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🚨⚠️BREAKING: Debt Ceiling Deal REACHED (NEWS BREAKING ON OUR SPACE!)
Recorded: May 26, 2023 Duration: 1:04:16Space Recording
Short Summary
The conversation primarily revolves around political negotiations related to a debt ceiling deal in the United States, with discussions on the implications for markets and political dynamics. There is no crypto-related content in the transcript.
Full Transcription
Guys, guys, this is weird.
I can't stress this enough.
This has to be something else, right?
Am I losing my mind?
This is something.
Something's going on here.
There's no way this is nothing.
I'm sorry.
I thought that this was going to be a different space.
I thought this was going to be a different kind of platform.
Holy cow.
How is it that we have now been crashed?
Is this the third time now?
Are we on the third one now?
This is crazy.
Hey, Mario, I got to become a host.
Hey, man, it worked.
Okay, okay.
Can you hear me okay?
Yeah, I can hear you.
Jesus.
Oh, yeah, it's glitching like crazy.
All right, sending out the invites now, man.
So, so good.
What's, so a deal is being reached.
Yeah, it's not the end of the world.
The deal.
The deal.
The handshake deal, according to my,
according to sources, multiple sources,
now confirmed by multiple people, by the way,
that a handshake deal was essentially done
and an official deal is imminent now.
And that they're just hammering out
some of the literal like financial paperwork,
like, you know, certain terms.
But the deal is here.
We're done.
The world is not falling apart.
Is that where I tell you I told you so?
Because usually you tell me I told you so.
So now's my turn for once.
Hey, Mario, we were the first to break it.
So it's okay.
Almost, almost, almost.
I was the first to almost.
I was going to break it yesterday.
The thing that people were going to get done is not breaking it.
Did he say that a handshake was done last night?
No, because a handshake wasn't done.
It was done.
That's what I'm telling you.
Hmm. My cat.
Then you broke it.
Well, we broke it.
The team worked on the back
I wasn't even here
No no but the team
Not just you man
There's a whole team behind Mario
Mario Mario is not a person
Mario is the team
Yeah, Vario takes too much credit the person.
The person doesn't deserve the credit.
People think you're just like...
But who is, but Matt Gates, Yo-Yo, Matt Gates did say that it's going to be Democrats that will, like, they will be the ones mainly benefiting.
Does that look like that's a case?
I think so just so it's clear, and this is what we were discussing.
Mario, I think you're...
I think you're a person, Mario.
Mario is no
I am a person
Yeah
But you know
Like how Mario
Always looks so good
On the spaces
And like it's like
How does this guy do it
It's because Mario
Has an incredible team
Behind him
That work their asses off
But but also
He's very good at
Running the show on the back end
Sorry Mario
I don't want to take any credit
Away from you
But I feel like
They're the unsung heroes
On the back end
They are bro
Anyway so
So the Democrats
Are the ones
End the benefiting the most
The Democrats
So here's what happened
McCarthy was being pushed from his right to do defense cuts.
And by the way, not only me, but Shermichael, also who's on stage, who's a political strategist, who's very close to the Republican Party, also heard from people within the party that they, the Republicans, uh,
did compromise.
Now, McCarthy's office
had never said
that they were going to do
defense cuts,
but the right of him
did want that.
And he ended up,
McCarthy ended up winning
over his side
and made the deal
and there will be no defense cuts.
And that's what
I think Gates was probably referring to.
Okay.
I'm just sending out the invites.
Robert, Mr. Wolf,
I've just sent you
through an invite up as well.
Mr. Special Sitz.
Let me co-host
The Wolf.
And I remember Matt Gates, when he was on this face, he said he would, like, he's pretty disappointed.
He'd say, I'd never want to, I'd never want a deal to even happen.
But I think that's just political talk.
The repercussions of a deal.
Yeah, exactly.
But there was an article, there was an article that came out as well.
I'm not sure if you guys talked about it.
I know it's probably clickbait.
I didn't click on it.
But it was about if a deal has not reached the losers, so if the U.S. defaults, the biggest
losers will be Japan and China, which was interesting.
Yeah.
Don't know how much debt. I think Japan holds a lot of, yeah, I think don't know how much debt Japan holds, but China should be surprising.
I imagine one of the extreme caucuses throws their own party under the bus in a matter of days. That would be my guess.
I mean, it's unreal. I mean, I'm surprised at how quickly this got done. Mario, you can take a victory lab.
Everybody knows that I was pretty bearish on it getting done before the weekend.
No, but I don't think you were genuinely bearish, Danish.
I promise you, I don't think so.
So I...
It just, it doesn't, I don't think anyone was really, anyone was taking it seriously.
Even the headlines didn't cover it as much as they did last time in 21 ever, 2011, I think it was.
2011, yeah.
Yeah, yeah, that was back then it was everywhere.
Now I was like, yeah, it's just playing politics.
And if anything, I'd say this is democracy in action.
Like, this is how democracy works.
You could say it's the flaws, it's the weakness in democracy.
But is it?
Like, this is how deals are reached.
Yeah.
I don't know. Mr. Wolf, like, do you think everyone was overreacting, Robert?
You generally say everyone's always overreacting, but I'm not sure in this case you think everyone was overreacting.
I'm sorry, Mario, was that to me?
It was to you because this is Robert, this is where you say Danish, I told you so.
This is where you tell everyone, you guys were all overreact.
I don't know if Robert heard the news.
I think I heard they asked you to take a victory lap.
I'm surprised he didn't tell me to take my second victory lap.
You've taken enough.
I mean, I don't do it every week.
You come in every week.
I haven't gotten a trophy in 40 years.
This is like one of those, you just joined a league and you get the trophy.
How's the economy doing, Robert?
Well, let's talk debt ceiling, because I would respectfully disagree on the military part.
I think that there was not a scenario where military defense was not going to go up, in my opinion.
I just didn't see that as something that the GOP, which is going to be the predominant vote in this round.
Yeah.
