Border Bombshell

immigrants into the United States. And this comes at a time when US and China still seem no closer on reaching a trade deal between themselves, so trade is still dominating the headlines. One of our guests will walk us through how to actually trade a trade war. And the bonds rally has kind of taken on a mind of

its own. Has it gone too far or our tenure treasury yield now headed towards to And of course we'll close out the episode with our tradition the Craziest thing I saw in markets this week, But first we'll talk about President Trump and his threats to place tariffs on Mexico if they do not stop the flow of illegal immigrants into the country. Here to talk about it is Brian Chappata, a Bloomberg opinion columnist who focuses on fixed income markets. Welcome to the show, Brian, Thanks for having

me so, Brian. The sort of knee jerk reaction to this new threat of tariffs on Mexico was very much risk off. We saw a rally in bonds, steep sell off in stocks, um interest rates obviously going much lower that two on the tenure really coming into focus next, is the market re overreacting here considering that President Trump has been known to sort of bluff or at least

change his mind in the past. Well, I think the market is very confused right now because you had these China trade war possibilities, and that was sort of well telegraphed, but Mexico sort of came out of nowhere. There was an agreement la utually in place the U S. M c A. And there's this question of Okay, if there's a deal in place and you could still arbitrarily throw some tariffs onto a country, what does this mean for

the China front? So now you're fighting a two front trade war, and the question becomes, at what point will this just completely mess up global supply chains, the overall markets and ultimately the U S economy, and that's when you start to get a risk off. You start to see a lot of people buy up treasuries. It's certainly messing up a lot of weekends for financial journalists and traders. I mentioned at least, but Brian so so much of the pricing in the bond market revolves around inflation and

what people are expecting for inflation going forward. Now, obviously a new round of tariffs on Mexico while we're still waiting for the goods from China to arrive on the boats. With those that new set of tariffs, UM, the implication obviously is that at least some of these UH expenses from the tariffs will be passed on to consumers, which should have uh an inflationary effect. But yet the bond market is reacting as if it's expecting less inflation going forward.

Could you sort of walk us through what the bond market is thinking and why traders seem to think the Fed's next move will be even more aggressive cuts rather than a rate hike to respond to higher prices. Yeah, well, I think this definitely is not the kind of price increases and inflation that the FED wants to see. It should be more of an organic, natural thing fueled by you know, wage gains and general economic growth. And this is more of a one time hit as a result

of this policy from the Trump administration. So I think it's sort of a trade off between inflation and growth, and I think the bond market is saying this is going to be a bigger hit on economic growth, and the FED will look through this idea that prices are going up because of these tariffs on China and on Mexico, and that's why you're seeing the possibility of a rape cut.

Although to be fair, uh, various FED officials, including Neil Kashkari, one of the more dovish among the FED officials throughout the country, uh, sort of says we're okay where we are right now. We don't need to do anything. We're likely to hear that word transitory again, just a different

meaningless time. Yeah. I mean there's so many I mean everyone's sort of playing game theory with with the tariffs, and obviously President Trump has been very actively going against the Feds, saying if we all I only got some FED help, we'd be doing even better than we are right now. And China is gonna get all the stimulus and I'm not gonna get anything. So there's a bit of game theory potentially going on. I'm not sure if

that's exactly the motivation here. I mean tying uh, these Mexico tariffs to immigration is sort of out of left field and kind of bizarre. Frankly, Uh, it feels a little arbitrary. And it's unclear exactly whether you know when the five percent goes to ten percent. I mean, there are dates, but when you know Mexico does enough for Trump to say, Okay, we don't need to tear a

few anymore is very unclear. And now let's turn our attention to the other trade war that's been dominating headlines, the tensions between the US and China, and joining us to break it all down is Lorie Calvacina, the head US equity strategist at RBC UM also spent some time at Credit Swiss if I'm not mistaken, and uh, Sarah a graduate of the University of Virginia. So congratulations to that basketball team. We're all begrudgingly saying congratulations, but we're

