The Compound and Friends - That Wasn't the Bottom

Episode Date: April 7, 2023

On episode 87 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Tony Dwyer to discuss how long an inverted yield curve can last, the unemployment rate and recession, bank lending standards, the Fed, commercial real estate, AI, and much more! Thanks to Birddogs for sponsoring this episode! Enter promo code "COMPOUND" and get a free Yeti style tumbler with every order: https://www.birddogs.com/collections/pants?utm_source=youtube&utm_medium=influencer&utm_campaign=compoundshowandfriends Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

I'm trying to remember which one I got it for the last time I was on which turned out to be a pretty good That was a pretty good timing one because not everybody was worried like we I'm so Yeah, I'm so pissed I last week we had on Yuri and Timur and the day before he came on I listened to him. He was on a year ago and I put I made a note for myself to listen to the episode with you, and I forgot.

So this was in February. And things were, the market peaked in January. The last time I was on was February? Yeah, it was February 11th. I think the title was Turbulence Ahead, right? Turbulence Ahead. Let's go.

Yeah. So the market peaked. Josh, go. Yeah. So the market peak. Josh, listen to this. So the last time Tony was on, I f***ed up. I forgot to listen to the podcast to re-listen to it. He was on February 11th. The market. My birthday, by the way.

Happy birthday belated. February 11th. 2022. The market peaked like five weeks prior, but nobody was that concerned if I remember. I mean, there was already shit that was like our career had already exploded and there was a lot of the headphones-fiving stuff was. Headphones on, headphones on. The title of the episode was Turbulence Ahead.

Yeah, well, Tony was right. So Tony was right. I should have listened to him. I faded him. I went the other way. No, you didn't. You don't fade me. Come on, Daddy.

What are you kidding me? Never. Never. I'm not putting my head in the trouble. I never faded Tony Dwyer in my life. Are you done with this? You're the first, then. Oh, we all get faded.

Oh my God, it's our job, man. I used to have a fade list way, way back in the day. I had an interesting... Do you remember how uncanny the Gartman indicator was? It was almost like the market forced him out. Oh, poor Dennis. It wasn't even his fault. The algos were programmed to fade whatever he said.

So it was... Really? It was not... I mean, don't you think it was not coincidental? It was every time he... I really don't watch or listen because... This was years ago. Excuse me.

This was like eight years ago. But it was every time for about a year and a half, two years. Every time he would say something, the market would go the other way. And it wasn't just that he was the worst, you know, trader of all time or prognosticator. I think the market was literally... I'll tell you the problem it's not that the problem is they created this like created this like uh aura they called him the commodities king he was no such thing like he wrote a newsletter it was a good newsletter he was not he's not a dumb guy he had insightful things to say.

But when you get built up as the commodities king and then you're on the air twice a day, five days a week, inevitably you're going to say long oil and then oil is going to go down the next day. There is an absolute push for people like us to try to be the guy. I don't want to be the guy. No, it's hard. Because as soon as you're the guy, you're on all the time. Who laughed? And things move around based on what you say. Yeah. It's just, I believe, like I said the last time we did this,

my job is to educate and help people in their process, not tell them what to do. If you did a show, if you did a baseball show, and you said every day, these 10 teams are going to win, these 10 teams are going to lose. The odds of like looking smart after three months of that are zero. But wait, hang on. I'm not – Because you will be wrong in front of enough people enough times.

No, no. He was wrong every single time. I know it got to a point where it was like that. I'm saying literally the algos were fading him. I'm not – come on. You remember. I know you're being nice, but you remember. The way that I've handled the media in my career,

because I'm good at being wrong. The reason that... The way that I've handled the media in my career is to try to help people versus look right. Because as soon as you're trying to look right, you're not using the data, you're using your emotion. Okay. So it's how you look.

And that's been that way going way back. You know what? You know what? Hair doesn't grow on a busy street. Right? But you know what else is useful? I'm wrong and here's why. Here's what I missed.

It's very hard to do that with sound bites. That's right. That's why I like things like this because you can talk about where you're right where you're wrong how you got there and i think that's the most important thing josh is how do you get there yeah is is because that's when that's when we can help people actually in the process because they can do it themselves if you tell them how to do it the other thing that that's impossible is batting average so be like here here are 10 ideas investing ideas like

five five the first five a few of them go wrong quickly all right I changed my mind about that or I'm wrong about that

that's not measuring how much is made how much is lost that's just like it's just a debt price nobody invests in the real world on batting average can I show you mental flexibility

I bought Google two weeks ago and I said, you know what? Nah, I'm going to sell it. I might buy it back. How about that? Yeah, you should. How about that? Because you're going to be way wrong.

How about that? We're going to talk about Google today, actually. I bought it. I changed my mind. I bought it. I sold it a day later. I said, yeah, I don't want it. We're going to talk at you about Google today.

I didn't read that article yet. People love to talk at me, so I'm good with that. So turbulence ahead. What do we see now? Blue skies? Nope. Blue skies. Oh, Tony.

Well, one of the most useful things that you taught me over the years is just like if you could simplify it to the Fed is on your side or it's not, it doesn't mean you'll get the market right every month, but like directionally, that'll be a better way to think. Is there going to be more money supply or less? That's it. I mean, you were talking about that with me years ago, and that turned out to be remarkably prescient. It's amazing how we try to complicate it to look smart going back to topic A versus, you know,

just on how are you going to spend money you don't have? Yeah. You borrow it. Well, what if you can't borrow you going to spend money you don't have? Yeah. You borrow it. Well, what if you can't borrow it? On chain. I don't know. Well, that's the end of the sentence, right? Yeah.

Like, you can't just, it's not magic. Right. Right? And therein lies the issue that we're currently in. All right. We're going to get into all that stuff. Fellas, how are we looking on time? We're ready.

We're ready to go? Let's get it going. This is an important man. Time is money. Not in a bear market. It's still a bear market. 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. Hey guys, it's me, JB. I want to tell you about Bird Dogs sponsoring today's episode. I got my first pair of Bird Dogs. I actually got shorts and pants today, and I'm really excited about them. They have stretchy fabric and this is very important in this day and age. Tried them on, way more comfortable than other shorts and pants and versatility,

freedom to wear one pair of shorts, one pair of pants, anywhere you go you could transition from a meeting to a restaurant. Nobody really knows what's going on. All they know is the pants look great. So I'm going on a trip. I'm bringing all of my new bird dogs with me and you guys should check them out as well. Enter promo code compound at the link in the show notes and you will get a free Yeti style tumbler with every order you place. Thanks, bird dogs. Episode 87. How did we get to episode 87? You guys feel like it's been 87? One at a time.

I was going to say one episode at a time. You know what? Keep it simple. You know what? I think that's accurate. I'm going to play something. A month, right? Blocked Robin Hood on my email, everything.

Like two months go by, and a dude shows up at my door with like papers he said i would like some collection company or some shit and it was like 75 000 basically this guy said if i didn't pay up he's gonna take me to court i was like go for it i got nothing i don't even got wages to in the end i think robin hood just like took the loss a bit of it because i haven't paid him a dime all right yo if you use robin hood and you get margin called and delete your account this is what happens okay first a little background a couple years back there was a bug on robin hood that allowed you to get infinite leverage i ain't gonna explain exactly how it worked but i used it to get fifty thousand dollars

of margin off of a one thousand dollar deposit And I'm guessing you know what happened next. I bought a bunch of zero data expiry options and I lost it all basically. So obviously the next logical step is to just delete the app, right? Of course. I did that. I thought I was good. What are you going to do, data collectors? I'm surprised I didn't work. Blocked Robinhood on my email, everything.

All right. So he blocked Robinhood and deleted the app and the margin call didn't go away. I can't believe it. That's so weird. That's so weird. I don't understand what kind of world do we live in? The system's rigged. When I was... I love, by the way...

Tony, chime in. I love this kid. The amount of people like this kid that have lost money because we've tried to help the little guy is... It dates back to 1987. You guys, I think we talked about it last time.

I was on the SOZ bandits. You remember? The SOZ bandits, small order execution system. It was put in place after the crash of 87. So a market maker had to be good for 1,000 shares in either direction. And I believe it was the first software. I believe it was. I can't.

I got to. They were in Texas, the SOZ bandits, right? They were everywhere. No, they were everywhere. So what had happened was that after the crash of 87, because everybody faded their bid and offer, their bid, went during the crash that they came up with, if you're the high bid or low offer, you got to be good for a thousand shares as a market maker. Forced. Forced. It had to be. So if you were off the desk back in the day and your assistant was looking at the computer and a news item came out and it became a fast

market, but you haven't moved your market, you would hear, you would just hear so's to head. And it was a small order execution guy. It was a software program built to find somebody that was stuck on a bid that shouldn't be there. And all of a sudden it's a thousand shares, a thousand shares, a thousand shares. The next thing you know, you got a bid that shouldn't be there. And all of a sudden it's a thousand shares, a thousand shares, a thousand shares. The next thing you know, you got a stock that everybody else has gapped down and you're getting along a thousand shares every second because you haven't moved your market and you got to be good for it. And back in the day, you can't delete your app.

So when you think about that, that was the first time you picked off market makers and it was to help the little guy, right? But if you fast forward to now, it's high-frequency trading that wrecked liquidity. It didn't help liquidity. It ultimately wrecked it because it was a program that – The smaller order execution system was created because during the crash of 1987, big institutions who were trying to sell got priority over retail. So they put this thing in place where retail had their own system on a parallel thing that they would be able to trade in.

