60: These Were the Most Interesting Stories of 2016

I think maybe I was understating a little bit, but I just wanted to be I just wanted to be on the right side of things. I wanted to be sort of conservative. But yeah, it was pretty wild year. And I feel confident in saying that for several years down the road, people are going to be talking about

various events that transpired in the year. Yeah, the history books will be looking back just like us, and there probably all the historians are probably gonna be listening to the Odd Lots Podcast really really get a sense of what happened, don't you think, Yeah, we should bury this

in a time capsule, right, Yeah, I agree. So there's obviously the obvious stories, you know, Brexit, Trump all that, but they're probably also a lot of facets to these stories and stories that people missed that we don't want those historians to pass over and miss That's right, So we are going to um do the historians work for them, I guess, and try to dig up some of the lesser known stories that happened this year, some things that really, um maybe taught us a lesson or entertained us or

amused us in some way, or that we thought were very important. So who do we have? So We've brought together a bunch of folks from Bloomberg News who cover various aspects of our world day in and day out. It cover stories better than just about anyone in the world. I guess I'm gonna I'll go around and introduce them, and then we're going to talk to them about their favorite stories of the year, so we can catch all the stories that we might have missed. All right, So

let me, uh, let me go around the room. I'll start. Ed Hammond is with us, Hey, Ed, how are you doing? He covers deals at Bloomberg. We have Mike Reagan, who is a veteran coverer. I don't think that's a word journalists covering the market, particularly the stock market for a long time. Who's leading a new blog venture here at Bloomberg.

Thanks for coming, Mike, Thanks for having me. Max Abelson Wall Street, Wall Street, Uh, Wall Street whisper Wall Street reporter, he gets a Wall Street to speak his mind, st legend Wall Street. He stumbled on the word yeah, I was going there was Wall Streets. Max A. Wolson Dan Moss are top editor for economics coverge great to be made a great prediction going into this year, which we'll talk about, um what probably one of the best predictions

of the year. And Megan Murphy who led all of Bloomberg's politics coverage this year and is now on a new venture leading Business Week magazine. So thanks for joining us, Megan, Thanks for having me. All right, So now that we have all that out the way, let's talk about our favorite stories this year. And uh, Ed, Let's start with you. What was your favorite story of I'm not going to

go with the deal story. I was sort of tempted to self grandize and go with the deal that we had broken by I decided instead to go with the story from July, which I partly like because it was kind of in the summer when everything was quiet, and it was the story of Brett Barner, who was the hedge fund manager um at Louis Bacon's fund, and he trashed his mansion out in the Hampton's and it was just it was one of these classic you know, we all sort of no hedge fund guys like that, and

they all pretend desperately that they're not a tool like that, and they're actually very responsible and they do all this charity stuff. But he did exactly what we all know they really do, which was go to a mansion, spray people with champagne, throw midgets in a swimming pool, um, I think, leave the mansion in a pretty despicable state. And then obviously he went on to NBC and defended himself and said that it was all good fun, it was harmless, that the midgets weren't actually there was sort

of paid entertainment. They were friends of his family. Uh. And Louis macn um eventually fired him and I think put out a statement which was sort of ridiculous, that's something like his behavior was not consistent with the personal views of the fun and it was just one of these great, you know moments where it all kind of it was all, um, what we think about these guys, and as I say, they worked very hard to beat anything but that, and it became incredibly public and it

was very foolish of him, I think, to go on to the NBC and m making very limp case in his defense. It was actual Wolf of Wall Street, right, I think it was billed at the time. You know what what's ironic about each using that story, ed, is that one of the best stories of two thousand and fifteen was his boss, Louie Bacon's unbelievable brawl with his neighbor out in I think it was like the Bahamas, Peter Peter and I guard and it was, oh man,

their fight was awful. You guys remember this. They accused each other of murder, being in the Ku Klux Klan, try dealing drugs. Louie Bacon and his neighbor really want after each other. And uh that story And wasn't it all because one was having potties like off the midnight?

It was? Indeed. Yeah. The other interesting thing about this story is it's also kind of a story of about like modern media and social media because it was all over Instagram, right, so there probably is a time when they could have had this party and then just paid the owner of the house the clean up fee and maybe some extra fee, and that would have been it. But the fact that all these people came to the

party and posted about it on social media. Uh, and so that that those images live forever really makes um really makes it hard for these stories to remember. The hashtag spray than which apparently is a thing, right who knew?

