While we wait I'd like to go ahead and start with a story that's not yet getting
It centers around Sweden, but I think that it is going to
First of all, good morning to everybody
Second of all, we're waiting for Danish third of all. I doubt this story would be covered anyway
So in Sweden the financial watchdog there is
Investigating some of the country's largest institutional investors pension funds
Invested in a Swedish company that is now one of the largest
Real estate owners in all of Europe
And that obviously that residential portfolio
Was built with incredibly low interest rate carrying loans
You know, there's a a fear of missing out and be greed
And it seems according to financial authorities both in Sweden and the FSA
in the UK and broadly in Europe
That these pension funds and insurance companies in Sweden
Did this without going through the proper procedures?
and they seem to have based on their investments a lot of concentration in this risk and
It is obviously something because they are insurance companies and pension funds. This is something that's obviously
Systemically concerning to the Swedish financial authorities to the extent that there is a collapse of this company
I'll go ahead and get you in the name
In a sec, but in any event my expectation is that
In terms if if we if rates persist if refinancing is so difficult if real estate markets generally are frozen
Then we're gonna see more of this where
What are supposed to be generally
I'd say more cautious and risk-averse investors the name of the the the entity
The residential real estate investor is Heimstaden Bostad
B-O-S-T-A-D Heimstaden Bostad in any event. So
They're currently I'm you know, I'm guessing that slaps on the wrist
are forthcoming certainly for the heads of those pension companies and insurance companies to the extent that this devolves into
somewhat of a big loss and under capitalization
For pension funds and insurance companies in Sweden. It's obviously, you know, but by our standards
You know not a particularly large situation. Heimstaden Bostad has a total of three billion dollars
Of debt, but it's now rated triple B minus
And it is certainly, you know in the distressed category and again if if interest rates
Soften so that this this real estate investor can go ahead and refinance
There is probably going to be some fallout
Directly for the real estate company and then for its investors and in turn for the leadership of those
For those institutional investors. The only the bottom line is is that
We may have some dominoes in Europe and and other parts of the world that may start to feel a bit like
You know things kind of dropping particularly in the real estate market. That was my opening salvo
I see that Donish is is not yet up as a co-host or a speaker
But he's he's in the room
So we'll go ahead and wait a second or two to go ahead and get things started
But just you know food for thought for today
Incidentally Bitcoin has been taking a pounding since yesterday
You know, so has every risk asset and I guess we're gonna go ahead and get right into that this morning
You know we talked on this show as if the FOMC
In terms of we knew what was gonna happen and we we almost knew what the rhetoric was gonna be like
And it seems that the market was incredibly surprised based on where the market has gone now mind you
I think it's really important to keep in mind folks
That every trade that's placed in the market is not placed by a human being
Data driven models that just trade
How much of the market that is I don't know how much influence that has I don't know, but there's certainly
machines out there that are counting letters of words and comparing words and synonyms and
so on when it comes to announcements and pronouncements and
You know and then on top of that, you know trading on the basis of momentum as well
And so, you know, if you believe as I believe I think yesterday and to the extent that we go down today
Is an oversell based on the information that we already had yesterday, you know
I believe that the market sold off more than it should have
Based on everything that the market knew yesterday and so therefore there should be a rebound coming whether that comes
You know next week or whatnot
I don't know, but I think it was way well
I think I don't think there was anyone who was a human and thinking that was particularly shocked
To the level that the market sold off based on yesterday's activity, but here's Donish. Let's rock and roll
I will say that given where we are in the world with technology the fact that spaces still doesn't let me out
orderly process is unreal and
We you know, maybe Elon Musk should focus on on
technical product here on
On X but and I'm excited to hear from our team by how mean I am now
So I will I will stop there. This is like ridiculous. We're nine minutes in and I just got in this is freaking crazy
Spaces and X and they're awful awful product
Let's talk a little bit about yesterday's fed. Is anybody here surprised?
To David's point is anybody here surprised? I will say there were two I sent two tweets yesterday about this one
Powell looked confident. He had his purple tie on
He was he felt pretty you could tell he was feeling good about himself. His hair was put together
Very little sweat. He was an antiperspirant. You could tell that the Powell felt good about himself
He was like we're doing it. We're doing it, right?
We just need more data about data about data who called data yesterday, by the way
The video that I shared he literally used data like eight times in one sentence
Alright, so continues to be quote-unquote data driven continues to say that hey
We have some data showing that things are moving in the right direction. We need more data in the same direction
We don't need data to be better than it is right now
We just need it to be consistent to what it is right now, which was very interesting as a commentary
By the way, that kind of speaks to the thesis that maybe three percent might be the new target
But God, you know only God knows if that's where we end up
but that that's one part of it the second part of it though was the rate cuts and
David you're right what fool out there truly believed that rate cuts are gonna happen in March
Well, even today as of this morning when I was checking
45% according to Fed futures
45% of people still think there was gonna be a rate cut in March
So I'm very confused about who these 45% are they're clearly not the best and brightest
They're clearly absolute idiots
Is there anybody up here that wants to fight me on this and tell me that in March of this year?