And you had to be good for a thousand. And then the bandits like looked at that and said, oh, wait a minute. Who can we pick off? There's a business here. Correct. Right. And as I remember, I mean, I got into business. Were you one of the So's bandits? No, I at that and said, oh, wait a minute. Who can we pick off? There's a business here. Correct. Right. And as I remember, I mean, I got into business. Were you one of the So's bandits? No, I was in a market making.

I was director of research at a market making firm, though. Okay. At the time, Sherwood Securities. Oh, okay, sure. I remember. That was, I mean, I'm old now, so there's a lot of the guy that ran that place was a rock star at a contest. How long did that shit go on for until, I guess, that got arbed out?

It got arbed out because there's not market makers really really anymore and there's no specialist because you've taken away the margin right right so why would you do i mean you could do it but if there's no margin in the business and you're taking a lot of risk from minuscule millicent why would you ever do that so what do we have today go ahead and try in a fast market to sell stock. Right. You just, you know, it just doesn't happen. And so it really ends up hurting liquidity. Right. I want to give you an intro. Tony sits on the U.S. operating committee and is the head of the U.S. macro group and the chief market strategist at Canaccord Genuity Group, a diversified financial services firm with operations in North America, Europe, Asia,

Australia, and the Middle East. Look at all, you got a lot of titles. Buddy, and if you want to read what we have to say. Bro, you got consonants in your title. If you want to read what we have to say, where do you think you should go? Canaccordgenuity.org. That's a good idea too.

However, DwyerStrategy.com. Dwyer Strategy. We're going to do all the plugs. Tony, the last time you were here, like the views blew up. People love you. How long have you been commenting on the markets and doing your thing?

It's been, what, 30 years, 25 years? 36 years. 36 years. 36 years. Because I'm bald, you don't look like you age as much. But I got into the business in May of 1987, one week out of college. Amazing. So you saw some shit, like, within six months. I'll never forget, right when I got to Wall Street,

there was a, I called it the banana boat cruise. There was a research department cruise, the research department I was in at the time. And it was a boat cruise around Manhattan. And I was from this town that had more cows than people. And I was like, it was a town called Marcellus. Kelly

Evans actually used to live in Marcellus. Is this upstate New York? Upstate New York, outside of Syracuse, just southwest of Syracuse. And I got to New York and I didn't know what's up. I lived in Union Square before it was nice. Yeah. Like way before it was nice. Pre-gentrification.

Big time. Yeah. And, you know, so you got the market ramp within six months and then you got the market crash. And it was wonderful because it's what made me want to be a strategist because I had the greatest group of people to learn from. It was Greg Smith, who is the number one I.I. portfolio strategist for like dozens of years. The guy was a rock star. OK. Ed Yardeni was the economist.

Everybody knows him now as a strategist. He was the economist. What firm is this? This was Prudential Beige. OK. And then Joe Feshback. Yeah. Was there.

The Feshback brothers? No, he was their cousin. Great guy. He wasn't part of what they were doing. No, great guy. So here's what I did. And I recommend this for any young person listening. It's okay to say hello to people that are at a higher level.

Yes. My job was as a liaison to rewrite what they wrote up in their strategy pieces. So I communicated in summary format to the retail brokers. You were chatty, too. Yeah, I was chatty, literally. Nowhere near as smart. So anyway, I ended up playing basketball with Greg Smith. Would hang out a little as much as I could with that in the office,

you know, if he'd have lunch or whatever. And I played racquetball and tennis with Joe Feshbach. I went up to them. I was a political science major. I didn't know bull market from bear market. I went up to them. I was a political science major. I didn't know bull market from bear market. I went up to them and I said, this is my job. I have no idea what to do with it. Can you teach me?

So Joe Feshback actually taught me on paper how to do point and figure charting. Greg Smith kind of taught me about the psychology of the market. And I watched Ed migrate through the practical application of the economic data. So if you read my bio, I just went through it. That's what's listed, practical application of macroeconomic data. Do you think some of the young people around Ritholtz Wealth one day are going to be like, Michael Batnick taught me? I feel like that's a thing that could happen. I hope so. Right? Yeah, why not? But isn't that the goal? Nicole's nodding. If the goal is to make the- Nicole, don't I teach you stuff every day?

Absolutely. Come on. You know, if the goal is you're going to make a billion dollars, okay, so what? Then what? No, I did that already. Right. You know, to me, the goal is that someday somebody will look back like I am with those guys.

And Larry Wachtell, by the way, was the guy that taught me how to communicate it in summary format. Yeah. Guy was phenomenal. He was one of the best. Like in media, he was a killer too too so that's how i got on tv i'm repeating myself from the last time yeah it's okay i got on tv because i was the i was the one guy there were four guys that were sitting on the desk with larry wachtel that this was like you know a few years later and he was the only guy on fnn before cnbc he was on fnn and he was the only analyst that

would be on you had to go into the american stock exchange and walk up a big flight of stairs and i would bust his chops because i'm a i was a punk i bust his chops come on let the kid do it right he'd be like you're not ready you're not ready you know you know what he called me impetuous youth okay be like you're such an impetuous yeah but i was the only one that would answer his phone because this was before they didn't know what a computer was there wasn't one so how do you turn it on larry yeah it was what do you think of ibm's quarter and how do you turn on the computer yeah so nobody wanted to answer his phone so i did because that's my that was my dad like you know you do you do what you're asked to do

so because I was the guy that answered the phone when he had surgery on his knee and couldn't walk up the steps of the amex he said give the kid a shot at a boy and you were ready no it wasn't so it was classic it was classic my wife would tell you how funny it was I get on tv and I got the earpiece and I've never been on TV before. Okay. And I know damn well I'm not qualified at this point. So I'm talking and- But you got the firm behind you. It's a real firm. It's a real firm. So Neil Cavuto was the interviewer and I was told by the booking agent

that he was just going to say, okay, what do you think of the market basically, right? So I get on, and he says, how does the movement in the Deutschmark impact your view of the T-Bone? You've got to answer a different question at that point. So you know what, though? I did what I hope we all can do. You move the conversation to a lot better. I like General Electric here. That's all I ever do. No, it's like, so I said, I can't answer that question, but here it is, and I went on my thing.

But in the middle of it, my earpiece falls out. I've never been on TV before. My heart's ready to explode to begin with. So you lose the producer. So, but the fact that I handled it, I guess, was okay, and they asked me to come back. I had a radio channel because the people listening to this can tell my voice. I hate my voice. My voice is awful.

It's unique. No, it's not. No, it's not. No, it's not. I had somebody in radio tell me that I'll never be in media because of my voice. It was a classic. How's he doing these days? All right.

First of all, congratulations on that. Let's get into what happened. I think this week is a momentous week because bond yields crashing. And it's interesting. This is the first time in a while, at least that I can remember, where both the bond market and the stock market decided to really fight the Fed in opposite directions, of course. The bond market is laughing uproariously at that last hike. And at this point in time, only the one-month, two-month, and three-month T-bill are trading above where they were January 1st. Everything from six months on out

is now trading below where they started the year. So the bond market is viciously fighting the Fed. Stock market too, because the Fed keeps talking about getting tighter, staying tighter, and tech stocks are ripping. So it's a really interesting time to see both of those things happening. But I want to give you this, speaking of Ed Yardeni, to react to. What does the bond market know that the equity market doesn't? The yield on the 10-year treasury is down from four and a

quarter in October to three spot to 9% today. The S&P 500 is up 8% over the same period. Bond investors must believe that the banking crisis will soon morph into a credit crunch and a recession, causing inflation to continue to fall. If so, then the Fed should be done tightening, et cetera, et cetera, et cetera. What are your thoughts on- But then why the stock market rally? Hold on a second.

What stock market? The F on a second. What stock market? The FANG stock market. Because before I came here, I looked on Bloomberg. Six of the S&P 11 S&P sectors were down on the year. Yeah. The Russell 2000- The ones that don't matter are down. All the technicians are talking about it appropriately.

It's the Russell 2000 on relative performance. It's back to the week of the low in March of 2020. Right. You got the S&P equal weighted, which people don't talk enough about, has given back all the relative performance gains of the second half of last year. So, you know, I think we really have to be very careful about what market we talk about when more than half of the S&P sectors are negative on the year. It doesn't mean they're always going to be that way and you're going to have rallies back and forth. After the banking, the BKX issue or that Silicon Valley bank issue, we put out a piece called BKX signals bounce then trounce.

Because the one thing, guys, you know and I know and everybody listening knows is human nature is very similar all the time. It doesn't change much, right? So when you think the system is going to fail, you puke it. When it doesn't fail, you're like, oh, thank God. You bounce it. And then you got the reality of what it does to the rest of the system, like not systemic failure, but what does it do to that movement in money?

So you feel you had a 19% gain in the FANG stocks each this year, and it's pretty uniform across all of them. Like, go look at Microsoft, Meta, et cetera. You feel that it's a bounce and we shouldn't make too much of it? There's so many places that I can point to where it would be historically unique to not have a recession, and the S&P has just never made the low prior to a recession. What if the buying in those stocks is a recession bet because they're the new defensives?

It could be. It could be, but defensives go down in a recession. Like if you look at the comment, I hear a lot of comments about how great industrials are. And they were up until January. Yeah. They were last year. Right, now they're down on the year.

But, you know, in the fourth quarter and then in through January, they were relative outperformers, right? And people would say, well, when certain and big industrial stocks are making a new high, how can you be close to a recession? Yeah, I probably said that.

