The Compound and Friends - Dan Nathan Predicts Recession

Episode Date: March 3, 2023

On episode 82 of The Compound and Friends, Nick Maggiulli and Downtown Josh Brown are joined by Dan Nathan to discuss earnings season, yields, mortgage rates, Buffett and buybacks, shorting private equity, world stock markets in 1899 vs today, how millionaires invest their money, the Silvergate collapse, and much more! Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Nick Maggiulli and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements 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 see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. 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/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

What I find really interesting about podcasting is, like, I listen to them, okay? Like, I love the medium. I've been listening to podcasts for years, and I think there's a certain formula that works on certain topics, you know what I mean? Like, there has to be a level of energy or interest by the people speaking. Otherwise, your listeners are just not going to be interested. You know what I mean? So one thing that's interesting is that a lot of people, when they're a guest on a podcast, they automatically assume it's an interview. Yeah.

And they wait to be asked questions like it's a TV appearance. Yes. That's not a podcast. No. Well, that's what I think you guys do so well at. You really have created an atmosphere. Like one of the things we're struggling with right now is that in the winter, Danny's been down in Florida.

You know what I mean? And it's just like you know having like remotes just sucks you know i know you guys want to do it all back in you know we don't do it we don't do remotes i know it sucks we we did we did like in during the pandemic but um yeah we had to you had to you gotta tell danny uh change his lifestyle. He moved to Boca. Like, are you kidding me? That'll be me. That'll be me, but seven years.

Yeah. Are you really going to move once the kids are gone? You're going to Florida? I won't be there all year, but I'll be there in the winter. Yeah. I just don't enjoy Florida, to be frank. I mean, I like going for Super Bowls. What is not to like about Florida? If the choice is between shoveling snow

in the suburbs of New York, which you don't have to deal with, but I do, or that, it's the most obvious. That's why I'm never leaving here. So I'll tell you what I'm going to do. So I am an empty nester right now.

My oldest daughter is a freshman in college. My youngest daughter is at boarding school. She's a junior. And I've had the best, like like seven months of my 23 years married. You want to put this out there? No. Are we taping right now? So no, it's been absolutely amazing. I don't think the girls listen to the comments.

Actually, I told you this, that my daughter, who's a junior in high school, one of her professors brought up a comment that you made. You said this on the NASDAQ tape. She was embarrassed. She was embarrassed in the back. She was embarrassed. You saw her, right? She's like, Dad, I told you. I know. Do not involve me in your shenanigans. She was like, nobody says that anymore.

No, but we have just been doing awesome shit. Last weekend, it was in Tempe, Arizona. I saw Eddie Vedder, Weezer, Green Day, and Marcus Mumford. Oh, you went to the innings? Innings Fest. Yeah, it was awesome. That's my friend's – my friend works at Live Nation.

That's his thing. It was awesome. I'm going to Jazz Fest in May. I'm just doing whatever the hell I want. Can I tell you something? Can I tell you something? My wife and I are in the most stressful period we've ever been in because of the age of my kids.

One is 14, one is turning 17. My daughter doesn't drive yet. I'm still driving both kids everywhere around the clock. The problems of teenagers are 10x the problems of toddlers. Everything is mental. When you have young kids,

it's physical. You have to constantly be carrying them, holding them, feeding them. When they're teenagers, it's all emotional distress. Yeah. Or around the clock,

it never stops. Yeah. If we have an afternoon without the kids, like if we're just like, hey, let's just go out to lunch. Let's just get out of here. We like, all of a sudden,

it's like we're back in the early days of dating. When you fell in love. Like we like each other, it turns out. And then one of these f***ing a**holes will call or start texting her some bullsh**t I call them a**holes that's fine I will tell you this this is and this is the the truth about like going from you know having teenagers to them out of the house every morning that I wake up I don't fill my headspace with, have they eaten? Have they taken their meds?

Do they know where they're going? Are they going to get to that doctor's appointment? What time's the game after school? And then, okay, so that's an hour every morning that my brain is just freed of. But you don't meditate every morning like I do? 17 years. I did headspace for like six months.

And then the last hour of the day, you're not like, dude, press send. Get that paper to the teacher. Go to bed. Did you do this? You know what I mean? That's gone. Whose sweatshirt is this? Put your laundry away.

All that stuff. Right. So listen, I'm not in any rush. I love having my kids with me. I know that I'll be very lonely when it's over. But that is the silver lining. If you're still together with your spouse, it's like a calm, it seems. So the friends that I have who are in their 50s whose kids are in college already, they're all on edibles all day.

And they're just checked out. I'm on edibles right now. And I know they're listening to this. And you know who I'm referring to. They're just checked out. I'm on edibles right now. And I know they're listening to this. And they know who, you know who I'm referring to. They're just checked out. But like they did it. It's like in a, remember when Al Gore lost the election in 2000? And then he like grew a beard.

It was like an achievement beard. Even though he lost, it was just like, this is my shit now. That's what my friends who have just had their kids go out into the world. I'm still keeping it together. I mean, I'm in that category. No, no, no. I'm not saying like falling apart. I'm just saying it's almost like it's an exhale.

It seems like for me from the outside, I wouldn't know. But that's what it looks like to me. Yeah, no doubt. I mean, but again, I think your point is that the teenage issues are so much more complicated than toddlers. And that's really like it takes a lot more of your brain power. The simplest way to state it is little kids. Nick's Nick is now never going to get married. Little,

little kids, little problems. Yeah. Big kids, big problems. Yeah. And by the way, my kids are on a roll.

Like, you know, they do everything that they're supposed to do, but there's still teenage kids in America. And it's, it's horrendous. I'm with you. A lot of dads with daughters.

I know you have two daughters. A lot of dads with daughters are like, nobody's good enough for my little princess or whatever. Or, oh, I'm going to walk to the front door when the doorbell rings with a shotgun when she gets picked up. I'm like, is there a boy out there who will take this girl away from my wife for a night? Like, just go out to, I'll pay for dinner. Just take her out on a

date. But you know what's really, again, as a father of daughters. Love you pumpkin. She's not listening. What I think is interesting about that, I just think it's a really important part of socialization for people to have girlfriends, boyfriends, you know what I mean? At that age, and I think that COVID stripped

a lot of that stuff. I think social media and the phone strip a lot of that stuff. And it's very different than when we were teenagers. Oh, 100%. We went on dates in high school. Her and her friends, they hook up. They don't go on dates. Nobody gets picked up and taken to a movie

and dinner and then dropped off at home yeah they go to parties things happen i don't want to know and then like i'm like is this so and so's boyfriend or so and so's girlfriend she's like that doesn't work that way no i'm like are there any is there dating is there does anybody call the house and ask may i please speak with she's like nobody's calling the house and ask, may I please speak with? She's like, nobody's calling the house. No one's calling. No one's calling. Do you remember how nerve wracking it was calling a house phone of a girl that you were wanting to ask out or something?

You have to hang up on the dad. Yeah, exactly. There's just no possible way you're having that. Really? Yeah. You would have talked about the Knicks for like 10 minutes. No, that's you. I could see you becoming best friends with the mom and dad of the girl that you like.

I was always great with the parents. Oh, I was like waiting for the parents to pull out of the driveway. Yeah. And then like stopping by. I always did really well with adults, whether they'd be teachers, not coaches. Not me, my friend.

Yeah. Not me. How we doing, guys? New studio. Who this? It's really dope. Yeah. As the kids say.

Almost there. So let me point out some of the features um you're a podcaster yeah so we did a very dark wall which i think accomplishes two things the first is it stops the reflection all the light bouncing all over the room so i think what you'll see on youtube is a better lit version of us. Yeah. Right? Because these guys can now control the lighting better. That's the hope. That's the hope. If not, we'll paint it back. Wait, what else is there?

What else do we do differently? I mean, so the wall is mainly just aesthetic to look nicer in the background, but also, yeah, to prevent reflections. We also went away from the toys. We now have color-coded books on the wall. Still a few toys. We have whatever this Andy Warhol-inspired

mouse or bear is. That's called a bear brick. Bear, okay. Yeah. And then we have, yeah. Do you know what this is from? I'm going to tell you what this is from. Accent lighting.

Do you know what this is from? Go. Did you see the Blade Runner 2049? Close. Quentin Barrel. But do you know, do you know, spoiler alert. Do you know... Spoiler alert.

Do you know this little... No, no, go ahead. No, but there's a little thing that Gosling's character is... I only saw it once. I guess I gotta rewatch it. It's a great movie. Is the new Blade Runner better than the new Dune? I love the Dune. The same director. Right. Which one's

better movie? The Dune was an amazing movie. Amazing. It was mesmerizing. Did you see it? I haven't seen it. I've seen it six times. Oh, wow. Right. Which one's a better movie? The Dune was an amazing movie. Amazing movie. It was mesmerizing. Did you see it? I haven't seen it. I've seen it six times. Oh, wow. Okay.

What's so good about it is how bad the first one is. Oh, yeah. Like, the effects. Yeah. It was like a 1983 movie, and it just had no hope. Sting was in it. Yeah, it had no hope. Michael, what was that director?

Dennis Villeneuve. Villeneuve. Yeah, Villeneuve. Yeah, yeah. Great movie. All right. We ready to rock and roll? Let'seneuve. Villeneuve. Yeah, Villeneuve. Yeah, yeah. Great movie. All right, we ready to rock and roll? Let's do it. I think so.

All right, we don't have Dan here forever. Yeah, let's do it. I got to go do Fast Money. Are you on tonight? Yeah. Okay. Want to give us some stock picks? All right.

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. Episode 82. Wow.

Dan Nathan is here. And we have a special guest host today. Nick Maggiuli is here. Hello, everyone. John is back from Belgium and France. What was the highlight of the trip? What's the best thing you did? Don't say waffles.

No, there's actually a crazy carnival in Dunkirk, which was a surprise. In Dunkirk? Yeah. In the north of France? I thought he was going to say Royale with cheese. Royale with cheese. Duncan is here. Nicole is here. Got a new look studio today.