I just didn't think that that was going to happen. I think that this was all about trying to cut discretionary non-defense. And that's why at the end of the day, the progressives probably won't come to the table. My guess is the Freedom Caucus won't come to the table. And you'll be able to do it with both sides without the far left or far right coming to the table. But...
But just my two cents.
To clarify, you're saying both the little extreme little groups are going to be pissed off and stay away from the...
Yeah, there's not the ideal situation.
Yeah, no, there's no question.
I mean, let's think about it.
I mean, one, you're going to take the base rate at a level where the progressive Dems won't like it.
You're going to...
You know, so that's one.
Number two, you're going to pass, you know, a one and a half million dollars spend,
a one and a half trillion extra spending, that the Freedom Caucus isn't going to like that
unless you go back to like pre-COVID levels, which isn't even on the table.
Number two, my guess is part of this negotiation. I don't have any inside information.
So part of this will be kind of like a 2022 base case, but maybe they'll be like an inflation kicker.
So that way McCarthy can stand up and say, hey, we got the 2022 base case.
And Biden can stand up and say, hey, we got more than the 2022 base case.
Right? That's kind of where.
you can kind of thread the needle a bit.
Something like that could happen.
If work requirements are involved,
where extra hours on work requirements,
you won't see the progressives come to the table on that.
So I think that, you know, this is why deals get done.
You piss off the extreme sides of both ends,
and then, you know, normal minds try to come together and pass something.
And this is what normally happens.
So, which is why I said that we would not default and there would be a deal, you know, in the nick of time.
Because this is how we, this is how we do stupid shit.
We wait till the end and we have an unforced error.
I think the biggest difference is, and I rather hear from you than me, but the biggest difference is this is nothing like 20.
10 years ago, 2011, 2012, because the stock market didn't go 20% down 20% just on the threat of default.
Just, you know, nothing's really happened because the market tells you they were going to pass it.
This doesn't surprise me.
What would surprise me if they didn't pass it?
Robert, how much do you think the Fitch news of them putting the U.S.
Credit AAA rating on notice?
had to do with this? I mean, do you think that was the big, big push? No, no, because I think
Moody's has still never changed their downgrade from a decade ago. So I don't think it, I don't
think it was really anything. I think that there's just no way the country was going to default.
And this would have just been a totally unforced error.
And both sides kind of get, you know, Biden's going to stand up and said, you know, we had a clean debt ceiling.
And yeah, we have to have budget negotiations because that's how budgets get done.
And McCarthy's going to come up and say we attached what we needed.
And, you know, you're going to have both sides take a victory lap.
It seems like Hakeem Jeffries is pretty upset.
That's what was communicated on one side.
Yeah.
Yeah, I mean, you know, listen, people would have liked to have seen more of the 14th Amendment.
Everyone knows from the Obama days.
He thought that was not viable.
You know, you can go look at that.
He was clear on that.
You know, maybe that's something that could have been more viable.
I don't really know.
I think that only could have really resulted in treasury payments, which in some ways you can always do a prioritization of treasury payments.
So...
You know, this is just, you know, how the dumb cookie cutter works.
And it's insane that, you know, over the course of the last few weeks, you know, we ended up with a deal that looked very similar to the original deal.
The big, big difference has been the freezing for two years.
And by the way, this was, according to our sources, a two-year deal.
That has been a question that people have been asking also.
This is a two-year deal according to our sources.
Yeah, well, they're going to get it past the election, right?
Exactly.
Listen, there's two things that was clear.
There was not going to be a type of two-week vote or one-month vote because no one
wants to take this vote.
Right. If you're a Republican, you don't want to take the vote. If you're a Democrat, you don't want to take the vote. And if you're in a tough swing state, whether it's the 18 Republicans in areas where Biden won or the myriad of senators that are coming up, Democratic senators and swing states, no one wants to take an interim vote just to kick the can. And then number two, no one wants to take a vote before the 24 election. So that is just...
That's, I think, smart business.
That I'll give them the benefit of the doubt and say that's smart, that we're not going to have it inside the 2024, especially when you have people like Donald Trump saying we should default, right?
That, you know, because I'm not president, let's default.
I mean, you know, I think you get into silly conversations.
Yeah, Mickle, what are your thoughts on this?
I was just before Michael goes, maybe you should update the audience again.
A lot of new people are joining.
What is the breaking news?
What broke earlier on this space?
I think you should be very proud of this, man.
If you could repeat it for the audience, people joining, I've changed the title accordingly.
Okay.
And before I say any of that, I'm going to do a few disclaimers, Mario.
You know, number one, I am not a journalist, right?
I'm just a dude that happens to come up on these stages every morning at 8 a.m. Eastern
and talk to incredibly bright people.
Some of those bright people become friends, and we get to know each other.
Some of them are involved and were involved on both sides.
So I actually have this now confirmed from reliable sources on both sides of this deal that actually work
on both sides of this deal.
And the conversation that we had this morning,
and by the way, we have somebody on stage also who confirmed it.
From his sources,
Shra Michael can also share his source.
But, you know, that the, and again, this is not financial advice.
that a handshake deal occurred last night.
They were able to get all the major points across the finish line
and that the debt deal is now done.
They are this morning, they had a meeting, uh,
And Tremichael was sharing there was a meeting this morning on the Republican side.
There was a meeting on the administration side.
They're working through some of the very, very, very fine details.
And that likely either today or tomorrow they will have a press conference to announce that the deal is largely made.
And then now it's going to go to the House.
they're likely going to need to do
a three-day period that is being requested
by the House Republicans
and so it will go to the House
certain people will dissent on both sides,
but the deal will go through,
and they,
both sides are very confident that this will occur
without any additional hiccups.
The other big, big news within that,
and again, that was shared to both me and Sir Michael,
so it does mean, and we, you know,
we don't sit on the same side of things,
which was, they were very, very clear
that there will be, it will be as,
planned out in Biden's budget,
that there will be a 3% increase in defense spending.
And those were, that that is what has been communicated to me.
That is what's been communicated,
sure, Michael.
