The Shintaro Higashi Show - Making $$ with Michael Darda | The Shintaro Higashi Show

Episode Date: August 18, 2025

In this episode, David sits down with Michael Darda — Chief Economist and Macro Strategist at Roth Capital Partners, frequent guest on Bloomberg, CNBC, and Fox Business, and a Brazilian Jiu-Jitsu black belt. They discuss Mike’s journey from economist to accomplished grappler, the parallels between markets and the mat, and how he blends his professional insights with martial arts lessons. From avoiding injury to navigating yield curve inversions, Mike shares wisdom for both training partners and investors.00:00 – Introduction & Background02:00 – Finding Jiu-Jitsu06:00 – Training Smart Over Time09:00 – Asymmetric Risk in Markets & BJJ14:00 – Ego, Risk, and Learning21:00 – Training in Your 30s vs. 50s24:30 – Macro & Markets: Why No Recession Yet?35:00 – Outlook Going Forward40:00 – Integrating BJJ into Professional Life46:00 – Closing Thoughts🚨 LIMITED-TIME OFFER: 40% OFF 🚨The All-in-One Instructional Bundle just got even better.Every major instructional. One complete system. Now at our biggest discount yet.Grab yours now at 40% off : https://higashibrand.com/products/all-instructionalsThis won’t last. Build your game today.🔥 Get 20% OFF FUJI Gear! 🔥Looking to level up your judo training with the best gear? FUJI Sports has you covered. Use my exclusive link to grab 20% OFF high-quality gis, belts, bags, and more.👉 https://www.fujisports.com/JUDOSHINTARO 👈No code needed – just click and save!Links:🇯🇵 Kokushi Budo Institute (The Dojo) Class Schedule in New York, NY 🗽: https://www.kokushibudo.com/schedule🇯🇵 Higashi Brand Merch & Instructionals: https://www.higashibrand.com📚 Shintari Higashi x BJJ Fanatics Judo Courses & Instructionals Collection: https://bjjfanatics.com/collections/shintaro-higashi/

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Live strong. Wear Higashi brand. All right, everyone. Welcome again to the Shentaro Higashi show. With David Kim, we have a very special guest. Michael Darda. I've known him since he was a purple belt. I was a white belt. He's currently managing director at Roth Capital Partners. He's chief economist and macro strategist there. And he's a regular guest on things like Bloomberg, CNBC and Fox Business. So you may have seen him if you

follow the financial markets there. But he's also a black belt in Jiu-Jitsu. I know at the very least he's a silver medalist at Master's Worlds back in 2021. I think you were there with Mike. That's right. Our mutual friend, Mike. Our nickname for you was Captain America to mix metaphors or mix our references because you fight for truth, justice, and the American way. And just to give people background, one of the things that people really like about the martial arts and judo and jujitsu in particular is that it brings people

from all walks of life together. So you never really know you could have, you know, the old joke of the police officer training with the pot dealer or something like that on the mat. You leave that aside, and you just, everybody's the same on the mat. Right. But on the other hand, sometimes it's nice to talk to people who have, you know, expertise and different parts of the off-the-mat life. And it's really, I think, interesting to bring those things together.

So that's why we brought you on, Mike. So I'm so happy that you're here. So the first question, I think, is, how did you find Jiu-Jitsu? to, you know, a macroeconomist, you know, I think you spent a lot of time in the Wisconsin legislature before, you know, sort of coming onto the street. So where did you stumble onto Jiu-Jitsu? Yes, so my wife and I were living in Norwalk, Connecticut, and I have to give her credit. She found Marcio Stomboski, Gracie Sports, and she took me to my first class with Marcio. And the genesis of that, I think, was like how a lot of people find Jiu-Jitsu.

You know, the ultimate fighter, I think, just went viral because they got that spike TV series going. And that was like 2005, 2006. And so that was, you know, before I started training. And we used to watch the fights all the time. And I just was always, you know, awed by, you know, these smaller people that if they had ground skills, they could handle themselves. And I kept talking about it, talking about it. Finally, my wife is like, listen, there's a place right around the corner. This is in their first. I didn't know this. This is the first time I'm married this story. And this was not, I think when you started, when I was a purple belt,

