The Compound and Friends - Once Upon a Time in Boston

Episode Date: April 29, 2022

On episode 44 of The Compound and Friends, Jurrien Timmer joins Michael Batnick and Downtown Josh Brown to discuss: the bond market meltdown, tech earnings, investor pessimism, Bitcoin in 401(k) plans, and much more! This episode is sponsored by KraneShares. To learn more about KraneShares' suite of China-focused and climate themed ETFs, visit: kraneshares.com/?adsource=wealthcast Check out the latest in financial blogger fashion at: https://www.idontshop.com Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

That's what I train for. But it's nice to – last two years I've been riding all year, like instead of just putting the bike away in October and bringing it back out in April. How do you get there? I've been spending time in California. How do you get to Santa Barbara? I fly to LAX and then I drive. What is that, two hours?

It's an hour and a half without traffic, 90 miles, 98 miles. Straight, like due north? Due north, 101 through Ventura. Beautiful. Easy, nice drive. When people say due before a direction, what exactly does that mean? Well, you're not swerving around. Right?

Directly. It's just pretty much a straight line. As the crow flies. All right. Cool, man. I'm jealous. Of what? California?

Yeah. I love Santa Barbara. I went as a kid with my family. It's a nice place. Yeah, it's a beautiful place. So my brother lives in Los Angeles. I don't get out there as often as I would like. But he's in Calabasas.

Yep. Which I guess is not really Los Angeles, but they say it is. No, it's slightly north. But you go right through it. It's a little bit north of Malibu, basically. That's right. That's right. They consider themselves Los Angelinos.

I don't get out there enough, but it's beautiful. I think you're the first Fidelity person we've had on the show. Don't mess this up. We're Fidelity customers. Excellent.

We do, I think, about 20% of our assets, maybe a little more, now classed as Fidelity. Have a really good relationship with all of the people that service RIAs. We love it. Our RIA channel is really second to none. Yeah, I do a lot of work for them. Yeah, I bet. You've probably met a lot of, like of the big RIAs on the platform. Yeah. Okay.

We're much bigger at Schwab, but we like both. So we run into a lot of potential clients who are already at Fidelity. So that's an obvious thing is to not move them. Yes. If you don't have to move assets in our business, that's great. All right. John's going to do a countdown. All righty.

Oh, no, we're doing color. Okay. And speaking of charts, I have everything in the doc prepared. Great. I know you don't have a lot. So, Urien, this is what I was telling you about. If you just kind of guide it. Using machine learning to look at different patterns. Wow, yeah.

And so the long and the short of it is, I'll send this report to you. The long and the short of it was he created this. I'm showing him Kai's research. He called it disruption at a reasonable price, DARP. I didn't read it yet. He's so smart. We're having him on in a couple of weeks.

I will. This first chart is a doozy. Oh, my God. Is that the Jim Bianco chart? Yeah. Oof. I've known Jim Bianco for 35 years. How?

We grew up in the business together. Before Fidelity, I was at ABN Bank or then ABN Amro here in New York. Actually, I worked here for 10 years. And we got to know each other. We're about the same age, the business the same amount of time. And he actually was just in Santa Barbara on his way to the Real Vision conference in San Diego. Oh, yeah, yeah. So I've known him forever.

So I first met Jim Bianco at a Barry Ritholtz big picture conference. He used to do a conference specifically for the blog audience. This is maybe more than 10 years ago. And I said to Barry, why is – afterward, I was like, why is Jim Bianco's voice so hoarse? He goes, here, click into this link. And I watched one of his – I don't know if he was doing it weekly or monthly but one of his like one hour just run down of everything that's happening he's very animated dude it's like a marathon he starts from like interest rates and then it goes it was just

um what's the right way to put it it's uh i don't know panoramic view of literally everything, like economics in 20 countries. And it was really impressive. I said, oh, now I get why he loses his voice. I feel like I use Jim's charts probably every week. Actually, every week, yeah. It's fair to say. All right. We're looking good?

Ready to rock and roll? I'll come in with three. Let me just test. Put my mic on! Put my just test. Put my mic on! Put my mic on! Put my mic on! Looking good? Oh, my God.

Looking wonderful. I feel like we could use another turn my mic on. One more? You know we had dinner with him last night, right? I saw. Legendary. We had dinner with Mike Francesa last night. Oh, God.

Michael's been obsessed with Francesa his whole life. Best night of my life. Best night of his life. He couldn't believe he was there. Come on, our friends. Episode 44. Oh, God. Michael's been obsessed with Francesa his whole life. Best night of my life. Best night of his life. He couldn't believe he was there. Commodore Friends episode 44. Here we go. Speaking of panoramic, Mike knows everything. Pretty impressive.

Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. lastnight.com. So today's show is sponsored by CraneShares. We've mentioned their K-Web a million times. I don't know when they started that thing, but they were early. Is it 2014, 2015? They've been around for a while, but they also have just, it's not just the internet. They have a suite of

China ETFs. They have clean technology, electric vehicles, healthcare, 5G, and semiconductors. If you want to learn more and learn about their research, go to craneshares.com. That's with a K, craneshares.com to learn more. All right. Compounded Friends, episode one, what did you say? 44. We are about to go on a run on this show. For those of you who have been listening to the Compounded Friends since we started last June, we are about to go on one of the most epic runs really ever in the history of financial podcasts. Am I overstating it, Duncan? No, I think that's accurate.

Starting today. Okay. Starting today. Definitely going to start last week. Nope. Who was last week? Don't worry about last week. We're talking about now.

No, last week was a good show. Were we off last week? Last week was one of our biggest first day downloads, right? What are you laughing at? Yeah, no, we're growing every week. Okay. My brain is fried. Who was last week?

Oh my God. That's really bad, isn't it? Anybody? Anyone? Who was on the show? Are you guys serious? Oh, I wasn't here. I wasn't here.

I wasn't here. Mike has an excuse. I don't. I knew I wasn't here. It was Will Hershey. Will was great. We're going to have him back. Okay.

Today we have a very special guest and I've been excited for this all week. I've been excited too. I know you have, but I've been a little bit more excited than you. Urien Timmer is here. Urien Timmer is the Director of Global Macro for Fidelity Investments. I'm talking about you while you're sitting right across from me. Just sit there. Urien, you have more than 35 years of experience in the investment world, and you are a 25-year veteran at Fidelity. Round of applause for that. 27. 27.

27. Who wrote 25 in the doc? You're fired. All right. Listen, your charts, I feel like, have taken social media by storm in recent years. And we're get to, maybe you have a theory as to why, but let me give people a little bit of your background. You joined Fidelity in 1995 as a technical research analyst. Okay. In 98, you became a

market strategist within Fidelity Management and Research Company. You joined the asset allocation group in September 2005. Prior to Fidelity, you were at ABN Amaro Securities from 85 to 95. And prior to that, you were in a heavy metal band based out of Eastern Europe, mostly death metal. Are my notes correct? That's exactly correct. All right. And we're going to link to some of your albums from that period for those people looking at the show notes. How did you – Although I do have a funny story about that, but we can do that later.

Let's do it now. What's the funny story? One of my closest friends and spiritual mentors is a yoga teacher and his yoga name is Raghunath. His actual name is Raymond Capo. And he's like yoga teacher to the star. He does all these pilgrimages to India. But before he became a yoga teacher, he ran – he had a heavy metal band, but it was like a Krishna heavy metal band. So all these deadheads would – these metalheads would come, but not realizing that his lyrics are all about peace and love and everything.

But he is like – Peace and love. He's like slamming on stage. And he was at my house because when he does workshops in Boston, he stays with me. And he has albums. It's called Shelter was one of his bands. Youth of Tomorrow was another one.

And you play bass for which one? But he would bring his album, and he would play it on my vinyl player, on my record player, while we're at the dinner table. Okay. And I'm talking to Raghunath while I'm listening to him scream on this vinyl. Peace and love, peace and love. And so anyway, that's my-

My yoga name is Maharishi. There you go. Is it? All right, let's get into it. So we're going to start off with the chart. Hold on, hold on. I want to do some biographical stuff. How did you transition from technical research analysts to more asset

allocation market strategy? What was that like? Because it seems like you did that pretty quickly early on at Fidelity. Yeah. So when I was in New York, I ran a bond desk for a Dutch bank. So we would execute ABN MRO. So I would execute Euro bond orders for Dutch investors, and we would execute treasury orders for our treasury in Amsterdam. And I got into charting and kind of started drawing lines on charts. And by the way, a lot of chart crimes being committed on lines drawn on bond charts on log skills these days, but that's another story. And so I really got into charting, and I've always been a visual person. So charting is sort of in my milieu. I'm also a photographer. I like to plate my food. So I'm kind of a visual person. Then I was hired by Fidelity to be a chartist in the bond department. And I quickly

realized that if you're going to succeed at Fidelity, where most people are fundamentally oriented, you have to kind of broaden your repertoire a little bit. So when I started charting stuff in the stock market and the multi-asset space, I quickly realized that I can tell a better narrative because, after all, all I really do is tell the narrative of the market through charts, that I can make more sense and talk the same language as my audience if I weave in the fundamentals and even some quantitative because I would backtest all the technical signals. Which, by the way, both of them end up with a batting average of about 50-50 if you don't make some assumptions about the context. Context is always everything. I just naturally evolved to more of a multidiscipline analyst.

