The Compound and Friends - The Year of the Rug Pull

Episode Date: December 17, 2022

On episode 74 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by the On The Tape podcast crew, Dan Nathan, Guy Adami, and Danny Moses to do a month-by-month 2022 market recap and share their predictions for 2023! This episode was recorded in front of a live audience at the Nasdaq MarketSite on 12/16/2022. Today's podcast is sponsored by Public. Check out public.com/compound to learn more. This is a paid endorsement for Open to the Public Investing, Inc., member FINRA & SIPC. This does not constitute investment advice. Investing involves the risk of loss, including loss of principal. See additional disclosures the description (or comments). For more information go to public.com/compound Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, everybody. Yeah, yeah. Try TRP. Let's make a podcast. All right. We were talking smack while you were away. What were we saying? I was saying you're big time.

We were talking about Matterport. I hope not. Oh, wow. I was going to ask you that. Yeah. Thank you. That was the first thing I was going to bring up. My attorney tells me no comment.

Is Dan doing his hair? What? My hair is... Really? When did you guys... You started podcasting before Josh or no? Yeah, 2017. After one episode, Josh said,

I don't think this is going anywhere. One of my better calls. Don't quit your this is going anywhere. One of my better calls. Don't quit your day job. One of my betters. When did you start? You did the pandemic. Pandemic. I was one of those.

So, so, I really had nothing to do for long stretches of time is the answer. How did Fast Money go? It was one of the best shows we've ever done.

Tell that joke to this audience before the mic gets on. The mics are always on. So Josh one day, Josh used to do... They can't hear you. Turn it on. What are we doing?

We're recording. Yeah, whatever. Oh, really? Turn the volume of your voice up, guy. Turn it on. What are we doing? Oh, we're recording. Yeah, whatever. Oh, really? Who controls that? Turn the volume of your voice up, guy. Turn it off. Turn what off? This must have been 2015.

Josh was very solidly part of the investment committee. I see. In the halftime report. Yeah, I see. He was still moonlighting a little bit on fast money at 5 o'clock. And he came in one day into the green room. Guy's getting all dolled up. at five o'clock and he came in one day into the green room guys getting all dolled up and uh and he's like guys guys this is probably one of the most important date didn't he say that

or something one of the most important shows we'll ever do it and so we've never what was going on what was going on that's like nothing you were there yes um but we we often say that in honor of josh you still you're still doing that on the call. So we do a 4.30 call, the show goes live at 5, and we do a 4.30 call with our producers, and Guy will be like, wait, Sandy, stop. This might be... I say this is the most important show we'll ever do. Don't, don't... I know, it's true.

TRB lives on. I'm trying to think, what year do you think that was? Probably 15. What would have been the thing that would have made me say that? The Yuan being deep egged? No, it might have been like something. I'm sure that's exactly what it was. I'm sure it was something really important.

The Yuan deep egg. Brexit. Could have been Brexit. All right. Josh would stroll on the green with those. You have the, like, he wears those headphones. He walks in i still do i mean it's it's it's it's a fantastic look this this i've never seen before can you just

know this this sergio ticchini thing i mean that is unbelievable i'm representing long island well any long island people here let's go let's go eric Eric? There we go. What is this brand? How old are you? Who's here from outside of New York State? Anyone? From where? Dave, what's up, man? Seattle. Chicago.

Oh, man. That is awesome. Thank you, guys. Israel? India. India? Okay. Well, thank you guys so much for coming.

We're going to have a lot of fun tonight. I promise. Who's been to the NASDAQ? Who's first time at the NASDAQ tonight? Okay. Very cool. What do you guys think? Pretty cool, right?

So the NASDAQ gave us this space for free. And the NASDAQ did a lot of work behind the scenes to help us to do the show, put this on tonight. So a round of applause for the NASDAQ. And how many nights a week are you at the NASDAQ? So this show started in 2000. Fast Money started in 06. Were you always here in the early days yeah we've been here since day one we used to do the show downstairs for the first 10

years we moved up here whatever it was six or so years ago but i was doing the show every night five days a week for 12 13 years shows changed a little bit since then but i'm still on three four times you are the longest running cast member of Fast Money in all of CNBC history. No, but you are though. Yeah, no, I mean, when we started, they started talking about doing Fast Money in November of 2005. And over the course of four months, the network brought in about 450 people to screen test, interview,

talk about a yet to be named show. And I was one of those people along with a guy named Eric Bolling, who some of you folks might know, Jeff Mackey, who's out of his effing mind, but brilliant, who Josh wrote a book with. Shout out to Jeff, yes. And a guy named Tim Strusini, and Dylan Radigan was our host, and 16 years later, here we are.

Is it true that if Eric Bolling picked a stock on a Tuesday and it went down on Wednesday, he wouldn't come and do the show? So Eric, I love Eric. I mean, Eric's a friend, but I will tell you. Yeah, that's a hard yes. That's a hard yes. I would say.

That's a hard yes. Okay, all right. I get that. And how did you guys hook up with Danny? Like, what's the origin story? Danny was pitching marijuana stocks on Fast Money one night. And we just sort of. He gave us his card.

And his phone number was 1-800-WEED-DELIVER, which is weird. No, but Danny, we obviously knew who Danny Moses was. I'm sure most of you folks here are aware of who Danny Moses is. And he came on the show. And we became fast friends. And when the pandemic hit, Dan had a great idea to start what do you people call these things? This is a radio show.

Potting, Dan says, which drives me out of my effing mind. But we just started a podcast two years ago and here we are. Okay. And why did you want to get involved with these two? I mean, you know, just being around them is very exhilarating. I learned so much from them and it's just, no.

I'm not investing in the market. I like to talk about the market. No, no. But you know what? Our combination is probably like you guys. I mean, I've actually read your blogs about how you guys met. And it's fascinating. And you guys met under kind of funny circumstances,

became really good friends, and then professionally and all this stuff. We met Danny. And it went the opposite way. I think we were sort of like bullshitting after the show and we had like musical interests and we went to a concert together. And then we were like, just when you're brainstorming,

you want to do stuff professionally and improve. It's not the podcast, right? No. Well, um, you know, we just got on and we're like,

we got to do this with this guy. Right. Okay. Absolutely. And we needed a buffer in between us. All right. How many episodes? You have multiple podcasts.

Yeah. So what we wanted to do is this. And listen, we had been listening to Batnick, and I did your podcast. And I think we already started at some point in early 2021, right? We started. And we just wanted to do what we do long form. We love what we do on Fast Money, but it's like sound money, right? We started, and, you know, we just wanted to do what we do long form. We find sometimes, we love what we do on Fast Money, but it's like sound money, right?

Like you came on last night and you had like 10 minutes of stuff to say that you had to do in two minutes. And, you know, we get so many, like there's like connecting with people like you who are trying to figure out the markets. You guys are all professionals. You do other things.

And our ability to just to kind of, you know, interact with you guys and just And it's just been fun. So doing it long form is like, I don't know, it's been great for us, hasn't it? I think so. I think people have enjoyed it. I mean, we went over 2.5 million downloads. We're not in your territory.

We aspire to be the TRB. But we're getting there. You'll get there. You'll get there. What do you think is the most misunderstood part of how you make the show or what goes into the show? They cut my shit out all the time. Are you being edited?

All of it. I like to get in the weeds, no pun intended, on things and dig through it, and Dan calls it wonky, and no one will care, no one will understand, but I'm just passionate about trying to help people. Is that not accurate? Is that what you're saying to him? no no no you're saying after he says we have a lot of stuff to do you guys will go for like two hours on your podcast we like to try to

like 30 minutes keep it to like an hour because we have just well we've we've figured out like listen we're going on two years on this thing and we figured out a format just like you and ben have figured out and you don't you don't stray too much from it i'm sure duncan doesn't let you do that um you know we like to have like a great free-flowing conversation the stuff that's most you and Ben have figured out and you don't, you don't stray too much from it. I'm sure Duncan doesn't let you do that. You know, we like to have like a great free flowing conversation and the stuff that's most important to us. And then we love to bring on a great guest and we were bringing on a lot of weird guests in the beginning a little bit,

but we figured it out. Like we, we bring on people that we think our audience is going to like hear us interact with the same thing that you do. Who's the weird guest. No, we had like, we had,

you know, we had, we had B you know we had um we had buff baffert on the week before the derby that he won and they got suspended for his life and we had an indonic and sue on who was an amazing guest we were so excited to talk to him but then you look at your data hit the eagles man but like you know we had tom leon he's never allowed in the studio at least when i'm there ever again but that's a whole other discussion so why too too bullish one way to one way. I like balance. I love Tom Lee.

Is he here? No. Okay. Cut that. No, I'm just kidding. No. We're not on. When we have Tom Lee on, it's 100,000 views on YouTube easily.

There's something about his delivery and his information. Santa Claus type stuff? I mean, he's been bullish since 2010. I mean, I don't really think that there are many people who have managed to last and been that consistently bullish and right. Like, it's hard.

So, I don't know. Have we started yet? No. So, in the back of the room, by the way, if you want to see the next star of CNBC, it's Christina Partsenevelis sitting right there in the back. the room, by the way, if you want to see the next star of CNBC, it's Christina Partsenevelis sitting right there in the back. Stand up and be acknowledged because that's true.

She's hiding. Why did you just do that? Well, because we're not on yet and it's true. Alright, how are we doing? Are we ready to go? Yes. Yes? Welcome to The Compound and Friends. All opinions expressed Yes. for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is sponsored by Public. Public is an investment platform where you can invest in

thousands of stocks, ETFs, and more. One thing we love over here at The Compound is information and data that can lead to more informed investment decisions. And on Public, you get access to a ton of information and advanced features. You can track unique company metrics, read analysis and opinion from expert analysts. Public has all of that, plus the app and desktop experience are both easy to use and navigate. When you sign up to Public today and transfer an account from another brokerage, you can earn up to $10,000 depending on the transfer amount. You can find the link in the description of this episode to download the app. For more information, go to public.com slash compound. Hello, everybody, and welcome to a very special edition of two podcasts. Starting here on the

right, this is Duncan. This is Michael Batnick. I'm Josh Brown. And we are collectively the Compound and Friends, a.k.a. TCAF. Give us a round of applause. To your folks. That's Danny Moses. You know, listen, we're really honored to be here. You had a great idea. You guys orchestrated this. Duncan did some great work, Nick, your whole team. And you had a mission to do this.

