The Compound and Friends - No pivot!

Episode Date: November 4, 2022

On episode 69 of The Compound and Friends, Carleton English and Scott Krisiloff join Michael Batnick and Downtown Josh Brown to discuss the latest from Powell and the Fed, earnings season, the wisdom of Warren Buffett, junk bonds, 2008 vs today, nuclear fusion, and much more! This episode is sponsored by Masterworks. Learn more about Masterworks at: https://www.masterworks.com/compound. This podcast is for informational purposes only and should not be relied upon for investment decisions. To learn more about the risks of investing in Masterworks, see https://www.masterworks.com/about/disclaimer. 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/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

So my five-year-old was looking for the music that plays in his bus over the summer. And he's trying to describe to us the sound. He's humming it to us, and we're like, I have no idea what you're talking about. And it was Phantom because, I guess because the show was back on Z100, they would play the commercial for it. And he took a liking to that music. Isn't that so funny? So he heard it in my wife's car, and he was took a liking to that music. What are they like? Isn't that so funny? So he heard it

in my wife's car and he was like, that's the music. And I was like, this? This is what we've been trying to figure out this whole time?

Yeah, because I wouldn't even know how you would like describe like the phantom music if you're a kid. Because I remember hearing it in my aunt

and uncle's car. And all I remember was a dun-dun-dun-dun-dun. Which that could sound like anything. We don't waste any time. Scott, what's up? Long time no see. Good to see you.

I remember you in our office reading like a psychopath every single issue. Yeah. Did you ever finish? I finished, yeah. So I can date probably. I think I was probably halfway through. So it was probably like 2015 or 2016. Yeah, probably think I was like halfway through. Did you ever finish? I finished, yeah. So I can date probably, I think I was probably halfway through. So it was probably like 2015 or 2016. Yeah, probably 2015.

Yeah. All right. Wait, so what did you, what did you, I can't even, what did you, did you ever do anything with that? So not like anything huge, but if you go to the timeproject.org right now, you can look at like all of my notes from every month that I read. And you can go back and, well, actually the notes only go back like till the 1930s. Let's back up. So Carlton, so you're late to this conversation. So Scott, why don't

you introduce what you did? She's like, I'm late to this conversation. I've been sitting here the whole time. No, Scott basically climbed Mount Everest on Time Magazine. That's what you did. Financial Time Everest. Mount Everest, yeah, I would say that. He read every single issue of Time Magazine. What do you mean financial time? No, I'm saying that's the equivalent of climbing Mount Everest. yeah, I would say that. He read every single issue of Time Magazine. What do you mean financial time? No, I'm saying that's the equivalent of Climbing Manifest. But Time Out, but you read cover to cover.

You didn't cherry pick? Read cover to cover. Okay, so wait. You read every issue of Time Magazine back to when? 1923 when it was started. Is that a weekly or a monthly? It's a weekly. Are you insane?

Oh my gosh, yeah. That's actually kind of insane. Yeah, it was pretty crazy. I mean, cover to cover. Are you the smartest man alive now? I like to think I'm a 200-year-old man. What was it like reading through World War II? It of insane. Yeah, it was pretty crazy. I mean, cover to cover. Are you the smartest man alive now? I like to think I'm a 200-year-old man. What was it like reading through World War II? It was insane. Fix his mic. Put it in front of...

I won't touch it. No, bring it closer. I mean, there were actually times... I mean, it took four years to read the whole thing. So, like, I started in 2013 and ended in 2017. But why? Well, I wanted to track financial markets. Stop, stop, stop.

How many issues a day? I'm trying to figure out the pace. I would basically read a month a day. So four issues. Four issues a day and then took four years to do it. I did not have kids at the time, so I had the time to be able to do it. Yeah, but how many? It would take me, I don't know, six hours to read one.

Yeah, no. I mean, like take me, I don't know, six hours to read one. Yeah, no. I mean like I did read it cover to cover. I read it kind of in the same way that you would read any news publication today where like you follow the stories that you think are important stories to follow and then you like edit out the stuff that you don't. So like I would just track along basically the same way that you read the news today. It was just on like 4X pace. It's kind of like listening to a podcast at 4x speed or even faster than that.

Did you ever get sick of it and be like, I'm not finishing this? Almost never. It was that compelling of a story. It's like reading a novel that is just the history of the 20th century. You read the story of the world. The story of the 20th century in America, which was like the dominant empire of the 20th century. Were you like, I know what happens next. Yeah, no, that was the crazy thing,

right? You know what happens, but you don't know how it happens. And so there actually is suspense and surprise that you can have in reading along with it. What was the craziest decade? I would guess. Definitely the 40s. Let me answer for you. I would guess the stuff in the 80s with Reagan and Gorbachev

and Russia falling by 1990. Like, to me, that seems like the biggest thing that happened in my lifetime and your lifetime. But was that not the most interesting thing? What about the Cuban Missile Crisis? Sorry, I just cut you right off. Cuban Missile Crisis actually is super relevant for today because it happened in… 63? 62, which was the year that the Dow was down a lot in the beginning of the year, kind of

bounced around and then bottomed with the Cuban Missile Crisis in like October, November, whenever that was. We never talk about the Cuban Missile Crisis. I read 11 Minutes to Midnight or something like that. The Cuban Missile Crisis was like one of the few times that the Dow bottomed without a Fed action. The Fed did start to loosen like around there in October 1962. But like the Cuban Missile Crisis really – I always say they were way too hawkish. They were way too hawk but like the Cuban Missile Crisis

I always say they were way too hawkish I've always said that they were hawkish going into it and it actually the March 62 sell off was because Kennedy went to war with the steel industry like he started to flex his muscle on that as president which historically presidents would do against industry

but yeah I mean the Dow kind of bounced along and then bottomed with the missile crisis because the Cuban Missile Crisis actually is what I think is the end of the Cold War. Like you had a lot of tension with Russia of like being kind of an equal power throughout the 50s. And then the Cuban Missile Crisis basically demonstrated

that Russia was not an equal power with us. And you have a real die down in the Cold War throughout the 60s and 70s. And then Reagan kind of like picks it back up and ends up being the death knell for the Soviet Union. No offense. Well, you had like the proxies in the 70s though. I mean, like the proxies in like Latin America

and parts of Africa. I mean, it wasn't quite the hot Cold War that we saw in the 50s, 60s, but I mean, there was- The world was still up for grabs. Like I read this book about Bob Marley and in the 70s, the CIA was facing off against Castro in Jamaica. Jamaica was the battleground, whether it was going to go communist or not.

We were still doing shit like that. I'm sorry, but the Cold War ended in 1985 with Rocky IV. I feel like that's in the record books. That's a really good point. That's in the record books. If I can change, and you can change. Did you notice a difference in how time was covering celebrity culture from like the 60s, 70s where it was a curiosity into the 80s and 90s where it basically became the V culture? Yeah, I mean I think celebrity culture is like a subset of just media culture in general.

a subset of just media culture in general. And I think that was a super interesting story of the 20th century where media changes along with technological modality of media, communications modality. And so like you saw basically the radio era, if you start in the 20s and 30s, and then you see that move to the television era, which like the presidential cycle, the political cycle is really what shows how much the communication cycle moves. So like the 1960 presidential election, which we all think is super important, as the televised state. Nixon-Kennedy. Nixon-Kennedy.

Nixon lost on television but won on radio. And like there are – there's a cover story in Time that year about the television camera at the convention, the Republican convention, I think, and like how this will be the first year of the televised convention, basically. And so that was super important then. And then you basically just have television as the big monolithic communications channel until 1990 when you have the 24-hour news cycle become the Gulf War CNN.

Exactly. I feel like you should be famous. Why aren't you doing a world tour? That's what we're going to make Carlton and Scott famous. By the way, this episode is like our Departed, where the credits start like 14 minutes into the show. Oh, that's right. They did that.

Right? Yeah, they gave you like a big chunk of the movie. They dropped the music of the Departed like legit 20 minutes into the movie. Yeah. That's what we're doing here. Because they had to do the whole establishment of them growing up

and then going to Police Academy. Oh, what a movie. They had, oh. Are we just watching that today? Let's just throw it on and skip the pod or maybe do the audio commentary.

Guys, this is a special episode. It is. For multiple reasons, but hold on. What was that? Oh, 69, nice. All right. Episode. Nice. 69. 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 Today's show is brought to you by Masterworks. Most people, myself included, do not have the wherewithal, the financial means to buy a Pablo Picasso painting. I don't have $6 million just lying around

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Let's go. Top Out of Friends, episode 69. We have fan favorite Carlton English returning and a new friend to the show, but someone Michael and I have known for a long time and have been in awe of his reading prowess. Ladies and gentlemen, welcome Scott Kresloff. Scott, we've mentioned your journey over the years. It's come up multiple times. We were so fascinated that we never forgot about that project.

I'm glad you're getting the end of it, the actual end of it. I ended up reading everything up to the year 2000. The year 2000, I finished basically when my first child was born. And then I was like, first of all, I've kind of like read enough at this point. And now you just watch Paw Patrol. And now I just watch Paw Patrol. Exactly. I don't read anything.

But yeah, I finished the journey then. And like beautiful closed book of Time Magazine was like the Person of the Century issue, which Albert Einstein was named Person of the Century. And so like, it's just, it was like a beautiful closure. The 20th century ended on like a great, great note for America. I think actually like the quote in Time Magazine was like, America bestrides the world like a colossus at this point, because there was the fall of the Soviet Union. And because there was like all of this economic prosperity in the US in the 90s. And so it felt like a right time to put it down. But the epilogue to the story is that Time magazine came for sale in 2018. Meredith, which owned Time was trying to

sell the magazine. And so in 2018, I made a run at actually trying to buy Time magazine, the magazine. Yeah, and I like had assembled a team of people who were like ready to buy it, and we were raising capital. Elon Musk. Who else? Well, Benioff ended up buying it in the end. Mark Benioff, the Salesforce founder. I didn't realize that.

Mark Benioff owns Time? He owns Time magazine now. Wow. What is he doing with it? Is it much the same? I mean, I think he's like- Is he man of the year every year? Yeah, every year.

That's what I would do. Every year, yeah. Okay. Or person of the year, my bad. Yeah, I. That's what I would do. Okay. Or person of the year. My bad. Yeah, I mean, I think he's done a lot with it. I think Mark is obviously a tech visionary, so I think he's elevating the brand

in new channels of media. Has he ever reached out? Is he aware of you? I think he's aware of me. Yeah, we've exchanged some emails on this. I actually, today, Time Magazine, its 100th anniversary is next year. So today, I took the opportunity of being in New York

to meet with one of the editors there and hopefully we'll be working on a project together that's so cool they should be like you should be like the

ambassador like the in-house historian of time you're the only person in the world that's done this like fact it's probably true

it has to be true well on a parallel track I actually read every single issue in a row of the X-Men, like starting in the late 80s, well into the early 90s. Yeah. So I don't know if that's equivalent, but I think I had a five-year run.

