The Compound and Friends - Priced to Perfection

Episode Date: May 3, 2024

On episode 140 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Jeff deGraaf of RenMac to discuss: technical analysis, the momentum factor, the outlook for Apple, RenMac's Market Cycle Clock, the Fed, Starbucks earnings, and much more! This episode is sponsored by Global X. Visit https://www.globalxetfs.com/ to explore a lineup of more than 90 ETFs, along with insights to help you navigate a dynamic investing landscape. Sign up for The Compound newsletter and never miss out: https://www.thecompoundnews.com/subscribe Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you remember the last time Jeff was on the show? Guess. Like exactly when it was? No, just like around when? Oh, we'll put it on camera. We'll put it on camera. You're going to talk about it? Yeah, we'll talk about it.

When do you think he was on? Uh, I don't know. I know you don't know. Guess. Wait, why would I know? All right, I'll tell you. What the **** did I guess of? What the **** did you want from me?

It was so long ago. Oh, all right, fine. You want me to guess? It was December. Yeah, 2022. How about... Wait, what? Yeah Oh, all right, fine. You want me to guess? It was December. Yeah, 2022. How about? Wait, what? Really?

We haven't seen you since then? It's been a year and a half. It doesn't feel like a year and a half, does it? No. Time, it's too fast. Wow. It's not a constant, though. No, it's not.

So the title was The Game Has Changed. And that was the bottom. That was the bottom. Do you feel like time is speeding up as you get older? Are you kidding me? the game has changed. And that was the bottom. That was the bottom. Do you feel like time is speeding up as you get older? You kidding me? I mean, I feel like the months are flying by. It's not even close.

I didn't even notice the change anymore. I just took my son on a, my youngest on the college tours, right? Down south, I'm like, whoa, like you kidding me? See 11th grade? Yeah. Okay. Come on. Your last kid? Yeah. I just, my first kid just got me? See 11th grade? Yeah. Okay. You're the last kid?

Yeah. My first kid just got into school. Nice. So we dealt last year. Yeah. She's graduating in a month. I don't know how. It's ridiculous.

Yeah. I agree. So my kids are five and seven, and seeing Josh's daughter go to school makes me feel really weird, because when I started working with Josh She was six. Yeah, she's a baby like what the fuck right and so it's like freaking me out a little bit Yeah, well the thing that the thing that somebody said to me. That's like the most true thing. I've ever heard is that

The days are long, but the years are short Yeah, right. So when they're little and you're like on soccer fields and then baseball fields and, and it's, it feels like it's forever. But then you realize, oh my God, another year just went by. That's totally true. Jeff, if you need anything, just hear the noise. Exactly. And that's, that's me.

The worst barmaid, worst worst barmaid you ever had. You gotta get the engineers involved. That way it's like a complete. Complete shit shot. Exactly. Just derailed. Exactly. Ladies first.

I'm good, thank you. I'm great, I'm good. Maybe in a little bit. We might just have a lunch. We just had a lunch and we had Santoli showed. Oh really? He's off to... Santoli's great.

He's great. He's off to... He's one of the best. The best at what he does. I'd say he's the best. Yeah. Jeff, no laptop today? The full...

I mean I can put this up. Do you want to do that? I mean if it... Sure. Yeah. If it hides my sweat marks. Jeff, no laptop today? The full, I mean I can put this up. Do you want to do that? I mean if it, yeah. If it hides my sweat marks. We'll talk about this, but that was the topping rates, no? When, just recently?

Yeah. Yeah, I mean, I'm in that camp, the chart doesn't tell you that that's officially there, but I think when you've got the... Chart on? I think you're trying to make it look like something. Yeah, I know, I'm with you. We have more important things,

we have more important things for you than that. Is Peloton going to zero? No. It's a $2 stock. Are you sure? No, I'm not sure. It'll get bought. I don't know anything about the valuation.

I just don't know who buys it. Yeah. Peloton CEO Barry McCarthy steps down amidst the company's restructuring, laying off 15% of the global workforce, which is 400 employees. And he came in hot, right? Hold on.

So the stock spiked immediately following the announcement because for most companies, layoffs are good. Not this one. Stock price then dropped. This is the fifth round of layoffs for Peloton since 2021 when it had 8,600 staffers. Yeah, this was a $261. Was this 161 or $261 stock? I forgot. What was the high? I'm looking right now. It couldn't have been a more perfect storm for that stock, right?

In both directions. Stay at home, everybody's getting fat. Market cap's down 98%. But what is, what was the peak share price because I'm a dollar's guy I know I know Josh listen to percent. He's right divided by 86 very traditional. Yeah, the top was 167 It's now under three bucks. Is that bad through that is as bad and that was a meme stock for a minute, right? Or was it just oh, yeah so Not really a ton So, too much debt. Not really a ton. Who would buy this though? Is there any value here?

Nobody. And there's not even a short squeeze. Like the shorts are going to cover at zero. Were never covered. So the last time I looked, which was a year ago, maybe more, they had hundreds of millions of dollars in recurring subscription revenue. Like there's something there. Because the machines, they're losing, if you're losing money on the machines just to get

recurring revenue, you could do that and eventually catch up. But if the sales of the machines keeps falling, then your installed base that you're modeling those recurring revenues for is shrinking too. You know what, maybe a private equity comes by and buys it for pennies on the dollar and cleans out. I don't know what the debt is.

More importantly, what happens to my Peloton? Is it just a regular bike now? I haven't rode my Peloton in a year. But you know what, it holds eight jackets. That's what I figured out. Exactly right. It holds eight jackets. That's exactly right.

So it's worth, speaking of working out, did you see these yet? What'd you think? Pretty nice, right? Not bad, not bad. Nicole, get a shot of the shot. That shot is gonna be blowing off my back as I'm flying through the air. Feel the material.

That's pure velvet. That's nice. This is like the... Dry fit. The dry fit. Wicking velvet. So, maybe this is an overshare, but the dry fit material has this combustibility chemical

with my skin where I put it on What's going on here? I put it on and I smell. That's three. That's three. That's three. What? Michael is stockpiling excuses in advance for this.

I'm running. I'm just saying I'm going to smell. That's all. He came in today. He's like, guys. Where is this 5k? Central Park. JP Morgan corporate challenge. Oh yeah, alright.

He goes, guys, I was on the phone and I stepped off the curb and I hurt my ankle. No, no, no. Last week he said he had shin splints. Hold on, I crumbled. I took a step off the sidewalk and my ankle went like that and I almost hit my knee. That's how much I fell. How many weeks of training are you going to miss because of that? Nothing good. I'll run tomorrow. Alright. But now also we have an issue with the shirts.

I have no issue with the shirts. You just said it's combustible. With my... You just said if you run in this race with us you're going to be on fire. Smelling. I will smell. That's okay. That's fine.

You'll be nowhere near me. I don't mind. Okay. What's your shoe of preference? What are you running? Ooh, I don't have running shoes. We'll have to see what his injury situation is. I run in my on clouds.

Although Josh and I were just in Los Angeles and we we were walking from did you call him sir, Josh? I don't know we were walking up to Sunset Boulevard And we're walking up the hill and he like fell to his knees. I didn't fall to my knees. I'm like Nicole I took a break. I didn't right you know, I didn't fall right, but you can't walk but you can run I don't get it. No, I can walk and run but I took a break It was a lot of walking. It was a lot of walking. You walked us into the Hollywood hills.

We have photo evidence. Me sitting? Is that the worst that ever happened? Come on. So you're not a runner? No, Josh is a runner. Are you a runner, Josh? I don't know.

I used to be. Really? No, at this point it's pure spite. I'm only running. I hate runner. At this point I'm only running and training because Michael said, I can't finish a 5K. Well I didn't know, I assumed, I thought it was a safe assumption.

Was it 3.21? Dude, it's 3.5 miles. Is it that one? Pretty much. 3.1. 3.1? But this is a 3.5. So this is slightly longer than a 5K.

If you stop at 3.1, it's not a 5K. Have you done this before? So these are metric miles? I've done a lot, yeah. The JP Morgan one. Yeah. He's a 5k. Have you done this before? So these are metric miles? The JP Morgan one. He's a real runner. He ran the marathon like three hours 40 minutes. No, two hours 40 minutes.

What are you doing? Eric, what I'm saying is like, the people that are running in this race are not marathoners. It's just like regular people completing a 5k. It's like no big deal. The problem is it's hilly in Central Park. Are you kidding me?

Oh that's not great for Michael Shinsplint's the hills. And they just did LA. The average pace for the first like, is 10,000 people jammed into the streets. So like your first mile is Milwaukee. But you can't... I line up in the back. You know David Kelly is a marathoner. I don't want to be in anyone's way.

Just take your time. Who is? David Kelly. Dr. David Kelly? He's, he uh, when he was here we were talking about he's run marathons. Yeah well I don't but you're right about that point everyone tries to get up to the front and then they can't really explode out of the gates in something like this.

It's hillier and hotter I think remember. It's hillier and hotter. I think though that we want to not lose sight of the fact that it's for charity, right? Like, yeah. Isn't that for charity? I don't know. Yeah, I'm pretty sure it is. It's gotta be, right?

I mean, but they keep their name on it for you. It's the corporate challenge, but they raise money for, I think it raises money for Central Park. Making it well known who's sponsoring it. John we good I think I think they raise money for the park itself So Apple reports tonight, what's your whisper number? You know how we do you know how on CNBC like we do a recurring segment does the market need Apple? It's a route. You know like you've heard that before I haven't heard that one what was still my thunder

oh why can I plan on talking about this later all right we'll go there we'll go there later is that me it's Ben Carlson take it very confident in my assertions Ben you're in the studio with Jeff DeGraff and Josh. We're about to start recording in compound and friends. What's on your mind? You're calling in. Oh, I called him. Dan, that's embarrassing. Ben, Mike called you because he missed you while he was in California this week. All right, love you. I'll call you after. Love you is a lot. Very confident in my assertion. Shout out to Ben. What kind of show are we doing here?

