1 00:00:04,000 --> 00:00:07,640 Speaker 1: On this episode of newts World, I'm talking with Anthony Esposito, 2 00:00:08,280 --> 00:00:11,880 Speaker 1: founder and CEO of Island Capital, co host of the 3 00:00:11,920 --> 00:00:16,400 Speaker 1: Policy and Profits podcast about the recent stock market volatility, 4 00:00:16,920 --> 00:00:19,960 Speaker 1: the Federal Reserve, and the tariffs, and as you can imagine, 5 00:00:20,160 --> 00:00:34,400 Speaker 1: it's hard to be more relevant right now than those Anthony, 6 00:00:34,479 --> 00:00:37,080 Speaker 1: welcome and thank you for joining me a newts World. 7 00:00:37,720 --> 00:00:39,959 Speaker 2: Mister speaker, thank you so much for having me. It's 8 00:00:40,000 --> 00:00:40,920 Speaker 2: a pleasure to be here. 9 00:00:41,440 --> 00:00:44,920 Speaker 1: So, given your experienced background, how do you see the 10 00:00:44,960 --> 00:00:47,320 Speaker 1: current situation in the stock market. 11 00:00:48,640 --> 00:00:51,040 Speaker 2: The current situation in the stock market, and I was 12 00:00:51,120 --> 00:00:55,360 Speaker 2: pretty vocal about this back in December and January. I 13 00:00:55,440 --> 00:00:58,280 Speaker 2: write a morning note where I was very vocal about it. 14 00:00:58,320 --> 00:01:00,840 Speaker 2: I was out on some TV hits and out on. 15 00:01:00,840 --> 00:01:01,880 Speaker 3: The podcast as well. 16 00:01:02,440 --> 00:01:06,720 Speaker 2: We were seeing an overextended, over leverage stock market coming 17 00:01:06,760 --> 00:01:10,840 Speaker 2: into December January. My technical model and I run a 18 00:01:10,880 --> 00:01:13,839 Speaker 2: technical top down model here, so I'm not looking at fundamentals, 19 00:01:13,880 --> 00:01:17,240 Speaker 2: I'm not looking at earnings reports. I'm really watching price 20 00:01:17,319 --> 00:01:21,240 Speaker 2: momentum and trend I was watching those indicators in my 21 00:01:21,360 --> 00:01:24,400 Speaker 2: model break down, and for the first time in a while, 22 00:01:24,440 --> 00:01:27,080 Speaker 2: it was breaking down on not only my daily count 23 00:01:27,160 --> 00:01:29,240 Speaker 2: so that would be the quicker trade, but it was 24 00:01:29,280 --> 00:01:32,240 Speaker 2: breaking down on the weekly and the monthly count, so 25 00:01:32,880 --> 00:01:36,440 Speaker 2: the daily count quicker and more active, but also intermediate 26 00:01:36,480 --> 00:01:38,840 Speaker 2: and longer terms. I was seeing what I was started 27 00:01:38,840 --> 00:01:42,040 Speaker 2: to call in January as a topping pattern, which typically 28 00:01:42,120 --> 00:01:45,160 Speaker 2: would occur as bull markets end and bear markets begin. 29 00:01:45,800 --> 00:01:48,600 Speaker 2: That is exactly what we saw now. I know the 30 00:01:48,640 --> 00:01:53,040 Speaker 2: headlines become interchangeable, and tariffs are a major headline, and 31 00:01:53,080 --> 00:01:56,400 Speaker 2: this is a major discussion as it creates a lot 32 00:01:56,400 --> 00:01:59,960 Speaker 2: of questions moving forward for the markets, for earnings, for investments, 33 00:02:00,160 --> 00:02:03,000 Speaker 2: for the economy. But I would say that right now 34 00:02:03,040 --> 00:02:07,520 Speaker 2: we are moving through the beginning phase of a bear market. 35 00:02:07,760 --> 00:02:10,640 Speaker 2: I think we took that twenty one percent down move 36 00:02:10,800 --> 00:02:14,399 Speaker 2: or so in the SMP cash and now we're kind 37 00:02:14,400 --> 00:02:18,040 Speaker 2: of seeing some volatility which is extremely emotional and attached 38 00:02:18,080 --> 00:02:21,120 Speaker 2: to again topics like the tariffs, and we are heading 39 00:02:21,160 --> 00:02:24,200 Speaker 2: into earnings and so on and so forth. But I 40 00:02:24,240 --> 00:02:27,880 Speaker 2: see the market as running its course through a bear 41 00:02:27,960 --> 00:02:31,120 Speaker 2: market which started at a peak of about sixty one 42 00:02:31,120 --> 00:02:33,480 Speaker 2: point fifty, just above sixty one hundred on the S 43 00:02:33,520 --> 00:02:36,040 Speaker 2: and P five hundred, and I see us in a 44 00:02:36,120 --> 00:02:39,480 Speaker 2: process of moving down towards forty two hundred or thirty 45 00:02:39,480 --> 00:02:43,000 Speaker 2: seven hundred on the SMP, in which that process we'll 46 00:02:43,000 --> 00:02:46,480 Speaker 2: see a ton of volatility, very aggressive bear market rallies, 47 00:02:46,520 --> 00:02:49,680 Speaker 2: which is nothing new, and some really heavy selling on 48 00:02:49,800 --> 00:02:52,120 Speaker 2: days where the headlines don't work or where you have 49 00:02:52,240 --> 00:02:55,200 Speaker 2: managers or hedgers just unwinding positions. 50 00:02:55,600 --> 00:02:57,320 Speaker 1: How much of this do you think was sort of 51 00:02:58,520 --> 00:03:01,679 Speaker 1: baked in no matter who won they and how much 52 00:03:01,720 --> 00:03:06,240 Speaker 1: has been made deeper by Trump's activity, particularly on terrifs. 53 00:03:07,040 --> 00:03:08,120 Speaker 3: That's a great question. 54 00:03:08,360 --> 00:03:12,720 Speaker 2: I think, broad stroke, the market was ready and poised 55 00:03:12,720 --> 00:03:15,920 Speaker 2: to fall regardless of who won, and I think a 56 00:03:15,960 --> 00:03:19,120 Speaker 2: lot of that had to do with the policies of 57 00:03:19,160 --> 00:03:21,840 Speaker 2: the previous administration. And what I mean by that is 58 00:03:22,360 --> 00:03:26,480 Speaker 2: we had a GDP growth, a nonfarm payrolls growth, and 59 00:03:26,520 --> 00:03:31,520 Speaker 2: a market that was basically supported by government spending, and 60 00:03:31,560 --> 00:03:34,000 Speaker 2: that in and of itself was a kfab. It was 61 00:03:34,040 --> 00:03:36,720 Speaker 2: a complete smoke screen if you look at the percentage 62 00:03:36,720 --> 00:03:39,920 Speaker 2: of jobs created that were directly or indirectly funded by 63 00:03:39,960 --> 00:03:44,160 Speaker 2: the government, or were direct government jobs. 64 00:03:44,480 --> 00:03:46,520 Speaker 3: If you look at GDP growth. 