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 Vildonna hire across asset reporter with Bloomberg. And this week on the show, well, sticky inflation, a slowing economy, even bank runs. Stocks have had a lot of headwinds this year, and yet the market is still pricing in a soft landing, where a scenario under which inflation is subdued but the economy avoids a deep recession. At least that's according to this week's guest, who is the w CEO of a major hedge fund firm. But does the market of it right? We're gonna get into it with him, Vildanna, But first I gotta ask, are you going to ask me a basketball question? I could don't. I don't know anything. I just know that the game was on really late and everybody was mad. Yeah, right, started after nine or something. That's about right. No. I was gonna ask you, um, if you watched MTV as a child, of course, of course, Oh my gosh, cribs, cribs, let's see my day. MTV still was playing videos. I don't I don't think I saw many cribs. Okay, So my craziest thing, the reason I ask is my craziest thing. The week harkings back to the early MTV days, and I'm wondering if you'll even know what we're talking about. Nineteen eighties, when did MTV start? It was like mid eighties. Yeah, okay, late eighties maybe, No. They they played videos when I was young too, But they also had like really fun shows. It was cribs. Was your main cribs? What else did they have? Oh my gosh, they had room Oh was that an MTV show? Yeah? They had Room Raiders Room rad Yeah, which is just like a really gross show, like somebody will go into your room and like literally go through all your stuff and try to embarrass you. Yeah, they had some good shows. I guess Jersey Shore was that's that's that's a gem. That's a gem. In fact, my daughter ran in to Pauly d Wow on her spring break where in Panama City, Florida, which is I guess is like the Jersey Shore of Florida. Yes, but anyway, we digress. We digress because our guest actually is really far removed from the Jersey for he's not really the Jersey Island. Sure, he's in the UK baste. Yeah, not quite the same Jersey shore. Not the same maybe a nicer Jersey shore. But anyway, Mark jones Man Group Deputy CEO, is joining us this week. Mark, thank you so much for joining us and welcome to the show. Pleasure glad to join you. I'm glad to be far away from the new Jersey Shore, right, it's definitely a different one on all side. Um, Okay, So you sent us a couple of notes before we started and you said we're in a tough period four large asset owners, and I wanted to ask you about this and what the backdrop is right now, what maybe some of your biggest worries out there are, and just sort of conceptualize this. Yeah. Sure, So I think if you're a large asset owner, you've obviously you've got some structural risk asset positions in equities and bonds, and you've had this very benign period where inflation just hasn't been a problem or certainly in developed markets, and obviously it's been back with a vengeance over the past eighteen months or so. And getting out of the way of that when you have those structural long asset positions is very, very tough for people, and actually, frankly, HARKing back to how do I risk manage my positions in an inflationary environment? Last year is one of the most difficult that most of our clients will have had for at least a decade and possibly significantly more. And they're definitely still concerned about what do we do now that this insidious sort of force on real assets that hasn't been around for a long period of time is back. What do they do with their allocations? Where do they need to move things around? Who can help them? Where's the ALP Do they still need to increase the private market allocations they've had in the past. Just sort of a long long list of debates that they're having in a way frankly that we haven't heard from them for a long, long period of time. You know, Mark, in the intro, I mentioned that, as you mentioned in your notes, it sure does look like equity markets at least are pracing in a soft landing. Here reading the restaur notes, I'm not convinced you believe they're right. Could this rally be a big head fake? Do you think? Yeah? I think the risk reward inequities is very, very tough at the moment because, as you say, they're effectively implying that the FED does manage to navigate this and land things perfectly. They've got an incredibly difficult job on their hands. I definitely wouldn't want to be in their shoes right now, because you've got very material risks both sides, and indeed you've now got financial stability coming up as a third dress that frankly I wasn't thinking about six months previously. But the standard ones, which clearly have been the ones on their mind for most of this period, are Okay, we do think we're going to cause a drop in economic growth, but can we time that perfectly? Can we have a mild recession without you know, major major job losses? At every time, you know, you hear him stand up, he does make the point of it's better to take pain now, otherwise it's worse long term. They understand what they're doing, they understand the potential consequences. Can they get the dial right there? And you know, economies are not things where the dials work desperately well. And the sort of feedback from what you do to how they behave as that perfect and then clearly the brisk the other side, which again you know they've been talking about previously. If they're sustained inflation, they have to get it back to two percent. That is their mandate. They will have to be high for longer if it doesn't move down. And the path between those two things is pretty hard. And then to throw the third problem in which we've obviously seen in the last month or so, is okay, do we put enough stress in the financial system here that they suddenly have to start worrying about financial stability? Is the you know, the other piece of their mandate that has been in the background for most of the lost eighteen months or so and then suddenly came very very aggressively. Interview with SVB, I do not envy him his job at the moment. I certainly don't. I don't think any I really don't. You say you're expecting more volatility ahead, Like, what are you expecting? What are you expecting from the Fed? I've read some interesting notes from some of the big banks this week. One of them said, when they're talking to clients, well, clients says they're sort of frustrated with the rally that we've seen in stocks. I guess if you were not positioned for it, you'd be frustrated with So what are you expecting going forward? Yeah, I think, I mean, I think equities difficult because we haven't really seen the cut in earnings und some drift down in earnings expectations, but nothing too material. So that's definitely one leg, which is just the fundamental piece, and then the other is just a flow piece. You know, we are starting to see people move back obviously money markets out of banks, but also into credit and government bond positions in a way that they just haven't had for years because there hasn't been enough return there to attract people. So whether that's the consumer or whether that's big institutional clients starting to come back to an asset class that frankly had fallen relatively out of favor. And some of that flow of funds is also an issue for equities. There's just people move money around. So I think it's, as I said, it's a tough tight rope to walk if you look at equities right now. I think there's plenty of other places where you can get comfortable returns without the same risk profile. And I think you're seeing plenty of people make some of those allocation moves. The US is obviously a bit of an outline, and that the balance is a bit better in some other markets. The SMP is remarkably calm in the face of everything we've seen recently. Mark, there's some comments from your colleague Lucallis, the CEO of Man Group, a few weeks ago that really sort of clop my eye. One thing he said was, such banks will have to break stuff to tame inflation. I think the mission accomplished there to some degree. I don't think that's what they thought they were going to break exactly. You'd never quite know what's going to break. But he also said a significant number of banks won't exist in twelve to twenty four months. And we have not seen the lows in equities this cycle. Now, these comments were a couple of weeks old. A lot has changed. It seems like the fire in the US regional banking system knock on wood, if it's not completely put out, it's not raging like it once was. The reaction from the Federal Reserve, the FDIC was very aggressive, you know, was that sort of the house view there about you know, the banking system being bracing for more failures. Has anything changed about that? How are you thinking about the state of the banking system. I think he was talking at a point when the market was pretty fee bro. Yeah, in full. What he's actually talking about is, Look, there's the US regional banks, in particular, the US as an incredible number of banks compared to virtually every other major market. There's obviously stress amongst them. There's likely to be consolidation as some of the stronger players take on some of the weaker players. We've obviously seen the extreme version of that, where it's been via fdoc rescues and then