I never missed an issue. It sounds equally life-changing. Including like X-Factor, X-Force, The New Mutants. Like I really, I got a lot in there. So now you read earnings transcripts. And yeah, I mean, well, you guys have and so now you read earnings transcripts and yeah i mean well you guys have known me forever is reading earnings transcripts well wait let's let's back up i actually have an intro written for you guys okay and uh and uh this is like um the most formal

part of the show carlton english is a reporter at barron's covering financial markets and asset managers prior to barron's carlton covered hedge funds at the New York Post and financials and energy at thestreet.com. Welcome to the show. Welcome back to the show. Thank you. And I see you on TV all the time. And I see you on – you're on Fox Business. And when is your show airing?

It's Friday nights? No, it's on Saturday mornings at 10 and 11.30 a.m. You tape it on Friday night. Correct. Got it. I get the big hair, the and 11. You tape it on Friday night. Correct. Got it. I get the big hair, the big eyelashes. I love it. Yeah, yeah. And Jack Otter is still on the show and who else is on it? He is. He's our host. Ben Levison, our managing editor, and then

Jack Howe, who is our streetwise columnist. All amazing writers. I read everything that all of you guys do. Thank you. You guys having fun with the show? Oh, it's super fun. And I'm just thrilled that we're back in the studio. Yes. We did the whole tape from home thing for about two years where we've all had to do the whole Zoom thing where you're just like, I'm looking at a box and pretending it's a person. No, you guys have a great vibe. It's a good show.

And I'm glad that we're all back to doing stuff live. Absolutely. Including this. And you're a Phillies fan? Are you representing? I am. I am representing today. As a true Philadelphia

sports team fan, I am just nervous. I can't enjoy any of this. You're not a bandwagon. You're a real fan. Okay. I've seen you go to games

for years. Yes, I go to games. Do not quiz me on anything because I'm not that deep into it, but I mean, I'm a Philly girl. What's Bryce Harper batting? Exactly.

Okay, don't worry about it. Duncan knows. I'm so nervous with tonight, too. No idea. What's Bryce Harper batting? Exactly. Okay, don't worry about it. Duncan knows. I'm so nervous like with tonight too. No idea. You've got the Eagles like undefeated. Like it's exciting. Oh, the Eagles are on Amazon Prime tonight. Who are they playing?

You don't know. I don't know either. Yeah. Who's Philly playing? No one good, I don't think. Let's see. I mean, they seem unstoppable. Oh, the Texans.

They're going by 50 points. James Harden's out for a month in other news. But I can't enjoy any of this because I am just so nervous about it because that's the thing about being a Philly sports fan. You're just always like – we've always had these great teams, but there's something sometimes goes wrong. So you just kind of – I don't know.

I feel like you're tough in football. I don't really follow baseball, but I feel like in football, you're probably a shoo-in for a Super Bowl appearance. No, there's no such thing. I know there's no such thing, but I'd bet it. Would you bet it this year? Would you bet against it? I mean, they're the favorite, obviously.

Yeah. But I— I think it'd be fine. Scott Kristoloff is the chief business officer at—help me—Helion? Helion Energy. Helion Energy. You guys are building the world's first fusion generators in between reading magazines. It's a lot of multitasking.

But you're also the editor of The Transcript, which I read. How often are you publishing that? Weekly. Weekly. Do you pick it up more during earnings season or not really? I mean, we're a little more active on social media during earnings season, but we still keep it weekly. The Transcript is one of the most helpful things that hits my inbox on a weekly basis. You guys do an incredible job. Um, it's a weekly newsletter. Basically what you're doing is you're pulling out the most important quotes, not just

earnings calls. You're doing fed your, what else are you doing? Yeah. I mean, it's like CEO interviews. Yeah. Basically anybody who's, uh, you know, uh's an important figure in the economy, which would be business leaders, politicians, will pick out salient quotes about capital markets or for capital markets. It's so well done. Thank you. And I didn't know that you were associated with it. So I guess somebody put me on the list and I started getting it.

Yeah. And I was like, oh, another one, another one. And then I just, it became part of my thing. When does it come out? It comes out every Monday. And you know, I actually, I started it like 10 years ago. So when I had my own little asset management firm, Avondale, I used to do this as Avondale earnings call notes. And then I paused it for like a year. And then we relaunched it. I write it with a business partner, Eric Mokaya, who's based in Sweden. And we publish it every week. And it's just been one of those things. Is it free?

Never promoted it. It's freemium. So if you like- I pay, not to brag. Oh, thank you. Yeah, you're welcome. Thank you. Yeah, I mean, we basically release most of it.

We block out some quotes, which are catalysts for people. So like the quotes that we block out are the ones that you should be investing. Does it live online on a page or is it just an email product? It's on a sub stack. Oh, it is? Yeah. Okay. Carlton, you get the transcript? I'm going to, but I don't know. Yeah. It's very helpful for you. Very, very helpful. For you. Cause you have to cover a

lot of ground. He's doing a lot of the hard work for you. How do you aggregate it all? Is that your secret sauce? Can you tell us? No, I mean, it's, it's just reading. It's just person power, basically. I mean, I think like Eric and I have been doing this together long enough that we can get through a transcript probably in like, honestly, five to ten minutes and pick out the stuff that we want to know about a company or about the economy and then we just throw them into a document.

We're like a pretty well-oiled machine. Did you ever connect him with the Quarter app with those guys? You can speak to them, right? Yeah, I think so. I think they may have sponsored us at one point, but yeah, I mean. What you're doing jibes perfectly with what they're doing. They're giving you the whole transcript as a PDF and the audio.

Yeah. But wait, are they stepping on your toes? Cause now they're doing some transcript. These type stuff on, on Twitter. We're often imitated. Never worry.

That's what we like to say. They're from sweet. They're from Sweden. It's going to be very benign. They're not coming for your neck. Don't worry. Don't worry. Yeah, no.

I mean, I think people have tried to aggregate earnings calls, but I think Eric was standing for a PhD in economics in Sweden, and we both have CFAs. We cover a lot of ground and have a lot of background in the way we're reading calls. So I think that comes through, hopefully, in the quality of the call. Well, that's, that's part of the thing is that you actually have to know what to look for that would be relevant to, I guess, most people that are getting the transcript, their investors, right? Yeah. Like that's, that's, that's who would

want it. Yeah. Um, so you have to know what would be relevant to the audience. Yeah, basically. So you're like kind of a journalist. Kind of. I mean, I know journalists really appreciate it because I think we cover a lot of ground for them. We present it in quotes for them. So they're like able to just take it and use it and whatever they're doing. Well, it's really helpful for me because I'm like doing a lot of media and I can't be an expert in everything. I don't pretend to be, but I have to be like fluent in what's going on in a broad array of things. And you make me sound smarter than i really am so really i love i love i love what you're doing all all the listeners if you guys are nerds like me find where you can subscribe to the transcript and uh we'll post the url in

the show thank you it's the transcript.substack.com and you can just free to subscribe and there's upcharge if you want thank you you. But enough about you two. We had an FOMC meeting this week. There seemed to be a sharp market reaction to it in the moment. Really worse for the NASDAQ than for any other stocks that I thought. Would you say that's accurate? Yeah. Well, the market ripped immediately.

To the upside. Yeah. The reason why was because there was some pivoty language in there. They said in their release, in assessing the appropriate stance of monetary policy, the committee will continue to monitor the implications of incoming information for the economic outlook. And this was the sentence. The committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee's goals. Okay. And so based on that, people were like, oh, okay. Okay.

They're taking into account the fact that there may be a lag and all that sort of stuff. Market rallied. And then he got on stage and the market fucking fell apart. It was bad. It was one of those things where I did not have to cover the meeting live. I mean, obviously, as we all know, we all have to be up on these things. I was working on something else. I'm like, oh, great.

There was a good market reaction to it. And then it was like, wait, what did he say? Mike texted me. You're like, what did you say? I was in the bathroom or something? I was out. I was like, what did he say? So Bespoke has this great chart showing S&P 500 performance on Fed days from 2.30 p.m. to the close.

And it was by far – the market fell – Do we have it? The market fell 3%. There it is. From 2.30 to the close. Oh, look at that. First of all, this data is amazing. I don't know where they get this from.

But look at this. The market absolutely fell apart. Why? Well – That's one of the worst responses to an FOMC. No, it's the worst. It's going back to 94. heart. Why? Well, that's one of the worst responses to an FOMC. No, it's the worst. It's going back to 94. So I thought it was, so, so I had data saying that the average move year to date for

an FOMC day was plus or minus 1.9%. And so this was kind of in line. And then at 315, it just completely fell out of that. So a few quotes, we will stay the course until the job is done. Mark didn't like that. What I'm trying to do is make sure our message is clear, which is we think we have a ways to go. Ways to go is not good. We have some ground to cover with interest rates before we get to that level of interest rates we think are sufficiently restrictive. Market didn't like any of this. Not one bit of it. Why was the market surprised by any of it, though?

That's the thing that – I don't know. Because, I mean, you're J-Pal. You can only say the same thing so many times. I mean there's only so many ways of saying something. And, you know, I read it. I read the transcripts. It's like I feel like this is exactly what he's been saying for six months.

We know inflation is still high. You know, we got some positive job data. We'll see more on Friday morning whether that trend continues. It's just none of this seems surprising to me if you pay any attention to what's going on. Well, the market thought there was going to be a pivot. There was some leakage. No, there was – it's not a pivot to dovish. No, to do 50 or maybe more to slow it down.

He did say we'll slow it down. He basically said we will slow it down. But what he did at the same time was push the upper limit. Yeah. So that's it. That's the thing. So listen, if the risk-free rate over one year is higher than we thought terminal rates would be,

if it's now in the 5% range, guess what? That's not great for the stock market, right? The stock market is competing with the bond market at this point. For flows. Yeah. And so the arithmetic is wildly different. And so things are changing.

Let's put this, John, let's put this chart up of size of Fed hikes cuts over the past 30 years. I mean, these are like, these are big outliers. So we're doing 75. There's been five in the last 30 years. How many have we done this year? Four.

This is the fourth? So there's only been five 75 basis point rate hikes in modern history. There was one. There was one going into this year. That makes the four that we did this year extremely rare and historic. And then they're going to hit us with another 50 or 75 in December. It's a lot. And we're digesting it. The stock market is not down 50% while this is going on. Scott, I know the story is still being written, but how do you think J-PAL will be remembered? If somebody's reading Time Magazine 50 years from now? I mean, this is super interesting. I actually thought he was going to be like a caretaker chairman of the Fed, basically. I

didn't think he was going to be around for that long. But the way that he's managing it, it seems like he kind of wants to be a long-term Fed chairperson. Would you have some pretty prolific Fed chairpeople in Mariner Eccles and then also with William McChesney Martin throughout the 20th century? That was LBJ's guy? William McChesney Martin basically came in. Kennedy, no? I think it was Zinder Truman, actually. Yeah, he was around for a long time. Yeah, late Truman, actually. Yeah, he was around for a long time. Yeah, late Truman, Eisenhower.

