The Compound and Friends - Canary in the Coal Mine

Episode Date: July 22, 2022

On episode 56 of The Compound and Friends, Shannon Saccocia joins Michael Batnick and Downtown Josh Brown to discuss the Nasdaq bounce, inflation vs spending, good news for the economy, Shannon's ideas for the second half, and much more! This episode is sponsored by The Peak Group. To learn more about investing in single family rentals visit https://bit.ly/3OCu6GQ. Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/disclosures/ Inclusion of advertisements by podcast sponsors does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers: https://abnormalreturns.us5.list-manage.com/track/click?u=f8843b0fc6f0ed7d35e67dcf5&id=33b07916d1&e=4e0f612ef0. Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you remember the first time you and I ever met? I do. You do? I do. I was just thinking about it the other day because I was in Englewood Cliffs. Were you? Yeah, and I was in that room. In that room where we met?

That big conference room. Yeah. So I remember that the show was like really trying to revamp and just do a better job at like having new people on. So we interviewed all these new people, and you were one of them. What year are we talking? 2015? Five years ago.

But I remember I sent an email after we did a test show, and I remember sending an email. I'm like, Shannon's the real deal. Because you and I ended up talking for an hour off the air. We did. We were talking about custodians, and we were talking much as I did because there's not a lot of advisors on the show it's not a lot of advice right not a lot of advisors are good at television let's start with that not a lot of right so as soon as I remember meeting you and I'm like

Shannon Shannon's the real thing well yeah because we were talking about all the challenges of like delivery and you know you've got you're competing against because we were talking about all the challenges of like delivery and you've got, you're competing against all the people that we compete against and what's actually a competitive advantage is like the delivery of your service, not like, we can all use the same instruments. It's just how we deliver them and how you do that. Somebody emailed us today,

what makes an excellent financial advisor? What makes a financial advisor great? And I think like stipulate that everybody has roughly the same technical chops i know it's like not necessarily the case but i think it's communication i think it's how you make people feel well well i mean that's that's like that's the job which so if you could just deliver this via email then nobody would ever show up in an office or pick up a phone but you obviously can't. And look at you now. You're a big deal now. I got new jobs. You got new jobs.

Do you get recognized in Boston and stuff, like walking around? I do, yeah. And I mean- Because it's a big financial city. It is. Like everybody there works in asset management. Yeah, it's not like, you know, there's not a lot of,

and especially in where I'm walking around, everybody's in financial services. I was actually at a little networking event the other day, and this guy kept walking back. It was in one of those WeWork spaces type places. He's side-eyeing you? Yeah. I know you look. And so finally he's like –

Where do I know her from? Where do I know her from? Excuse me. He's like, could I have a moment of your time? He's like, I recognize you from television. I was like, sure, it's a little weird in front of this group of other people. But yes, I'd be happy to step into the hallway and have a conversation with you. That sounds like fun.

You must feel good when people are a fan of yours. I mean, it's definitely better than – I mean, you set yourself up for the negative as a positive. They're not going to say I recognize you. They're going to say I recognize you and you're good. That's what you mostly are going to get. Right, but it makes up for the negatives that we get for being recognizable, right, in terms of – How was that? Was that you?

I don't know. Can I tell you something, though? I never, ever, ever had someone in real life say something negative to me. Right. Never. It's just internet shit. They just don't have it.

Yeah. Nobody would do that. Nobody would really, like, normal people don't act that way. That would be very uncomfortable for you and for them. Hey, you suck. Well, no, I. I'd rather there be an engagement, though. If you have something to say. Oh, I'd rather not. Hey, you suck. Well, no. I'd rather there be an engagement though. If you have something to say.

Oh, I'd rather not. You know, I'm happy to engage. I don't want anybody. Really? I don't want anybody saying anything to my face. You want to defend? You want to be like, no, I don't suck? You're right.

I'm wrong. I don't want to do that. Get the hell out of here. No, I'm like the opposite of say it to my face. You know what? Say it behind my back. Yeah. Say it to somebody.

Make sure they don't tell me. Wait. What would your husband do if like you're out with your family doing whatever, like you're at a Red Sox game? I don't know what you people do. You're at a Celtics game. I don't know what you Boston people do. What would your husband do if somebody walked up and was like, you suck or you lost me money or some shit? Like he would be in jail.

Right. Yeah. Oh, he would be so angry. Right. He's so protective of me. Right. But that's why. But he's not on social media. So he has – if he was on social media. Oh, right. Yeah. Oh, he would be so angry. Right. And that's so protective of me. Right. But that's why he's not on social media. So he has,

if he was on social media, I'll forget it. He would be mad every day. Right. So he has, so, but I think my theory is that's why if somebody doesn't like you, and by the way,

this applies to political pundits, sports, like if you don't like somebody's sports, like, I don't, like, I don't, I don't really care. Like if you don't like somebody's sports, like I don't really care. I'm not passionate about like is Jalen Rose good or bad on TV as a sports commentator.

But he's just in my face all the time. And if I did, he's fine. Let's say I didn't like him and I saw him in public. I wouldn't be like, hey, I disagree with your takes. Who gives a shit? So I think that's kind of the same thing with us where people, if they like you, they will say, I like you. And if they don't, they probably just don't approach.

The counterpoint, sports takes don't lose people money, generally speaking. Yes, they do. I mean generally. Well, depending. Shannon Sharp is not losing people money. He's giving his opinions, shitty as they are. Right. Or not.

No, fair. So I do think that's something that's different. But political gets people more charged up than money. And so let's say you're somebody doing hits on like CNN about the presidential election and shit. That's way worse. Yeah. Because people will come up to you and be like, I heard what you said about abortion or this or that. And how dare you?

Well, when you're being asked those questions, you know, I'll do like a lot of in-person type speaking and I'll talk about. So midterms are starting to come up, right? Because we're only a few months away. Yeah. And I have to couch every comment with, and this is not a political viewpoint, but, you know, basically if they split and nothing happens for the next two years, historically that looks good. It's good for the market. Right. But bad for women! Right. And for women,

how dare you, Shannon? Well, listen, you have to say that, but then they don't hear it. So you say this is not a political opinion. However, historically, the stock market prefers gridlock for blah, blah, blah, blah, blah. Not that I'm saying you blah, blah, blah. The caveats don't matter, by the way. People don't hear caveats. People don't hear the part where you qualify yourself. Same thing with like the war. When the war broke out and people were like, well, typically geopolitical conflicts have very short term. Super bullish. And then people are like, don't you care about people?

I think the regular audience gets it because they watch CNBC or Bloomberg all day and they understand like it's not a political thing. But then if you do business hits on Fox Business, you have to get political because that's all they want to do. Like no disrespect to anybody. But I have friends that do a lot of Fox Business and they're like, that's the struggle. It's like the host – the first question question is what do you think about the markets? The second question is like what's your stock or what are you buying?

The third question is like Biden really sucks, huh? And you have to like – if you care. If you don't care, you don't care. But that's the struggle with a lot of Fox Business stuff is they try to make it politics. CNBC is almost like operating in a universe where the assumption is like you're probably political in your real life but like completely apolitical with a few exceptions. The prism is the stock market. What does this mean for 18 days? What does this mean for the stocks? That's it.

Right. So I think we do a pretty good job of not letting the show get political. But I remember 2016, it was hard. Yeah. Actually, 16, 17, 8, the Trump years, it was really hard to not get political because he was yelling at stocks like he was on Twitter yelling at Pfizer. And like you might own the stock. How do you how do you ignore that when the stock is up or down 5 percent based on the president tweeting at it? Well, yeah.

I mean the Tax Cut and Jobs Act. You think about that and you're like, yeah, I mean cut the corporate tax rate. That's good for earnings. And then he follows that up, what, three weeks later with the first round of tariffs. You're like, why do you not just – Yeah, cut corporate taxes and then start a trade war. Right, great. Good work.

and then start a trade war. Right, great. Good work. But then also like so much of the narrative was, look how good I am at presidenting. Look at the Dow. Right, right. And his kids. See, they have both ways.

Right. I still, there are still people I don't talk to since 16 and 17 because their like stock market political takes were so toxic and gross to me. So fortunately, I'm not really on the air with them. But there were people that I remember on TV that were turning every stock market segment into love Trump or hate Trump.

And I guess that's the danger of letting too much of your views come through. Well, I think that's easier in some ways than to try to stay close to the facts and apolitical. It's a lot easier for me to get mad about things I'm already mad about and express that on television than it is for me to put that aside and say, okay, let's focus on the task at hand. Oh, I agree.

John, get in here. Oh, yeah. Come on. We have a show. We have a show at some point. Starting now, it's three o' get in here. Oh, yeah. Come on. We have a show to do. We have a show at some point. Starting now. It's three o'clock. One.

Episode. Episode. 56. Here we go. Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by Peak Housing REIT. A couple of weeks ago on Animal Spirits, Ben and I spoke with Joe Aulis about the single family rental market. Josh, what do you know about this? The single family rental market? I actually own some stocks that are single family rental REITs. Okay, well, you could do better. some stocks that are single family rental REITs. Okay, well, you could do better. So the Peak Group owns 1,850 homes. They're in seven markets, four states.

They've got a focus. I don't know if you call this a niche, the Dallas-Fort Worth area. Okay. You bullish on that? Sort of. We spoke about the Cowboys on today's show. Depends on the price of oil.

All right, so the Peak Housing Group, they've got $110 million in equity from LPs. You could own a piece of the real estate market without managing properties, which I've learned is kind of a pain in the ass. So I actually think this is a mega trend. People that are not, I don't want to say forced to rent, but people who decide to rent don't want to necessarily live in an apartment building and don't necessarily want to deal with a single operator who owns one or two houses. I totally agree. I don't know what the single family rental market is in terms of – I'm sure it's tiny at this point. It's tiny but growing very fast.

Yeah. So basically you can rent a house from a corporation. They are spreading their cost out across all of these homes and they can provide all these other services, everything from entertainment systems to alarms to landscaping. Ring? You want a ring? So all of a sudden you're not dealing

with 80 vendors to be in a home. You're dealing with one company that's doing it all for you. I think it's the future. To learn more, go to thepeak.group. Episode 56. Shannon Sikosh is here. Shannon, this is your second appearance with us? Correct.

Can you just come on every month? Yeah. Do you mind? Anytime you need me. Or want me, I should say. You certainly don't need me. We want you to be on the show all the time. We need you to be on the show.