We're gonna have break cuts
In fact, if you're listening right now, I would love I would adore for you to come up here and tell me your
Reasoning for why there will be rate cuts in March
All right. So if we don't have March look people just if people do believe there are rate cuts
After we can call an idiot. I don't think they're gonna take you on. I don't know man
I don't know some of these people do that after I talk shit about crypto
so I am interested to see if anybody if you are somebody that's listening that truly believes that after yesterday and
He straight-up said there will be no creating rate cuts in March that we will have rate cuts in March
I would love I would I implore you to come up on stage and share with us your thought process
But high likelihood like 99.99 percent unless there's some black swan event
Which could happen I guess, you know with a black swan because it's not expected
But you know, there could be some event that that draws out a rate cut but very highly unlikely
We're weren't there some guests like a last month
Maybe a month and a half ago in this space that we're saying rate cuts are inevitable. They're coming this month
They're gonna be here. Like there were some people that were quite sure about that. Am I wrong in remembering that?
Yeah, yeah, they just they won't show up for a little bit just because you know, they were clearly wrong
Unlike me who constantly says
Ridiculous things and then takes says, you know and Matt comes on here and I still let Matt on
You know, I know Matt was gonna say Donis you said ETF
Bitcoin ETF would not be approved. They already got approved. I was wrong. It's okay to be wrong, but that's part of the game
That's part of the fun, right? So the point here and by the way
I think I think Tesla is in deep trouble if for example
They come up with a new compensation package for Elon in the next couple of weeks and he gets his 25% voting rights
And everything gets figured out and Tesla goes to the moon. I will be wrong
I think Tesla won't figure his shit out because Elon is incredibly distracted. That's okay. I can be wrong, right?
I'm who the fuck wants to bet against Elon. So the point that I'm saying is it's okay
But just in to answer your question
There are people that have that came on our stages and said that we would hit the 2% target in 2023
They were 100% wrong. We've never seen them again
There are people that said that we would 100% have rate cuts by March
There will be no rate cuts by March
So I'm not just doing this to be happy about being right
I think the big question now is the way he said it again. He looks confident
He said unemployment is we don't need did you guys just hear he said we don't need high unemployment
We don't need unemployment to soften
Interesting. He said growth is great
Interesting. He said he said we just need the data to continue the way it's continuing and we will be in
It's a soft landing David. It's a soft landing. He sounded
But say the long tail of the curve you did bring up the long tail of the curve
But I am interested to hear your thoughts. I'm a buyer of this sell-off. I was a buyer yesterday
I'll be a buyer today. I think again not investment advice
I know we have to say that every day, but at the end of the day, I do believe
Again, I I want to hear Jay's take on this
But I do believe listen, I was at credit Suisse whenever a credit Suisse on the sell side
Whenever the market went the wrong way, right the way that nobody could explain right even the you know
Folks on TV or on the radio make up, you know reasons that make no sense, right?
There's so far a field in terms of reasoning. I
You know the folks on on the desk of credit Suisse was it's the machines now
That's also an excuse and also, you know something made up and like I said earlier
I don't know what the power of
algorithms machine-based trading
You know all that is but but it this is unexplored. I can't explain
Yesterday's sell-off and to the extent that it continues today to the level that it sold off
I just don't have an answer and in because of that, you know
I'm a fundamental guy at the end of the day in terms of my investing strategy
And so therefore I am a buyer in this market. I
Well, the sell-off is not was not a major sell for you
By any means right like five percent corrections historically going back 30 years
You're supposed to have five percent corrections twice a year and a two percent self isn't supposed isn't usually a big deal
It's actually strange that we don't have more
Volatility in that realized volatility was like in the single digits whether we're in a bull market or a bear market, you know
That's that's kind of what I don't understand and I think it's the you know, the financial leverage in the system
and you know the you know the use of of options and
You know that I think that confuses me more than anything else
But you know, frankly, they'll take you contrarian. So yeah, you have you have you have bigger problems, right? We have bigger problems today
But overall, you know if we think about what pal has done, you know
He made a one big mistake which was keeping rates low too long, but he's actually thread the needle pretty well
I mean if you compare him to all the other Fed
You know chairs, you know going back even prior to green spin, right? I think pal has actually fielded questions
Probably the most eloquently even though he comes off as Frank and sometimes he'll say well
We don't even know, you know what the neutral rate is and you'll be like, oh my god is the Fed clueless
But in reality the Fed is not clueless pal is just really honest
Do you think green span really knew what the neutral rate was?
