FRIDAY NIGHT DIRTY (Guests: Vincent Daniel & Porter Collins)

Hit it. It's Friday, September 19th, 2025, episode 274. I'm Patrick Szna. >> And I'm Kevin Mure. Patrick takes some crayons out of his mouth to make sense of this topsyturvy market we're experiencing. But before we do that, a quick announcement. After 18 years at the same price, Patrick has finally decided that inflation might be real and is increasing the price of his big picture trading membership. So, Patrick, on October 1st, I hear your prices are more than doubling from $948 to $2,000 a year. Two grand, man. You're getting expensive. That's why we set this up, cuz until September 30th, listeners can still get in at the old $940 rate. So, basically, if they want to apply all the great ideas that you talk about on this show, this is the cheapest way. >> Yeah, exactly. And to make this a no-brainer, it's 100% risk-free for 30 days. You can try everything and if you don't like it, you can cancel and get your money back. >> All right, you heard the man. Go to bigpicturerttrading.comnew prices before September 30th. After that, you'll need Deeper Pockets. >> All right. Well, let's get Danny on the show. Danny, what uh beer are we drinking this week? >> Right. Well, this one's close to um Kevin's heart, maybe, but this one's called Who's a Juice? Hold on. Let's see if it >> is that juice. >> Have I said it right? Hoser. >> It's hoser. Oh my. We know who's not the Canadian in the right, >> guys. I have no idea. >> It's a hoser. It's a hoser. >> Yeah. Hoser. >> Okay. So, this one um was actually made um when the tariffs situation was happening. So, um they don't sell it in America. >> Okay. >> And yes, and by Patrick's face, it is 10.8%. >> Wow. So, it's a bottle of wine. >> Hey, you know what? I thought it was going to be terrible. >> It's actually not as bad as I thought it was going to be. >> It is. It It punches you, though. >> Yeah. And by the way, we are upping our game. We finally got the beers. We figured it out. Patrick's got them in Portugal. I got them in Canada. >> Those are juice. Triple IPA. Not as bad as you would expect. >> No, I think it's pretty good. And we had a we had a delivery come from Canada yesterday, so we'll be plenty more of where you come from. >> Absolutely. All right. So, Kev, why don't you give us a disclaimer here, buddy? >> Sure. Nothing in this podcast should be viewed as investment advice. Listeners should consult an investment professional before making any decisions regarding topics mentioned in this show. Side effects of too much huddle may include the neutral rate nostalgia syndrome, the liquidity trap trauma, and the soft pivot paranoia. >> Yep, that sounds like a Yeah. All right, let's get the guest on. All right, folks. Um, this is something I've looked forward to for a long, long time. And a big thanks to, you know, our mutual friend, the Canadian semi-retired, uh, what should we call him, you know, uh, ex mining executive exellside guy that put us in touch. Um, but anyways, without further ado, I just want to introduce, um, Vincent Daniel and Porter Collins, both from Seawolf. >> Great to be here. >> Thanks for having us on. >> Oh, this gonna be a lot of fun. And listen for those who don't know they are obviously of the big short fame but I promise to not ask I figure you guys must get so many talks about it you know so many questions I promise to not ask a single question so if you want to know about their involvement in that go find some other podcast find something else but in the meantime we're going to get to know them for the people they are and we're going to learn a little bit more about them before their big fame uh so why don't we start with Vinnie why don't you were telling me a little earlier about where you're from, you know, how did you get in the business? Give us your little how you got to this point. >> Sure. Uh, I was born and as as I was telling you, Kevin, uh, prior to hit the recording, I I'm a New Yorker through and through. I was, uh, born and raised in what we like to call the outer burrows, Queens specifically. Uh, I went to school in upstate New York at at at the the the now True State Ivy Bingmpington University. And I studied and I studied accounting because that was the best way to get a job. And when I left, uh, I was an auditor for two years, got my CPA. Didn't like it at all. And I had a friend that I went to school with, uh, my friend Rich. After about two years, we we decided to have a dinner and say, who made the better choice, me or him? I went into auditing. He worked at Oppenheimer at the time. >> Okay. >> And it was clear he made the better uh choice. and he thankfully and I'll give him credit uh got me an interview to work for and eventually I worked for a fellow by the name of Steve Eisman which >> and I was Steve's junior covering uh the financial services vertical and that's where we grew up that's the sandbox that Porter and I had were in for quite some time and specifically I covered specialty finance which all these gobbledegook non-bank companies that lend money without a checking account or without non-interest bearing deposits and I was covering the subprime mortgage entities uh back in 9697 98 uh and I got to see during one of the greatest tech booms of all time my entire sector go BK which is quite interesting uh so so I guess that probably was one of the reasons I became uh a little bit more cynical and bearish than the average than the average Joe uh and then from there uh I started a boutique research shop with two guys. We tried to go independently. 911 happened. I joined a firm called Keep Brett Woods. >> Yeah. >> That that is again a sector specialist in financial services covering the same thing as lead analyst. >> And then after that about two years I joined the buy side and joined with Porter Collins uh at a firm called Frontpoint. Steve Eisman was the PM. We were we were the junior partners uh and we ran a long short financial services fund uh and that's kind of where our name starts to get known because of the thing that you weren't going to mention uh which was the short side. >> Okay. How about you, Porter? Walk us through your career. >> Well, I was a um I'm a New Yorker through and through as well. I uh during COVID I uh I picked up and moved to uh Texas, which I currently live. And um but uh I was a former Olympic rower uh world champion and uh I went to undergrad at Brown University and uh I got out of out of college. I I uh was an analyst at Goldman Sachs for a couple years. Um, but I had this I had a uh a roommate whose father was a short seller and for some reason I got a bug that I always wanted to go to a hedge fund. >> And so I I got a job at a place called Chilton and I was a retail covered the retail sector for a couple years. And then um eventually I worked for Steve Eisman at Chilton as is uh he and I both doing the financial services and after a couple years we decided to pick up and leave and that's where I I met Vinnie um and uh we ran Frontp Point for a while and then in 200 I think 11 probably we started Seawolf and that's uh where we have now and um in 2020 we we Vin and I essentially became a family office and that's what we do now. We're much happier. Uh we don't have to deal with uh clients, people annoying us, all sorts of stuff. And and uh you know the funny thing is our returns have improved a fair amount. What a couple different things. We can get into this but you know we we I mean I think the hardest part for for us was call it 200 15 onwards doing financial services because you know they they basically essentially neutered the financial services sector >> right >> post08 right and you know if you weren't in tech you know it was hard to beat the market >> and so and running a uh low net strategy or lower net strategy in financial services was not the way to make money and so we sort of felt liberated once we once we uh got out of that world. >> Got it. Okay. Before we get on to the markets and stuff, you mentioned first of all that you are moved to Texas. You're a New Yorker through to through. What has that been like? >> It's been interesting. you know the the once you get out of New York City you know you think that you know young kid we thought New York City was the financial center of the universe and you come to realize that's actually not and you know that that you know Warren Buffett's been doing his thing in Omaha for years and you know especially now with the internet and Zoom and you can kind of do do it from anywhere and I actually like working out of this time zone a lot better. Uh it start starts earlier ends earlier. I think mountain time would actually be perfect for me. But uh I'm in >> Are you a golfer? Is that why you like the time zone? >> Uh just you know the market closed at three. Who doesn't who you know who doesn't like all that free time in the afternoon whether to exercise or do whatever. So >> and just a little bit can you tell us about your rowing? you mentioned. >> I was uh I was in the 96 Olympics in Atlanta and I was uh 20 years old at the time and uh we finished fifth. >> Um we went on a couple years after that to be world champions and then in 2000 uh the coach kind of made a a uh a tough mistake where he split the boat up to try to win two uh gold medals and we >> Oh, he was greedy. He was greedy. >> He was greedy. And we we both and and both boats came in fifth. So that that was a that was a tough one. But uh no, I'm uh you know my my my athletic background comes into play I think uh in investing just the con just the consistent nature of it, right? And and and being you know just the the grind of it is very similar to the grind of practicing every day and and and working out every day. And so that for me is very familiar. >> Okay. So, let's get into your some views on the market. And uh Vinnie, I'll start with you. Um I I saw I was watching some of your previous interviews and you were talking about how this administration and this was before kind of this liberation day. This was earlier in the year. You were talking about how this administration seems to be trying to rearrange the economy from Wall Street to Main Street. And I was wondering like, you know, since then we've had a lot of things that Wall Street seems to be winning again. And I was wondering has your view on that changed? Where do you stand? Why don't you explain to us how you think that that that element about what you think Trump is trying to accomplish plays into your view about the macro world? Well, in in many respects, I think at least the narrative of what Trump wants to do, right, is give more towards his base, right, and take away from, you know, give more towards labor, take away take uh take away from capital, right? But I think the problem that he ran into was if and when you try and do that and the markets don't like but at the end of the day his report card like any president but it seems to affect him more and more more than most his report card is the market. So, as he tried to pull this, let's call this austerity gambit, like the vulkar Reagan, let's let's kind of slow down the economy, get rates low, and then rearrange the decks. The market vomited, and maybe it was a function of his delivery of tariffs, maybe it's tariffs himself. I I don't really care. All I know is that the market sank and more importantly than just equity markets sinking, bond yields rose, >> right? Which to me said, and I know you guys have, we listen to your podcast all the time, so this is probably, you know, it's probably a bad echo chamber, but to me it said, "Holy we're acting more and more like an emerging market." I don't know if that's true, but all I'm saying is we are. And Besson being Besson, that was probably not the script he wrote when when when he designed this and said, "We got to stick the heroin needle back in the arm somehow someway." So what we got from there was a suppression of volatility. We could probably talk about that at some point. uh which helped of course all things paper and less things Main Street and along with this one big beautiful bill which I think is more designed for for Wall Street than for Main Street for a host of reasons. So it's pretty much the same thing that we had prior to the Trump administration which is more marketsoriented and less main street with the narrative that we're going to be helping out uh the average jail. >> Right. uh Porter and I Vinnie mentioned there he says that the big beautiful bill is more designed for Wall Street than Main Street. when I would originally talk when when Trump became president and I said I looked at his policies and I and I and I highlighted the fact that if he truly wants to get um let's just say the trade deficit down if he truly wants labor to win. All of these things were negative for the stock market. And the push back that I got from a lot of smart folks was sure Kev, those are the things he's talking about, but at the end of the day, he's not going to actually do them because he's not going to he's not going to, you know, at the at the end of the day, he is a Wall Streeter. Not not a Wall Street, he's a real estate guy, but he's a rich guy. So, he's not going to choose the the the regular folks over Wall Street. Do you think that he's chosen Wall Street over the regular folks? >> Well, let's rewind the clock here. You know, Vin and I are financial services guys and and if you're a financial services person, you intently look at interest rates, right? And so we would study the Fed every move, every everything. We did this for, you know, two decades. And so if you rewind the clock to the first Trump uh presidency, gold was sitting there at $1,200 an ounce. And what you saw was him badgering the Fed to lower rates every single day, >> right? >> But good but >> people just forgot that that he did this. But it was, you know, by the time that the the Trump the first Trump administration was over, people were just so tired of the volatility like just get me anything but but this guy. And so you know and towards the end of his you know Trump won the gold the gold price started to to go up and then co came obviously the money printing started but then you you know come uh Trump 2.0 know, everyone thought he was going to be, you know, um, austerity. A good friend of ours was long a lot of gold and he sold everything and he put it into into zero coupon bonds because he was he believed in he believed in in Doge. He believed in Trump that it was going to cut, you know, the the government and finally we'll have this, you know, beautiful balanced economy and everything is going to work out. Wow. And and we and we Vin and I looked at each other and we're like, "No, I don't think that's the case. If you look back to to to Trump 1.0, that that didn't happen." And so thankfully we, you know, we held on and we, you know, we've had at le over a third of our portfolio in gold and gold miners, mostly gold miners. And so obviously it's worked out pretty well for us, uh, here. And, you know, we we try to be contrarians and we we look at ourselves and and and the stock prices of the gold miners these days, and we don't quite know