The Compound and Friends - We Just Might Pull This Off

Episode Date: January 13, 2023

On episode 76 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Callie Cox to discuss the latest CPI data, why Michael's feeling a little bullish, calling the Fed's bluff, chances of a soft landing, retail investor sentiment, and much more! This episode is sponsored by Composer. To learn more, visit https://bit.ly/compoundandfriends Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

So, Callie, this morning I was saying to Ben when Futures sold off, it's like, well, this is how the market works. Everybody, when the wage data came out last Friday, everybody got bullish, like Mito. And then we ran into the CPI report because it was going to be, and then we buy the boom and sell the news. Yeah, exactly. That's tale as old as time, right? But the news is not exactly getting sold, so we'll see. We'll see. We're hanging in there. There's just, Ben and I were talking about this this week. What's the next negative catalyst? It's got to be earnings.

Yeah. That's it. For me, I think it's earnings, but I actually think we're being too pessimistic about it. So it's all about less bad versus bad expectations. Let's cut all the nonsense. Sam Bankman-Fried has a sub stack. Yeah, I subscribed. What?

You did, right? It's only $29.99 a month. So he tweeted out a link to his sub stack, and he's doing content. He's in the content game. Yeah, so I read it for like five minutes. I was like, what am I doing? I read the whole thing.

I stopped it for five minutes. I couldn't take it. You're better than me. This is the most delusional person. It's delusion. Of all time. It's delusion. You can't get into somebody's brain,

but I think he's delusional. Yeah, he just spent two weeks in a Bahamian prison. Like, that would make anybody lose, anybody normal would lose their mind. I'm not dying on this hill, but I think he believes what he's saying. I think his head,

there's a lot of screws loose and he convinced himself that he's telling the truth. He's doing funny stuff like being like, all right, I'm estimating the value of this at 100 billion,

but just for argument's sake, let's say it's 50 billion. Right. So it's not, he's not like, he's using numbers, but he's making up numbers still. And then the main point he's trying to make is that nothing was stolen.

The whole thing is nuts. The Binance guy deliberately targeted me. Yes, yes. A lot of – You know what would be funny? If he keeps the sub stack going, but he just starts doing like posts about other shit. Like he drops a Fed post. What if he starts doing TikToks?

No, no, no. Just hear me out. I would not be shocked at all. Ed post. What if he starts doing TikToks? No, no, no. Just hear me out. I would not be shocked at all. Imagine he's like the first person ever to be on trial while simultaneously doing like

econ and market commentary on Substack. It would be pretty legendary shit. If he was just like a content dude. Well, let me ask you this. Once you go to jail, do you or if he goes to jail, does he, do you have internet access? Could he still do Substacks from jail? He's not going to go to jail for two years. I'm just asking.

This is going to go on longer than OJ Simpson. They have internet in jail. What's that? They have internet in jail. How do you know, Duncan? I feel like there's a story behind this. I don't think they let you publish a blog, though. I think you can send emails.

I don't think you can have a website. I don't think you can have a website. I don't think so. Because wouldn't the other guy, Shkreli, have been doing that if you could? Probably. Although he was— No, but he was pre-substack. He was pre-medium. He was kicked off of Twitter.

I don't think they let you post to social media from prison. I think you're very limited in how you could use the internet. So let's explain— You could find a wife. You could find a girlfriend. I was just talking to Cali about this. Let's could use the internet. So let's explain. You could find a wife. Like you could find a girlfriend. I was just talking to Callie about this. Let's explain to the audience. Why?

Because somebody asked Duncan, how come the cold open is not on YouTube? Well, the reason why the cold open is not on YouTube is because the boys are setting up right now. There is no cameras. This is the setup time. This is true. Right? John is literally messing with the mics as we speak. You're breaking the fourth time. This is true. Right? John is literally messing with the mics as we speak. You're breaking the fourth wall.

Broken. As somebody who's a fan of The Bachelor and Bachelorette, I love it when they break the fourth wall. Yeah, what's wrong with the wall? Yeah. Like if we did a

It's so real. If we did a confessional like after taping, you were like, when Josh started talking about Sam Bankman Freed, I was like, oh no,

is this a crypto podcast? That's the fourth wall. This needs to happen. That would break the fourth wall. The compounding friends after. Well, Howard Stern started this with the wrap-up show, and then Andy Cohen took that idea.

What's it called? The after hours with the housewives. Oh. I mean, that's a big show. Yeah, I'm not a housewives watcher. I'll be honest. I like the Bachelor and Bachelorette. More of a fed watcher.

I am a fed watcher. That's enough drama for me. Housewives post-show. Oh, did you? Did you have a decaf idea, Duncan? Watch What Happens Live? Yeah. Yes.

Yeah, right? Is that it? Is that it? Thank you, Nicole. I'm a fan. Did you talk to Robin about the thing? Yeah. Did, right? Is that it? Is that it? Thank you, Nicole. Did you talk to Robin about the thing? Yeah. Did she end?

So I literally had no time to read your email yesterday. Okay. I didn't think about it until this morning. She goes, so that email, I don't know. I need to know right now. Does she know? I don't know. She said, I don't know.

I said, we'll talk about it later. I mean, her first reaction was not bullish. All right. So then we got to do a different option. What do you have to know right now? Because this is, everything is waiting on, everything is waiting on the landing page. We need a photo for the landing page. All right.

Well, I'll tell you, I'll tell you later. That's right. Watch White House is live. Nicole, you're absolutely right. I think, I think we, I think we've done enough on Housewives. Well, it's also Below Deck and Southern Charm. So every one of their shows, there's another show to talk about the show you just watched. Literalized, yes.

And they bring in guests to talk about it. Yep, yep. So we're doing this. This is going to happen to us, right? Imagine Duncan. Imagine Duncan was our Andy Cohen. And he just like hosted a wrap-up show. I don't – no offense to Duncan.

I don't really think that anybody – I don't think that would be very popular. You can make it work. Thank you, Duncan. I don't know if there's enough. I love the spirit. I don't know if there's enough there. All right. So stocks are energy up 2% today, leading sector.

International stocks. Kyle, you on this? International stocks? I am, yeah. Blowing my mind. I mean, monster outperformance over the last couple of months. I mean, I think that's the perfect example of people getting too bearish and too pessimistic and then taking a step back and piling back in. I don't know what's happening.

Like, why are they going up so much? Obviously, a lot of it is the U.S. dollar. But the performance, I know it's just short term, but let's just look at three months, for example. It's like dramatic. So SPY. I think last quarter was the best performance for international stocks, ex-U.S., relative to the S&P since like 2009 or something. Something ridiculous. It's 25%.

It's 25% versus 11. So I looked at the ratio chart and it's above, it hasn't been 5% above its 200 moving average for over a decade. That's how persistent the downtrend has been. All it took was for the dollar to come down 10% after rallying for like two years straight. But the other thing is like even the local currency markets, I think the UK is close to an all-time high. DAX too.

So I don't know because everything that we see, I don't know anything about the European economy, but everything we see seems so bearish. Also, developed market equities were positively correlated with developed market bonds. Like they both rallied. You got back interest rates in international sovereigns, and then you got stock prices rising at the same time.

We had the opposite phenomenon last year. When we had big rallies in rates, our stocks fell. They didn't have that in Europe. And that's it. To me, that's interesting and probably not what a lot of people would have expected. Like you would have thought, oh, the yield is going to rip. Is that going to be good or bad for the German stock market? Because it was horrible for the United States market, and it wasn't.

Can't stop thinking about that boond. I know. That's all you think about. Well, it's also interesting, too. So, I mean, obviously, we saw the gilt panic back in September. And everything kind of fell out of correlation then. And then it feels like September turned October and then, you know, investors changed their minds. What was the guilt panic? The 30-year. With the British prime minister? Yeah. The British PM Liz Truss. We had Mark Rubinstein on to explain that to us. That seems

like a year ago. I know. When was that? September. Yeah. Oh my God. That just came in want. Yeah. It's almost like we ripped the band-Aid off a little bit. And we were like, okay, well, that sucked. Oh, and another thing. European banks. EUFN still going vertical. Mm-hmm. Let's see.

I'm sure Credit Suisse is not bouncing. Eh, Credit Suisse bounced a little bit. Deutsche Bank. Went from $7.50 to $13. Since the end of September. The moves are... Just indiscriminate buying.50 to $13.00 since the end of September. The moves are... Just indiscriminate buying. The moves are strong.

Hurt my mic! Hurt my mic! The moves are strong. All right. I think we're good to go. Let's do this. Want to click me up? All right.

Plots coming in? Zero percent chance. Zero percent chance. Episode what? It is. Look how I found my friends. Episode six. Welcome to The Compound and Friends.

All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by Composer. To learn more about Composer, visit composer.trade. You've probably heard us talk about this before. The way that I describe Composer is, if you ever did any backtesting, right,

and you wanted to bring it to life with a strategy, you could do that at Composer. You could build your own what they call symphonies. So you could build rules, rules-based. And in today's environment, where things are more muddy than ever, it is important to have rules. So you're not just hopping from one foot to the next like I do every podcast. So today I want to talk just

for a second about one of their symphonies because they have their own strategies. You can build your own if you want, but they've got something called crude reality, what they call the smarter oil playbook. So Duncan, did you know that if you wanted to buy like spot oil, like if you want to actually track the price of crude oil, you can't do it? I did not know. What you can do, you could buy ETFs, but there's all sorts of shenanigans that goes on with the roll yield and the future. So you're not actually getting exposure to the price. So here's how this symphony works. If oil, if crude oil is actually going up and I'm talking about an ETF, if it's actually going up, then you could have the entire portfolio in crude oil, the ETF that represents crude oil.

If it's not, you can hedge it. You can go into other things. So there are all sorts of symphonies for all sorts of investor risk tolerances. I suggest if you are interested in learning more about these different symphonies and how Composer can implement them for you, you go to composer.trade to learn more. Episode 76. Big show. New friend on the show today. You have never been here before.

I have never been here and I am nerding out right now. This is so cool. We are so excited to have you. We've been looking forward to this episode for a long time. You're here on the perfect day. CPI day. CPI day. Let's give everybody the official introduction.

We wrote this for you. I hope you like it. Shall I read it to you? Stare into Josh's eyes as he reads this. Well, no, I have to read it. Make it very awkward. I have to read off the screen. Callie, you are an investment analyst for eToro, a multi-asset social investment platform with 20 million plus users.

Give that a round of applause. Prior to eToro, Callie was a senior investment strategist at Ally and a senior research analyst at LPL Financial. Welcome to the show, Callie Cox. What's up? So good to be here. What? Wait, let's start from Ally. Is that the old GE Capital?

Or is that the old General Motors? GM, yeah. GM, that's right. Yeah, yeah, yeah. Okay, so what was it like to be the senior investment strategist at essentially the old credit corp that GM used to own? What was that gig like? Well, you know, I joined there in 2020. So I wasn't there in like the old GM to ally days.

So it was much, much further along than that. But let me tell you, like working with retail investors, that was the first job I had working at a brokerage that, you know, catered to mainly retail investors. Is that what that was? It was a broker-dealer? Yeah, it's a broker-dealer. It still is. Ally Invest. So, you're slinging stocks at people?

