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#bitcoin Good times and Friday fireside chat with Magoo . $qqq $spx
Recorded: April 22, 2023
Hey, Mr. Producer, are you able to hear me properly? Testing, testing. Just testing what to make. Yeah, just send Magoo, send Magoo a co-host invite.
McGurly, you're able to hear me properly, brother. Yeah, I can hear you. Awesome, man. Awesome. Yeah, we'll get started shortly. I'm just gonna wait about a minute or so for Will's outlook to come online. Man, he's a pretty big fan of yours, brother.
My goo is it sure that you're coming to BTC Miami bro is that is that like our our our the rumbling
True. I don't know. I think after current events, I have to take a double think if I want to show my face there.
Oh man, what current events would those be where I saw you on a space the other day with David what happened there man I was so confused about like the whole situation or like people trying to do like NFTs
The ICOs now is that a new thing? Well, it's a new thing in terms of Bitcoin, as with Hillary to call it, "Ord Nulls." They want to create cheap digital art and then a sign of value to it right away and then sell it and auction it off to people.
And a lot of people I guess are not entirely happy with that because it's something because essentially they're NFTs right like you can argue about whether or not they have value based on they're on the Bitcoin blockchain versus the Ethereum blockchain.
But I think a lot of the people that dislike NFTs in general, that's not really a deciding factor, it's more so I'll call it the human behavior that's associated with NFTs and NFTs sales and the shady shit that has happened I guess on the Ethereum side.
things in terms of selling pictures of rocks for 400k and later trading them and mismanaged or mismarketing and outright scamming people. And so people are up in arms with that on Bitcoin because they think the same
big claim magazine at least being one of the first people to start like selling quote unquote um... ordinals we'll get right back to your brother skimmy just give me uh... one minute
All right, we're good now. We're good now. Sound quality is perfect and everything. But, huh, so are these like NFTs? Like what sort of use case do they even have? Because on different other platforms, you know, there's some gamified element to it. Is this
Basically just like a novelty like kind of like the ICOs right where they were just an ERC 20 token with a wallet are these sort of like the same thing where they're just an NFT that's like oh thank you for giving us money or what have you. Yeah, there's a there's
lots of distinctions to be made with like inscriptions and like ordinals right because like there's the aspect of sure it can be an image of whatever right and people try to say and call it digital art right but then there's also the use case of just inscribing information to the blog
and then not actually selling that as digital art. Those are two completely different things, but they used the same technology. But what people were mad specifically about Bitcoin Magazine is that they put on what they call digital collectibles or digital art
and then just selling it outright in an auction style fashion, kind of like an ICO, essentially. Little bit of different dynamics with how the auction was actually operated and like a Dutch format, but nonetheless, auctioning off digital collectibles. And I guess
some people are not super enthusiastic about that. Well, I mean, outside of that, man, I believe the last time that we had spoke, you know, you were you were you were right on all your forecast through to like, you know, the next one.
It's silver gate and all that stuff and Genesis I believe we spoke like mid-December along that time frame and you know that was some pretty well stuff Back in March and as far as like you know price action goes I believe you and I had agreed that like end of year would be around these levels like the 28k
32K level man. So if I'm not to be pretty interesting, is there any like recent data to suggest that you know we could be seeing extended periods of volatility to the downside or the upside? I haven't been keeping up with Magoo as much as
I should have on your adventure across some of these Twitter spaces. Yeah, I have, I guess I have, I haven't really been on too many Twitter spaces. Not much has really been happening since the March. I think I had a space talking about kind of like the bank and crisis. Ever since then things
have really been quiet for the most part, at least in life if you just want to look at equities. But there's some pretty big signs of distress in the market, right? Like the banking crisis happened. But the Fed is still raising, and I think they actually might raise
raise again because well they can. But in the Treasury market we're seeing quite a big rush for collateral, like especially on the short end of the curve, like how fast
The yield is dropping on like just say like the one month like the T-Bells or the one months They haven't moved like that since 2008 like the other day like yesterday. I'm pretty sure The the one month
dropped like 25 basis points which is like that's insane in one day right like these are acting like shitcoins to be honest with you how big of these moves are and at one point in the day it was down I think over 50 basis points and recovered a little bit and even now today
It made back some of that ground and it literally gave it all back during the day. If you look at the one hour, basically around 2pm Eastern time, it actually started to try to rally a bit, but then into the clothes and now it's even
lower than where it closed yesterday. So there's a huge rush for collateral because there's a huge dispersion between the Fed bonds rate and the one month treasury yield which shouldn't happen, right? It means that there are people
are putting a massive premium on collateral because it's not just the yield that people get from these T-vails and these Treasuries and these bonds. It's the functionality that allows them to actually operate as either banks or
or shadow banks or just regular financial institutions where they need this collateral to actually operate. Whether it means needing that collateral for collateral levels to basically issue more loans, there's a lot of different things that people would need this and there's just been this huge dash
For treasuries on the short end of the curve causing this huge disparity in the yield curve, right where you have now the yield curve like the one month is at like three three hundred thirty five basis points and then you have the two months at almost five
100 basic points. Then you have the three months that are basically 510, the six months around 505, and then the one year at 47, and then basically it then goes down again. So it's like a weird, the weirdest curve in the yield curve that I've
ever seen really where it's inverted but only at like the two months and the three and the six and the one year like everything's inverted is have to very short it on the curve and why that is is while people need collateral but like the real question
is that we don't know. We can guess, but who is it that are bidding on these on the short end that are basically not even caring about the yield and just getting their hands on that collateral? I don't know. Is it banks trying to change the
the ratio of their loan book, like not their loan book, but what their collateral is, so they actually have more trajectories on the shorter than the curve instead of on the long end, which is probably true because the Fed has what they've done is they've created that program
in March where "people who have access to the Fed window or the discount window, they'll have the ability to basically give the Fed land basically, long dated treasuries and the Fed will give them money directly
up front at one to one value, like literally one to one value of what those bonds were originally, right? Even though they're underwater right now, right? But this is what caused Silicon Valley bank to blow up, right? They had a mismatch in liquidity where they had
all these people wanting their deposits back but they had a whole their money allocated to long-term treasuries which were down 20-30% and they were having to sell them to kind of to get liquidity but they were on their waters so they were having to realize that loss and that's a huge loss and all of
banks have that huge loss, it's just not marked to market because of the way that accounting works. So now the Fed has given them a tool to basically get instant liquidity without taking a loss. They're doing that and it appears to be that they're taking all of their treasuries on the long end of
the curve and they're taking them to the fed, they're getting dollars for them, one for basically at par what their value were when they bought them and then just bidding the fuck out of the shordan because they still need that collateral but they need to change to the kind of duration this
of their of their bomb portfolio. But why they're bidding the fuck out of it. It means that they are just moving from the long end to the short end and they're not actually like using the tool that the Fed gave them to basically
allow customer deposits to come out. They are essentially just using it for themselves and just putting all the liquidity on the short end. It seems like that's the only way or the only institutions that I think would have enough
money to be moving the short end this much. And so they're just kind of reform heading where the duration is across their bond portfolio. So it's super, super interesting, but there's been a huge raise for collateral on the short end, which we've seen.
Magu, so are these entities betting for another liquidation event as we saw basically at March
A liquidation in terms of what? In terms of bangs or in terms of consumers' signs or bangs?
Yeah, banks, banks are specific and I've been speaking with individuals a bit older than myself. I'm about a turn 26 and a couple of months and with individuals that lived through a way they kind of said like,
the current rumblings going right now and some financials after this is very reminiscent of the 2008 I believe I believe it was like Lehman who collapsed before Bear Stearns like it was
like six months before and then you know after that a couple months later you know going into early stages of 2009 we had that massive pretty much down only in the pyramid like the first the first quarter
Yeah, it is it is GFC Ask because the only time that any that that we've seen this big of a move in the short end of the curve the lot at least the last time was the GFC where you've seen rates their yields persist really drop on the on the
front end of the curve at this fashion. If you pull up your trading view and you go look at the one month, you're going to have to go to look basically at 2020 to see basically that the drop that has happened. Before that, you see
2008 where there was that much basic drop in some of these yields. But that's what they're doing. If that is what's happening and the banks are reshuffing their liquidity profile
to have their portfolios on the front end of the curve. It means that they expect that they're going to need that liquidity sooner than later. And what that means is, essentially, is that they think people are going to be needing to have access to those customer deposits.
more so than keep them in the bank. So they're setting themselves up to be able to withstand massive amounts of withdrawals from customer deposits. And what that is in other claimants terms, that's a recession, right? Because that's when people
people basically stop spending and they have to basically dip into their savings and they dip into their deposits and everyone does and to basically get the money. That's what these people are probably doing. They're making
if people need to get access to this capital, then they can get access to it and not affect the bank. Because before, without this tool that the Fed has introduced, apparently these banks didn't actually believe the Fed and they just
kept on buying long-dated treasury bills or bonds and the rates kept going up and they kept going more underwater and more underwater. And then one little liquidity by or drain where people actually need to take their money out
out, and they have to go and sell these long dated bonds that are under water. And so now they're just basically creating that they're changing the dynamics so that if that does happen, they can actually facilitate that without like bringing down the entire banking system.
It on over to the first green. I don't want to hug up the mic too much.
I want this space to be an interactive for the BB community. So for a screen, I saw you post something up on the nest. So feel free to share that with McGoo.
I'm a good hey watch. So I was trying to find the chart.
But I think it's more expensive now to borrow money than it even was in 2008. I can't seem to find the chart but it was in my feed earlier. Oh, it definitely is. It's definitely more expensive. Whether you want to look at mortgages or if you want to look at car
loans, it's more expensive now to borrow money than it has been in like 30 years. You just gotta go look at rates, right? If you just eat like the simplest, just like pull up the 10 year, you just pull up the 10 year and
compare that throughout history and that will give you a pretty good indication of how expensive it is to basically get access to capital. Guys, so I want to follow you up there, Magoo.
Is the reason for capital being more expensive than it has in 30 years is that due to rates being highest in the most aggressive 12 long time periods since Paul Volker right so we went from zero
to a little over 5% in 12 months right. So that's like a what a 500 plus percent increase my bad 400% plus increase is it due to that or another underlying factor that I'm currently not aware of
Well, we had, like in terms of like percentages, like this is a faster rate hike than even Volker, in terms of real numbers, it's not right because he went from like, I think it was like seven to like, almost 20, but in terms of percentages, we went from literally
50 basis points on like, like, I'm sure like a fed funds, a fed fund or like, whatever it was, 25, 50 basis points, now it's over 5 and the span of like, essentially a year. So in terms of percentages, that's like, 5, 6, 500% increase, like so,
There is no wonder there's been massive volatility in a bunch of different things because the cost of capital has changed drastically, insane amounts. If you just want to look at the 10-year peak around
and a half percent. And the last time that it was that high was basically leading into the great financial crisis. I think in 2007 it was around roughly the same. And the last time it was higher than that, it got a little bit higher than that from like 2000 and
I think let's see here. So there's a couple peaks from 2004 to 2007 where the 10 year was higher than that, but other than that, the 10 year hasn't been that high. And then the Fed funds rate, but like, basically, it peaked in like,
If you want to talk about it, peaking the late 70s with Walker, where was that 15, 16% or whatever it was and it's been on downwards decline ever since then. If you're a TA person, this is the first time it's broken out of that channel, just down only from the late 70s.
But capitalizing costs this much in a very long time. Basically you'd have to look at pre-GFC to find capital cost in this high, essentially. And that changes everything. That changes the dynamic with car loans that
changes the dynamics with mortgages, that changes the dynamic and venture capital, changes the dynamic and private equity. It changes the dynamics almost everywhere because the cost of capital is like 500% higher than where it was in COVID.
And so that changes everything from PEs on stocks to basically how much your car payment is every month. And it's changed in a bad way if you want number to go up with any asset, almost, almost free asset like the
with cost of capital being as high, more people are likely to park their money in treasuries than they are to yolo them in fucking shit coins or mean stocks, right? And it basically takes us the window to the sale of a lot of the risk assets because of
the rates being so high. I'll pass it over now. Go ahead, four screen. Go ahead then we'll pass it over to Snorlax and premise. I mean, this is kind of a broad question. I've been listening to you for a while, McGuin, I know you are kind of
well-connected in the financial space. So I was just curious, is there anything you're particularly eyeing for kind of the next credit event or like something you're really just kind of keying in on going, "Hey, that might be what breaks." So this isn't any secret, but commercial real estate
in a really bad state. Like a lot of people have been talking about this over the last, I don't know, months. And I'm not like a real estate expert by any stretch of the imagination, especially even commercial real estate, which is a completely different beast. But a lot of commercial real estate
state is structured a lot differently in terms of the financing when it comes to like as you would call it like a mortgage basically for you to buy your house and you have like your monthly bed and your monthly mortgage bill. Corporate real estate is a little bit different where the underlying owner cares more about
free cash flow and how much equity they have in certain deals and how much the vacancy and the vacancy, basically the occupancy rate is of a building and how much free cash flow is coming in and if it's actually enough to actually pay their mortgage because they don't operate
and a state where it's like we're underwater and we're going to continue to be underwater. They'll just hand the keys back on like normal real estate where people need to earn a living. And so with the occupancy rates of where they are now and they're only going to go lower just because like,
corporate real estate or commercial real estate is there's a lot of different sub sectors in it some of them are more are going to be stronger than others like the weakest ones going to be office space and specifically like class B office space like not like the bees knees of
the building is amazing and it doesn't matter what really happens. There's always going to be a tenant because it's just like some of the best buildings in downtown Manhattan or let's say in San Fran and it's the newest building. But then there's like class B where it's like not the nicest buildings, people
are less likely to go to the office because it's not amazing and those deals have a very high risk right now of the owners just walking away and handing in the keys because the work from home like is never going away at this point
The way that I see it is there was this idea coming out of COVID that people were going to go back to normal in terms of like how people actually operate in white collar jobs and basically everyone going back to work. But that's not happening.
ever. Like that has been it's becoming more and more and more apparent and I'm even seeing this like anecdotally with hiring people and looking at the market that I'm specifically focused in. If you're at like on-prem job you probably have to
offer like a 20-25% premium on your offer to candidates for them to even consider it because of how much of disadvantage it is for them to have to go into work whether it's the cost of them having to drive there or the cost of them in the time
family, the time manor of like, well, I'm going to be wasting two hours on my day commuting, whether it's driving or sitting on a train or whatever it is. And also, there has been this huge mass migration of white color workers all over the United States because they said, well, I'm getting
paid $180,000 to do my office job that you're supposed to be in Manhattan or you're supposed to be in San Fran or Houston or Miami. I can keep that and go move to fucking Cincinnati or fucking Toledo or anywhere. Name my bum fucking
anywhere and basically your cost of living is more than a cut in half and you're keeping your salary. And so that's not changing, right? And where we're at with the job market is job employers have to suck it because if they don't do that and they
don't allow them to work from home, they're just cut out of the top tier candidates in the marketplace because the people that actually know what they're doing, that are worth anything, they can demand anything right now because the job market is at a generational, historical low in terms of not low, but how tight it is.
is, how much of a demand there is for actual talent and how little talent there actually is. And so the people that have talent and these are the people that are getting paid these huge salaries that they can dictate what they want and move anywhere on the planet. And some of them are even leaving the United States hold together.