65 00:03:46,480 --> 00:03:49,040 Speaker 2: As direct payments from the government, you were looking at 66 00:03:49,080 --> 00:03:52,400 Speaker 2: about eighty percent of the jobs created were either funded 67 00:03:52,400 --> 00:03:55,640 Speaker 2: by the government or low paying services jobs. That's not 68 00:03:55,880 --> 00:03:58,440 Speaker 2: where we want to be. And the adjustments down upwards 69 00:03:58,440 --> 00:04:00,280 Speaker 2: of a million jobs at the end of the year 70 00:04:00,680 --> 00:04:03,320 Speaker 2: that were never created that were reported. If you look 71 00:04:03,360 --> 00:04:05,640 Speaker 2: at GDP growth, we were looking at fifty to sixty 72 00:04:05,680 --> 00:04:09,720 Speaker 2: percent of GDP growth directly or indirectly funded by the government. 73 00:04:10,040 --> 00:04:12,800 Speaker 2: That was debt creation, that was tax dollars. So not 74 00:04:12,840 --> 00:04:15,680 Speaker 2: only is that not real growth supporting the market right, 75 00:04:15,720 --> 00:04:19,760 Speaker 2: supporting growth and earnings, but it's also extremely inflationary, which 76 00:04:19,800 --> 00:04:22,599 Speaker 2: is exactly what we saw. You can also go into 77 00:04:22,640 --> 00:04:25,840 Speaker 2: consumer spending, which is a driver of earnings for the 78 00:04:25,920 --> 00:04:29,159 Speaker 2: S and P five hundred, consumer spending was also being 79 00:04:29,240 --> 00:04:32,400 Speaker 2: driven by transfer payments from the government. So we had 80 00:04:32,440 --> 00:04:35,839 Speaker 2: an administration that hid the fact that we were actually 81 00:04:35,920 --> 00:04:36,720 Speaker 2: weakening as. 82 00:04:36,640 --> 00:04:38,880 Speaker 3: Far as GDP growth, that we were. 83 00:04:38,720 --> 00:04:42,480 Speaker 2: Weakening as far as manufacturing jobs, which have been technically 84 00:04:42,480 --> 00:04:46,800 Speaker 2: intercession for two years, and they hid that by spending overspending, 85 00:04:46,839 --> 00:04:50,640 Speaker 2: printing money, taking on more debt, and actually weakening our 86 00:04:50,680 --> 00:04:53,479 Speaker 2: position as they said or tried to present us as 87 00:04:53,520 --> 00:04:56,120 Speaker 2: we were in a stronger position. What that did is 88 00:04:56,120 --> 00:04:58,560 Speaker 2: it created a floor or a put for the market 89 00:04:58,839 --> 00:05:01,719 Speaker 2: and everybody played a long from the twenty twenty two 90 00:05:01,760 --> 00:05:06,120 Speaker 2: lows through the twenty twenty five highs, we saw a 91 00:05:06,200 --> 00:05:10,880 Speaker 2: narrative of AI, a narrative of continued growth. Really pump 92 00:05:11,000 --> 00:05:14,480 Speaker 2: through the markets and keep those models running and keep 93 00:05:14,520 --> 00:05:18,080 Speaker 2: that narrative moving when under the cover, we had really 94 00:05:18,120 --> 00:05:21,080 Speaker 2: seven names that were carrying the entire SMP five hundred, 95 00:05:21,400 --> 00:05:23,760 Speaker 2: and it was on a narrative that was really falling apart. 96 00:05:23,839 --> 00:05:27,520 Speaker 2: So the market, regardless of who one was poised to fall, 97 00:05:28,040 --> 00:05:32,240 Speaker 2: we were overvalued, we were overlevered, and the breadth was 98 00:05:32,279 --> 00:05:35,080 Speaker 2: extremely narrow. Now, what I would say is as we 99 00:05:35,240 --> 00:05:37,400 Speaker 2: come out of the election and we head into this 100 00:05:37,520 --> 00:05:40,560 Speaker 2: tariff conversation, which is the Trump conversation. Remember we had 101 00:05:40,560 --> 00:05:43,839 Speaker 2: that massive rally coming out of the election. Everyone ready 102 00:05:43,839 --> 00:05:47,359 Speaker 2: for President Trump, for America first, for true growth, for 103 00:05:47,440 --> 00:05:51,200 Speaker 2: a restructuring. But it's kind of like you don't realize 104 00:05:51,279 --> 00:05:53,960 Speaker 2: the pain that you may need to go through to restructure. 105 00:05:54,000 --> 00:05:56,680 Speaker 2: We have decades of problems to fix here in our 106 00:05:56,720 --> 00:05:59,560 Speaker 2: trade deficits, which I think is the real tariff conversation. 107 00:06:00,320 --> 00:06:03,840 Speaker 2: Our trade deficit conversation is a fifty sixty seventy year 108 00:06:03,839 --> 00:06:07,720 Speaker 2: old conversation and that takes time to fix. So where 109 00:06:07,760 --> 00:06:11,880 Speaker 2: the market would have fallen anyway with a Harris administration, 110 00:06:11,960 --> 00:06:14,039 Speaker 2: I think it would be falling into a bottomless pit. 111 00:06:14,600 --> 00:06:17,520 Speaker 2: The market falling with the Trump administration is kind of 112 00:06:17,560 --> 00:06:20,719 Speaker 2: the grime through the cleanup of the problems left to him. 113 00:06:21,040 --> 00:06:23,240 Speaker 2: And I've made this joke and I'll say it because 114 00:06:23,279 --> 00:06:25,839 Speaker 2: I think it makes sense. You know, clean up on 115 00:06:25,880 --> 00:06:28,520 Speaker 2: Aisle seven. We're trying to get from the Biden administration 116 00:06:28,800 --> 00:06:32,240 Speaker 2: over to the Trump