reseales, But just more generally you would expect to see consolidation. Then maybe some failures. Banks do fail, that's part of the nature of the business model, but it was a much It was much more around the banking system generally either consolidating or maybe some going out of business. We did we did manage to trigger a comment from the Bank of England saying that they were comfortable with the banking system off the back of that. So that was definitely not an intended effect and maybe slightly taken out of context in a market where everyone was feeling a little bit more scared than they are today. Yeah, but no, we I mean, look, there's definitely still some stress in the banking system. And I saw some of the big investment bank defaults back sort of post in the financial crisis, and I remember telling people post that, look, the key thing is not to be there if there's a default of a bank, And that was the lesson that I thought everyone had learned in OA, and I spent years telling everyone when we get bank runs in future, they're going to be faster because everyone's going to remember O eight. And it turned a bit into the sort of horror story by the fire, because we didn't have very many defaults in banks for a long period of time, and then we just saw obviously the speed recently, which frankly, even though I was expecting bank runs to be faster, I was amazed at how fast really quite big institutions went from functioning to into FDIC hands. So SVB obviously is the one that people focused on. I actually think signature is the more interesting one in some ways, where there was almost no noise because everyone was focused on SVB, and then it was gone over the weekend, which is a remarkable sign of the speed of liquidity withdrawal in the current world. I wanted to ask you about that. Actually, I wanted to ask you about the speed with which we saw some of these bank rounds actually happen. And obviously we have had some weeks go by, and we've had some retrospective and lots of news reports about what actually happened and how, you know, different tech figures, we're talking to each other in different chat groups and whatever else. Can you characterize what happened and sort of the astoundingness at which and the speed at which had happened. I mean, it is just classic bank runs, So it's it's just liquidity withdrawal and banks a levied institutions, and you know they can't cope with some level of liquidity withdrawal. The thing that's different, it's clearly the sheer speed of which it happened. And as I say, all of the stories, you know, the press commentary is around SVB and the concentration of the client base there, and you know, effectively did they create their own bank run? But then go look at signature where it's not obvious that any of that was happening, but exactly the same thing happened at very very high speed. You know, look at the money coming out of credits we set great speed. Again, that's not coordinated action, that's just people reading press reports, and the world is much more attuned to some of this information. Clearly, generally financial information percolates far far faster than it used to. But I don't think if you look at the set of them, I don't think you can say it's sort of specifically a social media thing, or a concentrated set of clients thing, or a tech thing, because that's not the case with the other institutions that ran into liquidity issues. I think it's much more around general speed of information flow combined with frankly, just a classic tail risk with banking as a business model, which is bank runs happen, They will happen again. They've happened for decades. I'm not sure when the first one wards, but it won't have been that long after the first bank was started. That's probably true. Mark. I wanted to talk about sort of the climate of the hedge fund industry itself, you know, sort of a mixed year in twenty twenty two for a lot of funds. CTA's trend following funds did did very well. There were a lot of outflows from some funds. Madgroup actually managed to book about more than three billion dollars worth of inflows. And I was looking at some of the better performing funds. The HL Diversified Fund was up more than thirteen percent, HL Alpha up eleven percent. Now, of course, some of the long and only strategies, it was tough to post a positive return last year given the markets, but pretty impressive returns for some of these AHL funds. What if you could break down for us what worked? Is it to oversimplify it, to just call it trend following with some of these strategies. Is there more going on or was that really a big part of it? Trend fulling was definitely a big driver. So I think systematic funds did very well last year. In macro markets, there were some big trends to invest in, so some of the commodities moves at the start. Obviously the bond moves throughout the dollar move was a big positive contributor. So there were plenty of places for positive returns to be had, and CTAs are very good at capturing those sorts of macro moves. And I think when you so when you step back, we've had this very prolonged period where all developed markets have basically been doing the same things with interest rate policy. There's been this very very high correlation, and then that's clearly pushed into a bunch of other asset classes. It's generally dampened volatility down, it's increased correlation. It's been quite a tough environment for alpha, or at least there's less opportunities than you would sort of normally have seen pre that period of very very low interest rates. What we're moving back into now is something that's much more into O eight. So you've seen I mean, actually equity vole hasn't increased in the same way, but in a lot of other ethic classes you've seen quite material step ups, whether it's that in fixed income or in commodities or in currencies. You know, there's a lot more going on. There's a lot more differentiation in how countries are managing their interest rates because of some of the core macroeconomic differences between them, where inflation is, where energy policy is, in each of those places, strength at the job market. That's exactly the sort of environment that suits some of these macro strategies. Over time, because there's just a lot more opportunity. There's the risk management skills are a lot more relevant when things are moving around in that sort of a way. So, yeah, trends were absolutely critical to a lot of the strong outline returns last year. But we think that environment is going to persist, and frankly, it feels like that's the future decades going to be a lot more like that rather than just the next year or so. Really, so twenty twenty three will another good year for trend follow me think I mean individual, I mean that the last month or so it's been tougher for trend followers specifically because of the interest rate moves post SVB. That's in the nature of the strategy. You will have some difficult periods. They work over time, but it's a higher volatility and lower correlation between things, so at some level, just much more macro uncertainty in the sort of simplified way of putting that, that's the environment when you want strategies which can help you navigate that uncertainty, And that at heart is what trend followers are very good at doing over time, and I think we who knows in twenty years, thirty years, time, I suspect we'll look back now and go the previous ten years with the outlier rather than the other way around. Okay, and you said there's a bigger opportunity set for alpha than over the last decade one interest rates where near zero. Can you talk about what you mean by that? Yeah, I mean it's it's because of that higher volatility, So there's more there's more risk in markets, which if you've got skill, is the opportunity set obvious. You've got to have the skill in the first place. Similarly, within equities, you know, there's more dispersion within equities than they have been for a prolonged period of time. Again, if you are good making those investment choices, that's a great environment for you because there's just a bigger opportunity to make money for your clients. You've got to have the skill. Otherwise it's just risk with out the positive return. So I think it's it's sort of a more difficult environment because the risk is higher. But where you've got expertise, that's what you want. You know, our job is to take risk on behalf of clients when there's more opportunities in the world. Because it's a riskier period, you can add more benefit to them, and that's that's definitely what we're looking to do from here. I think what he's trying to say is he has the skill the firm. There's a there's a one and a half thousand double PhDs and the like sitting around me who definitely have the skills. You got to call him doctor, doctor. Doctor. We do have some gen you in rocket scientists, so on any day that you're feeling small at yourself, you can just go talk to someone and if you immediately feel a lot smaller. So I always joke about this. It's amazing how many actual rocket scientists find their way into investing, and yeah, quant we've interviewed some of them. Mark. I think one really sort of interesting sea change that we saw this year with Silicon Valley Bank is a greater focus on private markets venture capital, especially