Let me introduce who is in the room with me. First of all, filling in for Michael Batnick, who is in Arizona at the moment, is Nick Maggiuli. Nick Maggiuli is the chief operating officer here at Red Holds Wealth. Nick has one of the best, I would say one of the consistently,

one of the best, most consistent blogs in all of finance. It's called Of Dollars and Data. If you follow me on social, you have probably seen me every Tuesday when he publishes sharing that link. Nick is also the author of the book, Just Keep Buying, which came out at the top of the market. Is that accurate? April, April 2022. So not the recovery in 2022 before it crashed again.

Dude, it's the right, listen, it's the right message. It's the right message. But the timing was like, you know, you can't control that. Yeah, of course. But I think if people followed what you said and they kept buying throughout 2022, and you can correct me if I'm wrong, they are higher, right? On average, I don't know. Actually, if you started buying at the beginning of 2021, right,

just like let's say same amount every month, $1,000 a month, you did that for all 24 months to the end of 2022, you're Just like, let's say, same amount every month, $1,000 a month. You did that for all 24 months through the end of 22. You're only down like $100 right now. It's like very, like just into the S&P 500. So even though like the market is down since the beginning of 21,

if you're buying every month, you're not down that badly or something. Where's the book? Do we have that? Give me this. I'm going to let you leave with it. All right. For the cameras,

this is Just Keep Buying. If you don't have a copy yet, I don't really know what to tell you. Nick is an incredible writer. And our guest today is Dan Nathan. Dan is the principal of Risk Reversal Advisors. He is the co-founder of Risk Reversal Media, where he is the co-host of the second best financial podcast. It's called On the Tape.

Also, OK Computer, which is your tech podcast. Yes. OK. You got with Packy? Packy's been doing it. We have Katie Stanton, Rick Heitzman of First Mark, a whole host of great – Jeff Richards pops on. Yeah, so it's good.

And what's Market Call? Market Call is what Guy Adami and I do every Monday through Thursday at 1 o'clock live. Where? It's a video streaming thing. You'll find it on our YouTube. We just launched a YouTube channel. Okay. Yeah, so we do that.

It's very visual. YouTube's going to be big. Carter Braxton someday. Carter Braxton Wirth joins us. Liz Young joins us. Okay. It's really good. I haven't gotten the invite yet.

Yeah. I assume maybe it's in my spam filter. It must have hit that. We'll check on that. All right. And you're a CNBC Fast Money contributor, which is where you and I first met. How long have you been a contributor? Since 2009.

Now, are you salty at all at the differential in what I get paid versus you? Or are you okay with that? I feel pretty good about it. Okay. All right. Wait, do you know what I get? All right. We'll talk offline.

I think you and I met on the set of Fast Money originally. Probably 10, 11, 2011. 10 or 11. Makes sense. Sounds right. Okay. Awesome. Here's where we're going to start.

The S&P fell below its 200-day moving average, and it spent pretty much all of 2022 below its 200 day. And really, it seems to be hugging this area. 3,900, 4,000, 4,100 is the top of the range. The range seems to be narrowing, but it's not quite falling apart. How important is this to you? So I think that's a theme that's really important going back to 2022. Like, like it wasn't disastrous, like meaning like to Nick's point, if you kept

on buying the whole way, the duration of the drawdown at its lows, the S and P was down 27%, right? But October, right. And, and, and it had a nice rebound into the end of the year. And so it didn't feel a panicky panicky. The VIX never got meaningfully above 25. That 200-day that you just referenced was technical resistance to the people who care about that sort of stuff. So the fact that we're talking about it right now, I think, is important because we have a 20 VIX. But the most important thing is that we have a Fed funds that's about to be over 5%. Okay. And our lifetimes, I mean, like since we've been in the markets, okay. So the last 20 or for me, like 25 years,

the, the, the Fed funds has rarely been above, you know, that level, which I think is really interesting. Right. So, um, you know, it's important right now because I think there's just a whole heck of a lot of uncertainty about where the economy shakes out, how we do with rates where they are, where valuations are in the stock market. Okay. Like that's what's being – like that's the battleground right now. have five or six stocks that all look, as companies, very similar to each other, right? When you think about the largest ones that make up 25% of the S&P and they make up 40% of the NASDAQ, and they are still driving the train. So that line, whether it gets breached or whether it holds, really, in my opinion, is dependent on a handful of stocks still.

Still, even though market cap-wise, they're smaller? Yeah. I mean, they're down, let's call it 15% on average from their highs. I know Google and Amazon are down a bit more. Tesla's obviously down a lot more, but Apple and Microsoft, the relative strength that they've shown, I think is really important. And those two stocks are about $4.5 trillion in market cap. Just think about that. It's probably one and a half X the entire Russell 2000. Right. So what, so when you, when you see the divergence in, not that like, you know, my shop, we don't predict where the S and P is going to end the year, but that's what a lot of attention is on just because people like to have some semblance of a guess that makes sense to them. When you look at the dispersion between where the strategists are

and you look at the fact that on balance they're negative, like, isn't that the most bullish thing in the world? Like, it's hard to be bearish in the presence of that much professional bearishness. Yeah. Well, so we just had Tom Lee, a fun strategist. I know he's been on your pod and you've known him for a long time. Not a bear. And just, you know, I mean, I've known Tom a long time. I have a ton of respect for him. The amount of qualitative work that he does just talking to people and then the amount of quantitative work they do as a fund, right, looking at the markets and arriving at their outlook is really impressive. But he is often labeled as a perma bull, right? And so that doesn't really change his tune.

So our viewers or our listeners have been saying, listen, you guys got to bring on somebody who does not confirm your views because every week it's this strategist after that. And we can't find too many of them. That's your point. You, Guy, and Danny are pretty bearish. Yeah.

Okay. And we have been. And you have been. It's not new. So we started our podcast in January of 2021, Danny Guy and myself. And again, I mean, I think we've been tactically long individual names. We've been tactically long parts of the market. We've actually made calls where we've said, we're done with our shorts.

We think we can rally. We did that in June of 2022. We did it in October of 2022. And again, we've been wrong about a lot of things. We've basically been right about most risk assets for like the last two years. What we've been really wrong about was when the NASDAQ was up 18% about a month ago and the S&P was up 10% a month. We didn't really kind of change our tune. You know what I mean? And so, but now I don't know about you guys. I don't feel so wrong about that because I actually feel going back to what we started this

conversation about. I think what's about to happen with rates, what's about to happen with inflation, what's not happening with unemployment at 53-year lows, what's happening with a Fed that now is contending with something that there hasn't been a Fed share that's had to deal with a very long period of time. I think that's the thing, that level of uncertainty with the S&P at 18 times, basically the 10-year average. And really importantly, it averaged the S&P 10, it averaged 18 times. And the average interest rate in the Fed funds was like, you know, under 1%. On the last 10 years? Yeah. Like, think about that. So, like, something's got to give.

And so, we've just not been able to find too many bullish strategists. And some of those other permabulls, they threw in the towel late last year, like almost near the lows, which I thought was kind of interesting, the timing of that. Right. If I told you that we would see in one year Fed funds rate go from zero to four and a half percent, would you assume that the stock market would still be able to sell at an average 10-year historic multiple of 18? I would not have guessed that. Yeah, I wouldn't either. I mean, when you look at the 200-day moving average, though, yes, the S&P is now below its 200-day moving average, but two-thirds of the time, it's a false signal. Two-thirds of the time, the market does not crash,

does not roll over. Only one-third of the time, it does. not crash, does not roll over. Only one third of the time it does. And that's how you can, some trend following strategies can make money, right? So it's like, if 66% of the time, this goes back to like the early 90s, you can run it even before that, you know, you're going to be, you know, it's a false signal. So like I go with base rates and like most years the market's up and I'm probably, if you need a bullish person to come on, you can probably talk to me about that. Well, that's one thing that's interesting. And Josh, I'm sure you hear this all the time, is that if you're a bull, I mean, one of the pillars of that bull case of forget all of the quantitative data that hopefully goes into their S&P earnings estimates and all that sort of stuff is the fact that, to your point, Nick, is that the S&P is rarely down two years in a row. And my – so this is part of my market DNA. Okay. I came into the business in 1997. I was at a hedge fund that traded long short and we would turn, you know, like, like we would turn on the market and, you know, for two days and we'd get really long and, you know, and we were just trading every which way and there was- Playing it like Buffett. Yeah, but there was- Like it.

And listen, I started out working for Steve Cohen I was 10 feet away from so it's kind of like you know the Michael Jordan of trading back then but this huge bubble was inflating and everybody knew it at the time

there's some kind of like notion that like oh no people didn't recognize it it just popped eventually no everyone everyone knew it but they didn't know

how much further it would go and they all assumed that they would get out before an ending correct right and that was largely retail okay that was largely retail. Okay. That was largely retail, like who missed the boat because most institutions did just fine with that. And I guess my point is, is like, it was the hangover period of the dot-com implosion that is just scarred me for kind of

life because, you know, 2000, no one believed that March was the top, right? And there was some huge rallies. And you guys have seen all the data about the bear market rallies because that's a lot of people are trying to draw an analog to what we've seen. 20% rips the whole way down. Lots of them. There were some 30% rips, okay? And so think about 00.

No one believed it until the very end. And then at 01, it just felt really bad. And then, you know, we capped by, you know, 9-11 and then Enron and all this sort of stuff. But 2002 was the worst year of all of them, felt the worst. So think about a protracted bear market like that. If you're an investor, that's going to turn you away from a lot of those things that you've come to believe in much easier to predict times. And then it just goes back to the financial crisis where of all of the devastation that was done, literally the financial world as we know it

was brought to its knees and the S&P was down one year. One year. Yeah, that's it. 09 was an up year. Yeah, like that's it. And thinking about even- And 07 closed near the highs.

Yeah, but think about 2020. Okay, 2020, we had a black swan effect. That term gets thrown around all the time in markets, right? We literally had the only one that any of us will ever live through, right? A pandemic. And the stock market ripped and closed up that year. Yeah. Now, if you're somebody that would remain bearish throughout all that, though,

your answer is that's not because of earnings or that's because of extraordinary policies that were necessary to save the world. But my answer is like, well, it doesn't really matter, does it? Because it happened. It doesn't matter. Right? So, look, I would have guessed that the October low and then the rally off of that is another bear market rally.