really happy for you. I'm happy I went to the University of Delaware, which is actually a knockoff of uv A, Like they literally copied the campus at Delaware. So this is like as close to a national championship as I'm gonna get, I think. So I'm happy, We're We're excited, Lori. You guys actually put out a report this week called how to Trade a Trade War, twenty one pages long, very in depth. You guys went through every single or an is called transcript from the last season. You also

surveyed your guys company analysts. How can you actually go about it? It's clearly not that simple. It's very very tough. And I think what's complicated matters is right after that initial Trump tweet a few weeks ago, we felt like people were in denial. They just didn't want to think

about it. They said, Okay, these this escalation isn't actually going to go through on Friday, And then it did, and then people were sort of in a state of shock, saying, Okay, well there's this window, it's probably not actually gonna happen. And guess what you know last week it felt like the middle of last week clients were saying, we actually have to figure out how to position for this in our portfolios and so we went to our analysts. We gave them about twenty four hours and we said, you've

had some time to think about this. Within your industry, what would you buy and what would you sell? What's most at most at risk, what's least at risk. We really wanted to understand, as the news ebbs and flows, what are the both sides of the trade. Just let's have these lists ready to go. We also asked the analysts to just standardize our thoughts and really we tried to assess their gut feel. I think investors right now they want hard data, they want hard numbers. I don't

think it's possible to get them yet. And we just said, what's going to be the impact to demand, what's going to be the impact margins? And when we did that, we found that we actually had some very clear sector and industry takeaways. There were some very clear leans and tilts that we saw develop. We cross referenced that with some work we did analyzing transcripts, and we we literally went through all five hundred transcripts through the last three

reporting season. So much time, so much time. This is not something we all did last week. This is something we do every reporting season, but We've been characterizing what companies say on trade, and we had like six or seven different categories, and we said, let's just put those into two basic categories, good and bad. And when we did that, we found that the sector takeaways pretty much

lined up with what our analysts thought. I feel like everybody is sort of looking at the UH sales and revenue exposure to China, and you don't hear much about the cost exposure. UH. You know what what companies are importing from China? Is that data sort of harder to come by, harder to quin There's a reason everybody is running those revenue numbers because it's it's in footnotes and financial statements. The cost estimates are not and so that's

why you don't see it. We actually made a purposeful decision not to look at that revenue data. We know everybody's looking at that. We know largely you're talking about semis and technology when you're talking about companies that list

direct China exposure. We think everybody knows about that. I mean, what was interesting to me is that as we went through the different sectors, it was very clear consumer discretionary, industrials, tech and materials are really the most at risk areas, wasn't too much of a difference in terms of impact on margins and impact on demand. Analysts answered those questions largely the same um areas that were more immune communication services,

utilities rates just no real direct exposure. Everything else was somewhere in the middle. We've heard about the macro tradebook before, the playbook, you could call it, and a lot of people have said, Okay, go into small caps, get out of emerging markets, get out of China, get out of semiconductors. This week we actually kind of saw the opposite. I thought it was pretty amazing that we saw emerging markets, we saw China, we saw semiconductors actually outperforming in small

caps underperforming. Is it the idea that maybe you need to get a little more granular, a little bit more micro, or is it the idea that right now investors are just still unsure of what to do well. I think it's a question of applying the risk and factoring in the risk two different parts of the market at different points in time, and I think the semiconductor one has been a really obvious one for a very long time. If you want to go in and run a screen

just looking at Chinese revenue exposure. You're gonna get a big list of semi companies and everybody knows that, and everyone was doing that analysis back in the fall. Now I think people are starting to look at the retailers which are really more affected by List four UM, and nobody really had that on their their time horizon. Nobody really thought that was even up within the realm of possibility.

So that's where all the focus is right now. One thing I find interesting in your recent reports your neutral as far as small caps versus large caps. And I'm interested in this because I've been on TV a few times when the market's really bad and the anchor will say, well, small caps are doing worse than large caps. You know, aren't they immune to the trade war? And my answer is always like, well, they are immune to a strong dollar.

