Projects
![]()
No projects found
Investors
New
DAO Treasuries
DATs
Lend / Borrow APRs
Chains
Categories
Spaces
#FinanceDaily: Walmart’s Earnings | Debt Ceiling | 🇨🇳 gets downgraded
Recorded: May 18, 2023 Duration: 1:32:51Space Recording
Short Summary
The transcript discusses various trends in the crypto and broader economic space, including the rise of meme coins like Pepe, the influence of political posturing on markets, and the ongoing innovation in crypto compared to the internet boom. It also highlights the shift towards onshoring and automation in the U.S. as a response to geopolitical and economic pressures.
Full Transcription
Hei, alle. Vi er bare starte. Giv oss en par minutter for å få alle på.
All right. Vi har, tror jeg, giv meg en sekund her.
Vi er fortfarande påstående på en del men vi kan ikke vente for länge siden Walmarts utgivninger kom ut.
Neely, jeg er sikker på at du er på en deep dive just nå.
Men vi så det to minutter tidigare. De har utgivet utgivninger.
Initiale tanker?
De har faktisk vært utgivet i omkring en uur.
The conference call starts right now, so we've had a chance to digest some of this.
They did. They reported their first quarter.
It was $1.47. I think estimates were around $1.30.
They beat on revenue.
It was a very good and clean quarter, kind of all around, and
It's very clear that they're taking market share. In fact, they call that out in their overall release as well. But what's really behind that, we think, are two things, grocery as well as health and wellness.
Så to major kategorier for dem.
Grocery overall represents probably about 60% av der total sales.
I think we think of them as kind of an everything store, and they are,
but really 60% of what they sell is grocery products.
Clearly with CPI and food inflationary prices still remaining pretty elevated, it's not a surprise that they're doing well both on a nominal as well as a real basis here.
Food inflation for them overall was up low double digits.
They reported up low double digits in groceries, so they are kind of passing through whatever they can down to their consumers.
you know,
totally losing it on their PNL.
But,
I gotta tell you,
Danish,
the one thing that was new to me this quarter,
I think you're going to be very interested in since you're a doctor,
Their health and wellness category accelerated.
It was up, I think, like low double digits last quarter, and now it's up high teens.
So that's a pretty decent acceleration.
And here's what's interesting.
They call out for the first time that they are seeing an increase in script counts.
So historically, they've been doing better because they've had a higher mix of like branded versus generic drugs or drugs.
immunizations
or just branded drug inflation,
but they actually called out for the first
time increased script counts.
So that to me is also
a sign that people are looking for
value, and they're like, okay, it's not just
my grocery, I'm now bringing all of my prescriptions
over here. That's my take.
Well, to be fair, a lot of that is also
driven by specialty pharmacy, so
I wanted to kind of walk through
Walmart's healthcare strategy,
since that is something that
And I want to call out a disclaimer that technically Walmart could be considered a competitor of my startup.
And so I wanted to call that out before I make any comments.
Okay, so one of the big strategies that Walmart doubled down on in healthcare,
and it's going to be a large part of their movement, their approach moving forward.
What is the one industry that everyone knows to be recession-proof?
Healthcare. Healthcare is the most recession-proof industry, people would say.
Because if you get sick, you don't give a shit if there's a recession out there.
Alright, so that's why all of these retailers across the board realized that products were artificially inflated during the pandemic.
and that they had to find a service revenue source,
and especially one that was recession-proof.
So this was part of all of their strategies.
There's a reason why CVS acquired Oak Street Health,
which works with Medicare Advantage.
There's a reason why...
we're seeing Walgreens get deeper and deeper with VillageMD
to spend billions and billions of dollars
building essentially the Taco Bell version of healthcare,
which is how every gas station has a Taco Bell at it.
Just like that, every Walgreens has a VillageMD at it.
and they see that driving multiple sources of revenue.
One is services revenue
from these value-based contracts
where you get paid per person instead of per visit.
And then the second revenue
is exactly what you're talking about, Nealey.
And there's a lot of,
issues with this i'll walk through what that is but one of the biggest issues with this is sort of
the corporate practice of medicine there's a broader question around hey if the same company
that owns the pharmacy is the one that's making the prescribing is that a good thing for society
It depends on where you stand on these things, and I don't want to overspeak on this because there's a lot of companies doing this, but think about what that means.
So you go to the Taco Bell of healthcare, you walk in, and by the way, when they make a prescription, you can go pick it up in the drive-thru.
I mean, think about how nuts this is in terms of healthcare. So all of them are doing this. Walmart specifically is...
is trying to do everyday low prices for healthcare,
which I think is fascinating.
So essentially saying, hey, look, we have,
we are, as many people know,
Walmarts and a lot of communities
where there are healthcare deserts, right?
And so they brought on Marcus Osborne
and then Cheryl Peggis,
by the way, both of whom ended up leaving.
Both of them were very well-known leaders.
Both of them ended up leaving
to start with their own employees, right?
So, when you think about Walmart's strategy, Walmart is the largest employer in the country, which means that if you are going to build a healthcare system around those employers, you have a very captive audience that you can test things on.
So they tested their clinic model, and then they acquired a company called MeMD, which is a telehealth company, and they tried to put it all together to execute on that.
So...
I will say that across the board,
people don't see Walmart as a healthcare company,
and I don't know if the concept of everyday low prices
is attractive for people when they're thinking about,
you know, their healthcare needs.
I think a lot of people don't want
the discount option for when you're worried about cancer, right?
So there's, but there are other things,
like let's say you have the flu,
or you want to go to an urgent care,
maybe you can see Walmart as an option.
But Walmart tried a couple of different strategies.
The strategy that is accelerating their revenue,
and I have not read the report yet,
so I will be reading the report about the healthcare side of things,
has been this concept of
the,
you know, going to employers and trying to convince them to offer Walmart as a benefit for their employees,
so the enterprise side of things, and then the urgent care side of things, the retail side of things,
where they have so many people walking in and out of Walmart, it's their captive audience.
If they've got the flu, they can come in and get a quick flu test or a COVID test or, you know, and so on.
What they haven't been able to do is, you know...
in my opinion, and again coming very closely from this,
is change the perspective of who Walmart is in healthcare.
And so I do want to say that Walmart's healthcare strategy
has not gone exactly to plan.
Don't let the top lines fool you.
They literally have had changes in leadership there
three times in the last five years.
And these are like not small people. Marcus Osborne is one of the most well-known people in healthcare, and he left. So it's not been a good experience for them. And it's not surprising, right? It's not surprising at all to me.
But yeah, I did a pretty good job.
Så, om det kommer til å finne ut en kompani som kan trodde på det, med all respekt, Dr. Danish, det kan være Walmart, ikke sant?
Jeg er helt sann.
Det er fint. Vi kan ha vår egen lille spesie om det.
Men jeg tror, vi går tilbake til, hva er dette som sier om ekonomin? Hva er dette som sier om konsumenter?
Det som jeg ser i dette, er at folk er nødt til å finne...
ten dollar and twenty dollar bills
in their back pockets
when it comes to their overall consumer budget.
They are trying to find value
in stretching their existing and limited household budget
as costs to live remain elevated,
regardless of what the CPI percentage rate is.
We're still well above in many categories
where we were pre-pandemic on an absolute basis.
And that's what they're doing.
They're executing on the cost and the price side
as it relates to market share.
But it's a very valid...
I'm sure we could have a wonderful space
talking about the future of healthcare,
but this is around the consumer economy.
I think it is important, though,
from an economy perspective to discuss this.
And luckily, I run the space,
so I can run how the space runs.
But I was going to say that,
one thing I was going to say is
retailers have tried for the last 10 years and failed.
Amazon started AmazonCare.
Have you heard of Amazon Care recently?
They died. They closed it.
It's over.
So if we think that retailers,
Walgreens, by the way,
was behind the
was the ones that made the beautiful decision to believe in Elizabeth Holmes
and ultimately helped fund most of Theranos.
So, Neely, while I agree with you that retailers have an opportunity,
they can't get out of their way because they keep thinking of a patient as a consumer
and they forget that healthcare is an inelastic good.
And so, you know, again...
I wanted to push on this because we're going to hear over and over in these meetings,
because everybody realizes that a recession is coming,
we're going to hear that, oh, we're going into healthcare,
because healthcare is recession-proof,
and I'm telling all of our audience to listen that this is not financial advice,
but don't let them fool you.
Healthcare is not something that anybody can just do.
Not even the greatest retailers.
Healthcare...
Patients are not consumers.
The consumerism of healthcare has failed for the last 15 years.
And, you know, while I can't predict the future,
you know, a past performance does not always predict the future.
I'm telling you...
They're not consumers, having taken care of thousands of patients.