Look at the chart. Yeah. It happens literally every time. Yeah. As a matter of fact, it happened, the industrials, I believe, made a peak in the middle of the recession in 2001. Do you remember in 08, when we were already in a recession?

We didn't officially know it yet. Yeah. But we were in one and oil went to 200 and the leading stocks were like Caterpillar. So like there are head fakes in the stock market all the time. All the time. And if you look at, you know, anyway, yeah, there are. The problem I think that we have in our business is that you said it earlier. Soundbites work. Yeah.

Like I can get away with coming on a show like not like this one because you guys do your work. But I could go on a TV show or another show and I could just make a statement. I literally could make it up. It could become a soundbite and get around the street. Yeah. And nobody really questions it. Right. Now the problem. So to me. you could go on chatter and basically say anything

and it can become something that somebody picks up and it goes viral. And it's not saying it's right or wrong. It just is. Yeah. Right. And I think that the reason that I've, what I've tried to do is have a fundamental thesis that doesn't move because the prices move. It's built on. Oh, I only follow price. My mood changes every day. I hope I'm bullish. Well, my mood changes. I guess I'm bullish.

I swear to God. My opinion on the market has probably changed 25 times today. Yeah. Right? It's hard. It's hard. But my actual actions and opinion, public opinion don't change because I put myself in a box.

I say, these are the reasons that I have this view. This is why these reasons are important. And if they don't change. For example, the BKX goes down 12% in three days during the Silicon Valley thing on March 9th. I mean, that's a smoke-a-thon. That's a, you know, everybody's talking 08. Everybody's talking about systemic risk. All the deposit money's gone. Anytime that's happened in the past since there has been a KBW bank stock index, you've had a median 8.8 percent bounce. So the time to put that out – For the S&P or for the banks? For the S&P.

OK. For the S&P. That's interesting. So the time to put that out isn't eight days later when it's bouncing. It's into the teeth of the drop. Right. But then you're putting your ass on the line. And therein lies

what we talked about before. Do you want to be right? Do you want to look smart? Yeah. Or do you want to act smart? But so my biggest weakness is I think I'm too humble. So...

You're a f***ing guy. No, but I'm kidding, kind of. But I always... I always... If I think something that the market... If the market disagrees with me or if I disagree with the market,

I always defer to the market. Now, the market's obviously not always right. But so, for example, I think I that the market, if the market disagrees with me, or if I disagree with the market, I always defer to the market. Now, the market's obviously not always right. But so, for example, I think I am with most people who anticipate the economy to contract, who does not see relatively attractive valuations in stocks, especially relative to bonds. And yet the market will not tell me that I'm right. And even if you look at the equal weight, yeah, it's not ripping. Well, the market's screaming you're right. That who's right? That you're right. And even if you look at the equal weight, yeah, it's not ripping. Well, the market's screaming you're right. That who's right? That you're right.

Industrials are down. Materials are down. Energy's down. Financials are down. So in the first quarter, the S&P gained whatever it gained. I don't remember what the exact number was. I think it was 6.4. Half of that was from Apple and Microsoft.

Yeah, that's what I'm saying. So X-Tech, the market was flat in Q1, which is, you know, it's not bad. No, X-Tech, the cyclical sectors that typically do the best off the bottom, including small cap and levered, didn't. They're not working. Let's put this up from Tony. This is S&P 500 down greater than 19% from all-time highs. These are like the real bear markets.

And then you're showing us the two-year treasury. So walk us through what we're looking at here. All right. So I went back and I looked at any time the S&P, any time it's been down more than 19% peak to trough, which was it started doing that on October 12th of 2022. It was down 25% at the low, right? Yes. So I looked at any time we, my associate Mike Welch helping me, any time the S&P was down 19% versus when did the two-year peak. So what the point of this chart is, the S&P 500 has never made the low, a bear market low, before a peak in the two-year note yield. Ever. Really? So if the peak in the two-year note yield on that bottom was March 8th.

I think that's the blow off top. I think that's done. But it doesn't matter. You don't, you know, my friend, friend Helene, don't rationalize the indicators. Okay. The S&P 500 has never made the low of a bear market prior to a peak in the two-year note. So what's the implication? So stocks- You go back to the low.

Bottomed with air quotes in October, the two-year peak three weeks ago. It was a low, not the low. A low. Okay. So you think we take out the October lows? History said, forget what I think. Who cares what I think?

The history absolutely says that it would be historically unique to not take out the October lows. So that's on the two-year. Now let's talk about it from the recession point. Anytime the yield curve inversion, percentage of possible yield curve inversions has hit this level, any time that the conference board leading economic indicators has hit this level, and any time that bank lending standards have hit the current level, you've had a recession every time. We got two data points, economic data points this week that would indicate that things are going in the wrong direction. We got ISM manufacturing, which is very closely followed. 70% of manufacturing GDP is contracting. 70%, not great. Today, we found out, this is from Daniel Zhao. He's the economist at Glassdoor. Initial unemployment claims were 228K last week, a decrease from 246

the week before, but there was big revisions up. So, John, can you throw up this chart, please? So, we've got the official as of yesterday and the official as of today. And what I mean by that is the jobless claims from last week were revised up like a lot. Next chart, please. You saw this? Buddy. Look at this. Look at that.

So the dark blue is what it was reported yesterday or last time and now big revision of this. So the Fed is creating interest rate policy off of sticky weekly initial unemployment claims. Yeah. Right? Yeah. Until it wasn't. Right. And now it wasn't.

Once you get over 200,000. Which you've now done. Steve Leisman had a good thing that he did on TV earlier today about how it showed up one time in the course of like the last X number of weeks. And now it's every one because of the revision of the last cycle. It was revised up from 198 to 246. And continuing claims are now not fading away. Like all of those open – that open job thing and the JOLTS thing, we're starting to realize that those were not real open jobs.

You should actually read how they calculate the jolt survey. Tell me. There's, I think. Hang on. A year ago, 3% of the labor force said they were quitting their job. Is that what it was? Which is high. Yeah, it's a high number.

Right. And that's not the case anymore. Forget the jolt survey. Let's just talk about how they collect the unemployment debt of the household survey. Yeah. They go, they have to, I believe it's- They send you a fax. They knock on your door or they call you.

Okay. How many people listening to this have a landline that they would, and if you saw that it was the Bureau of Labor Statistics or Census Bureau, you would actually pick up. I don't have a home phone number. Right, so imagine who answers that call. And imagine who's answer, if Patty Dwyer is home answering and somebody knocks on the door and says, I'd like to ask you some questions about your personal life.

Yeah. What are the odds she's going to give it to them? Nobody's answering that call. They have to find, I think it's 60,000 unique households every three months. And they have to do it regionally too. Yeah. Right. So they're still collecting data in a very bad way.

And the point is that the Fed is making interest rate policy off of data that gets highly revised. The Fed is making interest rate policy off of data that gets highly revised. Even the best data, the weekly initial unemployment claims, continuing claims, are probably the highest frequency best data that just got totally revised in a different direction. So when you think about the Fed, Josh, and you look back at all the mistakes that they've made – I'm good at mistakes. They're great at revised data and you wonder how could they have raised rates when the data look like that? Because it was so revised when it's in real time. They're thinking initial unemployment claims are really tight still until it just got revised. Talk me out of this. I don't think data dependent is the right posture right now.

It's a horrible posture. How about common sense? Okay. What this data dependent is the right posture right now. It's a horrible posture. How about common sense? Okay. This data dependent shit, they're looking at year-old data, comparing it to now, and there's like newer data sources that I understand aren't classically in the indicators that they say are important to them. But we're all aware of them. That's right. Like apartment rental prices. Everyone knows that this data aware of them. That's right. Like, like apartment rental prices. Everyone knows that this data now exists and it's better. It's collected at a higher frequency

by reputable private corporations. Can we just like at least incorporate it? Cause it's telling a very different story than what the fed says they're looking at. So I have a question for you, Tony. If you, so let's say, so may as a may for you, Tony. So let's say, so May is their next meeting. It's a while away. What are they more focused on, inflation or jobs? And I'll put it to you this way. So if inflation comes down, but unemployment stays low and jobless claims don't really, really blow out, would they pause? Or would they say, we still have more work to do in the job market versus if we have like some, some bad shit come out of the job market between now and then, but inflation stays,

but inflation is now like, what would they, what would they look at? Mike, inflation is not the problem. It's the labor market. It hasn't been for three or four months. So it's the labor market. It's always the labor market. Check this out. So if you're, if you're Jerome Powell, when the unemployment rate is 3.4%, right? You're at a historic low. Things are going along just great on the labor front. It's easy to say we're going to stay tough on inflation until we see the whites of the 2% eyes, right? That's easy to do when you're at full employment.

If you look at a chart of the unemployment rate, which I think I had in here. Yeah, we've got one of these. employment. If you look at a chart of the unemployment rate, which I think I had in here, what you notice in the unemployment rate is it goes down on an escalator and up on an elevator. I wish I could get up and point to it. Companies are very hesitant to hire people until they have to. But when you start to lose your revenue stream, you lay them off really quick. So, all right. So, Josh, let me just finish with my question. So what are they going to be focused on? It's very easy to say we're focused on inflation until you start getting a spike in the unemployment rate.

