Happy Groundhog's Day, everybody.
It's gray here in New Jersey.
Jersey we haven't seen Sun in a couple weeks it's been pretty awful well it's
the same thing you said yesterday like exactly the same weird really it was a
it was a groundhog day joke you're a much sharper person than I am I'm not
very witty that's not my thing I apologize but I will say I have I have
useless wit you have useful wit I have seen Pakistani Phil we were in that neck
of Pennsylvania as a family a bunch of years ago and we got to see we weren't
there on Groundhog's Day but we did get a chance to see him in his lair he lives
inside of a library like they have this special home for him inside of the
Pakistani Public Library and it's you know it's an American icon I guess but
I can say that I I've seen Phil apparently there have been many fills
they die ever so often and then they get replaced and we're gonna go ahead and
Donish is gonna join us in a couple minutes oh he's already up maybe he's
he's dealing with some stuff but yesterday was a nice rebound today in
the market but definitely I think some shorts got their faces ripped off
not to sound violent or anything but that's that's the lingo in the industry
on on tech clearly I mean yes earnings were great you know out of meta out of
Amazon statements about what they're working on initiatives and so on but the
violent movement that we're seeing I believe has something to do with the
fact that there's got to have been a fair amount of short interest that may
very well be getting squeezed because these these are these are big numbers
in terms of percentage gains and you know at this point it's listen this was
that's what makes a market right these are very controversial stocks because
they've run so hard for so long and and now people are going to go ahead and
take strong positions on both sides and it's it's it's a bit you know if this is
not for the faint of heart this may get very binary you know as time rolls on
Donish how you doing good morning good morning sorry a little late interestingly
I was giving grand rounds for people that know what that is at Geisinger and
I have so many comments I'll end with that with the comments around healthcare
today because the the grand rounds was around innovation in healthcare and I
have the I'll talk about that at the end but I was so sorry about not running
behind I just wanted to start with the the success story that is meta I mean
can everyone here that's an Elon Stan admit that good execution great
leadership and focus not being distracted by this next shiny new toy or
the or or or politics actually allows you to be a good leader and build a
company that actually changes everything whoa I feel triggered I feel triggered
incredible work on that and doing that Congress tells you to do like a good
little boy that helps I just would be completely what is meta doing to the
Congress you see this is the point it's like well it's like it's so fascinating
because I you rather die than be good I'm sorry go ahead six months ago six
months ago we would have we were the market was destroying exactly mark suck
destroying mark Zuckerberg for chasing the next you know shiny what was that
which was the meta metaverse that was not a shiny thing they worked on it for
like ten years but yes go ahead I'm sorry they were they were saying that
didn't work out in fact his incredibly intense focus on the metaverse was
being questioned it wasn't a shiny thing thing tiny thing would be for them to
just go and chase crypto like you landed with dogecoin or just go you know go
crazy and start focusing on people like you know on conspiracy theories and
getting involved in things that doesn't actually have anything to do what he
does with the business or maybe not focusing on his companies that are
literally changing the world Elon has built companies that are literally
changing the world and he can't focus anymore he's getting ahead of it this is
a good reminder I hope he sees this and says you know what maybe it's time for
me to get back into on the factory floor maybe it's time for me to get back with
the developers let's go build something great like it's awesome he is it's it's
sad to see Elon loose focus and and I think that that was the point I was
making it wasn't like me laughing at him who cares like we have we have
literally the that you know the Tesla of our generation who is defocused by
stupid people on Twitter right like we have literally one of the greatest minds
ever defocused I'm hoping that that you know all of us can call to him to get
back to building incredible things again because he is so defocused and we've got
an alien aka Mark Zuckerberg who is doing a great job of building and
running a company right now and we have to give him his flowers he deserves his
flowers if you're if you're seeing what the stock did they by the way for people
that are not aware why this is happening it's happening because they did
something that is so unprecedented he did the Facebook play again and what I
mean by that and this is what people aren't talking about is he did the
Facebook play again Facebook was free it still is largely free but they thought
through just getting people to use this new technology at a level that is
unprecedented which was web 2.0 everybody joined it they thought about
network effects happy you know demand side economies of scale the more people
they use it the more powerful it becomes and they did that using llama the open
source AI tool and we're seeing the same playbook again guys he has made the
greatest open source AI tool out there with especially now it's segment anything
which is computer vision so it's not just text anymore it's computer vision
as well and I think that that is showing up they are absolutely murdering the
game meta is on the right track they didn't you know and the ability to say
look I made a mistake with the metaverse I am now gonna refocus on AI
which is something that we can do really well and by the way they haven't given
up on the metaverse they're just putting that aside as their core focus and they
went into cost-cutting they went into making sure that their company was
running lean they he it's just good leadership I'm sorry if that triggers
people but it's just really good leadership I'm happy to hear the other side
how is Mark Zuckerberg not being a great leader right now forget about Elon for
a second I don't I don't I don't disagree at all no I think I think all
hats off to mark Zuckerberg I think he deserves that dividend check he's
getting but just to you know prove the point though I don't see any judge
refusing to you know block that or I don't see any judge blocking the
dividend on the board just saying like again I'm not saying what's happening to
Elon is correct I actually think it's really bad precedent for Delaware
Chancery I'm just being clear I'm like super against it but like this is
actually it's not even about fucking Elon sorry I know the whole world is
obsessed with him but it's not even what they're doing in Delaware Chancery is
gonna be like scary for any founder anybody building a new company yeah but
that is that is a pretty epic distraction and that's not the first time
it's happened to him I'm not gonna you know I'm not I definitely wouldn't say
I'm obsessed with Elon and I've definitely made some good money on the
Tesla stock but I think I do I can acknowledge though because I'm kind of
like you I think I'm the opposite story I used to be a Republican when I was
younger and then I became politically homeless as well when I realized
Republicans had lost their way as well but you know so it's not a political
thing for me but you I think that a reasonable person would admit that he
takes his share of kind of unfair lumps and you know it started years ago when
Elizabeth Warren and Bernie Sanders started attacking him just for having