But so far, I'm wrong. I'm in the same boat as you. All right. another bear market rally. But so far, I'm wrong. I'm in the same boat as you. All right. So, Nick, if the S&P dips below that 200-day moving average, it goes back to that cluster at 3,800 where we ended the year, okay, in December. And let's say we're on our way back to the October lows, which is like 3,550 or something like that. The next target is 3,400. That was the pre-pandemic high in the S&P 500, February of 2020. Think about that. I guess you got to go back to some math

here. I know that no one said there was going to be any math here, but think about where S&P earnings are going to settle out for 2022. They're going to be like $225. And so on an 18 multiple, it kind of gets you kind of where... So right now, some of the most bearish strategists, some of the smartest people that I know on Wall Street, Mike Wilson, for one, I think is, and I've known Mike for 25 years, okay? And he thinks his base case scenario is $200 in earnings. So, okay, we're not going to have, you know, we're not going to have a trough multiple with trough earnings. That's not going to happen, right? We're not going to get, we're not going to see $195 match up with 13 times. And I think it was, was it Tepper or Leon Cooper?

One of these guys came on your show, I think recently, and was talking about how they could see an S&P drop multiple 13 times or something like that. 13 times $200 per share in earnings is what? 2,800 S&P? Like in that range? Yeah. And then some of the technicals, if you go, I had Carter Wirth, we're charting on our market call yesterday, and he actually came on Fast Money. And he basically, if you do a trend channel on a log basis from the 2009 lows, you take that low down at 666, right? Remember that one? And you bring it, it actually lines up with our pandemic low in 2020, okay? So we're at the midpoint of that range.

And that's a mathematical formation when you think about it on a log basis or whatever. So we're at a really critical technical point for the S&P 500 in and around, let's call it 3,900 where we are, and then to the bottom end of that range gets you down to like 2,800. Let me give you the bullish take on that. Yeah. Okay. Everyone's looking at the same thing here. Well, no, no, no, no. So let me give you the other side of that.

Everyone's looking at the same thing here. Well, no, no, no, no. So let me give you the other side of that. A, the Fed just threw 500 basis points worth of rate hikes at us in 13 months. And literally nothing fell apart. Not in credit, not in the stock market, nothing. Even housing. So mortgage applications are down.

No shit. Refis are down. No shit. Plenty of demand for houses. Okay? So really, they couldn't crash bonds. They couldn't crash stocks. They couldn't crash the housing market materially.

All these things are lower. We understand that. So that's one. Most of the bearers, if I would have given them that amount of rate hikes in that condensed period of time, they would have said Dow 20,000. Right? Okay. So that didn't happen. that condensed period of time, they would have said Dow 20,000. Yeah. Right? Okay.

So that didn't happen. Number two, you now have companies that have figured out the playbook for this environment and look at fucking Salesforce this week. Yeah. They're not growing.

But they're cutting costs. That's all they're doing. And that's good enough. Look at what that's doing for stock prices. Look what it did for Meta. Look what it did for Netflix. Yeah. Look what it did for Disney.

Look what it... So if you're bearish stock, forget about the economy. If you're bearish stocks, what's your answer to that if 300 of the S&P 500 companies adopt that playbook and keep their earnings growing

despite no revenue growth? It's time. Okay, so think about that. If you're talking about cutting costs, that means jobs. If you're cutting capex, that means stuff that flows through the economy. Okay, so that's the thing that we haven't seen yet. And we also have unemployment at 53-year lows.

We've seen it in the headlines, though. We have seen it in the headlines. How many days a week are you seeing unemployment headlines? Listen, I will— All the time. I will give you that, okay? I will give you that 500 basis points and increases, okay? And the S&P is literally only down 10%

from where it was a year ago right now. I'll give you all of that. But let me just tell you this, okay? You cannot, at a certain point, those cost cuts are going to work their way into the economy where you have lots of debt that's going to be reset at much higher rates. It's just going to be a slower sort of economy here. And so I guess my point is, is that that's the stock market

that you're talking about. And the things that go on in the stock market are goofy. I mean, we know that, right? Well, you can't invest in GDP. This is the game. So let me tell you this. All right. So CRM, Salesforce gapped up 14% today. That's $140 billion market cap company. All right. Snowflake, which was a $40 billion market cap company, gapped down 14%. So software company that's growing 40% a year. Expectations were that they were going to grow 47%, but they guided to only 40%. It's crazy, but guess what? Snowflake's not in any index. No, I understand. My point is about the goofiness in the stock market, is kind of what I was saying. It's like this stock was trading at 20 times sales

on a $2 billion revenue base. This was just like a few weeks ago. There's still a lot that has to come out of that stock. It's going to have to grow into that valuation on a gap basis. It's still unprofitable, okay? If you look at Salesforce, Salesforce is Cisco circa like 20 years ago.

It's a roll-up, okay? And Benioff, he might be a genius. He built an amazing company at an amazing time, but he's bought a bunch of shit and he rolled it all up into a company. And now he, Slack, and there's a bunch of other things. And all of those CEOs that were part of his management team, did you notice they all left over the last few months and everything like that? So to me, I don't think Salesforce to, you know, there's three activists swarming, you know what I mean? Five.

Five. Okay. You know what I mean? Five. Five. Okay. You know what I mean? He's listening to them. Yeah. Well, I guess he is. I mean, it makes sense. I'm just telling you that, and I'm not like bullish per se, but if this is how the stock

market muddles through, it's not completely ahistorical. Totally. These companies don't necessarily need revenue growth if they can preserve profitability while the economy kind of lurches into normalization i'm not saying we should have multiple expansion on that but if 2024 is earnings growth again like and we just muddle through this year it's like not the worst yeah i mean except that you you know you have a fed balance sheet that's double than it was five years ago. I mean, the world is just like just a wash in debt. I mean, when you think about it. And the other point I was going to make about just like

what transmits to the economy after such a rapid increase in rates, look at some of the data you're starting to see in subprime. You saw Capital One. You saw all the banks now are taking higher reserves for write-offs. You saw that the auto delinquency rate is at a 15-year high. It just got over 6%. I mean, these are the sorts of things that people were not paying attention to in 2007. They were not, okay? And you just mentioned that the stock market literally closed very near its all-time highs at the end of 2007. And 2008 was Armageddon. And no one wanted to recognize anything. And I'll just say this because I do a podcast with two guys who are like the biggest Fed haters.

And I love the guys. Guy Adami is merciless. Yeah, he's got a bone to pick. He's got a bone to pick. But I think Jerome Powell has actually been genius in a way. I think they made one huge mistake in 2021. That's a little too far. Well, what I'm saying is he got the job in 2018. He wanted to normalize interest rates. I give him

a lot of credit for that. Okay. Like he did do that. And the stock market dropped 20% in Q4 of that year. And then he did an about face. So like, you know, wasn't great, but what he did in 2021 is just kept, they were buying $40 billion a month of mortgage mortgage-backed securities in the face of a raging housing bull market, which made no sense. So they screwed that thing up. But the fact that they are actually sticking to their guns right now, I think is really important.

And the fact that they are more afraid of inflation than they are about asset bubbles. Delinquencies and auto loans, higher credit card loss reserves, et cetera. It's still tiny. Like it could get worse. Yeah. 100%.

It probably will. But this is the first recession that people were actively preparing for a year in advance. And who wrote – which one of us wrote the piece that if it is going to be a recession, the consumer has never been in better shape to deal with it or something. Remember? I think it was Ben. Just look at the bank account balances. In other words, A, it's the recession that everybody predicted, like universally. And B,

we've never been in better shape, corporate balance sheets, household balance sheets, to contend with an actual slowdown. Never. I mean, we've been talking about a recession for how long? Are we in one? Has it happened yet? Is it going to happen? Think about how extended the average person you knew was in 2005, 6, 7, second homes,

third homes, bullshit mortgages. Think of how people are not in that condition right now. They just aren't. The underwriting quality for almost everything has been way better than it was in the mid-2000s. So even if we have a slowdown in higher rates for a year, it's not as though it's like a shock to people. I think we were shocked at how fast rates rose last year. I don't think anyone's shocked right now that they are where they are. Yeah. Well, I'll just say this about like how consumers are positioned right now. Again, with unemployment at 3.4%.

Okay. My wife is positioned at Neiman Marcus. I'll literally show you on Live360. All right, no. But when you think about pre-pandemic, what were some of the things that we were really worried about? We were worried about automation. We were worried about,

we're talking about things like universal basic income and stuff like that. All the truck drivers are going to be unemployed. But think about this. Elon Musk just had his investor day, and I'm seeing these bullish folk on the Tesla cult talking about how autonomous EV trucking could be $100 billion a year.

I mean, literally, I saw this in print today, and stuff like that. But then think about this other craze that's going on with this kind of these large language models and all this generative AI and everything like that. That is some of the most disinflationary stuff that you could possibly imagine. And throw that back into, you know, like this whole notion that we are like, I don't know why unemployment like won't buy. I mean, like it's the craziest thing in the world. We had 10% unemployment and I know it was forced, you know what I mean, three years ago or whatever it was. I mean, it's the craziest thing in the world. We had 10% unemployment, and I know it was forced,

you know what I mean, three years ago or whatever it was. I want to hear why you do. But think about if those two things all come together, okay, like in some way, shape, or form, where automation and AI and all this sort of stuff, we could be on our way back

to 5% unemployment in a rough patch of the economy. What if all of a sudden people stop getting hired because AI is taking their place? I think that's going to happen, but over 25 years. I don't think that's a 2023 story. No, I don't either.

But interestingly enough- The fear of it will be in 2023. I saw that Credit Suisse made Microsoft today their top pick, okay? And they're basically saying that the integration of open AI technology into, let's say across their productivity tools and Bing and this and that, whatever, could add 20% to their EPS growth over the next five years. I just feel bad that Credit Suisse itself won't be around to see that play out.

It's going to be first Boston. Why do you think unemployment won't budge? What's your – you have a take? I don't have a take on that. I don't follow that stuff at all. So mine is we had a million people die. Yeah. They're not coming back to the labor force.