Yeah, the talk and talk. And so if you have that chart that the unemployment rate, I don't think I actually have it in here, is led by the NFIB hiring plans index by four months. And that's been tanking. Explain that. Led by the NFIB hiring plans index by four months. And that's been tanking. Explain that. So small business, the National Federation of Independent Business, tracks the biggest group of small businesses. And they have a hiring plans index.

The hiring plans index, you can go online and get it. It's free. It correlates with a 0.8 against the unemployment rate and leads it, according to my friends at Ned Davis, by four months. So once you see alarm bells there, it's not long. And it's six months old now. Now it's been really, hiring plans have come down pretty hard in the last six months. And then people, Josh, what do people come on the shows you're on and say? Well, unemployment's strong.

Look at the continuing initial unemployment claims. It just got revised out. It's telling you that the NFIB data is right. The mantra is the consumer's strong because there's still $1.3 trillion in excess savings in their bank accounts. Therefore, even if the labor market were to weaken, which clearly it is right now, first of all, it's still historically pretty incredible to be at a three-handle on unemployment. Second of all, people have enough in the bank excess than prior to the pandemic they used to have. That spending probably won't change to the degree that it otherwise would.

I don't know that I agree that that money in the bank will ever come out. It's there. That's what people are saying. But if that were true, why are people paying a higher interest rate on so much credit card debt that just hit it and household debt that just hit a new high, new record high? So in other words, you don't want to pay a higher – the problem of this cycle, which I don't think enough people are paying attention to, the Dwyer family, this is how we spend money, right? You go into a recession. Hopefully, I don't get whacked and I keep making money. So all of a sudden the Fed cuts rates. So my 1996 mortgage, I paid three points to get seven and seven A's. Rates come down to 5%. I refine my debt,

take out a little bit of equity and do a bathroom, redo a bathroom, right? Because my interest expense on that increased debt is the same monthly payment I had before because I get to take out more debt for the lower interest expense. Here's the problem. The pandemic didn't create a credit cycle because the Fed came to bat for the corporate and all bonds right away. So you didn't have a credit cycle. So we're about 15 years now into a positive credit cycle and a positive credit build,

a historic amount of leverage oh there was no washout in there was no washout in borrowed money correct so it just kept going so you're at zero interest rates forever yeah so do you guys have a mortgage yes no what's your rate uh three and a half okay mine mine's three and mine's two and seven eights right just about everybody in the universe is below three and a half because it was there for how many years, right? You'd be crazy not to. Right. You'd be crazy not to.

So here's the problem. For me to refide my debt like I did back then or I've done it like three or four times. That's how – it started out as can I get a new sink and it ended up to be almost a new house, right? Right, right. That's just the way it works. Right. But for me to refinance my debt, because it's, I got a two and seven days loan. You got to get based on the historical spread of mortgage rates to the 10 year treasury yield for, for it to make sense to me, you got to bring the 10 year bond yield back down to about one and a half to 1%. Yeah. So what, what are the odds of that when

your core inflation rate is at this level? So by having rates so low for so long, you've talked, Josh, how much about they're still buying mortgage debt into the heart of a housing boom. I couldn't believe it. They kept mortgage rates so low for so long. Yeah, I couldn't believe it. So you've wrecked – the catalyst to come out of a recession and to increase your spending is to refinance your debt and take some that's interesting because you're not getting an increase in your wage because you're in a recession no one's how can you michael and i can't do it so wait i want to go back to your chart though i want to ask you a question about this sure

john uh the unemployment rate so what what you're showing here, you're saying each recession begins with a spike in the unemployment rate from a low level, but then it goes down on an escalator. No, no, it goes down on an escalator below that. Right. After the recession. But look at this pandemic. It was an elevator in both directions. Or am I reading this wrong? No, because, well, you had to. Because it was fake. It was an elevator in both directions. Or am I reading this wrong? No, because – well, you had to.

Because it was fake. It was fake. If you look at every other time, the rate of change to the downside is much slower than the rate of – look at each low in the unemployment rate. It is right before recession. Quick to fire, slow to hire. Correct. No.

Backwards though. No. No. Wait, say that? Slow to hire, quick to fire. Yeah. Okay. Because think about margins. We talk a lot about margins like we actually know what we're doing. backwards though no wait what slow to higher quick to fire yeah okay because think

think about margins we talk a lot about margins like we actually know what we're doing okay so margins I'm buying I bought a snowmobile up in

in uh what'd you get Polaris no I ended up getting a um Ski-Doo okay

fast whoa yeah whoa you have a need for speed whoa I can understand we're jet ski guys so i also snowmobile snowmobiles it's more fun i got the aid anyway it's great so um now i lost my job okay so i go into the guy and he's like it's gonna be unfortunately parts supply chain

blah blah blah it's gonna be about four percent to five percent more and i'm and i'm like yeah whatever you know because my earnings were good. Everything's good, right? He can raise prices when the economy's fully employed and gaining employment because people like me are willing to pay it. That's right. The problem in margins, margins don't peak at a macro level because costs are going up. Margins peak because you can't cut costs fast enough when you have a revenue shortfall. Oh, so when the sales slow down, you still are stuck with those higher costs. You're stuck with it. Even if you lay somebody off, you got to pay them severance.

That's right. Right. So especially outside the US. So the problem becomes you have this elevated cost structure that was built on, guys, especially on Wall Street, take about six months or a year ago. Yeah. People are paying people bonuses just to come into interview. You couldn't get anybody to come in. So your cost structure is elevated at that level. And then you don't lay them off right away because you're like, well, this will get better sooner.

Right? And then when you lay them off is when the revenue shortfall happens because you can't cut cost as fast as but also you could like spend three years gradually adding people and then lay off three years worth of hires in in a month and that's how you get that that's right that's how you get that pattern i think that's right i think there was like two and a half catalysts for the stock market to rally whether we're talking about tech or the market just whatever i think it it was the dollar falling was a tailwind, right? The dollar was a wrecking ball. The dollar was 11% off its high.

The dollar was a wrecking ball in 2022. And I think it's a combination of interest rates falling, which might be the same thing as stocks anticipating a Fed pause. So those, I think, were the first two and a half pillars. And then the third thing, which Josh and I keep talking about, was just people not being prepared for a rally

and being really off sides. So if you look at some of the things that performed best in the first quarter it was things that had the shittiest 2022 so we've got some charts here john if you please one is from bespoke showing the different deciles and josh and i spoke about this and what are your thoughts but it's just the opposite of what you would expect literally the things that performed best in 2022 did worst right over here and the things that did worst did best. Another great visual opposite day. It's the opposite. Another great visual of this John next chart,

please. This is a scatter plot. It's showing the same thing. Um, on the X, we've got the returns in 2022 from worst to best. Yeah. And on the Y we've got 2023 Q1 returns and it's very linear.

I mean, this is a pretty good, our styles. This is like, it's very linear. I mean, this is a pretty good R-squared. These are styles. This is like cyclicals, bad by bad. How many times do you interview somebody on CNBC or they come in like me and they come on and they present their stuff? And, you know,

because you don't want to look like an idiot, everybody had to be long energy coming out of the year. You had to be long industrials because the big names are rallying and making new opportunities. It was everything value. It's like window dressing, but not in a mutual fund context. It goes back be long industrials because the big names are rallying and making new It was everything value. It's like window dressing but not in a mutual fund context

or like in a commentator context. It was the opposite of window dressing. People had to catch up. People had to reposition. I think that fueled either short covering or rally or whatever.

But it was, they were trying to look right, Mike. That goes back to our original even before we started the show. If you're trying to look right, you're going to have to chase your tail. So I think that's what happened. My point is, I hate the phrase the easy man was made because it was the opposite. If you're trying to look right, you're going to have to chase your tail.

So I think that's what happened. My point is I hate the phrase the easy way it was made because it was the opposite. It was hard. But I feel like whatever fueled the rally, whatever sort of rally we had in Q1, I feel like that part of it is over. But that's why these things get exacerbated. Because it was repositioning. So like if you, if in January and February, you were underweight tech, which sounded like the smart thing to be. Everyone was. And then those stocks worked. What are you doing in March? You're buying Apple.

You're buying Microsoft. You have to. You don't have a choice because you can't. And so that reinforces that nascent trend and turns it into something bigger. Until you just run out of that, like you ran out of buyers of energy. You ran out of buyers of industrials. Let's go to this CNI bank lending standards. This is a great chart.

Yeah, I want to talk about this. Okay, so this is prior to Silicon Valley Bank. This is a senior loan officer survey that comes out of the Federal Reserve. You can go to their site and get it. You don't need to take my word for it. The chart on the top is the large and small businesses commercial and industrial lending standards. business is commercial and industrial lending standards. So if you're either a huge company or a small company and you're going to the bank for a loan to make a commercial and industrial project or whatever you're going to use it for, when

that line is going up, it means lending standards are tightening. So that arrow and that reading is pre-Silicon Valley Bank. So you know that got worse. I know it because I love to talk to my neighbors. The last people people should talk to is me. They should talk to their neighbors and ask, how's business? I have a buddy who's a commercial real estate guy, does real estate investment. He's been at a small bank for 20 years. How much is he drinking now? No, no. I mean, he asked them for their money, right? And they're hesitant now after Silicon Valley Bank.

You have a worst case scenario for these banks. They're losing their deposits, their source of funding. So their cost of funding is going up and the yield curve is already inverted. Yep. And the borrowers are less interested. Right. And how do you know?

