Hello, and welcome to What Goes Up, a weekly markets podcast. My name is Mike Reagan. I'm a senior editor at Bloomberg and I'm hold on a higher across acid reporter at Bloomberg. And this week on the show, well, everyone has been talking about how higher interest rates are causing the sell off in technology stocks, but is that the entire story? We'll talk with a veteran equity market strategist who thinks there's more to it than just that, and will also pick her brain about the upcoming earning season. But first they'll thought, I've got a pop quiz for you. Are you ready? Probably not, but okay, I know I wonder you there would be a pop quiz and you got very nervous. Did I've been nervous for the past hour for I've been nervous for like the past thirty years, but but especially nervous with pop quiz filed outa As you know, to make a name for yourself in the stock market, you really need to create an acronym of your own. So I've got it. There's a new acronym that I'm a big fan of. I'm gonna tell you what it is, and you tell me what it stands for. It's magma m A g m A. Okay, it's meta Amazon, Google, Microsoft, Apple in some order and in in one of those orders, it's pretty good. I'm not sure if you got them all in the right order. Um, we'll find out. I also I kind of feel bad for Alphabet. You know, they're like, look, guys, we changed our name in alphabet and everyone's like, no, you're still Google. Sorry. That consonant in in our made it made its way into the acronym. So I guess the lesson is, if you're going to change your name, there's enough ase you need a you need a constant. But luckily for us, that acronym acronym is courtesy of this week's Yes, I think she created it. Maybe maybe she can shed some light on that for us. But well, obviously we'd like to have strategists on the show a lot, and we're lucky enough to have one of the best in the biz working for us right here in house at Bloomberg and very excited ever on the show. We really are. And I have noticed that acronym in in her recent notes. So I want to welcome back Gina Martin Adams. She's the chief equity strategist at Bloomberg Intelligence. Thank you for joining us. Thank you. And I have to say, if I have Deliver or Die by Magma, I might be in trouble. Hopefully I can make my name in some other way shape or we did come up with Magma. And I'll tell you why the G is still there because Google's ticker, Alphabet's ticker is still G O O g L, so it's based on the ticker. That's why we could still still have the G in there. And yeah, our team came up with Magma. I can't say it's catching fire, forgive the pun, but we're trying to wait until the podcast comes out. Yeah, you know, hopefully hopefully we can get magnetistic. It's a good one. I've seen a lot of attempts to recreate the acronym. You know. Another good one is um ed Yar. Denny has a Magnificent seven he's been out there with because it's really the top seven stocks that everyone talks about instead of the top five anymore. So I'll credit him with that one. We're all struggling with how to describe this giant group of megacaps that really dominates everything in the SNPI. Yeah for sure, and we do want to talk to you about that because you have been writing a lot of research reports about the big tech companies. But I want to start with just something that's happened this week, which is we heard from Powell this week, and I wanted to ask you if you feel like he actually ended up saying anything new and why he's hearing in front of Congress sort of helped stocks form a bottom from the recent sell off that we've been seeing at least four for a day or two. Yeah, Well, I think, um, you know, did he really say anything new? I don't think so. I think that the market is incredibly sensitive to anything that happens with the FED. When they hear from the Fed, they seem to feel better, right, Really, when the market is freaking out is when everyone speculates about what does the minutes mean? What did we read here? Uh? Forecaster comes out and says we're gonna get six sites instead of three, and that creates a lot of panics. So I think that just hearing his voice and hearing him restate that the FED is still going to be somewhat measured in their approach. Um is still going to remain vigilant and consider both sides of their mandate. Probably was the trigger, but it did he really say anything new, in my opinion, not necessarily. I think that they're pretty consistent in their messaging. But in the days leading up to his speech, the market had gone through a process of perhaps getting a little bit too irrational with respect to FED expectations. You know, we were pulling forward every possible interest rate forecast, talking about fifty basis point moves instead of twenty five basis point moves, and starting to talk about QT and what that might mean, all in the span of a very short time period. So I think, if anything, it's sort of squelched a little bit of the speculation and allowed the market a minute of a minute to just start to breathe again. I'm glad you brought that up too. You know, I've had that same thought. I wish someone could almost study that. I don't know how you would do it, but it's like, it seems like if you were to print out a speech and send it out into the market and print form, you'd have one reaction. But if you had pal just read it in front of the cameras, who would be a completely different reaction. There's something about his soothing tone, I think, yeah, And I think that already one's really there's there's something about the hearing someone say it rather than