And they have to do it. So work from home is not going anywhere. And that's for putting a huge, it's literally putting, it's like a generational trend that is changing and that the first sector that's going to get hurt bad by this.
this is office spaces and that's just one part of commercial real estate and there has to be a massive re-evaluating. Like when I mean massive I mean like 30 40% valuation changed to the downside for some of these office spaces right. It's not going to be as precipitated
is some depending on your location, but across the board there's going to be a huge repricing of office spaces because no one fucking needs office spaces anymore. Everyone's working from home. And so without that demand, there's a fucking huge shop, right? And so there's going to have to be a huge
repricing about. And one of the problems that that brings is most of these deals, like most of these commercial real estate deals, are done with regional banks. They're not done with your JP Morgan's. They're not done with your bank of America. They're done in localized parts of the country.
those deals are done with local banks, right? Call them community banks or regional banks, everyone call them, but most of the commercial real estate deals are done with those banks because it's higher risk and they're going to suffer because at the end of the day the land
have the ability to just walk away from the deal and the people that are going to be holding the bag are going to be basically either the bond holders, whoever owns the actual credit, like the debt. So whoever, if they've repackaged that debt and sold it somewhere, those people are going to be sitting on it or if the banks have
haven't done that, the banks are going to suffer. It's not going to be the people that actually own the building. That's why it's ironic how commercial real estate works. They can walk away from a deal. They can be like, "Well, I had 10% equity in this deal and the rest
credit basically, right? Essentially what I'm saying. And let's say the real estate gets reprised 20%, they're now negative 10% into this equity, into this building. Well, they're like, "Okay, I'm going to walk away." It's done. They just hand the keys back, but it being bought a boom is done.
that it's left on the bank and whoever owns that actual debt, if they sold and repackaged it in some form of MBS, that gets burnt on it. So I think that is a huge sector that will, that there is going to be another huge credit crunch coming from. And then
Normal real estate is what everyone call a residential real estate. That's not going to come down nearly as much. It's not like a 2007 and 8 type scenario where everyone's leveraged to the fucking teats. It is going to come down more than what it already has, but is it going to come down another 30% in
now. Is it going to come down 20? Is it going to come down another 10 to 15%? Probably. But that is going to be a less of a cascading failure because now we don't have at least the United States. There's not as much variable rate more
were people all of a sudden realizing that their payments have won from 1500 to 3000. Now that's different in the UK that's different in Australia and New Zealand and also Canada. Those countries are, which are all commonwealth countries, they still operate on variable
rates. They have fixed, they call them fixed rates, but they're variable and I think I think 10 year, 10 year, five year and 10 year terms. So they have a 10 year fixed or 10 year or five year fixed. But after that, they have to refinance. And then the rate goes from where let's say it was at prime plus 3%, but now it goes from
Prime plus 3% to prime plus 6% and someone on a million dollar house in some of these markets, let's say in Canada and Vancouver, Toronto or if you go to Australia on the Gold Coast or if you go to Manchester and they're sitting on a million dollar property and they're basically only 10% into the deal
and they're basically paying let's say $3,000 a month or $26,000, $27,000 a month on mortgages and they have to refinance them because their time is up. They just go from paying that to more than doubling their real estate payments, their mortgage payments, which isn't the same, right?
So if you're an individual and you're paying 3,000 and then all of a sudden they get to refinance and now you're paying 6,000, that's a big problem. It's so much of a problem that the regulators are going to have to change how mortgage rules actually work in those countries.
I mean by that is the banks cannot withstand a wave of retail, not retail, but residential mortgages to default and just hand in the keys. They just can't do it. They can't allow that to happen. So what they're going to have to do is re-emeritize those
So if you have a 30 year mortgage or whatever a 25 year mortgage, they're going to be like, well, instead of now going from 3000 a month to 6 thousand a month, we'll just reamertize this and now instead of a 30 year mortgage, it's a 60 year mortgage or whatever the number is, that's the only way that they can stop the cash
of like defaults from happening where they're just like well now you have to pay this mortgage over 60 years and most people are going to take that is because they have real realistically no choice right because you can you can default on it and or claim bankruptcy with that's a whole other shit show for those people but now you're gonna have people
stock was like maybe not 60 year mortgages but probably 40 and 50 year mortgages at this point just to save those real estate markets because if they don't prioritize those markets that are super heated in like Canada, Vancouver, Toronto, England, Manchester or the Gold Coast in Australia
But those real estate markets would collapse like 50-60 percent, right? And a lot of those economies actually rely on the wealth effect of those real estate valuations. And if you had a 30 or even a 30 or 40 percent decline in those, those countries would see massive recessions, right?
it would be insane. And so they have to do their best to stem that from happening and the way that I think they're going to do that is by re-emeritizing those mortgages. That's not going to state them completely. There's still going to be a revaluation in some of these regions, some of these super hot regions
like, do you want to look at Vancouver or Toronto? You're still going to see probably another 15% decline in real estate valuations from here. I think there are already down 10, 12%, maybe even 15, depending on the region. So you're probably going to see at least another 10% down from here as well.
The United States, like I said, is a little bit shielded from this because of the way that after the GFC, there's no real variables. But you're still going to see overall a little bit of decline in valuations just because of the new, I forget what they call them, the realist in the
But the new issuance of new mortgages in the lending standards are a lot tighter and a lot more people can't afford massive mortgages at these new rates. And so there's not as much, I mean, loan origination, that's the fucking word I'm looking for. There's not as much new loan origination.
see this with the mortgage divisions or the lending divisions of a lot of these banks, they're firing their entire department because no one is actually borrowing money and so they don't need a whole fucking loan or origination department at these banks because no one actually is boring. So you're going to see some
Some of those values just continue to come down the state, but nothing like it's going to be in some of those markets, laying those regions I told you about. >> Sure, Alex. Go right on right ahead, brother. I want to give you some time to speak on this roundtable space. So thanks, Norlax, for coming on up, man. Good to see you in here, brother.
For sure guys, thanks for having me on. Yeah, I wanted to ask you a question McGee, I really appreciate the chance to speak with you. The question's pretty much on a similar topic of discussion, you know, since I feel like the issue of liquidity is so obvious and apparent.
When I'm because I trade a lot of lower time frame so you know when I look at Spoo's when I look at the NASDAQ I mean like you said it's trading like an altcoin and it's not necessarily indicative of a healthy market so but when we talk about potential areas of distress you know I wanted to know your thoughts on
whether or not potentially the larger tail risk now of a credit event or just an event period could potentially be caused more by the private equity sector rather than maybe the banking sector given the increasing exposure to a market as the levels of liquidity are
actively decreasing because, you know, personally, I feel like there are probably numerous areas where, you know, we can talk about systemic risk and probably have it hold water. Yeah, so that's another area that's going to see a credit crunch. Private equity and then there's obviously there's different aspects
private equity if you want to consider VC venture capital as part of private equity. But the best part about private equity and then has been at least for the last since basically the peak in the markets, call it like end of 2021 or Bitcoin started tanking in November or October. Private equity has this amazing
the whole market is down 30% and private equity is sitting on the private equity because it's not liquid and it doesn't trade so they don't need to market the value of that private equity and so they're just sitting
pretty. But we're getting to the point now that they're going to have to be forced to mark some of this private equity, mark the market. And that's going to appear like just like money instantaneously being vaporized, right? Like if you have a company that all of a sudden had a billion dollar value
You can look at some of these charts too. If you want to look at unicorns, I like looking at this chart, especially for Silicon Valley. You look at all the unicorns that have existed and basically the new valuations that have existed. And like, as soon as 2020 hit, the unicorns went through the roof. There's never
been more unicorns that have ever existed. It's like literally against the quality unicorn because it's supposed to be rare and in 2020 rolls around and the amount of unicorns just goes through the roof. It's insane with how many companies that are valued over a billion dollars actually happen.
And a lot of those have marked to market to be honest with you. And whether the private equity firms, they have not done it yet, they will for the long as if the Fed continues to hold rates and not even raise rates more, they're going to be forced to mark to market basically some of
their holdings and that's just going to appear to be a quote unquote like an evaporation of money. But once in to be said about VCs and private equity, they have so much cash on the sidelines. Like they've been raising so much money in 20, they raised so much money in
2022 that you're just holding on the sidelines like this isn't exactly private equity but I take a look at blackrock like blackrock literally just raised I think it was like 30 billion dollars for single family houses To basically scoop up because they know they're about to take a shit on on the market and so
And this is in the face of them closing redemption on the biggest like real estate rate in existence and only letting so many people get out at a time and they're raising money on the back end of that to basically buy in on the cheap when it goes down. So there's been a lot of money
raising in the V.C. world and in private equity. And it's really weird because in private equity how that works are like your L.P.s and you give people money, you're paying people to hold money essentially. You're paying people to hold your money even though they're not investing it.
So it's a weird dynamic that forces them to invest it. But nonetheless, they too are not there. There's going to be an event there. I don't know what that's going to look like. It's just going to be a, it's just a revaluation of private equity, right? And basically, on people's books that Mark
as soon as you mark the market something, you think this person or this company has a balance sheet of 5 billion of investments and now it's 3 billion overnight because they mark the market, right? And that's going to be a, that's going to cause some shock, right? Just an act of itself. Premis, go down right ahead, man. Good to have you here, brother.
I appreciate it. Yeah. Yeah. I heard you bits of what you were talking about and I like to play a little devil's advocate and I'm actually still not. Travis, you ever to hear me? You ever hear me? Are you good? Yeah, he's speaking. Yeah. Oh, yeah. I was about to make one. Yeah, I'm not able to hear him. Well, I'll be steady. Can't hear me, guys.
He promised to drop down and come back. Yeah, I can know that the man while he can't hear you as a co-host, but I think the speakers and the crowd can. Can't worry speaking, kimchi. Okay, he can't hear the speakers either. I'll come back to
Hey, can you hear me, Robbie? Yeah, yeah, I can hear you. Is it something on my end? Yeah, it might be something on your end, I think. A couple people were speaking that they couldn't that you couldn't hear. My check. Okay, okay. I'm gonna drop my check.
Yeah, you're good enough. You're good now. Yeah, you're good. Yeah, I promise you good. Yeah, I guess I kind of wanted to pose a question since an earlier tell me was talking about the unemployment. A lot of people know my opinion on employment. I think it's
a little tougher than it's been. Stuff like gig economy has obviously changed a lot. You were talking about how people aren't going back into the offices. I agree with that sentiment too. And I was going to hurt, I believe also commercial real estate and such. And you know, I think I think a lot of people are forgetting
getting some stuff though. You know, I hear a lot of people talk about, you know, specifics, but then when I look at the economy, if we're talking about trying to get unemployment, if unemployment going up is going to be the narrative, I just don't see it coming other than the gig economy. We also have a was a trillion dollar infrastructure bill that's going to start creating jobs here in 2023. We got a chip plant being built and
Arizona we got Intel who's gonna be building a new chip plan Ohio these are gonna be job creating events that the Fed what while he's raising rates you got a president who's over here creating jobs so I just I keep looking at it and I'm looking at unemployment and I can go to unemployment rate and I can tell you here that we're still at lowest unemployment rates we've had
since the 60s right and I I believe those 2020 or 2019 up into this point this 3.5 back in 2008 unemployment was about 4.6% when the Fed fund rate were at the same levels at around 4.4 4.8 etc. Right now we're at 3.5% unemployment is not really moving we're seeing some
claims come in but those claims are going to go look for jobs. When you get first laid off you do apply your first week we're hearing about the layoffs but then they go get a job that's why I'm going to take up and they tick right back down. So I kind of want to see what people were thinking about that. I think a lot of people ignore that there is stimulus in the economy and infrastructure bill, a $60 billion chip bill, trillion#
infrastructure, but those infrastructure jobs have not started yet. And I just really think a lot of people think, hey, unemployment is just going to take up magically out of nowhere, even though there's been no signs of that. And I think it's going to take a lot longer in people to realize, especially when we got a president spending money right now. And of course, he could turn back on the student payments anytime or he could also just forgive them.
anytime. There's a lot of stuff. I think people, we've looked at the bed and stuff. We forget about the real economy. The jobs are strong. There's a labor shortage. They're creating jobs with an infrastructure bill starting this year at Chipsville. All these different jobs coming back to America. If anything, we have a labor shortage and that's our biggest problem. That's kind of what I'm competing there.
There's two things I could say to those points regarding labor. One, a lot of the layoffs were tech. Tech is not the average wage. It's significantly above average. Someone get in 250 a year and whatever state, I mean, you could easily get 2, 250 a year.
the high-end tech job in Texas. Obviously, New York City, that's not the most extravagant of a number, or even California for that matter. But the point is that's a good reason why unemployment insurance didn't really kick. Someone making 250 isn't really that interesting and unemployment insurance. The odds are they're just
to hit the labor market and see what they could do in that regard. Another major consideration is the size of the labor force. The labor force is smaller than it's ever been, I think. I believe that's the actual metric. One half the population of the United
United States does not work for one reason or another. And this countless legitimate reasons to not be part of the labor force, my wife's not part of the labor force and so on and so forth. But I would argue strongly that we have a crisis of we are currently in an unemployment
crisis, there's not enough labor, and the complexity is the types of labor that we traditionally think of for productivity, and we're in desperate need of a revolution of redefining what productivity is. That's a good part of the narrative that I see
for the future of digital, web3, crypto markets, new ways for the population to actually contribute to organized productivity, not necessarily mining or manufacturing or anything we would consider more so a traditional type of employment.
