The Compound and Friends - High Conviction

Episode Date: February 17, 2023

On episode 81 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Jay Woods and Dan Russo to discuss the New York Stock Exchange, technical analysis, the Dow Jones Transportation Average, Bitcoin, recession calls, stock/bond correlation, what drives Elon Musk, 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. Michael Batnick 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

All right, so Jay brought us a 40-pound bottle of tequila. What's the story here? Oh, what's the story here? That's Michael Jordan's tequila. You know that, right? No, I don't. Yes, you do. Well, you know that.

Excuse me, I said Jay. I said Jay. What's the story here? Oh, no, Josh is spot on. I was just at an event at the New York Stock Exchange that Scott Wapner hosts, you know, and Josh King of the New York Stock Exchange called Whiskey Wednesday.

And, of course, I brought tequila from Whiskey Wednesday. But the guest that he interviewed. They should do that at 7 a.m. Yeah. Well, that would have been back in the 50s and 60s. And then go trade. I feel like you could have done that in the 80s. Yeah, I think they did.

That's how I got my start because they were drinking and I got to go. Was it 80s, Whiskey Monday, Whiskey Tuesday, Whiskey Wednesday? Pretty much. I think Jay was the only one trading in the 80s. Get us a mic. Yeah. So the story with this is they hosted this event, and Scott will interview some celebrity every time,

someone that's usually on his show, and this time was the Celtics owner. And he was telling this story about how he and his wife were out to dinner with Michael Jordan. And Jordan, a huge tequila guy, and they came up with this idea. No, we got to create your own brand of tequila. And this was the brand. They had some reps there, and they convinced me to try it. I hadn't had tequila since my 21st birthday. It was my 21st shot on my 21st birthday.

It was Cuervo back then. Yeah, it was. It was a little plastic cup, and that was shot 21, and that's the last time I've – I couldn't even smell it. But I had this. I heard the story about the bottle shaped in 23 degree angles from Michael Jordan. Oh, I don't even know about that.

Yeah, the bottle is the art. That's 23? Looks like 27 to me. I'll take your word for it. Yeah, get your compass out. Just double check. But 23 degree angles and I tried that. I thought it was great and I thought I'd just bring some to you guys it's one of my favorites and we actually

you've had this? yeah we just polished one off during the Super Bowl me and two other guys it's embarrassing with the kids there but yeah it's one of the best

and you never want to assume that an athlete or a rapper or a singer or a movie star has a good tequila yeah

because they mostly don't but this is like a really good one. The Rocks is Jordan. He's going to put his name on it. It's got to be the best, right? The Rocks is like mid. It's okay. It's not great.

It's just mid. No, it's a mixer. Hopefully he's better at that than at owning a basketball team. Who, The Rocks? Duncan from the top. Oh, Charlotte. Duncan from the top rope.

Charlotte Hornets. Oh, well, Duncan's a Charlotte native. He could say that. He's been one of the worst. I think they just need to sell that to you. Wait, you have... You have LaMelo Ball. Right. For now. just need to sell that to you. Wait, you have lamella ball. Right.

You have that for now. So I think I f***ed up Valentine's Day this year. How so? So I I guess I get accused of this often that I have no idea what's going on around me. Which is sort of true. Like I walk through the house with a podcast in my ears

and staring at, you know, Slack on my phone or whatever. So anyway, I did like a card. I did a balloon and a package of Twizzlers, but like in a cute way. I used to take my wife to the movies and she would always get Twizzlers. Okay. And the card was like, I didn't like write a novel.

I just, but I wrote like Beatles lyrics. Like my wife complains about the winter. She hates it. She wants to move to Florida. So I wrote like, here comes the sun. Like I just like, we're trying to like do something very low key. I was not like, cause I'm not allowed to, this is a whole other thing. I'm not allowed to spend money on her.

Why? Because I'm an idiot. I buy the wrong thing. So she tells me what she wants and then I could spend money on her. Why? Because I'm an idiot and I buy the wrong thing. So she tells me what she wants and then I can spend money. So that's the way it works. And you listen,

you actually succeed? Dude, I'm the kind of idiot that like I booked a surprise trip during hurricane season to the Caribbean. I do shit like that. You get a good deal

around that time. Yeah, well, no. I had to literally not go and just eat it because it was an actual hurricane. I think it was, I think it might have been Katrina.

I don't even know what's going on anyway so i just do this like little thing yeah and she's just like all right uh you know and i'm like what do you what do you all right like i got you a valentine's she's like no i appreciate that you did that you really like just don't know me at all she's like first of all beat Beatles lyrics? I'm not your mom. Like, your mom would love that, right? That's harsh. That is harsh. No, but—

What song? Taxman? It doesn't—yeah, I wrote the Taxman lyrics. No, it's the point, though, that I do think that I have to step up my game in terms of just observing. Oh, Twizzlers, I'm not eating sugar. How do you not know that? Everyone knows. Oh, Twizzlers. I'm not eating sugar.

How do you not know that? Everyone knows. So anyway, she's like, if I asked the kids right now what they should have gotten me for Valentine's Day, they would know exactly because they observe. They're paying attention. And the answer is $7.99 flowers from Trader Joe's. They actually have really nice flowers. Yeah. She goes every week.

She buys flowers for eight bucks, puts them in a vase. My wife does that too. Yeah. And then they die and so what? It was eight bucks. She's just like, that's what I like. I don't like the Beatles. I've known you 30 years. You know that. So that was like half-assed. And then you know I'm not eating sugar or you should

have known. I don't eat Twizzlers. And she kind of had a little bit of a point. So you need to be present. You should take a yoga class. I know. So I went to Trader Joe's, and I got the flowers, and we're still married. Perfect. But I do think that there's something to that where I'm really not in the moment at all.

I have no idea what's going on. There's a lot of pressure on that day. And you're married how long? We'll be 20 years in October. It's Valentine's Day. I'm just not good at that shit. It's just a Hallmark holiday? You could have gone that route.

True. No, I'm just not good at that shit because I'm not observant of other people's shit. It's true. Meanwhile, this guy on Instagram, great birthday post for your wife and Valentine's Day. Okay, that's factually not true. No?

Why? But like, what is your, so your Valentine's Day is the same week as Robin's birthday every year. I haven't bought, maybe I shouldn't say this out loud,

I haven't bought Robin a birthday present I don't think ever. Really? How is that possible? Nicole's like, what? We're not present, but we're not present people. While like, what? We're not present people. While you were dating?

We're not present people. By the way, it's 900 degrees in here. We're not present people. Okay. Like, if she wants... Yeah, it's f***ing hot in here. Is there anything we can do about this? Is it a little hot in here?

My ears are sweating. 70 outside. Put the AC on a little bit. I know Duncan's going to get upset, but... No, you know what I got for her birthday this year? Literally, my mudroom got finished on her birthday, coincidentally. So you got her a construction project. Love the mudroom.

Mudroom's a must. Do you know how I won Valentine's Day this year? How? Just one simple post. My ladies, my wife, my two daughters, and her dog, Lola. Where did you post this? On LinkedIn? Not on LinkedIn.

Mastodon. Mastodon. Myspace. You really want it on? I mean, yes. No, just crack a window. Oh, that Mastodon. Mastodon. MySpace. You really want it on? I mean, yes. No, just crack a window. Oh, that's a good idea. We're going to get a little bit of ambient noise from the street below, but

I feel like we could live with that. There we go. That'll work. Hey, we're not plugged in. John, we're not plugged in over here. Did it go up? Yeah. Alright, so neither of you guys have been on the show yet. Two of my favorite John, we're not plugged in over here. Did it go up? Yeah. All right. So neither of you guys have been on the show yet. Two of my favorite buddies to talk about markets with.

Jay, I thought that you were on the show, but I— No, I was invited. I was on vacation. I couldn't come in. Oh, okay. What's your excuse? Where have you been? I don't know.

Where's my invite? We've been doing this for 18 months. All right. And Ramp was upset he wasn't on show 69. He's still fuming about that. We can't have Ramp because there's a video. Well, he can wear a bag over his head, you know. For 90 minutes.

Jay, do you see this T plus one settlement? Yeah. What would be the ramifications of that? It would be great. I mean, T plus two is archaic at this point. I mean, look at where technology has come in all this time since we've gone to T plus two. I mean, it's there. And then everything is solved by the blockchain, I'm told.

I don't know. Is this an SEC ruling, right? I believe so. And, you know, they need to speed up how trades are processed and settled. You saw this? It just makes sense. This is in response to the meme stock stuff? Yes.

Yeah, because a lot of the things that went on during the meme craze, people didn't understand why they weren't licensed day traders. So their money didn't settle to get in and out of a stock. And when they were on margin and there was a whole balloon. Alright, we're back.

We're back. Alright, so I think that was not the issue though. It was net whole blown. Yeah. All right. We're back. We're back. All right. So I think that that was not the issue, though. It was net capital requirement. Yeah. So what does settlement really have to do with that, I guess? But the T plus two, it's just when you're in 2023. Is that where we are?

Yeah. You know, the way things transact, I mean, just seeing my evolution on the floor from paper to, you know, actual milliseconds. We can't speed up the process. I remember T plus three was 25 years ago when I started it. They used to have Wednesdays off to settle. T plus three. And where are we at now? T plus two? T plus two.

So we're going to T plus one. Why don't we just skip T plus one and go right to the blockchain? Yeah, it's like six minute abs. Exactly. What about zero days to expiration? You guys up on this? Danny? Watch it.

I mean, I'm not super up on it. We don't trade a ton of options. But I think it's interesting. I think it remains to be seen what it means for market dynamics. But I don't know. It kind of creates more of a casino environment than probably what most investors want. Zero days to expiration. But does the option create on that day?

Yeah. They listen, they expire. And it's gone option create on that day? Yeah. They listen, they expire. And it's gone. So how much do these things move? They can move a lot. But isn't that the majority of the option trading now? That is starting to become that way. And the volumes have been spiking dramatically.

So as a product, the people bringing that product to market are very happy with it. How do they make money? Just activity? I think the more volume, the more. So who wins here? Citadel? Nobody wins. No one wins.

No, the house wins. But who is the house? The market makers. The market makers, I guess. The exchange must like it. The exchange is probably like it. Market makers probably like it. Whenever there's more volume, that's.

How about hourly options? Can we do that? Probably. We just got to T plus one. What if I'm bullish on Cisco, but like between two and three o'clock, and I just want to put that... I guess I would ask you, how bullish are you? Bullish enough to buy an option

that's going to expire. All right, let's start the show. Oh, I didn't even have my dock open. Let's go. Yup. Okay, got it. By the way, remember what time of year it is, Duncan. We have to freeze this room out from now on in the afternoons. You're such a fat guy with the body temperature.

It's just I would rather be cold than hot. All right. All right. Wow, we're back. 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 Thank you. I think the Fed screwed up by allowing the zero interest rates to go on for too long. I think we're just beginning to pay the price for that. It'd be nice to say that it'd be great if the Fed got lucky.

I've been around for 50 years and I've never seen the Fed get lucky. I've been around for 50 years, and I've never seen the Fed get lucky. All I've seen the Fed do is mistake in terms of not acting fast enough. Super bearish. A real estate guy is not happy with the Fed? Do you know who that is? Michael just said it's a real estate guy, so it is. Is it Zell? Yes.

Very good. What were you going to guess? I was not going to guess. You were going to say Wilford Brimley? It did sound like Wilford Brimley. This old house. Sam Zell talking to Sarah. He's a doubter of the soft landing thing that I guess everyone over the last two weeks has become starting to believe in.