Look at the bottom chart. That's the loan demand on those loans. Okay. So you have loan demand falling. You have lending standards tightening. There's no way if this is the current state of small and mid-sized banks, what's like really happening. There's no way we get out of this without something. If it's not a technical recession, it feels like one. Yeah, and that's what the data shows. That's, again, the lending standards. What could reverse this, Tony? Fed drops rates huge.

That's the only thing. Like overnight, 1%. The bull story here, Josh, the bear story, the worst case scenario, in my view, is a soft landing. Because it keeps the yield curve inverted for how long? Forever. Yeah, and we stay that way. Right? I know it's awful to say, but you need a recession.

You need a credit cycle to get the next cycle going. You need the Fed. Listen, six weeks ago. What if we're just – I'm being – not just. People are thinking I'm out of my mind even more than normal because I was saying that the Fed had already raised rates 100 basis points too much. And they're like, you're out of your mind. You've got to fight inflation because of initial unemployment claims. Right. Right. So literally I'm saying they, they should

have stopped a hundred basis points ago. Okay. The two-year note yield drops from a four, a 504 to a 377. Yeah. That's 125 basis points. So the market agrees with you. You have to have the Fed drop rates fast enough and hard enough that it makes a positive yield curve and it incents banks to lend. But what if they don't and we're in economic purgatory? That's the worst case scenario. That's a zombie economy. How long can you be in an inverted yield curve?

Can you go three years that way? It never has. Never has. I mean, you've had years where you've had in the Volcker period. So when I got – I was on in February and the title was Turbulence Ahead. You guys know my view. I've been – You crushed it with that call.

I used to be – I'm a permable. I had somebody stop me on the street the other day, enough with the doom and gloom, right? So anyway, I'm a permabear when there's no money. Right. The problem that we have is when I think of a common sense approach to this thing, I'm trying to figure out how the Dwyer family is going to have more money. My income is not going up. Wall Street isn't booming. Right?

Banks are tightening their lending standards and the markets are blah. Yeah. So where are you going to get that? You need an increased amount of money to spend. So, guys, why does the market bottom? I get this question a lot. How come the market bottoms in the middle of a recession? Because the Fed drops rates enough that you steepen the yield curve enough that you can

have, you know, that money availability is going to improve, right? You know, it is. And then stocks, it allows you to look through that. Did I give you guys the money supply chart? That's a great chart. I don't know. I don't know if we have that. Oh, we do?

Okay. Okay. Because what you're going to see on here is when it comes up is money supply for the first time post-World War II has gone negative year over year. I think it was three months ago. This is the chart. Great chart. So it's now minus 2.35%. It's never been negative before.

But then, you know, so the money availability is obviously not there. Now, if I were a rational person, I'd say, duh, it went up more than it ever has before. So what do we do as American consumers and businesses? Wait, Tony, back up. The money supply, just explain this to people. The money supply exploded deliberately because the Treasury and the Fed working together and all these government programs all hit within an 18-month window. Like whoosh.

And it was just money for businesses, money for regular people, money for unemployed, money for employed, just everyone. Everybody got money. And then, I don't know, 100 different programs, money for hospitals, money for this. Okay. So that happened. That was very deliberate. That's how you get this spike here. What do these numbers mean?

So the spike, it's year over year since 1960. So the money supply up 25% year over year in one year. In one year, which has never happened before. And even the big spikes are more like 10% historically. Yeah, not even. So off the charts that nobody's ever seen anything like it. So what happens with that money supply? My buddy Mike Dardick did a great job on this during the time because I didn't actually think that inflation was going to be as bad as it got.

And he did because of the explosion of money supply. The money supply move that went up so much, Josh, what do we do when they give us money? We give it to Tiger. We spend it. We give it to Bitcoin. Well, that's what we did. I bought snowmobiles personally. Mike, you know, I don't know if Mike bought one, but I, you know.

My 13-year-old started doing venture capital. Like that's what, no, that's like the way. Yeah, you know, I don't know if Mike bought one, but I, you know. My 13-year-old started doing venture capital. Like that's, that's what, no, that's like the, yeah, we all bought toys. Everybody used the money, whether it's invested or spend it, the money got out, got. I re-fied twice. I should have had more. And the second time I pulled money out of my house. In retrospect, I should have had more fun. You should have. Yeah. Come snowmobile with us. Tony, do you, do you put any, any, uh, merit into the stats like this? There, there's been, it looks 13 quarters since I guess 1950 where the S and P was up 5% or more in Q1 and 11 times it was higher in Q2. Does that matter to you?

Momentum at all? Yeah. You know, the momentum is there. The problem that I have is, yeah, you can't rationalize the indicators. There's great. So there's going to be somebody epically wrong here just on the money supply. Yeah, go back there. So what happens now?

So the money supply, people would say it's going down because it went up so much. But what created the inflation that we have was we spent the money. It's gone. We spent it. Or we invested it. It's not sitting in the account. But wait, what about – so everyone was talking about this, that this was the most telegraphed recession of all time, if we get one. And I think everybody agrees that we will.

And corporations did a really good job binging on credit in 2021 and 2022, so they're flush. We know what happened with consumers. Now, obviously, they're running out of it. And that's that data right there, Mike. That's the data on money supply. You cannot spend what you don't have. But when you say they spent it, but there's a velocity of money.

So if I spend it in your business, you now have profits that you will spend. Well, you bought a good and then they reinvest that and build a new plant or do whatever they do when the company takes that money in. But the supply is shrinking regardless is your point. Yeah. Remember, growth comes from new money going in. You've got to have a replenishment and expansion of the money. Otherwise, if you're making the same amount of money, you're not borrowing any more money. You've got to have new money to grow more than that.

There's got to be a source of capital. How long does it take, in your opinion, for a 25% year-over-year explosion in the money supply to get worked off? It's happening now. It could be very quick. Oh, really? It could happen.

Like, I don't think this is going to be- We don't have to have like a stagnant decade to work that off. We raised rates. So I got, so going back, I'm jumping around, but in February we had the turbulence. That's nice. It's nice to be right once in a while. But when I really got cautious when Jerome Powell mentioned Paul Volcker's name, because he made it clear that that might be necessary and he would be willing to do it.

And what Paul Volcker did is he inverted the yield curve on purpose to create a recession to shut down double digit inflation. Here's the problem. We've raised rates faster than Paul Volcker did. When he did it, you were at a generational low of government debt to GDP. We're not in that situation today. I think it was 42%. Today, we're at 137.

I have a theory that Volcker also killed disco. I don't know where to go with that. Think about it, though. Just think about it. All the parties ended when he inverted the- Was that 81? Yeah. That was the end of disco.

I think he really saved not only the economy, but music. I wanted to put that out there. I can tell you that the dwarf- I'm not allowed to sing and dance, so I have no idea what you're talking about. Yeah, sure. It's a social rule. They come out of the- The government has mandated I'm not allowed- You were in Studio 54 with my parents? I'm not allowed to sing and dance, so I have no idea what you're talking about. It's a social rule. They come out of the government

has mandated, I'm not allowed. I'm not allowed to sing and dance. Tony, I think you're going to like this data from Warren Pies, who was a guest on our show. He does great work. He's showing a six month post-bottom. So if the S&P bottomed in

October, and he went and looked at what happened every time six months later, this would be the weakest bounce. The one that we're in now. The one that we're in now. So we're up 10% six months after the lows. On S&P. The average, I don't know what the average is, but we've got 34, 42, 13, 27, 32, 12, 47, 24, and 52.

Those are six months post every bottom. So the next chart does a really great job visualizing this. Next chart, please, John. This would be unprecedented. Now, one other thing that they've never done, he said- We're pushing John to the limits today. Sorry, sorry, sorry, sorry, John. He said until last October, stocks have never bottomed in a hike phase. And we are in, still, we've been in a hiking phase. So the black line shows- And what kind, oh, bear market bottoms. Okay, that removes the 1994- Which, Tony, would support what you're saying,

is that if October was low, it would be the weakest bounce after six months ever. Yeah. Which I think strengthens your point that it's unlikely that that was the bottom. Well, unlikely or likely, Josh, it'd be historically unique yeah like you've never done about now it's historically unique well yeah pretty much i mean there are

things that are working like the bkx is like the asterisk era it's just one of those things where maybe the asterisk isn't that it's totally different it's just more levered yeah maybe it's more extreme so you know like the money supply always spikes coming out of a recession. It was more extreme. The money supply has never gone negative. It's more extreme. So somehow we're going to have this magical soft landing, this nice landing where there's going to be no inflation and full employment when we've never raised rates faster into the most levered system in a generation. I just, something always, and we've talked about it on air, something always breaks.

And you just don't know what it is. Oh, is Silicon Valley Bank broke? Well, you know, and let's put that on a shelf and think about what's the Silicon Valley Bank is going to make the government ask other banks, have you marked to market? Well, we know they haven't. Not just on government debt.

How about private debt, private credit, private equity, venture? Forget about it. And it's not the banks. They're not the investors. They're the providers. The investors are pension plans, endowment funds. So, you know, if this actually is a credit cycle, it's the most levered credit cycle with the most rising. And so you ready for this, guys? This is going to blow your mind.

That's the bull story. Why? We're 15 months into this. This stuff doesn't happen at the beginning. It happens toward the end. So we advise institutions and wealth management around the world, our phrase is we want to be light and tight. We want to be light in exposure to be able to take advantage of weakness versus betting on it. Because you guys manage money. Let's say you're

really bearish and the market's going down. Most people press their bet a little bit. Well, they get more emboldened because they're getting confirmation every day. Right. So I think the final leg lower is when you're in that recession and you're going to make the low. So I want to attack the next move low. It's going to feel worse, though. Look at this. Of course it will.