Ways for a housewife or someone who's taking care of children to also contribute to organized productivity. This is greatly represented in the stability of the nation. The psychological well-being of the nation is
so dependent on people contributing to organized productive activities. And when people are not psychological while being tested the coin, which is very much, I'm sure, what everyone sees is occurring in the... In addition to the lab or delivery
you have a very short window of time to reach mid-level competence or you're gone. Yeah, that's another thing. In just to kind of talk about specific numbers. So, going in before COVID hit, United States had 60 million employees. Or no, sorry, I had to back
We have 60 million employed right now. Before COVID hit, we had 63 million. The unemployment number that they actually tell you, the headline number, is not the whole truth. Right? Right now, you can say, "Hey, we're at
like almost historic level unemployment at like 3.4 or 3.5 or whatever it is now in that zone. But that doesn't tell the story because I posted something else in the nest. I've had this feeling for at least four or five months now that the unemployment numbers are mad
asking the coming recession because everyone what that individual just pointed out was like the job market is 100% right with like the unemployment number being super low more jobs are going to be coming and all those things but I think that is why a lot of people are in doubt or
Basically fading the coming recession because ultimately This is how all soft landings go right it appears to be a soft landing until it's not right you basically have Unemployment absolutely stable and then all of a sudden it just starts ticking up right so like unemployment
is a lagging number because the unemployment numbers don't even really have all those texts people that got fired even in November yet, right? Because they usually they got like probably a 3, 4, 5 and even 6 months severed package where they're not even filing for unemployment.
until that is over and that's if they haven't even gotten another job yet or what they're doing it for just hanging around. So I don't think we're going to see even those first wave of layoffs and tech show up in the unemployment number until probably June. And so that's a huge thing, right?
Just a quick note on the June thing. So if you're a recruiter, you know, quarter to quarter three is prime time for recruitment. So that's what you really figure out if people are pivoting from their careers, from their current place of employment and everything. So I understand what you're all saying, because I understand some numbers could still pop up, but then I would counter with
this that the gig economy is offering $1,400 bonuses for people to come drop or lift and make 70 a year. Bill is still going to create a bunch of jobs averaging over 70 years. So it's the infrastructure, but the infrastructure bill is probably going to create at least half a million jobs with those type of payments. They're talking about still jobs coming into the market.
But the thing is though, we have just went through one of the biggest labor shortages in our generation. We can talk to why that existed. Like not like the worker participation number for the actual people that what they used to calculate unemployment.
It's basically all the free money that was given to people and they didn't need to go back to work and so talent to stayed out of the job market altogether Whether it's the changing in the training of the job the job laborers that didn't have the correct skills, but Nonetheless, we've went through an extreme
Mainly tight job mark job sector phase, whatever you want to call it over the last three years and Employers and like I have my own anecdotal experience where especially in tech it has been near impossible to score highly trained and highly skilled individuals without literally blowing out job off
like I mean just like literally giving them ridiculous numbers to even land and get them in your company and they've just been two years trying to hire employees and so they are not trying to fire anyone unless they absolutely have
have to because they know how hard they work to even get the workers that they have. And normally how things go in a recession is people do not fire people until earnings go down. As soon as earnings go down, then they start firing people. And we have just
started to cross the hill or go over the precipice of earning starting to actually show weakness and basically start to go down. And so when earn, like always seen so far, is companies that overhired that basically were cutting fat out of their organizations to tech
is not just tech but growth in general. They basically hire when the cost of capital is basically zero. They hire it as much as they want to see what sticks. And then as soon as the cost of capital and things start to shift, they start to cut all the blow. Right. And that's what we've been seeing since November. The tech
companies seeing the coming recession and cutting all of the blow, but the broader economy doesn't work like that. The broader economy doesn't cut people until they absolutely have to, and that when they have to is when earnings start to actually weaken, and that's what we're going to see going into the summer.
And so I think we're going to start seeing over the next two, three, four months. You're going to see those unemployment numbers start to actually tick up. You know when the bread or the bread economy starts to see those numbers tick up significantly is when banks are in offering the term
credit for net 90 and net 30 for companies that have inventory to cover employment for that period of time. In 2008, what was it for we were around 4.8 or something? What's the number that was
What's the number? What's the magic numbers? We go from 3.5, slow to 3.9, back to 3.8. I don't think that's the price of it over four. Is it higher than what it was then or is it lower than it was then? Just speaking on the labor market specifically, what's your thought on that? In 2008? Yeah, well, yeah, I think I'm applying it and stuff.
roughly a little bit higher than I believe, co-pre-COVID levels. But the last time before the GFC, I believe they're at like four and a quarter around and then it boosted up to 10%. And I don't think, like, if it doesn't take a genius,
You can almost know nothing about how the job market actually works. If you look at a historical chart of unemployment, you see the waves. You don't see it's never flat. It's flat for a period of time and then it goes back up in cyclical moments and then goes back down. I forget the stat that I heard
the other day. But it's like if unemployment takes up, I forget what it was. If it takes up a certain amount, there's never a time where it's not picked up another like 200 dips or something. I'll try to find that stat. But I don't think this coming recession is going to be one where we see 10% of
employment. Like let me just put that out there. Like I would be shocked if we get above 6% unemployment. Right. The Fed says that they're targeting for, I think it was four and a quarter. They want to get unemployment to four and a quarter to kind of get these structural inflation down. But we always know the Fed. They always
It's all over overshot. I would be in the camp of expecting to see unemployment in this recession probably from 5 to 6% just randomly throwing that out there. Just because of all the things that one guest said about how tight the job market actually
is out there in all those reshoring of the supply chain and all those infrastructure jobs and the investments that are being put into infrastructure, bringing back chip manufacturing, all these different things is structurally inflationary over
next decade. And that's why I think unemployment won't go over 6% in this recession. And you can, you can, you can, tamize what you want from that, like in terms of like how bad the capital markets are going to decrease in this coming recession.
Obviously, I believe the United States is a lot better position than Europe per se. Europe is fucked for a lot of the better words. They're fucked. They're actually probably going to be entering the recessions first and it looks like they are probably
are in a recession today. Like their GDP is like zero or like close to the zero bound. And like you have England. England's inflation is still like 10%. But that's insanity. And their GDP like never actually really recovered. So they're upshits Creek.
that's for sure. And Germany, they just posted macro numbers the other day, I believe, of their PPI. Surprised negative 2%. Like, it came in 2% lower than what they thought it did. And that's a huge, that's massive. That's like a massive deflationary surprise.
I would be absolutely shocked if we get out of the summer without being in a recession. But I could be wrong. I've been around before.
I would be shocked if we get out of the summer without being in a recession in the United States. All right, so we're going to go on over to Will's Outlook to give his outlook. And then after that, out of respect of the rotation, we're going to go to fee capital investments right after Will's Outlooks Outlook.
will give us your outlook man. So I'm going to start off by coming up premise. No, but I do want to bring up the topic of gig economy, right? I hear that word a lot and it's not just from you premise, but I want
people to understand sectors too, right? And when we bring up something like Lyft for instance, $14 a dollar per driver, Yadda Yada, it's in incentivizing people to come work for a company that offers nothing, right? And that's really what it is at the end of the day. It's a services sector with
with no benefits, a services sector with no protections, and a services sector that has a revolving door of employees. And that's really kind of the way I see lift, as well as many other, I would say, predatory type models, business models, and I call it
where you type business model because of the way it's set up. It's set up to have employees as contractors versus employees. And you know that basically when you're set up as a contractor you really have no rights and you can be fired at any moment. And that's why I call it a revolving door type business model. There's a lot of those out there.
So we can call it we can call it giga we can say they're surviving they're making it they're offering all this money. But I think they're offering this money because of the predatory nature that they have on their employees and they have the available capital to be able to do so because of the way they pray on their employees. That's a lot different than say something like Facebook.
or something like Google, kind of like what McGoo was kind of, I would say leaning towards as an example where we saw Facebook go around at around of 10,000 employees at their 10,000 employee layoffs and then we saw Google kind of follow through in the same manner, we saw Twitter follow through in the same manner
We saw Tesla follow through in the same manner, but services sectors continue to tick up. Right. And I think services sector going services services sectors going into summer makes sense to tick up. So I think, you know, those incentivizations will happen going into summer. But as McGu said, I think that that
that will also kind of start to tick down mid-summer, going into late summer, going into winter. And that's where we start to see that move back down to that retraction and that services sector. And that strength that people see in the services sector, I think then kind of starts to alleviate itself and kind of will say eat it
at the end of the day. So I did want to kind of touch base on that, but I'll give you an opportunity from this guy and respond. It looks like you want to respond to that. Yeah, you know how about your brother? I did not. I kind of got a response. I, you know, first I would say the main reason why that's important to me, them offering those bonuses for people come over one mile.
She was a data analyst for marijuana startup. She got fired. I think AI assisted to it, but you know they caught up with something. She thought it was cool. They fired her. She immediately went and started to auditioning Boulder, Colorado. She averages about 30 an hour. Two Uber eats told her she could take online classes paid for by them if she's a diamond driver, except for actually offering some
and benefits, maybe not crazy, but something Macau just kicked could do instead of flipping burgers for 15 an hour at McDonald's or less. Three, what we do is they get economy, right? We all connect online, we run different services, businesses, etc. You know, those type of things are also get economy. They get economy is just more than kind of door dashes. There's just kind of one thing I was getting out. But there
There's still so much money in it. And so they don't count when DoorDash is saying, "Hey, come drive for 1400 bonus." They don't count that as, but now hiring already. I don't think any economists, I don't think the Fed, anyone looks at the numbers from the gig economy. And I think about 20 to 30% of people kind of participate into it. Those are the numbers that I
I'm saying. So, you know, I just think it's stronger than people are giving it credit for. I think a lot of people are kind of underestimating it. It's just really hard to do that and to take those into the consideration. The models, because a lot of those gig economy jobs, and I think gig economy, honestly, is very too big of a problem.
of a label because you can throw almost everything in the sun at this point in service is under the gig economy so like we got to be specific but a lot of those jobs that we're talking about all co-them temp jobs right I don't mean temp in the fashion of like a negative connotation I just mean they're not permanent and polemate jobs whether it's door to
or even people that are doing call center work from home and they're just going in there. The financial industry, we like to say we like to define money by, is it sticky money or is it not sticky money? And we want to create environments to have sticky money.
a perfect example for employment. These are the very first jobs that go away in a recession or any kind of economic downturn is those immediately go away immediately. There's no repercussions to the employer because they're on contract base or whatever you want to call it.
Whereas all of a sudden, if I don't have $40 to spend to buy one sandwich on DoorDash, because of the fees, I stop doing that. And that individual that works for DoorDash or not works for them, but as a contractor, that liquidity, all to call it liquidity, goes away instantaneously. Like literally, it goes from people are spending money on
Uber and DoorDash and all these things to instantly not. It's literally like a switch. That's how recession works. People go from all of a sudden they're spending their money, they're basically using their credit, they're spending money, and then all of a sudden one day it just stops. It's kind of like a psychological effect where
it slowly starts to tick down where people start becoming more conservative with their money and then all of a sudden boom stop. Right? And another thing with the gig economy that what people aren't talking about, I hate using the word gig economy, is it's more than just, that's just talking about it on
the employment side, the consumer side as well, is they're pushing the gig economy because like not only are they giving kind of temporary jobs, it's about temporary services like for example Uber, like it's like you're not buying a car anymore so there's another side of the story to the whole
like benefited the gig economy. So instead of buying it, so yeah, you're spending money on Uber as a service, but the whole car industry has to change because no one is buying cars anymore, right? Or you can take this to whatever other thing that's in the gig economy, right? Oh, someone's buying the sandwich on DoorDash, well that means
that someone's not buying groceries or that someone that's not going to a restaurant. So it's not just imagine like a magically new GDP and new money being basically created. It's you're taking that already existing stuff and just moving it into like a different form or a different fashion. Sure, there's going to be efficiencies that are
added because of the gift economy. Like for example, that's like caffeine woods, whole fucking feces about robot taxis and Tesla is that like, okay, well, no one's going to be buying cars, but like we can create this $5 trillion robot taxi economy where literally any time that you need a fucking car, it's at
your door and it's driving you and you don't need to buy one. Well, that's five trillion, and I'm not saying that's true because some of those numbers are just fucking assing in. But ultimately, like, is that five new trillion dollars to the global economy or is that money that's being taken away from certain sectors? Right? Like, it's probably
There probably is net, it's probably net positive, like in terms of like the GDP, but like you're taking it away. So like people, people just say, "Oh, gig economy." Like that is, they're taking that from somewhere. It's not just like the economy is magically growing. - Oh, I can use it. I'm saying an Airbnb in entire month.
here in Puerto Rico, why the owners making money, living somewhere, like it even created a new housing sector where Airbnb's you had all these people, which I'm waiting for those guys before, I'm which I'll like, I know there will be a pressure point, what I'm telling people since I use it and I see very busy and I can open these apps and Colorado says very busy plus three dollars per order across the board.
actually view these things it ain't now. There's a lot of demand. My homegirl literally just replaced her entire job with the gig economy. She loves it. She does many different things. I want to weigh in real quick premise. So like I once you understand I know exactly where you're coming from too, right? I'm talking about both sides of Queen when I'm talking so I'm talking about both sides of my mouth.
in a sense, as I'm understanding that people are seeing strength in the services sector. Don't disagree with that at all. It's there, right? But the services sector will be the hardest hit once a recession sets it. It will be the bottom of the barrel once the recession sets it. And I think that's the part that people don't really
get to or understand and yeah what we do too is a service right premise what a lot of people do on Twitter is a service but that service will stop being viewed that service will stop being used a lot of lot in a lot of cases I think you know in a economic downturn and that that money that's being allocated to these services sectors will then be allocated
and get in the store and get gas and paint rent and they'll stop being allocated towards getting a lift to go down to the local movies, the theater with your boyfriend and so on and so forth. That's basically where that money will rotate in a recessionary environment.
