Treasury yields started to spike soon after the Federal Reserve signaled it’s edging closer to winding down its pandemic-era bond buying. But can stocks do well in that type of environment? Brian Nick, chief investment strategist at Nuveen, talks about that and what the surge in yields is signaling about the well-being of the economy. Plus, he shares his current strategy and discusses areas of the market he finds attractive.
Hello, and welcome to What Goes Up, a weekly markets podcast. I'm Mike Reagan, a senior editor at Bloomberg, and I'm Waldonna Hirich, across asset reporter at Bloomberg. This week on the show, well, everyone is freaking out about interest rates again. The tenure treasure yield is up twenty some basis points since the Federal Reserve September meeting. That's when the Central Bank signaled that tapering of its asset purchases will likely commence sometime this year. At the same time, well, remember that soap opera surrounding the debt ceiling. It's been renewed for another season, so as the drama about a potential hard landing in China's economy. So what's it all mean for your investments? We'll get into it with the chief investment strategist at a major investment firm. But first we have a very special announcement from Charlie Pellett himself. Well, every good mystery must come to an end, so we'll keep you in suspense no longer. What Goes Up is pleased to announce that Bill Donna hi Rick will be the new co host of the show. Permanently, or at least until Reagan drives her nuts. I like how Charlie could not resist getting a dig in on me on that that introduction. They're built but which I really appreciate. By the way, this is news to me. Oh well, surprise, surprise. Thanks. We know how much you love the the attention and the spotlight to be on you, so I I don't at all. Yeah, you'll get used to it, you'll get used to but but I love but I love everything Charlie does. So I appreciate that that's that's one of the members here that that you love, Like, okay, yeah, that's fair enough. Yeah, but I'm very proud to have you, Bill Donna. I mean we I obviously enjoyed the mystery co host gimmick for as long as it lasted. But uh, long time listeners will know vil Donna has been a major behind the scenes contributor to the show since it's beginning. Uh that vildonna energy is unrivaled and she's uh uh importantly, she's on the phone every day with smart people who may or may not realize that they're they're actually auditioning for for a guest spot on the for the podcast, right, I don't know if you tell them that. I never do, and I think that might have been the case with this week's guests. We can we can ask him. I want to introduce this week's guest. It's Brian Nick. He's the chief investment strategist at Moving and he also used to work at the New York Fed. So I think he's the perfect guest for for the podcast this week. Thank thank you for joining us, Brian, Thank you very much for having me. And I would say every time I talked to a reporter, I secretly hope that I'm auditioning for a podcast. So this is this is fantastic. It's every strategist stream right. It is finally paid off. Well, you know as well, Dona said you started earlier in your we're working at the at the market's desk at the FED itself. Um so, I want to hope and you can kind of put that FED hat on again before we actually get into your views on the market, I just talked to us a little bit about what you're expecting for the tapering process. Um uh, you know, how aggressive will the FED be? How soon are you expecting sort of the the normalization of interest rates to follow after tapering, and you know, how do you think the market. Is the market prepared for what's coming um or is it over pricing under pricing at any of the risks here? Yeah, So I think from the Fed's perspective, they have this sort of institutional memory of the last crisis when they did wait a very long time after the financial crisis three or four years before that. You when we're talking about tapering their bond purchases, and they were off and on with QI one, q E two, q E three, but it took until for them to actually get you know, busy with the with the task of rolling down those bond purchases, and in retrospect, they probably think they did that too quickly. J Pal himself has said the economy is actually in better shape today that it was when they first announced that taper in the market had a big tantrum about it. An interest rates doubled in a pretty short period of time. So the Fed is taking lessons of the last recovery and their part in, you know, getting to the period of higher interest rates and fewer bond purchases, and it probably thinks it went too quickly, tightened too much tightened too quickly, even by what at the time seemed like very very slow standards. And and so this feed has become much more dubbish in its reaction function to hotter economic data, whether it's growth or higher inflation, much more tolerant of inflation. I'd say, almost dismissive. When you hear a FED chair get up in front of everybody and say, well, the difference between two point four percent and two percent. You know, the average households not going to feel that. You know, we're not in Paul