reading it. It comes across more certain. I totally agree. And I think it's a legacy aspect too, because if you think about how the FED used to operate, you know, you'd have teams of people inside banks trying to figure out every little language change in a FED statement and what that might mean for future interest rate increases and what that might mean for future FED policy, and in the open era of communication. Really, just the last twenty thirty years here, we've become much more accustomed to constant communication, and we really crave that constant messaging. And so I think there's something to be said for the fact that the personal message, we need it, we want it, we want to hear it all the time. We've gotten very spoiled by it. And when we're there's a vacuum of messaging, the market is tendent, has a tendency to revert to its worst self and start to extract the late extreme potential outcomes. Runs me. In the old days, didn't they used to look and try to figure out how heavy green spans briefly exactly. But let's let's get into it about interest rates in tech and I was noticed that in one of your recent notes. I think it's a really important topic to kind of dissect a little bit. I mean, I think may and maybe it's partly the media's fault. We we tend to shorthand this notion of rates are up, tech is selling off. You know, it's obviously causing effect there, but uh, your work, you you seem to think there's more to it. I mean, obviously tech long duration stocks are are clearly sensitive interest rates, but in your opinion, it's it's and and the work you've done, it seems like you think there's a little bit more to it, that that's not the whole story. Can you can you talk to us a little bit about what, um, you know, what is really the story with tech and this sort of mini correct Yeah, I think it is multifaceted, and I thank you for giving me the air time to discuss it because I do. I do believe that there is absolutely a tendency, particularly in this environment where rates volatility is coming to the forefront, where the market is naturally going to trade on duration. So your longest duration stocks like the tech and the high growth stocks, the stocks with much longer dated cash flow growth are likely to perform much worse than the lower duration stocks like the financials and the energies of the world. That's just a given. That said, when we really analyze what's been happening with tech, and specifically what's been happening with the Magma, the biggest of the tech stocks, we saw this extreme flight into this group throughout twenty and much of one, at least the early part of one, really in and sort of seeking safety, and that resulted in this tremendous valuation premium for this group. Not necessarily related to interest rates, right, because for most of one long term interest rates have been slowly rising, albeit in fits and starts. We're certainly off of our lows. So if it were all about duration, why would these stocks have been performing so well when interest rates were initially rising and now all of a sudden not that's not the entire story, right, So we saw this incredible valuation sort of premium get built into these stocks when there was just an absence of growth, in an absence of confidence everywhere else. Really, over the course of the last six months or so, we've started to see that valuation premium compressed as the market has become a little bit more confident in growth prospects for everyone else outside of this space, and a little less confident that these providers are going to be the dominant providers in the marketplace. As you've had new entrance to the market, you've had a lot more competitive you know, the competitive environment has changed so dramatically and the like. On top of that, we did see a pretty consequential technical indicator developed in November where the tech space in particular had gotten so extremely overbought that we were inevitably due for some sort of correction. I mean, it was really clear in that late October early November rip when everyone just rushed right back into tech, that this was a sector that was overbought in prime for some degree of correction. So we've been really since the middle of November in a period of time in which this space has been sort of rationalizing that extreme as well. So you've got this multiple faceted that this multifaceted story going on with tech. It's not just about rates. While I think rates are certainly playing a heavy part, you know, it's a longer term story. It's also at technical story. It's a story of valuations and how those are adjusting to a new reality and also earning strenths. Frankly, so, so how do you see that all playing out sort of in the longer term? You know, um, you know, my my guess is that really, you know, high growth tech is always gonna command some some sort of multiple premium um in a sort of normalized environment where you know, inflations normal below two and g d p s you know two or whatever, not these off the charts, uh numbers we've seen. I mean, is that is that a safe bet? And let me let me do one more question on there. I'm making a two party But um, the other thing to me seems to be that, um, you know what we think about is growth really isn't growth anymore? You know, the magmas aren't really putting up the the eye popping growth that they once did. Is that is that part of this is absolutely part of the story, is how do you really define these magma companies? Are they growth companies? Are are are they value companies? Because a few of them are actually in the