The Pomp Podcast - #870 How To Invest During A Recession w/ Darius Dale

Starting point is 00:00:00 Speaking of, here's Darius Dale. Darius thinks that's funny. Darius, where's the coffee? That was hilarious, dude. Right? I mean, is that not the game? I'm sorry if I was laughing in the background. That was great.

Starting point is 00:00:13 I love that you showed up in the Diamond Hand shirt. Oh, yeah, absolutely. Is it not dope? It's phenomenal. I'm taking these to go, actually. Yeah, no. Oh, yeah. With the Diamond Hand shirt and Jordans.

Starting point is 00:00:23 Oh, come on, man. Get the Cavaliers. Yeah, I still got it a little bit. Sign of the tank. We got a lot to talk about. Yeah, a ton to talk about. The Fed, are they just being little babies and they don't want to actually raise rates by 50 basis points?

Starting point is 00:00:39 What's going on with the 25 basis points? I say they're bringing a water gun to an inflation war yesterday. No, yeah, I mean, so these guys are firefighters, right? I mean, imagine showing up to 9-11 with a water gun, and that's effectively what they're doing. So the markets enjoyed that yesterday. A lot of what happened with the market response It's a function of derivatives, markets, dynamics.

Starting point is 00:01:00 You have OPEX, options expiry this tomorrow. And so a lot of those puts are coming off the table and that's causing this sort of mechanical lift to the market. But the reality is the Fed more or less told you yesterday they're going to mechanically raise interest rates and mechanically shrink its balance sheet until they break something. Now, they're never going to say we're going to break something. And that's sort of implied by their growth forecast

Starting point is 00:01:26 where growth never goes below trend employment rate never goes above trend um but they've got uh interest rates uh if you look at um the dot plot um going both above trend and so it's pretty clear that the markets and the economy are on a collision course uh for the fed to break something it's just a matter of when not if is it guaranteed that they're going to break something it's not guaranteed but let's be let's be realistic right like the fed operates in this sort of vacuum whereby they believe monetary policy has, quote-unquote, long and variable lags. That's one of the creepiest things they say. They always say it and, like, look sheisty when they say it.

Starting point is 00:02:05 And this is true, right? We know monetary policy operates with long and variable lags, but those lags have become shorter, right? There's so much forward guidance now. Every time they open their mouths, the markets take what they're saying and reprice it into bond markets, into rates markets, into equity markets, et cetera. And so those lags have shrunk over time. It's impossible to measure how long the lag is.

Starting point is 00:02:24 But what I mean by this is at the end of the day, they're not going to know they've broken something until the markets tell them they've broken something. That's the problem. Inflation is not going to come down fast enough to get them off of this policy path. Why did they only do 25 basis points and not 50? Were you surprised by that?

Starting point is 00:02:41 No, I'm not surprised by it because the markets were pricing in 25. If you look at sort of the Fed does not like to surprise markets, at least not going back to the Bernanke Fed and Yellen Fed. Greenspan wouldn't mind surprising. Obviously, Paul Volcker didn't mind pissing people off. But the reality is, in this new Fed regime, it's very unlikely that the Fed will ever do anything that's not priced into the market for that meeting. And so only 25 basis points are priced in. And part of it, obviously, we've got a lot of volatility. Russia, Ukraine is a big risk.

Starting point is 00:03:10 But the reality is, they don't have a choice. They're doing the littlest they possibly can do, but they're going to do the littlest they possibly can do for as long as they can possibly do it until something breaks so is it fair to say they're just going to keep doing like 25 basis points every meeting as of right now unless something changes just 25 basis points every meeting until inflation comes down yeah so i mean we obviously going back to our uh last week's discussion you know we all know at least the four guys in the room or four and a half five guys in the room we all know that inflation's going up in march i don't think anybody's going to be shocked by that um we could see in may when the fed does its meeting in may it's very likely that they

Starting point is 00:03:48 outline uh quantitative tightening which is when the fed shrinks its balance sheet basically sends all the liquidity uh dynamics going in the reverse way um for risk assets and so um we're going to get uh the data on that they might choose to to speed up uh their policy uh tightening projections or tighten at 50 basis points of that meeting but what's more likely to happen is they maintain this sort of 25 basis points per meeting um um outline and just use the balance sheet as kind of the flex tool if you will yeah it's um does that mean that a recession is the only outcome now like like if they keep doing this then we just get recession yeah so it's it's here's the problem again with markets right the fed believes and according to their dot plot according to their projections