money and that started that kind of started him down this whole path so you
know it was it right to take them on was it right to fight back I mean I
don't know that's that's a great question could he have focused and said
I'm not gonna listen to that I'm just gonna keep going I think you have a
point there but I think it's fair at least to acknowledge that he's he's
taking his share of really unfair shots I will say how silly is it for him to
now take on the state of Delaware right like if you're an investor in his
company you're sitting there being like oh no what the fuck is he doing just
shut the fuck up to stop it please please let me focus can you just focus
on building the future you literally are gonna get us to Mars you might actually
solve paralysis you might I don't believe that with Norlin but maybe if he
works hard enough on it if he focuses right like you might actually solve all
of these like real problems instead you're sitting here putting in memes
about Delaware like what are you doing and and that's the point that I was
making when was the last time you saw something from Mark Zuckerberg that
actually meant anything you know like that that really affected his core
business outside of maybe the fight with Elon which was stupid and was never
gonna happen anywhere David I'll let you go I know I'm triggering everybody just
out the gate no no and I'm sorry to have cut you off I think first of all the
point the highest point here should be the fact that meta has crushed it and
that they're doing you know incredibly well and they're doing great things and
you know this may be a new leg and a new chapter you know for the company and so
therefore in terms of investing you know folks I think you know it's worthwhile
to look at meta as a long in terms of and this is really the money point in
terms of you know how this translates vis-a-vis Tesla I think it's important
to look I'm not going to be as skeptical as you are in terms of the difference
between Zuckerberg and Elon it may be very different today because as luck
would have it one is sitting in a very great seat right now although you know
Zuckerberg did have a tough time in front of Congress but I don't think that
that's gonna go ahead and really do anything vis-a-vis the business and
earnings and Elon in terms of the share price you know he seems to be down on his
luck right now and yes he's doing some stupid things
Zuckerberg has done some stupid stuff but it's been a long time as you said
when was the last time he did act immaturely at times early on he grew up
very quickly in terms of being a CEO and his stock and his business you know
recovered and gained greatly do I believe and this is where the money's at
do I believe that Elon can go ahead and replicate that and right now he's just
he and his stock are in you know in the garbage in the toilet and he can turn it
around I do believe so you know and if others don't do believe so it's a good
opportunity to go ahead and invest in the stock if you believe though that
he's just an enigma and really can't get out of his own head his own way his own
ego whatever it is his own craziness you know then that's another story that will
plague him you know for a long time to come you know the fact that there are
and we didn't get to Amazon yet but the fact that there are multiple tech
companies that are just crushing Microsoft too that are just crushing
things and we're in a generally good market but also we've come off of a very
hot 2023 certainly for these stocks I think it's just it's going to polarize
this market even further the Bulls are just gonna go ahead and continue to
crowd into you know the Magnificent Seven you know give or take a couple
maybe and the rest of the market I don't know you know if it's gonna get
carried along or if it's gonna be left behind but you know folks should really
focus in on that in terms of where they're putting their money to work I
will say this is starting to hurt the the bullshit narrative that Tesla's a
tech company I'm just saying it out loud so that people can hear me you know I
thought Tesla was a tech company I'm just kidding
Tesla's obviously a tech company it's just funny they just don't behave like
it because they can't focus yes Matt let's hear the other side sorry Paul I
got to give Matt give it to Maddie I keep it balanced and again I hope people
realize that I'm just disappointed because I just I think Elon he's like
he is truly the Nikolai Tesla of our of our generation and just like Tesla it
feels like he's going mad he's going crazy but yeah go ahead sorry man just
the context here is that honest is still upset about space is not working yeah I
was gonna say like me I think Donish woke up on the wrong side of the bed
this morning and you know he woke up and chose violence just right out the gate
meta had great earnings Elon sucks well meta had great earnings and Tesla had
the one of the worst earnings ever so yeah I think that was like that's not
actually true I don't want to relitigate that we spoke about that earlier in the
week like their earnings were like basically right in line with where
expectations was but you know I think your broader point about like Elon
starting to look a little crazy like this is nothing new and like he's been
picking these sorts of fights for a long time I mean let's not forget the
whole SEC stands for you suck Elon's see I mean that just like there's been
years of like distasteful kind of behavior and this is really nothing new
I mean you if you're investing in Tesla or frankly any of his companies you
understand that there's some baggage that comes along with his with his
genius and with his ability to execute but I want to maybe push back a little
bit on you know your you know point around like Tesla not not having good
earnings I mean looking looking forward I already said this earlier in the week
but you know that the outlook for this year is not looking super great and I
think that's why the stock is not looking so strong it's probably less so
on Elon's behavior to be honest with you I mean the stock was down this morning
on news of another price cut in Canada which is the type of thing that I've
been criticizing for an extremely long period of time so you know I think Elon
needs to have a little bit more discipline and try some other approach
rather than just these you know blunt force price cuts but the the other thing
around the this whole Delaware drama just that I want to put out there is you
know there there are there's a certain portion of the you know Tesla retail
investors that are just 100% support Elon no matter what and you know like
we'll kind of shut their brains off in the process and there's this petition
that some shareholders representing over a million shares have put together
basically saying they unequivocally support you know Elon's decision to move
Tesla to or to reincorporate into Texas and we need to like act urgently and
like there's these I think it's like a five-point list and you know it's like
somebody who knows how important those sorts of decisions are in the kind of
trade-offs and shareholder protections and you know different tax profiles like
that's an extremely nuanced decision and frankly like there's a lot that needs
to be figured out with Elon's comp plan like what is the the plan around either
you know doing some sort of retroactive compensation plan to kind of replicate
what was done in the 2018 plan and or to come up with a new plan that will be you
know holistic and try to keep them along and more focused as you were pointing
out down it for a while so there's a lot of you know trade-offs that are going
into all these decisions right now but the kind of gut reaction of some of the
investors to just you know unequivocally support and like we have to
move to Texas right now like that's just I think a bit reckless and but it
