The Compound and Friends - Someone Is Blowing Up

Episode Date: May 6, 2022

On episode 45 of The Compound and Friends, Matt Phillips joins Michael Batnick and Downtown Josh Brown to discuss: the market decline, forced liquidation, the FOMC decision, quarterly earnings, Bitcoin in 401(k) plans, Ozark, and much more! This episode is brought to you by our friends at Masterworks. Visit https://masterworks.art/compound to skip the 10,000 person waitlist. See disclaimer at mw-art.co/x. Check out the latest in financial blogger fashion at: https://www.idontshop.com Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

So what are you doing at Axios? I write the morning markets newsletter. Well, it's good. You'll be able to hear your voice. Oh, cool. Yeah. So I do the morning markets newsletter every day with my partner, Emily Peck, who is a former HuffPo person. Where were you before? The Times. I was writing markets financial news for the Times

for about four years. Where's my documents? And before that, FT, Bloomberg, Journal? Where was I before that? No, weirdly, I was at Vice. I was at Vice News.

Oh, that reminds me. I got an email from Vice. I never responded. Oh, really? They want to talk about crypto. Oh, cool. Yeah, they've been doing good stuff on crypto.

And I was at Vice for a year. I was like kind of running their like finance vertical. And I was like. Did they sell? Not yet. They were like looking for. They were huge. It was huge.

In like 2017, 18? Yeah, I saw you on Vice. You had to go eat an entire buffalo with Action Bronson. It was a great episode. It was such a weird... Is that true? No. It was such a weird place to work.

Like, it was very strange. I went there. I went to Vice. To that, what, South 2nd Street in Williamsburg? I went to Williamsburg. I was on Desus and Mero before they got on Showtime. Oh, yeah. Yeah, I had an episode with them.

I was in the elevator with them once, and I was so old. I mean, I'm getting older. How old are you? Whoa, what's this? It's Garfunkel, man. Is this what you're listening to? Yeah, this is some anti-stock market crash music. I need that.

I need that. I need some serenity. How old are you? I guess that's what Josh was listening to. How old are you? 44. You're my age. You're not getting old. You're my age. I'm getting old.

You're aging like fine wine. Yeah. Yeah, turn art back on. Garf Uncle, man. Yeah, that is... That is a good song to play. You know George Winston, the piano player? No.

That's some peaceful music. George Winston. Is it George Winston? Is that his name? It must be. Yeah. That's some peaceful music. George Winston. Is it George Winston? Is that his name? Yeah. I grew up with that in my house. I don't know why. Do you mean George Vincent?

No, George Winston, the pianist. I don't know. Yeah, it's like he has albums that are like December, winter, Thanksgiving. Very festive. Piano. Maybe I should get my computer out. You definitely should. Yeah. Thanksgiving. Very festive. Piano. Maybe I should get my computer out. You definitely should. Yeah.

Yeah, definitely. Yeah. We're in the dock. Do you look at... There's that tick index. Do you look at that? No. I don't know.

Do you need... You might need a Bloomberg to access that. Oh, yeah, yeah, yeah. Plus, whenever it gets extreme, like, everyone tweets it anyway. That's true, yeah. Yeah, that it gets extreme, like, everyone tweets it anyway. That's true, yeah. Yeah, that's the only place I've ever seen it. I was saying to Josh,

I feel like we're, like, we're, like, approaching circuit breaker territory because we're just not bouncing at all. I'm afraid this will be, like, a flush. When was the last circuit breaker right after COVID? 2020. There was a couple of those, right? What's the first one?

Is it 7.5? I don't know what it is. I don't know what the other is. What are the rules? Let's go to the rule book. NYSE. Here it is. Circuit breakers halt trading.

Set 7%. All right. 7, 13, and then 20. All right, chill, chill, chill. Why? You don't think that could happen? No, I hope not. But wait.

No. Trading will only halt for 15 minutes. It gets shut out. Before 325. All right, there's like a time. Level three is like a flagrant two. Like, it's done. If it hits level three, it's done.

No, but if it happens after just, they let it play out. They're not going to halt it and then reopen it and close it. We're not bouncing even a little. Now for GameStop, there are different circuit breaker rules, right? Dude, Duncan's got this tinfoil hat shit.

For GameStop, they will never halt GameStop because they're afraid of Twitter. Duncan's favorite source of news besides for Axios is Infowars. Oh, my God. You kind of have a little bit of an Infowars vibe. I feel like you could. No, not personality-wise. I could see you dipping in.

If you don't know who that is, then how do you explain your Alex Jones tattoo on your back? That's right. Oh, that's his thing. I could see you. I actually think, is Infowars gone? Did they declare bankruptcy or did he declare personal bankruptcy? How do you explain your Alex Jones tattoo on your back? That's right. Oh, that's his thing. Okay, gotcha. I could see that. I actually think, is InfoWars gone? Did they declare bankruptcy or did he declare personal bankruptcy? They're trying to separate them somehow. Oh my God.

I just Googled InfoWars. Why would you do that? The tagline is InfoWars. Throw your computer out. There's a war on for your mind. The number one independent news service in the world. Battling globalism. Oh, f***.

Oh, my God. Disgusting maniac. I don't know. Got to hear both sides. You don't think Hunter Biden crashed the stock market today? Then I don't really know. I don't really know if we could relate. You know?

Put my mic on! Do you know who that is? Who? Put my mic on! You don't have that is? Who? Put my mic on! You don't have your headphones on. That sounds very medley. Yeah, guys. What are we doing with the volume?

Put some respect on his name. It's not volume. It's distorting. Why am I distorting? It's a sign. Let's get everything uncomputed. Oh, no. Are we going out LOD?

Well, it's only 3 o'clock, but we're on the lows. Probably rallies. Duncan, do something. I don't think so. I don't know. I made the mistake of looking at my Robin Hood. Put my mic on! There we go.

Bonds are starting to rally. They should. Finally. The money has to go somewhere, my friend. Well, apparently it doesn't. What? You don't think that's just a classic trade out of ARK into five-year treasuries? No?

Isn't that what we've seen in prior recessions? How much is ARK down now? 70. Oh, man. Yeah, it's remarkable. That assumes that you bought it at the high, though. Okay. So if you bought down 20, you're only down 60.

Is Buffett buying more? I think Berkshire might be getting a margin call. That might be all the first selling that we're seeing. Actually, ARK Bounce is only down 69%. Not nice. Are people finally leaving her, though? No. She had a billion dollars of inflows as of

a week ago. I feel like we got to be close to the point where people are crying uncle. How? Do not pull that Martingale shit anymore. I was telling Ben. I don't know all these terms. I know what you're describing. It's what you're describing.

It's like a psychologist study. What? You know, like Dunning-Kruger, for example. That one I know. But anything that's named after a psychological study, like Martingale, don't come to me with that. Martingale is like Vegas, bro. Don't come to me with that. It's not psychology. Whatever.

You know what I'm talking about. I'm not talking about just psychology. What are you saying that I'm doing to you? You're coming to me with terms that I'm not familiar with. Okay. So isn't that how we learn? It's disrespectful. Stop it.

What? I can't ever tell you something new? You have to know everything that I know? You know in 40 Old Virgin when Kevin Hart says, watch your mouth and help me with the sale? That's what's going on. Why? Did Ben know what a martingale strategy was? I don't know.

I don't know what a martingale strategy – what the hell does that mean? When he describes it, you'll know know it it's very pretentious i was saying that the buyer of arc because baltunis always has these charts showing like and yet again they're taking in another 10 billion dollars or whatever yeah so it's like who the hell is the buyer down 60 in the hole on any etf that's never happened ever. So I'm saying it can only be somebody who is pursuing a Martingale strategy. Martingale is a gambling system. It's not a psychological – here it is.

The Martingale strategy involves doubling up on losing bets and reducing winning bets by half. OK. It essentially is a strategy – Better dollar you lose bet too. Shit, I lost again four and you just keep going until you're even. Yeah. Right. Yeah. Right.

Double, then quadruple, then octuple. You know who made that famous in the market? And then you finally win. Munger used to do it in the 70s. What? The Martingale strategy? Did we do the clap yet? No, right?

No. Clap's coming up right here. It's still a cold open. Okay. Let's get it going. This open is very cold. The Nasdaq's down 6%. Holy shit.

Ice cold. One hour left, though. Anything can happen. Anything can happen. Come on. Let's go. Let's go. Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any

investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by Masterworks. What was the last time down today? Like five and a half percent. Do you know how much my Picasso was down? Probably flat on the day.

Flat on the day. How much do you love that? I love it. Okay. How do you own a Picasso? I know how much money you have. It's not that much. Tell us how you do that.

Well, there's a site called masterworks.io. Okay. And they fractionalize art. So I'm a proud owner. I don't have my wall, but I've got it on my virtual wall, my digital wall. Okay. So you own point something percent of a Picasso. That's kind of cool. Not to brag, but yes. Okay. How many other, how many other pieces of art do you own pieces of? I've got six. I think I've got seven. I think I've got seven. I've got six others in my repertoire, my portfolio. Okay. So how do you do it and how do you get liquid? How do you do it? Do paintings sell?

Tell me the whole thing. Do they sell? Tell me the whole thing. I go to the site. I see what I'm interested in. I buy. I buy. And then when they sell on my behalf, I will get liquidity.

Ben got liquidity. Ben got a sale. Ben got a sale of one of the paintings he was a fractional owner in. Yeah. That's kind of cool. Anyway, here's what you do. You go to masterworks.io. You got to check out the disclaimer, masterworks.io slash disclaimer.

Let them know we sent you. And thank you for listening. Here we are. There's going to be beats. Here we are. He's a fan of the nonsense. All right, Mike. All right.

Episode number 45 of The Compound and Friends. You guys who have been listening know that we have lined up a series of extremely intelligent guests ever since we started last June. Today, we're very fortunate. We have one of my favorite people covering the market, one of my favorite journalists. Will you call yourself a reporter or a journalist? A reporter. But you're both though, right? Yeah. Yeah. I'm probably less of a reporter now.

So when you're a journalist, you turn the hat backwards, let's alone and over the top. All right. Matthew Phillips, ladies and gentlemen, welcome to the show. So happy to have you. Happy to be here. Happy to be here. Are you excited about this one? Are you as excited as I am? Very. Very excited. All right.

We wrote this whole bio for you. Can I read it? Sure. Okay. If any of this is untrue, Duncan put it in here. Matt Phillips reported for the Albany Business Review and the Bakersfield Californian from 2002 to 2005. All right.