He doesn't see it going that way. I wanted to give you guys a big introduction. I'm so happy that you're both here together. I'd be happy individually, but this is just awesome because you guys are friendly, and we've kind of been to a lot of the same events over the years, all of us together. Don't wait for the podcast listeners. We've got three-quarters of the audience of the host are bald today. It's a win.

It's a win. And I'm trying to catch up as fast as I can. All right, let's start with Dan. Dan Russo, I wrote you an introduction. You are the director of research and a portfolio manager at Potomac Fund Management, an investment management and research platform for financial advisors. Prior to Potomac, you spent time at Chaykin Analytics, Susquehanna, and others, including time on the floor of the New

York Stock Exchange. And Dan, you're also teaching technical analysis at Baruch College in New York City. Welcome to the show. Thanks for having me. It's great to be here. We're so happy to have you. Jay Woods. Jay is working on something new. So currently, you're on the board of directors of the CMT Association. Most recently, chief market strategist for Drive Wealth Institutional at the New York Stock Exchange. You've been on the floor how many years? 30. Okay. Most of that time you were with Goldman? Correct. Okay. Goldman Sachs bought- Spear Leeds and Kellogg. Spear Leeds and Kellogg. In 2000. Okay. Great deal for Spear. While at the New York Stock Exchange, you reached the highest level elected position on the floor as executive floor governor. And you've been known to give a nice tour, including to me and my lovely family.

That's right. Which was pretty epic, which we could talk about. Tony Dwyer officially refers to you, shout to Tony, as the official NYSE greeter. Scott Wapner recently called you, quote, the mayor of the floor, which I would agree with. And you also introduced my kids to Sports Illustrated supermodels. Yeah. Which is true. I guess we brought the kids down to the floor during February break.

Yeah. And that's right around the time they put out Sports Illustrated. You're nodding. I know when you know that issue comes out. I break. Yeah. And that's right around the time they put out sports. So you're nodding. I know when you know that issue comes out. I do. Okay. Is that in February? No, because I was on the floor as well.

I remember they would always bring the models down to ring the opening bell or the closing bell. Do you know why it's February? Well, they actually just moved it to May because swimsuit season. But it was always February for Valentine's Day. That was when the party was for years. Recently, they expanded. They got a little more diverse in the people that are in the magazine, and they moved it to May. So we haven't seen them down there this time of the year, unfortunately. Yeah.

Well, so hold on. And then, Dan, you were saying that Jay got your daughter on TV? He did. We have these pictures. John, put this on screen. Let me see. Right there over Quintanilla's shoulders. Oh, look at that. That's my daughter and Jay, not me. Let me see.

Let me see the next one. And there they are hanging out on the set. Now the younger one got really upset. You know how much money she cost me on Zillow? She's the worst. She was dead wrong. She was dead wrong. Okay. Absolutely. How old are your daughters? Twelve and eight. Twelve and eight. Those were the days. Yeah, it's fun.

I have a 16-year-old daughter now. I have a 17-year-old stepson. If only I could go back. If only I could go back in time. All right, that's awesome. So how long have you guys known each other? God, I don't know. We overlapped on the floor, actually. I left the floor in 2007, so we overlapped there briefly.

So we know a lot of the same people. But it was kind of more when you got involved with the CMT Association that we really became closer. Yeah, it's the technical analysis bond that brought us together. I've overlapped your time on the floor, but we were both working for – We didn't work in the same room on the floor. Market makers. We're in the garage. We stood in one place all day.

So I – there were 5,000 people at one point down on that floor. But I would only know like 500 because I just stood in one place. People came to me. So you didn't really... The last five years or so, you have a very specific spot on the floor. You are right when people walk in. I was. You were the first person

that people pass. Every guest that comes down those stairs from the CNBC when you get your hair and makeup done, it looks so pretty. Dude, they should build you a statue outside the NYSE. Like a shack. Next to the fearless girl? They gotta build the Cashin statue first got to build the Cashin statue first. Yeah, the Cashin statue first.

He does deserve a statue. They could put you on top of the bull. There you go. That would be fantastic. No, Mr. Cashin deserves all the accolades. I just say hi. I'm friendly to people. It's pretty easy.

So you and I met through the floor, but yes, CMT. Let's talk about that for a second. There's chartered market technician. That's like we have JC on the show a lot. Good friend. Do they still like him there or has he been excommunicated? What's going on there? JC is a lightning rod.

He brings attention. He's my favorite guest on this show. He's my favorite CMT. Yeah, he tells it like it is. And some of the older guys in the organization may not think that's the best way of going but he brings eyeballs to us he has been such a strong advocate for the organization

we're having our 50th anniversary in April so if you go to the cmtassociation.org you can check that out super respectful of the CMT organization but they should kiss JC's ass he's still very involved we're chapter heads of the New York chapter, and we're going to have Brian Shannon.

I didn't even tell you this. Brian Shannon's coming in in early April, promote his book. Shout out to Shannon. We're going to have some drinks. You guys will be invited. And, you know, for the 50th anniversary, we got the floor of the exchange.

We're having a big party. Some nice speakers lined up. Probably not allowed to say. Did you get Michael Batnick? We're working on it. He's tough. If I get invited, I'll come to that. It's not exactly Miami in February. No, not quite the

same thing. Are all the guys that trade on the floor quasi or full-on technicians or not necessarily? It's a mixed bag. There are people that go with their gut. There are people, you know, most people. How are they doing? If you're not a technician, then what are you trading on?

Right. Rumors that in you. I think it depends on your role, really, right? If you were a market maker, you kind of knew your stocks back in the day. I mean, I left the floor in 2007. But, you know, the group of stocks that I was assigned to trade, I knew those stocks inside, out, and backwards from a trading perspective. I had a rough idea of what they were doing. I traded a huge mining company that was based in Australia.

So you knew the news on those stocks. Of course, you had to know the news because, I mean, the news was generally out before the open. And this is pre-technology becoming as prevalent as it was. I mean, we were the ones who set the opening price based on supply and demand. All the order flow came to us, right? And you would see an imbalance. You've got a large imbalance to sell. You were going to take the stock lower until you found a point where supply equals demand, and you would see an imbalance. You've got a large imbalance to sell. Well, you were to take the stock lower until you found a point where supply equals demand and you would open the stock.

Obviously, that would be predicated on the news a lot of times. Earnings, takeover announcements, things like that. Like if a certain news story came out, a certain type of headline, you knew, oh, shit, here comes the you know, here comes the buyers or here come the sellers or who knows. But like you had a sense of that ebb and flow. You had a sense, but plus you saw the order flow. I mean what was our market share at one point? When I started, it was 85%. 85%. What is it now?

It's 25%. Less than 30%. Mostly open and close. That's where the block volume comes in. Those are the two most important trades of the day. So you want a human involved in those at all times. Okay. And then IPO stuff is still important. The human element.

What's an IPO? I haven't seen one of those. You might see one next year. No, no. They're coming. You don't see a lot of IPOs with the VIX over 20. No. The pipeline is robust. It's growing more robust. You sound like a banker. Yeah. This is the line. Stop.

The pipeline is robust. Wait. So I was on the floor for a few big ones. Yeah. I was there for Alibaba. The Yeah. I was there for Alibaba. The biggest. I was there for Twitter. Yeah. I'm trying to think.

There were a few. I was there for some hilarious shit too like Fitbit. Yeah. They put a giant f***ing treadmill. I mean like 50 people could run on it at once in front of the New York Stock Exchange outside. Yeah. That was pretty epic. Yeah.

You missed the Gateway Cow back. That was before you. When they had to the Gateway Cow back – that was before you. When they had to follow it with a giant pooper scooper. Oh, they had a live cow? Yeah. Did it come in the exchange? The chimp was there. They had a lion for a gold company up on the podium.

Dick Grasso was the greatest. He brought in some of the craziest things you could ever imagine. See, they got to do more of that. Like, is there a committee that says, you know what, let's have some fun with this? Yeah, they're trying. I think they've been doing it for years. I mean, they turned the opening and closing bell ceremony into the greatest promotional event in financial markets.

But it's true, because you know why? Like, you know why I think that's important? Like with ESPN, you have great visuals. So for financial media, you don't have highlight reels like, you know, Dan Russo slamming slam dunking a basketball like that doesn't exist. So having like a spectacle, not because it's obviously it's silly, but just giving people good visuals, I think promotes investing. And just generally speaking, I think there should be more, not less. It does. Well, the stat about the bell

is and it sounds crazy when you say it, but it's the most watched event on a daily basis throughout the world. And you think about it on Wall Street today. Ding, ding, ding, ding, ding. They're showing you. You may not realize you're watching it, but they're showing it. And then that person... They're showing that clip on newscasts across the world. And then, unfortunately, if the market,

the Dow closes down 1,000 points, everyone still has to sit there and clap as they're cheering for them ringing the bell. Those are awkward. Yeah, those are awkward. But, you know, we've seen – we get celebrities. We do a lot of charity work, a lot of charity bells, a lot of promotion. ETF space has been huge.

So you're seeing a lot of ETFs. Katie Stockton, friend of the show, friend of ours, recently just rang the bell for her ETF launch. So it's a great, great platform. I love it. All right. We're going to get into – we're going to start with – No, we're not. Yeah, we are's a great, great platform. I love it. All right, we're going to get into, we're going to start with Bitcoin. No, we're not. Yeah, we are.

No, we're not. Starting with Bitcoin. No, stop. Yes, we are. It hit 25,000. Stop, stop. It's not the biggest story of the day. Bro, why are you calling it Bitcoin?

That's so lame. All right, fine. Bitcoin. No, you dropped the Sam Zell clip and then you just left it hanging. Can we talk about that? All right, let's go into that. All right.

So there was some news this morning. PPI came in hot. Market opened. I think NASDAQ was down 1.3 at the open, something like that. But I just want to talk about the possibility of a soft landing that Sam Zell is not buying. So the NFIB, the National Federation of Independent Businesses, does a survey where they ask the single most important problem. Obviously, it was inflation that spiked from 0% of respondents up to 40%. That is now back down below around 25%.

Goldman came out today and said, we have cut our subjective probability that the U.S. economy will enter a recession in the next 12 months from 35% to 25%. 65% is still a consensus somehow. And the Citi U.S. Economic Surprise Index is its highest since April of last year. economic surprise index is its highest since April of last year. So if anything, there was a good analogy about like that we were going for soft landing, but we might not land and we just might reaccelerate. It seems to be that the news, at least on the economic front, is getting hotter again. Or less bad.

But how is it possible? How many rate hikes do you have to do for these things to roll over? Do you have to go to 10%? I don't even understand how we could have a re-acceleration. Could we just say the data is misleading if you look at any one month and you have to just think in terms of three months, six months? It's not just the data that's so good. The market front ran the data. The market continues to look good. Industrials, semis, and homebuilders, three of the most

economically sensitive stock groups, look amazing. Like, the news and the price action confirms bull market. Like, I know why we're, like, afraid to say it. No, I'm not afraid to say it. I would have guessed that we would be in a bear market. Oh, me too. We're really in the same place.

We're in the same place we were two years ago This time 21 Minus the Oh we're in the same place And what fascinates me is the amount of conviction On both sides People who are bared up have a ton of conviction This will happen, we will go into a recession The market will correct 30% from here

And the bulls have just as much conviction. And then you look at the chart. I think so. I think the hardcore bullish people do. But they always will, right? I mean, permas are permas, right? They're always going to do their thing. And that's kind of who I'm talking about here.