Starting point is 00:04:34 which again are ridiculous um they're going to take so i sent you a few charts i don't know if you had time to load them up or not, but one of the charts is called dot plot, where we show the feds, you know, the two-year, the two-year, the one-year and the two-year forecast for the fed funds rate relative to their longer run rate. And this is the first time, if you look at their two-year projection, that we've seen the dot plot, their dot plot going to restrictive territory, i.e., they think the federal funds rate is going to be higher than the level of federal funds rate that is, that'll cause the economy to slow. And so, you know, that's a meaningful signal in and of itself, but they didn't change their GDP or their unemployment rate projections to say that they're

Starting point is 00:05:13 going to go below trend. They're going to go below a level that is sort of indicative with a healthy expansion. So that's a ridiculous expectation. And so to answer your question, will we go into recession? There's no guarantee that we have to go into recession. It's that the conditions are in place for a recession to occur, particularly given that the Fed is likely to be tightening for longer than it should. And start it later than they should. And start it later than I told you, we've been talking about this for a while now. That was the lowest the unemployment rate has ever been at the beginning of a tightening cycle. That's the second tightest that the yield curve has ever been, if you look at the 10-2 spread, at the beginning of a tightening cycle.

Starting point is 00:05:50 And so what those two indicators are telling you is, one, the unemployment rate being as low as it is, that we're pretty late in the business cycle. And then number two, the yield curve being as tight as it is, as narrow as it is, is telling you that we're not only late in the business cycle, but we're already slowing cyclically, uh, to a place that, you know, to undetermined location, but that undetermined location has a very high or very reasonably high probability of being a recession. Yeah. It's, um, it's fascinating when you start to think about, uh, they're going to keep doing this. If we go into a recession, they might not necessarily reverse course right away either. Like they're so slow to act based on this data. Uh, what would be the, the alarm bell to them like if stocks dropped 20 percent yeah they step in and and uh could they do an emergency rate

Starting point is 00:06:34 cut or what would they do yeah so great great question so to me that that is the problem for markets this year is that because the fed got started so late there's going to be and because inflation momentum continues to accelerate we talked about the acceleration in median cpi and the broad baseness of inflation the acceleration and sticky cpi both of those numbers are running get 6.5% on a month-on-month annualized basis. Those numbers are way too high for in terms of a 2% core PC target. And so in terms of like what can stop, prevent a recession, prevent the Fed from tightening us into a recession, the only thing that's going to tell them is financial conditions. And that's actually the first chart I showed you. I sent you the financial conditions

Starting point is 00:07:14 chart where the red line shows the Goldman Sachs financial conditions index. And I'll summarize kind of how that works. When the index value is low in that particular chart, what we're showing here is is is financials are easy so the equity valuations are high credit spreads are very tight you know the dollar is weak you know all the things that would be supportive for like the price of bitcoin all those things are uh good when the financial conditions index is high it's telling you the reverse is true valuations are are low credit spreads are wide dollar strong you know you have disinflationary forces in the market and so right now financial conditions are still extremely loose by by all standards you pull the chart back far enough and you realize

Starting point is 00:07:51 It's like, hey, look, they're still as easy as financial conditions were at the peak of the tech bubble back in 2000, 2001, or back in 2000. And so there's a long way to go in terms of the markets having to finally tell the Fed to stop. And so ultimately that tells me that, look, the downside for something like the stock market could be another 10%, 20% from here pretty easily. I mean, in terms of where we calculate the Fed put, we do it through a variety of different lenses, whether it be policy or looking at historical analogs, this current growth inflation policy setup or positioning setup for that matter. We get to like basically down 29 to down 34 percent peak to trough for the S&P 500 pretty consistently across those nine different frameworks. Not, you know, so we were somewhere between let's call it 3200 and 3400 on the S&P. We don't even need to get into recession before. If we saw $3,400 S&P, the Fed will be cutting rates.