we were at the new location and they have a bunch of locations now. But at the time, the first location was, I think, on, like, Main Street or something behind a steakhouse. So, so, oh, the basement spot. Yes, the base. I never trained there, but it's legendary. Yes, the legendary basement spot. So my wife took me over and we just started together. Mostly, we were just doing private lessons, but then I would go to like, you know, I think one class, one public class a week. And I would get so beat up and gassed out. and tweaked and contorted that it would take me a week to recover so that's all my body could really take you know when i first started as a white belt it's like one private or marcia would try to correct all the dumb things we were doing or me in particular and then i would do one public

class and then that was like that was it but that was enough to keep me going at least in the early days oh that's old school too because that was like you had all the old school guys just you know putting the herd on people i have to give marcio a lot of credit here because you know i mean the the privates were fantastic for you know that like fundamental skill development and the one-on-ones were so good for that but i remember asking him like in my early days like what is the best way to learn jiu jitsu like is it just privates is it the open public classes is it both and he always said the group classes are the best way because you need to have those different body types that you know in different skill levels to you know to progress and that was

not in that's not in any instructor's financial interest to tell a student that the group classes are the i mean yeah you probably have on your show talked about the controversy with i guess this guy money bird or whatever we haven't yet actually we haven't i'm not sure. I'm not sure we will because I think a lot of people are being free with their opinion about it. Right. Exactly. But, you know, suffice it to say, you know, there are folks that just do privates, essentially. That's all they do because either it's the time or they're worried about getting hurt. You know, I kind of call this Hollywood jujitsu, you know, so a lot of actors and actresses that get into it just do the private lessons. But you don't develop in the same way

because you don't get the practice against different body types and skill levels that the group classes can afford you. And so, you know, it was uncomfortable to, you know, I wanted to just kind of recede into just doing the privates with who I knew and that was it. But, you know, Marcio gave me the right advice on that score and we kept going with it. Yeah, I would say you took it to heart, just given your current lifestyle. Well, now, you definitely train a lot. Well, you know, but now I think it's also a matter of, you know, having been involved in this for 15 years, also kind of knowing how to stay safe in a public setting with a lot of different bodies and skill types. And you sort of, you know, I'm 51 years old. So, and I've been through my, you know, handful of injuries, you and I share.

a similar surgery within them. Yeah. And so, you know, we have to pick our training partners pretty carefully. And so I don't have any problem doing that. And you just kind of learn how to navigate that after you get hurt enough. Yeah, yeah. I know one of the interesting things is you, just for work and things like that, often you're on the road. We were just talking about how you call a few places home, depending on the time of year.

So how do you manage that? because you're splitting your time between Florida, New York, other spots when you're talking to clients and stuff. So how do you handle that? Yeah. Well, I used to be on the road a lot to see clients pre-pandemic. And at that time, you know, we were just living in Norwalk. So I managed it through a combination of doing privates and then doing the group classes when I could. Now it's a little different in that I'm on the road. not as much in terms of business, but we spend about eight months a year in Naples, Florida, so that's kind of, you know, home. And then we bounce around between New York City and Martha's

Vineyard four months out of the year. And so I have training spots and all of these. And, you know, you get to know people. So, you know, so it's, you know, it's different. But you just kind of make each geography your own. And, you know, you hope to meet good. training partners that you learn things from and vice versa. And I'll have to say I feel like I've been super lucky in that regard. I mean, I've just met some incredible people that I enjoy training with that taught me a lot, that I have fun training with, that I feel like, you know, with all the injuries I've had, I can get good training and kind of like, you know, navigate in a way that works for me. So, um, so it's been good. And then, you know, I'm sure you've experienced this as well,

but you get to a certain level. And sometimes you're just the highest ranked person in the academy that day. You might have to run the class or run part of the class or, you know, if it's the instructor, they might say, David, we like your judo. You did this throw really well. Can you show the class? And so then, you know, you kind of step into that role, which has been fun as well. So let me ask you this.

Let's start smearing the lines between your professional and personal life. So one of the things that I think I'll invest. investors are looking for, you know, they're looking for that, like, asymmetric risk profile, you know, that low risk, high reward situation. Some people think they find it. Some people actually find it, you know, depending on, you know, their market. But I think one famous example of this from the economics realm is in the opposite, in the negative direction, is like that whole Akronoff lemon market, right, with used cars. That's the classic. example of sort of this information asymmetry. Are there any jiu-jitsu techniques that you feel are