value indices, which is kind of compelling information Uh, so, how are they really growth or not? You know, I think that the real clarity you can you can direct some real clarity by actually looking at the duration of stocks, right, And you can even go into the tech sector and decompose what are the highest duration versus lowest duration stocks. The Magmas are not necessarily the highest duration stocks in tech. If you think about what's sold off the most over the course of this most recent rip and rates, it's really been some of the fintech companies, some of the recent I p O, some of the non cash companies, right, the companies that aren't even generating cash flow yet aren't even posting positive earnings growth, right, those are the companies that are most at risk, whereas Magma's kind of a safety play. But relative to the entire s MP five, they are higher duration, Right, So I think that it's all it's all relative and what the universe the universe that you're speaking to that really matters. But I think you make a good point because when we really look at the growth prospects for Magma, that was probably what created the valuation bubble that I alluded to. When you think about sort of pre crisis, these stocks actually traded at a discount to the rest of the SMP five Post crisis, they've traded at a massive premium. Why have they traded at a premium? Is it really just about interest Rate's probably not. It's mostly because they were pumping through double digit cash flow growth, really strong earnings growth, still posting revenue growth in an environment where many companies were in complete distress and weren't you know, we're posting negative earnings in some cases. So as we get to an environment where more opportunities emerge and other companies in the SMP five hundred and the broader markets at large can produce the learnings growth, the competitive set for investor dollars suddenly changes. Right, there's oh, there are energy companies that I might consider buying now, or financial companies that I might consider buying now that two years ago I thought might actually go out of business. Um, So I think that that's a big part of it. But when we look, for instance, over the course of this year, this subset of companies that just that five Magma companies is expected to still produce faster revenue growth than the rest of the SMP five hundred, but slower earnings growth than the rest of the SMP five hundred, and that's a pretty big contrast to where we were two years ago, where they were producing much faster earnings growth and revenue growth than the rest of the index. So that tells you that margins are Another part of the story is these companies, while their margins are high, they're not getting higher and you've still got margin growth, really exponential margin growth for some segments of the SMP five hundred to enjoy in this early part of the expansion, where this group doesn't have that natural benefits. So I think that that's another headwind that we've got to consider for this group just in the short term. Doesn't mean that over the long run they might not be great investment idea US, right, But in the short term, when we're thinking three, six, twell months down the road, it could be pretty choppy for some of these um you know, really big stalwart positions in the SMP. So I was hoping, actually that you would dig into the earnings trends for some of these companies because I was looking at one of your notes and I watched one of your recent Boomark TV interviews and you had said that if we look at earnings trends. Tech is likely to lag over the course of two and your note said the EPs growth pace for these companies may remain below the INDEXUS into the fourth quarter, and that that sort of diminishes some of these the magma's appeal. So can you can you go over that? Yeah? Yeah, absolutely So when we look out over the landscape of two and this is just referencing what is currently in consensus, a couple of things are working against Tech number one company. These are guiding us to expect less. So this is something that really evolved within the October earning season as all of a sudden. Whereas in the early part of this recovery, companies were persistently guiding analysts to expect more out of them and it's a really positive tailwind for stock prices, in the third quarter, companies suddenly started saying, hey, analysts, maybe you're a little too optimistic, and that really is a reversion to normal times pre crisis, that was the norm. Companies constantly told analysts, you might be a little bit too optimistic. While we all know this earnings game where they guide analysts to expect a little less so they can beat every quarter. We seem to have reverted back to that norm, but that was particularly a profound change for tech, where that's where the vast majority of the negative guidance started to come from. As all of a sudden, the tech companies themselves were saying, you know what, the supply chain of stress is gonna last a little longer than we were hoping. And even though our sales are pretty strong, they may not be as strong as you were hoping for. And no, we're not going to be able to be as efficient as you had hoped and produced that bottom line earnings growth with margin expansion to degree that you're expecting. And we see that throughout all most of tech, but especially for the Magma companies because they are so in the spotlight and they did have such a gigantic valuation premium developed. But if you're just looking at over the next four quarters, for example, that