Starting point is 00:08:42 And so that's the only thing, in my opinion, that will prevent a recession is if the financial markets collapse enough to tell the Fed to stop. Yeah. So that's basically what they're looking for. It's like we're going to keep doing this until we see somebody yell uncle, essentially. And really, it's asset prices, even though they're not focused on asset prices. I'll rephrase it, actually. the what jay powell said yesterday is we're going to do this and and and stick the landing perfectly and perfectly slow the economy bring demand in line with this new reduced level of supply both

Starting point is 00:09:11 labor supply and also you know shipping and all that stuff bring demand perfectly in line with this new labor level of supply even though six months ago we didn't realize it was a low level supply causing elevated inflation but somehow we're going to perfectly stick this landing but obviously all of us in financial markets are watching this like you're not going to perfectly stick this landing you're going to over tighten or you're going to tighten until the market breaks either or it's both of those are bad outcomes in my point so that's it's we're sort of headed for a very negative um kind of decision tree if you will the only thing that's a positive outcome in between now all this is a you know ceasefire in russia ukraine but i'm not even sure how positive

Starting point is 00:09:46 that is right i mean it's positive from the perspective of you know not losing any more human life and human suffering but if we don't remove the sanctions and you know russia still sort of separate and apart from the rest of the rest of the rest of the global financial world and China and Russia are doing this and the US and Europe are doing that if those things don't change then the real true bear case associated with the Russian Ukraine as it relates to financial markets won't change and so I worry about investors that are sort of gearing there's a lot of investors that are fearful of having short exposure right now and in fact in OPEX are about to lose about one-third of all S&P you know that's that type put exposure on Friday people

Starting point is 00:10:25 were kind of scared to put that on. You can sort of sense that because, one, the Fed is not being overly draconian. They're going to be measured in how much they destroy the economy and financial markets. So that's positive at the margin relative to prior to the meeting when they could have been unmeasured. They could have been unhinged. So they took that off the table. But in the context of losing all that put exposure, losing all that short exposure, people are afraid of this Russia-Ukraine catalyst. Like, what if they shake hands on Sunday? What if they shake hands on Monday? What if they shake hands on Tuesday? But the reality is once they shake hands, you get rid of that positive catalyst and you look forward next month the month after that the quarter after that the quarter after

Starting point is 00:10:59 that and there's no positive catalyst for a while what should i do i was gonna ask what what did you think of the market's reaction yesterday i mean the s&p was down a bit but it bounced right back bitcoin same thing did you make anything of that or no yeah so the market's reaction yesterday was was was it was somewhat interesting i mean it was to be expected so as long as they didn't effectively say we're going we're going to tighten until something breaks you know he They said what they had to say in the press conference to sort of assuage those fears. And so what happened yesterday is that a lot of the sort of puts and short positions that were open, let's call it back in January, back in February, early March, to account for this meeting and also to maybe position for some of the Russia-Ukraine dynamics, those puts, they get covered. They get bought back or sold.

Starting point is 00:11:44 So what happens is the positions get closed. And so the closing of those positions, because they're being offset by hedges, you know, by people who sold you those puts, the closing of those hedges is causing the market to rise. So it's not like a fundamental choice of investors saying this was a positive outcome, therefore I got to buy stocks. It's more like this was not as bad as an outcome as I thought, therefore I got to close my short. And that's what happened yesterday. And so those types of dynamics do perpetuate meaningful market, you know, squeezes, particularly in bear markets. The problem is, in order for that to sustain, you actually need good news. You need a series of good news.

Starting point is 00:12:20 And the easiest series of good news, and the one that matters most for financial markets across long periods of time, is accelerating growth. Well, we don't have accelerating growth. We have a globally synchronized slowdown, whether you look at China, Europe, US, all the major economies in the world are slowing down simultaneously right now. So that's out the picture. You look at policy, what could cause a meaningful, sustainable shift? Well, obviously, the Fed's doing the reverse in terms of policy.

Starting point is 00:12:44 There was a headline on Wednesday morning about China with this rhetorical shift in China. They had a meeting, basically sort of stopped the bleeding, stopped the massive crash in Chinese Chinese stock markets. And they sort of kind of spooked the market in terms of saying, hey, look, not spook the market to the upside in terms of saying, hey, look, we're talking about more stimulus, more of this and that. They haven't followed through yet. And if they don't follow through, then that's going to be a hard sell in terms of all the relief rally we saw in China. So, again, I think this is a tough year if your goal was to sort of try to make money and compound returns, because the reality is there's so many headwinds working against that. And unfortunately, the historically, I think the government has kind of played the approach of kick the can down the road. Is that kind of the playbook that you're seeing them say now, which is the six or seven rate hikes throughout the year, small rate hikes kind of gradually introduced or like are they kind of taking action now? So I'll start by saying they're definitely not kicking them in the knees.