For those who don't know Shannon or aren't familiar, we wrote like a little intro for you this time. Shannon is the chief investment officer at SVB Private and is a CNBC contributor. SVB is? Oh, yeah. Let's do that. Silicon Valley Bank. Correct. Merged with Boston Private.

Correct. Which is where you were. And you are now the CIO of the whole thing. I am. You're a huge deal. You're a huge deal. And previous to that, you were the director of manager search and selection for Silverbridge Advisors, and you were an analyst at State Street. Did I miss anything major? No, that's my whole life right there. Okay, pretty impressive stuff. So what's the biggest change since the merger of SVB and Boston Private?

And I want you to be as honest as you can. I want you to really let it out. I mean, my average client age declined by about 20 years. Because you have all the tech money. Yeah, innovation economy. It's a completely different client base. In terms of age, demographics, experience, working with an advisor. I mean we were talking about this before the show. For the most part, we're trying to work with clients who – or historically who already had an advisor experience.

For a lot of these clients, they've never worked with an advisor before. It's their first money they've ever made. Right. That runs the gamut from people who are like, I'm not worried at all. I can continue to do more of this, and this is just the first liquidity event to – I don't know what to do with this.

Was Silicon Valley Bank managing money like doing wealth management prior to the merger? They were. They had financial advisors there? It was small. It was a small RIA previously. Okay. And you guys were a big advisory firm in addition to being a? They were. They had financial advisors there? It was small. It was a small RIA previously. Okay. So.

And you guys were a big advisory firm in addition to being a bank. Correct. So now the bank's merged and the wealth management side's merged. And how many people are we talking about? Yeah. I mean, we've got, I want to say like just in, you know, kind of wealth management, a few hundred people. Okay. It's a big firm. Yeah. So, okay. And it's a big firm.

Yeah. So, I mean, it's a, it's a big firm. We have a big reach. Obviously the commercial bank, SVB Capital, SVB Securities, which is the old larynx, you know, investment bank. That's, you know, four pillars of a pretty substantial organization. But this focus on innovation economy is the biggest change, right? Because, you know, that was, we had obviously had innovation economy clients, but SBBs really

made their name as being the, you know, first stop, last stop for those types of businesses. I remember, I think, I think this is true. You probably know. I remember like Silicon Valley Bank originally, like we used to trade not with banks, the stock. They used to trade with the NASDAQ because they would take stock certificates in lieu of cash for payments for certain things. Is that true? Yeah, that was the old model of just flexibility coming out of the dot-com era.

They'd be like, all right, we'll be your banker. We know you don't have any money yet, but pay us in equity? Yeah, essentially, yeah. I mean, not as big a part of the business anymore. But if you think back, that nascent part of the economy, we talk about the missing middle of banking. Nobody wanted to bank these companies back then. So, you know, that was it. And then from startups to global funds, you know, this big rise in VC and PE, banking all of those funds. I mean, that's an incredible business.

Okay, so you're a big shot there now. Yeah. All right. Do you get to spend a lot of time on the West Coast for that? Are you flying? Yeah. I mean, I think from trying to grow our existing business, but really just grow the knowledge of the private bank. We're a big newer part of the business in terms of our reach. What's a culture clash like Northern California and New England? Oh, it's exactly the same. Is it interesting? Okay. Yeah. I mean, I, I think values wise, not that different in terms of just client experience, but yeah, I mean, it's certainly different. I would say, you know, from, from my perspective, the employee engagement's really high with SVB. So similarly to clients, right? Clients love being

clients of SVB. We all hear that, you know, but it's really true. And I think the employees really love being SVB employees. And there's a lot of opportunities. So people have moved around a lot. You see a lot of people that have a decade, 15 years of experience doing different things as the company has grown. And so growth always affords opportunities to people, which I think is the most interesting part of getting to know the other employees of SVBA is just how much they've grown with the company over the last 10 years.

Are you all remote? Not all remote. But we have a lot of virtual employees because we hired a lot during the pandemic. Sam. But I mean, I like being in the office occasionally. I think it's, it's great to collaborate. We've got offices here in New York, Boston, Miami, you know, all the places where you

would expect an innovation. See how many people I have here today? Yeah. This is the most, this is the most that I can remember having here. I thought it was for me. It's all for you. They all, they all want to, they all want to step to you and tell you how much money you lost them this year. So they're going to line up outside.

Fantastic. The NASDAQ bounced in the last, let's call it 30 days. Today, sir. What was the low? June 13th or something? 16th, I believe. Okay. Did anything specific happen on that day?

There was a CPI report? Yeah, no. Stock stopped going down. I think that CPI report that we were talking about the other day, that was, I believe, on June 30th. No, no, no. That was, no. It was July 13th. Am I right?

I can't even remember. I'm looking at the chart. But anyway, nothing. There was no moment. There was no declaration, okay. But there was enough selling. It was done. It was enough. I don't think those lows are going to hold. I mean, I hope they do was enough selling. It was done. It was enough.

I don't think those lows are going to hold. I mean I hope they do. Hang on. You're stealing my thunder. I was about to say that. Well, all right. Let's get into it. So just starting with technicals, 4,100, there's a ton of congestion.

That's the May – that's that May area where we definitively broke down from. So let's see what happens. If we approach 4,100 and we rip through it, great. But for me, I feel like that's where things will get tricky. But maybe those June lows are tradable. Like maybe that's a bottom that we can bounce off of again. Well, so there's definitely some good signs. So this is with Jason Geb for a sentiment trader.

He said the bear market is over and he caveats the shit out of this. He's sort of doing this tongue in cheek, but it's true. In modern markets, so he's going back to, I believe, post on 1960, the S&P 500 has never lost ground over the following year when advancing volume was 87%, which sounds cherry pick, but he, you know, he'll stipulates that, whatever. Or more of total volume for two out of three days coming off a 52-week low. So basically, in English, what that means is that we were at a 52-week low and advancing

volume was absolutely overwhelming to the upside. And this is the chart. You can't see it, listeners, but we will put this in the video and in the show notes. This is a pretty good track record. So after two to three, after two or three days? Two out of three up days. So two out of three days with more than 85% of New York Stock Exchange up volume within 30 days of a 52-week low.

So big, big, big vying. This is not that convoluted, honestly. It's really not. It's another way of saying a bread thrust, which. Which is a little bit more easier to understand. Whatever. He quantifies it. Okay. What do you think? I'll take the other side because it's two to one here.

I guess my challenge is that I'm looking at it more from the macro perspective and I'm trying to think of the catalyst for us to hit a new low. Run out of sellers. That's the only one I can think of. Run out of sellers to hit a new low? Oh, to hit a new low. Run out of sellers. That's the only one I can think of. Run out of sellers to hit a new low? Oh, to hit a new low.

Yeah. Oh, what would have to get worse? I think that most of what could get worse is, look at the CPI parent, 9.1%. I don't think that would get worse. That's not going to get worse. The Fed's not going to get worse. The Fed is seeing evidence that the work is being done for them.

Yeah. Earnings were, I mean, fine, fine. And, and if I look at what is expected, if we're talking about the NASDAQ. Are earnings fine? Do we have enough information to be able to say that? So far, there's been no giant surprises to the downside. What's interesting is that Apple is up big off its low. Big, big, big. Over the last week though, it's analyst trimming estimates every day. What's Amazon up? So a ton too.

Off the lows. Yeah. Oh yeah, yeah, yeah. Yeah. I mean, Amazon looks like it put in a meaningful bottom. Apple too. But here, here's, here's where it can get worse. So I happen to agree not to get like too, uh, uh, crystal ball here.

Um, obviously that was a trade of below, right? Like, A bottom was in. The bottom, we'll see. A bottom was in. Obvious only now. Right, obvious only now, of course. So, assuming that earnings continue to just be okay, right, not terrible,

I think that if we do go into the R word, it will start to show up a little bit later in the data. And you're starting to see more hiring talk, more slowing talk. So I think right now in the short term, market is looking past CPI peaking and ran out of sellers and we're getting a rally. So we're in an interlude

between the end of the inflation scare, but it's a little while before like, oh no, it's really a recession. Right. That's so bullish. Well, it is. And so I look at it's really a recession. Right. That's so bullish. Well, it is. And so I look at it on the flip side of that. I would like to see, you know, 11 million job openings

not be 11 million job openings because I think that's a ludicrous number. None of those are ever going to get filled. And I think that they're- I think it's a fake number. Right. Well, we talked about this the last time I was on. We talked about like the inconsistency of reporting,

you know, and that hasn't gotten better over the pandemic period. These are virtual jobs. They're not even like show-up jobs. I think they're fake. Right. They're out there. Let's see if we get a hit type of thing. It's phishing.

It's basically phishing for employees to see if they can pull somebody in that they can get a reasonable wage. That's not like, hey, we have a baseball team. We have eight players. We need a ninth right now. That's not what kind of jobs is 11 million jobs out there. No way. No. So, so take that off the table. I think that's actually a positive. We take it off the table because I think it's diluting the actual narrative of what's happening here. And the actual narrative is, is I got asked about stamp. I get asked about stagflation all the time. Wage growth is coming down. Wage growth is coming up. The stickiest

part for margins is wages. We start to see wage growth coming down at the commodity stuff is great because that hits PPI. It hits CPI, it hits the numbers, you know, from a trailing perspective really quickly. I think the most important thing is wages are starting to normalize. And those job openings are going to come down. And all these companies that keep warning us about margin, they're going to be able to actually pinpoint much better by the end of this year what their margins look like in the future. And that's where we're going to be able to look at earnings.

And so I hear you on the recession thing. I just don't think we're set up for a sustained recession. There's no overheating except in asset prices. And hey, we've solved part of that problem. So I have trouble seeing where, again, I'm not going to argue whether this is the low, the true, I mean. Who knows, right? Well, so can we go, housing is more important than stock market. We learned this in. Whoa, whoa, whoa. Is it? Yeah. Major. From a wealth effect perspective. No, major. It's for most, for most people listening to this, the house is their main

asset. And it's the primary determinant of how good they feel about their situation. Like if they're in a bad situation housing-wise because they're not able to make their payments, it materially changes their situation. So this is renters or homeowners. It's probably 15% to 18% of all economic activity revolves around the house. It's probably 15% to 18% of all economic activity revolves around the house. Like factoring in like lawyers and realtors and renovation, like remodeling. Home goods. Everything.

It's probably like a huge chunk of GDP. And what's restoration hardware? It's housing related. What's that? Is restoration hardware optimistic? The stock's been cut by – it's market cap by two-thirds. So I don't think it has to fall off the cliff to have a negative impact on the economy. So the question is like what could get worse?