One more second. And on that note, let's turn on Do Not Disturb. Good idea. Good idea. Good idea. True. The thing he called me was pretty good. True story. He does have me there. I actually called him. Are you looking good, Ben? Yeah, I think so.

Alright, three claps coming in. Applause Compound and Friends, up the ceiling. Music Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any

investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by GlobalX. Since 2008, GlobalX ETFs has been committed to empowering investors with unexplored and intelligent solutions. GlobalX specializes in ETFs that track emerging trends like the rise of artificial intelligence, as well as strategies aimed to generate high income potential.

Visit globalxetf.com to explore a lineup of more than 90 ETFs along with insights to help you navigate a dynamic investing landscape. That's globalxetf.com. Episode 140, ladies and gentlemen, you are now tuned in to the world's greatest financial slash investment slash lifestyle podcast. We're the best fans in the world last week. This week, Michael and I were in Los Angeles. Great turnout, great enthusiasm.

We had so much fun meeting you guys. Thank you to everyone who got up, got in the car, came to see us in Los Angeles. That show, for those of you who missed it, is going to be on all channels shortly. But I want to just give a shout out to the fans who came. Today's show is going to be amazing. We are with technical greatness, is the way I would phrase it. Our friend, Jeff DeGraff is the chairman and head of technical research

at Renaissance Macro Research, AKA RenMac. Jeff did time at Merrill Lynch, Lehman Brothers, ISI Group. He is a member of the Institutional Investors Hall of Fame. He's a private pilot. He's a CMT and a CFA charter holder. Jeff DeGraff, welcome back to the compound friends. Thank you, it's been a while. We didn't realize how long it's been. We're so happy that you're here. So what's the date today? Today, we're taping this on Thursday, May 2nd at approximately 3.08 in the afternoon and I guess it's been 16 months since you were here?

Almost 16. Okay, should we go back to what Jeff told us last December? What did you tell us last December? Well, it was two Decembers ago. It was two Decembers ago. Excuse me, two Decembers ago. What was the name of it? What do we call it?

Oh, the change is coming? Yes, or something changes here or something like that. Something catchy. Yeah. The game has changed. The game has changed. There we go. But you, so I know you're not like, you don't do like extended victory laps, but there were a lot of key things about that period of time that were changing and some people picked up on them, some people didn't. Yeah. But in the charts it was pretty clear that stocks were behaving differently.

Definitely. What do you remember about that moment and what do you think you'll be able to use going forward as a reference point for your own just like, oh, here's how the market works. Like edification. Yeah. So it's almost Cinco de Mayo, so I brought you guys some margaritas. We appreciate that. Cheers. Happy Cinco de Mayo.

I'm going to hold off on my first sip until we get at least 45 minutes in. That's fine. No problem. I'm already three in. Okay, good. So a couple of things were going on then. I think the big one, and this has been really a part of our process for 25 plus years, which was this relentless improvement in the credit markets. It just was continuing to get better and better and better. Corporate spreads, etc. And that's just not something that you'd expect to see

if we're going into recession, which is what everybody was predicting. And look, I mean, the curve's inverted. There are a lot of signposts there that say, hey, historically when this happens, then that happens. But if you looked at the real time indications, what the blood pressure of the market actually was, it's like, this patient's not dying.

This patient is actually stable at a minimum and maybe actually flourishing underneath the surface. So we had Neil Dutta on recently, your partner at RenMac, and similarly, he became known for being one of the few voices in macro saying, I know everyone, you know, I know the consensus is now recession is a foregone conclusion, but I don't see it that way.

And he ended up being right as well. What's interesting to me is he arrived at the same conclusion that you did, but he's looking at the economy and you're looking at market behavior. Right. And I think that's an important part of our process at Red Mac,

which is we don't get in a room and say, I'm bullish, so therefore you be bullish, or you're bullish, therefore I'm going to be bullish. We come to our own conclusions. And I think it's important, because if you don't, then you're going to lose good people, right? I mean, you have to have your own sort of intellectual horsepower and curiosity and independence.

And, you know, so when we come together, and I'd say we're on the same page, boy, I'd say it's probably 70% of the time, you know, but it's for different reasons. And different reasons. And we can play off each other. And then we can also challenge each other, too. And so I think it's really helpful to say, hey, Neil, what's going on with truckers? This is something to do with labor unions.

OK, that's fine. The charts look bad, but that's an idiosyncratic problem, right? And so we play around that. And not everybody does that. And I think it becomes a real problem. One, who do you follow? Because everybody sooner or later is gonna be wrong? So do I really want to be stuck going down the drain with somebody so far? It's so funny that you say that

Obviously Michael and I aren't selling research, but we do a show on YouTube That's been running for like five years now, and we often disagree, but we work together it's possible to have a workplace environment where two people arrive at different opinions for entirely legitimate reasons, and eventually one of them will be right or maybe both will be wrong. And that's like, okay, we don't have to have a situation where you work here, I work here, I have seniority, therefore you have to accept what I'm saying. So I think that that's the way things should be,

but I also understand, especially on Wall Street, where reputations and egos, I understand why there's a lot of research shops where it's not that way. Right, right. Well, and look, in our business, the data's changing daily, right? I mean, Neil gets a data point every single day.

I mean, if he's looking globally, it's almost every single hour, right? We get market feedback every single day. I mean, if he's looking globally, it's almost every single hour, right? We get market feedback every single day. And so you're going to have to be malleable, and your views are going to change through time as the data changes and the markets tell you how you should be thinking about things. So being very rigid in those outlooks is just,

it's a recipe for disaster. So you really need to be fluid in your thinking and you know something that I've always thought about which is okay here's where I think we are. Now what are the likely paths to where we're going right? And so what are those signposts? What are those things that are going to tell me that I'm on the right path or I'm on the on the wrong path? And if I'm on the wrong path then what is that path? How do I identify that path and what should I be looking for there? And that's really, it's a daily process.

I mean, I write daily. Our clients get, as far as the Degraph daily, they see our daily commentary. And it is a royal pain in the ass. There's no doubt about it. Sorry about clients out there that get it. But the reality is, I do it as much for myself as I do it for our clients because it forces me to look at the markets every single day and figure out what's going on, or at least put

the chart on the pile that says, I've got to figure that out. I don't know what's happening here. What should I be doing about that? Do you think the market is noisier than it was when you started, just because you mentioned the data points that we get? There's so many more data points that literally technology wasn't able to capture

probably when you started your career? I think, I mean, there's an old story about a client who used to messenger car service, black car, the Financial Times to his office from JFK to get the head start, to get the information advantage, right, so he'd have a guy there at whatever it was, 4.30 in the morning, grabbing the paper. Take the information highway? Yeah, take information advantage, right? So he'd have a guy there at whatever it was, 430 in the morning, grabbing the paper. Take the information highway?

Yeah, take the information, right? Otherwise, he knows the Van Wick. Right to his office so we could read it early before the rest of the street. It's a good question. We don't find that there's more or less mean reversion. We don't find that there are more or less false trends or legitimate trends. The markets chemistry as we view it, the way that we look at the world, has stayed relatively similar. Now it's not exactly the same. I will say

that things like breadth, and I think this is because of ETFs, breadth tends to pendulum. In other words, it'll be a hundred or a hundred percent of the financial stocks are up on the day or a hundred percent are down because it just becomes a basket. It's just easier to do it that way. Where back in, you know, my day at Lehman, it was never like that. If you want to create a basket, we could do it with ten names. I'm sure you could find things within the market that's very different, but I made a chart of the rolling 30-day change in the S&P 500 going back to the beginning of time. And just by that one metric, there's

no difference between now and 100 years ago, just within the S&P 500 or whatever market you're using. It's an EKG. I want to ask you if you think it's possible for a technician to have quote unquote conviction versus someone that's looking at macro or fundamentals. I'll tell you why I'm asking that question. You're looking at the charts every day. Yeah. You might believe something on a Monday that two weeks later, you know, two following Mondays later,

becomes completely invalidated by price. As a technician, you can't double down on what you thought two weeks ago. You have to say, this is what I thought, but this is what I think now. It's a discipline that inherently does not lend itself to the concept of conviction. If you're truly focused on price, because prices change. Someone who follows the macro, they probably shouldn't have as much conviction as maybe they have,

but they can say, no, this is a blip, my original opinion was still right. So like, what's the push and pull within your own mind when you're deciding whether or not you've changed your mind, or you decide, no, I still think I'm right? Because you kind of have to be somewhat malleable. Not in your principles or how you look at things,

but in your conclusions. Well, I think the word you use is probably the most dangerous word on the street, which is conviction. What conviction implies is that you know something that the rest of the marketplace doesn't know. And everyone else is wrong. Right. That's pretty dangerous in this business.

Look, there are people that can make money doing that, but there are also plenty of people that lose a lot of money after they've made it that do it. We have an old saying, conviction kills and dogma is death. And I think you have to be pragmatic. And when you're pragmatic, the idea is that, look, I believe that this trend is in place.

I try to really disassociate myself with the narrative and the news flow. That's pretty hard to do, but I really try to do that. And you have to rely on those tools. Now, for us, sentiment is important. For us, mean reversion indicators, long-term mean reversion indicators are important. And in the interim, the trend following indicators are important, and in the interim,

the trend-following indicators are important. So if I'm in a situation where I know, and I know we talked about China a little bit, China to me is very similar to the last time you had me on for the US. I think that we're in a game-changing environment. We gave you a shot on Halftime Report today. I appreciate it.