Because I just had Nick make this. So what we're looking at here is the number of months before and after ISM drops below 50. And so this is the S&P 500, the average S&P 500 returns. You could see, so this is month zero when it first drops below 50. Leading up to that, stocks suck. And in a 12-month period, stocks usually go up, right? So they don't go up prior to the ISM dropping below 50, which is intuitive because that means that the economy is contracting. But look what happens around six, seven, eight months after it first.

That's the recovery phase. So you're 100% right. If we're closer to the end. We're closer to the end. Let me see this. The Fed lowers rates when the unemployment rate goes up. It's scary. In a democratic system

when elections are every two years in Congress, the last thing you want to do is see a monster spike in unemployment. You sound cautiously bullish. I'm not positive. Looking to take advantage of that.

They're cautiously bullish. Levered era pivot, not a pre-recession buy signal. So I think this is what you're getting at, Tony. The only time the pivot was a buy signal was when there wasn't a recession coming. Correct. Which was in 1995. Yeah. Okay. So walk us through what we're looking at. And it takes to debate. 1995 was a tightening cycle. But if you look at 1989, 2001, 2007, and 2019, you got a bounce, whether it was very short

term or a little longer from the Fed pivoting, but it was telling you you're about to go into recession. So how do you know you're in a recession? So if everything's based on the market's never bottomed before a recession, it's 23.5 weeks is the data, just so you know. What, the length of the recession? No, from the start of the recession to when the S&P bottoms.

Oh, wow. I can tell you the week. That's it, you know, I've done the work. So how do you know when the recession begins? And the answer is when the Fed pivots and the yield curves turn positive, that's when you're about to enter recession. Also, we're going to get the unemployment rate tomorrow. And when the unemployment rate historically averages 50 basis points higher than the low of the cycle, you're in a recession. It's called the SOM rule. She hates the fact that—

50 basis points. So 3.9%, Josh. For an average of three months, you know you're in a recession. Okay. So why? Because that's 50 basis points above 3.4? Yeah, yeah. That's just—

I see. So by the time this comes out the numbers will be out i don't know this depends what time you wake up if you get let's say we've got 3.6 percent in the last month let's say it jumps to four just for giggles i'm not calling for that you know it's trending there right well you know that the fed is about to ease because they don't want that just the jolt survey and the revisions to the unemployment claims and some of the ism data has interest rates going down and everybody's talking about Fed cuts.

So how do you think the stock market would react to bad data tomorrow? If we get bad data. So you said I might, I sound cautiously optimistic. I'm not. I said cautiously bullish. Cautiously bullish. I'm just cautious. Until you get that negative data, you have to have the time when bad news becomes bad

news. And it's a popular thing now for people like me to come on tv and say bad news to me we've been saying it for the last six months yeah that's the end of a decline is when bad news becomes bad news because it makes the fed get aggressive what do you think lower interest rates steepen the yield curve the outlook for money improves that this it's not a quant program. It's not an algorithm or an educational. Tony, I think the thing that happened this week, though, is that the baton has been handed. So up until now, the baton amongst the people who are worried is inflation. Even though, to your point, we know inflation statistically peaked.

It's still the thing, right? Yeah, it is. Yeah. OK, I think this is the week. And I'm just going by yields and going by commentary this is the week the baton was officially handed to the economy the bad news is bad news crowd yeah and agreed and now i want to i want to use that exquisite segue to get into the reason why and i guess we're talking about, but like specifically the thing that's in everyone's face is the banks.

And one of the things that the banks are most exposed to is commercial lending, commercial real estate. Okay. I don't know what the hell to do with this. Same week, commercial real estate. UBS says, don't worry about it. Morgan Stanley says, it's going to be worse than 2008. That's like literally, I'll tell you exactly what they said and then i want i wanted to get i've been waiting all week to ask you this i want i want to get your take on this it's a very very

big segment of a huge deal borrowed money it's it's half the small mid-sized banks it's like half of their loans okay uh ubs uh an expected credit crunch on the back of rising cost of funding for banks may further compound its troubles, meaning commercial real estate, said the chief investment officer of the Americas at UBS. However, in our view, while the risks in CRE have certainly increased, it does not pose a wider systemic risk. Here's Morgan Stanley, same day. MS&Co analysts forecast a peak-to-trough CRE price decline of as much as 40%, worse than in the great financial crisis, Lisa Shallott said in the Weekly Global Investment Committee. Note, more than, quote, more than 50% of the $ 2.9 trillion in commercial mortgages will need to be renegotiated

in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points. Shallot flagged an outsized risk to regional banks, given small and medium-sized banks hold 80% of U.S. commercial real estate debt. Nearly $450 billion in commercial real estate debt is due to mature in 2023. So that sounds like concerning, but then there are people saying, don't worry about it. It moves really slowly. It's glacial. It's not a shock to the system. How do you answer this question? I say that since obviously nobody knows or it would just be a stat and we don't quote it. So my feeling on it is let's put the systemic risk up on a shelf. Let's say it's not.

I don't know. Like back in 2008, I was pretty negative that my buddies from the big short, you know, from Front Point had guided me through that. They were awesome. So the problem is that back then there was CDS, there was derivatives off of the problem. I don't know that that's true with commercial real estate. Clearly there's too much leverage there and the banks have big exposure, but you don't have to be worried about the market or the economy because of systemic risk, Josh. The way that I've been pursuing is let's put that on a shelf.

It's just the implication it's going to make for lending availability. If enough people are worried about it, it has an energy all to itself. It already has. It started day one. That's where the lending standard comes from. Correct. So this is human nature. I'm a political science major right but it's what happens when you go into the onset of a banking crisis think of bear stearns in 2008 right okay they saved it yeah cds crashed yeah credit acted better that's over thank god right and the market rallied big credit rallied big yeah but it wasn't over that was the the beginning. It was the onset. The psychology of how these things work is, oh, my God, the system's going to fail. The BKX is down 12% in three days. That's a signal we talked about earlier, right?

Yeah. And then the Fed or somebody somehow comes in and saves a day. And you're like, oh, thank God. And it's that feeling of relief, the psychology of relief. And then you get the tentacle, which I'm more concentrated on, Josh, which is what are banks going to do with this new environment? It ain't helping. They're not going to lend. And they don't even have interest rates going in the direction. Typically, when you're in a banking crisis, at least you have the Fed helping you. They're already falling aggressively. Let me show this to you. So we don't have the stat. So we don't know

what's going on with these loans at small and mid-sized banks all over America. The closest thing we have is CMBS. Okay. John, give me this Wall Street Journal chart. This is CMBS, commercial mortgage-backed securities, BBB spread blowing out over U.S. treasuries. This is Wall Street Journal, I think, today. Is it okay? Let me quote this.

U.S. Treasuries. This is Wall Street Journal, I think, today. Let me quote this. As of Tuesday or this week, the average extra yield or spread above U.S. Treasuries that investors were demanding to hold CMBS with a triple B rating, that's the lowest broad investment grade tier, was 9.46 percentage points. That was up from 7.6% at the end of February and approaching the 10.8% level reached in March, 2020, when local authorities were issuing stay at home orders. The average price of the bonds has dropped to around 75 cents on the dollar. A year ago, it was 89 cents. So this is it. Like this is your, it's, this is about this index comprises 9% of all of the loans, commercial mortgage-backed loans. So it's a slice of that whole market, but we can't see that whole market. We have this that we can see.

Could it be exaggerated? Maybe. But we're now at the same level we were at in March of 2020 when it looked like we would never need an office building again. That bothers me. And it's, you got the same relative performance chart of the Russell 2000

because those are the businesses that are borrowing and have commercial real estate. One more, vacancy rate, downtown offices. Look at this f***ing shit. Would you buy that chart?

I would. Right? If that, if that were, if that were a stock, you'd buy it. Vacancy rate in downtown offices is 17 and a half percent and for perspective during the 2009 uh i guess we had an economic meltdown the worst it got was 13 and a half percent pre-pandemic it was 11 it's a mess

so this seems troublesome to me and it seems like an area that stock market investors like myself haven't had to worry that much about over the years and unless you're a real estate investor well i'm not so well but but then it's all the same thing guys because it all comes down to businesses that are trying to cut costs faster than the revenues are falling yeah and so as long as unemployment's at a low and things are all good and people are making money and willing to spend and take out credit card debt and household credit, you're good. And that that's not happening right now. Right. So what happens when you spend less money at businesses, more real estate problems come into play and they

have to figure out a way around that so you know again what what makes you but wait a minute these built but so then these buildings get handed back to the banks and the banks have to sell them and they're not because there's no buyer and that's where you get the real credit crunch that's right well the real credit crunch comes when pension plans start selling credit because they're they're in illiquid we're not there we're not there. We're not quite there yet. No. Okay. All right. That would be even more troublesome. Right.

Well, let's say your pension plan, you've got to make 7% a year. What do you think they did when the highest part of fixed income, highest yielding part of fixed income was giving them 3.75%? Yeah. Right? They're levering the hell out of it. Right. Or they're going, how do you do it? You do a private equity or private credit. So you're an illiquid instruments. You still got to

do your 7 percent a year. So now you just took down your stock portfolio 15 percent if you held on throughout the whole. Right. Your bond portfolio came down just about as much. So now you still got to pay that 7 percent. Right. And your private equity and venture and all the other stuff is probably not giving you 12 percent.. On paper, it used to. We're in the discovery process, which is, to Mike's point, you sound cautiously bullish. I am not bullish until we get that drop. So I want to go back to one chart that we missed earlier. This is, again, from Warren Pies.