what to do with ourselves and the positions. But for now, I just don't think this I don't think it's stopping. I don't think the the austerity is stopping and or starting again. And if you look at the same things happening in China, it's just they're debasing your dollars every day >> and they can't they can't stop it. Trump tried to stop it for six weeks and he he he went the other way. >> Um and I'll let either one of you ask, you know, answer this question, but I recently had a subscriber reach out to me and he was saying like, I don't know what to do. I've been longing these gold miners forever and they've done so well and it feels like the the the sentiment has changed so quickly and they've run so far and I I want to sell some but I'm I'm kind of perplexed because what do I do with my money and they yet they've gone so far like how are you guys dealing with this problem and I use the quote the word problem with quotation marks because it's a good problem to have about belonging these gold miners and having them finally awaken. Are you just taking a longer term picture and you know saying a year from now they're going to be higher so I'm not going to think about trading them? >> Well, it's the answer is for the most part yes. Although when when certain names get crazy high, we start just trimming a little bit on the average. So, so I I like to if the RSIs get to like 85 and they have on some of these names. You say, "All right, let me sell 5 to 10%. Let me make it feel like I'm doing the the smart process." >> Right. Right. But but I will say like if you've asked us for the past four or five years, the one thing we are steadfast about and and for all you bears out there, right? And and we we our default mechanism goes to being bearish and again it probably comes to as what I saw in the '9s and when you cover financial services and you see how the sausage is made, you have you generally have a cynical eye. But we found one of the great things about not doing solely financials and being more of a generalist is we have found a way to express our bearishness and it was really gold. Right. And and so and I guess >> smarter people found I think you guys say that the asset class that shall not be named which is Bitcoin. >> You are you are a listener. You're showing here. Absolutely right. >> I we are avid listeners. And so, but like to us the one thing we're we're completely it would be it would take a mountain of good information for us to get away from our thesis that the at the end of the day debasement's the only thing they can do. That's what they're going to do at the end of the day. They're going to debase the currency and it's a global thing. So, as a result, if you believe that, and we do, then maybe not the next 10%, because I could see gold trading off and the like and the wiggles and your crayons that you guys use and all that other stuff, but for the next three to five years, it's hard and very difficult not to see debasement and therefore why shouldn't you own gold? So, we're trying to manage through this champagne problem that we seem to have right now. >> I like that. I'm gonna write I'm gonna write that down. man >> and the dangerous words of this time it's different. If I if you again rewind the clock of to how these names you know the biggest one pneumont you know back a decade ago the balance sheets were completely flipped right that the debt was very very big and the cash was small and now pretty much every stock in this sector is in close to net cash or or you know swimming in cash and that that's the difference and and the entire commodity complex during COVID or during the last 10 years has looked at death and and no capital flows whatsoever. all the capital flow has been going to tech and if you look at these tech companies they're starting to look like you know capital cycle companies with all this capex coming in right now right and >> ah >> so it it it's very interesting to to us and you know we we you know the big one we we had was an eco eagle you know it was the cleanest you know in in you know five years ago it was the cleanest best balance sheet and you know we don't see any change from that right now so >> I got it I Um, let's let's talk a little bit about that AI because you brought it up and you you rightfully have highlighted how in the past, you know, like the tech was the capital light industry. That was the one that was like that was the reason you owned it was it was capital light industry and it was doing so well. Now all of a sudden we've we've had this switch where all of a sudden all the capital's going into there and you know our mutual friend you know uh Cuppy talks about the fact that it might even be larger than we think. Where do you guys come down on is this a bubble and you know is there a way to take advantage of what potentially could be a very exuberant and overs supplied market? Well, there's so many ways you could take advantage of it, right? In our view and and the way that we don't we're value guys at heart, right? We're contrarians at heart. So, us going out and buying the latest meme AI craze, don't look for us for advice on that. We're chances are we're probably short trying to short it rather than go long it. But if we think about AI, the it seems inevitable that the powers that be want this to happen, forget about whether I agree that we should be doing this or not. So if if I make that assumption that by hook or crook, this is going to be part of our life going forward, um how do we take advantage of it? Well, one and you know what the typical value guys hear people hear all the time is this sucks up a lot of energy, right? A lot of energy. So, is there any place we could look that where it h where AI has not been impacted the underlying equities? Now, today's a bad day, but we've been card carrying uranium bulls for four years, right? And we loved it just because of the supply demand dynamics uh associated with uranium. Forget about AI. AI is just the cherry on the icing on the cake. Uh and we just think uranium is going to take significantly more market share uh as a percentage of power consumption combined with the fact that it seems to be the preferred source of energy for all things AI. The other thing we're doing, which is really more part of our process, right, which is holy cow, and we just did it today, I can do a a thoroughly analytical review of a single stock name using Gemini deep research and have an answer in within 10 15 minutes that probably would have taken us at the very least two to five hours. And this is free of charge relative to say subscribing to Faxet or Bloomberg or some other subscript premium sub data subscription service. So it just seems to me you've lowered our cost of of analysis by leaps and bounds as you guys are spending all this capex money to get us all to use it. So why not take advantage of that? >> Um >> so you know go ahead. We've liked to fight bubbles, you know, and I think the fun thing is to to fight bubbles, but you know, it it can be dangerous, right? So, you know, we we've thought of this as AI for dummies. What's what's the e what's the easier play? You know, I don't feel like chasing Nvidia at some crazy multiple or, you know, the Mag 7 at the these crazy multiples. The one thing we did do well was we we we bought the value name in the group which at the time was was Google. And you know the thought process was that you know if you look if you if you think AI was a was a bust Google's core business is the is the cash cow in in the group right and and your your search business would go on and they would still make a ton of money. >> But and if you look now you know they're number one the Gemini is number one in the app store and it it you know they have the entire ecosystem. They've seen every query that you've ever typed into to Google. >> You know, where do I get beer late night, you know, like they they they have they have you down, right? And so, we're we're we're attacking all of Kevin's isms on his podcast. Just nailing one by one by one is perfect. >> Where do you get beer lately? Yeah. And and then and then you know you have to think about Nvidia is a hard one I think in that it's the it's the it's the hardware in the in the software space and obviously they have a huge lead in chips. The question is I guess is will they keep that lead and they have they have 72% gross margins. You know, I you got to ask yourself, are the the big hyperscalers and all the the big Chinese players going to allow Nvidia this lead, right? And and this and this profit for for for an extended period of time. My guess would be no. But, you know, am I going to really go hard against that? Probably not. So >> one of the things I find interesting about you guys is you take a very macro view of the world and you talk almost like macro you know analysts and then you go and do individual stock names or sectors is this a conscious choice or is it do you know you found as a individual stock analyst that you were getting run over by the macro so you figured you should learn it you know which came first. Well, our core expertise is in financial services, right? And and and if you cover the financial services sector, so think Goldman Sachs, Bank of America, and and just go down the market cap. Um macro is part of what you had to do. You had to have >> a perspective on rates. However, you know, we use it as a guide, right, as we search for micro ideas, right? And and and the other thing I would say is again you guys wax poetic about it. We do as well. Um I think market structure is dictating so much of what we see this day and age. And I think there were three massive forces um in in the markets today, right? Let's call it the Mike Green, right? Which is ETF passive flows, right? you know, young kids and their W2s are going to target date funds and they're buying 30 names, right? And then you have the crazy VA targeting regime, right? Which are the Citadels, Millenniums, the 72s, the Janes, and the Quans, right? Which their their degree of leverage is predicated on where volatility levels are. And not only that, given the sheer size of them and some of the books that sit in there, nobody plays in market caps below say five billion. So what we like to do generally speaking is two things. One, as a result of that, I think the market is incredibly inefficient um below a certain market cap. And above that, so much is is is dominated by liquidity and flows right now than ever before. We like to play and troll around in what we like to call the land of misfit toys, right? Where where the normal rules of engagement that we know as as, you know, middle-aged Gen Xers still exist. The rules have not really changed all that much. We're still subject to the laws of gravity. And because no one can play in them, the pool is deep and wide. It's just no one's looking. So we we dig through what we think should not be in that pool and purchase it and we give ourselves some duration call it 6 to9 months a year sometimes two years and what we're looking for is on a per stock basis outsized returns. >> Oh that is so good. So is it five billion? Is that your cut off? You think that that's around there? >> I threw that number out there. I actually think it's a little bit higher now. So whenever you speak to your Pod Monkey friends >> Yeah. >> and you and you're talking about a certain name, the first thing they'll say is I can't look at that. That's too illquid. Right. Right. And and and so they can't sell $20 million of it in one day. >> That's right. Now we we we have spoken before uh briefly on the phone and when we were discussing I think we did get into this discussion about pod shops and and and how much they've changed the environment. So let's let's go back there and let's talk about this because I I believe that the world has changed a lot and that the structure of our market and the way that things trade and how it's behaving and like I think even the golds today and this past couple of months is a perfect example of the pot shops. I think the reality was that they finally the numbers started going up. It started to hit on the quants and then they were able to buy it again and and they're all driven by this. But I would love to kind of get your perspective of how they've changed the market and is this a risk going forward. you know, we we we don't like to admit it, but we did uh spend about a 18 months at a very very large uh market neutral fund and it really changed our perception or or our outlook on the market and just by you know we were old school sort of tigeresque trained right we you buy good companies and short bad companies and we we lived in that world for a long time and then we went to you know one of these pod shops and there's I mean yes they do research but it's managing tickers on massive amounts of leverage and you know they just think of the world totally differently and and they would have these rules like you can only you can only own a stock for like they would um what would they call it Vinnie like youth or or they analysis >> aging and so like they they said, you know, this this position is old. I go, I don't care if it's old. I I I like the stock. It's great. It's cheap. It's going up. Like, but but you know, they want velocity. They want movement. They they want you to hit every earnings uh print. And a lot of times many would say like, I don't want to play on earnings. Like, this is too volatile. It's 50/50. I have no idea. But they want you, you know, fully invested on every single quarter. And so that's why you see a lot of that volatility. And for us, you know, it might have been, you know, we we we walked in there and we hated it the first day we walked in and we said, "We got to get out of here. This is is a nightmare." And so, uh, but we we learned a lot and actually we I think we applied it to how we invest going forward and that was that was helpful. >> Do you guys think that it's a um a risk to the market? Like do you do you worry about the proliferation of pod shops? I think it dictates the market in in part. So, >> okay, explain that. >> Oh, let me explain. Let's think about liberation day, right? Why did post liberation day act so poorly? Aside from the fact that we were all frightened to death about those tariff rates that were put out. It's my assumption that at that time all of the pod shops were all in because volatility was low. So, their books were entirely grossed up. Right. Okay. And now that you introduced an element of volatility and risk, they all had to do an ants marching and and degross at the same time. >> Correct. >> So if just the tail of the tape on that one, Ben, just the tail of the tape on that one. In March, the VIX was 15. >> It went to 60 in three weeks. >> So now let's let's think about Fed policy when it comes to this. And if you're if you let's subscribe to the Luke Groman and say that the S&P is a matter of of national security and I do believe that if all of a sudden more and more of the capital resides in voling and if you look at it on a gross basis and we could talk about why we feel this way on a gross basis meaning the gross notional