Yeah. I mean, a lot of those people weren't in the labor force to start, if we're being honest. All right. Fair. Some were. But really, you had the entirety. I don't want to get you started on Trump. But the entirety of the Trump presidency, there's no immigration, legal or illegal.

And there is no immigration, obviously or illegal. And there is no immigration, obviously, during the pandemic over the next three. So it's seven years, give or take, without young workers coming from anywhere else. And we have a finite supply. And then there's a capital story that Savita writes about. She's like, one of her themes for this year is to invest in areas that have been starved of capital in the stock market. So industrials and transportation. Weed. Like tech has had 10x the amount of money thrown at it as oil and gas or whatever the

figure is, right? Like just one example of many. But anyway, the point is these industries that have been starved of capital as a result under hired and that's why all the predictions in the zero percent interest rate era about we're going to need universal basic income and all the truck drivers are going to lose their jobs to machines

it's actually the opposite it's the people who are sitting on stage at Davos talking that shit that are losing their jobs because nobody needs them anyway you need a truck driver right now like you need oxygen and there aren't enough of them. So it's really interesting and ironic

how completely 180 things have gone. And now you need people to do very basic jobs, not people to pontificate on what AI is going to do to society. Those are the first people to get fired at every media company? I think that's a really great point. And, you know, I'll just say this is that, you know, you and I, we're not economists. We're not strategists.

You know, we're not like these people who are like put out there. And, you know, all those people go to Davos and they speak at those things. And they're supposedly doing a lot of really thoughtful. If they asked you to go. I would not go to Davos. You wouldn't go? No. Nobody ever asked me.

I think I would. It looks like the douchiest thing that I could possibly imagine. No, but I would do it my way. Yeah, yeah. I feel like I would do it. I just, you know what? I heard it costs 30 grand. We should do a podcast.

And I don't do Twitter. We should all go to Davos. I'm like three years behind you, like dropping the everyday, like looking at Twitter and everything. And when Davos comes, I literally go, you know, they have a mute button. You can mute terms. You can mute a hashtag.

You know what I mean? Or whatever. I'll just say this. So we often look at a lot of this stuff through the lens of the markets because that's what we're charged to do when we go on CBC or we're talking about this thing. I think there's an absolutely brilliant scenario where, you know, I probably got a little aggravated by this whole idea of like a no landing. You know, we went from hard landing to soft landing to no landing. Yeah. If we can get out of all this, okay, and we don't have meaningful unemployment, like have to tick up to like 5% or anything like that, that would be truly amazing.

That's a no landing. I know. I mean, it would really truly be amazing, but there will be other repercussions for it in our economy. Let me throw the chart at you. John, earnings versus the stock market, 1930 to 2021. This is Ben Carlson, wrote this last October. So we get the question from clients all the time, why would we stay invested or why would we not pare back on stock if we know for a fact that earnings coming down? Very reasonable question. So this is how we answer it. And there's a lot more to this,

but over the last 90 plus years, the stock market has been more likely to see positive returns, double digit returns, and up years of 20% or more when earnings are down from one year to the next. The market was also more likely to experience a double-digit loss, but not by much. So there's no linear connection between a calendar year of negative earnings and the stock market going down. I wish it were that simple. And now there are a lot of reasons for that, the Fed being one of them, or the anticipatory nature of stock prices adjusting themselves in advance of earnings falling,

which I think you would say is exactly what we just lived through. So that's why the earnings thing, 220, 225, doesn't freak me out maybe as much as it should, just because you and I have had multiple years in our careers where earnings were lower, stocks were higher. Look at 09. But the difference here is interest rates. I mean, that's the difference, right? So if the stock market is a discounting

mechanism, and last year when we were falling out of bed in October, everyone was pricing, or at least people were thinking about a negative year-over-year S&P earnings scenario, right? And so everybody was also talking, like Nick just said, it was the most anticipated recession that actually hasn't happened yet, right? So what happened is that everybody got to that mindset in Q4 of 2022. And then what's happened is the stock market, the price of the stock market changed. That's how we got this concept of no landing, right? And so to me, that's not particularly helpful. And I think it's one of those things that's turned a lot of these strategists around a little bit. But we are going to have a recession.

Make no mistake about it. At some point. And the stock market will have to discount that before it. Okay? Like, just think about that. This is the clip for TikTok. Dan Nathan just predicted a recession at some point. No, but this is the one that—

I mean, when? I mean, that's the thing. I think the funniest thing about this table is if you flip the columns, like just the top, like when earnings are up year over year, when earnings are down, if you just switch the names, you wouldn't know which is which. Like you couldn't tell by looking at the numbers which is which, which goes back to the base case.

Let's read this. When earnings are up year over year, 72% of the time returns are positive. In the next year. In the base case. Let's read these. When earnings are up year over year, 72% of the time returns are positive. In the next year. In the next year. When earnings are down year over year, returns are positive 77% of the time. And this includes, you're talking about interest rates,

this includes everything from 1930. So this includes high interest rate periods. Of course, most of history hasn't had, I mean, I guess the rates we have now are pretty normal. So I think this includes a lot of that. So I mean, obviously, the situation is always different. Well, they're anything but normal, right? So what happened here is that at three negative years in the stock market, 2000, 2001, and 02, what they did was convinced whoever the powers that be, right, and primarily at the US Federal Reserve, Guy makes this comment all the time that their dual mandate is not stable prices and full employment. It's to keep the

NASDAQ and the S&P well bid. And that did change after that recession and extended bear market. That's me. Yeah. And so when you think about that, okay. So all that stuff that we've tried to like kind of say, okay, well, you know, in 2006, it was this, or in 2018, it was this. I mean, interest rates were like nothing, right? And so risk asset bubbles were like a common occurrence here, you know? And so, I don't know. I mean, listen, I don't, I don't wish, I think of this as all, it's a bit of a game, right? And like, like literally it's a game.

Like invest with Red Holtz, do your thing. Don't ever change. You know what I mean? You do you, okay? Keep dollar cost averaging. I say to all young people who have long-term time horizons, there should be a focus on just thinking about

you're 25 and you have your first job out of college. You max out your 401k, you max out your IRA, whatever the hell you can do. You can't touch it. It's going to compound on average. You tell me, Nick, tax-free over 40 years until you can get to it. You know what I mean? And that's a great way to do it. Then there should be a certain portion where you YOLO, or that's how you express yourself. Maybe you're into ESG. Maybe you're into AI. Maybe you're into weed stocks. Maybe you're into crypto. Maybe you're into NFTs. But it should be a much smaller percentage of that other sort of stuff. You know what I mean? And so to me, I kind of live more in that camp.

Those are the stuff that we're asked for hot takes on podcasts or on our shows on CNBC, right? And those are things where I think we can be effective because they're less scientific, right? They're more of a feel. Yeah. Oh, 100% or trends. Yeah, you're following trend, right? And so trend is always going to be something that's based on sentiment and all these other factors outside of long-term historical averages. Let's touch on yields because I think this is the biggest story of the last two weeks and definitely having an impact on stocks.

But I would have thought it would have a bigger impact. Sean put this together for me today. have a bigger impact. Sean put this together for me today. The one month, three months, six month, one year, and two year yields are now all at or above their 2022 highs. So the interest rate situation has gotten even more, let's say, violent to the upside. The 10 year is above 4%. It's 13 basis points away from the 2022 high. And the 30-year is now above 4%. And 30 basis points below, it's 2022 high. I would have thought that this would have been much heavier competition for stocks. And you would have seen a much bigger shift out of stocks and into a 4% or 5% treasury,

but it doesn't really seem to be happening. What do you, you ever take on why that might be? I mean, I think it could be like, no one wants to sell their stocks and necessarily move out, but someone may be like, yeah, because remember the market's still down, let's say what, 13, 14% on the exact number now. So it's like, there is some upside there

that's bigger than this 5% yield, but maybe all the new money is going. Like you can't, you have to look at flows versus what's your existing portfolio. Like I know for me, but I'm also trying to save for an apartment eventually. So all my new money is going into treasuries just because like I have a physical goal

I'm trying to reach. And you can't take the risk of stocks if you're about to do that. Yeah, and in the next two years, and I talk about this, like this is not something I would recommend. If you're trying to buy a house in the next two years, you should not be parking that money in stocks. Even though like the expected return is probably higher, like you should be parking in treasuries.

Like that's just generally true. Are you surprised that like these ridiculous yields that three years ago seemed inconceivable? There are people talking about what if we never see 3% again? But $18 trillion of negative yielding debt just two years ago. Right. That was like not that long ago. I mean, it's insane. And it's also like what Nick just said is not something I've heard more than 10 times

in my career where people are like, yes, I want to park money in two-year T-bills. Right. You know what I mean? Never. So it is amazing. There is an alternative. So it is amazing. There is an alternative, and it's a really safe and good alternative unless MTG tanks are debt rating.

But, you know, I mean, and I don't think that's going to happen either. So, yeah, there's a great alternative. I think that for the first time in a while, I mean, this is obviously what the Fed was trying to do with their zero interest rate policy and quantitative easing is push people out on the risk curve, right? And so they wanted you to take a loan now to buy that apartment that you can't afford. Do you know what I mean? Like that was the whole goal, right? And so then when people saw how easy it was, then they could do a summer home too. You know what I mean? Like whatever the hell it is. And so that's what's changed. I just think that, listen, there's got to be a bit of a reckoning for all of this kind of really bad behavior. And then all of this really uncertainty because the investment world as we know it has just been turned upside on its head. And you cannot tell me that one year down 20%

in the S&P 500 cures all those ills. It just cannot happen. So from a biblical perspective, you think we need more punishment? Yeah, I think we need fear. And so I'm not wishing that your 401k or your investment account or this and that, whatever, like gets fear. And so I'm not wishing that your 401k or your investment account or this and that, whatever, like gets demolished. What I'm saying is you'll get it all back. Just don't panic, right? Don't like the way you were YOLOing NFTs and SPACs and all this other crap in 2021, don't do the opposite. If we're down 30% from the all-time highs. Don't YOLO into cash. Yeah, but maybe YOLO into cash right now. But you YOLO into cash right now, though. But you know what I'm... But generally,

what I'm saying is... 100%. No, no, because it's not just moving into 5% T-bills. You shouldn't ever be as hot as the market or as cold as the market internally.

