Lots More With Charlie McElligott on This Week's SaaSpocalypse

SPEAKER_1 (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Joe Weisenthal (0:08)

I think there's a chance you might have to re-record an intro, or at least the intro might be out of date by the time the episode comes out.

Tracy Alloway (0:15)

That's how you know.

Joe Weisenthal (0:16)

That's how you know it's bad. That and when people start waving around standard deviations.

Tracy Alloway (0:20)

Standard deviations.

Joe Weisenthal (0:21)

And also when people start saying it's a healthy correction in the market. Although I haven't seen that much of that.

Tracy Alloway (0:26)

It's pretty gnarly. Also, when we don't just say the date that we're recording, but we say the minute we're recording this at 7:04 a.m. on February 6th, 2026 All the signs are back.

Joe Weisenthal (0:42)

Joe, I want a t-shirt that says Ruthless Utility Maximizer.

Tracy Alloway (0:46)

Black gold.

Joe Weisenthal (0:47)

Let's talk about losers.

Tracy Alloway (0:48)

Who cares?

Joe Weisenthal (0:49)

I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.

Tracy Alloway (0:55)

Skulls Unlimited.

Joe Weisenthal (0:56)

What's the ticker for that?

Tracy Alloway (0:57)

No, I think that in a couple of years, the AI will do a really good job of making the Odd Lots podcast.

Joe Weisenthal (1:04)

How do I get more popular and successful?

Tracy Alloway (1:06)

One day that person will have the mandate of heaven. We do have the perfect guest. Welcome to Lots More where we catch up with friends about what's going on right now.

Joe Weisenthal (1:17)

Because even when Odd Lots is over, there's always lots more.

Tracy Alloway (1:21)

And we really do have the perfect guest. But it is weird, isn't it? Because it's a little different.

Joe Weisenthal (1:32)

It's been a lot.

Tracy Alloway (1:34)

It's a surreal type of market environment, especially over the last week.

Joe Weisenthal (1:37)

Right. So if you've been living under a rock, markets have been tanking. There have been a bunch of different things going on. But first of all, gold and silver and the metals complex started plunging. Then you had basically a slaughter in software. What else? There was one.

Tracy Alloway (1:55)

Oh, crypto.

Joe Weisenthal (1:56)

Crypto. Crypto is a big one. So Bitcoin has like down to 66,000, something like that.

Tracy Alloway (2:03)

I think it hit 60,000.

Joe Weisenthal (2:04)

Oh, wow. And that's the thing. I can't keep up anymore.

Tracy Alloway (2:07)

No, I know, but nobody did matter.

Joe Weisenthal (2:09)

And also there's concern about private credit because private credit has so much exposure to software and they basically lent all the money at the top of the valuation cycle, which I wrote about in the newsletter yesterday. But anyway, there's a lot to talk about in markets. Who do we call when markets are moving? That's right.

Tracy Alloway (2:27)

What's up, Charlie?

Charlie McElligott (2:28)

You guys are amazing.

Joe Weisenthal (2:29)

So this is Charlie McElligott. Of course, he is the cross-asset macro strategist over at Nomura. I'm going to start with the simple question. Maybe it's not an easy question, but what was the proximate catalyst for all of this? Cause you have a bunch of different things going on, including by the way, the nomination of Warsh at the Fed.

Charlie McElligott (2:49)

So absolutely part of the feedback loop, but these things are never singular input in a world of thousands of macro factor variables. In this case, and you know I'm an ambulance chaser, that's kind of what my gig is, a grave robber, a carpet bagger, all those things. I try to reverse engineer car accidents. And kind of the qualitative starting point of that is to locate consensus positions that tend to then crowd in positioning. When trend trades develop, that's usually accompanied or a requirement, a requirement being low volatility to accumulate those kind of smooth trends. So point being, I think there were a number of market narratives that got a little lazy. You know, for instance, Q4 of last year, as we recall, I think there was somewhere three to four months ago, there was still a fair bit of concern with regards to this idea of like labor cracking, you know, and there was still a lot of feedback with regards to Liberation Day and the policy volatility dynamics. You know, before things really got hot with policy volatility most recently, but and that was leading to some, you know, some skepticism. And as it relates to kind of the equities world, what did you do? You just stuck in the stuff that kept working. And that was that same dynamic we spoke about a number of times last year, you know, that crowding into secular growth, mega cap tech, AI, they just keep growing earnings, profitability, all of those metrics. And they took up this massive part of the market.