And so, Nili, I just wanted to double click on that,
because we're going to see, actually, all the retailers touch on their healthcare side,
and what they're hinting at is, like, don't worry about the recession.
We have this other service revenue, and I wanted to make sure that we addressed that.
Nili, I'll let you respond to that, because I do want to make sure that we get
Det blir svært å forklare en doktor som har behandlat hundre eller tusen patienter.
Men jeg er en konsument av sjøvård,
og jeg vil si at en ting som jeg tror at sjøvårdindustrien prøver å forklare
er at det er en liminal område av konsumentdirektiv sjøvård,
i den at vi nå har en tredje av våre sjøvårdplanser,
som er højt deduktive planer,
i den første, la oss si 2-3 tusen, 6 tusen dollar,
are spent by the consumer and out of their pocket.
It is entirely plausible and possible
that what the healthcare industry needs to better understand
how to capture and captivate
is how do I make my experience lovely, easy,
and understandable and transparent
As the consumer actually spends the first, call it $2,000 to $6,000 out of their pocket.
And then there's the billing side on the other side of it.
But, you know, so much of healthcare is coming directly out of people's cash and dollars because of these high deductible healthcare plans.
And that is something I do believe is an opportunity for the healthcare industry to captivate.
Det har vært fascinerende på den nye høgdekommende helseplanen.
Det som de ikke vet, kanskje, at Neely vet, er at vi har sett en bevegelse mot mer tilgjengelighet for patienter
for deres sjøløse beslutninger, og så har de vært prøvd å forbedre patienter til konsumere.
Neely, hva tror du data viser på nødvendige høgdekommende helseplaner?
Er patienter kommende konsumere?
Det er en ledig spørsmål, så du vet svaret.
Data viser viskøst at de ikke var konsumere, ikke sant? Vi vet dette.
Healthcare costs have gone up with high deductible health plans, right, Nealey?
And healthcare costs are directed by CMS, which has nothing to do.
High deductible health plans.
I can't wait for us to have this space.
Donish, let's do this.
Let's not do it this morning, but let's do this.
Okay, I care deeply about this category as well
from a consumer economics perspective.
Perfect, yeah, because the problem here is that
everybody that looks at this, they forget that
there's a lot of weird dynamics from a behavior perspective
where patients actually think that the quality of care is higher
when things are more expensive,
which is fascinating in terms of a mental model.
And then the second part is that people also have...
significant loyalty to their provider, even though they hate their provider, which is also interesting.
There's like a lot of behavioral economics here, but we'll move on for everybody else's sake.
But don't buy into the retail.
That's pretty standard in a lot of industries.
You pay more, people think they're getting a better product.
That's a lot of research by, I think it's Francesca Gino out of the Harvard Business School.
Because, you know, what's happening in healthcare, and I'll stop after this and we'll move forward,
is that everybody's looking for a savior in healthcare.
It's so bad.
As an industry, to Nili's point, the experience is so bad.
Do you know what the net promoter score,
which is a sign of experience in healthcare, is?
Like, 38.
It's like worse than going to the DMV.
Like, people absolutely hate healthcare.
So everybody's looking for a savior.
And some people are looking at the consumer for the savior.
The consumers have asymmetric information.
They actually don't know what's going on.
When your doctor tells you you have cancer, you're not thinking,
oh, I wonder if I should use this drug or that drug.
You're like, doc, please save me from my cancer.
If somebody...
So are you predicting then that Cost Plus with Mark Cuban is not going to do so?
No, no, I think it's going to do well for people that have chronic diseases.
Right? Once you've gotten the medication, you don't care where that medication comes from.
But when it comes to services, who your doctor is, people will be very specific on that.
That's my point, is that people don't give a shit about products.
They care about services and healthcare. That was the main point.
So, all right, awesome. We're going to move forward.
But any other insights about the general economy, Nealey?
I just wanted to make sure that we did touch on that.
I know that they mentioned that their clothing and clothing,
What was the other one? There was clothing went down.
Yeah, their general merchandise category is down mid-single digits, which is consistent with what we've been seeing over the retail sales data.
You know, they're a big component of that category.
So it's not a big surprise to see that by the time they were reporting it.
It would be categories like apparel.
Home was called out on the negative side as well,
which again has been a theme that we've been seeing across the board.
Home is a category.
The home goods division of TJX, even though TJ Maxx had a great result,
their home goods division did very poorly.
And then electronics also did it poorly.
We've seen these things in retail sales categories.
What did perform well in general merchandise, though, was automotive.
as well as some seasonal categories.
Seasonal is a very broad term, so that can mean a lot of things.
But automotive is fascinating, right?
Because we've definitely been seeing reports about how people are keeping their cars longer
because of the costs, right, to cars.
And so self-maintenance is a category.
And they couldn't get cars. People couldn't get cars.
Exactly.
Like their lots were empty across the entire country for long periods of time.
So they just were pouring tons of effort into their current vehicles to keep them going.
And then when the cars did come back,
they were obscenely high.
You got it, Justin.
One question I have, Nealey, is
what indications, does this continue the theme
that the consumer is potentially getting weaker
in terms of consumer confidence, consumer behavior?
They're going to stop.
spending as much money, you know, is that theme continuing in your opinion?
Yeah, I think so. I think a lot of people are like, hey, I mean,
Caleb and I were going back and forth a little bit on Twitter about this.
Like, hey, where's, you know, where's the slowdown in consumer?
Well, my view is when Walmart does well because of grocery market share shift.
I mean, just think about what that means, right?
Det betyr at det er folk som allerede har kjærlighet mot hverandre i votningstidene,
som nå kjærligheter sammen, bare for å få kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kjærlighet mot kj
And it's not, so it's not just inflation that's driving it.
It's in their customer transaction counts were up 2.9%, you know,
so it's very clear that they're taking some share and it's because of
grocery. I don't necessarily view that as a, uh,
ok, vi er fint, konsumeren er fint.
Vi hadde kategorier som Boot Barn er underperforming,
Home Depot talte om underperforming,
Targets General Merchandise også gjorde dårlig,
de er bare pågående på fôd og høllomål.
Det er de generelle kategorierne som er der
de diskretionerende utbyggandet er,
det fint å ha vs. det nødvendig å ha,
og det er det som fortsatt underperformer.
Vi tror ikke konsumeren er ut av skjønnen.
So, Caleb or Samantha or anybody else, you know, did you guys get a different read from the earnings? I know that they raised their full year guidance, and there have been talks, like Neely was saying, online about, hey, you know, I thought the consumer was weak, what's going on? Caleb, do you think, yeah, go ahead.
Yeah, you know, I mean, I did that tweet, not facetiously this morning, but, you know, I think we have seen a lot of negative news around retail in general.
And I think...
If anything, and look, I totally agree with what Neely said on the call right now,
and with the comment that she made under my post,
that the fact that Walmart is doing so well isn't necessarily a good sign,
because it really highlights the stress that the US consumer is facing within the economy right now.
So I completely understand that 100%.
And so that's my kind of perspective on things as well.
I think...
What this does is highlight the difference between consumer discretionary and consumer staples.
Right?
So, when we have companies like Target and Home Depot reporting, which, you know, didn't have great numbers by any sense of the imagination, those are consumer discretionary stocks.
So, people are going to shop there for things that they don't need, but that they want.
Right?
Når vi ser kontraktingspending i disse områdena, er det ikke nødvendigvis en god søndag.
Men når vi ser en utstyrning, eller styrke eller stor utstyrning i konsumerskapelser,
er dette indikativt for konsumerskapelser som spender på ting som de bare trenger,
ikke nødvendigvis det de ønsker.
Neely gjør en fin poeng om kjøkkenstor-spending.
Vi har ikke hatt Costco-erninger enda, men jeg tror
That will also be very indicative. I just did kind of like a full write-up on Costco recently on my newsletter.
And, I mean, first of all, it's a great stock in the first place.
But even just kind of from like this kind of fundamental standpoint about consumption trends in general,
Costco is interesting because it really kind of toes the line between
being a consumer discretionary, but it's much more so of a consumer staples kind of company,
which relative to even something like Walmart is perhaps even a little bit more recession proof,
just because during a recession or a slowdown in consumption trends,
we're going to see the U.S. consumer move towards value as much as possible, buying in bulk, etc., etc.,
Um, so, look, I think, uh, first of all, there's just been a lot of negative sentiment around, uh,
retail and the US consumer.
I think a lot of those concerns and that sentiment has been deservedly so,
but I also think it's been a little bit overhyped.
And so I think that, are there red flags? Of course, 100%.
Is everything crashing right before our eyes right now?
No, I don't think so.
But I think we could certainly be kind of on a path towards that trajectory.