Now, there weren't a lot of technicians with high positions at firms like Fidelity back then. Who were like the people that you were influenced by that were technically oriented? Like who did you learn from? We had the masters, Bob Farrell, of course. Acomporo was around. Acomporo. Yes, Louise, Gail, Gil Dudak. But, you know, at Fidelity, we've had a chart room for 60 years. And, you know, Ned Johnson recently passed, but he was the chairman

when I was hired. He actually personally hired me because basically, you could become a PM if you wanted. But if you're going to work in the chart room, you've got to go through net. And so he was the last interview out of, whatever, a dozen. And I'll never forget it. It was just a great discussion about the markets. But we have a cadre of technical analysts. And in the old days, in the 60s and 70s, the chart room was like a command center. And Ned's father, Mr. Johnson, who started Fidelity, he was also a visual person. He would hang up charts on his office and clip out magazine

clippings, et cetera. So there's a very long history of visualizing information, whether it's technical or fundamental or anything else. JC talks about the chart room at Fidelity, right? All the time. It's like legendary. Yeah. Do they do tours? Can I go?

Yes, you can. You can get me in there, right? That's where I want to go next. Before we get into the first topic, I just want to kind of get a sense from you. What is the current state of research generally? There seems to be more of an acceptance on the fundamental side that, yes, we understand the story behind this asset class or this stock or whatever, but then it's never been more important to understand what the buyers and sellers are doing. And Soros talks about reflexivity, but very often the fundamentals will change based on price in the market.

So if you don't accept that there's validity to supply-demand and technical analysis, very often you can miss shifts in the fundamental story because price will lead that and in some ways cause that. Do you feel that that concept is now more well accepted just generally speaking amongst asset managers, portfolio managers? I think so. And even our most ardent, fundamentally oriented portfolio managers will look at charts. And Peter Lynch- You could put Will Danoff on- Absolutely. You could put Will Danoff on notice. And Peter Lynch would always look at charts. So the way I think of it is the fundamentals tell you what and why, and the technicals tell you when and how much. And so one of the things we do is if you're really bullish on a stock fundamentally and the chart looks like crap, well, you better figure out why that is. What are you missing? Or maybe you're not missing anything. But it's a good second opinion. And

it's looking at breakouts and, like you said, support and resistance. And you want the chart to agree with the narrative. And I think that's very important. So right. So one of the jokes that we used to make when I was doing retail brokerage, we had like a couple of people who were doing technical analysis. Everyone else was just telling stories. Call up a client. We like this company. The drug's going to get approved, whatever.

And nobody wanted to hear about charts until a stock would break down. And then all of a sudden, hey, can you take a look at this for me? What do you think? You know, like there were no atheists in a foxhole. There are no pure fundamentals people in a market correction. Well, and a perfect example is if the narrative gets really, really bad, but the stock or the S&P or whatever index you look at is not making a new low and is producing some kind of momentum divergence or what have you. Sellers dry up. It's a sign.

It tells you that there's trend exhaustion. It screams. And looking at intermarket confirmations, even like Bitcoin versus the Bitcoin sensitive equities. The sensitive equities are making a new low and Bitcoin is not. That doesn't necessarily mean Bitcoin is going down, but it gives you a pause, a reason to say what's going on. I think that's such a great point.

When you think about big turning points in the market, there was nothing fundamentally different in April of 2009 versus February 2009. What changed was that at some point in March, people stopped selling. what changed was that at some point in March, people stopped selling. And then, of course, we can look back three months and 80% later, 80% rebound later, and we could find something that maybe was different. So, oh, they changed the accounting rules, FASB 157. You didn't have to mark to market anymore, whatever. It was hard to do that in real time.

But the technicals told you, hey, the news is not getting better, but people have stopped selling for whatever reason. We'll discover later. And March 2009 was a perfect example because commodities, high yield, emerging markets all made their bottoms in December of 2008 and made higher lows in March of 2009. S&P made a lower low, but lots of divergences on momentum, various breadth indicators. Sector level divergences. And then the Fed went full on QE. And that was the narrative shift. But the stage was already set.

That's right. OK. So all right. So it sounds like we, at a very basic level, agree on a lot of the big things about how to look at markets. And why don't we start with the bond market? Because I think this is the worst start to the year for bonds in my career. And I'm doing this 22 years or something.

So I have that right? Well, the ad goes back to 1976, I believe. And so what we're looking at is so far worse than anything we've ever seen. I think the gray line is 94, which got about here, but it didn't keep going down. And it's- Time out. Let's, for the people that are listening, not watching, Bloomberg Global Aggregate Total Return Index. So this is the biggest index

covering the most important- Investment grade bonds. Investment grade bond index. And as of April 22, we are down 10.5% to start the year. It's worse. And it's worse now. So the question that I have is, why are we hearing about blowups all over the place, risk parity funds blowing up or somebody blowing up? We saw a major blowup in Orange County in 1994. How come we're not hearing that right now? Yeah, well, we usually hear about those things after the fact, right?

So it's likely that someone somewhere is blowing up or is getting massive margin calls. Maybe it's in the risk parity space because obviously- Do you want to name any names? I don't have any names, but we all know that the 60-40 paradigm is not working right now. The 40 is down and the 60 is down. I look at a slightly different version of that chart. I look at just the drawdown from a two-year high, and I think the Barclays long-term government index is down something like 27% from a two-year high. And that's pretty-

Yeah, TLT is- Zero coupon bonds are down 40. TLT looks like Cathie Wood just bought it. Zero Z is at 82. But the 10-year was at 298 last week. And I think there's actually starting to, it's starting to get a little interesting. From the long side. From the long side.

From the long side. Why do we think, I haven't seen a lot of people talking about this. So you've got the ag 13.5% off its highs and junk, JNK, HYG, whatever, is down only 10%, which is very unusual, I think. Yeah. So the Barclays high yield corporate index, the option adjusted spread is around 410 basis points, which is up 100 basis points from the lows, but it's nothing. It's not much.

It's nothing. So what is that telling us? You know, the favorite blame is, well, the Fed controls the market, but the Fed hasn't been buying corporate bonds for a while. So I think what it tells you is that the fundamentals actually are very solid, right? High yield issuers, they turned out their debt at super low rates. Usually, like remember in 08, right? When the bond market closed in November, December 08, and Ben Bernanke had to come to the rescue, it was because there was this wall of maturities.

And if you're high yield, that means you have to roll over your debt. Because if you don't have to roll it over, you're probably not high yield, right? Because that's just the way the math works. And they've all turned out their debt at super low rates. And so fundamentally, they're solid. So I think spreads are widening because investors are not buying. Because they're not buying bonds right now. They're selling bonds. But it's not that there is a systemic stress in the market itself, maybe in different pockets of it, but not systematically.

I was going to ask you about that. As illustrative as the charts might be, you look at JNK, HYG, is there something that at an index level is getting missed when you then look at some of the fundamental news? I read an article in the journal yesterday, Carvana, which is a stock price that's crashed. A lot of people aren't aware its bond prices are also going through the floor and now they cannot sell bonds traditionally through any of the major banks on Wall Street. So the story is about them going to Apollo for what we're euphemistically referring to as alternative lending solutions. But when that process starts – and Carvana is not a Dow component. I understand that.

But it's got to be indicative of a whole segment of the market that's probably going to get to that place. get to that place. When you have a 10.5% yield and you can't sell more bonds in an environment with rates as low as they are today, probably in the next three months, we're going to be reading more, not less stories like that. I mean, there could very well be individual instances like the one you just cited. My sense is that if you look at where the systemic risk are, they've really been in China and EM here. And typically, that happens when the dollar goes up. And of course, China has been in its own world of hurt with the policy changes. And now we have the lockdowns. And of course, Evergrande, the whole property.

We don't have anything like that. No, I don't think so. The economy is strong. The GDP print missed, but that was mostly because of exports. Final consumer demand remains very strong. People have jobs. They have money to spend. So I think economically, the fears of a recession are overblown at this point.

But in a way, the way I think of it is China is what the US was like during the GFC in a way. And the US is what China was like during the GFC, right? So China was stable. China kind of stimulated us out of the whole mess during the financial crisis. And now, I think the US is kind of the stronger link and China is the weaker link in terms of just leverage and debt and defaults and things like that. China will not participate in the pandemic. They are still at like a COVID zero mentality. Good luck.

They might have forestalled some of the stuff that we had to go through here. Yes. I don't know if they can really come to the fore. And they don't have great vaccines over there. That's also part of their problem. They're not as resistant to the- Can we go to this 30-year treasury chart? Yeah.

So Zero Hedge tweeted, this is not some crazy thousand-year bond issued by Austria. This is the 30-year treasury sold in May 2020 and which trades at 66 today. It's a loss of a third of your investment in the safest paper in the world. This is remarkable. It's not really the safest paper in the world. I know. Whatever, whatever, whatever. The 30-year investment in the safest paper in the world. This is remarkable. It's not really the safest paper in the world. I know. Whatever, whatever, whatever. The 30-year, maybe the two-year. It's supposed to be the risk-free asset.

Yeah, the risk-free, but still. And obviously, it's not risk-free. There's tons of duration there, but still, that's a lot. Does this concern you as a strategist? It concerns me mostly from the perspective of the 60-40 paradigm. But the term premium at the long end of the curve, which is what we're showing here, remains negative. Real yields were, what, minus 150 on the 10-year last year. They're basically zero now.

The five-year still, negative 45. The long bond is now a positive real yield when you use the tips break-evens, which on Twitter, people fault me for using tips rather than backward-looking CPIs. is now a positive real yield when you use the TIPS break-evens, which on Twitter people fault me for using TIPS rather than backward-looking CPI. In English, for some of our less experienced listeners, when you're talking about real yields flipping from negative to positive or at least getting to break-even, so you can buy a bond, earn a rate of interest that is at least keeping up with the prevailing inflation rate. Which is keeping up with the expected inflation rate.

Expected, of course. The Fed owns 31% of the TIPS market. So we have to wonder how solid the price signal is in the TIPS market. But that's another story. But real yields have gone very rapidly from negative and they're moving to zero. The term premium is coming up, but it's still negative. John, throw up his chart. And so what you get is you have an extremely fast reset in the bond market,

much faster than I think anyone expected, including myself, because I figured I've been using the 1940s analog of financial repression since the pandemic started. the 1940s analog of financial repression since the pandemic started. And I always concluded that eventually the US bond market will be- Can you walk us through that? What is the 1940s paradigm? So the 1940s, 1942, of course, the US entered World War II after Pearl Harbor was bombed. And the Fed was not yet independent. That happened in 51. That was the Treasury-Fed Accord, or the Fed-Treasury Accord. I can't remember. So the Fed was still an independent. That happened in 51. That was the Treasury-Fed Accord or the Fed-Treasury Accord. I can't remember.