in Silicon Valley, and sort of this notion that boy, they had a great run. There was so much sort of interest in private markets that almost seems to me like the end of an era once Silicon Valley Bank broke. I mean, is is that an exaggeration? Do you think? I mean, was that whole private market craze a low interest rate phenomenon. I mean, is has this has every changed now for say private versus public the appeal of each type of investment. Yeah. So, I mean we've obviously had this huge trend in asset management for I mean, it's more than a decade old now, arguably too of increased allocation into private markets over time from the big asset owners, and the period of low interest rates definitely helped that trend because you just had to go somewhere you for returns them rather than the traditional asset classes. I don't think we're going to see some huge pivot away from that, because there's a lot of money allocated and you can't pull it out quickly. It takes time. Plus frankly, they are useful sources of returning people's portfolio. But I do think the speed of that trend is definitely, at a minimum going to slow down, and I think for a lot of people they're going to tilt back towards public markets for the first time in really quite a long time, because it's been relatively inexorable of adding to their private allocations year by year by year. And that's for a couple of reasons. One some of the stuff that we touched on earlier, where there's actually there's more return from some traditional asset classes, in particular on the fixed income side, So people go, actually, I don't need to reach out on the risk spectrum. I can meet my investment goals with some much more traditional returns, investment grade, credit, whatever it may be. And they're much happier if they can do that in a lower risk way and meet whatever their their retirees obligations or whatever their responsibilities are. And so that piece definitely is a big driver. And then I think the other thing is we saw the benefit of liquidity. The UK obviously had a relatively spectacular blow up in the guilt market last year. You had clients who suddenly had a very very strong liquidity need to meet that big, big market move, and they were having to sell assets to meet cash calls. And suddenly that reminder of things that I can liquidated if I need it in a crisis, and the value of that so I'm not a force seller of something else. We'd sort of forgotten that as a key benefit of liquidity, but I think we've had a few reminders in some of the sort of panic periods of that benefit of more liquid assets. So both for a risk management piece of balanced piece and a course sort of return piece, I think you're going to see tilts bag. Private markets are well established as parts of investor's portfolios. It's not that they're just going to drop them, but I think the speed of growth is going to change. Okay, So if we are seeing a tilt back towards more liquid assets, where do you already or maybe where are you foreseeing that money actually going from our business? Clearly the head fund business is a big part of what we do, and some of the systematic strategies, in particular macrosystematic strategy. I think people are looking at again this clearly saw them had a good year last year, and I think they agree with what I've just discussed around the environment suiting those sorts of strategies and needing something nimble to help them move around. So strategies that are able to take macro risk successfully on behalf of clients. That's definitely a big source of demand. Liquid alternatives as well, so sources returned that are equity or bonds, but again that you can liquidate if you need them, so you get that protection in the portfolio and then frankly just playing vanilla fixed income at whatever risk level people are looking at, you know, whether it's high yield or investment grade or not so much of our business. But guveyes, I think people are definitely coming back to just because it works now. It's not for a long period it was all risk and no reward. We just sort the risk materialized last year, but you've now got back to an environment where there's actually some reward again, so you can make a plausible case for it being a bigger part of a portfolio. So a mix of liquid alternatives, particularly systematic macro, and then some core fixed income in particular that I think people are coming back two off to a number of years of not really being focused on it, right, I mean when you can get yielded a money market fund these days. Uh, it's it's such a dramatic change of climate from what we're used to in the you know, the post TFC ere It's it's pretty amazing really. But Mark I used to joke last year that they passed a law that every podcast guests had to talk about inflation. Um, yeah, this year's done that. Yeah, this year. I think the law is that you have to talk about AI at some level, and I feel like, you know, at some level you must have some rocket scientists already in the firm, uh using AI. But I'm curious how you're thinking about it. You know, obviously this chat chept sort of caught the world by storm and has everybody wondering about how AI is going to be used in all industries, but investing especially. I'm curious if it made as big of a splash in your world, is there a bigger focus on AI now because of this, And if you could tell us you know, where you see it going as an investment tool, and maybe a little bit about how you're using it now if it are. I mean, look machine learning as we would have called it, but AI and the sort of popular vernacular that's been a big part of some of the research efforts here for a number of years. You know, we use those techniques in various of the strategies. You've got to be an expert to deploy it successfully. In finance though, in terms of running money, naive approaches are very dangerous frankly, so you need the human expertise alongside some of those techniques. The bit that the entire world has got wealthy excited about over the last couple of weeks, so some of the generative AI. I actually think he's one of the first times that the hype is appropriate against the technology. So whether that's useful in the pure investment decision side, that's definitely to be determined. But in our wider business using that as a way to help people do all manner of commercial tasks that we need, in commercial processes that we need, absolutely, you know, we clearly want people experimenting across the whole business of figuring out how can I use this to make myself more productive. I think you're going to see that, frankly, in almost all industries because it really is a remarkable step forward on the technology side. And I say that normally when these things come out, my view is, Okay, let's wait and see. Everyone always over hypes them and says innovation is always increasing. Doesn't show up in the productivity to statistics at the government level, So I'll believe it when I see it. This one, I genuinely think is going to have a big impact across most of the business world as people figure out how to deploy it. Right interesting our podcasts, Okay, I think you are safe. I think I saw some report from one of the sales side which was listing jobs that were at risk, and they've missed cell site research report writers somewhere. Maybe that was not a mistake. The other thing I think they're probably gonna pass a law that we have to talk about is commercial real estate and the credit cycle. I mean this banking and I you know, I don't know if he really should use the word crisis. You know, what's so unusual, Mark is to have this banking turbulence. We'll call it triggered by interest rate risk and deposit flows rather than credit. You know, but I do feel like the focus now is shifting towards especially that in the US, and problem I'm sure in the UK to the commercial real estate office reads here in the US, how are you thinking about the credit market? Has it? I mean, is that the next candidate to look for as far as the central banks breaking something? I mean, is that the next shooter draft? Do you think? I think we've got a bit of time because most large sort of segments of borrowers took the opportunity to push maturity out when rates were so low. I mean obviously saw that on the consumer side with a bunch of the refinancing mortgages in the US, you saw it quite a lot on the corporate sideway. There's really not much in maturities this year or even that much next year. And similarly on the real estate side, because interest rates were very attractive and you were asleep at the wheel if you weren't doing something in credit at that point in time. The bit that we're worried about mid term is okay, But if you had to refinance now, how many of those businesses can actually cope with where the interest coupe would be, whether that's real estate, whether that's the consumer, whether that's some of the sort of highly leveed corporates. And I'm sure there are all sorts of people sitting in various offices around the US and the wider world sweating and hoping that interest rates come down considerably before they have to do that trade, because there will be a lot of assets that need a new capital structure at that point in time, and they'll either need an equity injection or they'll need some very beneficial credit provider. But