Again, do not use this as financial advice.
If you're taking your financial advice from Twitter,
I do want to warn you from doing that.
And so just wanted to make sure that that was very, very clear.
All right, perfect. We're good.
Okay.
uh and uh mickle go ahead yeah and as i was saying earlier no matter what side you're on i think
this is a big win for the american people i just wanted to jump in with some numbers that were
just reported it looks like we have consumer spending coming in and it was supposed to come in on a
negative for most of the different um
categories and is actually coming in positive. And we actually came in with slightly higher PCE
inflation at 4.4% rather than 4.2. So inflation is still sticking around, but it looks like the
consumer is also still holding up pretty good as well. And it looks like once again, we're
seeing this inevitable recession slowly get pushed out further and further. I just thought
those were some interesting numbers. Mario, so does that mean I get two trophies on one call?
You get two trophies on one call.
Dr. Danish owes me and you trophies.
He owes me one.
He owes me two.
Robert, I have to ask.
What is your passion?
Sorry, go ahead.
What did you say?
I said you love trophies.
I said you love trophies.
Participation trophies.
Yeah, Trevor can get some participation trophies.
Absolutely.
Exactly.
So, you know, I do think it's very interesting now in terms of how the markets will react to this.
You know, Robert, as you are aware, the markets were worried about defense cuts.
It weighed down on Boeing and Lockheed and others.
With this news coming out, I'm assuming that's going to make them rise a little.
Again, not financial advice.
But do you think that there's going to be sector-specific impact of this?
You know, obviously the one month was above 6% this morning.
So obviously, that's going to reverse.
But, you know, do you think there's going to make any sector-specific impact?
In fact, there's going to be a broad impact on the market.
So, I mean, listen, you guys have been all over this.
So all joking aside, you know, I like to just goof a little.
But you guys have been incredibly smart on this.
But I think the way I would look at it just from a macro perspective,
and then you guys can dig deep into how this impacts your daily or weekly or monthly trading.
But, you know, for the most part, right, the social safety net wasn't touched.
military spending's going up. You're going back to a 20-22 baseline. So really, you know, where's the give? The give's going to be in, at least from a budget perspective, right, which can change every year. It's going to be in discretionary non-defense spending.
which is, you know, things, whether it's climate-driven or IRS-driven or, you know,
Veterans Affairs driven, which I think is getting a bump too.
So it will be all those other tangible things.
But if you actually look at the full amount, it's like 15% of the budget is discretionary non-defense.
So it's a small amount.
So...
You know, you'll have to look at what that is being impacted by.
My gut tells me there'll not really be any sector, you know, to, you know, hit by this.
My guess is there's going to be two things that will come out of that.
The Republicans are going to be able to say we didn't hit Veterans Affairs
when the Democrats will continue to say they hit Veterans Affairs.
And there, you know, so I think you have to look at discretionary non-defense and look with an eye of, okay, where were the cuts made?
And my guess it's going to be somewhat de minimis.
I mean, Robert, isn't it true at this point that there's effectively nowhere to make significant cuts?
I mean, when you consider that the debt service is now the number one line item ahead of defense, defense is going up.
Right? I mean, it doesn't leave that much left, so it's going to be largely semantic.
So if you look at it, I think 70% is non-discretionary and 30% is discretionary,
and that's split between defense and non-defense.
So, I mean, there's just as not a lot of movement.
I think I saw something like you would have to cut non-discretionary defense,
85% for the next decade.
Exactly.
Some ridiculous thing that.
I mean, it should be pointed out here, right?
You obviously get your trophy because you bet on the odds.
I mean, this is the, I believe, 79th time we've raised the debt ceiling since 1960, 49 times under Republicans, 29 times under Democrats.
And usually, and not to be political at all, but usually it's only an issue when there's a Democrat in office and the Republicans negotiate.
Republicans generally just quietly raised the debt ceiling.
But to your point, this was always going to happen.
I think what you guys should look at is how this vote happens, right?
You know, I was predicting early on, and I think I'll probably be off, but that they'll get like 250%
you know, 250-ish, you know, maybe 125 from each.
But I read somewhere where McCarthy's thinking he gets north of 200.
That seems off to me.
It will be interesting where these votes come.
And, you know, once again, you know, what actually gets cut is going to have to be some cut.
So if you're using a 2022 baseline...
I think that if you get the inflation kick, I think you're probably talking about $100 billion in cuts.
I just don't know where it's coming from.
Which is effectively nothing when you consider our debt service.
No, yes, it's nothing, but literally you don't have that much discretionary to begin with.
I mean, but at the same time, the big question is, are we doing enough?
with this situation and how does how does the market look at this is this i mean obviously
it's a positive in the short term
But, you know, is the market going to look forward and say, holy cow, we still have like an actual debt problem that we didn't really solve the underlying problem.
We solved the short term problem.
But what are we going to do to solve the underlying problem?
You know, and especially with high interest rates, that debt has only gotten.
Well, Donis, you know what the issue is going to be to your question is.
rate probability for June is now 60%.
So the market is now saying, all right, we saw the PCE was up.
We saw consumer spending was up.
And this is kind of the situation we're in.
The economic data is good.
They're going to have to tighten more.
And especially-
Jay, actually, we did not announce this yet because of this breaking news.
But can you share the PCE numbers from this morning?
Yeah, sure. So, you know, at April personal spending first rose about 80 basis points versus 50. And then the PCE numbers were supposed to, you know, we're supposed to be around 4.6%. They came in at 4.7% on a month over a month basis, point four versus point three. This is what the Fed looks at. And even the core numbers, which is X energy, were up.
0.4% on month over month versus 0.3% expected. Now that compares to last month when they're only up 10 basis points versus 40 basis points this month. So the month over month numbers have been higher than everyone has expected this far into the year.
And, you know, right after that report came out and went to CME rate futures, and, you know, after that piece came out that the debt ceiling negotiations are showing progress, you know, we're at almost a 60% probability of a rate hike.
I'll just post it up here.