No, no, no, no, no. I'm doing what I do. It's essentially what I do at eToro is a content-focused job. I am a strategist. I run our models. You know, I look at portfolios and think about portfolio strategy. But I think of a way to communicate it to the retail investor, the individual investor who's saying like, OK, well, I'm seeing this on CNBC. What matters for me?

And that's basically what I did at Ally too. I helped build out there. We call it the point of view strategy, which is a content strategy around developing these market insights and then just thinking of really innovative, engaging ways to bring them to customers and infusing them throughout the business. 20 million users is really big. It's pretty big. We're pretty big in Europe. So how did eToro get to 20 million users? Tell us what we don't know about the eToro story.

So fun fact, eToro is 15 years old. They started in 2007. I had to do the math in my head really quick. 2007, Yoni and Ronan started it back in Tel Aviv. Yep. And they just started growing. And, you know, we really caught fire back in Europe, especially in the past few years. And I couldn't tell you how.

Why was it so popular in Europe? A lot of cream sauces in your portfolios or cigarettes? What do they like about? A lot of baked beans. I really think it was just our focus on that particular market and the fact that we offer just so many products. And that's Etorah's big thing. It's like, we're just going to give you every single product you want. We're not quite there in the U.S. yet. The U.S. is a little – I mean we're a little bit younger. So we're slowly building out our broker-dealer business over here. But in Europe, Yoni is super, super passionate about putting everything on the platform,

NFTs, crypto, CFTs, stocks, bonds, options, commodities, currencies, everything. Wait, what's a CFT? CFT? It's a Certificate of Financial Trauma. I mean, honestly, you're not too far off. What is it? It's Customer Alicia. I can't remember what it stands for. But it's essentially like-

I want the three. Can I have a million dollars worth? I'm bullish. I know. You don't have to Google. We don't want- It's not 60 minutes. You don't have to have the answer.

It's okay. It's kind of like an off-exchange way to speculator hedge. Oh, Michael loves off-exchange. It's not available in the U.S. Would you say it's over-the-counter? It's an OTC? All right. So eTor.

All right. So but now the European online brokerage market probably wasn't as saturated as the U.S. one. So that was probably a very smart thing to pursue growth there because here we have like a million broker-dealers. So what sets you guys apart from all of the other ways that people can trade here up to and including, let's say, Robinhood? Well, we are a social investing app. We were the original social investing app

because we've been around for 15 years. We just offer so much and we are very, very focused on, you know, tapping the retail investor and giving them exactly what they need, which I know is kind of like a selling line for most retail brokerages. Yeah. Um, but you actually do it, but we actually do it. Come on. Uh, but we are, I believe we're the only brokerage that offers stocks, crypto, and options right now. Really? All on one platform.

I might have to check on that. I bet it does, no? Whatever. Who cares? Who cares? You do it better. All right. Well, we're so happy to have you.

Thank you for coming. So let's start with CPI. I thought this was a nothing burger. The market, like initially, like the knee jerk was down and then ripped higher. There wasn't really anything in here that was different than anyone's expectations, but maybe you could tell me I'm wrong. Yeah. So I think, I think overall you're right. I looked, so I was on my Bloomberg, you know, watching it per usual. Not to brag. No, no, I have a Bloomberg terminal. Yeah. She's the best. All right, go ahead. yeah. So around 830, I was like looking on my Bloomberg terminal, you know, watching everything come

out and it was bang on for like the consensus type stuff. Which is rare, right? Like everything was in line? Pretty much. Pretty much. It was pretty, uh, well. We give people the numbers. Um, CPI was down 0.1% month over month in December.

Which was expected by the way. Expected. And in November it was up plus 01% month over month in December. Which was expected, by the way. Expected. And in November, it was up plus 0.1 month over month. Annual inflation, 6.5%. Slowest pace since October 2021. That number, which is the big number everyone focuses on, which we could talk about, is now down six straight months, which is great. The energy index. But wait, but wait, but wait.

If you annualize, like, the last three months, we're, like, there. We're, like, at is great. The energy index. But wait, but wait, but wait. If you annualize like the last three months, we're like there. We're like at their target. Yeah. And it's because goods inflation is falling like a stone right now. Yes. The energy component was down four and a half percent in December. So that helps. Goods fell 0.3%. The thing, the sticking point is that food costs are still high. And then obviously anything to do with rent, but we know that's like a six month out of date thing. I'll just throw this out. According to the CPI print, shelter was up 0.8% in December, but the apartment list national rent index,

which is like probably better, fell 0.8% in December month over month, which is the fourth straight decline. Rents declined in 90 out of 100 of the largest US cities. The sharpest decline in NYC, minus 3% in December alone. That's a big drop. So these things are going in the right direction. I guess it took the market like five minutes to process that. And then we were green on the screen the rest of the day. Yeah. But here's where I struggle. I feel like when I see economic data these days,

I almost have to look at it as an analyst and then dissociate a little bit and think about how Jay Powell is seeing it and how the Fed is seeing it. Because we've seen these trends. We've seen real-time data show that rents are rolling off. And a lot of real-time data is showing that inflation is slowing very, very quickly. And that's what's making everybody angsty right now. They're like, hello, we're seeing it. We're seeing it happen. But at the Fed's December meeting, Jay Powell was like, oh, we have a high burden of proof. You know, we need to see more evidence.

And nothing has really changed from that trend perspective, which makes me nervous, which makes me think that the Fed wants to see something pop up in CPI or PCE. When you say pop up, what do you mean? So I'll back up a little. Like a downside shock? So I'm looking at services inflation. I'm looking at services inflation, X energy. I'm looking at the rent component of CPI, services X rent. That still hasn't peaked in the CPI data. It's just climbing more slowly. Yes, it is climbing more slowly. We're getting there, but it still hasn't peaked. And I think where the market is thrown right now, and honestly, where a lot of people are thrown is we're seeing rents roll over again in real-time data. We're seeing real-time data confirm the fact that the Fed is actually pulling this off.

But the Fed is like, no, no, no. We need that high, high burden of proof. And you're like, well, how much more can I show you? They need a million layoffs. Other than the official, yeah. Well, I think that's right. I mean, that's the way to go. Because wages rolled over dramatically. Yeah.

So what else? Is it just employment? I'm with you. What else? Headline unemployment is three and a half percent. How the hell can you declare a victory on inflation if the only people who have gotten fired are like a handful

of white collar workers at Amazon? What if they're thinking that we need demand destruction, we need a recession? Because if we don't, if we pull off the soft landing too fast, people will start spending like crazy again. Well, they're dead set on getting inflation down. And that in a vacuum makes sense because you need to nip inflation in the bud. You can't have persistently high inflation. Yeah, yeah, I agree with you. But I think they're just being like super, super, super sure, which I'm not sure is the right approach. If we get a recession in the second half of this year because they do 25 in February, they do 25 in March, we blow through the month of April, there's no FOMC. May, they don't make any noises

about pausing or they do another hike. And then the whole accumulation of everything that they did in 2022. And then in the second half, we're in a recession. What's the narrative? The Fed retook its credibility. Don't mess with the Fed when they tell you they're going to do something, they do it. Or, hey, these idiots missed it in both directions. They let inflation run hot for a year. We had the worst inflation in 40 years. And then they crushed the economy after to add insult. What if those are the two narratives and you've got just two camps?

Well, I'm asking, what do you think would be like the, what would be the vibes? What would be the vibes? I think it's the second one, but maybe I'm wrong. I think it would be the second one too. What's the second one? but maybe I'm wrong. I think it would be the second one too. What was the second one? That they're idiots? Look at these idiots. They missed it.

They didn't tighten. And then they overtightened. A year after they should have. And then they got it wrong on the way out and they crushed the economy all over again. And now we have to go back to 0% interest rates because there's a financial crisis. Yeah, knowing how the world thinks right now. And that sounds like a really – that's a bad way to put it. But, you know, knowing the vibes right now,

the vibes around the mistrust of the government and the fact that crypto exists, decentralization and stuff, yes, I think that would be the case. I think that's like, honestly, maybe like because I'm getting a lot of stuff that's being filtered through social media or whatever, I honestly think consensus is that they blow it and that they've already blown it and it's too late.

Like, I think that that's the expectation is that they're going to get it wrong in both directions. It's starting to shift to maybe they're going to pull this off. Like, there's definitely- In stock prices, I agree. And the economy, and the economy. Like, listen- I agree with you.

Everything that we're seeing looks and smells like a soft landing. It's not over yet, obviously. If you get wage growth to fall but keep unemployment under 4%, that's the definition

of a soft landing. Yeah, and there are ways you can do that too. And with inflation trending down. So one of the things that's different about today versus...

Wait, can I just, I want to throw one thing into that mix though. It's where the puck is going. And where the puck is going is that even if they're done hiking rates, they're not done with QT. And that is every bit as aggressive in terms of tightening real financial conditions as rate hikes are. That's one. Two, there's a lot of debt like in the trillions that has to be rolled. It'll be rolled at higher prices. And that is also another version of tightening just by a different name. So even if they stop

with the Fed funds rate, we are like definitely not done with tightening. So it's very premature to start being like, hey, they just might pull this off. I feel like there's way more tightening to come regardless of the next FOMC. So two things there. I'm in the camp where I think they can pull it off. I'm a little more optimistic than the average Wall Street economist. More than me. And I'm not an economist.

Maybe it's just because I'm cup half full. But it looks like they're pulling it off so far. And there is just so much strength there. The job market will not budge, which is a great thing. That's what we want. So, you know, until I see proof that a recession really is coming in the leading indicators, then, and you're seeing a little bit, a little bit of weakness. The ISM services number made me a little nervous.

And leading economic indicators are rolling over. Like, to be clear, they don't look good. Oh, yeah, yeah, yeah. But I mean, we're talking about the more rate sensitive ones, right? Like housing has been in the toilet for a while now. You know, I'm thinking especially about initial jobless claims. I mean, those have stuck to historical lows for so long. And I mean, I'm thinking a lot about the job market, too, a lot of what we're seeing in the job market. And it's just it's really, really hard to think a recession is around the corner if the job market is so strong.

But I will say one thing about QT2. Yes, the Fed is slowing rate hikes and yes, they might be done, but that doesn't mean they cut. I think so many people are overlooking the fact that the Fed is more than happy to pause rates and to see. I hope they pause. And to keep tightening via balance sheet. Yeah, yeah, exactly. It's continuing. And I hope And the reason why I hope they pause is just from the perspective of an investor in fixed income. Yeah.

Like it just makes our jobs as planners a lot easier. Wait, why is that? If we can fulfill somebody's financial plan with 4% bond yields, like that's fantastic. It's been 70 basis points for the last decade. Maybe a little bit more than that, but- One of the things that we're trying to do as financial planners, there's no way to know what asset classes will do. But there is some certainty in being able to quote the starting rate of a treasury bond and its duration and giving people some sense of, yeah, you can pretty much expect to get that as your annual rate of return from that bond.

60-40 became 70-30. Right. So if 60-40 can be 60-40 again, it's a wonderful thing. You can give people a little bit more certainty on a larger part of the portfolio. Yeah, and you don't have to step out so far and risk to get that return. Exactly. We haven't spoken about housing, but I think that if rates stay here and they go back a little bit lower, like housing activity is going to skyrocket.

I think that prices will probably come down, but I think that buyers are going to return and sellers – What's the magic number on a 30-year mortgage? Is it sub 6%? It's already down 120 basis points from the high. I'm sorry, Michael Antonelli, 1.2%. Where is it? It's 6.1, 6.2. So I'm saying it's under 6.