So the Fed was still an arm of the Treasury. And historically, other than regulating banks and other things, one of its jobs was to monetize wartime debt or debt during wartime. And so the US went from a debt to GDP of 40% to 120% as it mobilized the US economy to enter World War II. And the Fed monetized that debt by capping long yields at 2.5% and T-bill yields at 3.8%. And it expanded its balance sheet tenfold. Like most people, when they think of QE, they think, well, that never happened before the financial crisis.

Well, the Fed was doing it during World War II. So from 1942 to 1946, the Fed increased its balance sheet tenfold while capping rates. And so during that period, from 1942 to 1951, when the Fed was allowed to become independent, the Barclays, or not the Barclays, it didn't exist back then, but using the old Ibbotson series, long-term government bonds had a CAGR, an annualized return of about 2.25%, with a volatility, an annualized volatility of about 2.25%, which is – today it's 11%, right? So that's how drastically different that was. And inflation ran for about – at about 5%, 6% during that period. So that's financial repression. So if you have a lot of debt that you need to pay for, and of course, back then, Bretton

Woods, the dollar was not freely- You mean keeping real yields negative. Keeping real yields negative is the sneakiest, easiest way to get out of debt. We had insanely high employment. We built out the interstate highway system. A lot of people were working in defense and working for contractors. Everybody was producing. So yes, the inflation wasn't great and there was some repression.

But I want to say the quality of life coming out of World War II and throughout all of the 50s and most of the 60s was like pretty damn good. Absolutely. And also I don't think a lot of individuals owned bonds during the 40s, right? Nobody was complaining about financial repression because they didn't have bonds. Exactly. So, you know, since the financial crisis, three and a half trillion dollars has flown into bond funds and ETFs. So, you know, the public at large is a lot more exposed to the bond market.

I think that, you know, today it's very hard to find data from the 1940s about who owned what, but it was probably the banks and the Fed at the time. So, Yuri, we're looking at this chart that we were just describing. And the 10-year, how low did it get in the spring of 2020? Nominal yields and inflation expectations. The nominal yield went to 0.31% very briefly. And then even last year, it was at 1%. And now it's knocking on 3%.

And the real yield, so those two lines are the two different TIFs, inflation break-evens that I look at. One is the 10-year. One is the five-year, five-year forward, which is very esoteric. It's what people expect the five-year inflation to be five years from now. And I'm like, who even comes up with that stuff? But is that implied by the market? I can't panic about five years from now.

It's all implied by the market. And it's one of the Fed's favorite indicators. And actually, it's a useful one because we all know about supply chain bottlenecks and sanctions, and that pushes the CPI way up. But then base effects kick in, and the rate of change comes down. So the five-year, five-year forward actually gives you a sense of how anchored or unanchored those expectations are over the long term. how anchored or unanchored those expectations are over the long term. And to me, this is the Fed's biggest risk is that what seems to be one-off inflation shocks are strung together enough

that people start changing their behavior. And then you get like a 1970s type of situation. We're not saying that yet, are we? We're not saying that at all. I don't think we're like the 1970s. But the risk is that if people, if it seeps into the psychology and people start changing their behavior of how they consume, then it's going to be harder for the Fed to put the genie back in the bottle. Aren't we seeing that though, in jolts and, and wage gains, and like that, there is evidence that the expectation of higher prices is starting to be baked into finished goods.

And there are some areas where it's going to be harder to reverse that psychology than maybe we thought. Yes, I think so. And the Fed called inflation transitory. I'm sure it regrets ever saying that. But at the time, you can't fault them. It was a one-off supply chain bottleneck situation after the lockdowns and then the reopening. So nobody could have predicted Russia-Ukraine and now the Shanghai lockdowns is just going to compound that whole thing even further.

But I think what people would push back and say is that it was the fiscal response that did this and the emergency measures lasting way too long. It was like kerosene on an already burning fire. Well, and I'm glad you pointed that out because bringing, coming back to the 1940s analog, you know, what was unique about that cycle that we haven't really seen since was that coordinated fiscal monetary impulse, right? I mean, and I'm not saying the monetary impulse during COVID was coordinated with the fiscal, but the Fed bought the same amount in bonds that the Treasury issued in Treasury, right? So the fiscal relief, the CARES Act, the stimulus plan, you know, five plus trillion is basically the same amount that the Fed- It was highly coordinated. They had a joint press conference. There was no doubt that there was a

hand in glove approach and Powell was, was Trump's chairman. Well, and, and, but, but the point is that that was a highly effective cocktail of stimulus. And it worked. And, you know, in retrospect, and it's easy to say this for someone like me or anyone else, the Fed should have, you know, put the foot on the brake or taken the foot off the gas pedal sooner. A lot of people were saying that, why are they still buying $60 billion worth a month? Why are they inflating the real estate market with home prices up 19%?

What are we shooting for? Up 25%? So, exactly. So, in retrospect, we should have seen the potency of that fiscal monetary cocktail coming sooner. And the fiscal side kind of took care of itself, right? Build back better hasn't happened. It's not going to happen in all likelihood.

We have a midterm election coming up. So the fiscal stimulus has turned into a fiscal drag. But the monetary side, now what we thought was going to be a very gradualist return to normal from zero to neutral, which is considered to be 2.5%. Now, it's warp speed, shock and awe. And the forward curve, whether you use LIBOR or Fed funds or SOFR, now has a terminal value of about 3.5%.

That was 2% a few months ago. And so the goalposts keep moving. And in all likelihood, if inflation does persist, which obviously it is so far, instead of the Fed just returning to neutral, it has to go past neutral. And when I look at historical cycles going back 40, 50 years, I have one chart. I don't know if we have it. But if you look at R-Star, the Fed's version of R-star, during a typical Fed cycle, the Fed will go 200 to 300 basis points below R-star during an easing cycle.

And then just like a pendulum, go 200 to 300 above during a tightening cycle. You're saying they always overshoot in both directions? Yes, they do. And on purpose, right? Because they want to tighten or they want to ease. So that means, by definition, going over neutral or under neutral. And so six months ago, or even now, if you look at the Fed funds rate, we're still very much under neutral.

Neutral is considered half a percent real. Then you add to 2%. But rapidly chasing neutral. But rapidly chasing it and then overshooting. And the question, I think, for the bond market and, by extension, the stock market, because the stock market, the math is very much dependent on the bond market. If you look at valuations through a discounted cash flow model, and we can talk about that. But if we end up having to go to $200 to $300 above our star, you're looking at 4% plus

Fed funds. You're not going to get there. Which I don't think we're going to get either, because I think the economy is highly levereded to low rates and we're starting to see that already with mortgage rates and et cetera. But I'm just saying that has been the Fed six months ago versus now. It really had to catch up and kind of shock and awe the system, which is what it's doing now. You know when they pushed Brainerd out from behind the curtain and told her, make the most hawkish speech of your career so they know we're serious? To me, and I think that was in February, that was a moment where the market said, wait, who said that? Hey, Jaron, what do you think about money coming out of the bond market?

We've seen net outflows for a couple of weeks, pushing months now, which we haven't seen sustained in a long, long time. Which is interesting considering the fact that this are now when bonds are more attractive because they offer higher yields. What do you make of that dynamic and where do you think the money is going? Is that going to money markets? Right now, actually, we're seeing outflows from equities, bonds, and money markets, which is a little bit unusual, but usually it ends up in money markets. But since the financial crisis, and I've been charting this for years, because bond yields were falling, and I think because immediately after the financial crisis, people generally did not trust the equity recovery because the Fed played such a heavy hand.

Same thing during COVID, right? I mean, in the early months of that recovery, people were like, oh, this is a bubble. Dead cat bounce. I thought it was, for sure. And so from 2008, 2009, all the way to maybe a year or two ago before the pandemic, most of the investor flows was going into bonds or total return products. Back to the PIMCO days where they had all these total return bond funds. And very little of it went into equities. So bond funds and ETFs took in $3.5 trillion cumulative from 2009 to two years ago.

Equity funds took in maybe half a trillion. And when you think of that as a percentage of market cap, right, the stock market's $40 trillion, So that half a trillion is nothing. Nothing. On the bond side, that $3.5 trillion is 15% of the ag. So these are huge numbers. And part of this was demographics, aging baby boomers solving for income rather than growth, not trusting the recovery maybe, and finding the return that they need in the bond market. But then that played itself out.

You got into the pandemic. You got into negative real yields, several hundred basis points. And now you, of course, have rapidly rising bond yields. And equity flows have actually been very positive until about two weeks ago. From the pandemic bottom to two weeks ago, that money has gone out of bonds into equities, which to me makes a lot of sense. So we've been talking about this a lot, but when does, about where's the bond money going? When does the money come back to the bond market? Because there's got to be a point, and I think

we're probably getting close to there, where people are like, all right, 3%, like that's pretty attractive. I said, I would take 2.5% gladly on money that I'm going to need in two years. Well, now you got it. Now I can get 2, 6, 5, 2, 7. We got to be getting close. Yes. And the tips, and again, I think people have a tendency to look at backward looking indicators. So they look at the year over year CPI, 8.5%.