capital that they're managing right is the incremental trading flow is dictated by these people then all of a sudden part of Fed policy which they will never admit to is to target low volatility levels because in order for that model to work, volatility levels have to be low. If volatil volatility levels are permanently plateaued, right, they got to degross and that would be that's a so we saw that during liberation day. But then like I agree with you Kevin, I think what happened is once their V metrics probably said, hey, you can go risk on again. This is the reason why we saw what we just saw, >> right? >> So, I think it dictates Fed policy in a large way. >> And what were you you were mentioning the gross levels? Do you think the gross levels are even higher than the market understands? >> Yes. Well, just look look at it in terms of V when when V was 15 in in March, right? They could probably lever these Quan funds could probably lever six or seven times, but V goes to 60 in 3 weeks time. They have to degross, right? So, so they're they're they're selling and they're buying and they're just compressing, you know, the the book as quickly as they can. And so that that's the reason, you know, the market went down so quickly. And so it it's it's, you know, the tail wagging the dog. Yes, the liberation day was a lot of uncertainty around that. But but the VA increase alone was the reason for the market just to throw up on itself. >> Kevin, could we Oh, sorry. Go ahead. >> Could I get wonky just for a little bit? Yeah, for sure. >> To show our financial chops, right? So, almost everything that we see in in financials is dictated by regulatory risk weights. I know it's a long winded way. And so, post DoddFrank because of the GFC DoddFrank increased generally speaking the risk weights of all the financial institutions. You used to be a prop trader. You're no longer allowed to be a prop trader. those things. But most of the risk weights that were raised were on all things loans, then credit card loans, uh, mortgages, >> mortgages, uh, commercial real estate loans, uh, and the like. All things that touch main street, right? What was not raised in fact it has just been loosened and loosened is all things securities and derivatives because they get the ability to net and they add more and more things to the net to show that we don't have risk and that it becomes then a function of volatility. So it's not surprising to us that all the froth and the bubble that you see is all things in so this kind of fits into this whole K-shaped economy we see. I'm not saying it's the complete thing that dictates it, but it fits that all things intangible in paper. There should we no one should have any business being able to yolo basis trade treasuries at 50 to 101 leverage. Nobody should be able to do that. No one should be able to do to play in the futures market and get teen amounts of leverage to express a position. They shouldn't. But they do. And as a result, that's why you see so much frothiness in trading in markets. >> Okay. >> And and go back to the GFC. You can see why we're so scared of leverage >> because we saw it firsthand. >> Yes. >> Right. And and the danger that it produces. And so and and and the quant shops know that. And and when when VA goes up, they shrink their books as quick as they possibly can. Oh, you know, speaking of the GFC and and I think you're the perfect guys to ask. Could you really explain to me shadow banking in a way that is accessible? Like, you know, you hear some people talk about it and I I don't really get it as well as I should. So, could you explain like the shadow banking how it works and where that leverage got put into the system >> pre GFC or post GFC? Let's do both if I could and where it might be now. >> Well, based upon what I just said, I think where it is now, >> yeah, >> resides in securities and capital markets. I think the majority >> that's not really shadow though, isn't it? Because that isn't that reported. >> But but usually, but before it was on the bank's balance sheet, that's that's the that's that's no no shadow about that. That's on that's you can see on on Bank America on Bank America's uh supplement they give you exactly where the loans are going. They they tell you we're giving this Y XYZ to commercial and industrial loans this to credit cards and then and now the biggest sector that they loan to by a leaps and bounds is financial institutions. So, okay. >> So, they're they're allowing Apollo, Aries, and all these these debt funds, the p, you know, private debt funds. They're supplying those guys with the leverage. >> Not only them, not only them, Porter, it's everybody. The Citadels, the Millenniums, the Jane Streets, the 72s, they are all getting usually collateral-based financing, right, to to maximize their leverage. I don't know exactly how they do it, but clearly the amount of dollars they're trading is significantly higher than their NAV. This is where I think the shadow banking system lies right now. And as a result, and it's usually what to me shadow banking is, you're not regulated by the OC, the FDIC or the Federal Reserve or not directly, right? and the bank and they're using the banks as a warehouse line so to speak or the central hub as well as things such as this such as the CME which provides the margin requirements for everyone that wants to play. This is where the shadow banking lurks. Uh I would say and you know the major difference between pregf and post GFC is that I don't think the policy makers and the powers that be really understood where the leverage was. I actually think they understand it now and the my concern is that they're not going to allow any material adverse price discovery anymore. So like we we view that we were probably the last people that benefited from material adverse price discovery. Home prices came down. Everything came cascading down. It all sucked. Right. But post that I think they said no MS not on our watch. Never again. >> Which is why everything gets inflated and that's why you've switched to the other side. >> Correct. Which which if you take it even further now you got me now you got me all going Kevin. I actually think this is the biggest reason why we have a bifurcation of wealth between the halves and the have nots because when it comes time for the people to lose, they cry to DC and they get bailed out. And you imagine if you keep doing that again and again and again and again, behavior start to mount. It's only natural. >> You know, the the Silicon Valley depositors should have got wiped out, but of course they didn't. >> Yeah. Right. And you know the the the the irony of the all-in guys previously you know talking all libertarian and then the moment their bank gets into trouble it's like bail me out bail me out bail me out it's just like h you know bunch of douchebags are >> Kevin do you realize I had this conversation with someone at at the house treasury subcommittee or whatever it is and a few others that if the jumbo non-interestbearing depositors weren't bailed out, you probably would not have stable coins because the excess capital that was sitting at this company circle, right, excess cash resided at Silicon Valley Bank and it was in the form of non-interestbearing jumbo deposits that would have been an unsecured creditor and so they would have quote broke the buck on US dollar USDC. >> Interesting. Yeah. And and that's back to your point, Vinnie, that in essence by bailing them out, they're propagating this financial asset bubble. >> Correct. >> They're not allowed to fail. >> Right. And and going I my next question was >> you're bringing up old anger that we have here. This >> the good news is the good news, Kevin, is you you asked a question before of why you guys look at the micro instead of the macro. Yeah. >> Because our macro heads are all up with with this stuff, >> right? And if we express it, you would be bearish all the time. That's right. What we what we figured out is well, park your heads in the micro where it's not that crazy. There are some interesting things and just express your macro in in the form of gold and then and then you're good to go. >> That's the funniest part that one of the things that liberated us is we we the most bullish thing we were on is we were bullish on deficits, right? So, so we were we were long like why don't we be long gold and all this other stuff that's is going to reflate. >> That's a great line. I love it. Bullish on deficits. One last thing before we get off this shadow banking. One of the things that I've thought about in terms of crypto is that I stop and I think about the US dollar system in the late 1800s when specific banks could create credit and we had this situation where um they were individually creating credit and there was like something like 10,000 banks or 20,000 banks some obscene amount kind of going into the 1929 you know depression and then it collapsed. collapsed in on itself and all these banks couldn't do it. One of the things that worries me about crypto is that what if there's a huge amount of credit being created in there and aren't we exposing ourselves and is doesn't that become an actual like find a risk to our society and to our economy as it grows and it ends up being more difficult because like let's go back to the GFC. They broke the buck, but they were able to come in there and actually uh back all the money market funds and and put it back to a buck. But what are you going to do if there's a run on the crypto on the stable coins? >> I mean, I think if if we start giving our views on crypto, people are going to turn the podcast off. >> No, no, no. You can go ahead. Listen, they already know that how much I like it. We're we're all having fun staying poor, so just go ahead. Like do you agree that there might be more credit in there and it's a it's something that is underappreciated? >> Yeah. All it is is this week I saw a one of these what what are they called? Treasury digital DAX whatever and this company uh their their DAC their asset is Salana. And I had the the the president give me the pitch and it frightened the out of me because because his pitch was, well, we're trading at a discount to to Micro Strategies. We should trade at a premium to Micro Strategies and once we get there, we could just issue capital and buy more Salana. I go I like that's your pitch. That That's your pitch. There's no other And he And then didn't you ask didn't you ask him what what the use case of Salana was? >> Yeah. and and like and he was giving you some smart contracts. I go, you know, you use these words smart contracts. I go those are if then algos, right? Like that's that's all it is. And I go all you guys I see in crypto is secured margin lending. Now, I will say we've been studying the genius act in stable coins and I have to tell you the the man, you got to you got to you got to give a golf clap to how clever these people can be from time to time, right? Which is they effectively have tied Bitcoin and Ethereum into the potentially too big to fail um uh argument. Hold on one sec. I think I'm being disturbed. Yes, you're going on your walk. I'm doing a podcast right now. >> It's okay. >> It's very on brand. Don't worry about it. Perfect. >> So that's perfect. So So um so and if you walk through the mechanics of it like now we're tied and and the the buying and selling of treasuries de facto is tied to the level of Bitcoin, Ethereum or whatever qualified asset makes it uh that is backing stablecoin. It's pretty frightening when you think about it. >> Yeah. I I I think it's crazy. Okay, let's talk about uh something other. Maybe we'll step back. Why don't we talk about names you like? You obviously love the gold names. You mentioned a couple. What are some other ideas that maybe aren't as appreciated that are, you know, something that is truly a value name where you're picking up that you're willing to talk about? >> Good questions. you know, we're we're we're value guys, so we don't like paying a lot for the muffler and that so that that's hard in in this market where, you know, the obviously the valuations are if they're not at at all-time highs, they're they're close to being at all-time highs in terms of the valuations. So um you know we we try to step back and I I think I'll give an example and I'm not recommending people buy these here but you know early in the year we we went on CNBC and and uh we were pitching that we were along Chinese stocks and >> at at the time you know BU was was trading for about cash value at the time you know Baba was trading at five times earnings and and you know everyone was like well what what's the catalyst Well, you know, they're you know, don't don't you know that you don't really own a security that that you know that that that the Chinese can take it away in any any moment? >> China is uninvestable. Remember that one? >> Investable. >> Yeah. >> And so, you know, the the the things a friend of ours, James Aken, uh he always tells us to, you know, ask ask the question, what can go right? And so, you had all this negative Chinese uh rhetoric going on for so long. And you know, uh, Jackmaw, they obviously put him in a closet and and said, "You're not allowed to earn money." And you, we didn't see Jack Ma for five years. And that was the risk of Chinese stocks that that you came out and and one day your CEO was dead and and you know, the stock was down 90%. So, but you know, five years later, the rhetoric from the Chinese regulators starts turning because they they they want to get the engine of the consumer economy going. And so you you you put breadcrumbs out there. You start with a a cheap stock or maybe you start with the the the the the premise that hey the the you know the inflection in the regulatory u uh rhetoric coming from China is changing and then you go look for cheap stocks. And so that's kind of what we do and and that's the process that that we we look for. I mean Copy actually says it well. He does inflection investing and we kind of do it too whether maybe there's we spend a lot of time on inflection and cash flows or if if you look at a lot of commodity names you look at maybe an inflection in the price of the commodity because obviously it's just price times volume and so you know so we we spend a lot of time uh thinking hey what can go right you know one of the names or one of the sectors that we've been been thinking about and people have talked about for a long time right now that and it's it's quote unquote dead is oil and gas stocks and we haven't been buying them yet, but we've been starting to figure out hey what can go right here and and if you look at you know oils oil to gold ratio or you know even an inflationadjusted oil is super super cheap and so you know that's the type of thing scenario of like hey what's what's hated right now what's really bombed out what can might not work today, tomorrow, but you know, in three months time, people are like, you know, that this is pretty cheap. Things are getting better. And so that's kind of how we think about things. And if you put together a portfolio of, you know, five, six, seven themes like