So still keeping an eye out for further deterioration,
but I'm not ready to call it quits yet.
Dere folk virke, og dette er en æstig spørsmål, Caleb,
Dere folk virke kjøpe på Costco når budgetet blir tøft?
Fordi det krever mye oppfart investering,
og folk har ikke mye kass på handet når de kjøper i bulk.
So like per unit cost
Yeah it's way cheaper
But the up front hit is a lot higher
So I am curious do we see a
Surge in sales at Costco
With recessions or do people
Go to Walmart you know everyday low
Prices right? Yeah so I
Wouldn't say that they see a surge in sales
During a
Right? It's like, with Costco and any of like Dollar General or any of like Dollar Tree, for example, which are other publicly traded stocks, we see less of a decline in spending in those areas, right? So it isn't necessarily an expansion in consumer trends over time.
in those pockets of consumer staples,
it's just simply that they experience a muted decline
relative to something like a target.
So that's kind of the key here.
It doesn't mean that they're...
Does that make sense?
Yeah, so you're basically...
Again, to Dionysus' point, not financial advice,
but you're basically saying that they're sticky.
They do a really good job maintaining customers
through recessions and through troubled waters, basically.
Korrekt.
Og Costco har utrolig høye retensionsrate på deres medlemsmodell.
Særlig fordi du er investerende med de medlemsmodellene, ikke sant?
Ja, du er absolutt rett, Caleb.
Men, du vet,
jeg tar en spørsmål derifrån,
og vil anvende kommentarer på siden av.
Den spørsmålen som jeg tar,
vil du gå til en Walmart doktor for din kancertreatment?
Få gudstjent å svara på det.
Jeg vil gudstjente høre fra folk.
Just the framing of that is amazingly epic.
Just the framing is hilarious.
Yeah, sorry.
Just because, you know, healthcare is healthcare.
So I thought I'd put that in there.
And again, to be fair,
the traditional healthcare system sucks too.
So there's no doubt about both being awful.
It's just which one is more awful, I guess, is my question.
And so, you know, I wanted to move forward from that.
And again...
I'm gonna make a prediction.
It was funny,
Caleb kind of talked about Target,
and I remember that I used to call it,
you know, me and my friends used to call it Tarjay.
I'm sure everybody else did too.
And, you know, Target is like the nicer grocery store.
I do wonder if they're gonna hire McKinsey,
and McKinsey's gonna come in and say,
hey, you guys should acquire,
a healthcare company so you can get more services revenue,
since all of them tried to do that, Walmart and others.
And so that's my prediction of the day, not financial advice,
that in the next 12 months, Target will acquire a healthcare company.
We will see, but that is my big prediction.
Are you as sure about that as I was about Twitter acquiring Call-In?
Nei, jeg kjente at du var feil.
Jeg kan være feil, men du vet hva, Justin?
Du må bare være rett på
en av hundre forventninger,
og så blir folk veldig eksited.
Og jeg vil bare sikre at i dag
vi får vår...
We get our sponsors done, and that way I don't have to worry about it,
and Romeo on the back end will stop bothering me.
So again, comments on the bottom right.
IBC incubates and accelerates AI and Web3 companies,
partnering with VCs and funds to work with their portfolio companies
in return for equity and zero cash.
If interested, DM Mario and his team.
They're also doing Shark Tank-style pitches across all platforms,
different industries, any startup or portfolio companies of the VCs that are listening, or
people that have invested, please feel free to hit up Mario.
I will say that I have been seeing a lot of Pepe action, and I will tell you very quickly,
this is not financial advice, but please do not put your money in meme coins right before
a fucking recession.
Jesus Christ.
People are incredible.
Yeah.
I love, and that was a special shout out to Joa, who has now become a Pepe stan.
So really, really, it was an audience of one for that comment.
But, you know, wanted to continue to move forward.
Sorry, Scott, I don't know what your thoughts are, but I don't know if you're a big Pepe fan.
I despise Pepe, so we're in the same camp.
I don't know.
I believe people have the right to trade and invest in, quote, invest in whatever they want, but they also can do that with lottery tickets and casino chips, and at the craps table you get free drinks, which is a lot better than just losing your money and pouring home.
I mean, people invested in Beanie Babies, and you know, that worked out, oh wait, it didn't work out, never mind.
By the way, Alibaba did a kickback.
Yeah, it was speculated on Beanie Babies.
Alibaba data kom ut før, vi har ikke berikt om det tidigare, men det kom ut i et tag.
Alibaba-revenuen kom ut 2% år på år, til 208,2 biljon kinesiske yuan, som er 29,6 biljon i første kvartal.
But what's interesting is, as many people know, the Chinese government coerced them to break into six different units. Let's not talk too much about that before I start getting hate mail from Chinese nationals, but the craziness. This is the first full quarter in which the company reflects China's reopening, and
We're going to talk a little bit about this at the end.
I want to make sure that we give ourselves enough time about Nomura's report on China,
N-O-M-U-R-A, for people that are going to look it up and want to be educated on it.
They put out a report where they downgraded the Chinese economy.
And just as a reminder for my friends, when Silicon Valley Bank was going down,
everybody was talking bricks, bricks, bricks.
And what happened to BRICS is going to be my...
You know, when I think of 2023, one of the commentary I'm going to think about
is how everybody thought that, you know, China was going to become the reserve currency.
Oh, Joa came up just to talk about Pepe.
If you shill Pepe, I will take you down.
So, Joa, know that before you start shilling it, but go ahead.
Yeah, I'm not... Look, I'm not going to shill it.
There...
If you classify it as a meme coin, 99.99999% of meme coins are scams, right?
So, and I think most people up here have been on these panels, consider me a smart person, you know, or somewhat intelligent, let's say.
Just look in, just...
I look at it as their growing community.
There is no figurehead that will dump their coins on you.
People believe in it, and I look at it like a trading card.
Like, people believe that a piece of cardboard with ink that has Iverson on it
is worth less than one that has Michael Jordan on it.
That's all it is.
Diamonds, for example, people buy diamonds and think it has value.
The reality is they're actually abundant, and the beers hold...
the most, and they have a huge vault,
if they wanted to dump on people, they could.
Right?
Unlike what they're trying to do with Pepe.
I believe the community is growing, I believe that they're
that they keep telling people
to take profits, they're not
dumping on people, and that's the only reason why I like it.
I like anything that's a
movement for change
to, hey, we'd rather
have this and get people to believe in
this, versus believing in
something else. That's all they're doing.
So, you know, they kind of did convert me.
I spent eight hours actually looking into what they're doing,
why so many people believe.
Just like, you know, when...
What's his name? Jordan.
Jordan Peterson came up. I'm like,
why is he attracting so many 18-year-olds
to his conferences?
And I looked into it, because I didn't get it at first.
And that's exactly what happened here.
I've never bought a meme coin.
First time I ever bought one. I put very
little in. It's money I
can lose.
I do think they have a huge fire in their belly, and they're growing, and they kind of did something different from the norm.
That's the only reason why I'm there.
I will protect my listeners.
Please, please, unless you literally have money that you want to throw away into a ridiculous quote-unquote community, please.
A community...
Joe, I'm going to say this.
I second what you're saying, Danish.
No, no, but hold on.
Communities can exist without one portion of people
making money on another portion of people.
That is not a community.
That is a...
That is not a fucking community, sorry.
The community only exists until the price goes down, and so it's a thin veil of community pretending that they care about anything but price going up.
I've known Joe literally personally for almost 30 years now.
Since we were like 16 years old, I've known Joe, so...
Ja, så, og jeg har viss
So I understand the idea of the scarce asset, but that doesn't make much sense.
And as for most meme coins, 99.9% being scams, I mean, in my view, and once again, I fully support everyone's right to invest in whatever they want to trade these things, but it's just a scam that made it.
for now yeah right i mean i think it would be a hundred percent and then some of them get big
enough to not be as big of scams anymore yeah i think i think you brought up a good point when
the price goes down a lot that's when it's going to be tested just like bitcoin i i mean i bought
it back at 400 and then it went down to like 30 bucks and i kept holding because i believed it
if that happens then you have something if that doesn't happen and it has not been tested yet
then it won't.
Then it'll die like most meme coins do.
From what I'm seeing, I think they're going to hold on,
but we'll see.
I'm just...
Go ahead, Danish.
Nei, Alex skulle få sista ordet på det, fordi meme-kåpen, for en viss måte, det er det ene de gjør bra, de tar over fucking konversationer.
Fordi det er bare en ideologisk problem, hvor du enten tror på det eller du tror det. Det er galet. Alex, jeg vil få sista ordet på det.
Gå for det, Justin.
and they did like a multi-level marketing,
kind of like a Ponzi scheme type of thing.