Two missions, actually, is really give back to the people who've made this possible for us. You guys listen to our podcast. The feedback's been amazing. And we couldn't do it without them, right? And then Josh is like, we want to raise a lot of money for No Kid Hungry. And so thank you for including us, Josh. Yeah. And audience, please give yourselves a round of applause because this time of year and in this economy and with inflation, what it is nationally, you're hearing stories about the cupboards being bare at kitchens and at pantries.

And it's a huge issue. And so you guys just being here and helping us do what we've done means a lot. The money, I know firsthand where the money goes, how it gets used, and it means everything to the people that are looking for that lifeline. So, so again, give yourselves a round of applause. Thank you guys. Thank you. All right. So the idea for the show tonight is that we're just going to go through 2022. We have a collection of some of the biggest events of the year or the things that move markets. And we'll just, we'll go through how we reacted to those things in real time, whether or not they still matter months later. And then we'll do some forward-looking stuff and talk about 2023,

which, oh my God, I can't wait for 23. I'm all set with this shit. I'm ready for the next thing. But let's start with January. Michael, the bear market started on day one, basically. The market made a new all-time high. It was January 2nd, I think. And then that was it. That was all she wrote. That was all she wrote. So the S&P 500 ended January 5.8% below the high it set on January 3rd. The Dow had fallen 1,206 points to start the year or three and a quarter percent and ended four and a half percent below that first day high. The NASDAQ was down 9% immediately. And it ended the month 11.2% below the November highs. Who saw it coming here? Well, I mean, David Seppert comes on CNBC for years. And I get upset because he makes it so simple. And when the Fed was easy, the Fed had

rates at zero, he would come on and say, look, it's as simple as this. Don't fight the Federal Reserve. And you know what? He was right. The simplicity of it made me nuts. But if that's true, the same should be true when the Fed's taking away liquidity and adding and raising interest rates. So if you're bullish under that environment, you're effectively fighting the Federal Reserve. And we've been saying that since this time last year, and it's proven to be the case. So Fed still has to pedal to the metal. So I think, again, if you're bullish in this environment, you're fighting the tape a little bit, Josh. It's sick how simple it really was.

When you look back, that was the first inkling we got in November that the hiking cycle is here, and that was the top of the list. But it wasn't the first signal, okay? Because we started our podcast in January 7th of 2021. And Danny, like he just said the wonk, and I'm gonna let you kind of get into it a little bit. Danny had like a laundry list of things that were just some of the most ludicrous things

that he's seen in the markets in his entire career, right? And we were all focused on, okay, well, the people sell for $69 million, unprofitable SPACs, the SPAC volume in January of 2021 equaled, it was greater than that of the prior year. And then Q1 SPAC volume was greater than the last 10 years, right? Unprofitable tech companies and the valuation. I mean, the list went on and on and on. And we kind of been harping on those things. And the beauty of doing this is we're timestamped, right? Like we had it, we did it where where this was the core thesis. We were equally as frustrated as you guys were that the NASDAQ topped out in November of 2021. The S&P step kept on

going. So Danny, you were all over all this. Fourth quarter, 2021, we were talking about it every week. I didn't understand it. I really felt that we were to either be flat or potentially down. The Fed was already telling us they were going to pull liquidity. They were talking about QT. They're going to start raising rates. They put it out there, but we just kept ignoring it. And there was a lot of liquidity still in the market at the time. And plus, the invasion was coming. We saw the Russia stuff was already coming on the horizon.

So I was shell-shocked in Q4. Q1 didn't shock me as much. But I'll tell you, one of the things that happened in January, which is ironic because in 2007, I remember when Blackstone went public. It was literally the top of the market. TPG went public. I think it was January 13th or something like that. I'm like, right in the time where you would think that, you know, from a private equity perspective, LBOs and things will start to just start to come down.

That was actually, that day may even have been the top. So the signs were everywhere. But it always takes, well, on the short side, you're always going to be early when you're short. But things are starting to line up. I mean, I'm not going to fast forward and ruin December of this year, but fast forward now into where we are. But I was shocked by Q4. If you go back, Josh, and take out just Q4, look at the chart.

I think the S&P was called 43, 4,400. That last 400 points didn't make sense to me. So I remember Blackstone going public June of 2007, and it wasn't long before. Was that the top? Was that October? Yeah, it was up and down. It was close enough.

Yeah. It was close enough. Elizabeth Holmes was found guilty on January 3rd. Also coincided with the top. It wasn't a public stock, but I think it was the end of an era, kind of like an era of belief. Is that a good way to put it? Yeah, no. Wake up call.

Now it looks like it's happened since a lot more people have been arrested. Yes. Agreed. Bill Wang. Rush, but importantly, reckoning for due diligence. I mean, think of all the people, the sophisticated individuals who joined her board, the VC firms that gave her boatloads of money without any due diligence, and we're seeing that play out right now here.

Somebody was saying, I forget who I was talking to. They were saying WeWork should have been the top in 19. Howard. Lindzen was, and he's basically saying, if you didn't have a pandemic start in January of 2020, WeWork would have been the top. But then all the stimulus and low rates that came prolonged the nonsense for another two years. Great point. But like, who would have thought

the Vision Fund from SoftBank at $100 billion to invest in fairy tales would have been the start of things. But that's right. Like that should have been the end. But that actually turned out to be gentlemen, start your engines. It was the worst January for stocks since 2008. And here are some of the NASDAQ losers. Netflix down 28 and a half percent the first month of the year. Amazon down 12 percent. Roku down 30. Alphabet down only six. Apple down only three. Microsoft down only seven. That masked a lot of the carnage that was already starting because those stocks are so big and they just

they didn't get hit 40% of the they're 40% right of the Nasdaq who put this in LA Rams come back to beat the San Francisco 49ers in the Super Bowl

it's not even true well that was the NFC Championship game I don't know what that is I put in what who put that in I didn't I saw it in there

did Sean do that I don't know and it was against the Bucs they put the Rams that was in February that wasn't even okay, and it was that way I think all right team wrong mom tried to help on the edits as well Well, what are your thoughts from the January experience before we move forward? I think Jan what I remember John's don't we go because he's on don't we always go like as January goes

So goes the rest of the year isn't that like a stock traders almanac? Cliche right guys heard that before so had you heeded that from what went on in january actually you you turned that pretty okay i'm jumping the gun a little bit but i remember when the growth stocks started to really collapse it was like i guess early spring i said are we gonna look back and this is like an opportunity or a time to get out and now we have our answer yeah but it was it was it look back on this as like an opportunity or a time to get out? And now we have our answer. But it was pretty vicious. It was not an opportunity.

Yeah, but the thing, it's funny. You guys probably spent a lot of time talking about it. Again, just like you said, masking. There were five stocks that made up 25% of the weight of the S&P 500. They made up nearly 45% of the NASDAQ. But at that point in the NASDAQ, there were already dozens of stocks in the NASDAQ 100 that had been cut in half, you know what I mean, the prior year. And so everyone was holding on for dear life. And I think, Guy, you make this point all the time. It really was about market

structure. It was about where assets continued to flow because people were still trying to be optimistic because they're looking and they're saying, hey, listen, the S&P is still intact here. Yeah, they didn't connect. There were 1,000 IPOs in SPACs in 2021. And by the end of 21 going into 22, most of those were already cut in half. I think ARK was cut in half at the end of 21. We're going to do ARK. Let's not jump ahead. February, Russia invades Ukraine.

So this is what was going on in February oil prices surged above $100 per barrel I thought you had Vlad Putin behind me Brent Crude, the global benchmark went up 8.5% to trade at $105.40 that day that had happened by 5.30am and oil above $100 a barrel for the first time since 2014. What else?

So what's behind me? Charts. Let's just break in here. Because, Guy, we did a podcast, and I think it was the first week of December, last week of November in 2021. We had Ian Bremmer of Eurasia Group on. He's like a very well- Not to brag, we had him also. Okay. We had him first. We had him for longer. Okay, but he gave us better stuff. And so,

you know, Guy, you had this amazing exchange with him. Okay? And you were like, listen, this Ukraine thing, this is happening. And no one wanted to believe that it was going to happen. You had him pre-invasion or pre i mean this was this was like he's like listen we call him nostradami for a reason here and then we also and then you were talking about china and taiwan i mean talk to us a little bit about that because you know like and you would have been you know

balls on oil you know yeah well we do it and fast money and melissa asked us you know i think that's a financial term it is yeah continue you know what are the what are your concerns of 2022 and i said it's geopolitical and nobody really believed that but it turned out to be the case and russia wasn't amassing a hundred thousand troops on the ukraine border to take pictures you know i mean they were clearly there for a reason so didn't you always say the big risk is geopolitics. And then finally, not like it was setting up. And I thought China, Taiwan would happen a lot sooner than it potentially could happen. That was the second part of it. But it's clear to me that that was a huge potential risk. The fact that now we're sitting here in December and crude oil is lower than when we before they

went in is fascinating. But it's probably we'll save it for this you know when we get to December of this year. Josh think about this in all of 21 inflation was transitory right transitory right so towards the end of 21 when the Russian invasion happened and people realized there's immediate impact that exacerbated it that was the kind of nail in the coffin so to speak as far as I thought what the market what was the nail in the coffin oil prices zooming up and all these other things the supply chain things that we're going to start to kind of abate like what do you mean the food supplies so what do you mean so let's let's run that back absent the Russian invasion of Ukraine would Powell have looked more prescient and would inflation have been transitory no I mean I still think it was already because they all they already were late to raise weights to make a transitory car I disagree No. I mean, I'm still thinking it was already- Because they already were late to raise rates

to make a transitory cut. I disagree with that. I mean, like, I think that, you know, we've spent so much time in the financial press, like, you know, like talking about the semantics of the word transitory. It's clear when we look back five years from now, that inflation spike was transitory.