administration policies. So the process of 117 00:06:32,279 --> 00:06:35,440 Speaker 2: fixing and changing policy to seeing the effect of the 118 00:06:35,480 --> 00:06:39,080 Speaker 2: policy is messy, and the risk markets the stock market, 119 00:06:39,480 --> 00:06:41,880 Speaker 2: that's the mop. So as you're cleaning up the mess, 120 00:06:41,960 --> 00:06:44,599 Speaker 2: all the dirt, all the grime, all the chaos is 121 00:06:44,640 --> 00:06:46,640 Speaker 2: going to be in the markets. You're going to see 122 00:06:46,680 --> 00:06:48,280 Speaker 2: it every day on the headlines. You're going to see 123 00:06:48,279 --> 00:06:49,839 Speaker 2: it in the newspapers, You're going to hear it on 124 00:06:49,880 --> 00:06:50,279 Speaker 2: the news. 125 00:06:50,760 --> 00:06:51,479 Speaker 3: But at the end of the. 126 00:06:51,520 --> 00:06:54,600 Speaker 2: Day, we're heading to a better spot under the Trump administration, 127 00:06:55,520 --> 00:06:58,000 Speaker 2: whereas the Harris administration, I think we would have been 128 00:06:58,200 --> 00:07:00,240 Speaker 2: heading into a bigger mess, and we would you did 129 00:07:00,320 --> 00:07:03,240 Speaker 2: quite a few moths, so the sell off was coming, 130 00:07:03,520 --> 00:07:05,640 Speaker 2: But I think the pain that we're going through will 131 00:07:05,680 --> 00:07:06,760 Speaker 2: be productive in the end. 132 00:07:07,440 --> 00:07:09,760 Speaker 1: I'm curious to get your reactions. I tell all of 133 00:07:09,800 --> 00:07:14,680 Speaker 1: my friends, don't look at your stocks until August of 134 00:07:14,720 --> 00:07:19,040 Speaker 1: twenty twenty six. You're just gonna have turmoil and you're 135 00:07:19,040 --> 00:07:22,520 Speaker 1: gonna get heartburn. But sometime around the summer of twenty six, 136 00:07:22,960 --> 00:07:26,320 Speaker 1: my personal belief is that the investment boom and the 137 00:07:26,400 --> 00:07:28,760 Speaker 1: various things will all begun to hit and all of 138 00:07:28,800 --> 00:07:30,680 Speaker 1: a sudden, my guess is the end of the bear 139 00:07:30,800 --> 00:07:33,560 Speaker 1: market will be in the spring an early summer of 140 00:07:33,600 --> 00:07:36,440 Speaker 1: twenty six. What's your reaction just to that observation. 141 00:07:37,280 --> 00:07:38,920 Speaker 3: I think that you're pretty much spot on. 142 00:07:39,440 --> 00:07:42,000 Speaker 2: I love your thought on the investments actually starting to 143 00:07:42,000 --> 00:07:42,480 Speaker 2: take off. 144 00:07:42,520 --> 00:07:45,040 Speaker 3: So I've said previously that. 145 00:07:45,280 --> 00:07:49,000 Speaker 2: The investments that were the onsharing of manufacturing, the onshuring 146 00:07:49,040 --> 00:07:51,760 Speaker 2: of investments, and we've seen trillions of dollars coming in 147 00:07:51,800 --> 00:07:56,200 Speaker 2: and be committed. Those, if you notice, those became the 148 00:07:56,240 --> 00:08:00,160 Speaker 2: secondary tertiary headlines and everything became the tarre corf. 149 00:08:00,720 --> 00:08:02,000 Speaker 3: President Trump is crazy. 150 00:08:02,000 --> 00:08:05,080 Speaker 2: We're kind of reverting back to the same old tantrums 151 00:08:05,080 --> 00:08:07,640 Speaker 2: that we had. But what I believe will happen to 152 00:08:07,720 --> 00:08:10,640 Speaker 2: your point, mister speaker is as we come through the 153 00:08:10,720 --> 00:08:13,920 Speaker 2: mess of the cleanup and the clouds kind of clear, 154 00:08:14,520 --> 00:08:16,640 Speaker 2: we're going to realize that there is a massive amount 155 00:08:16,640 --> 00:08:19,480 Speaker 2: of reinvestment on sharing and new investment in the country. 156 00:08:19,800 --> 00:08:22,440 Speaker 2: And what that will do is that will create a 157 00:08:22,560 --> 00:08:26,120 Speaker 2: v spike recovery and economic growth in this country, in 158 00:08:26,240 --> 00:08:28,680 Speaker 2: jobs growth in this country. I think the market will 159 00:08:28,680 --> 00:08:32,600 Speaker 2: be absolutely on fire now. I say that, I think 160 00:08:33,120 --> 00:08:36,520 Speaker 2: super insightful. I love the point you're making. I say 161 00:08:36,559 --> 00:08:39,240 Speaker 2: that as an individual who's running a portfolio here under 162 00:08:39,280 --> 00:08:43,560 Speaker 2: Island Capital, we are actually up thirty eight percent year 163 00:08:43,600 --> 00:08:46,840 Speaker 2: to date as of this minute. I've been ahead of 164 00:08:46,840 --> 00:08:49,559 Speaker 2: this and I'm really happy being short or long. 165 00:08:49,760 --> 00:08:53,040 Speaker 3: For me, I don't care which way the market goes. 166 00:08:53,400 --> 00:08:55,760 Speaker 2: My model doesn't care, which is kind of why I'm 167 00:08:55,800 --> 00:08:57,920 Speaker 2: a technician and a CMT, and I like to look 168 00:08:57,960 --> 00:09:02,040 Speaker 2: at my models, my signals. I can basically work in 169 00:09:02,080 --> 00:09:04,600 Speaker 2: a vacuum and the price and price action, along with 170 00:09:04,679 --> 00:09:07,079 Speaker 2: trend and momentum, will tell me what's going on. I 171 00:09:07,160 --> 00:09:08,480 Speaker 2: know if the news is good or bet or if 172 00:09:08,480 --> 00:09:10,000 Speaker 2: the market looks at it as good or bad. 173 00:09:28,840 --> 00:09:31,040 Speaker 1: Are you significantly into gold? I have. 174 00:09:31,360 --> 00:09:34,800 Speaker 2: Gold is one of my five main areas or sectors 175 00:09:34,800 --> 00:09:35,440 Speaker 2: of investment. 