Starting point is 00:13:42 I mean, you know, no, but that's a good question. So they're doing what they have to do. They could do more, but obviously, given the geopolitical situation, they don't want to do more. Right. They want to do the least amount possible while also at the same time sort of, you know, you know, given the appearance of returning the economy back to price stability, to borrow a quote from Powell. And so, you know, could they do more? Could they accelerate in the future? Sure, yeah, that's a likelihood. I don't think that they're going to.

Starting point is 00:14:12 I think what's more likely to happen is that this thing is going to be like watching paint dry until it isn't. And eventually what's going to happen is the Fed is going to bring the policy rate and the balance sheet to places that the market won't like in the context of the economy slowing down. And right now, if you look backwards, the economy is doing just fine, right? Real consumer spending is still at an elevated level. retail sales came out yesterday they decelerated but they're still decent growth rates um you know PMIs are still comfortably above 50 six months from now they none of that stuff will be true it's very unlikely for that stuff to be true in fact uh pop the last uh chart I wanted to show was the last one the energy crisis slide um you know so the the the chart shows you know energy

Starting point is 00:14:55 crude oil prices and then it shows the the trailing two-year change in crude oil prices and so you know whenever you go above 100 on that trailing two-year change like it's it's effectively an energy price shock and you pull this all the way back to the 1970s whenever you have an energy price shocked you know one of two things tends to happen we go into recession the stock market collapses or both or both of those things happen at the same time the 2005 going back to 1970 has been like you know let's call it seven or six or seven or eight of these episodes these dynamics 2005 is the only one that didn't end in a recession or a market collapse and so this is still ahead of us right like this is still something that's in the pipeline coming down the pike you know

Starting point is 00:15:34 as months and quarters are ahead of us do you think we get seven rate hikes this year uh it's unlikely um i think at some point the fed's gonna have to pivot dovish right inflation's not going to be that signal so they have three let's go back to what the what's the fed trying to do here maintain price stability promote maximum inclusive unemployment or employment so there's sort of two there are two stated mandates right from congress those those are the two mandates and then there's a sort of third hybrid mandate because they understand how financialized the economy is right like in the hybrid mandate is financial conditions like the stock market up enough or you know stuff like that so we know inflation is not going to come

Starting point is 00:16:11 down at any point in time over the next 12 to 18 months for them to say mission accomplished let's start cutting rates i mean that's that's how that that signal was a year or two from now uh the unemployment rate going up is a breaking of something in the economy typically unemployment rate doesn't go up until you get into recession and so that would obviously catalyze the breaking so they won't avoid that so it tells you in terms of their their uh you know kind of mandate their three mandates financial conditions is the only mandate where they're going to get feedback to say stop doing what you're doing which means the market has to go down you know in order for this fed to not effectively cause a rise you know a sharp rise in unemployment rate it's like either

Starting point is 00:16:53 that's going to happen and drag the market down because of it or the market just has to go down sooner than that occurs. So the Fed can stop. And I don't, I, you know, so to answer your question, I don't know when that is going to occur specifically. It's impossible to know that in real, you know, ahead of time. I have views on when that might start to occur. The earliest that could start to occur, at least according to our growth models is sometime in mid to late Q2. I don't think it'll be mid to late Q2 in terms of the Fed pivot. It's probably going to be something that looks like Q4. So you're probably going to have to have like a nasty summer and fall from a financial market perspective in order for the Fed to sort of get the memo that, look,

Starting point is 00:17:29 you've already done enough. So it's is it fair to say we'll get close to seven, maybe, but not probably four or five or five or five and a couple hundred billion, three or four hundred billion dollars in QT. Yeah. And, you know, the Fed markets might not like the outcome because, again, the this the number one problem I've set this in every day or every other day, at least since, I don't know, probably beginning of November, the number one problem with 2022 is growth expectations. You know, the world, the Bloomberg-contented economists,

Starting point is 00:17:59 Goldman Sachs, Morgan Stanley, J.P. Morgan, all these economists, they get paid hundreds of thousands of dollars to put out these forecasts. They continue to believe that the U.S. economy is going to grow above its potential growth rate in 2022. As recently as this morning, as recently as this morning,

Starting point is 00:18:15 with everything we know that's happening in the geopolitical sphere, that hiking interest rates, you know, obviously financial conditions tightening, they're still talking about 160 basis points, higher than our potential growth rate that's obviously not going to happen so those numbers need to come down and so the fact that those numbers need to come down at the same time we don't really have a real good sense of what the terminal destination is on the downside risk in