So you were on with Scott last night talking about China or something? Yeah, two days ago I think. Two days ago? Yeah. All right. But the point of that, I'll walk you through it, which is we know that the long-term alpha generation, just by owning the Shenzhen 300 or the ETF, whatever you want to look at,

the long-term alpha generation is the worst it's ever been in the history of our data. You've never lost more money in China versus S&P. China versus S&P. MSCI world, right? The entire world. All right. You've you've never lost more money in China risk adjust China versus S&P MSCI world, but the entire world So you've never lost more money with more volatility than you have as of basically the beginning of the year So that to us starts to perk our antenna. Okay, this is so bad that maybe it's good But that's the first the first set

The second is then where is the sentiment usually the sentiment will follow the price, and particularly the risk adjusted price. And we measure a lot of different things, but the ETF outflows were one that stood out to us that people are just saying, why am I in China when I can own Nvidia or whatever the case may be? So you've got that behavioral aspect that set itself up. And then we wait for price. We wait for price to confirm. And we made a tactical call back at the end of January that we thought the confluence of those two, sentiment and the alpha, was enough to say, look, let's play for a bounce. I think this is washed out.

And that was the bottom. But yeah, I think that, well, we thought it was at least a tactical bottom, right? That tactical bottom to us is like, that's 20%, 25% in a pretty short period of time. You can play it and make money, and it's a pretty low risk way to do it. But what's happened is we never came back and retested.

We actually stayed up there, and now we're starting to break out again, and we're starting to change these trends. And so from my standpoint or my seat, I look at it and say, look, the biggest sin I can commit as a technician and as a listener to the market is not believing it when it happens, right?

So I've got these two preconditions that I know historically are pretty good, and now the market's telling me that it wants to go higher, and I might be wrong, there's no doubt I might be wrong, but if I'm wrong, I'm gonna be wrong by that much. How much is like K-Web up off that late January print? I don't know, probably 20-ish percent. A lot.

So bonafide bull markets. You know what's so funny about what you're saying? So you're looking at this through the lens of price and technicals. Somebody that doesn't focus on that at all. Yeah. Could have could have made the exact same bullcase on Chinese equities in January, but for entirely different reasons. Completely. Somebody who focuses on the news flow Yeah, would have said hey, uh the authorities on Beijing seem to be saying a lot of things that are constructive

about their own stock market. They threw out the head of their version of the SEC. They enacted all sorts of more friendly policies and even What's His Name made an appearance. Jack Ma showed up in an interview or something. So, I mean, this guy was exiled, probably where Napoleon bought the farm. Were his hands in front of him, or were they behind him still?

Dude, he was relaxed, and he was like, and he was like talking about Alibaba or something publicly. So, somebody that focuses on news flow and not technicals could have said, I think these stocks are worth the risk here. They're in an 80% drawdown or whatever. Now you could have somebody that's fundamental. They could say, oh, valuation-wise, these are the cheapest stocks in the world, growth stocks.

And they were. The Chinese internet companies were growing still, I think 20, 30%, and they were selling for multiples as if they would never grow again, probably because the risk was existential. Like, will these things get taken off the US markets? And that was a term that I had heard a couple times, and it's always music 20 years,

which is this market is uninvestable. Uninvestable was the consensus on these assets. Perfect. Except for when it's Russia. When do you start buying Russian assets? I was going to ask you that. That's what I was going to ask next. Okay.

All right. But so anyway, I think that's really interesting that different people looking at the market with a different discipline could have all reached the same conclusion. And I mean, that looks like one of the better global markets year to date right now. Well, and that's a good point too, Josh, which is, you know, is it easier to create a bull market in the lone bear market when all the other G7 are in bull markets? Or is it easier to create a bull market when everything else is in a bear market? Of course you're going to, you know, I mean, there's just some tailwind that you get there. And I think what's what could be interesting, it's not our call, but I'm thinking about it, which is, are we today in an asynchronous

world? In other words, the Fed's trying to slow down the US. There seems to be some evidence that it's happening a bit. At the same time, you have China stimulating. Do we end up doing this that in aggregate, it ends up being 2.5%, 3% growth, but nobody's growing too hot too fast. It's not collectively synchronized. And as we slow, then we start to stimulate,

as they speed up or get too hot, they start to pull it back. We might be in this nice- Is that how the world used to be before the great financial crisis? You had different central banks moving in opposite directions at all times, right? Yeah, the 90s, before the 90s was really it. I mean, it came out that modern portfolio theory

has started adding to, particularly EM back in the 80s, early 90s, and about the time that that was published, it stopped working. Well, for the less, that's an interesting observation, because for the last 10 years, it was all global central bank coordination. Everyone was doing the same thing. Right, yeah.

And you have less currencies now also. The 80s and 90s, every country had its own currency, right now There's like four that matter, right? So it would be nice if we had an environment where if the S&P has a bear market You can call your clients and say alright cool But you know Brazil and Japan kind of bailed us out there. We just haven't had that in a really long time It feels like I remember the back in the days in the in the early 90s where the the big bearish Narrative on the u.s. Was you've got the second largest

Country in the world which is Japan in this massive bear market. There's no end to it How are we ever gonna? Yeah, you know not be sucked into that vortex. Yeah, and we weren't right and so You know stranger things happen. I guess is the way to think about not to belabor, we can move off this China thing in a minute, but I was telling you before we started that I bought China, and a few days later I said, ah, I don't want to deal with this headache. So the same thing, washed out in sentiment. Reading proxies in Chinese.

Just completely washed out, and the stocks did stop going down. I said, you know what, I'm going to take a shot. And then a couple days later, I just don't feel like allocating my money. I'd rather just put it somewhere else. Because there are so many things working over here. But there's a big difference between identifying a trend change and then putting the money there and sticking with it on the way up.

And especially during the chop, it's hard. It is hard. I think an important part, I started trading commodities probably 25 years ago. Best thing I ever did in terms of just creating the discipline. One, because there's a massive amount of leverage, so you can't mess around.

Two, it really lends itself to technical analysis because there's no way I can know what's going on on the Ivory Coast with cocoa. At the same time, I know what's going on with soybeans. I mean, it's just impossible. You have to obey price in that market no matter what. So with that, I knew at every point

where I was going to get out or where I was going to get in. No ifs, ands, or buts, no messing around. I just knew where it was going to be. And so it's not that I didn't have that emotional creep that comes in and says, oh, is this right? Should I be here? Should I not be here? But it just kept you disciplined and just said, look,

if I'm wrong, fine. I'll be wrong at this level. But you knew before the trade. I knew before the trade. Right. Absolutely. Federal Reserve FOMC was yesterday. Rates were left unchanged.

Seemed like a pretty positive reaction. I felt like today, like people woke up and just said, FOMC was yesterday, rates were left unchanged. Seemed like a pretty positive reaction. I felt like today, like people woke up and just said, you know what, yeah, that's kind of cool. He didn't double down on hawkishness, he didn't seem nervous, he didn't intimate that we could have hikes on the table. These were some of the things that crept into market psychology during the course of April. I think April is the worst month we've had in

September or something for the S&P 500. So a lot of like rollbacks of people's expectations for rate cuts in the second half of the year and a lot of concern that you know the economy is slowing but maybe it's stagflation because inflation is still with us, etc. So he kind of poured cold water on all of that and the market was able to recover. Is that how you read it? I do read it that way. I think the setup was important, though, and the setup to us was there was a narrative that developed

partly because of what you're talking about, which was policy-wise, and partly because of what we've seen from AI and what we call the momentum narrative, right? So you had momentum running in basically the 94th percentile, the spread between high momentum names and low momentum names. What, coming into April? In actually as early as early March, in person that. So we are unapologetic momentum players, trend followers. I mean, we will do it all day long until it gets to an extreme where it tells us that that good chart is actually vulnerable

because the momentum factor is so strong. So you want your momentum to be going more like this and less like that. Like once it starts to go. Yeah, I want the spread between the best stocks and the worst stocks to be somewhere between the 20th and 80th percentile of historical returns.

Normal. You want a slope. You don't want Empire State building. Correct. And so once you get there, it's the one area that we found that we were going to say, hey, we're selling good charts. We don't want to be a part of this.

And what you end up with from momentum extremes is usually a sentiment extreme, right? So Price drives behavior. It's not the other way around. So when you get the strength people become more bullish They start making so called irrational decisions or at least, you know, not well thought out decisions And so you have this pocket of opportunity for disappointment And I think that's exactly what the Fed did. And what we saw with the inflation numbers is, it wasn't that those numbers were so bad,

it was that the expectations were so high. And it just didn't take as much to push you off into that, what we think is a consolidation slash correction right now, not the end of the world, but certainly it was a function of where the positioning was and the expectations of where things were gonna be It was I think it would I think you're exactly right. It was really easy to make money in January February March We had that narrative of the broadening which was true at the time

Yeah, you could I think a 10 out of 11 sectors were positive on the year. You were making money in things that Didn't really work last year. But then also the stuff that worked last year was really working this year. You had Supermicro and Arista Networks and this whole new crap of AI names leading. And it was just easy. And you woke up, you bought NASDAQ stocks. By the end of the, you know, by the close you were higher. And once it gets like that, I totally agree with you, it changes people's behavior.

They bet bigger, they are bolder the way they come into stocks and more stocks start working because they start looking for what's the next in video. What's the next? All right. So we had that behavior. I think it got washed out in April. I don't know though on the internals if it really hit extreme levels, I mean more like when you talk to people, they don't seem as bullish as they seemed in February. Definitely not. Okay. But I wouldn't say they are to the point

where we can say with high conviction that this correction, if that's what you want to call it. Oh no, I agree. Because nobody's despondent. Still buying stocks. Just as one random anecdote, so this is a chart of Caterpillar. Right? Like the correction that we just happened was absolutely necessary. Right? Like this is it. You look at this, you say this is a good thing.