that of, you know, we we we were looking at copper, so you know, a couple a year or two ago, and and we we extracted a couple copper names out of there. Same thing with the the the platinum and palladium names. We did the same thing. And so, you know, as you see these reflation trades that go on, like gold was the first one to pop and then the silver miners went and then the, you know, the platinum miners went and so, you know, we try to go through there and so it's not all commodities commodity related names. We have a lot of oneoff, you know, special sits that value traps that we love. But, you know, at at at worst, we're going to get out flat or just eat it for the next two years. But if things go right, we can make three, four times our money. That that's how we look at it. >> Our our the stock that I've had the most fun owning, I'm not sure, but it it gets to our process, right, was we started looking at we love again shopping in Phileene's basement and and and where things are bombed out. And one of the areas that was bombed out was the XRT, right? and and so >> and then all of a sudden, I think it was early August, late July, this company, American Eagle, decides to hire Sydney Sweden as their brand spokesperson, right? And we're not dirty old men, but Jesus Christ, that seems like a good idea. Buy the stock, right? Um, so we bought the stock and it was like, you know, we did the drug and I think it's drunk and miller or or buy first, ask questions later and do work. >> I think it's is it is it Soros? Is it is it It's one of them, right? And and and >> and so like and then all of a sudden we're like, "All right, get over that, you dirty old men." Start doing work and then we realize like, "Holy this is trading at like four to five times EBID. The balance sheets clean. They just bought 8% of the float because they just took an inventory right down. And this is near and dear to our hearts because we've been on the wrong side of this freaking trade for God knows how long. There's 18% short interest. So, so, so, so there's an ability to squeeze and we just simply said using the James Aken like what can go right here? Well, if this woman somehow increases same star sales from negative to flat to positive given where the stock was and it was 60 to 70% off its high, this thing could pop like like like mad. And so, that's the type of stuff that we like to do. Whereas we go in, we try to find names that has real this coiled spring energy, but we clearly know something has to inflect in the fundamentals. You know, if it doesn't, then we're just going to sit on something that just sits there. And that's kind of the way we like to play the game and also look for themes in the process. But but we used to pitch this name and people would they'd laugh at us for for about, you know, a month and a half. Be like, "Ah, dirty old man. What the are you doing?" and and the stock went from 12 to, you know, 20 where it is today. I you know, the the problem Vin and I are going to have is that we we've owned it now for three months. We got to own it either for another nine months or or, you know, to make wait to long-term capital gains or figure out what we're going to do with it. But that's the that's, you know, champagne problems. I guess >> that is more champagne problems. Okay. Uh what you know, you guys are old hands at doing these podcasts and you've done some interviews yourself. What would you have asked yourself that I might have missed? Like what is something that I should have been asking you about that's important about the about you or the environment that we're in? >> I got one. We were talking about it today, Porter. When do you get off this faux train? Right. Like, so yeah, for a bunch of cynics and bears, we've been running that long, right? and and it's has served us well. But we all know this game has to end at some point, right? And and like while while we're playing micro bulls, our macro is like crushing us down and and we're like, "How do we get off? When do you know you get off?" And and that's that's and sadly I don't have the answer. So thankfully you didn't ask. Uh but but it's it's the question we keep asking ourselves, >> right? because we know at some point this is probably going to end and we probably don't want the exposures we have when it does. And and by that you mean you've been playing this reflation and that's your grand kind of bigger theme but within that there's still going to be uh you know cyclical you know business cycles or do you mean that it's actually the whole macro cycle is going to change? >> Well obviously it's been it's been a bull market for a long time. Right. Right. And and the question is is when when is the bull market over and thankfull we we fake dressed up as bulls recently, you know, I would say for the past five six years and it's been the right call. The question is when when is the right time to get off? What are those conditions that that's going to wave the white flag and say, Vinnie, it's time to sell. And I and I think that you know we we actually uh we shouldn't say we've been bulls for you know we were very bearish in 2022 >> okay >> in the later half of 21 when you know these value I mean look at the look at the micro cap index it's finally breaking out again but it's nowhere close to where it was in postcoid right and so >> you know we saw the inflation just like a lot of people did and we're like this is going to be a real problem and you know the thing that that concerns me now is that, you know, we're cutting rates, but we're nowhere close to the the 2% target. And I think Gold's kind of telling you that today that that, you know, you guys are cutting rates again, and you're nowhere near the the 2% target. You got Fed's uh Trump's guy calling for six more cuts, and he's only the first Trump governor in. He's getting he's getting like three more soon. And so are are they gonna run this thing so hot >> where inflation takes off and that's going to kill the market? >> Yeah. >> And and you know there are so many excesses all over the place and there's growing social unrest. You can feel it, right? You can feel the the tension between the the you know we talk about politics all the time. We we've I've pulled back so much from political views in the past, you know, call it 10 years because it's not helpful. It's really not helpful for investing because everybody's so charged charged up. You're either Trump deranged syndrome person or you're a MAGA person. >> Yeah. >> And for for us, it's not helpful in in investing. So, you know, that there's that that tension everywhere. And I think that, you know, the next bare market's going to be probably pretty bad. And and we got to we we've been we think almost every day about what are those conditions going to make us sell and sell everything and go to cash and watch the prices right at, you know, 11:00 and and enjoy our day. >> So you have no insights though in terms of what they are, just that you're looking for them. Were you looking for them three months ago or is this a function of the new price? Like is has it changed? Has your attitude looking for. You have to always >> We're bears. We're always looking for them, right? But >> but we know now >> now that they've increased stimulus into the system, I think we're back into a liquidity driven market. And so what will cut this off is a reduction, a forced reduction of liquidity like we had in 2021 when Powell came in. And what will cause that is inflation that will be politically untenable. And and so as a result, that's what we're So we think we think subject to change. We're going to get it hot first and then and then as we as the economy percolates and inflation rears its ugly head back into statistics that people actually will consider inflation, don't get me started there. Then then all of a sudden we we were going to get probably really bearish. >> Yeah, we're so heavily indebted. This is a refinance market, right? And and so there's so, you know, there's treasuries, whether it's anywhere there, there's all this debt and it's a refinancing market all the time. And so the mo and this is goes back to our financial services back background. When the when the Fed pulls the the punch bowl or the financial conditions tighten sufficiently, you know, that's when the problems arise, right? That's when Blackstone can't sell, you know, portfolio 721, right? they can't they can't uh liquidate it, right? And so when when those financial conditions tighten, you know, we're going to see it and we're going to get bearish. Um do you do you think that private equity and private credit are a disaster waiting to happen? Are you as worried about that as you know some of the commentaries that you hear? >> Well, they've done a good job of hiding it, right? They they've h they've they they've just they've suspended marktomarket accounting for four years, right? They've done a beautiful job of that, right? They're just, you know, all these big universities aren't getting their distributions, right? They just been ah you're flat again this month. And so, you know, when you don't have price discovery, lo and behold, it's not a problem. >> Yeah. Um a a quick question in terms of the economy. Do you think that you you mentioned you think they're going to run it hot? Do you think that it is uh the labor market is giving false signals of of weakness? >> No, I actually think the labor market is weak um weaker than it has been, but it's really hard to get incredibly weak when you're running 7% fiscal deficits. Um but >> in order to get the economy percolating again, I think they and this is something we did not speak about. They are hellbent at getting rates low and getting the housing market going because that is that's a needle that can move the economy. And that's why I'm not surprised that Treasury Secretary Besson has and Trump has declared housing a national emergency. Right? What does that mean? or more importantly, what are they going to do about it? And and rather than get all nervous about it, just think about what crazy cockamame thing they're going to come up with, right? To try and get the housing market going. What What do What do you think would happen if Trump Well, let's not even talk about him firing Powell. Just imagine he puts in uh you know Zervos in as Fed chair come you know the summer and Zervos ahead of time says once I get there my goal is to get rates down to 2%. So he in essence guides the market even though Powell's still in charge and potentially could actually you know move the curve the forward curve down right. What do you think happens in that environment in terms of the economy the stock market and like does that just cause the dollar to go no bid? I would just I would love your kind of opinion about how that plays out if if a true Trump kind of yes boy gets put in there. Well, you're you're talking about yield curve control, right? And I mean, the Japanese are the leading edge of of yield curve control players, and they they they pinned yields at basically zero for a long time. And now yields are I mean, they're not that high. They're, you know, one6, right, the Japanese 10-year. But, you know, they're talking about raising rates. They're talking about selling down uh they're selling down their their all the ETFs they bought over the next hundred years. and uh you know so I think the yield curve control is inevitable. I think quantitative easing is inevitable at this point, right? There's just too much debt, right? And and they need buyers. That's why this whole stable coin stuff is is to find buyers of our debt. And you know, we're rolling down the the curve. And so, you know, again, you can either be bullish or bearish on that. You can you can take our bearish hats and say this is disaster, or you can take the bullish hat of saying I'm bullish on deficits. I'm bullish on reflation. I'm bullish on inflation. and and play it that way. And so we we have sort of many minds about that. >> And that's going back to your your Vinnie's point about when do you leave? Like when does that tip from the reflation to the kind of bigger problem and a crisis that causes the stock market to sell off? >> Well, you know, if yields go above 5% like you can turn turn off the lights here, right? And so that's why it's it's of national security. It of of to get rates down. It it really is that that existential >> because, you know, we're running such we're running 10% budget or 8% budget deficits now. Imagine what happens in the downturn, >> right? And so that's why that's what that's what drives me nuts that the these they're the recklessness of these politicians and of the central bankers and they're in they're in it together and they've they've they've they've edited they've aided and abetted each other along the whole process. You know V Vinnie yelled at Bernaki about this 10 years ago. Okay, wait there's a story. Okay, this is we'll end it on this. What did you when did you yell at uh Bernaki? So Bernani consults very large multi-manager hedge funds it's known and he at when we were in one of these places he was actually consulting he usually does it like a week or two before the Fed opines and and he wasn't with the Fed at that time so there was no I guess this was all legal and so for whatever reason they sat me right next to Bernanki which Vinnie took a a page out of Steve Eisman's playbook and it's he's so juiced up. I and I I was literally grinding my teeth and and and I go, "You got one shot at this kid. Let it fly." Right? And so I I essentially asked him a question of one can argue and put myself in this camp that you and your institution, your former institution, the Federal Reserve, have aided and emedded all of the excesses that we see in fiscal spending by printing money and allowing our government to issue debt at an extremely low price, artificially low price I might add. Right? and it's actually you guys that have enabled all of this. Um, what do you say about that? And do you take any, you know, responsibility for what we're seeing right now? And he basically went, "Meeting's over." And he walked out. He walked out. First, no, first he said, first he said, "That's rubbish." And then he said, "Meeting's over." Oh. That's that's that's pretty small of them because that listen you're correct like the reality is that if they had risen rates and the the the government might have behaved differently >> and actually that's one of my biggest complaints about the Fed is that they in when they went to raise rates they uh in 2022 they didn't sell off their balance sheet. They should have been doing quantitative tightening immediately and pushing it back out into the market and forcing the market to discover what the correct price of that was. >> Yeah. But as we said, there's no price discovery anymore that's allowable. >> Yeah. Okay. That's a great story to end it on, but we're not going to let you go off without getting your desert island desert island trader picks. Okay. Okay. And so for those who don't know this game, it's uh there's a BBC show called Desert Island, and you get to pick 10 albums or 10 bands that you want to be stuck