The Compound and Friends - Somebody's gonna be wrong

Episode Date: April 14, 2023

On episode 88 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Liz Young to discuss building a career in finance, cooling inflation, the stages of a recession, whether the VIX still matters, commercial real estate, the credit crunch, and much more! Thanks to Roundhill Investments for sponsoring this episode. For more information on BIGB and BIGT, including a prospectus and full list of holdings, visit www.roundhillinvestments.com. Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Liz, where are you based out of? Here. Oh yeah? Yeah. So SoFi is headquartered in San Francisco, but we have a pretty big New York office. Yeah. In meatpacking. So I'm here.

Why does the picture of Guy look like he just learned a secret about you? It's a dirty one, too. No, he looks like Lex Luthor with hair. He looks like a villain, kind of. I wasn't going there. I'm just saying the facial expression. Like, he looks like he just found something. All right.

Poor guy. Are we good with this? I'll be fine. It seems so. All right. If you're going to move it, just tap my shoulder if you're going to move it. Gotcha. Thank you.

What's up? L-O-L-O-L. L-O-L-O-L. Josh. What? What does O-O-T-D standL. L-O-L-O-L. Josh. What? What does O-O-T-D stand for? O-O-T-D? Yeah.

Liz, do you know? Jump in if you know. Uh-uh. Uh-uh. We're old. I'm not very young. I was going to say out of this. It's like a social media thing? Nothing to do with finance.

Out of this nothing? No? Okay, I'll start you off. Outfit? On. Outfit on. No'll start you off. Outfit? On. Outfit on. No. Outfit off? Outfit. Outfit off the.

Outfit of the day. We don't know. Outfit of the day. Of the day. Wow. Well, this is my outfit of the day. None of us are winning that today, I don't think. We got two black t-shirts.

Outfit of the day. Right. Michael looks actually more bumed up than usual. In this crew, you probably win. Look at me. Look at me. They always wear t-shirts. That's a win. And everyone, yeah.

Would you say this is your OOTD? Where's your Mickey Mouse sweatshirt? I actually feel overdressed. The story behind the Mickey Mouse sweatshirt is it was literally 40 degrees in Paris. I know. And my daughter showed up like half naked as usual. No jacket. Like everyone else is wearing a jacket in the place and she's like shivering.

So I had a sweater on. I gave her my sweater because she would not wear anything from the store at Disney. So then you were half naked? So no, I bought a Mickey Mouse sweatshirt. Oh. So I walked in, I'm like a f***ing idiot. What color was it? A big white sweatshirt with Mickey Mouse on my chest.

And the funniest part, wait, where's my phone? Do we have a picture? Where is my phone? I have a picture. Can you get my phone? Yeah, where is it? My office. What's it called?

So that was my outfit of the day. And the funniest part was we got back to the hotel. And we pull up. And I get out of the... No, but look at behind him. Everybody's in, like, jackets and pants. And you two are in shorts freezing. Oh, my God.

So we get back to the hotel. We get out. That's so good. And there's like six men that work outside with the umbrellas and the whole thing. Yeah. And they go, how was Disneyland? And I'm like, how did you know I went to Disneyland? They start hysterically laughing.

If not, I'll tell Alex to put something down. Thank you. I was like a fool. Oh, man. Did you guys see the story? There's a story in the New York Times last week. You read it away. You didn't see it.

About like disarray and meta and employee morale just being really shitty. I read it this morning. No. So I was thinking about this as a, I am a shareholder of Facebook and the stock is going vertical today for, I don't know. I didn't see the news today if there was any news. I don't know. I didn't see the news today if there was any news. And it was like, I know this is not news to us,

but Wall Street doesn't give a shit about employee morale, right? Because a normal person would read that article and be like, oh, my God. That sounds bad. It's disarray. Like, oh, my God. The stock must be in the toilet. And it was. But Wall Street cares about profits, not how people feel.

Yeah. The article was about. Pause for reaction. Agreed. Liz agrees. Cool. The article was about... Pause for reaction. Agreed. Liz agrees. Cool. No, no, no. The article was about how they're cutting back

on free ice cream sandwiches and stuff, right? I didn't read it. So when Josh sits in this chair... By the way, I'm sorry to cut you off, but when Josh sits in this chair, automatically there's gravity

between his hand and his chin. Why? I don't know. It's the whole show. It has to connect. The whole show. You do the know. It's the whole show. It has to connect. The whole show. You do the finger. It's gravity.

But yeah, the employees were pissed off. They got rid of, the dinner starts later. They got rid of Palat. I don't know what they got rid of, but they basically. John, I'm disconnected. I mean, I think it matters in a tech community. I think it matters in the tech sector if you're trying to attract employees.

For sure. That for sure matters. But you're probably right. I mean, the stock like the tech sector if you're trying to attract employees. For sure. For sure matters. But you're probably right. I mean, the stock isn't going to react to it. Now you, yeah,

right. The stock doesn't care, but now you would say that like good culture, good morale will generally lead to more productivity and better overall earnings.

But at the end of the day, we care about earnings. Michael and I visited Google in Venice Beach. What was it like? And they're like, come give a talk at Google. That was probably peak silliness. Yeah.

Oh, definitely. This is 18, 2017 or 2018. Yeah. It's as ludicrous as it gets. I mean, it was. So they go. So everyone we meet there, this really awesome guy walks us around. We meet everybody in Google.

And everyone that you meet is like, did you check out the dining room yet? What's the big deal? So then there's an hour before my talk. So they're like, okay, why don't you guys go to the dining room, get something to eat, and then Josh will go on stage. So we go to the dining room, and I got it. They're like, get whatever you want.

I'm like, what do you mean? Like, whatever I want. Do you like Thai noodle, mango salad? They're like, literally think of something. I mean, basically. I'm like, what do you mean? Like, whatever I want. Do you like Thai noodle, mango salad? They're like literally think of something. I mean, basically. Oh. I'm telling you that, no exaggeration, it's a gigantic room with stations. But like, I think I had, all kidding aside,

chicken fingers, spicy crunchy tuna roll, grilled cheese, like anything. Like fettuccine Alfredo. Just walk around this room. They just have stations and chefs and it's open all day. Do they also have a gym for you to work out? I mean – I wasn't looking for it.

Of course they do. Yeah. No, but so just the point was like that's the kind of shit that they're cutting back on. Yeah. And to us, we're like, yeah, no shit. Obviously, that's what you do when your stock price gets cut in half. But if you work there and you're 25 and you have that on Monday and on Tuesday, you don't.

Well, that's the expectation now, right? Like, I mean, I went from Bank of New York to SoFi. We didn't get free anything at Bank of New York. I mean, water out of the faucet, right? Go to SoFi. And I was like, Fritos? Yeah. I can have all the Fritos, you know?

Right. It was amazing. I felt spoiled. Yes I was like, Fritos? Yeah. I can have all the Fritos, you know? Right. It was amazing. I felt spoiled. Yes. But we've never had private chefs. Private chefs is next level shit. Yeah. So,

the end of the article was badass though because the employee Slack messages, like they're doing like the bones to see like, are you still here?

Who's getting fired next? And somebody wrote like, it would be nice if like Mark started coding again or something like that. Yeah. And he goes, I never left.

Zuckerberg jumped in to the Slack and said, I never left. Oh, wow. Oh, because he's on like paternity again or something like that. Yeah. And he goes, I never left. Zuckerberg jumped in to the Slack and said, I never left. Oh, wow. Oh, because he's on like paternity leave or something. Yeah. Anyway.

Always watching. Well, that's the morale part, but the stocks, stocks are doing nothing but going on. I'm thinking about selling up before earnings. I feel like I had a good run.

When do they report? A couple of weeks. Here's what you want to do here. Please. You want to, you want to, you want to trail this. Trail and Please. You want to trail this with a 10-day. So predictable. I like it.

Why wouldn't you? No, I'm just worried about earnings. Well, you'll get a gap and you'll kill yourself. Other than that, trail it. You'll have a rough day. Trail it until they report and then blow up. That's what I always do. I'll trail it and then down 18% on earnings. Cool. That sounds like a plan. That's what I always do. I'll trail and then down 18% on earnings.

Cool. That sounds like a plan. That's what I always do. All right. Looks like we're good to go. All these sound effects. Liz has a lot to do tonight. Liz has nothing to do tonight.

88. Thank you, John. Thank you, John. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of RitholtI-G-B, is the first ever ETF in the U.S. to provide concentrated exposure to the six largest U.S. banks. This is kind of crazy. We've spoken like a million times about some of the problems with the other sector ETFs. And you've got like PayPal in one, but not the other. You've got Visa in this one, but MasterCard in the other one. What if you just want to own the stable sex?

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So you can migrate as an investor also if you just don't want those exposures or you have them some other way. Maybe you don't want to double down. I like big big. I like big big. I like Big B. So until now, investors could only invest in ETFs, as we said, that track large diversified bases of companies within broadly defined sectors and industries. With Big B, that's Big B, you get exactly what it says, six gigantic financial institutions. Also, this week, Roundhill launched the Big T, the Big Tech ETF.

It's the first ever famigate ETF. That's Facebook, Apple, Amazon, Microsoft, and Google. Did I get that right? I feel like I said alphabet. Did I say alphabet and Google? Yeah, and I heard this ETF has Big T energy. For more information on Big B and Big T, including a prospectus by Folders to Foldings,

visit roundtillinvestments.com. The number 88 is very lucky in my culture. All right, guys, this is a really exciting show for me. I've been out of the loop all week and just kind of catching up last night and today while I've been away. But it looks like a lot has gone on and we have so much to talk about. I think we should start though, before we do anything, Liz, we wrote an introduction for you. Thank you. All right, hold on. Let me give you, let me do the whole thing. Liz is the head of investment strategy at SoFi. Prior to SoFi, Liz spent six years as a strategist at BNY Mellon and was an analyst at Baird and BMO.

Liz Young, welcome to the show. Thank you. I get applauded in and everything. I hear the crowd already loves you. So great. Your story is so kick-ass and we have so many listeners who are relatively early in their career,

viewers, I should say. So our YouTube demographic is insane relative to all of financial media. Like 18 to 44 is the biggest segment. And it's not – Duncan, do I have that right? What is it? 18 to 34? Yeah, probably I'd say to 35.

That's how they break it up. Yeah, I think. Okay. Is that the biggest segment we have? Yeah. Okay. So that's what YouTube is. That's why I love YouTube.

It's not that I don't want to talk to everyone. It's that where else can you talk to young investors, young asset managers? Okay. Your story is like crazy inspirational. So don't, don't get nervous about that. Your story is crazy inspirational. And I don't think Mike has any idea, Duncan, like nobody really knows it. So I'm not going to like make you do a 40 minutes on this, but when you me your story i was like oh shit liz young is badass so i really want to like just go through this because i think um people will be like very inspired who are pursuing a career on wall street or really anywhere and are starting from what they perceive to be the middle of nowhere like how do i do this yeah you literally did it. And I think it's really cool.