And that's crazy, right?
Like, considering the conversations in the market, I mean, I thought that it was consensus a few weeks ago that there was going to be rate cuts this year.
So, yeah, and Mario, I think I disagree with that.
I think we had after the call.
I think a bunch of us were saying that listen to the Fed, he kept using the word firming,
he kept using the number 2%, 2%, 2%, 2%.
I think we even counted how many times he used 2% in one conversation.
And many of us thought the market was just wrong,
that the next move would be neutral to up again because of the words he used.
And if the Fed's telling you this is what they're thinking, you should start listening.
Yeah, and I just want to get back to your question of whether we think the market's going to react to negatively because of the debt problem.
I mean, I think we've had a debt problem for a couple decades now.
I don't think it's in the purview of the market quite right now.
I think that the market's going to react more to the obviously the inflation numbers positively to
the debt deal.
But it's interesting
to watch the dynamics.
Like this morning we saw,
we see that they're getting
closer to a debt deal.
I mean, your news hadn't broken.
I don't think on CNBC or any of those.
There's the channels that most investors are watching.
But there is that.
that idea that we're getting closer to a deal.
So that's boosting the market.
But then we got the inflation numbers.
But then we got CPI numbers, which show that consumers are still spending.
So it's like all over the place.
And the market's pretty much steady right now.
Guys, just quickly, if you just don't pin anything for a bit.
I've pinned above the tweet.
I want to actually get this tweet.
I want to give it traction.
Usually I don't do this in spaces.
I want you to all go in there, comment and retweet, do both.
because I want the press to catch on to this
because I really want people,
you know,
the press has been attacking Twitter spaces
since the crash during the Desantis inauguration,
not inauguration,
the DeSantis announcement.
And I want to kind of give a fuck you to the mainstream media
that this broke on Twitter spaces.
So if you could go in there and comment and retweet
if you can or do one or the other,
and it will give it traction
and hopefully you'll get it to get enough traction,
which I'm sure it will in the media.
I'll send it to a few people in the press.
Okay.
Catch on to it.
I'll see if they cover it, though.
I have a feeling, again,
they will not mention Twitter spaces.
They'll just take the news and mention it.
But they have to,
because there's a recording,
the audio recording of Danish's beautiful voice,
breaking this on the space.
We'll see how they try to avoid spaces.
They always try to avoid it one way or another.
I should send you a few articles, Dynish.
They're pretty sneaky.
But yeah, I want to...
So hold on, Mario.
In the past, they've taken your news and then just said unnamed sources.
All the time.
All the time.
I can give an example again.
During the yesterday's Matt Gates and Lauren Bobbitt, um, space that we did.
They got something that was said and they posted it.
Of course, during the Descentus thing, they got a whole bunch of things.
Some do mention spaces.
Some are pretty proud about it.
TechCrunch, for example, is pretty positive about it.
But others don't mention.
Fox News generally mentions, but recently they kind of eased up on it.
But a lot of the others don't like to mention Twitter spaces.
So it is what it is.
So, Mara, it is interesting, though, that they're doing the ignore strategy rather than the attack strategy, right?
So how much of each are you getting percentage-wise?
Yeah, I wish they attacked more because then it gives us more exposure.
But they don't attack, they just ignore.
They can't ignore the Elon ones.
The Elon ones, they mention.
When Elon comes on our space, well, he's not – yeah, when he does smaller space, when he comes on our space, they ignore.
When he does a big space like the DeSantis one,
They mentioned, but I've had many things Elon said on our space, like when he came and said in our space that his life, what was it?
He said something about if I, if you find me, if you find me dead, I did not commit suicide or I will never commit suicide, which is kind of hinting that, hey, I'm worried about my life.
And so he hinted that it was, I think a few days before or a week or two before that that person that was stalking his family got arrested and that whole drama happened.
And the media covered that very extensively, but they never, never mentioned that he said it on Twitter space.
Yeah.
there's multiple other examples
but yeah I wish they hate on us more
because exposure is always good
yeah and again
for us
go ahead DJ
No, it's amazing that one of the most valuable human beings by just pure market cap, perhaps, not even making a value judgment is fearing for his life.
I think that's an incredible world.
Yeah, yeah, it is pretty fair.
I think the richer you are, generally the bigger target you are.
But no, the other point is that they did not cover the space.
I will say they...
There is this really exciting...
I'm sorry.
One thing I was going to say, though, you know, Mario, when I first started working with Mario on these spaces, like, I remember the Silicon Valley Bank crash.
That's when we first started doing some of these spaces together.
And I remember he told me, he was like, hey, just know that suddenly you're going to get access to things that you never thought you'd have access to.
People will start telling you things that you never thought you'd know.
And it's so interesting how incredibly powerful these spaces actually are.
And no matter whether these spaces are bigger today than media, there is no doubt.
that this is the future.
I mean, this morning, the amount of information that we got
and the ability to jump on the phone with some people
that literally don't know me from Sunday,
but know that we are honest on these spaces,
we try to be balanced on these spaces.
It's just so fascinating, Mario.
I have to say, I didn't believe you when he first said that.
I'm not going to lie.
Most of the news that broke during the FTX collapse
when our spaces first blew up...
Most of the news that broke, including a lot of findings that they were reported a bit later because the media didn't report what they heard in our space.
A lot of it came from our space.
Like we were the source of the majority, at least for the first few weeks, the majority of the news because all the whistleblowers were there, everyone was listening to that space.
And by the way, you should have probably noticed that when Bill Ackman and Cupid and Robert
Wolf and all the others came on our space during the collapse of Silicon Valley Bank,
the media was listening.
They reported a lot of the stuff there.
My team monitors that stuff without mentioning the space.
Again, I'm not saying it to complain, but like it's...
For me, I thought it's pretty known
that they're not big fans of Twitter spaces.
I see it as a threat.
And I'm not shitting on mainstream media.
It's just pure competition.
They see us as a competitor.
Why would they give us more attention?
So I'm not going to attack them for that.
There's definitely...