Well, what could get worse is these high prices that are being held up by scarce inventory start to fall because the buyers just literally disappear. What would make the buyers disappear? just literally disappear. What would make the buyers disappear? If rent prices ease a little bit and wage pressure, to your point, eases a little bit and people are just like, you know what? I'm good where I am right now. I'm not making any changes.

I think home sellers are being inordinately rewarded for the scarcity that exists. And that won't continue if like things really normalized to the extent that you think they are. I just, I don't, I don't see that scarcity issue becoming, being solved anytime soon. Oh, I agree. Just from month over month,

like the amount of months on inventory. But the demand side could disappear. I agree with you. What about people talking, what about people talking themselves into a recession where you have CFOs and CEOs saying, we're going to pull back, we're going to, we're going to slow and it becomes self-fulfilling. We, we, we put ourselves into a recession. By the wayFOs and CEOs saying, we're going to pull back, we're going to slow, and it becomes self-fulfilling.

We put ourselves into a recession. By the way, we've said this a million times, a recession doesn't need to be like an end of the world type recession. We could have a moderate recession. We could have like a cute one almost, right? Like an adorable- We could have it right now. I mean, that would be a cute one when you have a Q1 GDP decline that's net exports and inventories.

Inventories come back. Right. Everybody understands that. But we had Apple, Microsoft, and Google recently talking about slowing down. Initial jobless claims are – John, can you scroll down a little bit to fill this chart up? We're in like section two, so sorry I'm skipping around. But initial jobless claims ticked up to 250K this week, which is still low. But it looks like we're up.

Here we go. Look, I mean, again, we're still very, very low. But we really – my point is we really haven't even – What is this? This is initial jobless claims. Continuing claims are still like – Very low. Very low.

I guess that's my point is all of this caution that we've seen coming out of earnings calls, not just this season but last one, we haven't really seen anything much in the data yet. Well, that's not true. We've seen PMI come down. It's all anecdotal. Why wouldn't I take that cover, just like the Fed? Why wouldn't I take the cover to be conservative right now? Why wouldn't I take the cover to say, hey, we're pulling back until we're sure that all of these things that you're warning us about, which is lower enterprise spend, which is this coming recession, which is buyers, you know, the demand falling out of the bottom of the market. Why wouldn't I be conservative? I mean, to me, I think CEOs are being appropriately rewarded for being conservative. And I see no change in that. The banks were. Bank stocks were. Absolutely. Absolutely.

You know, Charlie Munger said probably last year, if you're not confused about what's going on right now, then you don't understand it. So you had J.B. Hunt basically on a conference call say, I am seeing the CEO, it's like one of the biggest trucking companies. He's basically like, I am seeing absolutely no slowdown in demand for anything whatsoever. Every bank CEO said that too. And then like the CEO of Tesla is like guaranteed recession. It's like what do you even do? Like what do you even do with this level of disagreement amongst like business leaders?

Because it's so – You buy Bitcoin. So anyway, I think a lot of evidence, quote-unquote, evidence of recession does not really exist. It's almost all anecdotal, and a lot of it is vibes. It's like feelings-based. No, but really. I know.

I'm laughing because you're right. It's just – There is no evidence of recession. Right. There is evidence of things that are making people feel like they're in a recession. And that evidence is- Well, what about gasoline prices? That makes people feel pretty shitty. I know we've come down a lot. I think it's like 38 straight days, by the way, or something crazy

of low gas prices. But it was not just gas prices. It was literally everything. And if you weren't paying more, you were waiting. And people really, really hate inflation in dollars and in time. But they're not stupid. They know that if their wage goes up 5%, but their cost of living goes up 14%, it's a personal recession. Also, the wage gains are usually one time. They're a one-time increase. Whereas when you go to the gas station again,

I know they've come down. You don't buy it? No, I do. First of all, I mean, the wage thing drives me crazy because we didn't have any wage growth for 15 years. So like, let's just factor that into margins. Let's enjoy the moment. Like, let's move on. Okay. Because we needed it and we needed a reset here. I think from a, from a perception, a confidence perspective, I don't disagree with you that everything feels more expensive, but I don't think this,

the difference is I don't think demand's destructed. I think it's delayed. And so if we're looking at demand delay versus demand destruction, that's an entirely different story because you start to see the dispersion between consumer confidence and consumer spending. You're seeing it now. I don't get too excited about, oh, we're back to 2019 consumer spending levels because, yeah, of course, we're paying more money. So, you know, it's not like we're getting any more. Yeah, nominal terms. But wait, real retail sales are still very, very strong. But that's what I was going to say.

Next point. Nice segue. Real retail sales are pretty strong. Again, factor out gas. Obviously, that's a big part of it. But I'm looking at historically that correlation between consumer confidence as a leading indicator for consumer spending, it's terrible. Like the statistical significance of that is terrible. So you can feel all you want, but the delay in the demand actually, I think, would be positive for the economy.

We had this huge surge of goods spending and a huge surge, a huge then rotation to services. Neither of those were ready. And you get all this pressure. A delay would be fantastic and would set up for a great 2023. Well, we haven't spoken about the elephant in the room is the— Don't talk about me like that. The chance of— I am the elephant in the room. The chance of a policy mistake and the Fed just going too far. Which one?

Pushing us into which one. Yeah. Well, they only do it every f***ing time, but let's definitely not worry about it this time. I mean, it only always happens. For the first time since May 2018, from the Bank of America

Global Fund Manager Survey, hawkish central bank rate hikes are the number one risk according to fund managers. But I guess to your point, Shannon, what is not being priced into the market right now?

What are people, like what is the risk that materializes that people are not already pricing in? I guess a policy mistake would be if they go too far. Taiwan. Like Taiwan Semi or Foxconn, both of which are in Taiwan operating mostly China-Taiwan, like being inhibited because that's app. Let's Apple can't do anything without Foxconn. And literally the globe would shut down without Taiwan semi. These are the two most systemically important stocks to the U S stock market and economy.

And neither one of them are based here. And like, I don't think that's like an imminent risk. I don't think China wants to destroy its own economy in the process. I'm just saying, like, people are like, what's a tail risk? That's a tail risk. I think they're showing that they're willing to destroy their economy from a policy perspective with zero COVID. That should scare you.

I think it's – that's why I think you're right that that is a meaningful concern. I think it's – that's why I think you're right that that is a meaningful concern. The only thing that I think that will cause them pause is actually what's happening to Putin and the – What is happening to Putin? That's off the front page? It's off the front. I don't even think it's on the fifth page. No, and it's because he cannot continue – basically he has given up every opportunity to have a sustainable economy going forward because of this move. He was already on that path from an isolationist perspective.

But I think the Taiwan question actually is – I think it's broader than just Taiwan. I think it's – Hold on. Putin's selling oil in India now. He doesn't give a shit. He's fine. And they have a bigger population than China now? Is it right up there?

And now he's going to play games with them this fall when it gets cold out. And I don't think – I think it's too early to say that Putin is like in any kind of like worse situation than he was in three months ago. But can we just say that I just think the broader concern from a geopolitical perspective is that what we were just talking – we were talking about earlier about the fact that there's no sustainability in like geopolitical risk. And it doesn't matter. I think we're entering a new phase where it actually absolutely matters. But that's why I think about global versus isolationist policy, globalization versus isolationist policy. And how does that get, how does that affect everything from a global economy perspective? Like how does the rearmament of Germany change the political landscape? How does that affect everything from a global economy perspective? Like how does the rearmament of Germany change the political landscape? How does that actually change the trading landscape?

What happens with Japan, which has basically been off the map from an economic perspective for decades but is strategically important from a military perspective should these risks continue to accelerate? What does the end of just-in-time supply chain mean for multiples of stocks? Like, what does the end of just being able to order things from all over the world and have them arrive on time, what does the end of that mean for profit margins in the S&P 500? And then is that a jaker? Because then you have to expend all this CapEx to bring production closer to distribution, you hurt your margins in the short term. But does that create this additional sustainability in the global supply

chain and for companies here in the US? Do we become more strategically viable? Right. How long before it becomes seen as a positive? Right. And what does it mean that Elon converted 75% of his Bitcoin to fiat? We just don't know these things. What about the yield curve? Has that lost its signal? How much weight do you put on that? I'll tell you in three months.

Because that is steeply negative. It's screaming. It's screaming recession. Yeah. It's now inverted twice, meaningfully. Right. 20 basis point inversion two weeks ago. Would you say that the dynamics of central bank policy, the yield curve, and the way that the bond market has been operating in the last 30 years are the same or different?

I would say that. And I said that in 19, and then COVID punched me in the head. So I would have said that. I would have said, throw your yield curve out under 5% Fed funds rate because it's not the same signal that it was when there was actual yield in the market. Actual yield. There's nuance here because companies gorged on borrowing in 2020, right? So they're good. They're like fat flush with cash.

borrowing in 2020, right? So they're good. They're like fat flush with cash. But at what level do borrowing rates start to impact not just corporations, but people that are borrowing money on a daily basis, whether it's for homes or other things? Like, can this economy handle a 4% tenure, 5% tenure? My opinion is it can. Congress can't. It can't fund the country. But it can't. That's why there's a ceiling. That's why these people who are talking about 6%, 7% – They don't know what they're talking about. No, it's absolutely ludicrous. It's never going to get that high.

Say, Duncan, we told you. No, no, no. There's no possible way. You can't pay the bills. None of this works in a situation where we're paying interest like that on the debt. It just can't work. I don't care how much they roll that balance sheet off. Like where if you look at where we were in 2007 versus where we are today, I mean, that to me is your is your answer about the yield curve. It is the yield

curve is is is going to be artificially held at a certain level because we are now Japan from a debt perspective. Look at the interest rate environment in Japan. Do you think that has anything to do with the economy? Do you think there's any correlation between the economy and the yields that are paid on JGBs? Absolutely not. Well, what does a 4% 10-year mean for multiples? What if we don't go into a recession and earnings are fine, but people are just like, you know what? There's more competition for my dollars. I'm going to allocate some more to bonds. fine, but people are just like, you know what? There's more competition for my dollars. I'm going to allocate some more to bonds. I think that's a reasonable expectation. And I think that that's why you get the divergence of what you're seeing, the factors that are

starting to show some meaningful outperformance. And you guys probably do a lot more factor analysis than I do, but I'm looking at cash and hand factors, dividend factors. Quality, dividends. But we can look inside the stock market. Look at the massive bounce in homebuilders, for example. Maybe they're looking past peak interest rates or peak since kind of silly at just 3%. But isn't that the same argument about why you want to buy energy now is because the housing market is undersupplied, energy market is undersupplied. So that's a three-, four-, five-year play on what you need.

market's undersupplied. So that's a three, four, five year play on what you need. I mean, home builders for me are, you know, that's the firing line of your argument earlier, Josh, about the housing market. I like housing adjacent stuff because I think that's the softer way to play it. Like what, Home Depot, stuff like that? Yeah. Yeah. But I think from a home building perspective, everyone's talking about the bull case for that is that even in a slightly higher mortgage rate environment, people are then going to start – instead of anchoring to two and a quarter, what are they going to anchor to? Five and a half, six percent? Rates are cheap. Yeah. At some point, you're going to anchor to a new level, and that demand I think comes back.