on the island to listen to. So we do the trader edition, which is you get three albums or three bands, and then one trader from history that you get to be with that will help you trade during this period. So, who wants to go first? >> You go first, Porter. I'm dying to hear your musical things. I I don't even know where you're going to go. I uh my best friend's a huge piano player and so I'm uh I'm very partial to that and and uh I could either pick uh Billy Joel or Elton John, but I'm going I'm going with Billy Joel. And that's my first one, >> Long Island Zone. And then uh I'm obviously a huge Zep Zeppelin fan. And uh my last one I'm wearing actually the t-shirt right now. Bob Marley. Love Bob Marley. >> Oh, there we go. A little bit of Bob. Okay. And what's your trader? Um because we got our start in the hedge fund business as being sort of tigeresque or I I I I pretended that I wanted to be a tiger-esque investor. My pick is Julian. >> Oh, that's a great pick. Julian Robertson. All right, Vinnie. >> Vinnie created quite a stable of unbelievable investors, you know, and a legacy that along the way. So >> that's right. Okay, Vinnie, what do you got? >> So Zeppelin, that's the boring one. I I can imagine for people our age, it's going to be so common. >> Uh I was debating between these two guys, but I'm going with Prince >> uh over Michael Jackson. I think he's probably arguably the best musician of our lifetime, pound-for-pound. Uh and >> he only weighs 90 pounds though. But >> yes, it did. And then I I'm a big big lover of old school hiphop. So I was debating between Public Enemy to get my rage out or or or Dr. Dre, but I'm going to choose Dre because you get all of NWA with that and every and and uh Fitty and Eminem. You get them you get them all because of his production. >> Got it. Who's your traitor? >> And I'm not kissing ass to him, but he is our mentor. But with him, we get all of us. Just for pure entertainment factors, I would choose Eisman because our our time at Frontpoint, right, was just so magical that like it was pure entertainment every day, right? It was almost like being on a curb enthu enthusiasm episode every day. And it was just it's just the banter of all of us having fun. But just I I would love to bring back the crazy that we were dealing with during that time frame. >> When when when LinkedIn first came out, I I created a LinkedIn account. This is called 2009 or whatever. And uh I put uh job title, I put zookeeper, and I can't find that password. So my it's still out there calling zookeeper. So that it was a it was a it was a total jungle the the between you know bears and bulls lots of interesting personalities. We had a lot of other people on the team as well. So it was uh it was an amazing place to work. >> Oh that's great. Those are great picks. Okay. So before we go you guys have a new venture. So let's take some time to plug this and get you some people listening uh you know uh subscribing and uh listening to your your new podcast. And let's someone give us the plug. So um on top of just managing our own capital rather than open it up to outside investors which we didn't want to deal with the the headaches and the ajida we said well why don't we write sort of a blog or or or provide commentary sort of a blog of what we do on a daily basis. You know we're already in the social media you know crowd. Um let's have some fun right doing what we're doing. and and pretty much what we're doing is we think we're a little different in that we're sort of single stock or thematic contrarian players. So we started a writing a substack called what are we doing? uh as well as providing a weekly Friday um uh podcast, right, called the Friday the Friday Night Dirty uh with our partner with our partner and also former Big Short alum and Frontpoint alum and Seawolf alum partner Danny Moses who's in the podcast world and it's just again coming back to my choice of Eisman. It's just really getting the band back together and having fun, but doing it in a way that we think is quite educational. >> All right. So, it's what are we doing? And is when you subscribe to What Are You Do We Doing? Do you get the podcast or is the podcast separate? >> No, that comes with it. The Friday Night Dirty comes with the What are we doing? Because we we would it it came from we'd be on the desk and we'd walk in the morning and and be like what are we doing here? Like why why are we even in this position? Like what do we just sell it, you know? So, uh, and and the other thing we we we've enjoyed because we've been off the institutional reservation for quite some time. So, we've we're really more retail investors or high net worth managers. So, we had to scrge around and find alternative sources of information. That's kind of how we fi found you guys, Kevin, and everything else via Twitter and the like. And then we started playing around in Discord chats and we just found the community this odd ducks of professionals extremely value added to our process. So what what we want to do is sort of develop a community of people who are like-minded or even not like-minded to be honest to join us in in in this fund that we're having of of playing idiosyncratic names and building a portfolio of of weird stocks that hopefully can outperform the S&P. Okay, sounds great. So, it's what are we doing? It's W AWD. I'm just looking at it right now. It's on Substack. You get your writing and the Friday dirty. Is it What is it? >> Friday night dirty. So, you guys going to record this right after this? >> We did it this morning, but >> Oh, you did it. Friday morning dirty to this week. >> Usually, if you want to announce bad news, you always do it, you know, Friday at 8:30. So, no, no one actually sees the news and then by the time Monday comes around, they they forget. You just we just got one. >> Really? French just down was downgraded their debt rating. So that is perfect definition of a Friday night dirty. >> There we go. >> You don't do you don't do it on a on a Wednesday morning. Yeah. I do it on Friday afternoon. >> That is awesome. You guys, it's been a real pleasure chatting with you. Thanks so much for taking time. >> Thank you. >> Thanks for having us. >> All right, Patrick, it's time for Talking Charts. What do you got for us? >> Well, listen, what a week. Uh I mean we had the much anticipated FOMC uh and I'd love to just get your take on what you took away from it but obviously they came in and made it pretty firm now that they are going to uh be doing the three cuts this year right there's two more coming uh and but uh I was I think the market was expecting a more dovish sounding Powell and um and I think that what they came across very kind of like growth is still high and and uh inflation expectations are still a little bit higher like that that they're that they may not do many more cuts after that like what was your takeaway? >> Yeah, I was actually surprised the stock market took it so doubbishly. Um >> yeah and and looking at the reaction from the bond market and the currency market I think they correctly interpreted it as a very down the road middle of the road um Powell conference and in fact if anything I think it was disappointing relative to the expectations that you highlighted there in terms of their uh you know expectations about forward rates and I'm just looking like you mentioned the fact that they you know firmed up the fact that there's going to be, you know, three more or two more hikes now until the end of the year. And I'm looking at the end of the year um like in the WRP function on the Bloomberg. I'm looking at like what they expect end of the year FOMC rates to be and it and it's unchanged. It barely moved like it's it's it's just a straight line. So, I'm with you. I'm a little confused why the stock market was so bullish. And uh to me, it indicates the fact that the stock market is not trading on Fed expectations. and that that's not what's driving the stock market and that the currency market and the bond market correctly got it that there was down the road if anything a little bit hawkish versus expectations. So the interesting part of what you just said uh I agree with is that but there also could be just simply the lag time. Uh often currency and bond markets are the first to react, but we've seen scenarios where uh where bond markets and currency markets will move for an entire month before suddenly the stock market has this kind of aha moment. It's like, oh wow, um things are out of caliber and suddenly the stock market joins the party on a lagging basis. And so we could have a scenario that if the trends did legitimately pivot in the bond markets and in the currency that the stock market will start to care at some point here. >> Yeah. No, I I'm with you so far though. Just >> the mania is the mania, right? Like and uh I you know we both talked about it like you know two weeks ago that we thought that the stock market was getting a little bit tired and it doesn't show any signs of that at all. Well, it is it is uh rising in a tired pace, but it is rising and then we'll talk about in a second. So, let's start off just quickly looking at the silver futures. So, this is exactly what you were talking about in one sense that like this is the December 2025s and the uh the Fed basically gave the market exactly what they were pricing in. There was virtually no movement uh whatsoever. It's like if if you even looked at this chart and said point to where there was a FOMC thing, you couldn't identify it. Like there was literally uh no movement uh on this. But what's interesting is that when you go Can I take a moment out to just just kind of point out that you have become a complete stir trader. And for those who don't know what stir is, it's short-term interest rates. You're starting off with December so futures as like the most important chart to watch. Well, no. Well, I listen after the Fed after the Fed meeting, that's a place to start. In my opinion, that's not going to be normal. Uh I it's just like I I was just simply feeling that this was a good reinforcement of the statement you made. >> It's okay. You can be a stir trader and be >> Don't Okay. Okay. Okay. So, uh, what's interesting is is that though the December 2026, which arguably more accurately reflects potentially where a terminal rate, uh, could, uh, land, uh, started to fade like we were at 3% level a month ago, started to price in potentially a rate lower than 3% and it's back to 3%. Uh and so so clearly Powell talked down the dovishness uh in in the market for now. Um there was obviously the reaction in the bond markets but the what I want to start with is the dollar and and uh that turn. And uh what we basically saw was without knowing what was going to come out of the Fed, the dollar uh basically traded right down to its July lows. But it wasn't just that. It went for a direct double bottom retest of its lows. But the uh but the most important currency cross in the pairing, the Euro US dollar actually broke to a higher high. And so uh guess what? It's the noble animal might have just shown up. >> Oh yeah. >> Prairie dog. >> Oh yeah. >> Is this a Is this a prairie dog? Like the euro broke out before the Fed meeting. um and then even broke further north of 119 in the post reaction and then it's been selling ever since. Uh so so to me this is a very interesting whenever you have a breakout candle this I'm going to give you some little technical analysis that I've observed from my years of experience. When you have a breakout candle I always say one day never makes a new trend. Uh it's the the breakout day itself is not important. What is always most important is the next uh 48 hours that follow which is essentially a scenario where uh do the bulls maintain the price? Do they follow through? Do they continue to show up? Is there more new flows coming in to build on this new trend or is it a fake out that completely fades and wipes out the entire breakout? And so the two days that follow are often way more important than the breakout day itself. And the fact that we had a breakout to a fresh 52- week high on the euro and it completely faded the breakout candle uh it it uh is not a plus for the bulls. Let's just put it this way. It's uh it's not what they wanted to see. And then when you go clearly uh there's uh there's uh some political things going on in uh with the budget there in uh in England. Uh but you basically have the uh had a legitimate breakout attempt uh of at least for a multi-month high um of uh of the uh pound and uh immediately fades uh right and uh and even uh you know I know you spent a little bit of time out in London. I'm just going to uh look at, for instance, uh the the 30-year uh bond, but you can see that uh without making a higher high, the 30-year bond out in uh in um the UK basically completely rolled over and broke down, making >> Is this the yield you're looking at? >> No, no, this is the bond. >> This is the price. Oh, I see what you're saying. >> This is the This is the actual price. And so crew is not going to be very happy with that, man. >> No, they they are not. This is why I'm that's why I brought it up because you were you were uh kind of uh talking about that whole uh everyone loving that long bond there and but so we have a situation where where uh where we've seen at least in the currency markets a couple of major European ones fading but the other big one was obviously the uh US dollar against the yen. We uh that 50-day moving average has been holding every pull back that the US dollar has had for about uh all summer, all July, all of August. And we had a couple closes going into the Fed below there, like there was going to be a fresh breakdown out of this uh out of this trade range and uh uh immediate reversal. I know that in Japan they announced that they're going to start unwinding some of their ETF purchases and other things like this. I'd love to hear your take, but clearly uh uh the currency markets uh were anticipating and I think a much more dovish Powell and the moment uh that press conference started uh his tone uh disappointed whatever the currency markets were pricing in and the US dollar reflexively was snapped right back onto the upside. I would not want to call any of these bullish breakouts, but clearly the dollar reversed the moment the FOMC happened here. >> Yeah, can't I can't disagree. I think it was a definitely a buy currencies on the rumor, sell on the news situation. And this is ultimately where I stood when people asked me what they thought about what my forecast was for this upcoming or this previous Fed meeting was. I said it's going to be tough for Powell to you know uh confirm the level of dovishness that the market is priced in and yet you know you've highlighted the fact that the US dollar uh is is correctly interpreted it that the interest rate market is correctly interpreted and it just leaves stocks like all out on their own like you know interpreting it differently. >> Absolutely. So let's uh look a little deeper on the bond market just to reference because we'll we'll talk lots of stock market stuff here in a second. But I wanted