Volker territory anymore, right when we have the FED chair saying that. And obviously inflation has been much higher than two point four percent this year, and the FED has been extremely tall and continuing to do the asset purchases, continuing to really like shoot off any notion that they're going to be raising interest rates anytime soon. I think they got to a point where even the doves on the committee were comfortable that liquidity was ample. This emergency stimulus, you know, bond buying program was probably um no longer doing a whole lot of good, probably wasn't doing harm, but wasn't gonna be helping anymore. And so I think they were very explicit, in fact, more explicit than I expected them to be at the September meeting that they would be heading into November with the expectation to be announcing a taper, probably start that in December, wind it down maybe fifteen billion a month until they're done it at the end of July, and I think that's probably the timeline that we're looking for, probably a bit more aggressive than maybe a few months ago what we would have expected. But I think with with the COVID cases sort of peeking and coming down, some of the economic data has actually turned a bit better and inflation hasn't gone away as an issue for the FAT to have to consider. Um, this is probably kind of the media outcome from markets in terms of interest rate hikes. I do think this is where maybe the market is being a little bit too aggressive pricing in FED hikes. Yes, the FED dots are telling us that about half the members think that they should be raising rates next year at least once. I mean is also half the members don't think they should be raising rates next year or won't have to raise rates next year, And I think there will be more doves on the committee a year from now than there are now. Because Biden's going to pick three two or three new FED governors, it'll probably be more inclined not to raise rates, and so I wouldn't look for them to lift off until the first part of three, with a caveat being that if inflation continues to come in a lot hotter than expected, that may be pulled forward into the second half of next year. So, Brian, obviously we saw a spike in treasury yields right after the FED meeting, or maybe not right after. I think in a story I wrote, uh, we said something like eighteen hours afterwards. So it is is that what's behind the sell off in the bond market? Is it what we you know it was, it's parked by what we heard from the Fed? Or is it more so the outlook for growth? It both? Can you walk us through your thinking? They're sure. I think it follows the pattern of a taper tantrum, except in a much more mild case than we saw in real interest rates rising. You don't really have inflation expectations doing much, so the markets not screaming that the Fed's making a huge mistake by tapering. Do you think all the way back to June. That meeting, when the dots were interpreted as being more hawkish and the FED maybe kind of mishandle its communication spook the markets a little bit into thinking it was going to be a bit too hawkish. You actually saw long term interest rates fall, which is a sign at the market, at least the bondo market thinks that fed's making a mistake and going too quickly. With the September meeting, I think it was handled a bit better. The communication, the separation of the bond buying from the interest rate lift off um again, the dismissive attack towards inflation, I think I'll probably also got got markets attention. So when you have interest rates rising at the Yolkurf steepening, I think it's a sign that the markets are optimistic about growth, and I think you have to consider the context. Yes, the FED was probably sort of proximate cause for the increase in rates, but we also have now a clear decline in US and global COVID cases, So it seems like the delta variant is is in decline in many more places than it's than it's on the rise at this point, and the economic data sort of sneakily has gotten a little bit better, or at least it's less prone to disappointment than it was. Over the summer, we got a really good retail sales number, some of the housing numbers, home construction was was better than expected, and so I think that the overall tone has become a bit more optimistic, maybe reversing some of the pessimism we saw in July and August, which is when rates were declining for reasons that that to us at the time we're pretty mysterious. So a bit of a reversal of what we saw then. UM, not quite risk one, because we've seen the equity markets and how they behave. But I think an overall more optimistic tone in the bottom market UM that sees the FED is as pretty much getting things right and not too many other things interfering with the general story, which is slower economic growth from a very very high rate and peak in the second quarter and at least a number of quarters of of above trend growth ahead. So you know, I think, so still still relatively smooth sailing for the US economy. Ran so obviously, uh, equity valuations are are super high, at least compared with history. Credit spreads are razor thin um, and you make you set up some thoughts heres too toldon and I, uh, sort