Maybe you could tell you arrange or give you a couple but these guys don't have a crystal ball and neither
You know just like me and you don't have a crystal ball, but you know, the interesting thing about yesterday's meeting was that
You know, we entered the meeting
With a 60% probability of a March cut right in everybody every almost every single bank, you know outside of UBS
Who's a little bit, you know more conservative, but you know and a couple others
But almost every single major wire house major bank was expecting a March cut even Goldman
Like they actually changed their outlook for cut from March to May
just yesterday and if you look at the probability of a cut after
How spoke it fell to you know 37% now why it's not under Jay
Why it's not under 35% right and and why it's not under 10%
When we are one month away from the March meeting, you know that I think that is really what puzzles me and I think no
Nothing was out of the blue with yesterday's kind of minor sell-off and we're bouncing today in futures and then you know
We're up 60 bips and Russell. We're up 45 and nazi and we're up 27 and in
S&P, you know, one of their other reasons. I think we were already weak yesterday
Cuz you need you know, we were already weak going into the power meeting was obviously you had mega cap names like net like Google down
7% right so and we had consolidation in Apple Apple was down six days in a row
Which I think you know people probably notice in their accounts, but you know, nobody was really talking about so I
Do think it was more than just the meeting
I think we were already weak going into the print
But I actually frankly don't think that type of sell-off should be like an earth shattering
Sell-off I think it was a product of you know expectations now in the morning
You also had the New York Community Bank, which I think is very interesting
They increased the reserves from like 60 million to almost half a billion, you know
They on the commercial real estate office side
Their reserves went from like 200 basis points for reserves to 800 basis points of reserves now
Why is that happening? Well these well, they had to do that didn't they?
Because of the signature bank of acquisition exactly which there I was leading to even before they bought signature bank
They bought a bank called Flag Star Bank. So
NYCB is a very aggressive, you know
They had a goal growing to 100 billion of assets and they did in a very aggressive way
They weren't even done integrating flag star when you know through the FDIC they get this opportunity to bid for
Signature and as a result they just they just grew too fast
Right and you know their their deposits actually declined by about a billion eight, you know last quarter
they you know, they had to really sour real estate commercial real estate loans at you know, one issue in the multi-family loan space and
You know the market was just extrapolating that we would see issues at other banks and this banks a little bit different than other banks
I think we'll see we'll still see and we have been seeing actually some very small banks go go to
Essentially go into receivership and a lot of them aren't even publicly some of them aren't even publicly traded
But you know, I don't think that that's over and the commercial real estate wells are over
Although I will say I'm pretty close with the class a real estate market in New York in some areas are
Bottoming in some areas or not. Some areas are still free-falling
But going back full circle you had, you know a huge bid
For the long end of the Treasury curve, you know in the morning
then you had, you know condition continuation of tech sell-off in, you know into the afternoon and
You know, that's when he went to the Fed meeting and what the market was expecting was that pal would include like it in the last meeting
You know some sensitivity for failing banks right in his outlook for rates. He completely took out anything related to banks
So going into it everyone was like, oh he's gonna cut he's gonna cut he said, you know, get your zero DT
Get your futures get your this get your that and then he basically said, you know
We're balanced just like he always did which is what I thought he would say and
It doesn't mean that he's not gonna cut. I actually think that there's a high probability. He cuts in the second half of the year
It's it would be surprising to me if he did not because I had my view is that you know
So whether you know whether people believe it or not
You know, he is data dependent and as the data comes out so data comes really strong
He won't if the data comes in weaker. He will go ahead
I know I agree with you and I think that that's the point just to be clear my base case
unless the data says otherwise
But my base case for 2024 is there's no rate cuts. There might be rate cuts in early 2025
It's just because I don't think it's gonna slow fast enough
I don't think unemployment is gonna get softening up. In fact, he even said it now. It's an election year
I think there's a lot of other things at play. I've made that clear that I'm I'm not a hundred percent believer in BLS data
Or BS data, but Dwayne. I wanted to go to you. You had your hand up your thoughts on yesterday's meeting in Jay's comments
Well, yeah, I wanted to make a quick hot. Well, good morning everyone
I wanted to make a quick comment about, you know, the 35 to 40 percent