I think it's much harder to have a lot of conviction in the bull case, even though I'm saying that like them. Which is backwards because you should have more conviction in the bull case because the market has a tendency to go up over time. And I always like to say this. When I was on the sell side, right, worked with analysts, strategists, things like that, there's career risk to being bearish and wrong.

Yes. If you are vocally bearish, whether it's on a stock, whether it's on the market, and you're wrong, nobody forgets that. You can be bullish and wrong, nobody cares. You know what the mitigating factor to that is? Most of the perma bears don't actually manage money. So there's very little actual disappointment based on them being bearish. Like there's obviously some famous hedge funds.

Right. But the thing is the media loves them because they get- They sound smart. Well, no, they, right. They sound smart. And like the pronouncements they make, make for great headlines. Yep. It's clickbait.

They almost have like, they almost have like a welcome mat that's always out for them. Yeah, because both sound naive. You don't see the risks, right? Exactly. Yeah, no, right. Only you see the risks. The rest of us are complete idiots

and we have no idea what we're doing. All right, so Dan's got some trust that he brought up, but fine, let's talk about Bitcoin. Well, can we just, I didn't want to do like 15 minutes on it. Can we like mention the fact that Bitcoin is at a six month high? That's because it's an inflation hedge.

Clearly, that's the only answer that makes sense. Seasonality, February. It's the best performing month. So what is this? Who brought this chart? Who brought this chart? Right here. You know, last 10 years.

Look at it. Wait, wait. What is going on here? February. It's up like 9 out of 10 months. 11.7% gain on average. So February is Swimsuit Sports Illustrated Month. Valentine's Day that you suck at.

Valentine's Day and Bitcoin. So literally it's higher than 90% of all months that were shown. 9 out of 10. And what's at 11.7? 11.7% average gain. But when you show this, is this tongue-in-cheek? It's tongue-in-cheek and, you know, it's what technicians do. Package it.

It's seasonality. Seasonality on 13 years of data. Oh, yeah. Small sample size. Can I just put like a performance fee on this and sell it though? Sure. So I saw a good thread on why – because yesterday we were like – I didn't even see the news. I said, why is – what happened?

Yeah. And what was the news that you just told me? The Bitcoin Fed lowered interest rates. So no, there was a coordinated crackdown from the government on ramps and off ramps. And they're going after stable coins now. And it's potentially problematic. So somebody had a good thread on this. This guy, Rich Rosenblum, said, the sharp rally from 22 to 25K yesterday struck many as unintuitive.

Why would Bitcoin jump 10% immediately after a fresh strike of the regulatory shock and awe campaign? He said, one, the threat of regulatory action against stablecoins potentially scared capital into Bitcoin and ETH, i.e. a reverse flight to quality,

as holding a stablecoin earning zero already looked bad last week. Once building a probability it drops to zero, it's tempting to move to other crypto assets that are less reg and credit sensitive. I thought that made a lot of sense.

It actually does make sense. I think it does make sense. Are you laughing? Yeah. Why? I never would have thought of that. I thought it was earnings. I didn't know why it dropped.

You thought it was Bitcoin earnings? Yes. I actually had a good explanation. Okay. Which is that the Republicans came out with a bill in the House to make it illegal to stop Fidelity from including, not just Fidelity, stop 401k plans from including Bitcoin as an asset class. But that wouldn't pop at 10%. This would. He's right.

Yeah, I think he's right. Who knows what pops at 10? Yeah, no, I assume that this is right. I did include a weekly chart, a five-year weekly. Okay, let's throw it up. Throw it up. And technically, it just broke out. I mean, look at that.

We're going back. You know what? Let's do it. Let's do it. Let's do this right here, right now. I hate diagonal trend lines, and I will defer to the technicians. But there's no price memory Let's do this right here, right now. I hate diagonal trend lines, and I will defer to the technicians, but there's no price memory there.

It doesn't do anything for me. I hate trend lines. Ooh. What? I hate trend lines. Even horizontal ones? Horizontal ones. They're subjective. You and I can look at the same chart, and we can draw trend lines and have completely different trend lines on the chart, right? They're subjective. Now, there's some rules about, you know, from the

old CMT curriculum about how you're supposed to draw them. But you know, to me, I'd rather use the moving averages. What is a moving average but just a dynamic measure of trend? Oh, interesting. So, you know, you could start, you know, who's to say that that's the right trend line to draw? You know, do you connect

highs? Do you connect closes? Do you connect opens? There's too much subjectivity. So, what is this trend line though? That's intraday price highs. Weekly. Weekly. Weekly. Price high.

Intra-week price high. Weekly high. Weekly low. And the only thing I want to point out is something's changed. The trend is broken. Do you buy and sell at every trend line? No, you don't. You want to have more evidence.

But right now, something's changed. And it's at 25.2 is resistance. If you go back. What is the red line? Is that 200? That's the 200 week moving average. So, you know, I mean, there's still rising interest, as we like to say. But something's changed. And it looked like it wanted to go much lower when it broke down during the whole FTX thing. And it didn't. It made one low and then a series of higher lows and then broke back out. Pre-FTX, which was in November, Bitcoin was at $23,000-ish.

It's $25,000 today. It's unbelievable. It never happened. How is it that the $200,000 day never turned down? No, $200,000 a week. $200,000 a week. I can give you a daily, but this is just a show. I'm stuck on $200,000 a day. $200,000 a week, I get why it's never gone down.

Dan, we've got some of your charts. Let's talk on it. What do you want to talk about? So, oh, this is what you were just mentioning, that Bulls and Bears both have a ton of conviction. Yeah, I mean, like we were talking about, Bulls and Bears have a ton of conviction, but, John, that's the first Potomac chart. The S&P 500 has gone nowhere for two years.

Now, obviously, there's been a lot of volatility around that, but I don't know. How do you have a ton of conviction when, I mean, just look at the past year of trading. Right in the middle of a complete slop fest, right? That's a technical term. It's in the curriculum. The market's without trend. It is. Well, no, the trend is sideways. Sideways is a trend.

There's three trends. Yeah, I guess. Right? So, you know, you want to have a ton of conviction. You want to speak like things are going to happen. I love when people speak in absolutes. The market will rally 50%. It will? Yeah, maybe. That's such a great point. The thing that I've been saying to Josh, seemingly every day, this market is strong. So I'm not saying that things can't change tomorrow,

but for now, even look at today. The market gapped down a lot. I don't want to say the market wants it. The market is going higher. We're buying dips. We were just talking about this. The mentality has changed. I see an inverse head and shoulders. Do you want to throw me out the window? No. It's not a solid neckline to me. It's not solid. You need to see volume. I thought I saw a head and shoulders. You you want to throw me out the window? No. It's not a solid neckline to me. It's not solid. You need to see volume. I thought I saw a head and shoulders.

You want that volume to confirm the break of the neckline? It helps. It helps. I don't believe in that shit either. I'm not a big volume guy because volume gets skewed four times a year when you have expiration and rebalances. To me... Getting back to what the market is actually doing.

This morning, you had PPI that came in hot. Yep. You had one of the Fed officials saying that she was advocating for a 50 basis point rate hike. The market this morning took that is very hawkish. And six hours later, you know, the close is still 45 minutes away. But, like, dips are getting bought. Agreed. For whatever reason, they're getting bought.

We bought the CPI dip yesterday also. Yeah, we have. And the retail sales number didn't scare people. What would you say—like, this is bad news is good news, but in the other direction. Because remember when we were rooting for weak economic data, because like that would prop up stocks because people would think the Fed would be done. Now it's like, wait a minute. Now bad data is strong data. And it's, and we're still rallying on that. It's almost as if buyers and sellers don't really care. The narrative is changing.

The narratives change. So the story is actually we're avoiding a recession. The economy is re-accelerating. People were too bearish. People got offsized, and now it's positioning. Okay, I get that. I mean, two weeks ago, the most consensus view on the street was that we were going into a recession, right? I mean, it was literally the most consensus view on the street. What if we had a recession, but it was in the stock market and it was a correction of valuations and an earnings recession?

We've had two, quote unquote, bear markets in the past three years. Yeah. So like what if the recession was stock market recession? Like that happens. Of course it happens. So. But there's so many textbook definitions. I say this a lot.

Put an asterisk during this whole COVID era. Yes. Very good point. Yeah. This is the steroid era of stock trading. And we had the worst decline ever during COVID. Fastest bear market, fastest recovery. Exactly.

And now we're seeing it. You know, we had it just in eggs. We had it in chicken. We had it in gas prices. Lumber. Remember lumber? Ramp bought the high on that, too. We had like a six-week recession in the real economy.

Yeah, and things happen so quickly. And now people are rooting for the recession because we know the stats. We know, all right, two consecutive quarters of negative GDP growth. All right, that happened. We're going to have a recession. Didn't happen. Yield curve inverted. All right, when was that?

It was about a year ago. Usually the average is 12 to 16 months after it inverts, you hit recession. So the sweet spot, if we are to hit recession based on those stats, are April to July of this year. So that's what a lot of us look for in it. But then it's the NBER who makes the decision, and the job number has been phenomenal, even though we hear the headline, all these layoffs. The NBER guys can go on vacation right now. They're not going to miss anything because— They backdate the recession anyway.

Yeah, yeah. PR guys can go on vacation right now. They're not going to miss anything. They backdate the recession anyway. And then, you know, I mean, people have shown the stats out there. These tech companies massively overhired. So, I mean, they're just kind of normalizing that. They haven't even normalized down to pre-COVID levels. Not even close. So here's a good stat from Anthony Scaramucci,

of all people, because he doesn't, you know, he's not a stat guy. But anyway, here it is. The S&P 500 closed today at whatever close above its 200-day moving average for the 18th session in a row. No prior S&P 500 bear market in history has made a new low after making 18 consecutive closes above its 200-day moving average. So, sentiment trader confirmed. Did he hire Charlie Bilello? He got that.

Sentiment trader confirmed. Here we go. The S&P 500. This is the chart. I know people that are listening can't see it, but it's never happened. Okay, so do you remember when- Things that have never happened happen all the time. All the time.

It just happened this year or last year. So when everybody was talking about, we had the initial drawdown. And then the October. And then the rally. Yeah. And people were saying, never before has a bear market retraced more than 50%

and retested low. And then in October, we made a new low. So again, none of these stats are infallible. But we talk, as you guys talk as technicians, about market behavior, supply and demand. These stats to me are meaningful because it's just a history of human behavior. And even though this is an extraordinary moment of time, human behavior doesn't tend to change this dramatically. So we can make new lows. But this is a good stat.

I like this stat. What is this? This is the stat I was just telling you. Oh, this is the one. This is the 18 days. Yeah. All right. Let's do your internals and intermarket stuff. I think this speaks to your point. You know, the market is strong under the surface. I mean, a lot of people,

you know... Looking for the Dow transfer chart? Yeah, the transfer chart. A lot of people poo-pooed Dow Theory, but we still use it as part of our process at Potomac. And we kind of use it a little bit differently. We're not just subjectively looking at the industrials and the transports. We're putting some quantitative – Just real quick for the listeners who are not – mostly not technicians.

Dow transport – Dow theory is that the behavior of the transportation average stocks should confirm in one direction or the other what the industrials are doing because everyone follows the industrials. But if the industrials are making highs and the transports aren't, then that would be some sort of negative divergence would – Which would make you be more skeptical on the Dow industrials. I mean it kind of dates back to when we were more of an industrial economy, right? I mean, the Dow theory is over 100 years old, right? Think of an environment where a lot of the manufacturing was taking place on the East Coast, but the country was expanding West, right? So you had to get the stuff there. Yeah. The rail companies were kind of the internet stocks of their day, right?