So you inherited $10 million. Is that right? That's right. 11, 11 actually. All right. All right. So, but like, give us, give us like the, give us like the, the early Liz Young situation, like where you start from and how you decide, I got to do something different.

Yeah. Well, actually, I mean, I'll start long ago and far away because I think it's important. Well, I actually am going to. I'll just fly through that quickly, though. But my mom had me when she was in college. She was super young. She was a single mom until I was nine. And at nine, she got married to my stepdad. But for that whole period from zero to nine, it was just the two of us. And she was struggling, right? I mean, we were on welfare for the first 18 months of my life. And then she got her first full-time job as a nurse. She had put herself through college.

And she put me into a Catholic school. We were living in kind of a rough area of Milwaukee. She was getting child support. But get this, $244 a month, okay? Oh, my God. Never spent a penny of Milwaukee. She was getting child support, but get this $244 a month. Okay. Never spent a penny of it, put it all away. It put me through undergrad until I was, I think it was my senior year or so it ran out. And then I applied for an academic scholarship, but I say that all because then she got married to my stepdad. They had a daughter. So I have a younger sister and I was 13 when my younger sister was born.

My mom was back in grad school then. She was putting herself through grad school to get her master's in psychiatric nursing. She worked full-time the whole time and then raised two daughters. And that was the precedent that was set for us, right? It was not- You watched that. We watched that. Yeah. And mom was the breadwinner. Mom was the full-time career driven woman. She was absolutely passionate about education and it was not just encouraged. It was absolutely expected that we would do the same thing, not in that same field. In fact, you know, my stepdad was a teacher and the, it was basically like, you can't be a nurse or a teacher, right? We could do whatever else we wanted. And I ended up in finance. I loved math. I was good

at math and I wanted to be in business and finance seemed like the right outcome there. Went through the CFA program after undergrad, grad school first, then the CFA program. And here I am today. And we'll get into that too. My sister is about to finish her doctorate in pharmacy. So it's, you know it's just that example, I think, even as young women coming up in, no matter what the industry is, to have a mom that's, it's just, that's what you do. You stand on your own two feet

and you build your own career. So that all being said, chose finance. I'm the first person in my whole family, and it's a huge family. My mom is number six of 10, and I'm the oldest of 15 grandkids. So huge family. I'm the first one, only one in this industry.

And I went to a state school in Wisconsin, right? I mean, we talked about this before. The typical path of maybe somebody in our seat, you have an internship at Goldman, and you come up kind of through those ranks, or maybe you knew somebody, or whatever the case may be. We all know a lot of those stories. I had none of that, right? Stop talking about Dan Nathan that way. Love you, Dan. So I came up through state school, graduated, got my first job out of college. $30,000 a year was my salary. My first raise was $600 for the whole year.

This is at Baird? This was a regional bank in Milwaukee called at the time M&I. So not exactly Goldman Sachs, not exactly SAC. Not quite, but then it got bought by BMO. So that's how I ended up at BMO. Anyway, fast forward a little bit. I had been in a trust department there for a while. At a couple points in people's careers, I truly believe this, you have turning points. Maybe somebody takes a chance on you. You decide to say yes to an opportunity, whatever it is. Somebody tosses you a bone, right? And the first thing that you need

is that somebody is willing to give you that opportunity. The second thing you need is that you're willing to say yes and take the risk. So I had a turning point at that first company where there was a guy in investment management. He was our chief market strategist at the time. And he was the CNBC guy. He was the one that went and spoke to clients and gave all the presentations. And he hired me as his analyst after he had interviewed a bunch of people. And for whatever reason, didn't like any of them. I was the last one that he interviewed. I was wildly underqualified and so young. I think I was the last one that he interviewed. I was wildly underqualified and so young. I think I was about 26 maybe when he interviewed me. And he took me on and he said,

I want to mentor somebody. So I worked for him for two years and I learned more in that two-year period than any other time, right? Than most other two-year periods afterwards. He convinced me to sign up for the CFA program and that's kind of how I got on that path. And then that's where the bug was, where it was, I want to do that someday. But I didn't think anybody would give me a job like that until I was like 50. Right. So anyway, that was the first big turning point. And then after that, I went to Baird for four years and was an analyst. And second big turning point was, you know, I went through this period. There was personal stuff going on. I was married at the time. I had everything. I had set up the Wisconsin life. I had the three-bedroom house, the two SUVs in the garage. You were like the suburban wife about to become, you know, like that whole track.

Yeah. I was on the track. I had put it, all the pieces were in place, right? And there was just this part of me that felt square peg, round hole. This is not the life that I was put here to live. And there's more out there for me. There's something else out there for me. I don't even know what it is. You said to me, like, you looked around and everyone seemed really happy with how everything was except for you. Yeah. And I couldn't figure out why I wasn't. It's a weird feeling. People

are like, isn't this great? And you're like, not really. No, and why aren't I happy in this, right? Why aren't I, why don't I look like all of you? And I legit rolled a grenade down the hallway of my life, right? It was like, I have to give myself the chance to go do something else. I don't necessarily have that chance in this situation. So left my marriage, sold the house, moved into a one bedroom apartment in downtown

Milwaukee, still working at Baird. Didn't have a plan. I had no plan. I was like, I don't know what's next. But were your friends like, what the hell are you doing? I think people thought I was nuts. Yeah. Yeah. I mean, most of them were very supportive, but maybe secretly thought it was nuts. Okay. Well, you kind of were. Totally, totally. But that's, you know, you have to be able to take that sort of chance, right? So anyway, I had no plan.

And then the next thing you have to do is start telling people about what you might want, right? You have to ask for help. You have to put it out there. And I started to do that. Said the right thing to the right person at the right time. And he happened to be building a team. Was it by Apple? That would have been also good advice. Uh, he happened to be building a team at bank of New York of strategists. And he said, I'll bring you on. You can be the first one. So it happened very quickly. Um, again, I had to be willing to say yes right yeah so had already

rolled the grenade down the hallway at that point and then i just kept rolling it it was like all right quit my job move across the country get to new york i don't know anybody here i mean even the guy that recruited me lived in boston i i knew nobody right i didn't know my co-workers i had no friends here uh so i land here and sort of crossed my fingers and this is this happened in less than a year it was like from you know leaving a marriage to moving to New York was like July to May it was very fast so I get here and I'm like I hope this works out right were you saying to yourself this whole time like okay now this move okay now that move like you were saying this is the right sequence.

I don't know that I had a sequence. And actually, that's a good question. So I mentor a number of young professionals and some of the maybe weird advice that I give them is don't make a five-year plan. And absolutely do not make a 10-year plan because what it does

is it gives you tunnel vision and then you don't say yes to anything that comes in and maybe could take you off course. And some of those are the most beautiful opportunities. Yeah. So I've written a lot about that. Yeah. I mean, let, let life happen sort of to you at the same time. Right. And you know, did I have a plan? No, I didn't necessarily have a vision. I had a pipe dream, and I would tell any young person to have a pipe dream and maintain it. And just to be fair,

I'm not telling people to go get divorced. That is not the advice here. But I had a pipe dream. And as long as it felt like it was moving sort of in that direction, okay. What gave you the confidence to do this? Because that's scary. A lot of people wouldn't do it.

Yeah, I don't know that confidence is the right word. Maybe naivete, right? It was sort of, well, why not? Why can't I do that? You had to believe in yourself enough to do it. I believed that I could learn how to do it. I believed that I could figure it out. We did a lot of crazy shit to launch the firm

that we had no idea it would actually work. But you almost had to, you do get to a point early in your career when you or when you're building something where leaps of faith are necessary. Yeah. Because there's like no way back. Right. Like that there is that thing also. So you move to New York, you can't that up and go back to Wisconsin or you can but you know you won't be happy right so once you do that then it's like all right I better meet people here I better go on interviews I better start talking that's so there is no way back at a certain point right well it's whatever that saying is about if you want to leave the island burn the boats or something something like that I burned all the

boats right and and I remember getting here and maybe for the first month thinking, Oh my God, I hope this works out. I hope this works out. Right. And then it got to the third month and I was like, no, this has to work out. Three months in New York, no job. No, I had, yeah. New job, new job, new job. And I was like, this has to, I will make sure this works out. I refuse to go back with my tail between my legs. So whatever I have to do, this will work out. Right. And, and if this doesn't. I refuse to go back with my tail between my legs. So whatever I have to do, this will work out. Right. And, and if this doesn't, I'll find something else here that does. And I think it was that maybe, so maybe it's not the confidence, but the commitment to it,

the commitment to, I wanted to move here no matter what. I just didn't really know how to get here. But the other piece is like, I started a job that I didn't know if I was going to be good at. I had never been a public speaker. I had never been a strategist. And I had to learn all of that and figure out even if I was good at being a public speaker. And, you know, I would say to anybody out there, public speaking is not a natural talent. I mean, you have to like it, I think, in order to get better at it. But it's not a natural thing. And the first presentation I ever gave in that job, and the boss that brought me here would know this story. Well, uh, I had a financial advisor. It was a Morgan Stanley office in Detroit, Michigan, some suburb of Detroit, Michigan and financial advisor come

up to me afterwards. And mind you, this was like, I gave an eight minute talk in a lunch meeting. Okay. This was not anything deep or well thought out. And basically told me for the next 40 minutes how bad it was. No. Yes. And it was like very. Like why, the way you delivered it or what you said? Yeah, it was, I think his first words were, it didn't, it wasn't working. And I was like, okay, thanks for the feedback.

He could be right. For sure, for sure. But 40 minutes of feedback on an eight minute presence, right? It was, it was, and it was the first one I ever did. And I went back to my hotel room and I cried. I called my boss and I was like, I don't know if this is right for me. And his exact words were something like,

don't be a chicken or welcome to the big leagues. Go for a run and get over it. Good advice. Yeah. Good advice. I think a lot of us have had on Wall Street that trial by fire thing. Yeah.

Because how else do you grow if you don't have those terrible looks? Like most financial advisors you meet when they tell war stories, it's like the person's house they had to go to. Yeah. And like the person's family they had to meet or like those kinds of things.

Most of them haven't had to give like a public speech in front of a lot of people. But for everyone, they have their own thing that they're afraid of. I have a quick one, not to derail your story because it's so wonderful. But I started in the insurance business and there were meetups

and I met somebody who I clicked with, who was really nice, told me that his grandmother had an insurance policy. And so I met this guy. Week after week, I would go just to develop a relationship with him. I had no other reason for being there. And it was at a dingy bar on Wall Street.

There was like nobody there. And finally, he got me because I thought I could like roll it over and, you know, make a commission. I had sold zero policies. He showed me the cash value. It was like $74. You worked it. You worked it. Boom.

Well, all right. So you get through all that. Yeah. And then, like when did you know you you worked it boom well alright so you get through all that yeah and then like when did you know you were making it like when did you know do you ever know that

well alright but when was your first inclination that like oh I am good at this and I can do this I think the first inclination

about public speaking was probably after being cause Liz it's a big jump to now be a TV star. Oh, God.