You know people who are anticipating a rate cut in March here
I at least from some of the conversations that I had people really got excited about the growth story and the overall GDP growth
and the overall strength of the economy, so I'm people were looking at it as if well, you know
Normally the set would keep rates high and persistently high until something breaks and then of course they would cut rates
So people are looking at the growth story and thinking that well
You know if there's so much growth in the if there's so much growth in the economy here that
Before something breaks that power would would make some cuts that so that you wouldn't inhibit growth
So I think that that's where that sentiment is coming from
So I mean within those comments him during the meeting, you know, he did say that growth isn't really in the picture
It's not a part of the said mandate
So he did clearly say that so we're going to see sentiment decrease in terms of the anticipation of a rate cut for March
I you know slightly here, but I think people are still going to at least on that side
They're still going to hold out hope what was interesting was the comments about labor. So at least from my impressions here
He was saying that they could you know, possibly thread the needle here and have a strong, you know
have a strong labor force and you know have
Growth on both sides here and then still be able to
Bring down inflation. He said that you know, he's looking at inflation as being in a sustainable decline here
So at least that's what I got from it that he thinks that he can thread the needle and have inflation come down
And then I'm perhaps have a cut
Maybe anticipated for later in a year
On one of the questions that he was asked he sort of echoed some of the things that some of our speakers and myself have
Been talking about which is if we continue to see
issues with goods deflation
Slow down right which is as he said, he's like look services
Disinflation has not really taken hold yet. Good's deflation is driving a significant amount of this overall
Disinflation. He also said that he doesn't care about how things are basketed
He just looked at the overall numbers in terms of his own personal goals and his own
The feds goals and so, you know, he did say hey look that could be something that those one of the questions was like
What gets in the way and he was like, well if goods deflation slows down and if we suddenly have goods
Reinflation or goods issues with goods deflation because of what's happening in the Red Sea or or oil then, you know
We might see this and it's a really good caveat
I will say that people are saying that hey, he's doing a great job. You said it to Jay
My only pushback is we're here because of the decisions he made and the Fed made
You know, we were here because of the stupid transitory comments
We wouldn't even be here had we gotten ahead of this and we hadn't spent a crazy amount of fiscal spending
It's not just the Fed. It's monetary and fiscal spending that got us here
But I do want to you know, call a spade a spade if somebody
Messes up something and then fixes it. You still have to say that they originally messed it up
Yeah, I just had a you know, I wanted to posit something to the group
I I too am bewildered how the CME Fed watch tool the futures
Rate cuts happening in March. I mean, I really don't see what these people are seeing to get there
But the question I wanted to pose to you all is what data
Do you think the market needs to see to actually be convinced?
There won't be any March rate cuts because that when that happens that is going to flip the major rethink
Right and whether or not we get them later in the year call it, you know
early second half of the year
The market's still gonna have to wrap its head around that, you know rates are longer than expected
You know, so what what data is it guys is it gonna be the the PMI report out today?
Tomorrow's employment report or do we need to see even more data closer to the Fed meeting?
I don't know. I kind of feel like this has to do with the BTF P
But I'll let others weigh in but guys I have to jump in with some breaking news people are watching this
So this could be impactful
Farmers in Europe are blocking EU headquarters right now
German farmers opposing cuts to fuel subsidies. Sorry, somebody's audio is on
Hot mic Chris. I think it's yours. Thank you
German farmers are opposed opposing cuts to fuel subsidies causing all this chaos and travel
French farmers rising costs EU policies and imports blocking highways
Belgian farmers Spanish farmers Dutch farmers each have many different reasons
For example, like Polish farmers are there because of trade disruptions because of the Ukraine war
Dutch farmers are there because of nitrogen pollution, but they have come together and they are literally you can see the video. They're
Rioting outside of EU headquarters right now. I'm not sure if it's gonna have any impact whatsoever
I don't know if they're boycotting or they you know, they have to eat too, right?
so that I don't think they're gonna suddenly reduce supply but
Fascinating to see remember remember the the saying
Inflation chaos breeds inflation and inflation breeds chaos. This is the the thing. This is the issue
And so I just want to you know
These are some structural things that are gonna start happening that people just will they'll be like, oh, why is this happening?