good asymmetric bets? Well, I think so. It's an awesome question. Yeah, I would say probably close guard. You know, it's old school, you know, Marcio Stomboski that was like, you know, his classic guard and he was good at everything, open guard too. But like, that, like, that that Hodger Gracie-style close guard with the arm drag, you know, I feel like, man, if you can, if you can get good at that, it is super high reward, meaning that you can submit or sweep your opponent in very low risk. If you have somebody in closed guard, they really can't do anything to you, but try to open the closed guard and then pass. I mean, you know, there are some rare exceptions to that rule like I'm sure you've seen the you know the Ezekiel choke from inside

guard or something like that but you know it's very low percentage in it in in in in those techniques are you know you're you rarely see them succeed so I would say it's not flashy it's not like on the cutting edge of what people in the gear are doing although you know these old school techniques come back you know it just cycles over and over but I would say in terms of you know information asymmetry, you know, or just high reward, low risk. The classic Hodger Gracie style, Close Guard would have to be number one, I think. Yeah, and I still use it. It's not like a go-to, but I mean, a lot of times, if I'm rolling with somebody like

larger and really physical, I'll go to Cloose Road and try to work the arm drag and, like, you know, I don't know, you just kind of feel safe there. You don't have to burn a ton of energy. And especially with big, strong folks, I mean, you know, sometimes they'll just try to like push their weight into you and they'll give you a pendulum sweep or they'll, you know, they'll jerk their weight back and give you like a hip bump sweep. Yeah. And I'll give Marcio credit again. Marcio taught when I was like a blue belt, he taught me this hip bump sweep or you're just using the, you're just, you really just have the cross grip. You're not doing. that you would typically... Yeah, yeah, not sitting up. You're sitting up and, like, grabbing the elbow and it's really telegraphed.

And I guess, you know, it's called like the low, you know, the low hips, hip bump sweep or whatever, but, you know... Oh, is that the one where you just, you sort of get them to fall to their hip, kind of? Well, you're just using a cross grip. You're using a cross grip on one sleeve, and all you need them to do is come to a little bit of posture, and then you're just kind of thrusting forward. You could almost do it without being in close guard with your... feet crossed, but it works perfectly if you get their reaction, right? I mean, it works typically like you're trying to take the back from an arm drag from closed guard and they shirk all their

way back, especially like big wrestlers will literally fall right into this, like almost every time. I got to remember this one. Yeah, and then you just, you know, that's it. You just have the cross grip and you're just doing the hip bump sweep and it works like magic. And if they push forward, the pendulum and if they just do nothing, we could use the Kurt Oceander quote. If they just roll over like a piece of, you know, then you take the back. So it's just, you know, it's like I think a lot of this stuff in Jiu-Jitsu works really well with systems. I mean, that's kind of like her claim to fame is, you know, he taught all those guys these systems. And the system is just that you work for off balances and you try to get your opponent to react and the reaction opens up,

opens the door for an attack or a submission. So, you know, I'd have to say close guard probably in terms of being something that, you know, is kind of no frills. It's viewed as old school, but, you know, high reward, low risk. I think you're right. It's the simple things often are the best things. So one other thing that people often talk about, and I often think about this between the markets and Jiu-Jitsu is sort of the ego. People always talk about ego in Jiu-Jitsu and, you know, being wrong, right? Yeah. And so the whole idea here is that people always assert this, that for Jiu-Jitsu,

it's sort of like a ruthlessly concrete activity. If your timing is wrong, or your perception is wrong, or your decision-making is poor, like, you will immediately find out that you were wrong. in one of those areas, right? For sure. And I think that's why people like to say it's a check on the ego and it's healthy. And so I'm wondering for you, what do you think is a harsher taskmaster? The mat or the market?

They're both humbling and humiliating in their own ways, for sure. And, you know, I think there's a lot of similarity and a lot of parallel. else there. You know, the, so the ego can get you into a lot of trouble in finance and trading. I mean, you know, this happens to a lot of retail investors where, you know, the old adage that, you know, the retail investor will sort of get swept up and buy really aggressively at the top. And then if things go down a lot, they sell everything at the lows. And that's kind of the exact opposite of, you know, the magic of, you know, buying. of dollar cost averaging and buying loans in or selling high or at least, you know, averaging

in. In Jiu-Jitsu, you know, the ego is a constant battle because we all have some ego or we wouldn't even care about training, you know, I mean, you wouldn't even get out of bed to go to the academy to improve yourself if you didn't have any ego or any expectation for yourself. But where ego can get you in trouble on the mat is, you know, it might be time to tap out. Are you going to fight through that submission too long? You know, and now I think you probably deal with this as well. Having gone through a, I've, I had a two level cervical disc replacement C5 and six, C6 and seven. I think you had the exact same level. Exactly same. Yep. I feel really good right now. The training's been good. And, you know, we both probably get caught in the occasional