That's right. And the more you can go against the prevailing feeling, the better off you are. I'm with you. Let's put this Goldman Sachs chart up, John. 99% of borrowers have a mortgage rate lower than the current market rate. Well, there goes the refi biz. Who put this in?

I did. Okay. What do we got here? Yeah. So I think this is super interesting, especially the distribution. I didn't realize there were so many people below 3%. This is showing the percentage, each one of the numbers. showing the percentage, each one of the numbers. And so this just shows like people do not want to give up their very low cheap mortgages. But I do think there's an opportunity to buy right now. I think there's actually never been probably a better time to buy despite the high mortgage rates. You're going to say, well, rates are so high. Why would you buy? You're crazy. Well, because let's go back a year. Buy a house. Buy a house. Yeah. I think it's more of a buyer's market. You go back a year, year and a half ago, and it was so many sellers. Everything's above

listing. Now you actually look, you know, seller concessions are reaching new highs, right? Redfin just talked about this. They'll cover closing costs. They're going to maybe do some repairs. So you have a lot more leverage as a buyer. Now, obviously, the best thing you could do is be an all-cash buyer.

You can just bypass this whole 7% mortgage thing. But for those that want to get a mortgage, I mean, this is like an option, right? You can get a 7% mortgage, and if rates go down, you can refi eventually. If they don't, like what option do you have? Right? I mean, you might as well strike when you have the most leverage in the mortgage market. Well, I guess what would be the reason not to is that home prices could fall another 10%. And then you feel like, not only did I just get the worst mortgage rate in the last 20 years, I also bought something that

was 10% overvalued. But I guess if you're planning to live there, you can live with that. It's not the same as buying a stock. Yeah, I mean, you do that over 30 years. It's a very small difference, right, in the grand scheme of things. Like, no, I hear that. But like, okay, even if they fall 10%, like right now, like prices, remember, prices are sticky. It's hard. It's really hard to drop your price even more because then everyone in the neighborhood, it's like there's a societal pressure not to drop prices, which is why concessions are going up. So I think you can make it back up. You might not get it on the listing price. You can get it elsewhere in the, in the deal, right? So you're saying, Hey, you know what?

Maybe you do $30,000 of repairs because that doesn't have to hit the list price, right? So I think there's a lot more to this than just looking at prices. Like, yes, prices have come down about 14% since they're high. Um, but like, that's the most sense, you know, the housing crisis prices very rarely drop housing prices. They had the CEO of United Mortgage on a squawk this morning. Did you see it? Squawk and friends, uh, squawk and friends. Uh, Matt Ishbia is the guy that just bought the Phoenix suns. Oh yeah. Okay. He seems like a nice guy. Uh, Raznik Raznik says he knows him. He's from Detroit. Yeah.

So they beat the shit out of him. He basically had to, like, answer for the mortgage market in a weird way. And Durant. And the Durant trade. Well, I don't think they didn't, like, twist his arm on that so much. But they were, like, basically, he was like, we're winning. We're the biggest mortgage company in America. I think they are.

He's a new countrywide, I guess. I don't know. He's like, we're the biggest mortgage company in America. And think they are. He's a new countrywide, I guess. I don't know. He's like, we're the biggest mortgage company in America and we win every day. We win for our customers. And I think, I think Joe was like, dude, your stock is down 67%. All right.

So did you guys- Wait, wait, wait. So he got super defensive. Yeah. And he turned into a high school wrestling coach and he's just like, well, yeah, you could look at the stock price,

I guess. Well, it's a f***ing show about stocks, sir. Like, what are you... I don't mean to like... I don't mean to poke fun. This guy has clearly

crushed it, like in life. Yeah. And not a great move with Duran. But other than that, this guy clearly has made a lot of smart moves.

But if I were his handler, I would have been like, dude, when they talk about your stock price and you have no control over it, you got to smile. Aren't you amazed though, how many people, and again, you and I have been doing CNBC for 10 years plus, and how many CEOs come on and they really are not prepared to do the one thing that they're meant to do there is just kind of, you know, make investors feel good about the stock price. Well, name names. No, I just, you know.

By the way, I don't think this guy did terribly. It was an uncomfortable. Listen, to have the guts to come on the air when your stock price has been cut in half. Yeah. I give you a lot of credit for that. No, I know. I'm not being really that critical. I'm just making an observation in a way.

I just want to make one point about the mortgage refi thing. So, and you asked this question, you started this part of the conversation by saying, are you surprised that with 10-year yields up where they are, where 30-year mortgages are, that we're not seeing other, like, more dramatic knock-on effects? It was interesting this morning when I woke up and I looked at the markets as the first thing that I do, as you guys probably do most days. And I saw the 10-year above 4%. We all knew it was going to be there. And I saw the S&P was down like 50, 60 basis points in the overnight session. And the NASDAQ was down 80. It was interesting that, did you see the banks? Did you see the money center banks? Did you see JP Morgan, Wells Fargo, Citi, and Bank of America? They were all down between

1.5% and 2% this morning before the market rallied. Okay, so this is Thursday into the close that we're recording right now. That's me doing my little podcast thing. I mean, just in case you just, you know, Duncan can edit that. But I thought that was really interesting because it speaks to that. Like those mortgage businesses, and I know they've been retrenching from those, and they're trying to get in front of that and cut costs and everything, wells in particular, whatever.

But those are the sorts of things we're going to start to see. And then going back to the kind of whole unemployment thing, I mean, wells in particular, whatever. But those are the sorts of things we're going to start to see. And then going back to the kind of whole unemployment thing, I mean, the banking business, there's about six banks that don't need to exist, right? Big ones that we have on our main pages or our fax machines, you know what I mean? So we're likely to see some consolidation. We're likely to see a whole heck

of a lot more job cuts over there, right? And then you think about AI and automation and some of these other things, they will take out a lot of these sorts of processes. Now, this is a five to 10-year sort of thing. So I just think there's a lot of businesses that learned how to get a lot more efficient, to your point, during the pandemic with all this kind of work from home and all this sort of stuff. But they're also realizing how much they can do without, you know what I mean? And I think those sorts of efficiencies we're going to see over the next 10 years.

Well, I would just say the push and pull on that is they're going to have to learn how to do without people because we're not making more people. But the workforce is not going to grow by 5% next year. That's what's missing. That's what the labor market is demanding right now. We need like 5% more workers, every industry. So it might be that this is the best time in history to get laid off. Like, truthfully, to get a new job.

So we haven't even done this yet. Throw in deglobalization and reshoring and think of all the incentives. That's jobs negative or positive? No, I mean, it's jobs positive, but it's also very inflationary. Okay, so you're making a situation that's, it's making the Fed's job so much harder. Oh, I agree. So like, so much harder. So you think about, so Fed Chair Powell's going to be in front of the Senate next week, and this is all going to get really politicized, all the inflation stuff and everything like that.

Like, the Republicans are going to start bashing him, you know what I mean? Start. For inflation not going down fast enough, right? The Democrats are going to start saying, hey, listen, bro, we're going into election year here, you know what I mean?

We need, like, rates lower. But they're going to be careful what you wish for, because if they do kind of push too hard for a pivot, maybe inflation goes higher, right? And as wage growth is the stickiest part of inflation, we've already seen all those inflationary inputs as it relates to commodities and stuff, mean revert shipping and all that sort of stuff, right? But if wages were to start to tick up again, then that means the Fed's going to have to stay higher for longer. And that's the one thing that will depress stock prices. Yeah, I don't think the S&P is priced for a year of 5% plus interest rates right now.

I don't think so. And that's why – I've been wrong before. I'll bet you – I was going to say my left pinky, but I'm not going to do that. I'll bet you whatever you want over the next – Bet me a ticket to see the National. Done. Are we going? Yes, I'd love to say my left pinky, but I'm not going to do that. I'll bet you whatever you want over the next – Bet me a ticket to see the National. Done. Are we going?

Yes, I'd love to do that. I'll bet you a ticket to see the National that before then, the S&P 500 is going to retest. It's going to kiss those October lows. So that's $35.50. You may say, okay, dude, $39.50 or $4,000, that's not such a thing. But a lot of people, I think, are kind of in the camp that everyone's convinced that we're going to have— You know what I'm going to do with those October lows? What?

Nick, tell them. Just keep buying? Yeah. I mean, listen, I have a book here that says that. Please, run the counter. Yes. Please, bring it. Just keep buying.

No, but that would be, like, amazing because I'll actually tell you I'd get a lot more constructive at 3500 and the S&P 500 because at that point it's discounting a lot of the stuff that we just talked about. You know what I mean? I agree because I'm going to say, well, what's the new negative thing? Yeah. Because there will be one. Yeah. If we revisit the October lows, there's more shit going on than is going on right now. Yeah.

Well, here's one thing. And I know that like, again, we're not, you know, we're not political scientists either. You know what I mean? But, like, the situation with China is about as bad as it's been in our lifetimes as far as, like, you know, just our – and so when you think about this, isn't it great? There was a story in Bloomberg earlier this week talking about Apple suppliers, like, hurrying to kind of, like, you know, reorient the supply chains out of China and Taiwan, OK? And they're doing that. Elon's building in Mexico. Everyone sees it coming. No, no. They all see it coming. But think and Taiwan, okay? And they're doing that. Elon's building in Mexico. Everyone sees it coming.

No, no, they all see it coming. But think about this, okay? Think about if you're the largest market cap company in the world with a $400 billion revenue base that depends on China for a good part of your future growth, manufacturing, you know what I mean? All that sort of stuff, right? Well, if you're China, and think about what they do to their own tech companies, okay? If a lot of the jobs, the hundreds of thousands of jobs that are there to make iPhones and iPads and MacBooks and everything like that, they're going to Mexico or Brazil or Vietnam or this, that, whatever. Then if you're the Chinese, you don't give a shit anymore about Apple and Tim Cook and the 20 years that they spent, you know, reorienting their company manufacturing, everything like that. And you actually may shut down the app store in China soon. You may, like, do a whole host of things. You may push their citizens towards being more nationalistic

towards their own products. I think it's important to also know Apple's iPhone is like four or five in market share any given quarter in China. Okay, so think about that. So these local manufacturers that use Android software that are far more popular than Tesla. Same thing. Okay, Tesla – Tesla, same thing.