So, you know, Charles Dow started looking at the industrials, the companies that make the stuff. Yeah. And the rail companies. The original Dow Jones Industrial Average was all rail companies. Pretty much. Because that's what the technology was. Yeah. Right.

So, you know, if the companies that make the stuff are having trouble, that's probably going to filter down to the companies that ship the stuff at some point. Right? So this concept of confirmation. So we still use it. Right? We use it a little more quantitatively. We put bands around moving averages as part of our model at Potomac, but it's done well.

So what is, this is just indicating that? This is just a weekly chart of the transports. What are these two lines? Those are bands around the 27-week moving average. So generally, if you're up above that upper band and making higher highs, that's some pretty good internal behavior or intermarket behavior, you know, especially-

What's in this now? It's like FedEx, UPS, bunch of rails. Some of the airlines. The airlines. Probably Union Pacific, right? Okay. You know, it's a lot of this stodgy old industrial companies. Is Uber in the Dow Jones transportation average?

No, I do not know. And if not, why wouldn't it be? I think it should be. It should be. Avis car is, and remember when that went up 200 points? Avis went to cars in the Dow Transports? Yeah, a simple car. And there was a day where it went up 200 points.

It became a meme stock. Oh, I remember that. And it's price-weighted. And all of a sudden, the Transports had this ridiculous move. We're going back two years. I knew what we were talking about. I would have brought that. But the transports used to be 20 stocks.

Yeah, 20 stocks. 20 in the transports, 15 in the utilities, and 30 in the Dow. And the Dow's a mess. How is Intel still in the Dow? All right, put up this weekly advance decline line. What are we looking at here? Just a weekly running total of advancers minus decliners, right? Are you pulling out the non-stocks or

you're not? No, we actually, we actually use all NYSE traded stocks, which is an issue. So we include the, we include the closed end funds, the bond funds, right. To get a holistic view of what the market's doing. And, you know, again, you know, we're not just kind of looking at lines on the chart. We're putting some math behind it, you know, moving averages with bands. And, you know, this to me is a breath confirmation. There's been a lot of breath confirmations. We have some other charts as well. So you have the transports doing well.

You have advanced decline data starting to turn and move higher. So to Michael's point, it's a strong market under the surface. Now, the S&P 500 has gone nowhere. And the S&P 500 is the benchmark, but there are a lot of other stocks out there. If you look at equal weight indexes, if you look at a lot of different ways of looking at the stock market away from cap weighted index, it's all the same message. So I was looking this morning at the advanced decline line daily data for the S&P 1500. Okay. And it is within striking distance of a one-year high, the advanced decline line for the S&P 1500. Okay. And it is within striking distance of a one-year high, the advanced decline line

for the S&P 1500. If you talk to the average, even professional who works in the market, they would not guess that. No, of course they wouldn't. January was a very strong month for stocks. I think the market was up 6% or so. It's now February 16th and the market has gone sideways all month, but we're digesting those gains. That's fair. Right? Like we're just, we're not, but we're not advanced, but we're not giving anything back. Also though, like just historically after a shitty year in the market, you should expect a big stock market rally. That's what – not always, but almost always the worst years are followed by pretty good years. And look who's leading. It was all the laggards from last year.

So the rotation is – it's real. I think that's probably – I mean discretionary – That shit happens all the time though. ARK is up 43% year to date. There's a great book called There Was a Very Good Year, and it's probably the biggest debate in the market. It happens all the time, though. ARK is up 43% year-to-date. There's a great book called There Was a Very Good Year, and it's the 10 best years

in the market, and they all follow, I think all of them, for the most part, follow very bad years. Maybe the late 90s is an exception, but for the most part,

after a really bad year, you have a really good year. But I think the cognitive dissonance this time and what people don't like about this is, okay, fine, we had a bear market last year, down 20% in the S and P is pretty rare. Now we have a bounce. The problem is this

bounce is not being accompanied with a recovery in earnings. In fact, the profits are getting earnings getting worse and rates are going higher. So like, why is it bouncing? Like, why is it bouncing starting in January? Why wouldn't the bounce start mid year? Maybe when the fed's actually done? Or when we know the extent of the earnings damage? That's why I think people are struggling with this. You can speculate on what that is, and you guys probably have a better view of that than a lot of people.

I mean, beginning of the year, people rebalance. I have no idea what's going on. Rebalance their portfolios, right? Fresh money comes into the market, you kind of rebalance. You got a lot of things got really offside last year. Here's the thing. That's what should happen, but actually, the fund flow data into the market. You kind of rebalance. You got a lot of things got really offside last year. Here's the thing. That's what should happen. But actually, the fund flow data is the opposite. People are putting money out of stock markets.

People are pulling money out of equity funds every week this year, mutual and ETF. But this is what I'm saying about positioning. People are still so offside. They're offsides. This is interesting. The Dow Transportation Average, according to Investopedia, does not have Uber in it. However, when I look at the transports, I look at IYT. Right?

That's the ticket that I look at. And Uber is the fourth biggest holding. What? Explain. How is that possible? IYT is just a transportation ETF. It's not the Dow Transport ETF. And they'll rebalance more frequently.

So who's that? S&P Dow Jones indexes? Yeah. So what are they doing? They're cutting edge. They see the future. No, no, no. I thought iShares was MSCI.

iShares is MSCI. Yes. No, but I'm saying, why wouldn't it be in the Dow Jones transportation average? Because they don't rebalance these things. When's the last time they changed a Dow, Scott? How do people transport themselves, if not via Uber?

I don't know. We got to poke them with a stick. Wake them up. Yeah, Lyft is in here. Just kidding. All right, what do we have from Sam Rowe, Mike? I don't know. We got to poke him with a stick. Wake him up. Yeah, Lyft is in here. Just kidding. All right, what do we have from Sam Rowe, Mike? I don't know. What is this?

Rally from October. Who put the Sam Rowe? Yeah. Oh, okay. Here, exactly. Sam is proving our point. So this is from Bank of America, Global Fund Manager Survey.

The rally from October 12th, driven by easier financial conditions, generally viewed by investors as a bear market rally rather than a new bull market. 66% of investors think it's a bear market rally. Only 23% of investors think it's a new bull market.

This just happened? This is February 23rd. Oh, wait a minute. I'm sorry, February 23rd. My bad. So they're still so offsides and getting more offsides. They're selling their funds.

So the longer stocks stay up here, the more people are going to have to chase. And it could lead to a nice short opportunity for people waiting to short this market. What do we have here? 10-day breadth thrust. Yeah, I mean, listen, that's

a pretty rare signal. This is basically taking a running total past 10 days of advancers, decliners. And when the ratio gets over two. Stocks going up versus stocks going down. Yep. Over two meaning two to one?

Two to one. Okay. Over a cumulative 10-day period. So you take the past 10 days, add them up of advancers, divide by past 10 days, decliners, right? And if that ratio gets over two, it hasn't happened often, right? So last time it happened was the bottom in March, 2020. Coming out of that, yes.

We're higher six, 12 months afterwards. It actually happened in May. So, I mean, that's a pretty powerful signal. So it just happened in the middle of January, right? There's the one, you know, it actually happened in May, June, 2020, coming out of the, it's actually June 4th, June 4th, 2020, coming out of the COVID lows. So what else could cause that other than a lot of people buying stocks? So who are the bears? Well, the bears got out at the end of the year, and they just don't. Nothing can artificially cause a breadthrust.

I'm trying to think out – I'm trying to think, like, what would be a reason to explain this other than people buying? Short covering. Short covering. Short covering. Short covering. So we showed that chart last week. It was the highest short covering since 2016 or something like that. Yeah, but this happened in mid-January. Yeah, that's what I'm saying.

So, yeah, no, this happened before the short covering from last week or the week before that. They said short sellers lost $300 billion year-to-date or something like that. Maybe. I forgot when that came out. People like to pick on short sellers. I like short sellers. They keep the market honest. They do. What's this table with this breath thrust? This table is basically the stats around that breath thrust. And, you know, what's kind of

interesting to me is a lot of people love to call out, you know, what happens. This is, you know, how the market tends to perform, the S&P 500 tends to perform over the next year of trading, right? Which everyone loves to do. But nobody tells you kind of what the ride is like over the course of that year. So we pay attention to those last two columns pretty closely. MAE is max adverse excursion. So the most you were down on the trade, if you took it since the signal. Yeah, that's a great. I love, I love max adverse excursion.

Max adverse. So the excursion is like. Let's say this, let's say this So the excursion is like the- Let's say this triggers, the S&P is at 100, right? So you buy the S&P at 100. Why don't you just say max drawdown? That's like the- Because it's not max drawdown.

It's the wood of the Pumonical. It's not max drawdown. Max drawdown is your drawdown from the high. Right. This is the most you were down in negative territory since putting the trade on, the most money you were down, right? So you could be up 100% and then draw down 50 that's your drawdown i understand so you know what's the ride like everyone all right so a 10-day breadthrust triggers and then you're like counting down

historically backward yeah what all right so okay so what is the lesson from the second to last column the lesson is i people love to throw the stat out there, the market's higher one year later. Yeah, that's what we do. That's like half our shtick. You just blew up our spot. Go easy on us. No, it isn't.

What's the MFA? Max Favorable Excursion. No, finish your thought. But I think it's helpful to know what the ride is like. Yes, I agree. Can you withstand it? It's right up there with the, if you put $10,000 in Amazon on their IPO, you'd be worth

this much today. But would you have ridden that 90%, 95% drawdown? If you forgot your passwords, your brokerage account, then you would be. Right. So we think it's favorable to kind of, or at least helpful to talk about what, you know, what could go wrong. What's the path to get to that? So MFE.

Is max favorable excursion. So that's the most you were up on the trade at any point within that one year period. So even that looks favorable. So the max favorable excursion after a 10 day bread thrust a year later is 26% on average, of course. And the max adverse version of that

is negative four on average. That seems like a pretty good trade-off. Look at here. Yeah, of course. It probably is, but not everybody can withstand that. Well, what's the worst? 18.5%? Yeah, but look at a year like 1949.

Jay remembers it. Oh, yeah. At one point, you were up. It's the first year on the floor. Exactly. The most you were up at any point within the year was about 31, a little over 31%, but the trade would have closed with a gain of 12.8 percent. Okay.

So that's your drawdown. That's a big drawdown. Right. But you had Sinatra. You did. It wasn't all bad. Did you? 41?

Probably not. You would have. 49? Yeah, I think that was him. 49, you had him. Hoboken days, yeah. Yeah, yeah. All right.

Yeah, I think that was him. 49, you had him. Hoboken days, yeah. Yeah, yeah. All right. That's a good message for people because the way we phrase it is the map is not the terrain. Exactly right. It's the same concept. I could point to the other side of the map and show you the route to get there, but I can't describe the feeling of going through that route.

You almost have to live it. And I think from an investing perspective, it's like, yes, Amazon is up 19,000 percent. But there were days where you were down half your money. But if you show it on an arithmetic chart, you don't see that 95% drawdown. That's right. So that's the way you should do it. I think that's a very good lesson for people.