I don't think it's near term because the maturity dates are just they're far enough away. People are going to have to start looking at it next year, maybe the back end of this year some people. But we've still got a reasonable period of time and their most credits are still quite healthy at the moment. You know, I wonder if trying to raise capital on the equity market, as Silicon Valley Bank trying to do is sort of radioactive this year. Yeah, I mean, obviously the most large sort of equity markets are relatively shut for new issuance. Some secondary stuff's getting done, but not at anything like the volume that you would need if interest rates stay here, and you're just going to need equity going into quite a lot of asset classes to improve the cap structures. So I mean, look, there's a lot that's going to have to be done in quite a few markets. I just think we're twelve months away from it, probably. But so what everybody's talking about is a credit crunch or a credit tightening. I'm wondering if you think there's a difference between the two, or like what the more severe scenario might look like. Yeah, I think i'd normally distinguish the two. A sort of credit crunch is just the absence of provision. You just can't get things done or there's no sort of clearing price where things can get done. That's when you just get large default waves. And I think it's it's just hard to tell right now where that's going to be, because it is going to be so much around where credit and rates are. In twelve months forward. If things stay here, I think you're going to have a decent pickup in defaults. And I say that as someone who's heard about a default wave coming for ten years and it's just never turned up. And the view that distressed debt is the place to be on the sort of hedge fund strategy side, and actually the opportunity has been relatively limited. But I do think we're getting to that point where you know, when you hear the FED talk about the lag effect of interest rates into the economy, that's part of what they're talking about is, well, people can hunker down and they've got fixed rates. It doesn't bite them, it doesn't hit their cash flow. They kind of know it's coming and maybe they change their behavior a little bit, but where they're not actually paying the higher coupon, it's not fully in their behavior. When you've actually got to refinance and figure out what you do. Whether you're a consumer and you've got your mortgage coming up, or you're a corporate and you go, okay, do I have to look at my cost structure because I've now going to make this higher interest payment. That's really when it bites. And I don't think we've seen most people respond, whether that's corporate's real estate consumer to that move yet, because it hasn't. Actually she started to hit that pocket. Mark Jones, Deputy CEO of Man Group, joining us from London. Such a pleasure to catch up with you, Mark and hear your thoughts on the market. Really fascinating. We can't let you go just yet, though. We do have a tradition here the craziest things we saw in markets this week. I have a good one. You got a good one. Yeah, let's hear it. I'm sure you saw it. Dogecoin rose thirty percent because the Alla must put a picture of the little doggie on the Twitter homepage, and I looked. I went on Twitter and I found it. Yeah, I have it on money. It's just a little happy dog. I don't get it. I don't, Yeah, Mark, I assume Man is not exposed the dogecoin and not that I'm aware of. I'm sure someone has some. Someone's got some in their private account. How about you mark you see anything crazy in markets recently? I was. I was thinking about that as you asked the question, and it's the old thing about this week is having had a bunch of things that sort of eight on the Richter scale last week was to borrow a quote from Sherlock Holmes, it felt like the dog that didn't bob. It was a remarkably quiet week in markets, given quite how dramatic things were previously, So almost the thing that was most have noticed how little happened, given how chaotic it was prior to that. I think the thing I thought was most interesting as someone who runs a financial services institution was just seeing the change in CEO at ubs as they start to go through what will be an absolutely enormous change project there, and just interesting to see that shift back to the previous CEO but actual market booths. Genuinely, I think the absence of anything dramatic was the most striking thing last week. I love the Sherlock Holmes quote the dog that didn't park it. If I remember that was because the thief was the owner of the dog. Is there it spoiler something it's I think it's I read to my son recently. I think it's because the dog doesn't balk. You know, somebody didn't go past if I remember correctly, don't. I know, we've had a hundred years to read it, but don't. All right, it's about a horse being stolen, but I forget the details. I know, I'm trying to remember it. I think, yeah, it's either that, Yeah, well, we're not going to figure it out here, but a good quote. Nonetheless, it kind of makes me worried that the dog wasn't parking in markets last week. I feel like that's that's an ominous sign. Yeah, but all right, my crazy thing also somewhat involves some good British fiction for you. I know your favorite bil Donna is a quote unquote Taddy first edition of Harry Potter The Philosopher's Stone, Taddy meaning it's just it's a mess. I guess it's lacking a spine. Protective plastic was peeled off, pages were yellowed. But it is one of the first edition hard acts. There are only five hundred first editions of that book printed, three hundred one to local libraries, so this is somewhat rare, but I'm gonna make it harder, okay, because we're gonna play prices precise mark you're ready. I thought this had something to do with MTV. That's the other items, okay. A giant gong used on MTVu Tina Turner actually stood upside down and banged it with her feet one time, if that helps you. That sold at auction according to the New York Post and according to the BBC, A whiskey collection rescued by divers from one hundred and twenty eight year old shipwreck, the SS Wallachia, sank in the Firth of Clyde in eighteen ninety five while carrying a collection of whiskey in beer. Wilkinson's famous liquor Whiskey was recovered from the wreck. So it's time to play the game. Show what fetched the highest price at auction and give me your estimate? Was it? A the giant gong on MTV? The Taddy first edition of Harry Potter and the Philosopher's Stone or seven bottles and half bottles so summer, half bottles and one bottle of beer. Actually McEwan's export beer was also recovered in this whiskey collection. Rescued from one hundred and twenty eight year old shipwreck. Okay, I know what I'm going. I'm definitely going with the whiskey. Not that I like the word taddy, but I can't go with that. Definitely the whiskey. And what's your your dollar figure, pound figure, my pound figure? Okay, I'm gonna go with seven hundred and fifty thousand pounds, seven hundred and fifty thousand pounds for one hundred and twenty eight year old shipwreck. Hiskey. That's cool, you know, like people like whiskey, but also it has a nice story. Yeah, all right, Mark, as a expert in valuations, Well, firstly, I'd like to sell you some Whiskey's got a few bottles to download. Hopefully no one paid too much for the one hundred and twenty eight year old bottle of beer on the side. That's hard. I think I'll go with Harry Potter. Harry think it's going to be a lot lower. Yeah, what's your price tag on Harry Potter? One fifty thousand, one fifty thousand pounds. You guys are very generous bidders, I will say, Mark wins. Wow, it was the Harry Potter I can't. I gave you a Harry Potter book and you I didn't choose it. It's sold for twenty thousand, one hundred and sixty pounds about twenty five thousand dollars. It was taddy though, all right. The giant gun used on MTV sold for fifteen thousand, three hundred. Now you could be right about the whiskey because it hasn't sold yet. This is it's estimated to sell for three to four thousands. For the whole collection, it's about five thousand. So maybe come and comes in and bids it up. But listeners of what goes up, go out there and bid this thing up. Yeah, you can sell me some books and I'll sell you some whiskey. Well, the problem with one hundred and whatever year old whiskey that was picked up from the bottom of the ocean is it's got a great story, but it tastes terrible. I think I have no idea. The beer I wouldn't touch, but the whiskey I have no clue. I don't even like whiskey. Work. Mark Jones, I think just proved why he is deputy and I'm not the top priced asset. What he hears it yeah, and he'll be setting some collections of his whiskey to you. Yeah. All right, great to catch up with you. I hope we can have you back some days. Great pleasure, great being with you. Thank you so much for joining us What Goes Up. We'll be back next week and so 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 and review the show on Apple Podcasts, so more listeners can find us. And you can find us on Twitter, follow me at Reaganonymous, Bill Donna Hirich is at Bildanna hirech. You can also follow Bloomberg Podcasts at Podcasts. What Goes Up is produced by Stacy Wong. Thanks for listening, See you next time.