you know, cross choke or guillotine or whatever, and you're feeling good. And it's like, well, I could probably defend this for a while or should I just preemptively tap? And like, you know, there's no rule about that. But, you know, you do have to be more conscientious in terms of, okay, I'm not going to just try to fight this out and put myself in a potential, you know, injury. Like asymmetric wrist the other way. Exactly. So, you know, but, you know, it's a fine line because you're feeling good. You want to be able to train. You want to be able to try to defend a little bit, but like not to get caught up in an ego war where it's like, oh, I'm in a bow and arrow choke. I'm not tapping to this. I'm going to fight it out. And,

you know, you have to know, where that line is. And I think with, you know, a higher level, if you've been at this for a while, that should be a lot more obvious. But when in doubt, it's better to just swallow the ego tap and keep training. Another, um, relevant recent example of this for me is that, you know, I got taken out for three months with a staff infection this year. And now, oh my God, yeah, that was gruesome. And, you know, now we're hearing, you know, these stories, terrible story about Ben Ascran, who had a double lung transplant and, you know, was really fighting for his life. And I guess that was also from a staff infection. So these things can be really nasty. But the point being, in terms of ego and jujitsu, right before I

got taken out this year, first three months of the year. We were doing a lapel guard for two months at my home gym in Naples, Florida, Evolution MMA, Denelson Pimentas, who gave me my black belt. He's our head instructor for jujitsu. And he was taking us through worm guard and some squid guard and stuff like that. And I realized like, oh, wow, I bought this Kenan Cornelius lapel Encyclopedia in 2019 right before the pandemic shut down Jiu-Jitsu. I don't think you're alone. I don't think you're alone. I never watched a minute of it. I just had it. I never and it was like I think it's like a partially decommissioned website now or whatever. Yeah. Yeah. Um, you know, when when we went through that little mini course and

in Naples, then it really just sort of like got my interest going. So then I, I watched the whole You're one of those guys now. I just went through the whole course. And then, you know, and the point here is ego and jujitsu, if you're going to add something new to your game, you're really going to try to implement it. Like, you're going to fail a lot. Even if you're a black belt, like even if you think you're good, you're still going to fail because you're not going to automatically just be in Cornelius with lapels. And for me, like, I like the lasso and I like, you know, different spider guards and I like gripped based guards. And so, you know, this is something fun to play with. But, you know, I mean, you have to realize it's not going to work, especially at the higher levels when you're rolling with people. And so if somebody passes you, submits you, like, who cares? It's training. Just keep going and try to get better. And I was just starting to have so much fun with this. And then I got taken out for three months with this staff infection. And now I've been back to training since, you know,

since April. And I'm just like trying to work it. And especially when I come here to, you know, New York City and train, I train it at Marcello Garcia Academy in the morning. You know, some days we'll have a bunch of black belts my size. And I'll try to do it in every role. It might fail in every role. But, you know, if if I feel like, well, I'm getting to the position or, you know, maybe I get the occasional sweep, you know, you have to just kind of grade yourself on what am I trying to accomplish here and not worry so much about the ego. Like, sure, we could, you know, we could all go into the gym and just play our A game all the time and try to never give up an inch, never give up an advantage, never give up a point, try to avoid getting submitted. That is not,

in my opinion, a way to progress in the sport. Even if you don't compete, I don't think that's a way to enjoy the sport. So, you know, now it's easier said than done because maybe you're trying to implement something new and you're you're trying to work wormguard or squid guard and you get smashed and like four roles in a row you're like what am i doing you know and maybe maybe go back to something i make a career of that yeah it's okay like it's just you know it's just training i mean you're not doing it you're not getting paid for it you're not doing it for a medal well this brings on another question because we're both the same age and um you know i'm sure when you started you're a different person, you know, well, knowing you, you're probably in better shape than you

were when you started. When did you start? How old were you when you started? I was 37. I started in 2011. Yeah. And so, you know, I actually... So a young man. Yeah, I, yeah, I mean, I look back at that and think, yeah, I was a young man. But I was actually pretty close to 200 pounds. Like I walk around at 155, 157 now. So through jujitsu, and it really wasn't even until I was probably like five years, six years plus into it, that it was right around the time I think I was, I was a brown belt. I was thinking about competing and then, you know, got a little more serious about the diet and overall fitness level. So what. Yeah. Yeah, I remember when you got lean. Yeah. So it wasn't It wasn't right away because I was a big boy my first few years of Jiu-Jitsu,

