The Compound and Friends - The Difference Between Traders and Ballplayers

Episode Date: August 20, 2021

On this week's episode of The Compound & Friends, Michael Batnick, Cardiff Garcia, and Downtown Josh Brown discuss: economic indicators, Fed Chair Powell, inflation, Ethereum, podcasting, Steve Cohen vs the Mets, and more! This episode is brought to you by Polymarket. For a limited time, sign up with referral code “Compound” to get your first trade reimbursed up to $100. Visit https://polymarket.co/CompoundShow to learn more.   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/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

It's pretty cool. Dude, it's a great setup. And I like that you guys have put the mat in here to try to muffle the echo and stuff. It's a beautiful room, man. So Duncan and John really know what they're doing? Yeah. That looks great.

We drew up this game plan. It sounds good, too, man. I mean, when I listened to it, it was in my ear. It wasn't like I just had it playing on speaker, and it sounds good. Yeah. I mean, that makes such a big difference. When you listen to an amateur podcaster interviewing people on Zoom,

they don't have their own audio settings right. It doesn't work anymore. Like 10 years ago, people might have done it because there weren't that many podcasts, and they hadn't upped their game. But now everybody has to have, you know. Even if it's great, you would never know because you can't make it for five minutes. You're just like, I can't listen to this.

Yeah, I'm out. I'm out. Yeah. Actually, it's a good thing because some of those people are all potential clients of amy's and mine for our new company yes i can't wait to hear about where do you have people recording i mean for our podcast it's been all remote but we'll usually book a studio in their city and we'll have them go and then we'll and then we'll go to one here and we'll book time there i have a little setup at home like in my go and then we'll go to one here and we'll book time there. I have a little setup at home, like in my closet that I was using.

What studio do you go to here? Digital Island, which is in Chelsea. There's also one called CDM Studios, which is in Hell's Kitchen. I'll go there, but I've got my NPR set up at home still in my closet with literally a blanket draped over my head on either side.

And it sounds great, but it's more comfortable. I was recording in my closet with literally a blanket draped over my head. Yeah. On either side. And it sounds great, but I was recording, I was recording in my remote office, which has, I had 18 foot ceilings. It was terrible. And my voice sounded like you were speaking into a Canyon, my voice bouncing off of the warden desk in front of me and then hitting the ceiling and then hitting the mic.

Yeah. And so it was like always very echoey shitty and duncan's like dude can you just put a pillow in front of the mic yeah i'm like i can't my computer is there i can't see that i can't see my computer huge velvety blanket over the entire setup it works i've seen that yeah yeah that's it's what i did for a year and a half when npr went remote that's great that's crazy dude we went home on wait hang on one sec how's his uh his mic is good yeah yeah did you check mike michael on on on unless you're just like particularly fired up i mean i am i the left do the levels just blow out all the time on this podcast like all the time like are you just sitting there stewing in anger i keep it on the other side just i keep it on the other side it does it's because of me i own it uh it

happens to me too man so is anybody in that studio there you know friday quest park from us oh in npr the office is still closed because they're they're renovating they're they're installing new studios and stuff until next year okay so all of their on-air people or most of their on-air people are remote? Yeah, remote. They have like office manager type people like going in and keeping tabs on the place. But everybody's gone. I mean, look, this is like part of the big story, right? They're taking advantage of this moment to install better stuff, to spend money on the place.

If you're going to be in the game, then now is a good time because there's nobody in the way. Yeah. It's a pause. And everybody had to do it. I mean then now is a good time because there's nobody in the way. Yeah. It's a pause. And everybody had to do it. I mean, that's what we did. That's what we did here. I said to myself, all right, I'm three years into a 10 year lease. I can't get out of it.

I don't want to get out of it. Yeah. But it may be years before we start regularly having in-person client meetings in the conference room and even employee meetings in the conference room. Right. So what can we do to actually make this something? Yeah. Like to make this pay off. We're in New York City.

There's tons of people we like that we want to talk to. Like let's do something. So then Duncan was basically like basically like yeah we could do this but i can't do it myself yeah so we we found john and these guys built this and you got to invest i mean you got to get the equipment you have to hire people who know what they're doing i stole all this shit that wasn't that wasn't a problem from npr right across the park yeah yeah yeah no problem nobody's come come back to notice uh if they're there or not so i only have like partial approval from Barry.

So I got all the sound buffering stuff purple because that's his favorite color. And I figured like when he comes in and sees it, he's not going to be that mad because – He hasn't seen it yet? He doesn't know what this is? He's like Prince. No, he's seen it since. But I'm saying we started putting up sound buffering equipment in the conference room. I was just like, well, if I get it purple, yeah, it'll take a little bit of the edge off.

So I can come in and vibe out with you guys sometimes with all the purple. Yeah, 100 percent. No, it's listen. It's it was a big investment and it still is a big investment. But we're having a lot of fun doing it. So now this is compound and friends. Was that inspired by Conan O'Brien needs a friend? Like you invite me over and now you're hoping I go to your barbecues and

stuff or what? You know what? That's a good question. Nobody ever asked me that, but somebody asked me if we copied Howard Linsen cause his podcast is panic with friends. And we definitely didn't do that on purpose. But now that I think about it,

is that Howard? Yeah. Now that I, now that I think about it, is that Howard? Yeah. Now that I think about it, like maybe subconsciously, I a little bit copied. But that's okay. Howard rips me off all the time. That's the way the thing works. That's how creativity works. Yeah.

So if I subconsciously ripped off Lindsay and it's not the end of the world. Keep inviting me to your slumber parties. Oh, shit. Your slumber parties for day traders. Yeah, that's the next podcast is the slumber party. How'd we close? That's horrible. All right, did you get out of everything?

I'm good. Went short. Did you get Josh out of everything? Did you get me out of all my stuff? Look at Palladium. Remember the show was the hottest thing? That's the most bearish. Do you remember that?

Yeah. Look at Alcoa. Down 11% today. And you know what sucks about all those commodity-related stocks? They were all breaking out. Look at copper. And it reversed in two days. Yeah.

Copper's having its worst week in a while. Good. You know what I haven't checked in a while is lumber because it was collapsing earlier this year. Crash. 70%. Crash. It turns out that shit actually literally grows on trees like actually they found a better way to cut down the tree did they draft paul bunyan back into surface when you were at ft alphaville

i could see you writing writing a headline like lumber prices crash as wall street realizes they grow more stuff grows on trees right wall street joins what is that is that a lumber chart that's lumber wow that's not what you want to say wait is that at the pandemic if you're if you're a buyer of houses that's good that's terrific oh man so when does that show up in the home builder that's awesome when does that show up in the inflation data that collapse in building material price well Well, the prices aren't coming back down, though. That's the thing. KB Holmes, the CEO.

At the retail level, they're not coming back down. Well. At the wholesale level. Fine. But the margins are all, they literally said you raise prices, what's going to happen as lumber came back down? Right. He said, we'll take it to margin.

And that, my friends, is why you want to buy stocks. This is still a demand story though, right? And it's going to take a while. Well, the lumber was a supply story. The lumber was a supply story, but I think the fact that prices still haven't adjusted, even though- Why was lumbers down and house construction?

Wait a minute. Why was lumber a supply story? Because the mills were shut off for months. That's all that was about. That's all that was. And so demand is still as hot as it was two months ago. Maybe it cooled off a little bit on the housing side, but the supply came back on.

Yeah. So all the, oh, it's transitory. Well, I mean, the- It is transitory. The price increases of lumber was- How many short- Hold on. The price increase of lumber was transitory.

What's not transitory is home prices. They're not coming back down with lumber coming back down. And that's where people get confused and talk past each other. I think home prices also are going to turn over a little bit. They are. Pretty soon.

And it's already starting to happen. Did you see the starts numbers? Half of the permits numbers? The 20 cities and Case-Shiller? I think in half of the 20 cities, prices are easing. Yeah. So let me pat myself on the back a little bit. I know it's anecdotal, but a few weeks ago, I wrote a post that last year, if you went on Zillow in my town, Josh and I live in the same town, you saw like six red dots, 10 red dots.

There was no houses for sale. And now there's like 300 dots. Everyone is selling. And all over my town, I'm seeing price cuts because people are coming and listing their 2,000 square foot house for $830,000. It's like, okay, that's not the pandemic anymore. And so I'm seeing price cuts all over the place. Some of this stuff is localized. Totally, totally.

I'm not saying that my town is representative of the entire nation, but I still think there is a limit to how far prices can come down because it's still, in my opinion, a demographic story more than anything. 70 million people like me that are willing to buy. At the same time, though, a lot of people who had the financial wherewithal to buy an $800,000 house, they shot their shot already. It's not an infinite amount.

So like the people who had no problem getting a loan in 2020 and definitely wanted to buy a house and get out of a city, they did that. And that ends at a certain point. Well, those were the most aggressive buyers. Correct. So now you still have buyers now, but they're not like salivating just because you put a house up. No, they're good.

They're good now. Like now there's more supply. So it's making supply cut up to demand. It stands to reason, right? Yeah. And by the way, because I can bring in a little bit of anecdata myself. Hello. I mean, I keep up with my cousins in Tampa on this because they're homeowners.

And just a few weeks ago, red hot. And even a few weeks ago, getting unsolicited buyers, right? People literally calling them up, knocking on the door. Are you for sale? Yeah, but their point is like, we would love to do this, but where are we going to go? Like, they have families, right? They would have to buy something else at a higher price. Also inflated. So I think a lot more people are doing what Michael's doing now,

which is they're taking some money out of the higher equity value. They're taking some money out of their house. They're refinancing, things like that, rather than actually selling, which is why I think a lot of this just has a limit to how far it can go. So this is where the Fed contributes to inequality. Not that they're doing it purposefully,

but my house went up in value by 30 percent. And I'm just like – it's just money that's been created out of thin air. So I'm like, oh, wait a minute. I want that money. Give me that money. Thank you very much. And now I get to do with it what I want. How do you know your house went up in price by 30 percent?

Yeah. Because I got an appraisal. I think it did, but I'm asking. Because I got an appraisal, which is a total racket. The guy came and took seven pictures. He's like, yep, your house is now worth, but I know it is cause I know it is. He's got an appraisal for the loan.

Literally. I said, yeah. So, so now my LTV is good. I'm exactly where I was. My minimum payment went down by 30% and I get all this money in my pocket to do with it. How's your gamma? Hot.

Here's an interesting point about inequality in housing, though. This house is just leaking gamma right now. It's unbelievable. All right. Big John, set us off. All right. Coming up with three claps. We're just starting now?

Yeah. After all those pearls we just gave everyone, now we're starting? That was the pre-show. Oh, no. That all makes it in. OK. There's no official start time. I'm on the friends.

So 12. it in. There's no like official start time. Welcome to the Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's The Compound and Friends is brought to you by PolyMarket. So I made my first bet this week and I looked at, will Joe Biden be president of the USA on September 30th, 2021? And you know what? Why would I want to bet on something like that, Duncan? I mean, I'm not an anarchist. I'm a patriot. So I didn't do that.