Right. Yeah, well, that didn't happen for a few years. Sure. I didn't go on TV for the first time until I had been at BNY for about three years. But I think the first time that I maybe walked off of a stage and realized that I had more energy afterwards than I did before,

it was like, oh, I actually, I enjoy this, right? And I was so engaged and you know how when you're just naturally engaged in something and I'd come off and finish a presentation and take notes about what went well and what didn't go well and I was just so obsessed with with getting better at it that's when I think I realized I loved communicating and connecting with an audience and especially taking the little that I felt like I knew at that point. I mean, I was 32 when I moved here, the little that I felt like I knew and being able to communicate that to people in a more simple way and watch them get it. Right. I think that,

that was the moment. And I remember the first big presentation, first time I was a keynote, it was at a conference, an RIA conference in Philadelphia um and I was so nervous like so so nervous to the point where like sweat was dripping down the backs of my legs at no point you weren't just like it's Philadelphia who gives a shit no it was a room full of 200 RIA right and and I was this that's what I do everywhere I go I'm a New Yorker good for you so I'm like but I wasn't I was I was a scone? I was already feeling a little bit foreign in the whole East Coast thing. And a funny story about not realizing how close Philadelphia was to here. I'll tell it later if we have time.

So I remember getting on that stage, and it's a room full of 40 to 60-year-old men. And I remember feeling very aware of my age, very aware of my gender, very aware of the fact that they aware of my gender, very aware of the fact that they were probably judging the same. Right. And I was so, so nervous and I had, you know, maybe cracked a joke in the beginning and kind of lighten the mood. And then it was a very short presentation, but it went well. And in my head it was like, okay, good job. You didn't F it up. Right. And I came off the stage and I got some really good compliments from the organizers and then the audience and people were asking me questions.

And I think maybe that's the moment, right? Where you have somebody that comes up and actually asks you a question about what you think about something in the market. Yeah, and it was like, oh, maybe I'm okay at this. So I actually did those types of meetings. I joke about Philadelphia or anywhere else. One of my favorite things

is exactly what you're describing. Get on stage in a room. Like granted, at this point, people know who I am. They've heard of me, whatever. Maybe some people in the audience are actually like really excited, but most are just like, whatever, it's another guy on a stage. But the feeling when you get off and you feel like the room appreciated what you did. I'm with you like that for me is the reason why I keep doing it. Yes. Because truthfully, with what you do now, the amount of people that you could reach at a time,

myself included, to go speak in front of 50 or 100 people, not always the best use of time, especially if you're flying there, staying overnight, whatever. But it's a very unique feeling that you don't get from most of the other things in this business.

Totally. It's a completely different connection. you don't get from most of the other things in this business. Totally. It's a completely different connection. And as you know, TV, you're looking into a camera, right? You can connect with the people that are next to you, but you can't really connect with the audience. And I think that's a beautiful thing about being in a room with people and being able to have that kind of interaction. I agree. And I still do the live speaking for that reason. It's a very unique thing that's very different from all the rest of the stuff that we do. Yeah. All right. So you're at SoFi now. I am. Yeah. Look at you now. Yeah. Well, I like this

analogy. So I had been at Bank of New York for six years. BNY was the first stock ever traded in the New York Stock Exchange, right? Founded by Alexander Hamilton. Is that true? It is true. I went from the company that's the first stock ever traded on the NYSE to a company that was going public like 60 days after I joined. It was night and day. You joined, but did they already announce the SPAC was buying? Yes. We knew we were going public. The stock was rallying.

The SPAC was rallying. The SPAC was rallying. Huge. Yes. Right? Yeah. So I joined at the end of Marching. The SPAC was rallying. The SPAC was rallying. Huge. Yes. Right? Yeah. So I joined at the end of March in 2021. We went public in June. And it was, I mean, it couldn't have been more opposite, right? But again, that was one of those times where, and even just knowing my demographic at the time, I was 38 when I did this. I thought,

if I'm going to take a big risk, might as well do it when I'm not married, don't have kids. And you know, nobody else is depending on me necessarily. I can take this risk right now. If it, if it doesn't go well, the only person who really suffers is me. Right. And I was okay with that. And I knew that that demographic that I was in was going to expire at some point. I couldn't maybe take the same risk when I was 48. Right. So it was, it was sort of now or never. So far, probably not banging your door down at 50. I'm just guessing. Probably not. Mine either. Probably not. Yeah, exactly. Exactly. And it was an opportunity to go out on my own and see how it

went, right? It was another kind of test for myself. I had never built a function by myself before. I had never been the only one creating content and suddenly I was. And everybody has that sort of, well, at least I think most people do, has fraud syndrome. And I came into that excited. Imposter syndrome. Yeah. I came into it very excited, but also thinking, oh my God, can I do this? And am I going to be good at this? I don't know. But there's something exhilarating about that. And it makes you work harder to be good at it, right? To make it succeed.

So what's the biggest difference between the stuff that you're talking to SoFi clients about or the types of work that you're doing versus what you were doing at Bank of New York Mellon? Because obviously polar opposite organizations. Yeah. I mean, the TV stuff is relatively the same. I'm obviously representing a different brand and we have a lens more into the younger audience.

Most of our members are between the ages of 20 and 40. You guys call the users, not clients, you call them members. Members, yeah. What's behind that? So, I mean, the whole tagline is get your money right. They're a member of the platform. And once you're a member,

you also get other benefits, right? Like we'll give you a free CFP to talk to if you're an invest member. So it's this sort of community. And if you use all the products, even better, right? We have another tagline about being better together. So if you're using both our banking products and our investing products and our credit card and some of the insurance products and the budgeting. It does feel like more like a membership.

It's a membership. It's a membership. It's like a prime membership, but for finance. It's your entire financial life. Okay. So how different is like your day-to-day there versus Boney? Oh, very different. I mean, I was meeting with clients at BNY, but those clients were typically the financial advisor.

So it was the intermediary and they were my audience. And I was working with our distribution team to position a lot of the strategies that we had. I rarely met with end clients, but the interesting part of that is the times that I did, I'd give presentations to end clients and I had so much more fun doing that. It was like, oh, real people, regular people, right? That you can teach something, something to, and you have that moment of the aha moment. And SoFi is all end client, right? There's no intermediary.

So it's all end client. It's all individual investor. And there's a lot of education to be given and to be shared there. And they're so hungry for it. And they're so excited for it. They're not, they don't have this like jaded, I've been a financial advisor in the industry

for 40 years. You're talking to FAs, you're talking to people that have heard pretty much everything that you're ever going to say multiple times. Yeah. Okay. Yeah. All right. I love it. Well, listen, it's a great story.

I wanted to make sure our audience heard it because when I first heard it, I was like, that's pretty cool. The other thing is, you know how we get the emails of who's going to be on the shows with us? Yeah. Like you'll get the email the day before. Okay, your hit time is this. And here's whenever I see you on there, I'm like, all right, this is a good conversation. So I think you do like overall a really great job. And you talk a lot about the macro stuff.

And one of the things about the market this year, that's like the only, it feels like the only game in town. Even with the individual stocks that are working, most of the reason that you could ascribe to that is because of some macro force that's making that particular type of stock in favor or out of favor. Do you see it the same way? Yeah. Yeah, I do. And I mean, as much as I've been cautious this year and I'm getting criticized for being wrong and after a big rally.

How dare you be cautious? I know. How dare you be wrong? Yeah, right. Cautious and wrong is okay, though. And stay wrong, right? Choose to stay wrong. Cautious and wrong is better than reckless and wrong. That's true. That's true.

So that's good. But that being said, as a macro strategist, I mean, a market that's been trading on the macro for the better part of the last 18 months is kind of the best situation for me, right? Because I can link it so much more closely. And there's a lot of economists out there. I'm not an economist, but there are a lot of economists out there and we hear from them pretty often. It's difficult to hear about the macro and not link it to something else. What does that mean then? If I'm an investor watching TV or I'm an investor in the audience or reading whatever it is that you're doing, you have to give them something to do, right? You have to give them- Or not do, right. Right. It's got to be a takeaway. You have to link it to the market in some way. So in a period where the market is trading

basically all on macro news, I can do that every day, all day long. So we got three pieces of macro data this week. We got more, but three specifically relating to inflation that were very important. And they all came in the same direction in a good way. We got wages slowing, their slowest pace of growth in a long time. We had consumer prices coming in less than expected, or at least maybe in line, and producer prices. So it's like a trifecta of decent macro news. What was your interpretation of that? I mean, it's decent in the sense of inflation was public enemy number one, still is, right? So it's good that the enemy is weakening.

One of the intricacies, I think, of it or the interplay between CPI and PPI is that CPI is what the consumer feels, right? Those are the prices that the consumer pays. PPI is wholesale prices. So that's what businesses are basically paying to each other. It's definitely good that they're coming down because if PPI had stayed high and CPI was coming down, that means the margins get compressed even more, right? If PPI though is coming down more than CPI, it probably means that businesses are not building up their inventory as much. They're expecting things to slow down. And that actually is not a great indicator for the economy.

And this goes back to some stuff that I'm sure other people have said, but we can't have it both ways. You can't expect inflation to fall and see no other repercussions. You can't expect inflation to come down and demand to stay strong. You can't expect consumer spending to stay strong. You don't think we can have a moderation in prices where demand holds up? Not everywhere. It's too tough of a needle to thread. So this is later in the doc, but since we're talking about this. So Bank of America said, Sam wrote, tweeted this, heard on floor 16, one Brian Park, one liners from our fundamental equity analysts ahead of earnings indicate that first quarter demand held up.

Yeah. Yeah, and it did. I think it did. We'll find out. In a lot of places, right? But I think there are areas where it's weakening. And I don't think we're at the point yet where it's falling apart. But the thing about the consumer is they can change their mind overnight on whether or not they're going to take that trip or buy that washing machine or remodel the basement.

They can put that on pause pretty quickly. Companies can't make changes that quickly, which is why we heard headlines last quarter about companies that had all this inventory built up. So a moderation in prices, you have to think about why that's happening, right? Why would a company lower its prices? Why would a company lower – I mean, for example, Tesla's lowered its prices how many times this year? But there's all sorts of stories. There could be demand, there could be input prices, which is obviously preferable to demand softening. John, can we throw some charts, please? We've got a few in here that I think are interesting that are worth talking about.

All right, so we spoke about this. CPI was up 0.1% month over month. That's about as low as it's been since 2022, which is good. And you've got year over year heading in the right direction. Next chart, please, John. So this is a good one. This is from Michael McDonough. Maybe his name is Matthew. I can't remember. At Bloomberg. Michael. Michael. Okay. So we're looking at US CPI year over year and the line to focus on. So there's lines that show the number of things in the basket that are going up over 2%. And of course, that's still near 100, unfortunately. You've got things that are going up between 2% and 4%. But if you look at things that were up

over 4%, that peaked around, I don't know, almost a year ago and is now starting to roll. So different components within CPI that are rising at different rates. But so the things that were up over 4% year over year, that's starting to abate in a meaningful way. What are those things? Well, probably used cars. Next chart. I don't think rent has come down that much. It's shelter and services.