176 00:09:35,559 --> 00:09:38,360 Speaker 1: Yes, it's good because that has really gone way up. 177 00:09:38,640 --> 00:09:39,560 Speaker 3: It has it has. 178 00:09:39,600 --> 00:09:42,200 Speaker 2: I actually had a call out in gold to just 179 00:09:42,280 --> 00:09:47,160 Speaker 2: be perfectly upfront on December twenty seventh, as gold was 180 00:09:47,200 --> 00:09:49,560 Speaker 2: breaking above twenty six hundred, I put out in my 181 00:09:49,640 --> 00:09:51,679 Speaker 2: morning note, which is typically just the S and P 182 00:09:51,800 --> 00:09:54,360 Speaker 2: five hundred. I keep it very simple. It's not my 183 00:09:54,480 --> 00:09:57,560 Speaker 2: full model or my full universe. Everyone watches the stock market, 184 00:09:57,679 --> 00:09:59,640 Speaker 2: so I write on the S and P five hundred. 185 00:10:00,080 --> 00:10:02,200 Speaker 2: I put out a strong buying gold and called for 186 00:10:02,240 --> 00:10:07,240 Speaker 2: three thousand. It's been an absolute charm of the contribution, 187 00:10:07,400 --> 00:10:09,200 Speaker 2: the attribution in the portfolio. 188 00:10:09,559 --> 00:10:11,640 Speaker 3: As far as gold goes, I can't complain about. 189 00:10:11,960 --> 00:10:16,280 Speaker 2: It has gone way beyond three thousand and way faster 190 00:10:16,360 --> 00:10:19,360 Speaker 2: than I expected. But it's kind of worked with negative 191 00:10:19,360 --> 00:10:23,400 Speaker 2: correlation to the market right as we've seen this fear really. 192 00:10:23,280 --> 00:10:24,560 Speaker 3: Flow into the market quickly. 193 00:10:24,600 --> 00:10:27,160 Speaker 2: With this massive draw down, we've seen a real rush 194 00:10:27,200 --> 00:10:30,320 Speaker 2: into gold and into not only individuals buying gold and 195 00:10:30,360 --> 00:10:33,080 Speaker 2: funds buying gold and retail buying gold, but more importantly, 196 00:10:33,480 --> 00:10:35,880 Speaker 2: the sovereigns have been all over the gold purchase and 197 00:10:35,920 --> 00:10:38,840 Speaker 2: chasing it up. So phenomenal move, and I think for 198 00:10:38,880 --> 00:10:41,720 Speaker 2: all intents and purposes, we could seek some consolidation lower 199 00:10:41,760 --> 00:10:43,959 Speaker 2: to the three thousand level, but I think it actually 200 00:10:43,960 --> 00:10:46,000 Speaker 2: has more room to go to the upside. 201 00:10:46,160 --> 00:10:48,959 Speaker 1: One of the things I did notice is that the 202 00:10:49,040 --> 00:10:52,240 Speaker 1: ten year treasury got to four point four to one percent, 203 00:10:52,760 --> 00:10:55,720 Speaker 1: which I think partly tells you how much challenge they 204 00:10:55,800 --> 00:10:58,400 Speaker 1: have in placing all the bonds. But how do you 205 00:10:58,520 --> 00:11:01,800 Speaker 1: interpret where the trail renoes are at and what the 206 00:11:01,800 --> 00:11:03,120 Speaker 1: federal reserves should be doing. 207 00:11:04,280 --> 00:11:06,760 Speaker 2: So the move in the treasuries is interesting. I'm not 208 00:11:07,000 --> 00:11:11,920 Speaker 2: sure whether it's a structural change in the debt market 209 00:11:12,280 --> 00:11:14,920 Speaker 2: or whether it was part of a bigger unwind of 210 00:11:14,960 --> 00:11:17,920 Speaker 2: what's called a basis trade in fixed income and in 211 00:11:17,960 --> 00:11:21,120 Speaker 2: the treasury. So the basis trade, essentially is you have 212 00:11:21,200 --> 00:11:23,680 Speaker 2: a trade which is trying to make money, and it's 213 00:11:23,720 --> 00:11:26,720 Speaker 2: a massively levered trade on Wall Street, and some of 214 00:11:26,760 --> 00:11:30,920 Speaker 2: the largest multistret funds are in the trade. Significantly, you 215 00:11:31,000 --> 00:11:34,360 Speaker 2: are essentially trading the basis of the ten year or 216 00:11:34,400 --> 00:11:37,640 Speaker 2: the bond versus the futures out on the curve, and 217 00:11:37,679 --> 00:11:41,160 Speaker 2: you're trying to make very little spread on a massive 218 00:11:41,200 --> 00:11:43,920 Speaker 2: amount of investment and that's where the leverage comes from, 219 00:11:44,000 --> 00:11:47,480 Speaker 2: and that's where the trade unwind becomes that important. We've 220 00:11:47,520 --> 00:11:50,160 Speaker 2: seen the tenuere now spike from four percent back up 221 00:11:50,200 --> 00:11:51,240 Speaker 2: towards four point four. 222 00:11:52,080 --> 00:11:54,280 Speaker 3: The investors that were in or the traders. 223 00:11:53,920 --> 00:11:56,280 Speaker 2: In that trade were long the bond and they were 224 00:11:56,320 --> 00:11:58,840 Speaker 2: shortening the curve out and trying to make that spread. 225 00:11:59,440 --> 00:12:01,680 Speaker 2: So now to unwind that trade, they need to sell 226 00:12:01,720 --> 00:12:05,240 Speaker 2: the bond. As they sell the bonds, that spikes yields 227 00:12:05,280 --> 00:12:08,560 Speaker 2: higher because there's an inverse relationship between price and yield. 