The Pomp Podcast - #927 Darius Dale On The Odds Of A Recession This Year

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Darius Dale is the founder and CEO of 42Macro, the leading macro risk management advisor. In this conversation, we talk about what's going on in the macro economy, what's happening in the financial markets, how Darius is looking at various metrics, and also what you at home should be thinking about as you invest your capital. I really enjoyed this conversation with Darius, and I hope you do as well.

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Starting point is 00:02:56 guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, we got a lot of stuff we gotta talk a lot of stuff going on let's start with uh uh maybe bill ackman recently is supposedly lost 430 million dollars on netflix i would love to be in a position to lose 431 million yeah and by the way his funds only down two percent for the year so like he's chilling he's chilling hard

Starting point is 00:03:35 uh netflix facebook all this stuff is down pretty significantly uh robin hood i mean just like they're all down is the bleeding over or is this just the start of something that could get way way worse. Yeah, no, I still think it's the start of something that's going to get worse, way, way worse, you know, for Netflix in particular, probably not. I mean, damn thing was down 30, 40%. But the point is, like, you know, when you're in these sort of financial market bubbles, I think we can all agree that, you know, the past couple of years, it was a bubble, pull up a chart of pretty much anything on a log, certainly on a non-log scale. When you're in these bubbles in the equity market, you know, there's always kind of like

Starting point is 00:04:14 one or two big companies that come out and, you know, report something, either earnings or guidance that's really negative and causes the stock to collapse, you know, that's usually the beginning of the end of the bubble. I would argue Facebook last quarter was kind of like the predecessor for this move we're seeing in Netflix. But you go back to the, you know, the housing bubble, Bear Stearns kind of collapsing in 2007 was a big deal. You go back to the prior tech bubble, you know, 2000, Qualcomm kind of missed and got it down. And that was kind of the end of the tech bubble. And so there's always these sort of like seminal moments when you look back in time and say, hey, look, that's kind of when like the whole valuation narrative change and the kind of

Starting point is 00:04:53 range of probable outcomes that investors would assign to value these companies, you know, really started to shift downward. And I think that's exactly what Netflix has kind of given us the looks on. When you start to see this, how do you know when the market's bottomed? Like, should people look for certain signs to say like, okay, now's the time to deploy capital, which I think is what Ackman was trying to do. Netflix had already fallen. Then he went in to buy some and he said, you know, we're so glad that the market provided this opportunity for us. And then it fell another 35%. So I don't think he thought he was buying something that was falling. I think he thought he was buying something that was heavily discounted and it was basically bottoming and then

Starting point is 00:05:29 he would benefit on the recovery. So what are the signs that you look for, for the stock market to quote unquote have bottomed? Yeah. So it's obviously it's impossible to, not impossible without luck, but it's very difficult to ascertain tops or bottoms in real time, right? And so you have to rely on like different sets of indicators to give you a good sense. So, you know, for something like on a fundamental side of things, when you're looking for a bottom, what you want to find is sort of one B within, you know, one or two quarters of a real second derivative inflection and growth. And generally speaking, you want to be in that part of the process where the third derivative is already improving, it's already positive. So, you know, that kind of is like the

Starting point is 00:06:05 first sign that you're getting close to the bottom from a fundamental standpoint. From a policy standpoint, you obviously want to be very close to a dovish pivot out of the Fed or out of the major central bank of the kind of economy that you're investing in, China, PBOC, ECB. And so we're obviously not anywhere close to that. We're no more close to a growth bottom. And then typically when you're having an event in asset markets, and this could be for single stocks, could be for credit, could be for the broader index, typically what happens if you're you're already having a problem, investors tend to overpay for volatility, near-term short data protection. And what typically marks the bottom is sort of you rolling past the expiration of

Starting point is 00:06:41 those options. They evaporate. They don't exist anymore. Investors monetize those options. And then the dealers who sort of have to short futures, short things to kind of hedge that risk to the downside, they start to unwind those trades. And that tends to create that force of bottom. So neither of those three things, which I would be looking for to ascertain a bottom in something like Netflix or the broader stock market have occurred yet? So when we start to think about the reason why some of this has happened, stocks got super overheated. There's all this undisciplined monetary fiscal policy. We've talked about that quite a bit. There's a very interesting comment that I saw. I think it's the Allianz economic advisor, Mohamed El-Aryan.