You need these corrections along the way. This is what sets up the next like higher. If we do get one. I'm not specific to Caterpillar, but just generally speaking. So interestingly enough, the two areas that had were reflective of the most momentum was tech, obviously. That's easy. But industrials was the second. Tech has corrected from the 93rd, 94th percentile of momentum down to the 61st.

So that's kind of done what you would hope it to do. It should get a little better, but not the end of the world. Industrials were in the 99th percentile, so higher than anything we'd ever seen that. Those are the best charts. They're unbelievable. But it's only corrected to the 94th percentile.

So the point being, there's probably still more of that to work itself out. Now, that doesn't mean that it's bearish for the next year. But what it means is that the next three months, the next maybe six months, you're probably going to have underperformance. And that's why to us, the narrative is important because once you get those momentum spikes, the narrative generally changes.

People want to go back to whatever that was back in January, February, we want that, right? But the market doesn't give you that. The market will not be a bear market, it'll still be in a bull market or a bull phase, but it will pick up on something else. And that's why the China breakouts And that's why the China breakouts, that's why the copper breakouts, these things are so important to us because we feel like the high probability trade

is not bullish to bearish, but bullish to rotational into something else. And that's what we're still trying to sort through in the dark here. Where are those charts? Where are those potential leadership names? But that's our, right here, that's those charged, where are those potential leadership names? But that's our, right here, that's our top play. One of the ways that we got a positive reaction post FOMC is that, okay, we still have no

idea when the rate cutting cycle is going to start, if it's going to start this year or not. But they did say that they would slow the pace of reducing the balance sheet starting in June, which is something that maybe we don't focus on all the time, but shrinking that balance sheet is de facto pulling liquidity from the markets. It's doing so in a fairly invisible way unless you work in a bank. You can't really see it. It's not posted in the newspaper. But it's a little liquidity here in the room with us right now. Yeah. But specifically, it was cited that that decision to do that was to ensure that money market

funds don't experience the volatility and stress that they saw in September 2019. Right. So, which is when they started doing reverse repo out of nowhere and people were like, wait, why are you doing that? So I guess maybe that was like a little bit of an olive branch to the people that were hoping for a sooner cut. But all things considered, we still have high inflation prints and we still have no idea when we're getting rate cuts. And the market is holding up fairly well in the face of that much uncertainty. And I'm actually a little bit surprised that the reaction wasn't worse.

From the markets? Yeah, for stocks. Yeah, I... You don't sound like you are. Yeah, I'm... Look, I think we had two weeks ago, we had... There's three things that we look for at a low. We look for what's called an external oversold condition, which I can talk about, an internal

oversold condition, and then we look for a sediment extreme, a sediment spike. We'll stop right there. What is the difference between those two things? So an external oversold condition is you look at the S&P. It's a conglomerate of 500 different names. And that oscillator we use, our own oscillator, is oversold. And it says the market's oversold, right? So you could put that on.

You could put it on corn. You could put it on copper. You could put it on cotton. It doesn't matter. It's just what it is. An internal oversold condition is what's happening to the constituents within the market, right? So the first one doesn't matter. It's just what it is. An internal oversold condition is what's happening to the constituents within the market. So the first one doesn't care about what 3M's weight is

versus Google versus anything else. The internal is individually how many names are oversold. We do that on a percentage basis. So 54% of the S&P 500 made a 20-day low simultaneously back about two weeks ago. That's a good number. That's a number that says- That's a washout number?

Yeah, the risk managers are tapping people on the shoulders saying, I don't care what you think about XYZ, take it down, right? We don't want that much of it. We had 10% of the names trading above their own 20-day moving average, very short-term moving average. Both those are internal measures of being oversold. 90% were below.

So that's a washout. Yeah. So we have an external oversold condition, we have of being oversold. So 90% were below. So that's a washout. Yeah. So we have an external oversold condition. We have an internal oversold condition. We start saying, OK, this is getting, we're in the zone. This is the zip code. What we'd love to see, it doesn't always happen, so this is the challenge.

What we'd love to see is spiking put call ratios, something that shows that people are now positioning themselves differently, playing more or protecting more for the downside than the upside. We hadn't really seen that. Now, it's not that surprising because one, the correction lasted all about three weeks. So sentiment is a function of time and price. We're down about 5%.

So it wasn't terribly severe. So I sense that it's just going to kind of grind a little bit more and take it out, but we had a good oversold condition. The problem is, is it really a correction if Amazon and Alphabet are making fresh all-time highs? You know what I mean? It's hard to really characterize it as a correction. That's why we use those internal measures, right? Because usually if it's above 50%, it's good enough, right? As somebody who wants the market to go higher over time, I would much rather see-

Is that you or me? Me. Not you. As somebody who wants to see that, I would much rather see this sideways corrective action as opposed to the market just continuing to go higher and higher and higher because that sets up for instability. Yeah, yeah, I would agree.

If we have a consolidation that takes us in through the end of May, I think that's good news. And by the way, if you look at presidential election years, the lows seasonally in election years tend to come right around Memorial Day. So there's no, yeah, so there's notion of sell in May and go away. I actually, for one, I don't know where that ever came from

because it's not really true. You should be selling in mid July. It does rhyme. And Iuly. It does rhyme. I know. It does rhyme. We have those charts, we'll get to that in a second. In July and say goodbye. I want to make sure that we hit your

Renmac Econ Market Cycle chart. What are we, trying to throw this out please? It's a clock. Yeah. We've got inflation and growth. It's actually a treasure map. So what time is it? Please.

So it's nine o'clock, right? This is juxtaposing inflation versus growth. I'm sorry, Jeff, tell everyone what is this called? This is juxtaposing inflation versus growth. I'm sorry, Jeff, tell everyone what is this called? This is our market cycle clock. The market cycle clock. There's no CM there. There's a...

You guys should TM this thing. Yeah, we should. Okay. There's a relationship between inflation and growth. There's a lot of different ways to measure both. It's proprietary how we do it, but it's all public information. We're not coming up with something terribly outside the box here we do the math the transformation is a little unique in that we use some diffusion

indices versus rate of changes etc because they tend to be echoey and you don't want that we do the same thing yeah right so we concur well you know COVID right what happened to COVID wait Well, I mean, you know COVID, right? What happened to COVID? Wait, what do you mean diffusion? What are we saying here? Better, good or bad. Okay.

Good or bad, better or worse, right? We care about things better or worse. Not the numbers. He's neither CFA nor CMT. So you have to dumb it down, please. It's fine, no, it's fine. Talk to me as if you would a small child or a golden retriever.

I understand. The inflation has perked up. Those shadows that you see is where we were over the last six months, right? So we were down the bottom left-hand zone. The color, this is for you Josh. But you wanna be there. You wanna be in the bottom left.

Absolutely, we were there the entirety of 2023. But is that why it's that dark colored green? Yes, because good things happen. That's the best place to be. Yes. So now we're drifting away from that. We're drifting in a spot that's now historically more average returns. But here's the kicker. It's really unusual that this move clockwise. Usually it moves counterclockwise. In other words,

when we're in the bottom left, we would expect to go to the bottom middle and then start going higher. So we think, and Neil would. That's a reacceleration of inflation. That's why that happened. Right. But where Neil's coming down is these data points that we're seeing, the long term data points, would suggest that that rate of change, that inflation,

is going to continue to move in a favorable trajectory. And what we've really seen is kind of these random four or five indications that have popped but they've had enough weight in the inflation prints to give us more than what's really underlying trend inflation. And so the idea here is this is a very unusual move. The only time that we did something like this before was when Saddam Hussein invaded Kuwait and we had the oil shock, right? So it was a spike in-

It was exogenous, it was not economic. Exactly. And so it was a supply shock, it spiked the inflation, and then we went right back into the end of the clock. So this is an unusual period that we're living through, obviously, with inflation falling, new trend and growth still doing reasonably well. Yesterday, Powell said,

I don't understand where our concerns about stagflation are coming from. Stagflation in the 1970s was 10% unemployment, high single-digit inflation, slow growth. Now we have solid 3% growth and inflation under 3%. I don't see the stag or the inflation. Right. I think that's totally fair. I want to ask your opinion on...

Stagflation, by the way, would be... It wouldn't be there. Put the clock back up. I have one more question on this. opinion on strike? Deflation, by the way, it would be, it wouldn't be there. Put the clock back up. It would be in the top left to top middle. That would be your high inflation, lousy growth, middling growth. Not where we are. So Jeff, the Y axis here is inflation. The X axis here is S&P 500 annualized monthly return.

Who says he doesn't know he's so good? And what we're saying here is where the hot dot is right now, it's not in some sort of, for those who are listening, it's not in some sort of a danger zone, it just tends to lead to average returns. The box is white. Correct. Okay, so this is not something to be alarmed about.

This is my question. If we continue to move clockwise, which you said does not happen very often, and we get into that top left hand corner, it's still a white box where the average returns for stocks prevail, but that would be, if this is an aberration, that would seem to be a huge aberration. That'd be a big outsized event and probably almost impossible without supply shock. Hold on. So almost impossible is a thing. Yeah. Could oil prices do it?

Sure. Absolutely. That's usually the driver of inflation. But so would you and Neil sit there and say, well, it's just oil prices or... That passes through. That's a big deal. Okay. So then you would say, okay, now the clock is a doomsday clock because it is continuing in the wrong direction. It's in a bad spot and your clock is slow. Yeah, that's a bad outcome. And by the way, that's white and it's a low number,

2.74% is a low number, so why is it white? It's because it happens so few times. 41 is the number of instances that statistically it's too few to really What is what is 200 basis point? How much confidence do we have in 240 basis points not enough to make that call so? Expectations John Charlie, please expectations of a Fed cut increase yesterday During and after power was speaking. Are you surprised for people that are listening not watching? Are you surprised that the expected basis points of total Fed cuts in 2024 drifted lower the entire year

as the market seemed to really not give a shit at all? I mean, eventually it did, but maybe that was just noise when it pulled back as rates went higher. Were you surprised by the path of this juxtaposed with where the S&P went all year? And what do you think of our chartsmanship? Good God, I'm trying to digest what you just said.