Well, suddenly if you can't keep your farm open if you can't manage
You know if you're used to subsidies to help you and those subsidies are now not covering the amount that you need
This is the kind of shit that happens people on the ground
Literally cannot survive. So this is the issue but I wanted to go David
I'll go to you and then we'll go back to the rest of the group. Oh, I
Wanted to come back to to something that is I just want to give my opinion
Not that it's consequential on the fact that I think Jay Powell is gonna go out as one of the great
In contrast to your point. I feel that people forget very easily
It will always be a stain on his reputation that he said transitory
Uh, but I do believe that he at this point from where he is in his career
I think he may very well go out as one of the great
Fed chairs of all time and frankly to go to jay's points earlier regarding other fed chairs
He's had a stroke of a lot of good luck. Jay Powell, right? I mean he's living in a world where
Far far far in a way the united states is the most solid strongest
Best growth story in the world
All things considered and so therefore, you know, I I don't think he's had as much peril as other fed chairs have but
The market's not going to care. I think the historians
Uh, this is going to go he's going to go down as one of the greats of all time
If not the greatest of all time
And I will push back with it
The the job is not over and many of us are worried that the job will not be over
As I said structural changes are happening
We are going from a zerp or zero interest rate economy
To a high interest rate economy and that transition will start breaking things and when it does they will go back and they will say
And I think most people will remember the bump not the way back down. I think most people remember yellen
And jerome powell being wrong
So wrong and part of it was covet part of it part of it was fiscal spending
But they did the wrong thing at the wrong time for political reasons
I think a lot of people will remember that people will look back at this time and they will say that's when things changed
It's two opinions. I want and it's good that the co-hosts are are are disagreeing on this
So so it seems balanced and is balanced paul. Go ahead. We'll go to you and then we'll go back to jay
I want to go back to what something matt was saying about uh,
You know some of the banks and the fact that it was out of
The thing that I look to there was something that uh, I think uh,
Barry sternlick said of starwood, uh eye connections yesterday or two days ago. He said basically there's 1.2 or one
Trillion dollars of losses in office real estate
and that can't be overlooked and I think
you know some of the view of
You know people expecting rate cuts. It's not that
They're they're they're expecting it's that they they're maybe wishing
Uh, because I think the real estate market, you know
office but other parts of the commercial real estate market
Some amount of lower rates for the refinance ability of their of their assets
The banks cannot take I'm not saying there's one trillion dollars of losses on bank balance sheets
But i'm just saying that there is this view that office real estate. I mean you're seeing it every day these
Real class a buildings that are literally 25 30 percent
Valuations of like 2016 2017 prices so
State you can't stay you ignore that for so long
And that's the thing that I think people are really kind of thinking about in the back of their mind is okay
What is the banking market? What does the u.s banking sector look like?
with these changes that are going to have these refinances or lack of refinances that people mail in in the keys or
You know have to put up more capital. It's a major kind of question and
I'm sure the fed is you know, I don't I didn't listen to the whole
Uh statement, but I I didn't hear that a lot of questions on that
Paul I gotta tell you one of the things that's that's incredibly important or interesting
Is that the corporate high yield and senior secured loan market?
in terms of capacity immediately being eaten up
And the real estate market is ice cold
And I think it's interesting that the market is being very discerning
In terms of the underlying assets and enterprise versus real estate
Because it is at this point. Although there's not a lot of deal flow. It's really a tale of two cities
I don't disagree with you by the way. I totally agree with you source third lip. I know what's going on
You know generally in manhand i'm sure jay is going to go ahead and weigh in on that
In a lot everyone's hoping by the way if they own an office building that it's going to get converted to residential
Which which can happen fast enough or you know profitably enough for people
I just wanted to point out that the corporate market
In terms of high yield and senior secured debt and maybe it's because there's so much private credit
Dry powder out there that needs to get put to work
Uh, but that stuff is happening versus the real estate market
You're saying corporate so just going back to the yeah
I was just going to say dave you're using corporate high yield opportunities, right? So that's
That's what's no there are no no no the corporate high yield opportunity the spreads are the lowest they've been in like two
Over two years. That's what that's what I was just about to say
So, I mean you guys touched on the commercial real estate issues. I highly encourage everyone on here
You can do it for free to read s.l. green's earnings transcript or to listen to their call
Um, and before that, you know to donish's comment, I mean let's talk about
You know every single uh treasury secretary and fed governor, you know, how many of them have actually historically when you look back
Are people excited about you know, even bernanke right who quote unquote saved us from the gfc?