What I did was this. Okay. Will Cardano, the cryptocurrency, will Cardano break $3 before January 1st, 2022? Duncan, is Cardano the one that JC was pounding the table on? Yeah, and he was 100% right. He was 100% right. So I said yes. Now check this out. The odds, it was 56% said yes, 44% said no.

I put 150 bucks on this wager. If I win, it'll pay out $260. So a 73% return on my investment. Now, I was thinking about this. Well, what if I just put $150 in Cardano and it goes to $3? No, no, no. In that case, I would only have $215. So yeah, if I lose, this will go to zero, but my upside is higher. So that's what I did. I bet on Cardano to breach $3 before January, 2020, 22. Who knew? I'm a Cardano bull.

Let's go. To learn more, go to polymarket.co slash compound show to bet on your beliefs. Oh shit, fire. Oh, shit. Fire. Yo, hit the applause. What's up? Hey, that's an air horn.

People don't even know. Respect. You can't say fire. It's for emojis. No, but... All right, fire emoji. There you go. People don't even know how smart you are, Cardiff.

And I'm so excited to have you on the show because we really haven't had anyone smart yet. So wait, I'm calling all of your previous guests. Doug Bonaparte is very smart. Doug's not smart. Allison is smart. Allison is smart. All of our guests, JC is smart.

All of our guests are smart. I'm smart in my own way. You are like genuinely a very, very smart person. I don't mean that like, oh, you're wise. Like I mean smart when I say like, you know how to make points and you've read as much as anyone else on the subjects that you weigh in on

and you ask great questions. Dude, that's kind. You got to lower expectations before the episode. Can we introduce Carl? Jump over. All right, Carl F Cardiff to the audience. Cardiff Garcia, as you could tell from his name, is from the Scottish part of Spain. Can we just do that first?

The story of my name? Yeah. Sure. I know it, but let's just do it. My family's Cuban, actually. Okay. But before I was born, they did one of those genealogy studies, and they think we have an ancestor

from the city of Cardiff in Wales. Wales. Right. Very long time ago. And my grandfather was just like, that just seems like a cool name. I love it. Can we go with this? It is cool.

It's a great origin story. And, you know, they went with it. So people probably know your name. Your byline was very prominently featured in the Financial Times for how long were you there? Seven years. And you were the editor at Alphaville? I was the U.S. editor of Alphaville and the host of Alpha Chat.

I did not start Alphaville. Who started Alphaville? Stacey Ishmael? Paul Murphy. And then there were some co-founders with him like Stacey Ishmael and Helen Thomas and a few others. I came in later. I think that Alphaville was the proto, like the, like the,

the earliest and the best version of what a mainstream media firm covering finance should do with blogging. And obviously a lot has happened since then, but like you guys were doing it better than the wall street journal, better than the economist, better than the New York times. Like I felt like Alphaville really was a true blog, but the people blogging there were subject matter experts and reporters.

And I also thought you guys did a great job building the community, which is how I know you and how I know like Izzy and all the Alphaville people. But you guys were doing trivia nights, but big time hedge fund managers were coming out, traders, like you guys really, I think did it, did it exceptionally well. Did you remember how you and I met? No, I was, I just joined. Don't say anything incriminating because we're recording this. Maybe not incriminating about you. Did I sell you something?

I just joined, I just joined Alphaville and, uh, I was on a panel with Howard Linton and you were buddies with him already back. This was like 10 years ago. And we're on this panel and I made like some throwaway joke about stock twits. And he called me a dick in front of like 500 people or something like that. And afterwards, like we went to dinner. It was a lot of fun, but that's what I remembered. I mean, I made some kind of throwaway joke. It worked. And he's like, thanks a lot, dick. Howard's the best. That was great.

I vaguely remember that, but I just, I wanted to get that out there. You guys really, like, I think invented a genre of mainstream financial media, like doing that. Do you miss it? Yeah, for sure. You know, I've gone on to do some really fun, wonderful stuff. We'll get into that. Do you miss it? Yeah, for sure. You know, I've gone on to do some really fun, wonderful stuff, but I, I miss the, I miss the ability to like, just go in super, super deep on something, write it up. And then also to have it be part of like this iterative conversation, which is what blogging was at the time, right? Like you'd see something you'd link to it and

then you'd comment on it yourself. Somebody would either disagree with you, argue with you, and you could follow this trail. And by the end of it, everybody who'd followed the trail knew so much about. You know what happened to that? So much. I think Twitter took that over. It did because they were doing that on the street dot com. They had this thing called columnist conversation. It's the same idea. Like all the people who are writing columns for the street, they would basically be tweeting at each other before there was Twitter. Yeah.

And that's now gone. All right. So Cardiff is, we're going to get into Cardiff's podcast and his podcasting business and the stuff that you'll work on at NPR later. But I want to jump right into the big economic indicators this coming week, because I think this week, I don't know, Michael, I don't know if you agree with me. This is one of those weeks where the economic data was not ignored by the stock market. This is one of those weeks where like there were big reactions, I feel, in all the investment markets. So what's the first thing you want to do here? Well, not to be that guy, but I'll be that guy. In terms of the stock market reacting to the economic data, we've been saying for a long time, and it's been happening under the service, that the stock market has been without leadership, that a lot of the stocks were stalling out.

And so if this is an excuse to take a break, to pause, to heaven forbid, fall 5% from all-time highs, let's just do it. Let's just get it over with. When you say without leadership, what do you mean? I mean like the technology companies, for example, like the groups that you want to see leading. So Microsoft looks good. Google looks good. But Amazon looks like crap. Netflix doesn't look good. So a lot of the names that were leading just have been rolling over.

In the second quarter, like there was an obvious narrative driving the stock market, which was value stocks and cyclical stocks. And the best charts were companies that do heavy lifting in the real economy. And like the big technology names kind of were a little bit sleepy. And that was a narrative that you could understand. You say like the economy is reopening. All of these factories are coming back online.

Orders are coming back in for CapEx. And then it made sense why those were the leadership stocks. That all started to fall apart when this Delta thing got serious, probably a month ago. And now a lot of these stocks are in free fall. So let me just clarify one more thing. So it's not just the stocks that are leading, but even with the S&P within one and a half percent of all-time highs, if you just look at the sectors and then the stocks, like very few stocks look amazing, even with the market hanging at highs. And I mean, value stocks had been underperforming growth for like a while and

it looked a little bit like- About 30 years. Well, but it looked like they were finally starting to catch up a little bit because of that story. Then you had Delta coming on. I mean, one thing that I actually didn't look at at the time, but as the stock market was recovering earlier this year, was whether or not the breadth of the market was starting to look a lot healthier than like what had happened in 2020 when you had these tech stocks that were driving everything higher. I think it was at its best in February, but it looked damn good through, let's say, what would you say, middle of June? But like three weeks ago, three, four, five weeks ago, all anybody was talking about was, uh-oh, 35% of stocks are above the 50-day with stocks going all-time high. And that ended up not mattering for a few weeks because then it was like 65%, 70% of stocks came back. But stocks – and listen, we're up 18%.

It's August. Stocks were up. How much last year? It's fine. We're so spoiled. I know. The market's chilling for a second. It can happen.

How about we went up 18% last year too? It's so outrageous. If stocks fall 15%, people are going to freak the f*** out. And you know what? It's okay. We can take it. We probably should chill out for a little bit. And, I mean, this all coincides with what was happening to the 10-year yield over the last few months too, right?

Where, you know, it peaked back in March right after the big fiscal package had been passed and when it looked like inflation was going to be something that could potentially be a problem. At least a problem was priced into where yields would go. Little by little over the last few months, we've seen more evidence that inflation – if higher inflation isn't going to be transitory, at least it's not going to go to like 7%, 8% or something crazy, right? Like it might level off at 4% a year or whatever. Do you think anybody really believed that that was about to happen?

I think they think it's already happening. A very, very small group of people. That's true. But the people that you're talking about, Josh, they don't believe the CPI is accurate. Like they don't believe it's accurate at all. So it almost doesn't matter what the number is. And also though, I mean, it's not that like everybody starts believing it, but some percentage probability gets priced into assets, right?

And all you need to do is unwind that little bit of percentage probability, and that can lead, you know, the 10-year to go down. It can lead stocks to go higher, you know. And by the way, something, you know, the two of you would probably know a lot more about this than I would. Two of you would probably know a lot more about this than I would. You know, for decades, the 10-year was above, like, the S&P 500 dividend yield, right? Well, now the S&P 500 dividend yield is down to, like, 1.3, 1.4, something like that. I check it out every now and then. They're neck and neck. They're, like, neck and neck, right?

Which probably is why the market has so much support. The stock market has so much support here. Yeah. And you have to take that into account when you're looking at the market. So I don't know. If the market's chilling out this week because of some data that missed expectations by a little bit, but frankly, isn't that bad? It's not the end of the world. So I want to go back to the Treasury thing.

Sure. We were talking about this James McIntosh story, and he does really good work at The Wall Street Journal. This is him. The quote, the core of the problem is that as inflation soared, bond yields fell, creating an instant contradiction. Inflation is poison to bond investors, so they would normally be expected to sell. That's a great line.

So he's basically saying, what the hell happened to the normal market relationships? This is one more piece from him. The market response from March to the end of this month can be thought of as pricing in a repeat of the secular stagnation brought on by the 2008 financial crisis with the twist of slightly higher inflation than in the past decade. What's going – I don't like that theory. I don't get that. Yeah.

So I'm not sure. I think it's interesting and there's a lot of mystery to this. But can we also just point out that like bond yields have been falling for 35 years or something like that? Right. Like that's still trend. If this is it's, it's back on trend.

That's right. Like, you know, and maybe at some point that'll reverse depending on what the economy itself does. The aberration was the rally this day. I don't think rates don't respond to the economy the way that they do in textbooks.

Like they just, they just don't. So, or what about, but like to the economy the way that they do in textbooks. Like they just don't. Or what about – but like to the economy or to inflation or some combination of the two? Like I think those pressures matter even if they're not the sole determinant. Things like long-term demographics, growth rates, expected long-term growth rates. I think those things all matter. I think that there are so many price-insensitive buyers, and we've been talking a lot about this, that the relationship between yields and economic growth and – I mean James nailed it. Like I think the way that he said it, like an instant contradiction is really apt. Yeah.

Right? Because for two reasons. Not only do higher economic growth, literal growth and expectations portend higher yields, but also inflation, actual and perceived, which is what we're having, should be really bad for bond prices. And they're just not right now. Let's say it was backwards. Let's say, so right now people are guessing at the economy to try to figure out where yields are going. Let's say it was backwards. You would lose money. You would be a serial money loser if you were making bets on the economy and you were using your input was the 10-year treasury rate. Right, right.