Hey, I just got to...
So I go ahead.
There's definitely a media hierarchy because when I had a tiny little show, I would break stories and get ripped off all the time.
So if you're not like the New York Times, the Wall Street Journal, the Washington Post, if you're a smaller entity that, you know, they like to rip you off and not credit you.
And it kind of makes me mad.
But it happened all the time to me when I was on WHO Radio in Des Moines.
By the way, there might have an additional news comment.
uh mario yeah yeah send me yeah i'm gonna step off for a second i'm gonna be on the space but
i i was gonna i was gonna i was gonna step off because because i want to start talking to the media but um
yeah like i i i who's who's right let me ask a question who are the insider traders here
that traded the news as soon as it brought now i'm joking i'm joking but how
How major, my question, my question is, like, Mario, this is not financial advice, my friend.
No, no, it's a joke, everybody.
But my question is, is this, I'm looking at it as, I do want everyone to share it,
et cetera, because a lot of people might consider it as breaking news.
Some people thought that we'll never, we won't reach a deal, or we'll take a while to reach
a deal, and we might start to kind of,
experience what we experienced in 2011.
I never thought that.
In my eyes,
I'm not seeing this to be as major
as some people are making it out to be.
Am I correct?
Or this will impact markets.
I'm not watching how the markets are reacting.
Because I think the markets ignored
the whole fud around the deal not being reached.
Sorry about my audio.
Let me fix my audio.
Sorry for being too loud.
But I'd love to get your thoughts.
You still need a vote, right?
You still need a vote on both sides, I think.
You know, one, I think the market was already pricing in.
I mean, we're still near, near all-time highs and equities all month.
So I think the market was less worried about this than it was in 2011 or even in other debt ceiling years.
And I think number two, I think it still needs to be voted on.
But you see it in the bond market, you know, bond yields are going up because it.
You will expect about $650 billion of new treasury bill issuance if the debt ceiling does rise.
Dakota?
I was going to say, and your three largest buyers are out of the mix, right?
Foreign buyers aren't buying treasuries.
The Fed isn't buying treasuries.
Banks don't really have the capacity to buy any additional treasuries.
Bomb yields could probably continue to rise here.
And in terms of the, have we seen the worst?
Because I've missed the last few finance spaces because we're doing obviously the night ones.
But have we seen the worst of the banking, quote contagion that everyone was worried about before?
Is that another I told you saw by Mr. Wolf special?
Maybe you could give us a bit of an update there.
Yeah.
Have we seen the worst of it?
You know, Pac West was successful in selling some assets.
Okay.
and you know i think they were the main bank you know outside of a bank of hawai and some some other
banks that you know right now everything is stabilized in the near term but i think they were the
next bank i think speculators were were shorting and i think that essentially delayed um and you know
their capital ratios are going to be around 10 so outside of further deposit outflows um
I think in the near term, they're going to be okay.
But, you know, Western WAL actually showed us, you know,
over a couple weeks ago that their deposits actually rose.
So there has been a lot of short covering in the KRE,
a lot of short covering in the,
in those specific banks.
Some of the broader issues, right, around if rates continue to rise and, you know,
some of the real estate issues are not going away.
But with commercial real estate, it takes a very long time, you know, to see those, you know,
those MPLs on your balance sheet.
So, you know, they'll have time to address those issues.
But I think, you know, we were all kind of saying that this is not systemic, but there were a few people saying this is a systemic issue and you're going to see failures across the country.
And I think we all made the point that this is not systemic and, you know, five, ten bankruptcies or banks entering receivership is fine.
You know, even before pre-Vulker in 1978, when rates started to go up, you had 10 banks default.
And when Volker started, you had...
several banks default every year.
This is not like something brand new.
It happens every rate hiking cycle that is, you know, a little bit sharper than the norm.
And in terms of the news on the USA, go ahead, sorry, Dakota and Justin.
Go ahead, Dakota.
And then Justin.
Oh, I was going to say, you could probably start to get concerned more about commercial real estate when LPs are getting concerned.
You know, we're not hearing any concern on the LP side at all.
Yeah.
Did you see that Blackstone just defaulted on a hotel this morning?
I did.
So I think it's going to be a bunch of small defaults and then it's going to accelerate.
But, you know, I think it's going to be over a period of like two to three years.
I don't think it's like, you know, the resi issue, which all came do ahead at once.
And in terms of the, so guys, I do want to go back and, Justin, I know you wanted to speak, but I want to go back to the economic, the U.S. economy and the data we had yesterday, are we going to continue seeing, you know, the Fed Act hawkish and what could that mean for, I want to know what it means for risk casters.
Yeah, that was my question, is this a sign that the investors just don't really care about debt ceiling talk anymore.
To Robert's point, days ago, like, people don't believe there's actually going to be a problem.
They believe they're just going to sign the, and correct me if I'm wrong, Robert, I'm pretty sure this was you.
But they don't believe in the drama.
They think it's going to get done.
They think it's just a political tool and everything's going to be fine.
And investors never really negatively reacted.
Is that what I'm seeing?
That was my view.
Yeah.
I mean, the reality is we've been in a 40-year cycle or 40-year trend of downward rate pushing, right?
In the last 10 years between the Fed, the ECB, and the Bank of England, we've seen 13 rate hikes.
And most of that has happened within the last 12 months.
The macro environment is going to change.
It is changing.
And I think that's the piece that people haven't priced in or figured out how to price in correctly to the markets.
And also another piece of breaking news.
Yeah, Robert, I'll let you go and then I want to mention something else.
Go ahead, Robert.
I was just going to say there haven't been deficit hawks forever.
It's all bullshit.
Okay, so this idea that the market thinks that either the left or right or deficit hawks isn't true.
It just isn't true.
And so, you know, I just think that the marketplace did not look at this.
In my opinion, we've been saying this for over a month now.
I didn't view this anything like 2011.
Okay.
You know, I was in many of those rooms.
John Bainer.
Why? What's the difference, Robert, between now and 2011?