And that's that's kind of the point that I wanted to point out out of all of this is that like while that service services start to set there is strong right now that that can tick down a lot faster than what people think it can, you know, don't don't forget as well like the headline unemployment numbers usually
don't peak like the highest unemployment they don't usually peak until basically after the market is already bought right like that like I think I think the number I think is six months right like some of the things that are the last to bottom in a recession are unemployment
In real estate, right? Like in terms of like like so this is the thing you're not just gonna see oh Unemployment go from 3.4% to like 6% right like unemployment is gonna reach 6% near the end of the recession Like it that's that's the thing and so when a recession usually
hits, like the unemployment peaks at the end of the recession. That's the whole point. If you're looking in my opinion, if you're trying to look at the markets and make any type of considerations and trying to actually make a future bet, looking at unemployment is one of the last things you want to look at.
because at the end of the day, that unemployment is a backwards looking number to begin with, let alone in a recession, where it's going to be the last thing that peak. So if you're trying to make any assumption on any bet that you're making in the market, unemployment should be the last thing that you're looking at.
I'll be it that's right charts. I don't be using macro to trade. I'm just talking for my yeah, I don't know if that's I like looking at stuff like CPI I have a home of CPI heavy I call CPI good and I've been saying that unemployment went tick up fast I do think most people are surprised so I'm the right because Uber and left and the over
gig economy contribute to unemployment insurance? They're contractors. So I think that's an interesting potentiality. If you have like sand of ubers, that capital flow isn't there anymore. Do they even have the option to apply for unemployment insurance?
We play basketball. I know you're 65 and you're a bea sir, but I want to welcome you up to the stage and also For Mr. Jacob's and Neil Jacobs man. I sent you an invite to speak once again pardon me sir these conversations like what we have these round table conversations some of us tend to
have long-winded responses but we appreciate that here at Because of Bitcoin and we want to welcome you up here if you're able to and yeah it's good to have most of our team up here you know we have a Will's Outlook who's new to the team and of course we have Snorlax and Premis joining us in this conversation
with McGoo who I've seen him here across these winter spaces for almost a year now. So if you guys enjoy this content feel free to follow us and also follow McGoo. He's a pretty funny and entertaining guy but an individual that's been in markets for a while and has a firm understanding of how
how these macro events take place. Since I've known him, he hasn't been wrong with any of his major predictions. Wisdom, you know, someone is truly filled with wisdom when they back up their shit. So we always appreciate that man.
appreciate that. So Uncle Joe welcome on up man. What do you have? Yeah I know thanks for having me up. Bobby it's awesome to always talk to you guys and we'll go in others. I was just going to say a couple things. Number one to the gentleman who was speaking Captain Rational. They're under the COVID relief program on the pandemic.
unemployment assistance they expanded unemployment insurance to cover in many states and also there's localities that have done similar expansions for gig economy workers including Uber. So they are covered under the current operating law that still extends out believe it or not through them the COVID pandemic which is remarkable when you think about it.
So the question is what I have to look up whether that will still extend out if there were a recession later this year and may have lapsed or may laps at the end of 2023, but I would not be surprised if you saw a similar expansion given the proliferation of gig economy workers and particularly at the state level in place
like Illinois, I know they will expand the cover game economy workers. But the larger question is when you talked about employment, you know, micro-cantles framework, I think is correct on this. Mugu to what you said, like if you're charting equities and your only goal is to sort of catch the big downside movement equities, rises in unemployment are very, are actually
extremely coincident with the first initial rises on employment. When unemployment starts rising rapidly, equity market sells off and it sells off really hard. So that's one historical thing to look at if you are trying to chart when the big capitulation will come in the equity market generally tends to come with the proliferation or with the prolific rise in unemployment.
Yeah, it's when the bulls actually capitulate that they're actually going to be a recession. Like we've been in this, we've been in this and it's not so much what the under or the headline number of unemployment is, it's the delta on
how fast it's changing and their ability to finally accept that a recession is on horizon. And that's the latest. Right. And now, if you're looking at it right now, okay, if you're trying to time that capitulation of the goals, there's we're still always off. You don't see that in the labor market data right now.
You see mild increases. You see some beads recently. So like yes, by definition, you know, recession generally begins when unemployment, the unemployment rate bottoms and starts to rise. That's generally the beginning, just how they measure inflation. They already assume you have recession.
But to pick the point where the equities roll over, you want to see what you're talking about. They want to see the delta, the rise in unemployment very rapidly to be coincident to a downturn in the agree market.
Yeah, I guess the at the end of the day I guess the Not the proof in the pudding, but the Like you're gonna have to be early like you're not it's not gonna be a writing on the wall, right? Like even when the unemployment starts to take
up there's going to be people that are like, oh this is just a normal flow and then the next print is going to be something stupid where it's going to be like it's going to be so apparent that there's that's when the capitulation is going to happen. No, well the data, right? So I think what let me rephrase and tell you a group of this, the official data sources
that will be published. Those will already be known to the market before they get published. I'll tell you some example. There are firms out there, major research analyst firms that monitor Google search trends. They have their own proprietary models on how they gauge what the official numbers will be. So you will start to
see that price action before the official numbers are already being reported. But that's not to say that once the official numbers are reported that you won't see further downside, you'll just see there'll be a cascade already of selling that has occurred because people have sniffed out that the official prints are going to be pretty bad.
Yeah, yeah, exactly. And I guess the million dollar question is like when is that going to happen stateside because like I don't fall into like the camp of no landing or soft landing. I just really don't think that's the
that's viable. To me, the question is when are we going to see that uptick in unemployment? I have my own anecdotal numbers and things that I'm looking at that's not individually to one company but a
across many companies and how I'll just say executives or boards are looking at things and how they're planning for the next 12 to 24 months out. That like I said earlier I would be I would be shocked if we don't see an uptick. Well you see you see things before that right prior
It's unemployment rising, you see two things. Consistently, you see delinquencies and defaults. They always rise, which makes sense, right? Like from a demand perspective, once people start becoming delinquent on their debt obligations, then that destroys further and further by side pressure, then that can
to workers being laid off because producers and employers aside, we don't need as much staffing. So the delinquency rates are really the first sign. This is why most people got the trade wrong in 20, excuse me, 20 or six leading up to the housing crisis because you saw delinquency start to skyrocket.
But the real estate market hung in there for a while because that delinquency rate rising takes time to filter through into the actual home builders and other aspects of the real estate market. Similarly here, like before you see labor softened considerably, you're going to see delinquencies rise, necessarily.
Do you think that that might be skewed a little bit this time around because of how like those policies that you just mentioned about unemployment insurance, there's you can name your your COVID-19.
Yeah student love whatever it's student loans whether it's basically people not being able to be evicted and not paying like you can name the program like do you think that? Excuse that view any end? Absolutely. This is why we always tend to fight the last war right and again like you can look at the goldmins
If you don't believe me, go Google it, I've tweeted it out a hundred times, there's still from a balance sheet perspective, consumers still have a ton of cash left on the sidelines in terms of excess savings. Now everybody posts this chart, and this is really key. If you see this chart posting, pointing out how it's wrong of how the
savings rate, meaning new savings is falling rapidly. But that says nothing about the excess amount of savings, the accumulated savings that have taken place since the pandemic. And what it shows you is that by Goldman's assessments, about two thirds of this
the end of the year, by the end of 2023. So that tells you there's more of a runway before this hard landing. It's not to say there isn't going to be a hard landing or there isn't going to be a crash or the plane. It's just saying there's more of a runway. And that's the thing you have to take into account.
I think most people have underestimated just how much freaking cash got floated onto household balance sheets and even with inflation and real terms. You can look at the Chase data, as well as far as similar data for their checking account customers, they're elevated from 2019 levels on a real basis.
Meaning adjusted for the high price increases based on CPI, they've still got cash. That needs to be completely depleted before you see the Dilling could seize rise. And all these other programs and student loans and all these other things, they just tell you that this thing can take longer than people have ever, I think, anticipated.
Do those numbers from GS? Do they actually break it down in terms of the aggregated amount of per house? So the cheap DPMorch
and chase data. That's checking account level data. That breaks it down by the household. But let me post in the NAS tier of the chart that I'm referring to. It talks about excess savings for overall. So here it is. This is the
the right here. Okay, so even one second. There we go. Okay, Goldman Sachs estimates that households have this was this was a trip. This was a tweet from January, so it's a little bit outdated.
Goldman Sachs estimates, House was had drawn out about 35% of the excess savings. We'll have spent around 65% in other words, two thirds, which is what I said by the end of 2023. Look at that chart and tell me how it's going to all go to hell in the next month.
Can I jump in here? Yeah, I was gonna bring it right to you man. Welcome to the spaces brother. Go on ahead man. Thank you. Appreciate the invite and loving the conversation. A bit sick so I'm gonna keep this short. I do want to back up Mr. McGoo here regarding because I am up in Canada.
People rotate out of their low interest rate situations. They are Accepting these longer terms. Basically what's gonna happen here is you're pushing out home ownership decades out and you're just gonna spend your life paying interest to these banks so
The whole ownership is pretty much dead in Canada. I'm trying to figure out this inflation rate story. I don't know if we've peaked yet. I've been looking at these short-term bond rates the one year or two year. Typically they mimic the federal funds rate.
Typically when the short-term bond rates peak, we get a recession about a year, maybe more, maybe less from that point. So we are kind of out of vertex now. But at the same time, we've had this banking situation, which is supposed to be deflationary, but at the same
time we've had the news of these opic cuts that are supposed to come next year, sorry next month. So if they actually follow through with that, that could add a inflationary pressure with the energy prices making everything expensive. So I don't know if they can actually stop raising rates if they're mandated
is 2% and if they want to get to that 2% they should get there sooner than later because the longer they wait the people are going to get entrenched, right? They're going to change their behavior for the higher rate situation, right? So I don't know how that's going to work.
out. And we also, regarding the labor market, we just had this article from ZeroHeads saying they dished out 23 billion less in tax receipts. So how does that go with the labor market story?
Another thing as well is that a lot of firing and hiring also has tightly is also tightly coupled to like just corporate earnings right it's not just about the linkancies it's it's also about the margins that these corporations are making or not making for that
matter. And I believe there could be a world where at the end of the day, the unemployment numbers can go up even with those, even with that chart that you posted Joe, that basically for a family household of like their savings and how the trajectory is based
basically going to the end of the year, that could accelerate greatly because if corporate earnings start to decline and we've seen some weakness, we haven't really seen like a full on roll over yet of corporate earnings at least in the public sector, we've seen
in inventory's rise in some early warning signs, but if that starts to roll over, I said that earlier, that's when a lot of the real layoffs happen, right? We've seen the tech layoffs because they've cut all the fat starting in November because they see what's on the horizon. So they're
been cutting their fat, but we haven't really seen those numbers even really being applied to the unemployment number at all. And on top of that, once corporate earnings actually start to roll over, and you can say this is a chicken or the egg problem, but there is some signs that
corporate earnings are starting to whether it's going to be next quarter or the quarter after that where it's kind of the writing is on the wall that hey look like we're in an earnings recession or whatever you want to call it or even that they've started to roll over. That's when you're going to see layoffs not just in the tech sector
but from the actual industries, services, industries, manufacturing, right? Because if you want to look at the manufacturing numbers, right? Like the manufacturing numbers in the United States, those are fucking in the toilet. They've recovered a little bit, but those are still in the toilet.
So that is a leading indicator where I think we're going. But I do agree with Joe that the consumers still have a lot of money on the sideline, but I think that can accelerate to the downside quickly if corporate earnings go down. And you might think, well, if these people still have the money,
how is corporations going to have less earnings? Well, it's because of its sediment, its psychology. If people believe that they're in for a hard time or going to be in for a hard time, they're going to tighten their pockets. Well, and they're going to stop spending. Yeah, so let's just talk about that. So if you
want to look at historical examples where consumers have been relatively healthy from a balance sheet perspective and then that has an deteriorated rapidly. What tends to occur in those scenarios is you have some sort of exogenous shock like, for example, extremely elevated oil prices that can put
tremendous pressure on both businesses and households and every element of the supply chain. Or for example, in 2008, if you want to draw that analogy, you know, a systemic banking crisis that can hasten the activity of employers and otherwise sort of cautious business
participants and say no we have to cut staffing now because there is an exogenous threat that is changing the game. So many people I think suspected that that could have resulted from SVB and signature. I think that we know now, 30 days later, that was overblown.
Right, but that's not to say that you can't have some more some different exoscientist shock for example things like commercial real estate or other weakened Elements of the economy and that can rapidly cause staffing decisions that would have been put off for another two or three quarters to say nope, we got to do this now
It's happening now. Keep in mind, unemployment began to rise rapidly in 2008 as the banking crisis started to accelerate. And that's not a coincidence because people saw the writing on the wall and they said, "No, we need to make these decisions now." And suddenly you see this explosion and unemployment, you know, through the middle of the letter half of the year.
Well, that outlook go ahead man. Man, I got so many things. You must be out look, bro. Your gillis your outlook amongst the the ten or so different outlooks, man. What what what
One thing I wanted to touch base on were far past it but what you were referring to there Joe was the CARES Act. I believe the CARES Act for contractor employees ended in December of 2020 could be wrong on that but I'm pretty sure that that
That's when it actually ended. And that was what covered employees that were contractor and employees under under what they and just for just so you know premise, it was called the gig economy by the way too. All of them were under that label called the gig economy.
So I just wanted to throw that out there also just so people are aware. So basically contractor workers under the gig economy. I wanted to get your thoughts also, Joe. What do you think of oil? What do you think of where oil is and how it's sustaining and holding the strength?
That's my opinion. Maybe I know I think oil is going lower because I think we're headed towards a recession. I think the oil chart, you know, you had this bounce that you saw from the Saudis, you know, saying they're going to, you know, once again, cut production and what have you seen since then? Since you had
the balance which had gapped up on the 3rd of April, right? We basically went higher for a week or so and then straight down mode. So I don't really think it's showing particularly strength. I think it was oversold due for a balance and I expect lower lows on the way.
in the remainder of the year.