Starting point is 00:07:19 El-Aryan, yeah. Mohamed El-Aryan. Yep. And what he described was this idea that the Federal Reserve may actually move their inflation target from 2% to 3%. So I went down this deep rabbit hole, did this whole look at, that's a 50% increase. That didn't take me that much of a deep dive to figure out. But what is an inflation target? How does it work? I wrote all this stuff.

Starting point is 00:07:44 And the deeper I got in, I was like, this may be one of the biggest stories in finance right now that doesn't seem to be getting a lot of attention. But do you think that they would raise the inflation target from 2% to 3%? What would the ramifications of that be? So let's talk about what – let's go backwards because the ramifications are more interesting than whether or not if I think they'll do it or not. I don't think they'll do it.

Starting point is 00:08:01 That's the kind of quick takeaway. The ramifications are very, very positive because it means the Fed has more leeway from an inflation standpoint in terms of their reaction function. So if you have a higher inflation target, all things being equal, you don't need to tighten as much to get inflation back towards neutral or back towards the target. You know, right now, CorePC, which is their preferred metric, is running at a preposterously low 5.4%. It doesn't even sound right when you say it out loud, but let's just say it's 5.4%. That's still, you know, 240 basis points above where they're, you know, sort of where the midpoint of their target range is. So that's a big deal. But if it was only 240 basis points, they would have to do less tightening, less quantitative tightening, all that stuff.

Starting point is 00:08:41 And so whether or not they'll do it, the reason I don't think they'll do it is because, you know, when you look at most polls, you know, whether it be consumer confidence readings, you know, Gallup polls or any sort of like politically oriented poll, inflation really for the past few months has really been the dominant sort of number one fear factor in America. It's been the number one reason why people are pissed off. And so for me, I think the Federal Reserve just kind of give it a reading the tea leaves between the Biden administration, Jay Powell, Janet Yellen, and all the kind of commentary we're hearing back and forth. It strikes me that they realize that if inflation got worse and if they were deemed to be perceived to be doing less than they already

Starting point is 00:09:20 are to combat inflation, that would actually exacerbate the problem, make it worse for Democrats to have a successful outcome in November, although they're probably not going to have a successful outcome in November. It's the last time we'll see a dual Democrat majority for quite some time. Yeah. When you start to then think about they're not going to do it, why do you think they're not going to do it? Well, this is everything I said. You think the key to winning in November for the midterm elections is to get inflation genie back in the bottle. And the reason I say that is because the Republican sort of campaign narrative, particularly the early parts of this campaign process, which they get earlier and earlier, obviously, is the Democrats gave you inflation. We're here to fix it.

Starting point is 00:10:01 And so the Democrats – That's a pretty powerful story. It's very powerful. It's worked every time. There's not been a time in U.S. history, going back to the Civil War and I'm sure probably before that, where that narrative, where that message resonates with the people, with the common people. And so the Democrats, if they allow the Fed to sort of ease up on combating inflation or if they allow inflation just to get worse from either the Fed or from other existential circumstance, they're going to get not only just like lose, they're going to get absolutely buried and could potentially get like sustainably buried for I'm talking like multiple election cycles. But if they move it to 3%, then they have less to get back to their quote-unquote target. And then can't they claim like a false victory?

Starting point is 00:10:39 They can claim a false victory, but people aren't stupid. Wow. They told us it was transitory for a long time and people believed them. That's why people were pissed off. Yeah, yeah, yeah. Totally. I love everyone, but the education level of the nuances of economics is not quite as high as I think it should be. No, not at all.

Starting point is 00:10:59 If something tells me that if they raise the target to 3%, they would gaslight all of us. Of course it's 3%. We got to the three. Look how close we are. Totally. And then this is the problem, right? It's like human beings feel the change in inflation. What matters is the rate of inflation, not the level, the price of goods, because obviously things are always changing in the economy.