but I probably am in physically better shape now because, you know, when your skill level comes up, you can increase the training frequency. And then, you know, I think with age, the key is like diet and sleep. You know, those two things really have to be dialed in. And, you know, and if you drink, I think that, you know, the alcohol consumption has to be tempered because when we're young, we can get away with a lot. And, you know, at least for me, I didn't, I never really thought about those things when I was, especially in my 20s and early 30s, you know, eat whatever you want. Like, I was always into fitness, even before

Jiu-Jitsu. But, you know, when you're older, especially when you're asking your body to do a lot and train at a, you know, at a level of intensity, you need the sleep, you need the recovery, you need the food, you know, and so anything that interrupts that can be a problem. But, you know, I feel like I kind of hit my stride really in my, in my late 40s. So this is before my neck injury, before the staff infection or any of that. I had my, you know, little run at Master's Worlds at Brown Belt in 2021. So I was 47 years old that year. And I honestly felt the best i'd ever felt in my life physically at that point and you know was kind of on a bit of a high after that i never expected to even you know win a match let alone get into the get into the

finals um and then you know subsequently i've had more i got promoted to black belt in 2022 by you know i mentioned denelson commenta before he's our instructor in naples at evolution MMA. So he promoted me in May of 2022. I've had more injuries at Black Belt since then than I ever had in my career from white to brown. So now I guess maybe it was just a, you know, delayed reaction to aging or just the accumulated stress. Yeah. Oh, that probability just came home to Roost. Yeah. You know, just lumped into one tail there. Like, yeah. But I do want to get to your macro view. because I've got a, I do have one particular burning question. And I don't know exactly when this episode will go out.

So we'll try to keep it a little bit broader. So it doesn't date itself, you know, immediately, because I know you, you can do it all. But we've gone since the financial crisis, right? 2009, 2009, basically. We've had, you know, I don't think, I think we've gone recession-free since then. if i if i'm remembering correctly yeah 2020 was a uh uh close n b er defined recession okay um no it was a real recession and it was recognized officially as a recession it was also the shortest recession in history was really right two months march yeah but it was real in the sense that the economy fell so hard

so fast in those two months even harder and faster than at any month during the great depression And, you know, that one of the 1930s, right, two, and the, you know, 29, 33, and then 37, 38, you know, those lasted a lot longer. This was just two months, but because the economy was effectively shut down, the unemployment rate went from three and a half to like almost 15%. Yeah. That's never happened in history. So it was a real recession. It was just a, it was the shortest and sharpest in history. Right. But the thing that I've been trying to figure out is, how have we avoided it this far? Because, like, you know, the classic, the classic signal is inverted yield curve, right? That's the classic that everybody points to inverted yield curve. I mean, there's a little bit of Eisenberg uncertainty there, right? Because you look at it and it changes sort of the outcome. It's sort of how I think about it. But, you know, given just all the volatility, given, and I don't just mean like VIX volatility. I just volatility and

policy, you know, expectations, you know, inverted yield curve, all that kind of stuff. I'm sort of mixing the time horizons here, but I'm just like, how have we avoided this? You know, I also am shocked that this cycle has persisted the way that it has. I mean, we had an inverted yield curve not just for a few months, but for essentially two years. And, you know, a persistent inversion in the yield curve has probably been the single best leading indicator of an eventual downturn, bar none, you know, going back in history. I mean, you know, maybe, you know, we can find one false signal or two. I think 1967 there was a false inversion, but never as deep and persistently inverted

as what we saw, say, between the fall and winter of 2022, right into, you know, most of 24. and no recession, right? I mean, the economy just kept tugging along. So that was really quite unprecedented. There were other indicators also that hit the skids in a way that typically would be associated with a recession. We had a period of money growth going negative, even in nominal terms, very unusual historically. And yet, you know, economy just kept chugging along. We also went through a regional banking crisis in 2023, and so we had, you know, banks tightening lending standards in a fairly drastic manner. So you put all these things together, inverted curve, a big crash in monetary growth. Obviously, the Fed raised interest rates over five basis points, over five percentage points during this time.

tightening lending standards and you know all the pieces of the puzzle were in place for you know what you would expect in terms of a downturn but it didn't happen and I think the reason it didn't happen it's easy to say now right we're looking in you know in the in the rearview mirror I mean first of all in the heat of the moment if you look back and you read history every time there's been an inverted yield curve it gets written off and people say you know it's different this time And it's never, it's just what they see in terms of the real-time data still looks okay. And what's coming doesn't look as good, but, you know, it's not in the in the no at the moment. But now we have enough, enough time on our hands to look back and say, okay, it does look like it was a false signal this time.