That's pretty much it. Is there more? Yeah, there's a few things. Matt was a Wall Street Journal reporter. That's how I met you from 2005 to 2012, a pretty exciting time to be at the journal. You covered some shit. Yeah, yeah. It all went to hell.

It really did. And then you were at courts covering finance and markets. And then you were at courts covering finance and markets, editor-in-chief for Vice Money from 16 to 18, markets reporter for The New York Times from 18 to 22, not 18 years old, from 2018 to 2022. And now you are the markets correspondent for Axios, and you co-write the Axios Markets Newsletter. Over 650,000 people get that newsletter, myself included. I read it every morning. I never miss it. You guys do an amazing job with it.

Thank you. All right, let's start with this. What the f*** is Axios? You guys came out of nowhere, and you're like half of my reading material now. Yeah, no, it's awesome. What exactly is this about? It's built on sort of this mantra. There's like, you know when you go to start a new place, and you're just like,

they've got their own language, they've got their own, they've got their own. Axiomatic? Is that where it comes from? Or axiom? They've got, it's smart brevity is the thing.

This infuses everything. And at first, when you show up someplace, you're just kind of like, yeah, yeah, that's what they say. But it's really like everything about the place

is like, is it smart? Is it fast? Are you wasting people's time? Okay, I love that. Yeah, and I love it too because, you know people's time? Okay. I love that. Yeah. And I love it too because, you know, you don't have to do all the stuff that you have to do at like a traditional media place where it's like,

can't we find a person who's- Fact checking. Forget about all that. Who has time for that? No, I love the facts. It's just like all the kind of like nonsense that you dress up around our story. Kevin Smith from Oregon who just sold his, in his 401k. Right. Right.

Oregon. What did I say? Oregon. I'm a gone guy. I say I'm already, I'm sorry. I promised myself I wouldn't do that. Hold on.

So I actually, just as I was asking you that question, it occurs to me, I asked Sam Rowe that exact same question on the show. And he actually said smart brevity. All right. So you guys really like eat, sleep and breathe the thing yeah it's just just don't waste my time don't waste the reader what's your typical article length it's never it's never more than 600 words and it's almost always between like 300 and 400 respect your audience respect the audience man

yeah definitely well that's very that's a very au courant concept though because nobody's going to read dude nobody knows what you're talking about au courant yeah i didn't know we were going to speak the language of international diplomacy okay i apologize all right wait a minute so you are covering markets this is something that you have done at the highest levels you've done this at the journal new york times yeah uh so you've got that ability to understand everything but now you have to make it short and sweet and impactful. Is that hard? I would say I get to make it short and sweet.

Okay. You know what I mean? So much about working in newspapers, all those places are amazing. I mean, they're just like amazing. They still do amazing work. But so much of what you write is dictated by the format. You know what I mean? It's dictated by the paper.

Bloomberg's got like a 16 paragraph format and you kind of have like by paragraph three they're rehashing old articles right right it's like why the journal makes you find the dumbest person and quote them right from oregon from oregon most most of their sources are from oregon okay what's the difference between what you were doing last at the times versus now? What did you have to do there that you no longer have to do? Put a liberal slant on everything? You don't have to do that anymore, right? Now you can tell the truth. No comment.

No comment. It's a, you know, basically it's like, yeah, I think I can just kind of cut right to the core of what I think is going on. I mean, it's way more voicey what I write now. You know what I mean? I mean, I think to be honest, covering I mean, it's way more voicey what I write now. You know what I mean? I mean, I think to be honest, covering the markets, it's an interpretive act, right? Like you have to, you cannot, there's no scientific answer to why is the market up, right?

You have to, even if it seems very clear, you're interpreting. And so like, I think I'm a little bit more straightforward about like, hey, you know, this is what it seems like going on. Here's why I say that. Well, so, but here's the, though. Anybody can write interpretive. But I think you're you doing interpretive is more valuable, given how long and for how many outlets you've been covering

this stuff. I'd rather have your interpretation. Thank you. Then a guy with like dot ETH in his Twitter handle. I mean, like, I feel like I feel like it's coming from a place of experience. Well, thanks. Yeah. No, I mean I don't interpret based on nothing. I mean I'm trying to be honest about what I think is going on, you know? All right. So good.

This is a good place to start. What the hell is going on? Interest rates? I don't know really. Right? No, it's – Give me your shtick. What are we living through right now?

We are living through the end of – And don't use any big words because Mike gets upset. The end of the Greenspan put. Wow. The end of – The Greenspan put. Yeah, the Fed put. This sort of underwriting of easy money policy that began in the late 80s.

When did it start? 1987 Greenspan cut rates in the middle of the day or whatever. Yeah, the next day he came out and just sort of winked and said, we're going to be supportive. And it worked. Yeah. No press conference back then. Yeah, yeah, yeah. I mean, it was a big deal because they never said anything.

Right. You know, and they came out with this kind of cryptic statement saying we're supportive, basically, and the market went through the roof. Okay, but so you're saying that doesn't work anymore or we can't really do that anymore? Market went through the roof. Okay. But so you're saying that doesn't work anymore or we can't really do that anymore? I'm saying we can't – I mean the Fed can't really do that anymore because now we've seen inflation again. We've seen inflation. And even if it goes away next month, we're not going to forget about that.

This is going to be a major searing experience for Washington for decades. Well, we've got midterm elections coming up. Right. And what's more important than the short term is the stock market or battling inflation? I mean, have fun with that, right? Yeah. I mean, the stock market, I don't know how. I mean, people are miserable no matter what. You know, it's like they're it's not going to help their miserable mood. Like the national mood is just pissed off, you know. But so like the're it's not going to help their miserable mood like the national mood is just pissed off you know but so like the stock market's not going to help you have a president with a 35 approval ratings i don't think he's done anything yet for people to disapprove of right uh this might be the worst setup of all time it's bad for a president like

going into mid because you get killed your party gets killed in the midterms anyway yeah that's almost no matter what i mean and now you have like the worst inflation in 40 years people are getting raises but they're mad because their cost of living is going up twice as fast right people can get three jobs if they want them but this is going to be like a republican landslide yeah at the end at the end of this year although yeah yes i mean the the historical political corollary would be 82 though which was like a miserable time economically. When? 1982.

Oh, okay. You know, Reagan came in. I mean people forget, but in 82 people were like Reagan can't run again. Yeah. You know, he's like – there was like unemployment really high. Well, you and I were four years old. Yeah, it was brutal. So what do you remember from that period? Oh, yeah, man.

I was looking for a job. I was looking for a job. Damn Reagan. All right. Baseball card, inflation. Let's set this up for people. We're recording this on Thursday afternoon. So by the time you listen to this, who knows?

It could be a very different day. Yesterday, Powell made it clear that they're not considering 75 basis points. Yeah. And the market took off like crazy in the last hour and a half of trading. We had a plus thousand point day in the Dow. Yeah. Led by energy and tech. And just everything went up. Today is the polar opposite. We just took a leg lower, by the way. Yeah. 4.3, I see. Yeah. So this is turning into one of the worst days of the last,

I don't know, 10 years. Maybe it'll be on the top 50 list. Yeah, it could be. I mean, we're back to that 2020 scary. Can you remember a rally that was given up this quickly of that magnitude? A thousand up and then a thousand down on the Dow? I know Mike hates my talking points. How should I phrase it? Four percent? Yes, please.

This is a pet peeve of mine with the Dow. No, I understand. A lot of people get mad at that. All right, NASDAQ down five and a5% after being up 5% yesterday or something. Can you remember the last time we've seen something like this? I mean it's got to be March 23, 2020 when the Fed came out and said we're printing like crazy. Because it was bleak and then it was like – Right.

But was that it after the Fed said we're going to do this plan? It was actually later that week when the fiscal – when the government said – so basically on Monday the Fed said we're going to print $2 trillion worth of money. And on Friday the government said, by the way, we're going to spend $2 trillion worth of money. And we're going to send it to your bank account. Yeah. OK. And that's kind of really when it went – All right, Mike, what's this first chart?

Hang on. S&P is down 4%. I'm just eyeballing this. We've had about 40 of those since 1993. So this is bad. What's this chart that we're looking at? All right. The chart that we are looking at, where's my screen?

Pardon me. I apologize. All right. This is from Bespoke. Thank you, guys. We're looking at the daily return after a big positive reaction for the FOMC going back all the way to 1999. And the average is slightly negative, but the only time we saw something worse than what we're seeing today was what, what, uh, 2011. Yeah. So there's

a, today's yellow. We're looking at the yellow line. Okay. So there's a bad, bad, bad reaction. So to the point of like, how often have we seen this after FOMC specifically? Yeah. One other time. Once. So it reacts like a post-Fed, but probably most of these days were not a huge up day after the Fed. The day before, yeah. No, they weren't.

It's saying this is the day after a big positive reaction to the FOMC. So this is the second worst day two after a Fed decision is the right way to phrase this. And we're on course for probably the worst day. August 2011 was, I guess, the debt ceiling fight in Europe. That was Europe. Oh, right, right, right. So, all right. There's a lot of talk that somebody's got to be blowing up.

So sentiment trader Jason Gepford tweeted, there have been two days in the past 25 years, two days when the S&P 500 futures were down 3% and the 10-year treasury futures were down 1%. That was October 9th, 2008. People know when that was and March, 2020. And then he said, someone is blowing up and this is forced liquidation. I am sympathetic to that. It might be more than one person blowing up, but I don't think that there are fundamental decisions being made that you would buy a stock on Wednesday and sell it down 11% the next day. That doesn't strike me as fundamentally driven activity.

So I think that's correct. What's the 10-year? It's at 307 now. I mean, all your hedges are not working. Well, that's what's- They're worse. year? It's at 307 now. I mean, all your hedges are not working. Well, that's, that's, that's worse, right? Like worse than the thing you're hedging. Yes. Yeah. So you're, you're terrified. So look, throw up this chart guys. This is, this is like the longest duration bond. So we're looking at zero coupon bonds and we're looking at TLT. Both of them are by far in the worst drawdown that they've ever experienced. Zero coupon bonds are in a 41% drawdown.

Oh, my goodness. Yeah. Oh, my goodness. This is a shit show. So hold on. So the PIMCO 25-year zero coupon US ETF, I don't know how much money is in that, is down 41% from where? From its high in what? It looks like from.

Oh, no. Dude, this is from the beginning of 2020. No, no, no, no. It made a high in, all right, that's true. It has around $360 million in assets in it. But here's the thing. These in theory, TLT has $20 billion in assets almost. In theory, this should be what spikes when equities puke. And the fact that these are puking, it's almost like one is causing the other. And so Josh is saying like, well, where's the money going? It's going to cash. Well, except that these should be the ones that spike, except if the reason for the panic is interest rate related. So I've said that not only are bonds not buffering the sell-off in stocks, they're causing them. You know what, how big a pair of balls you have to have

to be like very long, the zeros with interest rates. Yeah, it's the most high duration form of bond, like the most interest rate sensitive. It's all rates. Bonds go up 1% and this goes down 90. So the thing that's very weird about this environment and there are many things- Wait, put up the second one.