Okay. Okay. So if you just saw the headline numbers, CPI and then PPI, which we'll talk about in a second you have to you have to say to yourself like okay it's not two percent but the trend is probably not all of a sudden going to reverse uh back higher and like for me that that seems like the more important thing to the market so even if we get stuck it's probably not like all of a sudden a reversal to the upside. Not a sustainable one. One of the things that happened in this CPI report is that

for the first time, I think since May 2021 or sometime in 2021, core came in above headline. So the headline number, which includes food and energy, right, came in lower, it was 5%, versus core that came in at 5.6, right? Which means that most of the moderation in the headline number, which is the one we talk about the most, is energy and food. Food finally was just flat month over month, but energy really pulled back, right? So the way that you have a spike back up is if energy prices go back up. Well. They kind of are. So we'll just do X that. I like just being able to say X whatever we don't like anymore.

Get rid of it. That's like the super core that the Fed did. Let's not look at shelter because that's too high. Let's take something else. Let's do the PPI charts. This doesn't seem to be market moving the way that CPI is. And I guess that makes sense. It could have been if it went the wrong way.

I guess if it was decidedly extreme. The market seemed to have just kind of whatever. No, but the market's up bigly today. I think the market reacted positively to it. But it's interesting. Rate hike odds didn't come down all that much. No, they're still at 66%. That's what. Rate hike odds didn't come down all that much.

No, they're still at 66%. That's what I mean. There wasn't like a really big move in either direction. The PPI is confirming CPI. And does PPI tend to lead CPI? Or do I have that backwards? It probably does. Yeah, it probably does.

I mean, it's usually below. But yeah, it probably does lead. Let's do this. Let's do this chart from Carl Cantanilla. Wait, hold on. Before we get there, there's one in between that you missed that I thought was interesting. So this is also from Michael McDonough. It's a histogram showing where inflation comes in, especially relative to expectations and the dot that we're looking at, which is way out of bounds.

So the PPI came in. It fell by half a percent. And I think it was expected to come in, what does that say? 0.1%. So this is a big downside surprise. Probably the first one. Actually, it's the first one we've had. Like a downside surprise.

Yeah, of this magnitude, yeah. And so what's interesting, though, is that I don't know if you would expect maybe rates to go down. Because, okay, is this indicative of the economy softening and then maybe rate hikes coming? The 10-year is up a decent amount today. Yeah. Well, but I think it's because rate hike odds didn't come down, right? And yields have come down so much already this year. Yeah. How much more do you want them to fall? They're still below, right? The Fed funds rate is still above them. They're still below the Fed funds rate. But isn't this a good thing? Like, if rates don't have to come down

because the economy is not melting... Yeah, I don't think we need a crash in rates. It would not necessarily be positive. It's already around the short end. Headline PPI for March fell half a percent.

The estimate was for no change. And most of that was energy. So the year over year core gain is still 3.4%. And that's in line. But again, that's versus almost 5% the prior month. So it's meaningfully falling now, I guess, is the big takeaway from my perspective. And earnings were the thing, right? Like earnings are a huge driver of this.

Now, of course, there are people that are going to- Wait, so for context though, a year ago, March 2022 PPI rose at 11.7%. Wow. That's crazy. So just with the turn of the calendar- Yeah. Yeah, matters.

It matters. Stuff rolls off. What you're basing it, what the year over year, which is why all the year over year numbers probably aren't even that important. It's month to month that really we should be focusing on. So Liz, does the slowing average hourly earnings get you more optimistic because inflation is abating? Or does this say to you, well, why are average hourly earnings going down? Is that

because maybe the economy is softening? Which camp are you in? I mean, but it's both. And that goes back, you can't have it both ways. Average hourly earnings do have to come down in order to not put too much pressure on the costs that companies are facing. Right. But at the same time, how do they come down? They come down by either people leaving the job or working less or companies paying less, but you don't really do that. Right. You're not going to go to somebody and say, okay, so inflation came down, your wage just got cut, right? So it's more that there's kind of a labor turnover. What I think is going to happen, which actually started happening last month, is that jolts start to really come down hard. That's a big one. And we're going to have that,

we're going to have a reading of jolts before the next Fed meeting. I bet it's going to come down again pretty hard, which is what should happen, right? And that's actually been a problem. And one of the things that keeps wage growth too high. Initial jobless claims were very steadily under 200,000 a week. Now they're averaging 240,000 a week for the last four weeks. There was like a six-month period where all you read about in the business section of the newspaper was layoffs. And you didn't see it anywhere in the data because it sounds like a bigger number than it really is. You would read Netflix laying off 5,000 people, Meta 20,000 people, Amazon 25,000 people. And you're like, oh my God. And then we get a blowout jobs report. I think it was in February. There was a six-month period where if you read the news, you were worse off for understanding what was going on.

But it feels that just looking at initial claims, continuing claims aren't moving that much. We're starting – we've already tipped. And now there's a new baseline. It was 200,000 or below, 200,000 or below. Now it's at quarter million. And again, that's initial. So these will start to compound and result ultimately in a higher unemployment rate. Right.

Well, there's also, so you can watch this too, that the 12-month average of the unemployment rate versus whatever the most current read is. When the most current read goes notably above or just above cleanly, that 12-month average, that's usually a recessionary signal. We're like right on top of it. That's where Michael pulls the buy trigger. We're right. He likes to buy that thing out. But the unemployment rate can't stay at 3.5% forever.

Of course. It's ludicrous. Remember last year, there was charts showing job switchers versus people that are staying at their jobs. And the amount of money that people were getting to switch jobs, I don't know if it was a 9% wage gain

or whatever it was. That is over. We're not in that world anymore. We were at 3% quits and the normal is like 1%. We were like at triple the normal. Well, because yeah, if you quit,

you got a double digit wage gain. Yeah, look at Liz. She couldn't wait to quit. She was rolling grenades. Took me six years. She was rolling grenades to get out of that job. Robin Hood, hit me up.

All right, let's do earnings. So we're recording this Thursday night, and tomorrow starts like the real shit. Thanks. Wells Fargo City, JP Morgan, and then it just becomes an onslaught. Boom. Next week, the week after is even bigger.

This is the New York Times. Wall Street's forecasters expect that profits in the first three months of 2023, this is Q1, fell almost 7% from a year earlier, according to FactSet. That would be the second consecutive quarterly decline and the biggest since the pandemic in 2020. Businesses have also told investors to dial down expectations. 78 companies in the S&P 500 offered guidance that is below the Wall Street estimate. So we already know this is not a great quarter for earnings. What are the takeaways for investors, given the fact that this is like not really news? Maybe in individual companies, there might be some

fireworks. But overall, this shouldn't have a huge impact, at least my best guess, on whether or not we maintain this rally, unless you're like really looking for big disappointments. But it depends where they come in. So Liz, if earnings do come in as lousy as people suggest, what would you guess the market's reaction is to that? If it comes in as bad as expected, not going to be. No. But I also think, so there haven't been revisions since what happened in March, right? Since the banking crisis.

So once we start hearing from some of these companies, especially the big banks. Do you think there was any impact outside of banks? I don't know. Do you think any consumers changed their behavior

because of Silicon Valley Bank? I would imagine for a brief period. Like a day? Like a week or two. I would imagine people probably did. Are you like, on a scale from like Rubini to like Hossman? Like a day? Like a week or two? I would imagine people probably did. Are you on a scale from Rubini to Hussman? She's cautious. It's a different scale.

Yeah, I mean, I do expect a pullback. I do think that... Okay, here are the takeaways for investors. An earnings recession, if we confirm one, which is what the expectations are, right? This would be the second. Two consecutive quarters of negative earnings.

Quarter. So this would be confirming the recession. Next quarter is expected to be negative two. So that would be three consecutive quarters, right? That's part two to a three-part series in economic contractions. Part one is that you get a bear market. Part two is you get an earnings recession. So check.

We have it. Right, check. Part two is you get an earnings recession. Happening now. Last thing that happens then is the economic recession, usually. Okay. I'd buy that. Okay. So. With some overlap of the different pieces. Of course. Yeah. The timing is always different, right? However, that's usually the sequence more or less, right? The bear market starts first. The earnings recession starts second. The economic contraction, we find out about it third. It probably started concurrently. Because the economic, and especially in a situation where the stock market has never been more important to business decisions, to people's 401ks, it's bigger than ever.

Stocks is a percentage of GDP. Stocks is a percentage of the money we expect to have when we retire. It's never been bigger. Well, that's a good point. The stock market fired all these tech workers. It wasn't necessarily the economy. 100%. Right.

So actually, that makes sense because if you think about it, the negative economic shock, which you're saying is part three, is the externality of what happens six months after stocks have crashed, let's say. By that logic, you've seen the Silicon Valley economy already go into recession. Because their stocks crashed a year before everyone else's. Okay, go on. Okay, so because of that, because this would be— I'm just going to keep summing up everything you say, by the way.

That's fine. Just repeat, yeah. No, I love that. I really haven't heard it phrased that well. So if that's fine. Just repeat, yeah, because, you know. No, I love that. I really haven't heard it phrased that well, so that's okay. So if that's the case, right, we're sitting here at what, 18.1, probably 18.2 times forward earnings. Too much? I mean, if we're headed into an earnings recession, so that means earnings haven't bottomed yet, right? And the economy still has to confirm a contraction.

Rarely do you see a bull market just completely withstand that, right? So we probably do have to have some sort of reset somewhere. What I would say, then it becomes nuanced. I think tech has a chance to not pull back as far. I don't know that tech needs to make new lows. Because last year was the tech wreck part of it, where it was rate-driven. Rates were rising, growth got killed, right? That all made perfect sense to us.

Well, Netflix and Facebook fell 70 plus percent. Right, exactly. They might not have taken out those lows. I mean, I work for a fintech, fintech felt, right? Like that was sort of the tech epicenter. This year, it's about an economic contraction. It's about a cyclical contraction and an activity contraction.

So here's what I would tell people to watch in earnings season. If you look at the sectors, the expectations for each sector's earnings growth. Now, overall, we're expected to be negative year on year, right? But the sectors that are actually expected to contribute positively to it are all cyclical. So if we have an economic contraction...

Energy, industrials. I'm looking at, yeah, consumer discretionary, industrials, energy, financials, real estate, maybe a little bit. But those four- That's where the earnings growth is supposed to come from. Those are the only ones that are expected to have positive earnings growth. So if you go into an economic contraction, those are going to get hit too, right?