of your general thoughts about the market. And one point you made I think is really interesting. Uh you said that the economy is early to mid cycle, but markets are are late cycle, you know, presumably looking at evaluation metrics like that. And I think that's an interesting way of looking at it. I agree, I I completely agree. But I'm wondering how you think that resolves itself. I mean, to me, there's there's kind of two maybe main possibilities. You know, obviously that the markets can can sort of you know, come down and drag the economy, uh down with them into the late cycle or uh, you know, end of the cycle for the economy, or you know, I always think maybe you get that correction on the X axis of the chart rather than the y access you know, in other words, just a market that goes nowhere for a while, uh, until learnings catch up that sort of thing, um, rather than a sharpe drop in price that brings things back to a sort of a mean reversion evaluations. But how are you thinking about how that will resolve itself? This discrepancy between where the economy is, what part of the cycle, and where the market seem to be in the cycle. Yes, so just just quickly, I think to put some some meat on the bones of the argument that if you look at the economy, the unemployment or it's not high, but it's higher than it was pre pandemic. We have a lot of people who haven't even entered the or re entered the labor force yet. So I think there's still many millions of more people who will be getting jobs in the next call at six to eighteen months, and so that it's a sign that you're you're creating jobs at that clip. It's still early cycle. Savings rates are very high, which is not abnormal after research when people have built up savings, although the reason that they're high is much different than this massive physical stimulus and people you know, essentially confined to their to their homes for many many months um and then things like inventories, their companies are scrambling to restock inventories, they let them wind all the way down. That's something that happens earlier in economic cycle as well. Whereas the markets are behaving almost as if the pandemic they never happened. Equity valuations, to your point, are higher than they were pre pandemic. They were a little bit off their peaks from earlier in the year. They have been coming down because the market has been doing less well than earnings growth has been doing. But credit spreads certainly extremely resilient and much better UM you know, have exhibited you know, late cycle signs in a way that that they weren't even doing before the pandemic. So how did this resolves itself? I think your your point about maybe the market's not giving you a whole lot as a diversified investor for some period of time. I think it's probably the way we see this resolving. As the economy continues to decelerate gently, I think we get you know, slightly less good market returns, and we're seeing the third quarter has resolved in a way that the net net sp five really hasn't gone much of anywhere. UM. Interest rates are incrementally higher than they were to start the quarter UM, but really it's a three D sixty degree turned throughout the quarters, a little bit of treading water already this early in the cycle, and I think investors can expect some more of that doesn't mean there's not opportunities in places credit outperformed in in the in the third quarter, but it's gonna be I think more frustrating, certainly for anybody who's gotten used to the last eighteen months or go back ten years of returns for somebody in a portfolio to generate those types of returns when markets have already moved so so fast, so forward, um in terms of you know, pricing in a very good and mature economic cycle when we haven't really arrived at that point yet. I think from a from a fundamental standpoint, um. The other way it could resolve is that we're just wrong about the economic cycle being early, and the market is actually much tighter than we think, and those workers aren't coming back, and that means we do get your classic kind of overheating. The FED has has become too debbish and he's gotten behind the eight ball, and that's where you get the kind of the rapid end of the cycle. We talked about that as an investment committee. We talked about that at new being quite frequently as a big risk. But we don't think that's that's something we should be acutely worried about unless there's more evidence in some of these Jaws reports coming out soon that that there really aren't that many more people on the sidelines are going to get back to work. So just to tie a few of these things together, everything that's going on with the bond market, and then you know what we've seen from the stock market so far this year. I know one of the things that we were thinking about is just what the background looks like, the economic background looks like right now with yield spiking, versus what the setup looks like back in the spring when we were seeing, you know, a similar things happening in the in the bond market. And I think some people would argue that the economic background just looking forward, it doesn't look as strong as when