Is the second chart. Okay. So we've got the three to seven year, so intermediate term bonds, government bonds, treasuries, Uncle Samuels are in a 10% drawdown. That's worse than high yield than junk bonds. And normally credit spreads would be blowing to the moon right now. And they're just not. So what the hell is going on? Is actually, but if you look at this, isn't there some precedent to this?

No. No. No. I mean, what's going on, I guess, is that. No.

What am I looking at? No. I mean, all the junk bond issuers have locked in. They have so much money right now. A lot of them are energy companies, that too.

Yeah, yeah, right. But look, look at the purple line. Every time there's a dip, the purple line crashes relative to the orange. And I'm talking about junk versus intermediate term bonds.

This is weird. This is very, very weird. It's weird to have a seven to 10 year treasury acting worse than the junk bond index. Yeah, that is weird. And these are bonds that people own, regular people own. What are you saying when you look at this environment

that we're in? The stock market's acting like the end of the world, but spreads are not blowing out at all. Is it just a function of how much money has been raised recently in the debt markets and everybody's locked in at a low rate? No, I think that's it. And I think, I think Marley, you nailed it in that, you know, the energy component of high yield is huge. And so it's probably 30% or something like that. Yeah. I think I've seen even higher. So, and especially even some of the edgier stuff. So if you had, if you had the, the debt of an energy company right now, you probably

feel better than you would feel owning the debt of almost anything else. Yeah, for sure. Okay. For sure. Okay. How long can that last though? Don't companies have to start rolling debt at some point? Yeah.

But as far as I, as far as I know, and my, my editor, Kate Marino used to work at Debt Wire. So she's really like. Shout out to Kate. Yeah. Oh, you know, and my editor, Kate Marino, used to work at DebtWire, so she's really like – Shout out to Kate. Yeah, we know stuff. Oh, you know, yeah. She's like really locked in on credit world and she says like – but there's like really no like looming maturity wall or anything. Like these guys are sort of fine for the foreseeable.

They've had a couple of years where you could sell anything to anyone and they did. Yeah. And they took advantage of that. You know what else is in the worst drawdown of the last 10 years by far? Amazon, Facebook, and Netflix. Oh, yeah. And you expect Facebook and Netflix to be on this, especially Netflix. All right, whatever.

But like Amazon? Yeah. Everyone that owns stocks owns Amazon. Yeah. A lot of it. If you have a retirement portfolio, you 100% have a lot of Amazon and Apple, and you're just in these stocks. And Amazon's down almost 40 from its highs. I think Netflix is the worst performing stock in the index, the S&P this year.

Last I saw, it was down 67%. I would believe it. I believe it. All right. So what's your big takeaway from what went on yesterday with the Fed's decision? Because the controversy today is they should have done 75. That's not my read of it at all. I just think they put it off too long.

Yeah. And the market almost like is blowing by them at this point. The market tightened. Yeah. Yeah. I think – well, yesterday obviously was like – you could see it. It was like a rocket when he said we're not doing 75 anytime soon. I mean I think that the – it's kind of wonky, but the productivity numbers this morning, the unit labor cost number there.

Say more for the audience that's not fully aware of that. So each, I think, quarter of the government puts out productivity numbers that show basically GDP basically broken down by hours worked. Is productivity a residual? Because how do they calculate that? It kind of is. It's just like hours worked divided by hours worked. Is productivity a residual? Because how do they calculate that? It kind of is. It's just like hours worked divided by GDP, basically. And it showed what? What did we see?

It showed productivity went down a ton, which is like, I've always kind of been skeptical. Like, that's kind of good because it means people are getting paid more. Josh was slacking this quote. I've been saying it. Yeah, my productivity is through the floor. Right, right.

But the thing, there's an underlying breakout of labor costs in there that basically just shows they're sort of off the chart. And like it's the kind of thing that like anyone trained in like monetary policy is going to say like, oh, wage cost spiral. We got to drop the hammer. We got to cut this off the knees right now. And so the combination of like – Bank of England said something about inflation too. What did they say? Bank of England came out and raised hard and said, we're going to do more. And it kind of made Powell look like a weenie a little bit. And so I think it changed the-

That's the title for the show, Powell's a weenie. It kind of opened the Overton window of rate hikes. How is the Fed funds rate at 75 basis points? The Overton window is like something that- The realm of the possible. Like something like you're like making the possible discussion go in a place that prior to, like nobody could-

Thank you for translating for the audience. Yeah, exactly. Stuff that was considered unthinkable now is slightly more thinkable. Right. So 75- So what the Bank of england did they have kind of been ahead of the the fed yeah for a while now on inflation yeah yeah definitely

i think they were worried about the i think europeans in general are more worried about inflation or some european countries yeah because their grandparents all told them weimar germany stories right i think right okay and it's You know, there's like the demographics there. There's a lot of people on pensions. They vote. This stuff, this is right. This stuff just blows it up. So Matt, you spoke about this being like the end of easy money.

The Fed put, we're finally allowing some runoff up to $95 billion a month. And it's, we're on pace for the Fed to shrink their balance sheet by $3 trillion over the next three years. So I was writing yesterday that I think what is over are the V-shaped recoveries. Like I don't think the market's going to be at a new high in 60 days from now. Yeah. It's hard to see that when the Fed removing so much liquidity. Like yesterday, weren't you like, oh, wait, this looks V-ish.

Yeah. I know it didn't last, but I would have said the same thing. Yeah. No, I kind of – I'm kind of getting more sympathetic to that view. It's like yesterday I said the V's were over, even though yesterday looked like the beginning of the V. Right. I wasn't saying that, but I'm coming around to that. It's, it's hard for me to picture us. I agree with you. It's hard for me to picture us making a new high in the next 60 days, but 60 days might've actually been long. We made an, we made a, I think 60 days was how long it took to make a new high after COVID?

No, it was 140. 140, okay. Yeah, but no, it was fast. And then all 2021. Yeah. Right, so the worst pullback you had in 21 was 5%. And it was rectified within a week. If one of the rallying cries of the last 30 years

was don't fight the Fed. Yeah, or buy the dip. Right, or buy the dip, same thing. But like now it's in reverse. Like why would you fight it? Right, right. I mean, it's interesting. And so many of the people. Yeah, or buy the dip. Right, or buy the dip. Same thing. But like now it's in reverse. Like why would you fight it? Right, right. I mean, it's interesting. And so many of the people that came out and bought the dip, you know, originally, like we were talking about GameStop earlier or whatever, you know, like those people, you know, they were trained to buy the dip.

Because it was, I mean, and it was, you know, everyone on the street bought it. And then sort of everyone, you know, on Main Street started to buy it. Barron's did a piece last weekend that basically called 3% 10-year treasury the line in the sand, meaning that's where people's calculus gets very different about taking risk in the stock market or not. I think that's true. I remember talking in 2011 and then, I guess, in 2018 when we got there, 3%, talking to bond fund managers who were like, I know like, you know, rates are going up,

but I told myself if I ever saw 3% 10-year, I'm buying it. Okay, here you go. You know, and then, you know. Nobody seems to be buying it today. That's true. If things do get harder from here, and I think they're going to, and we're going to get back into the moosh,

but just taking a step back, it's okay. We've literally done, the S&P has literally done 15% a year for 10 years. Did you not think it was going to get harder? Yeah, 27% last year. The problem though, as always, is that the lion's share of new investors who came into the market in that 10-year period all did so two years ago. Yeah. That's the problem. Why is that a problem? Well, it's a problem for them. We went through the first eight years

of the last 10 years. Will millennials ever invest? But you know it's not a problem for them. It's a good thing. Well, I know that, but it doesn't feel that way. Right. It wouldn't feel that way to me at least.

I also think everybody would sign up for a sideways two-year market. Like, all right, given the run we've had, if the worst we get is a side year, but the thing is, people aren't worried about that. Right.

They're worried about down 40%. Right, right. Yeah. I is, people aren't worried about that. Right. They're worried about down 40%. Right. Right. Yeah. I mean, if there's an upside, you know, it seems like a lot of the stupidest things that people have been doing with their money are not in the stock market. Yes. You know what I mean?

I agree with that. So maybe we- You won't see those things. You won't see them blow up. Like a 57% drawdown that we saw in 1999 or whatever. It's so crazy how quickly, like, the environment changes. Like, stocks were up 8% on stock split announcements and not small stocks. And not long ago. Like a year ago. Yeah. Tesla stock split Apple. I think Apple was even more recent or Alphabet announced

the big one. And Shopify going up every single day. It was down 70% going into earnings and it fell whatever it's down today. What is it down today? What do you make of the pace of shrinking the balance sheet? So they put a monthly cap on it, $95 billion max. They're going to – they're not selling bonds out of their portfolio. They're going to allow up to $95 billion worth of bonds to mature and not replace them with new bonds. So that's – I mean it's not big in the context of the size of the Fed's balance sheet. Yeah, what is it? $9 trillion or something?

Yeah, but it's like big though. But isn't there a – That's a lot of – I mean that seems like a lot of money to me. $95 billion a month. It's a huge psychological component because even in March 2020 when the Fed said that they were going to start buying bonds, that was the end of it. And they didn't even really buy that many. Right. Right. No, it's huge. I mean, it's like, it's the government saying we got free money. We got your back. And now they're not saying that.

It matters. Yeah, for sure. For sure. For sure. And, and, and, you know, they've been saying it pretty much continuously since 2008, you know, and now, but it's not even just that they're like changing their policy now. It's that we have seen the beast of inflation, you know, and that's not going away and they're not going to behave the same way for a very long time. So when do they cut rates? Yeah. It'll be cutting rates next month at this point. Yeah.

All right. So, so they're not as, they're not as focused on the health of the stock market as maybe we thought they used to be. Yeah. I think so. Your big thing was like the Fed watches a 200-day moving average. I still think that's true. But you still think that they're-

I just don't think it's priority number one anymore. I think now it's inflation, right? Yeah. I thought that so long as, what you said is right. So long as inflation was a non-event or they were trying to produce inflation and couldn't even do it. Right.

So long as that was the environment, I think the stock market was job number one. Yeah. Tied with actual employment data. Yeah. And then when the employment data was going their way for years at a time, it really just became the stock market. And then there was a huge distraction with Trump. And then now it's this.