Is that the magic number where people call the mortgage broker? Yeah. I don't know where the line in the sand is, but for people that have been frozen out, like they're going to come back really quickly. Um, so I'm going to give you some anecdata and I don't love anecdata, but I am a millennial and I do have friends. But if it supports what I'm thinking, then I love it. So let's see. Yeah. We'll be all for it. We'll be all for it. I mean, I, I still have a lot of friends in Charlotte looking for houses. The search sucks right now. But the main thinking, and I'm talking like probably five to ten friends.

The main thinking, though, is like, by God, we need a house. We are going to find that house and we'll just re-five. Is Charlotte representative, though, of what's going on in most American metropolitan areas? Why not? Probably not. Why not? I think you're in better shape than most. Yeah, I think so too.

Charlotte's like a boom town. But, you know, anecdata. Hey, you're from, sorry I forgot, you're from Charlotte. Do you know Paul? Paul? No. Okay. We have an advisor who works for us in Charlotte. Oh, we should meet. I am not that Paul. 100%. Do you know Carolyn?

No, I'm just kidding. You have a CPI chart. Can we get to this? Well, so should meet. I am not that tall. 100%. Do you know Carolyn? No, I'm just kidding. I'm just kidding. You have a CPI chart. Can we get to this? Well, so this is what I wanted to discuss. Pop this on. Oh, wait, hang on. Just the last part

of the housing thing. So if, because they're going to break something, they're going to break something, which was not unreasonable. That thing that they were going to break

was the housing market. And it slowed dramatically, right? Housing starts down 40%. They did it. But if it can get turned back on and they don't break the housing market, like that's another feather in the cap for the soft lightning crowd.

I think so, but you have to balance out. I don't know if that's good though. That's the thing that they don't want a reacceleration in home prices. I get it. I understand. No, but I don't think you get that. I think you get activity at lower prices. Is there a such thing?

Why not? Can we get like a burst of you get activity at lower prices. Is there such a thing? Why not? Can we get like a burst of activity that doesn't drive prices up? Absolutely. When? From where – there's nothing in the data. This whole experience was so – there's no analog for it. Do you feel like real estate is either hot or cold? If real estate gets hot again and houses are turning over, prices are going up, not going up.

I think that you can see an acceleration of activity without—you're not going to see new all-time highs in home prices. Unless rates come dramatically, though, which is probably not happening. Yeah, so you think we can land somewhere in the middle, right? Yeah, I think houses will adjust. Lukewarm, Goldilocks. So here's the thing. House prices went up so much that for them to get back to the average of 2019, that'd be a 30 plus percent crash, which has never happened before. Duncan, is this the most optimistic show we've done in like a few months?

I'm feeling good. I'm placing trades. How much, how, how much of this optimism you think is coming from like stock prices have been going higher? Like Mike sounds pretty bold. Wait a minute. Wait a minute. When did we speak to Derek?

Was that two weeks ago? Stacks weren't on fire when I, when I started getting optimistic. It's been two weeks, right? So anyway. You might even be driving the rally then. I'm not going to fight you on that. I won't fight you on that. The rally is coming from inside the podcast.

All right. So, Callie, you did this thing on. So right now, the S&P 500, it's Thursday afternoon, and it's nothing with nothing. Up 0.33%. I'm sorry. There are pockets of strength, as there always are. But it's a relatively quiet day on Wall Street.

Prior to this, there has been a lot of volatility on CPI Day. So, Callie, what had we seen prior to today? So, I feel a little silly pulling this chart up now since everything is quiet. But there's still 45 minutes left. It's not over until it's over. So the past four CPI reports, I mean, everybody saw this. The market was nuts around them. I remember in October, I actually had a doctor's appointment.

So I was in the doctor's office when CPI came out. And I remember checking the market right after it and being like, bleep, shit, whatever. I was like, oh, my God. Like, look at the market. It dropped like 3%. The doctor's like, Callie, you have three months to live. And you're like, I know, but wait. Wait, wait, wait.

CPI is out. I need to check them. I need to place some hedging trades. Yeah. So I remember checking it like minutes after and we were down 3%. And then got out of the doctor's office like 30 minutes later, we were down 3%. And then got out of the doctor's office, like 30 minutes later, we were up two. And we've seen those kinds of swings for the past three or four CPI reports.

I think that this has something to say about positioning. I think that there's just a lot of like data-driven positioning going on. And the market is just so laser focused on data and it matriculates through the rest of capital markets, including the options market, which I've done a lot of research on. But look at this chart that you did. Like September was a surprise to the downside.

But then you get a reacceleration in October that freaks everyone out. So Josh, this is close to close changes. The ones that you're looking at. No, but these are on CPI days, though, is my point. Right. Yeah. So I'm saying we thought, I think this this summer you had a big rally that started. The market bottoms in June, July, we rallied hard.

August is a pretty good month. Stock prices. And we thought we kind of had seen the worst of the inflation. Yeah. And then that number came out in, I guess, I guess the October number was the one. And it just shocked us to the downside. And it was like, oh my God, this isn't over yet. Right.

So could that not happen again? Like. Oh yeah. It could totally happen again. I'm sure it could happen again. Didn't happen today. Next CPI, who knows? Let me just defend my bullishness for a second.

So everybody's pessimistic. The stock market was down 20% last year. And the big thing, the whole thing was inflation. That was it, right? That was the whole deal. We are past peak inflation. And so I think there are reasons to be optimistic. I think the big risk, which is obviously a risk, are earnings. I don't think the whole thing was inflation. It was. The whole- I think the big shock was- It was the primary. Come on.

Russia invading Ukraine- No, no. Was a massive market story. It was inflation and interest rates, which was the same story. It's a Fed tightening. It's because of inflation. China spent the whole year in rolling COVID lockdowns.

Nobody here cares. It was not about that. But it mattered for fundamentals. It doesn't matter. But I think that those are subtexts to inflation and interest rates. I agree. I agree.

Inflation. Like those CPI days that you're talking about, those were like the new – remember when jobless claims day was the big day or unemployment? It was CPI day. It was NFP. Nonfarm payrolls used to be the Super Bowl every month. Yeah. CPI took its place. I totally agree that that was the story.

And so I just think if earnings come in less bad than expected, even if they fall, just not as much as people were thinking, like, I think the risk can be to the upside. So that's where we're coming from, too. That's my view. I think that we're being too pessimistic once again with fourth quarter earnings, especially with the dollar and, you know, the big fall that we've seen in the dollar. Has that been worked in? I'm not so sure. Yeah. So anyway, of course I could be wrong, obviously, but I think there's reason to be optimistic. I want to talk about inflation expectations, which are a big driver of actual inflation. Those are rolling over dramatically. Why? Because a lot of this is

just gasoline, right? That is a big driver of how people view inflation. Yeah. Isn't that crazy psychologically though? Thinking about how, you know, gas prices are the thing that's always in your face. You know, we can talk about egg prices. We can talk about groceries. But gas prices are like the main indicator for average America. I buy eggs every week. I have no idea how much eggs cost.

You know why? I just, it's one of 40 items in my shopping cart. I have no idea. I think employers are feeling less anxiety about whether or not they'll be able to find labor. It's not showing up in the form of headline unemployment, let's say. But all of the small business owners or NFIB or whatever, that's all cooling off.

Like, I don't think people are panicked about finding workers right now in the way that we were, let's say, a year ago. And that is a big setter of inflation expectations. Like, if you're able to hire people or not feel like you can't fire anyone, that kind of anxiety feeds through into higher expectations that are just not materializing right now. So that helps. That's a really good point. And the thing that we've been harping on this whole year, too, So that helps. That's a really good point.

And the thing that we've been harping on this whole year, too, is that inflation expectations have basically hovered around 2% this whole year. And that is the big difference between now and the 1970s. The market investors think the Fed can do this. And they haven't. Well, I mean, time to time, you're going to hear people complain about it. I do, too. But on the whole, cumulatively, investors haven't stepped off of this idea that the Fed can do it. The Fed almost, in a weird way, has retained its credibility there.

Well, so let's talk about calling the Fed's bluff. Let's do it. So, Callie, what do we have to say about this topic? Okay. So, I mean, gosh, there's so much to say about this topic. So everybody's talking about the bond vigilantes. Vigilantes? I don't know if I said that correctly. That sounds very sophisticated. Vig vigilantes. Vigilantes? I don't know if I said that correctly.

That sounded very sophisticated. Vigilantes. It's only vigilante if it comes from the vigilante region of France, right? Exactly. That's right. Okay. So the bond vigilantes, vigilantes. Two-year yield, obviously, pricing in, has been pricing in rate cuts for a bit.

It peaked in November. And, you know, the big question is, can the bond market force the Fed's hand? To cut rates. To cut rates. Wait, Cali, can you just explain for the listener that doesn't understand what's the difference between the two-year and the Fed funds and what's driving what? Is there a tail that's wagging the dog here type of thing? Yeah, yeah, yeah.

So the Fed funds rate is the policy rate that the Fed changes. It's the overnight lending rate for banks. Yes, banks trade around money every once in a while. All right, so that's the Fed changes. It's the overnight lending rate for banks. Yes, banks trade around money every once in a while. All right, so that's the Fed funds rate. The two-year yield, we're getting into the Treasury market. This is debt backed by the U.S. government. The two-year yield seen as a proxy for the Fed funds rate, you know, ostensibly two years down the road. But a lot of people look at it as what will the Fed do next. And we've seen in a lot, in many hiking cycles in the past, that the two-year yield has foreshadowed Fed rate cuts.

So when the two-year rolls over, the Fed is likely to cut next. Right, exactly. So when the two-year peaks and then falls from that peak, the Fed stops hiking or they tend to cut. What was the peak yield on the two-year in November? Was it 4.5? Something around 4.5. 4.6?

Yeah. I missed that. Come back. Okay. And now what is it? Four and a quarter? Yeah. It's like around four and a quarter.

Okay. But we don't know that that's the peak. We know it's a peak. But okay. Right, right. But that's just pricing in like traders' expectations. And okay. Yeah.

But if that is the peak. If that is the peak. It's 4-1. I mean this. 4-1? This rolled over pretty. Okay. Does anybody else see head and shoulders?

Anybody else see that? What's interesting is when we say roll over, that's the yield we're talking about. Price is up. People are buying those bonds to make those yields fall. That's people looking at that and saying, wait a minute, let me get this straight. You're going to pay me 4.5% risk-free over the next two years? I'll take it. I'll take all you got.

That's how you put in a top in that bond price. So like we're talking about rolling over in terms of the yield. in that bond price. So we're talking about rolling over in terms of the yield, but another way to think about it is, hey, people feel pretty good that this is about as high as rates are going to get, or they're just happy with that level for whatever bucket of money they're using.

Right, which insinuates down the road that rates, the two-year rate will not be higher if you're stepping in there. So definitely bonds are ripping. So bonds are ripping. Yeah. 10 years under 3.5. What's this thing on Neil Kashkari on investors' expectations?

I actually didn't read this yet. Did you read this article? Kashkari? Yeah. Which one? So Kashkari was speaking with Tim Morales. Let me quote it. Oh, I don't think so.