But wages are sticky and they had nothing to do- Only until we get back to automation. Remember like pre-pandemic, we were worried about automation taking all the jobs, the robots, and universal basic income? But I'm saying we're still dealing with rising wage inflation right now. Still right now. And that's the last piece of it. No, listen, I think inflation's peaked. We'll get to that later. I know, but we've gone over this, and you guys probably talk about it too. I mean, the Fed did something in 2020, but they kept on doing it in

2021. And that's the thing that caused this weird spike. We had zero COVID in China. We had disrupted supply chains. We had deglobalization factors. And then we had a shooting war in Europe. And so all of those things, you just said it yourself. If you're waiting for geopolitical to invest, you might be waiting a long time. It just all happened to happen at this moment. The timing of the invasion could not have been worse for where the Fed was, which was already late. And it made everything worse. But I still think we would have had an inflation battle this year because of wages and rents. Because of $4 trillion in stimulus, though, to keep our economy afloat, keep households afloat, keep businesses from, you know, credit issues like

we had during the financial crisis. I mean, they did their job. Spotify crashed at hard pivot in February from 234 to 150. It was a $46 billion market cap in January. It's about 15 billion today, probably lower. Yeah. One of the biggest media company crashes of the year. But the specific trigger was they did a hundred million dollar deal to bring Joe Rogan on. Joe Rogan had, shall we say, alternate opinions about vaccines. And the musicians started to boycott the platform. I don't think that's why Spotify is worth $15 billion today. I think it was coming down anyway. But you guys are music guys.

What are your thoughts about how that whole thing went down? If you don't follow me on Spotify, you're doing it wrong. I have an 845-song playlist. And I just, what do they send you? What do they send you? All stones? Raps. What do they send you

at the end of the year? What are they called? Raps. So I'm in the top one half of 1% of all Led Zeppelin listeners in the world. Now you know

where the stock's gotten killed. Just saying. So you can play Stock Market all you want. I'm just saying, follow me on Spotify. Joni Mitchell took her music off Spotify.

Did anyone notice? Well, you know, people notice Neil Young. And Danny, I'll let you jump in here too. I mean, listen, I said at the time on one of my podcasts that I'm not sure if you said the same thing. I mean, Spotify had a Joe Rogan problem because he was the face of this publicly traded company. Like Daniel Ek was the CEO, but no one knows him.

And no one knows what his messaging is and the direction for traded company. Like Daniel Ek was the CEO, but no one knows him and no one knows what his messaging is and the direction for the company. So he allowed his entire company's brand to be co-opted by a guy where probably half of their users don't agree with what he's got to say about a lot of things. Right.

I guess that's a danger of doing huge deals like that. And then that person becomes, whether you like it or not, the face of the business. Howard Stern was serious. Starbucks announced a new price hike after a price hike in October of 21. And Starbucks, believe it or not,

is one of the best performing stocks in the S&P this year. They seem to have had no problem putting through price hikes. Hasn't really affected them at all. In fact, sales are going up for the most part. Are you surprised the degree to which most U.S. companies were able to get away with price hikes? I can't think of anyone. Chipotle, too. Some have pricing power and some don't.

Those are the winners. But I'll say this. Keep in mind, we were in lockdown basically, right, for end of 20, a lot of 21. And so the comps start to look very easy in 22 versus 21, especially in Starbucks where people are actually going back to work and going to get to Starbucks. And they raised prices and people wanted it, and that's fine. But now going into 23, you're going to face those comps off of 22, 21. And that's another reason, I think, not to jump ahead. By 23, it would be difficult.

But listen, you have a good product, you have pricing power, and you can pass that on. You're in good shape. And I think the price of coffee actually hasn't gone up as much as they probably raised their prices, to be honest with you. So they'll get that benefit. What do you think about this idea that prices – costs will come down for corporations, but prices won't, and that's what saves earnings in 23? That spread. won't. And that's what saves earnings in 23. That spread. So everyone, so they all raise prices because they had to, because labor was expensive, because lumber, like anything you want to input,

all of those prices ease off, but companies don't then roll back the price increases. And that's the thing that saves earnings for the S&P 500 in 23. If that's possible. If wage growth doesn't keep up, they're going to get hit. I mean, the revenues will drop because they can try to charge more, but there's just less wallet from the consumer, I think, right now. And there will be

going into 2023. There'll be examples where companies can do that, but I don't think that'll be... You don't think it'll be widespread enough to help? Okay. Not in a commoditized business.

Maybe if, you know, not in someone that's competing. Why don't you take March? So March was, what happened in March? We got the biggest inflation jump month over month. It was the first time we hit 1% month over month. It was the first rate hike. The Fed raised rates 25 basis points,

which in hindsight, maybe they should have gotten gotten after it uh a little bit faster this is a good chart march is when shit really started to blob we had more 52 week lows in march than we had in 30 years and i wonder if this is a sort of a data crime in here if i wonder if this is being measured funny because how are there more highs more new lows here than there were in 2008. It's the number of stocks. It's not a percentage. That's how. More stocks? I don't know.

Nobody look at that. Let's just talk about that rate hike. It was mid-March. It was the first rate hike they had done since 2018. It was 25 basis points. You put that in some sort of context, they really eased into this thing. All of us can go back and remember post 9-11. They were still saying

transitory in March? No. I mean, that's why they were raising rates. They basically were kind of... But their dot plot, that was one of the first dot plots and they were still low to Josh. Yeah, but I mean, they started but at that point, I mean, Fed Funds was expected to be above

3%. It was at zero, okay? So there was a huge rally in the end of March. You remember that in the stock market? Yes. And people thought, okay, they finally did it. And, you know, we were kind of saying, you know, the last time when they were raising rates in 2018, what happened, Guy? The market went down 19.9% from Halloween ofeen of 18 until christmas eve and then then jerome

powell who was newly into the job got scared by current president trump back then who browbeat him into submission and he got scared by the market that went down so i loved jerome powell up until the point that he flinched and i happen to now like him again until he flinches again and then you'll hear me talk about him. But that's exactly what happened back in 18. A firm pulled its ABS deal from the market. And that looked like it was the beginning of the end for the buy now, pay later stocks.

So you can't reinvent lending. I talk about this on the podcast. There's a group of these buy now, pay later. I call it short now, cover later. And so you can't read it. So if you grow your lending book faster than GDP. I like buy now, pay never. Yeah, buy now, pay never.

Whatever they thought they'd read it. Max Lefkin, who obviously was at PayPal, who's obviously a smart guy, thought that you could bring tech into lending. We saw that work peer-to-peer lending club years ago. You just can't do that. And what happens is, when you originate these loans, you've got to sell them to somebody because these companies are not set up, basically, to keep these loans on their book. Well, once

these loans start to deteriorate and underperform and you have delinquencies and charge-offs, your investors in these pools will pay less. And so if your cost to originate is X and you can't sell them at a profit, now what do you do? You hold them. So when this ABS deal kind of got pulled, it was the first indication that there wasn't enough appetite. Therefore, their platform would kind of come to a standstill. So throw in Upstart, which is not buy now, pay later, but it is a, quote, lending platform. When you see, like in the financial crisis in 2006, when Wall Street started to pull the credit lines from the large subprime companies what happened was these subprime companies were forced to balance

sheet these loans themselves well none of these companies are set up for that so that's what's happened these stocks are on their way to zero i mean there's these things are down 90 i think and so one of them got one of them got acquired uh square bought one which one did they buy that's 21 that was after payment did they agree that That was 21, right? That was 21. After payment. Did they agree? That's hurt Square. That's why Square stock is where it is. It's a big problem. It was all stock.

It was a $29 billion all stock deal. Square was trading at all-time highs. And we actually were talking about this right after that. Do you remember that Amazon did a deal with a firm? And people were like, well, if there's a frenzy for these assets, why wouldn't Amazon buy it? And I think Danny said something like, why buy the cow when you get the milk for free? This is like one of the big things on Wall Street, like one of the tricks that they pull.

You have technology analysts covering specialty finance companies, right? These technology analysts are told by their bankers, you're covering this. Why? Well, we need a 10x multiple revenue on this. OK. And these analysts don't understand how the financial system works. They're focused on user growth, not credit. Yeah, it's ridiculous. So that happens a lot.

That happened to Carvana, too. Another thing that happened in March was that's when yields really started to skyrocket. The two-year went from 1.3 to 2.5 in like 30 days. And growth stocks fell apart. Bed Bath & Beyond surged 70% in March when Ryan Cohen took a stake. And we know how that ended.

But it was kind of a moment where it was like, oh, we're still doing this? Like, we're still doing memes? I had thought that was dead and buried, but it came back kind of with a vengeance this year with AMC eventually also. Do you think we're done now? Am I? This is you. Oh, I'd love, yeah. No, we're almost there, but I'll say to Ryan

Cohen, who had pet food delivery, worked out great, and now everybody thought he was God's gift to the corporate world, comes in to Bed Bath & Beyond, takes a steak, says he wants to be on the board, and then sells his entire steak. He's one of the only people to make money this year in the stock. But then on GameStop, I mean, to come in, he owned 12, 13% of the company. He buys an additional 100,000 shares at $100 a share. So

it's now split four for one. So let's call that today's 25, which now the stock's at 20. It says what? What is it going to? NFTs. He had a partnership with FTX. I mean, think about this for a second. So he kept the stock up. Is that who? They partnered with FTX to do NFTs? Yes, of course. God, if I knew then what I know now. Still a $6 billion company, so are we there? We're in the eighth inning of this crap.

Stock's three bucks. Which one? Bed Bath & Beyond. No, GameStop I'm talking about. That one has $20 more downside. Where is it? 20. Yeah, Bed Bath & Beyond did not do an FTX deal, I don't think.

No, no, GameStop I was talking about. GameStop, right. Exactly, so. Elon Musk, I was talking about. GameStop, right. Exactly, so. Elon Musk started to openly criticize Twitter, the platform, in March, presaging what I think is probably one of the biggest stories that will be when this decade ends. This is going to be like a top ten. All right. Can we throw this back to you?

Because one of the things, it's funny, a lot of you guys in this audience right here are listening on the pod. You guys know downtown Josh Brown because he was at downtown Josh Brown on Twitter, and he was a force, and he was funny, he was witty, and he probably every once in a while had a decent stock pick. But you left Twitter before it was cool to leave Twitter or to get canceled off of it.

You know what I mean? That sort of thing. I mean, like, what's going on now? But talk to us about that. I mean, because a lot of his criticisms you probably had. You left the platform and. Oh, no. So I don't think that he and I share the same criticism.