He had this great chart showing S&P 500 earnings per share, which we haven't discussed yet, and what happens during the hiking cycle, when they pause and when they cut. And intuitively, maybe counterintuitively, S&P 500 earnings per share continue to go up through the hiking cycle. Why? Because the economy is overheating and the Fed is trying to bring it down. Okay. When the Fed pauses, still you see an upward bias towards earnings per shares. By the time the fed is cutting, things are generally not great. That's when earnings really start coming down. They panic because there's a recession and then they start. So we're not there yet. No, it's too early. It's too early. So now I could be

epically wrong, but if I'm epically wrong, all the macro indicators are epically wrong and they're totally different. You throw them out the window because it's just, there's too many unique occurrences. It's hard to be bullish for all of the reasons that we're discussing, right? Stocks aren't cheap. They have competition and bonds. The economy is not expanding. But also it's hard to be too bearish I think given that everyone is bearish I don't think I hear that a lot I don't know that everybody is bearish

you don't think everybody is bearish? I think everybody says they're bearish I think Twitter is bearish and I think TV is bearish everybody in your seat is bearish which strategists are expecting earnings per share to go up or the multiples to go up besides Rebelski?

Tom Lee. Well, so let's, let's, I'm not going to comment on other guys. So, so my number is $210 a share. That would not be catastrophic. No, that's a mid single digit loss. It's going to be worse than that, but let's just say it's $210. Okay. My earn, that means that the earnings yield from when we started this show is about 4.75%.

Okay. Not much higher than 10%. I'm sorry. I'm sorry. That's a lie. The earnings yield is 5.1% based on the current price of the S&P divided by 210. On a six-month T-bill, on the decline, you're getting four and three quarters. So you're only getting paid 50 basis points to take that risk in an elevated market with all the commercial real estate and all the other

issues that you get. But it all comes down to the only thing that really bottoms out a market and allows you to look forward after a rate hike cycle is an outlook that the money can improve. That happens from getting a new job and a raise. We're already at full employment. It happens when the Fed is easing aggressively. They have yet to do so. And when banks are lending more, we still have an inverted yield curve. So that's not going to happen either. Right.

So that's why. So the legs of the stool are not under the stool. There aren't any. There are no legs. I agree. You're floating on the water. These are expected earnings. But that's the good,

I'm sorry, guys. Go ahead. But that's the good news. We're getting there. I agree. We're 15 months into this. Well, here's another hour in the crib where we're getting there. I agree. We're 15 months into this. Well, here's another hour in the quiver. We're getting there.

Finally, analysts' expectations, they continue to come down. I do have these secret charts in your pocket. I forgot to put those in the doc. I know that chart. They continue to come down. So now expected earnings growth declined for the first quarter. I'm sorry. Decline is 6%.

So they're getting there. They're getting there. Last question. What the hell are international stocks thinking? Because these are incredible charts. Europe. I know. there they're getting last question what the hell are international stocks thinking because these are incredible charts europe uh like there are massive massive rallies all over the developed world away from the u.s are they is that are they living in an alternate reality maybe that's the dollar drop i i well it's gotta be part of it truly truly josh i can't figure that one out

i can't like there's some wild things like truly truly josh i can't figure that one out i can't like there's some wild things like for example this is i don't remember when gold and bitcoin remember all the conversations whether gold stuff so gold and there were so many conversations on tv and among the investment community about why is bitcoin replacing gold yes but they were inversely correlated yeah bitcoin was just just acting as a risk asset. And this isn't a recommendation. I'm not allowed to do either one. Fair. But now they're correlated, which is interesting when the dollar is going down and the markets are under pressure. Yes. So that may have a tie to money flowing into Europe on a weaker dollar, which isn't being

perceived as the safety net. It's gold, which is- Bitcoin is up 50% this year-ish. Is it? Do I have that right? I mean, it happened to have bottomed right at the end of the year. But gold is pretty much what's on everyone's lips right now, of course. It's at a record high. Let's see. It's like energy coming into the year.

I know. Seriously. I could have a ways to go, though, because just from my own experience, like when gold gets going in one direction or the other, it takes a while. There's enough things in this game. It's okay. You're good at this.

I don't know. It's very confusing. I can't find a way to get bullish, but it's very confusing. I don't need to make a big downside bet. I just need to not have a big upside bet because I don't know. The problem in our business is people make investments on other people's advice. And when it goes against them, they don't have the intestinal fortitude to hold it. Because it was not their idea. It wasn't their idea. So my point is,

I have this fundamental thesis based on money that doesn't change because of the S&P goes up or down 2%. It changes when the availability of money for my household or my business changes. And it hasn't. All right. The Fed does its first, not the pause, the cut. Let's say it's sometime in the second half of this year. Things have gotten bad enough by then. Inflation has moderated enough. So then you enough so then you in your mind you say okay this isn't the bottom you know that historically but eighth inning yeah and there's going to be fireworks by the way in the ninth inning i'm going to be early i i'm going to get creamed i'm going to be early and i'm going to be so crazy thing is going to happen in the ninth inning but that will be the actual bottom getting

excited i remember when i joined canaccord so people never get bullish i think it was in 2011 i looked at the team there and i said it was during that crisis in 2011 and i said you may never get this opportunity in your life again to buy stocks at this valuation with this kind of and they booed you and yeah you look like an idiot because the market went down right away like you know if i'm doing my'm doing my job right, and I think this is really important for the people that are listening that watch TV and listen to people like us. If we're doing our job right, I want to be wrong for a little while so people can take advantage of the call. Thank you for saying that. Right? I'm not supposed to.

I don't give a shit. Very much agree. Sorry, I shouldn't be. My compliance department is going to get mad. I've done this now for 36 years if my ego's involved and i need to look right anymore i got a bigger problem than what my market opinion i love i love that mentality hey uh so bill ackman uh opened up chat gpt and the prompt was write me the worst tweet in history and uh i'm gonna read you what came out a day after the below he he did a tweet with a stork throwing a baby out of the nest because it was disabled

so it could feed the other babies and he wrote capital allocation so that didn't go over well so he said a day after the below tweet i found what i thought was a dead bird lying on its back which had apparently hit a window. And then he tells the story. He's with his daughter and they nurse it back to health with fruit juice using a small spoon. And it opened its eyes and it said, I love you, Bill. And it flew off 90 minutes later. And then he said, helping a small creature survive is an incredibly moving experience, particularly alongside a child. If you are given such an opportunity,

I would encourage you to take advantage of it. This goes in my never tweet folder. And I like Bill. I'm a Bill Ackman fan. I think he's like one of the most interesting people in the industry. This is very weird. This is as strange of a thing for somebody to tweet as I could really come up with.

You and I came off Twitter, I think, at the right time. Have I never nursed a baby bird back to health and then tweeted about it? No, I never. How about you just do the next right thing and let the results be what the results are going to be? Josh, you and I, I believe, stopped tweeting at the same time. I think you and I independently, I don't know.

I'm off Twitter, right? I'll be three years Memorial Day, but nobody's counting. You and I did it at the same time because I was getting off fast money, going through Times Square almost dying because I'm looking at the phone and people are beating the piss out of me on Twitter. And I'm like, wait a second. Because you disagree with them. They don't pay me.

I'll never meet them. And they're not very nice. Yeah. So what exactly am I doing here? But other than that, it's not bad. Other than that. So I don't do any social media. I don't feel the need for anybody to really give a crap what I'm doing in my life.

But for you. The only people I care about are my friends, my wife, my kids, and my close family. Will you tweet a link to this episode, though? If I could tweet it, I would. Well, listen, I got to tell you something. One of the things that I figured out about that is that if you have self-respect, then you will – whatever social media you use, you will put yourself in a position where you can interact with people that actually care what you have to say. And so that's how you end up really liking YouTube, for example. Our audience is amazing.

It's amazing. up really liking youtube for example our audience is amazing like we met amazing dunk duncan says this morning we have a super fan in town from australia yeah he flew from australia and we were like on his list of things you gotta do uh met him met him in bryant park today oh yeah you did what a sweetheart of a guy like but that's like creating an and creating a situation where you can be on social media but there are like some guardrails. That's right. You have the ability to get rid of people who are there for the wrong reason. Well, I remember somebody said to me at some point, we'll hold you accountable.

What does that even mean? Here's who holds me accountable. God. IRS. Wife. No, I don't even care about that. God, wife, kids, friends, done. Yeah. Oh, my company. Wife. No, I don't even care about that. God, wife, kids, friends, done. Yeah.

Oh, my company. My company. I'm held accountable by the people that are in my life, not about people I don't know. And God, hell yeah, you get together with that YouTube person. You're going to make a story for them. Our job is to make a story, educate them, and help them with their life and process. Fully agree. So I think LinkedIn is a great platform.

