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Speaker 1: This episode is brought to you by P and C Bank.

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Speaker 1: National Association Member FDIC erness What's Up? You ever walk

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Speaker 1: pushing your vision forward.

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Speaker 2: Being that you predicted the big short right in two

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Speaker 2: thousand and eight, you kind of forecasted that do you

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Speaker 2: see parallels in today's economy? I know that there's something

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Speaker 2: that a lot of people are nervous about, as far

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Speaker 2: as a recession is one thing, but perhaps even something

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Speaker 2: bigger than that. That's what some people are actually, you know, predicting.

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Speaker 2: Do you see parallels? And are you bearish now the

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Speaker 2: same way you were bearished? Then?

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Speaker 3: Do I see some parallels? Sure? I see some parallels.

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Speaker 3: Am I as barish as I was then? Not even close,

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Speaker 3: I mean, not even the same universe. So let me

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Speaker 3: just a little elaborate a little bit about that. Do

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Speaker 3: I think that there could be a global trade war? Sure,

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Speaker 3: it's possible. It's also possible so there won't be a

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Speaker 3: global trade war. Do I think that a trade war

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Speaker 3: would cause a recession? Absolutely? I think a trade war

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Speaker 3: would cause a recession. Do I think a recession that

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Speaker 3: could happen because of the trade war would be a

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Speaker 3: financial calamity on the same order as great financial crisis

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Speaker 3: of two thousand and eight? Not even close, not even

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Speaker 3: in the same universe. You know what happened in two

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Speaker 3: thousand and eight. I mean, if you could boil down

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Speaker 3: the financial crisis of two thousand and eight into a paragraph,

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Speaker 3: it would be great financial crisis happened for four reasons.

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Speaker 3: Large financial institutions had way too much leverage. A big

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Speaker 3: acid class subprime mortgages blew up. Those same large financial

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Speaker 3: institutions owned a lot of subprime mortgages and derivatives. In particular,

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Speaker 3: credit to fault swaps, which is a very technical financial instrument,

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Speaker 3: tied the balance sheets of large financial institutions all over

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Speaker 3: the globe into a spiderweb that was so complicated. Nobody

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Speaker 3: knew where it began and where it ended. That's the

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Speaker 3: cause of it. The reason why that was such a

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Speaker 3: caamity is. Look, if General Motors, God forbid, went bankrupt,

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Speaker 3: let's just say, and the government didn't bail it out

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Speaker 3: and it was liquidated, that would obviously be terrible for

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Speaker 3: General Motors. It would be terrible for all the employees

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Speaker 3: who got laid off, and all the companies that supply

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Speaker 3: stuff to General Motors. Maybe some of them would go bankrupt.

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Speaker 3: They would certainly have problems. Maybe that would cause a

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Speaker 3: recession in the United States possible, but that's all that

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Speaker 3: would happen. But if you can't get your money out

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Speaker 3: of the bank, if the financial if the large financial

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Speaker 3: institutions go down, Planet Earth burns, that's the end. So

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Speaker 3: where are we today? You know, post dot frank the

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Speaker 3: leverage of large banks is literally less than half of

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Speaker 3: what it was. It's probably almost two thirds less. That's enormous.

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Speaker 3: So for example, City Group, which used to be levered

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Speaker 3: officially thirty five to one, but if he added up

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Speaker 3: all the stuff that didn't officially show up on its

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Speaker 3: balance sheet but they were responsible for, it was forty

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Speaker 3: to one. Today it's twelve to one. Yeah, it's like

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Speaker 3: the distance between Mercury and Pluto. You know, to blow

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Speaker 3: up a bank that's levered forty to one, if I

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Speaker 3: could use an analogy, it takes a pebble. Blow up

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Speaker 3: a bank that's leverage twelve to one, takes a meteor.

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Speaker 3: So do I think that, you know, whatever President Trump

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Speaker 3: is doing could potentially cause a global recession? Sure as possible.

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Speaker 3: Do I think that would cause a financial crisis that

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Speaker 3: would cause the banks to go down? Not at all?