points to the fact that there is like this extreme version of the of the Elon
stands who you know will just say whatever he tweets now is gospel and we
need to run with that as fast as possible exactly I mean he made that
decision on a pole can you imagine can you get billions of dollars invested in
Tesla right now well he did it's exactly what he did when he said should I sell
some shares in order to pay taxes to like basically get a lizard to warn off
my back it was like he'd already made up his mind he knows that like if he hints
a certain way that you know he's gonna skew the pole and so he did and then he
sold and it kind of frankly screwed over to shareholders the way that he sold
these massive blocks just on the open market with like zero regard for how
that was gonna you know like significantly drag the price down so
like yeah I think these sorts of shenanigans or he's like trying to
portray some sort of democratic process where he's really listening to like his
followers and his shareholders I'm like okay a Twitter poll is not the way to be
making these sorts of decisions and and so that that is actually a really good
example of the things that have nothing to do with people coming after him and
him being the victim like he's no victim he's the second richest man in the world
now right so like I'm sorry but like I don't buy that shit and and again just
as a reminder he has literally built some of the most impactful companies ever
but he also as you said has you know these other types of shenanigans that he
does but this is the the cost of genius I guess but it's also he could also curb
it if he wanted he just chooses not to because he doesn't give a shit and
that's really worrisome because again that leads to really bad long-term
decision-making all right David let me hear it no you got you gotta let Paul go
first I was gonna I was actually gonna go ahead and I'll feed this up Paul won't
say anything about it is we would be remiss if we didn't discuss apples
earnings as well oh yeah I want to mention a dividend you know I don't try
to comment on stocks do your own research but meta releasing a dividend
like what does that mean to either the opportunity for them or for other tech
companies like is there not are they just making so much their margins are so
high that they can pay out this dividend was it needed by investors or is this
something like like what normally happens they I guess in the old days
they people would buy stock back and maybe that's something that and tech
companies are not allowed to do anymore and or they would they would reinvest
either but I guess the third thing is they could buy other companies right so
and maybe that's when you look at what happened well the third the third option
is off the table because a old Lena Khan they can't I was gonna say yeah is
robotics robotics a robot yeah I robot the Roomba folks that kind of fell
through that's number one so over for Amazon but I was gonna say that number
one buying companies the public company has become incredibly difficult number
two there's clearly legislation that's gonna come back come out around buybacks
and so I actually think this was very smart getting ahead of the problem buy
backs are gonna be off the table and they're gonna be incredibly scrutinized
I think over time and so this is a good option I don't know could they have
reinvested into their growth sure but yeah clearly there's an underlying
belief that that they are going to be lean and part of being lean is getting
some of that back to the investors that believe I mean I don't think like what
don't we have some RIA people on this show they declare a dividend and it
starts to become a recurring event this is only first so we don't know but you
know if it starts to become a recurring dividend they're bringing a whole
different set of shareholders you know into their stock I mean they brought in
their stockholder base massively for people that need current income you know
off of their investments so to me I mean if you can afford to go ahead and
start declaring a recurring dividend right the risk is is that it won't be
recurring or it'll need to be cut or whatever but if you can afford to as a
stock to go ahead and do that on on you know a pretty you know confident basis
that's amazing I mean you brought in your base and you watch your share see
your stock rise because of that amazingly so I think it's a I think
that's part of what's going on with the gain in the stock that people are
speculating that it's going to become a recurring dividend and that's it that's
they'll be a standout when it comes to that yeah I actually invited Matthew who
is an RIA to come up here and share I don't know if any of you the rest of you
are RIA's but if you are please speak up you know it's just that Matt are you an
RIA yes yeah I'm an RIA too oh awesome what are your thoughts on David's
comment around around dividends and bringing a whole new type of investor
onto the table because it provides income I'm certainly not your typical
RIA so you know we we actually have a firm called rebellion air where we're
kind of doing things differently so it's certainly not going to change our
decision-making process really what we try to do is you know find individual
companies that we think are going to do really well and then have little slivers
of our overall allocation into those names which we think are kind of better
poised to take advantage of some bigger trends that we think are going to tick
off so we don't really prioritize income in those sorts of decisions so I think
I might be a more generally yeah more generally I guess Matthew your thoughts
on the you know David's comment around there are certain types of investors that
might be more interested in this stock that have stayed away from it and are
looking for more income generating stocks Matthew your thoughts on David's
comment and maybe that being why there's so much inflow yeah I definitely have to
agree that it's really interesting to see a dividend come from this kind of
stock it's a maturation thing for sure it's awesome to see them doing this I
definitely think it does attract a new kind of investor one's looking for
equity income I do caution it on the sense that it may or may not be
recurring but I did like the headline saying that as a result of this Mark
Zuckerberg net 700 million because of his own dividend so I thought that was
funny and you know what I will say that him
him making money from his own dividend is kind of hilarious and I
I think that that's I don't want to say he did it to
mock Elon but I wonder if that kind of you know
because obviously meta has complete regulatory capture
and so he might have seen it coming and I wonder if he was like I wonder I
wonder if today it stings just a little bit more
or it feels just a little bit better because he got paid and Elon didn't and
by the way for anybody that's listening there is no way
that Tesla does not come up with a stock a new compensation plan that takes
care of Elon there's literally no way right math
there's no way yep you're definitely right that's that's
absolutely going to happen it's a question of what it's going to look like
how it might be retroactive or whatever but it is definitely coming I mean you
kind of saw the seeds of this being planted a couple weeks ago with Elon
saying he needs to get to 25 voting interests
uh it's like oh if you don't think that he had an inkling from his uh
from his lawyers that this case might go against him and that's why he started
you know commenting on this uh I think you might be a little bit
uh too naive so 100 he's got some big new
comp plan coming hopefully it comes before he loses even more interest
right like that's the goal the goal is that they move quickly that they are
swift and it's it's it's interesting enough for someone