In reality, they're just actually preparing for lower demand. This is what Joe is saying with oil prices continuing to go down. They're just trying to adjust the supply to where the demand is going to be, not to where it is. That's them projecting out that the demand for oil in the future is
to be lower than it currently is, right? And that's just them. That's deflation, in my opinion. Like that's them projecting deflation into the future. That's kind of what I was hinting to and we go, maybe I didn't voice it well. It's more or less like it doesn't seem like they're trying to pressure oil up as much as it is just trying to keep support
under oil when I said why would you have to keep support under oil if it was truly scarce right I mean unless unless it's not the whole their efforts are proving the case for recession I mean you would not be engaging in that activity of cuts support the price if that was true demand if the
China reopening story were jitt you would not have to do that so I don't I don't buy it yeah that's the biggest yeah that's the biggest horseshit story of I think the quarter of or maybe even last quarter at this point the China reopening story that's falling flat on his face like they that it is like literally like they really
opened and how they're supposed to be this huge gluttonous of commodities and it's going to add to global liquidity. Not only has it been lack of lustre, I would say it's been an upright disaster for China. They have literally like their economy, it's like those little rockets you get as a kid and you
pump them up so much for water and you try to launch something, it goes two feet in the air and falls flat down and it's like, "Oh, okay, that's what this is." You will never hear someone say they're stacking you on, like not in this lifetime. And also, so one of the biggest trade fairs in Asia just concluded, it's called the Canton Fair, otherwise known as the China Importance
the next part of the fair, that attendees there without hesitation have admitted they're mainly catching up from all the shipping backlogs that have it every port worldwide because of COVID. Summer may simply be when the pain begins to show to a point where it's undeniable, but there is a reason we're seeing dead cap dead cat bounces, what are in the indices or in crypto, because it's not
Only that the year of the cat, but a lot of the industries are simply playing ketchup from the past three years. Like we have people who have first hand an anecdote of experience and construction of real estate that have already made points about how less than less people are building or signing new deals. And I work so I work in merchant services credit card payment processing all that.
credit is killing it because everyone's using credit because they know like credits not gonna run out because if credit dies then the current system dies. What do you mean the year of the cat? What was that? Joe it's the year of the cat. Oh, is that a is that sorry I'm not familiar?
you know how there's like, you have a lot of this, this has to be a voice clip man, this has to be a snippet for the future. What's the Chinese calendar? Oh the Chinese, I'm sorry, I apologize.
it's just a calendar it's not the Chinese calendar it's my my sorry I didn't know you're sorry about that no I'm not a fan they did it you're good
Yeah, I don't think so. Yeah, TLD are my main point is we're playing catch up. So if you see any industries feeling like they're feeling the heat again, it's only it's not because of anything new.
Yeah, liquidity at the end of the day liquidity is Going back down again at the end of the day so We had that we had that so go ahead Joe All right, I was just gonna say we had that surprise of like the drawing down of the the Treasury and their GL on
to add kind of liquidity into the system. Then you had China did add some liquidity. They China has been adding some liquidity this past quarter. But and then we had the Fed if you want to call that program that they instituted as inflationary and adding liquidity or whatever you want to do that or whatever you want to
to call that. But at this point, liquidity is going back down. If you could pick one chart to literally map global liquidity, it's literally Bitcoin. Just look at the Bitcoin chart and that's a reflex of chart of global liquidity. It's no surprise
when the bubble liquidity starts to go back down again, the Bitcoin basically goes down. So the BTFP that you're talking about in the discount window, we have now chewed up 38 as of today because I just looked at the ODL numbers. We chewed up 38% of the balance we got in March.
38% and remember unlike the BTFP the discount windows term is 90 days They have to anything at the discount when it has to be repaid in 90 days So the liquidity which was predominantly prescribed by the discount window before they got the BTFP up and running that will be gone within another 60 to
So, basically, if you just do the math or what the QT they're continuing to do, which they've never stopped doing the actual QT in the passive maturation and not replacing those bonds, you're going to be down to a new lower low on the balance sheet in mid-June.
So let me give an example of that real quick joke just for the people who don't understand. So you're in the ocean, right? You have a boat, your boat sinks. Now you have to swim and eventually you're going to run out of energy and you're going to drown, right? So somebody comes by on a robot and they throw
you a life raft, you then set on that life raft, but one of those little doughnuts, right? You sit on that doughnut until a ship comes by to pick you up if a ship comes by to pick you up, essentially. And that's basically what the Fed has done with these programs.
That's what a lot of people really have to grasp with the situation. These are just little life wraps, little donuts that they want to them to keep them afloat. And they charge you for them. And they charge you for them. Exactly. The liquidity comes in. It's temporary. It is QE while it exists. But once it goes back
out is actually more QT because you're getting charged for the loan on top of it. So it's more QT to the economy when the loan is paid back than what it would have been as a. If they paid back. Yeah. But that's obviously. The real story is this that for
for a decade or more what the Fed's policy was, it had sort of this one-sided monetary policy where they said when financial stability becomes rocky, we're going to vary our broad tool of monetary policy, i.e. when there's illiquidity in the Treasury
market, we're sluddenly going to pivot or pause or stop hiking rates or stop draining the balance sheet. And I think they've learned from those episodes her better or worse. And they've commented on this publicly, posted tweet where there was a comment last fall about this exact thing, how financial stability is not going to
turn their monetary policy goals. So let me put that in more simple terms. What I've read their policy to me in recently is that they are going to do these sort of surgical approaches, stabilization efforts, new facilities, new isolated areas where they were going to provide liquidity were necessary.
They're going to do that on an ad hoc basis if little things, little configurations start to fire up, but they're not going to do it in a broad tool of monetary policy. In other words, they can keep it high. They can keep draining the balance sheet and if they need to do a facility for the banks, they'll do the BTFP. If they need to do BTFP 2.0,
they'll do that. If they need to do a facility for commercial real estate, they will do that. They will deem systemic risks to the financial system and handle with those on a one-off basis without deterring their long-run policy goals, which is a different Fed from what we've seen, I think, for the last 10 years.
Completely agree. Completely agree. Now at the end of the day, what do they not bail out that could cause systemic risk to the economy? Right? That's that's the real question of where this goes. Nothing. Nothing, right? Because that's the thing. So like you can say that you're going to do these targeted things.
They've already bailed out the venture capitalists right? If it's structurally important they're gonna bail it out This is precisely why bulls feel the way they do and that's why I don't blame them for the way they feel right they feel as if they have that support there that will
keep them afloat. But I want to really let people understand, look at price right now and look at price at the beginning of the last year. The spy has not moved. It hasn't moved. We're sitting in the same price ring we've been in for a long time.
And that that should be indicative of people to understand where we are in a market, right? And that tells me that the market isn't bullish or bearish. It's simply complacent and complacency is not a good thing for a market if you want to move forward.
I want to welcome you up brother. Thank you so much for taking the time to come up on stage men. Huge fan of your personality and all your energy men. I hope you bring it during this conversation. Very excited to have you on here sir. How's it going? It's good. I think people don't fully understand what Joe said.
Because what Joe said is what I've been saying for a while now and I think it's really important and I think he really hit the nail right on the head of your and I think it went over your head to go whether you like it or not. I think you're wrong.
Mad that I told everyone that you told me that you said stupid shit. Okay, shut up. What you tweeted the other day was dumb and it was wrong. But that's not the point. What Joe said is let's get Tina going here. Let's get the old man in his diaper.
What Joe Martinez, let's hear it. What Joe said, I think is correct. And I think you can get a traditional credit contraction without having a
a systemic structural problem. And I think that's what the Fed is after. So that you get something that actually really raised inflation out of the system and gives a system a chance to readjust itself and will work asset prices substantially lower. And I think the markets read
on BTFB was completely wrong and I think it's a really big deal and a major shift of policy. I think it matters a lot. So let me tell you people are totally missing. Yeah, let me just read this again because I think it's really critical. And if look at this in the NAS this tweet, okay, which was under reported in my opinion from October
I'm not going to read the whole thing, but I just listen to this. In considering what might happen to alter my expectations about the path of policy, I've read some speculation recently that financial stability concerns could possibly lead to the FOMC to slow rate increases or halt them in earlier than expected. Let me be clear.
not something I'm considering or believe to be a likely development. One factor that is likely helping to stabilize the system is the existence of monetary policy tools that could serve as a backup source of liquidity in times of financial stress. For example, swap lines at the Fed maintains with other central banks, check that box. They have been used effectively in the past to relieve stress
in the financial system. I think the availability of these facilities tend to be a stabilizing force at other times. In addition to help monetary policy, the Fed established new standing repo facilities in July of 2021, one for domestic, another for foreign. These facilities are capable to respond to strains that may put upward pressure on money market rates by thinking
And it is likely that the mere existence has been a stabilizing force. Along with improved regulatory framework, I believe we have the tools in place to address financial stability concerns, bold and underlineness, and should not be looking to monetary policy for that purpose. The focus of monetary policy needs to be fighting inflation.
I think that's the whole ballgame right there. I think everybody understands it. You can see the market reaction. So pretty much nobody understands that. What I think is the market. The market is going to be a second here. What market has been doing? What this means.
in my opinion is that you can see a long extended bear market where PE slowly adjusts lower as rates remain very high for a very long time and you slowly suck it's like a large leaky balloon which is going to slowly
lose air over a very long time horizon. And I think it has implications for what this market is going to look like over the next one to two years. And I think you've got bears that are looking for an imminent crash, you know, bowls of things that are going to go sky high. And I think neither of those things are going to be right.
And so when you put that together and you start to understand what the shift to policy, they're not going to use macro policy. So let me tell you a story back in 1998.
around the time of wonter capital management. The Fed cut rates at three o'clock in the afternoon on a monthly option expiration on a Thursday, specifically targeted the stock market. They're targeting the stock market again, but this time on the negative side, they want a
contraction to happen, but they want a contraction to happen long and slowly. So it takes the steam out of the asset markets and takes the steam out of the. It's a control demolition. It's a control demolition. That's a huge change. And it means you're not going to get. You're very unlikely to get.
a massive fiscal response because you're not gonna have a crash. You're not likely to get this big blow up because you're not gonna have them. This is a big shift that people are missing this and I think Joe is exactly right in this. I don't think they did well some people early on miss this
because a lot of people thought in a lot of people on this stage, they were fighting this, literally what you just said Tina, they were fighting this even as early as like four or five months ago. That
Don't be surprised if rates at Fed funds are still in the 5% range come Christmas and the economy isn't in the tank and is just slowly working its way there but the stock market's 5% 6% 10% lower just don't be surprised because that's a real possibility.
be surprised about items. So I would be surprised if we are still at five percent of the parties. I know you are because you're expecting a crash and what I'm telling you is I don't think that's what you're going to see because this is a big shift of policy and they're intentionally and they're in
forget Tina I think you forget that it was me explaining to you how this is a change in policy back in the early part of 2021 when no one believed me and that Bitcoin was going to hit all-time highs again because the Fed had was going to come to the rescue like I was one of the first people talked that's terrific but that's not that's not where we've
are at this point. So that's great. That's great to do. No. No. You saw that 64K. I wish I sold everything at 64K. I could have bought it all back and then some at 16. But that's again not the point. The point is where we are now. So you can pack yourself on the back for it. That's great. But it's a huge. No, Gina. Let me, let me, let#
Let me finish I know it's almost past almost your bedtime, but okay, so At the end of the day like I believe we are in this different regime like this whole decade I believe is going to
be structurally inflationary over the next 10 years. And you're going to see this because of just the energy shortages, the overall geopolitical landscape, the Fed being one of those main reasons because keeping rates high this whole decade. And I don't
like they're not going to keep them at 5% for the entire decade, but they're going to be substantially higher, I believe, this decade than they were last decade, right? Like they do not want to go back to the zero bound ever again. They've realized, as what Joe said, is that just doing blanket statement QE
did very little to actually benefit the economy and it actually created a lot of negative effects. They don't want to go back to the zero bound and just blanket statement QE. They are going to keep a moderately higher.
I mean, what is a lot of time? Shut the fuck up, you let the economy crash when you can try to have a control. Being a no one wants to talk to you ever because you don't shut the fuck up and let them go. You're not one to talk. You go on and on even longer than I do. So trust me, you're not one to talk.
Alright, first of all, shut up. Okay, let me finish then you can go off on your tie rate. At the end of the day, the rates, like they don't want to go back to the zero bound and they want to keep them at something that's moderately, maybe not historically, but just moderately high, whether it's in the 2-3% range, maybe you've
4% range and just bouncing around those areas and they don't want to get back to the zero range. That's just structurally because the inflation is going to be high and they have to because if they try to pull off what they did in the last decade, in this decade you're going to actually find inflation which they weren't able to find last decade. And so the Fed
But the regime is different. I think the stimulus this decade is not coming from the monetary side is going to be coming from the physical side, like the treasury. And that's not happening in the next year or two because of other reasons, whether you want to talk about lame duck and just all these other
reasons, but that's not coming. But when it comes to the economy, the backbone of the economy, if rates are kept here, and let's say the Fed gets in another 25 basis point hike, maybe another one after that, maybe, and then they
just hold it there. It is a controlled demolition, but the whole point of the word demolition is lower. It is going to be going down. I don't, I've never said this to you now. I don't believe one day we're going to wake up and the S&P 500 is down to 15%.
Because that's what volatility is what makes them step in right and they know they're not going to respond to the stock market going down. That's not what they care about. They've never actually cared about that. They care about the financial system. But again, you're dancing around the point. It's a dancing around the point. You really you really you really you really
the conversation. Again, you're not focusing on what Joe said. You're really not. You're taking you off on a tangent and you're jabbling on about really kind of nonsense. The point is Tina. Tina, go sell your Tina. Tina, go sell your dick. Tina, you Tina, you are
Literally the epitome of a fucking noodle hand Bitcoin that by it's if and then sell it And the quality keeps getting sucked out of the next long guess what Tina you're not right there. You're not right Tina like there's a reason why no one ever brings you on stage is because you're a rambling boomer next
Okay guys, we'll take it from here man.