But if you look at the makeup of small caps, I mean a lot of banks, a lot of consumer discretionary at risk to import costs, UM obviously higher beta, and small caps so when the market goes down, they're going to go down a little bit more. I mean, can you give me a smarter answer than that? Well, the so I I spent about seven years as a small cap strategy in the past, and and I can tell you that they're They're kind of two issues that

small caps are always in the epicenter of. One is their risk on or risk off, So bad news generally small caps go down, but then sometimes they benefit in a more fundamental way, and they don't always get credit for that. I think it's even more complicated right now. Yes, small caps are more domestic, so things like the small cap banks really no exposure to the trade war unless we get pulled into a recession um. But other than

that they should be fine. Retailers are more complicated because they have margin pressures, and it goes back to these cost pressures that we can't really measure, we can't really screen for. But what we know is that smaller companies in any sector have less scale, They have less bargaining power, they have less of an ability to manage issues like this. They can't manage their supply coins changed quite as deftly as the big cap companies, and I think that's what's

hurting them right now. Another thing I caught my eyes. You have a preference for financials energy and financials energies one story, but I'm kind of surprised that financials giving our our guy Brian here has been writing about this panic buying and treasuries. I mean, uh, flat inverted yield curves. Uh. You know, intuitively you would think would be bad for net interest margins at financials. So what are you saying there to Carl. So we think the yield curve, it's

when it really hurts the banks. We think it's more about the economic signal that it's sending, and we tell people continue to look at the preponderance of the evidence. The yield curve is one signal. Um, we don't think the U S economy is going to tip into recession this year, but we do admit and acknowledge that it's an anchor, it's an overhang, it's a problem. Um. We like the valuation story and financials. We like the fact that investors are starting to to really struggle to find

more defensive places to hide in the market. Healthcare has really broken down as a defensive proxy. So we think the relative immunity of something like the trade war and the financials could actually benefit them. But but the the yield curve is definitely a problem. That's a good segue in you Brian the yield curve is inverted again, We're all gonna die, right, that's the signal again? Do I have it right? So? What what tell us about what you've been writing? You you had a piece talking about

this panic buying and treasuries. But it doesn't sound like you think it's been overdone. That you think these yields are lower for longer. To use a catch phrase from from a few years ago, I mean, is that where we are again. We're back to this permanent low yield environment. I mean it feels like that's sort of the end game, no matter how you spin it, right. I mean, there's

been so much build up of debt across the world. Uh, you know, economy has become so financialized, everyone's exposed to equities. I mean, the only way to sort of keep all of this going without some sort of major problem is by keeping yields low. And that's what we've seen in Japan for a long time. It's what we've seen in Europe and in the US. The Fed was able to get several rate hikes off, but ultimately they're going to have the lower rates again at some point, and so

it is a concern. I mean, I think that in the short term, the rally has gone quite far. Jeff Gunlack came out on Twitter and said, you know, we've seen the top people are gonna sort of have buyers remorse now, um, and I think that's probably right. I mean, the tenure yield is below the lower bound of the FED funds rate. So if the Fed's gonna stay on hold, Uh, it doesn't look what are you doing quite so good?

What are you doing at you know, to twenty? But it's it's sort of feels like we're in this environment where the Fed's not going to raise anymore. That's for sure, they might cut at some point in the next two years, and so bond traders are trying to get ahead of this and that's why you see the long end rally

and the curve invert. How much dispersion do you actually see in Wall Street views right now, because I know you look at Bank of America, they're calling for yields potentially to fall to two point out five on the tenure. Then you mentioned Jeff Gunlack, I know, Macro Risk Advisors, a couple of other shops have come out and said, we are going to see a popping interest rates. We can't stay around two point two. I mean, are you just seeing a lot of different opinions at this point

in time. I mean, I think it's pretty universal right now that everyone's coming down because they're following the market. Um, that's for sure. That it seems like, especially among economists, there's a major reluctance to capitulate and say we're heading back down towards two percent when it seemed very clear that we were headed towards three and possibly even four percent.