like Elon to pay attention and somehow they get him to focus because
you know there's a lot of projects going on in Tesla uh Tesla's making a lot of
you know robotaxes are still not here FSD is still not really full self-driving
uh Optimus is just getting started I mean
it just feels like we're a little bit behind the eight ball
SpaceX obviously is doing great um and we'll continue to go
that's a company that really I have to say they are going after him which is
in an unfair way but um but but yeah I mean it's just really hard to run all
these companies and I one thing I will say is that Twitter
or x is the one company that is the most distracting for him
this company may have been the company that screws him the most
uh but uh but we will we will see because this is a
a very addictive platform obviously but not as addictive as the others
any other comments on meta before we move on to amazon David I'll let you
take amazon go ahead your thoughts on amazon
they're earning they absolutely crushed it and then
obviously apple uh which the china story is the real real deal actually
let's go to apple David what are your thoughts on
you know you were mentioning apple earlier your thoughts on apple
and their earnings they saw their stock drop based on
their outlook on china uh going from I believe a positive one percent
growth to negative five percent in outlook uh for china was
very striking uh your thoughts David yeah I
I think at this point the market is left questioning
um two things first of all what's apple's next act um it can't
just be in terms of the stock valuation it can't just be you know continuous
refreshes of of existing products um certainly I
don't want to go ahead and limit the company
to its hardware obviously its its software its platforms
um or an app store and so forth are incredibly important
uh but I think people invest in apple and have
always invested in apple certainly um you know since the time of jobs um in
the next piece of hardware frankly for the most part
that is going to go ahead and and lift the stock to another level
um you know I was actually debating whether
to get a vision pro I you know the goggles that are coming out um
and and I just don't need them I mean there's I'm not a particularly
heavy watcher of media um and I you know my work generally is done on a PC
I don't do it on a mac um and so you know I decided against
it uh but the question is is is that the next thing obviously not a
thirty five hundred dollars starting price for a pair um you know
there would have to be some changes to make it mass market but I I just I
think people are left questioning the second thing is
is what about the cash pile uh that the company's got
um what can they what will they you know go ahead and do with that cash
pile um and I think between those two things
and like you said the the the the the business in terms of manufacturing
and in terms of sales worldwide is always a moving target uh it's never
particularly easy uh in terms of just because of their
scale um it is not easy for them to turn on a dime and go ahead and either
you know manufacture in you know one country versus another they're tied with
certain suppliers for certain things um and
they've also got an enormous amount of of fixed capex already you know I'm so
sorry to interrupt David I'm so sorry the numbers are in
holy cow I just put them in holy cow uh sorry uh
Paul I'm gonna I'm trying to put them up on the thing but it's showing just yours
I have all the details here okay breaking job market crushes estimates
u.s non-farm payroll actual three hundred and fifty three
thousand the forecast was one hundred and eighty five thousand
u.s manufacturing payrolls uh actual was twenty three thousand
forecast was three thousand private payrolls
actual three hundred and seventeen thousand
forecast was 170 average earnings uh month over a month was actually
point six the forecast was point three
u.s unemployment rate was actual three point seven came in
point one below estimates this is unreal numbers and just uh in case people
are wondering about labor force participation
that also came in below expected at sixty two point five percent versus
forecast sixty two point six holy cow just again headline main headline
u.s non-farm payrolls actual three hundred and fifty three
thousand versus forecasted 185 000
unreal guys thank freaking goodness uh
maybe 10 years up 10 10 basis points yeah 10 years up 10 basis points what does
that tell us the idiots that thought that rate cuts
were coming in march and by the way we're holding on
today 30 something percent of people still thought rate cuts were going to
happen this morning there is no way rate cuts are coming
can we finally get a hallelujah on this does anybody
here now think that there's any way in which they can do rate cuts guys
oh again reminder non-farm payrolls came in at actual at three hundred and
fifty three thousand versus a forecast at 185 000
and most of that is not government it was private payroll
at 317 000 versus forecasted 170 000
any comments is everybody just stunned at these numbers
uh but at least kind of relieved are you actually relieved
uh the entire market the entire market has been obsessed with these rate cuts
there are no rate cuts coming there are no rate cuts coming
i am telling you all i've been saying it i've been shouting it from the
mountaintops of spaces that are more interested in just
seeing some some forms of stability that's all i'm interested in
uh but just as a reminder talking about stability
average earnings are up 0.6 here comes inflation but i this is good
for the economy for sure uh but the question really will be
is it uh is the job market way too hot robert wolf has joined us because the
job numbers are good so uh wait a second i'm just kidding i'm
just kidding so that means i've joined you for
over a year right when the job's not like
it's not like it's been bad i don't know i think we should have a bidonomics
hallelujah i know that there's a bunch of i know
there's a bunch of haters but the guy's gonna win
the wins at the back average hour earnings
was incredible both month on month month on year
the revisions were up also another hundred plus thousand
i know there'll be some haters saying well this is
you know seasonal cyclical yeah maybe fifty thousand of it i mean these
numbers are insane you know i i think donish and i have
been quite a line that we have not thought the fed should be
cutting rates and we have agreed that the wind
for the economy has been incredibly strong led by wages and jobs
and we continue to see more of the same
and you're seeing upward revisions so
i could see that uh you know the question is
what did powell know because
versus sorry is i can is it just me or is his audio cutting in i think paul
krugeman is trying to hack his microphone
robert you know you know i'm sorry about that you know i'm not progressive guys
you know i'm very moderate so no krugman here
you know i'm straight down i just think the data speaks for itself
but robert shouldn't we be worried about inflation right now average earnings
oh wait a second donish donish okay come on look at my interviews on fox
i have said my biggest concerns long tail inflation
i have not changed that okay no question with service sector
driving the market which is 80 percent of gdb
gdp with wages outperforming
inflation for the last you know year but price is still up
you know we have more money going after higher prices
and so yes we're going to have and where consumer sentiment is
yes i'm nervous about inflation i've always said all along the idea that we
are looking at a two two and a half range makes no sense in a post-covid
world i'm not going back on anything i've said
um so yes i'm nervous about long tail inflation but
purchasing power is doing better purchasing power is doing better how
sorry that that last comment i agree yeah so if so if wages ahead of if wages