But he was around for a really long time. And then obviously we know Volcker is in the modern era, a really important chairperson. And then Arthur Burns. I think one of the most bearish things that I've read during this time was somebody on Twitter, who I don't even know really what the source was, but was kind of quoting something that they had heard inside the Fed Fed that Powell was pretty concerned about his own legacy as an inflation fighter in this. And he didn't want to be remembered as Arthur Burns, the person who let inflation just go.

Nobody does. And so like that to me was the one quote that I read like in July as we were like bear market rallying, where I was like, if this is true, then Jerome Powell is coming and just like like a hammer coming down on the economy, making sure that he plays his stuff out. He's the only Fed chairman that was not trained as an economist. Yeah. I don't like that he's really worried about his legacy. That's maybe not the best thing in that role.

Like worry about the economy and we'll deal with your legacy like sometime in the future. And the two things are not necessarily the same. He comes in under Trump. He spends the first two years getting tweeted at relentlessly. I don't even know what they wanted him to do at that point. But this strikes me as the biggest policy error in 50 years. Which one? What he's doing right now?

No, what he did last year. Or last year, yeah. What he did last year. I don't really think it can be undone at this point. So you think he's taking the right course's doing right now? No, what he did last year. Or last year, yeah. What he did last year. Oh, yeah, last year. I don't really think it can be undone at this point. So you think he's taking the right course of action right now? Me? Yeah.

I wish they would talk less. I don't like the press conferences. I come from a time where they didn't do this shit. They just came out. They made a move. You went off of Greenspan's briefcase size? Dude, Greenspan spoke like the caterpillar from Alice in Wonderland. Nobody can understand what he meant. And actually, the famous quote was

somebody saying like, somebody saying like, we understood what you meant. He said, then I failed. Like, what was it? He goes, that means I failed. Like, that's, that's my kind of fed is like, shut up. We know what we're doing. This is too much. I think so, too, because and I say this as a reporter, we're getting answers to questions, holding power accountable, all of that. I mean, that that is the job. But you listen to some of these press conferences and it's people asking the same question over and over, just trying to split a hair on some point. And like I was saying earlier, how many more ways can Powell say what the Fed is trying to accomplish? It's we have to get inflation under control.

And he can't throw the R word around too much because that will really spook markets. But it just feels like what the Fed is doing. The R word is very politically incorrect. Oh, totally. No, no, no. Like, no president wants their Fed chief saying recession. Like, you're just not supposed to say it. So that's why he says pain.

Exactly. And then people say, oh, well, what kind of pain and blah, blah, blah. And it's like throbbing. That is just trying to say, look, we have to get this under control. I mean, we're talking about, you know, eight, eight and a half percent inflation. Look at what's going on in other parts of the world. Argentina is at like 100 percent inflation. They go dead.

Like, I mean, think about like the global impacts of all of this. So I think what the Fed's trying to do is just can we manage a recession? He keeps going like we're going to be data dependent and then the reporter is like, yeah, but what are you going to do in three months? He's like, we're going to be data dependent. I know, but still, what are you going to do? Yeah. And it's a game at this point. Can we do the two-year?

This thing is trading like a fucking meme stock. Look, I mean this is not normal right i yeah the numbers are not that dramatic but we go into the meeting at four and a four spot five five and then he's a little bit conciliatory a little bit dovish sort of in the statement and the yield drops to four spot four two, I think was the low. And then he says higher for longer, however he said it. And we're at 4.7 in a 4.6 something in a flash. That seems like a lot of volatility for a situation where they're going out of their way to like constantly communicate. So I feel like it's too much talking. I don't know. What do you think? I mean, I think that the market did get hoodwinked here by that Wall Street Journal article

that happened a couple of weeks ago, which said that they were going to pivot and everyone was like, okay, they're going to pivot dovish. And then they went into this quiet period. No one was really talking. And I think this was like the data point that probably, I don't know, disciplined actors were looking for is like Powell's going to speak. He spoke, confirmed that they're not pivoting. Even if they are pivoting, he confirmed very clearly that the pivot doesn't matter to a slower pace. It's about how high we're raising rates. And all the data that we've seen in the last few weeks suggests that we actually have to go even higher than we thought. We're going to get a jobs report by the time this airs, Friday morning, we're going to get October non-farm payrolls. They must have seen it.

It must be a shock. It's got to be like a whopper of a jobs report for him to be suggesting five and a half percent or whatever. Wait, do they see the jobs reports in advance? 100%. Is that controversial? No, it's not. That's their job. They should see it. They see the data as it's coming in. I don't know if they see a finished job report, but they see the data that's going into it.

So they could put it together. They could piece it together. I mean, because we've seen the 75 basis points from 50 heading into a jobs number before like like the fed try i think wants not to not be humiliated so what happens if we get a strong job report to mark to the to the market pancaked again i don't know yeah i don't know isn't hasn't that been a trend this year not one jobs report has come out and given you any inkling any idea about inflation being under so you're you're looking're reading all these transcripts. I feel like the layoffs and the hiring freezes

only come from tech companies. So Stripe announced today 14% layoff. It's not spreading yet. Yeah, no, there's nothing. And this is, as you guys were talking about this, I was thinking, like, the jobs report is a lagging indicator at this point. Because you actually, if you're just reading along

with the earnings transcripts like we do, or any source, you're seeing still strength in the labor market. You're not seeing real weakness. So there are these data points of people freezing hiring and stuff like that. But the commentary from kind of the overall economy that we saw throughout this earnings season was strength in the labor market. Can we bring inflation down without unemployment going to 6% or higher? Is that possible? I don't know.

It's never happened, but we can dream. I think the real question is, will the Fed lay up until we get a recession? And I think the answer is probably not. They seem to be very intent on creating a recession at this point. Powell in the press conference talked about the probability of a soft landing is really low now.

But if they keep going, the housing market is already frozen. It's going to break. Yeah, and these are all leading indicators, right? And unemployment is a lagging indicator. And it's also the one the Fed looks at. So like you think about policy errors, their just entire model is focused on like heavily lagging indicators,

which is why they missed inflation starting and why they'll be- Like they're looking at- Possibly last to realize that there's a recession. Rent and wages, which comes after the destruction has started. It doesn't lead us into that. Yeah. But that's what's in PCE, and that's what they're looking at.

Yeah. I assume they're looking at other things, but I don't know if they're making decisions based on it. Yeah. Like credit card data, debit card data. My actual opinion is they just used the S&P 500. I've always said that. But they didn't seem to care this year.

We broke the 200-day moving average. They came in with another 75 basis points. I mean, this posture of Fed that we're seeing now is one we haven't seen for a very long time, certainly since the financial crisis. I'm surprised. I know he keeps saying the same thing, but I really am surprised that he's sticking to it.

I think all of us are, and that's why you're seeing this gap in equity prices and the underlying cost of capital, which is really scary for equity securities and also real estate. But you know what a worst-case scenario is? He does 25 basis points in December. The f***ing Dow Jones will be at 40,000. That's the problem. You'll get an ease in financial conditions like we have never seen, and it'll be overnight.

And that's what he can't do. He is between a rock and a hard place. It's tough. He can't do that. It'll work against everything that he's done so far. Well, I think to Carlton's point, this is why, like, how can you be surprised by this? He keeps saying it over and over again.

He said it over and over for a year, but for a decade, they trained all of us to be like, well, you're going to come to the rescue the second. There's the Fed put there for multiple decades. We've all been bailed out by the Fed. Maybe if he were an eyepatch,

maybe if he totally changed his persona from what it was in the easy days when they were failing to hit their inflation target, if he just came out more of a badass and like almost like changed his demeanor, but he's still like so chill. Yeah. He's like very matter of fact and soft spoken.

There's no emotion. So people haven't gotten the message that like, no, you don't understand. It's not going back to the way it used to be. Yeah. Yeah. You need a little, as I've said before, you know, and cigarette hanging out of the mouth. Yeah. So let's talk about earnings. Uh, it's, it's Scott, it's good to have you here because there's a very busy period of time before we get to earnings. I'm just going to, for the

record, it's three 34 Thursday afternoon. Coinbase is coming out in 20 something minutes and PayPal. And I predict that Coinbase is going to go, it's 56, 59. I think it's going to open up at 45 bucks. How much did it go down today? Or is it down today? It's down almost 7%. It looks disgusting. It's trading so heavy.

And Robinhood numbers weren't great. Stock acted well because it's less bad than expected. But I feel like Coinbase is going to be a disaster. Like the numbers are going to be so bad, I think. Coinbase was green this morning. Was it? Yeah. What could you possibly be expecting to be good on this call?

It just has to be less bad than expected. That's it. Which is possible. I don't know. Is anyone trading crypto like in real life right now? What did Robinhood say about their crypto trading? Did they mention it? I actually haven't read that one yet.

Okay. That's below his line. Robinhood is below my line. L-O-L. All right. That's below his line. Robinhood is below my line. LOL. All right. So from facts, we've got around 50-something percent of companies reported. This was at the end of October. Excuse me.

The growth rate for earnings is 2.2% right now. If that is where we finish, it will be the lowest earnings growth rate since Q3 2020. And I wish we had numbers before that because obviously that's an outlier. That was pandemic. On the revenue side, 9.3%. If that is where it lands, that will be the first time that we've had lower than 10% since Q4, 2020. So it's a real deceleration. We're getting strength. We're getting strength in, of course, earnings. I'm sorry, energy, industrials look good. But communication services, oh boy. Not good.

Yeah, it's brutal there. I mean, you look at like what happened to Meta. What was it, two weeks ago? I mean, is that what we're calling it now? It's just, it's ugly out there. It's definitely like a kind of pick or choose though when it comes to some of the tech-oriented stocks because some have done very well.

It's the worst thing I've ever seen. I just bought it like after it blew up. You bought Meta? I bought Meta. I bought Facebook yesterday. I bought Meta and it's still falling. I might just get rid of it. But that is the worst thing I've ever seen, I think.

Like outside of Lehman, you know, like outside of that stuff, like just a regular company, not going bankrupt or anything like that, like just a regular company, not going bankrupt or anything like that, but just a regular company where sentiment and fundamentals are collapsing simultaneously. That is hands down the worst thing I've ever seen. Oh, the decline is warranted. I'm just saying it's down $800 billion in market cap or something. I have never seen anything like that. No one has.

Can you think of anything even comparable from any era? No, I mean, there's nothing comparable to this. I mean, like, the thing that's incredible, though, is it's Facebook had operating leverage, like the financial companies had financial leverage. And so when you start to get a decline in revenue, profit falls really quickly with it. Explain what you mean by that.

Well, like, it's actually a function of how strong the Facebook business model is, it has so much operating leverage because it has like a low fixed cost space. And then all of the revenue you're driving through it is just great. So the gross margins are still, I think almost 80% of the family of apps, which is absurd. Yeah, exactly. And so like, it's like profit is revenue almost. So if you have like a 10% decline in revenue, you have a 10% decline or larger. Oh, it becomes one for one. Yeah. And it's like profit is revenue almost. So if you have like a 10% decline in revenue, you have a 10% decline or larger. Oh, it becomes one for one. Yeah.