And the economy survived. Why did it survive? I think what was happening was a little bit of primacy, recency bias in financial markets. so the Fed raised interest rates a lot and markets immediately thought the Fed would be reversing course sooner than the Fed did and more you know more meaningfully than the Fed has so far and that expectation you know was was creating an inversion in the yield curve usually a lot of economic weakness tends to be associated with markets expecting rates to drop but this time that did not happen.

And one reason for that also could be we've had a lot of volatility in the supply side of the economy. So we had all these distortions from the pandemic with global supply chains and the shutdowns that happened. We had a two-year period where productivity growth was negative from late 2020 to the end of 2022. And so just as the Fed was raising rates dramatically and inverting the yield, curve, the supply side of the economy turned back on. And I'm going to get too into the weeds on this,

but I think what probably happened from a theoretical standpoint was the short-term neutral interest rate was just temporarily elevated. Some of it was because of a strong cyclical recovery that's demand side, you know, high inflation. Yep. And some of it was the supply side of the economy coming back to life. And so that meant that the Fed needed to raise rates a lot, you know, up above 5% just to stop the overheating. And that wasn't enough to actually crack the business cycle and start what we would think of as, you know, a recessionary period. So if you look at, you know, nominal and real growth, nominal growth was going at a double. So that's real growth. Yeah. We had double digit, two years of double-digit gains. You won't see anything like that since the high inflation

of the 70s and early 80s. And then nominal growth started moderating in 23 and 24. Real growth was very weak in 22 and then picked up in 23 and 24. Nothing else can explain that but a positive supply side shock with tighter monetary policy. So with a supply shock, real and nominal variables go in opposite directions. And this is, you know, we don't even have to use your fancy math here, David, just supply and demand diagrams will do it for us, right? You ship the supply curve, you know, and prices and quantities are going in opposite directions versus a demand curve shift. And so it sounds like a bunch of mumbo-jumbo, but we actually have the data now to prove that this is what was happening. The real economy picked up on the back of a stronger supply side

after 2022 and the Fed successfully moderated nominal growth without crashing it. They pulled off something we have not seen since the early 1950s, which is an immaculate disinflation. We came out of a period of near double-digit inflation to sub-3% inflation with the unemployment rate staying at low levels instead of shooting up in a recessionary manner. Unprecedented outside of the early 50s, and that was a pretty different environment than what we're dealing with here. And I'm happy to go into those differences and some similarities. But this is really pretty much unprecedented in terms of the Fed hiking rates as much as they did to try to restrain very high inflation and coming out of it with full employment and so far no recession.

I mean, it does sort of feel like we got lucky, though. I mean, that doesn't sound like, I don't feel like that's a story the Fed was telling itself, you know, as it was applying their policy, you know. Definitely not. And I think, you know, I think Chair Powell, you know, they obviously overdid it with the stimulus and, you know, the fiscal authorities overdid it. And the Fed, you know, the Fed has recognized that. Chair Powell has recognized that demand was too hot. The Fed was too easy. But he's also, I think, been very articulate, so, you know, we can criticize them for that and then give them some credit. Some of it is love for sure. But he's been pretty articulate and accurate, I think, on this, which is that there's been some good fortune to have, you know, the supply side pickup. So not just productivity, but, you know, we had really rapid immigration growth, legal and illegal immigration at a time when the labor market was overheating. And that took the heat off of wages. Now, that stopped because the border is basically closed, but we've also have a slower economy right now. And so the labor market is still in equilibrium.