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Speaker 1: Looking at the state of the economy now right, did

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Speaker 1: we look at global trade? Didn't need to be changed? Yes,

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Speaker 1: didn't need to be blown up. I mean, there's plenty

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Speaker 1: of skeptics on that. I wonder when as you look

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Speaker 1: at it, what do you think would have been the

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Speaker 1: most effective way to get some some of these trade

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Speaker 1: solutions from country to country or from a global standpoint?

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Speaker 3: This may be a little bit controversial. I don't completely

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Speaker 3: disagree with what President Trump has done in terms of

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Speaker 3: imposing towers to get the ball rolling, because I think

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Speaker 3: if you went to any country and said, look, we

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Speaker 3: don't like the terms of trade, let's talk, they'd laugh

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Speaker 3: at you. They'd say go away. So the only way

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Speaker 3: you're going to get people to change in terms of

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Speaker 3: trade is to put a bazuka to their heads. What

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Speaker 3: I don't like is the chaos there we're in and

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Speaker 3: we're out, We're out that we're in, We're here's our

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Speaker 3: towers and then there's our towers. We're taking it away,

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Speaker 3: we're putting it back. That that causes too much. That's

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Speaker 3: that's that's not my that's not my strategy. You know,

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Speaker 3: by President Trump loves loves chaos, but everybody, most people

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Speaker 3: in the world don't. So that's where I would disagree.

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Speaker 2: If you were building or a bit short portfolio today,

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Speaker 2: what's the one trade that looks almost inevitable to you

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Speaker 2: that will pan out over the next four or five years.

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Speaker 3: I have no trade that I think would pan out

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Speaker 3: within the next year. Okay, what about four to five?

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Speaker 3: Four to five. I still think that most of the

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Speaker 3: technology trades that people have, you know, whether it's Nvidia

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Speaker 3: or Microsoft, any of the well known, will will be

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Speaker 3: great because I think we are still in the very

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Speaker 3: very early innings of AI. Very early innings were like

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Speaker 3: inning one. Yeah, so you know, between now and inning nine,

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Speaker 3: it's going to be a bit of an adventure, but

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Speaker 3: I think if you stick it out, you'll make a

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Speaker 3: lot of money. What's going to happen within the next

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Speaker 3: six months because of all the trade negotiations, I wouldn't

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Speaker 3: have a clue, and I just would say you need

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Speaker 3: to keep your risk lower. You wouldn't try to be

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Speaker 3: I would not try and be a hero right now.

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Speaker 3: I don't think you know what would argue that the

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Speaker 3: markets come down a lot, so valuations are better, and well,

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Speaker 3: of course the market's lower, the evaluations look better. That's

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Speaker 3: the tutology. The problem is that if you go into

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Speaker 3: a global recession, all the arnings astments are going to

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Speaker 3: come lower, so then it doesn't look so cheap. On

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Speaker 3: the other hand, if most of the countries settle with

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Speaker 3: the United States and then everything is fine, it will

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Speaker 3: have been a great time to buy. But I can't

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Speaker 3: handicap that.

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Speaker 2: How much risks are you keeping on the table?

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Speaker 3: If I may follow up in my own personal portfolio,

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Speaker 3: I have about fifteen percent cash right now, okay, which

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Speaker 3: is a lot for me. Are you going on very

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Speaker 3: long term? What I have done is I've gone through

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Speaker 3: my personal portfolio and any stocks where I said, do

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Speaker 3: I really love this? Why do I really own this?

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Speaker 3: Is there any thesis? Creep? Get rid of it. That

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Speaker 3: was the first thing I did, and I took a

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Speaker 3: lot of things just lower and but like I said,

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Speaker 3: on long term, the problem was with like let's say,

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Speaker 3: liquidating your potfolio. If you wanted to go to an extreme,

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Speaker 3: is you got to pay over thirty five percent capital

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Speaker 3: gains taxes? So you know, do I think the market's

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Speaker 3: going to go down thirty five percent? I mean it could.

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Speaker 3: I mean if we have a global recession. It's not impossible,

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Speaker 3: but it's a lot. So I'd rather just trim some

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Speaker 3: risk and just sit on the sidelines and sit and

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Speaker 3: wait until let's go and look if things get better.