Magma group is expected to post about eight hundred basis points slower EPs growth than the s MP five at large, so significantly slower EPs growth, which is anomalous. Right. This is a group that really persistently beat the SNP five hundred terms of earning growth right through the middle of that seems like a very weird scenario to me, where companies are guiding lower and analysts are raising their reestimates. Have you ever seen that before? And I mean it sounds like you're kind of perhaps uh side more at the analysts than the than the management. Yeah. So there's always these interesting dichotomies that emerge where companies there are more companies guiding lower than positive, but we never get one of companies giving us guidance as well, right, So we can only derive so much of our expectations from guidance. For tech, it's usually pretty good as an indicator because more tech companies guide than any other sector save consumer discretionary UM, so we get some pretty good guidance out of tech. We don't get guidance for all of the SMP five hundred though. As a matter of fact, we get guidance from less than a hundred companies in the SMP five hundreds, So you can only get so much out of it. But shifting direction can be meaningful as long as analyst expectations are still moving higher. That's generally the factor that matters more for equity prices and for equity markets at large, because that revision momentum reflects the entire herd of the analyst community for all SMP five hundred companies that large, So it's a much bigger um and broader and deeper indicator than guidances. That said, items can be meaningful for certain companies, and we certainly want to pay attention to it to some degree, but revisions are more important to follow. And frankly, the other thing to consider from a guidance perspective is just what does it really mean for guidance to be more negative than positive? And as I suggested earlier, we were in a really abnormal position when guidance was more positive than negative. That's where that almost never happens. That's what happened in one And I think a big part of why stocks just ripped so hard over the last two years is nobody thought we could do this well, including companies themselves, and so it came as such an incredible shock. Yeah, it wasn't that there was a situation where so many companies just either pull their guidance or give any because they just got up, stay through the cards in the errands, get it fold. Yeah, Yeah, which makes me wonder, you know, I assume, okay, and you know in on I don't think anyone, Uh, you know, it's sort of in your type of seat who has to make projections and estimates and and sort of predict the future. Uh, and correct me if I'm wrong, But I'm assuming your confidence level and everything was sort of lower than what it would have been, you know in a non pandemic environment. Certainly, where's your confidence level now in what you're analyzing for the for the future. Has it gotten back to that you know pre COVID level? Is it halfway there? You know? How do you think about how confident you are in in what your actually um? You know, your confidence level and predicting market valuations is always low. You know, it's just we all struggled for the holy grail of trying to find that perfect model that tells you where valuations should be. But on my regression models, for example, that try to predict the earning side of the SMP five hundred equation versus the multiple side, the earnings model is is roughly two thirds better than the multiple model, And there's is no way to know because when you're predicting the multiple, you're predicting sentiment to a certain degree. Obviously, how much our investor is going to be willing to pay for this cash flow over time. I will say that the earnings model I I would argue that you should be more confident that earnings growth will be at least stable to close to double digit growth over the course of this year. And I would say I'm more confident in our earnings model than i have been in the most recent past because things have finally normalized when you're coming right into recovery. Our earnings model is based on macroeconomic inputs, so we take things like where is the unemployment rate trending? Well. When the unemployment rate was trending back to five that created a lot of distortion in the model, as you might imagine, And now that we're back to more normalized conditions of unemployment, we can use a model more effectively when it's driven that way. And it's the same with durable goods orders. I have reasonable confidence that at this stage of the economic cycle will probably get pretty strong durable goods orders growth. That's an input to the mall at all. Um The things that are more uncertain right now are really more multiple and valuation based, which you know is kind of an environment of normal again. You know what was abnormal was an environment where the FED was printing money, more money than we'd ever seen. The balance she was expansion expanding faster than we've ever seen. Now we're moving into a more normalized environment, So hopefully the valuation model proves itself to be a little bit more predictable as well. But you know, interest rates I think are the big question mark for this year as opposed to economic conditions, and usually economic conditions drive the earnings models, so we should have a little bit more confidence there. Yeah, well, that seems like the data has been coming in. You know, the magnitude of the beats or mrs is uh come back to to earth to some