So this is his tweet. Do we have this? We have this? Given that Twitter serves as the de facto public town square, Do we have this? Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy, what should be done?

I actually don't think that there needs to be a global town square. I don't think it's necessary or healthy for 300 million people to be yelling at each other from all over the globe. I really, I don't, I'm not in the camp that thinks that's a good, fundamentally a useful thing for anyone. I don't really see what it solves. All I can think about is what it causes. So my criticism is, it's not a criticism, it is what it is, but I don't think that when you get

past a certain number of followers, you can enjoy your experience there. And the other thing, and a lot of people that I admire, I wish they would stop tweeting. I can't believe they still tweet at their follower level, because these are two things that maybe their parents didn't teach them. The first is absence makes the heart grow fonder. their parents didn't teach them. The first is absence makes the heart grow fonder. So if you're in people's fucking face all day long, they like at a certain point, they're going to turn.

It's just a matter of when. The other thing is familiarity breeds contempt. I guess that's another way of saying the same thing. So that's why the Kardashians stopped tweeting. That's what like there's, there reaches a point where people don't want to hear or see you all day long you have to know when you've reached that point i probably it would i probably left four years later than i should have yeah i call that my home life right so you can you can relate

i can relate you can relate uh coming back yeah exactly never Come back now? It's on fire. It's literally burning to the ground. Why, are you still tweeting? Like, are you tweeting? I wouldn't know. You don't tweet. I tweet our content because a lot of our audience is there, but I don't interact with people anymore. I stopped doing that a long time ago.

Do you look at your mentions? No. I had a tweet today. It was Elon Musk's location. Trading for in Philadelphia, Duke and Duke style. Margin call. That's what I was trying to get. I'm trying to get booted at this point.

I'm very lucky, though. Yeah. I have Nicole to send tweets for us. So a round of applause for Nicole, by the way. How many people are on Twitter here? I'm just curious. Okay. Let the record show

no one's left on Twitter. How many people are on Mastodon with me? Smaller. Smaller number. One. Got one. Yo.

Who is that? I'll follow you back. Let's keep it moving. We're going to do April. So Elon files a 13G. He buys 73 million shares of Twitter, which is $3 billion at the time. This might be the worst purchase of all time.

Well, hold on. He actually bought it in January when the stock was below 30. He told us about it in April. No, but think about this. So it's funny. I did CNBC's options action the day that Twitter went public for some reason.

They went public on the New York Stock Exchange, sorry guys. And we did a show from down there, okay? It went public at $27 in November of 2013. And Elon Musk is buying the stock in February of 2022 at $27. What a piece of crap. And you know, it's funny, like he's running this company into the ground.

Jack Dorsey was running the company in the ground for years and years. We have this chart of Twitter from the IPO, and it's— It's a horrible chart. Horrible chart. So, it's basically round trips to the IPO price. And then he bought the stock. When it comes out that he finally filed— First of all, he filed the 13G,

which is what you do when you're passively acquiring more than 5% of a stock. Turns out he wasn't very passive. But we'll leave that there. The stock rallies 30% immediately. So Snap's chart or price, whatever, market cap is down 90%, like literally 9-0. What is Twitter down if Elon never gets involved? Or if it's publicly traded? I'd say it's $12. I mean, Snap has...

Why would it not be down 90? Snap has a $14 billion enterprise value. It has a similar revenue base, probably growing faster. They monetize better. Talking about what you say, Josh, people actually get joy out of Snap, you know what I mean? And Twitter is important to people in news, in sports, in politics. And misery.

Misery. And misery, yeah. Accusing people of crimes. This stock right now would be trading at all-time lows, basically. Absolutely. I would say 11. My guess would be 11 or 12. Guy?

No, I mean, a lot of analysts said that's a $15 price target, I remember a lot of people putting on. And you're probably right. That's where it'd be. But the reality is that's what happened. I mean, personally, for me, Twitter is my source of news and that's how I get headlines and stuff. And it's in my world when I started, this is the new tape effectively for me. He got caught, right? He didn't 5420, just like 420 funding security. He got forced into it. They accepted his offer on April 25th. He got forced into it because the judge, they had all this discovery with all his emails and all.

He didn't want that, so he'd rather go spend all that money. And now Tesla's down. Tesla burned $700 billion in market cap or something like that. Bill Wang from Archegos is arrested in April. Notice the only reason that's newsworthy is it just kind of came and went. Because guess why? Because there's six or seven broker dealers. They want that to go away.

Think about how embarrassing that is for them. They all lost. Well, that was a 2021 story. No, the arrest. I know, but Bill Wang. We don't have to spend time on it, but the story there is he is avoiding filing as a largeholder of these stocks because he's using swaps to get exposure. Well, in his relationship to ARK Asset.

That was the other thing. And the swaps are pushing up stocks. And was he a seed investor in ARK? Yep. So he was Cathy's earliest backer. Correct. And they had some stocks in common, which probably helped her portfolio as he drove them higher.

We allowed to say that? Sure. Okay. I think we're saying that. Fidelity announced they were going to allow retirement savers to put Bitcoin in 401k accounts. This is one where they could have like just very quietly said, LOL, just kidding. This month, they actually followed through and it's open.

I opened one. And think about this. I don't have – I was never really big into crypto, but given what's going on with FTX, probably what's going to go on with Binance and what might go down with Coinbase, why would you ever even consider that?

Now, these are not FDIC. Didn't I say that? Say what? Oh, wait. We might be saying something different. No, you were talking about Bitcoin. No, what? He's talking about Fidelity.

I opened a Bitcoin crypto or a Fidelity crypto account this month, okay? So they announced it, that they were going to do it, okay? Oh, so this is what I'm saying. Shouldn't they have 100% market share? Well, they will. I mean, just think about it. Okay, so we agree. I'm saying. Shouldn't they have 100% market share? Well, they will. I mean, just think about it. Okay, so we agree. Yes, we're in agreement.

If you're into crypto and you're a sane person, you will have it on Fidelity. Yes. That would be my guess. Yeah. So maybe it's not as crazy as it seems on the surface. I think it's kind of cool that they're doing this in an 80% drawdown

and allowing, like how many times on Wall Street historically have you seen a brokerage firm open up the gates to do something with an asset class that's been more than cut in half? Almost never happens. It's usually the reverse. Yeah, and they're starting. You can buy ETH and you can buy Bitcoin.

And they're really leading with that. Listen, I'm not shilling for them. I'm a customer and I use it. And if anybody came to me, I used to say five years ago, they'd say, what do you know about Bitcoin? I want to buy some Bitcoin or ETH. I'd say, you know what? Go open up a Coinbase.

Talk to Beakers. No, what I'd say is I'd say go. First of all, he's been bearish all year long. And he's been on our podcast. This is BK, Brian Kelly. And he's done a great job with it, to be very frank. But I'd say go open. Go to the App Store.

Download the Coinbase. Read some of the stuff. Put a little fiat in there. See what the experience is and buy a little and then start looking at it. And that's the only way you're going to get comfortable with it. I would tell no one to do that right now in any of those accounts.

I would say if you're really into it though, do it on Fidelity. Yeah, I think that, God forbid, it goes to 25,000 or something. They're going to look very gutsy and right for doing that. I can't believe they went through with it. Guy, you're a big blockchain guy, I assume. Yeah, I love the blockchain.

I've been using it since I started at Drexel in 1986. I find it to be, I mean, this shit is so like, I should have been born in like 1918. Maybe I actually was. I don't realize it because this world is not for me. But I will say quickly about Bitcoin. My sense, it was born out of a concern of central banks run amok. Fiat currencies are just a disaster. And if you think about, I don't think it's coincidence, TRB, that Bitcoin topped out in November, effectively, of last year. Oh, definitely not a coincidence. Around the same time the Fed pivoted. So if you think our central bank, our Fed, is going to flinch or blink,

to me, that's going to be the next green light for Bitcoin to go. That's just my view. But what's different this time, and you could have said that in that retail frenzy, the ICO frenzy in 2017, because Bitcoin went from $20, to what, 3,000 or so at the lows in 2019, 20. The difference now is confidence, right? There is very little confidence in all these institutional players that supposedly, you know, they'd come on shows and they look like brilliant people and they're like telling you how the new financial world's going to be.

And they screwed you. You know what I mean? They absolutely, every step of the way. And so to me, I'm not sure it comes back as quickly when the Fed pivots. Well, the biggest difference between this crash and all others is there's normal people involved this time around. In all of the other crashes, it was only Bitcoin bros. There was no normal

people or normies in there. And so everybody who got burned, everybody who just got burned for the first time and is down 80% is not coming back. I would agree with that. Do you think Bitcoin and crypto in general attracts scammy people, or does it turn

the people who get involved with it scammy because those seem to have been the most successful companies so far is that a human nature like i think it's a if you think about crypto kind of as a now i guess it's an 800 billion dollar industry it was three trillion and shrinking yeah shrinking think of it kind of the dot com you had real companies that came to light then you had pets.com you have all the charlatans that come after to try to take advantage of all these investors. And so I think that's where we are. I'm actually shocked that Bitcoin is still where it is.

That actually probably means it's going to stay at this level and maybe potentially move higher in Ethereum. It was all the other stuff. And I'll give, I rip on the SEC all the time. I'll give Gensler credit. If he hadn't stopped BlockFi when he did in February, which I don't think we put in highlights from 2022, but if we had not stopped this lending product, the lending product, I give him credit. It would have been, this would have been a lot worse. They told Gemini no lending. Like they made it clear to Coinbase, no lend. I have no sympathy for investors that invested in these companies, like, you know, FTX of the world. I have a ton of sympathy for customers

who lost their money they thought was safe on deposit in crypto. So here was the thing also, you could talk about what, like what would the tells of this thing? When Jack Dorsey, who is the CEO of two very large publicly traded companies puts his Twitter account,

it's just the Bitcoin cash tag in his Twitter bio. The religious nature of these Bitcoin maximalists is really scary. Think about that. In the stock market, anytime you've seen any behavior like that, you know, it just really – so the Bitcoin thing never made a whole lot of sense. I was off Twitter for the laser eyes thing, which I think was the summer of 21, and I had to ask Batnick. I'm like, what is this shit? Like what – I mean, Dan, you had – for a day or two, you had a monkey of 21, and I had to ask Batnick. I'm like, what is this shit? Like, what? Dan, for a day or two, you had a monkey of some kind.

