27
Speaker 1: cells of of traders. When you see a big move
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Speaker 1: in a stock or a market when the market is
3:34
Speaker 1: up three percent or down three or like we saw
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Speaker 1: the other day when when Niccolo was down, what was that?
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Speaker 1: How do you say it's in the price? It's in
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Speaker 1: the price is accurate except when genuinely new information comes out,
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Speaker 1: and that big surge or that big sell off is
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Speaker 1: how the it gets into the price. So you have
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Speaker 1: to be careful. Everything that's known is more or less
4:01
Speaker 1: in the price. What's not in the price are the
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Speaker 1: is the genuine new information, the genuine surprises. So, Barry,
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Speaker 1: if I look at cash in money market funds, in
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Speaker 1: uninvested cash and pension funds, isn't it a fair statement
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Speaker 1: to say cash is on the sidelines, and that's perhaps
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Speaker 1: a bullish call for stocks. So pull you buy it.
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Speaker 1: You buy a thousand shares of Apple from from me
4:28
Speaker 1: and across you you know whatever, whatever the toll. I
4:31
Speaker 1: don't know where Apple is trading today, but you have
4:34
Speaker 1: cash and you give it to me, and I have
4:37
Speaker 1: the stock and I give it to you. So the
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Speaker 1: cash that was on your sideline is now on my sideline.
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Speaker 1: There is always and I'm choosing my words carefully here
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Speaker 1: trillions with the t trillions of dollars in cash in motion.
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Speaker 1: It takes either one or three days T plus one
4:53
Speaker 1: or T plus three to a trade settlement. Uh, there's
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Speaker 1: money in in s m A s and separately managed
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Speaker 1: accounts in prime brokerages. There is cash all over the place.
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Speaker 1: There is always cash on the sidelines, and yet academia
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Speaker 1: has never convincingly demonstrated that you could show when there's
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Speaker 1: x amount of cash on the sidelines, markets do y
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Speaker 1: in the future. There's always cash on the sidelines. Every
5:18
Speaker 1: trade has a buyer and seller, even with margin, even
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Speaker 1: with borrowed money, it's still cash changing hands. So when
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Speaker 1: is there not cash on the side? Yeah, that that's
5:28
Speaker 1: actually quite a brilliant and incisive points. Barry, what were
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Speaker 1: the phrases that stuck out to you that were maybe
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Speaker 1: some people don't like them, but you still find a
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Speaker 1: lot of wisdom in them, because I know you've done
5:39
Speaker 1: a lot of work as well on you know, cognitive
5:42
Speaker 1: and behavioral types of investing. So so there's a handful
5:48
Speaker 1: of things that I find really fascinating. One is everybody
5:52
Speaker 1: wants to be a contrarian, which is kind of amazing
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Speaker 1: because by definition contrarians other people outside of the her,
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Speaker 1: outside of the crowd. But there's a certain romanticism to
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Speaker 1: being that person who who makes makes the big short bet,
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Speaker 1: who who, or who buys when everybody else is selling.
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Speaker 1: It's much harder to do than it appears. That That
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Speaker 1: always cracks me up. And then the simple truth, sort
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Speaker 1: of the flip side to that, The simple truth of
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Speaker 1: the trend is your friends. You know, crowds are mostly right.
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Speaker 1: Markets get it right most of the time. It's only
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Speaker 1: yet extremes. You know, go to March two thousand when
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Speaker 1: trees grow to the sky and and we're not buying
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Speaker 1: discounted cash flow but clicks and eyeballs. Hey, the crowd
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Speaker 1: was totally wrong. They're just as the crowd was wrong
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Speaker 1: in in March of two thousand and nine with the
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Speaker 1: markets down fifty and people forecasting the end of the world. Hey,
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Speaker 1: at a certain point, um, the you know, the trend
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Speaker 1: is your friend, except for the bend at the end.