I got to get in Josh's crib here. Let me think about this. So in 2020, we ignored all of these dwindling odds of cuts. But in 2023, this was all that mattered. The market was rallying heavily on expectations of a Fed cut. That peaked and the market seemed to not give a crap. It kept going higher. Yeah.

You already dropped the S-bomb, so you might as well say it again. I didn't know if it was cable first and foremost, but okay. Look, the, the, the amazing thing to me has been since basically a year ago, well, before that, the forward

curve, when you look at the forward expectations, the forward curve has continued to be wrong. The forward curve was we've got three more months of hikes and then we're going to get cuts, cuts, cuts, cuts. Right. And that has just not played itself out. And the market hasn't really cared one way or the other. Now, I think it got to an extreme back in October, right? And then it reversed and that gave us, you know,

obviously the nice tailwind that we've seen over the last six months. But now there's some concern that that's not gonna happen. And so we were getting this correction and that's, you know, taking place. I don't know how long that's gonna go. Powell seems to intimate that he's not gonna hike, but maybe he has to push this off a little further.

But again- Well, he took the hike off the table yesterday. He took, right. You're right. So that was something that was a concern that was out there that's going to affect that probability, right? The question is, is it one? Is it two? Is it three this year?

How does that look? That's all going to be inflation dependent, as he said. And if you look at Neil's work in how he's thinking about these data points, within three months the alignment with Powell's testimony yesterday with the data should come to fruition. In other words, by the middle of the summer we should be in a pretty good spot if those data points kind of go back to acting the way they should and not have this kind of random synchronicity that they had that really threw things off. One thing that's been powering the market higher has been

consumer spending, consumer resilience in the face of higher inflation. And it's pretty astounding to see that consumers are not changing their spending habits. But there is one area where it's starting to come to fruition, and that is where people are spending their money in terms of fast food. Pete's Hut is having some issues.

Starbucks yesterday was an absolute abomination of a conference call. In fact, the CEO started with, and I'm quoting, thank you, Tiffany, and thank you all for joining us this afternoon. Let me be clear from the beginning. Our performance this quarter was disappointing and did not meet our expectations. Our Q2 total company revenue was $8.6 billion, down 1% year over year. Global comp store sales declined 4%. Negative 11% comp growth in China. Our global operating margins contracted

by 140 basis points. And our overall earnings per share declined by 7%. This is a wild opening statement. You've probably seen this before. I never have, where you see a gigantic gap on a monthly candlestick chart, because it happened. That's the beginning. John, we have this chart. So look at this.

These are monthly candlesticks. I've never seen this before. So this thing gapped down 17%. Ugly. Put up the five year price chart, John. From, this is a wide charts. So I'm not showing you candlesticks. I'm just showing you price.

Nasty. This looks like it's on the way toward the lows from the pandemic. Oh yeah. That's crazy to me. That's really... The stock... Starbuck's ended the day down 15.84% yesterday. This is the worst day for Starbucks since March 16th, 2020. It was down 16.2% on the day that the world came to an end. So that's remarkable. Our research associate, Sean, tells me Wednesday ranks as Starbucks' third worst day in public company history.

Its actual worst day was July 1999, down 28%. Not sure what happened there. And again, minus 16% in March 2020. The CEO went on with Kramer. Kramer coked him. He was on with David Faber, Carl Kindenia, and Kramer. And it was like, good cop, bad cop, worst cop. And Kramer just lit him up.

And one of the things that he said which is relevant to our discussion now the CEO the occasional customer to Michael's point he said the occasion he kept saying I think he said it 50 times in 15 minutes the occasional customer is visiting less and then he also cited deterioration of economic conditions which I'm not so sure about. He said it weather. Weather geopolitics in the Middle East was an issue. So it was really bad. And Kramer's like, what if you just priced yourself

out of the market for what people want to spend? Well, they did. They did. So I am a Starbucks daily drinker. He said, despite strong mobile and order pay and sales, we saw a mid-teens percent order in completion rate within the order channel this past quarter. In other words, they're using,

they're putting items into their cart and they sometimes choose not to complete their order, citing long wait times. It's not wait times, it's so f***ing expensive. I drink Starbucks. It's a $9 coffee, it's crazy. So I just get the dark roast, that's it. I'm a very simple man.

And I've started to, you know what? I don't feel like spending four dollars today And I've started to make coffee at home, which I would never did Not a nutmeg, but it's just too expensive. Our question is what is your order at Starbucks? I'm a venti cappuccino extra shot whole milk. You know, so what do you spend? So you're 675. That's a seven dollar.'s a $7. I don't know anything about that. It's seven plus. That sounds like it's seven hands.

I went from the Devotee category to the Occasional category. And I brought in an espresso machine, which is fantastic, by the way. I was 365 days a year. And I'm probably down to 320. And I'm definitely not unique. Now you're an Occasional customer. So you're in that book. No, I'm probably down to 320 and I'm definitely not unique. Now you're an occasional customer. See you in that book.

No, I'm still 85% of days, bud. Is this a canary in the coal mine for consumer spending and therefore the entire US economy? It's a Starbucks issue. Or is Starbucks the subject? What could be the guess? Look at Chipotle. Look at Dominos.

All right, look at McDonald's. They said the same thing. Yeah, but look at Texas Roadhouse. So I think at best, that's a stretch. I think it's very idiosyncratic. Well there's companies on this side that are able to raise prices and people keep going. Tripoli, a great example.

And then there is McDonald's and Starbucks and people are starting to say, you know what? Because at some point, with some of these foods, if I'm going to spend $16 for this, I'll either spend 20 or 25, or I'll just make it at home. So when we look at industry groups, we do it equal weight, so we eliminate the Amazon effect.

So it's consumer discretion. And when we go through for restaurants specifically, we'll look at the Russell 3, because that way we get a huge population. But they're all equal, so we'll get a huge population. And the restaurants in the Russell 3 are still in an uptrend. Restaurants in the Russell 1 are still in an uptrend. I know it's just one stop, but-

Texas Roadhouse. But there are- Well, that doesn't, they have the lemon pepper. That doesn't count. Come on, come on, fight fair. No, so the point is, there are some restaurants that are killing it, and some are getting killed. Shake Shack had unbelievable earnings yesterday reported.

Yeah, and Shake Shack's not cheap. And the stock held up and they don't sell cheap shit. So I am more than occasional visitor. He's in the loyalty program. They don't even have a loyalty program. The royalty program homes. All right, can we do Apple? This is the second largest publicly traded company on earth.

Right, Microsoft Bigger now? So I actually second largest publicly traded company on earth, right, Microsoft bigger now? So I actually feel like for the first time in a while. I bet you answered that because I would not have known what the bigger one was. Microsoft's bigger. I'm pretty sure. They oscillate, is that the right? I think that Apple is marching at the beat of its own drum.

The market doesn't need it anymore. Unless they say something, I think you're right, unless they see something really horrific about the consumer, they're probably okay. But I think that for the most part, the Apple story is actually an Apple story, unless of an overall consumer story. Here's a story on Apple. We're looking for literally negative 10% on iPhone revenue, which is half the company's

revenue. Nobody's expecting anything. It's not great. Services should be up. It's the only growth business there. Not a great chart, I'm going to tell you. Not a great chart. No. Not a great chart, and I think Nvidia

has been the primary beneficiary of money out of Apple. Like I think it's literally handing market cap, not market share, market cap to Nvidia. This is their fifth out of the last six quarters of sequential year over year revenue contraction. That's really rare. And it's not even like selling at 16 times earnings. It's like a 28 times earnings story.

So the market might not need Apple, but a really bad reaction in Apple is going to... People will notice it. I mean, we're going to run this show tomorrow, So the market might not need Apple, but a really bad reaction in Apple is gonna... People will notice it. I mean, we're gonna run this show tomorrow, so I don't want to go crazy on prediction, but I still think it's important. Well, here's so...

Put the chart up there. Can you put the chart up? So the chart that I just made is Apple divided by Qs. This is weekly. So it's stopped going down relative to the Qs over the last couple of weeks, but this could break hard tomorrow. Yeah. Or not, or it could bounce, who knows.

I mean, I would think it would bounce from there, but not to change, like in our view. So that's divided by the Q's. That's just the apple week. Yeah, the reason I asked you to pull up, because it's kind of fallen off our radar. I can tell you this, that the 50-day cross through the 200-day, about three weeks ago,

you know, just as a very simple definition of trend. And so it went from, well, you know, tech is leading tech is leading to, this is actually rolling over and looks vulnerable. That's daily, not looking good. Yeah, so I would actually expect that to rally and I'm a seller of the rally. Tell you what else happened, we found out in the middle of

February that Berkshire Hathaway had trimmed its Apple position in Q4 For the I think for the first time since they started to invest in it That's a larger shareholder and that was the buyer of it Basically every share that someone else sold either was bought by the Q's the company buyback or Berkshire and That dynamic is now not I mean, maybe they started buying it again. I guess to your point nobody is expecting Much the good news and and they also are probably not gonna have a great number from China Which I think the expectation is it's like negative 14 percent China sales and people are paying attention to that now

It's a really key market for them. You know always scares me about technology Is the old saying that in the long run, every technology company makes toasters? You would have thought that would have been true with this thing 10 years ago. Well, it was true with BlackBerry, it was true with Motorola. It's like at some point, it's probably going to be true,

unless they catch up and they can somehow figure it out. The toaster companies never figured out services. Or software. I get it, there are differences. I'm sure there will be a question don't worry about I just worry about you know it becomes so ingrained in who we are and what we do well iPhones iPhones not growing but some right and and something else comes along um well it's not the vision Pro at least not yet I'm sure that'll come up and it's just been it's just been an absolute bomb can we

look at your um Can we look at your Can we look at your bullish call in December based on escape velocity? Looking for 5800 by year-end sure and then you have a thrust indicator Confirmation here, right? So tell us the story. What are you telling when Mac clients right now? So there's two there's two ways that we think about momentum One is through trend which is path of least resistance. Think about trend as I spill this delicious margarita on the table, and somewhere it's going to end up. Nicole will kill you.