They're not going to meet it though. The home builders do not – You say they're not going to make it? They're not going to meet the demand. No, I agree with back. They're not going to meet it though. The home builders do not. You say they're not going to make it? They're not going to meet the demand. No, I agree with you. So people think they will, but they won't. Because they're not like, oh, we got to supply this housing market.

They don't give a shit. They're not going to build and lose money on every house they sell. It's just never going to happen. So they're going to look much the same 10 years from now as they look today in terms of the amount of output and the margin that they're building toward look much the same 10 years from now as they look today in terms of the amount of output and the margin that they're building toward. These are like for-profit

businesses. They're not a piece of the macro in the same way that like WTI crude is. Well, another reason to add to the confusion is that there's a lot of conflicting signals, but also a lot of the market just got wrecked. So home builders fell 40%. So maybe we already priced all – like we just don't know. We don't know. It might be enough. Is that enough? Could be. What do you think – you talked about rents earlier.

What stabilizes rent prices? Because we went from whipsawing between nobody is ever going to rent again in a top-tier city to now, you know, like— New York City rent past five grand for a one-bedroom? Right. Who's house paying for that? Here's the problem. The rents will stabilize. They'll stabilize at very high levels.

Like, they're not going to fluctuate up and down every year, just like people's salaries don't fluctuate. Like, once you get to a place where this is what I make, it doesn't go down the next year. This is why consumer sentiment is in the toilet. Real world price volatility

sucks. You accept that in the stock market. That's a contract that we all sign when we're investing. You don't expect it to show up

on a daily basis in your life. And you don't even appreciate it if it drops because you know it's about to go back up. Like, so,

so where, like where do these things settle out? Or, or when they stabilize, will that be bullish? Tell me what level they stabilize at. What if the Fed signals that it's done enough and the rate of inflation slows meaningfully and then like gets back to their 2% or 3% target? How long does it take? Wait, no. That's not even the point.

The point is that, OK, it stopped going up, but it's not going down. And all of these prices are now permanently elevated in our economy. That's the problem that I think people looking at day-to-day, oh, the market's rallying. The market must think it's priced in. How do you f***ing mind? People a year from now are going to be still mad about the rent increase that they just went through. They don't get used to it that fast. But that's, I think that's why I keep telling people not to anchor to 2019 because you're right. Everything's reset. You're right. That

world's not coming back. That world's not coming back. But what does this new world look like? And if we're anchoring ourselves to a new set of prices, does that lead to – how long have you been saying that estimated returns on the equity market are going to be lower? Seven years. Yeah. And we were wrong. Literally. Right? Yeah.

So do we actually enter into this environment where all of those estimated returns that we all use in our financial planning software actually come to fruition? estimated returns that we all use in our financial planning software actually come to fruition? And do we get to a point where now we have to think about engineering growth in the actual economy? Heaven forbid. That's the real need. Here is the new world. Things are not available at your fingertips just because you press enter on a computer. You wait for stuff.

Car leases are so egregious and outrageous that people hold on to their cars for longer. Homes, while scarce, stop going up in price because the rate to borrow goes up so much that the consumer is just like, I would rather live in a box than take out a mortgage like that that I know I can't even pay for.

Like that is the new world. Teenagers don't talk to each other. They do dances on a screen and share. Like the new world is not great. People are not happy right now. The frustration is manifesting itself in like the judgment of Joe Biden, which I guess always happens. Joe Biden has nothing to do with the fact that United Kingdom inflation hit 9.4% this week. He's not also the president of the UK, but it doesn't matter.

That's where you're seeing that dissatisfaction. It's just hard for me to understand what would have to happen for that to go away. If you tell me it's falling gasoline prices, I think that'll make people happy for 10 minutes. Well, but the question is what parts of the increasing in prices are sticking and what's not. So I think that car – Wages and rent. Right, which are the two big ones because car prices will go down. I think you can see food prices go the other way.

But the big ones are sticking. And be careful about cheering for the prices that go down. Why are they going down? Because perception of demand is falling. Well, hopefully it's supply-meaning demand. So now corporations, small businesses, large corporations, whatever you want to say, they're looking at retrenching consumer, looking at potential for falling sales and higher costs.

In what environment is that good for stocks? Like in what point in history was that mix? Now the question is, was a 20% haircut for the S&P enough? And a 30 for the NASDAQ and a lot, lot, lot more for individual stocks. I don't know. We're going to follow this in. If I knew, I wouldn't be talking about it. I'd be executing. I don't know. I just feel that if we get out of it this time and we're back at new highs in three months, that was way easier than I would imagine.

I'd be very surprised if that were the case. Okay. Much more surprised by new highs and new lows. Let's go into this New York Stock Exchange 90% update. That is the same thing. It's Bank of America quantifying the same thing. It's just, it's Bank of America quantifying the same thing

that Jason did. Show me these stocks trading near lows with the big rallies. So this is a new feature on YCharts. I'm embarrassed that I own

one name on this list. Which is pretty neat. This is from yesterday. So... Sean, did you ever see this on YCharts? So they've got a stocks trading near lows list

and yesterday these names screamed. Carvana, Peloton, Coinbase, Affirm, Unity, all the biggest. Carvana went up 20% on news that they got kicked out of the state of Illinois. So that probably bottoms. By the way, these names are so blown up. Carvana could go up 40% in a day and you wouldn't even see it on the chart. Honestly.

Peloton, 17% rally. but it's back at 11. Dude, 17% rally, you can't even see it. Coinbase, 14% rally. Affirm, which is buy now, pay later. Unity, Chargepoint, which I own, which I've been destroyed in. Confluent. All right. These are flyers.

People are taking flyers. People are taking flyers. Yeah, to me, what really matters is that Apple and Amazon put in meaningful lows and then bounced hard. That's what really counts. We're going to hear from them next week, I think. We're going to hear from who? Yeah, well, everybody. Tech giants. We've got Twitter on Friday.

That'll be a debacle, I'm sure. You know what's interesting, Josh? Throw up that chart. You're not Josh. John, got Twitter on Friday. That'll be a debacle, I'm sure. You know what's interesting, Josh? Throw up that chart. You're not Josh. John, throw up this chart. So this is a CFO optimism index. And Derek Thompson has spoken a lot about this. It's this idea that people are optimistic about what's going on in their own life,

but think everything is going to hell. CFOs too, apparently. We've got a chart showing the optimism about their own company versus the optimism about the economy. And the divergence is massive. In other words, CFOs are confident, reasonably confident, in fact, very confident that they're doing okay. But holy shit, you're all fucked. Well, this is a relative game.

It's like the whole economy is going to go down. But because of my execution and guidance as an incredible manager. Yes, that's exactly it. My company will do better than yours. So again, we're not going to caveat this and say on our earnings call and our guidance, you know what, if the whole economy goes down, we're going to go up. But we're going to say we're going to do better than our competitors who are clearly not as established. So this index is saying that when they ask a CFO about if he's optimistic about his own company,

that has barely fallen this year. But when they ask a CFO about their optimism about the overall economy, that has collapsed. It's pretty bad. So they're like, everyone else is screwed. I got this. We're good here. But then isn't that going back to just what you said, Josh, which is like this real data versus sentiment?

Yeah, it's all sentiment. But Shaddaa, you make a really good point is that why wouldn't CEOs take the cover of what everybody else is saying and lower guidance, lower expectations? They might. I would. I mean, I don't run anything. Why did Elon Musk turn 75% of his Bitcoin, quote, position into cash? Because he's saying recession every day on Twitter. That's what he thinks. So he did the smart thing.

He's building up his cash. cash. So like if you think about next week, let's say you're Tim Cook or any CEO of a large growth company, even if you think your numbers look great, you're exactly right, Shannon. Why wouldn't you sandbag and just buy yourself a little bit of breathing room for the next quarter just in case? So now will the market see through that bullshit? Shrug it off? Maybe. It's everybody though. It's not just one industry. It's not just one sector. It's everyone. And they're saying, despite the fact that we're seeing X, Y, and Z positive data, there's so much uncertainty out there. And I do think that at some point as an investor, you do have to take a step back and say, okay, like be that as it may, right? Like who's actually providing solid guidance that I

can bank on versus you're just trying to set yourself up for a beat. Jerome Powell. Yeah. Yeah. But for the average investor, that's too much of a mind game to play. But the average investor is not setting prices. Yeah. Point taken. Let's do this inflation versus wage growth, because this is really the heart of what I'm trying to say. John, we have these charts. Because we haven't seen real wage growth in a minute, right? Is that what's going on here? So think about a person who's living in this reality. So think about a person who's living in this reality. Average weekly earnings have risen by 4.2% year over year.

But when you adjust it for inflation, they've actually fallen by 4.4%. That's pretty brutal. This is fucking brutal. This is people's real lives. They might not statistically feel it to this extent, but they're like, man, I just got a raise. That's the way they think about it. They don't think about it. I just got wage growth. I just got a raise, but

my landlord just and my health insurance and this and that and my car. They don't know that gasoline prices are down for the last 30 days. They just hear their friends talking about all of their higher expenses and they feel it. And that is what's contributing to an environment. You asked, can we talk ourselves into a recession? Yeah, we really can. Because if you feel that way, how many iPhones are you buying next week?

Actually, I was talking to a friend yesterday. We were talking about like, you know, what do you think market, blah, blah, blah, blah, blah. I'm sorry. Let's just do one more while we're on the subject. This is also in the Wall Street Journal. This is change in June from a year earlier. This sucks. Like everything about this is overall sales, groceries, furniture, cars and trucks, eating out, clothing, recreation.

But so Robin asked me – this is relevant, Josh. Can we talk ourselves into this session? Robin, my wife, asked me, we're moving our baby – he's not a baby anymore. We're moving him out of his room into a different room. That room is empty. And we're doing the closets and the cost is outrageous. We're going to wait. What's the rush?