If there's somebody who's there for the wrong reason, you get rid of them. Like it's really important that you don't do and say things about your market opinions in such a way that you're couching your views because you're worried about what, you know, the mob is going to... Buddy, you know, I have a very strong opinion about this next thing. You don't get to mistreat me under any circumstance ever. Right. I mean it's got to be the way –

That's the end of the sentence. It's got to be the way that you carry yourself. I agree with that. Can we talk a little bit about AI? You must have some thoughts about all the excitement around this. Not stock picks, but like you must have thoughts about the investing and the economic implications if this is really going to be the wave yeah you know my kids my kids did it about me which i thought was pretty funny but you know and it was pretty accurate what they did at chat gpt yeah like tell me about tony dwyer yeah and i

actually liked it so i was like you, I'll blow that up somehow. But what it comes down to is it's – I'm wondering – so here's what I'm wondering. Like in the far resources of my mind, nobody expected the internet to be what it was in 1994, 1995. Yeah. And my thinking is I wonder if chat GPT and AI – not chat GPT. I don't know anything about it. If AI is that. Is that that next technological revolution that acts like an industrial revolution and it has dislocation things?

Like you don't – tell me about the market when the yield curve inverts. Goodbye, Tony Dwyer job. Yeah. Well, people still don't know what to do with that though yeah and by the way that's actually the most disappointing feature of chat gpt is that i think this is on purpose they're throttling the data that they're making available when people ask investment or financial questions so i was doing a bunch of stuff with it over the weekend and every data source ends in September 2021.

Yeah, yeah, yeah. So if you ask it questions like that, for example, I think they don't want to be held responsible for what could be construed as financial advice. Yeah, yeah, yeah. So it's not like AI, like, you know, open season, do or say whatever you want. Think of an earlier thing when you said, when Mike said, it's the most forecasted recession of all time. earlier thing when you said uh when mike said it's the most forecasted recession of all time put that into a search with the date 2007 with the date of 1989 with the date of 2000 people were making that same exact comment really do it don't trust me so people in two oh i remember like larry kudlow was like recession, everybody's human nature is very consistent.

Okay. Right? Everybody, each time you think it's the most forecasted recession of all time. And it is, frankly. Like it is every cycle. So the CEO of Google gave an interview to the Wall Street Journal this morning talking about how serious they're about to get with AI. And basically they've siloed it up until now.

They have like two big ai units and they had nothing to do with the products that we actually use and so that's what's going to change so the next time you do a google search you might see a little chat bot there say is this what you're looking for can i help you like what so that's all that's all like the next thing that's that we're going to start to think about productivity and the productivity revolution technology only exponentially improves itself with speed right a boat during the industrial revolution could only go so fast and carry so much same with a plane even today technology exponentially improves itself with speed so the faster it gets the faster it gets so it's great cancer you, medical applications and biotech.

What happened with the pandemic? Like these things came out very quickly because of technology. The downside is it's going to be a very dislocating function, just like it was, you know, like Home Depot was for the local hardware store. Yeah. It's going to dislocate employment. Except this is that, but for every industry all at once correct and that's what's different and that's what the internet was that's right that's what wireless phones were that's right like this feels like a moment like that for me it does for

me too so does that protect maybe the downside of the commercial real estate some of the other things like that does that keep you in a 1995 scenario i Well, it's disinflationary for starters. Did I not give you guys the conference board comps leading economic indicators chart? No, we haven't. Can I pull that up just for giggles? Yeah, I would love you to. This is a really good way to close this.

Tell us what they mean by leading economic indicators. What's in here? It's credit indicators, lending indicators, stock market. It's the conference board has a whole bunch of indicators that lead you into knowing whether the economy is going to go up or down. This data point goes back to 1960 provided by Bloomberg. So I've been hearing a lot about the soft landing. Eventually, listen, how do you know a pilot and a group of 1,000 people? How?

You don't have to guess. They'll tell you. So I'm a pilot. OK. like i can't make a soft landing you gotta land at some point dude you need gas right money is gas so anyway conference board composite leading economic indicators that green line is where they pull back to in a soft landing 2016 17 we're already through that 19 we're anytime you've been at the red line which is where we are today you have a red shaded area every economic indicators point to the same thing more or less so that's my point that you know when you haven't had time to disprove the soft landing what's the only way that you can disprove a soft landing time when you're

in a recession and then oh you got to be in the recession oh i guess it wasn't a soft landing. What's the only way that you could disprove a soft landing? When you're in a recession. You got to be in the recession. Oh, I guess it wasn't a soft landing after all. Right. So how do you know? So I look back and note the three periods of 1966, 1995, 96, 19, or 2016, 17. Those periods of soft landing didn't have yield curve inversions. The conference board leading economic indicators weren't here and the lending standards weren't as tight. So our call is just that, you know, based on the data, we're going into recession. You can almost say turbulence ahead part two. Turbulence ahead leading to one hell of an opportunity, and I want to stand ready to attack. Tony, last question.

I'm not going to get bearish 15 months into this. Again, I want to be early, Josh. This is when I got to lean forward because I get excited. The wrong thing to do here is start betting big on the downside. I'm with you. Spot me 10%. So maybe we're 10% away from as bad as it gets. Tony, give me that.

Is it a recession? Are we in a recession today? Yeah, pretty close to it. Yeah, okay. Good way to end it. It happens pretty quick. Yeah, pretty close to it. Yeah, okay.

It happens pretty quick. Like you get a guy that's trying to open up a refi, a retail debt at under $500,000 that his local bank who's always giving him money won't do it. You're in a recession. It's like you can't spend – and I'd love to leave the listeners with this. You cannot spend what you don't have. leave the listeners with this. You cannot spend what you don't have. So if you're already at full employment, bank's not giving you the money and the financial markets aren't surging, you've got to find a new source of money. And the only thing that does that is when the yield curve steepens to the point where lending institutions want to give you money at a cheaper rate, you can afford to do it. We're a ways away. Can I sell my mudroom? Your what? My mudroom. Yeah, that might not have been

the best investment for this economic environment. Tony Dwyer, ladies and gentlemen. What a man. What a show. Thank you so much. You taught us a lot today. We're going to do favorites and then we're going to let you

get out of here. Does that sound good? That sounds great. It's great to be with you guys. I'll go first. So I'm leaving for Paris tomorrow and taking the kids. And my kids have a-

In this economy? Am I right? In this economy. economy oh forget about it what paris is rallying this might be the most expensive trip i've ever taken to um so so my kids have no frame of reference about anything to do with france or they just i don't know i don't know what they do all day i think they're just on tiktok like they haven't read anything or or seen any movies or anything. I'm not disappointed.

I understand that's just that generation. So I was going to show Justin, my son, some movies about France. Like, history of France. Because we're going to see all this historical shit. So we're watching The Man in the Iron Mask last night. Oh, Leo. That movie is amazing. And I forgot.

Who else is in it? 1998. Malkovich and Leo. me let me walk you through it now malkovich keeps his california accent the entire movie he's one of the three musketeers oh yeah and he's like god damn it d'artagnan is it tony banderas in it uh no you know who's in it j Irons and I said Justin you recognize his voice that's Scar from the Lion no Scar

from Lion King Leonardo DiCaprio basically playing himself he's like sends a guy to go get killed in the war so he can steal his girlfriend for the night

he's like literally playing himself and who else is in it Gerard Depardieu who is disgusting like in real life no in the movie he's like a pig in clothes And who else is in it? Gerard Depardieu, who is disgusting. In real life?

No, in the movie. In real life. He's like a pig in clothes. And one other guy. What's his name? Gabriel Byrne. Whatever. It's an amazing cast.

But doesn't Leo play two characters? Well, don't ruin it. Don't ruin it? That's from like 30 years ago. Yeah. Don't ruin it. Anyway, so Justin falls asleep 10 minutes in. Because they start talking about the politics of france in the 1600s he's out he's completely out uh but i stayed up i watched the

whole thing i thought it was showing way miss what's that yeah yeah i love that yeah no that that'll that'll keep his attention uh anyway i don't know apropos of nothing great movie about france and uh great great, I don't know. Good shit. Alright. Also, Succession Season 4, off to a good start. We don't have to spend a lot of time on that. Are you caught up? I do not see Season 2, Episode 2 yet. I don't know what you're waiting for. Okay.

What do you have for us? Well, not much. I'm excited for Dave. I'm going to start with a little dicky. Tony, this is definitely not for you. Tony's not watching that shit. But the audience might be, if they don't know. What else? What channel is that on? FX slash Hulu.

Okay. I haven't seen any of it yet. Tony, what do you got for us? What should we be reading or watching? I like The Night Agent. I thought that was pretty good. I didn't start that yet. Oh.

That's really good. What is it? It's like a CIA kind of. It's Netflix. Can we agree? It's low quality. Like, it's fun garbage. Yeah. But you know what? In my life. Netflix it's low quality like it's fun garbage yeah

but you know what in my life that's okay I love brainless fun garbage me too I'm good at it I need stuff that I can have on and not have to be staring

at the screen the whole time that's this that's exactly it I don't want to think about the market I don't want to think about an answer to the question

I don't want to think about anything in family or at home I want to just you know John Wick 4 you gotta turn your brain off oh did you see John Wick yet not yet I want to do it you know, John Wick 4. You got to turn your brain off. Oh, did you see John Wick yet?

Not yet. Okay, I'm going to do it this weekend. I think we're going to see it. Yeah. All right. Tony Dwyer, ladies and gentlemen, thank you so much for being on the show. We really appreciate you. Guys, it's really great.

Thank you. Great job this week, Nicole. Great job, John, Duncan, Sean. Great job in the doc. We appreciate you. Guys, thanks so much for listening. If you have not subscribed to the show yet, I don't know what you're waiting for.

Give us reviews. We need those reviews for the algos and for all the AI and chat GPT. I got nothing else to say. We're good? Yeah? All right, guys, have a great weekend and we will see you next week.

I don't even think I said anything I was in trouble for.