It's called Winners Marketing,
and they were there every week.
And what was really interesting is they focused
on that very idea of community to build this thing
and get all these people to pour in all this money,
and they would have this little inner circle
of guys in suits at the entrance of,
They would all meet together at the beginning, and they would tell people, like, if you rise up through the ranks, you can be a part of this inner circle.
And all these people were walking by, and it was people that, as I heard these conversations, were there for community.
Like, they were paying a lot of their own money. They were losing all that money to be a part of this group.
So I thought that was an interesting group dynamic of this whole, I mean, I agree with the word crypto scam, so...
Alex, go ahead. Last word.
I'm just curious
if 99% are scams, what the
1% is that isn't a scam, because I haven't
seen it yet.
That's specific to meme coins.
That cannot
be translated to crypto in general.
There's thousands of...
Yeah.
Because I'm going to say, I mean, there's hundreds of companies in crypto with some of the most brilliant entrepreneurs and technologists that you've ever met who are literally trying to build things.
Whether they succeed or not, I can't speak to the fact.
Much like in the internet boom, people love to...
å forstå krypto på 90-tallet, i fornøyd 2000-tallet på internett,
er at det er en dårlig ting.
Jeg tror det er en favoritabel forståelse,
fordi alle som forstår det,
det er faktisk legitimelt prøver,
det forstår ballet,
og du får Amazon, Google og Meta,
de største fyrkene i verden,
som kommer ut av det,
som jeg tror kommer ut,
men vi prøver om 10 eller mindre.
Og til ditt punkt,
for den avgjørende investeraren,
å kjøpe de 10 ut av nå,
kanskje 100 000 kroner,
er effektivt umulig.
Eftersom du er rett, i det kortvarige termet,
du blir sannolikt feil i det langvarige termet.
I langvarig termet, ingen av de her kommer til å holde deres kvalitet
i kurset av, la oss si, en kvalitet i timelineen.
Eftersom token kan skade på en kompani, kan protokollet succedere.
so it's not exactly the same as stock right i mean for example you can look at ripple and xrp ripple
could continue on as a company for uh years to come making billions of dollars and the xrp token
could go to zero and neither of those things would be in conflict yeah talking about that's why i
come that's why i compared it to trading cards and diamonds and not currency or you know stocks
Yeah, but that's what people said about PFPs and NFTs, and, you know, outside of Mario, I don't see those anymore.
So, you know, I think that that has been clearly seen, that it doesn't, it's not going to work.
This whole, like, digital trading cards bullshit is, like, is useless.
All right, anyways.
I just don't, yeah, go ahead, please.
Go ahead. No, Scott, you can retort if you want.
No, I wasn't going to retort. I was just going to say that, you know, you can buy an American Express black card and spend your $10,000 a year and you wouldn't want your black card to go to zero or remain a part of that community.
Or for your golf club membership to all of a sudden be worth nothing because it was a volatile asset.
So the notion that you need a volatile asset for the community is inherently wrong because that just means you're there for the price pump.
Yeah, and even if it turns out to be right, like, do you really want that to be right, honestly?
Alright, so let's keep going. I want to make sure, so going back to infrastructure commentary, Alibaba actually announced today that it plans to spin off its cloud division.
I have a feeling I know why. Can I put my tinfoil hat on for a second? I think this has to do with the Chinese government.
Because the data needs to be controlled on the sovereign cloud.
We can talk about this separately, but that's actually what's going on, in my opinion.
They did not announce that today.
I'm just saying that they are spinning it off as a separate publicly traded company.
And as a reminder, the e-commerce titan...
miss revenue expectations.
They're taking concrete steps towards unlocking value.
These are the words from Daniel Zhang, the CEO.
Taking concrete steps towards unlocking value from our businesses
and are pleased to announce a full spin-off of the cloud intelligence group
by a stock dividend and intention for it to become an independent publicly listed company.
For people that are not aware, China has a sovereign cloud,
which means that they have access to data that nobody else does.
Everybody that's using the internet has to build that infrastructure,
or is built on infrastructure that's on the sovereign cloud.
So, you know...
Laet's say what the good thing about it is, they have access to a lot of information that today is fragmented across multiple different units.
The bad thing is they know everything you do in China.
So, you know, and that, it depends on where you stand ideologically.
I can't imagine anyone that would want the government to know exactly what you're doing on all of your platforms.
uh but you know if you're if you're into that then you know that that's your own thing
but that that this cloud division is also important
because the cloud wars are accelerating we've seen google cloud and we've seen azure where
Microsoft, Amazon, AWS, Alibaba,
will double, triple, quadruple down on it.
I have a feeling they will do what they have done in other instances,
where they will be the discount option, which is smart.
There is a lot of need. Cloud expenses have skyrocketed.
I think as AI continues to accelerate,
we are going to see cloud being a very exciting area.
Any other comments on Alibaba before we move on?
Because we're going to talk about China separately as well.
And the Nomura, N-O-M-U-R-A, Nomura report,
very well respected analyst that did a pretty deep dive on the reopening,
how it's sputtered, and why people are, why they think that the GDP is going to miss.
Any comments on Alibaba before we move on?
If not, we're going to continue down.
Debt ceiling, big updates.
So, the teams met yesterday again.
The two sides met yesterday again.
It sounds like...
Again, this is my opinion, and I agree with, by the way, Wells Fargo now,
which makes me hurt a little.
But the Wells Fargo analysts agree with me
that the fact is that all of this overly positive news
is driving the markets way too much.
We actually don't know anything yet.
No actual plan has been figured out.
They have a new quote-unquote framework.
By the way, if you Google debt ceiling...
McCarthy, Biden, and Framework,
you're going to see like a hundred different news articles
that are using those words.
That means it's being completely choreographed.
We've seen this story before.
They're choreographing this.
What the Wells Fargo analysts said,
and what I think,
is they're actually further away from a deal
than they're acting they are,
because they don't want everything to collapse.
And so, again, I've been a bearer on this.
There have been people up on stage right now that believe that this debt ceiling thing is going to be a nothing burger.
But I think that, of course, we're going to figure out a solution in time,
but I think that we're going to hit the June X date or whatever,
and we'll have to figure out what we're going to do in the interim.
Are people feeling very bullish on all of the news with debt ceiling,
or are you tinfoil-hatting conspiracy theorists like me thinking that
at strenght er wekning og wekning er strengt.
Det er ok. Jeg vil høre det.
Ingen? Ingen her tror at dette stålbåndet vil bli bestemt på slutt av denne uken?
Jeg tror det er vildt sann.
Jeg tror det er vildt sann.
Jeg mener, tror jeg at det vil, men jeg vil sige det er 50-50,
og jeg tror det er så sann som ikke,
men jeg kan ikke sige med forståelse at det vil,
fordi det er ikke som om vi får akkurat informasjon fra vårt regering.
and like you said it's a dog and pony show but i would take maybe potentially the other tack
which is that they're sort of warming it up and making sure nothing crashes but that doesn't mean
that they don't have a deal i wouldn't be surprised if they actually have a deal in place right now or
just slowly waiting to announce it because it's better for pr and press to do it in this manner
50-50 is actually pretty scary.
If you think about it, 50-50 is actually kind of a scary number.
Because normally, I would put it at like 90% chance that they just raise it.
I agree, but it's not June 1st yet.
You said by the end of this week.
I think it's 90-10 by the time the Treasury actually runs out of money.
I just think if we're talking about this week,
either side does have incentive to milk this until the last possible hour,
which we've seen countless times.
Yeah, 100%, because they can get donors and get PR and raise their profile from this thing. You're absolutely right.
Yeah, to your point, Justin, I think this is political posturing. Right now, it would look like the Democrats' fault, and unless they're able to change that narrative, I think the Republicans hold out and don't give in, just so they look better going into the next election.
Yeah.
Hold on, Joa. You said that it's the...
You're saying it looks like it's the Democrats' fault.
Walk me through this logic a little bit.
I want to make sure that we expose that, or walk through it.
Expose is the wrong word. Sorry.
Well, it is kind of exposed, but right now I feel like the American sentiment is
Republicans put up a bill, Democrats didn't approve it.
And I have this...
This is just my gut feeling, that the sentiment in the US is right now the Democrats can't get this through, and it's their fault.
I don't know if other people on the panel agree, we'd love to hear, but that's kind of what I feel like.
And typically it's not. Typically the narrative I've heard in the past is the opposing side is not going along with the plans.
But that's not what I feel like the majority of the sentiment is right now, and I think that's why the Republicans are holding out.
It's because they see this as a big plus for re-election.