everybody was looking forward to the reopening. Then at the same time you did, as you just said, we have seen stocks run up quite a lot since then. So does that mean like through the end of the year, just the bullish set up for the market is a little bit less constructive or how are you thinking about it? Yes, So, this this economic period that we've been in start obviously starting with with the first quarter UM. Most people who are investors today have never experienced something like this before where we have six or seven GDP growth for a period of six months and they were decelerating from that. But the absolute level of growth in the third quarter is still going to make it one of the best quarters that we've seen in several decades. Right, even if it's three and a half or four and a half of me that that's well above normal, certainly post financial crisis and even before that. So we're still running the economy hot here and we should still be seeing you know, solid contributions from consumer, albeit not as good as the first half of the year when we were getting stimulus checks and other kinds of of of transfer payments that was enabling consumption to be artificially high. Um. We got that second quarter, UH revision for GDP. We're now consumer spending annualized at in the second quarter. That's just not gonna happen in the third. What didn't happen in the third quarter is not gonna happen in the fourth quarter. Um. But it's still gonna be solid. People are still drawing down on considerable savings. UH. We know that businesses need to restock inventories. We know they're making investments to try to make those workers more productive. That, by the way, is one of the things that can help forestall more inflation. Is if we just get more productivity out of the existing workforce, we can pay those people more without having to charge higher prices to to the end end customers. So there's a lot of good things happening economy. Global manufacturing output is an all time high. Trade flows are called close to their all time highs UM. But we don't have this huge demand shock every single quarter the way we did in Q one and Q two, because the fiscal stimulus is gonna very quickly go from being an a plus two once it sort of expires and becomes a drag and that minus and that's gonna mean that, yeah, the growth rate is gonna come down. It's gonna come down to four ish three ish two wish, and probably by the end of next year we'll kind of get a sense of where the new normal is. Maybe it's you know, one and a half percent to two and a half percent growth, something like what we're used to pre pandemic. But we know from experience that equities can do fine and that scenario credit can certainly do. Find in that scenario UM and some of the I think rotations that we've seen into more those more familiar out performers like technology and brawdly defined a lot of you know, higher growth companies. You know that I think has been of a piece with a recognition that that growth is decelerating. What we might get pockets of cyclical outperformance here and there, like the ones we've been in for the last few weeks. I think for the most part, we're settling back down into a more familiar pattern for growth, albeit after several quite good quarters for the US economy, which would still you know, I mean, we're creating jobs, we're seeing wages move up, and yes, inflation still probably running above where the FED would ideally like it to be. So, Brian, I think regular listeners of this show, UH listen up for for two main things when when they listen to the show. One is the craziest things we saw in the market. That's your real test. We'll get to that later. That that's your that's your real doctorate thesis there that that we'll get to. But the other question they look out for is, well, just tell me what to buy right now for a guy like you, you know, I know, moving you've got a big um what is it one point two trillion or something like that at one point to bigger than bitcoin. Well we'll say, uh, that's on the day. It depends on it depends on the day. But you know, so obviously you got your eye on across all asset classes, across all uh, you know, markets around the world. What is sticking out you know to you now as sort of worth investing in right now? To to simplify it, to it to sort of the most basic question. Yeah, so we we do have this sort of late market cycle thesis, which means that a lot of things that would normally at this stage look at look inexpensive, look to us fully valued or maybe even a bit expensive. The question is looking outside of those areas which I think make up the bread and butter, traditional uh diverse fire portfolios that people invest in. That's going to be the key, and it's it's really up to the individual. Are you diversifying fully into things like a liquid alternatives, private credit, farmland, timber. Those are all things that that we're keen on getting investors into if we can. But I think even for investors who who don't have that liquidity tolerance, of that ability to allocate alternatives. It's things like emerging market credit, which is an asset class that still looks early cycle compared to the US markets. It's