But apparently all these guys doing a sprayer thon, and it was this kind of this great disconnect between the behavior of the people there are apparently with the people there, and what they were doing it for, which was apparently to raise money for I think was it an animal shelter like I Lost dog shelter or something, And yet they were obviously doing things that were seen as some overly debauched even by their employers standards. It was a rental house too, I believe didn't you didn't you rent

the house? It was? And I think the sort of the alternate version of the story, the one that Mr Barnard came out with, was that the owner of the house was just trying to shake him down for more money, and the person who rented in the house and asked for like twenty dollars in cash up front, and was this kind of dodgy guy and had all these other

things going on. I think it was. It did come out that the guy who rented in the house had some problems of his own, But anyway, it was just one of these great stories in the middle of the summer and everything is normally quite quiet and flat, and it's sort of it brightened up my July. And none of us were invited. Is the worst part? That is?

That is the real worst part. Speak for yourself. Do you think part of the reason why that story took off was look in the middle of a campaign season, you know, Wall Street vilified by more than one candidate, and you know, just the midget throwing. It's almost like a cliche. It's almost like, could this really be true? Wow, it is actually true. I believe the official name of the sport is dwarf tossing, not midget throwing. I just

want just for the record for the historians. Traditionally, this kind of debauchery takes place at market tops, right, and everyone just is so so flush with cash that they decided to spend it on rented midgets or dwarves or um, whatever term we choose. Well, what was the date, because the bond market did peak on July eight, so maybe we could go back to uh, maybe maybe that was in fact the bottom of ten year yields. That would be a great one. This was July seven. He got fired.

He got fired on the seventh. I think the party was the weekend before. But why, in the political climate that you know prevailed for much of this year, and really the post financial crisis landscape, why would you give your foes something like this to grab hold off. I don't get it. That is that's the huge blunder. All right, Max, let's stay on the Wall Street theme and uh, let's talk to you. What was your favorite story of Business Week?

Does a good thing called the envy List where everyone has to pick an article by someone outside of Bloomberg, which is good because you know, if you flat of your colleagues too much, you see it as a sucker. So I picked some stories outside of Bloomberg that I admired very much. One of them was about something that I just I don't think I even really knew existed

before private prisons. Mother Jones did this four month investigation into private prisons that was so good that basically the Department of Justice within a few weeks after it was like, yeah, we're not going to use private prisons any longer. And

the stock plummeted. And the amazing thing for me, besides the fact that the story was just an incredible story, because that it had all this effect and that, but on the other hand, Trump won the election, of course the stock went right back up to where it was before for the Mother Jones investigation and private prisons came out. Yeah, Joe, I remember we wrote that story right like the day

after Trump's win. We wrote the prison private prison stocks were surging and the idea was maybe, um, the Justice Department was going to back down on all of this. It's it's incredible. I wonder what the writer, whose name is Shane Bauer, I wonder what he thinks that he spent. What he did is he got a job in a private prison run by c c A. It's that the Corrections Corporate America, although actually they just they just changed

their name to too Much. It has like it's called like civics now something it's gotten very probably it has very benign sounding name. So you know, afterwards, the Department of Justice, the Inspector General Report came out with a report that basically agreed with this guy's investigation. He got a job in one of these prisons, and it is it's a dark I really recommend everyone reads it very very very depressing. It sounds like something from the wire.

It's really really bleak portrait of how untrained these guards are. And you know, I assume the stock market pop because Trump is going to reverse that decision and they're going to go back to it. Yeah, those stocks really went nuts the day after the election. On the other hand, I just have to say two downs sixteen was such a good year for business. Jersalm. I want to give a quick shout out to a couple of other things

that I've loved. So because I'm a classy guy surrounded by English people, I want to mention the London Review of Books had a beautiful, beautiful piece about Satoshi and it was by a guy named Andrew O'Hagan, the bitcoin founder. The bitcoin founder. Though the question is what was this guy the bitcoin founder. It's like the size of a novel. It's like forty thou words. I think it must have taken up all of the l RB that week. Also a beautiful, beautiful story that's similar to that first one.