Maybe it's a fragile equilibrium. But, you know, the rapid labor force growth and the pickup and productivity kind of happened at the perfect time because the business cycle was overheating and the Fed was really trying to restrain things. And so that is the part that is luck. And Fed chair, Paul, articulated that pretty well in the sense that inflation's coming down with, you know, real growth, staying firm. And this is happening because we're getting positives on the supply side, productivity and labor force. And the Fed obviously implemented tighter monetary

policy, which, you know, which also helped to lower inflation. So some of it was luck and good fortune. And, you know, some of it, I think you've got to give the Fed credit. They got rates up to the right level and didn't totally overdo it as they usually do. So combination of both. Yeah. So this begs the question then looking forward now, because we've done sort of our diagnosis of how we possibly, you know, avoided recession. But that doesn't mean there aren't clouds on the horizon, not that I'm wishing for that by any means, but, you know, it's a question of whether this is just sort of a delayed reaction, you know, because the business cycle is the business cycle, you know, it's hard to escape. What is your, your high-level outlook on that front?

Well, you know, the ego has definitely been bruised. I'll try to forecast this cycle, just like in jiu-jitsu when we have to tap out unexpectedly and frequently. So, you know, I hesitate to be too confident in a projection here, but, you know, I can tell you that at least for the first half of the year, we are seeing a slowdown. So we're getting some volatility on the supply side now, but, you know, with a headwind rather than a tailwind. So these tariffs that have been implemented and announced, you know, the effect is to raise inflation and to weaken real growth. It's just a classic supply shock. And so, you know, for the first half of the year, real growth ran just over 1%.

And, you know, that's after a two-year period where we were pretty close to 3%. Which is an amazing streak of strong for a developed economy like the U.S. with not demographics. That's one hell of a run rate for eight quarters. And even nominal growth has fallen off in the competition. composition of nominal growth has become less favorable, more of its inflation, less of its real GDP for the first half of the year. Again, classic signs of an adverse supply-side shock or a supply-side disturbance. And so this is just the tariffs coming through. Now, the financial markets, rightly or wrongly, are extremely optimistic that this is all temporary. And that, you

know, once the tariff disturbance dissipates, it's going to be off to the the races again and everything that free sailing right yeah like and right because we had you know this fall in the s and p between february and early like the first week of april we fell almost 19 percent in like less than two months and so it wasn't a huge fall but over a period you know a fairly short period of time that was a meaningful drop completely reversed right completely reversed. And so markets are very optimistic. They even with the tariffs that have been announced and imposed that, you know, this is just going to be temporary dislocation. It's not going to be something that is going to be a meaningful drag on growth for an extended period of time. And,

you know, also that it won't lead us into a recession scenario where, you know, profits drop a lot. The unemployment rate shoots up. That might not be correct. But at least, least for now, you know, that's what markets expect. And I think it really comes down to whether the Fed can continue to get lucky here. You know, they did cut rates a percentage point last year. And then they stopped. And it seems like deja vu because we recently got some soft jobs numbers. And so now markets are expecting the Fed is going to cut rates again in September on the 17th. Well, they started cutting rates last September, and we had kind of a job scare last summer as well. And so it kind of feels like deja vu again, and markets are just kind of comfortable that the Fed is going to be able

to keep the soft landing going. And, you know, I hope that that's the case. I was pretty skeptical on this whole AI thing. I thought that it was a little bit overbaked and overhyped, but I've kind of changed my view on that, just through my own experiences using it. And so it could be that once we get through these tariff shocks, that productivity is going to be pretty good for a while. And that could really carry us. So markets are optimistic. You know, they might be a little overvalued here, but, you know, they might not be wrong either. And I think it's important to at least acknowledge that. So, and that's after two years of trying to figure out why the business cycle didn't fall apart.

So I'm trying to come at this level of humility. You're just coming back stronger, my man. I'm up to my eyeballs in the AI stuff these days, so I will definitely follow up with you on that. Because it is, it's a puzzle right now when you think about the economic impacts. It is, yeah. Last question for you, because you are one of these guys, I think. You represent something that a lot of people search for, I think.

maybe never find in their professional because I think people are looking to live more integrated lives these days, you know, where they're not like a different person at work, a different person at home, a different person at the golf course or, like, you know what I mean. Like, you know, everybody's got their different facets of their personality. And you found a way to sort of bring Jiu-Jitsu into your professional life. I've seen some of your notes. And, you know, many times there's a section, you know, about Jiu-Jitsu and about your experiences there. So I'm just wondering when you started doing that, you know, because when you're sending out research notes and talking to clients and that kind of thing, there was a time where I don't think people would really

encourage you to do that. Yeah. I don't even remember the exact date that I started to share the martial arts experiences, but I think it was before the pandemic, probably around 2017 or 2018. And the way it started was I used to publish these Q&As or clients. So if I had written something or if I had just gotten a bunch of emails or calls from clients about a certain market event or macroeconomic piece of data, I would do a Q&A just so all, you know, without anyone's name on it, but just to represent the questions I'm getting and the answers that I would, I would fashion and share it with all the clients. And then at the end of the Q&A,

I would make up a question that wouldn't come from a client, would just be me, but it would be presuming. But everybody else thought it was a real client. Yeah, I think they caught on pretty quickly that there's no client asking about MMA and Jiu-Jitsu and stuff like that.