And we also kind of, for us, we're big on good alone, better together. So we always look at things, we don't never just look at one indicator, right? Nobody would really ever trade on one indicator, but people love to harp on this stuff, but you kind of start combining this. You have this breath thrust, you have transports doing well, you have advanced decline data starting to inflect higher. I mean, and news getting better and earnings, not that bad. Like it's everything. We're almost, we're almost starting to sound

like permabulls. I'm getting, I'm actually getting scared. My default, my default setting is actually bearish. I have to work at a place that's systematic. Otherwise, I would just be bearish all the time. But I think that's most people. Wait, why? I have a theory on this. In my age? Yeah, I think we're about the same age.

It's human nature. It's not unique. All right, hear me out. You and I have seen big bear markets. So you and I have seen big bear markets. They always come back. But at the same time, like, so, you know, sitting in college in the late 90s, right, it's the greatest thing in the world, right?

Basically cutting class to go to the library to trade Microsoft and Cisco. And at one point, I actually told my dad, I said, I think I'm going to just become a day trader. Like, this is pretty easy. And my dad was in the business. He was a sales trader. And he basically looked at me and was like, you know what, Dan? You're not that smart. It's a bull market.

He's like, just finish school and go to work. Boy, was that great. Was that ever true? It was so true because I had a job lined up at the New York Stock Exchange for a specialist firm. I had interned there for a bunch of summers. And I was literally thinking about tossing that to go sit in some office on Long Island at Day Trade. Dude, a lot of people were. I know.

A lot of people did. In 1999? Yeah. A lot of people. None of them are doing that now. We just went through it though. But we're going through it again. They sell small business loans now.

They were doing mortgages in around 06, 07. So for me, that was just, we've lived through that. That was a formative experience for you. So you graduate, you go to work. It's the year 2000, right? The new millennium.

Everything is supposed to be puppy dogs and ice cream. I started working on the floor of the New York Stock Exchange the week that AOL bought Time Warner. This time is different. So we get the bursting of the dot-com bubble. So I have a front row seat for that on the floor of the New York Stock Exchange. And within that, we get 9-11. We get the accounting scandals, Enron, WorldCom. I'm sure you saw some of those stocks trading.

Enron was trading basically two panels away from where I was working it was the most crazy thing I've ever seen things start getting better then we get the global financial crisis and then we get COVID so it's like you have these once every hundred year events

we've had three of them and the market just keeps going up but it fascinates me that things go down so quickly. And I don't know. And psychologically, so this is not unique to you. Every investor is more bearish because the disposition effect, that loss is you feel them twice as much as gains. But I have another theory too.

Go ahead. I think your first trade where you really make a decent amount of money can imprint you as well. Oh, I totally agree with that. And when I was a market maker on the floor of the stock exchange, my first big money-making trade was to the short side. So, oh, I totally agree with that. So now, so you have all these events

and then like, oh, wow, look at this. I can make money betting against things. But also your first big loss, your first big loss could- I've never had a big loss. Sure, I have. Your first big loss though also, I think could have a really big effect

on how you think about risk. 100%. And that you can never shake. It becomes like wired as a part of you. Stan, since you started, you saw the dot-com bubble blob. You saw the GFC. You saw COVID and the markets.

I'm not saying it's rational. No, of course not. No, but the market's up 12% a year probably over the time. Compounded. But we had a loss day. Maybe not. Yeah. 2000 to time. Yep. Compounded. No. But we had a lost decade in there. Yeah.

That's true. 2000 to now? Yeah. Yeah. Maybe not. The error that you're referencing, late 90s when you were in college, I'm in college at the same time. Yeah.

The Dow's 8,000. Breaks 10,000 for the first time in 97, right? Yeah. It doesn't stay above because then we have the Asian crisis and all that shit. And then long-term capital. But so it's 34,000 now? Yeah, it's crazy. I don't know if that's 12% a year,

but it's like- Whatever. It's not bad. But guys, I bet it is. The markets are rolling over again on the list of days. Duncan, delete everything I said. Yeah, yeah.

Let's start this over now. I'm all bearish. This is why I'm bearish. Hey, what's this regime index? So basically, this is something that we created for intermarket analysis. It is a combination of relationships across equities, fixed income, and commodities.

It's basically – this chart allows me to be an economist without being an economist. So when I look at it and I look at the one-year slope or the one-year trend, you can basically see – so when it's above zero and green, the trend is accelerating. When it's above zero and red, the trend is still working higher, but it's decelerating, right, and vice versa on the downside. And to your point, things are starting to become, I say, less bad. We're still below zero, but green. So things are basically declining at a slower pace. So if you believe in market relationships, I'm not sitting here ripping apart economic data. I'm just looking at what the market's telling me.

And if you take this combination of relationships that we look at, things are becoming less bad. So what's in that? Commodities, bond yields? The copper-gold ratio is in there. A ratio of high beta to low volatility, a ratio of regional banks to REITs, right? And high-yield bonds to treasuries. Because there's signal in what the crowd's preference is from one of those things to another. I think which is outperforming the other. Of course. To me, the bear case is interest rates again, because we've got the two year at four, six. You've got the 10 year at three, eight. This is the highest it's been since December. If interest rates, which are in a pretty steep up at 3.8. This is the highest it's been since December.

If interest rates, which are in a pretty steep uptrend right now, at some point, this is going to present a problem for stocks, just like the risk-reward equation. Wait a minute, wait a minute. I could get 5% on one year. Like that is potentially problematic. Is this the most you've ever seen stock people

pay attention to bond yields? It's the most we're paying attention to every data point. The CPI was something that we never even looked at. And now we're looking at that. But yeah. It's a Super Bowl now. The bond market's moving faster than we've ever seen it before. But look at the volatility in the 10-year.

It was 3.4% just six weeks ago. And now we're knocking on the door. I had a chart of the moving index. I was going to put that in here. 4% again. So yeah, just the last six weeks, as the 10 years rallied, so has the market. So something is a little less huge. Two weeks ago, the two-year was at 403, and now it's 406.

That's crazy. Those are ridiculously fast moves. Just anecdotally, I don't ever remember a time where stock market people were this fixated on a 10-year treasury. We didn't talk about the bond market. We never had to is the point. No. You haven't had to in our career. Never.

Yeah. Right. Never had to worry about inflation, but you definitely weren't fixated on treasury yields. They just weren't the thing. Even when the Fed was the thing, the 10-year treasury, what the fuck are we talking about? And the dollar is the other thing. The dollar is the thing that drove the bus last year. As the dollar kept getting stronger, we kept getting weaker.

The dollar's finally stabilized. It found support and is rallying again. That's a pretty big balance and hasn't impacted stocks yet. Not yet. Something interesting that I didn't see a lot of people talking about. I didn't throw this in the doc, but I think your Danny did this this morning in like a quick blast. Foreign investors and or

banks or whatever put $1.7 trillion into US bonds last year, which offset the entirety of the tapering. Wow. And then some. Wow. That's crazy. So where would rates,

I guess like where would rates have gotten to if not for all that foreign buying? Maybe we'd be at 6% already. Yeah, yeah. Let's- So you're talking about interest rates, yet credit spreads are tightening. Yeah, I was going to say, let's go to credit spreads here. Credit spreads are tightening.

CCC chart. The chart that I brought. So this is CCC and below. This is like the crappiest of the crap. Can I say crap? Yeah. What's in here? Like FTX bonds? Pretty much. Bankruptcy claims. Right? So, and just like a simple weekly chart with a 52-week moving average.

And, you know, this is just something that we pay attention to and don't necessarily use it. That's the yield? 9.91? This is so weird. Financial conditions. Oh, the spread between. The price of the spread. Financial conditions are easing and tightening.

Easing and tightening. Yes. So, but like this thing did a pretty good job on the way up when it crossed above the 52 week moving average in early, you know, early 2022. Right. We came into 22. A lot of people don't remember, like everyone talks about how bad 2022 was, but. Made an all time high.

Market made an all time high. January 3rd. I was actually on some media platform screaming about how bullish I am. Me, who's like default is the bear. Right. But I've just kind of gone the trend following route. Right. So I always tell people, if you're a trend follower, you're going to be max bullish at the top and you're going to be max bearish at the bottom.

That's the risk. If you're a trend follower, that's – like every investment strategy has an Achilles heel. The Achilles heel for trend following is what the cost is of staying bullish past the peak. Look, people are default trend followers because we made the point that bears are the most bearish at the bottom. Of course. Or they sound the most convincing, maybe. Because they have the most confirmation bias. Yeah. So that's when they

really go crazy. So even if they're not necessarily following the trend, the subconscious trend is confirming that they're right. Yeah, I agree. Because the news is terrible around that time. Just go back to 2020. It's black. The market bottoms on March 23rd of 2020. We had just shut down. You were less than two weeks into it, and the market was bottoming.

And I remember April 6th being the day because it was my wife's birthday and our anniversary. And things were still terrible. We were trying to figure out what to do. It was our first anniversary. And I was running around the house. She's all happy and she's like, what's going on? I said, what's our anniversary? I said, I'm going to buy some stocks. This was for my personal account.

And she's like, what? Do you see what's going on? I said, yeah, it's okay. We're going to buy stocks here. The balance made no sense to me. You buy it as Bill Ackman was on the air being like hell is coming. That was March 15th. There were early indications that at least a short-term bottom was in, right?

And I think the biggest mistake a lot of people make is they think they have to be all in or all out all the time. Especially like, you know, if you're a research analyst or if you're, you know,

writing a newsletter, people expect you to be all in, all out. But in actuality, it's more nuanced than that. It's so f***ing childish. Incrementally positive. Swing to 100%

stocks or cash. Yeah, what are you?, bullish or bearish? The good news is nobody actually really does that. Nobody manages money that way. No, of course not. I mean, it's crazy. Jay, are you bullish or bearish? I'm neutral right now.

I think we are more – if you're equity, I'd be more bullish because I think we've broken out of these downtrends and now there are buyable dips. There are actual support levels to look at. You know, 4,100 in the S&P 500. We're above the 200-day moving average, starting to flatten. We're at 4,096. Yeah, all right. So we got four points. You're stopped out.

We'll see where we go. But it's hard as a technician to say that I'm still in the bear camp right now because the breadth has just been too widening to the positive side for me to say yeah you know but if you listen to the news then dude is that the worst kind of is that the worst kind of technician the one who says i'm bullish and then no matter what happens like they'll find a chart that confirms it yeah why they should stay bullish and vice versa and and this is what's not really a technician anymore. That's a demagogue. Confirmation bias, dogmatic. That's an if this, then that.

And you're always trying to manage risk. So you're not going to get the bottom. You're not going to get the top. But you're going to get the meat of that trade during the trend. I like to keep it simple. If the market is up that day, I'm bullish. If it's down, I'm bearish. All right.

There you go. Not enough people are talking about the possibility that stock bond correlation could be reverting to pre-2000 dynamics. I find this idea really interesting. Most of the people listening to this show, if they were around pre-2000, probably don't remember much about stock bond correlations. I know I don't. I mean, so stock bond correlations were positive pre-2000. For how long? All of the 90s? Most of the 90s. Like rates went up gradually because the economy was good.

Bonds went up, stocks went up. Yeah, okay. Bonds went down, stocks went down, right? And then kind of realistically, it's more like 1998. It was long-term capital management was probably the catalyst for the flip. Yeah. If anybody remembers long-term capital. I actually had a buddy who was working there.

He graduated a year ahead of me. He was talking about how great it was, right? And I was like, whoa, you got a job there? That's amazing. So summer of 98, that blew up. That blew up, obviously, in 98. And then Greenspan overnight went nuts on rates. Yeah.