always a bit of a penalty just for being emerging markets, but EM credit is one of the nice things about it. A little bit less China exposure than if you go with the e M equity side UM, so, less less sort of idiosyncratic ad hoc China regulatory risk, which is a big theme in the third quarter. UH. And then just just a an environment that we know is going to be a reach for yield, increasing risk tolerance of fixed income investors. As the global economy continues to to do fine, people are gonna be looking for areas where they can earn extra income and that's gonna be one of them. And then things like bank loans of floating rate loans UM also for the US, also a big asset class, sort of tactical preference for US as well in an environment of raising rising interest rates, and it's underperformed high yield just a little bit, so if you're looking at that loan versus credit trade, the loans look a little bit more attractive to US too, And you know, we're very focused on income. Almost every asset class we do has some sort of income uh bent to it, and so that that's one area that we're we're certainly looking for. And then something else that we talked about it every investment committee meeting and sort of in our d n A as E s G investing uh specifically, one thing we talked about it this uh this this last meeting, and we're gonna be writing about a fourth courter outlook is paying it more attention to the s the social in E s G and just do as an example, looking and trying to find ways to measure employee satisfaction with their companies. So you can look at how much companies pay their employees as our sort of a should I invest in this company or not? It has to be a pretty bad predictor for how the stock is going to do. But if you wrap up employee compensation into things like training, benefits, opportunities, lifestyle, work life balance and can find ways to measure those things, that's where the positive alpha comes in. So if you have that s G component to your security selection, that's something that can help with the margins too. In an environment where we know it's very hard to be a reliable stock picker. Free snacks. I think if you can correlate free snacks from a company to other returns, I think we'll find something. You know, we had just gotten the free snacks just before the pandemic, so they may be still be sitting in the opposite you have to re replenish them. I want to just rewind a little bit. And he did mention China's he sounded a little uh China verse uh there for a minute. And you know, I wonder if you look at some of the dislocations that have happened in the Chinese market in recent months, and it's I mean, it's got to be tempting to go bargain hunting across whether it be equities or credits. You know, even uh sovereign yields always in China looking a little bit better than than most of the rest of the world. But you know what what you're thinking on China right now, a lot of people saying it's it's simply uninvestable right now with this regulatory crackdown going on. I mean, do you take it that far? Whereas you know, is there a middle ground where you try to you know, take advantage of some of this dislocation, but maybe not expose yourself too much to it. Yeah, I think you said it with the middle ground. We actually had three different emerging market speakers in our at our investment community meeting and from around New vine Um. You guess what happened when we get three people. One of them is a bit more bullish, one of them embarrass and one of them sort of in between. And I think, you know, we're not We're not going to say that China is uninvestable because it's an economy that big, that's growing that fast, that has you know, a lot of kind of positive stories, whether it's technology, whether it's manufacturing. You know, just taking it off the table is very hard to do, even if you wanted to, because it's such a huge part of these benchmark indexes that any kind of China specific risk is going to destroy your ability to make, you know, to add value else one in portfolio. And you don't want your entire performance to be hostage to what's going on with China. So I think the idea is we want to be about market weight China, and we're not, you know, bottom fishing in areas that are at high risk for governmental capture. But we want to be much more selective. And I know that's you know, that's never like the most satisfying answer, that we want to be more selective and sharpen our pencils and find the right opportunity, But it really is trying to identify areas where the government may have an interest in becoming more active a k a. Reducing shareholder value, reducing profit margins because they're serving some kind of larger economic or political purpose, and looking more to areas that China is probably going to allow a bit of more of a lazy fair attitude because they're talking about companies that are trying to compete with the US and other areas of the world on a global stage. And I think a lot of that is is going to be in tech, some of that will be in manufacturing as well. Um, but it has become undoubtedly much much much harder because you could have been underweight China in the third quarter, and if you