And, you know, and so I would put charts in, you know, I put charts in all these notes. And so then, you know, I think I would, I would put like a photo, maybe a training photo or something in, or I started to do that. And then it got more personalized during the pandemic. So in 2020, when markets were melting down and the economy was shut down and we were trying to figure out with only a frame of reference from 1918 and World War I data was rudimentary to see.

not a lot of choice you know that talk about flying blind um i started publishing a sunday note that you you know you're on my list it's called sunday musins and the reason for that was the markets were so crazy for a period in 2020 that i couldn't get anyone's attention during market hours so it was like when could i publish something where i know i have a captive audience and i figured well how about 5 p.m on a sunday because it's kind of like right before dinner. It's right before family time, you know, maybe mom and dad are kind of checking their emails or something and I'll have like 20 minutes of undivided attention. So I started doing the Sunday note and at the end of the Sunday note, I would put in something personal, but it was more

like just to keep it lighthearted at a really stressful time. So it wasn't always jiu-jitsu. It might be like, you know, we're out at top golf or something and I swung the club when flying, you know, 150 yards or whatever and or it could be like you know a vacation or something like that and it's interesting because it starts to open up a different relationship with the clients but a one-sided one you know like in a setting like this you know you're interviewing me I'm talking to you or getting to know each other it's two-sided when you're opening up in a client letter you know it's just one the clients are learning things about me I don't know much about, I know, you know, some of them I know a lot about, but many of them, I've never,

you know, some of them I haven't even met. But it creates a bond with the clients. And this is not, you know, I was kind of just doing this for entertainment purposes and then trying to kind of keep things calm and lighthearted during a stressful time during the pandemic. But the clients then, you know, liked the idea of the Sunday note. I would get a lot of responses if I put something in about health, wellness, or fitness. Shockingly, I found out that, you know, I have a good number of clients that train. I'm not going to say it's a high percentage. I mean, it's an infinitesimal percentage of my client following, but I mean, you'd be surprised. I think I have 10 clients in Chicago that train, you know, two of which are black belts. So, you know,

that's actually kind of surprising because it's not like people in this industry are young it might be younger than us but so it's sort of just evolved over time i mean i wrote about my neck surgery i wrote about the staff infection you know i wrote about you know master's worlds i had two black belt matches after that when i got promoted to black belt that i lost and it's a different totally different ball game at black belt i wrote about that so you know win or lose, whether it's a struggle or a triumph, I try to put it in there. And, you know, if I can offer anyone insight or motivation, then that's good. But like, I think, you know, it's created a bond with the following that I have. And, you know, I'm happy to do it. But honestly,

I mean, I enjoy doing it. But if the, but, you know, my goal is just to try to educate and entertain people. And like, I have a passion not just for finance and business cycles, but health and wellness, obviously jujitsu, but, you know, weight training, golf. So, you know, I'll write about all that stuff. And if anybody gets anything out of it that's positive, then, you know, then I'm happy. And I always give the clients the option. I mean, it's at the end of the note. So I have it in both. Like, you know, this ends the- You can stop reading. This ends the macro portion of the note. If you're not interested in, you know, what your whoop app says after nine rounds of training when you're 51, then stop reading here.

I would say a good chunk of my clients, stop reading there. But a lot of them, a lot of them do keep going. Don't talk crazy, Mike. Don't talk crazy. Well, dude, thank you so much for sharing. We could, I mean, I have so many other questions I could ask you, but we've already been talking longer than I expected. So we'll just have to bring you back on some time and we can sort of update the macro view, but also get some more details on your A-Sem-Met. technique. Absolutely. You can educate me on AI and how to think about that because that's

sure. That's kind of the big one right now in terms of, you know, where we're going, not this year, but like over, you know, say like a five-year horizon. Yeah. You know, that's a big deal. Yeah, it's something I think about a lot. I don't know that I have a lot of answers, but it's definitely making me think kind of hard. So, but thank you, Michael. Absolutely. Thank you. everyone for listening to the podcast, and we'll catch you in the next episode.