A little bit dissatisfying because you get to the end of this monster monster piece and you're not quite sure which way is up. But that's I think that's sort of an accurate that's only you know, no one knows which way is up in in bitcoin anyway. I mean, I quickly have to say, my former New York Observer colleague Gabe Sherman just went bonkers this year writing about Fox Fox News, I mean basically single handedly costs the

top man his job. That's like a good example of someone who just like owned a story for a long time and then just like went to town and just totally dominated it. And unless you had been following Fox News as a beat for years, you could never have done what he did. What's cool for me as a journalist is that Gabe wrote a book about Fox News a couple of years ago that said that Roger Ales was basically creepy with women. But then the thing is,

nothing happened. The book sort of disappeared, and he stayed on the beat for years after the book came out, which you know, I whant to write a story, even if I've only spent a couple of weeks on it and it doesn't do well. I want to like, I want to die. I want to crawl up under my bed and not work ever again. But he's got sued over that didn't something I don't. I don't think gig got suit. No, Okay, well we've had to kind of

wall streety politics see things. Why don't we go over Let's let's do Mike and let's have him maybe maybe bring us a market story. I don't know, Mike, what do you have for us? Well, this one's a little bit out of left field, and and Max is going to make me feel like a suck up here for actually choosing a Timberg Business Week story. But it really was my favorite story of the year, by Matthew Campbell and Kit chill l It was about a Goldman Sachs trader in Libya. He went to Tripoli and it was

right when sort of Libya's markets were ringing up. And the story, if I were to pick one story of the year that would sort of you could make a feature film out of, this would be it. And it starts off describing like you know what a lousy place Libya is for a banker to do business. You know, there's not many five star hotels, not many courbet restaurants, but there is a sixty billion dollar sovereign Wealth fund UM. And this trader, Yusef Cabbaje cozied up to the sovereign

Wealth fund and it was a good salesman. They the story describes him as Goldman's basically their biggest rainmaker. He got the Sovereign Wealth Fund to invest in a lot of very risky equity, uh, derivative synthetic equity derivatives in positions in banks, and the timing was really unfortunate. It was right before the financial crisis, and very quickly these positions just went south and uh he handed up losing the sovereign wealth and ended up losing about one point

two billion dollars uh. And this guy basically had to flee for his life out of Tripoli. And the reason I think this year it's kind of interesting is because the story came out at the same time as a big discussion in the US about the fiduciary standard. Uh, you know, should you hold brokers accountable obviously for mom and pop retirees, and this case went to court this year.

Actually Goldman won the case. And you know, the argument was should a sixty billion dollars sovereign wealth fund, you know, shouldn't they be sophisticated enough to know what they're dealing with. They they claimed that Goldman had sort of led them astray with these uh, with these investments. UM. So fascinating story. I encourage everyone to google it and hopefully it will be a motion picture someday, if there's anyone from Hollywood listening. So Goldman in the end, Um, they didn't get in

trouble for it, right they Yeah, they were cleared. Yeah, they won the case. I mean it. You know, it's dragged on for years. Obviously Kadafi was ousted and then that that complicated things. But the verdict came uh police it was in the fall around October, uh, and Goldman actually prevailed. So fascinating. You know what I love about stories like this is when we think of trading in

the year sixteen or seen. You just think of someone behind a terminal looking at lots of screens with numbers blinking green or red, uh, looking at charts and lines on charts and going through spreadsheets, but any story that involves legwork and having to say, hey, here's a huge pile of money somewhere. It's in Libya, and I'm going to get on a plane and try to get some

of it. And anything you know that's it's sort of real is a good reminder that there is in finance, there's still this sort of uh, you know, well literal frontier market but sort of wild west frontier aspect to it that if you have the sort of get on a plan and try and get some of it, that you can make money that way. Yeah. Matt Levine wrote a column about it that was pretty interesting, basically saying the sort of the salesmanship has been sucked out of

Wall Street because of computerized automated trading. Uh. And here's an example of a good salesman, right for better or worse? You know this what's and also what's fascinating to me is this guy went from being considered, you know, Goldman's top rainmaker too when everything went south, he was sort of, you know, the biggest goat in the Goldman you know. And and it's it's interesting how quickly your fortunes can

change on Wall Street. You know, one day, you're at the top and then something goes wrong and you're you're quickly find your way on the bottom. I wonder what the hero or anti hero of that story would make of the hotel scene in Tripoli right now. I mean that was back when Libya had a government, right right, So probably as rough as it is, that than significantly rougher ye exactly accuately, the would be a few more opportunities. That's a good point. I don't know what the golden

will to send an army over to investigate. We'll see, all right. Megan Murphy, you had probably the most important beat often as a leader of Bloomberg's politics coverage, obviously the election of being the defining story of the year. So as you look back at what was your favorite story, I have to say this, just because I'm on with with with Joe and Tracy, that I have picked out a market's theme. Thank you. Um, it's probably like our

first one. So for me that it was really the Mexican pay so because here's why, you know, when as the politics editor of the cycle, I have to admit that people will come to me with all sorts of crab.