Like you would be out of business. So of course it doesn't work in the reverse. So I think that's what people are having a lot of trouble with because maybe there was a time where it was a more linear relationship. So like what are you hearing about that? And is this just something we're going to have to stop, like get over, like that the 10-year isn't really telling us anything about the economy?

For now, that's quite possible. But look, we're in the middle of this really wonky period of time, right? Like the pandemic's not over and it's resurgent now, right, with Delta. And I think that's going to have some idiosyncratic effect on these markets. So the short answer is, I don't know. But I do know that the 10-year has

been falling forever and ever. And there have been times when the economy starts looking like it's going to recover. The 10-year recovers for a bit, and then it continues on its same trajectory. What's going to get it out of that long-term trajectory? I don't know. I do think if the economy shows signs that like productivity growth is booming, there's actually a favorable demographic trend for the next 10 to 15 years, right? Which I think is sort of under-remarked. Things like that. So if the economy starts growing at, you know, two and a half, three, three and a half percent for several years, I think there's a chance that the 10-year will also recover. I think we could have that. We just haven't seen it. I think there's a chance that the 10-year will also recover. I think we could have that. We just haven't seen it. I think we could have that when you're describing the 10-year still be on the floor.

And in terms of productivity growth, 6 million fewer jobs than in 2019 with higher economic output. So far. We have this chart. John, you have this chart. Do inflation expectations matter? Was this yours? Yeah. So George Perks made this for me. So Cardiff, this chart is showing, so we're talking about like break-evens, right? What is the bond market saying? The difference between the yield on nominal treasuries versus real interest rates. And that's what we're seeing in the red line, OK?

The black line has lagged five years or it's pulled forward five years to see how accurate the bond market is in terms of pricing this. And honestly, it's not that bad. But it's not. It's not. It's not insane. You can't set your watch by it. No, no. And here's it's not that bad, but it's not. It's not. It's not insane. You can't set your watch by it. No, no. And here's another chart I want to show you. You can't set your watch by any indicator on Wall Street, but you definitely can't set your watch by this. So this is from the journal. Spending at US retailers fell sharply in June. Later in the article, it says they fell 1.1%. I mean, come on. Is that sharp? Look at this chart. Look at that

chart. Does that look like a sharp fall? Right. What are we doing? Michael, people have to write articles. I feel like you're being unfair. No, if the stock market- This complicates monetary policy, by the way. If the stock market is falling on lists and other softer data, you know, and with stock markets- And they're really falling that much. It's up 17% the other day.

Yeah, exactly. It's 2.5% off the highs. What are we talking about? Honestly, the indicators that came out this week were not that bad. So what else? So housing starts for single housing was especially, I think, pretty good. It was like up 12% year over year. That's been improving for the last few months, right?

This is why earlier when I said that like a lot of these trends that people see, they assume that like they're just going to continue forever. But all of these trends always contain within them the seeds of their own undoing, right? Housing prices are super high and people forget that that encourages a supply side response, which eventually has the thing leveling off. That's because that's where the starts ramp up

within reason. Like they're never going to totally meet demand because they won't make money if they do that. But they respond. They respond. Retail sales for July, people were disappointed because it was a miss. If you actually look at it, it's still above the trend from pre-COVID. Not the level, the trend. Let's say. Right? Just pull it. Just sorry. Oh, if you have it. Yeah. So I look at this and it's like, yeah, well, we also had earlier this year, we had the big fiscal package. So some of that impulse is going to like wear off, which is exactly what you want to happen anyways, right?

You have the fiscal package, which helps until the labor market recovers to the point where you don't need as much of a fiscal. So on the retail sales, Sam Rowe wrote about this at Axios. So on the retail sales, Sam Rowe wrote about this at Axios, and he was basically saying, like, most people aren't even aware that Amazon Prime Day got pulled into the end of the second quarter. So it would normally be in July and happen at the end of June. Right. And that's meaningful because not only are Amazon sales enormous, other retailers have their own promotions that day or even that week right to compete with amazon and online sales are 14 of retail sales yeah so having that time shift like it it made a really big difference in the numbers so if you're like reacting to that sharp decline and you don't even understand like why it happened it's. It's almost like you're

kidding yourself. It wasn't even that sharp, to be honest. It was a miss. But like, you know, again, we're still buying things, more things than we would have been buying if the trend from before the pandemic had continued, right? You've got a ton of income support, you know, and there was a big burst of it in March and April, you know, so the last few months before July were especially vigorous. And then it tails off a little bit. It's fine. Did you see, so a few headlines I want to talk about. Amazon is basically opening up a Walmart.

They're opening up fiscal locations. Yeah. They're opening a like smaller retail shops, like their food stores. So they're going to be 30,000 square feet. I think the typical Amazon fresh. No Amazon dude. Like Amazon store, Amazon, Amazon store. Like, like it's going to be, I think Mackie tweeted.

It's about a fifth of the size of a normal Walmart, but, but they're doing it. So a few things that surprised me 14% online being only 14% of retail. It seems to me like they could, there's a long runway. Like that's, that's not that big. So we got some retailers reporting this year that I want to talk about, or this quarter, this week. Target is growing comp sales at 9%. Digital sales, 55% on top of 270% growth last year. And all of that is people driving to the store, showing their QR code, and getting it dropped off. I do that three times a week. It's fantastic. Walmart isn't growing as quickly because Walmart is much, much, much bigger. So

throw this chart up, John. Actually, we just found out that Amazon over the last 12 months, you can't see it here, but Amazon just passed Walmart in sales, which is pretty bonkers. But this chart, which is quarterly revenue, just shows the scale of Walmart. Look at that exponential growth right there. And look how tiny Target is. What are the numbers? So the purple line is Walmart. That's $141 billion in revenue per quarter.

So it's about $600 billion for the year. So Amazon is $113 billion, and you're saying this latest quarter is even above that? I'm saying that for the last 12 months. Oh, on a 12-month run, right? So we will find out. I think Faxa compiled this data. It's not out yet. And Target is only $24 billion. So arguably, Target has the-month run rate. So we will find out. I think Faxat compiled this data. It's not out yet. And Target is only $24 billion.

So arguably, Target has the most room. Correct. Just complete top line. And then it seems like they're smoking it in Omnichannel. And the last thing I want to say about this is— Stock is up 50% this year. We talk about these businesses all the time and these stocks, and it's just crazy to think that Target paid $336 million in dividends last quarter and Walmart paid $1.5 billion. When people are like, I'm worried about inflation,

why wouldn't you just own those stocks? And as prices in the economy rise, those companies will raise their prices and pass that onto you in the form of a dividend. Well, isn't that why people a lot of times say that the stock market is a much better inflation hedge than any other asset? The data says it's better than anything other except for REITs, which are even better. Yeah. Yeah. So one question about Amazon and the retail locations, do we know if they're using that same technology that they use for these food stores where you just walk in, grab the stuff and walk out so they don't have to spend, you know, floor time or floor space on, you know, checking out. They can hire way fewer people, that kind of thing. Make the experience much more pleasant. How do they do that? Is that facial recognition? I don't, I don't think, I don't think Walmart's there yet, but. No, no,

Amazon. Amazon is used for the new, for the new locations. I've never walked into one. How do they actually do that? They have like these, They have like these huge cameras all above the thing so that when you swipe on your way in, they follow you and they see what you pull off the shelf and throw into your bag. And then you just walk right out and an hour later you get your receipt. It'll be really funny. You know? It'll be really funny to just go in there and like just start like acting like you're shoplifting, just throwing things down your shirt. I feel like- Like slide out the thing and start running.

You might as well have fun. It's a weird experience the first time you do it. I used to do that. Wouldn't that be like a fun way to do that store? That'd be a good prank. But I think there's a serious point here, which is that for a lot of the retailers in the last few years,

even those who sell a lot of stuff online, they've been focusing on their in-store presence, making those experiences kind of pleasurable, you know, making the aesthetics of the place beautiful. This is like what Barnes & Noble is trying to do right now, you know. They know they can't compete with online sales, so they make the in-store experience great. And it looks like if Amazon actually can make this technology standard across everything it does you know then it might even have a competitive advantage in that too i don't know i walked i walked into uh nordstrom this week my wife basically bought like she does catch and

release at uh nordstrom like she buys things and returns dude my wife does that what is that i don't know i don't understand i don't think i've ever tried anything you know what you know what it is the kids won't go shopping with her i think she orders a lot of stuff for them to try on, knowing she's going to have to bring it back. So, all right, whatever. So I went with her. They have like a third of the store in Roosevelt Field converted to like a – almost like an ad hoc fulfillment center. Like they have long tables set up with like A through F, like the letters of your last name, I guess, and just bags and bags.

And almost everybody in the store is in there pulling a bag off the table that has their name on it. Like if that's what shopping is now, I guess the way that these stores look is gonna have to change. Yeah. I mean, especially if Amazon is going to be a retail presence. And by the way, they can just buy all the JCPenney leases.

They could buy all the Sears leases. Like there's no shortage of places they can put stuff. I think that's a good call. Stores will look different going forward. Is that going to be a CRE story too, a commercial real estate story for like, you know- In what way? The death of, I don't know, retail space,

the death of malls, the death of like- So here's the thing. These streets on New York- It's not, the death of, I don't know, retail space, the death of malls, the death of like these streets on New York. It's not really the death. It's not really the death of, I think the type of retail. So I was, I was in Miami in February. There were, there were lines to get into the stores. And part of that is COVID and capacity restrictions. restrictions. But even without that, there were literally like 20 people on the sidewalk with velvet rope and a bouncer in front of, name it, Gucci, Louis Vuitton, Off-White. Like this is in

the design district. You were busy, man. I'm not buying anything. Someone's buying something with my credit card. It's not me. I think that type of retail never goes extinct. But if I have to walk down the aisles of a Target versus put the stuff on the Target app and pick it up, that's a no-brainer. Yeah. Specifically, I meant it was forestalling the death of these retail spaces, right? Correct.

These places have been, everybody's breaking their lease, everybody's going out of business. Well, now if you have this reorientation of retail towards something that's actually fun and enjoyable like maybe it slows down the decline of the traditional it'll be interesting to see if the online only retailers like i'm thinking of like chewy if they decide you know what why wouldn't we just have 50 retail stores they're almost like advertisements for the brand if we put them in the right place in A malls or in downtown areas,

like I think as we get out of this COVID phase, you could see more of that. It'd be interesting to see. What about, so I don't know why I said what about. Walmart's global e-commerce business is now massive. It's $75 billion up from zero. I don't know when they started this, probably not even five years ago.

And did you know that they have an advertising platform like Amazon does? I did just because I've seen it on their site. I didn't really understand that it was like a revenue driver. So they've got like a marketplace like Amazon and it's, they have an ad business. This is for third party sellers. Cause of course they do. Selling on, well, they're also doing streaming video. So they seem to be doing whatever Amazon does. Walmart's doing streaming video, really? And they're getting into financial services. Yeah, which they should have arguably done like 25 years ago. Yeah.