Okay, Tesla – Oh, I agree. They'll run the casinos out on the rail. I'm with you. Berkshire Hathaway has huge exposure to Apple and just sold their Taiwan semi position. They just bought it and sold it. It was like a day trade in Berkshire time. So I feel like that is a big thing on the horizon.

I certainly don't think that's a reason for people to not invest because it could get worse or it could also get better. And to your point, none of us really can. It's a disaster for Tesla. I'm just going to tell you that because like 40% of their sales are coming from China.

Oh, and I think that's starting to be reflected in Tesla stock. Tesla had a shareholder day this week. Can you remember a year where that wasn't an upside catalyst? It was a sell the news. It went down 6% today. So you know why though? I mean, so here's the thing that the cult followers, they just don't want to see that consensus estimates and earnings this year. So this was

a margin expansion story. It was an earnings story. With Tesla? Yeah. And margins last year in Tesla were 25 and a half percent gross margins. They're expected to be 22 this year. You know why? Obviously weak demand, the price cuts, okay, all of this expense. Yeah, all this sort of stuff. And then their earnings are expected to be flat. Their earnings are likely to be down. And consensus is still calling for 25%, you know, a revenue bump this year. This could be a really, really bad story for 2023 after it was a disaster in 2022.

And the other thing is, it's like that guy sold tens of billions of dollars of stock to buy probably one of the worst purchases in the history of corporate America buying Twitter. You know what I mean? Yeah, but he improved it, so. No, he didn't. And you know, and you're not on it.

I don't even know. Are you tweeting still? Or are you just like- Yeah, I tweet to my blog. That's it. I mean, once in a while, I'll say something, but like I see something funny.

Are you tweeting? I'm just doing our content, basically. That's what everyone says. And trolling Elon. No, but that's what everyone says. If you ask them, do you tweet? They're like, I just put my links out. I don't know anyone that's like, yeah, I love it.

I really don't. I don't know what it looks like now. I mean, the algorithm's changed so much. You have to either do a thread. You either do threads or most people are just posting links to content but links get so downplayed like in terms of engagement what about the super long ones

now you can do posts with how many I don't even know I've seen it you're saying are they giving like priority views to threads

they've always really done that yes because it keeps people on Twitter longer so that's like Instagram if you post something

that's real it's more likely to be seen but they've done that for a long time now you post something as a reel, it's more likely to be seen. But they've done that for a long time. Now you have people upload a photograph and play music and make it a video, but it's just a still photo, but it's a reel. People hate reels. I mean, they think that reels has ruined Instagram. So all of these things that we used to like.

Can I ask you about Buffett's? Taiwan? No, Buffett's letter this weekend and the whole buyback thing. This seems to be like a really big story again. Why are we still talking about buybacks? It's crazy. Well, tell me why we're still talking about it. I don't know.

It's like Newton discovered gravity in the late 1600s and we're like in the 1800s. Is gravity still a thing? What do you guys think? So are buybacks good or bad is still a topic? I know. How? How is this still being discussed? Because it's so easy to use it to make some people look bad.

Rich people, I should say. So the only argument I've heard against buybacks, which is something I've heard on Epsilon Theory, which is basically some companies use it as a form of really big share compensation. They're sterilizing the stock options. Sterilizing the stock options, right? But that has nothing to do with buyback. Buyback is the tool. It's like you're using a hammer to like do something bad.

You know, it's like you're not, the hammer is not the issue. It's like, it's the stock-based compensation that we care about. And the buyback is just a tool for that. I break your window with a hammer and you're like on MSNBC. Are hammers bad? Yes, that's exactly the issue okay i'm with you i'm with you on that what do you what do you think buffett said uh here's what he said let me give you this quote when you are told that all repurchases are harmful to shareholders or to the country or particularly beneficial to ceos you are listening to either an economic illiterate or a silver tongue demagogue,

characters that are not mutually exclusive. That's Warren Q. Buffett this weekend. What do you think? You know, I'm kind of in Nick's camp. I don't, I mean, I get that there's like a political argument about like how if 80% of the stocks are owned by 20% of the, you know, the people here, and we know that it skews to kind of upper income sort of folks or institutional owners or this and that whatever so you know the buybacks are taxed at a much lower rate than dividends and one is currently one percent which we're gonna have a trillion dollars worth of buybacks here regardless yeah and and so to me you know i i feel like it's it's about the incentives right and so um like if you're doing

it to offset stock-based compensation, well, maybe that's the wrong play. When you look at the difference between adjusted earnings and gap earnings for some of these growth companies, it's crazy. People still talk about this as a profitable company when you look on a gap basis. You know what I mean?

Like, it's not. Yeah, we're profitable. Just take out the billion dollars in stock-based compensation. And our friend Jim Chanos rails about this. And so then the other thing I'd just say is kind of interesting, that Buffett, since he bought Apple and he's made billions, right?

Like what's the number? He's made like tens, if not hundreds of billions of dollars in his Apple investment. Apple has bought back a half a trillion dollars worth of stock during that time period. But think about this. People have been talking about Apple as a growth company. You take out the half a trillion dollars that

they bought back over the last 10 years. This company has been growing earnings at single digits on average. You know what I mean? And it was trading for a while until the buybacks really kicked in. It was trading at below a market multiple. Do you remember that? Like for a good part of the teens and stuff like that. People don't even understand. Buffett is not even the reason Apple is doing buybacks. Carl Icahn is. Yeah. And he's not even in the stock anymore.

Yeah. He had to take Tim Cook out to dinner twice to get the buyback thing started. I think that was in Scott's book. I think it was, wasn't it? Apple was just sitting on – what else should they do? Yeah. Well, I mean, listen, you know – There's a fantasy that Elizabeth Warren and others have where companies are doing buybacks instead of employing her constituents.

And that's obviously not true because Apple has been employing tons of people at the same time as they're buying back stock, at the same time as they're doing R&D. So that's not really how the world works. Congress and the senators for the most part who make these arguments have shown us time and time again at these hearings and the like that they just don't know anything about any of it. I think like AOC thinks like a CEO sits and says, should I do a buyback or should I hire people? And that's not actually the conversation

that takes place in any boardroom. I mean, that conversation doesn't take place, but this is a capital allocation decision. It's, I mean, this goes back to Peter Thiel's idea that like, we don't know what to do with the money. And so we just buy back our stock. We give it to, to back to the shareholders. You guys figure out what to do with it. Right.

And so maybe the argument, and I'm not defending, I think they're generally wrong, but I think their argument is like, why aren't you taking more risk with your capital to do new things and try new stuff? And like, that is an argument to be made, but that's a, I don't think that's the argument they're making, but I think that is an argument that can be made. Can I make an argument about something about AOC? And this is probably going to be controversial with your listeners. Definitely don't do it. It would be for ours.

But, you know, it's funny. So many people that I know on Wall Street, the financial media and media and stuff who are lean left and are progressive, they can't stand it. It's like New Yorkers. She is a great politician. Can you imagine if she ever got learned up on the policy? Like I'm saying AOC, given how young she is and where she came from. You're saying in economics? Yeah, on a lot of stuff.

I mean, like, think about it. Like, for instance, and I'll tell you this, I think that, like, Elizabeth Warren probably thinks she knows a lot about policy and economics and this and that, whatever. I think she's a horrible politician. You know what I mean? Like, think about that, right? Like, those are two really different things. And it's like...

But here is what your moderate, liberal, socially liberal, fiscally conservative, you know, friend group doesn't understand what district does aoc represent yeah i i i get it she'd be pro and stock buyback she's representing some of the most impoverished areas of queens in the bronx and she absolutely should be a communist because that but that's she, she needs to get reelected there. Well, she's going to run for Senate. None of this shit in the stock market is, is helping anybody that she works for.

Well, she's going to run for Senate soon. Right. Think about that. And then she's going to have to broaden it out. It can't just speaking to that, like that, you know,

that demographic. I agree. I want to read this quote to you guys. We're, we're, we're running down to the wire here, but there's a lot of stuff I wanted to get to. This guy,

a copy car who is shorting private equity. And I don't know if I love that trade because it's a negative carry. These companies pay big distributions. And if you short these holding companies, you're responsible for that. But I kind of like his reasoning. This comes from an institutional investor. San Francisco-based Orso, the short dedicated hedge fund Copacar launched in 2019 with Scott Matagrano, keeps a running tally of celebrities involved in private equity and venture capital, including such names as Serena Williams, Diddy, Jay-Z, Alex Rodriguez, Tyra Banks, and the list goes on. According to Copacar, it's all about capitalizing on the influencer movement.

Why focus on Kardashian? Quote, it is ultimately fitting that America's most famous reality TV star has gone into private equity. Reality shows are scripted and fake. When the S&P 500 falls 25%, growth stocks fall 65% plus, and private investment firms massively overweight growth claim that their private investments in real estate are up in 2022. There is no better way to describe it

than scripted and fake. It's kind of true. Yeah. I mean, they don't take marks when they're supposed to. It's a private real estate fund saying it's up last year, and the average REIT is down 25%. Well, that was like that B-REIT, right?

Like the Blackstone REIT. Oh, actually, it's funny. I just saw a tweet today from EconomPix, someone I follow, and he said, in January, the average real estate mutual fund returned 10.2%. The worst one returned 5.72%. B-REIT lost negative 0.2%. The worst one returned 5.72. Beery lost negative 0.2%. So that's a catch-up from the prior year.

Yeah, they're starting to mark to market. They're slow. They're doing it. Oh, they were actually probably up 5% or 10%, but now they're going to start marking. Don't your people call this a fugazi? Yeah, I don't know. What a fugazi fugazi.