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Speaker 3: If you miss the first five percent move, So what

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Speaker 3: you know, if things if all the trade stuff gets

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Speaker 3: settled one way or another, you know, it'll be a

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Speaker 3: bull market again for years. So cares if you missed

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Speaker 3: the first week?

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Speaker 2: Yeah, the dollar is I think I hit a three

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Speaker 2: year low. Is that something that's concerned too?

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Speaker 3: You you know, let's let's do the doomsday scenario. That's

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Speaker 3: some people like to paint. So the doomsday scenario would

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Speaker 3: be like the US deficit is too big. People are

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Speaker 3: not going to see US bonds as the safety vehicles

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Speaker 3: that they once were, so they're going to sell the

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Speaker 3: US bonds, and that, of course causes a dollar to

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Speaker 3: go down, and something else will replace the dollar as

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Speaker 3: a reserve currency, and there goes the United States is

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Speaker 3: a great empire, and it's armageddon and cats and dogs

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Speaker 3: are lying together, and you know, whatever else happens in

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Speaker 3: rmbage depending upon your religion. But I think what people don't.

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Speaker 3: And by the way, that thesis has only been around

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Speaker 3: for forty years. So I remember in the nineties Pete Peterson,

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Speaker 3: who had been one of the founders I think of KKR,

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Speaker 3: was talking about how the deficits way too big and

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Speaker 3: it's a disaster and God help us, etc. And I

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Speaker 3: was in the nineties, and here we are twenty twenty five.

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Speaker 3: We're all still pretty healthy. See what what I think

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Speaker 3: people miss? And by the way, I can't talk with

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Speaker 3: what happens short term to the dollar. What happens short

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Speaker 3: term for people training in bonds is not something that

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Speaker 3: particularly interests me. So the fact that the dollar has

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Speaker 3: sold off, as I think, got a lot more to

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Speaker 3: do with you know, hedge funds, repositioning, de risking, you know,

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Speaker 3: looking looking for save havens. But long term, what I

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Speaker 3: think most people don't recognize that the financial the financial

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Speaker 3: system of planet Earth runs on treasuries. Banks, for example,

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Speaker 3: lend to one another overnight and what's called the repo market,

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Speaker 3: and the repo market is only trillions, and it's all

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Speaker 3: at overnight treasures. So to make an argument that the

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Speaker 3: dollar is going to lose its reserve status, I think

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Speaker 3: you have to make an argument that is going to

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Speaker 3: be some sort of substitute for treasuries, especially short term treasuries,

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Speaker 3: and right now there's no substitute for short term treasuries.

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Speaker 3: I mean, banks are not going to park their money

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Speaker 3: in Chinese bonds. They're not going to there's no eural

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Speaker 3: bond of any real significance. There's no alternative. So as

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Speaker 3: long as there's no alternative, it's not something I particularly

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Speaker 3: worry about all that much, even though people like to

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Speaker 3: talk about it on CNBC and you know, paint doom

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Speaker 3: and Gloom was listen, I predicted doom and gloom once.

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Speaker 3: Once was enough. I'm not interested in predicting doom and

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Speaker 3: gloom again, unless I really, really seriously thought it was possible.

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Speaker 4: An illegal alien from Guatemala charged with raping a child

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Speaker 4: in Massachusetts. An MS thirteen gang member from El Salvador

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Speaker 4: accused of murdering a Texas man of Venezuelan charged with

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Speaker 4: filming and selling child pornography in Michigan. These are just

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Speaker 4: some of the heinous migrant criminals caught because of President

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Speaker 4: Donald J. Trump's leadership. I'm Christy Noman, the United States

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Speaker 4: Secretary of Homeland Security. Under President Trump, attempted illegal border

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Speaker 4: crossings are at the lowest levels ever recorded, and over

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Speaker 4: one hundred thousand illegal aliens have been arrested. If you

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Speaker 4: are here illegally, your next you will be fine nearly

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Speaker 4: one thousand dollars a day, imprisoned and deported. You will

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Speaker 4: never return. But if you register using our CBP home

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Speaker 4: app and leave now, you could be allowed to return legally.

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Speaker 4: Do what's right, leave now. Under President Trump, America's laws,

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Speaker 4: border and families will be protected.

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Speaker 3: Sponsored by the United States Department of Homeland Security,