This is Nick Tim Morales quoting Kashkari on investors' expectations of rate cuts. This is Nick Timares quoting Kashkari on investors' expectations of rate cuts. Quote, I've spent enough time around Wall Street to know that they are culturally, institutionally optimistic. He asks, is it a game of chicken? And Kashkari laughs. They are going to lose the game of chicken. Oh, that's the one that you sent me. Okay.

Game of chicken. Yep. Yep. Yep. Kashkari does not hold back. What's with this tough rhetoric? Chill out, dude. Why? So that's from a 7,600 word New York Times Magazine story that tells the tale of what

the Fed has been doing over the last year or two, partly through a profile of Kashkari. I think we're all set with this guy. Is 7,600 words enough? Is there more that we need to read or hear from him? He seems to be the guy that reacts really aggressively in both directions. He was a zero percentage of straight guy for a long time. And the Fed's not doing enough. And now it's the other way.

Let's play a game of chicken. Yeah. And see if Wall Street wants to guess how high we're willing to take rates. I think he's the Fed's influencer. So it's Jay Powell. He's like their TikTok account. He's their SDF. I don't, you know what?

I don't really care that much about what he has to say. I'll follow the two-year. I'll take your advice on that. Yeah, well, so the thing with the two-year too is I think, I mean, I think the trend is obvious here. The Fed is peaking out hopefully soon if we get inflation under control. And then after that, you know, hopefully we can bring rates back down. But I think the timing is where people are getting thrown off a little bit because they

see the two-year fall and they're like, rate cuts are coming. And historically, especially in recent history, that hasn't happened because the Fed pauses. So what if the Fed doesn't cut? Then what? I mean, if the Fed doesn't cut? Then what? I mean, if the Fed doesn't cut, then rates stay high and we're all still stuck in this kind of purgatory of- No landing? I mean, I have no idea. Hopefully a soft landing. I think the Fed can pull it off, but- But don't we think it's a good thing if the economy can digest higher rates, normal rates?

It's not like rates are double digits, just normal rates. The 10-year is, what are the 10-year fall to? The 10-year is 3.4. It's not, but wow, that's actually quite low compared to where it was. It was at 4.4, wow. It broke 3.5 today. Wow. But that's not high.

If we can't take this, like. Jamie Dimon said the Federal Reserve's rate hikes might need to go 50-50 chance. They might have to go to 6%. He said on Fox Business last week. What do you think about that? He wishes it would go to 6%. Well, they would do pretty well if it went to 6%. Yeah.

You guys would too, by the way. Yeah, yeah. We're a brokerage. Everybody would be okay with that, except for the actual economy. But everyone running a platform that sweeps cash into some sort of a cash management vehicle would be okay with 6%. Look, I stand the economy. I stand a strong job market. Okay.

Paul Tudor Jones said that if they pull this off, it would be a moon landing. We landed on the moon! Yeah, quote. on the moon. Quote, there's huge amount of savings that consumers have from all the COVID relief bills and the stimulus that was applied both from a fiscal and monetary standpoint, said

Jones. He is faced, told Powell, he is faced with that very difficult proposition of working that down without breaking things. And he is saying this is the most challenging economic environment in 40 years. Sounds like a 2022 quote. And if we pull this is the most challenging economic environment in 40 years. Sounds like a 2022 quote.

And if we pull this off, it's a perfect moon landing. Is that overstated? Understated? I like the imagery. Of Jay Powell landing the rocket on the moon? The idea that we can break inflation without causing recession seemed highly unlikely. And I think the chances are growing. I think the chances are growing.

And the consumer, I mean, we know the consumer is the best storyline in the economy right now, and it continues to surprise us, which as the months go by, and as I see the consumer stay strong and the job market stay strong, it's easier to believe in that soft landing that felt impossible six months ago. So the only way the consumers stay strong, well, so if last year was all about inflation, which I think it was, and if we had to boil this down, this year down to it's all about, what is the blank?

Is it all about employment? Is it all about earnings? Okay, so I'm going to whip some data out of my pocket for this. So we do quarterly surveys with retail investors, not just on eToro's platform. Globally, no matter the platform, demographic, age, whatever,

we ask them what they're worried about, what they're investing in, what they're doing with their money. Just basically like a brain download from retail investors. So we did a run in December. And all of last year in our quarterly surveys, investors were like, inflation is the biggest risk, bar none. Like, this is what we're worried about. I'm even adjusting my portfolio for, or to deal with inflation.

Sorry, but they're just getting this stuff because they're hearing it in the media. Like- No. I don't- They were actually worried about inflation. Yes, because the media is, I'm just saying the retail investors in general- Josh, the media does not drive gas prices. No, no, no. But it starts somewhere.

But they're seeing it in their real lives too. Yes, I agree. Retail investors also told us that they were cutting down on their investing because their bills are higher. Okay. So, okay. That's true. Yeah. I, I, I think that there's more there, but anyway, so the cut in December that we did, we asked them, what's the number one risk in your mind for 2023? They said the state of the U S economy. So I think we are pivoting over to recession worries now. Okay. Now we're not worried. It's too hot. Now we're worried how fast, but I just, I can't, it's hard to get bearish

with employment this strong. Now, obviously that can change, right? I'm not saying that the employment will remain where it is, but as long as people have jobs, they will continue to spend money. John, give me this Bank of America. And as long as they continue to spend money, like how do you... Credit card chart. Yeah, you can't fight it. Don't fight the consumer.

And the other way to get bearish is, listen do you- Credit card chart. Yeah, you can't fight it. Don't fight the consumer. And the other way to get bearish is, if you just say, we're still normalizing the rates versus equity valuation story. That you can convince me of. Yeah.

That we're not in a zero interest rate environment anymore and stocks are still too expensive. That I could, fine. I won't fight you on that. Yeah, show me something. Speaking to that,

so this is coming from, let me read it off here. This is coming from Bank of America, credit and debit cards, spending, everything. This is,

this is like until this week. So this is as up to date as you get. Restaurant spending per household income group, year over year change

of the seven day. Airline spending per household. Entertainment spending per household. Lod airline spending per household, entertainment spending per household, lodging spending per household. And which direction is it going? They're all re-accelerating higher. Vertical.

Vertical. Total card spending. Look at this one. Total card spending per household and cruise. Cruise. Could you imagine? How do they look? Cruise spending.

These are all now trending that higher. Transportation inflation right there. Cruises look okay. But that's the risk of that re-acceleration. That's why they need Kashkari out there being a bond villain. Royal Caribbean is ripping. These stocks look good. Cruise. Yeah, I'm saying.

I'm agreeing with you. The data is agreeing. That's the problem. Look at Wynn. Look at this chart. Look at this. Look at Wynn. Look at this chart. Look at this. Look at Wynn Resorts. Yeah. So, okay.

So what they did was they knocked like $10 trillion off of everyone's portfolio and home price, give or take, right? Like the losses in the home market. Mine didn't go down 10 trillion quite. In the aggregate, the losses of like home values, stock market value, bond market, let's say 10 trillion for argument's sake. That sounds like a lot. It didn't really put that much of a dent in consumer spending that you would have guessed. I saw a data point today. 90% of refis last year were cash out. How crazy is that? Really? That's wild.

Which makes sense. I did. Give me my money. I need to book a cruise immediately. My home is magically up 25%. Okay. Cash out refi's to take cruises. Or to remodel. Aren't you remodeling? I'm getting mud.

Actually, my mudroom is happening as we speak. You're building a mudroom? Yeah. What's a mudroom? So this is funny. I said this to my wife because- I'm only middle class, so we don't have things like that. No, shut up.

You have a big- Because you have a two-car garage. I don't. Okay. So what is a mudroom? So- It's like hooks to put raincoats on and then take an Instagram picture. So listen-

It's where you leave all your shoes. Somebody tweeted, no idea this was even a thing, but apparently rich people have mudrooms and drop zones. I don't know what a drop zone is. Where they put their stuff before they enter their house. Well, I wouldn't walk into my own house wearing shoes.

It's disgusting. Well, I do. You're an animal. Wait, you walk out of Penn Station? Hold on. I wear sneakers in my house. How many public restrooms

do you use in a given day in Manhattan? 17. And then you go home and walk into your f***ing house? I do. No, you don't. I do.

No, you need a mudroom yesterday. That's why he's getting a mudroom. I have a little, I have a one-car garage. So when we go upstate a lot, we have a cabin upstate. When we come home, we just dump everything out in the door. Out in the yard. Yeah, and it just takes a week. They're real aristocrats.

It takes a week. So anyway, so we're cutting our garage in half and we're making that where you have shit. No, that's smart to do that. We have like a whole wall in the garage. In your garage. Cubbies for shoes. So when you go to your house,

you could go into your garage and you could get undressed or do whatever you have to do. I don't have that. That's essentially a mudroom. That's a mudroom. So I basically- Your garage is your mudroom.

I use it as a mudroom, but it's not a mudroom. Exactly. Right. Yeah, you can't walk in- You walk on your carpet with the shoes that you walk through the city.

I don't have carpet. Only downstairs I wear sneakers. Maybe that's not as grungy. And we also, like, we like us do the Swifter. No, we do. We throw our shoes out and we just get new shoes the next day when we leave the house. Well, I wear new shoes every day. You don't?

You've met Sprinkles. You know there's no mud coming into my house. So, no, you go into Josh's house, take your shoes off. Oh, dude, take your shoes off in the driveway. If you come to my house. Don't even come to my house. But I do take your shoes off, but take your shoes off. Yeah. I'm in that house, take your shoes off. Oh, dude, take your shoes off in the driveway. If you come to my house. But I do take your shoes off, but take your shoes off. Yeah, I'm in that camp.

Take your shoes off. We all should be. Okay, investor positioning. Despite weak returns in December, investors increased equity and bond allocations heading into 2023. For me, that's just rebalancing, but maybe I'm wrong. What do you think?

We have this chart? Yeah, I think you're right. I think it's rebalancing. I think there was a lot of rebalancing going on at the end of the year. As there should have been after you arrived last year. I'm with you. I rebalanced my portfolio. But I also think we shouldn't understate the fact that, you know, I, so the biggest thing that I've realized working and studying retail investors is the fact that retail investors invest when they have cash. And you just showed that B of A chart of consumer spending going parabolic. Retail investors have a lot of money, and that's a good thing. Americans have a lot of money. The job market is strong,

and they're going to invest that money. I mean, there are undercurrents. That's not the only thing there. But I think that, you know, this continued retail investor optimism is because Americans are doing really well right now. I don't see optimism. So this is from State Street. If you look at, I'm sorry, previous chart, if you don't mind. If you look at the cash allocation, now we look at percentiles, okay? So a year ago, it was 28%. So investors had relatively little cash.

What was 28%? Their cash allocations, the cash allocation. In their portfolios? Not that they had 28% of their portfolio in cash. If you look at the historical amount that they had in cash, this was the 20th percentile. So they had a light cash position. Okay. When? One year ago? A year ago. Okay. So it was still a bull market.

Exactly. Exactly. Okay. When? One year ago? A year ago. Okay. So it was still a bull market. Exactly. Okay. In November, it was in the 94th percentile. Okay. So I take all that back. I'm just kidding. No, no. But you also have to separate.

There's all sorts of investors. Yeah. Right? There's traders, there's buying holders, and everything in between. But just from this survey alone, and this is, everybody was bearish. The cash positions of fund managers was at all-time highs. Across the board,

you saw bullish, I'm sorry, you saw bearish sentiment. The takeaway here, the rolling three-month flow differences, equity minus fixed income. So look at this.