And it's not a fixed cost operating the company because they keep throwing more money. CapEx is closing. They're spending like into declining free cash flow at a rapid rate. Yeah, yeah, yeah. CapEx is going to pass revenue almost. I mean, it obviously is like a total cluster

over there right now. But if you guys did buy Meta, the two quotes we actually picked out of the earnings call, which I think should make you feel maybe a little bit better, which I saw is like a hint of a catalyst. Don't tell me it's about feet in the Metaverse. No, I think this entire conversation is actually supportive of it. The idea that Facebook is a Metaverse company has become so overblown at this point that people think all of the investment is in that. And actually, the CFO was talking about the vast majority of their investment spend is in AI and data center.

So I don't want to say they're catching up to TikTok, but that's where all the spend is. Yeah, and so that's the second callous. So the first one is AI and data center is actually where they're spending their CapEx, which I think the market would probably be much more comfortable with than metaverse. And then the second data point is that they're actually taking share from TikTok is what they said on their conference call. No way. It's not true. Which if they are, that Reels is taking share in terms of – They must be taking share of users.

So I mean they – I think they're taking share of eyeballs is actually what they said but i have also heard that like from like this is anecdotal stuff from other businesses that like tiktok's really hard for a business to actually buy space on and like figure out how to advertise on so i actually heard a cmo told me of a consumer products company like a week ago told me that what they like to do is they like to see what catches fire in tiktok and then they go and promote it on instagram reels because they can measure people still. And that's what Sheryl Sandberg did for Facebook. She really turned it into like a measurement advertising. Here's the problem though. When they tell you that Reels is growing, what they're doing is cannibalizing other formats of their own. Yeah.

So, right? Like the creators all pivoted to Reels because that's what Facebook was putting into people's feeds. So here's TikTok usage, which appears to be plateauing. But now we're stepping on what are your thoughts because I'm pitching this on Tuesday. Okay. So let's move off of Facebook for a second and just talk more generally about – I think a lot of people have moved off of Facebook. Yeah, seriously.

About earnings. That was probably the most interesting. All right. So Josh and I spoke earlier in the year like a lot that analyst estimates are still way too high. And they were – like this wasn't that long ago. This was probably what, like four months ago? Yeah. So it's not that long ago.

Gina Martin-Adams tweeted, we can safely call this an analyst forecast capitulation. S&P 500 estimates now falling for the two years ahead. This is a good thing, right? Coming back down to earth. So this is 2022 expected earnings per share, 23 and 24. Crashing. They're all crashing. Crashing.

But are they? It looks like they're crashing from the chart. They are. We're going from 270 to 260 is a crash for 2022? Percentage-wise, what is that? Yeah, but look at 2023 and 2024 they're coming down materially yeah all right so that that's interesting to me so we're saying that 23 estimates in orange are significantly lower than where we think 2020 so an earnings recession

even if we don't get a real recession is that is that the takeaway from this uh but also they're always wrong. I mean, estimates are coming down. Yuri and Tim are tweeted, while most companies are beating lowered earnings estimates, and that's why it's important that these estimates come down so that we can step over them. There's an unmistakable slowdown in EPS growth. He said, X energy, earnings growth for 2022 is expected to be a modest 1.8% with risk to the downside. Earnings growth for 2022 is expected to be a modest 1.8% with risk to the downside. So much of this, though, is the comp.

And the comp is 2021. 2021 was so bizarre. That's one of the bigger issues. The other big issue, though, is that the earnings – Scott, you could probably confirm this. The earnings component for S&P 500 earnings is like 70% goods, 30% services. And the real economy is the reverse of that. So the economy is going to be better than earnings. Is that the right way to think about that?

I actually don't know that stat. Yeah. I think it's something to that effect. This is from Semblest? Who did that? Like cars and iPhones are a really big part of – and barrels of oil and pills from Merck are a really big part of S&P earnings. But in the actual economy, it's like 70% services, only 30% goods. The stock market is the opposite, right?

So that's how you can get like a big disparity. Like we could be in 3% GDP this quarter that we're in right now, and earnings are going to be 1% and falling. So that's how you get that kind of disparity. Interesting. It would be interesting to see that in terms of market value too, of how much market value is ascribed to future earnings basically. I mean, you know. I know we don't know. Are sellers exhausted?

And I ask this because – I'm exhausted. Like Peloton opened this morning. It was down a lot. I don't know how much it was down, but it's up 6% on the day. Roku I know was down 20% in the after hours last night. It's now down 4.5%. So we've said this a lot and we don't know, but like how much front running has the market done?

Like how much? How much fear is baked in already? Well, that was my— I mean, Facebook's down 80% almost. But that was my thing on meta. Like, how many times can they sell the stock off on the same news? Like, all right, we got it. There's plenty too much, you know, now what?

Well, they keep doing it. I mean, if you have multiple compression and earnings decline, though, it's not good. It's—who knows what the bottom is, right? It feeds on itself. Yeah. I mean, it's—and this is— meta was, like, the most extreme case of it this year. But it's for the whole market.

If you have earnings starting to climb, but you have, like, these really inflated earnings multiples, and you have the cost of capital going up, but you have these earning multiples – It's dangerous cocktail. Yeah. I mean, like, the S&P 500 earnings multiple or earnings yield started to converge with the 10-year treasury yield. And so, like – It's tough, shouldn't there be an equity premium? Probably. And if the 10-year treasury yield is going to go to 6% in order to be a real yield or 7%, like, what do you do with earnings multiples there?

What do you do with cap rates on real estate? That's the other thing. Like, we have real estate that trades at like 3.5%, 4% cap rates for the last 10 years. What the hell is that? That was a screen open. Oh, I was like somebody else's antenna coming in. We are in midtown Manhattan.

That was Carlton's supervisor. She's due back at Bound. They are selling the shit out of Fang. Amazon's down 51%. Somebody told me Google's going straight down. Somebody said this somewhere. I forgot where I told me- Google's going straight down. Somebody said this somewhere. I forgot where I heard it.

Apple's market cap is bigger now than Meta, Amazon, and Alphabet combined. Is that possible? Yes. I've read that. Is it possible? I mean, we could do that. Apple is bigger.

Amazon's 900. Meta is 250. Apple's bigger than who? Meta, Amazon, and Alphabet. Apple's still than who? Meta Amazon and Alphabet Apple's still 2.2 which is insane So Amazon 900 Amazon is 1

So between Amazon and Google you get to 2 Yeah same wow that's crazy That's insane Because these were all stocks that we thought Were on the way to $3 trillion each. I think the difference between Apple and the others is Apple's profits are so secure in the way that they're being truly generated that the market has given them a lift. That sounds complacent to me. No, no, no.

This is what I'm saying. Apple is actually trading more like a consumer staples company than a tech company. And this is actually the concern when I say real estate cap rates of 3.5%. It's like the consumer staples or like the steady cash flow elements of this economy are not actually pricing in where interest rates are going, where the cost of capital is going. And so if you actually believe the cost of capital is going to rise and stay there as the Fed keeps communicating, then how can you justify equity valuations, equity costs of capital, costs of equity at like 3.5%, 4.5%? Yeah, the hurdle is just so high. So, yeah.

You think about – you talk about risk-free 5%. Yeah. This is the scary part. I mean, that's – What if it goes higher? So the market's repricing right now. It makes sense. And it has a lot more to reprice actually actually. So like... Cut us mic off. Cut us mic

off. No, but I mean, like the fear and greed continuum is real. Absolutely. Like maybe we're like far on the fear side and maybe you go through a period of like you readjust. And this is actually the way that the Fed and the whole economy reacted throughout like the 60s and 70s to inflation is you would basically get the Fed come in, hammer the economy. It would go like to the point where they couldn't handle any more pain. And then they would reflate the economy for a couple of years. And then it would be the same cycle over and over like five times they did it basically. But if you look at the chart of the Dow from 66 through 82, it's flat on a nominal basis. But on a real basis, you had a worse bear market from 66 to 82

than you did from 29 to 92. Because all the costs in the economy have gone up and your stock price has remained the same. So it's not a break even. Yeah. So like we as a society just like have this fear of greed trend that like, it's lower highs at this point, whereas we used to get to like higher highs with each push, each greed peak. But at least if the Fed maintains this posture for the foreseeable future because it's being pushed by inflation, we're in a lower high zone. And this is on the transcript. We've been talking about the Fed call instead of the Fed put since the beginning of last year. Well, it's just the Fed put idea was that the Fed's always going to be there to buy any dip, basically. And that they'll support the economy in a deflationary environment.

But if you're in an inflationary environment, all of a sudden, they're selling every peak. So anytime that the market goes higher— They have to fight it. They have to fight it. That's what we said, yeah. And the Dow literally stayed at the 1,000 mark from that 66 through 82. It was like 16 years that it never broke that 1,000 mark. You're not getting multiple expansion

anytime soon. And you could have multiple cratering. And you could have multiple come down and you really could have an earnings recession that I think is not currently being talked about. So what are we talking about?

2,200 on the S&P? For goodness sakes. I mean, how far does that fall? And Josh, I think you tweeted something like years ago that always stuck with me. There's like some- Thank you very much. There's some correlation between just like,

like just the human fear of falling. Like we don't like the- I did? Yeah, I believe that was you. Maybe I'm misattributing. Josh Brown said we don't like the fall. If it was brilliant and stuck with you, it was probably me. It was just like, so there was some point at which like falling prices feel like you're falling out of a window from like some sort of height and you just

don't want to sustain that. And so that's why like, we actually like the feeling of inflation or like things rising. It feels like more psychologically deep to have that. And so like, you know, will we get to 2,200? That's probably too much pain, honestly, for the Federal Reserve. So they'll probably get to a point where they're like, oh, well, 3,000 is enough pain and they'll start to reflate again. But the multiples will silently contract, right? Even if the nominal number stays flat, the earnings will grow with inflation. And so you'll have like earnings multiples contract over a very long time. So Google, for example,

Google is probably the first, not probably, it's the first company in history that went from 2 trillion on its way to 1 trillion. It's going to get cut in half. It's basically there. It's traded on an average PE

over the last 10 years of about 30, close to 30. And now it's 16 times earnings. What's scary about that, now it's 16 times earnings. What's scary about that is, so we did a decade of multiple compression in the 70s culminating in Volcker really pouring it on. But I don't think the S&P bottoms until eight or nine times earnings backing up the cash or something like that.

That's exactly right. I mean we're still double that now. It's not 1979. We're not on gas lines. It's not the same issue. I agree. I mean, I think this inflationary period is closer to, like, the post-World War II inflationary period, where you had, like, huge direct government stimulus to consumers in the form of they actually, like, worked on building planes and tanks.

And then the unwind. And then the unwind of that. Right. And, like, really the way the government fought inflation from 45 to 50 was like price controls, or like from 40 to 50 was price controls. And then Merino-Eccles was actually like the first one to start raising interest rates to fight inflation. Okay.