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 Vildonna hire across asset reporter with Bloomberg. And this week on the show, well, sticky inflation, a slowing economy, even bank runs. Stocks have had a lot of headwinds this year, and yet the market is still pricing in a soft landing, where a scenario under which inflation is subdued but the economy avoids a deep recession. At least that's according to this week's guest, who is the w CEO of a major hedge fund firm. But does the market of it right? We're gonna get into it with him, Vildanna, But first I gotta ask, are you going to ask me a basketball question? I could don't. I don't know anything. I just know that the game was on really late and everybody was mad. Yeah, right, started after nine or something. That's about right. No. I was gonna ask you, um, if you watched MTV as a child, of course, of course, Oh my gosh, cribs, cribs, let's see my day. MTV still was playing videos. I don't I don't think I saw many cribs. Okay, So my craziest thing, the reason I ask is my craziest thing. The week harkings back to the early MTV days, and I'm wondering if you'll even know what we're talking about. Nineteen eighties, when did MTV start? It was like mid eighties. Yeah, okay, late eighties maybe, No. They they played videos when I was young too, But they also had like really fun shows. It was cribs. Was your main cribs? What else did they have? Oh my gosh, they had room Oh was that an MTV show? Yeah? They had Room Raiders Room rad Yeah, which is just like a really gross show, like somebody will go into your room and like literally go through all your stuff and try to embarrass you. Yeah, they had some good shows. I guess Jersey Shore was that's that's that's a gem. That's a gem. In fact, my daughter ran in to Pauly d Wow on her spring break where in Panama City, Florida, which is I guess is like the Jersey Shore of Florida. Yes, but anyway, we digress. We digress because our guest actually is really far removed from the Jersey for he's not really the Jersey Island. Sure, he's in the UK baste. Yeah, not quite the same Jersey shore. Not the same maybe a nicer Jersey shore. But anyway, Mark jones Man Group Deputy CEO, is joining us this week. Mark, thank you so much for joining us and welcome to the show. Pleasure glad to join you. I'm glad to be far away from the new Jersey Shore, right, it's definitely a different one on all side. Um, Okay, So you sent us a couple of notes before we started and you said we're in a tough period four large asset owners, and I wanted to ask you about this and what the backdrop is right now, what maybe some of your biggest worries out there are, and just sort of conceptualize this. Yeah. Sure, So I think if you're a large asset owner, you've obviously you've got some structural risk asset positions in equities and bonds, and you've had this very benign period where inflation just hasn't been a problem or certainly in developed markets, and obviously it's been back with a vengeance over the past eighteen months or so. And getting out of the way of that when you have those structural long asset positions is very, very tough for people, and actually, frankly, HARKing back to how do I risk manage my positions in an inflationary environment? Last year is one of the most difficult that most of our clients will have had for at least a decade and possibly significantly more. And they're definitely still concerned about what do we do now that this insidious sort of force on real assets that hasn't been around for a long period of time is back. What do they do with their allocations? Where do they need to move things around? Who can help them? Where's the ALP Do they still need to increase the private market allocations they've had in the past. Just sort of a long long list of debates that they're having in a way frankly that we haven't heard from them for a long, long period of time. You know, Mark, in the intro, I mentioned that, as you mentioned in your notes, it sure does look like equity markets at least are pracing in a soft landing. Here reading the restaur notes, I'm not convinced you believe they're right. Could this rally be a big head fake? Do you think? Yeah? I think the risk reward inequities is very, very tough at the moment because, as you say, they're effectively implying that the FED does manage to navigate this and land things perfectly. They've got an incredibly difficult job on their hands. I definitely wouldn't want to be in their shoes right now, because you've got very material risks both sides, and indeed you've now got financial stability coming up as a third dress that frankly I wasn't thinking about six months previously. But the standard ones, which clearly have been the ones on their mind for most of this period, are Okay, we do think we're going to cause a drop in economic growth, but can we time that perfectly? Can we have a mild recession without you know, major major job losses? At every time, you know, you hear him stand up, he does make the point of it's better to take pain now, otherwise it's worse long term. They understand what they're doing, they understand the potential consequences. Can they get the dial right there? And you know, economies are not things where the dials work desperately well. And the sort of feedback from what you do to how they behave as that perfect and then clearly the brisk the other side, which again you know they've been talking about previously. If they're sustained inflation, they have to get it back to two percent. That is their mandate. They will have to be high for longer if it doesn't move down. And the path between those two things is pretty hard. And then to throw the third problem in which we've obviously seen in the last month or so, is okay, do we put enough stress in the financial system here that they suddenly have to start worrying about financial stability? Is the you know, the other piece of their mandate that has been in the background for most of the lost eighteen months or so and then suddenly came very very aggressively. Interview with SVB, I do not envy him his job at the moment. I certainly don't. I don't think any I really don't. You say you're expecting more volatility ahead, Like, what are you expecting? What are you expecting from the Fed? I've read some interesting notes from some of the big banks this week. One of them said, when they're talking to clients, well, clients says they're sort of frustrated with the rally that we've seen in stocks. I guess if you were not positioned for it, you'd be frustrated with So what are you expecting going forward? Yeah, I think, I mean, I think equities difficult because we haven't really seen the cut in earnings und some drift down in earnings expectations, but nothing too material. So that's definitely one leg, which is just the fundamental piece, and then the other is just a flow piece. You know, we are starting to see people move back obviously money markets out of banks, but also into credit and government bond positions in a way that they just haven't had for years because there hasn't been enough return there to attract people. So whether that's the consumer or whether that's big institutional clients starting to come back to an asset class that frankly had fallen relatively out of favor. And some of that flow of funds is also an issue for equities. There's just people move money around. So I think it's, as I said, it's a tough tight rope to walk if you look at equities right now. I think there's plenty of other places where you can get comfortable returns without the same risk profile. And I think you're seeing plenty of people make some of those allocation moves. The US is obviously a bit of an outline, and that the balance is a bit better in some other markets. The SMP is remarkably calm in the face of everything we've seen recently. Mark, there's some comments from your colleague Lucallis, the CEO of Man Group, a few weeks ago that really sort of clop my eye. One thing he said was, such banks will have to break stuff to tame inflation. I think the mission accomplished there to some degree. I don't think that's what they thought they were going to break exactly. You'd never quite know what's going to break. But he also said a significant number of banks won't exist in twelve to twenty four months. And we have not seen the lows in equities this cycle. Now, these comments were a couple of weeks old. A lot has changed. It seems like the fire in the US regional banking system knock on wood, if it's not completely put out, it's not raging like it once was. The reaction from the Federal Reserve, the FDIC was very aggressive, you know, was that sort of the house view there about you know, the banking system being bracing for more failures. Has anything changed about that? How are you thinking about the state of the banking system. I think he was talking at a point when the market was pretty fee bro. Yeah, in full. What he's actually talking about is, Look, there's the US regional banks, in particular, the US as an incredible number of banks compared to virtually every other major market. There's obviously stress amongst them. There's likely to be consolidation as some of the stronger players take on some of the weaker players. We've obviously seen the extreme version of that, where it's been via fdoc rescues and then