Look at January 21. Yeah. Could not get enough stocks. Right. So we finished the year just above the five-year median in favor of bullish on stocks versus fixed income. Which is amazing to me because 2022 was hell.

Like, yes, we have also noticed that investors are raising cash. Quarterly surveys going back to that. They have said for two quarters now that they're raising cash. I'm raising cash to buy stocks. How do you like that? Hey, some of them are too. We asked them why they're raising cash. There's a demographic story too.

The makeup, like whatever this survey, so whoever this survey is tracking, it's a much, fine, but it's a much, just it's a much younger investor demographic. ADII? No, just generally like the whole population of investors now skews a lot younger than it did even five years ago. Well, what if they're raising cash for mudrooms? Next chart, John. This is – I would say that's a good idea. This is the AAII – this is the bullish and bearish spreads and just rolling over.

And they also show their state street investor confidence index plunged for good reason. Listen, it's not just the meme stocks. It wasn't just the Cathie Wood stocks. Like, Apple looked terrible. Amazon cut in half. I mean, all of them. All of them. Yeah, where should sentiment be?

Yeah. You just had the worst year for a 60-40 portfolio. I think the third worst year of all time. Don't misunderstand. I'm not saying that sentiment is too— I'm saying it's appropriately bearish. Yeah. Like,

it should be bearish. It's been bearish for a year now. And rightfully so. Yeah. But however, when you have positioning that bearish

and you have a whiff of positive news and things are less bad than expected, that's how you set up for a powerful rally. That is exactly it. And this is why

bearish positioning, it feels really awful. I mean, we all feel awful and that's why we're bearish positioning, it feels really awful. I mean, we all feel awful and that's why we're bearish, but it is low key. One of the strongest market dynamics. I compare it to getting punched in the stomach, but knowing that the punch is coming, you know, if you know that you're about to get punched, you tense your stomach, you're like, oh my God, it's happening. Then you get punched and you're like, it hurt. Like the anticipation is worse than the, uh, the event. Exactly. It's like stubbing your toe. So you were explaining the quarterly survey of 10,000 global investors, why they haven't cut the amount of money that they've invested this past year.

You want to go through some of these reasons? Yeah, yeah, definitely. So it is a global survey of 10,000 investors. I look at the U.S. cut, but we do a big global survey. So anyway, U.S. cut. So overall, I've been shocked by how resilient the U.S. retail investor has been. Throughout the year, a majority of them have said, I am investing the same amount of money as I did three months ago,

or I'm increasing that. Hell yeah. It's fascinating, though, that they're doing that. Yeah, exactly. You wouldn't have predicted it. I wouldn't have predicted it. Well, it goes back to the fact that retail investors invest when they have cash.

That's also a good point. Like, forget about the surveys. What are they actually doing? Well, I mean, who knows? We feel like shit, but we're still buying. Well, here, you have it. You said some are moving into bonds and safer sectors like defensives.

Yeah, they're diversifying. But they're not selling out. Exactly. That's the key. And they're not cutting down the money that they're investing. They're not saying like, oh, this doesn't feel good. Like maybe I'll invest 50 instead of 100. Also, if you look at like,

Bautrunas does this all the time. If you look at ETFs under 10 basis points, the index funds, they're not slowing down the flows. Right. At all. Right, yeah. You said you're still seeing lots of interest in crypto. Wait, wait, hold on.

Before we pivot to crypto. We're not pivoting to crypto. Okay. This is a non-crypto podcast today. I thought we talked about SPF. Yeah, that was enough. I'll fling myself out the window if we do any more crypto. But they are still showing an interest in crypto?

They are. Is that because you can now buy things for a half a penny? Is that that phenomenon? Like, holy crap, this thing was $18 a coin and now it's four cents? we ask them were, we ask allocations. So we ask like, were you invested in crypto? Do you plan yes or no? Do you plan on investing in crypto in the next three months? Yes or no? Do you put investing in quotation marks when you write that? No. I'll have to run that one by Amy. Crypto looks good here. Watch your math. Michael's bullish again. Crypto is breaking out right now.

Yeah. But the really surprising thing to me is that, well, A, this isn't so shocking, but younger investors especially held on to their crypto. What did bald investors do? What did bald investors do? That's a cut we don't look at. Oh, that would be great if you just start asking. N equals one right there. What did bald investors do?

Can we do this put-to-call ratio snark? I want you to give us. Yes. Oh, this is my favorite thing. I want you to give us the unvarnished. Just really go for it. Okay, okay. First of all, explain to people.

John has the chart up. Explain to people what the CBOE equity puts call ratio is, and then tell us why you're snarking on it these days. Okay, so the options put to call ratio. By the way, options are not suitable for all investors. High compliance. Seriously, though. You just winked, though, when you said that all investors. High compliance. Seriously, though. You just winked, though, when you said that.

I did not wink. Check the tape. I did not wink. I want the listener to know that. All right. So the put-call ratio is essentially the volume of SIBO-traded equity put options divided by the volume of SIBO traded equity call options. It's a ratio. Yeah, it's a ratio.

It's a ratio. We're trying to find out how many bearish bets versus how many bullish bets. Right. That's the essence of it. But zoom out from that because this is volume. You don't know what those traders are doing. They could be buying. They could be selling.

And we're talking options too. We're talking puts and calls. So it gets really- You're selling puts. You're bullish. Exactly. So it doesn't really tell you- But doesn't it have to be somebody on the other side of that?

It could be a market maker. Oh, interesting. Oh, okay. Okay. Yeah. And options, I mean, options strategies

are so wide these days because there's so many products out there. Institutions use options differently than retail uses options. And it just- I have an iron condor

on right now. So- That's my favorite- On what, Doge on right now. So- That's my favorite- On what, Doge? Name trade. Yeah. That's my favorite name trade. All right.

So people are looking at this really big spike that I guess began in 2021, right? Well, I'm looking at the really big, big spike at the end of 2022. It's not going away. What's going on? So what are people saying is going on with this and what is your problem with it?

Okay. So put-call ratio, it spiked a lot in December and it spiked on the same day every week. I want to say it was Wednesday or something. And I picked up on it a little, a little into December because it seemed to be something that caught fire on Twitter. It was like the put call ratio is really, really high. That's got to be bearish. People are buying puts. First of all, we've already determined that put-call ratio is volume. It's an indicator of emotion, not direction. Oh, I like that.

I like that. Look at you. Yeah. Go on. Copyright. Go on. I got the track. Indicator of emotion?

Yeah. All right, go on. All right, so put-call ratio was really, really high. I dug into the contracts that were being traded on the day when the put call ratio spiked were they at mar-a-lago where did you dig into them well i don't know who was trading them okay but the top traded contracts the day that the put call ratio spiked were deep in the money puts on tech stocks which seems really really bizarre it kind of hit me weird at first because you think deep in the money like

that's not hedging right and like why would you buy deep in the money so who's doing buffett it so it's actually institutions so i i wrote like a little twitter thread on this because of course i can't get it out of my mind i'm like look this is deep in the money puts like we know the who would be putting that trade on and why somebody's selling that strategy to somebody else well exactly on wall street and I threw out there, I was like, maybe it's, I don't know,

maybe it's put sales for income or something. It's Kashkari. But I, Kashkari. No, but doesn't that happen on the street? Like somebody creates a strategy

and they start selling it to the buy side and then hedge funds are like, yeah, we're doing this strategy and when they, when they're like, when they're like talking to other

managers and then all of a sudden it becomes a thing. Yeah. So you can get a rash of that. This was an institutional trend becoming a rash man. And the only way you can really, the only way you can really tell is getting color from people who know the traders, which is kind of, kind of crappy. But I talked to a few people after I posted that, you know, just cause I used to be an options reporter.

I know people and I, I talked to them and they were like, that, you know, just because I used to be an options reporter. I know people. And I talked to them and they were like, no, this is a trade that's going on on Wall Street where institutions are basically rolling their put positions and collecting the income on them but avoiding that early exercise and just continually rolling them on tech stocks. And that creates the appearance, this spike in the chart. That's volume. Yeah. Okay. So there's nothing really particularly directional about that. It's not bearish. It's actually neutral because you have to hold the stock. So were you the only person to go out there and explain that? Or were you the first person to like make it? Yeah. You know what? I don't know. SIBO, and this is why I feel extra legit about that explanation. SIBO came out and posted a blog post about it.

There you go. The exchange where all of this volume happened. Did they link to you or did they reference you? No, no, no, no, no, no. And I doubt I was the first person to come out with it. Okay. But I'm sure a lot of people were talking about. But the overwhelming narrative was, oh, my God, the put-call ratio is spiking.

It's bearish. And it's like, no, people, context matters. You're saying it's the same thing happening with the VIX, lots of short-term options activity that isn't captured in the normal VIX. What do you mean by that? Okay. So the VIX is my other favorite thing to snark on. And by the way, like again, used to be an options reporter, wrote about the VIX a lot. The VIX can tell you a lot of stuff and it has acted the same. You want to say something? No, I'm sorry. I just pulled it up

and I'm like, whoa. Wait, what happened? Look at the VIX. It's just smushed. Wow. Vol smash down to 20 again. Wow. 19.

Sorry, I started to cut you off, Kelly. No, no, no. You're good. By the way, he does that to everyone. Don't feel bad. Go ahead. Hey, I know how it goes. Okay, so the VIX.

The biggest complaint about the VIX this year is that it hasn't spiked up to 80 or 90, even though we've been in this vicious, painful bear market. Not even 40. Can't even get the 40. Not even 40. I think the top was like 36 or so.

I don't get out of bed for a 35 VIX. I mean, I do. Okay. I'm here. But you're right. We didn't have that thing that everyone said we needed to flush the market out. Like, you want a real bottom, you need a VIX 40. You need a VIX 50.

Like this is the thing that we kept hearing. No, you don't. I think investors are appropriately anxious, but they're expressing that anxiousness in different ways. And I think I really get fired up about this because I feel like the easy argument is, oh, the VIX hasn't spiked. It means we have further to go.

Like there's no fear. And I'm like, no, the data we see around the VIX hasn't spiked. It means we have further to go. There's no fear. And I'm like, no. The data we see around the VIX, first of all, is incredibly bearish. Sentiment is bearish. There's no way around it. So what's going on with the VIX? Why is the VIX an outlier? And I dug into it a little bit.

Short-term options volume is a huge amount of daily options volume. Spot Gamma actually does really good work on this. They run the amount of short-term options volume per day.ma actually does really good work on this. They run the amount of short-term options volume per day. You know Duncan runs that handle? No, he doesn't. Duncan, what? That better not be you. Duncan's like, no, I don't. No, I don't. Anyway, so yeah, so short-term options volume is a huge, huge chunk of daily options volume. Meaning what? 30 to 50% or so. This is what spot gamma says. So I don't, I don't have that data, but, um, why this is so important is because the

VIX is a measure of 30 day options prices and short-term options prices. We have weeklies, we have dailies. Um, if you're trading weeklies, if you're trading dailies, I mean, that's, that's one to five days, it's one to seven days or so. And there's actually this less well-known VIX. It's called the short term VIX. It's a measure of nine day prices. And that VIX has been going insane this year and spiking before CPI days, before jobs days. Like how is that quoted? Is that quoted the same way the regular VIX is? Does it have like a number attached to it? Yeah. Yeah. It has a number attached to it. For argument's sake. Oh, God. It was like 37 yesterday. Holy shit.