You know now people are kind of questioning
He how he got us into this mess with all this qe in the first place
So, you know, I think that you know, people may remember pal and say hey, he said transitory
But you know i've heard you greenspin was worse
Um, but you know, it's tough to be a politician or a government official because you don't get paid much and everyone criticizes you
Um, so let's you know on the on the commercial real estate point
You know what i'll say is that if you go into s.l. green's earnings transcript and you actually read
Um, you will see and you know, I sent out like 150 page jll presentation, which
Um, I didn't fully agree with but there is no new office space
Being added to the supply to the supply of office and aggregate, you know being planned out through 2025
So, you know just like commodities just like in supply chains just like in almost every single topic we've we've covered
Um, you know in a commoditized industry
We you know supply is self-correcting. So, you know over time you are going to see, you know
construction just fall to zero, um for certain types of commercial property
And you know in places where there is a you know in new york
There's still like 40 million square feet of of retail office and office space right available
However in the class a space s.l. green was able to sell buildings
Pretty much, you know at close to 2019 values like you'll be surprised
but you know class a you know beautiful buildings with amenities and high ceilings and windows and good
Good plumbing and access to transportation are actually selling now
In places like san francisco l.a because of you know, the political problems and homelessness and you know
The fact that taxes are really high, you know, you're still going to have buildings that sell at 25 cents on the dollar
And that's what barry was was scared about
Um, but it's not everywhere in the world right in places like europe, you know capacity
Uh utilization at some of these buildings is like 98 percent, right? That's what barry was saying and in certain places in the u.s
Right people are going back to work
Uh, you know ibm has asked everyone to go back to work. It makes sense if you're a front office
So I do think that the u.s is one
It's a unique market because we still have so many people working from home
You do not see that in india or japan or europe
But the second thing is that you know
On the so that's the positive side of it on the negative side of it
You you will you do have banks, you know that own 35 of the of the first lien debt
regional banks of a lot of these
Properties and that's why you saw, you know near community bank tickets reserves up from 200 basis points to 800 basis points
Basically freak out, you know the entire bank market resulting in a bid for long term treasuries yesterday
And you know kre was approaching local, you know, you know
Eyes from last year and kre got walloped. It was down six percent yesterday. So
You know, I think the story is like you can't just
Like mainstream media likes to generalize things and in this this year, especially
Right. It's a stock pickers market and every theme you're looking at, you know
It has a silver lining right if it's commercial real estate parts of commercial real estate are actually going to recover and do do pretty well
And there's dry powder. There's like 2.9 trillion dollars of private equity dry powder
Some of it is allocated towards corporates. It's actually moving towards real estate because there's nothing to do in corporates
So like there are people who are going to buy some some of these higher quality
Properties and on and you will see distress you will see in my opinion like 700 billion of distress
I think berry being kind of dramatic 700 billion is like my worst case
Um, you know, but like three four of I think you'll see three four hundred billion of actual distress in my base case
Which you know compared to the total commercial real estate market?
Um is manageable and then on the other side of things
Um on the banking side, you know, we have too many banks in the first place, right having over 5000 banks
You know in a country like this doesn't really make a lot of sense with online banking
So I think you know over time you will see branch branch cannibalization branch closure closures. I read about them every day
And I think the only way you know that this is going to correct itself is you know with the free market
You know resulting in unprofitable banks closing over time and frankly, that's not a terrible thing
So you like to just you know stop there and you know
And see, you know if anyone else had a view on commercial real estate or was was noticing, you know
Different things in different geographies like one I gave it some positives
But on the negative side in texas actually saw a big multifamily property
Blow up. It's on my timeline
Um, and it was a class a multifamily property, right?
So we're talking about office and everyone's bearish in office
But in certain parts of the country like texas they've overbuilt multi as well. So, you know
It's a geog it's a geography thing and it's also, you know type of property thing
Absolutely christen. Were you gonna speak on commercial? Yeah, you know, we're talking about loans out on these empty
commercial buildings and also what happened yesterday with new york community, but
You had mentioned the btfp which they're going to stop making loans on march 11th
That's only six weeks away
And that's designed to give banks and creditors the liquidity they need so
It will be interesting to see and they're also raising interest rates on any new loans going forward
So that's going to play into all this as you were just talking about too
chris with the with the 5000 banks in existence
How many are going to be able to survive once they can stop getting these emergency loans?
And at another point there was just this kind of gives you an idea of
The distress that's happening overseas and then you kind of look and say will we see this here?
There was a swiss bank ceo who just stepped down
His bank had lost 678 million dollars
Because it had put these were loans that it gave to its top client, which was an austrian real estate company
And that is now in bankruptcy proceedings
Well, there's a japanese bank to support what you said christen just last night
um, that saw a 20 that that's where the stock fell 20 due to increases in loan loss reserves for
Us property lending that they did so I saw that. Yeah. Yeah, it's pretty interesting
It is and it all sort of ties together
I feel like you kind of watch what happens over in china and and all these different places and you say, okay. It's coming
Absolutely, so we've talked about the fed
We talked about real estate
I have to say that we have to the the day would not be complete without us talking about tech
Tech went to washington yesterday and they got
There was a ton of uh, a ton of pushback
It seemed very much directed primarily at tick tock tick tock was the easy prey
Uh, just like a touch of racism not like a crazy amount just like a touch
Just like a little little dabble of racism in the way that those questions were asked
Nothing wrong with the actual questions themselves, but just you know, tim cotton just
Maybe maybe just a little bit less would be good
Uh, just a little point to him. Uh, if people haven't seen the video
He spoke to the ceo of tick tock and uh, you know ceo of tick tock kept on saying that he was singaporean
And that he actually by the way, uh, his wife and his kids are actually american citizens
His wife and his kids are actually american citizens
He answered the question multiple times around
Having no relationship to the ccp. He was not part of the ccp. He's not chinese
He does not want to weigh in on world leaders
And again, I don't like tick tock people know I actually believe that there should be a ban on tick tock until a certain age
His own kids by the way, don't use tick tock which was fascinating
But to go after him and to keep trying to make him seem like well
I don't want to say that he was saying kind of look chinese, which is fucked up
But like he kind of acted like that's what he was saying
And I think that he was trying to connect him so directly to it
100% the chinese communist party has access to your data on tick tock. This is not libel
This is the truth actually by dance actually has employees in china
And their some of their leadership in china are are actually
members of the ccp and sit on ccp committees
They're involved with the ccp and they have access to your information on tick tock now
I don't know how important that information is
Uh, but you know, it really does matter when they're using it to manipulate young kids and their minds
There's no doubt about it
Literally yesterday there was a bunch of information around this new
Trend around leggings. They call them legging legs. If you guys don't know what it is and you have daughters or you have
Or you have family members, uh that suffer from these things. This is not a joke. They literally there's a current
Essentially like promoting anorexia trend that's going on on tick tock right now
And i've wonder if that trend exists in china
now culture is different what gets people's
Eyeballs are different but it is interesting how tick tock somehow only promotes the worst of us, right?