He dropped rates as fast as he could. So then all of a sudden now, if you just kind of look at that chart, those are one-year and five-year correlations between stocks and the 10-year note. So that's note pricing, not yield. So through most of the 2000s up until last year, they moved inverse. So this is your – when people talk about the 60-40 portfolio and the death of the 60-40 portfolio, this worked out so perfectly because it did its job theoretically. Stocks were up. Bonds were down. But when stocks were down, bonds did your job of hedging.

So our view lately is that that could be changing. And the one-year correlation has now flipped positive. bonds did your job of hedging. So our view lately is that that could be changing, right? And the one-year correlation has now flipped positive. The five-year correlation looks like it's about to turn positive. So what happens in that environment? Are investors ready for that? What happens when stocks and bonds are correlated? What happens when your diversifier is not diversified? Well, that happened in 2022.

That was the entire thing. That happens for a decade. But what happens if it's a decade? Well, I shouldn't say it can't. The idea that you're going to get killed in bonds again seems kind of unlikely. Is the two-year going to go from four, six, up to seven? I mean, I guess it could.

But if that happens, then your stock's going to f***ing destroy you anyway. Right. But, I mean, just the fact that they're moving together, I mean, I think that changes the investment equation a little bit for people who kind of think a little bit more strategically. So is that an argument for like a larger alt sleeve in a portfolio? I think it's an argument for like a barbell approach.

You're not going to really get people to not own bonds, right? Just given the demographics. Especially now when they're actually attractive. Exactly. I own bonds. You're way too young for that, no? Yeah, right? No. But I think there's probably- Never too young to start. I hear you. Okay, go ahead. There's probably an argument to be made for seeking out things that have little to no correlation to equities and taking kind of this barbell approach, right? Take your stock bond portfolio over here, but start seeking out things like, I don't know, trend following, things that are less correlated as a diversifier to add to the portfolio.

There's a few problems with that that I have seen. You've seen this too, I'm sure. The first is people just say, oh, alts. What does that mean? There's like 9 million different things going on. You could have a very different experience buying any one of the 12 different alts that I think you have to drill down. You know, I think you have to drill down

and actually do the work, right? Because if you look at something, you know, I forget what the ticker symbol is, but there's an ETF that tracks like the long short equity strategy. And it's- Is it BT, is it- BTAL is new, it's something different.

But a lot of these still have a tight correlation to the S&P 500. I mean, most long short managers don't run neutral. A lot of them will run 70% net long. So at that point, you might as well just buy the S&P for three basis points. Right, or if you want to use it as a hedge, just put 90% of the money to the S&P,

put 10% in cash. You'll have the same drag that you're getting from it. Right, so there's some element to that. Second thing is I think it leads people down some dark alleys when they're convinced that stocks and bonds won't be good enough and their willingness to do stupid shit. Like, I mean, I'm just throwing crypto,

but really anything under the sun that could go bad. It's not that they shouldn't do those things. It's that they shouldn't assume that that's a safe harbor. No, I don't think it's – no, you can never assume anything is a safe harbor, right? That's right. I mean, just take a look at the next chart that I have here. Okay. What's the next chart?

Here's your safe harbor. Long-term treasuries. LOL. It was until it wasn't. Here's your safe harbor with an equity-like drawdown of 46%. I prefer the zeros personally. This is wild. Z-R-O-Z. Yeah, what did that – that got cut in half, 46%. I prefer the zeros, personally. This is wild. Z-R-O-Z.

Yeah, that got cut in half, right? I'm pretty sure. Yeah. Zero coupon bonds. Yeah. The ETF is zeroes and zeros. It's still in a 50. That got hit for 60% almost.

Now it's down 50%. 50%. Yeah, almost. 60%. Yeah. I mean, that's- Because that's no income. That's just pure price.

It's all a duration. Oh, my God. Exactly. All of it. So here's your safe asset with equity-like drawdowns. Hold on. This is a 46% drawdown from the high. From the high.

This is TLT? TLT. Now, let's assume that most— This is a lot of people's default risk-off product. I know. And it worked really well, but it did also get killed in 08. Yes. Okay.

So, like, I think most people understood that it's not the same as buying SHY. Fair. I think, like, 95% of people using this as a hedge knew that it wasn't the best hedge. It's not cash. Hold on. Nobody's using TLT as a hedge. I mean, I was just saying nobody. To me, this is a trading vehicle.

It's a risk-off vehicle. No. I kind of think people— No, no, no. Hang on. I'll say nobody. To me, this is a trading vehicle. It's a risk-off vehicle. I kind of think people... No, no, no. Hang on. I'll say it differently. People piled into TLT when there was a risk-off event. I don't think people were using TLT and stocks as a 60-40 type thing.

Well, how much money is in it? I'll tell you right now. 20 billion. Oh, okay. So then, yeah. It's probably not a big component of, let's say, model portfolio at Morgan Stanley. Oh, 30 billion. It's probably not a big component of like, let's say, model portfolio at Morgan Stanley. Oh, $30 billion.

But my point is prior to this episode that we're in, TLT was – you're right. You guys are right. TLT was a risk-off trade. Whenever there was a risky event, this thing shot up, asset piled in. I think that's fair. Are there any triple-wevered bond ETFs? There are. Yeah.

I didn't know that. We're actually working on a quadruple. So we're trying to get that out quickly. What is this multi-color chart? We don't need to do this one. We're going to skip that? Let's talk about Elon. Oh, boy.

Is Elon Musk getting like visibly crazier? Like is that even – is that the narrative now? Is it possible? I mean the whole Twitter thing. Let me set this up. Okay. All right. Twitter chief executive Elon Musk rallied a team of roughly 80 engineers to reconfigure the platform's algorithm so his tweets would be more widely viewed.

This is according to a news site called Platformer. A disgruntled Musk called for an emergency effort after a tweet he sent during the Super Bowl failed to achieve as much engagement as a tweet from Joe Biden. By the way, that's bad. Quote, I have more than 100 million followers and I'm only getting tens of thousands of impressions. A Twitter – here. A Twitter employee and cousin of Elon Musk, James Musk, posted urgently in the company Slack at 2.30 a.m. after the Super Bowl. Right. Asking all employees. after the Super Bowl. Right. Asking all employees who can code to participate.

Quote, any people who can make dashboards and write software, please can you help solve this problem? This is high urgency. That sounds like Elon was punching him in the face. Yeah, and it's funny because one of my friends, Walt Peisic at Walt Lightshed, he tweeted and he noticed if you go to the for you part instead of who you're following, everything that he liked was

showing up in his for you feed because he followed Musk. So it was gaming that you, if you follow Musk, you're going to see everything he replied to, everything he liked. Why isn't it enough to wish? Look at me. I don't care how much money you have.

$44 billion is a lot of money for an ego trip. Like I don't know. Like why isn't it enough to be top five richest people who have ever lived or ever will and just like be able to like do the shit you love? Like he loves building rockets. He's not like, shit, I have to make another rocket. But wait. But wait. One of the companies-

Like he has the ingredients to have the greatest life anyone could ever live. But listen, so to that point- And he's worried about his f***ing tweets. One of the company's two remaining principal engineers

offered a possible explanation for Elon's declining reach just under a year after whatever. Okay. He said, public interest in his antics is waning. And so what did Elon do? You're fired.

Yeah, and that's probably the most likely explanation. It's not that he doesn't have reach. No, it's fatigue. People have seen it. Yeah, we got it. We saw it. We're over it. You know what I think this is?

Psychosis? These are like the kids in high school that got beat up. Yeah. And now they run the world. Okay. So they're still just childish and immature like they were in high school. I think it was good if you got beat up though in high school. I think so. I think you had – not bullied, but I think you had to have been some –

that's my problem with a lot of people I run into now. I could tell they've never been beaten up. Maybe beat up. Picked on. Geeks. Nerds. Picked on. Yeah, yeah.

Right? And high school probably wasn't fun for them. And now they have all this money. They can do whatever they want. So you do things like this. I think Elon's dad owned an emerald mine in South Africa. I think he was okay in high school,

but I see your point. This, I don't know. If this is a fake story, then we all are buying into it because it sounds like it's real. It sounds like something he would do. It's totally real. Absolutely.

So now Tesla workers are trying to unionize. Fired. They fired them all. Did they? Yeah. Yeah, I think that came out today orize. Fired. They fired them all. Did they? Yeah. Yeah, I think that came out today or yesterday. They had a – Oh, my God.

What's this picture with Phil Maddow? I like this. This is great. Let's stop this picture. So I just want to get some reactions from you guys. So we had Michael Jordan shot in 1998 against the Jazz, and you've just got the crowd fixated. And then you've got LeBron breaking the record.

And you've got literally, as would I, everybody in the crowd holding up a cell phone with the exception of Phil Knight, which is pretty epic. Look at the crowd. What year is that? 98. Okay, so look at the crowd.

Nobody has a camera. There's one dude. There's one dude to the top left of the backboard who has a physical camera. And then the guy on the bottom whose job it is to have a camera. Correct. And the rest of us were okay with that.

Like someone else is going to get this picture. It'll be in Sports Illustrated. I don't also need to get this picture. So the juxtaposition of this is pretty striking. I don't necessarily – I mean it's just good. It's just bad. It just is. One thing to explain this though, this is not because they want the picture.

This is so that they can show their friends that they were there. Yeah, yeah. So it is the experience, but the experience is worth more to people if they can use it to demonstrate why they're better than people they know. I would be taking a picture. That's how you have the memory, of course. You're watching it on a four-inch screen

instead of in real life. Well, I think people are, well, that's a fair point. But you were nodding when I said that. You agree with that? Yeah, yeah. No, I totally agree. That's a fair point. I would rather nodding when I said that. You agree with that? Yeah, yeah. No, I totally agree. That's a fair point.

Everyone would rather watch a concert now on the screen of their phone. How about this? If you took that picture, you'd probably post it to Instagram and never look at it again. Never. I was at LeBron's game at the Sixers where he went to third past Kobe Bryant who then died the next day. It was awful. And my kid, every kid there, anyone under the age of 50 was recording that moment. So I have

it. Have I ever gone back and watched it? No. But does this make it any less exciting? Are you not experiencing the moment because you're watching it through your phone? I don't think so. I think the electricity in that atmosphere was probably insane. Yeah, without a doubt, but we can sit back and judge Don't you think in 10 years, though, this will look ridiculous

because by then, I'm not saying people get over taking pictures and bragging how great their life is on social media. But by then, it will just become this thing where, all right, everyone is going to have the picture. It's cooler if you don't post it. No, no, no. It will never become that? No. In 10 years, you'll be taking a picture with your eyeball or something. I was just going to say it's going to be embedded in your eye.

The camera will be in your brain. Okay. So if everyone is doing that, then what is the point? So you can put it on Instagram. This feels peak something to me. No, it's not. It's not peak anything. This is what it is nowadays. The kids of these kids will mock these people somehow because we get mocked now.

I'm mocking them, and it's four days later. This looks ridiculous to me. And actually, you know what's amazing to me? Not one of these people is looking around and saying, oh, this is so ridiculous. Everyone's holding their phone up.

So if you're at that game, what are you doing? My phone's up. Absolutely. My instinct would be to take the picture, but I do think this about myself. I don't do things

that everyone else is doing. And if I did look around, I'd be like... Okay. Okay. You're 100% on your phone. I 100% would put my phone down if I noticed everyone around, I'd be like Okay, you're 100% 100% would put my phone down if I noticed everyone else

had theirs up. How would you? I'm an iconoclast! No, you wouldn't. You take a photo. You don't just stand there recording. Oh, dude, you would never see me videoing. You would never see it. I might take a picture.