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Speaker 1: Traders have rhyming, rhyming aphorisms for every circumstance. You need
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Speaker 1: to write a picture of book Barry, I think, um,
7:07
Speaker 1: I think I should get a five year old to
7:09
Speaker 1: do it. They have the insight that very often we
7:13
Speaker 1: in a crowd, Miss Barry, you don't miss much. I'll
7:17
Speaker 1: get it that. Who's on Masters and Business next this
7:20
Speaker 1: week is Pedro rp is the chief marketing officer for
7:25
Speaker 1: a b in Bev. They are a giant beer company
7:28
Speaker 1: with everybody from bud Wiser, Stella, Michaelobe Corona go down
7:34
Speaker 1: a list of beers. They they are typically the largest
7:38
Speaker 1: beer um producer and seller in every market. They're looking
7:43
Speaker 1: forward to that. It should be an interesting conversation for
7:45
Speaker 1: pandemic times. Barry Rittles, thank you, founder of Rittles Wealth Managements,
7:50
Speaker 1: Bloomberg opinion columnist and of course host of Masters in Business.
7:56
Speaker 1: What's time turned to the market once again and we're
7:59
Speaker 1: seeing continue improvement really for the indusease after hitting that
8:02
Speaker 1: low right after the open. The nastac is actually of
8:05
Speaker 1: eight tenths of a percent now. But for a bigger
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Speaker 1: picture look at things, let's bring in Lisa Shallow, Chi's
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Speaker 1: chief investment officer for wealth management at Morgan Stanley. Lisa,
8:15
Speaker 1: what do you make of these these moves? We're seeing
8:17
Speaker 1: quite a bit of volatility even though the vix is
8:20
Speaker 1: below thirty. But you know, we hit the bottom today
8:22
Speaker 1: and now we're suddenly up more than half a percent
8:24
Speaker 1: in the sp Uh. Yeah. So look, I I'm in
8:29
Speaker 1: the campus says we are definitely, you know, still in
8:33
Speaker 1: correction territory. I think we're getting a bounced today off
8:37
Speaker 1: of the phenomenal housing data, uh, you know, which is
8:41
Speaker 1: you know, clearly a high point um for the for
8:44
Speaker 1: the VHA recovery and and for you know, the overall
8:48
Speaker 1: economy and for the jobs market. But if you think about,
8:51
Speaker 1: you know, why these markets are in correction, I really
8:54
Speaker 1: think we've had uh kind of a triple play here
8:58
Speaker 1: where we've had to simultaneous delay of the much anticipated
9:02
Speaker 1: US fiscal stimulus, which now looks like it may not
9:06
Speaker 1: happen until one and I think from the job snumbers
9:09
Speaker 1: we saw this morning that could be problematic. Um, we
9:14
Speaker 1: had disappointing FED guidance last week just in terms of
9:17
Speaker 1: you know, the Fed not really providing um any additional
9:21
Speaker 1: clarity on on their tools or their policy or metrics
9:25
Speaker 1: around average inflation targeting. And last, but not least, we
9:29
Speaker 1: just have these intensifying odds of a chaotic and contentious
9:33
Speaker 1: US presidential election, and you put all that stuff together
9:37
Speaker 1: and we're just going to have wider risk premiums in
9:39
Speaker 1: the short term. So I'm not surprised that that we
9:43
Speaker 1: kind of touched, you know, correction territory in the SP
9:46
Speaker 1: five this morning. I think we may revisit this before.
9:51
Speaker 1: So at least us over Yeah, so at least if
9:55
Speaker 1: in fact, you know, we're not going to get fiscal stimulus. Um.