He had something. NFT. What did you have up there for a day? And I gave you, up there for a day. And I did it as a joke. Listen. No, no, I'm kidding. But here's the thing.

Now it's a joke. No, no, no. Hold on a second. How many girls did you get that day? It's funny. So I'm curious. I came into the markets in the late 90s. I worked at a hedge fund, and we traded stocks all day.

And the guy who ran it, Steve Cohen, okay, the owner of your Mets, they looked around the desk, and they looked for guys who looked like they just got out of college. And they said, there's this AMZN, YHOO, AOL. We don't know what the hell they do. Figure it out,'re moving around like crazy and we want to trade them and they were going up so for me i'm always curious about these sorts of manias and that sort of thing so i started doing a little crypto then i had some games i have to apologize it's fine yeah no no we all we all did a little what i'm saying but but but then i bought some nfts you know it was like it was like... You're a dick butt guy.

Yeah, I was a... I bought a crypto dick butt, okay? When I sold it, I made money on it. Mike was an NBA Top Shots guy. Duncan, it's too soon. Michael loves it. You were a Top Shots. How's that working?

No, great. It's great. All right, let's move on. All right, we're going to do... One of the biggest themes of the year has been, and we didn't talk about this, but this started really in the beginning of the year. And the first three, four months of the year, value, and we didn't talk about this, but this started really in the beginning of the year. And the first three, four months of the year, value

started to outperform growth bigly. And if value stocks had not held up and performed the way they did, and these are the Dow stocks, and nobody, who here, show of hands, who trades UnitedHealth? Two losers. Just kidding. Just kidding. Oh, sorry. Even worse.

Those stocks have done amazingly well, and had they gone south as well, what would the market be doing? It's no dick butt, but it's pretty good. UNH, pretty good. So this year, this is old, but I think it's probably, well, it's definitely still directionally right.

The value has outperformed growth by I think 20% or so year to date. Biggest spread since the dot-com bust. Does this have legs? Could this go on for multiple years? It makes sense, though, if you think about it. I mean, Jerome Powell did an interview where they asked him about valuations. And I'm paraphrasing, but he said, in a zero interest rate environment, valuations don't matter. And quite frankly, he was right. So the fact now, again, interest rates started going higher, it made sense that people were fleeing names that made no sense in a higher interest rate

environment and finding names that made sense. I will tell you, we can laugh about UNH. It's probably one of the best run companies in the United States. I think it's the largest component of the Dow, if I'm not mistaken, in terms of market cap. And it's a company that you can get your arms around in terms of valuation still. So these companies were left to the side for years. And now people figured out, wait a second, there actually is value here. So to answer your question, yeah, I do think it has legs. UnitedHealth's up 6% on the year. Everything else is. That's like being up 50%. This will absolutely continue. And value, you know,

the words of Morgan Freeman and Schlesinger, it's just a word. I mean, really, these are great companies. I call them GARP. You know, it's value.

Wait, was that Morgan Freeman voice? What's that? That's pretty good. That's pretty good. That's not full. That was pretty good. I'll do it.

I would say, I would say, definitely don't do it. He'll do it at the bar. Now you have to do it. Don't do it. Anyway, value is going to continue.

It's just finding bottom up, doing-up work, all that is. Multiple of revenues, now multiple of revenues. Why? Because inflation and interest rates? No, because these are real. Because most of the time, these type of companies have real businesses, real assets, real growth. Can I ask you a question? Yeah.

I don't know the answer to this, but I've always been curious, and I don't think anyone definitively could say, is it really value versus growth, or is it energy versus tech? Like, is it an industry question? Like, which industries are in better shape right now and in favor? Underweighted. Which ones are underweighted to your point? You consider it-

I'm saying like- If Cliff Fassas was here, he'd cut your head off. I know. When value outperforms growth, a lot of times it's because, like, for example, what are value stocks in January of this past year? It's banks who benefit from higher rates.

It's energy companies who benefit from. Because there's a book value to the financials. There's an asset value to the energy. There is actually something tangible. Right. These growth companies, and you can have good growth companies, but most of them, what are you valuing them on? Brands. The multiple revenue games.

TAM. Right. Exactly. That's kind of over. My buddy Eric Ribnerson back there, we traded at Oppenheimer together, watched JDS Uniphase, watched all these companies get created, lived through that cycle, and you see what happens. When growth goes, it goes. And that's why there's still so much room to the downside on many names that are out there.

I don't look at where companies, how much they're down. I look at bottom up of what they're actually worth. And that's what these stocks do. When they trade down like this, they make you take a closer look. And they can turn into value, but a lot of them don't. Even if you have a not so great outlook for 23, people still have to invest somewhere. And I could envision value having legs into next year. I mean, anything can happen. But I just it's hard for me to see a shift this pronounced, just fizzle out because the Fed pivots. This is a good example.

We were on the podcast a couple months ago when Meta, Facebook, whatever it's called, broke, right? And all of a sudden it kind of found it. It moved. It took several years to move from a growth stock to a value stock. And look where that stock trades on a multiple of earnings. Nine. It's not that expensive.

So my point is that it can make the transition. That's a tough burn through the atmosphere moment. But people won't buy Meta because it's a value stock. They'll buy it because they think it can go back to hyper growth. I mean, so I'm actually, so Michael, you started this part of the conversation about the outperformance of value of late. That's the story of the rally since mid-October, right? You've seen this rotation. Look at the S&P. Can you guys remember the last time the S&P outperformed the NASDAQ in a bull run? So you've seen the move into energy. Energy stocks have showed really good relative strength, despite the fact that crude has round-tripped its entire one-year move. And I think that's become a really crowded trade. The way I like to think about it is this. If that

energy is less than 5% of S&P weight, that means that it's been a disproportionate amount of its earnings growth this year. And we're going to have supposedly up, like what, low single digits earnings this year. If it falls off next year, and it's likely to do that where the commodity is, especially if we see, you know, maybe like easing geopolitical tensions,

then you don't want to be in energy stocks next year because it's really crowded and it's not going to be a place, in my opinion, these guys feel a little differently, to make money. And then the question is, what leads us out of this bear market, right? I am of the belief it's not going to be a sham company like Tesla, but Apple, Amazon, Microsoft, Google. Yes, they will.

And I think they will be the leaders. And people will tell you, if you look at history, the prior leaders of the prior cycle have never left. We've never had companies this dominant. You think of the monopolies they have, the moats, the balance sheets, the management. I was talking with Josh about this. Apple Pay went from nothing to, the annual run rate is estimated to be $4 billion.

What's it going to be in two or three years? $10, $15 billion? One of the things that I think is dangerous for investors, and I said earlier, we were talking about last year, earlier this year, like when growth stocks started coming down, Shopify, Spotify is an opportunity. I got my time mixed up. This was 21 we were having this conversation.

So I think one of the dangerous things is when people are anchoring to the highs. Oh my God, this stock is down 80% from the highs. It must be a good buy. The numbers that we're anchoring be a good buy. The numbers that we're anchoring to were fake numbers. The numbers in 2021 were ludicrous. Steroids. Ludicrous. Steroid era. So to Danny's point about doing bottoms up, you have to think like, what is this company going to sustainably earn? Not how much is the stock down? So stagflation became the big story of the month. Just to finish out May, we have a chart here.

story of the month. Just to finish out May, we have a chart here. Stagflation expectations. I think this is a Civita chart from Merrill. Hit the highest level since August of 2008. The question that was asked of global portfolio managers, which of the following do you think best describes the global economy over the next 12 months? Below trend growth and above-trend inflation seem to have really hit a high level at that point. And so far, that's been the right call, right? What do we have? Well, I mean, I'll tell you, summer of 21, Danny Moses was one of the few people who were saying, we are about to enter a stagflationary environment. I mean, I can say that with 100% certainty, and he's right. And that's one environment that the Fed, with all their tools, has no tools to combat, Josh. I think, though, that that is one environment that really can't last for long, because it carries

within itself the seeds of its own destruction. If you have below-trend growth, at a certain point, demand will fall, which will ease prices, which is how you get out of it. I don't think the Fed has a tool. I think enough time passes, and you can't have stagflation for the length of time that you could have, for example, an economic recovery. It's just fundamentally impossible. We're already seeing in the data the consumer is rolling over hard.

And the longer the curve keeps falling. Yeah, so we know that that can't persist for much longer. I agree. I would say we're in the sixth or seventh inning of that. And they just gave you the Fed dot plot, just told you they lowered GDP, raised unemployment, and set higher rates. That is stagflation in the dictionary. But I think they're overshooting here for sure. Let's go to June.

The bear market for the S&P 500 became official. In June, Duncan posted this. Oh, you got it? Is there a picture of me running around naked? Yes. You were celebrating. No, this is where shit got real. I think it's safe to say.

What was happening in June with the news when the two-year was going crazy? I don't remember this. Oh, put up this two-year yield chart. Well, I mean, bond volatility, Josh. We were talking about bond volatility all through 2021. And the bullshit line about stable prices. I mean, you think about US, think about government. This should be the most liquid asset in the history of mankind. And they were trading like $100 million biotech stocks. Right. They were trading like penny. The two-year was trading like a penny stock.

Which is ridiculous, if you think about it. So forget about the whole stable price thing. And we talked and we said it a number of times. At a certain point, bond volatility would make its way into the equity world. And Michael, that's what happened. So the two-year went from 2.8 to 3.3 in two days. Yeah, but no one believed the Fed was going to go 75 bps. That's when they did it? All right.

And you know what happened in June? This is the biggest one-day rise since June of 2009. Right. And then the market ripped for two months. I mean, like, it ripped. It was 18%, the S&P 500, and that was...

You could have made the argument that June was the bottom for stocks in July when we were going up every day. Something happened over the summer that had never happened before. They were saying there was never been a bear market rally that retraced 50% of the decline

and then made new lows. It happened. Two negative quarters of GDP, right? And then people were like, okay, well, that was the worst. That was going to be it. And I, for one, did not believe the Fed was going to go. I had a bet with Dan at the end of the year that I lost a lot of money. Something else happened quickly, and we got to go to the next month, I'm sure, but something

else happened in June. The VIX went for the first time to about 34 and a half. You hadn't seen that in quite some time. And there were two days in a row where we saw ridiculous interday swings. I mean, market up 600, down 400. And we talked about it. We said, this has the telltale signs of a short-term capitulation. That's what happened.