So that's probably the later end of, that's when earnings bottom, right? But that hasn't happened yet either. So my whole point of this is, do you imagine that after, what, 20% up NASDAQ in the first quarter, S&P has been rallying? This type of market probably doesn't just go sideways through something like that, through a news cycle like that. I agree. I'd be very, very surprised. I'd be surprised if the next 10% was higher, not lower. Right. We've already had a great rally. In NASDAQ or in S&P. Just generally speaking. So for example, there's a great chart from Bloomberg. Stocks post strong rally into earnings season. So the S&P 500 has best, and I never saw this before,

best pre-earnings season performances 2009. That's wild. So it seems to me that whatever less bad- Hold on. This is S&P's one month return before earnings season. And it's the best we've had since. And it's up 6% ish. So it seems to me that this is pricing in less bad than expected. Yeah. Now the question is, if we get that less bad than expected, we already rallied. So unless it's like significantly better than expected, which is possible, I think I'm more with you.

Yeah. Well, and here's the thing. It doesn't have to be like a 30% drop, right? No, no, no. But the other thing is this could just end up being a really, really long cycle that takes a while to reset the business cycle. And people say we had a recession last year. No, we didn't. Technically, yes, but it was due to imports and exports.

But how many millions of jobs did we have last year? Right, but we didn't reset the cycle, so it wasn't long. It, we didn't. Technically, yes, but it was due to imports and exports. It might have felt like one, but we didn't. But how many millions of jobs did we have last year? Right, but we didn't reset the cycle, so it wasn't long. Not a recession. No credit events, no washouts. Inflation was still a problem. Inflation peaked afterwards. There were pockets of recessions in tech, in real estate. Yeah. So I think something like this, or just thinking about it from that perspective, yes, the S&P drew down, what was it, 26% peak to trough last year. Recessionary drawdowns are usually 30% plus. Now it's like it was 35. True.

So that's why I think tech maybe doesn't have to make new lows, right? But recessionary drawdowns are usually beyond 30%. So if you take the high from January 2022, 47.96, and go down 30% from there, it's $33.57, right? So you don't have to have this catastrophic 50% drawdown from here in order to reset it and get down to a valuation level that makes more sense. But you probably have to come down a bit. John, put that chart back up for one second. Isn't this the thing, though, that has been frustrating the bears for most of the last 12 years? Like almost uninterrupted where stocks rally into the earnings. Yeah.

And you say a comment, which Michael just said, which I totally agree with. Like, all right, we had the rally. So earnings weren't as bad as everyone thought. Okay, great. They ran up, you know, 6%. And the NASDAQ ran up 12%. But then they do the same thing again on the other side. Buy the rumors, buy the news.

Like in other words. Buy everything. Just buy it all. Stocks rally into the earnings. All right, maybe the earnings won't be so bad. And then the earnings are just okay. And they rally again because they weren't catastrophic. We've seen that pattern a lot. I mean, look, even as a cautious investor,

I recognize that there are people out there buying. There are people that will buy all the dips. There are people that bought the market today on some cooler CPI and PPI prints. I'm not one of them, but there are people who will do it. And I think it will continue to shock us. I don't know if it's, and I would be interested in your guys' take on this. Is it that the market is made up of different investors now? Is it that there's so many more individual investors? It's what you asked.

Last week, I was walking around talking my shit like half the gain is Microsoft and Apple, and that was true. It's always the case. About the month of March. That was actually true. Things have changed. New shit has come to light. We dropped Lebowski-isms on this show. And I was away last week.

But put this Detrick chart up. This is Ryan Detrick. Around here, we respect technicals. More than 93% of stocks are above their 10-day moving average now. Wow. So you could say mathematically, Meta and Apple and Microsoft going vertical has been the driving force and nobody would argue that. But that's not all that's happening. And actually I looked at the chart of healthcare stocks, XLV.

It's fucking vertical. Yeah. It looks like the Empire State Building. I didn't even see this. Look at this. Wow. What is going on? Oh, shit.

IBB up – yeah. And XBI is cashing a bit. XBI has been terrible. This is happening with the dollar at 52-week lows, which is another huge reversal that we've undergone. That'll help earnings. Well, it's helping stock prices. For sure. Anyway, Dietrich says S&P 500 is usually up a year later 23 out of 24 times. And the average gain

when we see something like this, 93% above their 10-day. The average gain is 18.5%. That's meaningful. 23 out of 24 times? This is a breadth surge. So? I like the heavy D.

Well. Breadth. Well, I don't want to say breadth surge or breadth. Anyway, let's talk about why this might be the case. And I've been teasing Michael. Michael's been saying positioning. It's the only explanation.

I'm sorry. People are too bearish. No, I think you're right. So this just came out. Hedge funds are the most bearish in 13 years. Yeah. Hedge funds have built their biggest collective short position against the stock market since 2011. There's a net short of minus 321,000 contracts

on the S&P E-mini held by, quote, large speculators. So that's mostly hedge funds. That's how you get a NASDAQ rally 20% because everyone's leaning the other way or a lot of money is leaning the other way. And then when momentum picks up, they got to correct. Right.

And then they cover and then it fuels and then whatever. So I feel like that part of it is mostly behind us, you would think. But John, next chart, please. So this is S&P 500 futures, which is a large spec position that Josh just mentioned. And every time, you could see on the bottom pane, every time they get super bearish, it's marked a bottom.

Now, that doesn't mean—it's not always perfect. It doesn't always line up perfectly. This is JC. This is JC. This is from Ian Culley at All-Star Charts, our friend JC. This is a good chart. It's a good chart. People are super bearish.

Maybe they're right. But this has historically been a good buying indicator. So I remember each of these unwinds, these meltups. Like I could think about what I was thinking at that moment. And when you like really go back, like look at this one in 2016.

That looks like minus 250,000, let's say. So you think about what hedge funds were betting against in that moment. It's literally the US election, one of the most contentious elections ever. And it's Brexit simultaneous. And we had an earnings recession in 2015, 2016. Right. You also had oil prices crash and an earnings recession. So that negative positioning, whether you think it's a bet or a hedge or whatever, like I remember that wrapping up with,

oh, the election, actually both elections went the way that the bears were saying they would. Yeah. And the stock still resolved because there was a resolution. The difference between where we are currently versus all other previous bottoms where people got so bearish, stocks aren't doing bad. Every other time position gets way negative, it's been because stocks got killed. Stocks aren't getting killed. So coming into this week, you had CPI, PPI, wages, there's a because stocks got killed. Stocks aren't getting killed. So, coming into

this week, you had CPI, PPI, weages, there's a ton of economic data, and yet the VIX was at like 18. Well, guess where the VIX is today? It's under 18 for the first time since, I don't know, since like February. The VIX is asleep and stocks are ripping. Why? Do you look at the VIX as a signal, though, as a buy or

sell signal? No, we think it's a concurrent signal. So, CaliCox has done a lot of work on this. I think people aren't using the VIX the way that they used No. As a buy or sell signal? We think Cali... It's a concurrent signal. So Cali Cox has done a lot of work on this. I think people aren't using the VIX the way that they used to. That measures like 30-day positioning out. Right.

If you look at like, I don't know what it's called, front-month VIX, like shorter-term VIX contracts, that actually is moving around. I think the VIX is broken. Because of zero-day tax expiration options?

That's a huge one. That's just... What broken how? Will it ever be fixed? Broken as being at all indicative of what people are doing. When shit hits the fan, yeah, sure, the VIX will spike.

But I think like, I don't know if it ever had relevance as an indicator, but I just don't think it works the way it used to. One answer is to look at the volume size in inverse and 2X inverse ETFs and recognize that there is now a very good substitute

for options trading if you want to hedge a portfolio or put on a bearish bet that didn't exist 10 years ago to the same extent it does now or maybe 20 years ago. What do you think about the fact that even at 18, that's higher than we were for a long time, right? We were in the 10 to 12 range. We had a whole year. It goes through regimes. It goes through regimes. So are we actually, I mean, maybe this is- We're at the low end of a high regime. Yeah.

I would like, right? But also, it's not just that the VIX isn't maybe signaling what it used to, but I saw a chart somebody posted of 10-day volatility of the S&P 500. It's like zero. I mean, it's not zero, but it's much lower than it has been in a long time.

Liz, you had a chart about stock and bond market volatility divergence. Yes, I was just going to say because the 10-day volatility of like the two-year treasury. John, can you get this from her?

Crazy. Off the treasury. There's a link in the doc. Higher than it was in 2008, 2009. 10-day volatility. Liz, say that again. The 10-day volatility

in the two-year treasury. Yeah. Higher than it was in 08, 09. Yeah. Liz, say that again. The 10-day volatility in the two-year treasury. Yeah. Higher than it was in 08, 09. Yeah. It's out of control. It's something. That one. This is it.

Thanks, John. He's amazing, right? Yes. That was fast. It was good work. Okay. So this is your blog. What's your blog?

It's called On the Money? On the Money is the section. Mine is Liz Looks At, and then I choose a topic every week. Oh, got it. Okay. All right. So what are you, what are we looking at here? We are looking at the difference between bond market volatility, which is measured by the move index, which is treasury volatility and stock volatility, which is the VIX that we're all familiar with. That's in blue. Okay. So the craziest part about this is that bonds are supposed to not be volatile, especially treasury bonds. That's the whole point of existence is that bonds are supposed to not be volatile, especially treasury bonds. That's the whole point of existence is to not do what they're doing.

Is to not do this. Right. And then you see the subdued nature of the blue line, which is stock volatility. So rarely, if ever, do you see bond volatility this high and stock volatility this quiet. So the point of this and the last words in this paragraph are somebody's wrong. One of them's wrong. That's your theme of 2023. Yes. Somebody's wrong. That's your theme of 2023. Yes.

Somebody's wrong. They both can't be right. Right. So either the stock market is too complacent or the bond market is way too volatile. Right. But it's one or the other. But here's the thing. I've been saying I think the stock market has been too complacent this year, but I could

be wrong about that. And the way I could be wrong is that we just had a 40-year rally in bonds. So maybe it does make sense that they're normalizing and it's a painful normalization. And that's just kind of the era that we're in. So this is the chart that I was just talking about, the 10-day average of daily moves to the S&P 500. It's as calm as it's been since the end of 2021. And Liz, I've been saying the same thing, I think maybe framing a little bit differently. 21. And Liz, I've been saying the same thing, I think maybe framing a little bit differently. What does the stock market see that we don't? Because stocks aren't particularly cheap,

right? They're competing against much higher interest rates. The economy is not expanding. And yet, is it because companies are so aggressively cutting costs? Is it because the Fed maybe is done? The Fed will pause? Is it because there's a midterm election year and that tends to be like, what is it? Why are stocks- What is producing the calming effect on stocks? Why are people buying so aggressively? Well, how many years- I mean, nobody knows. Well, wait a minute. How many horrible years do you have after a year as horrible as last year?