ahead of inflation then purchasing power is better period
but if you look over a period of time people are really just catching up
right where prices were right if you still have food and energy
up x percent call it 20 year on year if not higher in some
then we're just playing still catch up but over time we'll reach that
equilibrium that's why the fed in my opinion will
stay at this neutral stance because they're feeling good about
wages and today's number shows that even more
i i just still cannot understand why we're not going harder against inflation
it is just such a huge risk uh if we start seeing reacceleration because
if wages are higher than cpi cpi is going to accelerate towards wages
that's just purchasing power this this location is not going to last
forever like you said no but more the only thing i will say is
they're more at an equilibrium right they're a little higher we're not
they're not off the charts higher right we're talking
they they're outperforming over the last 12 months
but not by a lot it's something i use and tout but
you know it could either either it could be argued you're talking about a
de minimis amount listen i think you guys have been spot on i've listened the
last couple weeks i haven't commented much
but you know let's let's not um
let's not forget the geopolitical risk we're facing
and the possibility of where energy goes with this geopolitical risk right so i
don't want to segue off of the unemployment number today and
labor and that stuff but i mean i i think we could have a whole
discussion on inflation where you know donish you you and i are much more
aligned you you may think you know the fed should
do something you know more hawkish than i do i think a
neutral stance makes sense um i don't think a cut does
absolutely david would love your thoughts on the numbers
um i i think it's i think it's great because what we will get out of the fed
is what we want what we you you and i want out of the fed
which is don't lower rates keep them high you know and frankly
maybe we need to go ahead and again assuming this data
continues and assuming it's not doctored and assuming it's not an
outlier um you know maybe the u.s economy does
function quite well at a five percent or so
you know fed funds rate and maybe we don't need to be
at two percent and and that would be great vis-a-vis the u.s
standing in the world right it's standing worldwide
other central banks are preparing and they need to be prepared for cuts
their economies are languishing there's a lot of distress
there's a lot of refinancing that's not going to get done
and so therefore they need to go ahead and cut rates if the united states is
able to keep its rates high that's actually very good for the
united states it means we are strong and getting stronger
i know and let's talk about you know trading this
you know the fallout from this is all real estate people
are going to be in denial i mean they're going to be
like well don't worry the the rate will eventually the rate
cut eventually come it's going to be even bigger it's
going to make up for the fact that we didn't get a cut in
march and we're not going to get one thereafter for a couple of months but
don't worry when it does come we're going to get
you know instead of 25 basis points we're going to get a hundred or a hundred
and fifty right and they're going to live in
lala land so i think you know let's see what happens
with the commercial real estate stocks today
um some of the etfs i'm curious regional banks
regional yeah yeah agreed i mean you're right
david you're exactly right i was talking to a real estate guy yesterday and he's
like uh it's like a tale of two economies at
the same time he's like we're ripping he's like we have a lot of deals in the
pipeline banks are giving money like it's like
like it's nothing but then at the same time you have people on the lower end of
the income bracket they you know can't afford groceries
because the percentages are going up so you're 100 right just and i will say i'd
be careful to listen to two types of people
crypto people and real estate people they always lie but yes i
but but uh but kind of taking a step back sorry
u.s ten year commercial side commercial side just to be clear
even worse just kidding uh but i was gonna say that
that uh u.s ten year right now is up 12
basis points go ahead emma so if we're talking about trading this um
just based on the basis of the jobs report you would expect
a more hawkish relatively speaking fed and chair pal and thus you expect
like least a stronger dollar u.s dollar relative to other currencies which
tends to be risk off more risk on in the u.s for often the
rest of the world but it's also tends to be
generally speaking a more risk off scenario when the u.s dollar strengthens
i totally agree with that totally i mean i don't i don't think
i will i think we might see you know the gains in let's say
you know meta uh and amazon you know pair their way back
um you know because of this certainly uh agree with that
uh is it just me or is everybody expecting a tenure to cross four percent
again we're gonna go back up it's gonna go back up guys hey donish one
yeah one thing that's interesting i'm digging into the report
the uh we had revisions up on december and january and you know there
are over 100 jobs uh i'm trying to pull it up here i
just posted it uh but did you see the march revision march revision is is is
big hold on let me get that number yeah december
let's see payroll for november was up 9000 december was up 117 000
right so that's huge so that's kind of like showing that the
the whole revisions have always been to the downside for the last year
now they kind of switch to the upside so it's pretty wild
uh you know that's you know don't so don't ignore the
the revisions either way right they were they were ignoring them on the way
one way now you know we can't ignore them the other way so that's probably
why you're having this big move as well one hundred percent robert your
thoughts you saw you in me
i mean you can't ignore it's the best jobs number in a year
i mean there's no ignoring the strength of this number and as the
gentleman just said the strength of the revisions
completely one way and then the strength of what
i think donish and i have been talking about all along
wages are popping period and this is the best thing we've seen in
wages i think in two years a four and a half percent annual rate
not just six tenths so i i just think that
you know yeah there are some things we should be nervous about right average
hour work week went down um labor participation went down after
it's gone up a little bit uh over the last
uh six months so there's a few things you know that
will allow us to debate okay you know those are some interesting things to
keep our eyes on but the overwhelming thing is going to be wages
and the gear towards you know how does this impact inflation
and for people that remember again for for what i do
for my day job we help employers with benefits
and you know medical benefits uh and provide health care
for their employees i was seeing this coming as people may know
weeks ago people are beefing up their their benefits people are spending more
money on employees there is the labor market is crazy tight
out there don't let the tech people worry you twitter is a fucking bubble
guys like the rest of the economy services
manufacturing they are beefing up right now
i'm telling you unions are growing those union numbers are not going to
show up companies are starting to unionize like
nothing you've ever seen it is wild out there right now this is
going to become a structural change it's done this on the girl
donish the other thing that would be an interesting topic for us to discuss
is you know infrastructure is the fastest multiplier of GDP growth right