228 00:12:08,800 --> 00:12:10,959 Speaker 2: So I think part of the spike we've seen back 229 00:12:11,040 --> 00:12:13,240 Speaker 2: up from four to four point four to four point 230 00:12:13,320 --> 00:12:16,640 Speaker 2: three today has been the unwind of that trade. I 231 00:12:16,679 --> 00:12:19,440 Speaker 2: think that that will settle back in and the ideas 232 00:12:19,440 --> 00:12:21,640 Speaker 2: it'll stay between four and four and a half percent, 233 00:12:21,760 --> 00:12:24,400 Speaker 2: I think it'll actually come in lower. I think with 234 00:12:24,520 --> 00:12:27,679 Speaker 2: a change in some regulations and a change in the 235 00:12:27,720 --> 00:12:31,440 Speaker 2: offering of the duration by the Treasury, I think that 236 00:12:31,480 --> 00:12:34,280 Speaker 2: we will probably get more demand into the ten year 237 00:12:34,640 --> 00:12:37,000 Speaker 2: and will pull that ten year yield down, which is 238 00:12:37,000 --> 00:12:39,839 Speaker 2: something that Secretary Besson has spoken about and I was 239 00:12:39,880 --> 00:12:42,280 Speaker 2: actually very happy to hear him speak about a month 240 00:12:42,400 --> 00:12:45,920 Speaker 2: or two ago closer to two months ago. 241 00:12:45,280 --> 00:12:47,080 Speaker 3: Because the real cost. 242 00:12:46,760 --> 00:12:50,520 Speaker 2: Of borrowing in this country is not correlated or directly 243 00:12:50,559 --> 00:12:53,520 Speaker 2: related to the FED and the FED funds rate. That's 244 00:12:53,559 --> 00:12:56,199 Speaker 2: the headline number. That's the thing that the stock market 245 00:12:56,240 --> 00:12:59,160 Speaker 2: is constantly chasing, and the FED has been very happy 246 00:12:59,160 --> 00:13:02,480 Speaker 2: to be somewhat artificially supportive of the market, and which 247 00:13:02,559 --> 00:13:06,800 Speaker 2: is not their role. The tenure yield will determine more 248 00:13:06,840 --> 00:13:10,400 Speaker 2: directly the cost of the thirty year fixed the cost 249 00:13:10,440 --> 00:13:12,600 Speaker 2: of a car loan, what you pay on your credit 250 00:13:12,640 --> 00:13:14,800 Speaker 2: card bills, what you can go and get a loan 251 00:13:14,840 --> 00:13:17,160 Speaker 2: at the bank, a personal loan at So this is 252 00:13:17,240 --> 00:13:18,680 Speaker 2: really should be the focus. 253 00:13:18,720 --> 00:13:19,440 Speaker 3: In my opinion. 254 00:13:19,800 --> 00:13:22,920 Speaker 2: Secretary Besson is the first Treasury secretary of the first 255 00:13:23,559 --> 00:13:26,920 Speaker 2: member of any administration to speak about the tenure yield 256 00:13:27,320 --> 00:13:31,480 Speaker 2: in realistic terms versus the FED funds rate. So I 257 00:13:31,520 --> 00:13:33,800 Speaker 2: think that the tenure yield will come in. I think 258 00:13:33,840 --> 00:13:36,720 Speaker 2: there will be more support for the bonds, and I think, 259 00:13:36,920 --> 00:13:39,120 Speaker 2: in my view, we'll see the tenure yield closer to 260 00:13:39,160 --> 00:13:42,240 Speaker 2: three and a half percent, which will be beneficial for 261 00:13:42,360 --> 00:13:45,960 Speaker 2: everyone as far as economic growth, and also benefit the 262 00:13:46,040 --> 00:13:48,880 Speaker 2: refinancing of debt for the government, which is a major 263 00:13:48,920 --> 00:13:51,960 Speaker 2: issue the FED right now, if you'd like me to 264 00:13:52,160 --> 00:13:54,760 Speaker 2: kind of shift gears and go to the FED, I'm 265 00:13:54,760 --> 00:13:57,880 Speaker 2: not happy with and I've been vocal for whoever's listening 266 00:13:57,880 --> 00:14:01,080 Speaker 2: with mister Powell. The idea of him being independent or 267 00:14:01,120 --> 00:14:04,000 Speaker 2: not independent, or an independent FED or not an independent 268 00:14:04,000 --> 00:14:06,480 Speaker 2: FED has nothing to do with President Trump. I think 269 00:14:06,600 --> 00:14:10,120 Speaker 2: mister Powell has shown himself to be very politicized and 270 00:14:10,240 --> 00:14:13,640 Speaker 2: very biased. He has not performed well in his role. 271 00:14:13,800 --> 00:14:16,480 Speaker 2: And I can go back to twenty eighteen and speak 272 00:14:16,520 --> 00:14:19,400 Speaker 2: about some of his rate decisions and asset purchasing decisions, 273 00:14:19,440 --> 00:14:24,239 Speaker 2: balance sheet decisions which have been very questionable, but most pointedly, 274 00:14:24,760 --> 00:14:27,720 Speaker 2: to cut rates by fifty basis points, which was almost 275 00:14:27,760 --> 00:14:31,840 Speaker 2: an emergency measure in September heading into an election, and 276 00:14:31,880 --> 00:14:35,000 Speaker 2: then two more cuts of twenty five basis points was 277 00:14:35,200 --> 00:14:38,000 Speaker 2: clearly political. There was no reason to do that for 278 00:14:38,120 --> 00:14:41,840 Speaker 2: a FED that's quote unquote data dependent. We saw a 279 00:14:41,960 --> 00:14:46,160 Speaker 2: chair that was really making decisions that was a contrary 280 00:14:46,200 --> 00:14:49,280 Speaker 2: to what a lot of members of the committee were saying, 281 00:14:49,960 --> 00:14:53,360 Speaker 2: and b made no sense. And now that President Trump 282 00:14:53,400 --> 00:14:56,480 Speaker 2: is in office, he came out on the sixteenth and 283 00:14:56,520 --> 00:14:58,880 Speaker 2: said he is not supportive of rate cuts. They don't 284 00:14:58,920 --> 00:15:01,440 Speaker 2: see any issues there on their hands. They have nothing 285 00:15:01,440 --> 00:15:07,520 Speaker 2: to do like his view and his actions are so 286 00:15:08,000 --> 00:15:13,920 Speaker 2: illogical and so badly timed that the idea that he's 287 00:15:14,000 --> 00:15:17,280 Speaker 2: not political or should still be in that role is 288 00:15:17,320 --> 00:15:20,240 Speaker 2: actually crazy to me, To be perfectly honest, in. 289 00:15:20,200 --> 00:15:22,840 Speaker 1: The old days, the job of the Fed was to 290 00:15:22,840 --> 00:15:26,600 Speaker 1: protect the dollar. We then passed the Humphrey Hawkins Bill, 291 00:15:27,040 --> 00:15:28,640 Speaker 1: which said, oh, and they also was supposed to worry 292 00:15:28,640 --> 00:15:33,120 Speaker 1: about unemployment, which I think made them schizophrenic. And I 293 00:15:33,120 --> 00:15:35,360 Speaker 1: think we'd be much better off to go back and say, 294 00:15:35,760 --> 00:15:38,000 Speaker 