Yeah.
i would put that 50 50 as well i would say that that's just directly across partisan lines
wouldn't you or maybe you could put it at 33 33 33 there's 33 people who are disgusted with both
then 33 on each side that uh think that their own party is not at fault yeah it's interesting because
you know the politics of this unfortunately do drive the financial side of things you know do we
think that
For example, this morning, a bunch of Democrats came out, including the Agriculture Ag Committee chairwoman Debbie Stabenow.
We saw Elizabeth Warren, Ed Markey, Jeff Merkley, Senator Bernie Sanders.
They all came out talking about the 14th Amendment, using the 14th Amendment to raise the debt ceiling.
For people that are not aware...
That would completely kill the dollar.
That is like a crazy sort of approach where we don't have consensus to do this.
I think the 14th Amendment would be an incredibly poor approach to doing this.
And they're saying that Kevin McCarthy has two main requests.
Attack ordinary working families across America by cutting the foundations of
for healthcare, housing, all this stuff.
So it's fascinating that that's where we are right now,
where one side is saying,
hey, you're cutting entitlements for the poor
and working class,
which is true if it defaults, that will happen.
And if we do cut budget,
it will affect certain people.
And then the other side is saying,
oh, we've got drunken sailors.
Scott, go ahead, sorry.
Well,
I was just going to say, to invoke the 14th Amendment, he would effectively have to break laws to pass it in that manner, so it just makes no sense.
I actually think, and as nonsensical as it is, it would be just as likely that they would mint the trillion dollar platinum coin and get it done that way because it's equally absurd.
I know you're laughing, but there's actually, I think, quietly a movement to do something like that.
I think that's like a 1% chance at lower.
But there are all kinds of sort of surreptitious options that they can take to get this done.
But I think, I really truly believe we're just watching political theater.
I mean, they've raised the debt ceiling, what, 78 times in the last, you know, 80 years?
Or 65 years? I just don't think that...
It's likely that they don't find a way to get this done.
It would be bad.
It's all about the political posturing in advance,
but it would be bad for everyone if they actually default.
Yeah.
I mean, a lot of things have happened in the last four years
that have never happened before, so...
I feel like that's, to me, that's like the only problem, Scott, is that that's what I think, I think I have a little bit of PTSD from the last few years. Like I, you know, I never thought, for example, Donald Trump would win. I never thought that we would have an 80-something year old president. I never thought that, you know, they would storm the Capitol. I never, you know, I mean, like, there's so many weird things. I never thought it would take 15 votes to get the Speaker of the House.
I'm hoping that we'll get a 95-year-old third-party candidate to really kick this election into gear since our two options are so good.
I mean, it's fascinating. I know that people can live longer now.
I'm happy that people can live longer lives.
I just really wish that the only two options we didn't have were, you know, Trump and Biden.
By the way, this is political news, but people saw that DeSantis is actually announcing next week.
So that'll be very interesting. And I don't know what impact that's going to have on anything.
But they will lay out their...
financial plans for their administrations,
and I think it will be very interesting to see whether he's going to come in
just totally America first, or is he going to talk about austerity and saving
and cash, which is like the traditional Republican approach.
I'd be very surprised to see him do that.
I think he's going to do what other Republicans have done in the recent past,
which is focus on entitlements and making sure that,
you know, they've been like very populist, I guess.
Yeah.
i think you might go fear shock and awe and just stick to the anti-woke agenda and not speak to any
real issues for a very long time you're probably right which is also sad uh so you know talking
about the debt ceiling really quickly uh
You know, the big question that I have is what do we expect this week?
So Reuters sort of laid the whole thing out, so I'll walk through the details.
So right now, we have two people from the...
Hold on, sorry, I'm getting messages on the back.
I just want to make sure.
Data at this time, I'm not supposed to...
Oh, okay.
Yeah, so right now, the...
Planen er at vi vet at de møtte på torsdag
last week. They've since
or they met on Tuesday of this week.
They've since assigned
two people on
the Democrat side
and one person who's
in quote unquote ally of McCarthy
on the Republican side. They have a framework
for a deal
and that framework will enable
some level of
negotiations
Interestingly, worker requirements has come up as a pretty big commentary.
And for people that don't know, Biden was asked about worker requirements for access to Medicaid and other entitlements.
And he said, well, I fought for worker requirements.
And then his team came in and was like, no, no, no, no, we're not going to negotiate on worker requirements.
and so
you know, but then he left the door
open again, and so there are some
of these tools that can be used
and that's why I think
the far left is
getting very upset because
he's
Potentially going, he wants to be deal maker.
He wants to make a deal.
And so it will be very interesting about what Biden wants versus what his team wants.
How do we think this is going to, Caleb, you know, my interest would be,
how do you think this is going to affect the markets for the next decade?
Let's say it takes next three weeks for the deal to get done.
Do you think the markets are going to continue to be within range and choppy?
Or do you think the markets have already priced in that there will be no default and it's just going to now start rising?
Maybe a bear market rally or maybe even go bullish?
Let's see here.
I'm trying to think of how I should approach this question.
I think...
You know, generally, I am the type of person who is going to pay as little attention as possible to this issue, because I think it's complete bullshit, and just, you know, classic political gamesmanship.
And so, if the markets are put into a state of fear based on this, I think most likely that would probably set up a buying opportunity for your favorite assets, all else being equal.
And so, you know, I would even apply the same thing to even three and six month treasuries, quite honestly.
I think that this is all just to kind of get people into a stir and try to point fingers and to win political points or to try to hurt your political opponents points.
Right. And so at the end of the day, I think that the debt ceiling should in all reality be renamed to the debt floor because we all know that it's going to get raised, whether it's this week, three months from now, six months from now, whatever the case is, the party still goes on.
And so, do you think the market's already priced it in?
I think when I look at, you know, like the one-month treasury yield,
you know, completely inverted,
even versus something like the three-month treasury yield,
yes, the market has priced in a significant risk
related to the whole debt ceiling and the potential default, right?
And so, it's like, you know, people are looking at
basically like credit default swaps on U.S. government debt
These have just absolutely skyrocketed in price, basically meaning that the cost to insure against the default is going higher and higher, right?
Because there's so much demand for those types of instruments and, you know, securities, right?
So, in a lot of ways, I do think a lot of that risk is priced in.
Could it be even more priced in? Yes. Could it be less?
Like, I don't know what the correct pricing in is, but I think generally when I look at it,
Treasury yield specifically, it's telling me that the market is assessing this risk and giving it a substantial likelihood.
So I think for me though, that's the thing. It's like, okay, great.
As that three month yield inches up a little bit higher or that one month yield goes up a little bit more this week, like,
I think the one month yield is over 5.6% on an annualized basis.
And so to kind of lock in that return over a one month period isn't necessarily the worst idea in my opinion.
Yeah, and it looks like the initial jobless claims just came out,
and it looks like the dollar is rising on that news.
So if somebody can look at the initial jobless claims that just came out,
it sounds like they were lower than expected,
meaning that the job market is still hot,
which should not surprise any of us.
But the dollar rose 0.4% to 103.33%, which is fascinating.
And it kind of gets to...
the last big topic of the day,
which is Nomura
downgrades
the Chinese economy,
and I want
to be very, very clear about
this. I have
significant bias on this
because of
my feelings around the Chinese economy
and how they're running
and all of the other things that bother me
about China in general.
So I do want to temper that
and I want to make sure that we have
a full discussion about it because this is not
a hating on China
you know,
group, and I think that there are people that
do sit on the other side of this conversation
with their beliefs around BRICS
and other made-up
terms. But
Nomura downgraded
China's full-year growth forecast
from 5.9%
to 5.5%,
and Ting Liu,
who's a well-known analyst at
Nomura sa China's post-COVID recovery
has been rapidly losing steam.
Um...
They said that their latest activity and high-frequency data in May
show that the momentum has been losing steam
due partly to weak confidence amongst consumers and business investors.
As disappointment kicks in, they'll see a slower activity.
They said that they're going to see slower activity growth,
rising unemployment, persistent disinflation,
and falling interest rates, and in their opinion, a weaker currency.
which I think is the most important part.
And I just told you the dollar is rising to 103.3 right now.
So the dollar indexed it.
Nomura added that it's also cutting its 2024 full year GDP forecast
from 4.4 to 4.2%.
As I mentioned, they cut the full year growth forecast
from 5.9 to 5.5%.
And they're essentially saying that this is largely happening
because...
I'm sorry, the second quarter GDP also, just to kind of get through the numbers, will grow 7.8%, third quarter will grow 4.9%, and the final quarter will grow 5.0%, all below initial expectations.
And so, you know, again, there's been a lot of talk around the rise of China.
There's been a lot of talk about China and Russia's work together.
There's been a lot of talk around other things.
But you may remember a few weeks ago, there was news that came out that Blackstone was tapped by the administration to reduce their exposure to assets in China.