But that's the last 12 months, right? We have to look ahead. And the tips break evens, not to overemphasize their importance, but those are coming down, right? The five-year break-even has gone from three and a half or even higher actually. How could they not? Costs in the economy, prices in the economy can't compound at 8% for more than six months. How reliable are inflation expectations historically? Are they close? The five-year, five-year forward actually has a pretty bad track record. But

it just it gives you a real-time sense of what the market is saying. But, you know, I think three percent on long-term treasuries with a falling tips break even. And, you know And we're at zero real rates right now, which is not great. Obviously, you want to have a positive real rate. But I think at those levels, the 60-40 may actually start to work again. And we're seeing that a little bit. The 10-year went from 298 last week to 275. Wouldn't you agree from a portfolio standpoint, if you're selling bonds now because you don't like price action since January, which is understandable, you are taking one problem, which is your temporary drawdown, and doubling its impact on you by now not participating in the higher yields that all these bond funds are rebalancing into.

It's almost like cutting off your nose to spite your face if you're out there selling bonds right now. It's the same dynamic as the stock market right i mean people were selling the lows in march of 2020 and it's understandable it's the reptilian brain it's the fight or flight well you don't know the law but but you know but if you're you know people always ask me when i'm on tv or whatever like what what should investors do? The market's down 5%. Yuri, what are you telling investors? Like, well, I hate to sound like a broken record, but have a plan, stick with the plan.

Boring. And rebalance. Yeah, but what stock? Yeah. But where will the Dow close tomorrow? Yuri, is the bond bull market over? Yeah, this is the US long bond back to 1978. We have been in this extremely obvious downtrend, lower lows, lower highs, all the way into Q1 of 2020.

The answer is the jury is out, and I hate to give such a lame answer. Yeah, what do I do with that? I do want to point out. You buy and sell. I hate to give such a lame answer. Yeah, what do I do with that? I do want to point out. You buy and sell.

As a chartist who's been doing this for four decades, I'm seeing a lot of chart crimes these days on Twitter. Talk on it. Talk on it. People plotting the yield on a log scale cannot do that. You cannot plot a yield on a log scale. It has to be on a linear scale. Why? Explain why.

Because you cannot plot a negative value. Try plotting the JGB yield on this time frame on a log scale. But there are no negative numbers. No, but it just means that, in principle, you can't do it. Also, a log scale measures growth, right? So what a log scale would tell you is that a 10 basis point move from 0.1 to 0.2 is the same as a 100 basis point move from 1.0 to 2.0. Right. And that's not okay.

Radically different. The other thing is, and this is one of the first things I learned at Fidelity, actually, I would draw, so this was 20 years ago, I would draw broken downtrend lines on this chart. And I showed it to one of the veteran portfolio managers, and he took the chart, and he drew all the failed trend lines that I could have drawn up to that point. You see how many times-

So it's interesting that you would select this line. So why is it going to work this time if it didn't work the last two times? I'm not a fan of diagonal lines. So what I prefer to do is I draw a regression line, a linear regression line. That's the dotted line. That's the dotted line.

And then I look at the deviation from that line. And you can see we're obviously going from below the line to above the line, but we're not doing it any more than any. We've done that many times. Many times. And also we're still making lower highs and lower lows, which is the definition of a downtrend. So I think it's too early to proclaim the secular boom.

Conceptually, though, let's say 10 years from now, we never revisit the lows from two years ago in the, in the U S long bond. And we're not back at 15% like the seventies, but we have a 7% 10 year. We have a 5%, five, right? Wait, what? 7%.

Yeah. Well, that's what we were in the nineties. Like it's, It has happened before. What are you smoking? In your lifetime. In your lifetime, we have seen yields. Okay, hold on. So that's what I'm smoking.

Here's my question. If that were to happen, wouldn't it make for a perfectly coherent story to say the bond market, the bond yield finally bottomed after 40 years during the biggest monetary rescue of all time in 2020 from a pandemic. Like, shouldn't it end with a pandemic and then a reversal? Like, wouldn't that be the type of life event that would put an end to a 40-year trend like this? I agree with the first part,

that the downtrend is probably ending. But that doesn't mean that a new uptrend is beginning. And I look to the Japanese bond market. I think coming back to the 1940s analog again for a moment, I think if yields rise too much, the Fed will do yield curve control, which is what the Bank of Japan has been doing for a year. That's going to be popular. People are going to love that.

That's what the Fed did in the 40s. It's what the Bank of Japan has been doing for years. Don't tread on my tenure. The Bank of Japan owns half of the stock of debt in Japan. It has been buying half the float. Even today, it is putting unlimited bids in the market to protect its quarter point yield cap target. If yields go up too much in the US and the Fed believes that it's going to undermine the economy, I think the Fed will do the same. And in Japan, the long-term JGB has an annualized fall of three. In the US, it's 11. There are days in Japan when the bond market doesn't even trade. It's like it's not a market anymore.

I'm not predicting the Fed's going to do that exact thing. But I could see a day, five to 10 years from now, where the Fed looks like the Bank of Japan. And the Fed's balance sheet is only 36% of GDP. The Bank of Japan's is like 125% of GDP. And it's been for a long time. But so the point is that in Japan, yields are just kind of flatlining.

And I think that's more likely than a reversal of the index. Yeah, you could control the yield curve all you want. You can't make Japanese men and women have more babies. And they ain't changing the immigration policy either. So if neither of those two things are happening, you could do whatever you want with with JGB yields at a central banking level. But and that leads me to my next question. If the Fed just decided they're going to be laissez-faire and let market forces take over rates instead of the Japanese experiment, right? What would

be the natural rate of interest on something like a five-year treasury bond? Or what would be the Fed funds rate if there weren't one? Overnight lending, what should it be if nobody was stepping on it? It depends on what happens to real rates, right? So real rates in a normal, healthy economy or an expanding economy, real yield should not be negative. And they still are on the five-year, right? It's still negative half a percent. If the five-year yield was reflecting a truly tight Fed with a positive real yield, the five-year would be at three and a half or four percent. Where would the 10-year be in that scenario? Well, at that point, the 10-year

would probably be inverted, right? The curve would probably be inverted. Because it probably on its own would not get above. Yeah, and also we have a very powerful demographic underpinning. We have – I mean the share of the population that's turning 65 or older is like a tsunami. So that is a very powerful contra move or it's – that has the trend, regardless of budget deficits. Which means more demand for bonds. That's what I was going to say, which would lead me to believe that the bond bull market is not over because there are 10,000 people retiring every day, baby boomers. Spoke to Wade Fowler this week. Apparently, that's a real statistic. It's actually confirmed. 10,000 every day,

that's a lot of demand for bonds. Well, and also, this explains the leadership in the stock market for the last 10 plus years. The FANG stocks, the big growers, those are companies that generate a lot of free cash flow growth, and they are indirectly returning it to shareholders via buybacks. That's been a very powerful machine that makes it almost like a bond proxy. And that's part of that same demographic story. So I don't think the downtrend in yields will continue. Like there's only so far you can go. But I also don't think it will reverse in a secular way. I think we're just going to be in a range of between, let's say, 0% and 4% for a while.

And if it goes too high, the Fed steps in, et cetera. This is not going to end with bond vigilantes refusing to buy treasuries. No. That's not how this one is going to go. And the Fed, through its asset purchases policies, can do what the ECB does, which is to force the banks to own it. We don't have negative yields anymore in Europe. But during the negative yield period, we would ask, who would be insane enough to buy a bond with a negative yield? Well, if the ECB tells its systemically important institutions

that they have to have so much of their portfolio in high-quality bonds, they don't have a choice. I did a roadshow in 2019 through Germany. I visited every major insurance company, and they have to hold their nose buying this stuff. They don't want to. Let's take this opportunity to transition from bonds and rates to their impact on the stock market. Barron said a piece over the weekend

talking about the line in the sand in the 10-year. When the 10-year has been below 3%, stocks have done fine. Average monthly return annualized 22 percent versus just 10 percent. These numbers seem weird, but versus 10 percent when yields were higher. This is from Paulson's research. I would take 10 percent. I think another way of saying that is that PE ratios are inversely correlated to inflation rates. And we're seeing that. We're getting a

masterclass in that this year. Inflation goes up, PEs come down. And I think I've been trying to kind of educate people, for lack of a better word, on Twitter, just to draw- How's that going? Just to show how the puzzle works on an equity valuation, right? Because what the Fed's doing, To show how the puzzle works on an equity valuation, right? Because what the Fed's doing, the Fed knows it can't do anything about the supply chain bottlenecks, right? The supply side of the inflation shock. They can only dampen demand.

They can only dampen demand. And the economy is pretty hot right now, right? You look at the Joltz report, as you mentioned earlier. So the Fed's trying to reduce demand. How does it do that? By tightening financial conditions. How does it do that? By raising the cost of capital for everyone, right? So mortgage rates went from three to five.

The 10-year treasury went from one to three. Corporate yields are up. Spreads are still OK. The only thing that didn't really listen to the Fed was the equity side. And so what happens is when you, I like to use the discounted cash flow model to value equities. So you put in expected cash flows in the numerator of the formula. You put in the cost of capital in the bottom. That's the 10-year treasury plus an equity risk premium, which is kind of like a- Duncan, that's how you do it too, right? Yeah, always. Equity risk premium is like a credit spread, but for stocks, right?

So it's the amount that a premium investor's demand to take on more risk. So those two together form the discount rate in the DCF model. And the discount rate was at 5% six months ago. It's still around 5% today. So that means that the stock market was not listening to the Fed. If that discount rate went from 5% to 6%, it would not necessarily knock the stock market down in price because earnings play a big role in that. But it would bring the PE down, right?

Because if you are discounting future cash flows with a higher rate, it's a lower present value of future cash flows. Lower present value means a lower PE. So when the Fed's tightening, taking the punch bowl away, draining liquidity, the PE ratio should come down as the cost of capital goes up, which it is for everyone else. Especially for longer duration stocks. Especially for longer duration stocks, exactly. And then it's a question of to what degree do earnings offset the PE derating. That's what I want to ask you.