So can I say your people? So can I say these people? Italian? No, have you seen? What do you mean your people? I watched this show. Did you watch this movie on Netflix, you people? You must have. Yes, of course. And you mean your people I watched this show did you watch this movie on Netflix

you people you must have yes of course and you loved it right they made that movie for me I literally was thinking like Jonah Hill

you know what I mean like if he was a little slimmer I would see him as you you know what I mean thank you so much one thing about that movie is that they went

way too far on the black stereotypes than the Jewish stereotypes. Like the Jewish stereotypes were funny. It was a little cringy after a while. Making Eddie Murphy like a militant Muslim was too much, I felt. He enjoyed it. You could tell.

Oh, no. He really enjoyed that. Listen, it's comedy. Do whatever you want. I don't get offended by anything. It would have been a better movie if it was like a little bit less of a caricature. I think it should have been a limitedature. I think it should have been

a limited series. I think it needed more character development. I would take more Jonah Hill. Yeah. Who put this in the US stock market? I did. Throw this up, John. What are we looking at here? Left pipe. Oh, by the way, let's get some ice cubes.

Yeah. We got some ice cubes that need to be marinated. Como's tequila. Left side is world stock market breakdown of market cap in 1899. Right side is 2023. This is bananas. Yeah. And so it's really cool.

Look at the UK, Dan. It's amazing. Yeah. I mean, so this is, remember, this is relative share, not absolute share. I would say the UK stock market is much, much larger today than it was before, even though the share has dropped precipitously. So the UK was 24% of the global stock market in 1899, and now it is what? 4.1%. 4.1%.

And what are some of the other big differences? I guess the USA is the main story. You know what I love, though, is that Japan at 6.3% now versus 58.5% for us. And Japan's equities have done nothing for 25 years. And in 1899, there was no Japanese stock market. Yeah, that's true. So I think we should prepare to see the US at 58% not be 58%. Yeah.

I would be shocked. I would be absolutely shocked. It'll still be up there. And it'll shocked. I mean, it'll still be up there and it'll definitely, I mean, because everyone's like, oh, you know, what happens when the empire, you know, like the US empire ends,

isn't the world going to end or something? It's like, no, like look at the UK was the biggest thing in the world then and they had a bigger share, but look, they're still here. They're just not what they used to be. That's it.

It's like, we're going to have the same thing. When that's going to happen, who knows? I mean, it could take a lot longer, but you know, for as far as I know know, I could just – I see it shrinking. I just don't know when. I was going to get to these last two blog posts that Nick has done. You did this one where you looked at Vanguard and affluent retail households.

So these are people at Vanguard with a million dollars or more and what they actually do with their money and their asset allocation. John, do we have this? So I thought what was interesting is how consistent the asset classes stay throughout this. So basically, equities are 60. This is back to 2015. Equities are 63%, then 2016, 63, then 65, then 61, then 64. I guess what I would ask you is like, what would have to change for this

to radically deviate from where it is? This is just the millionaire portfolio, right? This is averaged across all the ages, right? So there are actually changes in allocation based on age, right? So people generally get out of equities and go more into fixed income as they get older, which obviously makes sense. We all know the 110 minus your age

as your stock allocation, et cetera. So I think the only way I would see this change, remember, this is looking for 2015 to 2019, a relatively, you know, it's kind of a bullish period. Yeah, short period. Only in 2018 did we see a drop because remember at the end of 2018, there was that we had that little crash, right? So you did see a little bit of drop there. The only thing that's going to change this is a large change in markets, right? Like a massive, you know, depression or something like that, or just major changes in how people invest, right? Those are the only two things I could foresee. Are you a Grant Cardone guy?

Not really. Are you? You definitely are. I don't even know who he is. Okay. I mean, I don't think he's a bad guy. I just think he does say some stuff. Didn't he say something recently that was like, oh, if you're a single-digit millionaire, you're in the middle class?

That's what I wanted to ask you. So speaking of, he said, single-digit millionaires are the new middle class. Quote, you are not wealthy. You are worried. I just think he just, he says it to be provocative. He has no idea of what the data looks like. And if you actually look at the data being a millionaire, even if I know a million now is actually like you'd'd have to have 1.8 million to be like what a million was like back in, like,

let's say the year 2000, right? When, when, when who wants to be a millionaire came out, that was when like a million was a million. And now you need about 2 million to, to be the same off.

My answer is a million. Where? Yeah. Where do you live? Yeah. Amongst that, I'll tell you if you feel like a, if you feel like you're wealthy or not.

So what's changed? I'm a bit older than you guys. I think what a 50 year old man here living in New York, I think what's changed a lot about that sort of data and the way people perceive those sorts of things. Hold on. This is the Comos. This is Comos.

Añejo. Añejo Cristalino. It's delicious. So good friends of mine, just so you know, Joe Marchesio, I think you know from Human Ventures. He co-founded this company, CKBG, with Richard Betts, who is a master SOM, and they created this tequila. And they have a few tequilas.

The company is doing great, and the tequila is literally one of the best things. So I have the best tequila shop in my area. The guy loves Como. He has everything. Oh, really? He has everything. He has the best distributor. Yeah.

And he's getting shit that you can't buy online. And he loves this. And he loves this. Awesome. And you had the Rosa last time I was on with you yeah he doesn't like the red one he likes the uh he likes this one and the and the lighter blue one oh cheers hey congrats to your guys success i know that um cheers when last time i was here your youtube channel just crossed over like a hundred thousand uh yeah we're at 101,000 now. That's amazing. No, I'm just saying it's still amazing.

It kind of plats out a little bit. Can I tell you why it's so hard to build a really big audience on YouTube? Yeah. There are 50 million channels. I don't know if you knew that. Also, the way that you build an audience is something that we would never do. You trick people. Yeah. So you have outrageous video titles

indicating that something's either about to die or crash or someone's going to get hurt. Josh won't do any of the thumbnails

with the Hermaloon face. That was the other thing I was going to say. What's this guy, Meet Kevin? Something like that. No disrespect. I have no idea

who this person is. He's a huge YouTube channel. I watched a few minutes of it. Like, you know, I'm sure he's great. I'm sure his audience loves him. All of his thumbnails is Home Alone face. Yeah. But people fucking click on that if they see it.

And that's like, there's like shit that we're just not going to do. And I don't think you and Guy Adami and Danny are going to do that. No. But there's something to be said. I mean, like the way you guys and all of your properties and your whole Ritholtz family, the way you've kind of started out writing, keeping it real. Then you went to social

and you did things that were complimentary to that. And you had to stay within the bounds of running a financial services company. And, you know, you guys have done TV. There's something to be said. It's just slow and steady. I mean, none of us are trying to go public. You know what I mean?

Like, we're not trying to hockey stick anything here. You know, and your listeners and your viewers and your readers, they appreciate the consistency and the honesty and the transparency of it. You know what I mean? If they start seeing you doing goofy shit on TikTok, then you probably lose a little bit of credibility every talk. I mean, our entire business is reputation. And, right, so it's like, what do you want to want to sell like just to make a few extra bucks are you willing to

sell that out or like do you want i mean i always come back to this quote that jason zweig's father told him like if you tell the truth to people that want the truth you can make a living if you tell the truth uh or if you lie to people that want to be lied to you can make a fortune and if you tell the truth that people want to be lied to you make nothing you'll go broke go broke, right? So it's like telling the truth that people want the truth. Yeah, you got to pick that first group and just be like happy with that. And that's got to be good enough. And it's not a zero-sum game.

I mean, like you guys come on our podcast. We've come on yours. We've done stuff together. Like I hear from so many of our listeners, oh, we love Josh and we love Michael. And we like, you know, like, so there's a lot of room for everybody. You know what I mean?

Oh, I agree. And then the thing that I have to guard against is like there are a lot of influencers on social media that are like, hey, come on my show or I'll come on your show. And then you like spend a few minutes just looking at what they are. It's like, look, I have to say no to this person. I'm sure they're a very nice person. But this person is not'm sure they're a very nice person. Yeah. But this person is not registered to do business anywhere. Like is giving financial advice without a license is getting likes on their posts by saying shit that is obviously not true.

You know, it's just like, of course, I would never like give this person my legitimacy by appearing on their thing. But like, how do I say no without being a dick? Like, and that's, you know, something that you have to learn how to do. The easy thing is. You can't be seen with, you can't be seen with everybody under the sun. Well, here's the, here's the easy thing is like i know i know your business i know what you do every day i know what i do your business there's there's not enough time in the day to say yes you don't know what i'm saying is and so like why do we keep doing this stuff because a we enjoy

it b we really respect it you know i mean like that's at the core of it and i think that you know you hear this all the time people have to learn to say no it wasn't until the last few years that i started doing that and you just have to figure out how to do it graceful well 100 i mean you must get asked to you must get asked to do like uh speaking engagements that aren't appealing or like yeah collaboration with other creators yeah most of the stuff i've said no to is like crypto related stuff but like i do get like asked to do like oh let's do it like do a i'll do a guest post on your blog you do on one of mine i'm like no i don't want to do that. I don't do a lot. I don't want your post on my blog. Yeah, I don't try to do...

I did a lot of podcasts last year for the book, but I'm really trying to minimize the number I do this year. I think I've only done two this year so far. I'm not really trying to do any more. You had imposters on Instagram pretending to be you. Yeah, all that stuff. So it's just like there's a lot of that stuff going on, and I'm just not really into that. So I try to protect my time as much as I can. Before we move on

from this topic, I just want to mention the combo show that we did of a NASDAQ with On The Tape podcast hit number two on the podcast charts for investing. That was a big show. That was great. We got to do more of that. Because your whole audience and my whole audience tuned in and it was

a big show. It was fun. I thought that was great. We raised a lot of money for charity. Last thing we're of money for charity. Yeah. Last thing we're going to do, Silvergate. Yeah. Have you ever heard anything like this before? The stock, we have talked about it. The stock went down 60% today.

Yeah. They announced that they're not sure if they're still viable as a public company. They have so many investigations and lawsuits that they don't, like, they're not sure if they want to stay in business or not. This was a $14 stock when they announced that. I think it's $6 now. Have you ever seen anything like this before? No. You know what?