And he got fired by Truman. Was that 50s, that Eisenhower? That was like 48 that he started to do that. And so actually, the weird thing, I always was looking at this bull market, and the bull market previous is so weird. Actually, this one specifically, because it was the only multi-decade or decade-long bull market that didn't start with a nine times earnings multiple. And actually, the 82 through 2000

bull market and the 49 through 66 bull market were basically both fueled by disinflation. So you had these big inflationary periods, which actually ramp earnings, but you have the cost of capital ramping along with it. And then once you finally get the point where you break inflation, the cost of capital can fall. All of this embedded value from earnings basically then accrues to securities. But we had this like fear of falling bull market here where it was like, even though the economy was totally fine in 2010, the Fed just kept pushing, pushing like farther and farther with QE. Don't you think there's also an underlying thing about the makeup of the current bull market prior to the makeup of the stocks, the makeup of the stocks and the makeup of the

profit margin of the S&P with these 80% margin companies. Shouldn't they have traded at a premium? Maybe we took it too far, but shouldn't they have? I mean, maybe and probably, but in the old days, like Ford in the 19- F*** the old days, man. No, I'm serious. Like technology companies get big margin because people don't know how to build the technology,

but then everybody figures out how to build the technology and all of a sudden the margin goes away. So like, you know, software engineers know how to build I think software engineers know how to build an iPhone, but they can't sell it. But nobody's attacking Google's margins. Not right now. Speak for yourself. I might.

I mean, you honestly would probably have to go to the railroad era to like really know this, but after a while, the railroad started to have more industrial type margins. Let's do this earnings misses thing really quickly. So the market is not being kind to stocks that miss on the top and bottom line. Holy moly. This is from Bank of America.

Earnings misses are getting punished, underperforming the S&P 500 by 667 basis points the next day, the largest in history. Yeah, this is not an environment where you want to be the class clown. You want to put your head down and just do your best. So that's another good point. It's like companies are adjusting to the new reality, right? Like what Uber is doing, turning free cash flow positive as quickly as they did is pretty remarkable.

Like companies are onto the fact that the market wants something. But you had to have started that early. Like Dara at Uber in February was like, we're pivoting to free cash flow. We're selling all this non-core shit. Sold like half their stuff in Asia. They sold the automated unit where they were trying to build their own tech.

Forget it. Goodbye. Not every CEO got the memo at the same time. So Peloton, again, I know I'm mentioning this again, but it's up 7% now. It was crushed at the- Did you just buy this? No, I didn't. Stop pumping your bags on the show. That stock's going to zero. Asshole, I didn't buy it. again, but it's up 7% now. It was crushed at the – Did you just buy this? No, I didn't. Stop pumping your bags on the show.

That's not going to zero. Yeah, so I didn't buy it. I didn't say if I bought it. But they are shrinking their losses like dramatically, and I think every company got the memo. By now? Yeah. I would hope so. I mean after what we've been through, I mean there was all this kind of inflated growth that we should have known what was going on in 2020, 2021 was not going to be sustainable.

I mean, we're not all going to live in our houses and work in our houses forever. And everyone just pretended that it was totally the new normal. And things just got way ahead of themselves. Yeah, companies got rewarded for spending more. Exactly. Like big investment announcements, stocks were going higher. So I think like that, that mentality takes hold and everyone's doing it. Well, and especially with a lot of the platform companies, I mean, Twitter to some extent,

PayPal and other, like, there was this huge hope of, like, we're going to be a super app. We're going to be the all-in-one commerce, communications, finance. And, you know, people were like, yeah, that sounds great. And we're finally like, no, just stick to what you know how to do. Speaking of super apps, like Square is trying to do that. They report earnings and they look like they're about to go down 25% also. I don't understand the super app concept. I am perfectly comfortable using my thumb to move to a different app. I don't want to do everything all with one company. I don't understand why people think there's some reason why the super apple went out, but maybe I'm wrong.

What do you think? I don't know. Yeah. I don't get it. Warren Buffett, we should mention. Mike. He might actually know something. Like when you look at Apple relative to every other stock on earth, hey, it turns out maybe he wasn't lucky for the last 70 years as an investor.

His top three stocks are three of the best stocks in the market this year, or relatively speaking in their respective sectors, let's say, with Apple, Bank of America, and Chevron all had outstanding earnings reports. Apple is holding up better than any other mega cap tech company. Not anymore. Chevron is – not today. Chevron is crushing it this year. No, for real. Look at Apple. It's down 10% in the last three days.

All right. That's awful. Compare it to Alphabet and get back to me. What's going on? I think this is the story. You don't have to raise your hand. No, because Apple was up 8% after earnings. Yeah.

Get it all back and then some. I think this is the story. As people start to believe, pal, that they're actually going to raise rates higher and keep them longer. Repricing. You have to reprice the steady cash flows. And that's the scariest thing. I think what you're seeing this year, the scary thing.

Cut his mic again. The scary thing is you're like seeing the tide roll in and you're seeing it roll in on the stuff that was the furthest extended, like the meme stocks, the stuff that was non-free cash flow. Those sandcastles have already been washed away. Those are already washed away. And because interest rates were held so low for so long,

the cash flowing, the steady cash flowing assets deserve to be repriced too. And so it's like, how far is the Fed going to let the tide roll in before they're like, oh, wait a second. Now it's coming for the lifeguard stand. No, seriously. Apple is the lifeguard stand. Yeah, and so they're not going to be able to withstand that pain at some point. They're going to turn around, and that's why you could have a part two of this two years from now.

But fundamentally, the single biggest thing I took away from Time magazine is that securities prices are driven by the cost of capital and the Fed sets the cost of capital. Apple is the last man standing. This is my little – Apple reported its highest fiscal Q4 revenue. Ever. $90.1 billion in company history. Let me pause. $90 billion in revenue in one quarter. Importantly, this milestone was achieved despite stiff currency headwinds.

Yeah, they didn't even cry about the dollar. The tech giant also posted its highest fiscal Q4 gross profit margin ever. How the hell could that hold up, right? Like how could record revenue, when Qualcomm told us last night, declining handset, like there's just no way. So Apple's at a1.40-ish.

$1.42. You know where it was at the lowest in March 2020, which is not really relevant, but just for fun to really scare people. Let me guess. $1.10. It's at $1.42 right now. Oh, where was it in March 2020? What was the low price in March 2020?

$1.40? It's $1.40 now. The low was $53. Wait, what? For Apple? Holy shit. Wow. And where did it get up to? That's 60% lower. Where did it get up to in November of last year? The high was $185.

So, that could be... Does Apple hold $100? I don't know. I mean, you tell me what multiple you're going to put on earnings. Well, it's a 23 multiple now. Is that right? Okay.

I think Apple could hold the 20 multiple. If they're operating the way that they are, I don't see why it wouldn't deserve to. A lot of the staples are trading at high multiples. Yeah. I mean, they're pricing towards like a 5% cost of capital, like a 5% tenure. Well, and also to your point, I mean,

I almost start to think of Apple almost as a staple with, you know, kind of like a... It is. A lot of people do. I mean, look at this table. Your MacBook crashes tonight.

Your iPhone crashes. I'm buying another one. You're buying another one. Right away. You're not even... Barry Ritholtz is buying it, but I see your point. Yeah, exactly.

So, I mean, you know, am I going to rush out and get the newest phone or newest whatever just because it's out? No, but I'm definitely replacing. Can't live without it. Exactly. Can't really go a day without a phone.

Oh, but this is what Aswath was talking with Patrick O'Shaughnessy about a couple months ago. Like we don't know what the appropriate multiple for these SaaS companies. He was talking about Netflix. Like how recession-resistant is Netflix? Like probably people aren't canceling, but what happens to the multiple, though? Yeah. We know it goes in one direction.

We don't know how extreme. Again, this is a lot of bearish talk out here, and probably rightfully so. There is a repricing of risk. We're witnessing it every single day. Do you think we're more bullish on the show when the market closes green? Oh, yeah. You think we are? Duncan, what do you think? You more bullish on the show when the market closes green? Oh, yeah. You think we are? I mean,

Duncan, what do you think? You guys need to do a chart. It's a different vibe. Yeah, I think Darth Vader on the table, too. Well, we put Darth Vader on the table when the market's Nicole does that, right? Right, yeah. And then who comes on when the market goes up? Chewbacca? Yeah, Chewbacca. Wait, is that for real? Yeah, we do that.

So Duncan is gaslighting us. Carlton, can we talk about junk? We can talk about junk. Okay. Junk. So what's – Michael, set this up or somebody. What's going on here? So there's no junk bond issuance, which is an interesting dynamic. We spoke about this in a time that companies were just gorging on debt.

Why wouldn't they? It was free. So these are some pretty incredible stats. So junk-rated companies have raised just $3.7 billion this month. That number would represent the slowest October since 2008. These companies borrowed $91 billion. It's like the IPO market. It's like shut down.

Exactly. But this is actually shut down for a decent reason. They already gorged. Well, sort of the IPO market. $91 billion this year would be the lowest year total since, again, 2008. I hate these 2008 comparisons. I mean, October 2008, I was – I think we were both – well, you're in wealth management now, obviously. I was then and it was a brutal, brutal time.

But I think to your point, I mean – Wait, where were you in 2008? I was living in Seattle. I was with a boutique firm there. Jannie Monk. What is it called? Laird Norton. I never heard of that.

What were you doing there? I was – You cold calling? No, God, no. You calling rich people? Oh, my God, no, no, no. Pitching junk bonds? I was.

You were? I was an associate level working under an advisor. I didn't know that. Yeah. Oh, okay. That's where I got my start. It was – You loved it so much, you went right into journalism.

Exactly, for the higher page. Okay. But why don't you like these comparisons? I mean, we are seeing a capital market shutdown, unlike really anything that we've seen since then. Yeah, I mean, we definitely are unlike anything we've seen since then. But I think we saw just a totally different type of silliness in 2005 to 2007 versus 2020.

More irresponsibility. Yeah. Like, you know, we'll talk about the things that we saw over the last few years where, you know, the meme stock craze, SPAC craze, things like that. But I didn't have, you know, people making $20,000 a year, you know, buying vacation homes with, you know, zero down payment. You're not – you weren't seeing that type of things where people were really like speculating with like their future. It was more kind of the funny money that they were being given. So when you make these comparisons, like, yeah, of course it's going to be lower.

But to your point also, I mean, we did gorge on debt when it was free and cheap, which I mean. Which we should have. Yeah. That's the whole point of it. Exactly. So does not surprise me that we're seeing these levels. No, the banks stayed out of this.

I mean they did IPOs in SPAC. They did it as investment banks, which is their job. But they didn't also put their own money. Yeah, they weren't taking balance sheet risks. They weren't taking balance sheet risks because they can't anymore. They would have. I think they would have. Oh, totally.