But among the fixed income treasuries interest rates strategists specifically, there is a feeling that we're sort of stuck in a range. We've sort of seen the top for this cycle back in October and November when the yield was three point two three point five per cent um. So, you know, I guess we'll sort of see what happens here. But I think the uh, the move is definitely lower now now. Laurie, Obviously a big part of this move into bonds is likely people getting a little spooked at

at the stock market. Uh. You wrote recently that you do think people will come in and quote unquote by the dip to use uh everyone's favorite catchphrase. But we're not quite there yet. What sort of downside do you think we need for to bring in those dip buyers and will it require a catalyst? You know, what, will it be a midnight tweet from a certain president to do it? What evaluations? What, what would cause that dip

buying instinct to kick in? Well, well, I think that I don't think we're going to get there on valuation. Our valuation model has been pretty stretched and it's getting a little bit better, but we're kind of nowhere near cheap territory yet. So I think that's off the table

as the catalyst to get people back in. I do think you have to look back at history to some extent, and if you go back to we had these ferocious rallies off the bottom, but they had these you know, sort of different periods of consolidation that we're sparked by different things, and a lot of them went down to about ten And that seems to be the line in the sand where within the context of recovery, the market says, Okay, if we go any farther, we're pricing in a growth scare,

We're pricing in a really dire economic scenario. I think you watched that ten percent markets around fifty this time around. My sense is there investors will say, Okay, we're not in the recession camp. This has probably gone too far, and that's what where they'll step back in now. Hypothetically, if the data deteriorates, you know, we're looking at the I s M numbers, get some close to fifty that

you know lyne in the sand between contraction and expansion. Uh, if you have a ten percent equity dip and a sub fifty I s M, I mean, is is the same whole true? And and maybe some other disturbing economic data. I think if the ten percent doesn't hold and you get deteriorating economic data in a significant way, that says, okay, the recession issue was back on the table for this year.

You're looking at type decline. I mean, that's what we basically saw happen on the December lows, and that's that's pretty close to what your average recessionary drop is peaked a trough. Is that what the bond market is pricing in mil Brian, I mean the idea of low growth, low inflation. Obviously the market is now looking for a

FED rate cut. Yeah, I mean I think that's going to be the real big that that that's sort effectively bond traders are sort of daring the Fed to do a rate cut, And I mean, I think that if the data comes in week, the Fed will respond. But I don't think that the Fed really wants to sort of let the market steer its direction, at least throughout

the rest of this year. I think seems like a reasonable time when the Fed may start to see signs of weakness and reason to sort of start start dropping rates a little bit in hopes of this fabled soft landing um. But I think they're really really going to try to look through We sort of saw that most

recently with the sort of transitory comments on inflation. People were expecting that the Fed was going to change its tune, noticed that inflation was missing two percent constantly and acknowledge that. But j Pollo did not want to go there. Now another commun out out this week, Brian is Uh and I think this stems from Bloomberg Television sent a bunch of people out to PIMCO in southern California. I'm not saying I'm jealous that, you know, some people got to

go to California. I'm not saying I'm not jealous either, But but they came back with an interesting story, and that is that Pimco has gotten pretty bearish on credit, but walk us through they're thinking on why they're they're sort of getting a little scared about the credit markets. Yeah, So, I mean, I respect pimco uh and their investor is a ton and I think they're right to point out that.

I think they said that the corporate credit was the riskiest that they've ever seen or to some extent, and that cells we're gonna have a bunch of losses when the cycle turns, and that's true, but it's also not exactly the most novel point of view that we've ever seen, right. I mean, we know that triple b's now make up

three trillion dollars worth of the investment grade index. That's a lot, and companies have gone down the credit scale in order to you know, lock in you know a lot of debt, but also you know expand, and that's like one way they can do that. And Cellos are two thirds of the market, so obviously they are going to take the majority of the losses. So I mean, I think that they are barish, but they're also sort of just more broadly acknowledging that things are probably gonna

get tougher from here on out. We're a decade into the expansion, and you know, everyone keeps saying we're in the eighthitting or the night fitting or ex tratings or whatever like. Ultimately, at some point they're gonna be right, and they have got three to five year outlooks, so they say, you know, the next three to five years, we're probably gonna end the game, and uh, you know, something's gonna turn and things are not going to be so rosy for just plowing into whatever has the highest deal.