1: your number one job is to create a stable dollar 295 00:15:38,520 --> 00:15:41,520 Speaker 1: and to take the steps necessary so that if I 296 00:15:41,560 --> 00:15:43,920 Speaker 1: have a dollar this year, it'll be worth a dollar 297 00:15:43,960 --> 00:15:46,960 Speaker 1: in ten years, and that would be a very dramatic 298 00:15:47,040 --> 00:15:48,040 Speaker 1: change from where we've been. 299 00:15:48,280 --> 00:15:50,280 Speaker 2: I agree with that, and I think that they are 300 00:15:50,320 --> 00:15:54,080 Speaker 2: a major piece of that puzzle. I think that the Treasury, 301 00:15:54,280 --> 00:15:57,720 Speaker 2: the amount of debt that was created under again Janet 302 00:15:57,800 --> 00:16:02,520 Speaker 2: Yellen's watch, where Powell was completely silent. He had nothing 303 00:16:02,560 --> 00:16:05,360 Speaker 2: to say about it, and in fact he said when asked, 304 00:16:05,400 --> 00:16:08,200 Speaker 2: I don't comment on fiscal policy. Well, that stance has 305 00:16:08,240 --> 00:16:11,000 Speaker 2: now changed since the administration has changed, but we'll leave 306 00:16:11,040 --> 00:16:15,280 Speaker 2: that be for him to watch Janet Yellen create upwards 307 00:16:15,320 --> 00:16:19,000 Speaker 2: of sixteen trillion dollars in debt under her watch and 308 00:16:19,080 --> 00:16:22,720 Speaker 2: not have any idea where inflation came from, and then 309 00:16:22,960 --> 00:16:25,840 Speaker 2: say as President Trump takes office, oh, I know where 310 00:16:25,880 --> 00:16:28,720 Speaker 2: inflation comes from. Now it's President Trump and the tariffs. 311 00:16:28,720 --> 00:16:31,400 Speaker 2: This is the problem. As Janet Yellen waved on the 312 00:16:31,440 --> 00:16:33,320 Speaker 2: way out the door and said, hey, you guys might 313 00:16:33,320 --> 00:16:36,280 Speaker 2: have a debt issue like these are the things that 314 00:16:36,360 --> 00:16:39,720 Speaker 2: make me laugh. I think the FED would be better served, yes, 315 00:16:40,080 --> 00:16:43,720 Speaker 2: focusing on price stability, and the idea would be that 316 00:16:43,760 --> 00:16:48,040 Speaker 2: with price stability, employment will follow. The system does work, 317 00:16:48,480 --> 00:16:52,240 Speaker 2: the ecosystem works. I think the FED is confused in 318 00:16:52,640 --> 00:16:56,480 Speaker 2: their role overall and how to accomplish their goal. And 319 00:16:56,600 --> 00:16:59,160 Speaker 2: I would add to that, mister speaker, that when I 320 00:16:59,280 --> 00:17:03,520 Speaker 2: listened to mister Powell and miss Yellen speak about the 321 00:17:03,640 --> 00:17:08,520 Speaker 2: environment the ozone equity in their deliveries, not that those 322 00:17:08,560 --> 00:17:10,920 Speaker 2: things are are not important to me. I won't get 323 00:17:10,920 --> 00:17:13,640 Speaker 2: into that, but it's not part of your mandate. This 324 00:17:13,720 --> 00:17:16,240 Speaker 2: is not the ball that you need your eye on. 325 00:17:16,720 --> 00:17:19,159 Speaker 2: I think they really have lost their way. So a 326 00:17:19,200 --> 00:17:22,840 Speaker 2: Secretary Bessett now at the Treasury is a great change 327 00:17:22,840 --> 00:17:25,960 Speaker 2: of pace. I think that the FED, to your point, 328 00:17:25,960 --> 00:17:28,840 Speaker 2: would be well served to focus on price stability and 329 00:17:28,880 --> 00:17:29,240 Speaker 2: the dollar. 330 00:17:29,800 --> 00:17:33,840 Speaker 1: I think Bessett is far and away both the most 331 00:17:33,920 --> 00:17:38,360 Speaker 1: technically competent and the most stable member of Trump's team, 332 00:17:38,400 --> 00:17:41,440 Speaker 1: and I think that he probably will carry us through 333 00:17:42,000 --> 00:17:46,119 Speaker 1: all the tariff negotiations and all the challenges with remarkable skill. 334 00:17:46,359 --> 00:17:48,520 Speaker 1: He strikes me as a very, very competent person. 335 00:17:48,920 --> 00:17:49,639 Speaker 3: There's no question. 336 00:17:49,680 --> 00:17:54,280 Speaker 2: I've actually referred to him often, most recently with poise. 337 00:17:54,760 --> 00:17:57,480 Speaker 2: I'm from his world, and I understand what he's trying 338 00:17:57,480 --> 00:18:00,240 Speaker 2: to accomplish and how he's trying to accomplish. Its a 339 00:18:00,280 --> 00:18:04,240 Speaker 2: massive amount of knowledge, and he has superb poise, which 340 00:18:04,280 --> 00:18:07,440 Speaker 2: is something that we've been missing certainly in the last administration. 341 00:18:07,560 --> 00:18:10,280 Speaker 3: I mean, called a free for all is probably kind. 342 00:18:10,760 --> 00:18:14,040 Speaker 2: His poise and his expertise are just exactly what we 343 00:18:14,119 --> 00:18:21,879 Speaker 2: need here, and I'm very very happy. 344 00:18:32,240 --> 00:18:36,399 Speaker 1: The big bold challenge of all this is the effort 345 00:18:36,480 --> 00:18:38,800 Speaker 1: on tariff's what's your reading on that? 346 00:18:39,600 --> 00:18:43,000 Speaker 2: So the broad stroke for me on tariffs is it 347 00:18:43,080 --> 00:18:47,560 Speaker 2: is a conversation well overdue. We have a massive trade 348 00:18:47,600 --> 00:18:50,399 Speaker 2: deficit issue, and I think that's more the issue than 349 00:18:50,440 --> 00:18:52,119 Speaker 2: the actual tariff conversation. 350 00:18:52,720 --> 00:18:54,639 Speaker 3: I think it's a very difficult. 