reseales, But just more generally you would expect to see consolidation. Then maybe some failures. Banks do fail, that's part of the nature of the business model, but it was a much It was much more around the banking system generally either consolidating or maybe some going out of business. We did we did manage to trigger a comment from the Bank of England saying that they were comfortable with the banking system off the back of that. So that was definitely not an intended effect and maybe slightly taken out of context in a market where everyone was feeling a little bit more scared than they are today. Yeah, but no, we I mean, look, there's definitely still some stress in the banking system. And I saw some of the big investment bank defaults back sort of post in the financial crisis, and I remember telling people post that, look, the key thing is not to be there if there's a default of a bank, And that was the lesson that I thought everyone had learned in OA, and I spent years telling everyone when we get bank runs in future, they're going to be faster because everyone's going to remember O eight. And it turned a bit into the sort of horror story by the fire, because we didn't have very many defaults in banks for a long period of time, and then we just saw obviously the speed recently, which frankly, even though I was expecting bank runs to be faster, I was amazed at how fast really quite big institutions went from functioning to into FDIC hands. So SVB obviously is the one that people focused on. I actually think signature is the more interesting one in some ways, where there was almost no noise because everyone was focused on SVB, and then it was gone over the weekend, which is a remarkable sign of the speed of liquidity withdrawal in the current world. I wanted to ask you about that. Actually, I wanted to ask you about the speed with which we saw some of these bank rounds actually happen. And obviously we have had some weeks go by, and we've had some retrospective and lots of news reports about what actually happened and how, you know, different tech figures, we're talking to each other in different chat groups and whatever else. Can you characterize what happened and sort of the astoundingness at which and the speed at which had happened. I mean, it is just classic bank runs, So it's it's just liquidity withdrawal and banks a levied institutions, and you know they can't cope with some level of liquidity withdrawal. The thing that's different, it's clearly the sheer speed of which it happened. And as I say, all of the stories, you know, the press commentary is around SVB and the concentration of the client base there, and you know, effectively did they create their own bank run? But then go look at signature where it's not obvious that any of that was happening, but exactly the same thing happened at very very high speed. You know, look at the money coming out of credits we set great speed. Again, that's not coordinated action, that's just people reading press reports, and the world is much more attuned to some of this information. Clearly, generally financial information percolates far far faster than it used to. But I don't think if you look at the set of them, I don't think you can say it's sort of specifically a social media thing, or a concentrated set of clients thing, or a tech thing, because that's not the case with the other institutions that ran into liquidity issues. I think it's much more around general speed of information flow combined with frankly, just a classic tail risk with banking as a business model, which is bank runs happen, They will happen again. They've happened for decades. I'm not sure when the first one wards, but it won't have been that long after the first bank was started. That's probably true. Mark. I wanted to talk about sort of the climate of the hedge fund industry itself, you know, sort of a mixed year in twenty twenty two for a lot of funds. CTA's trend following funds did did very well. There were a lot of outflows from some funds. Madgroup actually managed to book about more than three billion dollars worth of inflows. And I was looking at some of the better performing funds. The HL Diversified Fund was up more than thirteen percent, HL Alpha up eleven percent. Now, of course, some of the long and only strategies, it was tough to post a positive return last year given the markets, but pretty impressive returns for some of these AHL funds. What if you could break down for us what worked? Is it to oversimplify it, to just call it trend following with some of these strategies. Is there more going on or was that really a big part of it? Trend fulling was definitely a big driver. So I think systematic funds did very well last year. In macro markets, there were some big trends to invest in, so some of the commodities moves at the start. Obviously the bond moves throughout the dollar move was a big positive contributor. So there were plenty of places for positive returns to be had, and CTAs are very good at capturing those sorts of macro moves. And I think when you so when you step back, we've had this very prolonged period where all developed markets have basically been doing the same things with interest rate policy. There's been this very very high correlation, and then that's clearly pushed into a bunch of other asset classes. It's generally dampened volatility down, it's increased correlation. It's been quite a tough environment for alpha, or at least there's less opportunities than you would sort of normally have seen pre that period of very very low interest rates. What we're moving back into now is something that's much more into O eight. So you've seen I mean, actually equity vole hasn't increased in the same way, but in a lot of other ethic classes you've seen quite material step ups, whether it's that in fixed income or in commodities or in currencies. You know, there's a lot more going on. There's a lot more differentiation in how countries are managing their interest rates because of some of the core macroeconomic differences between them, where inflation is, where energy policy is, in each of those places, strength at the job market. That's exactly the sort of environment that suits some of these macro strategies. Over time, because there's just a lot more opportunity. There's the risk management skills are a lot more relevant when things are moving around in that sort of a way. So, yeah, trends were absolutely critical to a lot of the strong outline returns last year. But we think that environment is going to persist, and frankly, it feels like that's the future decades going to be a lot more like that rather than just the next year or so. Really, so twenty twenty three will another good year for trend follow me think I mean individual, I mean that the last month or so it's been tougher for trend followers specifically because of the interest rate moves post SVB. That's in the nature of the strategy. You will have some difficult periods. They work over time, but it's a higher volatility and lower correlation between things, so at some level, just much more macro uncertainty in the sort of simplified way of putting that, that's the environment when you want strategies which can help you navigate that uncertainty, And that at heart is what trend followers are very good at doing over time, and I think we who knows in twenty years, thirty years, time, I suspect we'll look back now and go the previous ten years with the outlier rather than the other way around. Okay, and you said there's a bigger opportunity set for alpha than over the last decade one interest rates where near zero. Can you talk about what you mean by that? Yeah, I mean it's it's because of that higher volatility, So there's more there's more risk in markets, which if you've got skill, is the opportunity set obvious. You've got to have the skill in the first place. Similarly, within equities, you know, there's more dispersion within equities than they have been for a prolonged period of time. Again, if you are good making those investment choices, that's a great environment for you because there's just a bigger opportunity to make money for your clients. You've got to have the skill. Otherwise it's just risk with out the positive return. So I think it's it's sort of a more difficult environment because the risk is higher. But where you've got expertise, that's what you want. You know, our job is to take risk on behalf of clients when there's more opportunities in the world. Because it's a riskier period, you can add more benefit to them, and that's that's definitely what we're looking to do from here. I think what he's trying to say is he has the skill the firm. There's a there's a one and a half thousand double PhDs and the like sitting around me who definitely have the skills. You got to call him doctor, doctor. Doctor. We do have some gen you in rocket scientists, so on any day that you're feeling small at yourself, you can just go talk to someone and if you immediately feel a lot smaller. So I always joke about this. It's amazing how many actual rocket scientists find their way into investing, and yeah, quant we've interviewed some of them. Mark. I think one really sort of interesting sea change that we saw this year with Silicon Valley Bank is a greater focus on private markets venture capital, especially