And we're seeing...
some of the initial impact of that.
And so, you know, I think what we're seeing is that investors
are pulling their money out of China.
I think, you know, China was trying to play a game
and they're going to backfire.
But again, I want to hear the other side.
Joe, I know you believe a lot in the power of what China's doing
in terms of not from a, you don't agree with it,
but you know that they're doing it.
I think you're recognizing what's happening there.
from the other side I wanted to give you a chance to tell me do you think that China is stronger
today than it was a year ago obviously it is because they opened but do you think that this
decision making about partnering with Russia is backfiring uh wanted to give you a chance to weigh
in yeah I mean to your question is China if you look at you know what's going on no if you look at
The fact that you have many countries de-dollarizing and moving towards China,
their network is stronger than it's ever been.
Although that's not showing on the bottom line.
But don't forget there was a huge infrastructure cost that they laid out.
Just like most companies, when they don't show profits in the coming year.
And this is why...
I believe a lot of innovation gets stifled in the US once a company is public.
Like, why does Meta and Google, like, stop with, like, all the really good innovation stuff?
It's because...
It's because the CEO doesn't want to be judged by doing some big investment project that's not going to pay off for four years, and he wants to keep his position.
And I think that's kind of the same thing here.
They had huge infrastructure costs that they laid out.
Yes, that's going to impact them.
Are they stronger, and is that way growing?
I believe it is.
Interesting.
This news doesn't change your opinion on that?
Nei, det tror jeg ikke. Det er ikke det jeg ser.
Jeg ser ikke så mye på Kina, men på hva andre lande gjør.
Så din poeng er at andre lande er sammen med Kina,
så du tror på de dollarisering-narrativet?
I believe that there is, within one year, the amount of countries that have announced de-dollarization, I think it's up to like 36 countries, and that's all happened in one year.
Does that continue to grow? It really depends on a lot of things.
I think Biden, although I vote mostly towards the left, I think Biden's really messing things up.
If China's able to broker a peace deal with Russia and Ukraine, and the U.S. does not, I think that even hurts us even more.
For people that are listening, if you agree with Joa or you agree with me,
I'd like for you to go into the comments and put it in there in the bottom right.
I did put something really special for Noah in the nest.
I said, when bricks, which again, just to remind everybody that people have been talking about this.
Caleb, I've seen a few tweets from you about...
I wanted to make sure to give you the chance to respond, and then everybody else, please feel free to jump in.
Jeff also wanted to think about the relationship with Tesla and other companies in China, and are they pulling out?
I would love to get your thoughts.
But Caleb, go ahead.
Just from a financial and market perspective, what do you think is going on with the dollar?
And do you think this negative news on China will be positive or negative for the dollar overall?
Yeah.
I respect to the China news, again, I couldn't really care less about that, and it's influence on the dollar necessarily.
The dollar is a yield story, right? So yields influence the dollar, and that will then have an inverse effect on financial asset prices.
And so from my perspective right now, I'm seeing things like the 30-year treasury yield pushing back higher, the 2-year, the 5-year, the 10-year, they're all pushing higher.
The 6-month yield has erased all of the losses.
since the decline that started with the collapse of SVB.
The three-month yield is at new highs.
And so from this perspective, right,
it's not surprising to see the dollar kind of rebounding here.
This was something I outlined in real time on Twitter
as we retested those year-to-date lows.
talking about how, hey, this is a logical place for us to perhaps see a little bit more upside momentum.
The thing from my perspective is, you know, the dollar has been in a very clear downtrend since October of last year,
despite the fact that the Fed is still tightening monetary policy,
but this is simply because global capital has the ability to be forward-looking.
Så marken har i slutändan vært priser i slutt av rådhikkelsen i 6-8 måneder,
og jeg tror at den nedstående trenden vi har sett i dollaret siden,
er veldig indikativ av denne synken.
DXY, denne US dollarindexen, er i dag under 200-dager avgjørelse,
den har en nedstående sløpe til den avgjørelse,
og så utifrån den perspektiven, vi har fjernsatt perfektivt på den avgjørelse
etter å ha brukt den som støtte i 2021.
and even briefly at the end of 2022.
And so from my perspective, from a technical standpoint,
I'm not surprised to see this dollar rally.
I wouldn't be surprised to see the Dixie get back to about 105 to 106,
at which point I expect to see a downtrend kind of resume here.
Og det er ikke nødvendigvis pga.
Dette slags,
Jeg vil ikke kalle det fyrmangring,
Men dette slags diskussion om BRICS og enden av dollar.
Jeg har kun vært i marken i 10 år,
Men dette slags konversasjon har vært i 20 år plus.
Bare spør Peter Schiff eller Jim Rickards.
Og så fra denne perspektivet,
I certainly don't foresee the end of the dollar dominance.
Kind of personal story here, but I started digital nomading back in March,
and so I've been in Europe.
for the past two and a half months and I kind of made a little bit of a facetious joke to one of my friends who
works in the wealthy wealth management industry that so long as
The English language is the reserve language of the world
The dollar is going to be the reserve currency of the world
Right and so the simple fact that I'm in Budapest Hungary and I can go to a bakery and speak English with anyone
Is very indicative of the fact right? It's like a cultural thing, right? So
These types of things take generations to go over. I couldn't go around and speak Mandarin in Budapest.
So from that standpoint, I think language and currency, from a philosophical standpoint, if you will, there's an interesting little bit of a relationship there.
And so I certainly don't foresee the end of dollar dominance anytime soon.
Jeff, what are your thoughts? I know that Elon's making some moves in China and believes that there's obviously an opportunity there, but I wanted to get your thoughts just beyond that. First of all, on your thoughts on China rising as a dominant power, the de-dollarization narrative, everything it means, and then just in general, also businesses thinking about...
I know you work, you can't comment too much on Apple and Tesla,
well, Tesla you can, but Apple and others, and Google and others,
but they're all moving away their manufacturing and business from China,
so it's interesting.
We'd love to get your thoughts on the general sort of malaise around building in China.
Yeah, thanks.
And I do, again, I do advise clients in this space,
and I won't be specific on names, I don't have to for this space,
but yeah, I mean, in general what's happening is,
um there's definitely a move right now to expand geographically to kind of have geographical redundancy you know in southeast asia in other parts of asia so it's like okay you know in general there's an expansion of capacity or there's there's a movement or shift in capacity but it's not so much vacating
China and kind of people running for their lives.
There are some smaller companies that have actually done that.
But in general, it's more of this just creating this...
It's more...
The view is like, look...
These companies, they want access to these economies.
They want access to India, Indonesia, and so forth.
So to have access, they're protectionist economies.
You have to set up manufacturing there.
And oh, by the way, if you're set up in India for manufacturing,
it's actually a great export hub for the rest of Europe,
and you can also export freely back to the United States.
So therefore, you create that geographical redundancy there.
as a result.
But companies definitely that have had a longer history,
American companies, for example,
and some European that have had a longer history in China,
haven't necessarily abandoned China.
But again, they have in Europe,
in the last couple of years, they have created that geographical redundancy
where they had almost none before.
In terms of auto, it's very interesting in terms of free trade policies in that area.
Obviously, if you're not building in China, if you want access to that market,
you're going to pay a fairly hefty VAT.
whether it's consumer electronics or it's auto.
So companies still want access.
In Tesla, for example,
they just filed a petition to expand access
their Shanghai facility for electric drivetrains and the volume.
Right now it's capacitized for about 1.25 million per year.
They want to expand to about 1.75, so it's a fairly hefty expansion.
They're also building what's called a mega-pack factory,
which are these large industrial battery installations that can actually
act as a utility, and so they're working with the government there.
So Tesla, I believe they have a very unique,
they have the most unique situation of any modern company in China.
They did not have to set up as a joint venture in China,
so there's not some other entity that they're in business with in China,
and they don't have to share that IP and so forth.
So they have a very unique situation.
relationship in China and I don't see Tesla abandoning it, but what I do see Tesla doing
is definitely setting up that geographical redundancy. I believe they will have another
kind of gigafactory either in India or South Korea or probably both within the next two to three years.
You know, it's fascinating because as I think about this issue for China,
I think about the fact that China needs growth.
They can't just survive with keeping what they have.
They have to continue to grow to support their economy.
Their economy requires growth at a rapid pace.
Caleb?
Yeah, if I could just chime in on that.
How has China stimulated growth over the last 20-30 years?
They've devalued their currency.
Så det de har gjort er at de har gjort eksportene dyrt for resten av verden
med minisering av konsumtionen av sin egen population.
Så kina's utfordring nå, i forhold til det, er hvordan de fortsatt vil inkurre denne forandringen
utan å utvalutere sin krona så at den natale populationen, kineske folk,
kan faktisk være konsumtioner av sin egen produktion. Det er utfordringen.