for every dollar spent like a 1.6 times multiply it's also
the best wage wage employer for jobs i mean they get
paid much higher than than you know minute minimum wage and
you know we're starting to see the trillions of infrastructure just
starting to be spent you know i i know we could you know all
of you could hit me about the shovel ready obama days but this is
not talking about shovel ready these are real projects happening
and we've said that the spending was going to really start
happening in 24 those aren't even being impacted yet wait till those start
hitting so i i use that tips politics aside
politics aside only jokingly though the wind's really
at the back uh uh going into 24 and and the question is you know what does
what does the fed decide and they certainly
you know let's be honest they they changed their tune
um you know the other day and the question is do they change their tune
again and you know yeah get reasonable that two two and a half percent is just
not real well i'm not sure they can change their
target i know that you know more than i do about this no i said change their
tune they're not changing their target i just
said change their tune change their tune i think i think the
big question really is my concern around all of this is you
know while we want to hate on the the people there are people depending on
where you are on the political aisle you might say we're
spending way too much money true deficits are getting out of control true
inflation is potentially going to reaccelerate probably
at some level the questions are is it going to reaccelerate or is it going to
be long tail uh you know and how hawkish do we want
to go about this but this concept that robert's talking
about in terms of the chips act and the infrastructure act
is not just the government spending on it it's other private businesses coming
alongside it and spending on it that is the part of this that people
don't talk about and when that happens demand will get
stronger we already have a tight labor market
we already have uh the reason why it looks like
we have seen significant disinflation is because of goods
deflation uh kind of really pushing that number
again this can't be i think it could be a
just one other thing you guys have been talking about i gotta hop soon but
you know for the last month you know a lot of people have chimed in
rightfully so you know government's leading the way in a lot of the labor
numbers hospitality and leisure leading the
way you know absolutely but if you look at these
numbers this is private sector hospitality and leisure wasn't that big
neither was government i don't have the numbers in front of me but i think no
part of the world was 317 000 you're right yeah i think hospitality was like
15 000 and government was 30 000 i mean it just did not lead the way
which it has in the past uh year and so we're seeing a shift
and you know the question is if this is real and the revision is real as
uh someone said earlier let let's hope these are all real you know we've seen
revisions change but if this is real and it wasn't you
know a november you know december january cyclical thing
and it seems to be real because this is like 125 000 over any cyclicality
then you're then the conversations we're going to have are
very different uh than what we've had over the last 60 days
about rate cuts just very different absolutely and without rate cuts
how will these tech companies do well just kidding
david go ahead yeah i just wanted to make two points
before we get to dwayne um you know to go to tech vis-a-vis
the jobs market you know i i got to applaud tech
for going ahead and paring back their staffing
you know if if things are strong um you know
they could easily not in the case of amazon
um you know they bought mgm studios um probably around a year or so ago
and they started to go ahead and in this past quarter
make layoffs uh at mgm studios uh and in their content creation business
and kudos to them you know that they're disciplined enough to go ahead
and pay back unnecessary employees even at a time
where the company is doing quite well on the top line and
so i think you know keep an eye out for those for those signs in terms of seeing
who's being managed and led properly in the tech
sector and then the second thing is uh with respect to regional banks
citizens bank corp the chairman of that bank
uh came out last night and said you know what's going on with new york
um bank corp is uh is simply uh an outlier and they're really we the
regional bank crisis is in the rearview mirror i
when people make statements like that um in terms of
you know emphatic judgment on an industry that they're already
in that is mired in you know questions
to me that's a little bit of smoke and you know just keep an eye on
you know whether there is you know more than smoke
in the regional banking sector um you know going forward certainly
as donish as you said you know with rates continuing to stay higher
um and real estate continuing to be on their books
uh in in large part uh it's not going to be an easy ride through this for
for a lot of smaller banks yeah no one's more upset
right now probably than the real estate commercial real estate folks right now
looking at these numbers they must be absolutely just shaking in
their boots right now donish i have to hop but it's an interesting
comment i had dinner last night i'm driving from boston so apologies
for the background noise but um i had dinner with that
big real estate developer last night in boston and it's interesting he has some
very strong deals you know from a loan to value perspective in other ways and
the banks have more or less said if you don't shift all your deposits to us
it doesn't make a difference how good the deal is
100 100 yeah just because they're all saying right they're all going to jpm
and the boa to the gentleman's point earlier
like these commercial banks have to be more more funded
more well-rounded more diversified and it it you know the when these
refinancing take place you know there's going to be more bells
and whistles that um that come to fruition then in
years past that's for sure
100 percent dwayne your thoughts yeah hey good morning i just wanted to
comment quickly here i mean you know we can't be you know we can't be haters here
in the sense that uh you know wage inflation isn't
necessarily a bad thing it's you know it's definitely good for the economy
what i'd like to see is how this is going to trickle
across and translate into consumer goods you know white white goods
especially uh with with uh whirlpool uh they they came out
and they were uh you know forecasting a reduction in sales so i want to see how
that that were posed against some other competitors like samsung panasonic etc
so uh you know things aren't are improving in
regards to the consumer i mean even pessimism
like pessimism about the economy overall is actually reducing quite a bit
um it's down at least about about eight percent or so on surveys versus
you know when inflation was twice as high as it is now so
i want to see you know so i want to see how that works in regards to just the
overall economy and and jobs and you know of course there's
there's obviously the chance of a you know geopolitical black swan event or
just a geopolitical situation here which will
make inflation rise higher but i think if you know inflation goes into actual
workers wages and they have some more money in their
pocket you know that's a good thing i mean is it going to go into paying down
debts probably not but that's something else to
you know basically observe over the next few months here
absolutely and i think that sorry i i know there are people just so for
everybody that's trying to come up on stage
we're going to start rotating people because there's a lot of comments and
there's a lot of hands up so feel free to raise your hand and come on up on