Very few. Maybe it was never. Never, yeah. Well, but here's the thing. I don't know that we need to end down this year. I think it could happen quickly and then we make our way back up. I don't think we necessarily need to end negative. But, I mean, my question is,

I don't know who is buying in the face of all that, right? And what is... I am. Short coverings not going to be enough. No, well, because that conks out. Michael and short coverings. You must be really rich.. Well, because that conks out. and short coverings. You must be really rich. No,

but I'm buying every two weeks. 401k. I mean, I think everyone here is doing that. I am too, of course. But you mean like,

you mean like tactically. Tactically. But to your point before, you do see a pretty big rebound in a stock after they make an announcement about cutting costs. That's what we saw

in a lot of the tech names. Right. That's been the key to the market. How about McDonald's? They're closing the headcount or whatever they said, all-time high. Yeah. Stock went to an all-time high. That's what we saw in a lot of the tech names. Right. That's been the key to the market. How about McDonald's? They're closing the headcount or whatever they said, all-time high. Stock went to an all-time high. Well, so here's the thing. This earnings season, this one and maybe next one, is when we're going to hear about whether or not they cut costs enough. And if they come out and say, okay, we maintained our margins, our bottom line is okay,

because we all know revenue is dropping. If inflation drops, revenue drops, right? So did they cut costs enough to preserve their margins and keep that story intact? I love that you said that. In my lived experience, they never do that. They never right-size in one quarter. It's always the start of something. It avalanches because job cuts at one company create job cuts at 10 smaller companies that are vendors to that one company. Right. So I've never, listen, I'm, I'm doing this

since the late nineties. It's never happened. Yeah. But guess what? You've never seen what, I know there are a lot of never, but you've never seen what, what Facebook and Google, I don't know if it's Google, Facebook, Amazon, and Netflix, what they just did with their head count from 2019 to 2022, you've never seen that either. With all due respect, how many employees do you think Amazon has? Forget about Amazon. No, five million. I know. Whatever the numbers.

So they have a million and a half employees. So what do they do? But Facebook's growth was absurd. Facebook's headcount growth was absurd. So they're right-sizing their ship. That doesn't need to bleed over to Honeywell. Okay, but I just have never – all I'm saying, I just have never seen it. I've only seen – you're pushing a snowball down the hill slowly and then it picks up its own momentum.

And it's really hard for me to come up with a situation where a company like Salesforce and then Alphabet. Oh, but they are cutting. company like Salesforce and then Alphabet. I know. And then Alphabet. And then McDonald's. And then Intel. And one after another. All of these companies laying off people at the same time.

Well, the other reason why you might be right, Josh, and why this might feed on itself, look at the stock price's reaction. They're getting reward for efficiency. So the S&P is up 9% this year. And the Nasdaq is up 20%. So I am 20. I am very excited to see the market's reaction to earnings over the next couple of weeks.

Yeah. So the analogy I use, just so you don't think I'm copying you, I say a boulder rolling down a mountain. Yeah. Because it does. It starts slowly. And if you look at something

like the unemployment rate, it hits a low right before it spikes up. And it goes fast, right? It happens fast. One of the things I said to Michael is that people think that there's going to be this gradual moderation in a labor market. And I actually think there's going to be one month where we go, wait, what happened? Yes.

And a lot of that will be statistical. Just the way they collect data is not – Tony showed us that, right? People hire slow and they cut fast. That's right. You could cut three years' worth of hires in one announcement. And we've seen it in tech. We might never see it in some of these sectors or we might see it all at once.

The other thing that's making this even more weird than it already is, is that it was so hard to hire that maybe these people that had to compete for that talent are like, That was last year's story. Oh, absolutely. If you fought like hell to staff a hotel chain, you're not like, alright, occupancy is down month over month,

everyone's fired. Of course you're not going to see that. But I think that if you think about the pressures being faced by large publicly traded companies, by the way, every company in the S&P 500 is the Michael Jordan of its industry. It's the best managed, best run company of its type in the world, right? That's how you get there. Most companies in America are not run as efficiently and as well, and it's going to be sloppier. So we're talking about big public companies laying people off, but like 70% of employment is not at large

companies. It's at small. And if you think higher rates and demanding investors are putting pressure on Alphabet, you should see what they're doing on Main Street to real businesses. So that's where I think the shock happens. It's not going to be a meta layoff wave that's going to shock the market. But Main Street doesn't have a stock price. Correct. But they have investors. You know who the investor is? Sol Prop, the guy who owns the company making half the amount of money he made the year before. You think he's not firing people? Right. Yeah. Well, they don't have a stock price, but they have consumers, right? And you have to bring it back to the macro on some level that there is no such thing as a U.S. economic expansion without the consumer.

It just doesn't exist. So if 80% of employment is at small companies and a bunch of them get laid off, guess what they stop doing? Spending. 100%. And then that rolls through to the top line of all the other big businesses. And they do have a stock price. We've been talking about this for like nine months now. Well, and there is, later in the doc, I put a chart in of some of the consumer spending that is moderating.

So it just started to happen. Oh, there it is. I'm trying to get there. Consumer spending, all the way at the bottom, John. Yeah, yeah, yeah. So four-week moving average, we kind of smoothed this a little bit. But things like food services and drinking places and accommodation. I know there's still, hold on. This is a weekly

credit card spending, weekly card spend. Yep. Relative to pre COVID. This is from the BEA. Okay. So, so you're saying like, this is, this is just like what people are actually, not what they're saying they're going to do, but the actual transactions on cards. Yes. Okay. So what are we looking at? So these are just a couple of the data series. We picked out two that have been softening.

But think about what we've talked about consumers doing, what they're spending their money on, right? Their services, going out to eat, they're traveling, whatever. The spend, look at accommodation falling off a cliff there. And then even just in the last few months, you're seeing food services and drinking places falling too. So they are moderating their spending. Now, it's been super strong, right? But it's moderating.

Moderating from a high level. It's moderating from a high level. And there's all this chatter about the savings glut. There's still so much savings left. If there's so much savings left, why are credit card balances so high? And why are they not paying a lot? You know why? Because it's who has the money saved and who doesn't. Exactly.

The airline stocks are like 10% above their 52-week lows. They all look like death. You really couldn't pick a better environment for travel than the last two years. And those stocks look like it's 2008.

But does that make them a buy? They always suck. They always suck. Does that make them a buy though? Not for me. But look at Hyatt. Like Hyatt looks great. I'm sure I'll be wrong,

but I think they look worse now than they looked at Hyatt. Just my own. Casinos look okay. Las Vegas, Sands and Wynn look great. I know it's maybe China, but they look good. But the whole point of this is like,

maybe it's starting, right? Maybe people are moderating a little bit. This also could be just the blowback, the short-term blowback from a banking crisis. People got scared and they said, let's hold off for a little while. It does seem inconceivable. How much can the economy withstand? And now the credit crunch, which we're going to get to. There's so many bullets that the consumer has taken and they're still walking.

Let's go there now. Put this chart up with commercial real estate borrowing, CMBS. So this is great stuff from Michael Sembelus. And there's a few things to focus on. So I'll try and walk the audience through it. Here's the good. The good news is that commercial real estate borrowing as a percentage of GDP is well below what it was

in the peak in the 80s and the peak in the early aughts, like well below. If you look at a weighted average of loan-to-value by vintage year, and what loan-to-value measures is how much is the bank or whoever is loaning the money relative to the equity or the value of the company, that's going, it started at 68 or so percent in 2003, that's down to 54%. On the bottom left, guys, you look at the blue bars of where banks were absolutely out of their minds, making over 70 percent loan to value. That represented 50 percent of all loans in 2007, right before it blew up. That's basically gone. Banks are not- Nobody's doing that anymore.

Banks are not lending that right now. So there is a cushion was a cushion, like there was a cushion that is going on here. So that's, that's the good, right? Or the, like the, okay, not, not so, so bad. Then symbolist shows some other charts where it's like, eh, not so great. So we're looking at vacancy, shadow vacancy, which is space that could be available soon. And what's the, what's the other one? Underutilized space. So top right guys. And you see it's broken down by cities and Philadelphia is a train wreck. Los Angeles is a train wreck. New York is a train wreck. So what we're looking at here is you've got a vacancy rate of, I don't know, 10 or so percent, a little bit more. Underutilized space, forget about it. And this is a massive issue.

And the problem is, if you look at the debt that's maturing over the next two years, that is peak. So in 2023 and 2024, you've got over a trillion dollars worth of debt maturing. When these companies go to roll it, what in the world is going to happen? Especially if the companies are still firing people that are supposed to be tenants of the buildings. Yeah. Well, and what's their interest coverage ratio going to look like when they try to roll it right in a higher rate environment? Yeah, this is not good news. I can't spin it any other way. And it's not sneaking up on us. Like it's in everyone's face right now. But there's already headlines. I think so here's

the weird part about it. This is like business stuff, right? This isn't consumery stuff. And there's already headlines. There's been headlines for over a month about defaults on commercial real estate. And we've kind of glossed over them. They didn't move the market. There isn't anything, there's not chatter about it. You know, my mom isn't calling me asking about the commercial real estate defaults, right? So it's not really hitting main street. She's not watching CDS. No. She's too busy nursing. Mom, I'll give you a hundred dollars if you know what CDS stands for. So, you know, and nobody's talking about it in the regular investor community because it's business-based.

At some point, it probably does bleed over into other stuff. Something has to blow up, though, for it to become a stock market story. There has to be a blow-up. And it doesn't appear. Look, there's a lot of stress in the stock prices of office streets. All of them. But it took place over three years. These are not overnight blow-ups. They're like slow-motion blow-ups.

So Green Street estimates that office appraisal values are down by 25% in the last year alone, the largest of any property type of client, obviously. The head of KKR's commercial real estate acquisitions Group projects a very significant distress cycle in the office sector. Okay, we know that. John, throw this chart on, please. We're looking at a chart of office REITs, which are abominable, just absolute death. They are making new lows, or at least they're below the October 2020 whatever lows. And then you've got X Office, which is industrial residential retail.

And yeah, they're down, but they're hanging in there. They're like looking okay. I mean, there's still a pre-pandemic. Commercial real estate is a lot bigger than just office. That's retail. And by the way, we're going to get retail sales this week. We're going to get them on tomorrow. And a couple of things about retail sales.

So the first six months of 2022 retail month over month was positive. The second half of 2022, four out of six months were negative month over month. We've already had one negative month this year. We could have another one now. Negative month of year over year. Negative month over month. Oh, okay. Yeah.

So there's an obvious slowdown. Yeah. That now we have enough data, you can see the trend, right? And even you can take seasonality out of it because if the first six months of last year were positive, we already aren't in that case now. So there is a slowdown in spending in certain spots

and I think it probably just starts to pick up. There's a crazy table that Sembliss is doing here. It shows downtown recovery rankings and you've got Salt Lake City on top, Bakersfield, California, Fresno, whatever. Downtown recovery rankings. And you've got Salt Lake City on top, Bakersfield, California, Fresno, whatever. What is this measuring? Downtown recovery rank, I guess, is a percentage of, I don't know. Downtown recovery rank.