I'm surprised they didn't have something more sophisticated for that beforehand. They're going to do daily pay for their employees. They have a built-in audience of people where that is the only place that they can go. And why wouldn't they sell mortgages to those people? Why wouldn't they issue credit cards to those people? can go and why wouldn't they sell mortgages to those people why wouldn't they issue credit cards to those people it makes no sense that they've waited as long as they have to actually become the bank to i don't want to say rural america how could i say this rural america the exurbs yeah that's fine like the ex how's it going like are people using it is it working i don't know i

feel like wall street doesn't even care they just like the announcement yeah so i don't actually know if people are using it. I would imagine you can get some percentage of people to use anything. I want to take a hard turn into Chairman Powell. Did he talk this week? I forget. Yes, yesterday. It's all blurring together.

He talked yesterday and also the FOMC minutes from the last meeting at the end of July just came out yesterday. People don't know this about you, but you are like a credentialed Fed watcher. Like, you know, I feel like you know more about this topic than 99% of people who spout off about the Fed. And I don't think that you're like a fan or an opponent. I think you're just like somebody that really gets what's going on. What's different about Powell's Fed versus all of the other chairpersons and all of the other Fed eras throughout history that maybe our audience is not aware of? Carter, if you allow me. Yes, go for it. Yeah, please, please. Carter, if you correct him, if he gets anything wrong. Reminds me of the old cartoon where a man is sitting at dinner across from a woman and the

caption says, allow me to interrupt your expertise with my confidence, right? Exactly. Exactly. Mike's in. You could actually take a break. Mike, go ahead. Tag you in. Look, I mean, Powell has really quite surprisingly led a very big break from economic orthodoxy, right? And I say surprisingly because in his first couple of years as Fed chair, he was very much a continuity Fed chair after Janet Yellen, right? 2018, people forget this. He was raising rates throughout the year, right? And I think-

Trump liked him better because he came from business. He came from business. He was tall. He was a Republican. Not a little Jewish lady. You know. Yeah. Like he projected the image that he wanted.

Yeah. Right. Okay. Yeah, that was one of the reasons he chose him. But for his first couple of years, he was doing things pretty much as you would have expected his predecessor to do them. He was raising rates in anticipation of the economy overheating. And people sort of forget now that roughly in the middle of 2019, the yield curve inverted.

People were starting to get worried that there was an upcoming recession, right? And Powell started reassessing everything, you know, right around the end of 2018, 2019, because inflation remained low. And it looks like those Fed rate hikes were a mistake. Yeah, he was making a policy error. During the trade war, he was raising hiking rates in 18 yeah and then around christmas he had to reverse himself because we know the only indicator they actually follow the s&p 500 had broken the 200 day moving average and it's probably totally a coincidence that the next

day he came out and gave that speech, but he was like the Grinch, like saving Christmas after almost destroying it that year. You would say that that's an acknowledged policy mistake. Yes, absolutely. And not only that, he changed his mind, which is an incredibly rare thing for like a huge policymaker to do. And what he specifically started doing was saying, look, you economists, because remember, he's not an economist, right? Like he came from finance and he's a lawyer by training. And he said, you economists have had these sort of entrenched relationships between all these variables that you think are true, right? I now have to look at the real world to see

where reality is contradicting all of your expectations of where theory says we should be. Were the academicians pissed when he said that? No, I think a lot of them were realizing that this was necessary. And a lot of them had been pissed off at him too. Like there's a pretty good split in terms of what the academics think the Fed should have been doing all this time. And so he said, look, I'm not going to sit here and say that like lower inflation necessarily means that we're going to get inflation off the charts. All right. I'm going to wait to actually see it happen rather than doing what Fed chairs before had done, which is to anticipate that it was going to happen.

This is a huge change in thinking at the Fed. And he started sort of, you know, publicly denigrating even like the sort of dot charts that the Fed uses to sort of guide expectations of where policy is going. And he said, look, I'm not doing this anymore. I'm going to actually wait to see the data in the real world. OK, and I'll respond to that and not try to forecast it. I heard Kashkari tell Joe and Tracy last week, throw the dot plot out. It's a joke. Within the Fed, it's a joke.

And Powell led that sort of charge away from that. And so anyways, I think it's a big reorientation of what the Fed is doing. And the other thing he's done, which is quite remarkable, is he has explicitly said that we can't just look at these like two blunt variables of inflation and the overall unemployment rate. We actually have to look at different segments of society to see how they are doing, right? So this is why. Because it's not one economy.

It's not one economy, right? It's a multiverse of different economies that different people experience. Yeah. And I think that's a really great point. Is there a practical way, though, for the Fed to do that in the way they set policy, or is that really more about the speeches they give? Yeah, there's, there's a couple of things they can do, but the most convincing is just to talk more about it and say, look, right now, you know, the black unemployment rate, for example, is above 8%, right? The unemployment rate for white workers is less

than 5%, all right? And this relationship of almost two to one has sort of existed for a very long time. And if the overall unemployment rate right now were 8%, we'd all still be freaking out, right? Well, we need to at least give some due attention to the fact that there's this whole population within the US, right, that has a very high unemployment rate before we start talking about tightening monetary policy and slowing growth. So the way that you explained it, though, it obviously sounds very rational, but this is very controversial. There is a loud and growing chorus of people, and I'm not saying they're definitely wrong, growing chorus of people and i'm not saying they're definitely wrong who who are saying why is the fed chair talking about race and climate change and this is like so far a field of and they're having the same reaction they have when they find out that their first grader

is being taught about like uh same-sex marriage like that, they really are pissed off about it. And forget about, like, how you feel about that. He really is the first Fed chair to have to, like, contend with that stuff. Yeah. Maybe Yellen a little bit, but I don't think Ben Bernanke was talking about climate change, was he? No, but I would actually separate those two things because looking at racial inequality can serve as a guide to what to do about interest rates and overall monetary policy. But I could say the same thing about global warming.

Climate change is a little bit trickier because the Fed is not supposed to pick individual economic sectors to favor or to like disproportionately damage, right? So the question there is what can the Fed really do? It can do a lot about racial equality. Why? Because letting an economy run hot for longer, letting a boom continue for longer than it would have allowed the economy to boom in the past can actually shrink the employment gaps

between, for example, white workers and black workers. This is pretty clear in the data. Are you saying inflation has been shown to reduce economic inequality between racial groups? No, I'm saying that when you allow the economy to get closer to what it considers to be full employment, so when you get closer to the point where inflation might take off, we see the employment gaps between black workers and white workers shrinking because as more people get hired, workers start to get a little bit more negotiating power.

But don't we also see the type of asset, but don't we at the same time see the kind of asset price inflation that makes the wealth inequality gap balloon back up again? You can. Is it a treadmill? You can. And this is sort of what's interesting about monetary policy and wealth inequality in particular, right? So the middle class is way more highly leveraged to housing than rich people.

So actually, housing going up can do something about shrinking overall wealth inequality. Actually, housing going up can do something about shrinking overall wealth inequality. But we also know that, for instance, black workers have a much lower homeownership rate than white workers. So it could actually exacerbate racial inequality. But, you know— 401K participation rates. 401K participation. Right. But ask yourself this.

Are black workers better served by a labor market that sucks even if wealth inequality might increase along with a robust labor market. So if income inequality is shrinking and the price you pay is that wealth inequality is at least temporarily rising, it's a tradeoff that's better than the alternative. I think so because you also have a political mechanism that can work to do things to shrink wealth inequality as well. This can't all fall on the Fed. Wealth inequality is rising, has been rising, will always be rising. So I think that we can probably – it's better served to focus on income inequality because taxing the rich is not politically palatable. That's never worked. It's never going to work.

So I think that we – to the extent that we can improve income inequality, that's probably time better spent. Okay. So you point out that – so I was mistaken. I asked you like is there a serious conversation about not reappointing Chair Powell when his term ends, which is when? Early next year? Yeah, that's right. Okay. term ends, which is when early next year. Yeah, that's right. Okay. Like, I feel like he kind of has things under control to the point where like anyone would look at the data and acknowledge that

he's gotten us through a pretty rough situation. He doesn't seem to be a partisan hack or particularly interested in debating ideology from one part of the other. Like there's a lot about him for everyone to be okay with. Right. But but then you you let me know that there is something beneath the surface about bringing in somebody who's a little bit more i guess socially liberal or like what no tougher on financial regulation that's where the debate is happening right now. OK. So Powell is definitely not looking to crack down on banks or do any of the things that, let's say, the Democrats would like to see them do. Yeah. There's a specific issue, right, that a lot of – I mean, by the way, this entire split exists within the left, right? That's where the argument is taking place. Powell has consistently voted against raising capital requirements for the banks beyond where they are right now.

He's a banker. He's a private equity guy? He is a private equity guy. Right. Can't believe it. Can't believe he's OK with leverage. Well, but it's not that. you know, the idea of a counter cyclical buffer of like raising capital requirements when the economy is doing well, is it then when things get worse, when the economy tanks again, banks are

better defended because they're funding more of what they do with equity rather than with debt, which means maybe there's less of a chance of a financial crisis. His view, I think, and there's some evidence for this, is that banks are pretty well capitalized as is because things really did change after the financial crisis of 2008, 2009. And last year, when the sort of, when everything started to fall apart, the one thing that didn't happen was a financial crisis. The banks actually did show that they were sufficiently capitalized and they did get a ton of help, obviously, from policymakers, but they're supposed to do that anyways, right? Nobody was worried about the banks last year.

It's like the last thing we were worried about. Right. So the argument here is between Jay Powell and Lyle Brainard, who is very close to Powell, I think, on monetary policy, right? But she has consistently voted in favor of the banks having to have more capital. But do you think there's enough of a groundswell for, for, for support for her? I can't really going to be come down to something. Biden is going to second guess,

or I can't tell. All we know right now is from the reporting that's, that's been, it's been out there is that this conversation has at least gotten to the white house, but like, I have zero idea. Speaking on behalf of the stock market,

as I typically do. Yeah. No, thanks. Like we'll, we thanks. We'll stay with Jay for now. I feel like a little bit of continuity is not the worst thing. And a lot of people on the left, by the way, have really come to appreciate this sort of revolution he's led in monetary policy. So it's not like he has no, you know, fans on the left. It's just that that's where the split exists. Brainerd is a legitimate alternative, and that conversation

is happening. Is it Brainerd or Brainerd? It might be Brainerd. I'm just mispronouncing it. The reason why I'm asking is because every time I see her name, I think of Fargo. Oh, the town is Brainerd in Fargo. I apologize to Lyle Brainerd if I'm mispronouncing her name. I don't know.