This is a lot. And it's everyone but how about this hold on let's also this is this is the record breaking bucket

this is not normal what do these people give a shit about this record what does it mean to them none of them just being there is enough being there is enough kind of like what we were

talking about earlier just like being present but now you're enjoying it that's all it is it's just it feels peak something to me.

You know what else I miss too? You guys sound old. On a related note, I hate the flashlights at concerts. I kind of miss the lighters. Yeah. I miss lighters at concerts. Before you bring your own – bring an analog lighter. Actually – all right.

I love it. Jay, what's the sandwich generation? All right. Hold on. We got to get some ice in here. We're going to crap this in coral while we do the last topic. Okay. All right.

You can work on that box. Oh, it's 23 degrees. Now I feel it. Exactly. Exactly. It's very special. No, I came to you guys for help. We talked about this

outside the floor one of these days. No one talks about Gen X. We're like the forgotten generation. Keep it that way? All right. No, Jake, keep going. We had the greatest life.

You know what I mean? Just go out, come back at dark, get in the station wagon, no seatbelt, mom hit the turn hard, fly around. No phones, no internet. No, nothing. The best. But right now, in my experience personally, we are that sandwich generation. We have kids that are getting more and more expensive. My case, two in college, one in high school.

And then we have the aging generation that needs help. And a lot of our generation is in different directions because we're both product of divorce. And you have a mom here, a dad there. Me too. Divorce, divorce, divorce. Yeah. And there's no playbook that I've seen that says, all right, what's the play? I know how to save for college. I know how to save for college.

I know how to save for retirement. How do you save and how do you drag those elders along and say, all right, you got to help me out here and take care of yourself instead of relying on me on top of everything else? Unfortunately, you're going to need robots to come pick up the slack, take care of people. AI will fix this? No, not AI. Like physical robots are going to be taking care of 90-year-olds in the next 10 years,

and that's going to become the norm. Because we're not, we don't have immigration that will take all these nursing jobs that are needed. There's just no, what? Am I about to drink a measure

of a cup full of tequila? I was about to start pouring this in there. That's really funny, actually. I probably would have drank that. All right, so Jay, so what's the point? The point is, he's complaining about taking care of his parents. Yeah, no, no, yeah. I probably would have tried to do that. All right, so Jay, so what's the point? The point is, he's complaining about

taking care of his parents. Yeah, no, no, yeah, I need psychological help and that's why I came. No, it's just one of those things that I don't think has been addressed enough and as Josh shushed,

this generation is in a situation that we haven't seen. People are living longer, it's getting more expensive to maintain that lifestyle, so they're falling back on this generation. Nice pour.

You can't tell I was a bartender? Yeah. If you haven't noticed, college hasn't gotten cheaper. Sorry, Jay's trying to make a point. There is no point. The point is... Jay, you're 100% right. And a lot of what financial planners now are

faced with is answering these kinds of questions for people in their early 50s. They can't believe what they're looking at. They have parents who are late 70s, early 80s. They have kids who are in college and probably going to require assistance for at least the next 10 years. Like, I want an apartment in the city. My job is not paying me. You know, like that whole thing.

It's terrifying. And I don't think most people have saved money to be able to even do this. So I think it's a huge issue. Fortunately, there aren't that many of us. Gen X, relatively small. That's, you know, we're in hiding, so to speak. I think there are 65 million Xers.

I think 69 million boomers still alive. And then like 75 million millennials. So maybe the answer is we make our younger brothers and sisters do this. Alright, that works for me. I don't really know a way out. No, but this is one of those topics that I think is going to become more and more of something

in your industry that we're going to deal with. And I researched it and there aren't enough things. I may blog about my own situation and open that blog back up soon. But it was just one of those things that I came to you for help. I wasn't here for anything. And it's not just money. And it's not just money.

Our generation now has to contend with parents who are in the phase of life where you start making really bad decisions or your cognitive, like your ability to make decisions is on the decline. Not for everyone and not at the same rate, but this is a very real thing. There's actually software being sold in our industry where the client agrees at like 70, from here on out every year I'm going to take this test. And the test determines my own decision-making ability, et cetera. And there's documented research that people are just less and less and less able to do things or think correctly as time goes on. Nobody wants to hear that.

There's not one 65-year-old, you could say that too, that wants to have that conversation. So imagine having it at 70, at 75. Look what happens when you try to take somebody's driver's license away. Yeah, well, you can't. It's crazy. Yeah, they'll kill you. Right. Because it's much more meaningful than the driving itself.

Of course. So people don't like to hear that shit. And lastly, I'm surprised Michael didn't lead with the Eagles losing the Super Bowl. Well, what happened? Okay, my question is, Hasan Redik and the Eagles losing the Super Bowl My question is Hassan Redick and the rest of the defensive line I thought they were good I did too, I was kind of surprised I saw them go through the Giants three times this year

Too soon? I had a bit of conviction that the Eagles were going to win because I thought that on both sides of the line they had the advantage Obviously Mahomes to Mahomes but that had to hurt I am okay. The defense just, they had an off day. You know, Andy

Reid finally learned how to coach in a big game. Unfortunately. That's coaching. I would have bet Eagles. I did bet the Eagles. I did bet the Eagles too. They were begging you to take the Eagles. Mahomes is hard not to root for, but the one thing that frustrates me, and I'm not complaining about the call is, but as fans of the game,

you call it consistently, and let's see a fantastic finish or a possible fantastic finish. That was very tough, but to your point, it's not as if the Eagles were going to win. Although they were scoring a lot, they probably would have, but yeah, it's tough. Listen, you're on the streak. What is this?

This is why there are stats to say thank you for the Eagles losing because when Philadelphia does win championships. This is hilarious. Thank you, Ryan Dietrich. You can see when the Eagles won in 2018, the week after they won, the Dow was down over 2,000 points. It was the worst year since 2008. When the Phillies, they lost the World Series this year. So you can thank the Phillies.

We started rallying when? October 13th, right before the World Series. But we had the financial crisis, 1980, double-dip recession. It goes on and on in Philadelphia sports history. I didn't know the Athletics were based in Philly before Oakland. They were. Did you know that? I did.

How? Were you a baseball card collector? Yeah, but that was even before we were collecting cards. When did they move to? That I don't know. Like in the 40s, 50s. They all moved out to California. Definitely before the 50s.

So market is closed. Lows of the day. S&P down 1.36%. The Q is finished down 1.88%. Do we have DraftKings earnings? Duncan, delete everything I said. Oh, DraftKings is tonight? Yes.

I think so. All right, so we're at the point of favorites. And Redfin, Mike. Redfin. We're at the point of favorites. I'll go first. I have so. All right, so we're at the point of favorites. And Redfin, Mike. Redfin. We're at the point of favorites. I'll go first. I have two. This morning.

Hold on. Stop, stop, stop. We had fun today, guys. We did. It was a good show, right? Yeah. All right, how's the Sincoro hitting? Sincoro?

I thought it was too soon. All right. Cheers, boys. Oh, yeah. Cheers. This is very good. It is good. So being present and putting your phone down, right?

Did any of us pick up a phone besides Mike? No. My phone's not here, asshole. Love you. This is delicious. Okay. So yesterday morning, sometimes when my wife leaves the house at 6 in the morning, I just turn on the TV. And I did yesterday.

And Ex Machina was on. So I revisited that. Is that rewatchable? Incredibly. So listen to this. Incredibly rewatchable. It aged very well. I didn't realize

that movie is 2015. So, I mean, if you saw it, you know what it's about but it was actually A24's first big commercial success and they've been

wildly successful. What else do they make? I mean, basically all my favorite movies. All of the independent horror stuff. Is that Oscar Isaac? Are you going to see the Winnie the Pooh horror movie? I'll probably see it.

That's real? It's very real. I listened to Howard start on Brendan Fraser on, and they were reminiscing about one of my absolute favorite movies of all time as a child

Airheads Chris Farley Buscemi the Lone Ranger I f***ing love that movie okay Chris Farley Buscemi

Sandler Brendan Fraser Michael McKeon Kramer Rob Schneider Adam Sandler Kramer's in it Kramer's in it Kramer's in it

and the guy with the ponytail Miles I forget what his name is but he's the bad guy for sure why did Howard bring that movie up in particular I can't remember how it came up

but I'm so glad it did because maybe we're talking about Farley I can't remember oh I think Farley and Sandler is how it came up anyway just a shout to that movie

it's so rewatchable just an all timer it's definitely and you find something new every time you go back and watch it. Not me. I've watched it a hundred times. Okay, I've only watched it three. Just a banger. But fantastic call on

Airheads. Great rewatch. I'm going to do mine and then we're going to get you guys in the mix. I listened to Rick Rubin on with Dan Carlin. You guys listen to that Hardcore History podcast? Why was he on Hardcore History? The addendum. They're friends in real life. Okay.

So I guess a lot of famous people are friends with Dan Carlin because they listen to his show and they reach out. Tom Hanks. Remember that episode? He had Elon Musk on. Remember the Tom Hanks episode? Yeah. Tom Hanks. Tom Hanks is a huge fan of Hardcore History.

So Rick Rubin has a book out called The Creative Act. And it's – he thinks the first book ever written about being creative like not just about creativity but like what it's like when you are creating and Justin Costelli sent me the book I haven't gotten

into it yet Rick Rubin's a Long Island guy Oceanside I think really? yeah Rick Rubin basically

is like one of the five people who invented hip hop as like a commercial like he didn't invent it in the Bronx but like he his LL Cool J run the MC he made as like a commercial like he didn't invent it in the bronx but like he is ll cool j run the mc he made it like a big mainstream thing um anyway this book is uh this

conversation if you don't want to read the book listen to rick rubin on uh hardcore history addendum with dan carlin the other one is the last episode of uh last of us episode five i'm so glad you mentioned that you guys who's in on this so far? I'm going to wait until the season's over and I'm going to binge it. What about you? I haven't seen it. What else are you watching? Oh, we're going to get to yours.

All right. You might want to jump into this. I'm going to have to. I think you're going to have to. Where is it? HBO. HBO. Dude, the bloater that comes out of the pit.

Do you know what's called a bloater? Nerd alert. No. Yeah, no. Good time. The monster. Yeah, yeah, good pun. The monster. Yeah, sick. That's the fourth stage of the infection when they get that big.

All right. There'll be one more of those for the season. Dude. It's not a zombie show. There are zombies in it. It's basically what happens in a post-human world where there's just a few of us left. And civilizations, you know know little people rise up and create their own

little villages there's like this parasitic infection that's like a fungus that grows like a mushroom inside of people until it takes them over when do you watch this

when you're just and then like you're awful and then all the moving averages trend lower who's in it who's the star of that Pedro Pascal

okay the guy from Mandalorian that's how I would know and and Narcos now yes and he got famous

oh and Wonder Woman he was a bad guy in Wonder Woman the little girl from Game of Thrones is the other it's just it's amazing

alright Jay favorites alright well shout out to Brian Shannon he just released his book you know I think he's probably going to come in here and talk to you guys eventually but that's the last book Jay, favorites. All right. Well, shout out to Brian Shannon. He just released his book. I think he's probably going to come in here and talk to you guys eventually, but that's the last book I read.

You know who wrote the foreword? By the way, you wrote a great job. It was good, right? Great job on that foreword. Yeah, you really put some time into that. I was impressed. He's like, you have a week. I'm like, all right, I'll write all about anchored volume weighted average price.