Because Bainer had a 24, a 24-seat majority in the house.
He had a lot more power at that point.
Number two, the difference we were talking at that time was north of a trillion.
The difference here was like a couple hundred billion on a 30 trillion dollar number.
So we're just talking, in my opinion, it was kind of apples and oranges.
I don't think McCarthy, I think that he showed he could get the votes,
but I don't think he had the power with only a five-seat.
I think there was going to eventually be a deal done neither way.
But I think more importantly, we just, I think no one's believing that there's deficit
hawks that exist anymore.
You know, I just think that we're kidding ourselves.
And the market.
hasn't focused on this. They're focusing on interest rates. So I think there was someone's point
this morning. You know, obviously we're going to have more issuance. We're probably going to have
inflation, have a longer tail. Feels like, you know, rates are probably going to continue to creep up.
And so, you know, my view is,
Kind of just probably a little more pragmatic than technical.
To that point, Robert, last election cycle, I had Tom Steyer on my show.
And I asked him for a freaking half an hour if he was, you know, what is he going to do about the debt?
And what is he going to do about the deficit?
And is that a problem?
And for almost half an hour, I think it's on YouTube, you can see it, but for almost a half an hour, he just completely avoids the question, talks about leaning into the wind and didn't want to answer it. So do any people in Congress, do any of them care about deficit or debt? It seems like they view it as monopoly money. I think they do care, but we have a scenario that just overrides it all the time. I mean, listen, I was debating.
You know, it's got to be over a decade.
I've been debating Cudlow Forbes Laffer and Steve Moore, kind of like this show.
You know, it was one against four, and I told them they needed to add more people.
But, you know, listen, we haven't seen trickle-down economics work, you know, for 40 years.
So if the GOP is talking about trickle-down economics as one of their premises, and this is not being political, we know that didn't work.
On the flip side, we know any time there's a war, industrial America spends more in wartime.
We've had a lot of wartime over the last 20 years.
And then number three...
because of COVID, because the middle class has been getting hurt, we have the Democrats that
proliferate the social safety net in an aging population. And so if you look at those three
things, it's hard to assess, you know, at any given election where the deficit, you know,
deficits and lack of spending is going to come.
And the only thing you can bet on is either revenues from taxes, which doesn't seem
going to get there, or incredible growth.
And incredible growth, we haven't hit 4% growth forever.
Robert, there's a number three, which is an inflation tax.
There's three ways to address it.
Inflation tax growth in cutting spending.
And neither party really wants to spend cutting.
More information just came in.
I'm sorry.
That's what I was doing.
I had to step away for a second.
Two pieces of information.
Number one, confirmation that caucus will be informed this morning
and that we'll start hearing publicly about this in the next couple of hours.
So interesting that this information is now even more confirmed.
And then the other big breaking is that the number one concern right now on the Republican side
is that there might be a motion next week against the speaker.
That is what they're trying to figure out before they make this public public.
Robert, your thoughts on this.
I mean, this is the deal he made.
So the Freedom Caucus.
Listen, I have been saying all along, this is not being right or wrong,
that on these type of deals, the fringe on the left and the right will not like it.
And McCarthy has put himself in a situation that anyone can go to the floor and challenge the speakership.
I mean, for anyone to be in a situation where you can thread the needle where, you know, 225 members of the GOP is going to like this deal.
You know, we're kidding ourselves, right? I mean, to get this deal approved, you were going to need Democrats. So, you know, it's going to be, you know, the center left and center right driving this. And therefore, you know, I wouldn't be surprised if his speakerships on the line, although I don't think that that's necessarily fair, even though I'm not a fan of him. I don't think that that's fair to him.
Are we seeing a pullback to the center then? I mean, that's in general across the country. Are we seeing a pull back to the center? Kind of looking that way.
I got to hop in a minute, but I would say if you look at all the legislative victories, and this is, again, not being political, everyone knows I'm a Biden fan.
But if you look at the legislative victories that happened over the last few years.
everything happened in a bipartisan basis. It would not have happened without it. Whether it was
infrastructure, CHPS Act, even Inflation Reduction Act, you know, you finally got there even though
you didn't have Republican votes. But all of these legislative victories were bipartisan. In my opinion,
this debt ceiling was never going to get the left or right, the far left or right.
And the truth is, if you look at how Biden won, it was predominantly, you know, moderate Democrats and independents. And if you look at the midterms, listen, this was a year Republicans should have dominated the midterms with inflation so high. But I've spoken to Mario and on this, normal beats crazy.
And so at the end of the day, you know, we have if I think the silent majority is center left and center right.
It's like 60% of the vote if you include independence.
So I think that, you know, this is where we want legislation to be.
But it will be interesting.
I said earlier, watch how these votes go.
watch how they what baseline they use maybe there's an inflation kicker i don't think i i think you guys
have been spot on but we don't the devil's going to be on the detail right you know where where's
the 85 billion come from that they were looking for you know is the baseline get a kicker of the
whatever inflation is four five six percent that gives a reprieve so there's going to be you know a bunch of
trading going
on that we don't know what it will be, but I've been in the room to know you don't know until
you're able to read it. The other benefit is the 72 hours that someone brought up.
I mean, listen, I think anyone who understood that knew it was going to probably come today because that means McCarthy and Biden won't hear the incredible noise, you know, Friday, Saturday, Sunday, Monday into Memorial Day weekend because no one's in Washington.
So it really was going, I mean, I think all along I've been saying this is the day.
Because those three days is, you know, based on McCarthy's need for 72 hours, is a change.
And this was the perfect time to do it.
Craziness.
Robert did actually say today specifically.
This is the funniest thing.
I have to say it's incredible to have.
And again, for people that don't know, I push back at Robert at every moment I get.
And I keep losing.
But Robert, I'm going to win one of these days.
I promise you I'm going to win.
And then I will get to happen.
But it's just something, listen, 40 years of experience, something, I'm wrong on a lot of things.
Trust me.
But I've seen this cookie cutter before, as many of you on the call as.