I usually just read about it. Let's talk about inflation. We talked about it briefly, but this piece from GMO, first of all, do you think it's as hard to predict five years out as it is one year out? Is it like, or like which version of this statement is true? Well, that's a good question. Inflation is impossible to predict, period,

or inflation is a little bit more reliably predicted further out as opposed to over the next 12 months. I think it's definitely harder to predict the farther out you go. The further out's harder. Yeah, the further out's harder, right? But also, you know. But if we say there's this trend

that's a 35-year trend now, like this great moderation, then arguably it'd be easier to predict further out. Like it could be erratic in the short term, but eventually we get back on trend, which is down. But like things change, right? Like if you'd asked me two years ago, would inflation this year be running

at like four to 5% year over year? I'd have said, what are you nuts? Like, where the hell is that gonna come from? Look what happened. You know what I mean? I think you can look at trend inflation and you can look at like some economic pressures and where they're going and say with the enormous caveat that there's going to be no massive external shock like COVID or something else that like, you can guess at what something's going to be at what inflation is going to be in a year,

five years. Like I wouldn't even bother playing that game with you. You know what I mean? Because who the hell knows? Yeah, I think I hear what both of you are saying. I think it's an interesting argument. One of the things that I keep, that I was coming back to when commodity prices were rising, that I thought this was going to be temporary. And the thing that I would pay attention to are wages, because that's the sticky part. That's the thing that doesn't go away. And even though we are seeing the median wage all across the country rise to $15, I think I saw something that fast food averages $17 or something along those lines, which is fantastic. It's bad when it hurts the mom and pop businesses,

but if McDonald's and Chipotle have to pay a higher wage, who cares? It's great. They take it to margin anyway. So we have to pay a little bit more. No harm, no foul as far as I'm concerned. But looking at the Atlanta Fed wage data, which GMO shared in their piece, does this look like we're seeing wage pressure? Not yet. Right. Yeah. I mean, you know, it's been sort of this consistent growth since 2010. So actually, here, guys, look at this.

This is just a month old, so it did shoot up a little bit. Okay. But this is – so the Atlanta Fed wage data – So actually – 2010. Here, guys. Look at this. This is just a month old, so it did shoot up a little bit. OK. But this is – so the Atlanta Fed wage data – By the way, this is composition adjusted. In other words, this follows the same people as opposed to some of the other data series, which like – Meaning what? They have like dropouts and then that affects the wage data so that if like low-wage workers lose their job – So this is more consistent, no? This is like a very good like – You know why that's so important? This follows the same people. the wage data so that if like low wage workers lose their job. So this is more consistent now. This,

this is like a very good, like, so this follows the same people. Cause if you have, if you have a boomer retire at the top of the income scale for a given job. Right. And then you have a 21 year old right out of college, replace them at a lower wage.

They consider that deflation of wages when in reality, it's just different people at a different point in their life doing the same job. See, Carter, I'm glad you're here because the composition of wages, to Josh's point earlier, it changes when people are coming in, going out. But this says – and I didn't know this until you just said it. The Atlanta Fed's wage tracker is a measure of the nominal wage growth of of individuals constructed using micro data from current population surveys. So this is a pure message of overall wages and there's nothing to worry about. Yeah.

Wages are going up, but I mean, do they tell you when they're tracking you? What's that? I don't know. It's a self submit submitted data. I'm not sure if it's from the CPS, then I'm guessing that like,

yeah, that you, well, they track you from, from, from Nielsen family then I'm guessing that like, yeah, that you. Well, they track you from. It's like a Nielsen family who has the television rating box in their house. They track you from the vaccine. Oh, right. Hello.

Right. I forgot all about that. Yeah, this got way easier in the last year and a half. Right. Look, I mean, the information from both wage series is interesting because it's also helpful to know compositionally what's happening in the economy. But if you want to know like what wage growth is doing, you know, specifically like for lower and middle income workers, the Atlanta Fed service. That's the one that you pay the most attention to? I pay attention to all of them, right? They're all useful. But like this is a this is a good one. And I mean, you know, look, I think wage growth is probably, you know, going to be pretty

healthy for the next at least for the next few months. Aren't we just making up for like a lost 15 or 20-year period of very little wage growth for the average worker? Right. We've seen all those data points from 1976 to today. The nominal wage growth – or I'm sorry, not nominal. Real wage growth is 0.2 percent a year. Finally, people are getting raises and there's this cohort of the population that's like freaking out over it. Yeah, we better put a stop to that shit.

And there's this cohort of the population that's like freaking out over it. Yeah, we better put a stop to that shit. But like this is – this doesn't make any sense to me because you pay more and the people who are getting the wage bumps are also the people who are more likely to spend the money. So I – so which means that like there might be – again, there might be like a shift in like which economic sectors benefit. But this doesn't mean the overall economy is going to be worse. I don't understand where inflated pricing rises, but the pie is going to ostensibly grow if people that spend money have more of it. Yeah.

I wanted to get your take on this. What do we make of producer prices rising fast than consumer prices? So Lizanne Saunders tweeted this chart. It looks pretty rare. We saw this in the 70s. Obviously not a great time. We had this.

So what do we... John, this is the blue line, obviously not a great time. So what do we, this, John, this is the blue line, the line with the blue chart. What do we make of this? What's going on here? This is a great question. You know, I'm not so sure if you look at a chart like this, that producer prices have like a very useful, like it translates into actual consumer prices later on, right? It's important for like, you know, for producers, for companies. But right now, again, we're just like in this really weird moment, you know, and we've got chip shortages. There's weird stuff happening with containers, right? I mean, there's all these kinds of blockages which are going to affect these companies, but ultimately whether it translates into consumer prices depends on the health of competition between people who actually sell things to consumers. There's an analyst asking an auto executive on a conference call about like a Malaysian chip plant that closed down.

It's like, is that really going to be the difference maker between whether or not somebody wants to invest in GM or not? That a Malaysian chip plant is closed down. Like, what are we doing here? But that is, to your point, like there are a lot of things companies are telling us that they've never had to tell us in a long time. Yeah. And maybe it continues throughout the end of the year, which renders most of this data way too noisy to be useful. That's right. Yeah.

And again, like these things, there's always under the surface, there's things happening to undo the trend as soon as it starts, right? So a lot of these shortages, like there's a lot of money going into fixing them, right? There's a lot of very smart people who are trying to fix them. So yeah, there's shortages, but every time somebody says, well, the chip shortage won't be alleviated for like three to five years, I always just assume that they're making assumptions based on the like speed of production that we've had historically. Why on earth would that happen when the prices of these things have shot up so much? Like that always engenders a response. Right, they're going to sit there in Taiwan

and just watch this shortage persist? Yeah, right. Like has that been the lived experience of the technology industry? No. Sluggishness? Right, they're going to ramp up. I don't think so.

So let's talk about this Matt Klein chart. And I subscribe to his sub stack. And he is- Shout to Matthew Klein. Yeah, Matt Klein. Outstanding the overshoot. He's in San Francisco now? San Francisco, yeah.

Oh, I want to get your take on this. So I said to Ben the other day that all of these all-stars leaving journalism and starting sub stacks like Matt Klein, isn't that going to be a great opportunity for younger people in journalism to come up, to rise up? What do you think about that? That's a great point. younger people in journalism to come up, to rise up? What do you think about that?

That's a great point. And what I can say is I hope so, but part of it depends on whether the loss of some of these superstar types also is bad for the actual journalistic organizations. By the way, like- They're starting at Substack. You know? 10 years ago-

Barron's lost people to Substack. Like maybe that means fewer people who subscribe to Barron's for Matt Klein, right? Like there's a sort of,. It's hard to tell. Our friend Paki McCormick, friend of the show, castmate on the show, where would he be writing 10 years ago? Maybe for TechCrunch or something.

He started at Substack. That's a loss to the journalism industry that covers technology. Possibly the story will be one of specialization instead, where the journalistic organizations will hire like outstanding news reporters, like people who do the reporting and don't mind writing in like the traditional news style. Generalists, right?

And they'll be, but they'll be great at that and they'll select for that, right? And then the people who have more of a kind of an analytical bent or very like personality driven bent right they'll they'll still write for substack and on their own right like i can't imagine frankly either of you two being like the treasury reporter at the wall street journal or something well you don't think i'd be good at that i think you'd hate it yeah right i think you'd hate it and i think and i think they have somebody there now who like probably loves it. So let's talk about this chart.

What is Matt Klein showing here? So what he's essentially showing is that if you take out the auto sector, that the inflation in the rest of the economy is pretty bang on what inflation had been doing all the years. Looks like two and a quarter percent. Is that what I'm looking at? The green bar? 99 times out of 100 when you start X-ing stuff out of the data, it's bullshit. But in this case, you have to. You have to.

You have to. There's no choice. Because of the nature of the – it's not a recession. It's bullshit. But in this case, you have to. You have to. You have to. There's no choice. Because of the nature of the, it's not a recession. It's 1987, but in the actual economy, not in the stock market. That's right.

That's right. So you have to pull out used cars. We took the heart of the economy out of the body and put it on ice for six months. Yes. And then put it back in

and said, okay, now beat again. And shit got fucked up. Exactly. So like, so you pull those things out and you get back on trend inflation where we already were

and arguably are returning back to. That's the second point, which is that even those sectors where inflation has been running hot, in other words, the sectors that were targeted by the pandemic that he had stripped out and it's running hot, it's starting to mitigate.

Those are normalizing. They're normalizing. Why wouldn't they? We're not having a new pandemic. We're coming out of the old one, I assume. Yeah, transitory. I assume. Either that or this podcast is a super spreader event.

I got five people in here right now. Before we just real quick on this last topic. So I was listening to, Josh just mentioned, Neil Kashkari was on with Joe and Tracy. And the way that he was describing how people interpret the Fed and the dot plot, and he's like, it's nonsense, but if we take it away, the interpretation of us taking it away

will cause like a shit storm. And gold will go to 3,000. And so I think there is real problems with this transitory thing. The temporary, the transitory, the temporary, like it is confusing for people. And that's understandable, right? It's probably confusing for the specialists, for the Fed. I'm a little confused half the time, right? Even beyond what's normal. So I just like, I sort of think

that explaining this as clearly as possible is really important, which is why I like that chart. I think it's a very compelling thing to show people. But like with the Fed trying to communicate this stuff to people, yeah, because people prefer the very simple explanation. Right now, there kind of isn't one. So we have to wait it out. But also, people, I think, sometimes worry about like an overreaction if the Fed says, don't worry about the dot plot. Or if the Fed says like, listen, like, yeah, we might start tapering off purchases of treasuries and MBS and everybody's going to freak out. So then they try to say, well, that's not related to when we're going to eventually

hike rates. So there's this constant people freaking out and then the Fed saying, don't worry about it. Sometimes it works, sometimes not. Try to look through that stuff. The other thing is that most of the people covering the Fed, covering, like in their basement, assume the worst no matter what they say or do. Yeah.

Assume there's either ulterior motive or they don't know what they're talking about. Right. Or sometimes both. The Ethereum community seems different to me than – this is a hard pivot, but imagine if the Fed operated this way. So in the last week or two, they've been making like very concrete steps toward a couple of things that they've really wanted to do. One is limiting the issuance of new Ether tokens so that at some point there is something more close to a cap and that the value of ETH can grow. And they decided on a fork. And they did it. And now they're going to merge the two.