to just simply highlight when we go and look at the US let's say 10-year uh the bond uh did reverse like so we had um uh it finish a zigzagging measured move on the upside uh and it was due for a correction and this is the really interesting moment in the bond market because I mean I it reversed but just like the dollar we have not seen legitimate technical price action that uh has uh reverse the pri uh the trend that's in place. Uh arguably the US dollar still is in a distinct downtrend in spite of a couple of days of rebounding. And at the same time, these bonds are still in a primary uptrend. What's interesting here is that the 10-year um uh note futures here uh basically are now at a 50% retracement of the last bull advance at the same time as testing what were all previous highs which often act as support including that 50-day moving average right there. And so, uh, what this is going to be a real tell here virtually at these price levels where we're trading, uh, as to whether this was just a pause in, uh, a a new bond bull market or did things legitimately reverse and we're back to bond bearishness. Um I this is not enough to put the nails in the coffin of of this uh this bull thing, but we are really at an inflection point where uh if the bulls want to keep the party going on bonds, they're literally going to have to hold the line here. Now, this is this is the level where if if if bonds were going to go higher, they have to hold. Um I feel dirty saying this, Patrick, but I I think you're correct. And actually, I I find myself short the least amount. Actually, I'm flat bonds, which for me is like that's like being long. Like that literally is a long position for me. I'm flat bonds. Um I even took off my break even trades that I've held for years and years. And uh I I think it's one of these cases where um a a a a Fed that is not as dovish as everyone expects is actually good in the long run for the long end of the bond market. And that's that I think people are missing. So, yes, the knee-jerk reaction is to sell bonds on the fact that the Fed is not cutting as much as they as they as the market hoped, but over the long run, when you're thinking about as a long bond investor, you don't want to Fed this compromise. You don't want a Fed that is pushing rates down too low because ultimately that's going to mean, you know, according to theory, more inflation and therefore more inflation erodess your value. So, I think you saw a little bit of a of a the steepener trade coming off. I think there was an article that PIMCO had that trade on in size and they took it off. I suspect that um that for a while now you're going to be able to trade bonds from the long side which is really like very very unusual for me to say and uh but I look at this and uh >> CPY got it right. I mean he's uh >> well we'll see yet like I don't Yes, he's like it's going the right way but I don't think he's trading it for an extra two points or whatever. think he's trading it for a bigger move. And I think that's really the question is is the economy rolling over as much as the economic bears like me and CPY believe or is this the start of a new cycle as the Mike Wilsons and all the the tons of Wall Street strategists believe? And I'm going to take the other side. Like I think it's the end of uh the extended uh economic cycle that we saw that started in 2020 uh in co you know postco and even if you wanted to argue that the there was a cycle in 2022 which some people do it still means that we're two years in two three years into a cycle. >> Yeah. >> And so I think that really ultimately comes down to where you are in the economic cycle in terms of what you believe. >> There you go. Uh you know we'll we'll definitely watch. We're definitely at the crossroad on those bonds. Uh and uh and we're going to see whether the bulls can hold the line here at some very key buy on dip zones that uh typically if it's a bull market in bonds, these are the levels that should be bought. Like this is where you would see them leaning into the the dip buying. And so we'll see whether it materializes. So let's talk about the stock market. And uh so here are the S&P futures and the r uh the the rising wedge has been relentless. It's uh we continue to see uh it uh just not quit uh on the upside as it continues to to to crawl higher uh on an intraday basis. There's that a new hourly measured move that could theoretically measure all the way up to 6800 on this advance. The market continues to make higher highs and higher lows. uh there is zero evidence that the bears have uh done anything to regain an edge. But what is interesting is we're speaking now on opex. This is the option expiration, >> right? >> And uh often uh everything from gamma pinning to positioning uh dynamically changes uh over this weekend. And the question is is with no real major news next week and a lot of this gamma kind of flows um dissipating, the question is the market will be far freer to suddenly begin a trend move and uh and the question is which direction will that trend be? Will it be a a continued resumption of the bull to to a higher level or will we see that once we get past that opex that suddenly that long overdue market correction uh comes in and so like kev what I wanted to specifically talk about was just the actual length of this rally without a 5% correction. So, I went and did my own little quantitative um analysis uh going Yeah. Yeah. It's bizarre, but I I sometimes do this like pull out a spreadsheet and do some like a mathematics. >> Don't lie, you didn't do it, buddy. You got someone to do it. >> Uh no, no, no, I did. >> Really? But but but what I want to highlight was that going back to uh the start of the decade, so back to January 2020, >> there have been 25 market corrections that were greater than 5%. Like just like a fi the 5% variety, including including the crashes, right? like the COVID crash and everything. 25 of them, 14 of them were in the 5 to 10% range. So, you know, 5 1.5% 7% whatever, like you know, your your typical pullbacks, 14 of them, but 11 of them were greater than 10% including four of them that were greater than 20%. in terms of their drops. So, so the frequency of at least a 5% market correction is uh once a quarter like just just doing some basic uh division of of the frequency that that has happened over the last almost six years. >> Okay. And um and so uh we have a scenario where uh this rally off of now first of all in fairness it should have been a a strong rally because the magnitude of the drop of liberation day there's a reflexivity of it and so the the bigger the magnitude of the drop the rallies are equally as big uh on the reflexive side. So here we are 164 days into a third almost a 36% stock market advance. >> Okay. >> Uh this is uh the 100 percentile where this is now the longest for this decade and not beyond. So this is not a huge back test but uh uh but for this decade this has been the longest and the largest in magnitude rally without a 5% correction. Wow, that's interesting. I wouldn't have expected that. >> Right. And uh and so uh and the the the second longest one was the 2023 going into 2024 where it was like 157 days and 30%. So so we are now in a period where and that in itself doesn't guarantee a market correction. But but when you look at it from a context that market corrections are the natural part of a market cycle and there they're and this is not some sort of new paradigm where stock markets don't correct. Um the uh >> you sure about that? Uh well, I'm not I'm not so sure anymore, but but uh some sort of at least five plus% market correction uh would be natural to start at any point. And what what will the trigger be is the puzzle to solve, isn't it? Right? Like what clearly the Fed wasn't it? Uh you know, there was a chance that the Fed could have been it, but it wasn't. uh and so what is the next kind of catalyst uh for uh for for doing that? Now the um eventually we'll get it. Now, my speculation is that it won't be a crash this leg. Uh like often I'm always uh on alert for it, but like the idea that the stock market is just going to start some sort of a a decline is in while the probability of it isn't zero. Uh I would not uh suggest that that's the most likely outcome. More than likely what happens during market toppings uh is is that you have one of these 5 to 10% market corrections. Let's call it down to 6200 or something like this. And then often the market will still yet again retest the highs. It's entirely possible here that when we do get this correction that that will still be bought on dip and we will have some bigger topping formation uh start to develop through the fourth quarter of the year is is at least my starting base case of of how I think uh this market will play it out. The puzzle to solve is do we still go to 6,800 before this correction even begins? Like I don't want to keep talking like this is guaranteed to happen on Monday. Um right now the bulls remain completely in control of this market. Uh and we have to give them the benefit of the doubt that they'll um that they're still in control, but we're going to look for what are the trigger points for for one of these corrections. >> Great points. Um I'm with you. I think the OPEX is more important than than folks realize. I as well was surprised the fact that we had a seasonally weak month. September didn't seem to work. We also had liquidity tightening up. Didn't work. Um and now are the bears just basically grasping at straws. Having said that, you know, unless you believe that the markets, you know, have entered into some strange new paradigm where they don't behave like they have in the past and that they're just going to go straight up, it seems kind of foolish to be chasing here. >> Who was who was the um the market guy that said uh if um if it's obvious, it's obviously wrong. >> Oh, that's Mark Fischer. Uh he's Yeah, he's the guy that trades crude oil and he that's one of his favorite lines. It's great. when it's obvious, it's obviously wrong. >> And so the thing that I've noticed with seasonality is the moment it's obvious that we're going into the weakest part of the stock market and everyone is positioning expecting that this is when the stock market can turn. It's obvious the market isn't going to turn when everyone's expecting it. Well, and if everyone's talking about it and and position and you highlight, so the seasonality will work and that it it'll work because everyone will forget and go, "Oh, geez, that September never works." And so then nobody will position for it, so therefore it won't be a problem. It's always kind of like whenever someone's worried about a certain uh you know, crisis happening, it never occurs because the simple fact that they're worrying about it means that they've taken precautions for it. Yeah, >> this is what I argued, you know, in 2023 and 2024 when everyone was talking about the huge recession and all this stuff. And I would say like constantly I would remind them like the fact that you guys are worried about this is is is actually reason why you don't need to worry about it because it's priced in. >> And contrast that to today where it's in fact just the opposite. >> Nobody seems to be worried at all. And I know that some people claim that everybody's bearish, but I don't know anybody that's truly bearish. Like I watched Lloyd Blankine talk about on CNBC, the the former CEO of Goldman Sachs talk about the worries that he has and yes, he sounded bearish. He sounded like he was worried about all these things that the many of the bears, you know, highlight. And then they ask him, you know, what's your position? He says, "Oh, I'm 100% long." And to me, that's what this market currently is. everyone is even if they're >> you can't you can't this is the hard part is that you it's you you literally can't um uh not have skin in the game on a bull market that hasn't yet turned right >> but you can you can choose to not play and be >> but it's not but >> yeah it's difficult because then you continue to watch the market rising while you're sitting in cash yeah >> you know like and I I've I've And like you know uh what's there was this article that was showing the record amount of put selling that's going on and uh I actively manage um a an account with just dedicated to put selling and I probably have the least put exposure that I have had like in o in over a year at this moment. like I'm sitting so conservatively positioned and it feels like I'm not making any money while the market's going up. The im the emotional impulse to go out there and just say it, I'm just going to keep going is so high and just staying uh conservatively positioned is so hard. It's >> but that's why that's why extremes happen and that's why there ends up being when you know extended more more violent moves than should otherwise be the case >> and and I saw Tom Lee someone was nice enough to pass me on Tom Lee's presentation the other day and Tom Lee literally has this chart saying that this is the most hated rally in the world and I'm like are you like are you high like this is the most loved rally that I've ever seen. and and like I I completely and utterly take the other side of that and and and in fact one of my big arguments is that everyone's you know focused on the US and the reality is that the rest of the world is outperforming on you know many different you know basis like if you go look I wrote this piece where I looked at the year-to-ate returns of the S&P 500 versus all the other different indexes the S&P was at the bottom of the pile then you put it into US dollars it's even more at the bottom of the pile then you put it into a sharp ratio where you actually look at it, you know, adjust it for, you know, risk and we get into a situation where it's dramatically worse than everyone else. So, everyone's all excited about the fact that the S&P is rallying. Meanwhile, the MSCI World XUS index is up like has a three times sharp as the S&P 500. >> Yeah. >> And so to to me, this is this the real story here is that we're experiencing a global reflation. Everyone's focused on the US, but that's not really what's driving this. It's the spending out throughout the rest of the world. And they're actually outperforming everywhere else. And that in fact the US is is lagging in a lot of ways in terms of their stock market >> recently. Absolutely. like uh well we can talk about that like look like just uh take the most basic thing of just looking at um the uh emerging markets emoting markets uh had a run up 30% like the rest of the stock market did uh during the kind of post liberation day rally but the last uh few weeks just the last two weeks we're up 9%. >> Yeah. like uh ju like the this kind of reflation trade impulse that has happened on uh whether it's the Brazilian market um India turned back up like let's talk about these like look at the way um here I'll just uh look at on the Sensex but like the we had India correcting and suddenly it's it's back in the game but look at the way Brazil has broken out to a to a higher high but you you you look at the way um uh for instance, Mexico continues