351 00:18:54,160 --> 00:18:56,960 Speaker 2: Problem to fix, as is any problem that's developed on 352 00:18:57,000 --> 00:19:01,800 Speaker 2: a global stage over decades. But I think that all 353 00:19:01,840 --> 00:19:04,560 Speaker 2: of the efforts being put forth by the Trump administration 354 00:19:04,840 --> 00:19:08,439 Speaker 2: are certainly well thought out and well planned, regardless of 355 00:19:08,480 --> 00:19:11,439 Speaker 2: how they appear, and we'll put the United States in 356 00:19:11,440 --> 00:19:14,840 Speaker 2: a better position as we move through the resolution. I 357 00:19:14,840 --> 00:19:18,320 Speaker 2: don't know exactly what the tariff rates become, but I 358 00:19:18,400 --> 00:19:21,360 Speaker 2: do know that with our trade deficit at negative three 359 00:19:21,359 --> 00:19:24,879 Speaker 2: to four percent of GDP, what we're essentially doing and 360 00:19:25,119 --> 00:19:28,800 Speaker 2: have continued to do, is we've transferred our economy from 361 00:19:28,880 --> 00:19:33,080 Speaker 2: a manufacturing economy to a consumption economy, and by doing that, 362 00:19:33,480 --> 00:19:38,040 Speaker 2: we're sending US dollars overseas. So that trade deficit is important. 363 00:19:38,200 --> 00:19:40,240 Speaker 2: It's not that it's not important, and we're part of 364 00:19:40,280 --> 00:19:44,200 Speaker 2: this beautiful global world trade organization where we're all happy 365 00:19:44,200 --> 00:19:44,760 Speaker 2: and healthy. 366 00:19:45,119 --> 00:19:46,440 Speaker 3: When you send. 367 00:19:46,280 --> 00:19:52,240 Speaker 2: Dollars overseas, you're basically handing over our wealth to foreign nations. 368 00:19:52,359 --> 00:19:56,119 Speaker 2: You're giving them investment funds in the United States for 369 00:19:56,200 --> 00:19:59,720 Speaker 2: them to come back and buy us assets, whether those 370 00:19:59,720 --> 00:20:03,080 Speaker 2: are art assets in real estate, whether those are treasuries, 371 00:20:03,119 --> 00:20:05,919 Speaker 2: whether that's interest in our stock markets or our companies. 372 00:20:06,480 --> 00:20:09,960 Speaker 2: We are essentially transferring wealth away at a rate that's 373 00:20:10,000 --> 00:20:12,720 Speaker 2: not healthy. A three to four percent of GDP trade 374 00:20:12,720 --> 00:20:14,960 Speaker 2: deficit is not where we want to be, and we 375 00:20:15,040 --> 00:20:19,240 Speaker 2: don't want to be purely a consumption economy. If we 376 00:20:19,240 --> 00:20:21,639 Speaker 2: look at China on the other hand, which is really 377 00:20:21,840 --> 00:20:25,919 Speaker 2: a manufacturing economy and not a consumption they're not consuming 378 00:20:26,119 --> 00:20:29,600 Speaker 2: nearly what they manufacture and send out. I think the 379 00:20:29,640 --> 00:20:33,040 Speaker 2: point to the entire trade deficit tariff conversation brings us 380 00:20:33,080 --> 00:20:36,640 Speaker 2: to a place where we're reducing our trade deficit. We're 381 00:20:36,720 --> 00:20:40,320 Speaker 2: raining US dollars back into the country, and to your point, 382 00:20:40,440 --> 00:20:43,919 Speaker 2: mister speaker, strengthens the dollar. We don't want a slush 383 00:20:43,960 --> 00:20:47,680 Speaker 2: of dollars out across the globe or within the domestic 384 00:20:47,800 --> 00:20:50,760 Speaker 2: United States. That's not healthy for the dollar. That doesn't 385 00:20:50,800 --> 00:20:53,640 Speaker 2: create a stronger dollar, creates a weeker dollar. We want 386 00:20:53,640 --> 00:20:56,240 Speaker 2: to rain dollars in, and we like a country like 387 00:20:56,359 --> 00:21:00,600 Speaker 2: China to balance their economy with ours if they become 388 00:21:00,640 --> 00:21:03,920 Speaker 2: a little bit more of a consumer and reduce manufacturing, 389 00:21:03,960 --> 00:21:07,040 Speaker 2: because we've now on short manufacturing and we become a 390 00:21:07,080 --> 00:21:10,080 Speaker 2: little bit more manufacturing, which is where we should be 391 00:21:10,240 --> 00:21:13,280 Speaker 2: and what we are good at, we are the best. 392 00:21:14,080 --> 00:21:17,080 Speaker 2: That starts to create more of a balance. And I 393 00:21:17,080 --> 00:21:19,639 Speaker 2: would say that if not to pick on China, but 394 00:21:19,640 --> 00:21:23,040 Speaker 2: if countries like China abided by the rules of the 395 00:21:23,160 --> 00:21:26,040 Speaker 2: WTO and actually played a fair game as far as 396 00:21:26,080 --> 00:21:30,320 Speaker 2: intellectual property, as far as barriers, we would be globally 397 00:21:30,440 --> 00:21:34,160 Speaker 2: in a better place. I think that not only globally 398 00:21:34,240 --> 00:21:36,760 Speaker 2: in a better place, but the United States would be 399 00:21:36,800 --> 00:21:38,840 Speaker 2: in a stronger, better place, which is the goal of 400 00:21:38,880 --> 00:21:42,000 Speaker 2: the administration and the goal of the conversation. It's not 401 00:21:42,160 --> 00:21:48,600 Speaker 2: a random argument, it's not random numbers. The tariff conversation 402 00:21:48,760 --> 00:21:51,879 Speaker 2: and the trade def as a conversation for President Trump 403 00:21:51,920 --> 00:21:54,639 Speaker 2: is something he's been talking about for forty years, and 404 00:21:54,680 --> 00:21:57,359 Speaker 2: it's part of a bigger puzzle, and it's part of 405 00:21:57,359 --> 00:22:01,000 Speaker 2: a solution to a bigger problem which ties right back 406 00:22:01,000 --> 00:22:06,919 Speaker 2: into fiscal policy, monetary policy. What our manufacturing levels are, 407 00:22:06,920 --> 00:22:11,120 Speaker 2: our consumptions levels are, the strength of the dollar, inflationary pressures, 408 00:22:11,119 --> 00:22:13,720 Speaker 2: They're all connected. I think the conversation is a hard one, 409 00:22:14,119 --> 00:22:15,800 Speaker 2: but one that we need to have, and we need 410 00:22:15,840 --> 00:22:20,119 Speaker 2: to work through this process to become truly strong and 411 00:22:20,160 --> 00:22:22,480 Speaker 2: truly better and see real growth here once again. 