But they're doing this very cooperatively. It's weird to see. This community that's spread out all over the globe. Operating in lockstep. For what's best for the community. Like you almost don't see that anywhere else these days. Everything's so f***ing dysfunctional. So they've decided.

This is in the best interest. And very democraticallyatically because this is based on who owns it. Basically the miners, the validators, they're able to do that. What if the Fed operated that way? Like, I don't know how that would work. And I'm not saying replace the central bank with the blockchain, but it's just interesting to see a functioning, democratic version of monetary policy, even on a much smaller scale in a particular cryptocurrency. But they're like, they're doing that. Yeah.

So like, I was curious what your take is on that kind of thing. I don't know. I think, you know, we were just talking a second ago about the confusion that arises from the Fed sending off mixed signals. Now, imagine if it's like a flat structure and the messages are coming from, you know, a billion different places, right? I mean, the communication part of this is so important. So I'm a little bit out of my depth in terms of like the technology here. I mean, like I can follow the sort of things that get reported. I guess like, okay, this is what this means. I get it. And the community pulling

together and saying like, this is the right thing to do for all of us. Yeah. And then actually executing. Here's a question though. Like if the community has just decided that it wants to start limiting how much ether goes out there, it sounds like what they're doing is they're starting to treat it more like Bitcoin and more like an asset class rather than a proper currency. At the same time, they're getting away from proof of work, which is environmentally ruinous way that Bitcoin operates, moving to proof of stake, which arguably favors the people that own the most. So maybe it's less democratic from that standpoint.

But again, they've decided as a community to do this, and they are going to do it. And I just, like, I don't feel like we have that level of cohesion in anything. We can't even get people to get vaccinated. Like, we can't even agree that vaccines are better than getting sick and dying. So I don't know. I thought that was – No, it's impressive.

There's like this in Wikipedia. And everyone on Wikipedia works very well together too. That's a very good point. Carter, you found this from a BIS survey, and I thought this was really fascinating. Among the various cryptocurrencies, owners of Ether xrp have the highest income education levels what's xrp is that ripple i don't know josh yes uh while those while those owning litecoin while those owning litecoin are the least educated i would have thought it would have been doge i own litecoin it's pretty stupid the guy who founded it is on twitter and like the minute it

went up a little bit in 2017 he he sold all of his Litecoin. What's Litecoin? This guy, Charlie Lee, like invented it. It's, it trades. It's on a,

you can, you can buy and sell it on a Coinbase along with many other things that have no meaning. I asked, we interviewed him for the, for the NFT episode. You talked to him. Yeah.

He's thoughtful, but like he dumped his whole stake. Oh really? Like four years ago or something. A few months ago, a friend of mine was telling me about Filecoin. I said, Filecoin? What's that? He goes, it's a crypto. It's DeFi.

He goes, it's a crypto. I was like, no, I got that. What does it do? He's like, it goes up. Yeah, yeah. This is the thing. I'm still waiting for the real-world application of these things. Well, wait a minute.

That has real-world application. Which one? Filecoin, actually, you can use to buy server space, like to store. Like it actually, it's like a Chuck E. Cheese token. It has meaning inside of the Chuck E. Cheese. You can use it to play skee-ball. Can I use dollars to buy server space too?

You absolutely can. You absolutely can. But it actually has an ecosystem that it addresses. A lot of these things obviously don't. What if the real world uses that we're looking for are never going to materialize in terms of buying grocers with Bitcoin, but we're building toward a place where what if a DAO buy, I forget who was speculating about this. What if a DAO buys a sports team? What if a DAO buys a sports team? Or what if- A DAO is a decentralized autonomous organization.

So a group of people on the blockchain who get together to do something. So now I don't know that the NBA, for example, they almost certainly wouldn't allow it, but there will be giant pools of money. And in terms of all of the NFT stuff, which a lot of people think is a joke, like I think that there is, they are building real world applications. It's just not mainstream

yet. And it might not be for a long time. Is it possible, and this is just an uncomfortable point, that some organizations actually benefit from some kind of a top-down hierarchy and that we're trying to like put this like idealized democratic, small D democratic version of things into like a managerial structure where it's just not going to work. Cardiff, I could not agree with you more. I don't want the crowd running the New York Times. Like I want there to be editors and publishers and ombudsmen and the people that like set the tone for what would and would not be acceptable on the part of their journalists what are their standards i could not i i think religions probably shouldn't be democrat like we know what happened we know episodes in history where all of a sudden we

turned over the asylum to the inmates like what ends up happening it never ends up democratic it always ends up with somebody accumulating power. I don't know how they would do it in a blockchain format, but not everything should be a free-for-all and mob rule. I don't, so I agree with that. I just don't know definitively what should and what shouldn't offhand. I just know it when I see it.

I want to be open-minded about this. And so like your point, Mike, that, you know, it could well be that the real world application just hasn't emerged yet, but there's all these people working on the technology. And so eventually this will lead to something great. I'm not like dismissing that at all. But I think in the meantime, for people who are thinking about investing in crypto and they're looking at like, well, what's the prestigious crypto, you know, to invest in and like, who's the, you know what I mean? Like, like if that's, if that's Ether now, like great. But like, if they're looking at like, well, what's the prestigious crypto to invest in? You know what I mean? Like if that's Ether now, like great.

But like if they're thinking about doing that – I think that's a good sign. Well, I think – Point to the other – like if we point to the other finding in this survey, right now it looks like the majority of people who invest in crypto are not people who are worried about the future of fiat and they're not people who are worried about like compromised security systems they're gambling they're gambling that's fine they followed an influencer and just know it yeah and then they made money on their

first three trades and now they're but this is why this is why for me for years for me crypto was so confusing because on the one hand you had the the d gens and the loud obnoxious voices pumping it relentlessly. And you also had Andreessen Horowitz and all those people, the smartest people in the world, pounding the table that this is the next internet. And that scrambled my brain. I wasn't able to process that. It breaks your brain to think, how are these idiots going to be right? Right.

Yeah. They're clearly either criminals or out of their minds. How are they also going to be right when Andreessen Horowitz is right? So a lot of what we see is the speculation, the people going crazy. What did Robinhood report? Dogecoin was responsible for a third of their revenue. That is something crazy. And crypto is 40-something percent of their revenue.

And Doge was a quarter of that. Is it really? Robinhood said 26% of their revenue in the second quarter came from Dogecoin. I swear to God. Half their revenue is crypto and half of that is the dog. So that's the stuff, guys. That's the stuff that's in your face

where you're like, stop the ride. I want to get off. What we're not privy to is all of like the geniuses that are actually building quietly every day. Speak for yourself.

And I do think that that's happening i know it's happening we just don't see it um listen to this disclosure that robin hood put in a 10q in concert with reporting earnings quote if demand for transactions in doge coin declines and is not replaced by new demand for other cryptocurrencies our business financial condition and results of operations could be adversely affected, which is like if we run out of glue for people to sniff. But that's the thing, dude. You'll never run out of glue. So in terms of Robinhood, like I would not short stupidity.

Avi Salzman at Barron's Today headline, Robinhood is running out of investment manias to ride. You would take the other side of that? Never. Never. There's always something. So what's next? I have no idea. So I'll fucking buy it right now. Are they worried the other side of that? Never. Never. There's always something. So what's next? I have no idea. I'll fucking buy it right now.

Are they worried? I'll buy that shit right now. I'm not here to tell you if I know. Are you guys worried about the regulators coming for pay for order flow? Like what's the, you know? No. It would be very unpopular. Fine.

Turn that off and go to the stock exchanges and pay $5.99 a trade. Who wants that? Nobody wants it. I don't care if they're front running me by one one one-hundredth of a penny and I'm not getting best execution. Who gives a crap? Yeah. I see the headlines.

This is politics. You know what's more likely? This might be a blockchain thing or a DAO thing. What's more likely is a crowdsourced effort to build their own market maker to Robinhood so that they can be on the other side of the trades instead of a hedge fund. Like you want to democratize investing, democratize payment for order flow. Let's get some retail people on the right side of those trades. I'm sure that's coming.

Get a lawyer on the phone and let's get that IP'd and, you know. You like what I just said? What I'm interested about in terms of regulation, there's a lot of it. There was a lawyer on the Bankless podcast this weekend talking about regulation in the What I'm interested about in terms of regulation, there's a lot of it. There was a lawyer on the Bankless podcast this weekend talking about regulation in the infrastructure bill. I'm curious about FTX and the tokens that trade 24-7 that replicate like Tesla, for example, or any single stock. They have no voting rights. They are representative of the price of the stock. It's a derivative, I guess.

Yeah. So that's not legal here, obviously. I hate the idea. So, of course, it's going to be huge. The Fed, by the way, there is a segue between those two things we just discussed, which is the Fed actually started discussing crypto, I think, explicitly in the last meeting. I think it's the first time it made the FOMC minutes, I think. It's only $2 trillion. Good luck ignoring it.

It's only $2 trillion. Good luck ignoring it. It's only $2 trillion and growing by double. They're worried about stable coins in particular right now because they're not backed by what they say they're going to be backed by. And if they're in the commercial paper market and they have to pull out because there's a run on one of the stable coins, then it might cascade into other problems. Talk about real world application. Cade Cunningham, the number one pick for the Pistons, said that he's going to be getting some of his payment. I don't know. I didn't read the details, but from BlockFi in crypto. So I think what's going to happen one day, I don't know if FTX or somebody else is going to do this.

Like somebody is going to say like they're going to tokenize their contract. Spencer Dinwiddie tried to do this. They're going to get paid up front. The contracts are going to be tradable. I think all of that is inevitable. Yeah, could happen. I mean, again, regulations are the thing that stops these types of things from

happening. I don't even think you need regulation. The NBA could decide. We don't like the idea of fans speculating in the contracts of our contractually obligated employees. I don't know if they see the players as their employees or the team. What if a players union says,

okay, fine, but we want it. And they're going to, they're going to fight back. The team owners versus the players. They might, they just might not just like,

they don't like, they don't like the, the players gambling on games. They might not like the idea of people gambling on player contracts. Yeah. I don't know why, but when I say regulations, by the way,

I mean like, I don't just mean like somebody in Washington passing a law. I mean, like the NBA might decide, like, look, we have this already kind of delicately balanced system between the owners, the players union, right? They found a way to split NFT revenues. Okay. And like, they'll take that kind of an approach. But you're not tokenizing your contract.

But you're not freaking tokenizing your contract. All right. So, so let's, let's talk about the new bizarre your contract is what they might say. So let's talk about the new bizarre. I listened to your first episode. So let me set this up. You were doing the Indicator podcast.

Was it a radio show too? It was sometimes cut down into a shorter radio show that went on NPR. Right. So you were doing NPR, which is speaking of prestigious. Right?