degree. You know, we saw CPI at seven right on the those this week, So I guess that helps build a confidence I hope, so knock on. So, Gina, speaking of earnings, that we have the earning season kicking off this week, and I was looking through one of your notes and you said analysts are raising their forecast for the coming season despite company guidance moving in the opposite direction. You mentioned EPs growth everybody's expecting, but your guidance space model says an even higher is likely, and you said, analyst revenue outlooks continue to stun So what will you be looking for this season? I know a lot has been made over the last couple of quarters of you know, just even tallying up how many times people mention inflation or or the word transitory on on quarterly calls. So what what should we be looking Yeah, it's a great question. I we also have been in that involved in that game of tallying up inflation mentions and supply chain mentions, as you know, and it has been kind of stunning to follow. But the thing that I think is most important to watch really is what are analysts forecasts and company guidance around operating margins going into and beyond, because that's the real trigger that I think changed a lot in the markets as of last quarter um Where every other quarter of this recovery process has been all about a persistent beat top line bottom line margin beat everything, and a rage to top line bottom line margins. The third quarter earning season, which was between you know, mid October and mid November, was different in that, all of a sudden we started to see some real change in analysts confidence going forward, and by that I mean the revenue estimates continue to rise, but their earnings estimates stopped rising, and those earnings estimates, you know, or at least slowed down the pace of increase. And a lot of that is because operating margin forecasts kind of hit a ceiling where analysts were persistingly increasing their forecast for operating margins for the SMP five hundred prior to that season. In the third quarter season, we saw roughly half of SMP five hundred estimates for forward operating margins fall. So it's not that analysts are expecting margins themselves to drop, but they're saying, you know what, I'm going to rationalize my expectations for the future, and that rationalization ultimately creates a little bit of friction for stock crisis. We just want to watch how much does it rationalize and does it ultimately manifest itself in a reduction in operating margin expectations are not I think that's absolutely the biggest key to this earning season. We'll have more on that in our our notes for next week after a couple of financials report for Friday, So certainly look out for that, but I do think it's the most important factor to watch and It's not just important because I care about company fundamentals and the other thing I think to note about operating margin forecasts. They're a magnificent timing indicator. So you know, just historically, if you go back over the last ten years, all of those major corrections in the equity market, excluding the coronavirus related correction obviously, but those three major peaks and stocks which proceeded in near twenty percent correction in the SNP five, we're all accurately forecast by a peak in operating margin estimates as well. So I pay a very very close attention to this indicator. And should we continue to see sort of a material down draft and expectations for margins, you would anticipate a much weaker market climate to emerge. Um. You know, I'm hopeful that we can kind of hold in there and companies can guide us that some of these supply chain frictions are easing, some of the inflation pressures are easing. But you know, I'm not a hundred percent certain that we're we can be that rose colored glasses UM kind of optimistic. Yeah, this uh, supply chain issues seem to be lingering longer than anyone really expected. You know, and now flaring up again with the with this new variant of the virus. You know, I wanted to rewind a little bit, and you mentioned how, you know, interest rates or obviously you know, first and foremost on on most people's minds, uh this year. And I think we've talked about this in the past, about how it's it's often sort of that rate of change of interest rates. You know, if if it looks like it's a disorderly sell off in the bond market and rates jump really quickly quickly, that's really the scariest thing to equity investors, I think, I mean, is it is it that simple? You know, Could a sort of a slow grind higher in rates uh be digested at least from the index level, uh, you know, by the equity market and sort of a quiet rotation that that keeps the index a float, we're you know, Or does a grind higher eventually tighten financial conditions enough that uh, you know, either the FED has to stall its plans and sort of backtrack a little bit or that week. You know, I think it's a complicated question, and honestly, I would like to say that a slow grind higher should be relatively easily absorbed by equities. But a lot of that depends on what's happening with the curve um as well as what's happening with growth amid that slow grind higher. And I think that this is what the equity market is going to grapple with over the course of the year. Is okay. You know, when we throw into our model that we're likely to get a two to two point to five ten year treasury yield through two that's not particularly impactful to stocks. It's you know, it's relatively meaningless. Does constrain the multiple from moving higher, but