Starting point is 00:11:22 And so getting it back to three would be a victory relative to where we are now, right? Like we're 5.4%, you know, for core PCE, we're eight and a half percent for headline CPI. That is a directional victory, but it's certainly not a victory that one that you could sell to the general public. Because even though the general public might not understand the revision to the Fed's inflation target, the general public will understand that, hey, we're probably the rate of change, the inflation level that we're experiencing today is higher than it was when

Starting point is 00:11:49 XYZ was president or Congress, you know, was run by this other party. So that's the key takeaway. It's that like they're politically damned if they do damned if they don't. And I think the longer for the longer term sustainability of Democratic Party, getting inflation under control has to be the number one objective. Yeah. We've got this chart here that you provided saying headline CPI likely needs to average a lot more than just under three percent to catalyze the permanent death of the 60 40 portfolio and or risk parity. What does that mean in plain English? And what is it showing us? Yeah. So that chart, it goes with other chart, which I'll explain in a second. And so right now, stocks and bonds are going up and going down together.

Starting point is 00:12:27 That's the positive correlation. And empirically speaking, I'm not really sure why. I'm sure there's some theories out there academically. But at least empirically speaking, when inflation is over 5% headline, you typically see a positive correlation between stocks and bonds. And so right now, obviously, we're 350 basis points above that. And so we've seen this positive correlation between stocks and bonds really start to, you know, it kind of started last summer, but it's really intensified year to date.

Starting point is 00:12:52 You know, the reason I've sort of sent you that chart was as a function of the previous chart, which is the Japanese yen devaluation narrative. And so let me give you a little let me give the listeners a little background on that, because that to me is one of the kind of underappreciated things that are happening in global macro right now. So the BOJ, because Japan has struggled to generate inflation, had been in some version of hybrid deflation for a couple, you know, almost two to three decades now. They want to inflate money. They want to continue sort of stimulating monetary policy. So they want to continue inflating. And so they have this policy where they try to cap bond yields in Japan. It's called Eurocurve Control.

Starting point is 00:13:27 They are buying unlimited amounts of BOJs to effectively keep the cap on yields. And it's causing the yen to basically get eviscerated. It's going down as fast as it's gone down in quite some time, in many years. And so that chart really says, OK, hey, look, one of the reasons the yen is going down is because the US rates continue to go higher and higher. and Japanese investors want to go pick up the higher yield differential. And so the issue in the treasury market was that investors thought the BOJ would stop this yield curve control program and start fighting inflation like everybody else. We never thought that, but that was the consensus.

Starting point is 00:14:04 And the BOJ sort of effectively came out and said, no, no, no, no, no. We're going to continue expanding our balance sheet at an unlimited pace to maintain this sort of level of easing in our economy. And so at the margin, that is positive for treasury bond prices. That's negative for yields, which is positive for the yen at the margin. Now, it doesn't mean treasury bonds are done going down. It just means that you're removing this part of the bear case out of the Jenga board, if you will. And so going back to the correlation chart, if treasury bonds no longer have that sort of bear case in the Jenga board, you could sort of take that bear case out of the stock market as well, because they're positively correlated right now. Sorry, that was a really

Starting point is 00:14:41 long-winded explanation. But it's fascinating to kind of think through this, because this is the complexity of the entire system right at play here. And each person or organization that has some levers that they can pull, they're all pulling them. But I may be pulling levers that I don't know that, you know, that I'm pulling. Right. And so it's all happening at the same time. And so when you start to think about this, where's the safe haven? Like if you kind of look at the whole board, you say, all right, I'm playing, I'm playing the game. I just want to be in capital protection mode. Is it cash or is it something else? Yeah. So, I mean, I've been saying cash cash is king. It continues to be king. U.S. dollar, I know it's probably unpopular in this

Starting point is 00:15:21 room, but like U.S. dollar in these types of circumstances, particularly in a circumstance where the Fed looks like it has more runway just as a function of the trailing strength in the U.S. economy, it looks like it has more runway, more runway to not only be more hawkish sooner, but also to stay hawkish for longer than other central banks, particularly relative to Europe. And so if you're looking for an asset that can appreciate in value, you know, the U.S. dollar relative to the euro, US dollar relative to Swiss franc, US dollar relative to the, you know, most currencies is going to do well. You know, for whatever reason, gold is really hung in there for the most part, even though real interest rates have backed up quite considerably. And so,

Starting point is 00:15:57 you know, that, you know, we all, we talked about a few weeks ago or maybe a month ago, you know, kind of about the incremental attractiveness of gold and this kind of new, I would, I don't know if it's regulatory or geopolitical regime where, you know, they can just confiscate your, your, your central bank reserves or your FX reserves. And so I think about the gold, I think about dollar more, dollar more so than gold. And then again, just, just don't be a hero. Just take down your risk. You don't need, you can buy, you can be long the same amount of stuff, by the way, or sorry, sorry, the same composition of assets. I would not recommend being on the same composition assets, but even if you