These algorithms are opaque. We there's no explainability behind them. So I am
Just to be clear. I don't have tick tock. I don't use tick tock
I think tick tock is the worst thing we should not have on them on our phones. So i'm very biased on this clearly
Maybe our congressmen should and women should be a little bit careful to try to not go go after people for
You know their race. It's just it's just like a little commentary on that. I wanted to bring that up
That was one part of it seems like it was essentially
No action lots of talk. Did anybody see anything at when when with uh
All these tech companies in washington that that really was worth anything. Uh, I wanted to get other people's. Did anybody else watch it?
Actually, that's a good question. Did anybody watch it? Anybody on stage? Did you watch it?
Or any of it. I just watched the transcript of that one particular exchange
I was hoping that senator cotton actually had some information he was trying to get at but the more it went on I was like
Ah, this is getting progressively more awkward
Awkward to your point. I thought maybe oh he actually knows he actually knows this guy is chinese and has a connection with the ccp
He's trying to get him on the stand to get him to perjure himself. I think but i'm not sure i'm not sure if that's what was
Um, it is weird though that it seems like every six months or so about every year
We need to bring all the tech companies in washington because the new senators and congresspeople want to meet them
I feel like that's what's going on here. I don't feel like there's any real substance
I feel that they just want to meet these tech people and have their like have their
Kind of their bout with them and then they get to go back and make tech and the congress people get to go back to wasting
Time and nothing got done
Absolutely. And honestly, I don't even know what the real solution is unless you
You know, we're a free market society people want to see things they should be able to
You know, I mean you can do more than ban them
I mean there are ways to I mean china them itself. I mean cotton didn't touch on any real
Data or any, you know anything that would enrage, you know, the public that voted him in
But in china if you look at their version of tick tock
They don't have I mean it's almost
Educational right they it's all focused on education and they're not they don't have you know
The self-harm videos that are being highlighted in the algorithm. It's not
Oh, let's avoid fair speech. It's dude your algorithm is targeting young women with anorexia
self-harm, you know, there's a
drug, you know paraphernalia not exactly drug usage they screen for certain things but like
They are basically trying to and you know, they're trying to
Take all this crap content and put it in the minds of people outside of their own country
But domestically they limit the numbers the number of hours of video game use which and we can't do
but that's tense, you know, that's why 10 cent trades like it does they the algorithm within
Tick tock is not allowed right for the malicious types of content that are affecting our youth
That content isn't even allowed to be to be distributed
And wait, wait, can I ask a question on that jay?
Do you mean yeah, there's actually a law preventing that or you're just saying the algorithm is actually different
So I actually I think it's actually it's actually both one
You know if you were to create that type of content you might get a knock on your door
But number two the algorithm is actually set up so you don't even see it and and that would be an easy fix
You know if you were under the age of if you're under the age of 13
You shouldn't even be able to see self-harm content, right? Like they're they're easy things you can you know
Cotton should have been thinking about this a lot more pragmatically. And yeah, I personally think we should ban tick tock
But that's my opinion. It's a free country
You know cotton completely wasted his time on air, you know
Making himself look foolish when he should have been proposing ways to control tick tock
So i've kind of i've kind of wondered and I don't know the answer to this
But is the do we know the algorithm is different or uh, and again, I don't have tick tock
I deleted it one of my friends in cyber security and um, they won't even let you in
Like government buildings with it certain government buildings. Uh, so I I don't obviously like it but
um, I I do wonder if this speaks more to our national priorities than the priorities of our individuals than it actually does an algorithm because
Um the algorithm and again, I don't know this to be true
That's why i'm asking but I could see the algorithm being exactly the same
But the reason it serves up more toxic content in our country
Is because that's some of the stuff our culture promotes
I could totally and and as you pointed out there are certain things over in china not saying it's right or wrong
But there are certain things over in china that are straight out illegal or frowned upon in society that aren't frowned upon here
Well, why don't we see those same things on instagram?