Well, they are. That's what I want to ask you. So we, so we, well, they are. That's the part of the problem. We started the year 21 times forward earnings, forward expected earnings. I don't think. We're 18 right now. We're 18. I don't think that forward earnings expectations have materially gone up that much. But here's what's happening.

Inflation is helping revenue and earnings growth nominally. So if you sell 1000 refrigerators last year, at 100 bucks per, then you sell 1000 this year at 120 per, and you get away with it, because you say my materials costs are higher, my transportation, my employees, right? That makes your revenue growth look like it's 20%. And it is. Nominally, it's 20% revenue growth, but it's not. And we all understand that. That's exactly what happened in the early 70s.

No one looks at earnings. Say more about that. No one looks at earnings in real terms, right? Right. Earnings is a nominal concept. Let's talk about chart crimes. That's all we do. Earnings is a nominal concept. Let's talk about chart crimes. That's all we do. Earnings season is well underway.

200 companies have reported. It's been pretty good so far, despite a few very notable misses. And companies seem to have a pricing power because consumers are, they have jobs, they have income,

they have pricing power on the jobs front, right? Right. And they still have, you know, kind of maybe some leftover stimulus money from the pandemic. So companies are able to raise prices. And as you point out, earnings are a nominal thing. So stock prices are at the intersection of valuation and earnings.

So the way I look at it, the PE, like you said, was 21. It's now 18. It should be at 15, in my view, you said, was 21. It's now 18. It should be at 15 in my view based on where the two-year yield has gone because during tightening cycles – That's a stock market crash. No, it's not. That's three PE points. And if earnings are growing at 11% this year, the one almost offsets the other. So that's not a crash.

So again, it doesn't mean price has to go down. But if the denominator of the discounted cash flow model gets worse and the numerator gets better, then price is kind of still in between. Hey, I don't know that I've ever seen something like this before. So Teladoc was down 80% going into earnings, and it's down 42% on the day. And this is one of the most wild stories of the year of 2021, still of 2022. How much Teladoc do you own? Is that, is that Cathie Wood is still bringing in money. So Jeffrey Patak tweeted, this is what makes ARK a unicorn. Assets poured in during the run-up and remarkably have largely stayed put since then, despite the brutal sell-off. during the run-up and remarkably have largely stayed put since then, despite the brutal sell-off. Take the two together and it is maybe the biggest, fastest destruction of shareholder capital and fund history. John, can we throw this chart up, please? Look at that. I think that's over though. No, it's not. So next chart, Eric Balchunas tweeted, someone asked me, and yes, ARK is about

to post fourth straight month of inflows in April for some total of nearly $1 billion year to date. Top 3% among all the ETFs. Unbelievable. I don't think that we've ever seen that before in a popular mutual fund where it adds assets as its price is halved. To this extent, it's – yeah, that probably doesn't usually happen. That's correct. To this extent, it's – yeah, that probably doesn't usually happen. That's correct. And I don't look at the individual companies so much, but I look at Goldman Sachs as a bunch of equity baskets and one is like the retail – Non-profitable tech. Non-profitable tech, retail favorites.

Hold on. And so I look at those – This is a Martingale strategy, right? A what? Martingale. You know Martingale strategy? What is it? Play blackjack.

Put $100 on the hand, lose $200 on the next hand. I don't think so. Lose $400 on the next hand. Double and double and double until you get your money back. I don't think people are doing that. No? What are they doing exactly? Okay, maybe they're doing some of that.

But the meme stocks peaked in February of 2021, which is when it first became clear that the Fed at some point would have to reverse course. And so in the speculative parts of the market that are highly sensitive to the liquidity environment, which obviously non-profitable tech and meme stocks are, the bear market is, what is it now, April? It's like 14 months in. Yeah, this has been going on since February 21. It's been going on for a long time. And it reminds me in many ways of the 1994 cycle. I was around. You guys were probably too young for that.

But that was the Greenspan cycle. There was no transparency in the Fed. There were no dots. There were no speeches, no forward guidance. And Greenspan, out of the blue started raising rates. And that was a time where earnings growth offset a lot of the PED rating in the stock market.

The PE went down nine points, but the S&P itself was basically sideways with two 9% drawdowns, so not a big deal. But underneath the surface, two-thirds of the stocks in the S&P were down more than 20%. So there's always something that breaks when that liquidity tide goes out to sea, and we've seen exactly the same thing this time. If you're down 66% in ARK, I don't think you're doubling, tripling down. I think that this is largely small-ish percentages of people's overall portfolio,

where they're pairing this with VTI, VO, whatever, or index funds. And I think that- It could be a lottery ticket or something. I think it's new money coming in. Yeah. I think it's mostly new money. I don't think it's existing clients. I can't imagine that it is.

I 100% could not disagree with you more. You're the- Down 66%? Time out. So you've never invested in ARK or believed in Cathie Wood before, and now you do? That's a good point. And you have new money. You know what this is?

That's a good point. This is financial advisors. No way, dude. Financial advisors who got their clients in a year ago. No, I can't. And are, I'm telling you, they're rebalancing. Down 66, you're going in again? It's a rebalance.

They want innovation to be 5% of the portfolio. It's new money. And it's now 3%, so they got to top it back up to 5%. It cannot be new money. New's too much money to be 5% of the portfolio. It's new money. And it's now 3%, so they've got to top it back up to 5%. It cannot be new money. New money doesn't behave that way. New money only chases what's working. But that brings me back to your earlier point about why would people still sell bonds now that it's at 3%. in some kind of 60-40 algo or like a robo-advisor and you're looking at trailing returns and you say, well, the 40 is not protecting you against the 60, I can see why people would sell it now

because they're just following an algorithm or a formula. What's the Barclays ad down now? 13. The Barclays ad is down 13. It's bad, dude. The S&P is down 12. S&P is down 10. What are you doing, this rebounds? I don't even know what you would do. So a 60-40 is down, has the same drawdown as a 100-0 right now, which means that the 40 is not doing it. I don't know if we've ever seen the S&P 10% off the highs with bonds performing worse. In fact, I'm pretty sure we haven't. I think you're right on that. 1994 was the worst bond bear market at that time.

The 10-year yield went to 8.6%. Like you said, Orange County blew up. But the S&P was down flattish on the year. So actually, it was kind of lopsided in the other direction. When you have the 60-40 four months into the year, and the 40 is down worse than the 60 and both are down double digits. Isn't the most obvious trade, find an alternative asset manager that has a publicly traded stock? Because that's where all the AUM is going in the next four months. Anybody pitching something that's anti-60-40 is taking an AUM and probably eventually raising

earnings expectations. Yeah. And I think it's a good time to be creative about what goes into both the 60 and the 40, right? So historically, on the 60 side, so the last 10, 50 years, S&P 500, very large cap driven, has been obviously a great place to be. But during the 40s, 60s, 70s, it was value stocks. Small cap value did much better than large cap growth stocks. And so you could tweak the 60 by having more value, more small cap, for instance. And that's not investment advice, but I'm just saying you can tinker around with what

goes in the 60. And then on the 40 side, during the late 60s, I'm a history geek, as you can tell, but during late 60s, when yields started to rise, cash took over from long bonds as the most negatively correlated asset class to the stock market. So this is an environment where maybe a little bit of cash, less duration, maybe more tips. So high yield, which is relatively immune from the cycle, has a much lower duration and obviously a higher yield. Bored apes are very highly negatively correlated with rising rates. We're doing that but coming at that answer in a different way.

But we're doing exactly that, shortening duration but then like saying – I guess the question really is, is it about cap size or was it really about industry mix? Like in other words, if we say – It's industry mix. It is industry. Like in the 40s, 50s, it's not people were like, oh, buy me small caps. It's what types of companies tend to be small caps and are those types of companies positioned to do better given the economic environment than let let's say, a global large cap company. And also during the mid-70s, we had the unraveling of the nifty 50, right? So the nifty 50-

Which is a large cap story. Those large mega cap, like Xerox, IBM, Polaroid- Eastman Kodak. Colgate, Eastman Kodak. They had bulletproof earnings, especially in nominal terms. The earnings were bulletproof. And then everyone piled. So what we had, we had the speculative blow off in 1968. 1969.

It was 68. Everyone was speculating in space stocks. Any stock with Tronics in the name was off to the races. Then we had a recession in 1969, 70. It wiped out the retail investing public. Not nice. The institutions took over. They only wanted to buy those nifty-fifty

because they didn't want to get burnt. And then those stocks were bulletproof. Their PEs skyrocketed. Their PEs were twice as much as the rest of the market. The prevailing wisdom was it doesn't matter what multiple you pay for Coca-Cola. It's always going to be Coca-Cola. In four minutes, I'm going to explode.

We've got Amazon coming out. The fate of the world lies on Amazon. We've got Apple probably 20 minutes later. People are pessimistic, to say the least. I think a lot of it is inflation. It's probably not so much the war anymore, but it's just – it feels like things are getting worse. And that's what happens, right? When stocks fall a little, people think they're going to fall a lot.

But let's look at this chart from this guy, MacroCharts. And, Joran, you have a few investor sentiment charts. We've been talking about this on the show over the past few weeks. The AAII bull bear spread is extreme. It's below the lowest levels, the spread between bulls and bears, lower than it was during the pandemic. People are freaking out. And I think also they're not used to losing money in bonds. Yeah.

So I follow that same indicator. I also look at investors' intelligence. I look at flows. Yeah, there's my version. Demographically, the AAII survey skews a little older. It's boggleders. And it's also very volatile. So we generally look at a four-week average.

It's people that answer a landline phone. But clearly, sentiment is very negative right now. I'm more glass half full, even though I just told you that the PE needs to come down three more points. But earnings are holding in pretty well. The estimate for 2022 is actually rising. It was 10% a month ago. It's up to 11%.