Starting point is 00:18:37 terms of the economy that's a that the fact that those two things are happening simultaneously creates a lot of market risk dairies if you had no investable assets and you had five ten thousand dollars today would you put it to work or would you hold it for an opportunity cash in case of a recession or something like that? So it depends on what my duration is. So for, I would split that up. Let's say if I had 10 grand, I'd take 5,000 and say, this is my long-term, this is my pension fund retirement type accounts. You dollar cost average with that. You know, don't try to be a hero with that. For the other half, I would say this is more of my tactical. I can use this to take advantage of big dislocations in the market. And then I would be waiting on that to buy,

Starting point is 00:19:15 let's call it, using Bitcoin as an example. I would, I would diamond, I would, I would two hands it somewhere around 28 29 000 yep so i've been over here doing uh deep research trying to figure out quiet yeah i've been trying to figure out what um uh the average person if they said hey a recession is potentially coming and so i figured what they probably would google something like best way to invest in a recession yeah right some sort of search term like that and uh the first thing you get is an ad uh that says recession resistant asset invest in farmland high ir irr okay uh and of course they have all the normal things farmland outperform the s&p 500 it's a stable high yielding asset yeah yeah whatever net irr uh seven eight percent cash yield two and a

Starting point is 00:20:05 half percent etc so addresses recessionary type period but not necessarily inflation given the yield that it drives. Then there are articles that say five things to invest in when a recession hits. And the five things that they say, number five is invest in yourself. Yeah, agreed. Okay.

Starting point is 00:20:25 Number four, purchase precious metals. Number three, consider buying real estate. Number two, focus on reliable dividend stocks. And number one, seek out core sector stocks. And it is not the best time to flee equities completely, according to experts. When I see that, I think to myself, precious metal investments, what we've seen in the past is in the recessionary periods,

Starting point is 00:20:50 gold and other metals go down just as much as other assets. Yes, particularly when financial conditions get crazy. Yeah. Two is real estate's out of touch for most people, right, in terms of they can't just on the dime go and buy real estate. So they're going to go into some sort of REIT or something or whatever. And then the advice is like core sector stocks are reliable dividend stocks, which doesn't necessarily feel like that's going to outperform in a in a recessive period either

Starting point is 00:21:15 so i kept going and i went to a number of different um what i would consider asset management firms media companies etc and if i look at this one it says what are the best industries to invest in during a recession discount retailers consumer staples health care utilities service and repair companies sin industries like alcohol tobacco marijuana chocolate static industries uh funeral services health care and real estate i kind of look at it and it's like i keep telling you to buy stocks i don't understand this these lists yeah put these lists together like mutual fund company of america like then it says 11 tips for what to do gold is good invest in real estate keep the recession-proof stocks you have buy recession-proof stocks earn

Starting point is 00:22:10 money during a recession with dividend stocks lower your risk with treasury bonds keep the lights on buy utilities honor your elders invest in health care and senior living hit your 401k contribution protect your portfolio be cash heavy for now it's like five like that was five different like ways this independent orthogonal lanes of like investment decision making so like the reason I went and I looked at it and read all that. It's like the advice seems just not very helpful, right, that people are getting. This is why my company exists. I mean, this is the kind of stuff you get when you Google

Starting point is 00:22:44 as opposed to asking someone who has a background in institutional finance and quantitative ability to actually get you to the right answers. I mean, if you want to talk about what to invest in a recession, this first starts with having capital to invest in a recession. So that means don't lose a significant chunk of your assets along the way to recession, which is generally when a lot of the actual pain takes place. Markets tend to bottom in recession, right? They don't bottom after recession.

Starting point is 00:23:11 They bottom during the recession. And so, you know, you got to make sure that you're not overly long, you know, high beta risk assets. Quite frankly, I just know that's the best thing I can say is like, look, right now is not the time to be levered long high beta risk assets. There's probably more downside, more pain to come. And if you can avoid, you know, just taking a 10, 15 or even 20 to 30 percent drawdown of your capital, man, you are going to be really set up to take advantage of some price dislocations, you know, three, four or five, six, nine months from now, 12 months from now. Who knows when we see, you know, kind of the whites of the eyes of the nadirs for a lot of these charts.