Starting point is 00:16:28 just wanted to have a high beta portfolio of cryptocurrencies, you just need to have a lot less of that on, you know, sell half of it and raise cash, right? If you want to maintain that exposure but i would not necessarily argue that that's a good idea either so here's two wild stats for you gold is up 10 over the last year the s&p 500 is only up eight so gold's outperforming the s&p in the last uh 12 months both are underperforming inflation it correct and over the last three years both gold and the s&p 500 up exactly 53 so dead even flat for the last three years gold and s&p 500 wow that's crazy that's what a stat i didn't even know that do this for a living. That's pretty crazy. That's crazy. Yeah. So to get, to get flat for the last three years

Starting point is 00:17:12 is, uh, it's pretty nuts. I mean, that tells you everything you need to know about why the S&P is up 53% over the last three years. Yep. Everyone will tell you it's innovation and earnings growth and all the stuff that wall street is, is goes to business school to train you, train you and tell you. But the reality is if it was all that stuff, you'd see a spread between the performance of the stock market capital assets relative to a store of value. And so clearly, the stock market is really appreciated in the lockstep of the store of value because investors are using it as a vehicle to speculate on balance sheet expansion out of the Federal Reserve. Yeah. It's pretty wild to kind of think through this. Joe, John, what questions you guys got? How do you think

Starting point is 00:17:49 people in the chat were asking about travel? Travel's surging a lot and everything related with that. How does that play into all of this? Does this make it just worse in your opinion, or does it not necessarily matter? So travel, let me take a step back and ask that from the market perspective. If you look at airlines, so on a trending basis, airline stocks, hotel stocks, restaurant stocks, those kinds of, like that kind of, that bucket,

Starting point is 00:18:12 those things have been trending lower and making lower highs for quite some time. Over the past sort of six weeks or so, they've been kind of making higher lows. So the chart looks like it has bottomed, at least temporarily. And so that at the margin is a signal that things aren't falling off a cliff yet from that perspective.

Starting point is 00:18:29 There is still a reopening impulse left to kind of walk to get us through. Now I happen to think in the month of April, we're kind of towards the tail end of that reopening impulse. Maybe we get one more month of that in May, at the most into June. But the reality is we've already seen a lot of the reopening. If you look at the economic statistics and all the things that would be associated with that. So, you know, again, it's just really just – I would argue it's probably not even as positive as you might want it to be because the reality is the more growth we get up front in this particular time period, the more tightening we're going to get. You know what I mean?

Starting point is 00:19:04 Like it's just the central bank is going to look around and see that financial conditions aren't tight enough and they're going to start talking – I mean, Bullard said on Monday – Floated, right? Yeah, floated. I mean, he's a floater, by the way. They always push him out of the door when they need to sort of go incrementally hawkish or incrementally dovish. Yes. And so if we keep seeing higher growth and higher inflation numbers because, oh, by the way, you need growth to slow inflation, that's usually how it works, then you're going to see Bullard come out of the door, and then you're going to see somebody fall out of the door after Bullard, and eventually it'll be 75 basis point height, which, by the way, we haven't done since 1994. On the macro side of things, obviously, we're not the only country that is looming a recession, right?

Starting point is 00:19:40 A bunch of other bond markets have kind of inversed, Japan, for example, and other countries as well. How does that all play into effect? Is everyone going towards a recession? like similar to what the U.S. is, or is it just different country by country? Yeah, so Japan is a little bit different in that it didn't have the sort of amplitude of the recovery that a lot of other economies had, so it's unlikely to sort of – I mean, Japan is always kind of a foot in the grave in terms of recession, so let's be clear about that.

Starting point is 00:20:06 But do I see the same level of recession risk in Japan? No, probably not. U.S., Europe are probably front and center in that regard. So let me ask this a different way. How do I make money in international markets right now with a recession in the U.S. looming? I mean, in international markets? Yeah. It's probably not the best place to be putting your money.

Starting point is 00:20:26 I mean, if you're going to remain involved in the equities asset class, then defensive companies in U.S. markets are the best place to go. Utilities, consumer staples, health care. I would even say all REITs because not all REITs are defensive. But there's places to park your money. And again, I keep saying this. There's two ways for me to answer these questions. There's the, are you a retail investor or someone, you know, just managing your own money or, you know, like you have the ability to get out of the asset class, then cash is always an option.