Now, even with this earnings season, three quarters of companies are beating by about 300, 400, 500 basis points. So kind of a typical earning season from that perspective. We saw Google and Microsoft still doing 20%. Yeah. So if you think about it, when the PE was 20 or when it was – it's 18 now. When it was 20, I said, look at the two-year yield. Look at the PE. There's a disconnect.

The PE should be at 15. 20 to 15 is five points. That's about a 20% decline in the valuation, not in price. And so if PE comes down 20, earnings go up 10, then price goes down 10, which essentially it's already done. And so we have to compare what we think is going to happen in the economy with what's already discounted by the market. The sentiment work that you do, is this going to lag? Meaning, will stocks and or bonds start to improve well in advance of sentiment improving? Yeah.

Sentiment is always, at best, coincident, if not a lagging indicator. And this is a very, very high-frequency indicator. So I look at flows. Flows, until few weeks ago have been pretty robust. And that tells you that maybe investors in a time when bonds are not working even see equities as a store of value, which in most cases they are. You seem to not be as concerned as I am about the impact of the wealth effect from the stock market and home prices. I hate the term mental model. It sounds like something that someone would make fun of in Good Will Hunting. Somebody says my mental model. But I truly believe that we have made the stock market basically the arbiter of what's going to happen in the economy.

We've done that by virtue of pushing everyone into 401ks, which is not a negative thing. It's just the reality. I feel as though people feel a lot less rich now than they did in December and November. And that to some extent, that could wag the dog. And if this gets bad enough, it doesn't matter what we think of the economy because the stock market is going to drive the next leg of the economy. Do you think I'm overstating the importance of the stock market and how it makes people feel about their own situation? No, I think it's accurate. But the irony is that this is – what you just described is exactly what the Fed is trying to happen, right? The Fed is trying to tighten financial conditions.

And I've reverse engineered the Goldman Sachs Financial Conditions Index. And the equity market is by far the biggest driver. The other ones are rates, dollar, and credit spreads. So the Fed is trying to reverse the wealth effect. But it's like, how do you do that just enough to engineer soft landing, but not so much that it feeds on itself and then you have a spiral? And, you know, the stock market is owned less equally than the real estate market, right? So more rich people own stocks than the rest of the economy.

So the effect may be more lopsided in terms of what happens in the stock market on spending, because the average person, you know, this makes sense, but this makes sense to me. If I stipulate what you're saying, the,

the 80% of the stock market is owned by the top 20% of households or however, that is sliced and diced. That may, it makes sense to me now why a stock like Walmart is at the 52-week high list even with the rest of the market melting down. The Walmart customer is still going back to the store

a week later. So that intuitively makes sense to me. I guess I just worry last... What? Missed? Who missed? Amazon. Missed by how much? Down 6% as the first print. Net sales, sales 116 billion estimate

to 121 estimate was 125 oh boy we don't know if that's particularly meaningful I feel like we could be okay still sorry it's not going to be

a good second quarter it's a good reminder that the stock market goes up only 60% of the time but

so 40% of the time it goes against us and we need to fight our reptilian brain which wants to get out when it doesn't go in our way. But over the long term, the CAGR for the S&P is 11% against the vol of 15. So the value proposition doesn't change, but it's hard to live through the days. I'm glad you said that because nothing is easier than getting out of the market. It feels good. It's very satisfying. It feels so good.

But the problem is getting back in is impossible. You have to time the market twice. It's impossible. And maybe you get the exit at the right time. But just think back to the pandemic, right? We fell 35% in five weeks. And then we just came roaring back, and everybody missed it. Everyone who got out missed it.

What typically happens is price bottoms six months before earnings because the market looks ahead. The news is still getting worse. During that six months, earnings are still falling. People are dying. The economy is locked down. The P.E. is soaring by definition. The math, price up, earnings down, PE goes up.

Everyone calls it a bubble. The economists put it on the cover saying, you know, divorce from reality or whatever it was. Every time. But actually, that's how the cycle works. At trough earnings, you're always going to look very expensive. You cannot wait for things to feel right. You have to just have a plan and execute it. Can we go to this cost of capital chart that Urien brought us?

I don't think I've ever seen something set up quite this way, but I feel like there's a lot of information in here. Tell us what you're showing us with all of these colors, starting from Barclays high yield all the way down to earnings yield. What are we supposed to make of this? Yeah, so the gray bars is the financial conditions index. So think of it this way, right? The Fed has a dual mandate of full employment, price stability, and those things happen in the real economy, right? The jobless rate, unemployment report, the CPI, both of those are lagging indicators. And the Fed is using that to set policy that will have an impact for years to come, right? So it doesn't work. And this is why historically, we've had these kind of hard

landings when the Fed's tightening, you get a recession, an inverted curve, and all that stuff. So in the modern Fed era, the Fed has been using the financial economy as a signal, as a view into the real economy. And the financial conditions indicator, whether you're using Bloomberg or Goldman or others, give you a read into that. The problem, of course, is that sometimes you get a false signal, right? The stock market goes down. The Fed reacts like it did in 2018. And everything was fine. And then the Fed's overreacting to what the stock market is saying. But so currently, I think the Fed is trying to hit the brakes on the economy. It's trying to slow demand because you have inflation coming

from housing and wages. And those are two pretty sticky things that can persist. And so, like I said earlier, the Fed is trying to raise the cost of capital for everyone. If you're a home buyer, your cost of capital is going up. Mortgage rates are going up. If you're the government, your cost of capital is going up. If you're home buyer, your cost of capital is going up, mortgage rates are going up. If you're the government, your cost of capital is going up. If you're a corporate, your cost of capital is going up. If you're the stock market, your cost of capital should also go up. Because again, when I'm talking about the math of the discount and cash flow model, if the discount rate in that model goes from 5% to 6%, that's 5 PE points right there. That's a difference of a 20 PE and a 15 PE or a 20 and a 25 PE. So the Fed is trying to bring up the cost of capital in order

to slow the economy. The lowest cost of capital you could think of in the equity market is a SPAC. When the Fed saw 500 SPACs go public on the New York and 400 go public on the NASDAQ, why wouldn't they look at that and say, maybe there should be some cost to raising equity and we shouldn't have blind pools pulling in billions of dollars. But I guess they didn't get there quick enough. But that to me seemed like a very obvious financial conditions signal. Yes. And there's no cash flows. Vegasized signal. So Amazon net sales were up 7% year over year.

This is wild. So the cloud unit is still growing like mad, up 37% year over year. Wow. $18 billion. So how bad were groceries and books? So we'll offset that. Well, international was not good for obvious reasons.

Right. Yeah, it's not so bad. I don't think Amazon is a bellwether for anything other than Amazon. Really? Apple's going to be way more important to the market. Yeah. Yes, 100%. It's a giant company, but I don't know what it signals for anyone else. I do have to say, and you haven't seen this chart yet, but I can send it to you. But coming back to the Nifty 50, I've done a lot of work on this. And so you have the original Nifty 50 from the early 70s. Then you had the dot-com Nifty 50, I've done a lot of work on this. And so you have the original Nifty 50 from the early 70s. Then you had the dot-com Nifty 50, the Janus 20, as I used to call them.

And now you have the FANG Nifty 50. And it's interesting, in terms of the relative return of the top 50 versus the bottom 450 in the S&P. The return profile has been off the charts, very similar to the late 1990s and late 60s, early 70s. But the valuation has not moved at all. So the entire movement in price, the return of the new NIFI 50 has been supported by earnings growth. So there's no bubble from my perspective. Can we just talk about that for a second?

One of the reasons stocks go up is, yeah, they're risky. They need to compensate you for the risk that you're taking. But they go up because we're buying businesses, and businesses grow their earnings. Well, and it's the magic of compounding, right? I mean, you're compounding 10% a year over 10, 20, 30, 40, 50 years if you have a 401k and you're fortunate enough to start young. I mean, nothing comes close to that. Right. So to your point, the bears never got their heads around the idea that, yes, maybe it's absurd to have five or 10 stocks doing double

and triple the performance of the market. But wait a minute, they're growing their earnings by double and triple the rate of the overall market. Maybe it's not that it goes on forever, but at least there's a concurrent justification for that. Absolutely, yeah. It's not all PE. I don't think most bearers ever got there. They just fixated on how big these companies were relative to everything else. But their businesses are that big relative to everything else. But their businesses are that big. They have giant networks. And I've looked at this for Bitcoin, like Metcalfe's Law. You look at Apple's network, if you look at, and again, I don't do individual stocks,

but I used Apple as an example of a network effect. And you look at their sales over time. The valuation is multiples of the growth in sale because they built this huge moat and it becomes impenetrable. And that's the first mover advantage they have. They have an ecosystem. It's more than a moat.

It's like their own country almost of Apple users. Another thing that you can buy in, I mean, look at this. This is Apple. We're about to find out from Apple. But this is their quarterly revenue. And I should log this, but you get the point. How dare you not log this for our guest?

Didn't we just finish admonishing you for that kind of behavior? Where's my log? OK. Here it is. Here it is. I'm sorry. I'm so sorry. I'm sorry.

I mean that's a pretty beautiful chart. It is. All right. So we can also at certain places, namely Fidelity, now buy Bitcoin in the 401k. It's exciting news. Big news. Big splash this week. Yeah.

Well, it's in the works. I don't think it's available just yet. Well, it was announced. So my friend Eric Golden, who actually used to work as a portfolio manager at Fidelity, tweeted, Fidelity allowing BTC and 401k is a bigger deal than the spot ETF being approved. It's a big deal. How much money is in Fidelity 401 BTC and 401k is a bigger deal than the spot ETF being approved. It's a big deal. How much money is in Fidelity 401ks now? Do you know?

It's with a T. We have $11 trillion under administration. And I don't know how much of that is in retirement plans, but it's a big chunk. So let's say it's 10%? It'll probably be more than that. $1.1 trillion? It's probably more. 20%?