stage and also one thing i was going to mention is
uh in the bottom right corner we have some very intelligent
comments people are rightfully so
worried about the veracity of these numbers i think david alluded
to it i will say that it uh the game definitely
put together here let's just say let's just say that things are moving in the
right direction for for them and everything is not
sizing up but again having been on the ground
working with actual customers who have hundreds and thousands of employees
um i think i would i would implore you to not disregard these numbers i see
these every day i'm telling you all of our we
have hundreds of customers all of them are increasing their payrolls they're
paying them more it's happening this is real this is
actually real so just wanted to be very clear
about that because i know people are going to be worried about this for the
people that are listening and thank you for listening to us
but these numbers at least from my anecdotal
working across hundreds of customers i am seeing payrolls get stronger
and bigger except for in tech tech they're cutting left and right right
now so that that's the thing but job numbers
like this man they move markets they move decision making
i i don't know how looking at these numbers
people still believe they're going to be rate cuts in the first half of the
year i don't know how but i will tell you that i'm willing
to take the out at the other side of this bet
and i will also tell you that i'm probably going to make
a financial move based on that thesis now
i can't tell you what it is right now i'm going to look today
sit down and think through how do i play this but that is the bet i want to
take against now there is no way they're going to be rate cuts in the
first half of this year and if you still believe that after
these job numbers i want to bet against you go ahead hey i
was gonna say jay pal didn't have these numbers supposedly
that's what i'm kind of reading from on wednesday so
he gave that that march announcement you know
without even knowing this and then he he is doing a 60 minutes interview i put
up the comments you could get your popcorn ready
i think that's going to be pretty interesting i don't know if they got
they they sometimes they can recut these and they can actually jump in again
and and add to it so that's going to be
interesting to see if they uh if they look to do that because of uh you know
it's pretty big a little bit of a change to you know
the last couple months of numbers just a little bit
yeah there's a little bit of a change i i will i wanted to go to david subtle
david your initial thoughts on how this is going to move the markets
and how are you playing this yeah it's it's um it's interesting that it's
coming off of the back of some really really good earnings
reports uh at least from even apple's earnings wasn't bad it's just the
response has been bad um but but it is interesting that that we
have this you know we already have this strong
move three-month move i talked about before the strong three-month return
you're going into this earning season um stronger than what we even had last
summer when we had a really strong uh three-month return going into that
earning season that didn't play out so well afterwards
uh we had priced in a lot and didn't really fulfill and this one
um it's kind of it's similar to the year to the beginning of the year
in february where we had this kind of blow-off top move
um where these these big mega cap names um blew up in the pre-market
um and then filled in their gaps um during the regular trading session and
so i'm really watching the response here um to like meta and google this air
amazon to see um to see if those numbers fill in and i'm and i'm i'm
thinking that this jobs report is that catalyst to that that's
it's a strong move higher in yields strong move higher and it's funny that
it's it's hilarious to see because at three we talk about the three-month
return always as a proxy of the fed fed funds
which hasn't budged hasn't budged it's like moved
you know like a few basis points here a few basis points there but it's
it's been steady in the midpoint of this range
uh the five and a quarter five and a half this whole entire time
that the stock market's been going crazy and and the ten year and the in
the two years been going crazy so so all these other like markets are
pricing in what the fed's going to cut here in effect
and the three month is like no like nothing's going to happen
we're not we're not even considering anything imminent at all
and it's still happening that now the two year and the ten year are taking off
to the upside like crazy um and the three month is like
we just went up it's gone up like two basis points
hasn't budged and so i'm i'm really watching
and seeing if if those mega cap names start filling in their early morning
gaps then that could have a pretty i mean
negative effect on on that because everything like the russell's
down pretty decent right now uh the the large cap index of course
is influenced more uh influenced by those names
uh you you i would see you know a more negative response in the large cap
indexes once we start to fill in those early
morning gaps so that's that's how i'm watching and
playing today's news if you need to borrow money to stay alive
this was not good news for you that is essentially i know it's a very simple
heuristic and it does not always apply but think about it from that
perspective and i think that'll help guide decision making
if you have a giant cash balance you're doing okay right now
but patrick i wanted to go to you wanted to get your thoughts on
on the numbers and you have a chart up there for us and i know you have to go
soon so uh come on up and tell us uh what you
think uh these numbers mean uh from jobs and
recessions and rate cuts that's right well i look at
again always big picture stuff um the the fed i think like what they're
they're two mandates right it's uh inflation
and employment but the the initial claims i've noticed that
the in not the unemployment number the percentage
but the initial claims that initial jobless claims that's what spooks them
and not always but practically most of the times that
personally we've had recessions the initial jobless claims they start
breaking out upwards and that's often where you see i in
that chart that i nested i in the bottom panes the fed cuts
i identified exactly where the first first cut happens
after like a plateau or after they moved up and
it's practically most of the time the initial claims have to start be trending
upwards it probably goes in the fmo mc's
meetings they're keeping an eye on that and that spooks them
but look the initial claims now where it went down there i think we're at 200
2000 this week look i have a breakout line at like
at 241 000 so until the initial claims could
start really trending upwards and really start to scare the fed
and it's going to be tough seeing a cut there so just from that perspective of
course there's other evidence you could look
look at what the market's telling you with the three months and all these
other um the futures on the on the fed but
this is telling me right now that it's hold your breath
and but as long as the initial claims keep grinding lower
the probabilities are we would have to we it'd be eager right now to start
calling for cuts when the initial claims are
they keep tumbling downwards it's just it's hard to see
based on the evidence of this 40 50 year chart right it just
doesn't fit there with the model absolutely and i think that this is
again a reminder that um we just you know we can't predict
everything but that usually these things sort of
fit certain patterns and our job is not to give you actual financial advice
but just like patrick did there give you some patterns that can give you