Yeah, so everybody should get along first off and everybody should be heard I think but I get both both sides of the conversation
Right. I think it's just we shouldn't necessarily try to prove our points versus try to discuss the issue and try and discuss the resolution right at the end of the day. And whether or not I would say we agree or disagree with who's listening
why or who's doing what we should always respect everybody's opinion right so even if if I felt McGoo wasn't hearing Joe which I think everybody understood everybody's position that's on the panel
you know, I that wouldn't be my point, right? I would basically just kind of move into what my point is and move forward with that. I think everybody on the panel has had a solid position as far as they're out looking and what they think is going on and what they think is occurring. And I think a lot of people are looking at it from the perspective that way.
not see a hard landing, right? But it doesn't mean that this thing doesn't come down the way that everybody thinks it will because yeah a soft landing still you come down right? The plane comes out of the air, it comes down to the ground, it just doesn't crash. And that's still down. So that's still
cheaper prices that's still where I think a lot of people are their heads are as far as price actions ultimately heading. Yeah, that would be kind of my perspective on a lot of the conversations so far. Interesting now, very, very interesting.
Yeah, that wasn't on my dingo guard. I know I'm gonna have Tina on on stage because he just can't have a civilized conversation. He always degrades into personal attacks and attacking people and it gets annoying quick.
Well, it is a Friday night so I'm gonna let you enjoy that I enjoyed the conversation I enjoyed everyone pushing back on it I got a pushback at everybody else too, but like I said I like looking at numbers and I'm wondering when number go up and I think it's a little later Sounds like Joe thinks it could be a little later too timing is always hard guys
And that's the difficult part. So, you know, by respect to all the opinions and views and I think you're for the great conversation I had tonight. 100% yeah, I appreciate you being on here too, Permanse. I think you have some great outlooks. I mean, even me and Permanse, you know, we talked about different angles from, you know, what we were looking at and, you know,
the giga economy and I'm the only one for ever now. At the end of the day, you don't always have to agree. You just don't. You don't have to agree. But you should never live in an echo chamber either. You should always listen to other people's perspectives, understand their perspectives.
And you know, do you have to agree with them? Do you have to line with them? No, but you should understand them so that way if that if their side ends up playing out You can look at you the way you evaluated things versus the way they evaluated things and be like hey, this is where I messed up. Yeah, but we'll do that you have to show other
human beings a modicum of respect and not completely degrade them just because they don't say something exactly how you say it or don't believe exactly what you do and the problem I thought we were running into with that conversation is you have one particular individual just completely not showing other people respect so it is what it is.
Yeah, I mean those things happen. I think sometimes people get lost in the conversation at times too. Right. I try to be respectful to everybody. At the end of the day, I'm not willing to sit on stage and argue with anybody. It's not my position.
I think there's just so many people that are lost in the moves that are going on and they're so focused on these lower time frames what's going to happen.
next week what's going to happen this week versus you know where everything is ultimately looking like it's heading towards. Yeah sorry about that interruption guys but yeah let's be respectful of all our guests here and all that
stuff and try to limit some rough housing, although getting into the heat of things is all nice and we all got emotion and all that stuff, but it should have never go to insults and things like that.
Yeah, and you got to also remember too just as a general thing like I think it's important to be transparent like in If you're going out here in a public stage and you're advocating for a particular Conclusion or saying things are gonna do this or they're gonna do that like It's important to be transparent about your positioning right because you know as they say on wall
straight out, you're really just talking your book, are you really just trying to convince others of your particular positioning and why it's right? And you know, with some people, I think they come into these rooms and if they're overly bearish or overly bullish, I think they're just trying to talk their book, which is not helpful, especially if they don't disclose that.
Yeah, that's sign language for TNI, every time we talk, she just talks about his book. If we want to be disclosures, let me just tell you where I'm currently at so you can take it for what it's worth. Everything that I'm talking about, my problem
I think last time I calculated I'm around 83, probably a little bit less now, 83% of my entire net worth is in spot BTC. And the rest of that worth is a little bit of real estate, nothing investment
based mostly like what I live. Some public equity probably like maybe 5% to 7% public equity. Another probably 5% to 7% in private equity.
a little bit of cash. So that's where I'm at. I have a little bit of cash, maybe actually, well Bitcoin's probably a little bit lower now, so probably about 10% cash,
10% between private equity and public equity and then the rest 80% or around 80% isn't just bought BTC. And I've held that 80% is bought BTC even talking down Bitcoin because that's just what I personally thought was going on.
is what when I was getting it, if you come, I respect your opinion here, even if I differ with you on some things, because you have a tremendous amount of exposure here, and even with that exposure, you're not saying, like some people, Bitcoin's gonna rip to 500K this year or a million dollars.
you're not making those sort of wild-ass predictions because you in you have exposure right if the Bitcoin goes down a lot you're going to personally not gain from it. Contrast that with other people who you know sell entire huge positions and then suddenly start preaching about how the end is near and everything's going to collapse.
Yeah, no, and that that is well on the long side or the short side, right? And I don't think I need to I don't think Nye is near like I don't think we're coming into like a biblical ending here That's for sure like I think we're we're going to be entering a modest recession
This is not like some GFC type level shit that's going to be happening. I believe we're going to see moderate unemployment from probably probably 5% if I cut it down the middle upwards of 6%. You're going to see a 10% 10 to 20% earning recession probably just cut that
that down in mid-o'n'state 15 and the recession is probably going to last depending on when it starts. We have a different opinion about when it starts. I think it's going to start soon or you think it's going to start later. But I think we're around the same severity level. Is that correct, Joe? Yeah, I think that right now
Now, barring some major systemic issue that hasn't been identified, I think you're in for a garden variety recession, which is 5% unemployment. Probably given where asset prices are, I would expect.
double digit declines but again I'm not as confident that we necessarily even make new bottoms over what was we hit last year. Yeah that's that that is something we said like if you just want to all Bitcoin and the spy are a little bit different but you are right like you could see
You might just see a double bottom in the spy. I don't know where the spy will end up with 34 something. I don't know if it's 34 change or just 35 or something. There is a chance where it just double bottoms. There's also a chance like what I'm targeting on the spy for the bottom would just be pre-COVID highs, which
I think are just 3,400. Isn't that far off from where the bottom actually is? Well, we did have a double bottom, right? We had the bottom and the spy in June. And then we had the bottom in October, which I consider that a double bottom because with your within a percentage point or two of the same bottom. So how close was that?
close. So, so in, let's get the exact numbers. So in 3.84 different. Yeah, you're functionally it's a double bottom. I mean, and I don't even think it was like a day, right? It was an intraday basis before reverse. Yeah, I'm looking to which width.
basically on a day. Yeah, both of them were weeks of the day. Yeah, I would daily. Yeah, 3634 on in June. And then the WIC down in on October 13 was 3503.
No, sorry, 34.93. So you're talking, you know, very, again, on a closing basis, just like a weekly basis, the difference between the June close and
the October close was 2.5%. 2.3%. That's nothing. It's basically a double bond. I don't, I don't, I don't, personally, when I look at general market
I really try not to look at the spy just because of how Distorted it is with like Apple and Tesla like because it really does not paint a broader picture of like how General equities are doing even in the SP SP 500 because
because of how distorted it is with the top the big boys. Well they actually ended up removing the Tesla from the spy I think like a year or two ago. So who are the big boys now in spy? It's mainly energy if you actually look
a lot of it's energy, a lot of it are bigger players just like the whole but it doesn't matter because the story is the same. Go look at RSP, if you pull up a chart of RSP which is the equal weight, S&P 500 meaning that all the top 500 companies get equal weight, you're not over, you know, you're not over
over market capital is rising the mega caps. It's almost the exact same story. You see a bottom in June, again, and another two or three percent down in October. It looks almost identical on an equal way to basis.
We got Jaguar up here. Hi guys, let's go on to have you up here brother. I had to mitigate some previous conversation, but when I noticed you in the crowd decided to send you an invite to speak man, so let's just say conversations like that won't be happening again. Let's go to
Thank you for taking the time. Welcome to the crowd because bitcoin all that stuff with McGoo being our special co-host of the day. I appreciate that and thanks for having me. I actually missed it looks like I came in running the middle of the storm.
interesting exchange and I was like okay I thought this was about markets but something else isn't late perhaps and but it was interesting I caught the tailwind of it I think the debate there as I gathered was really about to boil things down as
I understood was whether it's something, some events that would lead to an imminent crash or something that will be much more prolonged and painful in nature that bleeds this market much slower to the downside. But I think, directly, the message, whichever side you may be on, was still the same, whether we can also
see the trends that are right in front of us as they're unfolding. It's the pace that can be debated in these spaces and that it's one person's opinions versus other. And so it's the pace that matters, right? I think that's where the disconnect was coming from.
And I have to say that the, you know, this market is not easy for anyone, even for the pros. And if you just look at, for example, just in the past two weeks, you know, we had six consents
days or seven consecutive days was 0.6% range in the S&P, three of those days market closed within 0.1% of the prior day. You have VIX termination going on in a massive scale, the volatile
stocks. It's not a stock market, it's a market of stocks, so you have to go shopping and find. And so I can only speak for myself as to what I have been doing and what I have been trading is I follow, you know, basically a quad model, which was originally invented by Goldman
tax in the 1960s and then later developed and adopted by so many shops and changed in different ways. But it's a very simple but a pretty powerful model. Basically you identify the market into four quadrants and these quadrants tell us in
know whether you have four combinations, right? You have inflation rising and real GDP rising. You have inflation falling, real GDP falling, you have inflation rising, real GDP falling, you have inflation falling, real GDP rising. So four quadrants, right? And depending on which
quadrants or which quad your end you have a basket of stocks that tend to work sector wise in that particular environment to their best that basically be DS and P materially. I'm pretty sure many of you are already familiar with this so I don't want to rehash this too much.
But based on the trends that are in front of us, which is the combination of falling inflation and falling real GDP output as very, very clear in front of us from all the macro data, we are firmly placed in quad four. Right. And what works in quad for our ongoing
three sectors. What are those three sectors? Those are the three most ultra defensive sectors. So that's your staples, healthcare, and utilities. That's it. And long bonds, you know, that's a side one. Because ultimately you would expect the economy, whether it happens on a slower pace,
or in a much faster pace which is up for debate as you were having before but aside from the pace you are firmly positioned in quad four. So if you pull up the charts you know while the market was dead you know particularly in the last two weeks and you know not giving any chance to anybody who
who's trading the index to make any kind of money longer short, but take a look at absolutely gorgeous rallies on a consistent basis that are unfolding in front of us in staples. The boring stocks. I mean, you know, everybody loves talking and video, Tesla and all that stuff non-stocks.
every single day because that catches the eye. That's the sexy part of it, right? Where the sexiness of the market is. Everybody looks at Tesla every single day on their watch list. You know, I mean, Elon Musk wants Twitter and right here we're on Twitter talking about all kinds of stocks and that's what steals the fender but no
Nobody brings up the Coca-Cola and Pepsi and General Mills and Kimberly Clark and all of these staples basket just every day they just trend higher and higher and higher. Pull up any of those charts. McDonald's for that matter too. Same with that club Starbucks is breaking out gradually as well. That's working.
Utilities are waking up my favorite name continues to be PG&E, PCG, quietly breaking out to, you know, to new 52 week high. I think it's going to 20 plus that continues to work hard. And I think right behind it next to energy symbol NEE, which is the clean technology.
the breakout in Striker, the surgical equipment maker. Look at the breakout in Zimmer Biomed, which makes a total knee procedure. How can these things never bring up for discussion?
Look at the breakouts and how many people talk about the gorgeous quarter with sharp increase in guidance from intuitive surgical ISRG that we saw a couple days ago. Metronic had a fantastic news tonight just before the market closed that
One of the products that is already selling very well internationally finally got an approval from the FDA. And I think this is stock as the press is starting to wake up with the rest of the group Boston scientific is waking up. We have inspired medical I and S.B. A lot of these diabetes and med text stocks. The thing
about these MedTech stocks and I'm not talking pharmaceutical or biotechs. I'm talking large gap, $50 billion dollar club names, you know, large gap MedTech stocks. What most people don't realize is that, you know, I mean, it's as obvious as it may be, you know, when the
When the pandemic happened, we know the elective surgeries were put off for a long, long period of time. And then just as we started to come out of the pandemic, then this entire group was hurt by nursing shortages and massive supply chain shocks as well as inflation pressure.
So their margins got killed. So basically we had a period of two to three years of, you know, just lacklister earnings growth. But now starting from really Q4 of last year and then more so as we're seeing in the channel checks and Q1, we're seeing improving trends appear.
from both margins and sales perspective with accelerating growth for all these met tech. So these things are breaking out, right? And they're working. That's your quad for playbook. So, you know, it's a market of stocks and we are in quad for and the best areas on the long side to
attack, our staples, utilities and healthcare. And I can one can park money in these areas and be long along on the side, be long bonds as well like I am, you know, and then and be comfortable with the market if you know if you want to be long something and and actually produce some out performance.
But at the same time, I'm also very actively short to market too in many different areas, you know, from Coinbase to Moderna to staffing companies such as Robert Hath International and Capital One Financial and those to
the companies that are tied to the auto credit cycles such as credit acceptance and world acceptance which gives loans to subprime lenders, WRLDs, Datastock, as well as many other, and then even
in banks, I'm short position in Blackstone, I'm short PNC, you know, and some of these regional banks where I see continue travel ahead of them. One has to use a, you know, the bifurcated approach can't be just judgmental about all everything at once in the same direction.
You know, I mean, you have pockets working higher. You have pockets working lower. You know, cyclical groups are getting gradually murdered. Did anybody see what happened in metals and miners today? Pull up the chart of Alcoa, US Steel, free port mac moran.
They got destroyed today, BHP group Rio Tinto got absolutely annihilated today because overnight on Thursday night Friday morning we got the European PMI manufacturing data which collapsed across the board, Germany, France, UK, the whole Eurozone PMI was a disaster.
And US is not doing much better either. US and we saw the Philly that came out. That was a got off number. So you know, you can use a long and short book if you know where we are in this quad model and we are firmly in quad four and that's how you can come out ahead of the market without having taken
and an extremely one-sided view that oh we're going to just completely crash and burn or we're just only going to go up and up and up. So you're telling me the hedge fund model might not be dead, but this decade the hedge fund model actually might be dead. Absolutely. This is a very active, you know,
This is passive investing is died sort of last year if you ask me right I think I think passive investing will probably be somewhat muted for this entire day. Yeah, that's what happened in 70s right? Yeah, you have to be very selective on what you're investing in and not not this generalized input
my money in an ETF and just expect to get my 5% to 6% return year over year. I think you have to be very smart and selective. And I think this is the decade, because last decade, hedge funds sure didn't be fucking even the SBY returns. Maybe this is the decade that hedge funds make a comeback.