And that's people trading weekly options? That's nine-day options. So it's people trading on either side of nine days because I think they average it out. Huh. Yeah. Okay. And actually, so some—I forgot his name. Somebody actually wrote a paper on this.

Okay. It came out like a few days ago. Probably Corey Hofstein. I think it was Chris Seidel. Okay. Chris, I'm sorry if I said your name wrong Somebody actually wrote a paper on this. Okay. It came out like a few days ago. Probably Corey Hofstein. I think it was Chris Seidel. Okay. Chris, I'm sorry if I said your name wrong. That would make sense. Ooh.

I'm sorry if I mispronounced it. I love Chris. No, I owe him an email. It's funny you mentioned that. We've had Chris on the show. He's great. Yeah, but so short-term options are dominating options flow. And of course, the VIX isn't picking it up.

It's not that the VIX is broken. It's just measuring what it's built. Something else. 30-day. Right, exactly. Yeah. And more and more people are not using those VIX is broken. It's just measuring what it's built. Something else, 30-day. Right, exactly. And more and more people are not using those 30-day options. So you said the options ecosystem has changed a lot over the past few years. Yeah.

Quote, for the better. But that means you have to think about options indicators differently. So maybe we should just be following the short-term VIX, or that should be added to the arsenal of people who are trying to determine what's really going on in the markets. I mean, I definitely give it an eye. I tweet about it quite a bit. You see the short-term VIX pick up before jobs days, before Fed days, before CPI days, which makes a lot of sense intuitively. Yeah, because that event falls within that nine-day horizon.

Exactly. I think you spoke about this. We had Nicholas talking about this. within that nine-day horizon. Exactly. I think you spoke about this. We had Nicholas talking about this. The thing is, though,

that all of these things where the market got crushed and therefore you would expect a VIX spike, it happened because it was a CPI day and everybody was positioned for it. So CPI coming in hotter than expected will not cause a VIX spike because it's not out of left field. VIX spikes tend to happen

with unexpected downside, not expected downside. Yeah. And that's another really good point. I think Nikola said it was like a Hitchcock horror. It was like Hitchcock horror versus some other scary filmmaker. I can't remember. John, Wes Craven. Let's go with Wes Craven. Yeah. Yeah. So none of this has been really surprising. That's a good point. This has been a systemic pullback going back to the interest rates and inflation argument. And we've been bearish all year. We've been appropriately hedged all year. So nothing is really scaring us. Everything is

less bad than we think. We're going to do this job market thing because you have some good charts here. We're jumping around a little bit, but I think this stuff is really important right now because this is where the rubber meets, my opinion, where the rubber meets the road for the Fed is labor. Everything else is an offshoot. The way opinion, where the rubber meets the road for the Fed is labor. Everything else is an offshoot. The way people spend, the cost of shelter, that whole wage price spiral thing, all of that is predicated on whether or not there's going to be slack in the labor force or not. And right now there isn't. And unfortunately for the Fed, I think millions of people stopped working forever during the

pandemic. They're not coming back. And we have effectively net negative immigration for five years, six years. Like a lot of things are working against the Fed. So that labor thing is going to be tough for a while. But let's go through. John, show us this chart, the first job market chart. This is from Dietrich.

This is showing this is the annual gain or loss for jobs. And obviously we know what happened in 2020, but we had back to back incredible years. In 2022, we added four and a half million jobs. And the next chart. That's such a big, that's such a huge, that's one year gain in jobs. Well, the next chart- The recovery has been awesome. The next chart from the journal is really just a sight to be seen. What we're looking at, for those of you who are listening on a podcast, are the jobly declines on a monthly basis, and then just the stair-step high.

We got them all back. And just look at this for a second. So we had gotten back to pre-pandemic levels of employment in the middle of 22. Is that right? Do I have that right? You said middle? I'm sorry. We got half of them back?

All of them. And now we're in the bonus. That sounds about right. And now we're in the bonus. Yes, that's right. Right. And it does. Incredible.

It does. Nobody could have predicted this. We lost 20 million jobs in two months, March and April of 2020. And then we got them all back. And it really didn't take as long as a lot of people thought it might. Yeah, which is something we should celebrate. We would not have done as much stimulus had we known. Had we known that by midway through 2022, we were going to get all of the jobs back and then some.

You wouldn't have had the March 2021 stimulus package, I don't think. The Biden one. Well, he would have done it anyway. He would have done it anyway because he got elected on that. Okay. What's this Carl Kempinian tweet? So I don't, you know, this chart is, I don't even know what's going on here. It looks like the chart is going backwards, but the tweet is, this is from Pantheon Macro, Out here, it looks like the chart is going backwards. But the tweet is – this is from Pantheon Macro. Wage growth is narrowing rapidly.

This dynamic strongly suggests that wage growth can return to a pace consistent with a 2% inflation target without a material increase in the unemployment rate. I'm just telling you right now. If this happens, soft landing achieved. If they can bring – This is the best argument for a soft landing. If they can bring- This is the best argument for a soft landing. If they can bring inflation down- Wage growth can come down without the economy- Yeah.

Without having a recession. You break inflation, you slow- Wage growth comes all the way down, unemployment doesn't pick up. And that's it. That's a soft landing.

And what is this chart showing, though? Do you know how to read this? Do I know how to read this? U.S. wages Phillips curve? Forget about this. It doesn't matter. Just pick it up.

Well, it's the Phillips curve. It's unemployment versus wages. Yeah. No, but it does look like it's trending backward. It doesn't matter. It's coming back. All right. Now, the other thing is, well, if you look at tech stocks, and I'm not just talking about

TDOC and DocuSign, look at what Apple is saying. Like everyone is saying the same thing, and what they're saying is not painting a very rosy picture. So I also – on the one hand, I could look at Caterpillar and say, well, listen, you don't get a recession when industrial stocks are ripping like this. But also Apple is the king. Apple is the stock that matters most. So when they're saying that things are slowing on their end, what do we make of this? So, well, first of all, this is tech, right? Tech has been one of the hardest hit sectors from all of these crosswinds that we've had to deal with. The international problems.

China. China, yeah. Dollar. Yeah, the dollar. Supply chain. International problems wasn't the best phrase, but that's like all encompassing that right there. I mean, high growth, their stock got hammered, not as much as the more speculative stocks. But it makes sense that Apple is a little more, you know, kind of feeling this, I guess is my point.

And I think that there's something interesting going on with big tech right now where like in a high rate environment, you just don't value innovation as much because you're thinking about what's working now versus what's going to work down the road. And big tech is in this kind of pivot point where they're seeing their lunch kind of get eaten by, you know, more upstart competitors and they're trying to pivot and investors just aren't allowing it. Is this the perfect storm of just saturation? Just Apple just was going to slow eventually. And it happens to be coinciding at a time when growth is out of favor. Is that just too coincidental? It might be coincidental, and I don't know how you would really gauge that. But I do think it's really interesting that big tech is kind of having this identity crisis because you're seeing it with other stocks too.

You're seeing it with Microsoft and OpenAI or ChatGTP. I can't remember which one they – OpenAI is a parent company. OpenAI. Okay. You're seeing it with Facebook and the metaverse. You're seeing it with Apple and trying to get more into software and services. It's almost like we're 10 years into it.

Big tech is like, okay, well, what's the next phase of our lives? I don't think they look invincible anymore is the point you're making. And AWS just posted its slowest growth rate since 2014. We got Apple App Store data yesterday. On Tuesday, Apple said it paid $320 billion to developers, up from $260 billion as of last year. Developers get 70% to 85% of gross sales. So that's Apple paying out. to 85% of gross sales. So that's Apple paying out. If all developers paid a 30% cut to Apple,

Apple's App Store grossed more than $85 billion in 2022. If Apple's commissions were all 15%, the App Store's estimated gross would come in lower, around $70 billion. That's the same amount of sales Apple suggested with the same data point last year when the company said it paid developers $60 billion. So what they're saying is this represents a plateauing of activity on the Apple App Store, which arguably is like the largest technology platform. No, it is. It's got to be, right? Yeah. And then also, I think they're trying to replace Broadcom. They're building that internally, that chip.

And so, yeah, they're pivoting to a different phase of their life. But then people are like, oh, Apple's subscription business is slowing. They just had another record year. They went from 745 million subscribers in 21 to 900 million subscriptions in 22. So slowing relative to what? Well, I guess relative to the fact that the market cap- It's a billion subscriptions. I guess relative to the market cap of $2 trillion

and relative to the fact that all of this growth has already been priced into the stock. Yeah. And then there's obviously other tech-specific industry dynamics that I don't understand. Like I'm sure if you had somebody else on here to explain it, they would give you a much more like detailed explanation and really dig into all these tech trends going on.

But that's the big thing to me, the innovator's dilemma in big tech. That's really, it's, I mean, I'm an analyst. I look at the pros and cons of everything. But it's, like, interesting, but at the same time, it's worrying. There's holes in every one of these stories right now for the reasons that you laid out. Like for every one of the fan mag stocks, like there's a serious hole. And it doesn't mean worst case scenario

will definitely happen. Let me ask you this. So the advertising slowdown, how much of that is consumer demand versus the fact that these companies were all funded with unlimited money and that's over now? Well, I think high rates

definitely have something to do with it. Oh, for sure. And so I think that's the first thing you cut. So I think that you could make the case that tech is in a recession. I mean, of course it is. And that it will continue. And it doesn't necessarily tell you about the economy what you think it might. Exactly.

Right. Which is not the economy. You have right now rolling recessions that are sector stories. You have recession in office property. You have recession in residential real estate. You have recession in tech media, telecom. You have recession in crypto, LOL. These are real.

The people working in these industries, they don't give a shit what GDP says. They are living in recessionary conditions, period, right now. I was at an Islander game two nights ago with two of my friends, and one of them is advertising and the other one does real estate law. And it's a recession. Like, that's it, period. Like, for an economy like ours that's this dynamic and this much dispersion throughout the economy, we should just not be focused on is the whole economy in recession yet. Let's be realistic. If you do certain things or live in certain regions of the country, you could absolutely

have different economic situation than someone else you know who's from elsewhere. Yeah. And it's a blessing and a curse. Like, obviously, you don't want to see certain sectors pull back. You don't want to. I mean, you want people to thrive. Yeah. End game. That's where we start Like, obviously, you don't want to see certain sectors pull back. You don't want to—I mean, you want people to thrive. Yeah. End game.

That's where we start. Okay, maybe you don't. No, I'm just kidding. No, I'm with you on that. So this is fun. Bed and Bath was up 50% today. Carvana was up 46%. Are we going to get another meme explosion?

No, because those won't revisit the old highs. Okay, unpopular opinion. I'm just saying. I'm just saying that was today. That was a 50% move in, what did I say, bed and bath and a 46% move in Carvana? Today.

I'm only buying the debt of those companies. What did GameStop do today? Unpopular opinion. GameStop was up 9%. Go ahead. I am not a meme stock investor, but I think the concept

of meme stocks is not dead. The concept of investing with community, the concept of, you know, watching, if it boils down to it, it's basically investors watching each other and thinking, hey, this is-

Is there a silver lining? I agree. Even though everyone lost all the money that they made in the big three or the big five meme stocks, is there like a positive takeaway from that experience? Yeah, people were investing. Maybe they got burned, but they were investing.