Starting point is 00:20:56 If you're not a retail investor, institutional investor, and you're not, you know, going into cash or raising cash in that regard, then you need to make relative performance bets. And the relative performance bet right now relative to international equities is very clearly U.S. defensives over everything else. Gotcha. Yeah. When you start thinking about stocks in particular, Berkshire Hathaway, obviously we're seeing CalPERS is going to vote to take out Warren Buffett. What's your thoughts on that specifically? And then how do you think about a stock that is kind of the epitome of value stocks in this environment? What has Warren Buffett done but generated a crap ton of returns for all of his investors over the last five decades, right?

Starting point is 00:21:32 What is that? What have you done for me lately, league? I think that speaks more to the dichotomy, this battle we continue to see that's emerged between baby boomers and millennials and Gen Z. There's probably some new quanti-millennial running calipers or Gen X person that's backed by a bunch of quanti-millennials, and they're looking at Grandpa Warren, and they're saying, hey, look, there's a better way to do this now. And I'm not saying that they're wrong or they're right. it's just that to me it's more of a different of this generational struggle that we continue to see pop up in various corners of the markets and economy yeah it's um it's really interesting are there any other stocks that you're like these should do really well in this environment stocks

Starting point is 00:22:16 like any equities in particular that you're like man you know this is uh this is super interesting for abc reason like obviously tesla is doing fantastic right so yeah i don't cover uh individual stocks but i mean you know the problem with the problem like so this is what you want in this particular environment which is very very difficult to do right you want companies that have a runway to growth that are not attached to the economic cycle i mean if you could find those companies you would be a billionaire you know hedge fund manager so let me let me let me caveat that saying like that's what all the hedge fund managers are doing and most of them do it poorly so like you know it's not it's not it's not even sorry not most of them at least half of them do it poorly

Starting point is 00:22:54 by statistical definition. It's hard, but if you have a company that just has a ton of runway either regulatory or there's some product innovation cycle, like a biotech, they just discovered a cure for cancer. I don't care if we're in a recession or not, that stock's going up. You want store idiosyncratic stores like that. The problem is that in this easy money era, we've been deluded into thinking that everything in the Cathie Wood ARC portfolio is one of those names and everything in the XLK, the tech ETF is one of those names.

Starting point is 00:23:25 And the reality is, no, it's been the damn central bank balance sheet. They 10Xed the balance sheet since 2008, 2009. Can it go 10X from here? No, it will go 10X from here. You think the Fed's balance sheet will go up 10X in the next 10 to 15 years? It might take another 10, 15 years, yeah. But it's, yeah, why would it? This is not, until they fix whatever the hell is wrong with the system

Starting point is 00:23:47 that causes them to keep doing it, And I'm not even sure that anyone really knows what's wrong. I think I, sorry, I have a theory of what's wrong with the system. The problem with the system is that the buy side, the risk has been pushed to the buy side in terms of banks used to know their clients, know their customers, know their regions, know their geographies. And they would extend credit based on relationships and metrics and all this other stuff. And, you know, it was easy to sort of like understand the risk and even transfer the risk, syndicate the risk and all that stuff. now all the sort of risk taking and risk pricing and understanding fundamentals happens on the buy side in the shadows it's literally called the shadow banking system for a reason you know

Starting point is 00:24:28 private equity firms hedge funds you know mutual funds are doing all the sort of capitalization in the economy and so that's an inherently less stable system because i'm at hedge fund a and i don't trust the valuation that hedge fund b puts on this credit or this this company or whatever And so there's a lot more friction in the economy in terms of, one, just that kind of process. We don't all agree to agree that this business is worth X, Y, Z. But there's also a lot of friction in terms of funding. The way hedge funds get funded, private equity funds get funded, it's more inherently unstable than just plain old bank deposits, something like that. So we are in a more inherently unstable system, which is why the kind of advances of society, partially why.