And, you know, I think some of this, and I think the market's telling you, they were ahead of this as well.
I just want to touch on what Robert said.
I think that.
What people don't realize is that extremes, they win out every now and then.
But if you follow history, most people move back to the middle.
And the middle is where you get the votes.
And I think both parties understand this.
It's just that the extremes sometimes take control of things.
That's why if McCarthy, and he'll get hit on this,
and someone will challenge his speakership because...
I got a feeling the Freedom Caucus is not going to like this.
And I don't know, let's just say, even if there's north of 50 members,
there's at least 25 who are going to really piss on the steal.
Yeah.
Hey, everybody, just wanted to confirm now.
Now we have three confirmations, again, from both sides of the aisle, that, and specifically
from the Speaker's Office directly through channels, not directly, indirectly, indirectly
through the Speaker's Office, that...
some of the information will be made public to the general public and to news media over the next couple hours.
The caucus was informed this morning. There have been now rumblings from members of the Freedom Caucus specifically about making a motion against the speaker.
And this, as people know, you know, this news is still developing, but
It's crazy to say this out loud, but I feel like we're kind of seeing Twitter spaces really, really do something different for, you know, be faster than mainstream media on this. And again,
We are not journalists, but we are getting to learn more faster.
So don't use this as financial advice, please God.
But it is fun to walk through this together.
And the news is all pinned.
The news is pinned above, just for everyone.
Sorry, Robert.
The news is pinned above.
I do want everyone to share it and comment again.
I do want traction for this as I explained earlier.
Go ahead, Robert, sorry.
And I'll tell you why.
And listen, you know.
I got to be the only one who goes on Twitter space is that lose Twitter follows right after.
But McCarthy's vote they took, I think it was what called, you know,
limit spend, grow, or whatever the, I don't know what the three words were.
But the recent vote they took tying the debt ceiling to the budget,
that was a hard vote for those Republicans who were in Biden districts where he won.
That was a hard vote for them to take because that legislation was definitely far-right conservative cutting a lot of things out that the general country would, you know, the majority of the country would not have been happy with, even whether it's things like Veterans Affairs or prescription drugs or whatever it may be.
So that was a hard vote to take.
Now if all of a sudden you have a vote that is...
somewhat bipartisan, and I'm using that word in quotes, because my guess is you're not going to get as many
Democrats as Republicans at the onset, unless they need them. But, you know, now you have McCarthy doing a bit of a
switch and bait if the details of this deal is what some of us think it's going to be. It's more of a
moderate-type deal. And so...
My guess is that's why, you know, you could see his, you know, his knees buckle over the next few days,
which is why I wasn't surprised they're going to do it on a Friday when no one's in town.
So is there any scenario at this point where this doesn't happen then?
Is there anything that can unwind this deal?
Is there anything that can undo this deal?
Or is it pretty much a sure thing at this point?
I think...
I think, you know, you guys seem to have some different information than I have.
I think it's all what the exact details are on where they're cutting discretionary spending,
what the work hours are going to be for social safety net things like SNAP or food stamps.
I just think we haven't seen whether the baseline, they use the gimmick of inflation to give, you know,
some reprieve to the Dems. I think there are...
certain things that won't that will preclude the you know both side both you know 10% of each side
or 15% of each side from voting for it so yeah I think the devil's going to be in the detail
I think it's going to happen but I do think that this is going to be a little more rockier than
meets the eye I have a question so if they're bringing forward if someone brings forward like a no
confidence vote
on McCarthy while they're actually drafting the text of this deal, you know, today or tomorrow.
Could that put the breaks on it?
That's the beauty of this.
The house is in recess for the next, because of the Memorial Day weekend.
That's what Robert was saying.
Doing this on a Friday is probably one of the smartest things they've done.
Wow.
Yeah.
And so that's sort of the interesting thing. And just as a reminder, you know, Matt Gates was on our spaces last night. And he alluded to this, but we did confirm it this morning for all the people that are joining us that a handshake deal has been done late last night and has been confirmed now from both sides.
from people connected to both sides of the deal.
And it seems, by the way, I just got a message that it is now breaking,
it's now going to start breaking in mainstream media.
So I guess we only beat them by like an hour and a half, but that's okay.
Congrats.
Hour and a half is actually extremely big.
That's pretty big.
That's a mile, yeah.
It's just fascinating, isn't it?
Like how crazy these spaces are.
We saw this with SVB and now we're seeing this now with this deal.
Fyodor, nice to have you, my friend.
Any thoughts on this deal?
Yeah, I mean, thanks, thank Dr. Dinesh.
Been a while.
Yeah, I think it's, I have to give compliment to Robert.
I've never heard that you speak before and I agree with everything you said.
I think it's deliberate that they've left it to this timing with the bank holiday.
I think it's, you know, quite common that even if you've got the fringe parts of both parties,
the moderates within either side will be aware that, you know, if you don't get a resolution to the debt ceiling,
then the repercussions of that are far worse.
I do agree that there could be potential ramifications from McCarthy,
and, you know, we'll have to see what that looks like.
It's...
The problem I have is that each time that this happens, it makes me think of 2019 and the government shut down.
You know, each time we see this, it gets more and more extreme.
You know, we've got worse and worse milestones being reached.
And at the moment, it makes me think of a quote from one of my favorite academics, you know, one of the biggest...
The biggest risk to the US isn't Russia or China.
It's the political paralysis that exists within the country at the moment.
Because if you've got both parties continuing to invite about, you know, very important monetary policy, you're going to see, you know, growing...
Your audio is a little soft.
Could you get closer than Mike, my friend?
Yeah, hang on it.
Yeah, so as Buehner is fixing my...
Is that better?
Yeah, that's much better.
Thank you so much.
Okay, so I'll just summarize again.
So I think the main problem I have is not so much.
Just the debt ceiling, it's just the broader risk that this political paralysis, you know, reflects.
That's arguably the greatest challenge and danger facing the US, not so much China or Russia as significant acts as they are.