just had the wrong names in the portfolio, you could still could have underperformed because of the acute underperformance of whether it was gaming, whether it was that you know that that for profit education sector, or whether it was areas of tech that we're you know, again surprised with um with with sort of that you know that that ad hoc regulatory capture. Yeah, it does kind of overlap with the E s G notion to some degree. I mean trying to figure out you know, E s G through the lens of Xi jing Ping. You know a lot of this stuff that there's overlap there. I guess there is. And when you've been talking about E s G in the United States, it's usually a data issue. You think you have a thesis on what I can do to allocate towards certain type of companies or maybe away from certain types of companies depending on the issue. But it's all about getting the right data. With China, there's not much of a hope of getting a lot of transparent data at the very very micro micro levels. We're talking like sub operating statements and and earnings reports. We're talking more things like like I said, employees satisfaction, you know, net carbon emissions, that kind of thing much much harder to get when it comes to China, but it's still the same. I think overall tone is that you want to avoid investing in places where there could be reputational risk, country risk. Um uh, you know, single single company issues that that end up again if you're overallocated to these certain areas, end up torpedo and your performance. Ryan. Just to to close out are are grilling of you, I want to ask you to look ahead to the next earning season, which is supposed to kick off in just a couple of days. I think I think it's October thirteenth that we start to see some of the banks releasing earnings. So can you just tell us, like, what will you be looking for? Because I know my inbox is always flooded when ever we hear these warnings from companies like Surewyn Williams that we've heard over the last couple of days. So what will you be looking for and is there anything that would be really concerning to hear from company management. Yes, So it's a continuation to the second quarter where we were really looking for statements or evidence that there was a declining profit margin because of a combination of higher input costs for all materials for some firms, and higher labor costs because there was a shortage of available workers or workers able to work at the wage that was being offered, and we didn't actually see that much of that. Even at the places that we know the sort of the price pressures or the the the labor costs are a bit of a stress. For example, UM, you know restaurants, fast food industry would be in an area what you would expect to see some stress. We didn't see that as much in the second quarter. I think part of that's just the man was so strong that revenue growth was able to kind of overwhelm UH rising costs. But we know that revenue growth is gonna be slowing down like the economy, which peaked in the second quarter. Earnings growth almost certainly peaked in the second quarter as well, just because of base effects. So we're gonna be seeing fully expect to see a decline in the year on year rate of earnings growth, and probably more anecdotal evidence that inflation, especially raw materials, maybe supply chain disruptions, and maybe a combination of all those things in labor costs is eating into profit margins. I don't think that's necessarily a flashing red light for investors. I think it's perfectly natural that you'd see profit margins peak in a very very hot UH quarter for growth and then kind of decline from there. But we don't want to see, you know, abrupt declines and profit margins accompanied by very kind of pessimistic outlooks for profitability because all of these issues are kind of coming to a head. That would be my my concern and one of the things that you know, even if the bond market doesn't step in and and tell the Fed that it's time to raise interest rates, profitability of US corporations might might be doing that. I don't think that's gonna be a huge issue in the third quarter, but I think it's the thing I'm most um intently looking at for for sort of a common theme across different industries. Well, you know what most intently looking at, bil Donna. Yeah, I know, skared a hazard. I guess you know, as co host, you're contractually obligated to laugh at my jokes. Now you realize that, right, Oh sorry, it's just so hard because I can't. Sometimes they don't even sound like jokes, That's that's what makes them funny. Yeah, you've really got to be paying attention there anyway. Oh my gosh, enough with that, Enough with that, It's time for the craziest things we saw in markets this week stand clear of the craziest things we saw in markets this week, I'm gonna say I got a really good one. I hate to declare myself the winner already, but um so we'll go through the motions with you too, but mine's pretty good. So I'm gonna I'm gonna wait till last. Uh, let's start with you. What's the craziest thing you saw in markets this week? So, Mike, I want to give a shout out to our producer too, for four heads who who flagged this story to me and you