You know, Oh, we're seeing a reaction and you know, various different esoteric corners of the market as the sort of Trump and Clinton uh punch off sort of lumbered along, and we and we have to be you know, we would always say to people that you know, even as late as the summer, we weren't really seeing that much

impact in the market. We we felt that markets were very late and sort of thinking about a Trump presidency and pricing in the reality of this, and that market seemed relatively calm, and so I have to admit that we would we constantly sort of back back. I think Tracy and I were probably some of the people that

came to random stories. But the one, sorry, Megan, the one thing that was actually real was the Mexican pay so and and just that sort of with you know of Mexican uh, you know, exports going into the US and watching that currency and watching how much I went back this morning and actually was looking back at some of the moments. So I'm talking moments when sort of Trump's groping tape gets released. It's like Mexican PAYSA strengthens,

and there's all these bloomer headlines. It's like Mexican pasa strengthens as groping video. It's released, and and and it was fascinating to me because you know, I did the election that coverage and on the night, you know, I

think the pay so fo what was it? And just watching, you know, watching that and again it was it was almost you know, it became such a barometer and such a fun, I hate to say that, a very fun indicator of where we were going after the debates and every little moment in the Trump campaign when I think about it, and became a running joke on my desk is where's the Mexican pay So There's two things I really like about the fact that the pace so became

the ultimate barometer for how the election was going. One, obviously, I just amused at all these politics reporters having to follows in my hands, but more importantly, not only politics reporters having to follow a currency, but learning that when the Mexican paceo goes down, the line on the chart is going up, which must have known a bunch of people's minds, because of course, the convention and currencies is

that in most cases are three exceptions. The dollar comes first, so it's US d m x N, which means that the traditional way you characterize that is to the dollar rallying against the pace. So so I'm so happy that all these politics reporters that have never thought about this learned an important aspect of quote currency quoting conventions because of this election. And some were very skeptical. Some were

very skeptical. Some were very skeptical. There's also a bit of irony in that that weaker currency was, you know, probably a really a good thing for Mexico's economy. Ultimately, you know how many Americans are checking out Cabo now for for spring break because it's so true. Mexico's manufacturing competitiveness having increased because the currency plunged on Trump's wind is the ultimate irony. And these were very, very sophisticated views.

I visited our colleagues in Mexico City Bureau in August, and you know, almost without question, the economists, the officials, the investors that we met, they all knew far more about what had transpired in the campaign that day than I did. Be going to breakfast at an investment bank at seven o'clock, they had all read five thirty eight, they had all read the daily two oh two. They were all set for the day that well, I guess that.

I mean that gets to one of the interesting things, um that I was thinking when we were watching them pay so, is like I get how it became a barometer for the election outcome. But on the other hand, there's it was kind of weird that people just settled on this one asset as the thing that they were going to trade, um, the election with, right, because you could have chosen all sorts of things you could have chosen, you know, the betting market, for instance, is a more

direct thing, or bank stocks or drugs docks or anything. Well, the Mexican paso is the most liquid, most actively traded emerging market currency, so it kind of becomes a proxy for emerging markets generally. And look the other country that was in the crosshairs of Donald Trump, China. Not a lot you can do with that market. Good point. Another one other point that I want to make about this, and this speaks exactly to what Tracy was saying, is in markets, you can get to a point where the

underlying reality is not that important. And what happens is, you know Cain's talked about this in uh, you know, his concept of the beauty contest, which I think we've talked about before on this on this podcast, which is that markets are not really about figuring out who is the most beautiful person in the beauty contest, but in trying to figure out who the people you're competing against, trading against who they think will be the most beautiful

person in the contest. And then there's endless layers of that. So everybody else knows that that's how everyone is playing the game. So at some point you settle on this idea that the Mexican pasto is the proxy for the election, And even if there's not necessarily any particular object to it as being the best, the fact that we've all settled on it as the proxy makes it a reality nonetheless.

And in my view, that's when markets get more interesting, get at their peak interestingness, when they sort of become almost purely expressions of group psychology very end, get further and further divorced from underlying reality. So I love I love this, call Megan, great choice. All right, Dan Moss, what was your favorite story of We're going to go

to Japan and a more economic landscape? So on July one, two of our colleagues in Tokyo published a story citing people familiar with the discussions as saying that an increasing number of b o J insiders concerned about the sustainability of what was then the monitary policy framework in Japan, which was the road to throw everything at the kitchen sink. Quei as far as the I can see, just keep hitting it and hitting it and hitting it in the hopes that that inflation target can get up to two.