By the way, the same thing happened, and I'm jumping now, in October. And we'll get to that. That's the most. By the way, the same thing happened and I'm jumping now in October and we'll get to that. That's the most memorable day of the year for me, that October down thousand and we closed positive day. Yeah, that was what we're going to get there. Let's do July. So July 1st, it became official. The first half of 2022 was the worst first half of a year for treasury bonds since 1788. And Guy will tell you. It was a crazy year in 88. I mean, really, on the heels of 87? Look at this shit.

I often tell clients, you are living through history, and every year things that have never happened before will happen. And this is one of those things, because when you're a financial advisor, a lot of what you're doing is trying to offset stock market volatility with relative stability of bonds. And it was

impossible to do this year. The worst six month start to a year for the NASDAQ ever. Put this up. Like even worse than the dot-com bust. Can you guys see the red line at the bottom? That is... We just did that. That was fun. That was not a lot of fun.

Equity allocation levels. This is back to Savita. Shout out to Savita. These are historic lows for global portfolio managers, which is why you get that capitulation. So this is July of 22. This is the net percentage of portfolio managers taking higher than normal risk levels. And it's effectively minus 70. It's the lowest since

October 08. And then this is equity allocation versus cash, also the lowest. So we're comping things to the Lehman summer of 08 to give people some perspective on how negative sentiment was. So in hindsight, looking at that, the rally in July makes perfect sense. Absolutely. Even if it wasn't destined to last. Can I just – one other thing that happened in July and early August, Q2 earnings, which started in earnest, let's say in the third week of July,

they weren't as bad as people expected. The stocks crashed. Yeah, and this is a really point. I think we're going to have to spend some time on S&P earnings expectations and where they finished this year and what they are for next year. Because I think there were no big alarm bells going off

by some of the major names. And they were kind of, it was, you know, eking out little by little some of the bad news, right? And so- Those fire trucks are coming for Twitter. Dan, Q2 was the quarter where Roku's down 70% going at their earnings and it falls 25% after hours. All the growth stocks did that.

Yeah, the growth stocks did. But if you were waiting for some of the mega cap names to confirm what had already gone on in unprofitable growth stocks, you didn't get it in Q2. Yeah, they were like kind of okay. Recession became the consensus view in July, and I still think that'll turn out

to have been the right call. Wait, show of hands. Recession next year? Next. How about recession now? Now Show of hands. Recession next year? How about recession now? Now, next year? Don't be shy. Hold on. No recession next year. Let me see that.

Why? Give me the one sentence version. I follow Mike Norman. Okay. He says no. He says no. Okay. I'm sold. You got something to say?

Okay. Employment holds up. Employment holds up. Well, can we get a recession without unemployment going to 4% or 5%? No. Then what makes it a recession? It's not two quarters of GDP. So can you have negative GDP growth? Can you have negative earnings with employment still holding in there?

How? Can it? We're seeing it. This is it now? But earnings – I think you're living well. The data hasn't whirled over yet. No, the earnings, you're right.

The earnings haven't yet. But that's a matter of time. I thought for a long – and quickly, we'll talk about this, but the Fed was never going to target the S&P. I think the S&P put is probably 2,800 for the Fed. That's when the alarm bells go off. I thought it was going to be the credit markets, but what they're targeting is unemployment. And they absolutely want unemployment to get to 5%. They're not close.

But the mechanism they use to get there is the stock market and the housing market. It's exactly right uh city group u.s uh equity research put this out this is the downgrades of stocks you could see wall street reacting in the month of july equity analysts upgrades versus downgrades goes sharply negative we have that up and so all right so charlie munger had this great quote in 21 i think it's equally applicable this year which is uh which is if you're not confused you have no idea what's going on which is an amazing right it's an amazing quote because while i'm showing you these upgrades downgrades and the recession becoming the consensus call. Also in July, we just regained every single lost COVID job at the same time. So how do you take these two disparate pieces

of information and process them and come up with anything resulting in clarity? I think stimulus is the missing piece of the puzzle. Like, why isn't the data turning? This is the COVID job. Look at this. This happens as everyone's downgrading the environment. It's very tough to understand. And then we have retailers coming out and saying that things are dire. The inflation is killing the customers.

And then you have other companies like Visa and others saying that, what are you talking about? There was a component of people spending money on services, right? Not goods. It was a total transition. That was kind of the after COVID boom, people going out and experiencing people that hadn't traveled in a while. So it's been a very confusing time as far as trying to pinpoint. But let me just say to quickly jump ahead, we're going to have a big recession in 2023. And the reason we have is going to be pretty simple. We're just now getting the impact of all these rate hikes. These rate hikes are just seeping in right now. And they

lag. The consumer savings rates are at an all-time low and credit's at an all-time high in terms of what's been taken out. I just don't see how- So Danny, let me ask you a question. This may be wishful thinking, but how much of that risk has the market priced in? Probably not even close to enough. Not even close. Not even close. I mean- Well, in October, at the lows, S&P down 25%, it was pricing in probably, like base case, a mild recession. You know what I'm saying? Up 17.5% off those lows, down 16% or 17% of the year. It's not –

I would have felt better if this year ended down 23%. But if you end down – Well, how many days we got left? Yeah. if this year ended down 23%. But if you end down... Well, how many days we got left? August, largest bear market rally of the year. This was another one that was so tough to...

Oh, this was the chart. Look at this. You had never had a rally like this. I went from naked a month earlier to lying down on the ground, but yeah, that was a good one. This is a bear market rally for the ages, and people were looking at that,

and they were saying 53% off the lows, and you're still saying it's a bear market rally for the ages. And people were looking at that and they were saying 53% off the lows. And you're still saying it's a bear market rally. It was very hard to say yes, but that's actually what turned out to be. This is the moment the S&P 500 spent 100 consecutive days below the 200 day moving average, which does not happen very often. Do this second one. Yeah, do this one. So as you can see, that experience of this year, the amount of time below the 200 day is fairly rare. And usually when you get to this level, it gets much worse. Let's keep it moving. Okay. Should we fast forward to December? We're going to do something on vibe session, but we'll skip that.

Pardon me? The vibe session. That's our friend, Kyla Scanlon published this in the New York Times something on vibe session, but we'll skip that. Pardon me? The vibe session. That's our friend Kyla Scanlon published this in the New York Times. The vibe session. It's not a real recession, but everybody thinks it's a recession, so it's more like a vibe session. I learned. No, no good. The gist was why does everyone feel so shitty when the data is pretty okay?

No, I thought it was a good observation. The data was still pretty okay. Everyone has their job. Why is the R word in every conversation? I thought that was pretty reasonable. Five. Bed Bath & Beyond up 300% in August. And then Ryan Cohen pulled off the rug pull of a century.

How did this go down? I don't remember the details. But this chart looks like the VIX explosion. There's a lot of stocks that debt was trading at $0.30 to $0.40, but the equity was still trading at ridiculous values, and that's all that was. It was just inability to refinance. But then he sold it.

He sold it instead of sold it. He created a short squeeze. Do you remember? He bought all of these out-of-the-money calls, way out-of-the-money calls. Oh, that's right. And then they kind of put it out there, whether he leaked it or whether there's a filing.

But actually, he filed, and then somebody saw it a few days later. But this is the thing. And the fact that you guys are all here, we love it. Don't be a f***ing moron in the market. Don't follow these people. I mean, like, seriously. If you're still buying meme stocks

in December of 2022, you know what I'm saying? Then you deserve to, you should be neutered financially. What was that? That fiscal flows guy? In December of 2022. You know what I'm saying? Like, then you deserved it. You should be neutered financially. Ryan Cohen, through his RC Ventures, filed a Form 144 just minutes before the close, of course, telegraphing his intentions to sell 9.4 million shares starting on August 16th.

This is equal to 9.8% of Bed Bath & Beyond shares outstanding and is the full amount of stock owned by Mr. Cohen. He rugged them. That was bad. He rugged them hard. By the way, the next week, we heard the creditors, they couldn't get funding. There should have been insider trading there, and I'll say that.

But no one ever did anything about it, so he was able to keep going. Rug pull is a crypto term, but we've adopted it in the stock market. I think it's here to stay. I kind of like it. I don't like the action itself, but- Friday night dirties also. It's a pretty great, like, it's a pretty great evocative term for what that is.

Sounds like Danny thinks this will be a rug pull in 23. Yeah. All right, September. This is when England went berserk. So this is Liz Truss, the incoming prime minister of Britain. She wants to do like a Reaganomics thing. She introduces – Was that tax cuts?

She wanted to do tax cuts into inflation and it didn't go well. The market basically kicked her out of office. The BOE wasn't happy. So she wanted to do this thing with – and the currency and the bond markets kicked her out in a month. Six weeks. Six weeks. Six weeks.

And I think that's the quickest prime ministership in the history of England. And that's including they used to cut people's heads off. That was pretty quick. Neil Kashkari at the Minneapolis Fed signaled that weak stock prices are among the things essential. Yeah, he's an asshole.

I didn't like this. I want you to go on this. He said this was, I think he tweeted this. I want you to go on this. He said this was, you know, I think he fucking tweeted this. He said, I was actually happy to see how Chair Powell's Jackson Hole speech was received. Why are you doing this? This is a guy, by the way, I mean, you go back a year, no inflation. He is so colossally full of shit. And then he subsequently turned.

It's amazing. And there are no repercussions for these mostly men, by the way. And the fact that he's still involved in some capacity is a f***ing joke. Should the Fed be openly talking about whether or not they like that the stock market went up or down? No, of course not. It shouldn't be in their purview. I know that it is. I mean, the fact, listen, I guarantee that they watch clearly, but it shouldn't be. And there shouldn't be even a consideration. Alan Greenspan

used to testify before Congress for six hours. And then when he was done, nobody had any idea what he said. And actually it's an actual quote. Somebody said, you did a good job. Everyone got what you said. He said, then I, then I made a mistake. Uh, I like I'm, I'm old school like you on this stuff. I preferred it when they shut up they did Humphrey Hawkins testimony twice a year and there was a time before us even when you didn't even know if they did a rate hike

or not, like you found out later there was no announce it wasn't a Super Bowl every month the fact that, I will tell you as we mentioned, we've been doing the show a long time you couldn't name one Fed official. Now they parade these, again, mostly men out, every

freaking day. You can rattle off six or seven names. They've become celebrities they shouldn't be. And again, I'll say this here, and then I'm not going to talk again. Amongst the many villains of the 21st century, and there are a lot, central bankers are going to be at the top of the list.