Starting point is 00:25:07 It's not the only reason why, but partially why the advances of society and the economy have been sort of flowed in such a, you know, not a homogenous manner. You know, we haven't seen like everyone benefit to the same degree. Yeah. It's really interesting, too, I think, when you start to look at the companies that are still doing pretty well. They are the like really, really innovative companies. But like Tesla, as an example, to Amazon. for a decade plus people were mad at uh amazon they don't make money they don't make money they make money it's a shit stock it's overvalued it's whatever bam most valuable company totally

Starting point is 00:25:43 tesla seems to be following a similar trajectory which just three years ago i mean there's maybe 18 months ago there's some people like it's going bankrupt yeah like probably less than 18 months ago right like like they're generating real money now like this legitimate business so do you think that eventually wall street and investors start to realize like hey these types of companies like they're not often but when they come around like you know i don't know the best investment strategy the last two decades was just bet on elon musk whatever he said tesla spacex neuralink paypal spacex or uh uh solar city like all of them just whatever he touched just bet on boring company. I don't know about that one. That was good. No, but like, but in some way, like that

Starting point is 00:26:29 was literally the thing to do. And you could argue the same thing about Bezos, right? Is just like every single thing he touched. I would even argue- AWS, man, it's the most, the best business in the world. Yeah. I would even argue like, maybe there's like a Mark Zuckerberg, right? Like obviously with WhatsApp and Instagram, that kind of value accrued into Facebook. So it's a little bit different, but Elon has given investors six shots on goal to invest in companies that he's involved with over the last you know probably 25 years every single one of them is a billion dollars or more two of them are 100 plus billion and one's a trillion dollar company yeah here's one thing i would i agree with everything you're saying i think there's a nuance to the story

Starting point is 00:27:05 however the reason elon musk can be a you know sort of payment processing person pivot to cars and pivot to solar and pivot to you know whatever else he pivoted to and the reason jeff bezos can go from selling books to selling trinkets to selling you know hosting services it's because we haven't had a legitimate cost of capital in this economy for two decades yeah certainly not on a real basis and so you know you allow companies that are what the lower cost of capital does there's been research from the federal reserve itself that confirms what i'm about to say is that that depressed suppressed cost of capital as much as you think it's sort stimulating, you know, investment and stuff at the margins, all it's really doing is, you know,

Starting point is 00:27:51 reducing the cost of capital for established players and really forcing it, really forcing all of the capital in the economy to these established large players. They allowed them to build uncompetitive moats, allowed them to sort of just spill over in every business. You know, I mean, what business doesn't, you know, Apple do at this point, you know, that, and so that's, this is why they're being so partially why they're being so successful is because they have an unfair advantage from a cost of capital perspective. If rates were like 6% on a real basis in terms of raising debt for Tesla or for raising Apple, we wouldn't see him pivot to Solar City or pivot to some other thing that is away from his core business, because the probability

Starting point is 00:28:30 of success on that capital, of actually generating cash flow on that capital is lower. The people who would actually, who really truly know solar, or who really truly know all these ancillary businesses like Instagram, you know, for Facebook, those are the people that can actually generate returns with the capital. And so right now we're just allowing the legacy players to kind of dominate as a function of these sort of easy money. The last thing I have is more of like a breaking news thing. CNN plus, which is like this whole streaming thing. So obviously they have a plus. What the hell does that mean? They spent $300 million trying to build this and less than 10 000 people a day we're watching it's only been live for like a month or so i get 10 000 views a

Starting point is 00:29:13 day on my youtube channel facts and uh uh they're shutting it down 300 plus they could have just gave me three and a million now i i guarantee i would have get a better challenge this is a far better channel not even close do you want to if they gave me 300 million dollars you know what i would do i would for a year give away a million dollars a day to the audience i just say look We're just going to give away money every single day. You'd have the biggest YouTube channel in the world. Abso-freaking-lutely. Holy cow.

Starting point is 00:29:42 $300-plus million they spent on CNN Plus shutting down. Actually, you'd probably break that up into like $50 a day for like 10 years. I mean, it's crazy, right? So when you see stuff like that, I do wonder how much of trends are changing in the market. It is all the monetary and fiscal stuff as well, but there's consumer behavior changes where they made a big bet. I think of this as like real estate, right?