What our reporters we're hearing was WHOA inside the building, there's increasing concern about, look, where are we going here? And sure enough, a week later, when the bj was expected to do a large easing, they announced a policy review. Things are going to be on hold for a couple of months, that we're going to think about it over the summer, and they're going to come back. And when they came back, what they had was a whole new framework. They were instead going to target various points on the

yield curve rather than a quantitative amount of money. Big shift. That is it unusual to get that sort of you know, inside the palace holes type of gossip from the b o J. And also is it an unusual situation in the United States where every member of the Fed goes off on their own little speaking tour between events, you know, and which sort of approach do you think makes more sense. Well,

let's take the second one first. There are quite a large number of members of the Bank of Japan's Monetary Policy Committee who makes speeches in various parts of the country. They just tend not to make the headlines. They tend to be more cautious than what they say, and in some of Kuroda's biggest decisions, the votes were split and it was really only his vote that carried the day. So you know, it's not a monolithic thing. They are in various parts of the country making speeches, but for

some reason they tend not to resonate outside Japan. But the dissension is real, and it's there now. The flip side of your question was is it a problem that there's too many fair officials speaking in too many places, saying too many different things. The trick there, and we wrestle with this daily, is trying to figure out which officials matter the most at anyone given point in the cycle. No names, but for example, if there's someone who's a chronic dissenter known as a hard money person with a

track record of being predisposed against further easing. It's important to take that into account when understanding what that person says, and the markets do struggle with that, I think sometimes, and I can understand it so down. I love that you chose this story because I think a lot of people maybe not forget, but this doesn't get as much

attention as it should. The Bank of Japan was, of course at the forefront of easy monetary policy and experimental monetary policy, and the fact that they kind of um started rethinking that strategy this year speaks to the rest of the world and really the efficacy of things like quantitative easing and of things like negative interest rates. Right, You're absolutely right, and privately officials will tell you. Yet, look, we know we're a laboratory. We're not that proud of it,

but we were out there first. And the things that Japan has been wrestling with, demographic change, a burst, property bubble, these are things that are no longer just a Japanese issue. The big difference is while Japan has a shrinking labor market a shrinking population, there is not a robust embrace of immigration. I also I agree with Tracy that there's a great story because yea, as as Tracy put it, we're seeing a lot of these same rethinks throughout the

world this year. The strategy of buy a bunch of stuff and said an inflation target is arguably worked, or has been mediocre at best, or is maybe just worked a little bit not as as strong as people thought. Great story that we'll keep watching. All right, Well, I want to thank all you guys for giving your favorite

stories of fantastic list. Ed Hammond, our Deal's reporter, thank you, Thank you, Mike Reagan, Markets Maven, thank you, Max Abelson great uh great stories from showing some great range on that and giving some shout outs to some non Bloomberg folks. Thank you so much. Megan Murphy loved your call, Thank you, and Dan Moss thanks a lot. Okay, Joe, Well, that

was our special hindsight episode. I guess I mean in all seriousness, I really love talking about the stories that are fellow journalists um loved this year or found interesting or important. It's good to get a range from different perspectives, right, not just markets people. Totally I think I loved I had totally forgotten about the spray Athon party because in the year which so much huge earth moving events happened. It's easy to have forgotten about a party that got

a plastered all over Instagram with a silly hashtag. But maybe maybe in retrospect that will have been the most important story of the year, right because of the market link. But I mean, you brought up the point about social media, and I think probably for almost all of the stories that we just spoke about, there is a social media angle, and we've been talking about this on the podcast a lot.

But like the degree to which social media has changed the landscape of everything from politics to economics, to markets, to the way finance works, um to the possibility of some hedge fund guy getting his party outed much fast

or than he would otherwise, it's just phenomenal. Yeah, I'm actually of the view that for as much as we talk about social media, and we've talked about a lot on this podcast and people talk about it all the time, we arguably don't talk about social media enough overall in this because I think the ramifications on every aspect of our life of everyone being able to communicate with each other and have their opinion on everything maybe even a bigger deal than we realize. So all right, Well, we'll

do more social media podcasts in all Right. This has been another edition of the odd Loads podcast. Thank you so much to our listeners who joined us in sen We'll be back with another fresh slate of episodes in I'm Joe Wisn't Thought. You can follow me on Twitter at the Stalwarts and I'm Tracy Alloway. I'm on Twitter at Tracy Alloway. Thanks for listening a