He's not moving in. And I don't want to spend that much money in a closet. We'll wait. And my friend said to me, the exact same thing. My wife has asked me for shades or whatever. And same thing. And so I think that we're not the only ones talking that way. Put this last one up.

Retail sales changed from February, 2020. So same article. But I'm still buying stocks. I'm still buying stocks. Keep going. Keep going. Inflation adjusted retail sales are still strong. Yeah. Not as strong as they seem when you hear things in nominal dollar terms, which I think you made that point before, but they're still decent. But they're not falling. People aren't. My point is we're not even seeing the shit in the data with the consumer spending and the labor market, and that's the economy. So can we go back to that first chart?

Josh, we're about to get schooled. I can see it. Oh, I want it. I want it. OK. So, right. So when adjusted for inflation have fallen by this much. Yeah.

So you made the point earlier. Weekly earnings when adjusted for inflation. Earnings are sticky. Yeah. We get back to inflation where it was. We actually – I don't think all of the price increases are going to be sticky. I don't because I do think that to your point, we are going to see this – some parts of the economy see demand destruction. And then I think like companies are going to have to right size, right price.

And so this to me is the persistent positive coming out of this. And this to me is where- That it's going to reverse. That it's going to reverse. Well, inflation is going to slow, but the wages are going to be sticky. And I would argue- That's a good point. Nobody's talking about that. We're talking about this in terms of- See how smart she is? So if you- I always said that. If you go back and look, and this is like, this is a little weedy, but go with me here. So if you go back and you look at the way that the Fed looks at inflation, they use this PCE.

And you look at the CPI. You know what the big difference is? Owner's equivalent rent. Right. And so that's been rising. It's been rising along with healthcare costs. CPI has a higher housing component than PCE. And so I would argue to you that, yes, they're feeling those additional rent increases, but they were feeling rent, health care, and education costs rising for 10 years before this, too. Without the wage growth.

Right, without the wage growth. Yeah, yeah, fair. And so for me, I think that the stickiness in earnings is where we won't see. That's not going to decline. Okay, so you got a raise. Your cost of living went up faster than the raise. You're pissed off in 2022. What happens in 2023 when the demand is destroyed to some extent,

things calm down, prices come down, but you still keep your wage? Yeah. That's when you get laid off. By the way, this is fun, right? Like there's so many things going on. Shannon, that's when you get laid off. That's what happens. So here's what matters.

Right at that moment. Inflation, interest rates, earnings, feelings, aka vibes. Shout out to Carla Scanlon. And there's a lot. It's a lot. It is. Let's go back to gasoline really quickly. Not only is it falling, the premium over U.S. crude was more than $60 a barrel at one point in June.

It's now less than half of that. At the same time, retail fuel prices in the U.S., that's gas stations, have fallen for 37 consecutive days. That's a big deal. And Sean, my researcher for CNBC, pointed out that crude oil now is only 3% above where it was the day of the invasion. That's wild. I think wheat is lower. So that's – you know what's amazing?

Yeah, wheat's down 35% or something. That's like the resiliency of markets is how quickly they adjust to new reality. Like we're not much higher than we were on the day Russia invaded Ukraine. So that whole thing about like it's priced in, it's priced in, maybe it is. So that's pretty impressive. So, I mean, and that begs the question of where do you think some of these prices settle out? Because that's when you actually start to be able to look at that from a stock market

perspective, right? If I'm an airline and I'm trying to think about where do I anchor my jet fuel price Because they got killed on gasoline. Right. Or jet fuel, whatever it is. But these expectations of – you guys remember the Goldman Sachs $200 a barrel oil call, right? Yes. In 2005, 2006?

Eight. 2006? Eight. Right at the top. Yeah. It was like late 6 early 7 because the commodities burst before the housing market did

and I remember thinking that's a ridiculous call because we were starting to talk about this slowdown in the economy but someone asked me the other day what's going to happen when oil goes back to $35 a barrel and I was like well I don's going to happen when oil goes back to $35 a barrel?

And I was like, well, I don't think oil is going to go back to $35 a barrel. But do we really know? Like what level of demand destruction brings oil down to, say, $60 a barrel? Like what is that like inflection point? And so, again, you're right. Commodity prices in general are reacting incredibly quickly to this perception of demand destruction. I think that at the end of the day, the number I'm looking at all the time, I'm looking at PPI every month because that's where I think that's where it starts. It usually comes out the day after CPI.

The day after CPI. But I think that's more of a leading indicator of where we're going to be at the end of the year. I'm more of a Facebook guy of where we're going to be at the end of the year than anything else. I'm more of a Beige Book guy. I like a little color commentary. In fairness to Goldman about that late 2000s oil call, that was in the context of this belief that like the bricks were going to like have this insatiable commodity demand and construction like out into infinity. And that was Goldman's thing. Like that guy, the guy that coined the term worked at Goldman. A lot of what they were doing with commodities was extrapolating China, Brazil, Russia, just

like their middle class becoming Americans. And of course, none of that happened. So how does the flip side of that when China doesn't grow this quarter but says they grow a percent and a half and they go from annualizing five annualizing, whether it's real or not five and a half percent growth to what like we're doing, how does that impact the, the, the cyclicals? Well, we're going to see all that in the numbers. It doesn't matter what they say, because we were talking about this last week with, uh, with Alex, the amount of revenue.

Yeah. We'll see it. Remember the chip shortage? What, it's over? Yes. In recent months, prices of memory chips used in many electronic gadgets have fallen. While semiconductors

used in cars and data centers are still in high demand, some companies are preparing for sales slowdowns. TSMC, that's Taiwan Semi's top executive, acknowledged, however, that the broader industry is dealing with an inventory correction that has led customers to cut orders from some of its peers. Our peers, not us.

After two years of pandemic-driven demand, quote, our expectation is for the excess inventory in the semiconductor supply chain to take a few quarters to rebalance to a healthier level. So double ordering of chips is now going to come home to roost. These stocks look terrible. They had a huge bounce though. Yes. But, I mean, they are in a – the semiconductor stocks are in a no-man's land. Historically, chip gluts don't take a few quarters. They take a few years.

Yeah, and so doesn't that – as the tip of that spear, where else has there been double ordering? Where else do you see? Oh, we saw that in an inventory at Target or Walmart and all those companies. So that's at the end. So there's a bunch of companies in the middle of semis and pillows that – like that's another sort of factor that we need to think about because – So potential tailwind if you're worried about inflation. If there's – like a glut becomes apparent in all of these things, prices come down because retailers have to get rid of it. Right.

OK. And so then you – so – and I think that that – but I think it's all along the supply chain, right? Again, it's not just inputs and inputs. But again, the problem is if we double-ordered people and the employment picture that we think is so tight is not that tight and there's just a shock amount of layoffs out of nowhere. And then they'll say it's bullish for stocks because the Fed is going to chill. And maybe that's true in the short term. They will say that. I don't think the hiring has been nearly at the level that you would need to see significant layoffs.

Again, I think where you see – and this is a little bit – if you read into the consumer confidence data, when people are asked about their current employment situation, they feel really great because there's plenty of labor mobility, right? There's a million jobs out there. They can move their job. I actually don't think that we'll see significant layoffs. I just think that those 11 million openings just – That's what I think. I don't think you have to have a crash in the labor market, but I think that there's a little bit of an illusion going on. Those 11 million job openings or whatever it is, you're saying they're not real. And I tend

to agree with you. No, they're not real. This sounds kind of alarming. AT&T fell the most in 20 years. This is on the open today. I think it got better. AT&T stock fell the most in 20 years after saying some customers are starting to put off paying their phone bills. AT&T fell as much It's down eight now. That's alarming. What a junkie stock this is. Hold on. Here's a quote. Quote,

I'm not surprised to hear consumers are paying their bills more slowly. I am. They are already struggling with higher food and energy prices. Research analyst Peter Supino. Quote, I'm not worried so much for AT&T as I am for the broader consumer economy. You wonder if this is the canary in the coal mine. End quote. Shannon, ignore it.

No, I don't think you should ignore it. And I actually – I think – These are not landlines. These are people's mobile phone bills. And to that point, you can't get a job. You can't interview for a job. You can't get anywhere from – Without a phone.

And so I actually think this was – is one of the more telling anecdotal things that I am noted – is noted for me. That's like a mess. Right. Okay. If that gets worse, will you all have to pay attention to that? Yeah. I mean so all of – we talk about this idea of – Auto loan delinquencies and cell phones.

Discretionary spend, right? We all talk about like what's truly – it's like food, energy, shelter, Netflix, right? With ads. But I think that this is that second level. It's like, okay, you really can't do anything. Even if you're low income, you absolutely need to have a mobile phone because in most cases,

you actually won't have a landline. You may not have housing security, but you have a phone, you can get to work, you can get where you need to have a mobile phone because in most cases you actually won't have a landline you may not have housing security but you have a phone you can get to work okay you need to get to so i think they had a billion dollar shortfall and they blamed it on collecting uh i think that's the number hold on this is important well stocks are going out of the highs by the way at&t said thursday it now expects 2022 free cash flow of $14 billion. That's versus $15. About $1 billion of the difference was tied to the timing of customer collections. The gloomier outlook overshadowed second quarter results

that topped estimates for profit and wireless subscriber growth. So they're hitting their profit targets, but they're having trouble. They had a price increase, $6 a line on mobile plans. I wonder if Verizon is going to say the same thing. There's no way that's company-specific. 100% it can't be. So who else?

Or if it is, then you'll see the stock fall out of bed if Verizon doesn't report similar information. So I'm guessing these aren't Apple users who can't afford their mobile phone bill for the most part. But how could that be like a good setup? So. Well, I mean, especially on the services side, right? If you're thinking about sort of install base. And I mean, that that's to me, I just I look at this. I mean, AT&T is what?

What are they paying? Dividend yield? It's probably seven. It's probably. Yeah. Well, it's higher today, Shannon. I don't own the stock. I'm just asking because I'm looking at it in terms of –

This is to the point earlier. This is a weekly chart of this disgusting stock. It's one of the worst stocks. Execution. It's about execution. So that's what I'm saying. Is this cover for we don't know how to collect our payments or is this actually a trend? That HBO thing, but then did it go so well?

It could be because that's been a shitty stock for years. So it could be cover. Mike, let's do this phantom surgeon trading thing. Oh, this is so great. Did you read this article? I did. Explain to the audience what this phantom surgeon trading means. You know what?