The path of least resistance, somewhere that margarita will end up on the floor. So that's the trend. Then we think about rate of change. And rate of change is momentum. How quickly, what's the velocity of this thing? And so if you don't have trend in a market, if you just wait for trend, the risk is, we all know it,

the risk is that you're gonna be late, not that it's gonna be completely wrong, it's just gonna be not as, you're not gonna be as invested as quickly or selling as quickly as you might otherwise be able to. So momentum helps you bridge that gap and say, okay, look, between a bearish trend and a bull market, is there something I can do to get myself

in a more favorable position? And momentum is one of those things that we find. So this is internal momentum. This is exactly what we talked about with the 20-day lows, except these are 20-day highs. And so when we look at 20-day highs, again, that 50% number tends to be a good number. You can see our little green arrows. You can see the forward returns. Those forward returns are generally better

than not. Now, there's a couple other stipulations we use with that. But the punch line here was we're coming off of an extreme sentiment condition in October, and all of a sudden we punch 20-day highs into about 71%. That's obviously a huge number on this chart, but I'll tell you in the last whatever it is 70 years since 1957, that has only happened 70% or better six times. Wow. So it was a really, really unusual bullish example. The three-month forward return when we get sorry the 71% is the percentage of stocks making a 20-day high on the S&P in the S&P correct okay so the three month average returns zero times was the market down from from that point right the day after not yeah including that day right that the close

of that day zero times the market down. One quarter out, the average return was 9%, which we got. Yeah. And this is essentially the end of the year, so it's close enough. Six month returns were 14%, which we haven't seen yet, but that tells us there's still some dry powder left in this thing. And 12 month returns are 22%.

Again, zero losses, right? So the average is 22%, so obviously some are a little higher, some are a little lower. But we looked at that along with the sentiment and just said, look, this is a pretty unusual number. We don't get this very often. And this is gonna catch people off guard. So certainly for the first six months,

we gotta maintain this bullish stance. If things deteriorate or there's something that happens in between, we can reassess it. But between now and then, these numbers are just too powerful for us to ignore and say, well, I think it's the Middle East or coming up with some bullshit issues. And this was you at the beginning or at the end of last year? This was officially December 14th of 2023. So let me ask you a question though. So I understand that and bread thrust

and there's a psychology behind that. Why all of a sudden is everyone buying all these stocks that can't be bearish? I agree. But you also mentioned before that you look for mean reversion. This is not one of those things that you're looking for mean reversion in.

No. Okay, why? Well, the history tells us that, right? Okay. And usually after you get these this escape velocity or these thrusts there's a there's an element of time that develops before you end up with the reversionary factors being a problem. Now we go back to that rolling alpha that I talked about, you know, right now in the rolling alpha I don't know exactly where it is I'd say it's probably in the 70th percentile. We worry when it gets in the 90th percentile. So it's not the reversionary factors that we concern ourselves with, which are long

term by the way, they don't tend to be very, very short term. They're just not in a position that's overly, overly concerned. Okay. I like that. And I think most people, when they see see a bread thrust they have one of two reactions Either they don't notice it or or even think too much about you know Why it's happening, which I think is probably most people But then there are people that do notice it and they're usually under invested like for me

That's a signal for people to chase Absolutely, okay exactly right and but it's like you're not in the game But what what is the what is people's reaction to that, which is usually, it's up too much, it's overbought, so I'll wait for a pullback. And then guess what? It never comes. It never comes. Let's do sell in May and go away is bullshit.

Better to sell in July and say goodbye. I haven't heard that one before. I've been around for a long time. And then there's some tie-ins to presidential election years. Let's throw this one up. So you mentioned before that May normally is the bottom of the market for presidential election years. I have a lot of opinions about why I think this time will be different.

I think most people do. But walk us through this chart. This is a composite. Yeah. So back to 1928, you had two lines here. The gray line is seasonality in every other year, other than an election year, right? So the year after the interim midterms and the year before. And this is a two year chart, by the way. So you get

kind of a sense of what's going on. The red is just specifically election years, that yellow stain is the the election week right so that's one the excellent choice of words. I might have said bar but stain is good So the the red dot is where we are today I mean you can see that typically we will continue to weaken into the Memorial Day holiday But as people start chirping about selling me and go away that actually ends up in presidential years being the bottom now Okay, word of caution statistics. This is obviously a fourth the sample size of what you'd have 1928 to 2024 so that it's of 40 different election years roughly right 40 different cycles in Here 25 right? Oh, no, I don't know. Yes, 100 divided by four.

Oh yeah, 25, okay. All right, so we have 25 years that this is an amalgam of. Yes, correct. So, you know. It's not terrible. It's not terrible, but you know, you can still drive a mid-size car through it. But it's interesting how different it is from

every other year. Correct, and that's what really stands out is that this point right here, you know, I wouldn't tell you in other from the gray but the spot which is also equally as interesting correct which means that we rip right in June July right and that's the that's the risk let me ask this does does any individual year actually look like this that's a good question it's a good question does any of the 25 instances... Alright.

I think this is one of those years that if it's going to be aberrant, it'll make sense in hindsight. Of course, this didn't look like a typical election year. There's a non-zero chance that we actually don't have an outcome to this election. So, I mean, I'm just saying, like, this is kind of where we are. Okay. I don't want to say more on that. We did China. Michael, what else should... Oh, should we do this?

Excessive negative returns in China? Yeah, let's do some of these charts. We spoke about this earlier, so we could just rip through these quickly, but these are too good to pass up. Yeah, I agree. Okay. So, all right, first one is the Shanghai Shenzhen 300. What are we looking at here, Jeff? Well, that's a downtrend, right?

But it looks like it's changing the trend. I'm seeing a crossover. And now what I want you to point, what I want to point out is look at that off the low, right? Look at that just almost straight up right through the through the 50-day, which is that red line. It wasn't even there. Like it wasn't even there, right? You know, I'm gonna wait for a pullback. This chart is saying that the yuan is going to be the world's new reserve currency

by the end of this year as we devolve into civil war and chaos. I don't know. I mean, this is like, this is a remarkable move. It's a good move, but that's what we call an acceleration wall. That's why momentum is important, right? Because if we're waiting for the 50-day crush to the 200-day, we're still waiting, right? But we have momentum. is important, right? Because if we're waiting for the 50-day crush to the 200-day, we're still waiting, right? But we have momentum.

It gives us an early peak that the high probability of a trend change is honest. That's the bottom pane. That's your proprietary oscillator. Yeah, it just measures deviations from trends. But you know why this is so hard? Clearly, just by the naked eyeball, and it's a very sophisticated naked eyeball,

this looks like a trend change. But the downtrend is so powerful, like, would you be surprised if it rolls over? Oh, that's a good question. It looks like there was a fake out in 22. In 22, yeah, but we didn't have the negative alpha, right? So you've got the setup, which is you just had this relentless pounding of negative returns. And so for every quarter, every year that goes goes on when you get these thrusts again We could be wrong, but we'll be wrong by this much and if we're right, we're right

And see what is the Shenzhen 300 look like work like? sector wise Not important I don't I don't know at all. Yeah, somebody was just asked me I was just in a meeting before and somebody asked me, they said, look, we get what you're saying, China important, how should I play it? I'm like, what do you mean how should I play it? Well, what sector should I own?

I'm like, all right, first and foremost, let's do this. By the index. Right, when you get a raging bull coming off a low, don't dick around trying to figure out what your, you know, just own it. I just think that's so smart, because whatever is the leadership group is going to become the largest.

Correct. It's going to become the largest waiting in the index anyway. Correct. So why get killed? The only thing that we've found consistently, if it's a new bull phase, is beta. That's it. So sometimes beta's energy, sometimes it's not.

Sometimes beta's tech, sometimes it's not. Just make sure you have beta. That's really what you want. So to your point about this just being the negative excess returns in China, this looks nothing like the previous other failed breakouts. It's just the downward movement.

And for the audience, Jeff, what are we looking at? So the bottom pane is, what's the best way to put this? This is looking at the amount of return I'm getting per unit of risk versus the MSCI World Index. Literally off the charts. Literally off the charts at the downside. So I mean, this is the point. So you're getting all the volatility

that you would get from every other stock market, but literally never making money from it. So then at this point, you married this with sentiment, which we'll get to in a second. You just have to say, all right, just hold your nose and buy something. That's what that is. Yeah. This is this point you married this with sentiment which we'll get to in a second. You just have to say all right just close your nose, hold your nose and buy something. That's what that is. Yeah this is this is the you hold your nose. Any other charts in the world that look like this? Some healthcare charts in the US. Like uh. Pfizer did. Pharmaceutical. Bristol Myers. Life science tools. I'm kind of bullish on

on on that idea too. Yeah. So I think the Biden administration there was just a ton of fear about drug prices and, you know, what the government was going to come in and do. He might not be the president in three months or six months or whatever. Like, I think there's some really great setups there. So I agree. What else? Anything else? I would just say on the other side of the ledger, homebuilders are actually excessively bullish returns. To the point, and I don't want to marry this because it's not going to be the same, but the risk adjusted return profile of the home builders is almost exactly where it was in 2005.

Interesting, very interesting. Okay, I love it, I love it. What's the next one, you want to do the ETF outflows? All right, lastly. So this is a sentiment setup, right? Yeah. So this is for the CQQQ. People pulling money out of,

what are the big China ETFs besides K-Web? FXI. This is CQQQ. Oh, CQQQ. This is the tech one, right? So it just shows that people had essentially said, why am I, yeah, why do I only use one when Nvidia's going up every day?