Starting point is 00:23:47 But, you know, it starts with, you know, being smart about the decisions you make leading into recession. And then when you're in recession, assuming you did your job well and didn't lose a significant chunk of your assets, then it's okay. I don't want recession-proof stocks. I want to buy stocks that will do well when the economy is recovering in the middle of the recession, when they're actually cheap. I want to go buy assets like Bitcoin that somebody had to sell because they needed liquidity, and then I can buy it relatively cheap for the next halving cycle. That, to me, is the appropriate strategy. This is the whole point of what I do for a living is to figure out where we are in this market and economic cycle and say, hey, look, probably good time to sell, probably good time to buy. I make a lot of decisions along the way for institutional customers, generally speaking, and they get a lot of value out of those pivots because that's what they're trying to do all day.

Starting point is 00:24:36 But generally speaking, for the average investor, there's only about, you know, let's call it one or two big pivots you need to make per year. and going back to the late last year last fall going back to early november in particular the big pivot you needed to make was okay i need to not be long too many high beta risk assets and then eventually the next big pivot i think will be when do you buy bonds heading into sharper deceleration and growth last thing i want to talk about bitcoin uh positive or negative if uh we watch the fed play out how they want to play out do you think that it reacts positively or no no it's unfortunate it's it's it's unlikely to react positively um i am very encouraged by how it's well it's traded i mean i think it hasn't made a new low since like late january um so

Starting point is 00:25:20 let's talk about lows around here yeah no no that's that's super that's super encouraging and so you know one it's telling you that like the ultimate bear case right like let's play it forward six months from now nine months from now everything i'm talking about today will be you know you know more readily available in data and charts. You know, you have an earnings slowdown, you have operating margins, you know, companies, corporations contracting, you're going to have real income still negative, consumer spending much lower than it is currently in terms of growth rate terms. You know, you're going to have a lot more sort of obvious pain. And I think that process of going from today where the economy and the economic outlook is still fairly rosy amongst

Starting point is 00:25:57 consensus, you know, again, because this believes that oil is a problem and the geopolitical situation is a problem, but they don't believe that fundamentally, inherently, the economy is a problem. And we definitely see enough underneath the hood in terms of consumer confidence and decline in real incomes that would seem to suggest that that's the wrong position to take. So the path to go from today where everything's fine, as long as you get rid of these exogenous shocks to, oh, no, it wasn't just the exogenous shocks. We actually were in mired in a cyclical slowdown and the Fed is actually making this thing worse. That process, in our opinion, won't be great for Bitcoin or risk assets broadly. But I mean, you're certainly going to want to

Starting point is 00:26:35 I think it could be Bitcoin bottom at some point in summer or fall this year and bottom ahead of stocks or bottom ahead of credit, most likely. It's a global asset. It's a much more free market. Are you guys going to sell your Bitcoin if we go into a recession? No. No, I'm curious. Recession-proof stocks, what would be an example of some?

Starting point is 00:26:55 Well, now, obviously, like a defense company, right? Unfortunately. A recession-proof stock is like something where the demand is inelastic. Um, you know, so, you know, like tobacco and stuff like that, but that doesn't mean the stock doesn't go down in price. It just means it's probably going to go down in price less than the broader market, right? That's what, that's what the sort of mutual fund game is. It's like, I, you know, I, I outperform by not being down as much, which is, well, I

Starting point is 00:27:21 asked because I Googled, uh, recession proof stocks, just to see what the common person would get as an answer. Um, it said seven stocks that soar in a recession from us news, um, Netflix target Lowe's home depot walmart what are your thoughts on those i don't think pretty sure netflix was netflix a stock in the previous recession prior to the kovach lockdown probably not yeah it might not even public like when they talk this is the stuff i'm talking about this is why i wake up during people getting this ridiculous information when they google stuff that's the first thing that come up comes up on google yeah um i mean this is no wonder people are frustrated with wall street

Starting point is 00:27:58 i mean i would be frustrated with wall street too if that was the outcome i didn't realize they're still doing that kind of crap i i uh personally think that uh we should just go buy casino uh stocks that's what it feels like and that is mgms cheap netflix is uh is down 50 over the last three months so and we're not in recession we're not in recession dude no i mean look this this this at the expense of using word that i loathe as a quantitative analyst but this feels a lot like the unwind of the dot-com bubble where it's like there's just a long period of time where there's not going to be any really truly supportive news for the market um you know the fed is tightening pro cyclically i.e they're