in Silicon Valley, and sort of this notion that boy, they had a great run. There was so much sort of interest in private markets that almost seems to me like the end of an era once Silicon Valley Bank broke. I mean, is is that an exaggeration? Do you think? I mean, was that whole private market craze a low interest rate phenomenon. I mean, is has this has every changed now for say private versus public the appeal of each type of investment. Yeah. So, I mean we've obviously had this huge trend in asset management for I mean, it's more than a decade old now, arguably too of increased allocation into private markets over time from the big asset owners, and the period of low interest rates definitely helped that trend because you just had to go somewhere you for returns them rather than the traditional asset classes. I don't think we're going to see some huge pivot away from that, because there's a lot of money allocated and you can't pull it out quickly. It takes time. Plus frankly, they are useful sources of returning people's portfolio. But I do think the speed of that trend is definitely, at a minimum going to slow down, and I think for a lot of people they're going to tilt back towards public markets for the first time in really quite a long time, because it's been relatively inexorable of adding to their private allocations year by year by year. And that's for a couple of reasons. One some of the stuff that we touched on earlier, where there's actually there's more return from some traditional asset classes, in particular on the fixed income side, So people go, actually, I don't need to reach out on the risk spectrum. I can meet my investment goals with some much more traditional returns, investment grade, credit, whatever it may be. And they're much happier if they can do that in a lower risk way and meet whatever their their retirees obligations or whatever their responsibilities are. And so that piece definitely is a big driver. And then I think the other thing is we saw the benefit of liquidity. The UK obviously had a relatively spectacular blow up in the guilt market last year. You had clients who suddenly had a very very strong liquidity need to meet that big, big market move, and they were having to sell assets to meet cash calls. And suddenly that reminder of things that I can liquidated if I need it in a crisis, and the value of that so I'm not a force seller of something else. We'd sort of forgotten that as a key benefit of liquidity, but I think we've had a few reminders in some of the sort of panic periods of that benefit of more liquid assets. So both for a risk management piece of balanced piece and a course sort of return piece, I think you're going to see tilts bag. Private markets are well established as parts of investor's portfolios. It's not that they're just going to drop them, but I think the speed of growth is going to change. Okay, So if we are seeing a tilt back towards more liquid assets, where do you already or maybe where are you foreseeing that money actually going from our business? Clearly the head fund business is a big part of what we do, and some of the systematic strategies, in particular macrosystematic strategy. I think people are looking at again this clearly saw them had a good year last year, and I think they agree with what I've just discussed around the environment suiting those sorts of strategies and needing something nimble to help them move around. So strategies that are able to take macro risk successfully on behalf of clients. That's definitely a big source of demand. Liquid alternatives as well, so sources returned that are equity or bonds, but again that you can liquidate if you need them, so you get that protection in the portfolio and then frankly just playing vanilla fixed income at whatever risk level people are looking at, you know, whether it's high yield or investment grade or not so much of our business. But guveyes, I think people are definitely coming back to just because it works now. It's not for a long period it was all risk and no reward. We just sort the risk materialized last year, but you've now got back to an environment where there's actually some reward again, so you can make a plausible case for it being a bigger part of a portfolio. So a mix of liquid alternatives, particularly systematic macro, and then some core fixed income in particular that I think people are coming back two off to a number of years of not really being focused on it, right, I mean when you can get yielded a money market fund these days. Uh, it's it's such a dramatic change of climate from what we're used to in the you know, the post TFC ere It's it's pretty amazing really. But Mark I used to joke last year that they passed a law that every podcast guests had to talk about inflation. Um, yeah, this year's done that. Yeah, this year. I think the law is that you have to talk about AI at some level, and I feel like, you know, at some level you must have some rocket scientists already in the firm, uh using AI. But I'm curious how you're thinking about it. You know, obviously this chat chept sort of caught the world by storm and has everybody wondering about how AI is going to be used in all industries, but investing especially. I'm curious if it made as big of a splash in your world, is there a bigger focus on AI now because of this, And if you could tell us you know, where you see it going as an investment tool, and maybe a little bit about how you're using it now if it are. I mean, look machine learning as we would have called it, but AI and the sort of popular vernacular that's been a big part of some of the research efforts here for a number of years. You know, we use those techniques in various of the strategies. You've got to be an expert to deploy it successfully. In finance though, in terms of running money, naive approaches are very dangerous frankly, so you need the human expertise alongside some of those techniques. The bit that the entire world has got wealthy excited about over the last couple of weeks, so some of the generative AI. I actually think he's one of the first times that the hype is appropriate against the technology. So whether that's useful in the pure investment decision side, that's definitely to be determined. But in our wider business using that as a way to help people do all manner of commercial tasks that we need, in commercial processes that we need, absolutely, you know, we clearly want people experimenting across the whole business of figuring out how can I use this to make myself more productive. I think you're going to see that, frankly, in almost all industries because it really is a remarkable step forward on the technology side. And I say that normally when these things come out, my view is, Okay, let's wait and see. Everyone always over hypes them and says innovation is always increasing. Doesn't show up in the productivity to statistics at the government level, So I'll believe it when I see it. This one, I genuinely think is going to have a big impact across most of the business world as people figure out how to deploy it. Right interesting our podcasts, Okay, I think you are safe. I think I saw some report from one of the sales side which was listing jobs that were at risk, and they've missed cell site research report writers somewhere. Maybe that was not a mistake. The other thing I think they're probably gonna pass a law that we have to talk about is commercial real estate and the credit cycle. I mean this banking and I you know, I don't know if he really should use the word crisis. You know, what's so unusual, Mark is to have this banking turbulence. We'll call it triggered by interest rate risk and deposit flows rather than credit. You know, but I do feel like the focus now is shifting towards especially that in the US, and problem I'm sure in the UK to the commercial real estate office reads here in the US, how are you thinking about the credit market? Has it? I mean, is that the next candidate to look for as far as the central banks breaking something? I mean, is that the next shooter draft? Do you think? I think we've got a bit of time because most large sort of segments of borrowers took the opportunity to push maturity out when rates were so low. I mean obviously saw that on the consumer side with a bunch of the refinancing mortgages in the US, you saw it quite a lot on the corporate sideway. There's really not much in maturities this year or even that much next year. And similarly on the real estate side, because interest rates were very attractive and you were asleep at the wheel if you weren't doing something in credit at that point in time. The bit that we're worried about mid term is okay, But if you had to refinance now, how many of those businesses can actually cope with where the interest coupe would be, whether that's real estate, whether that's the consumer, whether that's some of the sort of highly leveed corporates. And I'm sure there are all sorts of people sitting in various offices around the US and the wider world sweating and hoping that interest rates come down considerably before they have to do that trade, because there will be a lot of assets that need a new capital structure at that point in time, and they'll either need an equity injection or they'll need some very beneficial credit provider. But