to rip higher. Like you can go uh country after country in all of these like look at the way like the Cosby is is ripping to the upside in South Korea. Like we're we have a market uh like we we haven't even talked about China and the fact that China has broken out in a big way. Now this is the China A50 and it looks like it's stalled out. But you take something like the Kweb, which is the the Chinese internet stocks, and just in the last month, uh they've uh ripped 25%. Yeah. And Patrick, back to the bond just very quickly. One of the worries that I have in terms of my concern about being less short is that what if we are experiencing a global reflation? And that is, you know, I'm sitting around looking at the US labor market cracking and seeing some signs that the economy is slowing, but what if the rest of the world almost drags the US up? What if we get everyone else spending? And that is what that is what I'm concerned about when I get too bearish on the economy in the US. But then >> the question is is that is it therefore the best thing to do is to be playing it more like a pair trading rather than an outright short on the S&P which is essentially you have to be long reflation at the same time as you could be hedging uh you know you would have to get get some sort of convexity into an S&P uh fade because you don't want to be taking delta 1 risk on the upside on it in the in this kind of scenario. But you almost play uh this idea where there's going to be relative outperformance um in in all the reflation trade assets over that of S&P performance from here. >> Yeah. And I and I just back to the bonds though, that's what I'm saying. You're you're trading them from the long side. And if let's just imagine the world economy accelerates from here, it's going to be tough for those bonds to keep going up. >> Yeah. >> Right. Well, look, uh, bonds ripping higher is a 100% uh kind of a a diff disinflationary economy stalls kind of narrative. And uh if that narrative is not materializing, you can't you can't be long bonds. You can't it's uh that's 100%. Like uh we're in an environment where it's like no no matter which way you cut it. Let's just uh look at the big picture of bonds, right? Like uh we me and you have had this uh conversation a million times, but like when you go on a a weekly chart and you look at the bare market of bonds for the last uh um since the start of the decade, um just because there could be a bullish reaction on bonds down here does not mean that the bare market is over. like um you know like just because you know you you know you play a sixmon or ninemonth bond market uh kind of rebound thesis which is something I've talked about numerous times as well doesn't mean that you have to be big picture bullish bonds here. This is a a very challenging time to to be playing this bond market that way. >> Yeah. By the way, when you were going back to the stock market and you were talking about this fact that you thought any dip would be shallow, right? Was that a fair assessment of your position? >> The first leg would be shallow in in think of it think of it like the scenario that I would like to describe is that we could see a scenario sort of the way that 2007 played out. Not that I think a 2008's coming, but 2007 we had that July market drop that was about that 10% market drop and then it still rallied back to its highs in October of 2007 before it really rolled over. Uh, and so I often the first leg is bought on dip and still creates what is technically a topping formation like a uh head and shoulders or double top or some other type of a typical uh um distribution cycle along the market highs. And all I'm just highlighting is that I just don't uh want to put a high degree of probability that any market correction is a straight down one. >> Yeah. >> Right. Like It's >> Listen, I I hear you. That's the correct call. But I was just I the reason I bring it up and ask you that is because while you were talking about that, I was like, "Ah, you know what? I remember a time when the uh it kind of came out of nowhere and was a big a bit of a worse correction than everyone expected in September of 87. September, October 87." So, I pulled up the charts and guess what? The in August, guess what? The S&P was up on the year. I don't know >> 37%. Going into August or sorry, end of August and then and then it it dipped and let me just here I'll put in my thing and like >> the circuit breakers won't ever allow another one of these though. >> No, I get it. I understand. I'm just it just it's interesting to see because I was like oh and by the way saying that you know that you're gooding it. So then um it had a dip. What was the dip here? Uh >> I've justed the trade. >> Yeah. >> The the the interesting part about uh uh the the Okay. Well, let's kind of work on this thesis because what we basically had back in April was every systematic strategy had to be flat or short the market at the bottom. Correct. >> And you had the whole ball targeting fund thesis flows. Um, by the way, do you have an update like do you >> I got to go do that actually. Yeah, I got to go do that. We got to be getting close to the end. >> Yeah. So, so as these vault targeting funds, CTAs, uh, the all of your gamma traders and like hedggers and all this stuff like that, they are now on the other spectrum. They've got to be somewhere close to being a completely invested like where the marginal further buying has to be incredibly marginal. >> Oh yeah, I just pulled it up. Yeah, we're getting really close. Holy smokes. I'm going to write a piece about that because that's a good that's a good point. We're getting really close there. And so so the question becomes that uh you know what we've now the new market environment really is uh nowadays uh when can you trigger the systematics because like because like when uh systematic traders uh like and this is where I've I heard Jim Carson mention it before but the thing about a five to 10% market correction is not the first drop but rather if it stays uh down there, then suddenly it triggers all of these systematic trading things to do uh a flip. >> Yeah. >> And uh and that always spurs that second leg. >> I think Dean Kernard from Alpha Exchange also talks about the fact that it's the second decline that really gets you because people have monetized their protection >> and they don't want to pay up for protection because it's expensive. >> So like right now you >> lack of people hedged, >> right? there's a lack of people hedged and like right now every there there's a lot of folks that you know might be buying protection because it's cheap but you know if we go down five or 10 percent all of a sudden they're expensive they don't do it and then that's the one that really kills them >> and that's the thing is because of the nature of hedging so many people live in the less than 60 days uh kind of frame time frame for a lot of their direct market downside hedging. >> Yes. And so that means that you uh like almost like let's just use the 2022 decline as a a base, but like overall the entire decline uh lasted uh 290 days, right? Like so we're talking about a 9 to 10 month decline. And uh if you only started with two-month hedges, you basically hedged out this first leg. uh and suddenly implied are much higher uh uncertainty as to whether hedges were required uh changes and suddenly nobody has got the right hedges on during the next leg. >> Yeah. uh and not only that they it became it be the skew really widens and we get a situation where the downside outputs are really expensive and it just doesn't pay and there's been numerous studies by the sell side showing how it just doesn't pay and in fact a lot of the strategies that people have put in place to protect themselves during that period failed abysmally right they just did not work >> right >> so uh here's a question for you though Patrick so you're so you you brought it up earlier. OPEX, is this the turning point? And if so, do you think we just, you know, is it 5% only? Is that what you're arguing? Like I No, no. All I'm just saying is is that I I don't like Okay. So, like based on Fibonacci, right? Often people look for a retracement uh where like a 50% retraces. Now uh a 50% retrace is basically a 13% decline in the market right uh in the thing. So >> what are the odds that a sell-off slams 13% on the downside in one fluid motion? And my argument is I don't I I you can't assign a high probability of it particularly since like you were implying many people on the first leg are hedged up. >> Yeah. >> Uh so I I don't think that we go and do a 13% decline on the first leg. It'll be greater than 5%. So my my view is that whatever whenever a market correction begins we'll hit 6200. I think 6200 is that uh kind of logical place where it could be greater than 6200 which is about uh a 7 and a half% selloff. >> Okay. But I feel that that is a very realistic kind of uh expectation of where a first leg of a decline uh could find short-term low and a bounce uh on there. So that's that's the number in my head. Uh but obviously you know the one thing that uh good traders do is that uh we uh adapt to what we're the unfolding reality is we have to see where it starts. what is the catalyst behind it? Like there there's a lot of things that can change this. So this is just a conceptual idea in a period that we're in a very strong bull market still and we haven't seen the opening uh you know first shots of what a a bare decline is looking like where you know if we started off with some uh kind of huge news announcement that nobody saw coming and the stock market's down 7% in one shot well the well it's not going to be stop at 6200 you know like it's all going to be about uh how it begins and what it looks like when it gets started. >> Okay. All right. >> But is OPEX going to be the top? Are we are we recording this on the top? >> I am I am not willing to make that call. But I'm acknowledging the OPEX is a very important pivot moment just like the Fed meeting was. And I I've been highlighting specifically that it's incredibly important for us to watch this 48 hour window between uh the FOMC and the uh OPEX expiration uh as sort of a a a a point of high interest. And so this is definitely a a le a time frame from which I'm paying attention for the the the risk of a turn. But there is zero technical evidence that something has begun. So, I'm not willing to just uh say no, it's starting, right? >> Yeah, I hear you. >> I think I think there's a good chance because I think nobody thinks there's a chance. >> Like, zero. >> No, no, no. No, no, no, no. I think there's a chance 100%. >> Yeah, but I feel like there's I feel like everyone has now, you know, resigned to the fact that we're going to rally into your end. >> Like that's that feel that's what it feels like to me. It feels like everyone is like all in uh you know Lloyd blanklin lining it 100% long the craziest names it's going higher you can't fight this and yeah I hear you it just the markets look at the markets look the best at the top >> right like do we do we agree >> that's always the case >> yeah like they look the best at the top >> and and they feel like they can never go down >> right and then all of a sudden something changes >> and So opex is a good chance and I I do think that there there is that point and then the other thing that I don't think enough folks are talking about >> is the fact that liquidity is getting withdrawn from the system and we saw you know like almost nobody talked about it because everyone's focused on AI and all the funness you know all the fun going on in the stock market but we saw the the standing repo facility meaning the other end of the Fed's um structure to keep the Fed funds within a range. So like if you think about the reverse repo facility, it's designed to stop the the the rates from falling below the band. There's something on the other side called the standing repo facility, which is designed to provide liquidity when there's problems with funding. We saw it drawn down for the first time on a nonquarterend basis since before co And it was yes it was a technical thing and the the guys that really understand this will tell me it's has to do with a big bill settlement that was you know one day before um sorry a bill issuance was one day before the the previous bill came due. I get it. There's there's reasons for it. But having said that, we must be getting close because in the past there was so much liquidity that that was never needed. We didn't need to use the standing repo facility. We didn't see any sorts of cracks. So to me, I'm looking at this and I'm thinking, hey, wait, you know, this is we're getting closer. And one of the things about when they keep withdrawing the liquidities is that they won't know it until that just kind of we go too far. >> Right. right? Like it won't be there won't be nice easy, you know, oh, it's obvious we've gone too far. It'll be, oh, we've gone too far and the liquidity is spiking and there's real problems. You know, the interesting part about you talking about that um is the one thing that uh is a a famous kind of saying that I love to always reference, which is is that it's what you don't know, you don't know that always kills the market. like the things that we're talking about are are things we're talking about are not going to be what turned the market. It's that thing that surprises the market that we didn't know was even a risk. >> Yeah. >> Uh and the interesting thing is I haven't heard people talking about repo market. I haven't heard people talking about this. Like what if the risk uh actually emerges in one of these things that nobody suddenly and suddenly everyone has a eureka moment where nobody cares until everyone cares and then they all care at once. >> You know one of the things you mentioned the fact that that it's the thing you're not expecting or the that's kind of you know bubbling at the background. You know, everyone loves passing around that Bank of America fund manager survey and they show they ask people what are your biggest concerns and it'll be like tariffs, inflation, trade war, whatever it'll be. It'll be all the different things. And I always tell folks that whatever is the number one concern, you can ignore it because the reality is that the market is already positioned for that worry. It's the second and third and maybe even the fourth one. It's very akin to the old Don Cox thing. It's, you know, what is on page 17 that's on its way to page one. >> So, don't worry. 