actually, so you might already be familiar with it, but it's a CNN story and the headline is this hamster's crypto currency portfolio is beating the market and it's amazing. It's like, honestly, the craziest thing I've seen in a really long time. It's this German hamster and he's beating investors at their own game, apparently. So he has this little spinning wheel and he sort of runs around and then like wherever he ends up, if it's like a buy or a cell, it triggers these purchases, I think. And so he's been doing really really well in his portfolio, has ether and bitcoin, and I mean you can't. I think I win. You can't get better than that when it comes to cryptocurrencies. That that strategy makes as much sense as just about every other one I've heard. So I'll take the Hampsten. You know, Bert mack Hill had the monkey throwing darts at the dartboard, So why not a hamster. That should be the benchmark. The hamster the crypto benchmark. That's that's a pretty good one. That's a pretty good one we should make. We should make an index of like what the hamsters tracking and then just yeah, you get all you should get on that. You should get, you should get. We need a ticker ham h A M. That one's pretty good. I'll give you. I'll give you uh props for that one. How about you, Brian? Have you seen anything crazy? Uh? This weekend markets? Well, it's going to suggest that we look at the octopus that predicted the World Cup and see if that that he or she can come up with a better crypto strategy. So I'm gonna cheat a little bit and stretch the definition of markets to include prediction markets for what's going on in Washington, d C. Now, these are not the US treadury market, not the deepest most liquid markets in the world. But when you are kind of on Twitter religiously, like I am kind of following the minutes a minute, what's going on with the Reconciliation bill, there's this really cool um predicted market on on unpredicted that is basically saying, how big is the reconciliation bill going to be? And as this crazy week kind of wore on the one point five trillion and under category a much much stronger bid as we as we kind of wore on. I had been kind of thinking it was the two trillion number was sort of the over under um We're gonna get close to there. But you know now that it seems like there's even less agreement or consensus on on on these these spending bills that the potential is it falls apart completely or just becomes a much much smaller number. Now that that's the most fun weird thing I saw in markets this week. The extra bit of weirdness that I'd add to it is the financial markets seem completely uninterested in this UM. I to the best of my ability, I can't discern any movement in the tenure Treasury, the spire market leadership based on what's going on with this bill, because um, hey, we I don't think it's a great understanding of what's in it other than a sort of a lot of kind of kind of transfer payments. Um that could help the economy or could hurt the economy, depending on if you're paying more taxes or receiving more in benefits. But it's being doled out over you know, five or eight or ten years, depending on how they get it done. It just is dwarfed by all the stimulus we've done. Let's hit bottom lines immediately in the last eighteen months, and it almost seems like we have we kind of have this um uh, you know that we've gotten used to these huge fiscal influxes into the economy that when you you know, you said it's gonna be oh, it's true, tillion dollars over ten years, we kind of shrug it dot number even though it's still a massive amount of money. But it doesn't seem like it's having much of a much of an impact on markets for the time being. That's a good one. I'll hey, I love the predictions market. We'll allow that any time. How about the debt sailing is the debt shilling keeping you up at night, or is this the typical game of chicken that's gonna end at the eleventh hour like we've seen in the past. So this is my second favorite um predicted contract, which is will the debt ceiling be raised by October fifteen? And then Johnny Ellen comes out this week and says the drop dead date is the eighteen. So I'm a big no on the fifteen because why would they do it three days earlier? Thing? Right, if you got an extra three days, you know Congress is gonna use it. There's gonna be a lot of brinksmanship. My senses that Democrats are going to use a reconciliation process, which is a big pain in the neck for them, and get it in there and get it through and passed by the eighteenth. And the reason they're saying they're not going to do that, they want to wait until the last minute because they want Republicans to basically have the cave on letting them do it quickly, because the Republicans are not going to vote to raise the dead ceiling, but they're not going to throw obstacles in the way of the Democrats for spite as they're trying to kind of scramble to get this done at the eleventh hour. So I would say, if you're up on October seventeenth at eleven fifty nine eastern seconds, that's probably about when i'd expect the death ceiling to be right. That sounds about right. I'll to look up and see if there's a trillion dollar coin