I don't need to explain. Let me just go straight to the article because I read this and I actually audibly laughed to myself. This is from the Wall Street Journal. A sudden surge in trading volumes in class A shares of Warren Buffett's Berkshire Hathaway confounded investors last year. Okay. So let me interrupt myself. These things trade, what's the stock price? Is it $400,000 a share? It doesn't matter. Yeah, yeah. This is the one that never splits.

The A shares. The A share. So now we're looking at this chart of spiking volume and you're like, what the hell is going on? Now a trio of academics say they have solved the stock market mystery. The jump in volumes was an illusion caused by a change in how Robinhood Markets, Inc., Robinhood, reports fractional trades according to a new study released Wednesday. I don't really need to read much more beyond that, but it's just incredible. It is just incredible.

So Robinhood was not correctly reporting the trades and making it seem like there was more volume? I actually think it was DriveWealth who sits underneath, but it was just some sort of nonsense misreporting type of something. Here we go. Because they were reporting the fractionals. What was it? They were reporting fractional trades as whole shares. So if you were buying $10 of the A share, they were reporting it as if you bought an entire share. So you had kids on Robin Hood trading Berkshire A shares for some reason. It's called the rounding up rule, which is definitely – Maybe there was a meme.

And they were saying like this is a full share of Berkshire trading when it was – So these are the numbers. Because the A shares are so expensive, obviously they've been thinly traded. So from 2019 to 2020, just 359, not 1,000, 359 on average a day were traded. OK? So that's $100-ish million worth of daily trading. ish million dollars worth of daily trading in, in mid February, 2021. And basically since then they were reporting daily average volume of 1900, which is, I don't know, uh, uh, a lot higher than 359 or $800 million a day. So an eight X eight X a day based on just

fake news. So we, So we solved the mystery. Shannon, so we're going to talk about what you're telling investors now. I think that's what our listeners definitely want to hear. So I asked, joking around, what are your best ideas for the second half? But what are your ideas about the second half? I think everyone knows where I stand at this point, and they're probably sick of hearing about it. But what do you, like, what are you saying to people that ask you, which probably happens, I don't know, once an hour, five days a week. Okay. All right. So what are you telling

people? So, I mean, the biggest question I get is why do you still own technology? And that's the one I've been getting for a year, right? Cause I have a bunch of tech stocks in my portfolio. And also when does this kind of cyclical, you know, boom in things like energy, when does that reverse? And finally, you know, growth versus value. And the third one is where I start. I'm like, this is the most ridiculous thing that we still have to talk about because growth versus value. And so for me, that's a constant moving target. Why is it ridiculous? It's ridiculous to me because nobody's being forced to make that choice. target. Why is it ridiculous? It's ridiculous to me because nobody's being forced to make that choice. Is that why it's ridiculous to you? Well, in some ways, but it's, but I don't think you

should put it in terms of a binary choice because that universe changes over and over again. And there's constant resetting. I mean, you know, right now is, is Netflix a growth stock or is it value stock? How about in the Russell? You could be both right, right in the middle. You can sit squarely in both the Russell 1000 growth and the Russell 1000 value. You can be in both of those. And so how do you square that? One of the things that I continue to look at is the expression of technology across someone's portfolio. So I think similar to the Industrial Revolution, that we are in this over the last 20 to 30 years. Whether you believe

that technology is deflationary or not, I'm not going to get into that argument here. There's plenty of people who make a lot more money than I do that will say it is. But I think one of the things that I look at is technology isn't going away. And actually, technology helps to solve some of these challenges that we talked about in terms of the inflationary environment, in terms of labor needs, in terms of being able to keep prices from continuing to rise over time if inputs are coming in. And so things like reshoring of production

here in the United States, I don't think we reshore the type of production that we had here in the United States in the 70s and 80s because that wasn't efficient production. And we went overseas because we had to get lower wages and make that more efficient for margins to increase. But I think if you bring that back on shore. It's robots now. Right. Or it's robots with a human complement

because we don't have enough humans to do things like welding, for instance. So you need a robot. But it's not Michael Keaton building Japanese cars in the Midwest, like with Teamsters, with unions. That's not what we're talking about. Right. No. What we're talking about is in your business over the course of the next 10 years, if you're not putting meaningful capital expenditure into creating more efficient technology and a different way to deliver your product. So my second half ideas are centered around what companies across the market are thinking about technology, not just from an enterprise spending perspective and not just putting in one of those hot, cool SaaS socks that we talked about earlier, but which ones are looking at their business and going, okay, we have to spend

the next several years putting technology throughout our entire process to make us more efficient so that we can get back to the margins that we had in 2019. So we could reshore but not have worse margins because of it. Correct. Okay. So just buy the robot ETF is what you're telling people? Just robots. It just needs robots. I'm super bullish on automation.

I just don't know about robots being the trade. No, not necessarily. Not necessarily robots. What company is he talking about? So like someone like a Rockwell Automation, right? That is a great example of the combination of like a true industrial stock. Yeah. But that can help other businesses do well.

Or even thinking about the traditional big tech stocks. I mean, being able to capitalize on what a sales force in their CRM system. CRMs are not just for financial services people to be able to log in when somebody called you. I mean, it can be, to your point, Josh, it's the new version of just-in-time. It's creating that efficiency across the entire supply chain. And some of that has to come back on shore so that we don't have these disruptions, but it has to be done better than it was historically. And the problem is, is that a lot of these companies, whether they're in true manufacturing or whether they're in some sort of end-to-end product, hardware as a service, for instance, they're not accustomed to having to look at these businesses

and get really efficient and really tight and really lean. And so any company that can help other companies or other sectors and industries become that, I think is the huge opportunity over the next couple of years. I'm so tired of hearing about, well, enterprise spending is going to go down. How? How are you going to make your margins?

And it never does. It doesn't go down because you cannot make your margins without looking at your overall enterprise and incorporating technology into whatever you're doing. Enterprise spending is not just something you do when you're bullish. It's something that you do when you're bearish also because it's how you save your ass. So the growth can slow, but the revenue is not going down. It's not going you do when you're bearish also because it's how you save your ass. So the growth can slow, but the revenue is not going down. It's not going backwards. Right. What would have to happen for Salesforce to show negative revenue?

Somebody would have to have a competing product that they're giving away subsidized by a high stock price. Yeah, and they don't have – and someone – they would be so far behind on the land and expand. And it's not just Salesforce. It's a lot of these different chassis that are set up to be incredibly flexible for multiple different types of businesses. I think a lot of the problems that we've had with the high-flying, high-valuation stocks is that they either had no moat whatsoever, so no real competitive advantage, or they weren't able to grow their footprint once they get in the door. I mean, you want a company that can grow its tentacles. Why do you think IBM was such a great company for so long in terms of they would get in

there, they get their hardware in there, then they get the consulting contracts, then they get the service contract. It's the blob effect. And so I'm looking at that, but across different sectors and thinking about who's going to benefit from that much more than thinking about who's going to benefit from input costs continuing to be really high. Because otherwise you just buy a portfolio of commodities and just say, hey, listen, I don't think we're ever going back to 2019 values. So this is who put the Morgan Stanley thing in there. I did. Okay. So is that sort of similar to what Shannon's talking about? Morgan Stanley said in an inflationary world, we believe companies that have developed deflationary products and services will become increasingly valuable.

Yeah, that's what she's saying. Absolutely, yeah. And again, I think that – Well, let's go through these. Look over there, Josh. So we have developed a global shopping list of overweight-rated stocks that provide such – so these are companies that provide deflation to their given segment. So Salesforce is in here, right? ServiceNow.

XPO. Teradyne. Snowflake. Microsoft. So they have Chenier in here in the clean and alternative energy. I almost pulled the trigger on Chenier today. I think I'm going to end up buying that stock at some point. That's really interesting.

It's an interesting business. I was talking to Brenda about it. I just, I don't like the technicals of it, but I love it for the second half because I think it's going to be an energy-related showdown. And like three quarters of their energy deliveries were to Europe in the first half of this year.

LNG looks good. Does it look good though? Yeah, it does, it does, it does. But look at these lower highs. No, no, no, it's coming out, it's coming out. It's going to come out of that, right? I think so, it looks good. So at look good? It does. It does. It does. But look at these lower highs. No, I don't know. It's coming out. It's coming out. It's going to come out of that, right? I think so.

It looks good. So at 150, if this breaks 150, this could go to like 200. No problem. 150 seems to be resistance. Anyway, who else is on here? I don't even know half these stocks. Autodesk, I know. Microsoft.

But this idea that like people are going to have to spend regardless, but they're going to be spending on making this onshoring thing more palatable for profit margins I think is powerful. I don't just – I mean I know we're taking this in the context of manufacturing, but I think that there are – within the services industry too, there's an opportunity to create some deflation in terms of, you know, the delivery of services where I don't think it, I think the challenge will be in places like leisure and hospitality. I just don't, I don't know how you, I don't know how those companies are going to be able with the, with the amount of the percentage of their costs that are associated with, with truly with labor and that the labor needs to be well-paid to deliver an experience. Like I worry more about the margins for those, you know, because at some point you will hit a maximum.

You're staying in a hotel. They're charging you this room rate. There's no room service. That can't go on forever. Right. Eventually the demand for that will just go away. We've got Snap reporting a little bit, but Seagate missed EPS forecast by 16% and lowered next quarter's forecast by 38%. With no warning, they just straight up missed by 16%?

Seagate matter. It's such like a weird corner of tech. These stocks trade like eight times earnings. tech these stocks trade like eight times earnings it's it's it's it's the uh when you have to have a when you have to have a tech stock in your portfolio but you can only pay a certain multiple right that's like for a value tech manager super value like deep value the five deep value tech managers that that exist that's still they're still around uh snap's not out yet but snap's gonna be interesting because they're like, they are global ad. Snap is down.

I was looking at it today. Snap is down 87% from its high. What? I almost just bought it for that. Do you think that's justified? I don't find that justified at all. No, it's outrageous. I think it's crazy.

The problem is it's still a $26 billion market cap, and they're actually the only social media company that's worse at monetizing than Twitter. I think they have less revenue than Twitter. We talked about this recently. They have more users, less revenue. How? Because they suck. No, somebody gave us the—

They suck less than they used to, though. Somebody gave us the reason. It's because the way— Oh, it was Eric Jackson, I think. Maybe. No, Cantrell is. Wasn't it just last week? Alex.

Okay. Yeah, the way users use Snap, they don't go to the part of Snap where ads are shown. They use it to message their friends. They're not as interested in the content. You've got to slide over to the story part, and it's not in your face and not required. And it's not good content either. And there's not enough time in the day for that, right?