Starting point is 00:30:04 if you go to go to new york city think about um uh maybe 2014 2015 a bunch of builders were like oh all this chinese money's coming here all these foreigners are coming in here those stupid towers and they started building a ton of inventory and by the time that they got done building all that money had dried up because of various capital controls etc yep and so now all of a sudden they're off with all this inventory all the foreign money they thought they were going to sell it to dried up and they're like oh shit like we're left holding the back now they've been able to salvage it a little bit but they're definitely not selling it to who they thought and for how much they thought they were going to be this seemed very similar

Starting point is 00:30:40 all these people are like let's do streaming and netflix is like dude we just lost 200 000 uh uh subscribers like i think the trend is changing and all these people who took two three four five years to build it they're gonna miss the window totally of that growth this is exactly what happens in every industry capital chases returns and returns are generally highest in industries you know, with limited capital, you know, you need, you know, so like now there's a ton of capital chasing streaming content and the returns on generating streaming content just aren't going to be as the same, you know, it's actually pretty funny. Like I think it's a microcosm of the, of the day.

Starting point is 00:31:13 You know, I, uh, when, when I saw Netflix, uh, collapse yesterday morning, I like kind of triggered me and I was like, Oh, do I pay for Netflix? And I found out that I pay for Netflix. So I canceled my Netflix, you know, like, cause I didn't even know if I was paying for it. I'm like, do I still pay for this stuff? Like, no, I'm get rid of this. I'm like, yeah, I've watched most of the stuff I need to watch on YouTube. They lost 200,001 subscribers.

Starting point is 00:31:36 You saw that. Because of their stock price collapse. I would have never canceled if their stock didn't collapse. I did see this last thing I'm going to say, and then we'll exit stage right on this one. Yesterday at the end of the show, Joe brought up the fact that a huge reason why Netflix may be suffering

Starting point is 00:31:53 is because they got a little woke. And I was like, what do you mean? And then Elon tweeted, and he said, the woke mind virus all this stuff so joe sent me after the show exact word but yeah well okay all right hold on let me follow it off with what you did he was like did you see the documentary about the dude who's pregnant on netflix and and so yes that was a summarized version and so like i do think also though there's this thing of like you have a product there's people who like it i think society is changing a little bit now

Starting point is 00:32:26 And all of a sudden there was this like over-rotation to we'll use the term woke just cause I think that's what people know what that means. Yeah. But I think there's now going to be a rise in the anti-woke and you're going to get this balance back. We just pulled it up. It's called he's expecting. Oh, it's a series. They're like, we might be getting multiple seasons out of this. I get, I get that. So I have, I know we got to go. I have like buddies who are like, so I grew up very poor and very left-leaning and it's probably migrated to

Starting point is 00:32:55 something slightly left of center. And so now I'm like, I'm the one who's like, guys, I think it's, it's gotten a little too woke. Like, you know, you see all this stuff on TV and like my, my fiance's a white girl. And, uh, and so her and I like joke, like every commercial you see on TV is an interracial couple. Now I'm like, what percentage of couples are interracial? Like five at most, but like next time you watch television, you're going to, once you see it, you can't unsee it. That's interesting. I'm just like, like what? Like they're overcorrecting to you darius yeah no it's like we don't we we want representation not an overcorrection yeah yeah yeah yeah i i do think it's uh uh uh interesting if you're sitting inside of like a corporate

Starting point is 00:33:34 office i can imagine the marketing meetings are very much like we better make sure that we have uh the hawaiian pacific or like whatever represented right and you're like dude there's four people literally four people with like check marks that's literally what i envision right guarantee that's what they do and by the way like i always am careful to say like hey the spirit of this is actually like very well intentioned right they're trying to correct what is uh perceived as whether you agree or not perceived as an issue yeah but to your point the over rotation i think that people are like all right like everyone's turning people off unfortunately all right where can we send people to 42 macro oh well 42 macro.com come check me out on twitter 42 macro

Starting point is 00:34:13 d dale catch you next week i just somebody just texted me is watching the show live and he's just said in all caps l-o-l-o-l-o-l and then in quotes he's expecting well i'm out so i'll cheer us i kid you guys everyone go check out 42 macro check out 42 macro thanks so much for listening to today's episode i really hope you guys enjoyed this one make sure you're subscribed on apple spotify or your favorite podcast player and if you're looking to try to transition to get a new job in the bitcoin or crypto industry we've got you covered head over to palmscryptocourse.com we've developed a curriculum with the top teams across the industry it's a three-week intensive training program with over 50 events packed into that three-week time period go to

Starting point is 00:34:57 pompscryptocourse.com to learn more and i'll meet you guys for the next episode

The Pomp Podcast - #927 Darius Dale On The Odds Of A Recession This Year

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