doesn't necessarily, you know, crush the market by any stretch of the imagination, as long as the two year treasury remains somewhat anchored and only goes up incrementally. We have three hikes in the in the Fed funds rate over the course of the year, and economic growth conditions remain intact. Right, So it's really almost imposed usible to just isolate that tenure and say here's its impact by itself, because it really is why is the tenure rising, what's happening with the shorter end of the curve, and is it rising because you know, investors are freaking out about inflation while growth is plumbing because that's a really tough environment for stocks. Or is it rising because inflation pressures are still high and growth is skyrocketing, because that's a great environment for stocks. So I just think it's all about context. And unfortunately, UM, you know, we can isolate it, and we do. We isolated in our models, and certainly a three percent tenure considering our economic forecast would be pretty restrictive to equity multiple valuations at this point in time. But if a three percent tenure comes along because you've got forty earnings growth, that's a totally different environment, right, And and so I think that you do have to kind of consider a context from in which those rates are moving higher. Speaking of your outlook, I do want to ask you about what you're actually foreseeing for the SMP five hundred for this year, because just about everybody I talked to has been saying it's going to be just so much more choppier than it's been. In what I hear over and over again, is there storm clouds on the horizon to grapple with or some sort of iteration of of of that sentiment. And I know in your year head outlook, you said the path is likely to take its fair share of twists and turns as the economy transitions to expansion. So what do you foresee for the SMP fire and feel free to break it down into sort of, you know, the first half in the second half, as Chris Harvey did on the podcast last week where he said, we might see this cathartic up chuck in the first half of the year, which I love and so I want to bring it back with. So what what are you think? Um? Well, I can't promise any clever equips like cathartic up check up chuck, I can't even say it. Forgive me for that, But what you know, I I think the consensus that we're pretty close to consensus. Frankly, we've got low slow, slow growth and choppy growth in the SMP are most likely outcome for stocks over the course of this year. I'd say the likelihood that I'm too bullish is lower than the likelihood that I'm too bearish. I do think that most likely, if I'm wrong, I'm wrong because I'm too um too cautious. That may be a function of hanging out with you guys all day long, constantly, you know, asking me to really question whether or not I should be so bullish or not. But I, you know, I I do think it's going to be a function of where we end up on operating margins that largely determines what happens this year and can companies withstand inflation pressure. Will we see wage growth start to overcome? Um, it's start to over well other categories of inflation. While wages have been very very dormant over the last several years, all of a sudden, we're seeing a little bit of wage growth. And that's one factor that I think we probably don't pay enough attention to is what will that mean for operating margins going forward? Um? I think that's so far what the market has done is absorbed a pretty rocky move and interest rates and a pretty significant sell off in tech with relative ease. I mean, I think that you've got to take the signals from the rally in financials and energy for what they are, and they're very bullish. Uh So, if we can continue that kind of environment where you know, maybe we rationalize our expectations or valuations in some bloated sectors, but start to keep start to see more investment flowing into some of these cyclical spaces, we could have a much better market landscape than I think many of us are anticipating. Um. You know, I think the likelihood for recession is very, very low. I think the said if anything, will air on the side of caution as opposed to too much aggression. Even though the market is worried they might get aggressive, they've shown very little sign of of thinking about getting too hawkish. And as long as those are your baseline conditions, I think you've got to be pretty constructive toward risk assets. And then I go back to one other thing, and that is the fact that there is just no evidence that households are overly bullish towards equities. If anything, they just don't want to own stocks. They'd rather throw everything at crypto and n f T s and some of these other risk assets and just leave the poor stock market behind, as if it just doesn't matter anymore. You know. I hate to sound like the red headed stepchild, but I kind of am and have been for a long time now, where people just don't want to own stocks that much. So as the bond market becomes less and less investable, you know, as they start to lose a little bit money in in the bond market, they start to think about where are my other investment opportunities, And some of that capital could continue to trickle into the equity market kicking and screaming. But nonetheless it ultimately lands in the equity market, and that could produce more upside than we're anticipating as well. So I'm not, you know, overly worried about a major shift in stocks occurring this year, except for with respect to margins. It's the one thing that I really want to watch very