Særligt om sin population fortsatt vil forandre.
Vi vet at det har vært en problem med population, og det har vært snakk om terminal population.
Men Cody, jeg vet at du har en tanke på dette også, og jeg ville gi deg oppdraget til å gå inn.
Ja, jeg ville bare å ta til en av Kale's punkter.
Han tog på kravet om å retrasere noen av sine høje.
Jeg tror at dette tjener til den kinesiske konversasjonen,
samt den kredsforskningskonversasjonen.
Assumant at vi reker konsensus om å støtte kredsforskningen,
og vi begynner å utstyrke noen av disse 1,2 miljarder dollar
og forventede US-treasuries på markedet,
How do you expect that affects the yield curve and the strength of the U.S. dollar?
And does that continue to push the value of the Chinese yuan down?
So I think that, I mean, look, I did a post about this, I think it was yesterday, I'll try to find it as I talk, and so I can pin it up in the nest, but when you look at the curve right now, the short end is spiked, while the long end has this very, it's called a long belly, right, so basically yields from 5 plus years to 30 years are very suppressed, and even the fact that, you know, we're not seeing kind of like a camel hump, if you will, where we have these kind of like,
like two spikes where the one month yield is much lower relative to the three month yield,
but then the six, right?
Like I could get super into this,
but I think that the more concerns there are,
especially this week with respect to the debt ceiling,
the more that one year yield goes up, right?
Because this is a short term debt problem, if you will, right?
That's a short term risk.
And so I think the fact that we're not seeing,
as much momentum in something like the five-year yield to the upside
is generally indicative that the bond market believes this is a short-term problem.
I think that for me personally, looking at something like the dollar market,
I think it would mostly be correlated with something like the two or five year yield, much more so than the one month yield, because those risks in the treasury market are very different than the dollar itself.
And so I think that generally speaking, as yields push higher, that's going to have tailwinds for the dollar to keep going higher as well.
So I think that answers your question, I hope so at least.
Ja, definitivt. Jeg har bare en anbefaling, for det er svært å se hvor likviditeten er i markedet, og om disse kjøpene begynner å stå på markedet, så begynner kjøppriserne, særlig på den lange enden av kurven, å begynne å spikere.
Ja, jeg mener, personalt, jeg tror at det ikke har nokt kvalitet i markedet,
hva som betyr at disse kvaliteter går høyere.
Kvaliteter går høyere fordi det ikke har så mye behov,
og så går disse kvaliteter opp for å entise investerere til å lende deres penger til det USA-governmentet.
Og så har disse fundamentale risikoer om at det governementet kan betale av sine kvaliteter,
går høyere, eller sine lenders går høyere, du vet,
The government essentially needs to raise the treasury yield in order to entice investors to come lend their money.
And so, look, I ended up just finding the post right now, so I pinned it up in there.
And you can see the shape of this yield curve right now, where that one month yield is even significantly higher than the three month yield.
And look at where it was even one month ago. It was at 4.23%. Today it's at 5.63%.
Right? Six months ago it was at 3.7%.
Today it's at 5.63%.
So there's already been this kind of massive repricing
of these short-term risks,
and the question of, is the government going to default?
Is the money that I lent to the government
going to be repaid?
This is the question on investors' minds,
and the fact that the yield curve looks like this
is representative of those risks.
Do you all think that
The fact that China is potentially sputtering a little,
do you think that's weighing into the decision
of making sure we get this all tidied up
so that we can continue to fight
to put our finger on China, put our thumb on China,
do you think that's even going into the decision making,
or do you think they're just posturing right now, and that's all it is?
Like, you know, there's been, just so everybody's aware,
over the course of the last two weeks, there's been a lot of, you know,
data on Chinese economy slowing down,
you know, China saying no to Russia for arms,
all of this, like, sort of, not anti-China, but like,
doubting China's dominance conversation?
Do people think that that's potentially
just narrative and media working closely
with the U.S. government?
Or do you think that there's actually
something happening in China
as we start closing up?
I wanted to get people's thoughts on,
you know, are you bearish or bullish on China right now?
Jeg vet hvor Caleb er, men jeg vil likt å høre fra alle.
For eksempel, jeg vil likt å få Davids tanker på dette.
David, jeg vet at du kjøper i utbyggende markeder.
Du kjøper i Kina i kinesisk økonomi.
Jeg vil likt å få dine tanker på hvor du ser Kina på.
Vi snakker alltid om USA, men vår største kvartal eller kvartal er Kina.
Hva er dine tanker på markedsperspektivet?
Yeah, I think China has obviously been a lot more bearish than the U.S. equity market has been.
I can't hear David, so I don't know if it's me or everybody else.
Can you not hear me?
I can hear you, David, but I don't think Danish can.
Oh, okay.
Yeah.
What I was going to say is...
has a lot, I mean, it's a lot more attractive from that standpoint.
I mean, it's well, if you look at the ETFs,
I kind of tracked some of those equities,
they're well below the moving average,
you know, forming all sorts of like,
reversal type patterns like an inverse head and shoulder,
whatever kind of pattern you want to get out of the price action
it's been having over the past year plus,
it's bottoming and it's got a much better valuation
than U.S. equities.
If we go into a kind of a broader global risk aversion,
a recessionary environment,
U.S. equities,
obviously have a lot more to lose in that standpoint,
considering how much more overvalued they are.
But if we're not,
if this is all just one big...
hella correction and we're just going right back up to all-time highs um then that i wouldn't bet on
china to be the leader in that environment i would i would still stick with u.s equities but i'm not in
that latter camp as you probably know i'm in the former camp where i do expect that a lot of this
Risk appetite will start to really drop off
and China would be the better alternative in that case
because they've already experienced their bear market,
whereas U.S. equities clearly haven't.
David, just a follow-up question for you on that.
It's like when I look at MCHI, the iShares China ETF,
that's down just over a percent year to date.
If I look at KWeb, that's the China Internet ETF,
that's down about 8.5% year to date with MCHI.
With US stocks generally grinding higher,
I think the Nasdaq is up some crazy amount,
like 18% year-to-date or something.
How does that kind of...
You know, kind of fit within your overall perspective here, because it seems like so far, you know, investors have kind of spoken on where they think leadership is going to be if the market keeps grinding higher, right?
Yeah, that's what I said. If we keep moving higher, if this is if we just go up to, you know, 4,800 and beyond, you know, US equities is obviously the place to be in that regard and has been year to date and, and has been obviously really has been since the beginning of,
2021 like the nasdaq is is getting is is getting pretty close to its 52-week highs uh not just i mean
not just great year to their gains but it's already back to 52-week highs almost um so that's clearly
the leader in that scenario which i think is the lower probability scenario i don't think we go
back up to 4 800 um in that case but but if if we don't if we start to experience a break
på en bredere markedskip, under,
som sier, den 200-målende avgjørelsen,
som i min mening er definisjonen av den bare markedskipet.
Det er da du slipper den 200-målende avgjørelsen
og du står under den
på en utstendig period av tid.
Russell 2000 er faktisk under den 200-målende avgjørelsen.
S&P er ikke engang nær
å komme under den.
Så om vi gjør denne forandringen,
then China already has been below its 200 week,
and it's actually kind of forming a little bit of a basing pattern,
K-Web too,
and so it's, again, in that scenario,
which I think is more likely,
then U.S. equities have a very poor margin of safety,
relatively speaking, to Chinese equities
that have already experienced the bulk of their bearishness.
They will still go down,
but I believe in that scenario they will outperform,
as U.S. equities have a lot further to break down in that case.
But isn't there a reason for that?
Teknikalt, men jeg har enigh med din søster, er det ingen grunn, vi er på dette
Dødsfjellingsprøve, vi er på dette
Vet du om Fed kommer til å pausere eller ikke, er det ingen grunn å drive
Du vet at vi ikke har brukt over og sluttet over de 200 dager i alle disse indisene, eller er det noe annet?
Is there a reason why we haven't broken down below that on the S&P? Is that what you're asking?
Or, quite frankly, just broken out. I mean, aren't those two events, I mean, they're just fundamentally controlling technicals at this point? Or are you thinking it's something else?
Yeah.
your s p is like right on the cusp it's right i mean 4200 is obviously i mean everybody talks
about that level so it's a very very important technical resistance level uh we're right on
the cusp of that it's just a matter of like when is it finally going to bust through and
and whether or not i i believe the debt ceiling if and when we ever did get
an announcement i think it would produce kind of a fake out type move where you do get a
A break above 4200 and how long that lasts, maybe a week or two and you're right back below it.
That would be horrible from a technical perspective.