I mean so you read All of Time magazine. One of my fun things to do years ago was reading the annual reports from the big banks like going into the financial crisis. So, you know, 2005, 2006. I swear, it read like they had exclamation points on how they were trading and putting balance sheet risk on. I mean, you almost felt like Goldman Sachs like giddiness coming through in their annual reports from like 2007. I almost felt like Goldman Sachs like giddiness coming through in their annual reports from like 2007. Do you know the Lehman Brothers cover story from Barron's from 05 or 06? I don't.

It's Dick Fould on the cover. It's an insane interview. It's not really all his fault. I forget who the writer was, but the premise is like – Mr. Santoli, if it was your article i apologize the premise was lehman joins the big boys basically like that was the story and you know some like publicist pitched that hard and and got them to bite on it and it was like a hagiography for dick fold and he like was really flexing and like two years later is the biggest bankruptcy in American history. But like, that's like the kind of thing where you look back and you were just like,

this should have been a red flag. And I don't think it was to anybody. Uh, really? No, I mean, I just remember, and I was starting my career in 2005, but looking back at how money was just sloshing around at that time. I mean, I think back to the things working in finance, the things I was able to do and afford when I was 22, where I'm like, I knew nothing. How was I went, I went to a, I went to, you know, the ice skating rink at a Rockefeller center. So a friend of mine was a commercial real estate broker in like oh six or oh seven. And he's like, come to this, uh, come to this party. I'm like, I'm not invited. He's like come to this uh come to this party i'm like i'm not invited he's like dude nobody cares it's like a real estate a commercial real estate party in manhattan in oh

seven at the ice rink but it was in the summer and maybe it was the summer of oh six and they're like handing out lobsters and like they're not even asking like are you part of the party? Yeah. I like glide in. It's an outdoor thing. I'm telling you right now, it could have been a thousand people. All like dudes in white button-down shirts and like all professional real estate people. It was Tishman Spire, I think, through the party.

And I'm pretty sure they were handing you a lobster on your way in. Like when you go to Carlos and Charlie's, they give you a shot. Like when you're on spring break. They were like, oh, welcome. Here's a lobster. Here's some Dom on your way out. Literally, here's an entire lobster. Have a great time.

And if I had known anything back then, I don't know anything now. I really didn't know anything back then. I would have been like, this is some late cycle bullshit. Oh, totally. I mean, I had similar experience. So I started my career in Philly, um, working for a commercial finance firm. I, if anyone knows Philly, um, I worked on written health square, North part of the square. My friend worked for, um, a healthcare advertising firm on like the East side of the square. I swear every night that week, someone's managing director was hosting something somewhere. And just like you, it doesn't matter if you're not on the list. Just show up. Just show up.

So maybe that phenomenon was taking place in Miami in 2021, like crypto bashes. But that's not the economy. Exactly. I mean, it's a side show. I mean, and yeah, there is real money that's lost there. But it doesn't, I think, have that kind of, you know, full effect on the broader economy. Gunlock said, are you taking any asset managers' letters and pulling excerpts out? Why not?

I mean, we try to just follow people who are running industrial companies for the most part, like industrial tech. Because you're trying to keep it informational and not opinion-y? Yeah, and we don't really want to get over-biased by what the financial markets are saying or financial pundits are saying. That's interesting. People who are frequently or are managing money, talking their own book, I try to edit them out usually. Like this asshole. No.

Like me. Don't include my stuff. It's not going to age well. No, I mean, I think the real gods of our industry we put in, we'll put in if Soros says something or Druckenmiller says something, like Dalio will get in there every once in a while. Because that could be a spinoff product.

You could do the transcript, but like investment professionals. So you would have like Howard Marks, Michael Batnick, people like that, whatever they said. Gunlock said after the Fed, I think he was talking to CNBC,

he said, tax law said after the Fed, I think he was talking to CNBC, he said, tax loss selling is the biggest risk to the market going into year end. I'd say the Fed. I believe this is the biggest tax loss selling opportunity in two generations.

I'm not sure what he means by opportunity. And didn't everyone take tax losses and that's why the market's down 20%? The market's down because people sold. Yeah. All year. Like from January 1st on, almost every week is like net selling, net selling, net selling. So now people are first going to sell?

I'm not sure about that. I could be wrong. It just feels like it's that kind of old-fashioned calendar that you do know when November starts. Everyone's like, oh, don't forget to do your tax loss harvesting. Where it's like, well, yeah, but to your point... Everyone's sold already. That's why we're down. Exactly. I don't know. What do you think? Is that chicken and egg? Yeah, I don't think it's a major driver of our securities prices. I don't think so either.

And mutual funds fiscal year ends in October. Yeah. I mean, seasonality, I always found in reading the Time magazines, is real. It is real. The fact that we had a pretty severe sell-off in September. I mean, I guess October was technically good this year. But this happens.

Time out. October, notoriously, if you believe in seasonals, is a bear killer. Yeah. October is where they end. Yeah. So it's actually in line with what we should have expected if we believe in seasonals. What do you think about that? I know you're not a seasonal guy.

No, I'm doing something. Are you doing your not a seasonal guy. No, I'm doing something. Are you doing your f***ing taxes? No, I'm doing something for the show. Carry on. You're calculating something on a spreadsheet? Carry on. Okay, normally we do our homework before we come to school, Michael. No, I'm just kidding.

All right. Look, this kid just gave me. Wait. We did the secular repricing thing already, right? No, that's for real estate. Just hit that real quick. All right. This is a Wall Street Journal.

This is rising interest rates threaten to expose office buildings' inflated values. What are we saying on here? Sorry, sorry. Where's my doc? Okay. So just like we're getting a repricing in equities, same thing is happening in real estate. And this is interesting. All right. Some dude, Ronald Dickerman, who's the president of a real estate investment firm said, I believe that we are in the middle of a secular repricing of

commercial real estate. It's a pretty scary proposition, but that's what we're up against. So since February 1st, 2020, this is from the journal, the S&P 500 is up 20%. Office rates are down 43%. This is what I like to call the coup de grace, which I might be saying that wrong, but just check this out. We're looking at a chart of the office price index versus the effective- This is the price to buy a building? Versus the effective rent index. And what we're talking about is this, exactly. Between 1997 and the end of 2021, effective office rents, which factor in free

months of rent and other gifts to tenants. So for example, you sign a 10-year lease, you get six months free. Okay. So when that's baked in to the price of rents from 1997 to 2021, that fell 16% in the 50 biggest US markets, according to Moody's Analytics. And yet, 16% in the 50 biggest US markets, according to Moody's Analytics. And yet, and yet, office building values rose by an inflation-adjusted 91% during that time period, which is bananas. A lot of that is Chinese and Saudi money

that's no longer coming in. But like Chinese insurance companies are divesting hotels and office buildings that they bought as like these uh trophy assets and it's much the same way that japan was doing like right like 30 years ago and that's not coming back so who replaces those buyers who are willing to pay uh i don't know 500 a square foot to own the plaza or whatever like that's's, I think that's one thing. And then, um, the post pandemic reality of people working three days a week, you're just inherently going to have smaller footprints. And

that's what keeps me from buying these office rates on paper. The ones that don't have horrible balance sheets, they look ridiculously cheap, but I don't know what the multiple for these should be. Yeah. I mean, I think of myself as someone who likes going into the office, but it's just, it's not really feasible every day. I don't know how I did it before, but it's so much easier to get up, get started working from home.

And then all of a sudden I'm like, I'm just working from home today. So for what happens to commercial real estate prices, I mean, you're just not having the same foot traffic in there. You don't have the same need for retail on the lower floors. This adjustment could take a decade, though, because these leases are so long. Yeah.

So, like, when you – it's the re-upping or the lack thereof that's going to be the price discovery. Alert, alert, alert. Good news alert. I was wrong on Square. It's up 11% after hours. At least that's the first print. So happy to be wrong on that.

All right. So I was doing some homework mid-show. So I apologize. This better be the sickest revelation of the hour. All right. Listen. All right. So the last four sessions, this is kind of nuts, actually. Let's go back to the last seven sessions. So in the two days before earnings, Apple was down 2%. Then it was down 3%. We got the earnings pop. It was up 8%. Since then, down 1.5, down 1.8, down 3.7, down 4.2. That's bad. So I wanted to look at when was the last time that Apple fell 1.5% for four straight sessions? So- 1929. Spoiler. Sorry. it had to be 2008 I remember it well

it's not always so these are the numbers so it had that it did that in December 2018 remember we had like that minutiae and saying

don't worry I spoke to the CEOs and banks and everything's fine oh that was that just ruined that just ruined Christmas so that was

alright so that was the last time that happened but before that it literally was 2008 really so Apple down That just ruined Christmas. He said it's a gem. That just ruined Christmas. So that was the last time that happened. But before that, it literally was 2008. Really? So Apple down four straight days, more than 1.5%. Carlton hates that. December 2018, January 2008, 2007, it happened one time. And before that, you have to go back to the dot-com bubble.

You know a lot of- So wait, this is real shit. No, 100%. I think this is worse than 2001. 18, 08, 07, 01. And one time in 08, one time in 07, twice in 2001. I think this is – the NASDAQ, this is worse than 01. We haven't had it at 02 yet, right?

But like I think the destruction of capital is definitely higher because these market caps were bigger. Yeah. Squares up 14. And there are more – I think this is worse. caps were bigger. Yeah. Squares up 14. And there are more. I think this is worse. Yeah, but the crazy thing is, like, you have an $800 billion loss of market value of Facebook.

That's like $800 billion out of some people's pocket. That's bigger than Berkshire Hathaway. Exactly. And the consumer's still not feeling it. Amazon, too. And Google, too. They both lost $800. Yeah, and the consumer's still not feeling it. So the consumer's still not, like, it's not impacting. The consumer subscribes to my macro alerts

and is short you are Mr. History I don't want to say there's nothing to be learned from history but isn't this time truly such a weird period of time where the consumer is fine there's no unemployment that's like actually during the Franco-Prussian war

no but there's nothing like this. I mean, we've never juiced the economy to this amount. We've never had a bull market. I mean, it's like it's 12 years, 14 years, whatever it is now. Do you know a lot of people, when you talk to them, they think that we deserve punishment for the amount of stimulus. And they almost think in terms of, they think in like- Like puritanical? Yeah, biblical, I was going to say.

Like what we did, we deserve more pain than what we've gotten in the NASDAQ so far. Do you think those people own gold? A hundred, no, no, no. The Venn diagram, a hundred percent they own gold. We know who they vote for too. But there's like a,

there is a sense that this has to get worse to balance the shit that went on last year with the most speculative parts of the market. And we haven't fully paid for it. We did it. I'm not trying to do that at all. There is definitely data underpinning and all of that. And the chart you just showed up like – Oh, we're not accusing you of that. I'm saying –

No, no, no. data underpinning and all of that. And like the chart you just showed. Oh, we're not accusing you of that. I'm saying. No, no, no. But like the commercial real estate versus rents, it's just like the macro macro chart is household net worth versus GDP. And like the multiple has gone crazy on that. We've just taken all of the cashflow from the future by holding interest rates really low and repriced it into the present. And it's like, if you can't continue to do that because you're starting to create inflation, then a lot of those cash flows have to go back into the future. The people that I'm talking about don't know what cash flow is.