I don't think it's near term because the maturity dates are just they're far enough away. People are going to have to start looking at it next year, maybe the back end of this year some people. But we've still got a reasonable period of time and their most credits are still quite healthy at the moment. You know, I wonder if trying to raise capital on the equity market, as Silicon Valley Bank trying to do is sort of radioactive this year. Yeah, I mean, obviously the most large sort of equity markets are relatively shut for new issuance. Some secondary stuff's getting done, but not at anything like the volume that you would need if interest rates stay here, and you're just going to need equity going into quite a lot of asset classes to improve the cap structures. So I mean, look, there's a lot that's going to have to be done in quite a few markets. I just think we're twelve months away from it, probably. But so what everybody's talking about is a credit crunch or a credit tightening. I'm wondering if you think there's a difference between the two, or like what the more severe scenario might look like. Yeah, I think i'd normally distinguish the two. A sort of credit crunch is just the absence of provision. You just can't get things done or there's no sort of clearing price where things can get done. That's when you just get large default waves. And I think it's it's just hard to tell right now where that's going to be, because it is going to be so much around where credit and rates are. In twelve months forward. If things stay here, I think you're going to have a decent pickup in defaults. And I say that as someone who's heard about a default wave coming for ten years and it's just never turned up. And the view that distressed debt is the place to be on the sort of hedge fund strategy side, and actually the opportunity has been relatively limited. But I do think we're getting to that point where you know, when you hear the FED talk about the lag effect of interest rates into the economy, that's part of what they're talking about is, well, people can hunker down and they've got fixed rates. It doesn't bite them, it doesn't hit their cash flow. They kind of know it's coming and maybe they change their behavior a little bit, but where they're not actually paying the higher coupon, it's not fully in their behavior. When you've actually got to refinance and figure out what you do. Whether you're a consumer and you've got your mortgage coming up, or you're a corporate and you go, okay, do I have to look at my cost structure because I've now going to make this higher interest payment. That's really when it bites. And I don't think we've seen most people respond, whether that's corporate's real estate consumer to that move yet, because it hasn't. Actually she started to hit that pocket. Mark Jones, Deputy CEO of Man Group, joining us from London. Such a pleasure to catch up with you, Mark and hear your thoughts on the market. Really fascinating. We can't let you go just yet, though. We do have a tradition here the craziest things we saw in markets this week. I have a good one. You got a good one. Yeah, let's hear it. I'm sure you saw it. Dogecoin rose thirty percent because the Alla must put a picture of the little doggie on the Twitter homepage, and I looked. I went on Twitter and I found it. Yeah, I have it on money. It's just a little happy dog. I don't get it. I don't, Yeah, Mark, I assume Man is not exposed the dogecoin and not that I'm aware of. I'm sure someone has some. Someone's got some in their private account. How about you mark you see anything crazy in markets recently? I was. I was thinking about that as you asked the question, and it's the old thing about this week is having had a bunch of things that sort of eight on the Richter scale last week was to borrow a quote from Sherlock Holmes, it felt like the dog that didn't bob. It was a remarkably quiet week in markets, given quite how dramatic things were previously, So almost the thing that was most have noticed how little happened, given how chaotic it was prior to that. I think the thing I thought was most interesting as someone who runs a financial services institution was just seeing the change in CEO at ubs as they start to go through what will be an absolutely enormous change project there, and just interesting to see that shift back to the previous CEO but actual market booths. Genuinely, I think the absence of anything dramatic was the most striking thing last week. I love the Sherlock Holmes quote the dog that didn't park it. If I remember that was because the thief was the owner of the dog. Is there it spoiler something it's I think it's I read to my son recently. I think it's because the dog doesn't balk. You know, somebody didn't go past if I remember correctly, don't. I know, we've had a hundred years to read it, but don't. All right, it's about a horse being stolen, but I forget the details. I know, I'm trying to remember it. I think, yeah, it's either that, Yeah, well, we're not going to figure it out here, but a good quote. Nonetheless, it kind of makes me worried that the dog wasn't parking in markets last week. I feel like that's that's an ominous sign. Yeah, but all right, my crazy thing also somewhat involves some good British fiction for you. I know your favorite bil Donna is a quote unquote Taddy first edition of Harry Potter The Philosopher's Stone, Taddy meaning it's just it's a mess. I guess it's lacking a spine. Protective plastic was peeled off, pages were yellowed. But it is one of the first edition hard acts. There are only five hundred first editions of that book printed, three hundred one to local libraries, so this is somewhat rare, but I'm gonna make it harder, okay, because we're gonna play prices precise mark you're ready. I thought this had something to do with MTV. That's the other items, okay. A giant gong used on MTVu Tina Turner actually stood upside down and banged it with her feet one time, if that helps you. That sold at auction according to the New York Post and according to the BBC, A whiskey collection rescued by divers from one hundred and twenty eight year old shipwreck, the SS Wallachia, sank in the Firth of Clyde in eighteen ninety five while carrying a collection of whiskey in beer. Wilkinson's famous liquor Whiskey was recovered from the wreck. So it's time to play the game. Show what fetched the highest price at auction and give me your estimate? Was it? A the giant gong on MTV? The Taddy first edition of Harry Potter and the Philosopher's Stone or seven bottles and half bottles so summer, half bottles and one bottle of beer. Actually McEwan's export beer was also recovered in this whiskey collection. Rescued from one hundred and twenty eight year old shipwreck. Okay, I know what I'm going. I'm definitely going with the whiskey. Not that I like the word taddy, but I can't go with that. Definitely the whiskey. And what's your your dollar figure, pound figure, my pound figure? Okay, I'm gonna go with seven hundred and fifty thousand pounds, seven hundred and fifty thousand pounds for one hundred and twenty eight year old shipwreck. Hiskey. That's cool, you know, like people like whiskey, but also it has a nice story. Yeah, all right, Mark, as a expert in valuations, Well, firstly, I'd like to sell you some Whiskey's got a few bottles to download. Hopefully no one paid too much for the one hundred and twenty eight year old bottle of beer on the side. That's hard. I think I'll go with Harry Potter. Harry think it's going to be a lot lower. Yeah, what's your price tag on Harry Potter? One fifty thousand, one fifty thousand pounds. You guys are very generous bidders, I will say, Mark wins. Wow, it was the Harry Potter I can't. I gave you a Harry Potter book and you I didn't choose it. It's sold for twenty thousand, one hundred and sixty pounds about twenty five thousand dollars. It was taddy though, all right. The giant gun used on MTV sold for fifteen thousand, three hundred. Now you could be right about the whiskey because it hasn't sold yet. This is it's estimated to sell for three to four thousands. For the whole collection, it's about five thousand. So maybe come and comes in and bids it up. But listeners of what goes up, go out there and bid this thing up. Yeah, you can sell me some books and I'll sell you some whiskey. Well, the problem with one hundred and whatever year old whiskey that was picked up from the bottom of the ocean is it's got a great story, but it tastes terrible. I think I have no idea. The beer I wouldn't touch, but the whiskey I have no clue. I don't even like whiskey. Work. Mark Jones, I think just proved why he is deputy and I'm not the top priced asset. What he hears it yeah, and he'll be setting some collections of his whiskey to you. Yeah. All right, great to catch up with you. I hope we can have you back some days. Great pleasure, great being with you. Thank you so much for joining us What Goes Up. We'll be back next week and so 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 and review the show on Apple Podcasts, so more listeners can find us. And you can find us on Twitter, follow me at Reaganonymous, Bill Donna Hirich is at Bildanna hirech. You can also follow Bloomberg Podcasts at Podcasts. What Goes Up is produced by Stacy Wong. Thanks for listening, See you next time.