Yeah, I 100% agree I had quite a bit of discussions. I have a lot of clients that have their own clients, right? So they run family offices and hedge funds and institutional, institutional clients and I talk to them and they ask me and I ask them it's a back and forth non-stop conversation.
and oftentimes this is precisely what we come to where we start discussing, okay, how much does one need to take a passive approach here or do we need to change the style that we had in the ZERP environment to the last decade where the passive investors basically
I mean, it worked so beautifully because of the easy money that was in place, but now you've got to get a little bit more proactive with your approach and can be dogmatic about just all being long at once or all being short at once. And it's a very bifurcated market.
strong good money managers with sensible approach and running is simultaneous long and short book and finding opportunities. I think they're going to do very well and we're going to find out as this decade and false who those winners are. They're not in the spotlights today but they will be the ones that will be the
next one to replace car like on the worm and they're going to emerge those names in front of us. Guys I just want to take the moment to say that we are running a little short on time. We have about 25 minutes left of space time so what we're going to do we're going to go to Will then we're
I'm going to go to Sisu. Actually, we'll go to Sisu. I know he's been here for a while. We'll go over to Sisu. Then we'll go over to Will and then we'll finish off with Nick. But I want to remind you guys, case you're new here. My name is Wabi. I host Spaces throughout the week for Because Bitcoin. This is really one of the
First of all, a few times that I'm hosting more of these macro spaces really. I'm learning just as much as people in the audience here from individuals, more experience than myself. But Jaguar, I'm not sure if you've been to our other shows before, but I'm sure Will's Outlook in yourself can connect.
We'd love to have you in one of our other scheduled programings. Will's more of a diverse guy. You can see him across all of our shows. So if you'd like to participate in our future spaces, feel free to join at any time, man. You're a very well-versed individual. It's funny because
I every day I see this, you know, because bitcoin.com handle the yellow, the yellow one pop up in the spaces, okay, it's running. And I always join, I think I don't think many people even realize almost every day whenever I see it, I join and I just listen quite
I think this is the first time I was you know when you asked me you know to join in as a speaker so I did but I think I'm I think for at least a month month and a half now I've been a regular every single time when I see it which is almost every day. Yeah man you know good to have you up man and welcome to because
Bitcoin community. I myself, I drive all the digital asset stuff, so you know things like a Ethereum Bitcoin DeFi sometimes, all things of the like or you know community thought leaders like McGoo have been in the industry for a while and sometimes some cool folks, friends of the
brand like Joe Carlos here. You know we call him Uncle Joe around here so that's always nice to see Joe participate and most of our space is really he's almost like a regular I feel that you know there should be some Uncle Joe some Uncle Joe T-shirts really man so look forward to that look forward to that
But, um, Sisu go on ahead brother. We'll go over to Sisu then we'll outlook and then we'll wrap up, uh, we'll wrap up with Nick. But, uh, yeah guys, uh, please follow us here because Bitcoin every single follow means the world to us man. Um, we love being introduced to new people in the investing community as a
and yeah guys thank you so much for participating in this more late night spaces so see you go ahead brother thanks Bobby I just wanted a quick question from a goo and joe this week I thought was super interesting with genslers time in front of
Congress and I wanted to get you guys to take on how you see Like what the US exchanges will look like for the next bull run. I do think Gensler's gonna win. Do you think the game of chicken that Brian's playing right now at the permutual license is gonna win out and his pressure on his uh
on the people that he's supporting is going to win. I think there's the chance I feel like that a lot of the Shikwain activity will get dampened and maybe we'll have Asia lead the next pump into the next bull run. So how are you guys looking at what's going to happen with the exchanges over the next years?
Let me see if I can get Jill back up here. He moved back down to listener, but let me give you my thoughts. So let me specifically talk about Coinbase first. I said this on a tweet yesterday as much as I dislike Coinbase just for them basically having a
a generic casino. I just like Gary Gensler even more just because he's not sensible. He's trying, in the way that I view this, he's trying to amalgamate power under the SEC and they're trying to basically, so not only is he trying to bring under the
SEC's house, I'll call it a digital assets. He's having a hard time fitting digital assets into the existing rules and so he's trying to change how existing rules work and what they encompass and that is pulling in some of even the traditional finance things.
One thing that he's getting massive pushback from where I think the SEC is going to get bludgeoned to death with is qualified custodians. He's trying to change the definition of qualified custodian into basically institute new rules for QCs that have massive implications
and traditional wealth management space that a lot of these RRAs are not playing ball and they're pushing back quite extensively against him and that is just one of the things of like I'll call it the the
The unforeseen pushback on Gary because he's trying to basically try to have a one glove fits all approach and just being honest like as much as I don't like shit coins and I hate them Gary is being rather disingenuous with how he's trying to pull everything up
under a one well fits all rule because it's just it just doesn't work. There's so many moving parts from broker dealers to QCs to exchanges. What qualifies it in exchange like he had a he talked the other day about now he wants to redefine an exchange to something that's theoretically a protocol. He wants
wants to say an internet protocol that basically aggregates matchbooks is an exchange, no matter how that looks, even if it's an internet protocol, he's deemed that in exchange. And so there's a lot of things that he's pulling in that I just don't by fundamentally disagree with. And I think, and I tweeted this out yesterday, it's like, I don't think
Ryan is in Coinbase is going to try to be Gary Gensler in court as things stand today. I think they're playing distraction and they're playing stall tactics to where they actually want to be Gary Gensler in Congress in the Senate, not a courtroom. And that's what I
think their playbook is. And as opposed to what they're doing now with the Bermuda license, they're not the only ones. Gemini also announced today that they are creating an offshore non-US derivatives exchange. And so this does two things in my opinion. This lets them operate it
First of all, derivatives fall under the CFTC. They don't fall under the SEC. So the SEC has no jurisdiction there, even if it was inside the United States, but they're moving offshore. And there's a potential, a lot of money there, because a lot of the money, like, and people don't realize
This is a lot of the money that was actually going into the last bull run. Whether it was spot trading, whether it was derivatives, it was all a lot of it was coming from offshore. So there is a massive market for offshore money. And this last bull market, all the offshore people came to the United States.
whether it was through broker dealers, whether it was through Genesis, whether it was whoever. A lot of them came to the United States to do business. Some of them didn't. They're still buying hands, obviously, for the spot markets and there's FTX, which was offshore. But there is a ton of money offshore. And so one, this gives them a business model offshore where they don't
have to worry about the regulation that's happening within the United States. And then two, politically what it does is it draws the line and creates a wedge, a political wedge where you can be like, look, Gary Gensler forced us to do this. Look at all this business that we're doing nicely. Like, like, like, look, we're following
all the CFTC rules internationally and we're following these regulatory bodies in other nation states and we're making a fuck ton of money and that's showing a product market fit and that's tax money in GDP that you're driving away from the United States and you're driving it
offshore because of how dumb Gary Gensler is being. It kind of does two things. Ultimately, Coinbase is going to try to fight Gary in the Senate in the Congress, I think, before they try to fight him in court. That's what it seems to be their approach. Literally, ironically enough, I swear to
God, I do not work for Coinbase or anyone remotely even close to Coinbase. Yesterday I said this exact word, as I said, Coinbase doesn't intend on trying to be Gary in court but still long enough to beat him in Congress in the Senate. And literally eight hours ago, Brian basically tweeted, "Hey, we met with the SEC today.
Also important for regulators to set policy then enforce it, not start with enforcement and there needs to be clear rules. At this point, it seems like Congress needs to step in. Like, he literally gave a wink and a nod to like, this is what's going to happen. Like, they need Congress and the Senate to step in.
And this is something that's going to take a long time to play out, I think, in the courts. Not only in Congress and the Senate, but then the actual courts as well. So, in our things, going to look at terribly different in five years, fuck yeah, they will. There's going to be a lot more regulations, but is everything going to be regulated by the SEC?
That I'm not so sure of, right? You have all these fucking and non-accounts on Twitter that are short sellers that are basically going around basically saying, "Oh, Gary Gensler and the SEC are gonna fucking bring down everything and yada yada yada," because mainly they're short selling. They're short sellers, right?
And I honestly think that the SEC is not going to win this, at least with what they think that they want to accomplish. I just think it's going to look materially different. I think there's going to have to be new laws on the books. I don't think you can fit this into the current laws that are on the books with the SEC and security.
But that's my two cents. I appreciate it. I just see this as the last important piece of fud that people have, at least the institutions that have the real wealth that they can pile into Bitcoin. And the second this gets resolved, we can quantum leap 10x. But what you're you're take on how
along this my last is kind of worrying as well. It will take a while. Yeah, it's huge problem. I wouldn't be and and this is where my original prediction comes from when I said when are we going to see a spot ETF in the United States and I think my I've been saying it's either going to be it's probably going to be 2020
It's because all of this shit needs to be settled before that actually is allowed to go ahead. And it needs to be. And so it's just going to take a while for this to get like flushed out. Like Congress and the Senate move it just to be settled.
extremely slow a potential case with the SEC is going to go incredibly slow like all of this is going to be incredibly slow like it's not something that's going to be resolved to this year that's for sure if not maybe not even next year All right, we'll go on over to our lives. Good
Now I'll just say I appreciate it.
We'll go on our own ahead, man.
Hey, how's it going? First off, I'm going to thank Jaguar for coming up. I've followed you on a couple different spaces. I think you articulate, but you have to say very well. I think that your positions on the market are very sound. I'm in complete agrarian. I've been following energy for a while.
I know a lot of people think it's dead, but I think energy is one of the best safeties you can go into in a recession, as well as bonds and so on and so forth. I've talked about, I've talked bonds on multiple spaces already, and I know people find that boring. But I find it interesting, the staples conversation, and when you brought that up, I thought about something ridiculous, and that ridiculous
this thing is Alt-A. So if you want to see an up-only chart, look at Alt-A Beauty. It's ridiculous. Outside of Striker and so on and so forth. One other one too, I wanted to kind of bring up because you brought up Starbucks as a staple and I kind of agree but I kind of disagree. I think it's more of a service. And I
I look at also with Starbucks in this scenario and I'm all trying to give you the short. It's kind of overexposed on China too and I see China taking some pretty hefty downfall. They built I think 140,000 stores in China during COVID and I think they're continuing to expand and their anticipation is to build 900,000 stores in China or something like that.
like that. I think as their anticipation, I think China is going to get hit pretty hard during this recession when it comes down to it. And even if the US doesn't take a soft hit, which, you know, I think we'll end up rolling into a lot of these staples that are overexposed to China. So it's something I've been kind of painted to do. And
One other up only chart that I've been on top of pretty well is FSLR. So I'll just kind of bring that to your attention. And it literally just came over in 2022 and just blew up in a straight line. It's a pretty crazy, it's a solar solar company. Can I just quickly address all those three? I think of you very informative.
on the delta. You have a very interesting, we were a little bit perplexed about this too because it's not just Altar. If you look at Elf Beauty, ELF is the symbol. I mean that's another beauty stock. It's a monster stock. It just does not care. It just keeps going and going.
going and going. And you also pull up the earnings report over in Yara from LVMH and a couple others. I mean, it just seems that to the entire beauty space acts like defensive in nature. How long can that continue? Only time will tell. The second one was, I'm sorry, the second one was the
was a healthcare name right? Ultra beauty and then Starbucks was my second. Oh sorry the Starbucks yeah so a quick thing about the Starbucks 100% agree with you about your economic take on Starbucks one thing I will point out is that the I think this is this
celebratory time because we have Howard Schultz back in the game, right? So he's running the ship now. The old management is out. And the company went through a period of very long lackluster period. And it's sort of the same way that I believe
despite market hating Disney right now but I think Disney would also wake up and we may see a couple quarters of improving trend despite the economic turmoil that is still in place because we have there too Bob Igerback right on the on the leadership position so I think he's changing things the same thing is happening
If you look at Starbucks growth projections, they are 1%. Of course, in a full-blown recession environment, this could get worse. But I think some credit has to be given to the management and how it may actually perform better, slightly than some of the other peers.
a sort of a Starbucks between as a staple in discretionary and so we'll see exactly whether it can continue the momentum as well. And China reopening only started in January. I think in six months now it could fall apart but for now it's still in play. One thing about on China that I will say similar to the United
United States, when we came out from pandemic, the US savings rate was 14% because how much we had accumulated, basically from all the stimulus checks, which we have been depleting at a very rapid pace, particularly during the stack-flationary period, and by the end of the year, almost 80%
85% of that will be gone completely. In fact, or probably the US consumer is going to hit a brick wall in my opinion once the Supreme Court issues this decision about the student loans that's coming up in June. That's $393 per month in payment and that's going to be a direct hit.