I actually have like 20 years ago. I mean this is the thing that I think people – You saw a company come out and commit suicide? I don't mean like this, but I mean like this was – like this was 2002. This was – you know what I mean? Like this was stuff that was going on. And even in 2009 after the stock market bottom, there was like, this was O2. This was, you know what I mean? Like this was stuff that was going on. And even in 09, after the stock market bottom, there was like stuff like this. And, you know, one of the things I'll just say is like,

think of it, this was a regulated company that was operating in a very unregulated space. And so what like- With the shadiest people as customers. And I just find it interesting that like, you know, like, God, it was every day SBF and FTX for November and December and the calendar turns and we don't talk about crypto and we don't talk about it anymore. And then this story comes about and we got to talk about it on podcasts. And this happened

when I was on Fast Money last night. And I'm like, Melissa's looking at me. I'm like, I'm out. I don't care. If you were invested in this company, shame on you. You know what I mean? Like part of this story is the short sellers have been dead right here. What they have been doing, they've been very vocal, I guess, and they've been like writing letters to the Federal Reserve. And what they're basically alleging and looks like maybe there's truth to it because this company is waving the white flag. They're saying like this is a bank that's being used for criminal activity, like right out in the open, money laundering, all kinds of AML shit. And they're – I mean it appears that they're right. Yeah, so just real –

I don't know enough to have a judgment. Shout out to Porter Collins and Vincent Daniel who are Danny Moses' partners. They were in the big short. You know the guys. They've come on our podcast numerous times last year. They've been literally talking about Silvergate being one of their largest shorts. And they were like these guys, they were all over it. That's the other thing that's interesting.

80% of the float was sold short. Yeah. And normally when you see that, it's like, oh, my God, all these guys have to cover. This is a lie. Yeah. This one, actually, all the shorts made money. It's funny. I'll tell you this, that I was on a beach somewhere.

It was the December of 02. Okay. So think about this period of time. And I bumped into a guy and without naming names, he was a trader at SAC capital. And, and, and I saw him on the beach in the Caribbean and he's wearing a hat. It was CMGI. Oh my God. And I said to him, I said like, what, what, what gives he's like, dude paid for this this. You know what I mean? Like, literally, he's like, it's going to zero. It's short the whole way down. It's going to zero. You know, like, that sort of thing.

CMGI was an incubator of other dot coms that were losing money. Yes, you remember that. It was like a poster child. It was like a publicly traded VC fund. It was Internet Capital Group in that one. Remember that? Of course. Yeah, yeah, yeah.

And so I just always remember, like, seeing that guy with that hat. Let me ask you. So as soon as Silvergate put this out, they were supposed to report earnings. They're like, actually, instead of earnings, we have a surprise. We may not be viable. Yes, I've never seen that. We face investigations from the SEC, the FBI, the fucking everyone, and lawsuits, private lawsuits, and shareholder lawsuits. And this is not fun anymore.

And we're probably – we're maybe not viable. Right after that, every inbox in the country started getting hit with Circle, Coinbase, Gemini, Galaxy. We don't do business with Silvergate. We don't do business – we're stopping doing business with Silvergate. So they made themselves like a pariah with one filing. Nobody could do any business. I read – so Matt Levine wrote about this today, and he was like, this is like an actual bank run, not like the crypto stuff. A legit bank run. Yeah, this was like a legit bank run.

It's a bank. Yeah, it is a bank, right? And so I think the lesson here is like counterparty risk matters. Who you do business with matters. Even if you're doing the right thing, and I don't know, I can't speak for Silvergate. I don't want to say anything about them. I don't know enough about their business. But even if you're doing the right thing, if all your counterparties are not, you get caught up in that because then you have to sell assets for liquidity reasons, and then you end up getting hit.

So now how do you know who's a legitimate counterparty? This was New York Stock Exchange listed. I mean – You would have thought that this is the one. If all of your counterparties are unregulated, that's probably not a great sign. That's like – there's ways to think about this. You're like, hey, I'm going to be the – Binance was like very heavily tied in with these guys and moving money in and out.

So that's a huge red flag. Even if you don't know anything about banking, you know that whatever that guy's got cooking, you don't want to be anywhere near it. Just so you know, I'm absolutely mesmerized with what you guys have done in the studio since I've been here last. And I'm looking over your shoulders and I'm looking at this bookshelf, which is amazing. And I keep going back to one of the best books

on this bookshelf, More Money Than God by Bethany McLean. Oh, that's such a great. Right? No, that's not Bethany McLean. More Money Than God is, he's the one that put out that. Malibu? Yeah, Malibu. He put out the VC book this year. He put out the Power Law book. Wait, where is it? More Money than God is. He's the one that put out that. Malibu? Yeah, Malibu. He put out the VC book this year.

He put out the power law book. Wait, where is it? More money than God? It's right to the, it's right there. More money. Sebastian Malibu. It says it right there. Yeah.

Take that out. It's the hedge fund book. Take that out. Yeah. Cut that. No, Bethany's book was great too. What about Enron? Oh, yeah.

The smartest guys in the room. Yeah, yeah, yeah. Oh, why did I think she also wrote that? That was a good book. All right, we're doing favorites. Did you have fun on the show today? I loved it. It was amazing. I crushed it that. That was a good book. All right, we're doing favorites. Did you have fun on the show today? I loved it. It was amazing.

I crushed it today. It was amazing. I know you have to be out of here relatively quickly, so I'm going to let you go first. Am I going to leave and not listen to your favorites? No, no, no, but I'm saying you could kind of stop that. All right, real quickly, I love that you guys do this. My favorites, last weekend I was in Tempe, Arizona,

and I guess the name of the festival was the innings festival. It's at a minor league baseball facility. Yeah. It was amazing. I actually went to a Padres game and, uh, and, and saw, uh, the Padres play the white socks. I'm going back next week to Arizona. Is Batnick still in Arizona or no next week?

Uh, I think he's coming back today. Okay. Going to another Padres game, but the name of the festival is innings festival. But like when I was looking at it, it was kind of dad rock festival. Yeah, big time. It was Green Day, who I love, Eddie Vedder, who I love, Weezer, and Marcus Munfer, and Eddie's show. Who do you think goes to spring training games in Arizona?

Yeah, a bunch of dads. The same people that listen to Wilco and Perl. You and me. Yeah, and we're going to National, you and I. A hundred percent I'm going to go. Yeah, but I have to win the bet. I have to win the bet. Nick's going to come.

All right. So what was it like? What was the best thing you saw besides Eddie? Green Day. I mean, I'll tell you this. I loved Green Day since, you know, Dookie came out in 1994. What's it sound like? Is it just greatest hits now?

It is the greatest hits. But they have so many goddamn hits. You know what? They lean heavily into American Idiot. Oh, yeah. So a lot of Jesus Suburbia, American Idiot. That's right. Jesus is suburbia, American Idiot, minority. He just puts on an amazing show.

I love Billy Joe. Listen, I love Eddie. Mount Rushmore is probably Eddie, the boss. What's the other one left? Do you know that entire generation of singers are dead? Every single one of them. I will say this.

I'm going to see, go see people, Foo Fighters, as much as you can. Whoever they have replaced Taylor, like, you know, RIP because he was amazing. Dave Grohl,

I saw him three times in 2021. He's the last rock star. He is just so epic. Yeah. You know what I mean? Like, I love Dave Grohl. He's worked with everyone. I mean, because I'm really into metal.

I mean, I like rock, but I'm really into metal and he's worked with like, he's well respected in everyone in the metal community. Like, he's worked with like, you know, he worked with everyone. I mean, because I'm really into metal. I mean, I like rock, but I'm really into metal. And he's worked with like, he's well-respected in everyone in the metal community. Like he's worked with like, you know, he worked with Lemmy when he was alive. He put together like these metal albums and stuff. He's done a lot of great stuff. I saw the Foo Fighters show at MSG when they first opened up after COVID. I did too.

I was there. It was June 17, 2021. That's maybe the most epic show. Father's Day. You remember that? Were you there? You were? Yeah.

Is that incredible? They open with times like these and then like... Wait, wait, but you're going to say it. The weirdest thing that happened. Dave Chappelle? Singing Creep.

Dave Chappelle did a Radiohead cover. Oh, wild. Not something you would have on your bingo card for... It was so weird. For a Foo Fighters show. Yeah, it was amazing. Not on the bingo card.

Gorillaz? Gorillaz? Gorillaz. Gorillaz? I like the Gorillaz. I haven't heard the new album, but... New album is... I didn't even know they had one. That's your jam. Gorillaz? Gorillaz? I like Gorillaz. I like the Gorillaz. I haven't heard the new album, but. New album is. I didn't even know they had one.

That's your jam. You know what? It's the perfect blend for me of like, it's alternative and it's modern, but then it's like, they bring all these throwback rappers on to just drop these incredible verses. They toured this past summer. They were in New York, I remember. So the new record came out this week or Friday. It's called Cracker Island

and they pulled an MC from like the far side like they go back and they pull rappers from the 90s

2000s like people that you don't even think still are around and the whole thing just works really well so if you're into

alternative music or hip hop at all the new Gorillaz album is the shit. All right. That's all I have for today. Duncan, anything we need to announce so we can let Dan get on his way? I think we're good. Yeah? All right.

So far, so good, though. The new set. Let's see how it turns out. Okay. I hope it's slimming on YouTube. That's all I'm going to say. I think it is. Okay.

I doubt it. Your jacket actually blends in with the background kind of. Okay, great. So it's kind of like you're just a floating head. Okay, great. Hey, guys, thanks so much for listening. We appreciate you. Make sure you're subscribed. Make sure that you've left at least one review. Multiple reviews would be fine, too.

Reviews are how other people find the show. So if you think this is good, other people probably should discover it. All right. Our thanks to Dan Nathan. Dan can be found occasionally on Twitter. Ish. At Risk Reversal. At Risk Reversal. You don't seem too excited about it.

Riskreversal.com is the site. Yeah. And of course, On The Tape podcast, which I am a huge fan of. Make sure you add that to your regular listening routine. Thanks to Dan. All right. Let's get out of here. Thanks, guys.

All right, so do you feel warmed up? Like you're ready to go?