And so now the story is investors have no more appetite for subsidizing money-losing companies. That game is over. Yeah. But let me ask you guys this question. Why? I mean, this is something I've struggled to explain to people and I've tried in different ways and I kind of have a sense of what the answer is,

but why would super low interest rates make people... It's duration. Right. It's the same exact thing as the zero-grip bond. Wait, but what? Make people give their money to money-losing companies. It's the same exact... as a zero wait wait make people give their money to money losing companies it's the same exact if money if money costs nothing yeah and you're gonna pay me back 10x in 10 years right or i can get or there's a chance you will yeah then good enough so basically there's no

better option i but i i think the the casino aspect to the market pops up in every era yeah after a really big run yeah and in this case it was real gave cash to people who never had any yeah and this is what they chose to do this is what they chose to do with it i mean i i hate to say it that way story in uh at the times i quoted you in a story about you know like the sports game was i bullish or bearish no you you were you were sage and wise and you basically said uh oh, the – It was like sports bettors who were coming to – because like remember, people forgot that literally gambling shut down. There was no sports. There was no sports to bet on.

And so in like the spring of 2020, people were like, I know a game that's open. Well, so I was making this point like somebody – let's say the Robin Hood app went down. The person wasn't like, oh, let me open the Fidelity app. They're like, oh, let me go on DraftKings. It's like a pastime. Yeah. Not anymore because it's not fun anymore. Yeah, maybe not.

Okay. So these names were like, they were like alt stocks, right? And they were just like all the fun and all the hype. And it was psychologically like to Josh's point that investors were willing, but it was also just actual investors subsidizing, like venture investors subsidizing losses. And Lyft came out and said that they're investing and Spotify is still investing.

And when you're losing hundreds of millions of dollars, like that's cool when money costs nothing and investors are willing – like we've got your back. People don't want to hear that anymore. It's over. You mean institutional. Yes. Yeah. It's over. Yeah. Yeah.

Let's talk about the demise of the dollar because I get all my news from Bitcoin maxis on Twitter. And I've been told that the dollar is trash or going to zero or fiat or worthless or whatever. This is a weird one. This is weird. Why is the dollar at a 20-year high? What's going on here? Rates. higher rates. That's it?

That simple? Why didn't everyone foresee that then? The Fed told us they were going to start raising rates in December. They said three rate hikes this year, LOL. Well, it's also China too. Like the global economy is slowing down because China's like – COVID lockdowns. They've got 50 million people trapped in their houses because they don't want anyone out and about.

So it's a combination of that. So China has been weakening its currency. That has an amplifying effect. But yeah. But it's relative rates, right? Because the dollar is a basket relative to other currencies. And you would just think that, okay, inflation up, dollar down. But actually, no.

No. Yeah. Well, because it shows the Fed is going to fight inflation and they think you're going to keep raising. The dollar is always a pair. Yeah. It's not an absolute. It's the dollar versus what?

And interesting, a lot of it's the yen. And the yen, you know, they still don't have much inflation. I think that, no, I'm not a trader, but I've often thought like, I've often thought Japan would be an interesting spot to put some money now because they're still printing money. Yeah. And they show no signs of stopping.

And look at Europe. Put up the Jeff Kleintop chart. April saw the strongest European outperformance of U.S. stocks since January 15. Is that just because they went down? Did they go up, though? No. I think it's all relative. It's relative.

So it's tech on the performance. They don't have Amazon and Netflix. So they didn't get the benefit of all these big tech giants on the way up, and they're not bearing the brunt of it on the way down. You said it's really difficult to think how the European stock market could outperform the S&P 500. Only on the way down. Here we are. No, I'm saying on the way down. But that was inconceivable that Apple would fall more than their stocks.

It's happening. Right. So the way Europe outperforms the US on the way down could only be that our tech giants are the leaders. It's the same trade because they have cash flow producing companies. They're cheaper. They have higher dividend yield, higher cash flows. They're lower duration stocks. Dude, resources, mining is a huge part of their index.

Yeah, commodities, the UK, France. Okay. And one other thing. Dude, resources. Mining is a huge part of their index there. Commodities. The UK. France. Okay. And one other thing. One other thing. We've been looking at charts like this forever. This one, I think, comes from – this is SockGen, I think. Looking at the relative valuation of European stocks versus US stocks.

And it's been a downtrend. This is nothing new. But – Let me read this. This is from Reuters' Jamie. Jamie McGiever. European stocks are the cheapest relative to US stocks since at least the late 1980s. Wow. There's a reason for that, of course.

Are they now cheap enough so that gap starts to close or does war and gloomier European growth outlook keep them cheap? But isn't Europe heading right into a recession? I mean – And war would be good for the stock market. I mean it's like industrial capex. It's defense stocks. It's not a bad thing. I don't know if it's good for – I don't know if it's good for European stocks.

I mean I guess it's the – it depends on how much – on the energy from the Russians, yeah. European equities are – what is this? Is this book value? A forward PE ratio. European stocks are selling at a 30% discount on a forward PE ratio to the United States now. And they have not been at this cheap of a valuation. It's really off the charts, actually. But again, they're harder to buy, given everything that we've said before, which is if the US stock market's going to crash

or if there's going to be a US recession, I just don't understand how Europe avoids. And they have the same inflation problems we have here. Yeah. And maybe worse. Theirs might be more intractable. Yeah. So do you cover international stuff as much as maybe?

Yeah, I keep an eye on it because I think it's important. I mean, I think a lot of this is about China and we haven't been hearing so much about the Chinese lockdowns. But it's only going to make the – actually, Powell talked about it yesterday. It's only going to make the inflation really difficult. That's another thing that he has no control over whatsoever that's exacerbating inflation is if you start locking down cities like Shanghai. 25 million people. Yeah, and not to mention all the stuff that you need to leave there and go elsewhere. Yeah.

Okay. Do you have a view? Like how – are we over or underestimating the rest of this year inflation picture? I mean I don't – We're going to hold you to it. I don't really know obviously but like it's so uncertain. I don't really know because it, but like it's so uncertain. I don't really know because it's the supply chains, right? Like if this China thing – I mean this China thing that's happening right now is going to burble through for the next few months keeping things up.

But we've seen other stuff like used cars starting to come down a bit. I don't think it's likely, but this would really mess people up if we get supply chain issues in order and inflation does innovate. Yeah, yeah. I mean I think – I don't see how that's possible, but – This would really mess people up if we get supply chain issues in order and inflation doesn't abate. Yeah. Yeah. Well, I mean, I think – I don't see how that's possible, but – I think the term supply chain isn't even helpful because what we're talking about is like the global economy is in giant disarray. You know what I mean? That's like – it's not just like –

Is that bullish? It's not just like clicking a few chains – links of a chain back there. Yeah. Oh, we fixed the supply chain. Yeah. It's screwed up. It's like the system that under, underwrote the growth over the last 30 years is broken to a point where we don't know if it's going to make any sense to bring it back. Like, look at the time set a great story by Gina Smilick today about, um, and Anna Swanson about

shipping costs, right? Like if shipping costs are that elevated, all the outsourcing doesn't make sense anymore. Maybe you don't want to ship anymore. Right. Maybe you want to onshore. Right. The same thing with COVID. The amount of like dependence it turned out that we had on all these countries, this is way prior to inflation, just straight up like can we get things or not. Right.

I think was a big moment, like a reckoning. Yeah. And people are like, wait, why are we building all this stuff overseas? I mean, thank God it's not like been a bloody event, although a million Americans are going to have died of this thing. But it's like this is like a World War II level disruption. Like it's not – things are not just going to like – Snap back to the – Yeah.

Right. You're probably not going to revisit the way things were. I don't think so. It is interesting to think that like COVID started over two years ago. And now that we're just now starting to feel the ripple effects, but it took like, I don't know, almost two years. Yeah. You did this, you did this post about economic output in selected sectors by quarter. So I guess you're talking about the housing investment versus spending on recreation services. Do you recall writing this

or was this one of your ghostwriters? No, it was me. Okay. It was me. We have this chart right here. The purple line is housing investment, which in 20, I guess by the end of 2021

was 701.5 billion. That's an annual inflation-adjusted number? Yeah. What is that? What is encompassed in housing investment? Home Depot. Yeah. No, I mean, it's everything.

It's home, remodeling, building houses. Yeah, fixing them up. So for context, in 2011, that was under $400 billion. Yeah. So we've just about doubled the amount of money we invest in homes in this country, and that's inflation adjusted. Yeah.

It's a big deal. Yeah. And then the other line is spending on recreation services, which of course collapsed in 2020 and has made it about 80% of the way back, $450 billion a year. But we're spending almost two times as much on housing than on recreation. Yeah. What do you think these lines look like a year from now? They get closer? Does one turn down?

Yeah, I think recreation will go up, right? That seems to be what everyone's saying. Traveling, gambling, all this fun stuff. Could these lines cross? Is that possible? They did. Yeah, by 2011. I'm not saying.

Could we see that in 2023, 2024? Again, I doubt it unless there's a massive housing bust, right? You know, like that's why they were that low back then. I think – I don't think we're going to see a housing bust because in the same way that the Fed is not going to forget this inflation, like people cannot get houses if they want them without a huge hassle. And you're not going back to a rental apartment. Like you personally. No. I know I'm not, but I'm much further removed from it than a lot of our listeners maybe.

But like you just told us you're a country bumpkin now. Yeah. You're in Westchester. No. I know I'm not, but I'm much further removed from it than a lot of our listeners maybe. But like you just told us you're a country bumpkin now. Yeah. You're in Westchester. Yeah. You're like – you're going to keep investing in your house because what else are you going to do? Right now I'm trying to find somebody to like take out a wall. You and everybody else. Yeah.

Duncan can do that shit. We've had him do some like – Really? We've had him do stuff around here. Yeah. You want to go to Westchester tomorrow? I don't need you. Sure.

You want to knock out a wall? Yeah. Okay. I need somebody to put on a doorknob. My teenage daughter slammed the door so hard last night. What did you say? The doorknob flew off the door and hit the wall. Big heavy metal doorknob.

I've never seen anything like it. Teenage rage is like. I'm dreading it. My daughter's going to turn five in a couple of days and she already. You have some time. Yeah – You have some time. Yeah. You have some time. I was talking to my wife about it this morning.