And by the way, it's not a uniquely like conservative or liberal thing. But like we see this in politics. Like people are like Donald Trump has to go to jail. Like, dude, this guy is in court or his lawyers are in court every other day. He lost the presidency. Like, he's—everyone around him went to jail. It's like, it's not enough. No, he has to go to jail or else I can't sleep at night.

And so you see that on both sides. I don't mean to say—but there are people right now who feel like we just must be punished for everything. I'll make the bold case here, and I'm not going to go to the Franco-Prussian War, but I will go to World War II, which is like the other basically equivalent period of the type of stimulus that we did, the quantity of stimulus that we did over the last 10 years, the only other time in the 20th century, at least,

that the economy sustained sort of the same thing. And we were like 150 billion GNP before World War II. During the peak of World War II, we were like 350 GNP. Because we were just cranking out planes. It was all borrowing. Were we getting to that 200 something? Now? I mean, we're like 14.

I think we're like 20 trillion now, GNP. But this is in actual nominal 1935 through 1945 dollars. But we were like 150 before we got to 350, and it was all basically borrowed money. We were borrowing the money to win the war. We had to win the war. But when people did the analysis at the end of 45 or even 44, they were like, well, what's the economy's GNP going to be like

once we come out of the war? They were like, oh, we borrowed all of this money, the $200 billion. It's going to go right back to what the economy was before the war. And so all these people were saying the economy is going to get cut in half. And what actually happened was you ended up building so much new capacity that industrial capacity was actually soaked up by the consumer. People actually wanted all the extra cars that could be produced. And then you had some inflation with it. And so like nominal GDP held in pretty well. Real GDP fell by like, I think 10 to 15%,

but it certainly wasn't the 50%. But isn't that the problem now? That now we have, right? This is the point. You've like, you've juiced the economy with low interest rates for such a long time, but hopefully somebody out there, some entrepreneurs were doing things

that were like productive enough. Elon Musk was. That they actually, Elon, yeah. All kidding aside, love him or hate him. That's what he did with free money. Exactly. Hopefully, there was actually a positive, real net return. But that's a good point,

because Tesla could not have done what they did in a 5% world. No way. No way. Yeah, exactly, exactly. And the changes that are getting made in AI, like general artificial intelligence, you could triple, you could 1,000x

the effective workforce of the world within the next five years. I like what you're saying. And I hope that ends up being the balance to this idea of cashflow repricing is that, wait a minute, holy shit. Look at what we've actually done with technology that we don't even see yet, but it's starting to- Plug for Helion Energy Energy the fusion power company we're going to do that

at the end of the show seriously I mean like go ahead there's always that chart that comes out about the companies that were born

during recessionary times or the companies I mean you know 2008 whether they were born or kind of popularized Uber, Airbnb

exactly General Motors depression stock yeah that's true Burger King also I almost wrote a book about this actually what it was going to call Out of the Ashes all these companies that started during General Motors depression stock. Yeah, that's true. Burger King also. I almost wrote a book about this, actually.

What? It was going to be called Out of the Ashes. All these companies that started during a recession. Why didn't you? Because, you know, life. You're only doing 19 other things a day. Oh, here's what I want to mention. I know it's easy to lose sight of the fact, but the fact of the matter is,

like, absent COVID, would the inflation that we've been promised ever have come? It may not have. I don't think so. Well, no. Right. They wouldn't have needed to throw this much money at us. For the last decade, there were people saying that rates were too low and there was too much spending and there was going to be inflation.

That never came to fruition. Oh, COVID bailed them out. So COVID turning the economy off and then back on in the supply, demand, and balance created the inflation with the fiscal stimulus, of course, that we might never have otherwise gotten. Yeah. And World War II did that in 39 too. Like we never would have gotten the inflation. There's no alternate universe, but that's the reality.

That's the reality. And a lot of the inflationistas were bailed out and they won't say it, but you would never have labor having the upper hand the way it does absent a situation where people realized how important they were to their employers. And that doesn't happen without the dislocation that we had. Like, I think that's just a, we have to, we have to just remember how aberrant, you know, the situation was that led us here. We're going to end on a high note.

This was really funny to me. Coinbase is flat after earnings, which is kind of weird, but good to see it. Give it five minutes. You have five minutes to get out. Revenue's down 50% year over year. Howard Lindzen tweeted a pitch that someone emailed him. This guy probably wants to kill himself now. This is rough.

Did you see this? Did you guys see this? Yeah, this is rough. All right. So Howard tweeted, Oh, here it is. All right. So Howard tweeted me. Oh, here it is. Me slash people getting pitched Twitter, I guess as a private stock, by an ARK venture fund on A16Z backed Titan app today after another rate hike of 75 beeps are not how tech bottoms are formed.

Actually, it's distasteful. I am wrong a lot, but not about this. This was rough. I like Titan. I like the guys at Titan. This was rough. So Titan is a platform that lets people invest in private companies, right? PayPal's down 11%. Holy shit.

Titan is like an active robot. And they also now do venture stuff, I guess. Okay, fine. There's nothing wrong with that. There's a bunch of companies in that space. But yeah, how do you hit send on this email? What does the email say? Hi, Howard.

All right. Wanted to let you know that we are now able to provide Titan clients the opportunity to invest in the private Twitter deal through the ARK Venture Fund. There's a lot of layers of fees in here. Let's start with that. But then you're buying Twitter at $54. How is that a venture? At Elon's price. That's post, post, post, post, post, series Z.

If you're buying. So my joke, though, was that actually 54 is cheap because Elon's going to make Tesla buy it for 75. What's the opposite of a startup investment in a venture fund? This is so odd. This is an insane email to send, though, just in the current context of what's going on. Oh, no, it's funny. I was playing around on YTrust, and I went to look at some of the Twitter financials.

It's gone. It's gone. It's not a publicly listed stock anymore. I was like, wait, wait. The data feed gets pulled. Wait, wait. I want to. It's gone. Instead of calling them a unicorn, do you call them a. I was like, wait, wait. The data feed gets pulled. Wait, wait. I want to. Instead of calling them a unicorn, do you call them a dinosaur now?

Ooh, I like that. No, what's the dinosaur with the horn on its head? Triceratops? I feel like that's three horns. Oh, right. Hence Tricera. Yeah, yeah. Isn't there like a horn-billed?

I don't know. Are you thinking of a duck-billed platypus? John's Googling dinosaurs right now. Let us know in the comments. Don't look for an image. We're going to move on very rapidly. Did you guys have fun on the show today? Yes, we did.

I was speaking for him. Yes, he did too. Okay. All right. So we've reached the halfway point. No, I'm just kidding. Wait. We were recording this? Oh, my God.

I was. The whole time. I'm looking at a tweet from the transcript. PayPal beats on the top and bottom line and raises fiscal 22-year guidance, and the stock is still down 12%. Wait, if you're sitting here, who's tweeting from at the transcript?

My partner. Your algo? Yeah. Okay. Can you tell me what Helion Energy is? Yeah, it's a fusion power company. Don't start talking about fusion. I think you guys are going to like it.

All right, go. I actually think you guys are going to like it. I definitely am. Fusion power, power source of the sun. What is am. Fusion power, power source of the sun. What is fusion? Fusion is the power source of the sun and all other stars. But is that the cells dividing or? It's coming together.

Didn't you say the phantoms are coming together? It's atoms coming together. What is fission? Fission is when it divides. Fusion is when it comes together. Fission is when it comes apart. Exactly. Isn't this what created Mr. Fantastic, Captain Fantastic?

Yeah, basically. It's like this science fiction thing. People have been trying to do it on Earth for 70 years. Nobody's ever been able to do it. So is James Bond going to be able to stop you before it's too late? So what are you doing with fusion? Tell us. Yeah, I mean, so there's like five well-funded fusion companies in the world now.

Helion is one of them. And we're building right now our seventh prototype. We've built six prototypes. We actually do fusion every day in our sixth prototype. But the seventh prototype is the one that we expect to demonstrate in electricity for the first time. What do we actually do fusion every day in our sixth prototype but the seventh prototype is the one that we expect to demonstrate net electricity

for the first time what do you mean do fusion it's in a it's in a facility no wait all kidding aside this is Spider-Man 2 this is what Dr. Octopus was trying to do

yeah in like stylized form cold fusion my boy yeah no fusion yeah thanks for throwing this up but yeah I mean fusion is like what is that this is the holy grail of energy what is that called

this is the plasma accelerator this is energy. This is the plasma accelerator. This is our device. Lasers? Plasma, which is like the fourth state of matter. This is after you heat something in a gas, it becomes a plasma. Did I see right, this thing is 40 feet long? Yeah, it's about 40 feet long, 6 feet tall, basically. If you go to the art technology, actually just scroll down a little bit here.

Scroll down to like the third frame. This sounds expensive. It's actually cheap. You know what the fifth is? This is the whole mattress. To build, did you guys raise a ton of money for this? We raised $500 million last year. From the Pentagon?

No, actually from private investors. So Sam Altman led our round. Dustin Moskowitz was involved. Mithril, which is a Peter Thiel vehicle. $500 million, was that pre-seed? No, this is actually our Series E. We've been around since 2008, so we built six prototypes. This is the sixth one.

But this is important for people to watch because if we or others, but we can do fusion and make electricity from it, this is like the power source of the future. This actually upends hundreds of billions of dollars. So what's the next big milestone? You're going to generate electricity? Electricity generation, power a light bulb sort of

electricity. Plug an iPhone? Yeah, something like that. Let me be your marketing guy. I say light bulb for 12 seconds because 12 seconds is how long Wright Brothers' first flight was. So if we can do that, that's like that's the big deal. Wait, is this real or is this science fiction? This is real. This is real.

Michael, it only costs $500 million to power a light bulb in 12 seconds. You can't do this when it's just at your 5%. This is one of the things that's coming out. This is exactly why I said plug for Helion here. This is like the type of thing that if you're able to create a new energy source. You're going to bring down inflation. Yeah. Okay.

You don't have inflation anymore because you have a near zero cost energy. I like somebody who comes in not just with the problems but also the solutions. I like that. I mean like energy fusion is like one element of this. AI is another element of this where you like can – again, if you have hyper-intelligent machines, you just like thousand X the workforce. We can all go live on beaches. So when are you SPACing this?

You almost did though though, last year. You could have. You really could have with your eyes closed. No comment. Okay. You get pitched? Of course. Everybody got pitched on SPACs.

Okay. Chamath? Everybody got pitched on SPACs. Okay, fine. At any rate, yeah, this is an important societal project for people to be watching, I think. Dude, this is awesome. How do people find out more? HelionEnergy.com? HelionEnergy.com?

HelionEnergy.com. Wait, what's the ticker? Yeah, right, exactly. I mean, people in the financial community just are waiting for this to come public. And honestly, look, I mean, it's like, to me, I say it's like we're building a rocket. We have the launch pad. We're assembling the rocket right now. The rocket is scheduled to launch in 2024.