And, you know, this political runoff now with DeSantis and Trump is going to be pretty intense.
And it looks like the Democrats seem to have it a bit more together.
But as soon as you've got across the aisle issues, like debt ceilings, that only increases the, you know, other countries are looking at the US, right?
I'll use Turkey as an example and then hand it back to you.
But on Sunday, we've got the Turkish election and we've got a candidate who's much more democratic.
and we've got a candidate who's much more nationalistic
and people will look to the democratic one
and they'll think, well, the democracy is just not working.
We need a singular person who can make the decision.
I think it's pretty clear that it doesn't do well in that regard.
So just that's interesting is,
I could say the complete opposite of America right now.
America is showing the democracy worked, right, Cody?
Exactly. Yeah, this is exactly how democracy is supposed to work.
But to what, but Dakota, to what point, though?
Because each time it gets worse and worse and worse, is what I'm saying.
I don't disagree with you.
It's not worse. No, no. How is this... Hold on. Hold on. How is this worse to 2011?
I'm sorry, Pioter, you got cut off.
Yeah, I didn't hear what that.
Donish, no, no, I said, I said, no, that's okay.
Cody, you were saying something?
I've removed, no, no, Donish.
Donish, I don't think you can hear Mar yet.
Yeah, yeah.
Oh, good, good.
I've removed him from Khohoho, so he should, I'll bring it back up.
But Piott, he said that things get worse and worse and worse.
Well, let's look at facts.
This is not as bad as 2011.
Yeah.
The this singular situation may not be as bad as 2011, but the overarching environment that we're in is worse.
You've got a polarization and a populism that has predicated since 2016.
Maybe, okay, I don't want to.
No, no, I'm not trying to go politically.
I just want to summarize it one point, which is that I think.
You know, these feelings have always been felt for many years since maybe 2008 and the crash.
What's happened in the past of years is that they've just been brought to light.
You know, people have become much more confident to express themselves.
Piotr, I agree with the fact that things are getting worse, so I agree on that point.
But I want to push back.
Are you suggesting that because of the rise of China and some other countries that democracy itself is in question around the world in places like Turkey or maybe even Pakistan?
Like, what are you trying to say, Piotr?
Can you be very direct about what your thesis is?
I don't really understand how I wasn't clear, to be honest.
I think it's quite clear what I said.
All right. Well, you know, the most important thing right now, I think on our spaces, and we do more of a finance space than political spaces, is around sort of what does this mean moving forward?
So, as people know, there's a three-day period that will allow the Republicans and the Democrats in Congress to review the details of this deal.
That means that likely it will be brought to the floor in the house on Tuesday.
I just got, I just reached out to some folks on the back end to confirm that,
that if the deal is drafted by today, it will give them three days and it does not have to be days in Congress.
It just has to be three days in general, three 24 hour periods.
It will be brought to the floor and then the real fund begins.
I suspect that a deal will be reached in the House on late Tuesday, but again, no one can predict this, and then it'll go to the Senate and then to the President's desk.
And so that's kind of the steps from here moving forward.
You know, is anybody concerned about any challenges that happen along the way?
now i think the concerns are over i don't think anyone has concerns anymore i think anyone
that's trying to create fudge create fear around the the the debt ceiling i think that that news
is gone that ship is sailed and i think we're the ones that got that ship sailing um i think we
can move on men we can keep mentioning the breaking news but we can move on to the economy we can
move on how we're not in a recession we can move on how there's no banking contagion we can move on how
Racks don't seem to be that deep.
I don't know, Danish.
Across the board, things are looking pretty positive.
You know, all the doomsdayers are not going to be too happy right now.
I guess what happened to Bricks, Mario?
What about Bricks?
Bricks will talk about it in 10 years' time on this Twitter space.
Then it would be relevant.
And people will still come up and say, you know, America's going to lose its spot as reserve currency.
So how about this, Mario?
I think on this wonderful note, again, thank you, everybody, for joining us.
We start here at 8 a.m. Eastern every morning, sometimes with breaking news, sometimes with just news.
And so love having you all on. Today was a crazy day, but we'll see you tomorrow at 8 a.m. Eastern.
Thanks, everybody.
If there's more breaking news, we'll break it.
Danish, you've got to start a space again if there's more breaking news.
If there's, you get more scooped from your sources, you've got to do it again.
Don't mess around.
Through all the crash, you persisted.
Yeah, anyone, anyway, make sure, guys, the tweet is pinned above.
It's also pinned on my profile.
I want to get it viral.
That will be the thank you you can give me today.
I've never asked for anyone to really engage with tweets.
That's the first time I do it.
I've done, by the way, Dynish, you know, I've done.
Let me tell you exactly how many spaces I've done.
Guess how many spaces I've done, Danish, be honest.
Remember, I've only started about a year ago now, about a year ago.
Guess how many spaces?
A thousand.
624.
Yeah.
Uh, yeah, now and no.
All right. So if anyone guesses the number right, um, you can be, 3.50.
Jesus, you're fucking good.
Almost, but not, not it.
Man, it seems like you do them, you do like two or three a day.
Like, I would have expected more than that.
Yeah, it was 300, man.
Captured spaces is 300.
Spaces in the last 30 days.
Is it a 300 birthday?
Yeah.
No, but how is it 293, to be exact.
But how is it 293?
I don't know.
I'm going to actually do the math because it's 293, but I did 55 in the last 30 days.
Something doesn't add up.
Anyway, really appreciate you all.
Thank you so much.
The finance spaces got deleted for some reason the last few days.
Uh, yeah, I don't know why.
Mario, my tin foil hat is on, man.
They can't have a...
Must be the establishment, that's layman.
Must be establishment, guys.
Anyway, I'll see you tonight for the...
Tonight we're going to doing a big crypto space.
At 6 p.m. ESC, as always,
it'll be like a big debate between crypto haters and crypto lovers.
If you want to participate, hit me up.
Otherwise, enjoy your day.
Thanks, Danish.
Thanks, everyone.
Thanks, guys.