She was saying little kids, little problems. Big kids, big problems. So my kid is taking her AP exams this week and my house is – I'd rather be here. I'll take eight podcasts tonight rather than go home. I swear to God. It's too much. Go ahead. What are you taking

i'm just curious what she's gonna take ap world she's like me the subject she likes a lot of English history a word person and math she's just like bullshitting her way through i mean you're not going to any like school that she wants to go to if you don't have good math yeah yeah she hates it yeah yeah so so anyway there's a lot anyway, there's a lot of door slamming. What's this gross domestic product chart? John, throw this on screen. Every time I say on screen, I feel like Jean-Luc Picard. Yeah, I think that's GDP.

I think it's just like the good old fast and American economy. So we're a $20 trillion economy and $7 trillion has been wiped out of the NASDAQ year to date. Yeah. Yeah. I think that's- Does that go back into GDP somehow? What do we do? Maybe. I don't think so. I think that just is vaporized. I can't remember if I'm getting this backwards, but I feel like Ben and I were saying that the economy could outperform the stock market. This is like back in the early stages of COVID. I might be misremembering that, but I think that the economy can definitely outperform the stock market. Yes. This is a big hobby horse of mine. I might be misremembering that, but I think that the economy can definitely outperform the stock market. Yes. This is a big, this is a big hobby horse of mine. It's just like stock market is not the economy. Like, you know, it's, there are different things. There's

different logic undergirding. Which do you think drives which now? I don't think they have anything to do with each other. I mean, I think, I think, I think the, I think obviously the economy is driving it because of the inflation, you know, the economy is driving the market. But I do think, I really don't think they have a ton in common. I mean, it's like, this is my, my shtick about this, trying to, the stock market and the economy. It's like trying to assess the health and athleticism of the American public by looking

at the NBA. You know what I mean? They're like, it's like – That's actually very funny. It's like the most refined – The best businesses in the world are publicly traded. Yes. Well, it used to be that way.

Now you could list anything. Here's why I think that we could have that dynamic because you can have a mild contraction in the economy and if investors are like, all right, but we're not paying 22 times earnings for Apple anymore. We're paying 15. Right. That's it. Right. Well, in that way, they're disconnected.

But I'm a big believer that the wealth effect is driving the bigger home purchases and is making people feel more cavalier. But the wealth effect of stocks? About what size SUV they lease. Because people are borrowing against their wealth. But is that their house or the stocks?

Because housing is a much bigger- People borrow against their portfolios a lot. Really? Like people with money. More than you think. Wow. This is a very old thing that's come back around in the last 10 years. Well, that'd be interesting because you don't usually want to use the kind of volatile collateral.

But that's what wealthy people do. So- Must be nice. So Wall Street sells that as a product. They say you have to unlock the value of your portfolio. Apparently, that doesn't just mean the portfolio going up. And then the other thing they say is that you have to take advantage of both sides of your balance sheet. So they make money.

So if you're a wealth manager at a large – I won't name any names so that we don't get any emails. At a large Wall Street brokerage firm, they're highly incentivizing their financial advisors to convince the boomers to borrow against their portfolio. Right, right. Now, history is on their side. Most people are not even living off the money in their portfolio. It's crazy.

But they've saved so much money and the stock market has gone up so much they don't even need it. And they're not like going all in. No, no, no, no. You get a certain borrow rate against treasuries. You get a little bit less that you could borrow against stocks. But they are doing it. So it's not like these are like dividend collecting people. No, you could – no, they are.

like these are like dividend collecting people. No, you can don't. No, they are. They're normal people who are just being shown a way to borrow money without an underwriting process. And you can use the dividends to pay down the loan. Right. I see. I see.

So it's not a margin loan. You can't buy more securities with it. Yeah. They will send you a check or a wire for a quarter million against a $2 million stock portfolio. That same quarter million 15 years ago, like you would have gone to a bank and borrowed it. Now they're just like, sign the paperwork.

Don't take the money out until you need it, but know that it's there and ready. And once you have that established, you're on vacation, you're in Cape May. You see a vacation home. I think we should do this. Let's call our broker. Not let's call the bank.

Let's call our broker. Not let's call the bank. Let's call our financial advisor. And the financial advisor will then get another revenue stream on that money that they're lending. I think the Times did a big story about this, like contributing to more wealth inequalities. Because they're not selling stocks and they're not selling their stocks and paying taxes on the gains. They're just borrowing. Right, right. It's a way of like sort of manufacturing income. The only thing they can't do is buy more securities.

Yeah. But they could buy a boat. They could buy a house. They could pay for a wedding. So it's having your cake and eating it too. I never have to sell my stocks and bonds. Yeah. The Fed is making it that way.

And I could borrow very cheaply against them. And I don't have to go through all this paperwork and this whole process. Now, what happens if your portfolio tanks? Oh, well, we're going to find out tomorrow. Yeah. No, you just, you know,? Oh, well, we're going to find out tomorrow. Yeah. No, you just, you know, you sell- But it's not like a margin loan. You sell a little more ARK, you'll be fine.

It's kind of not, like Apple's still hanging in there. Apple's only 14% off its highs. It's still a $2.5 trillion market cap. I feel like Apple is like the 10-year in terms of everything trades off of it. Or the Fed funds rate, I guess I should say. Everything trades off of it. It'd be interesting to see,

because I haven't looked at Apple bonds. But like I know Microsoft bonds trade inside treasuries. They're actually lower yields. I have more faith in Microsoft than I have in Congress. That makes perfect sense to me. Oh, god. I might – I have more faith in Tim Cook than I have in Joe Biden.

It would make perfect sense for me to buy an Apple bond with a lower coupon. Yeah. Yeah. Yeah. I mean I don't know about like the faith or whatever but like it's an easy – George Michael. I agree. A wise man named George Michael. We were talking about like consumer spending and housing and recreation and stuff. Throw up this chart about concerts.

So it's another thing like where we have the full reopening. People are going back to living their lives. When does spending turn south? Like this is – if we do get a – and we're looking at a chart of sales of concert tickets. Wait. Is the blue line estimated or actual? No, that's fourth quarter. So hold on. Let's – so fourth quarter 2021, 173.3 million concert tickets sold. Like by far an all-time high. It was zero. So I was-

First quarter of 2020. Did these concerts occur though? Like did they actually happen? It's all hootie in the blowfish. I was joking with Ben. Like, can we see a recession where consumer spending goes up? And obviously the answer is no, but- Is it?

Yeah, no, we just had one. We just had one. Well, fine. In COVID. No, not a COVID recession. A normal recession. We have a recession where unemployment stays under 5%

because I think we're about to. Yeah, right? Because unemployment doesn't factor into recession calculation. GDP at all, yeah. Well, also the way that they calculate it is just like a general slowdown of economic activity, whatever that means.

Well, there's weird things. Two quarters of contraction. Yeah. Yeah, that's what it is technically. But it's like weird because that last negative GDP print we had was like largely driven by the surge of imports, which is actually good. It goes to what you're saying about people buying a bunch of stuff that we had to get from abroad. Yes. So it's a weird – GDP is a weird thing.

Is GDP the economy? I don't know. It's really not. No not it's the best we have it's it's so outdated but what else maybe the economy is just the friends we made along the way I think that's right that was a hoodie in the blowfish line wasn't it

I think it might have been you write a lot about Wall Street you think that what happened with Bill Wang and Archegos has more meaning than just that specific case. And I read another article someone else wrote basically saying the same thing, that that is a wake-up call that these people that are now looking at this stuff really want to jail somebody. Yeah. And the market rigging stuff is going to be taken very seriously now.

So tell, this is you. If you're trying to understand how Wall Street works, never let an epic screw up go to waste. When something goes wrong and even better, criminal indictments arrive, that's when you see how things actually work. Is that your, that's your quote? That's me. Yeah. Okay.

So what are you, what are you, what are you saying here? I think we saw that the banks have a lot of exposure to somebody. Like no one had heard of Arcegos. You know what I mean? Even – I was talking to a guy who was pretty well connected on the desk and he was like after this – after the bust happened and he's like, yeah, I only just heard of these guys like a month ago. Yeah. And that like snuck up and it was not insignificant losses. It's a family office. It's his own money. There's no client facing. There's no – ago. Yeah. And that like snuck up and it was not insignificant losses. It's a family office.

It's his own money. There's no client facing. There's no – Yeah. And it's all derivatives. You know what I mean? There's like all this stuff is very, very in the dark. Like, you know, what if this happened with a real big fund?

You know what I mean? Like there would be banks that would be really hurt by that. So his lawyers were negotiating with prosecutors like two days before they scooped them up. Yeah. And I guess the, the gist of what I read was like, expect more of this. We're not going to do this thing where your lawyers get to, uh, take us out to lunch for two years and, and figure out a way to not jail somebody. Like people are going to be jailed. You think that's going to be the case too? I don't know. I mean I'm not an expert on how these indictments and prosecutions go,

but it seems to me like some of the stuff – I mean maybe I shouldn't. Some of the stuff in the indictment seemed a bit thin. Like I mean unless they have a lot more – it was like he bought aggressively in the last half hour of the day. It's like, well, that's kind of when people buy you know and when people trade like there was a lot of stuff that didn't seem particularly damning well that's the manipulation part yeah is he trying to make it appear as though there's more demand for the stock than it really is which brings in other buyers right right that's that's the question but what you can't buy shares at the end of the day if you have a view?

You better not. No one's doing that today, thank God. We don't have that problem today. What the hell is with – I mean, I don't know what you could say here. What the hell is with Credit Suisse and Deutsche Bank? Are they in some sort of a competition to be embroiled in like a league table? Who has the most scandals in a year? It's not great.

It's not a great performance. Is it because they're foreign and the people they have representing them here are like not afraid? What is really going on? I don't know, man. I'm not an expert on the European banks, but it does not seem like they are well-run institutions.

Yeah, I would keep it that way. What are we doing in the last good quarter of earnings? Whose note was this uh well doesn't matter who the note was but they were just maybe this is bank of america uh earnings are still coming in okay yeah it was the guidance that was destroying a lot of places so apple for example which is the consumer right just had their best heart heart net at b of a apple had their best- Heart net at B of A. Apple had their best March quarter ever. And so the problem is you don't get credit for what you just did, right? And the guidance at a lot of places for not Apple has been really pretty bad. Yeah. But the revisions have been too bad. I mean, like it's, there's still, I think the

last forecast I saw was about a 10 percent increase out full year. It doesn't seem too bad. It seems mostly the valuations. I wrote a thing about this a couple of days ago. It's the valuations, and that's all interest rates. It's just like an upside-down bank shot. An investor psychology. Yeah, yeah, right.