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Speaker 1: You know, the FED has done pretty much the majority
10:01
Speaker 1: of what it can do to stimulate the economy. Does
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Speaker 1: that suggest from a portfolio perspective that I just kind
10:08
Speaker 1: of focus my portfolio and what's worked, the proven tech
10:12
Speaker 1: growth winners. I don't try to rotate into some more
10:15
Speaker 1: cyclical names. I don't buy into that at all, because
10:19
Speaker 1: what what what we're seeing in the marketplace is because
10:24
Speaker 1: to your point, uh, FED guidance, UM, you know, didn't
10:27
Speaker 1: really add to the debate. We're seeing, uh the treasury
10:31
Speaker 1: market not really act as a diversifier anymore. UM. And
10:36
Speaker 1: you know, while we've had markets down ten percent, we mean,
10:39
Speaker 1: you know, treasuries trading in a super tight range on
10:43
Speaker 1: yields of you know, ten to fifteen basis points. Maybe
10:46
Speaker 1: we've got move volatility at all time lows UM. And
10:50
Speaker 1: so uh, you know, if this is as low as
10:53
Speaker 1: rates get, uh, the valuation on my tech trade is
10:58
Speaker 1: vulnerable because so munch of my high pe s were
11:01
Speaker 1: premised on ever lower and lower and lower rates than
11:05
Speaker 1: we're not getting lower rates. We're not getting higher rates,
11:08
Speaker 1: but we're not getting lower rates zero How much lower
11:12
Speaker 1: can they go exactly? And so so you know, I'm
11:16
Speaker 1: not convinced that this idea of just you know, go back,
11:19
Speaker 1: hide out and what works, which is certainly today's trade,
11:23
Speaker 1: I don't know that that's really got got legs. Our
11:27
Speaker 1: advice to two clients in this environment is look in
11:31
Speaker 1: the short term over the next two to three months,
11:33
Speaker 1: in this this period of uncertainty, gold tips cash uh,
11:38
Speaker 1: and then for for truly long term opportunistic buyers who
11:42
Speaker 1: like to buy dips, we're looking at a quality cyclicals,
11:46
Speaker 1: high yield credit. You know, some of the things that
11:49
Speaker 1: have come off a little bit here, but we that
11:51
Speaker 1: do our leverage to to a pro cyclical rotation at
11:56
Speaker 1: some point. It's pretty interesting because gold is also also
11:58
Speaker 1: about a hundred bucks in the a couple of weeks,
12:01
Speaker 1: So I guess now would be the time to get
12:03
Speaker 1: in if you're going to get in right at eighteen
12:04
Speaker 1: fifty announce I I am, and and that's certainly what
12:10
Speaker 1: we're recommending to our clients. Yes, what are your clients
12:14
Speaker 1: most concerned about macro wise? Is it the election and
12:17
Speaker 1: uncertainty that maybe might follow it. Uh, it is. Look,
12:22
Speaker 1: so you know, as as you know, portfolio strategists and
12:26
Speaker 1: investment officers, we typically uh you know, always take these
12:32
Speaker 1: these periods of time around a presidential election to remind,
12:36
Speaker 1: you know, our clients are the facts, and to remind
12:38
Speaker 1: them that that typically it's not presidential elections that that
12:42
Speaker 1: determine things. It's policy. Uh, and policy tends to be
12:46
Speaker 1: driven by the composition of Congress and things of that nature.
12:50
Speaker 1: I at this time is different. And what's different is
12:55
Speaker 1: this idea that somehow we're not going to have clarity
13:00
Speaker 1: on those issues, um whatever, and maybe back for a
13:06
Speaker 1: punt until December race that and some are saying, you know,
13:11
Speaker 1: if this gets contested by a Supreme Court that has
13:14
Speaker 1: just recently you know been changed, uh you know, not
13:17
Speaker 1: until January. So this is different. And so what we're
13:21
Speaker 1: just saying is, look, we don't know what it means.
13:24
Speaker 1: I know that this is a level of uncertainty. Uh,
13:27
Speaker 1: that does wrought widened risk premiums in a very short term.
13:31
Speaker 1: So this is very different than than what we typically say,
13:34
Speaker 1: which is, hey, this this doesn't matter, try to look
13:37
Speaker 1: through it. Lisa Salad, thank you so much for joining us.
13:41
Speaker 1: Lisa is chief investment officer the Wealth management group at
13:45
Speaker 1: Morgan Stanley. They have about two and a half a
13:47
Speaker 1: trillion dollars in assets on their management and we always
13:50
Speaker 1: love chatting with Lisa to get her view of the
13:52
Speaker 1: market here and uh, this time is different, Vannie. I
13:54
Speaker 1: think as we think about some of this election uncertainty
13:57
Speaker 1: that I think a lot of investors are starting to
13:59
Speaker 1: really get concerned with. Yeah, I mean we love to
14:02
Speaker 1: see the president doesn't help things by making comments on
14:05
Speaker 1: on a daily basis, which you have to sift through
14:08
Speaker 1: and decide, you know, do I take this headline seriously?
14:10
Speaker 1: Do I take this headline seriously? And you know, if
14:13
Speaker 1: you have a lot of cash at stake, you really
14:17
Speaker 1: want to be parsing that pretty carefully. Yeah, exactly right.