They were- Even though they were buying things for the wrong reasons? And the friends they made along the way. It was the friends they made along the way. Friends they made along the way. I try to think like about the silver lining of that is, all right, their first experience wasn't great, but they're probably not going to do it again. But then you're saying like they will. Maybe they will.

This is not black or white. Yeah. Right? Like there's some good in it, some bad in it. I see both sides. And I don't think it's like a cop out. I really do. Yeah. And we're still seeing really high retail investor engagement. So

I have reason to think that, yeah, there was a silver lining there. Did they all become short sellers last year? Did all the meme stock babies of 2021 become like little mini short sellers in 22? Do you see any activity like that?

You know, we don't ask about shorting. No, they bought the inverse arc though, right? Didn't that thing raise a ton of money? S-arc? Oh, are you thinking like TQQQ? No, S-arc. Oh, S-arc?

Well, TQQQ was a highly traded vehicle. So for that younger crowd, they're like, oh, this doesn't work anymore. That works now. I'll do that. I guess that's kind of like what most people do when they come into the market in their first few years. Yeah. But I also think that's kind of over general, generalizing it because a lot of retail investors are long-term investors. They're like, look, I just want to like make a nice nest egg and go away. Can we talk about timeframes? Let's talk about timeframes. All right. So, um, you talked about how the short-term outlook is challenging, but the long-term outlook is bright.

Tell us why you feel that way. I agree with you generally, but I'd love to just hear your take on this stuff. Yeah, so this is the really fun part about being a retail investor strategist. There are many, many fun parts, but 2022 was awful, but the silver lining was the Fed is getting inflation down and nothing lasts forever. That sounds very, very heady. No, all things must pass. Exactly. And the biggest thing that I tried to get our customers to realize is if you're a long-term investor, this is an opportunity right here.

And everything around you is so bearish because the short-term outlook is that challenging. I mean, it's funny, like, looking at sentiment indicators for Wall Street versus retail. I guess they were both bearish, but it seems like there were so many talking heads stepping out there and saying like, this is the worst. Things are ending. I mean, you mentioned Jamie Dimon. And then it's like, no, if you're a long term investor, the world is changing underneath your feet. Those are new trends. I mean, society is resilient. Humans can get through this. I know it's painful right now, but nothing lasts forever. And I mean, the best thing is the Fed is trying to get inflation down. And that is an incredibly bullish storyline if you want to look at long-term trends.

Because they're basically saying we want, well, A, we want to get inflation under control. But we also want to flip this lever eventually back from conservatism or where we are back to innovation. So if you have the patience, if you have the risk tolerance to wait this out and invest like you normally do, then you can make it to the other side and things will be better.

So you're citing clean energy, deglobalization, robotics AI, and then millennials coming into their economic power as four of the biggest, there's not really catalysts. These are just like bigger secular trends. Like themes. Yeah.

This is how the world is changing. Millennials coming into their earnings peak like is super bullish. The oldest millennial now is like 42 or 44, depending on what your starting date is. Yeah. So yeah, the world is now theirs. My crew is going to pack it up

and shuffle off this mortal coil soon enough. I mean, yeah, we own the world now. That's good though. It's 73 million of you. And you guys are super uptight about a lot of things. But overall, probably the most capable generation we've ever seen in a lot of respects. And I think ambitious.

And there's like a lot of positive qualities about the new workforce. I don't like millennials being spoken about. I've been bald for 15 years. No, they're not children. No, but there are things about the millennial demographic that I think lead to a very positive setup for America. Very positive.

Yeah, definitely. And we're all, not all of us, but many of us are in our prime household formation years, which I think is a really good storyline for A, the housing market. You know what the biggest difference between millennials and boomers? Because I'm in the middle. I'm like the last. Gen X?

I'm the last Gen X. Okay. I'm like the last year of Gen X. I identify more with millennials, obviously. Even like the older Gen X people. These are people that like drop Caddyshack references. I don't know what the hell they're talking about. I'm more like a millennial.

I'm actually more like a Gen Z these days. Because they're actually just like talking heads. Yeah, they're – right. No, Barry is a true Xer. Barry loves talking heads. Barry loves anything like – Steely Dad. CBGBs was like a big cultural touchpoint for his generation.

It's like the club in downtown Manhattan where like the Ramones and television used to play and Blondie. It's like New Wave and Punk. And then like his generation thinks like Stripes is the height of comedy. Phil Collins. Stripes is not good. Oh, dude, none of it's good. So here's the question. What do you think

about 2000s? We were talking about demigra- Oh, millennials. Oh, so the big difference, my experience between millennials and boomers. And I teach this to advisors, actually, who are trying to—most advisors, like, 10 years ago, all their clients were boomers. And now they have to talk to their own generation, and it's like they don't know how. Yeah. The big difference is boomers, you could, like, say something, and if you were, like, really persuasive enough in the way you said it, they could like say something. And if you were like really persuasive enough in the way you said it, they would just believe you.

Like you could walk up to like three guys in a bar and just be like, Babe Ruth had a third nipple. And they'd be like, no, he didn't. No, he did. No, of course he did. He absolutely did. They'd be like, oh, all right. Right. If you do that shit with millennials, No, of course he absolutely did. They'd be like, oh, all right. Right?

If you do that shit with millennials, they will look it up in front of you. They will pull their phone out and fact check you in the moment over anything. We have no shame. You could say – Show me the receipts. You could say – like you could literally say, oh, I got drenched. It's raining out there. And a millennial will whip their phone out and be like, it wasn't raining. And they will like, they will do that shit.

The implications for wall street and for people in our profession is you can't, you have to know what you're saying to people. And if you're making a claim, you have to have evidence. Like if you say to somebody, this is a great time to buy international value stocks, which I think we were all talking about that before. Why? Like for – I think for a boomer audience, like, oh, okay. It's not like that anymore. And that to me, generationally, I can see where you might think that's a pain in the ass to talk to people that fact check you in real time. But I think it makes you better at what you do,

especially working on Wall Street and trying to deal with millennial investors. Yeah, let me ask you this. So we all know millennials and younger investors. The thing with Babe Ruth, not true, by the way. I don't want to put that out there. Oh, I was supposed to whip out my phone and look it up. Yeah, yeah. Oh, man.

What would happen if you Googled that? Possibly true. No, I don't know. I'm just giving you like an outline of this thing. He might have. You could convince people of it. He might have. Yeah.

Go on, Callie. I think it's Magic School Bus and Reading Rainbow that made us so inquisitive. I love Magic School Bus. What was her name? Oh, Miss Frizzle? Frizzle? Oh, she was great. Wait, Reading Rainbow was my generation.

No, we're the Magic School Bus. We were still watching. That's the guy from Star Trek. And SpongeBob. Next generation, right? I was too old for SpongeBob. Oh, okay. Okay.

What were you saying? Okay, so financial—something I've thought about was— How big of a tangent did I just take the show on? I'm sorry. I have no idea. Oh, we started talking about millennials. Yeah, so you guys are like awesome millennials, the two of you. Oh, thank you.

So I would just say that. Duncan's an okay millennial. Okay, so my question about financial advising when it comes to millennials and younger investors, I feel like you're going to have a lot of clients roll in with some like really alternative investments. I mean, maybe they held on to their meme stocks. Maybe they have crypto. You know, maybe there's like some endowment effect going on where it's like, okay, well, I really like the stock because I like the product. I'm wondering how financial advisors, how well equipped they are to deal with younger investors coming in and basically saying, well, I have this.

What do you think? I don't know that we see that much of that. I don't think a lot of those people need financial advisors. I think you need financial advice when the either complexity gets to be that you need outside help, like you have legitimate questions, and or it's an amount of money that you're not comfortable managing. And I feel like for most people that are under 30, they don't necessarily need that. But do you think they'll get there? Oh, I know they will. I'm positive. So what if they get there and they're like, well, I have, I have, well, that's when we teach them about tax loss, uh, uh, write-offs. Listen, when, when you, when, when you look for a financial advisor, it's not because your birthday came up and you're 40 and it's like, oh, I'm 40. I need an advisor. It's always a life catalyst.

I'm starting a family. Inheritance. My dad died and left me money. I'm making a career change. I got fired. I got hired. I'm selling a business. It's always – so that could happen to people at 20, at 30, at 40. So to Mike's point, it's complexity and a sense of higher responsibility usually because a dollar amount has gone up. That's the thing that drives somebody saying I need financial advice. So for – that won't apply – unfortunately, that won't apply to everyone in every generation. It's always going to be a subset of people that really need help. But how about this? The bigger point about what do you do with people that want to do what you're talking about? We'll do it. There's nothing wrong with eating your vegetables and also

drinking a milkshake. Like you can do both things. Yeah, I agree with that. Yeah. And I do that. I just, I wonder if advisors are, and you say that it's not going to be a big issue and i totally believe you there but like i mean millennials and younger investors they just feel like a different breed every generation they do now they do now they'll grow up you know what happens no i don't mean that condescendingly i mean they will get old right right right you get you get engaged you get married you don't time for this nonsenseendingly. I mean, they will get older. Right, right, right. You get engaged. You get married. You don't have time for this nonsense. You need somewhere to live. Once you need somewhere to live, that means you have to take out debt.

Once you take out debt, the pressure of your career amplifies. It crowds out a lot of the other bullshit that made you feel special and unique. Then you have kids. It gets even harder. And all these things are good things, by the way. It gets even harder. You're not like, you don't have time to focus on even better meme stocks life gets even better but they tell me but you you you don't have the time for frivolity with your finances and so every generation turns

into their parents it's only a matter of time i've said this before i'm eating i'm eating cottage cheese with pineapples in it i I mean, I am my dad. I started eating cottage cheese for breakfast, too. Yeah, there we go. I mean, you're an old. Welcome. I put cottage cheese on my McGriddle every morning. That's my go-to.

Did you have fun today? I had so much fun. Okay. Callie, this is great. We're so happy that you came. You'll come back? Yes, I'll come back. Okay.

You know dozens of people are going to listen to this, right? I know, I know. Okay. I mean, I'm going to send it to all my friends. We could have gone for another hour. This is a lot we're going to get to. For sure. We're so happy to have you.

So we do this thing to end every show, which I'm sure you know, called Favorites. And you're going to go first? Yeah. And what do you think the Compound and Friends listeners and viewers should be paying attention to, reading, watching? What do you got? Hit us. Okay, so reading, I've got a really good one. And shout out Lule Demise.

She told me to read this book, The Seven Habits of Highly Successful People. Amazing book. That's been around for a while, right? I know it's one of the best. I haven't read it. No, for a reason. Very good. For a reason.

Very good. Is that Stephen Covey? I think it is Stephen Covey. Why do you like it? So I'm only one of the seven habits in. I'll be honest. But it's all about how to be an effective person. Procrastination number one.

Which habit are you up to? Cottage cheese? Perception. Okay. Cottage cheese was the intro. Okay. It was like eat cottage cheese. All right.

Let's get into the real stuff. Okay. Yeah. So I'm in more of the perception and understanding that people have different perceptions. And, you know, if somebody is acting the way they are, it's probably something going on with them. That's a really crude way of explaining it. I should probably read more. But it's all around perceptions and understanding why people make the decisions they do. And I really like heady books.