market on predicted. That's that's uh, that's the other option. Not yet, but it's still early days. All right, those are good you guys stuff competition this week. But now now I can give you the winning entry in the craziest thing. I'm just kidding. We'll call it a three away time. But mine's pretty good. And this is courtesy of our colleague Nick Baker, who turned me onto this market. I can't believe I've never heard it about it before. It's called the royalties Exchange. Have you have you ever heard of this, fill Donna. It's not like royal family members. You know, you can't trade, uh you know, Prince Henry for I don't know, but it's royalties from music and movies I guess too. So up for auction this week where the royalties from the jingle the best part of waking up. Remember the Folders jingle? Yeah, classic jingle. Uh, So you know Folders still uses it from time to time, so you kind of you're kind of at the mercy of when they decided to use it or not. And I guess maybe, I don't know, Kanye West could cover it to who knows, and you get you get royalties that way, but I think that the mainstream of royalties is from the commercials when Folders uses it. So we're gonna play prices right here. Let's put your break, your out, your your dividendic's discount model Brian or whatever you call it in the in this case. So the royalties last twelve month royalties for this jingle were eleven thousand, seven hundred forty seven dollars. Right. Now, here's the deal with this. You if you buy this, you get um the royalties for the lifetime of the author who actually had to go and look up. Her name is Leslie Pearl. She's sixty nine, still alive, so you get it for the duration of her lifetime plus seventy years, so you know, you got at least seventy years there. She could live to a hundred and you know then you got a hundred years out of it. Um, so eleven thousand, seven hundred dollars in royalties in the trailing twelve months? What would you bid for that based on that information? Uh? And I've got the I've got the latest bid. The auctions like got two hours left in it, so we're pretty close to the final bid. What's let's start with you, old Ona, what's your bid for the royalties for the Falters jingle? I saw this story, so I might be cheating if if I give you an answer, you're allowed to cheat. It's fine. Oh okay, I think, well, Brian, you go first, so he doesn't get gonna run down and ask my wife, who's an act. Surely how long this lady's gonna live? That would give me an inside track on the answer. I know we need to we need more information on her lifestyle habits, I think to uh, okay, So it's a hundred years eleven thousand dollars a year with some kind of very low interest rate because I'm assuming interest rates are going down forever. Yeah, yeah, applied to it. So, um, let's see five thousand. It's a pretty good guess. I would guess I'm not gonna tell you what I guess we'll do. What's your guess? I was gonna say, twenty seven thousand. Wow, that's a big bitess spread right there. Yeah, maybe I'm misremembering the story UM eighty three thousand, three hundred and fifty, which, to your point, Pride, I think is a bargain. I mean you you yeah, right about You're talking about like a fourteen percent yield off of this thing. I mean, you know, granted you don't get your return of capital at the end of a hundred years, but it comes stream I would think would be a lot worth a lot more than uh uh eight three grand I don't know. I think I'm discounting a much too low an interest rate, but I think I'm probably right to do so. I agree, I agree, But yeah, pretty pretty good bargain on the folders jingle. If you know two hours left, if either he wants to get in on that, Dana, you could, uh, I wonder if they'll just let me transfer half my four one k into that and just fit it up. I don't know, you could try. I don't know if real ties are a valid for one k only if you do do it, only if you really like Folgers coffee. If you don't just I don't know why Folgers just doesn't buy it for four grand if they're spending twelve grand a year on the royalties, I don't know why they don't buy it. But we'll pay off in a couple I'm gonna give I'm gonna go talk to the people at Folgers and uh, we'll figure that out. But with that said, I think that's all the time we have, right Nick, really uh injoyed the conversation. Hopefully we can get you back again sometime. You passed Voldonna's audition, you can give me back anytime. Thanks very much for having me. Thank you, Brian, what goes up? We'll be back next week. And so that you can find us on the Bloomberg Terminal website and app wherever you get your podcasts, we'd love it if you took the time to rate and review the show while on Apple Podcasts so more listeners can find us. And you can find us on Twitter, follow me at reing Anonymous Well. Donna Hirich is at Bildonna hi Rich. This week's guest, Brian Nick is at Brian Nick now Vene, and you can also follow Bloomberg Podcasts at podcasts that get to Charlie Pellett of Bloomberg Radio and the voice of the New York City subway system. What Goes Up is produced by Tofur Foreheads. Ahead of Bloomberg Podcasts is Francesco Levy. Thanks for listening, See you next time, Ol