Starting point is 00:28:45 tightening into the slowdown and we'll be doing that for an extended period of time obviously we're not going to get any real resolution on the geopolitical front for a while obviously they can come to a ceasefire that's temporary resolution but the real resolution comes back and integrating russia back into the dollar system in the global economy i don't see that occurring anytime soon and then ultimately you still have china taiwan out there as a tail risk so can i ask a question that has nothing to do with finance or economics always uh there's a situation that i've been paying attention to i usually don't pay attention to this stuff but i feel like it's got a little crazy now uh kim kardashian kanye west and uh pete davidson this has gotten pete davidson's

Starting point is 00:29:21 going to space instagram kim kardashian telling people that pete davidson got branded with her name on i'm shook what's happening right now man the reason why it's interesting is because pete davidson is going to space from like low orbit space or whatever with the blue origin like on the commercial like on the so like what i've been thinking about i was like holy shit like pete davidson is going like that it must be accessible enough but now if we're like they're going to start doing this regularly and people are going to go to space like that seems kind of crazy to me davidson kegan off snl like that someone's telling me this is the marketing play kanye bullied him over yeah i was gonna say yeah and then pete and kanye come out with a double

Starting point is 00:30:08 banger on the next album i know he didn't call joe's bought a old staten island ferry who pete And the other SNL host, Colin, they bought us Staten Island Ferry. They got some cash. Those can't be that expensive. Kim may be paying, too. We don't know. We don't know. Bye, NYC.

Starting point is 00:30:26 He released a movie recently. He's got cash. Yeah, he's got cash. I mean, I don't know how much it costs to go. Well, I mean, to my knowledge, the only people who have been in space are, like, you know, old, rich, white dudes. So I didn't know Pete Davidson had it like that. Michael Strahan's going to space.

Starting point is 00:30:39 Say what? Michael Strahan. No, he already went. He already went. Yeah, I think he's going to get it. Michael Strahan went to space? Yeah. how much it costs to go to i think that well i'm looking up right now they said tickets on virgin

Starting point is 00:30:48 galactics uh is 450 grand right now i don't know if i'm going it started at 250 now it's 450 uh blue origin selling them for a million so they sold a hundred million dollars worth of uh space tickets wow yeah they just right off the that bro a million bucks i wouldn't pay a million but it was like 100k it's a it's like you could buy two ferraris or something for that or you could uh go to space one time yeah i'm sorry you go to space twice so you could buy one ferrari like michael strahan william shatner is going to space shrayan when he came back he's going again are they see by the way have we confirmed that they're coming back because i feel like the all the rich people are getting out of

Starting point is 00:31:36 here and we're gonna get a memo in like six months like oh yeah there's an asteroid coming i don't know what's going on conveniently they're all taking flights we we confirmed these people come back has anyone seen them on land i know yeah exactly since then oh no i haven't seen it again i don't think i haven't seen pete davison in a while no one did until he was taking photos in bed and texting him to kanye the uh yeah it's just the whole situation is very interesting and uh now kanye get kicked off instagram so i feel like like now he got censored yeah he got kicked off for what bullying he was he's putting up photos of people from like google images and saying stuff wasn't he

Starting point is 00:32:13 no he no he said is this guy what is this guy wearing is he influential or is he under the influence well did you see but did you see that did you see the back and forth between them i know what is that why you get kicked off i didn't see why i'm not gonna read them but he basically uh he basically like yo kanye i'd shut the hell up like somebody else was uh uh is with kim right now he like chested up to him right he was saying he was saying disrespectful things oh no i didn't see that uh uh in his response who pete oh pete would watch kanye no yeah you think so yeah well of course pete davis is like six five yeah but he was like a stick though he's a kanye's crazy you can't you can't count out a man you don't know what he's gonna do that if that doesn't

Starting point is 00:33:03 describe pete davidson if you can't count out a man that wears rain boots to an indoor stadium that's true yeah i don't know this my guy wears a mask to go watch the super bowl my man jake paul get involved in this man jake wants to do a fight with him and mcgregor on the card putin versus elon musk and then kanye p davidson a three-fight card by the way i'd pay whatever whatever it costs a whole bitcoin ticket like jake paul would be a multi-billionaire yeah whatever it costs i'm definitely taking it and thrillers hosting it the the other thing that uh i think goes into this is uh mcgregor definitely would be interested in