Probably. Okay, so all we need is for that 2 trillion, everyone to elect 10% of their money to Bitcoin, and we could send Michael Saylor to Mars. 10% would be a lot. Okay. It won't be that linear, I'm guessing, but I agree with you, it's a big deal. Look at this, this is Microsoft.

Yep. Unbelievable. And you can understand why someone would be willing to pay a higher multiple for a line like that than a jagged line for an energy stock or something like that. And so that stability, and that's why they call it these long duration growth stocks, they generate predictable, solid earnings, cash flows, and that's why they call it these long-duration growth stocks, they generate predictable, solid earnings, cash flows, and they return them indirectly via buybacks. All these companies are doing massive buybacks.

And that's an often underappreciated aspect of what I think has been a secular bull market since 2009, secular bull markets being long periods of above average returns, that if you look at a year ago, we were making a big deal about IPOs. There were a lot of IPOs out. When you look at M&A and buybacks together over the last 10, 15 years, they completely annihilate anything that came to market as IPOs and secondaries. And that financial, what do you want to call it, financial engineering or whatever, that's a very powerful because that's trillions of dollars of de-equitization that, you know,

these are shares being retired. At a time when people need more equity exposure than ever given prevailing bond rates. So that's, I think, is a very important, that and the demographics, I think, are the two underpinnings for the secular bull. And I don't see any sign that either of those are changing. Buffett talks about that a lot. He'll probably talk about it tomorrow during the Berkshire annual meeting or shareholder day live stream, where their share in Apple, even after they stopped buying it, has continued to grow as a percentage of Apple's earnings going to Berkshire

because of that buyback effect. And it's very real. When he talks about it, the numbers are very, very big and meaningful to Berkshire. So I want to do this valuation versus earnings charts chart with you. I'm not sure if there's anything else left to say. Do we have this, John? Yeah, we got it. So the black line is the S&P 500 price level. And then you've got earnings growth peaking versus PE turning negative. Yeah.

So what are we to make of this? So it's like seasons in a year, right? So you have price tends to, at inflection points, price will recover before earnings, which is what we talked about, usually by a couple of quarters, happened in 2009, happened during the pandemic. And so then you have accelerating earnings growth. Sorry, you still have decelerating earnings growth, but you have expanding PEs because the market's anticipating a recovery. Then earnings growth peaks, which it has now done. Earnings

growth was 50% last year. It's going to be probably 10%, 11% this year. Yeah, how could you repeat that? It's crazy. And then as the liquidity tide goes back out, which is what happens when the Fed's raising rates and at some point maybe draining its balance sheet, PEs derate. That's what we talked about with the cost of capital earlier. So you have periods of time where both earnings growth is accelerating and PEs are rising. Those are the boom times, right? Then you go up huge. That's 17 into the tax break. That's 21 after the stimulus. So then you have nothing but tailwinds, right? Then the market goes up 20, 30, 40%.

Then you have periods where none of them are working, right? You're in a bear market, the PE is derating, earnings is falling, then everything goes wrong. That's like 15, 16. Yeah, or worse. But then you have periods where one offsets the other. And that's where I come back to the discounted cash flow model, right? The PE is coming down, it should come down. That's what happens in this phase of the cycle. But earnings growth has peaked, but it's still positive, right? So you look at other periods like 2010, 11, 2017, 18. You have periods where there's PE derating, but positive earnings growth. And the market does OK, but it doesn't do great. And it's more vulnerable to corrections, which is fine.

I mean, the market- Higher average volatility in that period. The odds of a 10% to 15% correction historically is about 40%. And the market goes down 40% of the time. So it's something that investors really need to remember that it's not a free lunch. The market doesn't always go up. Well, also, if we zoom out, we've got up 15% a year for years. It can't continue. We've got to give some of it back and pause.

The market went up 116% from March 2020 to January 2022. Yes, but I started investing last week. What are we saying here with this consumer staples chart? We don't need to get into it. We're going to skip that? Let's skip it. We did investor pessimism. We did all that.

One thing I want to just talk about real quickly is Full Stack Economics put out this really interesting report and demand is – I mean the economy is still doing really well and this is – well, we spoke about this. But look at this chart. We're showing consumption spending is 4.4 percent above pre-COVID trends, which is remarkable. So – That's just the vapors from stimulus two years ago. But people, they're employed and they have jobs to pick from. You look at the jolts, right? The job openings versus job seekers, it's like two to one or something like that. People have money in their pockets. They have savings. The savings rate went through the roof during the pandemic

because people got fiscal relief and they didn't really have a lot of places to spend their money. So you're still on the afterburners of that. I do think that if inflation ends up being more persistent, then the disposable income side will start to get worse. I think that's happening already. It's already happening. You see it in the data. But it's getting worse off of a high level. So it's not – it doesn't mean you're going to be in a recession tomorrow.

Yuri, and Netflix found a price that people won't pay. They did two price increases in a row and the second one, the world told them, kiss my ass. I mean that's what happened. Nobody wants to phrase it that way, but they net lost subscribers after that second price increase. Is Netflix going to be the only high profile consumer facing business that reaches a point where people say, no, I'm good? No way. Chipotle is testing me. Chipotle is at $15. Chipotle is testing my patients. Chipotle is about to be able to kiss my ass. But one of the risks to the earnings outlook is one is that just the economy really starts to get soft and then you start getting earnings downgrades.

But the other one is that the profit margin, the operating margin comes under pressure. The operating margin for the stock market in the U.S., 13 percent, is the highest in years and it's been persistently at that level. and it's been persistently at that level. But if consumers are going to say, I'm not going to pay as much for your product, then companies will have to start. Well, can I say one thing? It'll eat into the bottom line and the margin will come down. The very small handful of stocks that we have now seen that,

the reaction has not been pretty. And Netflix is another example of a stock that was already cut in half. And then they come and tell us this and they cut it in half again very quickly. Intel's down 4%. Robinhood's getting wrecked again. US GDP- All good reasons to have a broadly diversified portfolio. Hear, hear. Yeah, that's why I own Intel and Robinhood. US GDP shrank 1.4% in the first quarter. Today's the first draft of Q1 GDP. Is this meaningful or not really?

I'm not an economist, but my understanding of the numbers is that the consumer, the final demand, is very strong. And this has to do with exports. I got it. I got it. I got it. So a friend, Callie Cox, tweeted. We don't need you here. Mike's got it. Take a pause. Yes, GDP fell at 1.4%, but consumer spending strong to three quarters, Yes, GDP fell at 1.4%, but consumer spending strong to three quarters, business investment also strong. But as Yuriy was mentioning, trade gap between U.S. and the world wiped out growth in those sectors. Well, that explains that. There's not much more to say on GDP.

The economy is pretty strong. And when you look at the consumer confidence data, right, a lot of people like to point out that it's the lowest in so many years based on inflation expectations, which is understandable. But if you look at the consumer confidence indices based on employment, on growth, on employment prospects, it's still very strong. So I don't think, you know, the very brief yield curve inversion notwithstanding, I don't think we're on the brink of a recession or anything like that. Last thing we're going to touch on before we go into favorites, and you don't have to have a strong opinion on this, but for our audience, we kind of have to cover it. It's pretty big news that Archegos founder Bill Huang and the former CFO of his family office – I'm doing air quotes, guys, were charged with securities fraud and literally arrested. Federal prosecutors say alleged scheme pumped the firm's portfolio to $35 billion from

$1.5 billion in a year. And famously, it collapsed in like two days. I guess what I wanted to ask you, in like two days. I guess what I wanted to ask you, just theoretically, total return swaps on individual stocks, probably not great for public confidence, transparency, regulatory concern. Like that's not the intent of what we're supposed to be doing in the stock market. Would you agree with that? I would agree. I mean, there are times when you have to resort to derivatives, whether it's swaps or something else, if you can't otherwise equitize an exposure, right? But that wasn't the issue with these stocks. If it's just leverage, I mean, just buy a diversified fund or index of stocks and call it a day. It's two things.

It's leverage, but it's also disguising what you're doing. Yes. You're not filing a 13G despite the fact that you've taken a huge stake. Smoke and mirrors. Right. So you're betting on the company's upside without disclosing that you have that exposure. And you're finding somebody at Credit Suisse who really needs the bonus, who's signing off on you being able to do that. off on you being able to do that. If we had 10 Archegos running around instead of one,

it could be Madoff-esque and it could have a huge impact on just consumer confidence, consumer investor confidence in general, right? I mean, if you had enough of them, it could be systemic and think of long-term capital in 1998, which was more on the bond side of things. But ultimately, the fundamentals will win out. If you have good companies, there will be investors to buy them if they get stupid cheap, as we like to say. But it can create outsized volatility. And that, of course, is something that a lot of people, if they look at their screens too much, are not equipped to handle. And so, yes, it could be a problem in that sense. But ultimately, the market will correct itself just based on valuations and fundamentals.

You're doing this since the 80s. So you've got probably some good perspective on this. We don't find out about these things until the bear market. They don't reveal themselves and they're never nipped in the bud. So there are probably going to be more of these and the worse the technical damage in the market gets and the longer we're in correction or in the NASDAQ's case bear market, the more likely it is that we're going to learn about a lot of things that have been taking place that nobody was aware of. You would agree with that idea conceptually, right? Yeah. And was it Warren Buffett who said about the tide? The tide goes out. We find out who was swimming naked.

Yeah. So I'm sure there'll be a few bodies washing up somewhere, probably in the bond market and not the equity market. So maybe some hedge funds were out over their skis and they got margin calls, or maybe it's some kind of highly levered risk parity trade. Maybe it's happening in China and not in the US. But usually when you have a move this large, this fast, there's going to be collateral damage. And that usually becomes known after the fact. And it's like, oh, yeah, now that kind of makes sense. Yeah. It'd be interesting to see where that turns up, but it seems obvious to me to look in the places where there was the most excess. So I'm not sure how that expresses itself in something like venture capital, for example.