I don't know what's exactly in there. But look at the bottom right. San Francisco. Holy shit. Out of 62 cities, it's very less. 31%. There was a headline about Whole Foods, right? They just closed a Whole Foods.

Oh, Salesforce. Salesforce is giving up the tower. Oh, really? Did you see that? Dude, if you have an employee base there, it's really hard to explain to them why they need to be there every day. Salesforce lists its remaining space

at Salesforce East Tower for sublease. Steve Roth from Vornado said Friday is dead forever and Monday is touch and go. Right. So Whole Foods is closing down its flagship San Francisco store. And I think because of theft, maybe. Yeah. But it's been open for like a year or something.

It hasn't even. No, right. It was like a brand new gleaming. But probably it's hard to attract customers there. Right. And there is a selective enforcement of just basic law in the city, and that's what happens. Torsten Slocke said that this is going to be a 0.75% drag on GDP compared to a potential 2% growth rate. So he said, with the commercial real estate bubble bursting, we are likely to enter three years with low growth, similar to what we saw after the housing bubble in 2008.

Put differently, once the Fed starts cutting rates later this year, interest rates will likely stay low for several years and QE is likely to come back in 2024. so he thinks this is going

to be a big deal on GDP? 0.75% of GDP growth? I mean, that's a lot. That's a lot. Like if GDP growth is let's say 2%? Oh,

it's over the coming three years. I don't know if that's annual or over the coming three years, but he just said QE is likely to come back in 2024. Huh. Not if inflation is still here. Bullish. But here's the thing.

What has to happen in order for QE to come back? It's got to get pretty bad if QE comes back. It should not be rooting for QE. No, no, no. I agree. I'm teasing, I'm teasing, I'm teasing. What's this non-residential construction makes up 2.6% of GDP? Throw this out.

So I think this is sort of similar to what we were talking about. It's much less. I mean, it's still a lot, but it's much less than it was in prior peaks, like significantly less. Non-resi construction is just like building of anything other than houses.

Okay. I mean, they did the thing, right? They built. We did the building. We did it, right. It's enough with the building. Yeah. Okay. What was- with the building. Yeah. Okay.

Oh, gosh. Okay. So this is from the New York Fed, and they do a survey of consumer expectations, and they say, change in credit availability, is it easier or harder to obtain credit than a year ago? And the good news, I guess, is much harder

is really kind of steady. That's not spiking. But for people that are answering somewhat harder, that is up substantially from a year ago, five years ago. Like that is – and this is what's going to do it. And this is deliberate though. This is what's going to do it, right? Yeah. This is what causes a recession?

Yes. This is by design though. It's what they want. It's purposeful limiting of liquidity, right? It's purposeful limiting the money supply and the velocity and everything that causes inflation. Because if inflation is the problem, you take the money out and inflation goes away. This is how you take the money out, right?

And in an expansionary period, your banks are lending, consumers are taking loans out, they're spending on credit cards, and the money is moving around the economy. And inflation is a healthy thing, generally speaking, at about 2% to 3%. Just not 11%. Exactly. Yeah. So, yeah, this is exactly what needed probably to happen. This is why I'm also in the October lows camp, like that we have to go there.

You think so? You are? Yeah, no, I always have been the whole way. Revisit or blow through? No, revisit. Okay. And maybe some things will blow through. Yeah. But I also agree with you where

like we could do that and have Apple be okay. No, you can't. I think just less bad. I think everything goes down. Not flat, but okay. Like okay. Like if you if you're a long Apple, could you withstand a 10% drawdown? I hope so.

I feel like you'll be fine. Yeah, I think just less bad. So that's a 15% drawdown from here to take out those October lows. Yeah, of course we can. I'm not saying we can't. Of course we can. I've always been there. And the main reason is that contraction of credit that Liz is talking about.

Like, that's like the thing that sets off the chain of events where you spend less, the person whose business you're spending less at lays people off, those people spend less. Again, I hope I'm wrong and we can like do it gently. Yeah.

I just have never lived through it. You can't do it gently. Well, but the thing is like- I've just never lived through it. Can't do the laws gently? Right. No, no, no. In the economy,

I would love for a situation where everybody just lays off 5% of their staff and we go on. Listen, I just blow through the lows gently. I just feel like every week that we have these conversations, more or less everyone's saying the same thing. The economy is softening. It's going to get worse. And yet, like maybe I'm giving too much credit to the stock market, but is the stock market just completely oblivious? Do we not all know this already?

I don't think it's oblivious. I think it's been trading on macro data that is changing. And it's been trading on support from things that aren't necessarily going to support it anymore, like endless consumer spending, endless liquidity, credit that continues to be available, right? That stuff just is going to dry up and it's supposed to dry up. That's what the Fed is trying to do. Fine, but how about this? I think there has to be a reason for stocks to roll over, right? And I don't mean just like 5%. There has to be a catalyst for stocks to take out new lows. They're not just going to take out new lows. There has to be a reason. Suddenly, no, but they can do it slowly with no reason. No, they can't. No, they can't.

What do you mean? They're not going to slowly drift to no lows for new reason. Why not? Because that's not how it's, this doesn't work that way. Who says? We always come up with the reasons after. No, no, no. For stocks to take out new lows. I'll tell you the reason after. I don't know what the reason is going to be, but there has to be. You're saying there has to be like a headline. There has to be a reason. Now, maybe it's earnings. Maybe it's unemployment. Maybe job. It's job. I ask you a question.

If two weeks from today, the NASDAQ is 5% off its high, will you still feel like there needs to be a reason for it to fall another 10%? I'm not talking about 5%. No, I'm not talking about 5%. That's nothing. No, no, no. I'm saying, but for it to fall the next 10%, will you still be saying there needs to be a reason?

I'll be there. Okay. All right. No, but my point is, for stocks to clip this. I'll be there. I'll be there. Okay. All right. My point is, for stocks to clip this I'll be there. I'll turn super bearish. For stocks to take out the October lows, it won't be,

there won't drift there for no reason. There will be, there will be headline events that cause that to happen. Yeah. And I think some of them will be credit. Some of them will be earnings. Some of them will be economic.

Does there have to be a big black swan event? Probably not. No, I'm not saying that. Probably not. I'm not saying that. Okay. And I think it's, but I think it I think there's going to be headlines, right? And I've asked myself this a lot over the last three months

as I've felt really wrong being cautious. I just cannot imagine six to 12 months from now seeing headlines that say something like Fed raises rates. Soft landing achieved. Fed raises rates 500 basis points in 12 months and we trot merrily off into a new billion. But what about the breath?

What about the breath? Yeah, listen. We can't ignore the bread thrust. Liz, did you have fun on the show today? I did. I had so much fun. Alright, so this was the warm up and we just wanted to kind of get the butterflies out. Okay. And we're going to start recording. 90 minutes more.

We do this thing at the end of every show called favorites where we just kind of give the audience some idea of things that are not necessarily financial related that we're getting into. So I want to let you go first. What would you recommend to the audience that you've been reading, listening to, whatever? Well, the book I'm reading right now is Mindset. I'm a big reader. I love reading some financial stuff, but also just psychology stuff and how people's mind.

I also buy a lot of books. Yeah. Sometimes open them. Okay. Very, very rarely. I visit a bookstore every Sunday. Okay. But I read this article.

It was an opinion piece in the New York Times. I think it was today. It might've been yesterday by Adam Grant. He's also the author of a book called Originals, which I love. What's Mindset? Is that a book? It's a book. Oh, tell us about it. Yeah. Oh, well, I just read the intro. Oh, okay. That's what's happened. I'll come back and tell you about that one later. But Adam Grant is an author as well. And he wrote an opinion piece in the New York Times about basically

the email culture and the urgency that we have to respond to everything all the time. And he wrote an opinion piece in the New York times about basically the email culture and the urgency that we have to respond to everything all the time. And I just thought it was a really interesting article that people should read. And it made me think some of the takeaways were like, don't take promptness as politeness, right? The quickness with which somebody responds to you has nothing to do with how much they care about you, how important that question was. You might want to just get you over with. Well, no, it was basically like if they wait three days, it's not an insult. It kind of is.

I agree. Come on. I agree. But that's why it was like- It's kind of the industry you work in, maybe. It was thought-provoking that I was like, I take it as an insult. Well, here's the opposite end of the spectrum.

So I listened to, there was a podcast on Acquired with this guy who has a fan. It was a podcast called David Senra. I listened to that. How great was that? I mean, he's a lot though. He's a lot. It's a lot.

I'm proud of him, but holy shit. So David Senra, this guy's life mission is to read about founders and entrepreneurs and builders, and he's obsessed with them. He's not an investor. He just is obsessed with learning about business. And then he does podcasts. It's a lot, but he's incredible. Anyway, he said something that I was like, right?

So what he said was, there are times where a venture guy or girl will intro him, will like reach out to him, would love to talk. And then the venture person's admin will follow up with a date like three weeks from today. And I've been on the other end of that. And it's so fucking like, ugh. Like you reached out to me. Then you send me your assistant who will schedule time with you. I don't do that shit. For three weeks from today.

Well, what do you do? Nothing. Talk to you another time. It's so- Do you respond to everything? No. Yeah. Well, I don't respond to email at all.

You can't. I'm a bad example. Is that not so obnoxious? I don't respond to email at all. You can't. I'm a bad example. Is that not so obnoxious? I won't talk to you. If you ask me to talk, I will not talk to your assistant about scheduling it. Like, you don't have – so in other words, you're going to spend a half an hour with me, but you don't have 30 seconds to get a calendar invite up? Right. Get the f**k out of here.

What is this? Yeah. So I don't even do that. I just won't even respond. Well, I don't have an assistant, so that's easy. Look at you. Yeah. Well, I have no assistant.

So, like, I would – I might someday, if I ever make it, I'll get an assistant. But you know what? If anybody out there wants a job as an assistant. If you say to somebody, hey, I really admire you or hey, we have so-and-so in common and they suggested we talk. Like if you're the one initiating that, don't throw a calendar invite at somebody or like that's a month from now well okay wait back to this responding thing though so what drives me crazy is like you've got i've got

seven different places i have to respond to messages right there's text messages there's two different emails there's personal email there's slack there's dms like all these different platforms which one do you respond to first? Like which platform expects a faster response? I feel like email is kind of a slower response platform. Slack is like immediate. Text messages is immediate. But it depends. It depends who's messaging you. Doesn't it? I mean, yeah, but Liz, I have all these doctors and all different reasons. Josh is very healthy. Yeah. And all the doctors are now like tech enabled. Yes. So I have to DM them in this special app for like Northwell Health has one. And for some reason, every one of my doctors is with a different tech, like a different giant group.

So I have to like do these. It's not an email like you're emailing a doctor. No. You're like in their environment on their app or whatever. I know exactly what you're talking about and then they're like they're not in any rush no and i will like like i freak the f**k out i emailed you this morning something's wrong or i have a question about my medication you don't get to respond to me in 24 hours my rash is not getting better no rashes thank god but like i'm injecting myself with s**t like can you call me back is there any way?