Hartnett's saying stocks always lead the news. So with stocks trading terribly since last fall, they were warning of bad news to come. Is that too easy to just turn around and say that? First were the high multiple stocks getting kicked around November and December as they sniffed out the Fed's aggressive pivot on policy in January. Now they're figuring out that first quarter

may be the last good quarter of earnings as higher costs and increased recession risks weigh on future growth. I actually think that's true. The recession might be premature, but certainly higher. I mean, obviously. We keep talking about this. We haven't seen this in the data. We haven't seen inflation change people's spending behavior yet. It has to, no? Well, I mean, like in theory, like if inflation is just going, people spend more to keep up with it, right? Like you have an incentive to spend when inflation is. That's why in Weimar, Germany, right? Like people would just like get their pay at lunchtime, run around with a wheelbarrow and

buy a loaf of bread, you know, because they knew by dinnertime, it would only buy half a loaf of bread. Yeah, nominal terms, they had really fast economic growth. Yeah, right. So you have, you got to spend money when in an inflationary environment. But I think this is an interesting point. Like to your point, Josh, about whether this hits people's spending. I mean that's when the margin compression story comes in. Like if people stop spending a little bit because their stock portfolio is down and maybe they don't upgrade their background. That would not say – well, two things on that. Not yet, yeah.

Two things on that. What's your take on this? We haven't seen that yet because I still think we're coasting on the fumes of all the stimulus. And people are just like they've had – they're okay. But the second thing, where do the earnings in the S&P come from? Because if you tell me like cloud computing, is there going to be margin compression at AWS? If so, why? Right, right.

Server costs? Well, although maybe getting those servers, getting the chips, getting all that stuff. But let's assume they've been able to do so so far, so it probably doesn't get worse. Right. So you might not see the same level of margin compression that you have historically seen as a result of inflation like this. The stocks are still getting killed. Well, they're killing them anyway. All right.

This is what Hartnett's quote, paying less attention to the relative strength of the U.S. consumer and more attention to U.S. corporates given the potential feedback loop. One, lower share price. Two, then budgets get reassessed. Three, then there's layoffs. Four, consumer slowdown. Five, earnings per share slowdown. And then six, however you think that ends.

Probably World War III. I hope not. One question I had is like – so if you're kind of trying to sink the economy into a soft recession or growth slowdown or whatever, how does that stimulate supply? You know what I mean? That's the problem. Right? It just takes the pressure off supply.

What if they can't get inflation? What if we're already in a stagflation that we can't get out of? It sounds like they're just trying to cool demand, which doesn't fix supply. It's not that tough to do. It balances the equation a little bit. It just takes a long time. They're doing it. Yeah, yeah. There's no question.

Without sinking us into a recession, I mean, that's tough. No, that's the needle that they probably can't thread. But if everyone gets the vacation out of their system this year, which it appears that they're all doing, right? Like that vacation that you've been putting off for two years, pay any price for it, go do it. Okay, fine. They'll

do that. Mortgage rates at a 30-year high or how many – when was the last time we were above 5% on a 30-year mortgage? I think it's 2008. 2009, yeah. 14-year high-ish? Yeah. Okay. Mortgage rates at that level will 100% put a ceiling on home prices and cool demand off. Yeah.

It takes a while, but yeah. Well, that's a big part of the supply crunch. Can't get lumber. Can't get labor. Can't get this. Can't get that. Right. So you can do it.

The thing is, but that can't do it in a month. Well, that's the demand. So like, what about the guy who runs the lumber mill? Right? Like he sees, he sees, he sees a recession coming. So is he going to produce more? You know, like, I mean I mean, that's the thing. We're in this weird loop where we need to get supplies up and people say, oh, well, we'll just cool demand and then supply will catch up.

But if I'm a producer, why would I produce more if I see a recession coming? You wouldn't. So you're saying that that actually could have the perverse effect of crimping supply further. Yeah. Maybe. I don't know. That seems logical to me. Another weird dynamic that we saw in the market last week, which is now reversing was

dividend stocks finally getting killed. They had been holding up really, really well as investors are looking for a safe space. But now with the 10-year at 3%, people are like, well, I'm not having any dividend paying stocks. I'm going to actually buy the 10-year, right? Like bonds are making those things relatively less attractive. And then today, on the heels of a disgusting 1,000-point Dow day or whatever we're down, these things are getting a bit, or at least they're down less.

Yeah, yeah. I mean, I think in a world of bad, less bad is good, right? But not just for the dividend. Think about what those stocks tend to be. Like you would be a buyer of a company that's a real estate investment trust for hospitals if you're looking for some version of safety or a utility stock, right?

Like I feel like it's – part of it is, oh, those dividends are now more attractive after this has come down this much. But part of it is these are defensive stocks. Yeah, yeah, both. Both for sure. I own some REITs that were yielding 4% – yielding 3% that are now yielding 4% like three weeks later. This is a face blower right here. The Russell 1000 value index. You know what really blows Mike's face?

The Russell 1000 value index is down – is only a 7% drawdown. That's it. Versus growth? No, just relative to itself. It's 7% below its size. The Russell 2000 growth, for example. So now we're comparing large value to small growth. The Russell 2000 growth is down 33% from its size.

Yeah. That's unbelievable. When do they do the rebalance? This spring, right? Russell 2000 value doesn't... Does that rebalance or reconstitution? No, Russell 2000 reconstitution. I don't know.

I think they do it in the summer. Either way, just wild. So yeah, to like the value stocks and dividend stocks, you know, I guess their cousins have been underperforming for a decade. Yeah. Yeah. It's been a long time. Do you cover crypto at all? I know you have no choice.

A little bit. I have to. It's been driving me nuts. You're not into it at all. It's not interesting to you? It's interesting, but I find a lot of it offensive, to be honest. What aspect? Me too, but maybe we don't agree on which aspect is more offensive.

I don't know. I had this old man moment in our Slack channel. A colleague of mine was talking about this. There was this, and I'm going to sound like a total gramp, but there was this like land sale recently. Yeah, the Bored Apes. The Bored Apes, Metaverse, real estate. Yeah.

And he was talking to me. He's like, it's going to be a big deal. They're going to raise a lot of money. And I just kind of. And they will. I think it was upward of 300 million bucks. And I'm like, let me get this straight. This is imaginary land.

That's what we're talking about. Imaginary. The deeds to imaginary land. You know, 300 million, there's like- That's a great inflation hedge, though, because you can't- Even if you wanted to sell it at a loss, you can't, like, find the code to type it in and make the sale. There's, like, people starving, you know, and these guys are spending $300 million on imaginary land, you know? It's not imaginary.

It's digital. All right, but let's talk about what's going on with Fidelity. So, Ali- Did you know Michael was a big NBA Top Shots guy? Yeah. We haven't talked about that. All right, but let's talk about what's going on with Fidelity. So Ali – Did you know Michael was a big NBA top shots guy? Yeah. We haven't talked about that. Son of a gun. We haven't.

Was that in your imagination or did you really do that? No, I did that for real. So we spoke last week about Fidelity opening their 401k lineup to Bitcoin. Not yet. They're in the process of doing it. And Ali Kawar, who is the acting assistant secretary of the Employee Benefits Security Administration, said, quote, we have grave concerns with what Fidelity has done. Does this seem a little bit overblown? We have grave concerns?

I don't know. I mean, if you're giving them a tax benefit, you know, the government has a big role in this. You're giving these people a tax benefit. Who? Oh, OK. In 401Ks, right? Like that's created by the U.S US government in terms of the tax code. But where are the grave concerns?

Oh, no, no. Here are the grave concerns. It's down how much? It's new and untested and it hasn't even existed. And most people don't even know what to do with stock and bond funds. This is like a level of complexity they were adding to their list of choices. And the labor department's job is not to be the arbiter of what's a good or a bad investment. Their job is to protect ordinary, regular people from f***ing up their retirement. So if you're putting an asset class in front of their face that's got a volatility level that's 4 or 5 X the stock market, they should have grave concerns.

It doesn't mean they're right, but why wouldn't they be concerned? What if I put lottery tickets on a 401k menu? Would that be okay? You know what I have grave concerns with? S&P 500 index funds that charge 2% in 401k plans. I have grave concerns with that. Okay, there are not that many of those.

I know they exist. There's a lot. So hold on. No, I are not that many of those. I know they exist. There's a lot. So hold on. No. Hold on. What are your grave concerns about this gentleman's grave concerns? I'm genuinely curious. Grave concerns?

It just seems ridiculous. You don't like the choice of language. Elizabeth Warren and Tina Smith sent a letter to Fidelity. Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans' retirement savings. I don't understand why- Do you know who pays for these people's retirements if they blow their 401k up?

You do. I do. The taxpayer does. So do we want to have more people gambling or less? Who said they're gambling inside of their 401k? You think people are going to be trading Bitcoin inside of their 401k? No.

What are they offering you? Like a fund? Like a Bitcoin fund or something? I don't know. It's exposure to Bitcoin. By the way, I'm not even against it. Yeah. I'm for the airing of concerns.

I'm not even against it. I am against the politicians deciding like what can and can't be inside of your retirement plan. Just generally speaking. I don't know enough about like the actual like ERISA, you know, the law that created these things to know whether – but some of it – these products were engineered by the US government through the tax code. ERISA and the labor department are extremely, extremely serious about this because they see themselves as being the guardians who are stepping in whereas this country used to be defined benefit. Yeah. So everyone that had a job at a big company, the big company was responsible for a pension for those.

That's all over now. So all you have now that replaced it as a 401k, which I think is great, but one of the drawbacks to this is you're putting very inexperienced, uneducated people in charge of a huge amount of money for them. And it's irreplaceable. You will never get back 20 years worth of earnings. Yeah. You think people will behave more irresponsibly with Bitcoin than they know? You're missing my point. I don't. I think irresponsible people will be irresponsible.

It almost doesn't matter. So what's your point? My point is this is an asset class that's so volatile and so prone to misinformation spreading on social media and so easily manipulated that it doesn't matter whether people are more or less responsible. It's more risk, period, no matter what they do. And it doesn't mean they shouldn't be able to do it, but it's definitely- It's worth thinking about. It's worth thinking about. Okay, so I agree that the 401k is a sacred investment vehicle,

but you could roll your 401k into an IRA and blow yourself up to oblivion. Well, 100%. With a double levered negative exposure to the price of oil. But you can't have Bitcoin in your 401k. Give me a break. We all agree that in the end, it's the responsibility of the person.

I just don't – like what are they protecting people from? We have grave concerns. Yeah, there's a like – We have grave concerns with what Fidelity has done. So why have seatbelts? Just drive safely. Like at a certain point, we have to decide that it's cheaper to prevent people wiping themselves out than it is to keep up after. But who says they're going to wipe themselves out if they put 10% of their portfolio in

Bitcoin? Well, some, but that's like maybe a wise thing to do. But it's like, it's like gambling, right? Legalized gambling. Like there's some percentage of the population that is going to have a problem, right? And it's like, that's just human nature. And what is the cost to clean it up versus what is the cost to prevent it? So it's like, yeah, it's worth it.