You know, it's funny. I feel like I've read about ten different obituaries for the credit cycle over the last five years, and recession is always two years away and it hasn't happened. But Laurie, Uh, you know, obviously the thinking, the traditional thinking is that the credit markets sort of uh lead the equity markets to some degree. Um, I'm curious if you buy that. And also if we are

in for a worsening in the credit markets. Um, you know, obviously the last time that happened was a big deal, uh, caused the Great Recession, caused you know this enormous bear market in stocks, I mean focused on the mortgage market, but is the equity market a little more insulated from problems in the credit land than it was then? UM, And you know what you're thinking, how how do you sort of incorporate signals from the credit market into how

you're looking at stocks? So I would say that the primary primary way we do it is we look at the small cap trade and we look at high yield, and what's the signal that we're getting from high yield? And we've started to see spreads widen a little bit, which is telling us some of this weakness and small cap is justified. But at the same time, there's nothing particularly scary there. I mean, we spend a ton of

time on this issue. Back in the fourth quarter when UM for for lack of a better word, every multi asset investor I talked to, was absolutely freaking out about debt levels in corporate America. So we we did a ton of work on this, and what we found is that if you look at the S and P landscape, things are pretty manageable. Things don't look that bad interest expense relative to sales very carefully contained. There's been a big rise in long term debt, short term debt, variable

rate debt, it's all very low. That's the scary stuff. When you look in the smaller companies, things don't look quite so good. Variable rate debt has been going up. There are certain sectors where it's a little bit worse than others. So I feel like there are pockets of risk in the market, but it's not as widespread, it's

not as deep as it's been in the past. In the beginning of the year, I remember a lot of people suggesting or advising that companies start moving investors start moving away from companies with higher debt levels because we were going to see higher interest rates. But now if that is off the table, can you kind of go back to these riskier companies that HI have higher debt levels. I think that you can, as long as you think

we're not headed into a recession eminently. I think as soon as the recession chatter picks up again that you'll start to see people put those trades that they put on in the fourth quarter, they'll go right go right back to them. But if you're kind of in this goldilocks scenario or the sluggish growth environment, you're probably okay. To look for bargains, and we did see a lot of investors hunting around for bargains and and some of

those more highly leveraged areas. You know, we used to hear a lot about this on consumer staples as a reason not to buy the staples companies. But nobody talks about it anymore, you know, Laurie. I also noticed you had a government studies. Yes, so it's coming in handy these days. I guess it is. It is more than you probably thought it would. I never thought I'd actually be putting my degree to here we go. So you know, we're getting to that point where politics and markets are

are about or on a collision course again for next year. Uh, walk us through how we should think about that, you know, um, how how closely should we watch the poll numbers? Um, that sort of thing. So I think you've got to keep an eye on them. And I think, to be honest, investors are really underestimating the amount of political risk that's out there. I think we're all focused on the trade war right now, but I think the next big political

issue that's coming back is election. And when you when you go through when you think about how it can impact markets, on an issue and an industry basis, it gets pretty you know, frightening is not exactly the right word, but it gets really concerning. UM. We did again a couple of surveys. We talked to investors, we talked to our analysts, and with our analysts we said, look at your industry. Give us an issue, you know, think about

it from an issue perspective. Don't just tell me Republicans, you know, are better for the marketing Democrats are bad. We don't want to hear that, but you know, look at your industry. Is there something that Democratic contenders are talking about that could be bad for your stocks? And we went through. We found a whole big list and we mapped it out by sector and we found that it was really you know, consumer staples, utilities, UM rates,