Brutal. True. Do it. Absolutely true. Everybody. Also in September, Future Proof. Who's there? Anybody go? Anybody there? A couple? Okay. A lot of people went. I was there.

Dan and Danny were there. Guy had a dentist appointment. When did this happen, this Future Proof? This was there. Dan and Danny were there. Guy had a dentist appointment. When did this happen, this Future Proof? This was September. No, it was in Sicily. Hey, if you watch this show, what's it called? The White Lotus.

Holy shit. Season two is in Sicily. That's where we stayed. That place is f***ing fantastic. The San Domenico Palace. I tell you, you should absolutely go. Shout out to you guys at Future Proof. That was a great event. It was on the beach. Was it

Huntington or Newport Beach? That is... That is Big Boy from OutKast. Yeah, it was great. Let's get to December. I know we have two more months, but people are getting... Are you guys getting bored? What is the deal? Josh is buying drinks afterwards.

We're rounding the turn what do you want record put buying up activity is this September or October what do you guys think is going on here in terms of market structure and derivatives and the spike real quick

I promise now I will shut up when the VIX historically spikes it's because something unforeseen has come. Like, nobody saw something coming. The VIX goes from 22 to 35 in a day. Most of what we've seen over the last year, to a certain extent, has been predictable. So I think people have positioned themselves for that. And that's why you see a VIX that's still trading in the low 20s. It does not suggest, by the way, that the market's on stable footing whatsoever. I think it just suggests that people are positioning themselves for what we're seeing now, which is going to slow down the process, in my opinion.

So all the big down days were either inflation prints or Fed comments. It wasn't like, holy shit, where'd that come from? Right. Well, think about it. You had event risk every week when a different economic data point came out. It was just constant event risk. But you knew it was coming though right you knew that you knew it was coming you knew it was going to be bad and then actually it was like you couldn't fade you couldn't fade any of this stuff it the bad news came true and we got a hit for it can i go back in time one second and then move back forward just real quick i think the boe thing

the bank of england was a much bigger deal with trust being forced out. And here's why. That's a first world economy, right? You got a first glimpse of what can happen when you don't have the ability to print money anymore and just chasing. That's what that was. And that is not done. But I'm saying that could happen here. We could see, you know, it's happened in Japan. You've seen it. So the ability of central banks to print our way out of this mess, that to me was the first red flag. The other big thing that happened in September, the U. the US dollar peaked, at least for now. This had been a major negative for stocks all year. And it was up at its peak 19% year to date, which is historically a pretty big rally for the dollar. And then we kind of have found out since that

it was like, why is the dollar so strong? Why is it so strong? Turned out it was just an interest rate differential because all of the central banks now are raising their rates. They're catching up. And as a result, the dollar is fading and their currencies are rising. There's nothing special about us. We just happened to have started first and gotten more aggressive than anyone else early. So that mystery's been solved.

Let's do October. So Liz Trust resigns. I don't care who replaced her. Chinese stocks bottomed. Put this up. What is this? But not really, though, right? Are they even lower?

I'm taking that off. Take it off. The S&P did hit its low for the year, though, in October. And at its lowest point, we were down 25%. So that was the day we got, I think, 8% inflation print. Yes. Dow opened down 1,000, rallied hard off the lows, and that was the bottom. 13th, 14th, and I think it was that Friday, the 14th, that Mike Wilson and Morgan Stanley, who's been bearish and correct, went tactically bullish as well and talked about a potential for a 15% rally, which is effectively exactly what happened over the ensuing two months.

So, yeah, again, and again, if you go back and look at the VIX, the VIX those two days, Michael, were trading around 34, and you saw those crazy intraday swings. So I'm not saying anything is predictable, but if you go back and look at it, it actually made a lot of sense. I've been using VIX 20 as like, I don't care what your outlook is, just buy them. And then VIX, excuse me, VIX 30 and VIX 20 is like, why are you so calm? And if you did that this year, it worked beautifully. You don't have to be an expert on anything those are just like that that's that range that uh i think you could trade against so

to danny's point about how many days do we have left um in december before we we see how this thing shakes out that october low holds no no i mean not it's not gonna hold in q1 i mean because again guy what about you no way i think if you do the math, the fair value for the S&P is somewhere around 3,200. So I do think you see lower first. And I think, by the way, that's extraordinarily healthy. You don't think low holds? Do you think there'll be some support there the next time we get there, if we get there? I mean, it's going to feel horrendous. It'll feel worse than it did this year. The second time? When it drops, yeah, because you're going to go through those lows from 2022. But there'll be a lot of opportunities.

And I'm just, you know, you've got to start dollar-cost averaging. You've got to be liquid now if you want to do something about that when the time comes. What do you think? Do those lows hold? No. Nobody wants to go against? Show of hands. Do the October 22 lows hold in 23?

Not one hand? Attaboy. Got two hands. I have to change my... You still want to be there? Okay. All right. November, Masayoshi Son,

who is my favorite investor of all time from an entertainment standpoint. I don't... Right? Nobody beats him. Unbelievable. Best quotes. Well, wait.

He invested billions of dollars in community-adjusted EBITDA. He loves it. Yeah. I mean, that was... Because he had a I mean, that was his WeWork thesis. This guy is maybe the greatest gambler of all time. I love it. He got Alibaba, and that was pretty much it.

Masayoshi Son steps away from SoftBank. That's November. He'll be back, that son of a bitch. He can't get up. Okay. Yields peaked. Maybe. Let's throw this up. Here's the one year, ten year, two year,

three month. You get the idea. They all started to roll at the same time. Yeah, but look at the one, look at the short part. So we're looking at the one year is purple, the two year is blue. So inverted. And the three month is green. They're holding

high. The only thing falling is the 10 year. And if we had the 20 and 30, it would be the same thing. Long-term rates are falling and short-term is not. I think the biggest question here is what would be the conditions in which yields started to go up again? I mean, that's kind of the most important thing. And that brings us back to possibly this stagflationary environment. Right now, And that brings us back to possibly this stagflationary environment. You know, right now, the 10 years come off 4.3% to 3.5%. And again, we've been talking about this. I think it is reflective of future growth, which speaks to the idea of a recession next year. But, you know, we've been emphatic.

Like, they peaked for, like, in my opinion, because we have a Fed balance sheet that's $8.5 trillion, right? And so they're not going to be able to meaningfully work off too much more. So they can't have rates too much higher. And the fact that their balance sheet is so high is a drag on growth. It's like this like really bad cycle. Do you like bonds here? Two-year treasury, what is it? 4-4 right now? No, it's down to 4-1-5. They're telling you the Fed. They're buying up the bonds. You must like short-term bonds here then, given your outlook. I own a lot of bonds. Buy them all day, right?

Yeah, absolutely. But the bond markets, the fixed income people are always smarter than the equity people to begin with. So the bond market is giving you a prelude to what Dan just said, what's going to happen. If inflation falls as fast as it is projected to fall, who the hell knows, 4% is going to look great. Listen, if the Fed, if you really believe they're going to go to 5%, two years, so that's, you know, they obviously are at the very short end,

but they're telling you two years from now, right, what is going to look, Fed will have cut. Have to. They'll already be cutting. But the 10-year yield is telling you things are going to drastically slow. And the scary part would be, like I just mentioned, the BOE, if you had that situation here, right, where all of a sudden, $31

trillion in debt matter, but that's a different podcast. You think the Fed cuts in 23? I do. You would double down, Dan? Show of hands, does the Fed cut in 23? I don't feel good about a Fed cut. I'm there, too. Hold on. Everyone has recession. Hold on. Everyone has recession in here, and S&P making new lows, but you don't have the Fed cutting

rates in 23? That doesn't work. I think they'll have no choice. Yeah. I do, too. What do you think is the trigger? 5% unemployment? Four and a half?

I just think inflation is going to slow dramatically in 2023. The Dow minus the NASDAQ 100. We basically did this. It's value versus growth. But we had a month. What month was this? Was this November? The Dow had the best month relative to the NASDAQ going back to...

Where's the UnitedHealthcare guy in here? That was why. It's the stock guy. Yeah, because of UnitedHealthcare. Elon Musk ignites the Twitter shit show. We're going to skip that, but that's currently happening. Can we do one thing just to spice this up? Because you guys want to have some fun, get Danny going on Tesla and Elon.

Here's the thing. We basically talked about Elon Musk every week. We need room for Sam Bankman free, though. Okay, just really quick. Tell the audience, Danny, why you think Elon is important from a behavioral finance standpoint. Like, if we're trying to figure out how this whole cycle ends, right? Like, meaning, you know, this bubble. We've seen lots of asset bubbles, and they're all coming undone. Why is this one really important?

Well, because to me, if you guys heard me talk about it, it's kind of everything, I think, that's been wrong about this cycle. of asset bubbles and they're all coming undone why is this one really important well because it to me if you guys heard me talk about it it's kind of everything i think that's been wrong about this cycle right um disregard for the laws and the rules both both in in the securities business and also in the product business that's one following this quote genius right who who just puts on a really a show. And he's a great showman. I mean, Ringling Brothers, you know, he's really tremendous. But people just blindly following him around.

And, you know, again, I'm not going to say that there's accounting irregularities necessarily, whatever it might be, but he's gotten away with a lot. I mean, there's three DOJ investigations. We know that. There's NHTSA investigation. There's the FTC. Show me a company that is still trading like this when it's still happening. So again, people are going to own this thing. They're going to follow this guy. The index now owns it. Yeah. Well, look at the largest holders. Retirement

America is buying Tesla every time. You know where it closed today? So $150. And on November 16, 2020, so like two years ago, OK, two years ago, it closed. It was trading at 140, and the S&P 500, it was added to that. Its stock doubled in a month and a half. It went from 140 to 280. So it's round-tripped the entire thing. And I just think psychologically that's important also. Well, put this in perspective. It's split five for one and three for one.