Well these are allocators answering to clients, and it's like absurd. It's perfect. How long could you go on defending this theme? Right. OK. I love that. At some point the client says, dude, I've heard this enough. And don't care.

I'm saying the same thing. I'm tired of your conviction. John, can we get the medals chart up? So there is a correlation between China and medals. It's like one of those things that I hate Dr. Copper. We're not going to do that. But like it really matters a lot for the metals, right? Pay attention to it. Okay, so what's going on here?

Specifically, the red line is the relationship, the relative performance of copper versus gold, right? So the idea is are industrial metals outperforming monetary metals? JC does a lot of work on this. of metals up performing monetary. So this is moving higher. It's you'd want to see this confirming with a movement in China. It is so it just gives us a little more comfort that what's happening in China isn't just an aberration, but it has some fundamental discipline. But Jeff, is there a chance that this is the tail wagging the dog and people see Chinese stocks rally and they reach for the more leverage way to play it which is copper Maybe but if I don't know if you have all the charts in here, but it's happening in aluminum. It's happening in gold

I believe it's too broad. It's too broad for that to be you know, okay, I would buy that correlation that makes sense to me Yen depreciation drawing attention. Yeah, I saw people I saw people chirping about this I miss as long as I've been in the business. It's Japan, Japan, all they ever do is is intervention. Why is this a story now? Do you think? Well, because you've got yield curve control, right? So now they have to kind of, they have to decide, are they willing to let the tightness be reflected? The normalization of the yield curve be reflected in the currency,

which chokes off the recovery, or do they want to keep the currency in a competitive landscape without being... They have positive real yields on JGBs now, or close? I think it's right there. Okay, and they have a stock market at 33 year highs? Yeah. So what is this about from their perspective? You know, it's a good question. I'm not exactly sure what the angst is, but I mean it's a bad chart. Does this look like a reversal to you or way too soon to tell?

That's a bounce and a downtrend. So when that gets over bought, that's absolutely sellable. I mean you've got a lot of work to do to take that and reverse that. So you guys in late February, so you mentioned like the momentum names just got too hot. Like the stove is now burning whatever you put on the... Not only that, but you had the momentum differential, right?

The high momentum names versus low momentum names. That differential was extreme. But you also, in the option market, started to see that the pricing of upside was higher to get the, to capture the upside than it was to protect the downside. That's backwards. I remember reading this note

and not fully understanding the chart that you included in it. So maybe I can ask you why I got confused. This is the Russell 1000 Momentum, Q1 through Q5 performance. These are quartiles within the Russell or? Yeah, so you take the top 200 names, right, that are the best performers over the last 12 months.

You take the worst 200 names and you just pair them off against each other. And that spread, we then, because that spread was about 14%. So that's the thing that you're saying was extreme. At the bottom. The best 200 versus the worst 200. Correct. Okay.

So why is that important to you? Because at those extremes, it usually means that people have crowded into momentum, and that's the point where it's unsustainable. Okay, got it. So where are we now? So we went from the 96th percentile to the 81st percentile. Historically, you will take it at least back to the 50th percentile You have to go to the 10th. So when you do see that in the 50th percentile Is that your signal on a contrarian basis to say I'm interested in momentum again? No, not yet

It's just not what that means No, it just says it's just not the fact the factor extrude the factor excesses have gone away And it's probably moved on to something else quality. I think it moves on to beta but that's a guess. Do you follow any of the momentum stock ETFs? Are any of those meaningful to your work? I don't follow them because everybody has a different definition.

When the momentum wanes like this and it goes from the 90th to the 50th or whatever it is, are those no longer momentum stocks? Does that don't they get reset? We do it every quarter. So yeah, they can reset. But really, what you're seeing is, and I think that's one of the reasons that you're seeing this recent pickup in utilities, this recent pickup in staples,

is that they were in the bottom 20%. So as the high flyers correct, the caterpillars that you showed and the invidias, you've had Duke energy breakout you've had you know some of these other Procter and gambles broken out. We have this we have 3m breaking out We have consumer state so we keep our own we keep our own list of like the best stocks in the market Predominantly based on how they're acting. They're all fundamentally good. Yeah There's it's there's 24 left on the list and I think half of them are utilities

and staples. Jeff, you're left. That's just another of my trading hilarious stories. So I bought XLU right near the bottom when it was getting puked and the spread between XLU and SPY was at an extreme and I got annoyed and frustrated and I sold the right over there. Yeah. Whoops. You want him to put a bandaid on that? We got, we got, we got. I don't know what he wanted to do with that. My situation. He's a gay.

We're laughing. He's a gay. You saw. You know what works? Tequila works to kill that. Hey, Semiconductor is another call that you got right. In early March of 24, you cited the momentum excess there. Yeah.

AMD reported this week and I don't want to say blew up, but negative reaction. We've seen Intel have a rough time. We went from a situation where every name in the SMH was up huge. Now it's gotten more selective. Do you think that'll continue? I absolutely think it will continue. This is the excess returns. The exact same thing I showed you with China.

This is just for semiconductors, right? There's an old saying, price to perfection. This is quantifying that, right? All we're doing instead of somebody just shooting the breeze and saying it, we're putting this to numbers. And what this is saying is, look, if you believe trees grow to the sky then no problem this is gonna work right but the idea is that once you're up here what you're really asking is that your every unit of return per unit of risk is gonna continue at this toward pace and we just don't see it that way. It never happens. It never happens. Nothing can be as perfect as the semiconductor trade had been for a very long time.

And I think what's important, Josh, is that's not a repudiation of AI. That's not how that's going to change the world. None of that has anything to do with this, right? This has to do with people looking at that narrative and extrapolating it into the ionosphere. So let me redeem myself. I saw sold AMD 185 at the way out. There we are. Let it go. It's too steep. Semis and semiconductor equipment option score.

What's in here? So that's exactly what we're talking about. Reflecting the same thing. Yes, that's when we're talking about the upside being priced versus the downside. That's the extreme. So you want both the momentum and the extremes in the pricing. Alright, let's do this last chart. We'll do Nvidia.

How about a short? No, I'm kidding. This is like, in my view, what Nvidia has undergone in the last three years is probably one of the most magnificent stories ever for growth stocks. So it says nothing about where the stocks are gonna go from here, but just like, we really have not had a lot of Nvidia's throughout the course of stock market history.

It's a really special and unique situation. A lot of things make it that unique and that special. I do think that there got to a point in February, March, where if you were a professional money manager, and you called yourself a growth manager, and you didn't have an allocation to Nvidia, you looked like an insane person, basically. It was like career risk times 10 on something like this.

Because not only was it such an amazing performer, it became the fifth largest stock in the country. So not owning it was not just underweighting it, but really putting your career in jeopardy. You're afraid of the trend. Okay, so that's probably what drove the rest of the semiconductors quite frankly. Sure, absolutely.

Where are we now? Well, so this is, I put this up because this is specifically that option score that we talked about, right? So those red arrows are pointing, look it happened back in July of 23 too, right? So this is the point where the option pricing is more aggressive for upside exposure than it is to downside exposure.

So people buying calls are paying higher and higher premiums? They're worried about the upside. They're worried about not catching the upside. Right, so let's say the stock is at 100. I can buy a call for at upside, right? So, let's say the stock is at 100. I can buy a call at 120, right? I can buy a call for $5. That same put at $80, so same delta spread away,

is at, say, $10. So, the cost of insurance is lower than the cost of capturing the upside. That's crazy. It's crazy. Yeah. Doesn't feel crazy at the time. And that's like the bell.

And that's the bell. That's us where we just say, look. Now again, if we look 12 months out, I can't tell you that it's worse or better. It's about the same. If I look three months out, it is definitively worse. If I look out six months, it's kind of, so what you do in our view, you wait for when you have that,

you take that back to either, at best, you take it back to a market weight, but you probably underweight it. There are different option strategies you can employ to try to capture that differential. You wait for an oversold condition to develop, and you use that because it's still within an uptrend to say, okay, this is my chance to now step into this

because it's still within trend. We've burned off some of the success sentiment. I still want to own the stock. This is my opportunity. There is a universe where this stock has to be a thousand just because it feels like it's a magnet pulling it there. And that's not extreme. It's an eight hundred and fifty dollar stock. Eighty five dollar stocks go to a hundred all the time. And if this had done a 10 to one split and we we're trading at 85 right now, nobody would seriously say it can't get to 100. But for some reason, a thousand both seems like

it's a magnet, but also seems like it's going to be a ceiling. So I don't know. Super market are the same thing, right? Yes. So I don't really know what to do with this, but I know it's the most vexing stock in the market right now, both for bulls and for bears. So you're closer to the oversold condition, which was a buy that was maybe a week ago We think it will it's still in trend so that's the good news

If you're a long-term holder, I think you're still fine I would worry and I would actually take action and reduce the positions If you broke under the low that we had whatever that was two weeks ago. So what was that? I can't remember the number. Was that 820? Yeah, it was probably, I don't think it had a 750.

Was it 750? Oh, it got that low? Yeah. What was that? Oh, I was on vacation. That was because Taiwan Semi, did they warn or they? I'm glad I didn't notice. Yeah.

But it didn't last, It was there for a day. No, it was rolling over. Then that hard break, and then it immediately recovered. So that hard break was one of those days where 20-day lows spiked. Nvidia recaptured. I'm just eyeballing 50% of the loss. So we'll see.

Is that the individual stock chart people ask you the most about or Tesla? Oh, Nvidia. Nvidia more so than Tesla. I think they probably know what you're going to say on Tesla. Yeah, I think that's probably true. It's a no man's land. That's probably fair.