What else? He's like, no, don't do that. Write about why you care what I think. And that was a good direction. Can I say something? I'm not mad at Brian. I love Brian. I wrote a little blurb,

and I didn't make the cut. I did. What? You're on the blurb. You're on the paperback. You're on the paperback. You got mentioned in the back. I got a blurb right on the top of the back.

Wait, I'm on the back? No, no, no. No, I'm not going to be found. I was scrubbed. I think I'm on the third? No, no, no. No, I'm not going to be found. I was scrubbed. I think I'm on like the third or fourth page. Your name was definitely thanked. You're on page three of the book? Or the blurbs.

Real quick, first time I ever met Brian Shannon. He's a great guy, Brian. We were at like one of those Linzen events in Coronado Island. And it's me, JC, and Brian Shannon. I'd never met Brian before. And we made a plan the night before, drunk, that we were going to wake up at 7 a.m. and kayak into the caves.

And the instructor meets us in the lobby. He's like, guys, we can't go out today. There's sharks. And Shannon's like, I don't give a shit. That's Brian Shannon. I said, I do. I'll go back to bed. That's Shannon.

I love him. Why do you love the book? I love the book because I knew – I kind of begged him to write it. I met him at a CMT event and he asked a question when I was on a panel. What's the biggest change you've seen in the market? I go the way people trade. They trade based on VWAP. They want to know where the volume is at a trade, not what the price is.

And he goes – Tell everyone what volume weighted average price means. It's the point in the day where there was the most trading at a certain price. Exactly. So the open and the closed tend to skew anchored VWAP because the biggest trade of the day is usually the opening print and the closing print. And this takes the average amount of volume at each price point and then – or it doesn't anchor. It gives you an average daily volume, average price of where all that volume is. So things tend to trend back to the anchored VWAP.

And now he anchors it and he explains in the book how he picks what events to start his trend line and, you know, how he uses the anchored VWAP over multiple timeframes. It's all bullshit. Yeah, well, it's done very well for him. To me, it's been the biggest change. I know, I know. That's why you didn't make the book.

I know. So shout out to Brian. Wait, was that your blurb? That was it? Troubled up on the floor. Wait, can I just, Dan, before we get to your favorite, this is just very interesting. This is a good illustration of how the markets work. On Animal Spurs this week, Ben and I were talking about how people are eschewing DoorDash and companies like it because it's so expensive.

Is it eschewing or eschewing? I don't know. Did I say it right? No, you said eschewing. It's so expensive. I spoke about how I tried to order something that was $43 and it ended up being $80, so I said absolutely not. In any event, DoorDash just reported and stock's up 13%.

Yeah, what do you know? And Uber Eats was great. There are people that are lazy enough. There are people that are lazy enough that they will spend whatever. Your boots on the ground research was worthless. Stick to charts. So real quick, the other thing,

podcasts, I always listen to you every Wednesday morning. Thanks, brother. I give you a shout-out on Twitter when I like it. If I don't say anything, just whatever. The show I'm watching is embarrassing to admit I'm watching Game of Thrones. I was the one guy on the floor that didn't watch it as it premiered.

Now I'm binging it. It's phenomenal. There's this show, Shrinking, with Harrison Ford and Jason Segel on Apple+. It's very cute. It's like your therapist gets really involved in your life and will show up at your events. It's fantastic.

Is he too grumpy to watch now? He's always grumpy. No, no. Oh, he's barely in it. Harrison Ford. He's like a... He's alright. I find him tough these days. He's not the main character. I mean, I grew up with Harrison Ford. Don't just watch him out. There's a new Indiana Jones. Did you see that commercial?

Was there in the Super Bowl? I don't think I'm gonna go. I don't know how they're doing that, but... Yes, you are. I really don't think I'm gonna go. I think don't know how they're doing that. Yes, you are. I really don't think I'm going to go. I think I'll watch it on stream. Oh, did you guys see? Actually, hold on. Keep talking. I need to find this.

And then last thing, concerts. I used to follow you religiously at every concert you went to. Did you go to Arcade Fire? That's your band? No, I would love to have. National? They're coming. National's coming August in New York.

Where are they playing? Madison Square Garden. I'll probably go to that. I got an extra ticket. Do you? Yeah, I do Madison Square Garden. I'll probably go to that. I got an extra ticket. Do you? Yeah, I do. All right. We'll talk.

And I was just wondering what you guys have been seeing because that used to be your thing. No, I know. I stopped. You know why? It's just like the year in my life right now with my kid trying to get into college and my son is now in eighth grade. And the amount of tutors and driving them. Neither one of them drives. And my son is now in eighth grade.

And the amount of tutors and driving them, neither one of them drives. It's just so overwhelming that when Thursday or Friday night roll around, I'm not calling my boys like, what are you up to? I'm like, thank God. I'm just going to go to sleep. I just want to put my phone down and watch a TV show, not spend money, not be in my car, not be coming or going. It's a phase. I'll probably come back at some point. But that's just where I am right now. And you've got to enjoy this. I. It's a phase. I'll probably come back at some point, but that's just where I am right now. And you've got to enjoy this.

I hope it's not permanent. Enjoy this time right now because they will be gone. Yeah, I know. It's hard to enjoy, but I understand that it's very, very finite. But that's what's going on. Dan, what are your favorites? You and I are sharing this one, I think. Which one?

Tulsa King, bro. I mean, the old guys are making a comeback. It's good. I love it. It's good. I love it. I love it so much. Stallone's a mob guy, goes away for 25 years, comes out.

Why do you love it? I don't know, because he's Rocky. I feel like, you know, it's kind of like you just grew up with it. Would you like the show if it wasn't Stallone? Somebody else. It'd have to be somebody like De Niro or somebody that just fits the part. It's an actor you've never heard of. No, probably not.

I probably don't think so either. I might not have even tried it. No. But I love – so Rocky was like a huge part of my childhood. I think it's the year I was born. Yeah. 76 or 77. But like all of those movies.

It was just like part of our childhood. It was like, oh, there's a new Rocky. Agreed. All right. He's really good on the show. He's actually acting. What if it was Vin Diesel? This is what I was looking for.

Vin Diesel is not comparable to Sylvester Stallone. Look at this. What is that? That's Harrison Ford de-aged. Wow. How crazy is that? Oh, that's weird. That's unbelievable.

I mean. That's like real AI. Duncan, look at this. Yeah, tweet that out. That's pretty sick. Hey, can you guys do that for me on YouTube? Isn't that incredible? You take 30 years off of me. Can you give me hair?

Wow. And what's Breathe by Rickson Gracie? Alright, so about a year and a half ago, I started I don't know, foolishly maybe, training jujitsu. Okay. And kind of gotten really into it. And he, Rickson Gracie is part of the Gracie family.

Kind of the family that put jujitsu on the map here in the U.S. when Hoist Gracie beat the snot out of some WWF wrestler at the first UFC. It's just kind of interesting reading about their life, how they kind of trained, how they grew up, and how they brought jiu-jitsu here. Kind of the key premise of the book is

you have to get comfortable being uncomfortable. Jiu-jitsu, you're on the ground a lot. You're training against people who might be a lot bigger than you. So I was training last night with a guy who's got me by like 50 pounds, right? That guy gets on top of you. You can do one of two things. You can panic and you're going to get choked or armbarred and something bad's going to happen. Or you can kind of just be comfortable with it and figure it out. So it kind of goes through his philosophy for dealing with hardship and through that lens. How long have you been

doing it? 18 months. Okay. Are you getting good? It's hard to tell if you're getting good. Are you surprising yourself? Sometimes. It's hard to see your progress because you're kind of training with the same people all the time. Okay. And everybody's kind of progressing at the same pace. And what's kind of when you tend to get from beginners is

you get a lot of like kids in their early 20s just out of college. You get in there with the ex-D1 wrestler. Yeah. So you take your beatings, but then you have somebody who's only been doing it a month, and you kind of manhandle them a little bit, and you're like, all right, I kind of get that. My friend Rappaport's been doing that for like five years. It's so much fun.

And his whole Instagram feed is now like him winning trophies or with the other guys in his group. I'm contemplating competing. I mean, what's the worst that happens? You lose? You're not gonna die? Well, you tear your ACL. I mean, you could get hurt, I guess. McMurtry just got hurt doing Jiu-Jitsu. Was he doing UFC? Was he like doing UFC or Jiu-Jitsu?

I don't know. I don't know. I don't remember it being Jiu-Jitsu, but he was fighting something. Yeah, I don't want to get punched. Why? Is that a big part of it? I thought it was more like wrestling. There is. That's the whole thing.

Jujitsu is grappling. It's not breaking. You're going accidentally, like, elbow to the face. No, but I would never do, like, UFC. They have those UFC gyms all around us, right? Yeah, yeah. I don't want anybody to hit me. No, jujitsu is wrestling.

It's basically wrestling. Yeah, yeah. So it's a lot of fun. I've enjoyed it. That face is the moneymaker. Not this one. I'm going to face a radio. Well, guys, we've had so much fun hanging with you two.

I can't believe it took us this long to have either of you here, let alone getting you both on the same day. It was just absolutely awesome. So thank you so much for coming out. Thank you for having us. I want to tell people where they can follow you and learn more about what you do. We'll start with you, Dan.

You are a tweeter? I am. You're a Twitter guy? Okay, what's your Twitter handle? At DanRusso underscore CMT. At DanRusso underscore CMT. Okay, and where do we learn more about Potomac Funds and some of the research that you were referencing before?

Head over to PotomacFund.com. PotomacFund? Yep. Not funds. Fund. F-U-N-D. PotomacFund.com. Exactly.

Awesome. Jay Woods, where should we follow you? I follow you everywhere. You do. You do. You can find me at the New York Stock Exchange. I'm in between things right now. Most people can't get in.

No. Well, you let me know, and I'll get you in. Bring your kids back. They came to see you on TV, and they didn't even pay attention to you. It was fantastic. 100%. But I'm at Twitter at jaywoods3. You can follow me at LinkedIn, jwoodcmt.

You're on Instagram. We follow each other on Instagram. What's that? Who's jwoods2? I don't know who jwoods1, 2, 3. I just grabbed 3 because it's my number, and it went well. But, you know, I'll have a big announcement

in the next few weeks about a career change, and I'm looking forward to sharing that. I'll do it on Twitter, too. Good for you. You guys are awesome. Thank you so much for coming out and hanging out with me. I wanted to announce that next week, the Compound is on vacation.

Like everybody. John, where are you going? Belgium? France and Belgium? Nice. Duncan, what about you? Duncan's going to North Carolina. I'm running a 5K in Wilmington, North Carolina.

Look at that. Where are you going? Hi, how are you? Where are you going? Hi, how are you? Oh. Where are you going? Oh, Disney. All right. Wait, I thought next week somebody was fixing up the-

Ah! Ah. They have 5Ks here, too. That's not next week. I do a lot of them. That's not next week? Shh. I'm having a staycation next week.

We're going to take my daughter to look at some colleges. Nice. All right. Good enough. But we're giving everybody- I don't know if Nicole's doing anything. We're giving everyone the week off, so don't look for the shows next week, but I promise we are coming

back hard the following week. We will miss you guys too much. Thank you so much for listening. Have an awesome weekend and week. Thank you. All right. So that was the warm up. You guys feeling good? Well, it's funny.

I listen to the show every week and I'm like, are we taping this shit? Like, I fell for it. I'm like, I don't know.