Similarly, in China, when they came out from two-year lockdown, their savings rate was 23% a decade high. And now they are spending, violently, everywhere. They're going around. That's visible in Las Vegas Senses earnings report that came out this week. You're going to see the same thing
in wind resorts, for example, if you look at the traffic trends, you know, the airport traffic trends in Hong Kong and many of the places they're just going bonkers. I think at some point it's going to run out of fuel sometime maybe in the next three to six months. Maybe that's when the negative trends will start to emerge for Starbucks as well. But for now,
Now it's simply, along with better manager, running the company. What are your thoughts on the geopolitical risk that was anything exposed to China? It's huge. That's why I don't touch any of these Chinese stocks. I'll play Las Vegas St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St. St.#
American company that is benefiting from the trends but if anything, you know, I look for rallies in Alibaba and Pin Toadoo and many others to short or just K-Wat for that matter because I cannot, you know, the the the unknown part about Chinese stuff
The risk for Chinese starts the Chinese stocks start at 4 o'clock P in a 4 p.m. Eastern time when the market closes because I have no fucking idea what will happen overnight I have literally no idea what that's my my major
who likes to hold on to his position for years and decades. I mean, he bought Taiwan Sami and six months later, he dumped the entire position, the fastest turn around in a portfolio. Gushan is why. Well, he went on national TV and basically, like, he almost let the noodles slip when he comes
about geopolitical risk and then he transitioned it to saying like through seismic there's basically earthquake issues like because he almost let it slip with how much danger there is with China invading or or doing something right like so that that risk is quite
quite large. The funny part about this discussion is that Taiwan's army would be the most obvious one, but the thing that keeps me awake at night. And we talk about Black Swan, right? Because if there was ever to be a scenario in which there is a direct conflict,
a war breaking out between China and Taiwan. Guys, you have any idea how much US investments is in China and how much we import? Do people know, for example, a minor small example that many people don't even know? 92% of all aspirin, aspirin sold in the
United States as simple as aspirin is imported from China. You're hitting on a good thread there and that's ultimately why I believe the United States will not interfere if China and moves on Taiwan because they can't. The only thing that is to like national security level strategic things that they need
is a silicone manufacturing and they're already re-shoring that by investing billions and billions of dollars in making those plants inside of the United States. My, like if I was putting on my tinfoil hat, I would say that it is a known quantity that it is a known
is overexposing themselves to China as well as I think many companies have and I can tell you 100% China will seize their properties and take everything they have. They like the over like there are five silicon there are five foundries opening in the next three years. Stay outside. Yeah just just test like
I guess 30% of its revenues from China, I mean, Boeing, all the Boeing wings for its planes are made in Taiwan. I mean, so what does that do? And then you, you know, we can just go down the list, PENTAIR, the POOL equipment maker gets 80% of its parts from China. They can make parts, you know, without it, without those facts
countries running there, it's not one thing. It's the, the, the, the 20, undoing or reversing 25 years of globalization in a switch if there was a war and significant deterioration in relationship between China and the US is a black so on event.
-Generations of Confucianism is not going to be emotionally reactive. -Yeah, and so the bill is going to happen in like South Asia, not in terms of like the pack all the stands and you know Sri Lanka and stuff like that over China and Taiwan. -Yeah, the one thing is like I think this decade is going to be a
De-globalization decade. Everything that was built since the onboarding of China to the world economy in 1990, I think that is starting to reverse. The ultimate goal is to do that over a giant of the long haul, the next 10-15 years, and not hope for a black swan to
where it's a light switch moment. But ultimately, because if you read a book by Jim Rickard and basically sold out, they're already retrying to restructure global supply chains. It's just that it has so much momentum that it's going to take at least a decade, if not decades, to take
take out the manufacturing base of the world China out of the supply chain. That's just not going to happen anytime soon. And so the risk is that if China does move on Taiwan, I don't think the US really has a choice, in my opinion. And it's why Joe Biden even beats around the bush when he talks about
supporting G with one China policy, right? They play their devils advocate when they send their politicians to Taiwan against the recommendations of China, but they are very cautious when talking about like one China policy, right? And to me, I don't think
think if China moves on Taiwan this decade, I really don't think the United States can really help. They can help with how the United States is helping Ukraine against Russia, but they're not going to inject themselves into a conflict with China. They might supply Taiwan with weapons
they might supply them with whatever they need to defend themselves, but you're not going to see US naval carriers defending Taiwan. Like at least this decade, I don't see that happening because if that happens, that's global thermonuclear war at that point, right? There may not be a direct, and I think there's
There is some good logic to that in reasons behind it. There may never be a direct conflict where the US gets involved. But the repercussions of this, in the sense that, okay, so in the wake of when the war started in Ukraine, how we use economic
sanctions and tools available with their allies in Europe, in the European Union, to push Russia back in the ways we cut them off from Swift System. Can they do that to China though? China is their problem. That's the thing, right? So I don't know. I think that we have to at least be
There may not be a direct military conflict just like arguably, technically. There is no direct conflict between NATO and Russia today either, although we are supplying weapons there too. We could have similar situation where it's all economics at that point.
You know, if people, what we saw during pandemic with the supply chain issues will end up being, will end up looking like a walk in the park like if that was nothing, what comes next, if there is a true full blown conflict between Russia and China in terms of supply chain shock. - Bye guys. - Bye guys.
Hey guys, I know there's a bit of a flow of the conversation here, but I understand that Nick has been waiting for a while to ask this question. Nick, I'm sorry for that brother. So, and I want to let you speak. If you have a question from a goo or anyone else on the panel, feel free to do so.
Hey, thanks man. No, I don't really have a question. Honestly, I was loving the conversation. It's really interesting to think about just as a tail risk that's out there. But I think it also kind of speaks to, you know, I think the conversation that Jaguar and Will were having earlier.
which is that in these type of environments having a somewhat equally weighted long short strategy if you're playing that game is likely going to be the winning one. And you know, Bagou, you kind of said earlier like, "Oh well, is the
is the hedge fund strategy going to finally work after them being outperformed by long-only portfolios for the past 10 decades. But the reality is, is over a long enough time it takes one or two extremely bad years for that long-only strategy to get completely
screwed and the typical response from that type of portfolio manager long only is going to typically refer to something like alpha, which I think if you look at just the numbers it's kind of bullshit, right? Because you could be, for example, getting a
15% compounded year over year for like six years. And great, you know, you two extra money, but you know, one bad market fall after that, you know, to the tune of 35, 40% your base split square one. So I think, yeah, I just, you know, you said that a while ago.
So I raised my hand quite a while ago and I know the conversations kind of taken it elsewhere, but I usually just see so much of a disparity on Fintwit, which is typically like people are either extremely long and they think we're in a new bull market or we're about to enter depression levels.
Who knows, you know, either one might be right, but, you know, to stay in the game, I don't think you can structure a portfolio like that, because it's just begging you to get blown out at some point. So, now, please continue though, with the edge of political stuff, that was awesome. That's all I wanted to say.
Go ahead man. What was that look? I lost track of where I was at. No. It happens man. It happens. I think this is a great conversation. I think it's a great conversational piece. I just wanted to point out though and I always think about
these things, this is why I always bring these things up because people look at tail and wrist and they look at what the possibilities are. But I also look at it from two ways. There's tail and wrist to this scenario playing out where China goes into Taiwan. But I look at China as a, they're a GDP country, right? They produce their production company. They don't have a lot of growth
potential, they don't have a lot of things that they're kind of necessarily innovating on, they are producing and selling to the world. So to close them off from the world is to close off their economy as a whole. And I think they understand that just just like we understand to go to war with them is to kind of shut down our
consumption, right? Because we're a consuming country. And that's what a lot of people don't really look at is what countries consume, what what countries actually produce China's the producer, the US is a consumer. Yes, we produce, but we consume a lot more than we produce. Hence GDP, you know, versus our debt and so on and so forth. And I think that that's
the way I typically look at it. So it's hard to tell if this whole scenario could actually play out of them wanting to act on Taiwan and wanting to put themselves in a position that could financially stress their entire economy to a point of where they could be financially destroyed for decades.
spot their population is in collapse at this moment. So that is going to be a very big headwind to their economy in general and they need to orchestrate a literal they need to orchestrate a collapse to control demolition.
Because the way that China's economy worked over the last 30 years is not how the Chinese economy is going to work over the next 30 years because it can't. Their populations in collapse, they need to actually start consuming things that they produce and they need to change their economy from basically the manufacturing base of the world to they need now to be an
an advanced country and actually start consuming and consuming themselves. And that's the only way that they can survive. They have a huge debt problem, probably one of the worst in the world. So that means that their currency is going to be devalued at a pretty large day. So it's going to be interesting. The next 30 years, it's always a different ballgame for China.
Well guys, this has been an interesting conversation. I think we've reached a good epoch to wrap up here. I myself, dude, I'm going to make myself a stake and then as an American, I'm going to backstop any sort of crazy depression from happening. I'm going to go
of Costco and I'm going to get the hot dog combo and then I'm going to take a pizza combo and you know it's the most stable asset in the history of mankind. It's been the same price since the inception of Costco so we're going to really think about it. Anytime you go to Costco you upgrade your membership you can
keep it consistent. You get your hot dog combo on a nice Saturday night. I like to do the Sprite, no ice, plain hot dog, wimpy with some sweet chili sauce and some ketchup and then just fill it on the bench and have my hot dog and my Sprite and peace. And that's really what it's all about as an American. You are by definition doing
your parts of backstop any sort of massive liquidation risk to this country. But anyways, getting on a more serious note, Magoo. Thank you so much, men, for participating in this space that's been going on for close to three hours now, man.
It's always a pleasure to connect with you and seeing your animal spirit come alive, man. Looking forward to reconnecting over the summertime, hopefully. Or if you're going to be in BTC Miami, maybe we can play some basketball with Uncle Joe or play some chess with Big Ben. He's going to be
there into the cryptoverse. So yeah, thank you all so much. Thank you to Will's Outlook and Snarlax and Primus for being up here earlier. Thank you Kim Chi. Thank you Forest Green. Thank you Fight Capital. Thank you Nick. Thank you Susie for coming on up. And also thank you Jaguar
on analytics, brother, I want to welcome you to the brand and yeah man we like to welcome up individuals that are enthusiastic about all financial markets. I myself, I play crypto exclusively, big coin and crypto if you want to be more specific. I do
Both faster classes differently by definition they are but anyways men You know, I like talking about markets in general I got I got a cut in and cut you off Don't forget to follow up because Bitcoin continue keeping up with right
That's right. I have a spirit. I have the like I think I went into another space and someone is like Wabi you have to say don't forget Yeah, yeah, yeah, yeah, yeah, it's like it's like a little bingo card game, right? So I'm gonna I'm gonna do the catchphrase now guys and if you enjoyed this conversation my name is Wabi. I host these spaces that are all
the week with individuals from digital assets space whether they're devs founders community thought leaders and of the like feel free to follow because bitcoin turn on bell notifications so that you can be made aware of when every single space goes live we have various spaces throughout the day and we're also doing somewhat of
the pivot on to our YouTube. We have some YouTube shorts. I myself, I, um, I, with the help of one of our producers created, um, a little YouTube short about, uh, about a new wallet that got released onto, uh, the iOS store, which I found pretty cool. And, um,
Yeah, we also do a Sunday space now streamed from YouTube, it's just me and some of our other team members every Sunday. Our first stream was this previous Sunday at 8 p.m. Eastern time if I'm not mistaken and yeah, we'll be doing a
YouTube video with David Hunter who is a proponent of the Meltop series. So feel free to check out our YouTube for all of our previous recorded spaces. And yeah, typically, you know, these spaces are almost immediately
uploaded on our YouTube channel about two minutes or so after they're completed and As far as this weekend goes we'll be hosting a few spaces on Saturday and Sunday So look forward to that and yeah feel free to follow us every single follow means the world means the world to me I get enthusiastic
he asked about it for everyone follower that we get I do one push up so you know let's just been saying I've been working on my push up game and not just my barbell game. What's speaking of my barbell game tomorrow I'm gonna train upper body so here's my workout schedule I'm gonna do my log presses my dumbbell press
My barbell rows, my lateral raises, my upright rows, my tricep extensions, my barbell skull crushers, my dumbbell curls, my preacher curls, my concentration curls. So yeah, I got to get ready for all that stuff. So thank you for your support guys. I'm assuming we don't want to be one of those for...
every fall over that we get. Yeah, yeah, yeah, yeah, do so for every for every fall that we got to do that's an extra set. So feel free to help me get jacked. You know, we're gonna try to run it up and yeah, let's get let's get the pump on the coin. Let's get the pump on the faller count.
I appreciate you guys so much for sticking around through all the spaces that we had today. If I think I hosted about three spaces today and then we had a market talk of course. So we did about four spaces and the one we did with Ben Cowan was about three hours.
This space was about 3 hours, the been count space was about 3 hours, the one that I did with Unsheath was about 1 hour, so that's 7 hours and then Carter did market talk for about an hour and a half. So basically about 8 hours or so give or take like 15 or 30 minutes, I think I rounded off quite a bit.
it there. So a lot of content for you guys. It's for market participants, by market participants. And yeah, I guess I might announce also here that we will be relaunching our new website. So you'll be able to see a bunch of articles from community thought leaders and builders in the crypto space.
So look forward to that and also more entertaining spaces like these, whether you find them educational, whether you find them funny, whether you find them annoying. Every single eye that pays attention on these spaces is good. It does cater to our algorithm.
them. So thank you for all of our fans. Both good and bad. God bless you all. God bless you, your family and your loved ones for myself. I like to go by. Kill them. Just close it off, lobby. Jesus. I was gonna say, hey, alright, alright.
Okay, okay, okay, all right, all right, okay, all right guys. Thank you so much. Thank you so much. Follow all of our Thank you follow all of our speakers on the panel. Thank you so much. We'll be back tomorrow and Yeah, God bless you all peace out man peace
FAQ on #bitcoin Good times and Friday fireside chat with Magoo . $qqq $spx | Twitter Space Recording
Who is the speaker addressing as 'Mr. Producer'?
It is unclear who the speaker is addressing as 'Mr. Producer'.
Who is the speaker sending a co-host invite to?
The speaker is sending a co-host invite to Magoo.
What is the speaker's stance on attending BTC Miami?
The speaker is unsure if they want to attend BTC Miami due to current events.
What are 'ord nulls' in relation to Bitcoin?
'Ord nulls' in relation to Bitcoin are cheap digital art that have a value assigned to them and are sold and auctioned off to people.
What concerns do people have about NFTs?
People have concerns about the human behavior associated with NFT sales and possible scams and mismanagement on the Ethereum side.
What did the speaker and the person they spoke to agree on in mid-December regarding price levels?
The speaker and the person they spoke to agreed that end of year price levels would be around 28k-32k.
What is the current state of the market according to the speaker?
There are signs of distress in the market, such as the banking crisis and a rush for collateral causing a disparity in the yield curve.
What is causing the disparity in the yield curve according to the speaker?
A rush for collateral is causing the disparity in the yield curve because people need it to operate as banks or financial institutions.
What is the speaker's theory about who is bidding on the short end of the curve?
The speaker does not know who is bidding on the short end of the curve, but theorizes it may be banks trying to change the ratio of their loan book or those who have access to the fed window.
What caused Silicon Valley Bank to blow up?
Silicon Valley Bank had a mismatch in liquidity where they had all these people wanting their deposits back but they had their money allocated to long-term treasuries which were down 20-30% and they were having to sell them to get liquidity, but they were underwater so they were having to realize that loss.