Yeah, you've got to prioritize your content. Let's do this SPACs are dead thing. Yeah, they're dead. We know. Oh, here. Snap's out. Okay. Snap.

Revenue a little bit light. It says Q3 revenue flat year over year, not providing guidance. Great. Good night. See you. Good luck. It'll double tomorrow. What are we doing?

Down 16%. What are we doing with this? Down 16%. That's mine. Oh, this is you? Yeah, this is me. Guys, snap, 16%. Down 16%?

Down 16%. Yeah. Nice. It was up 6% during the day. Down 16%. Yeah, 5.5% or so. NASDAQ selling off on that. That's pretty bad.

All right. Shannon, what's up? I want to talk about the SPAC IPO M&A thing. Yeah. How does that play out? Because you mentioned earlier in the show, we were talking about all this cheap debt, right? talk about the SPAC IPO M&A thing and you know how how does that play out because I we talked you mentioned earlier in the show we were talking about all this like cheap debt right LBO is great tons of M&A activity um put it to work let's go yeah but do you buy this so so if you think about

SPACs are would you argue with me the SPACs are dead. Oh, no. Now the lawsuits, now the SEC lawsuits are about to begin. For shit people did two years ago. It's going to come home to roost now. There are still consultants out there who think this model is going to come back, and I just think the investing public has had it with the SPAC model in terms of

the lack of transparency. It comes back every 15 years. Right. So for the foreseeable future, when I hope that we're sitting here talking to each other, it's dead. Yeah. IPO volume down 50% in the first half of this year. Revenue is down 60% according to ENY. I mean, but just think about the comps though.

This is comping to first half 2021 was insane. It was a carnival. But look at the Americas, which is basically the US. Yeah. That's why you think it feels worse because it's down 95% in the US. So hold on. So at this point in 2021, there were 287 IPOs and now there were 77 this year. It's down 95% the proceeds.

The proceeds. Holy shit. So IPOs in the first half of 2021 were 95 billion. They're 5 billion this year. I thought this data was insane. I thought it was insane. Mark it, dude. Mark it.

But that's why you think it's worse, right? That is insane. Because it's so much better. Over the line. Sorry. From a percentage perspective. The number of IPO, in any way you measure it, it's crazy. It's crazy bad.

So my view is that this doesn't come back, but I would be interested in your view on where, like, does M&A activity, despite the fact that debt's more expensive, do we use cash? Do we use cash to finance M&A? And does all this dry powder that's sitting around sloshing around in the VCPE universe, how much longer does that take to come out? Well, maybe this will help answer your question on whether or not these CEOs are just ducking for cover because they can,, if they were just bullshitting, then you would expect them to maybe start putting that money to work. If they don't put the money to work. Can I tell you? They're not going to put money to work and I'll tell you why. We know this. The historical

data is clear that M&A is pro-cyclical. The most. It's supposed to be counter-cyclical. More than buybacks. And opportunistic. No, it looks exactly like buybacks. People have the biggest appetite to do the biggest deals at the top of the market. So here's data from – this is PricewaterhouseCoopers.

$3.7 trillion is the number of cash and equivalents held by S&P 500 companies as of the end of 21. I do believe they'll use it to keep up the buybacks, but that's about it. $948 billion in cash held by PE firms as quote dry powder. PE firms might use it because it's use it or lose it in the PE world. Yeah. I mean, my view is that I'm hearing a lot about this incredible opportunity to buy cash-rich companies – cash-rich public companies because they're going to use it for M&A. We know that that's not the case. Does the flip side of that become –

By the targets? Yeah, by the targets. Who are the targets though? If nobody trusts each other's 2023 outlook, then who are the targets? What CEO wants to blow a hole in their own balance sheet based on someone else's guidance? None. At this juncture. At this juncture. It's too soon. So I don't think you'll see it. I could be dead wrong. Why are there 35 automakers all trading at eight times earnings and one of them trading at 50 times? Why does that exist? I still don't know.

Hey, tell me if one of these things are not like the others. So key points on CNBC's website about Snap. Snap missed on the top and bottom line in its second quarter earnings report. Duncan, I told you he was going hard on Snap. Snap set a plan to substantially slow our rate of hiring

as well as rate of operating expense growth. And third, finally, the company authorized a stock repurchasing program of up to $500 million. They're not going to do it. No. No, but they authorized it, and that's what counts.

Hey, this is the ultimate wink emoji. Okay. It's authorized. So I guess my question on the—if we're not going to see M&A, huge missed opportunity. Yes. It always is. Always is. But it's also a huge missed opportunity that people don't want to put their money in P and VC in this type of environment either. And that's, I think, even a bigger missed opportunity for investors in this environment. Say more. Because the there's two things that are happening. Right. Less competition to buy things, buy things and more scrutiny on what they're buying. So I actually think that it's not only being willing to buy and having the powder to buy,

but there's a bunch of companies that, you know, are going out for additional term sheets, right? Haircuts, 50, 60, 70, 80 percent. So if I'm running a fund, what I'm thinking is, okay, I've got some powder. To Josh's point, it's use it or lose it, right? No one's giving any money back, correct, if we're in the investment period. But I know for a fact that this two-year period, because I've had such a bad, you know, three or four years before this in terms of the deals that I found, I think that this creates this crop of meaningfully better targets because of the additional due diligence. And because, to your point, they're going to put their best people on these deals because there aren't as many being done right now.

So I would say that's even more of an emphasis. But this, again, this is the hardest thing in the world to do because of the agency problem. Like, the, like, We all put back. Getting aggressive now looks crazy to your LPs. No public companies are contrarians

in a bear market. Buffett. Fine. He's buying this Occidental Petroleum. Okay, fine. He's buying it like I've never seen him

buy a stock in a long time. He, is he 20% yet? I think he was 19 last time. Yeah, I don't think he was quite 20. He's buying it like I've never seen him buy a stock in a long time. Is he 20% yet? I think he was 19 last time. Yeah, I don't think he was quite 20. He's buying that stock daily. Facebook down five, Google down three. Oh, on Snap. Yeah, Snap's down 23.

I think TikTok is eating everybody's lunch in global ad market online, and now Apple's going to start running ads. Good luck. If Apple builds an ad business like Amazon did three years ago, like good luck to Snapchat. Like good luck competing with Apple for placement on people's iPhones. What do you think about Facebook? What do you think about meta? Like what do you – like how do you guys see that playing out? Personally, I think it's cheap for a reason.

Do you? Yeah. I think it's cheap for a reason. Do you? Yeah, I think it's cheap for a reason. I'd rather be a buyer than seller. No, I don't want to short it. I definitely don't want to short it, but I think it's cheap. Everyone's like, it's so cheap. Yeah, there's always a good reason for things being cheap, but there's a really good reason. But do you think that this whole, this, you know, this complete washout from a crypto perspective, NFTs, like, do you think this whole narrative around the metaverse, how long is that in the penalty box?

We'll find out real soon because if they're still burning – what was it last quarter? Was it $10 billion last quarter? But that's not even the problem. Throw the metaverse out. What iOS changes did to their business model all over the world is the real problem. And that's why it's 16 times earnings. Nobody gives a shit about the metaverse. You're right. Fair. Actually,

100% correct. Stock's down 60% from its all-time highs. Okay. Okay. I'm not saying none of that's priced in. I'm saying what changes that? Does Apple say just kidding? When's the last time do you think, like if you look at,

and I would say never, when's the last time that stock traded the way that it should based on the revenues that it engineers from advertising? Because I would say that the constant going from one issue for meta after another has never allowed. It's been years of one issue to the next. Dude, she left.

Why am I the only person that gets this? She left. Why would she leave? She's the smartest person. She's not only the smartest person in the room at Facebook. I mean street smart, not Zuckerberg smart. Not only is she the smartest person there, she's the smartest person in most rooms she walks into.

She left. She's gone. She sees most rooms she walks into. She left. She's gone. She sees it. Everybody f***ing sees it. That's what the stock, that's the stock price sees it. Pointing to an earnings multiple on Facebook tells me that you never understood what drove Facebook to begin with.

What always drove Facebook was not the valuation, right? And I always said this about Facebook. People are like, oh, I would buy it, but it's expensive. It's like, dude, when that thing is cheap, you ain't going to want to own it because that means the Roman Empire is falling down. So that company is in huge trouble on the Instagram front and Instagram is all it has. I hope it gets killed. I don't know.

I'm sorry. I hope not to be shot in front of Facebook holders, but like who likes that company? Come on. Nobody. That's the thing. Nobody does. It's Yahoo. Come on. Just say it. I'm sorry. I hope, you know, not to be shot in front of Facebook holders, but like, who likes that company? Come on. Nobody. But that's the thing, nobody does. It's Yahoo. Come on, just say it.

It's Yahoo. Well, it's evil Yahoo. But that's where it is now. Competitively, it's defending itself on all fronts. It's literally at this point. Oh, it's just under assault

by TikTok. It used to be assaulting everybody. It was eating into everyone else. Now, it's the thing that everyone else is attacking. And skillfully, I might add, they're losing to Snap on messaging with young people.

They're losing the TikTok on time spent on the app and any other metric engagement, blah, blah, blah. They're fighting on all fronts. They're fighting. And they never really had to to this extent. And she left. So what's going to happen in this space right which we're talking about this contagion and you're saying like there's there's not enough there's not enough eyes on these apps there's not enough in looking at the stories the

content's not very good so do we get further consolidation because from my perspective the ftc is never going to approve another it takes so long that's such a great question it takes so long for that process to play out. From who? From Facebook? Another Facebook purchase? They've bought everyone. But they're not going to be able to buy anyone anymore.

No, they can't buy anybody. So what's the end game for a Snap? What's the end game for Twitter? We're going to talk about it, right? I think Microsoft is going to buy Netflix. I think we're going to see massive— And they'll be able to do that? Yeah, they're the only one of the fangs that could buy something because they don't have any media properties.

They don't have any, yeah. Yeah, and they've never had a problem doing a deal. Like Microsoft fought their antitrust battles 25 years ago. Years ago, yeah. I don't know what the ownership looks like, but I feel like Reed Hastings is not going to be like, yeah, buy us, we're done.

No, it takes forever. It's a five-year process of just rationalizing multiples. Twitter is such a joke. The product sucks. In terms of like monetizing it, the promoted tweets are so out of touch. The shit that I see in my stream, I'm on that app for 19 hours a day for 10 years. They have no idea who I am.