UM and industrials. Oddly enough, we're really the only areas that didn't have some specific policy issue that the progressive candidates on the Democrats, UM, you know, would would would hurt. Is there any overarching concern about the tax rate that these cliporate tax cuts we've saw in the last couple of years? Will will you know? I had I had a few analysts mentioned that when we did it in the survey, but I'll tell you honestly, it does not

come up at all in conversations with investors. It's arguably something we should be thinking about a little bit as a risk, UM, but I think it's more issues like Medicare for all, drug pricing, green no Deal um, tech sector regulation where you know, we've seen Elizabeth Warren in particular be very vocal breaks and and they're the market leader, So that does get to be, you know, very concerning

with healthcare. Does this kind of become a binary trade? Well, you know, it's it's interesting on healthcare, we actually think that and tech have risked on both sides of the political aisle. And you go all the way back to election, Trump was talking about drug pricing and he started to talk about it a little bit this year as well. And if you go back to the mid term elections, the Democrats are convinced that they did very well UM and the House races in particular on the basis of

campaigning on healthcare. Republicans are aware of that, UM and with the White House support, we actually think odds are something does happen on healthcare regardless of how the election comes out, just because both sides are very, very attuned to it as an issue that their constituents care about. Brand does anyone in the bondom market care about the elections?

I mean, clearly, no one's going to run on a balanced budget, mom, assuming right, I mean, I guess MMT sort of creeps into the conversation every now and then, and the idea of just running persistent deficits and letting fiscal spending uh carry the day. You know, that could boost long term rates UM with the prospect of of higher growth and also just sort of a bigger debt load um. But specific policy proposals least sort of on

the you know, more macro side. I think it's a little bit too soon to say on that really is not that far away, scarily, I can't believe it, and the debates are starting soon. I mean, I think that's why equity investors really need to pay attention, because they are going to get hit over the head with these issues starting in a few weeks. With that said, though, Mike, I believe it is that time. Yeah, it's my favorite time,

the week, our regular ritual. The craziest thing I ever saw in markets parentheses this week, Sarah I'm going to start with you, what do you get? Okay, So we don't really usually venture into the commodities market this week, but I thought something pretty interesting did happen. Um So, one of our reporters did point out that if you look at the ratio of soybean futures to corn, it is now at the lowest in six years. No, but there's there's a reason. There's a reason for it, because

that sounds more like a recipe problem. Right, Well, there's going to be good news that will come out of it. But the idea is that when you land and an acre, you get more corn soybeans poor acres, so the ratio has to be higher an order for farmers to say it's worth it to plant soybeans over corn. So because that has now dropped so low, the idea is we could get more corn this summer. Excited, wonderful, you're really

enthused right now, Brian. Yeah, Well in front of it was I love my corn, Larry, did they warny about our gimmick? Here the craziest thing we've ever seen in markets? I am actually a listener of the podcast, so I was very well prepared for that. Fantastic all right, let's what do you got? Okay, So I actually I've been debating between two, and I think the one I'll start with. I'll just keep it in the political realm given our

conversation earlier. But what really jumped out at me, and I think this is one of those things I'll just sort of never forget, is watching Bob Muller do his press conference at the Department of Justice UM, insisting that his report spoke for itself. And the reason I bring this up is it just to me hitomized how odd things have been as an equity strategist since I have talked about politics more than I was ever told that

I should. It used to be that we were, you know, we were supposed to stay out of the political realm. That was too controversial. We cannot get out of meetings this year UM without talking about politics. I purposefully try not to bring it up a lot of the time.

But but what I think was interesting to me is that it's something that's really not on investors radars, yet it was right there, front and center on the Bloomberg And I do think it has implications if you if you talk to most equity investors, they'll tell you, we don't think impeachment's going to happen. We're ignoring this. We did a survey back in September and we asked people how markets would react if Trump got impeached but not convicted,

and people were completely split. They had no idea how to trade it. They we asked them, what would you buy and what would you sell? They had no idea what to buy or sell. So they're just totally ignoring it because they don't know what to do and they don't think it's likely to happen. But I do think the fact that you know, we saw Muller insists that this report speaks for itself. Well, it's seems like it doesn't.