carefully for risk emersion. Everyone spends so much time and effort analyzing sort of the fundamentals of the companies and the economy, and and not a lot of time looking at the fundamentals of the investors in the world. You know that this savings rate that went through the roof and corporate balance sheets that are really in many cases very strong, and and could you know, boost buy back and dividend programs, um, is that come more into your thinking, you know, the sort of the fundamentals of the of the bye side. Yeah, it's something I think about quite a lot. Actually, um. We do a lot of work on supply and demand for stocks, because I think it's something that we possibly really underappreciate it over the course of the last ten years. Is this idea that stocks didn't go up because people bought them. Stocks went up because corporates bought them right and and fewer corporates issued stock than bought back share. So ultimately that net supply and demand balance worked in favor of stocks, not because everybody had to own them, but because corporates bought them back and didn't issue us new ones. So there's just no supply. Now. I think that's some some things have changed over the last two years, many of them are very healthy, and that we have finally had new issuance of share class you know shares. We've had some I p O s come to the market. It's not all kind of trapped in private hands anymore. There is the capacity for new equity ownership UM in the public markets with new IPO issuance, but it's still the supply of new share is is still largely underwhelming how much companies are buying back in the form of demand UM. So it's something we watch very carefully. And then when I think about, you know, sort of getting a handle on what the real retail investment community holds for equities. I just look at household ownership in the flow of funds data because it's the biggest, most comprehensive database. I mean, a lot of people follow things like e t F flows, but et f s are a third of the overall market, so you can't really get a feel for what what ownership looks like. Um And if you look at household ownership of equities, they've increased on net, you know, excluding gains from the equity market themselves, of roughly one percent a year for the last two years, so they have started to add ownership. But over the last ten it's point three percent per year, So we've started to see some real interest gathering for the equity market. But if you go back to the nineties, we were looking at nearly two percent net increases in ownership every single year for a decade. So there's just there, just seems to me this enormous potential for all of a sudden people might actually like stocks again. You know, how do I capture that in a model really tough to do, But I want to respect the data for what it is and acknowledge that if people start to come back to stocks. It could produce incredible upside that none of us are forecasting. Yeah, and demographics, I guess make it tough too, with the you know, the baby boomers on one side of the barbell and the millennials. Maybe these millennials like l Donna will find I'll just take some of that, honestly, if you know, unless you have I checked a bit coming with it doing so great so stock work, it looks to be doing all right right now. Maybe maybe we'll get a little bit of that. Well, speaking of getting a little bit of that, love, Vildonna, you know what time it is, I know exactly what time it is. Stand clear of the craziest things we saw in markets this week, Jed, I think I gave you I I I hopefully I gave you enough notice about our craziest thing. Gimmick, uh not gimmick. Pardon pardon my lack of voca. Our tradition, it's a tradition we do. You kick us off. What's your craziest thing you saw in markets this week? Well? So, as Jina mentioned, cryptocurrencies have been under pressure recently, but there's one coin that's up a hundred percent so far this year. I don't know if either of you are aware of it. I feel like I should know this. I did read the story, but I can't remember they all They all blur together in my mind. It's one of the silly meme coins, isn't You could put baby dog baby does. That's right, put dog in there somewhere and you and your guests would be really good. It's called baby does. When I was checking how much it actually had gone up, and when I checked, it was more than a dred percent. But there were so many decimals involved. I knew you would love this. It was like zero point zero zero zero zero zero zero zero zero zero seven one. Yes, how many cents is that? It's like one billion? You could buy so many of them. Yeah, what's the whole crypto experience I'd like for you? Is it? You know? I feel like a lot of us kind of just ignored it, hope it would go away at some point. I mean, have you finally had to engage as an equity strategist um to some degree? And you know I say that investors are you know, forced into the equity market kicking and screaming. I've been forced to pay attention to crypto kicking Because I am an equity strategist. I kind of live in breathe stocks and what's happening, and even then in the most boring stocks in the SMP five hundred, So I'm I'm tend not to be on these sort of fringey risk assets spectrum. That's said, we got to a point where the equity market and the crypto market we're trading pretty closely together, hand in hand, so I do have to respect it as a measure of risk tolerance. I am a little bit worried about just how much ownership there is in crypto and how many you know, real dollars have moved into the crypto