None. So, all right. So then what's the end game for owning one of these? What's the end game for owning Snap or Twitter? Hope. Well, Snap – Snap has – Listen, Snap has huge engagement.

Yeah, just hoping they can figure it out. It's just not that profitable. Twitter seems hopeless at this point with the board. Who wants to get involved with that nonsense? I think we're going to go – I think we're going to skip ahead to favorites because otherwise we've been keeping you for way too long. instance uh i think we're gonna go i think we're gonna we're gonna skip ahead to favorites because otherwise we've been keeping you for what way too way too long in a room with no air conditioning

started uh we could we could go we could go on forever um let's do favorites michael we're gonna start with you this week okay everything no no no i didn't want to tease it was it was for myself everything bagels no no i do love Everything Bagels. Okay. Last night I saw a movie, and it was like a top ten holy shit I wish I was in a theater for this movies. I watched Everything Everywhere All at Once. Have either of you seen that? Is that the Korean one?

Yes. Okay, I didn't see it. No, no, no. It's based on a Chinese family. Chinese. Okay. I didn't see it. Either of you? Gentlemen? I haven't seen it. Okay, I didn't see it. Well, no, no. It's based on a Chinese family. Chinese. Okay. I didn't see it. Either of you, gentlemen?

I haven't seen it. Okay. I haven't seen it. So it was, you have to bow down to the creativity, the scenes, the, it was epic. It's a woman in the multiverse? It was beyond impressive and epic. Really? What is it on?

I bought it. I bought it for five bucks on Amazon. It was not necessarily my cup of tea. Like, I think I didn't love it, but I respect the shit out of it. And it is absolutely worth seeing because it's an experience. But damn it, if I saw it in the theater, I would have walked out and be like, that was fucking crazy. Is it subtitles? Mixed.

Okay. You understand what's going on, though? It was something. It was a spectacle. You know what they said Endgame was like the most ambitious crossover? This was the most ambitious, audacious movie I think I've ever seen. Wow. Really?

That's a bold statement. It was wild. Not my favorite movie. I didn't love it. Right. But holy shit was it something. But you were glad you had seen it. It's going to win awards for like best cinematography or stuff like that.

Wait, you're saying you're glad you didn't see it in the theater? No, no, no, no, no. It was my biggest, fuck, I should have seen that in the theater. Oh, I got you. It would have been even better in the theater. But it would have been something that you would have seen in the theater. No, I probably, I'm going to see, no, I definitely would have seen this in the theater. I just missed it.

But it would have blown my mind if I saw it in the theater. I think when it came out, people weren't in theaters yet, right? No, no, no. Wasn't it like a year ago? It was April. Oh, okay. So you could have theoretically seen it in theater. I just missed it.

But it's – so again, not my favorite. Not even close. I'm not even sure that I loved it. But it's worth – actually, I didn't love it. But it's worth watching. So I know you just came back from Italy and we talked about that before. Yeah. Is that your favorite or you got something else?

So I do have something else. So I had the opportunity to see an incredible poet that was honored at an event last weekend. Are you trying to say you went to a rap concert? No. So you'll like this. An actual poet. An actual poet. Sonia Sanchez, leader of the black arts movement.

Her poetry. Sonia Sanchez. Sanchez the black arts movement um her poetry sonia sanchez yes collected poems that's a great book um had the opportunity to see her poems are meant to be like performed yeah so she's i think 87 i saw her perform one of her poems one of her poems live last weekend and i'm captivated now i never read anything from her prior to this. I'm actually not a huge poetry person. How did this happen? Backstory, please. Yeah. So there's a group, the McDowell Group up in New Hampshire, and they essentially allow artists to come and stay on property and work in their studios. Film, writing, music, architecture. Okay.

And every year they honor somebody. So, like, you know, past honorees, like people like Toni Morrison. Like last year was Rosanna Cash. Like Rosanna Cash, it's an incredible group of people. So she was the medalist this year and I went to the ceremony. And I had no idea that she was going to perform one of the poems. Okay. And now I can't put the book down. Why? So, so what, so what is it that struck you to this degree? Was it the reaction of the people around you to the performance or it was like really your own? It was, she, it was the gripping reality

of the way that she writes. Like there are haikus in there. Yeah. And that you read the words and like just every single syllable speaks to you. I mean, not dissimilar to rap, right? You know, you get that incredible emotion. But I think given her history, because they went through her entire history of what she had done in education. She was an educator. She was a writer.

And having that context and then hearing her perform, like I just feel like now when I'm reading the poems, it's incredible. That happens to me sometimes when I go to – so I like visual art. When I go to a museum exhibit and there's a huge difference if I had read a lot about the exhibit and the artist before I go versus just going in cold knowing nothing. I often don't get it. Like it won't resonate with me if I have no idea why it's important or why it was like a big movement within whatever. So like I definitely understand what you mean. So having the history and the backstory

and then the performance is a big difference. if you pick this book up, like read her story and read what she's done and her life experience and then read the poems because they speak to you

in such a different way. And yes, I loved Italy. I, amazing. I know. Don't be scared. Everyone's going to tell you

it's going to be super crowded if you're there. I'm a New Yorker. I don't give a shit. No, I mean, just in general for the listeners. Like, you'll hear, you know, it's crazy. Europe. Travel was better there than it is here.

And it was incredible to be out. And Italians are amazing in terms of making you feel. So this is a good time to tell the audience. We will not have a show for the next two weeks. Oh, that's right. the audience, we will not have a show for the next two weeks. There will be no Compound and Friends for the next two weeks as I will be traveling extensively in Italy. I won't be there for

two weeks, but we are on a two week hiatus. But we have What Are Your Thoughts on Tuesday. We're still doing What Are Your Thoughts Tuesday and Animal Spirits is still going, right? We never stop. Okay. So this show is on hiatus for two weeks but plenty of content.

All right. I'll do my favorites real quick and we'll get out of here. I watched back to back Bill Burr's new special on Netflix live at Red Rocks was the greatest thing

I've ever seen him do. Really? Oh my God. He's getting better. He's like scary good now. He's, I'm telling you. I watched it. you didn't like it as much were you on the phone while you're watching no no no i was on my couch no i think he's he's

excellent he's always but i actually think he might be getting overrated and that's no disrespect to him it's just his status is elevated i think to an unfair level i don't i don't listen to his podcast because he's working out jokes and rambling and I don't have time for that. This was like... This material was strong. This was like strong Bill Burr material and just every joke worked for me. I don't trust the government.

But then I watched Dave Chappelle did... Next level. Yeah, so he went back to his alma mater. He went to like a performing arts school in DC and they wanted to name the theater after him. But then some of the students revolted and they were like, he's homophobe. He's obviously not or he's transphobic or whatever. And then eventually the student body, I think, voted. And of course, they want to name the theater for him. No spoilers. so I won't say anymore but he gave like a kind of acceptance speech

and it's mostly not comedy he's almost like Mark Twain yeah he is Mark Twain he's like everyone throws this word around but he really really really is a genius so you're laughing because of like he might do something with his face but the things he's saying are like

extremely true it was a monologue it wasn't a stand up special but there was obviously like jokes in between, but he's just so beyond. Yeah. Anyway, I loved it. I wanted to share a sleeping hack really quickly also that I've discovered. So I've talked about sleep apnea on the show before and snoring and all this shit. It turns out books on tape, specifically a tale of two cities.

It is the most boring, like literally I cannot. So this is narrated by a British guy. It's just this horrifically bad, boring story. This is Chaz Dickens. This is Charles. And I like Dickens, but listen to me. Audible, a Tale of Two Cities. Put it on.

No phone. Like put the phone next, put it on and put the phone next to you. Use headphones, and you will wake up with the imprint of the headphone. That's how hard you will fall asleep. You don't need Ambien. You don't need Xanax. You don't need alcohol. You don't need, what's that other shit, the gummies?

What do people take? Weird. CBD? Melatonin. Melatonin. You don't need any of it. You need A Tale of Two Cities on Audible. I'm telling you.

It lights out. And actually, you will sleep through the night. Like get into this habit. And the good news is you can go back to the beginning of the book if you get through the whole thing, which you can't. It's pretty long. You definitely can't. But if you do,

just go back to the beginning and it'll knock you right back out. All right, that's all I got for favorites. Shannon, we love you so much. Thank you so much

for coming back. We want to have you on on a regular basis. Is that okay? That's fine with me. Can we get you back here? Absolutely. Okay.

Thank you. Fan favorite. The audience loves you. You're a star on CNBC. You are killing it. Thanks to you, my friend. No, no, no. Not thanks to me.

Thanks to you. You did it. You are killing it at your new role, CIO. You're a big celebrity. And you're coming to Future Proof. Absolutely. So now that I know you're coming, I've got to find something for you to do there. I can't just have you milling around like a civilian.

Having fun? All right. Come on. All right. Shannon Sikosha, ladies and gentlemen, round of applause. Thank you so much for coming. Duncan, any announcements before we go? I've got a review.

Let's do a review. Okay. So Perry Masterflex wrote, edifying. It's his real name. Edifying. First time, long time. It's his real name. Edifying. First time, long time. Excellent podcast. Must listen.

I, too, learned to ride a bike in the Merrick Jewish Center parking lot. Boom. This guy really listens. And then last one. I'm bullish on this podcast. Excellent show. And Josh reminds me of Vinny from The Big Short. Keep it up.

Is that good? Vinny from The Big Short? I think so. He's from Succession. He's the Kindle right oh oh word isn't he that actor Jeremy Strong

yeah we're gonna have all of the real life people that were in the big short are coming to Future Proof to do Dan Nathan's podcast oh really

oh cool so I think so on the tape podcast friends of ours oh Danny Moses they're gonna get he's gonna get like all of the other people that it was based on. Not Bari.

No. No, definitely not. So anyway. All right. So you're going to be at Future Proof. Thank you for the reviews, guys. Keep the reviews coming. We appreciate them.

They mean so much to us. They help the show. If you like what we're doing and you're learning something each week and you're having fun with us, go ahead. Five star the shit out of the show. Write something as a review, and we will love you forever. Okay, thanks for listening. We will be back, not next week and not the week after, but the week after that. It's on. In the meanwhile, Animal Spirits is still going.

We got you covered. Great job, everybody. Nicole, John, Duncan, and we are out. Take us out. Snap. Negative 147 million. That's pretty fast, bro. What a disaster.

Stocks down 28%. No, it's not. Tonight? What do you think it is? Oh, my God. Don't know. It's not me. Guess what Alphabets can do.

It's not 25 million. Guess what Alphabets can do.