14:19
Speaker 1: And I think a lot of folks are saying, let
14:21
Speaker 1: me just get a little bit conservative here, gold tips
14:24
Speaker 1: things like that as we head into the election, and
14:25
Speaker 1: we'll recalibrate afterwards. Income inequality. Wealth inequality is an issue
14:31
Speaker 1: that has been growing in stature for Americans are really
14:35
Speaker 1: for many years now. Certainly the election became very important.
14:39
Speaker 1: Ben Steverman Personal Finance, Edward Bloomberg News joins us here Ben,
14:45
Speaker 1: really interesting story here Harvard talking about economic carnage in
14:50
Speaker 1: the wealthiest zip codes. What did you find? So this
14:53
Speaker 1: is about Ross Chetti, who as he's he's been one
14:57
Speaker 1: of the driving forces behind the inequality converse issue comes.
15:00
Speaker 1: What he does. He's an economist at Harvard. He has
15:04
Speaker 1: a staff of about forty people. UM. Philanthropists have been
15:08
Speaker 1: really um supporting him for years and um. He uses
15:12
Speaker 1: these giant data sets of tax data and UM census
15:17
Speaker 1: data that really track Americans um individually, over over over time.
15:23
Speaker 1: And he studied inequality and race and and um uh.
15:27
Speaker 1: He basically has diagnosed the American dream as dead because
15:30
Speaker 1: Americans now aren't earning as much as their parents do
15:34
Speaker 1: did or their great grandparents. UM and UM. So what
15:39
Speaker 1: he's did when COVID hit was he kind of just
15:42
Speaker 1: stopped everything and he built an economics tracker using private
15:46
Speaker 1: data from companies like MasterCard into it that really shows
15:51
Speaker 1: day by day, week by week, state by state, neighborhood
15:55
Speaker 1: by neighborhood. You can really see how the economy has
15:58
Speaker 1: been playing out and and see what's happened with small
16:01
Speaker 1: businesses and consumer spending and jobless things and all sorts
16:06
Speaker 1: of metrics. Really shows the devastation that's happened since March.
16:10
Speaker 1: You can see it by the way at track the
16:12
Speaker 1: Recovery dot org and there's a button on their saying
16:14
Speaker 1: explore the data, and you can literally go into the
16:17
Speaker 1: smallest of neighborhoods and figure out who's been suffering the most.
16:21
Speaker 1: And it turns out that his charge shows that by April,
16:24
Speaker 1: the bottom quarter of way journers, so those making less
16:27
Speaker 1: than twenty seven thou dollars a year, had lost more
16:30
Speaker 1: than three times the number lost by the top quarter,
16:33
Speaker 1: defined as those who are in more than sixty annually.
16:37
Speaker 1: It's it's pretty phenomenal how it shows income inequality. What
16:41
Speaker 1: will be done with this, Ben Well, it's a really
16:44
Speaker 1: good question. I mean, as you mentioned that data, it
16:46
Speaker 1: racially shows the recession is over, or at least it
16:49
Speaker 1: ended in July for the top who are and a
16:53
Speaker 1: lot of those people are just staying home and they're
16:56
Speaker 1: not spending money, and that has sort of been a
17:00
Speaker 1: It's clear from his data that that's been the driving
17:02
Speaker 1: force of the problem. It's not the it's not the lockdowns,
17:05
Speaker 1: it's not the shutdowns ordered by the government governors. It's
17:09
Speaker 1: the fact that people who have means are not spending.
17:12
Speaker 1: They don't feel it's safe to go out and spend
17:14
Speaker 1: their money. And so what can be done. There's a
17:19
Speaker 1: lot of small policies we could we could be doing,
17:22
Speaker 1: and that's part of Chetty's work is to look at,
17:24
Speaker 1: you know, what can we do for the education system
17:26
Speaker 1: to help low income people, what can we do for
17:30
Speaker 1: um housing. But but I think the thing about this
17:34
Speaker 1: recession that's weird is that we're kind of well off
17:38
Speaker 1: people are confronted with it because it's the people we
17:40
Speaker 1: used to interact with on a day to day basis.