You put me on this. No, it's not offensive. So go finish your drive trip. Go. That's it. I'm done. I don't mind Calendly.

If send me a Calendly link, grab. Great. I'll grab a spot on your calendar. Easy enough. But don't put me to your assistant who will schedule sometime three weeks from now. Yeah.

No, I don't want to talk to you three weeks from now. Do you want a name in shame? Do it. No, I can't. Are we bearish assistants?

Well, listen, I get it. People are busy. No, I can't. Are we bearish assistants? Well, listen, I get it. People are busy. No, but I have no problem. But guess what? I would,

it's not, it's not one. It's like, I've had this done to me half a dozen times in the last four weeks. Chat GPT fixes this. Uh,

all right. And what's the Zillow podcast? Oh, this is shameless plug. No, I just recorded it yesterday. It's my podcast, but I had the chief economist

from Zillow on. She's amazing. Yes, Skylar. She was incredible. She's great. She was incredible. My whole point, it wasn't because

I was the host. I didn't know. Both Skylar and I own the stock. Now I feel like sloppy seconds. Full disclosure, I own the stock. Go ahead. What did you guys talk about?

Everybody who's listening, you should still listen to mine. I'll listen to that tonight. It didn't drop yet. I'll tell you when it does. But her whole, some of the stuff she said was like, inventory is still so low, right? Home prices aren't going to

fall. And here we are. We're like waiting for them to fall. You just did the same thing that Michael was complaining about. What did I do? You were like, all right, listen to my podcast with the girl from Zillow. It comes out in about three weeks. I'll have my analyst tell you when it comes out. I just wrote

a blog post about inventory. You go on Zillow in our town, there's no houses. I was on Zillow looking at a $45 million house in Great Neck because it's fun. Stop for me. Believe me. But that's what I do on Zillow. There's no houses.

Her whole takeaway was even though mortgages have absolutely cratered, right? And affordability is down, prices aren't going to fall because there's still no inventory and there's too many people. It's just going to stay like this. Wait, look at this.

I would propose no silos, no buyers, no big deal, not to brag. Yeah. Look at this chart. Look at the median listing price. It's not going down. Right. It's still going up.

But it's frozen. It's frozen because people aren't moving. Also, on the days- You can't moving. Also, on the days- You can't build. Also, on the days where mortgage rates fall a little bit, right? They'll see a ton more activity. Activity spikes when mortgage rates go up. I forget what they call it.

Page views per listing, I think. And it spikes, right? So people are trying to catch it. And I'm like, really? They're trying to catch a bargain between what? Six and a half and six and a quarter percent? So there's still obviously huge appetite out there. Which is why the housing market has not responded to higher rates the way that you expected it would.

Also, they look at the age groups who are coming in and paying all cash. The silent generation is still buying homes for their grandchildren. The silent generation? How old are they? Like 80. Buying homes for their grandchildren. The silent generation? How old are they? Like 80. Buying homes for their grandchildren? There is money coming into the housing market that is not affected

by interest rates because it's taking huge amounts of cash. And a lot of this is like intergenerational family shit, but like that's a big component of the housing market depending on the region. There are just regions where it's normal for families to buy

homes for the next generation. They actually would prefer that versus investing in other people's stocks. So there's still enough cash buying new homes that you don't necessarily get a housing crash with mortgage rates

doing what they've done. That could happen. So anyway, the Acquired podcast you don't necessarily get a housing crash with mortgage rates doing what they've done. All right. That could happen. So anyway, the Acquired podcast with David Senra was great. You listened to Acquired, right? You know, the guy made me nervous though because I feel like Patrick stopped interviewing him. Patrick didn't interview him.

No, he did. Patrick interviewed David Senra on Invest Like the Best to introduce the new podcast being on Colossus. So what do you mean? Okay. What do you mean? No, stop. You stop.

Patrick was like my conversation with David Senra. And there was a certain point in the podcast. No, stop. I got it. A certain point in the podcast where Patrick like just put his microphone down and left the room. And this guy just went. He did like an hour of interviewing himself.

He's an encyclopedia. He knows the history of Sam Zell and Jeff and everyone. All right. Anyway, it was a great podcast. There's a new show on Netflix. I'm cautiously optimistic. In fact, I'm actually pretty optimistic. No cautious.

I'm bullish. It's called Beef. It's the number one show on Netflix right now. Okay. And it's about two people that like they almost hit each other in their cars and they start beeping and honking and one follows the other. And it's about each of their lives and how it intersects. And I think it's going to people that like they almost hit each other in their cars and they start beeping and honking and one follows the other and it's about

each of their lives and how it intersects and I think it's going to be really good so they have a beef with each other doesn't that sound like the kind of thing

that could happen with me in real life oh my god totally but it's just that that little that incident I only I basically read the intro

I saw one episode okay so alright I have some tips for visiting Paris great which I just did.

Amazing. I don't know if you can tell by my tan. I was in Paris for five days. Was that your first time? I went in 1989 as a teenager. Okay. So first time. Yeah, basically.

I loved it. Yeah. But a couple of weird things. They don't have ice. Right. Like, John, back me up on this. There's no ice in the city of Paris. I was just there for the first time in November. I don't remember this ice issue.

Who needs ice? Me, my wife, my kids when we walk 25 miles in a day. There's no ice. Like, you can't, you go and- Drink some water. Well, that's another thing. There's no, okay. What, they don't have water?

No, no, no, hold on. Hold on, it's weird. You go, when was the last time you were in Paris, no. Hold on. Hold on. It's weird. You go – When was the last time you were in Paris? November. It was the first time. Were you thirsty at all? I mean, I remember having to go and buy a lot of bottled water because I wasn't sure

if I could drink out of a faucet. Why can't I just have ice in my drink at any point? No, it was cold outside, so I wasn't – I didn't want ice. Cocktails? Well, yeah. But forget it. Diet Coke with no ice in it. What is this, like an endurance test?

I'm not going to drink this. Forget it. Diet Coke with no ice in it. What is this, like an endurance test? I'm not going to drink this. So we go to a – we see a Starbucks. Walk into a Starbucks. I'm like, venti iced coffee, black. That's my drink. They're like, what do you want? Like cafe Americano but like make it cold?

Sure, do that. They give you a coffee cup, like a paper coffee cup. They fill it with coffee and then they pour water in to cool it off. And then they take one ice cube with tongs, ceremoniously drop it like there's a fucking ice shortage. But is it a big cube? Drop it into the cup. No, it's disgusting. I threw it out in front of them. It's just not a thing.

They don't drink ice unless you ask for it. And when you ask for it, they give you one cube because they don't understand why you're asking for it. I thought that was interesting. Um, they also don't walk and eat. Like I will walk through the city with a sandwich. Of course. Manhattan.

Of course. Or a slice. Like I'll just do that. I did it yesterday. And everyone else did too. And it's like, it's okay. They're like horrified if they see you walking around eating. Like it makes no sense to them.

John, am I crazy about this or? I've never tried but I believe it. I want to go and test this all out. Because they have better manners than us. The Parisians eat meals. They sit down. They have breakfast. They're not on their phones.

They're actually eating. That's what they're doing. Right. Well, forget about it with this kid. What? Put your phone down. I'll tell you. Anyway, they don't snack.

So they eat like three meals a day like normal human beings. And my kids are like, Dad, I want a hot dog. I want an ice cream cone. I want this. I want that. It's not like Manhattan or Philadelphia or any other city where you walk around and there's like vending carts. And they just don't do it. They don't have it.

So I thought that was interesting. That's probably why they're all thin or it seems like they're much – Well, they smoke cigarettes still too. I saw a lot of electronic cigarettes. But yeah, to your point. Anyway, they just – they seem to be living life for the purpose of life and not living life the way we do, which is to get to the next thing. So I thought those two things were interesting. Can I tell you something about France? Stock market at an all-time high today.

How about that? All-time. Can't be the coincidence. Why? They're saving money on ice machines. I don't know. The last thing about Paris, and then I'll leave that one alone. The whole thing with Parisians are rude. It's the opposite. At least where I was going.

When you're in like a nice hotel or a nice restaurant, they could not be nicer. Yeah, I agree. They actually know how to serve. Like they are f***ing great at making you feel like a customer, welcome, like happy. The only thing is they're slow as shit. So you do have to ask for things like three times. like happy. Yeah. They, the only thing is they're slow as shit. So, so you do have to ask for things like three times. And like,

sometimes I'll have to ask four different people that are whizzing around, you know, running around the restaurant, like slow down. Can I just talk to you for a second? I need this. I need that. But that's maybe a New York thing,

right? They're really friendly. The whole like Parisians are rude. I live in New York. New Yorkers are rude. Like Parisians are good at like be our guest

they do that really well so that that whole stereotype was completely for me at least dispelled yeah by

by my trip to Paris alright that's all I had to say about that do we have anything left we have to do no alright hey

Liz it's been a pleasure having you on the show I want to tell everyone where they could follow you and get more of your insights. So you mentioned your podcast. Where do we listen to that? You can find it on Spotify.

It's called The Important Part. You can find it anywhere that you listen to podcasts. Okay. Twitter. How long have you been podcasting for? Oh, two years. Just finished season two. Look at you.

Yeah. How many episodes do you do? I just do it once a month right now. Once a month. Yeah. Okay. We're going to change it up for the next season, though, so stay tuned for that. Okay.

Very cool. All right. So we're going to follow that. And you're writing at SoFi. Yep. I'm writing. I post those on Twitter. I write a blog every week.

I write it usually on Wednesdays. We either drop it Wednesday night or Thursday morning, usually Thursday morning. And that one is called Liz Looks At, so I choose a topic every week. Liz Looks At. March Inflation Oh look at that, Boulder Up The Hill Yeah Seeping out of the balloon though Is that the balloon or Boulder?

Alright, Liz, so it's called Liz Looks At Liz Looks At And what's your Twitter handle? Liz Young Strat How active are you on Twitter these days? Very, very active, every day Every weekday I should say So everyone follow, what is it? Liz Young Strat. How active are you on Twitter these days? Very, very active. Every day. Every day. Every weekday I should say. Okay. So everyone follow

what is it? Liz Young Strat. Liz Young Strat on Twitter. Check out On The Money or Liz Looks At on SoFi.com and Liz Young's podcast which is called The Important Part. The Important Part. Liz, it's been a pleasure to have you. We appreciate you

sharing your story with us and all of your insights. And hope you'll come back soon. Does that sound good? Absolutely. Thanks, guys. What are you doing tomorrow? I'm listening to this after it drops. Hey, guys, make sure to like and subscribe.

And we will talk to you next week. Thanks again. Liz. Well, thank you. Stop. I know. I know. I know. I see her. I know. Now. I know, I know, I know. I see her, I know.

Now I owe you. It's so fun to do it in the house.