I'm not saying I'm totally, totally against having some exposure or the cost to clean it up versus what is the cost to prevent it? So it's like, yeah, it's worth it. I'm not saying I'm totally against having some exposure or the ability to trade it, but it seems worth thinking about. Like what are we doing here? How many people do we think will say, you know what? I'll have 5% of my portfolio in Bitcoin. What percent of 401k participants? I'm making this up, 15%. I have zero idea. Zero idea.

We'll say – Here's what you're not thinking about. What am I not thinking about? You're not thinking about when Bitcoin goes to 100,000, which Michael Saylor assures me will happen, do you really think that only 1% of people are putting 5% of their money into it? OK, fine. Or do you think 10 million people are going to put half of their money into it? They can't. It's capped. That f-ing day.

Fidelity caps it at 20%. OK. So then that's grave concern number one alleviated. Right. Okay. I mean, well, that's why we have to have the conversation. It doesn't mean don't do it. Yeah.

It means tell us. It's more of the tonal. You don't like the tone of grave concern. Tell us what you're doing to make sure that people don't take a risk that's 5x the stock market, which is already very risky. That the taxpayers have to come in and bail them out from. I think it's reasonable. You know, I'm just sick of this. Sorry. I'm just sick of this sorry i'm just sick of

the the duncan did you know he was like a libertarian deep down i never thought i'm not i'm totally i think we should add a don't tread on me shirt to the shop turning into uh joe rogan for investment you know what it's just all right i'm gonna leave it there keep your damn hands off his bitcoin by the way the fact that eliz that Elizabeth Warren is at the forefront of this actually makes me feel like this is maybe as much for attention and political. It's just political. Yeah. I'm with you on that. I don't have a problem with what you're saying.

I just feel like there's probably a middle ground. It's probably not yes or no Bitcoin. The middle ground has been addressed. It's capped. It's capped. 25%? 20. Yes, it's capped.

It's capped. 25%. 20. Can you imagine how rich you would be if you had 25% of your portfolio in Bitcoin five years ago, your 401k? Like relative to all other participants. I just don't like this. No, no, no.

We have to protect investors from this specific thing. Don't worry about all the other junk that have blown up billions of investor dollars. TVIX and all the rest of those. Like, don't worry about those. Those are fine because it's in your taxable account. But this piece right here is sacred. I think the Bitcoin people have a problem

in the way they're making political contributions. There's not enough going toward the Democrats yet. They haven't cracked the code. No, they're putting, I just, I'm just writing, I've got something that I've been reporting this week on that. They're, Sam Bankman-Fried is- You should break it right here. He's sending a lot of money to Democrats. I mean, it right here he's he's sending a lot of a lot of money to democrats

i mean it's low because he's smarter than most of them he's one of the smartest guys i've ever i've ever seen really yeah i think so that's what people say i don't quite understand what he's doing i mean he's like i only podcast know him but i found myself nodding my head when he's talking and i almost never do that with crypto people yeah yeah i mean he's spending a lot of money weirdly in safe democratic district primaries i don't know what they he's got these groups it's not weird it's it's optics it's publicity and he's zigging while everyone everyone else can't wait to give money to libertarians in the crypto space yeah so it's smart that he's going the other way i mean i guess it reflects his politics but it seems like

no it doesn't it reflects the the wisdom that he has that you have to buy both sides of the aisle but it's no but his mom i mean his mom was a democratic funder you know it's like i mean maybe he doesn't have the same politics as his mom but i assume i think somebody's got to buy elizabeth warren in this space and make make her recognize the uh income inequality solution that is uh eth Bitcoin is an inequality. All right, last thing before we go to favorites. Elon was serious. He's got like financing plans being announced every

hour of the day. What sort of spell has he cast on his fellow Valiites? Let me set this up. No, no, no. Ben Horowitz tweeted this. While Twitter has a great promise as a public square, it suffers from... So Andreessen Horowitz is this. Okay. While Twitter has a great promise as a public square, it suffers from, so Ben,

so Andreessen Horowitz is investing. It suffers from a myriad of difficult issues ranging from bots to abuse to censorship. I think we all would agree with that. Being a public company solely relying on advertising business model exacerbates all of these. Agreed. Okay, then he goes on to say,

and I want to ask you guys opinion on this. Elon is the one person we know and perhaps the only person in the world who has the courage, brilliance, and skills to fix all of these and build the public square that we all hope for and deserve. He alone can say this. Really? That's a true statement.

What do you mean? You might not like what he does with it, but he is the only person with the courage. The only person in the world who has the courage, brilliance, and skills. No, sorry. Probably not skills.

There are probably other people who have the skills to fix Twitter. The courage part is underrated. Also the money. Well, that's a good point too. But Andreessen Horowitz has a lot of money too. You need courage

because you're going to piss off everybody. He definitely has- No matter what you do. And I think not only is he not afraid. Yes. I think he revels in the uproar. Yeah. And there are very few billionaires

that want that kind of smoke coming at them. Right. All right. Tesla's chief executive has received letters committing 7.14 billion from a group of 19 investors. The biggest contribution comes from Prince Awalid bin Talal. I knew they were going to get liberal. Who agreed to retain a stake in Twitter valued at $1.9 billion.

Andreessen Horowitz. There's like five other people. Larry Ellison. Will you leave Twitter forever when this deal closes and move to Canada? I'm moving to MySpace. Oh, man. I'm much happier. You don't tweet. Not very much. I mean, I try to MySpace. Oh, man. I'm much happier. You don't tweet.

Not very much. I mean, I try to. It just drives me insane. It just drives me insane. Your life is better without it. But no, I won't leave it. I have to be. It's a part of my job. I have to be on it. I don't know where the hell you were all week. We were emailing you with no response. I sent Michael to your

DMs today. I don't know. Sorry. So I wouldn't say Twitter has no value Yeah, no, no, no I didn't know where you were Alright Sorry, dude We found you on Twitter, so that's good I was just going to show up

Alright So he was serious, though Yeah, it's remarkable He's a remarkable character Is this going to close at 5420? Is this going to happen? I don't know What was it?

It was trading at 10 49 I don't know In a tape like this, that means the market really thinks Is this going to happen? I don't know. It was trading at 10. 49. I don't know. In a tape like this, that means the market really thinks it's going to happen. Yeah, I guess you're right. What if Tesla goes to $700? But it's just the whole thing is so weird. It's like, this is a public utility.

Therefore, only the world's richest man can be in charge of it. It makes no sense. It's so counterintuitive. Why are reporters so obsessed with Twitter in general? A lot of your colleagues. We're very need no sense. It's totally counterintuitive. Why are reporters so obsessed with Twitter in general? Like a lot of your colleagues. We're very needy people. It's oxygen, right? Yeah, I don't know.

The Times just said the thing where they kind of warned everyone to stay off it a little bit. Because it's nothing but trouble for- Yeah, it's such a mess. Although what's her name

at the Times? That's like a big- Who? She's great. She covers social media. Oh, Taylor Lorenz. She left the Times. Oh, she left the Times. I do not- No, she's great she covers social media oh taylor lorenz she left the times she oh she left she left the times i do not no she's awesome she's amazing i think she went to the

washington post okay but she's amazing she's amazing right okay so but i've always said like twitter is the stock market for journalists because it's a take it's like what takes are hot yeah what takes are cold who's clicking on what that's important if you're covering yeah anything really you need to know what's being talked about yeah how do you know what's cover yeah no i mean well we did it before twitter we there were newspaper stories written before twitter i i don't know why it's like we're sitting in our desk you know what i mean like probably shouldn't be as much like you guys never have never – so you all have Chartbeat. Yeah.

We have Chartbeat. Well, we don't have it, but I think people have it. But reporters have it. Washington Post has it. Yeah. So they know whose articles are being read and where the traffic is coming from. And it's on a big screen. That's like the front page. That's the front page.

You know. So but on Twitter, you know how everybody's stuff is doing. What did journalists do before Twitter? Talk to people. Went out and walked. Shoe leather reporting. Jimmy Breslin never went on Twitter. Jimmy Breslin knocked on doors with a cigar hanging out of his mouth.

I took my kids on their first flight and they were on the iPad literally for the entire time. What did we do on flights? I didn't go on many flights as a kid. I kicked the seat in front of me. I kicked the seat, cried, ate. Still doing that. Still doing all three of those things. You still cry?

I still cry sometimes depending on how the weather is. I did car trips, like, D.C. and Boston, and we just looked out the window and played Etch-A-Sketch. We had a tape player. Like, we didn't even have, like, a tape player in the car. We would bring, like, a cassette player. And you, like, listened to books? Yeah, we'd listen to, like, The Jungle Book. Jurassic Park.

Yeah, Disney. Plugging headphones. No, it was just, like, hitting the the button and we'd all just like listen. Oh, no way. Yeah. Like what did you listen to? Yeah, like Disney stuff, you know, tapes. Now these kids are watching – they have every Disney movie ever made at their fingertips.

It's crazy. And they're still not happy. All right. Let's do favorites. I'm going to go last this time. Michael is going to go first. Okay. So my wife gets up out of bed at 5.45 every morning.

That's my favorite thing. To go to school. Is she a teacher? She's a guidance counselor. Oh, cool. And so I wake up when she gets out of bed and I like – I go on Twitter and scroll for 75 minutes. He reads Axios. And so recently I said, you know what?

I got an hour. I got an hour in bed and I'm gonna start watching TV. I don't like where this is going, Duncan. So anyway, anyway, anyway. So this week I started watching Barry. Oh yeah. I love it because it's 30 minute episodes, which is the best.

I can watch anything for 30 minutes and it happens to be excellent. I never watched a single episode. Excellent. You'll love it. Yeah. Strong recommend. Yeah, really good. He's the director, writer, producer.

It's Bill Hader from Saturday Night Live. So he's a hit man. And he wants to be an actor. Yeah. He's a Shakespearean actor. And it's- Is he funny? The Fonz is in it.

It's dark. Henry Winkler is- I love Henry Winkler. As this kind of like washed up acting teacher. It's dark and it's laugh out loud funny. So funny. Really?

It's laugh out loud funny. Kind of like funny Russian mob characters are really good. How many seasons have they been? So the third season is on now.