17:43
Speaker 1: And I think he's hoping that that changes the conversation
17:46
Speaker 1: about this stuff going forward, that we put more effort
17:50
Speaker 1: into helping the bottom of the population advanced economically going forward,
17:56
Speaker 1: and that could be a range of policies. So Ben
17:59
Speaker 1: is the certain, however, that this pandemic and the economic
18:03
Speaker 1: impacts could in fact not only widen the gap, but
18:06
Speaker 1: make it perhaps even more permanent. Absolutely, I mean, I
18:11
Speaker 1: think we've already seen the gap widen up until you know,
18:15
Speaker 1: up until July UM that stimulus was really helping low
18:19
Speaker 1: income workers and in fact, a lot of them were
18:21
Speaker 1: making more than they had made before before they were
18:24
Speaker 1: working because of the unemployment benefits were so generous. But
18:27
Speaker 1: now that that's expired, and now that we have these
18:30
Speaker 1: major changes happening in the economy automation, more online shopping,
18:35
Speaker 1: less in person services, um, there's a real concern that
18:39
Speaker 1: first of all, this becomes a little bit more of
18:41
Speaker 1: a normal recession and the the economic damage really starts
18:46
Speaker 1: to spread to new sectors. And secondly that um, these
18:51
Speaker 1: a lot of these people could be left behind for
18:53
Speaker 1: for a generation. Here we could have a real permanent
18:56
Speaker 1: problem with some of these workers basically becoming outmounded. And
19:00
Speaker 1: again you can see all of this data at track
19:02
Speaker 1: the Recovery dot org. It is Raje Chetty's project at Harvard,
19:07
Speaker 1: and of course he's got you know, funding from hedgehund
19:10
Speaker 1: managers and so on as well, and it's in their
19:13
Speaker 1: interests to figure this stuff out too, because you know,
19:16
Speaker 1: there's a lot more concern over the social conditions of
19:21
Speaker 1: this country and what might actually happen if it gets worse. Right,
19:25
Speaker 1: So there's there's there's also, you know, an element to
19:28
Speaker 1: the richest wanting to solve this in some way. I mean,
19:31
Speaker 1: what does it say about the large inner cities in
19:35
Speaker 1: the biggest cities. I'm talking about San Francisco for example,
19:38
Speaker 1: and Manhattan. So this is the thing. So we've been
19:43
Speaker 1: able to show he's able to show that there was
19:45
Speaker 1: a there was a substantial recovery in in April and
19:49
Speaker 1: May as businesses open back up. But if you look
19:52
Speaker 1: at those wealthy neighborhoods where wealthy people weren't spending, businesses
19:56
Speaker 1: were losing seventy of their revenue. And not only is
20:01
Speaker 1: that devastating for those businesses in the short term, a
20:04
Speaker 1: lot of those businesses have very high rents as well.
20:07
Speaker 1: So that's that's that's why you see all these businesses.
20:11
Speaker 1: If you look at the Upper east Side, if you
20:12
Speaker 1: look at Midtown Manhattan, if you look at um wealthy
20:16
Speaker 1: parts of San Francisco, those are the worst hit neighborhoods
20:19
Speaker 1: in terms of the small businesses and the workers in
20:23
Speaker 1: those businesses are obviously coming in from other places. Um,
20:27
Speaker 1: a lot of them are low income, and um, you
20:30
Speaker 1: know now with unemployment expiring, they're really in a desperate situation. Alright.
20:35
Speaker 1: I would urge everybody to try and find this story
20:37
Speaker 1: by Ben Steuperman. It is called Harvard's Chetty h E. T.
20:41
Speaker 1: T Y finds economic carnage and wealthiest zip codes. But
20:45
Speaker 1: also do have a look at that data tracker, which
20:48
Speaker 1: is that track the recovery dot org. And also just
20:51
Speaker 1: generally it's good to know about RAJ Chetty's project there
20:54
Speaker 1: at Harvard University. Lots of volatility with futures, equity futures
21:01
Speaker 1: very low. This morning we opened up a little bit
21:03
Speaker 1: in the green and now we're giving it back here.
21:05
Speaker 1: So we had it just a kind of a strange
21:07
Speaker 1: morning here with volatility back and forth. Uh, you know,
21:10
Speaker 1: not much big movement, but again some plus some minus,
21:13
Speaker 1: some greens, some reds. Gotta handle on what's going on
21:16
Speaker 1: in the markets. We welcome Sarah Conteck bloom Brick Cross
21:19
Speaker 1: Asset Reporters. Sarah, thanks so much for joining us here.