That would be a horrible thing for the markets.
If you broke above it, stayed above it for like a week, and then we're right back down below it on a debt ceiling announcement.
Yeah.
But again, if you look at the other indexes, take the S&P apart, right, and you look at the NASDAQ 100, which is basically 50% of seven companies, which is, you know, again, near 52 week high, is doing very, very well, which is also 25% of the S&P.
But then you look at the Russell 2000, which is already below its...
It's 200 week moving average has been trading below it.
And then you look at the Dow, which is, you know, has been moving lower here lately.
Again, those seven companies only make up nine and a half percent of the Dow,
which because there's only two companies in the Dow on that.
And this price weighted.
So it's a lot less.
So it's really just those.
large mega cap names.
I mean, you just saw a graphic on the TV
here that, you know, NVIDIA and
Meta are up 100% year-to-date. It's
De toa av de søvn, de store mega-kapte namnene, er de unge som behåller S&P på kastet av å bregge gjennom denne resistansen.
Uansett, Russell, som er en bredere titt på de lokale økonomiske forventningene,
det bregner ned. Det har allerede bregt ned. Og den siste gang vi hatt denne divergensen,
was the end of 2021, where the Russell broke down post-Thanksgiving.
The S&P and the Nasdaq went up to new highs in January of 22.
The Russell had already broken down, but its 50-week moving average started to correct.
Eventually, everything else followed suit.
My expectation is after all this debt ceiling goes away and the earning season is done,
that we'll probably start that process here on the S&P and the NASDAQ as well.
Hey David, can I ask you a follow-up question?
Sure.
You were saying that, and if I'm misunderstanding then let me know, that you think sort of...
China has, like what we're seeing in China, this repricing and downgrading is sort of reflective of what's been happening in the last couple of years in China.
And you think that basically they've bottomed out and that the United States, the U.S. equities have more to fall.
Is that what you're saying?
Yeah.
Can you explain it?
Ja, for them, the downgrade to China is like, you're two years late on that.
China has been on a decline since the beginning of 2021.
And a lot of that has to do with the dollar strength.
And the dollar had a really good move going into 2022, its peak there.
And it's been declining.
And that's helped China recover.
And the dollar rising up more, if it starts to rise up more, and I don't think it will go back up to that 2022 peak.
I do think there will be a little bit of a move higher.
If there is a drop in risk appetite, the dollar will benefit from that.
But I think the bulk of China's decline is behind us.
Again, if we go into this broader bear market scenario, which...
my definition is a break below that 200 week moving average where we get below it and we stay below it
which is you know every other bear market that's the case so if we
china already has had that bulk of that decline behind it it's way below its 200 week moving
average um and and it bottomed out last year when the dollar peaked way below its 200 week
moving average the s p at the same time during that mid-october low it was just it just barely
touched its 200 week moving average and and you know k web for example was you know you know
you know, it was less than half
of what its 200 week moving average value was.
So it's,
if we go into that extended decline,
The US equity decline is still ahead of us.
I mean, the last time we broke the 200-week moving average in 2008,
we fell almost 40% from the 200-week moving average down to the low.
The same thing in 2001 to 2002 when we bottomed out,
and the same thing in 73 and 74.
I mean, we dropped 30 to 40%.
from the 200 week moving average, not counting the move down to it, but from the break of that level.
And if that's a scenario that we get into again, because long-term valuations are still very, very high,
if that's a scenario we get again, which I would expect,
China already has experienced that.
Already has.
But what happened, isn't China basically very reliant on its exports?
Isn't it very reliant on a strong, robust U.S. economy?
So doesn't a drop in the United States economy also drop the Chinese equities,
and drops their forecasts because their ability to generate revenue, sell goods, goes down?
Ja, ja, det dropper de på en absolut basis.
Jeg tror ikke det dropper dem mer enn det USA-ekvides dropper.
Ah, jeg vet det. Ja, jeg ser det.
Ja, på en absolut basis, jeg er sikker på det putter litt press på det.
Men, jeg mener, deres margin av sikkerhet er mye bedre nå,
fordi de har, jeg mener,
I mean, I don't think the market has priced in a global recession and sold off Chinese equities first.
I think obviously China was closed down and had this reopening and all of that,
and the dollar rising put a lot of pressure on it.
But, I mean, it almost looks like, from just a pure technical perspective,
if you're not paying attention to any of the news out there,
and you were just looking at the chart,
You could argue that, well, it looks like somebody's already priced in a global recession into Chinese equities
because of how much they've already declined and how far down below these long-term averages it's already gotten.
And U.S. equities is so stubbornly very, very high, very similar to 2018 and 2019 because of these mega cap names,
which have been pretty much behaving as its own safe haven asset class.
What's the possibility of continued manufacturing leaving China and that negatively impacting them further, though?
Because it seems like maybe we're seeing an early part of that trend.
Yeah, and that's why, you know, I think that's why you see like India outperforming China in that regard.
Because you can, and other countries, right, but you can look at, you know, kind of India as a proxy for,
for where some of that manufacturing may be going now where people might be
shifting towards and india is very very bullish i mean
I mean, it's got a nice, good-looking chart, again, relative to what China's been looking like.
Again, India did peak, too, with other equities in late 2021, but way after China did.
And it's still killing China from a relative strength standpoint.
So if you're looking at that standpoint, like, where would be the better bet to be in?
on an emerging market basis, it would be India,
again, in this bullish scenario,
but again, if a global recession hits,
and manufacturing takes a lull everywhere,
then all that's been priced into India,
this movement out and really buying up India as a result,
obviously now they would have a very poor margin of safety,
and they would struggle more than China would in that scenario,
because again, they have the most to lose from that standpoint.
And they've been so bullish in pricing that in.
Just my own personal bias, I think there's going to be, and Danish has heard me talk about this before, I think,
but I think there's going to be a huge American manufacturing onshoring movement.
I don't know how close that is, so I wonder if people go to India first and set up operations there,
or some ambitious companies just say, ah, and they skip and go right to onshoring.
I don't know how possible that is. It's probably a little too expensive to bring an onshore right now,
but as robotics and AI and those things get a little bit more advanced,
I mean, we're seeing the Tesla bot, which is kind of silly looking right now,
but as that stuff becomes more sophisticated,
I imagine we're going to see a huge swell in manufacturing,
but I'm not sure how close that is.
Both are happening.
I mean, the U.S. is actually...
I mean, by the way, I actually onshore a smartphone,
a multi-million unit smartphone operation 10 years ago,
and our government...
Literally, there's no federal support for that.
Now you fast forward 10 years now,
You have the CHIPS Act, you have all these different things that are being put in place to onshore.
It's just going to take time based on the relative industry we're talking about.
But you'll see, to answer your question, you'll see both things happening
because there's huge population growth in Southeast Asia,
and there's just huge markets to serve.
So you're going to see that movement to India, to Vietnam, that's going to continue.
But companies are still, if they're big enough, they're still going to have that foot, major foot, in China, and they don't want to upset the Chinese government because, number one, you want access to that market, number two...
A lot of these supply bases for these factories, they've been set up over multiple decades.
So when you move to India, you could set up assembly and so forth,
but it takes a while for the localization of the supply base.
But when you start thinking about the different factors, let's walk through them really quickly.
The long-term factors, and then I do have to close the room because I have to get to my day job,
but I was going to say that the big factors are very clear.
One, automation is here.
It is only going to get better.
As automation gets better,
it won't really matter which country you're in.
That's number one.
Number two, Chinese...
I'll push back on that later, but go ahead.
Yeah, Chinese economy.
Yeah, in another space.
But I was going to say that the Chinese economy
has sputtered out of the gate
because of problems
of poor government practices.
They have made several mistakes over and over.
You know, authoritarian makes a lot of sense
until you realize that they can mess up
just as well as they can do well.
So that's the second big sort of factor.
The third is the politics in the U.S.,
We are now in the age of populism.
Populism means that both sides are going to talk about America first.
Both sides are going to talk about America made.
And by the way, while the average consumer out there,
the average voter out there,
sees that as really exciting,
what they're saying is,
The robots will be in America instead of in China.
That's really what we're talking about here.
But it will allow them to get more points.
And that's why, by the way, CHIPS Act was widely bipartisan.
That's why we're going to continue to see more bills pushing for that in the U.S.
So if you're looking at the tea leaves, if you're looking at, you know, as the crypto bros say, zoom out.
As you zoom out, you realize that there is a huge opportunity to bet against China, right?
Because the Chinese economy made sense in a different era.
And on that note, I'm going to close up the room.
Thank you everybody for joining us.
We start every morning at 8 a.m. Eastern.
We keep this heated.
And I appreciate everybody joining us.
We'll see you tomorrow.