a sense of where things are going uh go ahead jay i would love your thoughts
uh crazy numbers this morning yeah absolutely good morning guys thanks for
having me on i think you know this number probably shocked
everybody who you know in on january 11th we were at like a 90
probability of a march cut i think we were talking about that yesterday and
then prior to the fed meeting we were at 60
and then after that fed meeting was over we were at 37 and
after that meeting it was like i don't understand why
for march we were at 37 probability of a cut
with all the data that we have and you know the earnings
that we have had so far in the in the large cap at least and
i think the market could finally realize after this jobs report
i have to look at the cme futures for the rate probability the market could
finally realize that there's no march cut coming
and you know i think yesterday pal said he is going to
where there is a discussion and i'm sure that 60 minutes plans this stuff a week
in advance but you know i would be really
interested in seeing what he says you know over the weekend
um he's probably probably going to be talking about more about his personal
life and his career and how he dealt with the pandemic and less about
monetary policy but i'd be very curious to see if he talks
about this jobs report i mean what was most
concerning to me is you know the 10 the yield curve right the 10 years up 14
bibs futures the 30 years up 11 bibs the five
year is up 18 bibs that's you know it's good for that's
good for people who want to uh to lock in you know long-term uh risk
free yields for themselves but the three month is also up
to 540 so i mean the entire the entire curve
right from the from beginning to end is shifting up
and you know i think you hinted at this earlier you know there's
a whole swath of companies there's like there's there's a company yesterday
called um ocsl it's oak tree specialty lending
fund and if you look at their earnings call
you can do it yourself you don't need anyone's help
they had five accruals of companies that couldn't pay their debt
already right and they're lending it on average so far plus 650
which is roughly 11 to 12 percent so they have been lending it 11 to 12
to you know middle market um private companies
and everyone has been saying oh this is a golden age of private credit you know
you never see it to fall and you get a high rate i mean that's just make believe
right it even if we don't enter a recession
a lot of those companies can't pay 11 12 percent they're used to paying
you know four five six percent and the same thing goes for
the commercial real estate department you saw nycb you know they marked they
increased the commercial real estate reserves from 200 basis points to 800
basis points they went from 60 billion dollar charge
to a 500 million dollar reserve and you know the stock is down like 40 percent
oh you know uh when it opened and on top of that azora bank in japan
which has the biggest exposure to u.s real estate and floating rate
debt on the commercial side their stock was down almost limit down it was down
20 something percent um in japan two days ago and then last
night when it opened it was down another 18 percent
and it kind of bounced from there but you know a lot of the world is tied to
the u.s and there are a lot of foreign investors of u.s real estate
there are a lot of foreign sponsors of u.s real estate you know
we've been talking about for two years but now it's really coming to a head
and even though the losses aren't going to be anything like you know the
residential losses we saw in 08 like my bull case is three four is 300
billion losses that's like in a great scenario
and in a bad scenario it's you know it's you know above 500 billion of losses
so that's going to trickle through the system you know the small banks
lend to 35 percent of uh commercial projects and commercial
properties um it's going to matter and if rates
if you know rates were falling right for since october 27th since the treasury
qra when yellen finally realized like hey we
need to get this under control um rates tightened like 120 basis
points in a month it was the biggest tightening
and the biggest rally in the lean bit aggregate bond index since 1985
it was you know a 40 year 40 year uh rally
beat every other bond rally in that period of time and what we've seen now
is that you know yields have started to to
to jump after some of the compression with nycb
um you know the 10-year yield moving 15 bips in a day is you know
is a multiple standard deviation move on a
on a day like this so i think it's very interesting i think everyone's probably
looking at you know bond yields um remember that
most credit in the u.s is priced off if it's floating rate it's either priced
off sofa which is you know correlated to the fed
funds rate or it's based off a treasury yield
um so everything in in america when you when people are lending is based off
some sort of a some sort of a benchmark yield
and as it gets more expensive to borrow right companies are going to suffer even
if we don't have a recession
absolutely and and by the way just want to remind everybody
uh that uh you know we have a newsletter you can join the newsletter you can do
the telegram it should be up on the nest but sometimes
spaces doesn't work that well uh which is another problem but uh for
another day but i was gonna say jay's absolutely right there are
businesses that are gonna suffer regardless of whether we go into a
recession or not right now though i have to say
that what a crazy end to a wild week to begin with with the
fomc him saying there's not going to be really
any rate cuts to now us seeing these numbers today
to continuing uh craziness on tech earnings that i have to say
you know very few predicted that there were going to be
just so they were going to crush so hard
and to continually see that the crypto bros are wrong
which is funny i guess traditional finance is still
strong and alive and maybe maybe the system is working
i don't know i know it's hard to believe i did want to end
with one commentary around bricks because uh you know yesterday
saudi and around bricks in general uh because
something that my friend mario posted yesterday
about bricks uh made me think a little bit about how stupid
99 of the arguments around bricks are so one thing that he mentioned yesterday
is that with saudi's addition now bricks members by GDP
include china india russia brazil saudi ua
egypt south africa iran and ethiopia but GDP is not what fucking matters
what matters is the use of the currencies and what matters is how much
direct currency work is going to happen and i will remind you
that right now there are tankers that are sitting
uh uh outside uh there there are floating in the ocean because the indian
rupee was not being used in a transaction between two countries
and these countries don't know how to do this correctly
there is no bricks this is a sideshow the american economy is stronger
than ever the dollar will persist we are doing great this is not denial
this is not uh me american exceptionalism
this is just pure hard facts and i know it's going to be really hard
for people to accept this because if your entire personality
is around the death of american capitalism or around the loss of the
u.s dollar hegemony or if you're just obsessed with crypto
and want bitcoin to be the source or or any other currency to be
the the currency that's used around the world i am so sorry
but we're nowhere close to that and if we get to a future where you have to do
something like that that's like some mad max weird crazy
future that none of us want to live in so with that i will say have a wonderful
weekend please stop all your stupid dreams
around bricks and we will see you all first thing
monday 8 a.m eastern thank i thank follow everybody on stage
and please do take care of your family see ya