But you just have to believe that there were people trying to outdistance their competitors with even more risk in a lot of these places. And in retrospect, and it's easy to say that now, but a year ago, the economy was already really getting strong, right? I mean people were back to work. Yes. A lot of demand. And we were still – yields were still at 1 to 200 basis points negative real yields. It's free money everywhere. It makes no sense.

And in retrospect, that was an excess that should have been corrected sooner with hindsight being 20-20. Well, it always gets corrected eventually. All right. Let's do favorites. So this is the part of the show where we talk about the things that we're watching on TV or reading or blog posts or podcasts or whatever. I don't know if you came with anything prepared. I'm going to start – did you? You got something for us?

I can make some stuff up. He's got a little something. He's got a little something. I see that gleam in your eye. What are you reading these days? So people are always asking me, what business finance books do you read? And I see some of mine that are on the bookshelf here. But I like to feed my right brain.

And so I do a lot of cycling. I do a lot of cycling. Same, same. I do a lot of cycling. I do a lot of cooking. That's my passion. I see your pictures. I do a lot of photography. And when I read books, which I try to do, they tend to be more right brain books. And so the book I'm reading right now is called Rock Me on the Water by Ronald Brownstein.

It's called Rock Me on the Water by Ronald Brownstein. And it's about the L.A. during the early 1970s, the music scene, the TV era, and how that 74 was this pinnacle of culture that had gone from New York to L.A. Who's out there? Zeppelin? David Geffen? It was the Laurel Canyon folks, David Geffen, Crosby, Stills, and Nash. But the TV, the sitcoms, Mary Tyler Moore, Bob Newhart, All in the Family, all those shows. But I grew up in Aruba, starved for American pop culture.

So my whole family, we would sit down on Saturday night and watch all these shows. All those shows were on Saturday night, one after the other. And so I grew up consuming that culture. So now this book is about those formative years. Also the movies, you know, like Star Wars was later, but Godfather. Jaws. Jaws. And just how LA was the pinnacle of American culture that was in New York. But remember, New York in the 70s was a dump, you know. And so it's just, to me, as having been a spectator of it or a consumer of it many, many years ago, those are the kind of books that I like to read. So I'm reading—

What did you think of Once Upon a Time in Hollywood? Did you love it? At 69, it's a little bit before. Absolutely. No, I love it. That whole late 60s, 70s era, I was a teenager. It's just so nostalgic. I still – this is kind of funny.

But my favorite show growing up was Hawaii Five-0. Not the new one, but the old one. Jack Lord, Steve McGarrett. I watched the reruns. And my favorite car is – he drove this black Mercury Grand Marquis Braun, this gigantic boat, 1976 Lincoln. And if I ever see that car in drivable form, I'm buying it because that's going to be my car. But anyway, that's a Steve McGarrett car. But I still, when I'm on a plane, I have them all loaded on Amazon Prime.

And I will watch those episodes for like the eighth time. And it just brings me back. And also, Hawaii is not Aruba, but eighth time. And it just brings me back. And also, Hawaii is not Aruba, but the tropical setting, it just brings me back. Magnum PI, not the same effect? That was a little later. Hawaii Travel was really, that was 68 to 80. So that was really during those formative years. I was in LA and we did the tour, like a driver.

And we did the Laurel Canyon thing. And we stopped at like that general store yep and when you watch all those documentaries about that music scene with like the birds amazing uh neil young and and they all collaborated right so they have pictures of all these people in that general store you had jackson brown writing music and i'm paraphrasing here and then uh joni mitchell like lived upstairs or something. But she would end up singing it and recording it or Linda Ronstadt. And they were all cool with it.

They were all just like picking up their guitars. And it was not a competition. But that music holds up in a way that the Woodstock era music really does not. And the 80s music does not. You can put on music from that laurel canyon scene from like the mid-70s now classic vinyl i saw i saw eagles live uh by the way a couple of nights ago wow every generation is in the crowd there's children there's grandparents everything in between and they were part of that story because they started as kind of a folksy almost uh country

like vibe and then they kind of turned folksy, almost country-like vibe, and then they kind of turned it into a more mainstream. They were Linda Ronsted's backing band. They were, yes. Okay. All right. Great. What is it called?

Rock Me on the Water? Yes. That's a Jackson Browne song, right? I think so. Okay. I'm all in. I'm all in. Michael, what do you got for us?

I hated Once Upon a Time in Hollywood. Well, you have great taste. No, hold on. Hold on. Tarantino's my favorite director, but- Duncan, have we had enough of his movie takes? I'm too young. I'm too young.

It didn't resonate. It can't be too young. It didn't- What do you mean? Watch it again. It's not a true story. You already had nostalgia. That period in time had nothing to make.

I wasn't born then. Tarantino was zero years old in 1969. What are you talking about? Sorry. I think it hits a deeper chord when you can relate to the colors and the feel. So one of the things.

The cars. You don't know the source material well. It's not your fault. I don't even know Steve McQueen. That's my point. You had not seen the Westerns that they're parodying. You don't have exposure

to the source material. So you're watching, it's not a parody, but you're watching like a satire of an era and that era's culture and you don't know it once upon a time in the west is also an amazing movie once upon a time in the west yes okay what's your favorite what's your favorite aspect of that movie well it's it's a three hour long epic it has all the stars charles bronson oh yeah uh you know uh i mean

it was amazing claudia cardinale was that. Is that Sergio Leone or is that someone else? I think it was, yeah. Okay. And did Ennio Morricone do the movie, the music for that? I'm not sure. Okay, but it's one of those. I love all those movies.

Okay. All right. Michael, what do you got? Okay, I want to highlight Kai Wu, who was on the show a couple of months ago. He did this post called- Shouts to Kai Wu. Investing in Innovation.

He's basically trying to quantify any outperformance that might exist in disruptive technologies. And it's a kick-ass post. And I am loving Tokyo Vice on HBO Max. Anybody watching that? I haven't started yet. It's great.

Holy shit, is it good. So do you know Michael Mann did the first episode? We spoke about that. Michael Mann, wow. Michael Mann directed the first. The quality of this is so super high. It takes place in the 90s? It's a little bit of a slow burn.

It gets better and better and better. So an American, this is based on a true story. An American reporter went to Japan and became the first foreigner. It's called the gaijin. And he penetrates the mafia or the gangsters there. And it is really well done. I liked Japanese mafia movies. Super high quality.

Awesome. That's great. I'm totally in on that. Who else has a guilty pleasure called Archer? Did not watch Archer. I know of it. I've never watched it. You're missing out.

It's funny, right? It's animated. It is so politically incorrect, but it's hilarious. I was going to bring the new season of Better Call Saul. funny right it's animated it is so politically incorrect but it's hilarious um i was gonna bring uh the new season of better call saul and this is a show that's been really frustrating for me because i was a breaking bad die hard i thought you don't like better call saul i don't i didn't but i stopped i forced myself to stick with it i liked it i think they got the i think they got the message from the audience so it took them two years to get this new season out

because of the pandemic. They have sped the pace up finally to the point where every episode, something is taking place. I feel like the first five seasons were very self-indulgent. Just these long lingering camera shots on like a cup of coffee for 15 minutes,

make us sit there and listen to a dialogue that goes nowhere but a brick wall. That's almost David Lynchian. Yeah, they did. So what's his name? Vince Gilligan, the creator. Listen, it's not a diss. It's just, that's what he chose to do artistically.

And it was like taking Ambien. Applebee, we're good. Oh, we're good? Yeah, don't worry. All right, forget it. Delete what I said. We're good. Anyway, now they're like, alright, it's our last season.

Let's give the audience what they've been waiting for. There's no more build-up. People are just literally getting shot in the head, finally. So I'm back into Better Call Saul. Alright, that's all we're going to do this week. Our thanks to Yuri and Timur for coming. Did you have fun? 90 billion dollar

buyback. 90 for Apple. What's it doing in the post? Yuri, and this for coming. Did you have fun? 90 billion dollar buyback. 90 for Apple. What's it doing in the post? Yuri, and this is great. Up 3% or so. That's it? What do you mean it's great? Well, I had a big day today too. Yuri, did you have fun?

It was great. Thank you so much for having me. Okay, you're going to come back. We're going to do this again tomorrow? Yeah, let's do it. Why not, right? Okay. Yuri, you've been an amazing guest.

We love all your charts. We love all the wisdom that you share with the crowd. So where do we want people to follow you? Twitter, obviously, is your home base? Yeah, at Timber Fidelity would be, that's probably the best place. I'm also on LinkedIn, but there's more stuff on Twitter. Are you publishing anything for Fidelity? Is there a mailing list that people could find? We do. It's called Viewpoints pretty much every week. So if you're on Fidelity.com, you look for Viewpoints, there's a bunch of different articles in there, but I'm usually in there on Thursdays.

Alright, well listen, you were an incredible guest today. Thank you so much. Can we see your photography somewhere? Yeah, where can we see your photos? Are you on Instagram? Where do I see your photos? I'm on Instagram too. At jhtimmer on Instagram. I post all see your photos? Or do you tweet them? I'm on Instagram too. I'm on Instagram. At jhtimmer on Instagram.

I post all of them. Oh, I don't follow you. Including my friends. Dude, he's a chef. I gotta find you. He's a chef. I'm a little bit of a chef too. I'm not that good, but.

I love to post my food porn, I have to say. All right, well, we should end with porn. Our thanks to Urien and Duncan. Any announcements that we have to make before I get us out of here don't think so no okay guys thanks so much for listening

make sure you like and subscribe like and subscribe we will see you next week alright take us out of here with an Apple beat so iPhone

a 5% review is iPhone are iPhones ever going to stop growing how do they keep. Are iPhones ever going to stop growing? How do they keep growing? Good place, man. And new people are born. Before you get up,

can, Duncan, can you take a shot? I know she was in there. Well, we're going to do it in front of the sign right out here. Come on.