21:21
Speaker 1: Kind of a strange day in terms of economic data
21:25
Speaker 1: as well. We had the jobs those claims came in
21:28
Speaker 1: the weaker than expected, yet housing very very strong. Yet again,
21:34
Speaker 1: what do you make of it? Right? This has kind
21:35
Speaker 1: of been the story all along for COVID nineteen and
21:39
Speaker 1: what it has caused in the economy. You look at
21:41
Speaker 1: the labor market and sure, while we have seen immense
21:44
Speaker 1: approvement from March, still very very downtrodden, and the pace
21:50
Speaker 1: of the pickup from here, it seemed as though the
21:53
Speaker 1: improvement in the labor market has topped out a bit. However,
21:56
Speaker 1: the housing market has just been booming, and we saw
21:59
Speaker 1: that once again this morning with the housing data. And
22:03
Speaker 1: as your prior guests Lisa did say, we did see
22:06
Speaker 1: the markets turn around the same time that the housing
22:08
Speaker 1: data came out, but at the same time we also
22:11
Speaker 1: saw it turn right as the SMP five hundred was
22:14
Speaker 1: hitting its one day moving average, which is around thirty.
22:17
Speaker 1: That's also just about the level that demarkets that ten
22:20
Speaker 1: percent correction. So we do see some support levels swooping in,
22:25
Speaker 1: but the benchmarks just turning from green to red to
22:27
Speaker 1: green to red once again. Uh. Certainly of all tile morning, Yeah,
22:31
Speaker 1: I feel like m Life team hardly has a chance
22:33
Speaker 1: to get a piece out when they have to sort
22:34
Speaker 1: of undo it because the last piece there it was
22:37
Speaker 1: about the US stocks finding their footing in the early
22:39
Speaker 1: going and recouping the loss. It really is pretty phenomenal.
22:43
Speaker 1: I mean, our retail investors driving this market in any
22:46
Speaker 1: way anymore. Look the move these moves that we have
22:48
Speaker 1: seen are very quick, and there have been uh some
22:52
Speaker 1: signs that the retail market is still very, very heavily involved.
22:56
Speaker 1: Sundale Capital Research they compiled data for the o c
23:00
Speaker 1: C options data and they actually found that last week,
23:03
Speaker 1: while we did see market selling off, many short term
23:08
Speaker 1: small options traders actually increased their bets on a market increase.
23:14
Speaker 1: So they're very much well involved. They're still pretty bullish
23:17
Speaker 1: on these markets, which makes some think that maybe the
23:20
Speaker 1: froth that was really built up in the month of
23:22
Speaker 1: August has not been completely shaved off. And you also
23:27
Speaker 1: just look at what's going on the likes of Snowflake,
23:29
Speaker 1: for example, with its I p O. You had a
23:32
Speaker 1: stock yesterday took her sp I that announced that they
23:36
Speaker 1: were going to be an electrical vehicle company, and it
23:38
Speaker 1: absolutely just surged. And those are really the hallmarks of
23:41
Speaker 1: what retail traders do. If you look at some of
23:44
Speaker 1: these online forums, you'll see them discussing this. So we
23:47
Speaker 1: do still do see the footprints of retail very very
23:50
Speaker 1: much in these markets. Sarah, interesting story on the Bloomberg
23:54
Speaker 1: insiders selling stock at the fastest pace. Since I typically
23:59
Speaker 1: don't to see those types of stories, that doesn't suggest
24:02
Speaker 1: a healthy upward bias in the market. It doesn't, and
24:04
Speaker 1: especially coming from corporate insiders. When you think about what
24:08
Speaker 1: is going to go forwards with a company with their profits,
24:12
Speaker 1: with their revenues, what the economy is going to look
24:14
Speaker 1: like going forwards, I mean, it's typically the insiders at
24:18
Speaker 1: these companies that have the best sense of what's going
24:20
Speaker 1: on at these companies. So when you see a sign
24:23
Speaker 1: like this, The data actually also came from Sundale Capital
24:26
Speaker 1: Research that corporate insiders are selling their own stock at
24:30
Speaker 1: a very fast pace. I mean, that doesn't give you
24:33
Speaker 1: a very encouraging tone on the markets when those who
24:37
Speaker 1: lead these companies themselves are trying to get out and
24:41
Speaker 1: meanwhile getting out in the middle of a sell off.