universe over the course of the last five years or so. It's pretty phenomenal. And what that might mean for economic growth. If the fate of a certain investor is really tied to crypto and we have a pretty big crash like the one we've had, can they hang on or how much of their overall income and spending base is really dependent upon this asset. I don't know, and I think there's a lot of uncertainty there, but I do pay attention to it. I still try not to, admittedly, but it's hard not to. I mean, there's just there's a lot going on. It's it's driving a lot of trends um in fintech as well, so I think we have to pay attention. It's it's turning into a real macro. Yeah, I am a little worried it might be. Have you seen anything crazy this week up there in the Peppers genius? I think our first strategist joining us from there there we go see excited about that. That's a differentiating factor. Um, you know the thing that's really a couple of things have struck me this week and again, live and breathe in the equity market. But I think the biggest thing is this just kind of return of the old school financials. Right. If you think about what's happening in the financial sector, all of these disruptors are really losing out to old financial companies like coin based, square Hood all of them making new lows, while Goldman, master Card, Schwab all of them making new highs. I thought was really fascinating and a pretty big divergence. At the same time, your best performing spaces energy, that's the space nobody wants to own. Good old fashion energy companies like these are the oil producers of the world's um, you know, these are the gas pump station owners. Right, It's like, Wow, what an interest thing world we've moved into from metaverse and all of the height flying growth fintech stocks really taking all of our mind share for so long. I mean, I have to say, it's a very comfortable world for me. I'm really enjoying this transition. Um but but it's been fascinating to watch just how much things have really shifted over the course of just a week. Yeah. Absolutely, the old what's that old expression is? I gess that's pretty good? All right, I'll give you mine. I'm inspired by you. You seem to think anything involving any public company's fair game for crazy questure. All right, So I'm gonna go with Remember it was a few days ago there was this big traffic jam on in Virginia. It's snowed like seven inches in Virginia. People were stuck in traffic for like twenty four hours. One poor guy was stuck in that trapp thick in an uber with the meter running in an uber. Which but when you think about it, though, you know, you hit the uber and you get a price, you're expecting that to be your your price that you get. But no, they can apparently jack it up if it takes too long to get there, to get to their destination. Uh, they will. They will add some fees on onto it. So this guy was stuck in an uber for nine hours and that that snowstorm, so as you know, it's time to play prices. Right, what do you think the bill was for a nine hour uber ride? What do you think they hit him? This is really good? This is this is your best one ever? Wow? Um, okay, let's let me think. I mean, but there must come a point where you could even like fight Uber for like capping it, right, I don't know. I'm gonna say that he did. He did, and he got a refund. But but what would you guess they tried to tried to build. Okay, I'll go with six hundred and seventy dollars. Okay, I'm gonna keep a poker face. You know, what do you think dollars? I would have gone. I would have thought that too. I would have thought they would have you know, because I don't know, you try to do the math in your head of what's a fifteen minute uber ride? But they tried to hit him for a six. Can't believe it. I usually am like really under really really I would have I would have I would have bid what geta I would have been in Genus camp. I would have thought it would have been in the thousands, but still a heavy bill. And the guy complained and they gave him. They gave him a refund, but they won't say how much they but it was originally supposed to be a two D ride, so pretty pretty expensive. So the I think the morale for all of us is checked that weather forecast before you get in an uber. Uh you know, I imagine if that was a New York taxi app for nine hours, that would have been like a Hopefully you know, then they got along. Maybe they're best friends now, you know, there could be a silver lining to this. Well, yeah, we'll have to reach out to this guy. This was via USA Today, who got it from w t op news whatever that is, So maybe they'll follow up. Hopefully. This is really speak of fobs, Gina. We're gonna have to get you back again, uh soon. Always a pleasure to catch up at you. We haven't. We don't get to talk to Geno much anymore since we're all hiding in uh well, thank you very much for having me. It was a great, a great pleasure. Thank you, Gina. What Goes Up. We'll be back next week and so then you can find us on the Bloomberg Terminal, website and app where wherever you get your podcasts. We love it if you took the time to rate and review the show on Apple podcast so more listeners can us and you can find us on Twitter, follow me at ing anonymous. Bildona high Rich is at Bildonna high Rich. You can also follow Bloomberg podcasts at podcasts at Fact. You to Charlie Pallada Bloomberg Radio. What Goes Up is produced by Magnus Hendrickson. The head of Bloomberg podcast is Francesco Levie. Thanks for listening. 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