Starting point is 00:33:50 it uh kanye p davidson actually don't think they would do it but you did you see the uh i think it's czech republic i don't hold me to it i think that was who it was uh they posted a message on telegram talking shit to elon musk calling him uh uh e l o n a musk alana musk like basically calling him a girl and uh uh they were like you you're being disrespectful to vladimir putin he would like you know he would embarrass you like you may be a big man but you have no soul like whatever they're saying wild shit and so musk like eastern european shot at it put the translation up on his twitter and then change his name on twitter to alana musk he's great man yeah he's good richest man in the world and you got nation states talking shit to you and you're just like

Starting point is 00:34:40 whatever dude let me just you know give him some air yeah he's like i got nation states saying that i couldn't beat up world leaders like you're not going to mars who would get that though i mean i gotta believe putin he was in the kgb but you never know man with elon he might know some things my whole thing with this is like in a fight everyone always goes like oh who's bigger i seen some big ass dudes get knocked out by people who are just wild and it feels to me like in the pete davidson kanye west kanye west is just he's unpredictable he's very unpredictable and when he's unpredictable davidson's lanky though you know he's got bro pete davidson's getting tossed around by kanye west kanye did you see him doing push-ups in atlanta mercedes stadium before don

Starting point is 00:35:26 does listening party you can mask a mask on in a bulletproof vest you don't walk around the bulletproof vest on and not whoop people's ass the scene in the documentary where he's doing the bands is all he's got the bands bro he's going like this it's like an inch that's more Better than you've done today. True. True. True. True, man.

Starting point is 00:35:46 I don't know how we got off. Sorry. We nearly have spiraled out of control. Yeah, I just had to ask the question. My parting thoughts are in any fight, right, the better fighter usually wins the fight. However, if you have two good fighters in the bigger fight, the bigger person wins.

Starting point is 00:36:01 If you have two bad fighters, then the bigger person wins. But whenever you have a mix in skill, then usually the higher skill wins. That's a fair way to look at it. i'm going with kanye is uh been secretly preparing he had the what was the music video that came out where they had a cartoon and they put pete davidson in the ground yeah and everyone's freaking out and we're like do you guys not know these dudes are just entertainers i'm just i'm laughing because uh off the earlier conversation former george said that for the fight for fight night yelling

Starting point is 00:36:28 in lagarde could be ring girls we got never mind we're not gonna yeah i forgot the question earlier I'm going with Jake Paul, Putin, and Kanye. That's your card? That card. Parlay them all together. Elon Musk is fighting for the future of humanity and freedom and democracy. He is putting Putin in a box. Only one guy in that fight has nuclear weapons.

Starting point is 00:36:52 That's fine, but you can't use them. I don't know what he's going to do. Putin literally is a honorary black belt in a sport where they step on each other's feet. that's judo we watched the video we pulled it up they step on each other's feet trying to knock each other over not fighting yeah that's like a little kid walks with you kicks you in the shin putin could beat you up putin is five foot seven you john could put your hand like this and he couldn't reach you not even close yeah yeah and then i i have a feeling he would uh i have a lot of respect for his fighting ability even though i've never seen a second of him fight uh just

Starting point is 00:37:28 You scared? What? Not scared, no. 70-year-old man going to beat you up? Let's put it this way. If Putin took my Super Bowl ring, I would have gotten it back. You remember that story? Yeah, the Bobcraft?

Starting point is 00:37:44 He said, this is nice. Thank you. Debo, my bike punk. All right, where can we send people to find more about 42 Macro? Oh, appreciate you, man. 42macro.com. I'm on Twitter at 42Macro, D-D-A-L-E, D-D-A-L. Check us out.

Starting point is 00:37:59 Awesome. We appreciate you coming on. Always, man. I appreciate my brother's being- Yeah, smile on that Twitter picture. He's killing it. In April, if you're going to be here for the Bitcoin conference, on Saturday morning, we're having the SoFi Darty at 10.30 a.m.

Starting point is 00:38:19 10.30 a.m. on Saturday at Venu, V-E-N-U. What time does this end? Or not in, but can I get there at noon? We can do whatever we want. All right, I'll be there at noon. We're going to be there. They said they're going to have omelets. They're going to have mini chicken and waffles.

Starting point is 00:38:34 They're going to have Bloody Marys, mimosas. They call it the SoFi brunch. We call it the darty because if there's alcohol and us and you. If you see what I'm wearing, it'll be a darty. I'll catch you guys, man. This is great.

The Pomp Podcast - #870 How To Invest During A Recession w/ Darius Dale

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