24:43
Speaker 1: I mean, we've really seen a sell off this entire month,
24:46
Speaker 1: and they haven't been buying the debt. I mean, in
24:48
Speaker 1: some ways, it says more about the economy than their
24:50
Speaker 1: own companies right, or than the market in general, because
24:53
Speaker 1: they're obviously selling into the downturn in the market. But
24:58
Speaker 1: perhaps it's because they've extended themselves or who knows, right,
25:02
Speaker 1: who knows how how executive shape their lives, let's put
25:06
Speaker 1: it that way. So there, what what about the back
25:09
Speaker 1: story today? That's also getting my attention this idea that
25:11
Speaker 1: there isn't enough transparency for investors and SPACs with the
25:15
Speaker 1: incentive process. I mean, investors and SPACs are they're they're
25:19
Speaker 1: pretty sophisticated. Now, uh, not necessarily you would think that
25:23
Speaker 1: some are, but SPACs have also been a very big
25:26
Speaker 1: area for retail investors, and retail investors have really been
25:30
Speaker 1: flocking to likes of SPACs. I remember it was a
25:31
Speaker 1: couple of months ago when we actually had the spack
25:35
Speaker 1: called Spack was one of the most popular stocks or
25:38
Speaker 1: SPACs on Robin Hood. Um. So, whether or not you
25:41
Speaker 1: want to call them sophisticated, maybe not, because when you
25:45
Speaker 1: think about a SPACK, you don't necessarily know what it's
25:48
Speaker 1: going to look like in the next couple of years.
25:51
Speaker 1: I mean, you're writing a blank check essentially, So there
25:54
Speaker 1: could be some worries surrounding that, but I do want
25:56
Speaker 1: to hide like this morning, the one thing that really
25:57
Speaker 1: stands out to me, and something that's really been driving
26:00
Speaker 1: markets recently, is the real rates and inflation story and
26:03
Speaker 1: that still holds today. For example, if you look at
26:07
Speaker 1: ten year reel yields, we actually see them ticking a
26:09
Speaker 1: little bit higher once again. We see inflation break even
26:12
Speaker 1: coming off once again. And that wraps into this story
26:16
Speaker 1: of if fiscal stimulus isn't coming through, if we are
26:19
Speaker 1: worried about COVID once again, you have an upcoming election,
26:22
Speaker 1: what does that mean for growth? What does that mean
26:24
Speaker 1: for election? And maybe these inflationary bets that investors had
26:27
Speaker 1: placed just a month or two ago, maybe they went
26:30
Speaker 1: too far with that. Sarah plans I thank you so
26:34
Speaker 1: much for joining us. We appreciate that, Sara Pans a
26:36
Speaker 1: cross asset reporter, giving us thoughts on what's going on
26:39
Speaker 1: the market again, Vani, you know, wh when you look
26:41
Speaker 1: at the equity markets, it is has been a morning
26:43
Speaker 1: of you know, not big moves per se, interpret percentages,
26:46
Speaker 1: but just kind of back and forth between red and
26:48
Speaker 1: green on the screen. I think the market is trying
26:49
Speaker 1: to get a sense of you know, is it the
26:52
Speaker 1: the economy? Where are we in economy? Does you take
26:54
Speaker 1: a look at some of that data that came out
26:55
Speaker 1: this morning. Yeah, And interestingly, the VIX is now above thirty,
26:58
Speaker 1: so it seems like the big is reacting obviously to
27:01
Speaker 1: the volatility that investors are, you know, engaging in in
27:06
Speaker 1: this market. It's going to be an interesting why this afternoon.
27:09
Speaker 1: The dollar index as well is above ninety four. It's
27:11
Speaker 1: actually at ninety four and a half full, which is
27:14
Speaker 1: you know, phenomenal turnaround from earlier on in the week
27:16
Speaker 1: when we saw it below ninety three. So that's a
27:18
Speaker 1: pretty huge move. Thanks for listening to Bloomberg Markets podcast.
27:23
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
27:27
Speaker 1: or whatever a podcast platform you prefer. I'm Bonnie Quinn.
27:30
Speaker 1: I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney.
27:33
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
27:36
Speaker 1: can always catch us worldwide at Bloomberg Radio.