So that's 15 for one. We all agree on that? Yeah. Wait, is that how that works? Well, so funding secured was 420, right? Okay. That was 2018. Yes.

420 equals today would be $28 on apples to apples basis. Holy shit. It's up that much from 420? It's above 2,000 on a split adjusted basis. So when you, again, to Batnik's point before. It went up 800% in 2021. That hurt. That's how that happened. It was up 10x. Yeah,nik's point before. It went up 800% in 2021. That hurt. That's how that happened.

It was up 10x. Yeah, it's been crazy. So my point is that people think it's a buy because it's down a lot. Look at this thing. He's sold more stock in the last 13 months than Tesla has ever made. He sold $40 billion worth of stock, right? I mean, it's really, when people look back on this guy, SBF should hope this comes soon so they can take the mess off him

because it's going to be a spectacular story. You think this can only go in one direction at this point? Like, it's gone past the point of no return? I kind of am starting to think that way. Listen, you know, whatever the trigger ended up being because it was Twitter and people started to realize the kind of person that he is, the way he treats his employees, he didn't build the culture at Twitter. He built the culture at SpaceX. He built the culture at Tesla, even though he didn't start Tesla. That's a whole other story. You're seeing firsthand how he operates. So all those things that you've read about that you want to ignore, willfully ignore, all the racial discrimination suits, the sexual discrimination suits. I mean, kids from how many, I mean, you

know, having children with employees. I mean, all these things he's gotten away with, Mr. ESG, and guess what? He was leaning on the Democrats when he was getting, you got me going, Dan. He was leaning on the Democrats when he got all the subsidies. If he didn't have the subsidies, he wouldn't have made money. So, again, all this stuff, SolarCity. Did you guys think the government wants to give contracts to a guy who owns one of the largest social platforms in the world and pushes QAnon theories on his thing? I mean, think about that. No, let me just say this. I want to keep this to business.

So, let's be clear. I believe there is more than a 1% possibility that Tesla buys Twitter. Danny, you're crazy. I've been saying that for a year. And why would he do it? I'm with you. And here's why he's going to do it. Because he's marginally called.

Because that's how they resolved SolarCity. That's exactly right, downtown. That's exactly right. It hasn't happened yet. By the way, the SolarCity, just so we're clear, Cuomo gave a contract in upstate New York, $750 million, $800 million to hire all those people shut that thing down and went away i mean i just don't get how this guy continues to get away i think he's you know can he sell tesla is the board the board will let him sell tesla the board the board's

the board his brother practice to the board anyway sorry all right the business you got me i'm sweating the business but they're still selling millions of cars, which is- That's the other thing. The competition coming. I've never been in Tesla. I missed the whole run up. I'm not defending it, but nobody that was bearish on Tesla five years ago ever thought they would be able to produce cars at the rate they are.

If he had just kept- That was one of the biggest bear cases, right? Model S. Let's say he was a Ferrari of electric vehicles. That's all he wanted to do. And if he had done that, granted,

wouldn't have gotten over a trillion dollars, I could see this thing being okay, but he can't help himself, so... Okay. He's owned by the Chinese at this point. I mean, look,

all the money that he has is in China. Wait, you're saying free speech guy is owned by the Chinese? Yeah, yeah. So that's the biggest... That's the dumbest thing

about all of this. By the way, we want to thank our sponsor for this evening, Tesla Motors. I'll be off Twitter and the dumbest thing about it. By the way, we want to thank our sponsor for this evening, Tesla Motors. I'll be off Twitter. And the People's Republic of China. But this is my last point here.

So he's done this because he literally tweeted this. He loves humanity and he believes something that Josh doesn't believe, that the world deserves a digital town square. And he believes in free speech. Although that he's just, how many, Batnick? How many journalists has he just cut off? Come on, come on. So here's my last point on this,

is that China is so important from production, from demand, and from rare earth materials, and cheap labor for his future growth. And yet he just cozies up to the Communist Party there, but yet he believes in free speech everywhere else. And it doesn't make any sense because all of our digital companies or social have no access to that market over there, right?

So this is the thing that I think kind of comes unwound in the next year or so. And I just don't think that, you know, the hypocrisy makes no sense. This whole thing started with a tweet, like, what if I buy Twitter? And someone was like, I dare you to do it. Like, that's really what happened.

And 5420. All right, we're going to skip And someone was like, I dare you to do it. That's really what happened. And 5420. We're going to skip ahead to the last thing we're going to do tonight. Sadly, we will not have the time to discuss the midterm elections, but who cares? December 12th, police arrest Bankman Freed in the Bahamas with the U.S. expected to file for his extradition.

I am told, thankfully, vegan meals are being delivered to the Bahamian prison, which is great. U.S. authorities declined the comment. All right, so the charges are wire fraud, securities fraud, conspiracy of those two things, money laundering.

It's a very long list of charges. It's civil. It's criminal. And it has, I think, become, arguably, this will be one of the biggest stories call me crazy but i think he's telling the truth who sam he just he has kind eyes is what i've always said somebody somebody just won twitter this is like a few weeks ago and said you know how can you trust an obese vegan like that that was that was, I was like, you know. I called them Fat Fred Savage and these guys got mad at me.

What's wrong with that? Is it like, this is as big as Madoff. There's a million creditors in this case. There are more victims of this than Madoff by far. The dollar amount is roughly equivalent. We think it's like 50 billion they were gambling or that might be missing. Friend of ours referred to him as a financial terrorist.

He blew himself up and anyone in proximity, anyone that's ever taken a lunch with him or taken an investment from him or had a meeting on record with him or put money on any of his platform, like everyone's f***ed. Professional athletes. Like, it's really, it looks like terrorism.

Worst take ever, Bill Ackman, a Persian square, came on Twitter to defend him. You saw that, right, over the last few weeks? Yeah, that was a joke that I just made. It's like, how is he still having questions? Did he delete that tweet? It's gone? Good call.

O'Leary doubled down. He said, you know what, me too. What'd you think? Did you guys watch O'Leary on Squawk this morning? Horrible? It's gone? Good call. O'Leary doubled down. He said, you know what? Me too. What did you think? Did you guys watch O'Leary on Squawk this morning? Horrible. It's embarrassing. That was crazy, though. You look like you want to say something.

I just want to say there's one really interesting aspect of what's going on here. So it wasn't just all these fancy individuals and organizations, whether they be VCs or strategic investors who did no due diligence on this guy, but it was also the people that were willing to take his money too, right? And so I think what you're talking about with this guy, Mr. Wonderful from, you know, a reality show, yeah, Shark Tank, you know, he took $15 million to use his social presence and his media presence and his TV celebrity to push this thing and push the guy. If you go back and you look at a lot of those interviews, he's literally talking about this genius.

And so it's not just the people who invested, like shame on them for doing no diligence. It's the people that were using their supposed celebrity or their influence and they took the money just to be a shill for the guy. If you're Tom Brady, your agent probably brings you a thousand things a year and you say no to like 990 of them and you do 10 and this was just like one of the 10 that got through and like what do you want tom brady to do a forensic audit of this guy's books the guy

didn't even keep books so it's like i feel a little bit bad for like who else is steph curry uh shack like what do you want i don't he didn He didn't do it. Wait, wait, guy. Thank God you're here. You've helped me. I don't know anything that I'm saying. I don't feel bad for those guys. I'm just putting people in this shit. John McEnroe, maybe?

Larry D. Those guys, they make so much money, and you just said, like, 2% of the endorsement stuff gets through that's not Nike or this and that or whatever. What are they doing? Hold on. All the people yelling at Kevin...

By the way, we're not friends. All people yelling at kevin o'leary though like if ftx was like we'll give you 15 million dollars to like hang out with sam in the bahamas twice a year like a lot of people would have taken the money yes or no yeah you know what we have a company together okay and when we're gonna do a deal with somebody i'm not lying to we do a background check on them okay do a background check on them Okay, do a background check on him. He'll probably pass. No, no one did any due diligence on what what do you think? I know what is in his background? Didn't go to Stanford to MIT listen you talk Street, you know how this business is. Oh that guy sucks. He never made any money. Oh, she looked like that

Oh, just talk to people. Yeah, like talk to people in People talk like that. Just talk to people. Yeah. Like, talk to people. In a year like 2021, he was a high-premier trade. He was a quant trader at Jane Street.

So he was a genius for picking people off for, you know. All right. We've been going for 90 minutes. Let's end with a cheery slide. So this from Bespoke. We've had 16 down 1% days this year.

That is the most. What's the cheery part of this? There's no cheery part. The cheery part is You just rugged us. I just rugged you. So most people in the audience and on the stage think that 2023

is more of the same? Yeah. What about, do you have down 2% days? Sure, it looks the same. Okay. It's equally notable. It's always quicker than you think. It's going to go quicker than you think. Hey, guys, we want to do a couple of quick thank yous. Number one,

my staff and the staff of On The Tape Pod doing a lot of stuff in the background. They're not talking into microphones. They're not on camera, but Nicole, John, Duncan, give you guys a shout out. Yeah, thanks to Jacob and Steven and Amanda was definitely involved in this.

And we also want to thank... Oh, sorry. Our research assistant could not be here. Sean, he's somewhere out in the mountains in America, but has done a lot of work on the charts and the doc for tonight. No, it was great. And so thank you guys.

And also, Josh, thank you for bringing the idea of No Kid Hungry, you know, on behalf of us. We have a lot of great sponsors and we would not be able to do what we do. I guess we'd turn on mics and squawk about the markets, but CME Group, iConnections, FaxSet, SoFi. NASDAQ. Isabella, thank you.

Those are sponsors in particular. We're going to give $10,000 by Risk Reversal Media to No Kid Hungry on their behalf. So thank you guys. We appreciate it. And we appreciate all the money that you guys gave to us. Yeah, guys So thank you guys. We appreciate it. And we appreciate all the money that you guys gave to us. Yeah, guys, thank you so much for being here.

Thank you for listening to our shows. We would have nothing to do and no one to talk to if it weren't for all of you. So we appreciate it so much. And here's to maybe not a great year in the markets next year, but another great year for financial content.

We will be with you. I promise. Every week, you guys will be with us. We'll be with you. Give yourselves a round of applause. Thank you. And now we will be adjourning to the perfect time to around the corner in Times Square, if you have a blue bracelet, you are drinking on Danny and Dan and I and Michael and me.