But it's 30 minute episodes. So in eight episode series it's a movie. It's two and a half hours. It's very good. It's good. That is a good use of time. If you're up anyway

what are you I said why am I scrolling Twitter? I'm just on a TV show. You can watch Bloomberg at 6 in the morning and see how the Hank Seng did. So I bang out two episodes a morning and in a week I'll be caught up. All right, Matt, what do you do when you're not writing about interest rates and the housing market? What are your favorites?

This is not the coolest app. Go ahead. Disney cassettes? I'm a gardener, man. Okay, go on. i'm a gardener man okay go on i'm garden so is michael and i'm trying to be really i don't know what i'm doing michael does a little no you don't know when when you first start but yeah no man i got peonies are coming up dude i've got uh peonies yeah flowers yep flowers mostly okay daffodils like crazy big i'm a farmer i i i do uh i do vegetables oh really cool You're a florist, bro.

Yeah. Keep it real. I've got a, I'm doing some corn. I'm doing a three sisters. Oh, because you have land. A little bit. Some Westchester.

Three sisters garden. It's different than Long Island. You know, it's like corn, beans, and squash, the stuff you had to learn about in school. I'm doing one of those gardens with my daughter.

How's it going? It's in my garage at the moment. Like, their seedlings are growing. I haven't gotten it out yet. It's not warm enough yet. Yeah. Okay. And what are you doing this year? So you garden. Yeah the moment. Like, their seedlings are growing. I haven't gotten it out. It's not warm enough yet. Yeah. Okay. And what are you doing this year?

So you garden. Yeah, man. Yeah, that's good for your— We have Tony. I saw it's a huge garden. He loves it. Oh, really? Yeah.

It's good for the soul. It's so good for you. I do cucumbers, peppers— Oh, nice. —lettuce, tomatoes, obviously. Raised beds or— What kind of lettuce? Arugula.

Who's laughing? Wait, why is that funny? You're just talking about what kinds of lettuce? Arugula. Who's laughing? Wait, why is that funny? You're just talking about what kinds of lettuce. I do arugula. Well, no. That's fast. I don't picture somebody growing their own lettuce. I'll do a spring mix.

No, arugula's great. Wait, spring mix does grow in the bag? Pretty much. The bags grow on trees. You pluck them. All right, I don't know what I'm doing gardening at all. Well, what are you trying to do, man? I'm doing two types of tomatoes and basil.

Basil. Oh, nice. What type of tomatoes are you doing? Can't f*** up basil. Beefsteak? Cherry? Grape? No.

Roma in two pots. They're like the- Yeah, it's like the- The oval. That's like an egg. And cherry tomatoes in two other pots. And then basil surrounding them. Do you have to hide it behind the shed?

Is it the cherry? No. No, it's hidden. Do you guys have deer on Long Island? I forget. No, my wife thinks I'm going to bring ticks into the backyard if I grow stuff or slugs or whatever. I don't know.

So I'm growing this. He hides it behind the shed. I swear I'm growing this behind the shed. It's got ample sunlight, but I'm growing it behind the shed. She knows it's there, but like she doesn't want to see it because she thinks I'm attracting animals and bugs to the backyard. There's no deer. There's no deer. There animals and bugs to the backyard. There's no deer. There's no deer.

There's no deer in Long Island? There's no deer. Deer will eat all my stuff. No, there's deer in Fire Island. Yeah. Oh, really? If you want to see deer, they eat out of the garbage there. Sounds lovely.

It's quite picaresque. All right. My favorites. Ozark season four, last season. One of the best finales to any show I've ever watched. Unbelievable. I liked Ozark. You love it?

I'm so sad. So great. Can I tell you something? I was really sad too. Because I thought there were eight episodes. So I had no closure. I didn't say goodbye. You couldn't tell the last one was the last one?

I thought there was eight. Because it doesn't make sense. It didn't occur to me until I hit next. I was like, wait, wait, wait, wait. No! What did they do? That's a really weird feeling. I've had that that thing too

it was messed up it messed with me yeah but anyway they nailed it they did it was so satisfying yeah they they did it they did it almost as though jason bateman said guys i want to be able to walk on the street after this like i don't want to like i don't want to be one of these people that takes someone on a four season ride and has them fall in love with these stories and the characters and then piss everybody off at the end to be artistic. Let's wrap everybody's stories. I don't know if this is recency. I think it's in my top ten. I love that show.

It's so good. It's really good, but I couldn't watch it after a while. Just the violence was getting to me. Oh, but that's why I watched it. I wanted more violence. It wasn't dark enough. John, Ozark? Ozark?

Love it. Love it. Did you finish? Halfway through. Okay dark enough. John, Ozark? Ozark? Love it. Love it. Did you finish? Halfway through. Okay. Okay. Yeah, of course. We binge watched it in the first like 24 hours.

You didn't even let a day go by. No, it was very good. I was done by Saturday. The violence was a lot. I looked away at some scenes, you know. Yeah, yeah. It's kind of like sometimes I just don't want to see people's heads getting blown off. This season was not about Marty Bird.

Ruth and Wendy just have taken over the show. Yeah. Right? Ruth is incredible. They are the two main characters of the show. She's incredible. Ruth is kind of like the kind of – You can say redneck.

It's okay. All the New Yorkers listen to this. Yeah. Yeah. Yeah. Yeah. No, she's amazing. That actress is incredible.

She's incredible when you consider she was just playing the German heiress on HBO two months ago. Anna Delvey or whatever. She's like completely transformed into these characters. Isn't it weird they dropped that literally in the middle, in between the two halves of Ozark?

Yeah, she's incredible. Actually, TV's back. I feel like TV's on fire now. Wait, I got a show for you guys. What do you got? So this is what we're doing. Slow Horses. I haven't started's on fire wait I got a show for you guys what do you got so this is what we're doing Slow Horses I haven't started it yet but I've heard good things

multiple people we got a thumbs up from John what's the premise well so it's my favorite I was a fan of these guys this guy's spy novels his name is Mick Herron the premise is

you know like how New York City teachers like if they're really bad they can't fire them you put them in a rubber room yeah so it's like that but the there's for bureaucratic reasons um there's this thing in the british intelligence services where you have these up spies they send them to this one place where

it's like busy work and they hope that they quit after a while but you know they get roped in this like gang of screw-up spies don't quit. Yeah. They don't quit. Awesome. Apple TV, uh, Apple, the fun, the, the,

the books are hilarious. Laugh out loud, funny. And they preserved a lot of the great dialogue. But Gary Oldham is like this main, the guy who runs the team. He's the best. He's like a washed up.

One of the greatest actors. Yeah. Just amazing. It's really good. It's really good. The books are great too. Mick Heron is the name of the writer. All right.

I got to check that. I have it on my list the writer. I can't believe you saw The Northmen. You went to the movie theater to see this? By yourself? Why? I was going with somebody who canceled and I just said I'm just going to go. I would have come. You would have hated this movie.

I knew it. You would have hated it. This was the most violent thing. I heard there was a lot of head chopping. Honestly, it goes so far beyond that. There's a main character who has no nose. His nose has been removed, so it's just holes in front of his face. Because it was a film, right?

It was a film. Just slow, boring. It was. All right. How do I describe this? Do you know, do you remember True Blood? Of course. Remember True Blood on HBO?

Yeah, Eric Northman. So, right. Yeah, yeah. So it's him. Yeah. I guess he's 10 years older now. Great actor of Scandinavian descent. He's the main guy.

Right. And he's like a berserker, which are the scariest types of Vikings. They're like the shock troops. They're hypnotized using a mixture of like drugs and whatever into thinking that they're part bear, part wolf. And by the way, the historical detail that this director was going for is the reason I went to see it. Like, this is not Lord of the Rings. Yeah, this guy's obsessed.

This guy's obsessed with nailing the true details of how these people lived. Yeah. And a lot of their lives were based on like mysticism and magic. That's cool. These people would be hypnotized and they could like kill a thousand people each because they were just so completely lost in shedding blood. So why would I hate it? Because I love violence. It was boring, right?

It was filmy? No, it was very artistic. Yeah, okay, same thing. So there would be like whole scenes where it was like wait, that was fantasy. That didn't really happen. And I just, I guess I could picture you being like wait, what is this bullshit? Did you watch The Lighthouse? I saw that one. I think it's the being like, wait, what is this bullshit? Did you watch The Lighthouse? I saw that one. I think it's the same director.

Oh, it is the same director. So if you hated that, you'll really hate this. I know people – filmmakers love that movie. To me, that's the worst movie I've ever seen. So this is that but with people having like their eyeballs ripped out and eaten in front of them. Like this is – honestly, I've never seen anything more violent in my life. I'm going to watch it. I'm going to hate watch it. Now, if you are going to watch it, go watch it in the theater because the cinematography of Iceland is f***ing ridiculous.

But is it two and a half hours? No, it's two hours. Okay. All right. I'll hate watch it. I'm going to hate watch it at home. I'll catch. Hate watch it if you must, but I appreciate it.

That guy's – I don't think – by the way, this is a movie that you never want to watch twice. He's not quite as bad as Paul Thomas Anderson, but he's close. God. And with that, all right, listen, did you have fun today? Yeah, it was awesome, man. Okay. Have me back.

It was fun. Oh, 100% we're going to have you back. Yeah. So you have to keep writing, though. Listen, I read every one of your things. Here's what I do. Thank you for reading. Kate Marino, I guess, curates the newsletter.

Yeah, she's the editor. Okay. Yeah. Emily Peck, too, is my name.ates the newsletter. Yeah, she's the editor. Emily Peck, too, is my... I don't subscribe. I'm embarrassed to admit. How do I do that, Matt? Subscribe Axios Markets. Axios Markets. You do a great job with it, and I read it. I get it every morning, and you usually have an article

in there. Yeah. I feel like it's a great use of time because it's a short amount of time. Smart brevity on the markets. Awesome. Hey, you do a great job with it. Thanks very much. Thanks for having me. All right. Matthew Phillips. And how do we follow you? You hate Twitter, but you're there. Yeah. At Matthew Phillips. Two L's. At Matthew Phillips with two L's, ladies and gentlemen. Make sure you like and subscribe if you had a good time listening to the show and you want to experience it twice.

Check out YouTube dot com slash the compound R.W.M. Big John does a great job bringing this podcast to life visually. And so you can watch Matt's reactions to all the ridiculous things I've said today and Michael's eye rolls. And it's just a great experience. Either way you want to get it, audio or video. Duncan, great job today. Nicole, we missed you this week.

We'll see you next week and we are out of here. Take it easy. All right, you feel warmed up? Ready to do this? That's long, man. That's fun. Where are you from?

I'm from Jacksonville. I'm from St. Louis. I picked up, so I went to senior school. I'm from Jacksonville. I picked up. So I went to school. I went to. I speak Long Island.