Right, OK. But we've also been talking about Nvidia, right? So we were cautious on it three months ago. So now they're kind of like, what have you done for me lately? Where are we? How do we think about that? So Jeff, you've been really right on a lot of key things in this market. What is something that we didn't ask you about that you think is going to be important in

the second half of the year? No doubt about it. And I've not been as sharp on yields. I would have expected yields to be flat, not up, flat to down, frankly. What, like 10-year? 10-year yields, yeah. If we break through 5%, our bullish leanings are not going to be great. That's going to change your opinion on stocks.

The market will change our opinion on it. The market will do it itself. But I think the risk where we are right now, when we look at our yield impact model, and we look at some of the things that historically would be a detriment, because keep in mind, the 10-year yield drives valuation too, right? So the higher that goes, the more the valuation pinch starts to hit. Why is 5% the number? Because it's a fat round number.

It was the old high. That's it. Yeah, that's it. What do you mean the old high, from 18? Yeah, from November. Yeah, from. Oh, the six month old high. It's not getting to 5%.

Yeah, I don't think it is either. Famous last words. Wait, why not? I don't think it is either. Well, I'm old enough to remember when 3% was going to be the checker. I'm half kidding, I'm half kidding. First of all, it looks like, technically it looks like a top.

You know better than I, Jeff. But based on Powell's testimony yesterday, the risk that they're going to do another hike, it's over. You would have to see a significant upside surprise in inflation, and I think that's unlikely. But if you have the, so the risk to that is that if you don't take care of inflation soon enough, and I'm with you, I agree with that.

But if you don't take care of inflation quickly enough, then, and growth is strong enough, then you can support those higher yields, right? That's the risk. They're walking a very, very fine line here because you wanna push yields to the point where you actually break that lower, but you don't wanna push us into recession, right?

So you wanna break that lower that then allows you, right? You take the yields to 4%, but that allows you to cut rates by 150 basis points on the short end, and then you normalize the curve and things things are back to something that's okay. Yes. Okay. So when I give opinions, I'm a betting man,

so I like to sort of quantify where I'm at. I don't think that, when I say I don't think the 10 years going to five percent, if I needed odds, I'm making this up, if I needed odds, like what would it take to get me to bet on five percent? I'd say like plus 275, something like that. Does that sound about fair? From the guy with the Nick shirt on? Sure. Sounds like that. Does that sound about fair?

From the guy with the Nick shirt on? Sounds about fair? Yeah. Sounds about fair? Yeah, that sounds about right. I'll say it can't happen, but. I'm with you. Jeff DeGraff, ladies and gentlemen.

Did you have fun on the show? It was great. Thank you very much. Why haven't you been back all this time? Is it my fault? We invited you. I think it was your fault. All right.

We can't let this length of time lapse in between your appearances. You're too informative for us. I'll come for Cinco de Mayo and I'll come back for the holiday, you know, your Christmas fair across the street. Who made the marks? You or Eric? Eric, by pouring in the 1800 margarita mix into the cooler that we bought at CVS. In aisle 9.

Wait, what's the tequila in here? 1800. Oh this is 1800. Where did the mix come from? It's like a powdered mix? No no. Oh like the bottle? Well it's delicious. Straight from Mexico. Straight from Mexico. It's getting the job done. This is what's important. Let's do favorites. You got music for us? What do you got? You. Me? What are you talking about? I have something here. Oh, the favorites. You asked about my books or whatever and I said, you know, the one that really jumped out to me this week was Fried Chicken and Evil Women. That sounds like it's a country song.

It's not going to win any Grammys, but I think the title should. Whose song is that? I don't even know. I just saw it and I'm like, that is one of the best titles I've ever seen. Oh, who's the country... Are you a country music guy? You know, I... I have to say I am. That's a yes. So am I. I saw... What's his name? Luke Bryan. Yeah. No, Zach Bryan. Which one was it?

Zach Bryan played... In Long Island, like two weeks ago or whatever. No, Zach Bryan. Zach Bryan played... Two weeks ago or whatever. He played UBS. Yeah, but he also played the old Coliseum. Oh, he did? Yeah. Okay. It was one of the best shows I've ever seen.

Was Tyler Childers on that? No, he was not on that show. Who else was on that show? I just saw him in Tennessee. Okay. I saw him with 49 Winchester. Okay. Fantastic. They were an opening act.

They will not be an opening act for long. Oh, really? They are very good. Okay. 49 Winchester. Okay, fantastic. They were an opening act. They will not be an opening act for long Oh, really are very good. Okay, 49 Winchester So words, so did you hear that? Did you hear the country song that remakes the rap song tipsy? Hear that yet. No, that's like one of the top songs on the country charts, right? I think it might be the only case ever of country artists doing a remix a remake of a rap song, but it's like pretty good. Like I don't hate it.

I thought I would hate it, but it's not bad. All right, so when you get home, or if you ever hear, Gin and Juice by The Gords. Oh yeah, I've heard that. Okay, that's a good callback. Unbelievable. This song title reminds me of Fried Neckburns and some Home Fries by Santana.

That's a really good song. I don't know that one. I bet the song is better than this song. Is Fried Chicken and Evil Women about exactly what you think it's about? I just caught the chorus and I really couldn't catch the rest of it. Adding to Spotify. Michael, you got a favorite for us? I rewatched for the first time since I saw it originally, 10 years ago. John Wick. I always had a 10 year old movie first time since I saw it originally. Ten years ago. John Wick.

I always had a ten year old movie already. That's what goes fast. That's wild. Ten years old. Unbelievable movie. You know, I can honestly say my neighbors are like ready to kill me. They're like, what do you mean you've never watched a John Wick movie? I'm like, I...

How did you escape it? I don't know. You said you've never seen it either? Of course I have. I've never seen it. It's phenomenal. And I've heard great things and I have no idea how I've not seen it. What did you pick up this time that you forgot it from the first time you saw it? Well, I'm sorry you asked that because I was working while I was watching it,

so it was background. It was a background movie. Alright, but you loved having it in the background. Loved it. Okay. If you want to watch something in the foreground, I'm going to recommend Ripley on Netflix. It's black and white. Alright. Classy. Yeah, right. in the foreground, I'm going to recommend Ripley on Netflix. It's black and white, classy. Yeah, right.

Did you see the movie The Talented Mr. Ripley? Of course. How good was that movie, by the way? Fantastic. That thing, Philip Seymour Hoffman, come on. He steals the movie, he eats up every scene he's in. Gwyneth Paltrow, Matt Damon. So that was based on a book.

They went back to the book as source materials. This is not a remake of the movie. They made a television series for Netflix just now where they go back to the book and they flesh it out a little bit more. And so it's like, I think it's eight episodes. And it's incredible. You could tell they shot on location.

Bite-sized, this right here. The mafia coast. Yeah. Yeah. The scenery is amazing. The cinematography is amazing. Did you watch it yet? I'm one episode in. I'm liking it.

It's pretty cool, right? Yeah, I like it. Why does it seem like it's so special, the way it was shot? What is it about that? Well, I think it's Ellsworth, a famous cinematographer who has done a lot of beautiful, beautiful films.

Why do you think they chose to film it in black and white? Because it takes place in the 50s and they wanted to... A noir kind of feel, I think. Oh, it's a film noir feel? Yeah. Okay. I think it's going to get really good. I'm in episode three,

but it's like the pace is speeding up as you go. It's like one of those shows. Is the actor or the cast anybody you know? Who's in the show? Nobody. They're all unknowns. I don't know if they'll lead. You know why that's smart? Because how do you recast that? The movie was flawless.

That's true, that's a good point. So like you're going to put three new movie stars in it? Do you have the same, like is the Philip Seymour Hoffman character there? Nothing like him. Okay. Yes, he's in it. But again, they didn't remake the movie,

they went back to the book. Got it. So whatever the artistic choices were behind the movie were thrown out, and it's like somebody starting fresh with the original source material. I think it's really well done, and I like that. It's not somebody trying to be Matt Damon. That'd be hard to do.

Pretty damn hard to do. But you see a movie, right? A good movie. And then you read the source material where they clearly took artistic license. Now you're making another film, or not a film, but a series that doesn't want to replicate the movie,

but it's coming from the same source material. It's really hard. Why'd you want it to be good? But you have to let a lot of time pass. Yeah, fair. Let's face it, like Jude Law is one of one. Matt Damon is one of one. Like you're not going to get an actor who does their best Jude Law impression.

Right. So, I like the choices they made with this. If you've never seen that movie, you'll enjoy this. And if you saw the movie last week, you'll still enjoy this. Nice. So, I thought it was very well done. So everyone check out Ripley. Okay, that's it from us this week.

I want to thank everybody that joined us in LA once again. When are we going to have that out? Do we know? Did we put a time on that? Go ahead. Monday. Monday. Okay, that's great.

I think we're breaking it into two though. So we'll have to see how it comes together in post. We'll do it in post. Because we had two guests on it. Bellany first, time sensitive? Yeah, we'll see. We'll do it in post. Because we had two guests on it. Bellany first, time sensitive? Yeah, we'll see, yeah. You guys will figure that out.

All right, so shout to the listeners and the viewers. Thank you guys for checking us out all week. Special thanks to Jeff DeGraaff of Renmac. Where can people learn more about Renaissance Macro? Well, you can follow us on Twitter, which is Renmac LLC, or at Renmac LLC. I can go to our website, and we have a podcast every Friday, which you can pick up on the Twitter account as well.

Podcast listeners, listen to the Ren Mac podcast. The newsletter is go.renmac.com slash newsletter. So if you want more insights from Jeff and the gang, that's where you're gonna get them from We appreciate all your amazing charts and all your time today. Thank you so much for coming by hang with us guys always fun Thank you for having me. All right, take us out That's amazing. Did you like your ice cream? You're cool like a PCVS. You wanted a clue, didn't you? You wanted to bring it to the garage.

Exactly.