Exactly. Well because instagram is responsible and they're they don't have you know assisted suicide for teenagers playing on video
Um, so I think it comes to you know, a matter of respect for children of these other countries and running a business in a way
That is ethical. So so that's actually the main point jay's. Absolutely, right?
We would expect so for people that are not aware and again
I'm not doing this as a fear monger. I'm doing this as a doctor
Uh as somebody who has been seeing mental health issues rising in our country
Um, you know, there's a lot of data around social media and mental health
Uh, they they looked at certain apps. They have we have not had new data come out since tiktok
I think tiktok is severely handicapping parents and with their kids in terms of
Uh being able to help their kids, uh, because it's so addictive and it's so, uh easy to share
uh, you know 170 million people in america
Are active users of tiktok according to the leadership at yesterday
So 170 million, right? That means and we know that that skews young
That means pretty much every young person in america is on tiktok. They are promoting incredibly
Uh, anti-american sentiment, which is fine. Hey, look people have a right. We had that in the 70s
But you know that that can't be healthy for for a community and and they're promoting self-harm to what jay's saying
So for example the the data that tim cotton and others did not
Uh tom cotton and others did not bring up was around the fact that there's been actual evaluation and that's what uh was
Uh, there was a few people that were listening that mentioned this and I think jay is echoing this
There's actually data showing that there's more self-harm content on tiktok that there's more content around that that is that can be considered
Uh toxic on tiktok and yet that was not brought up. It was about china china china because that's what gets the sound bites
That's why we are all able to talk about them, right? And so, uh, china is the enemy
It's not just that china is the enemy
The social media companies have to have some guardrails and I think that's the issue
Uh, and we just have to have a broader conversation around okay
Should they have to provide explainability and open source their algorithms?
Like like x has to be fair x has done quote unquote open sourcing, but we don't have any of the learning parameters
So like we don't know how waiting is in in x we at least know how people are or what what?
What I mean by that is we know what variables matter on x but we don't know how much each variable is being weighted
We don't even know what the variables are on tiktok
Like what are they using to build these algorithms? What are the learning parameters? We literally don't know what the parameters are
There's something wrong here
Country's company that is used by pretty much every child in our country and we have no idea what they're using to build those algorithms
That should it's not about making people afraid
It's about like like reasonably waking people up that this is
An awful thing that we're dealing with
And if we see that utilization of this app is going up and mental health issues are going up
That's correlation not causation
But then you start seeing self-harm content being much higher on this app and you have to ask yourself
On the on tiktok and you have to ask yourself. Hey, is there a causation here?
And I think there needs to be more study on this there needs to be more evaluation
But yeah big missed opportunity. I thought that was a huge missed opportunity
Lastly, did we already talk david before you know when spaces wasn't working for me around fdx?
Just want to make sure that we touched on that. It's good news. We did not
After all of the craziness after all the ups and downs, you know
We laughed we cried and seems like fdx is going to give everybody their money back david. How do you feel?
Um with bitcoin at 17k remember frozen frozen in the bankruptcy docs
Yeah headlines are often especially when they're written by lawyers
Um, they are very misleading
Um in the bankruptcy context you'll find a company going bankrupt and having a two billion three billion dollar
You know dip financing facility and meanwhile it's a roll-up of you know
2.9 billion of pre-bankruptcy money plus just a hundred million dollars of new money. So I I i'm a lawyer
So i'm allowed to razz on them myself and i've probably written a bunch of those headlines in my time as well
Um, not not intentionally, but you try to make the biggest splash for your client as possible
At the end of the day. Yes, people are going to get their stuff back
First of all, it's going to take a heck of a long time
There's a lot of procedure to go through lawyers are going to make a ton more money between here and the finish line
And then the problem with the headline is maybe san bankman free gets some sympathy
Like oh if they're returning everything well, then everything was clearly there and so therefore
Investors creditors nobody lost out here
Why should san bankman free go to jail for the rest of his life at the end of the day?
Yeah, he might have lied. He might have done some stuff. That's
Unsavory, but at the end of the day nobody lost out. So I actually think the headline is is it doesn't serve the public very well
At all, but it serves the lawyers very well
It shows oh we can go ahead and essentially make everything out of nothing
It's going to be interesting to watch again for people that are not aware
That's how these spaces first got started. Actually, it was when fdx collapsed
Uh and people got on here and we had you know hundreds of thousands and this is how everything got started
So it takes us back kind of and look where you are now
Now you're an internationally recognized financial celebrity. Yeah, right. Uh, okay. All right
Well with that ridiculous comment, we will see you all tomorrow 8 a.m. Eastern. Thank you. Everybody that comes every day
We love you all. We'll see you tomorrow. Thanks