And I loved your show and I was a guest on it. And shout out to Stacey. Both of you guys, yeah. So they fired you. Incorrect. So during the pandemic, you've been very passionate about podcasting

and I think you're very good at it. And you said, myself and a business partner, we're gonna set up our own, not only our own podcast, but we're actually gonna set up a podcasting business. Tell us what you're doing there. Yeah. So Amy Keene is my business partner and she and I collaborated on FT Alpha Chat, which was the podcast that I hosted at the Financial Times before I went to NPR.

So she and I had been talking for a long time about possibly getting together and working together and starting up our own company. Something that actually is part of the broader economic story of last year is that because everything was shut down last year and our savings rates went through the roof because we were lucky enough to keep our jobs, it actually accelerated the date at which we could finally launch this business, you know? So, um, we did earlier this year and we're just four

months into it now, but we decided that because the podcasting like business models are so in flux right now. And because the business itself is sort of unclear, we're setting up like three buckets, right. Of things we're doing. Two of those are things we really wanted to be doing, and another one is a sort of a way to generate side income. So the first thing we're doing is the New Bazaar, which is the podcast that you just listened to. First episode was great.

We're going to link to that for everybody that likes podcasts. You got to add this one to your subscription list. It's really good. Peter, is it Blair Henry? Peter Blair Henry. That guy is super smart. Holy moly. And what a personal

story. That was amazing. We booked him for next week. Excellent. Well done. So you guys don't have to actually listen to the new Bazaar. Just wait a week. Bucket 2 is what? Bucket 2 is the podcast that Amy right now is herself reporting

and will host later in the year. But it's different from the first podcast, which is mine, which is going to be every single week and ongoing. She's doing one standalone season of a podcast. It's going to be five to eight episodes, and it's going to be a narrative podcast. Which means that it tells a story. Will there be murder?

No. It's going to be just as interesting as murder, I think. It's going to be an economic history of baseball's Negro Leagues, which her grandfather played in back in the 1950s. Oh, shit. She's been wanting to work on this project for a while. She probably has it all in her head already. Wait, did you say the economic angle?

Yeah, it's going to be business and economic stories from baseball's Negro Leagues. So the rise- I feel like there are so many of those though. And you know. That's, that's, I mean, that's such a killer perspective. Very crowded, very crowded space. For people that like sports and economics, which I think is a lot of our listeners.

Right. That'll definitely make the list. Yeah. And our hope is that for that one, instead of like selling ads against it, like we're doing for mine, we can just partner with somebody and they'll essentially- Sponsor the whole thing. They'll buy it or they'll sponsor the whole thing. Nike, if you're listening.

Right. Obvious. Exactly, yeah. It's a no-brainer. What's Dan Levitard's new company doing these days? So anyways, that's bucket two. Bucket three is where she and I basically just offer ourselves out as consultants

and as freelance hosts and things like that. So, you know. Cardiff is the new producer uh John you could stay Cardiff is Cardiff and Amy are the new producers of the compounded firm I think I think they've hired us actually oh really Duncan quits oh yeah Duncan no you hire us which way is the money going yes you saw that article about people working multiple uh multiple jobs. Right. What do you think of that? So let me tell you about the multiple jobs thing.

Oh, that's great. Let's stick with what you're doing. Okay. No, what I was going to say, though, you guys last week talked a lot about the fissuring of the workplace, people going independent, startups booming, right? Well, so obviously Amy and I left big organizations to do this on our own. Obviously, Amy and I left big organizations to do this on our own. Our lawyer that we hired to do our contracts and our IP, he just went on his own a year and a half ago. The sound engineer we're using is a freelancer.

The composer that we hired to do our music, he has his own company. We're literally not using any companies that have an organizational structure. Are you guys just all Venmoing each other? Is that like how money is changing hands? I love this because I've always been an indie person myself. Like I've always just been like I'm doing this myself. So I love that that's happening. How much room is there for new podcasts? Is there plenty because old podcasts just die out?

Because I know there's a lot, but there's a lot that go away and are no longer on the field of play. It's a lot of turnover. So that's why there's still room for new ideas. And also from the business side, right? Here's a number that might surprise you. This is the first year, 2021, when it's expected that podcast revenues in the U.S. in total for every podcast, right, will cross a billion dollars, right? It's remarkable. In revenues. It's tiny.

Right? It's small. And Joe Rogan's probably 5% of that whole thing. Wait, say that again? A billion for the whole pie? For the entirety of the U.S. podcasting market, revenues are expected to pass just $1 billion for the first time this year. What are we all doing? But, Cardiff, you're right.

Between the Ringer, Rogan, Marin, and the Daily, that's got to be 50% of the pie. That's a huge share of the pie. Are you surprised by that number? Yeah. A billion for the whole industry? So I spoke about this with Ben recently that I was flabbergasted because I think Yahoo Mail did like $4 billion in revenue last year or whatever Yahoo segments that they were selling. I couldn't believe how small podcasting is. Yeah, and still growing, I should say,

which is like, to me, I think there's still a business opportunity there, partly because of all the turnover that you just mentioned, Josh, and also because it's still an immature industry. There's a ton of experimentation happening right now with podcasting business models, okay? You guys have done host red

ads. It's a relatively new innovation of the last couple of years, right? It feels very, it feels very 1940s, quite frankly. Well, yeah, but a lot of, a lot of like BD is going back to the 1940s where there's like, you know, the, the sort of boundaries between like what's news, what's just who you are, it's personality driven. A lot of that stuff is very different from what we had for like decades of just like Dan Rather, CBS Evening News. You know what I mean?

It's just a very different ecosystem. So in terms of- Dan Rather in Vietnam like now, like if he were, he would be like selling muscle powder from the helicopter, like leaving Saigon. Jumping out of the crate. And he would own his own production and everyone that worked for him would be freelancing. Exactly.

It would be a very different world. It's just a different world. So there's still a lot of experimentation happening on the business side, which is also partly why Amy and I, who are already taking like a massive amount of like personal risk with our own finances, right? We knew that we had to like try a few different things. I was going to say, how are you sleeping since like starting your own business? Cause this is your first venture. Yeah. I mean, I was terrified when, when we started on, Michael could tell you, like I was anxious

all day. Like, are you, are you like that? Or are things clicking? It's not that I've gotten anxious. Cause I'm really excited that we're doing this. We've been, we've been dreaming about this for so long. long. We are working a lot. Like we're working long hours. In fact, in terms of running a business, I think the one lesson I've learned that's really stuck is that the advice that people sometimes give you on like LinkedIn or these damn like bogus sites where they're like,

hey, just write the six things you have to do today and cross off the bottom five. That's such horseshit. When you're running a business, you got to do all six things you have to do today and cross off the bottom five. That's such horseshit. When you're running a business, you got to do all six things. And sometimes three others that you're not even aware of. And three more that pop up, right? Right. What I've learned instead is that you still have to do all the tasks, but you have to get better.

I had to get better at switching my mindset between the different tasks because there is a very big part of our job that requires creativity and that you can't be hyper efficient about like you have to like think through the idea deeply you have to do a lot of reading you have to come you have to bounce it off people come back in and out so like you have to make room for that then there's things like sending off invoices and shit like that where you can just kind of you know you can just be as high proficient a lot of that stuff and then there's the stuff in the middle which is like business, you know, you can just be as high proficient as you can. Automate a lot of that stuff. And then there's the stuff in the middle, which is like business decisions, you know, like who are we going to partner with on things. Booking guests.

You are like such a prima donna to get you in here. Like you must go through that all the time. No, I'm lucky. I'm booking my friends. Like, yeah, I'm not, I'm not like coming to people out of the blue and like, hey, I read this paper you wrote. You want to come talk to me for two hours about it. Yeah.

But like, you're going to have to do a lot of that. Yeah. And that's really important. And so there's no sense in which it's like, well, I can just ignore those other things because I'm focusing on the one big thing. When you work for a big company, a lot of that other stuff's taken care of, right? That's right. Like, I'd never hired a lawyer before, right?

Like, this is not, you know. That's the trade-off. Things like that that you have to spend a lot of time doing. Um, and so you have to get good at changing like your mindset very quickly between the tasks, but you got to do them all, you know, and that just takes time. And I wish there was some easy way of saying like, I'm just going to work, you know, eight hours a day. That's no short term. Because the upside, because the upside, if this works, the upside is so big that the 10 hours you're working instead of eight hours, it won't even occur to you in real time while you're doing it. Because also this is a passion thing for you. It is.

This isn't like, oh, I guess I'll just do a podcast. This is what you want. Right. That's what I love doing. The hours aren't going to be the issue for you. So you're not, the hours aren't going to be the issue for you. The, the, the issue is, the issue is good. No, I don't even know what the issue would be for you, but it's, it's going to work.

Yeah. I listen, I've been listening to you for a long time. I listened to your new thing. You're, you're, you're going to blow up. I got a question for you guys, actually, if you want to, if you want to, you know, reverse. Why are we so good at this? No, it's, it's more, you know, when you have this podcast and I know you have like a few others, right. What kind of like process did you use to put in place like the scaffolding of like,

okay, we get the guest in, we have a band three segment first. We have this sort of built in suspense on this show right now of like, there's all these topics. People are wondering what the topic's going to be. They're wondering how good the guest is going to be, right? Presumably you don't announce that before the thing comes out. You know, you have like the favorites at the end. That's like, I'm fascinated by how people put built-in suspense into their podcast. Mike's been podcasting longer than I have. What's the question?

It's like, what kind of thought process, like how did you arrive at the structure of the show? So our show, as far as I can recall, like for Animal Spirits, for example, I think it's pretty much unchanged. We have our Google Doc. We have our topics and we've added and iterated and removed things and changed things. But for whatever reason, like we hit on a formula that worked pretty early. And then I think for What Are Your Thoughts, we did make one important tweak to that. So we have three topics each. And what we were doing for the first, call it-

This is the YouTube show. For the first year and a half- And this is so dumb what we were doing. When you hear it, you're gonna- For the first year and a half, we didn't know each other's topics. And so Josh, I was like suspenseful for the audience. Michael doesn't know what I'm gonna ask him.

It was like surprise, talk for the audience. Michael doesn't know what I'm going to ask him. It was like, surprise, talk about the stock market in India. Yeah. So oftentimes, Josh would ask me a question. I was like, I don't,

I got nothing. I don't know anything about this. And it was like, all right, cool, next topic. So I said, hey,

wait, this is so dumb. Why don't you just tell me your topics? I'll tell you mine. This way we can research and prepare and have thoughtful answers.

How dumb is that? To be fair, when it worked, it worked well. There were times when the reactions were good. Oh, the look on Michael's face when I would ask him about something. Well, that bar didn't work. It was this combination of surprise, disgust. You idiot. Yeah, yeah, yeah.

I feel like the audience did enjoy some element of that, but it was really insane. Carter, if you know. So I feel like the audience did enjoy some element of that. Yeah. But it was really insane. Carter, if you know what else, I listened to it. So I grew up listening to Howard Stern like my entire life. I know what audiences like. I know what I like. And so I think that like – and I listen to a ton of podcasts. So I think that we – Josh and I both have a pretty good sense of let's speed up.