Will it make it into space? We've designed something that we think will, but like we got to watch. And like, if it makes it into space, it's historic. This is, this is awesome. Carlton,

are there any nuclear projects that you would like to plug? You doing any fusion? Some in development, but too early to comment on. I am doing Asian fusion. Actually tonight, I'm going to pig and cow, you know,

pig and cow. Oh yeah. I used to live around the corner from there. It's Phil. It's not Asian fusion. You don't go to pig and cow. Me and Chris go to Pig and Cow. You know Pig and Cow? Oh, yeah. I used to live around the corner from there. You don't go to Pig and Cow. Me and Chris go to Pig and Cow. I'm taking my brother from L.A. there tonight, in fact. Really good restaurant. If you can stomach it, you should go across the street to Ivan Ramen, too.

Just, like, you know, do the blob. Two for one? Yeah. I can't do it. Look at the condition I'm in right now. I love Pig and Cow. You're svelte. You can do it.

Yeah, sure. Wait, Scott, you're not from around here. I'm from Los Angeles. He's from the. You're svelte. You can do it. Yeah, sure. Wait, Scott, you're not from around here. I'm from Los Angeles. He's from the future. Shut the fuck up. All right, we're going to do favorites, and then we're going to get out of here and go back to our experiments. All right, White Lotus.

All right, so are you a White Lotus person? I haven't watched it yet. I need to. Did you watch season one, though? No, and I had COVID earlier this month, and I was like, I want to watch it then, but I was just too out of it. How much earlier this month? Way earlier? Because it's November 3rd.

Oh, sorry. Sorry. Last month. What day is it? Yeah, sorry about that. Okay. Beginning of October, I had COVID, and I was like, okay, I'll watch it now. And I was so loopy from it, so I couldn't really.

Dude, season one, don't skip right to this, but do it. Like, really do it. It's so well written. I know you. You would really appreciate it. There's such a gap between the production, the writing, everything with HBO and everyone else. I mean, the gap is massive. I agree with that. Still. It's so prestige.

I don't know what they do, but they do it much differently than everyone else. It's Bukes. The guy that runs it is like an artist. That trickles down. Imagine Netflix, no offense, Reed, doing White Lotus. No. Well, the budget would be half per episode.

And they'd probably use Jason Bateman in every scene. Yeah. It wouldn't be the same thing. They're so good. No offense. We like Jason Bateman. White Lotus season two, it's the same hotel chain They're so good. No offense. We like Jason Babin. White Lotus season two, it's the same hotel chain, but they move it from Hawaii to Italy.

And I was just in Italy. And it's in Sicily, which is not the same as where I was. But I was watching it with Sprinkles, and we were like, elbowing each other. Like, doesn't this look like the Patsy Weidman? That's his wife, by the way. That's his wife, not his dog. Yeah, yeah. Right.

All right, that's your favorite for this week. I was going to use that, but you took it. Howard Stern fans. Howard Stern a little. I like his interviewing. I don't like his comedy. Yeah, I agree with that. You know what I mean?

It's a little too much bathroom. He's not funny anymore. Stop. His interviews are amazing. He's the best interviewer in the world. He's not funny anymore. You don't listen. I do.

I listen all the time. Don't say that. What's funny? Honestly. What do you mean what's funny? Sour shoes. Sour is not on the funny anymore. You don't listen. I do. I listen all the time. Don't say that. What's funny? Honestly. What do you mean what's funny? Sour shoes. Sour is not on the show anymore. You don't listen.

Stop. He interviewed Bruce Springsteen last week? This week? Monday. Oh, that would be good. It was amazing. So he set up a stool.

Bruce has his guitar and then there's a piano and he's just going back and forth. He tells a story and then he plays a little back and forth he tells a story and then he plays a little bit and then he tells a story and then he plays a little bit kind of like the Broadway show

yeah it's a good point it's a lot I saw that Broadway show apparently Howard's seen it like multiple times and I didn't realize how big of a Bruce Springsteen

fan Howard was so it was really cool to listen to so highly recommend yes that was great and you can watch it on the XM Sirius app do you have a favorite for us besides 8,000 issues of Time Magazine It was really cool to listen to. So highly recommend. Yes, that was great. And you can watch it on the XM Sirius app.

Do you have a favorite for us besides 8,000 issues of Time Magazine? Time? Is there anything else we should dig into? No, I don't think I have anything to bring to this one. You got nothing? Okay. Yeah, I mean, I guess my comment on this is like, you know when you were a kid and you walked in and your parents were watching some show from like the 1930s or 40s, like I Love Lucy on V-Rolls?

Yeah, yeah, yeah. Because that's all they wanted to watch? Yeah. I think I've reached that point. I'm just watching like 90s sitcoms hit me what do you got friends on the tv in the household still holds up still holds out and seinfeld always great friends a little problematic but still still holds up yeah no i mean it's great to like go they're time capsules now yeah it's like kind of crazy to watch are you a rachel uh guy or a monica guy no comment okay fair enough what do you got for me carlton all right so last time i had broadway now. It's kind of crazy to watch. Are you a Rachel guy or a Monica guy? No comment.

Okay, fair enough. What do you got for me, Carlton? Alright, so last time I had Broadway Rex, I'll do it again. Last night I saw Almost Famous. It officially opens tonight. I have tickets. Don't spoil it. Does Penny Lane have her stomach pumped? You don't want me to spoil it. I'm just kidding. I saw the movie.

It tracks the movie. It was an awesome, it was a joy to watch. Like, if you love the movie, you'll love this. I'm going in two weeks. I'm so excited. It's one of my favorite movies. You'll love it. Was Cameron Crowe involved?

Yes, and I met him last night. Really? He was in the audience. Did you take a picture with him? Somebody did. Somebody did. I didn't. I was like right there.

I'm like, don't be that person. Don't be that person. I talked to him, and he was very nice. I was like right there. I'm like, don't be that. Be that person. Don't be that person. I talked to him and he was very nice. But the show is incredible. And then last week I saw Take Me Out with Jesse Tyler. The Franz Ferdinand musical? No, no. Did you get that one?

This is, oh, God, the play. Gosh, I'm blanking on the playwright name. But anyway, it's about a baseball player who comes out of the closet and what happens from the aftermath of that. Jesse Tyler Ferguson from Modern Family and Jesse Williams from Grey's Anatomy. Is it a play or a musical? It's a play. Which do you like better? I've been liking the

plays a bit more lately. Even though I... With some of the musicals, like the newer ones, I just don't always walk out singing. And I feel like that... We were talking about Phantom of the Opera earlier. When you saw Phantom, you're like... walked out oh yeah michael was yeah i was yeah and it's just you i believe that i believe that you are though you're joking but i know he was um michael's on musical only but yeah i just like with some of the newer musicals i just don't

walk i enjoy them but i don't have that feeling of like I need to buy the soundtrack. So is Almost Famous done as a play but with musical moments or did they like make it into a musical? Done as a play with musical moments. Like to the soundtrack? Yeah. I don't think they got the full soundtrack. But they're not like singing the dialogue. No, no. Like they just have songs and then dialogue, song, dialogue.

They do – I say I don't want to do spoilers, but they do a tiny dancer scene. Of course. Seeing that done for stage. It's just – I mean it was such a moment in the movie seeing how it was done for stage. In the movie, they were on a tour bus at like 6 o'clock in the morning. Yeah. And they were all banged up. Incredible.

Exactly. Yeah, yeah. And kind of the same, but just seeing how you interpret that for stage versus – It's like one of the best movies ever I feel like. It's – It's so watchable. We're all nodding our head. Yeah. Yeah.

It's just so good. And it just makes you whatever your era of music was. I mean, I'm a child of the 80s. So what I grew up with was probably like more 90s hip hop or like 90s rock or alternative. But it just made me want to get. Yeah, it's not our generation, but we know all the songs. It's almost famous. Yeah, and you just want to go into like I just wanted to listen to music when i got home did you hear the podcast that this guy did he did saturday night

live for season one oral history got all the people season two was almost famous what's his name jeff miller it's something i feel like it's something miller it's like a very um uh it's like a very uh common name so it escapes me but james james miller yeah that's right so it's like a very common name, so it escapes me, but James. James Miller. James Miller. That's right. So it's six episodes, and they're all in it.

Oh, wow. Dude, he got, what's her name? Kate Hudson. Kate Hudson's in it. Because Brad Pitt was supposed to be heavily involved in the project, and he backed out.

Brad Pitt was supposed to be Russell. Yeah. Do you know that? I mean. He was too old. Too old? No, it wouldn't work. Yeah. But there's a lot of He was too old. Too old. No, it wouldn't work. Yeah.

But there's a lot of. James Miller origins. James Miller. There's a lot of stories like that. It's a whole season of Almost Famous. It's like six or seven episodes. Yeah, it's great. And they got like all of the stars, Francis McDormand.

Like they're all in it. She's. You must listen to this. So the mom, the Francis McDormand character for the stage. I mean, she brought something different, but it was just, it was awesome. I mean, that character was just like spot on for the stage. She anchors the movie. Absolutely.

Because she's the only one not going along with what's going on. And that's like an important part of it. Phyllis and What Happened was great in that. Oh my God. I know, that part makes me sad. Check that. It's the Origins podcast. I think it's the second season. And season three is Lake Placid. The dialogue, it's incredible. Oh, my God. I know. That part makes me sad. Check that. It's the Origins podcast. I think it's the second season.

And season three is Lake Placid. The dialogue. It's incredible. Oh, really? No. I am so gullible with you guys. Sometimes I'm like, uh-huh. We're from New York.

Every other thing we say is complete sarcasm. The history of large crocodiles. All right, guys. You're amazing. We loved having you both. And did you fly in specifically for this? You can be honest. I had some other meetings. You had some other stuff. All right. He, you're amazing. We loved having you both. And did you fly in specifically for this? You can be honest. I had some other meetings.

You had some other stuff. All right. We're so happy to have you. And you're very impressive, I would say. Yeah, seriously. I mean, like, batnick level. No, no, you're extremely impressive. And we appreciate you coming on.

And you'll come back sometime? Yeah, I'd love to. How often are you in New York? I mean, I can be out here. Oh, we we appreciate you coming on. And you'll come back sometime? Yeah, I'd love to. How often are you in New York? I mean, I can be out here, Corey. We'll see you next week. All right, Duncan, anything we got to do before we get out of here? Are there any disclaimers we need to now read? How does that work?

All right, we'll do that in post. All right, guys, you're awesome. Thanks so much for coming by. Appreciate it. Compound and Friends, episode 69 is a wrap. We will see you guys next week. Nice. Thank you. That was great. That was super fun. Thanks. Compound and friends. Episode 69 is a wrap. We will see you guys next week. Nice.

Thank you. It's super fun. Yeah. I didn't know how deep into the fusion. Oh yeah. That's my, my main project. That's most.

Would you have already achieved electricity? If you weren't wasting your time with the transfer? No.