16. I was looking on the wrong page. I was looking on the wrong page. >> You and me both. >> I was always looking on 16 and and and and you you and it was the 17th page. Okay. >> Well done, Patrick. That's a good line. All right. Let me Let's quickly um wrap by just talking about precious metals here for a moment. And uh what I wanted well actually we could talk a few of these commodities but what one thing gold had a little bit of a correction here uh obviously dollar up interest rates up things that typically take the wind out of the sales of gold. It's up again. But what's crazy >> is like I saw this bearish engulfing candle on gold coming in. I slam out my protective puts on my G GDX positions to 70. I pay up like a like nobody's business. Uh locking in 70 price. It drops to 66 68. I'm thinking, "Oh, I caught the top." And look at this freaking thing. Like just rips to a fresh new high. Like gold miners like like look at the way like Nico eagle breaking to a fresh new high, you know? Even even the platinum platium plays like SBSW uh go ripping higher. Like it's a brand new freaking breakout on uh on these precious metals like it feels like so like this is like the hottest part of the market and these guys are just like leaning into this again. >> Unbelievable. I think the Grant Williams um presentation from many many years ago >> 2016 was it 16 when he talked about like how little institutions own gold and if they were going to invest even a tiny little portion of their portfolio in gold or gold miners how much would move it >> if if Grant put his money where uh his mouth was uh he's uh right now retiring somewhere on an island. I'm >> he's already on an island retired. Damn it. All right. Um, quick thing. So, what what was interesting is um so uh uh on that show I cheat on with you with uh >> Oh, yeah. Yeah. You have to bring it up. >> There was >> I thought we talked about this in therapy that you weren't going to bring it up. >> Yeah, I wasn't going to bring bring it up, but uh the uh uh Louis Vincent Gav was on >> and talking about the reflation. >> Okay. And uh obviously uh a part of the reflation trade is many of these kind of commodities and things like that. So copper obviously got slammed in the face with that tariff uh kind of event where tariffs on, tariffs off. Trump kind of created extraordinary volatility. But what was interesting is that copper is trading at very close to its year uh even two-year lows. The four and a quarter being the bottom end of this range. But I'm shocked how copper isn't um trading uh even remotely back to levels in a reflationary environment where it was trading before all the tariff mess even became an issue, right? Like we've had numerous times in huge amounts of volume that have traded copper in this kind of let's 475 to 550 area and it's it's kind of stuck at its lows. It just doesn't feel that this makes sense to me. I don't think copper should be this low. Uh I don't know like how bullish are you on copper. >> Uh so I think the trouble with copper is you got to specify whether you're talking about US copper or >> copper or copper. >> I was talking Dr. copper. >> You're talking Dr. copper. So, okay, here's here's the chart of grade A copper and LME. And this is what you're talking about, which is is that Yeah. Okay. Uh on the LME, it's trading much closer to um the the highs of the last year uh than than the lows. And that's the bizarre part like why is it that the uh there's such a disparity uh in in the US uh you know, COMX? Oh, it's because of tariffs. No, but the tariffs are not an issue here anymore. So everything should have been >> there's always risk of tariffs and stuff like you like. >> Yeah, but it what? So it should be said trading at a discount. >> I don't know. I'm just I haven't paid that much attention to it. It just I there's a lot of copper. >> No, I'm not. >> And in fact, if I was going to buy anything, I'd buy the copper miners. >> Well, copper miners are doing well, but >> I feel like that's going to be the next stage. Like you don't need to go and >> copper has become tougher to trade. Like put LM. Do you have LME copper? >> Yeah, that's what I had on here. This is this is LME. >> Oh, okay. Sorry. Yeah. So, that chart looks fine. What are you worried about? >> Yeah. No, but but what I'm interested in here is Okay. So, it the chart is ignoring that one. No, no, but you can't. >> No, but you know what? I know. I want to buy it. I want to lean into this thing. >> Okay. Well, you can own it. Like, buy it. Like, if anything, you're just going to tariff it again. Like, it's like it's >> But you know what the funny part is? Okay. So what is what is the downside? I mean what what's your overunder? Like how what kind of a probability would you assign that copper breaks four and a quarter on the downside? Like it's not probable. So what is what if you were to just pick a number randomly out of your head? >> What is it now? >> It's it's a 460. So, if you were you're a dealer here and you're putting on some sort of an option pricing on the downside risk for one year forward, what's the risk that copper breaks below four and a quarter? What would you assign a probability to it? >> Like I think that's going to take like a real recession and and >> so what what probably would give a number >> one in five 20%. >> Yeah. like you should always good trader like you know >> I bet I bet I'm closer to the where the market's priced it than you think >> I personally think that there's a very good chance that low holds and so >> yeah but one in five is not like like that's not like a high probability that I think it's going down there >> so the the trade idea that I proposed was uh going long copper here and hedging it out uh with a 450 by 4 and a/4 bare put spread uh which is literally trading for two months out for under five cents under a nickel. And so you basically uh uh blunt your uh downside draw down risk if you're early to the trade and uh and have all of the upside if it works. There you go. These are the kind of things you learn at bigpicturetrading.com backnew prices with an s. get in there before it before it goes up. And Bryce, >> but but do you like it? >> Yeah, I do. I do. But thanks for the pleasure. >> By the way, by the way, I was you were talking about Louis Vincav and so I just want to say that he cracks me up and he is awesome and I was in a in a chat with him and he talked about Xi uh GM fooing him uh Trump and I was like I was like oh my god I don't think anyone else got it and I was like only a Frenchman would talk about that. So Jim Banfu was a was a famous place in Vietnam and for those who don't know uh the French used were in Vietnam before the US and there was a famous battle there and it was kind of interesting because the French got caught there and then the the the Americans got caught there as well. And so what I love about uh Louie is that these deep cut like you know historical references that he builds into his his narratives. Outstanding. Like just double thumbs up for me. Completely love the Vietnam uh references. Terrific. Terrific writing. >> All right. That's all I got. >> That's all you got? >> You got so much to talk about. >> We are We are We are done. >> Oh, okay. Well, listen folks. Thank you very much for tuning in. >> Yeah. >> Um Patrick, where can they find about about you and your wonderful product? And where can they sign up for a 30-day risk-free trial? >> You could go to bigpicturetrading.com uh forward slashnew prices >> with an S. >> And so with an S >> because that because making a new price would have been been too easy. >> I have the S in there. But listen, Danny's going to have the link in theuh description of the YouTube so you can find it in there as well. But thanks for the plug, buddy. But you know what? You listen, you people should be getting your letter as well. Uh and uh and so uh where can they get your letter still locked in at the uh low inflation price uh pre-adjusted levels that that are currently on. >> Thank you very much. You go to the macroourists.com and listen bare bull market bare market. We're just happy to spend some time together for on this crazy ride. Now, stick around for the after show. >> Danny, my man, >> did you finishing my words? I literally demoed this can and like I I'm like, how am I going to make it through this show? Like, >> oh my god, you both drank it. >> It is strong. Oh my god. It literally says extra strong beer. It's got like a beaver with a with a hockey helmet. It's going on. He's like >> it's it's as Canadian as you're going to get. >> It's a lumberjack hockey plane beaver. >> Oh my god. That's >> 10.8. >> Okay. So, we got to rate them. We're going back. We're We're going to be serious here. We got to do the rating. And remember, none of this amateur stuff like round figures Like, you got to like up your game, Danny. Okay. >> Okay. Okay. >> Well, do you know what? Straight away, I'm going to go I'm going to go for a high score. Now, I know Pat doesn't like to do 10 out of 10, but I'm different and I'm English and I like to be truthful with my answers. So, I'm going to go for a nine out of 10. >> Okay. Well, I I could I couldn't push him off I couldn't push him off the round numbers. He's just sticking with like >> I'm sticking with a nine. >> Screw you, Kev. We're not sticking with the round numbers. Okay, Patrick, what do you got? >> So, so here's my take. At first, when I took the sip, I was like, "Oh my god, this is strong." Because when I because you're in your brain, you have this kind of impression 10.8 this is going to give me the alcohol uh kind of back taste and everything. >> But throughout the episode I'm drinking this thing like a normal beer. It actually ended up being great. >> 11% sessionable beer. >> You know what? You can drink it like a wine. No, but uh Okay, so now I tend to like to rate beers in categories. So this is an IPA. So, I had to put it in the IPA category. Obviously, a strong double and triple IPA category. And to be honest, it's pretty damn good. >> Uh I'm I'm I'm in Danny's camp. I'm going to give an 8.6. I'm not going to give it a full nine, but but you know what? Uh this is this is the best hoser juice I've ever had, buddy. >> Okay. Who's her juice? >> Who's Juice >> with an English accent? Who's >> Yes, he's been he's been around me too much. Hoser juice. What did I call it? Hosa juice. Yeah, >> hosera juice. Okay, I'm going to um I can't stand uh IPAs and I can't stand high alcohol beers. So, right off the bat, like this was like it was going to be lucky to get a five for me and it is way way better than I ever expected. I'm in your camp. It's It's almost drinkable. I I'm going to give it like a 79. >> Wow. which is the probably the most I've ever given a triple triple IPA cuz usually and Patrick is completely correct that usually you take these things and you feel like you've like shotgun fire like you can taste the alcohol and and the alcohol is not that bad >> no >> no I so there we go >> okay what else is new and exciting with you folks well listen we got that beard delivery so I had uh I had some friends uh fly in from uh Toronto And uh you know, we were talking all summer that we've been dropping the ball on our our beer uh tasting in this thing. And I I called in a favor. I said, "Listen, if you got room in that luggage, >> uh we need some beers to feature on the thing." And they came through. We got 10 beers lined up. >> That's right. >> 10 beers. >> Take us to Christmas. >> But no, what do you mean Christmas? We're We're bi-weekly, buddy. Uh it's it's uh we're clearing. We're going in the new year with the with this beer list. Uh but um no, you know what? Uh so we're set up. We're ready to go with a with a proper beer tasting. But uh you know, Kev, you know where I'm going to be for the next episode of Market Hunt. >> Where? >> South Africa. >> Oh, really? >> That's cool. We're doing our mastermind uh out there with our mastermind group and uh and so we're going to Cape Town and so uh the next market huddle session which will feel a lot like this one except I won't have that kickass sign in the background. >> Lions lions there. You going to go on a safari? >> Uh we are. We're going to go we're going to take uh the members uh afterwards to uh Krueger Park for the weekend. >> That is awesome. So listen, we need pictures. >> Yeah. Yeah, like we want pictures. Like I think that we deserve them and if we're not going to go, we can't live the Playboy lifestyle that you live, >> but we want the pictures. >> The the safari is cool, but what I'm tempted to to actually do is book one of these uh great white shark uh things. >> And I don't know whether I have I don't know if I have the the balls to do it. >> No. Yeah, >> you you won't do after me with a great white shark anyway. It's uh >> do it, Patrick. >> You think so? >> Yeah, you got to do it. >> You're in a bloody cage. That's fine. Like, that's not going to be that scary. What's going to be scarier is to go >> where the where the where the shark jumps into the cage. >> Yeah, but he's at that point, he's kind of messed up. He's not going to be able to eat. You will, >> right? Like once he's in, he's too big. He's just trying to get out. That's a disaster. I bet you that that person didn't get eaten. >> No, no, he he popped out of the cage. You're correct. Uh they did he did not get bit in that. >> That doesn't surprise me. >> Uh but uh but >> still enough to my pants. >> Yeah, I I get it. That would definitely be, you know, >> that'd be tough. I >> I will I will do some surfing. I will. >> Yeah. So that to me is scarier. >> Really? >> Yeah. Then going and swimming in a cage. >> Like I'd still go surfing, too. But I'm I'm just Don't let it Don't think about it. >> Great whites don't go into the uh shallows, do they? >> Yeah. Don't even tell me a chance. They don't like it. They you know they don't like it. That's this is what I need to tell myself. They don't like they are not going into the shallow. >> This is they're only out in the deep water. They don't ever come into shore to eat like the the line the sea lions and stuff that are around you. So when you see all sorts of sea lions, just go that's okay. Those sea lions, they wouldn't be here if there were sharks. You just don't be a sea lion. >> Exactly. Like there's nothing to worry about. As a joke actually when I was in PEI, I was out paddle boarding and there was like a family like a bunch of a school of sea lions. So like of course like an idiot. I'm like out trying to chase them, right? Like you know trying to catch them. And my wife was losing her because she's telling me that that basically that's what sharks are attracted to. And then the, you know, there's sea lions. There's probably sharks. And there I am. >> You mean orcas? Orcas are the >> No, no, no. There's there's sharks. There's great whites in uh in >> P that that uh >> I think they caught one of the bigger ones there in there once. >> And in fact, there's actually an article about Halifax. Uh there's one that's been there's a famous dive spot where everyone goes and there's one that's been hanging out there and the people that are like snorkeling are getting to see them or her. I'm not sure if it's a him or her but it's the funniest thing they got like some ex-Marine like 65year-old dude came up from the southern US or somewhere in the US and he was hatic about seeing this shark. He loved it and there's like video. So Google it like Google CBC Halifax uh you know great white you can see it. >> Awesome. I will do >> there you go. You do that right before your trip buddy. >> Anyways we're we're looking forward to pictures. Have a great time. Uh >> thank you. >> And uh Danny, thanks for everything. We'll see everybody next week.