This issue is not going away, and I do think we have to consider how that impacts the elections, where the vast majority of people I talked to think that Trump is going to win. I personally think it's going to be close. Um, And I think we're just setting up for another year where we're going to be paying attention to things like this. We're going to be spending much more time than historically we would on on an election, right, and no one will trust any of the polls at all.

It's got to be about a thirty point spread, I think for people to trust the polls. I was. I was writing a note at eleven o'clock on the last presidential election at night. I had to redo it. Then in the night I had to redo it. Um. You know, I'm sure I'm going to be up all night when this one comes around as well. All right, Bran Chapada, I have a strong faith in you. As far as picking out crazy things in markets. You know, I didn't plan this, But I am also going with the commodity space.

Eight years ago I started at Bloomberg as an agricultural commodities reporters. So going back to going back to my roots, UM, looking at coffee pine intended, did you ever write I remember about corn, and I rede about soybeans. I not write about the fabled ratio that Sarah brought up. No, but UM coffee futures earlier this month, UM set the load, depending on which contract you look at, was either the

lowest in nine years or in uh fourteen years. But someone did not tell that to Clatch Coffee Roasters in San Francisco, because they were offering up cups of coffee for seventy five dollars each. It's it's insane. Uh. They just happened to buy this very select, very premium roast that only you know, there were only you know, a small small batch, Whereas throughout the rest of the world. Uh, there's just such an inundation of supply in coffee that

these futures were taking a tumble. So uh, you know, in San Francisco they are immune to the to the sort of cheapening of of coffee. I want to meet someone that brought a seventy In fact, I might even buy that cup of coffee just to see if it's just that. It's the Oscars for coffee, they told the Sacramento be So it's pretty good. There this good competition for the craziest thing we've ever seen in markets this week, Sarah,

I'll tell you mine. You set the precedent by going into the art market a few weeks ago, which I think is a valid it's a tradeable asset class. It's quickly becoming my favorite market as far as crazy things go. Uh. And I'll tell you about the story the New York Times had this week. It's about this artist named Peter Max who was very popular in the hippie air and lately, uh in recent years, they've made a business out of

auctioning off his artwork on cruise ships. Um, there's galleries on cruise ships and that The idea is basically, you're on a cruise, you're having a good time. You may be having a few cocktails. Maybe don't have the WiFi to check on the prices of the of what this guy's are typically sells for. So next thing you know, you're off the cruise and you're like, wait, I paid how much? How much for what now? So they jack

up the prices on the cruise ship. Well yeah, yeah, apparently that's that's what the allegation in the which makes last sense glory. Imagine if they only sold stocks on cruise ships and liked in the world, I'll pay a thousand of share. Now. If that's not crazy enough, it gets even crazier. Now, poor Peter Max is getting older, he's suffering from dementia. It's not clear that he can

even paint anymore. Yet they have the studio with quote unquote assistant artists who basically are making paintings in the style of Peter Max. And then he comes in like every now and then and just signs his name to all of them, and then they sent him off to the cruise ship where they're selling so allegedly at least not all of them are him. I mean the implication of the stories that none of them are his basically, uh,

nothing about that's good by say lose. But but the the the art markets so crazy that I'm wondering if this will just drive prices up there, like, oh, I got one of the fake Peter max Is that your time's heard about. So it's pretty crazy. That's the craziest thing I've I've ever seen markets that might That's got to be all your market talk we can do for this year. I don't know. I wouldn't be surprised if

you can come up with something new. Um. But with that said, Brian Chapada, Loria Calvacina, thank you so much for joining us today. What goes up? We'll be back next week. Until then, you can find us on the Bloomberg Terminal website and app or wherever you get your podcasts. We love it if you took the time to rate

interview the show so more listeners can find us. And you can find us on Twitter follow me at at Sarah Ponzack, Mike is at reg Anonymous, Our guest Lori Calvacina is at Lori Calvacina, and Brian Chapatta is at b Chapada. What Goes Up is produced by Top for Foreheads ahead of Bloomberg. Podcast is frincesca Levie. Thanks for listening, See you next time. Don't just st