We're boring the audience. Let's move on. Let's do this differently. And like I think some people are better than others and like not to brag, but I think we're pretty good at it. We're boring the audience. Let's move on. Let's do this differently. And like, I think some people are better than others and like not to brag, but I think we're pretty good at it. Yeah. Yeah.

Yeah. Speaking of, we just did like 30 minutes on podcasting way too much. So, uh, by the way, before I move on, uh,

John, did I hit my F bomb? Uh, ceiling is the other guy bleeping these out. It's enough. Like, I think I hit it for you. How many do I have left?

For example, Cardiff, we've got – go ahead. I was just going to say he jokes, but we literally do keep a list of F-bombs. No, I know that. So we've got three more topics, but it's enough. We're 80 minutes into this. Yeah, yeah. Yeah, let's do this fast. I was going to say when I was listening to your podcast before,

I was like, this thing is an hour and a half. I was like, that's – I mean, that's what, halfway through a Scorsese movie? That's right. Do we take breaks? I thought you were going to give me a, that's what, halfway through a Scorsese movie? Is there? That's right. Do we take breaks? I thought you were going to like give me a red cup to pee in halfway through or something. Let's blaze through this really quickly. I'm not going to talk about, I was going to talk about Jay-Z doing a sports betting license. Next time.

Next time. I was going to talk about Steve Cohen owning the Mets and sending tweets about how much they suck. That was something. Fantastic. You must have a take on that. You've been covering hedge funds. I mean, you can't expect these guys to have like a hands-off approach, right? None of them does.

Does Mark Cuban have a hands-off approach? No. Does Josh Harris at the 76ers have a hand-off approach? But putting his own team on blast on Twitter seems like even next, next, next level. Look at that. Read the tweet, Josh. All right. This is Steve Cohen's tweet.

I swear he sent this. August 18th. They just missed. Read the tweet, Josh. All right. This is Steve Cohen's tweet. I swear he said this. August 18th. They just missed the playoffs, by the way. It's hard to understand how professional hitters can be this unproductive. The best teams have a more disciplined approach. The slugging and what percentage? Baseball slugging. Yeah.

All right. Numbers don't – whatever. 17,000 likes, 6,500 retweets, all from Queens. Listen, this is a guy that could literally make his traders trade better. You know how he did it? You're fired. Yeah. Like literally, you lost money this month?

You're fired. Do ballplayers respond that well to that kind of pressure? Who does? Nobody does. Do ballplayers respond that well to that kind of pressure? Who does? Nobody does. That's a very understated way of saying I don't understand why you suck.

By the way. That's what he wrote. Now try harder. Yeah. Hit better. Oh, shit. That never occurred to me. If I just hit better, then we'll win more games. That's it.

So I think. And the next money ball. I think Cohen's going to learn a little bit about the difference between motivating traders through fear of losing eight figure income versus motivating multimillionaire athletes who could very easily take a 250 batting average and join another team. I will say this in case we don't get to the favorite section. Oh, we're getting. Oh, we're doing it. Well, then I'll say we're going to go there next. Actually, it's sports related. Why don't you, why don't you, why don't you lead it off? Well, I was just going to say that like one, like I've always been a little bit skeptical of the usual

talking points about why sports are great, like for kids in terms of like instilling discipline and teamwork and all that stuff. Right. I think sports are great for kids because they're fun, right? But I've always been a little bit skeptical of the typical story. But what I do think sports are great at is teaching us lessons about how an organization handles a situation where there is a constant tension between individual motivations and collective motivations, right? And so I think this idea of like Stephen Cohen, like going out there and putting his team on blast. Right. I think that like,

this is gonna be a 30 for 30 someday. I'm just curious if like he thought about like all of the different, you know, psychological components to it because my favorite thing to share this week was a very short clip between Kevin Durant and Draymond Green discussing a huge argument that they had last or two seasons ago, right? During a game, which ended up leading Kevin Durant to leave the team, right? And in that three minute clip, there's an absolutely massive wealth of insight about, you know, the need, the need sometimes for immediate confrontation, about what an

organization should do about facilitating collaboration and confrontation, how it can go too far, especially if it's going to be punitive, what its responsibility should be anyways in terms of providing the environment to solve problems versus actually pushing people to do it themselves, But also the kind of fascinating insight about what happens when two people are face to face and how suddenly something that really was a problem between the two of them gets sort of sent off to something else. Like they've deflected the blame onto a third party because now they're in person, right? I mean- They blame the team now.

This changed the trajectory of the whole league, right? In a massive way. And it was this small thing that probably could have been fixed within a couple of days. Things like this happen all the time, but I think a lot of people aren't alert to them. And if all you see in that interaction

between the two of them was like some like old beef between two guys and them settling it, then like you're not paying close enough attention to what a fascinating like, you know, heap of insights you should draw from that. I thought this entire conversation was incredible. I actually was watching it. People don't even know what we're talking about.

Draymond Green and Kevin Durant had an argument on the court. KD ended up going to Brooklyn. And they had won their rings already, right? A couple of them, two of them, yeah. So the interaction was basically Draymond interviewing Kevin Durant, but then they get into this fight that they had. And I think they, in the end, they blame the team.

Yeah. How the team handled it. Forcing, trying to force one of them to apologize to the other, et cetera, right? Yeah, so Kevin said that the team just didn't even want to apologize to the other, et cetera. Right? Yeah. So Kevin said that the team just didn't even want to acknowledge that it happened, which is like really awkward and bizarre. Yeah.

And then Bob Maia, they tried to force Draymond to apologize, which is equally bizarre. That doesn't work well. Easily stupid. And it just completely splintered. And it's a shame because I loved watching them play basketball together. I've never had so much fun watching the Warriors play. A lot of people hated it. I was not one of those people, but I certainly can understand why people did hate it. And this is what I was going

to highlight as my favorite, but it also jives with what I'm going to go with, which is being able to see behind the curtain with podcasts is something that we were never able to do. And I can't imagine as a child being such a huge basketball fan, what I would have given to see Patrick Ewing talk about the game or the Miss finger or no. Imagine if Jordan and Pippen did a podcast together two years after Jordan retired from basketball. I think,

I think we're so lucky to be able to see behind the curtain like this. And similarly, Tracy and Joe also had Bob Kaplan on and to be able to see behind the curtain like this. And similarly, Tracy and Joe also had Bob Kaplan on. And to be able to hear from people like this, I just love podcasts. I just think it's just such a great medium. It's so much better than radio. So I think we're really lucky to have this. Bob Kaplan, who is on the Fed and currently dissenting, he wants to taper now, right?

Yeah, he's one of the more hawkish members. I love hearing him talk about that. If you're just a casual market observer and you're not really in the minutes, you don't get to see that stuff or hear that stuff and to hear him. And questioning from genuine experts like Joe and Tracy, right? It's great. It's a really special thing that we all have access to. And also, Draymond is really talented.

He's on TNT a lot, but he's going right into the chair. Oh, 100%. I like watching him play, but I wouldn't mind if he just started doing that right now. He's terrific. He's less of a clown than Barkley. He's maybe slightly less entertaining than Barkley, but

still very entertaining and articulate about basketball. And he's in the game right now, so I, I think some of those guys on TNT who I love, by the way, they never played with the current stars. Yeah. And they don't keep up with like, you know, analytics and things like that, which are half the time Shaq doesn't even know who's on which team, which is sort of all running. I heard Draymond explain, like, he doesn't even really watch NBA when he's not in the game. He watches WNBA because he's like, they're actually running plays that I recognize from when I played more, a more organized version of basketball.

So I, I agree. That would be cool. I didn't see this whole clip. I just saw the clip that you sent me. Yeah. It's 24 minutes. It's not very long.

I'm definitely going to go. I'm definitely going to go watch it later. All right. Do you have a favorite? Your favorite this week? Yeah. Tracy and Joe's podcast with Bob Kaplan and Neil Kashkari. And that was great. Yeah. I mean, they're interviewing Fed people who are making policy now.

So like, that's as good as you... Shout to Joe and Tracy. They're awesome. Name the podcast, by the way. It's called Odd Lots. Which is... So they were part of, like you and know yeah so they they were part of like you and me and them like they were part of that early inner circle we were just talking about at the top of the show uh they were very much there joe has big time to all of us though we don't see

him anymore um which i fully understand uh my favorite this week uh as highbrow as everything cardiff just went into no i'm just kidding. Tyler, the creator's new album. Even if you're not a hip hop fan, do we have a album cover of that? Shout to Tyler. This is, I'm not going to say masterpiece, but I think it's my favorite sleeper hit of the summer. If you listen to hip hop or even if you don't,

basically Tyler is in a place where he has too much money to be rapping about what other people are rapping about, and he's traveling the world. What is this? Is this shtick? No, dude. He's a genius. He really is a genius.

What are we looking at? I'm looking at this picture. This looks like I can't tell what's going on here, if this is shtick or not. I don't know this person. Bro, he will put a bullet through your left eye. Basically, call me if you get lost The theme is like

I'm traveling He's not in the streets Like dodging bullets Or doing any of that stupid shit He's not in strip clubs He is literally traveling around the world And opening his eyes to things that As a kid he couldn't have imagined

And there's a lot of great features on it, like Lil Wayne pops up and DJ Drama. So even if you're not really a rap fan, this is at a level that you could definitely appreciate it. So I highly recommend. Call me if you get Stop Laughing and Pictures of Tyler. Perfect for end of summer. These pictures are awesome.

He is awesome. All right, that's all we got this week. So we want to make sure that everybody checks out the new Bazaar. You can download that on all podcast platforms. Do you guys have a website for that yet? That should be up a little bit after Labor Day. Okay. You got to find somebody that just left a big company and hire them to build your website.

Actually, the person who's building our website is someone who works on his own, too. So it's a completely fissured workspace. Man, I would hope so. All right. For the latest in financial blogger fashion, don't forget to check out idontshop.com.

We're going to have some new stuff up there pretty soon. If you haven't gotten your official The Compound and Friends merchandise, I don't really know

what you're waiting for. Go ahead and do that. New Animal Spirits every Monday, every Wednesday morning with Michael and Ben. My favorite financial podcast podcast personally.

And so make sure you check out that. I want to say thank you to Cardiff. Thanks to John. Thanks to Duncan. You guys did an awesome job this week. And Cardiff is hiring. So if things don't work out here for one reason or the other. Send us the resume. Absolutely. All right. Hey, thanks for listening. We'll get back to you next week. We're off, but we'll be back in two weeks. Is that right? We have a break this week. What are you guys going to do at the break?

We'll see. Yeah. No big plans. It is my birthday next week. Is it? Yeah. August 27th. We'll have the Duncan's birthday show a week later.

I'm going to be in California. I can't record. All right. All right. Thanks, everybody. Do you feel warmed up now? Are you ready to this let's do this let's go let's go