I'm weird like that. I do heady stuff at my job and then get off and, you I really like heady books. I'm weird like that. I do heady stuff at my job and then get off and read heady stuff. But Seven Habits of Highly Successful People, really, really good. I don't have really good

streaming recommendations. I mean, I'm watching the Harry and Meghan. It's slow right now. It's slow right now. It's a little slow, yeah. Everybody says white lips. You can't get enough

of this Harry and Meghan thing? I love the Monarchy Man. I have no opinion because I'm not paying any attention to it. What is it that's attracting your attention to this thing? I think it's something about how society has accepted this thing, and I'm talking about the monarchy

here, but you can apply this to a bunch of different things. Society has accepted this one thing, and it turns out that it was all just... Made up. Well, made up, but it had, like, chinks all over the armor, basically.

Society seems to be rebelling against this at an accelerating rate. Like, the monarchy has been falling apart slowly for a thousand years since the Magna Carta. I thought they loved

the royal family. But no, I feel like a deal with Spotify for a podcast and a Netflix show have accelerated something that like the English Enlightenment, like it took hundreds of years and then like six months. Yeah. That's to me, like from the outside looking in, that's how quickly it feels as though this whole monarchy concept is like crumbling. It feels like it's happening really fast.

Exactly. And that's happening all around society too. Meghan Markle brought down the British royal family. Yeah, she did. Effectively. Yeah. And you're down with that shit. All right.

I'm down with it. I didn't say I was down with it. I just like watching it happen. No, but you gave me a little bit of, damn right she is. All right. All right. I don't hate it. All right, what else?

I mean, UNC basketball, go Heels. I had to throw out a target. Did you go to UNC? Is that a trick question? No. Oh, my God, yeah. The listeners don't know. Oh, I'm sorry.

Yes, I went to UNC. I grew up in North Carolina. Yes. Huge, huge Tar Heel fan. Duncan. Duncan's from North Carolina. You should mention that. Hey, you're from North Carolina huge huge Tar Heel fan Duncan's from North Carolina hey you're from North Carolina do you know Duncan you should talk a little bit about

the UNC team that's just off a 13 win streak UNC Wilmington my alma mater nobody wants to hear that shit UNC Wilmington's coach up until a few years ago was actually one of our assistant coaches and the name escapes me but yeah UNC system there you go I visited Chapel Hill once beautiful place up until a few years ago, was actually one of our assistant coaches. And the name escapes me, but yeah, UNC System.

There you go. I visited Chapel Hill once. What a beautiful place. Yeah, oh my gosh. It's just, it has my heart, but I'm biased. I grew up in North Carolina, watching a lot of UNC basketball.

We were number one preseason. Not so great now, but that tends to be our projection every year. And the Tim Ferriss Mark Manson podcast. Who's Mark Manson? Mark Manson is the author of, uh, the subtle art of giving, not giving up. Never read that. Oh yeah. Yeah. I haven't read it either, but, and I listened to Tim Ferriss from time to time, but I listened to this episode a week ago and it's all about just basically how Mark Manson became a blogger. And he just delves into like

his creative process a lot, like how he, how he started a blogger. And he just delves into like his creative process a lot, like how he started writing the book. And I just love breaking the fourth wall and hearing how other, you know, more creative writer-minded people do it because that's who I am. I went to J school. I would consider myself a sensitive writer

when it comes down to it. I'm a numbers person, but that's truly who I am. So hearing somebody else's perspective on how to be creative, how to write, uh, is just really, I don't know. It's just really interesting to me. I'll definitely check that out. Cause I'm, I'm, I'm interested in the same thing. So what's, what's J school? Journalism. Journalism school. Good question. Oh, who was the journalism professor at, uh, UNC? Chris, uh. Chris Rauch. So I visited his class.

Chris Rauch is the reason why I'm here. Uh, were you there when I visited? No, you're older than that. Wait, how is it the reason that you're here? We invited, I invited you, not Chris Rauch. Well, okay, that's true. Chris Rauch inspired you to, uh, look at finance? Chris Rauch is the reason why I took a business journalism class.

Okay. And I started off as a reporter and then I turned into an analyst. Wow. Wouldn't have happened without him. You know who else? Julia LaRoche. Yeah. Yeah.

A whole bunch of people that I know came out of Chris's class. Yeah. And he had Talking Biz. Talking Biz News. Talking Biz News where he chronicled which financial journalists were going like from CNBC to Wall Street Journal. Like he did that for a long time. Yeah. It's like you switch jobs and like Chris has already written about it. You're like, I haven't even Street Journal. Like he did that for a long time.

Yeah. It's like you switch jobs and like Chris has already written about it. You're like, I haven't even announced it. How'd you do? Yeah. So Chris invited me down to lecture his J school class on how the stock market gets covered and blogging, which is something that I was uniquely, it's probably 10 years ago. But I remember that. It was kind of cool.

Yeah. Shout out to Chris. Is Chris like, you think he's listening to this? I'll tell him to listen to it. He's at Quinnipiac now, actually. Is that right? Okay. He's the dean of Jason.

Tell him to listen to this episode. Michael, you have a favorite for us this week? Yeah, I got a few. Okay, go. I was re-watching Hall Pass. It was on HBO. I don't know. What is that?

Really? Owen Wilson, Jason Sudeikis. I don't think I saw it. I know what it is. I don't think I saw it. It's very funny. Okay. What else?

What did I see this week? Oh, I went, I saw a horror movie in the movie theater called Megan. You know about this? I was going to go. Was it good? It was incredible. It was so much fun. No, it's a doll.

It's like another Chucky. It's so much fun. It's like, it's way, I mean, I like Chucky, but this is way better. Were people in the theater like jumping on your seats? It was me and four tweens. That's it? The whole theater? That's it.

It was scary. Did you sit right next to them? Yeah. It was funny. Alison Williams was great. It was just, and it was 90 minutes. I was home before Rob even knew I was gone. Oh my gosh.

I have such a rant about how long movies have become. I'm like, if you can't do it in 90 minutes, why? Make it two. So Babylon's like three hours plus. I want to see it, but I'm not watching that. No, make it two movies. Yeah. Like, why does it need to be?

So here's the great thing about movies these days. Megan will be on, you can watch it at home in 30 days. Right. You know what I mean? Like the minute it leaves the theater, which it does after a week because everything's a flop. So I saw somebody tweet about something and I thought it was kind of a joke. And then I went on Tomatoes and it got great reviews from the critics.

I was like, oh, wait a minute. Well, did you like Annabelle? I love all those movies. The Conjuring movies. I love all of them. Same. Love. Okay.

So this is not like that, but sure. Same thing, I guess. That movie Babylon flopped. Babylon flopped. I still want to see it, but I'm not doing it in the theater. No way. Who's in that? Brad Pitt, Margot Robbie. Ed Norton. At all? Is Ed Norton in that?

I think it's a huge cast. And nobody went. I was very disappointed with Glass Onion. Sure, I had fun, whatever. It was just such a disappointment. I haven't seen it, but I did recently watch the first movie that's escaping my mind. It's,

what's the name of it? The first Knives Out? Knives Out. That was awesome. Yeah, I thought it was really good. But it's hard, I mean,

sequels are never as good as the original, right? Yeah. So I'm a little worried about watching Glass on You for that reason. I thought this was different.

It just wasn't very good. No. You listen to music? Do I listen to music? Yes. Talking heads? I like the talking heads. I went through a talking heads phase during COVID.

Okay. You ever listen to, you ever see on the Apple Music app, they're like putting out things in spatial audio now? No, because I use Spotify. I don't know what it means. Can you explain it, Duncan? What is spatial audio? I actually don't know that much about it, but it's kind of, it surrounds, it's supposed

to be immersive. It's immersive like- In your headphones? No. Yeah. Like you have AirPods in, right? What is spatial audio? I actually don't know that much about it, but it's surround sound. It's supposed to be immersive. It's immersive. In your headphones? Yeah, like you have AirPods in, right? Yeah. And the music is coming to you from one direction. I love it. If you turn your head, it is still coming to you from that same direction as though you're in the room.

Does that make sense? How can you be bearish? How can you be bearish? It's kind of like using the accelerometer in the AirPods. Right. So you're moving around physically with the AirPods in your ear, but it's making it as though you're in the space that the music is being played. Anyway. I love that.

So I started clicking on. They're like putting out old music remastered in this, or maybe not remastered, but reformatted in this spatial audio. Yeah. And I can't believe how cool, and I don't listen on AirPods. Like, I have, like, real headphones. I'm, like, an audiophile. They just, like, last week I saw the concert for George Harrison.

They put it out. This was, George Harrison died in, like, 2002. They put, filled Royal Albert Hall with all his friends, and everyone came out and played his songs, like Clapton and just everybody. So they put that out in spatial audio and you put it on your ears or you're driving and it's in your car and you just like really feel like

you're at this event. So my recommendation this week, find something, live event or otherwise, on Apple's music site in Spatial Audio. Is Spatial Audio its own category? No, but they'll just say new in Spatial Audio. Like where it would say Dolby or something and say Spatial. Right.

So they're just dropping old stuff that you probably either never saw or whatever, but in the new format. Maybe I'm tricking myself with the thinking that i notice but i feel like it's really better it's very cool you know what i'm you've checked it out what's your favorite george song i just dropped the reference to all things must pass while we were recording the show maybe accidentally maybe not uh here comes the sun he wrote that right yeah no i think that the album all things must pass start to finish is like on a par with any beatles album like truthfully it's like maybe not as well known but i think like if you say what's his best work did he do one of my guitar john the weeps yep yeah and clapped and

played on that yeah uh revolver is the best that's a good one. Yeah. I like What Is Life. Well, listen, check this concert for George. Again, it was taped in 2002, but Ringo's on it. Paul McCartney comes out on stage. Monty Python comes out. Wait, Monty Python's a person? No, it's a comedy troupe. But they were friends with George Harrison. Oh, okay.

So all his friends come out and pay tribute to him, and now it's in spatial audio. It's worth listening. All right, we're going to wrap up. This was so much fun. Thank you. Oh my gosh.

Thank you. Thank you for having me. Mutual admiration society over here. And, and, uh, we're going to have you come back next week. Be busy.

I'll fly back up. All right. Everybody follow Callie. Where do we follow your stuff? Tell, tell the audience where they can read more of you. I know you're a tweeter. I am a tweeter.

Callie A. Bost, B-O-S-T. Follow me on Twitter. I post on LinkedIn. Thanks, Elon. And IG, hopefully one day. And shout out eToro. Shout out eToro. eToro has a blog. If people become a client, can they just start sending you emails?

If you want. It's probably easier to get me on Twitter. Callie, you are a treasure. Thank you so much for coming on. It's probably easier to get me on Twitter, but. Callie, you are a treasure. Thank you so much for coming on. We had the best time. We would love to have you back someday. I'm coming back. All right, awesome.

You did a great job. Duncan, great job this week. John, knocked it out of the park. Shout out Nicole. Shout out Compound Nation. We will be back with an all new episode next week. Have a great weekend. It's so fun.

That was the warm up. They have disclosures at the meetings. That was the warm up? Yeah, you ready to really do it? Yeah, let's do it. I want to give you a feel for the show. Yeah, oh my gosh. That was so much fun. Yeah.