412 00:22:23,040 --> 00:22:25,920 Speaker 1: As it struck you that we're seeing a lot more 413 00:22:26,000 --> 00:22:31,680 Speaker 1: coverage of tariffs and almost no coverage of the scale 414 00:22:31,720 --> 00:22:35,640 Speaker 1: of the announced investments. There are two Swiss pharmaceutical companies 415 00:22:35,960 --> 00:22:40,199 Speaker 1: between them have announced ninety billion dollars in investments in 416 00:22:40,240 --> 00:22:42,800 Speaker 1: the US, just those two companies, And every time you 417 00:22:42,880 --> 00:22:45,800 Speaker 1: turn around there's either an auto company or there's in 418 00:22:45,920 --> 00:22:48,919 Speaker 1: videos now putting hundreds of billions in. It seems to 419 00:22:48,960 --> 00:22:52,359 Speaker 1: me that that in the long run may actually be 420 00:22:52,440 --> 00:22:53,920 Speaker 1: a bigger story than the tariffs. 421 00:22:54,840 --> 00:22:58,640 Speaker 2: I absolutely agree with that, and definitely in the long run. Right, 422 00:22:58,680 --> 00:23:01,160 Speaker 2: So this is what we were talking about before, where 423 00:23:01,200 --> 00:23:05,879 Speaker 2: the pain of fixing our trade deals and fixing the 424 00:23:05,880 --> 00:23:09,719 Speaker 2: policies that were in place prior will end. But then 425 00:23:09,760 --> 00:23:12,480 Speaker 2: we're going to see this massive spike in real growth 426 00:23:12,600 --> 00:23:15,560 Speaker 2: in this economy, in real growth in the market. It 427 00:23:15,600 --> 00:23:19,320 Speaker 2: does not surprise me that the focus has been on 428 00:23:20,160 --> 00:23:23,000 Speaker 2: the negatives of tariffs. It does not surprise me that 429 00:23:23,040 --> 00:23:26,200 Speaker 2: there's a pylon the idea that there are so many 430 00:23:26,320 --> 00:23:31,040 Speaker 2: in the world, but more specifically in this country, that 431 00:23:31,080 --> 00:23:34,760 Speaker 2: would rather see the negative headline and a failure on 432 00:23:34,800 --> 00:23:38,119 Speaker 2: the part of the Trump administration rather than see the 433 00:23:38,160 --> 00:23:41,840 Speaker 2: Trump administration because of the fact that it's President Trump's 434 00:23:41,880 --> 00:23:45,760 Speaker 2: administration succeed is a said commentary on where we stand 435 00:23:45,760 --> 00:23:49,600 Speaker 2: as a nation. If this were flipped and it was 436 00:23:49,880 --> 00:23:54,480 Speaker 2: the Harris administration creating all this turmoil, but working towards 437 00:23:54,520 --> 00:23:57,880 Speaker 2: what they say is a better economy and more productive 438 00:23:57,920 --> 00:24:01,119 Speaker 2: growth and fairer trade deals, we would see complaints, but 439 00:24:01,200 --> 00:24:04,400 Speaker 2: we would not be seeing such lopsided reporting on what's 440 00:24:04,440 --> 00:24:08,080 Speaker 2: going on. Again, there's a bigger picture here, and I 441 00:24:08,160 --> 00:24:10,840 Speaker 2: give President Trump a lot of credit for ignoring a 442 00:24:10,880 --> 00:24:13,040 Speaker 2: lot of the noise and grinding through, because at the 443 00:24:13,080 --> 00:24:17,920 Speaker 2: end of the day, they are reporting negatively on everything 444 00:24:17,960 --> 00:24:19,520 Speaker 2: that's going on, and we don't. 445 00:24:19,320 --> 00:24:21,359 Speaker 3: See the positive reports that are there. 446 00:24:21,760 --> 00:24:24,040 Speaker 2: What will end up nipping them in the butt, as 447 00:24:24,040 --> 00:24:27,600 Speaker 2: it always does, is when the tide goes out and 448 00:24:27,640 --> 00:24:30,240 Speaker 2: we see what's really there, we will be in a 449 00:24:30,240 --> 00:24:33,440 Speaker 2: better position. GDP growth will be stronger, the dollar will 450 00:24:33,480 --> 00:24:37,439 Speaker 2: be stronger, the markets will be healthier, and employment numbers 451 00:24:37,440 --> 00:24:40,240 Speaker 2: will be better. And this is why the country voted 452 00:24:40,240 --> 00:24:42,919 Speaker 2: for President Trump and brought him back into office. The 453 00:24:42,960 --> 00:24:45,679 Speaker 2: negative reporting, I can go one further for you. The 454 00:24:45,680 --> 00:24:50,680 Speaker 2: negative reporting just on Tesla's earnings alone was absolutely insane, 455 00:24:51,280 --> 00:24:54,080 Speaker 2: even from Wall Street analysts calling for the company. Now, 456 00:24:54,280 --> 00:24:56,560 Speaker 2: all of a sudden, Tesla is they're in a make 457 00:24:56,640 --> 00:24:59,560 Speaker 2: or break spot. There are red flags everywhere. This is 458 00:24:59,600 --> 00:25:02,600 Speaker 2: a reb old story, a rebuilt story. This is a 459 00:25:02,640 --> 00:25:05,639 Speaker 2: company that made nineteen billion dollars in the first quarter. 460 00:25:06,240 --> 00:25:09,240 Speaker 2: This is a company they're the only fully US made 461 00:25:09,240 --> 00:25:13,199 Speaker 2: car company in the world. Premiere technology, premiere electric vehicle. 462 00:25:13,480 --> 00:25:16,240 Speaker 2: Five years ago, Elon Musk was going to put civilization 463 00:25:16,359 --> 00:25:19,920 Speaker 2: on Mars. He was the darling of the left and 464 00:25:19,960 --> 00:25:22,120 Speaker 2: then came out and said, hey, I believe in free speech, 465 00:25:22,440 --> 00:25:25,760 Speaker 2: I believe in the Constitution, I believe in a strong border, 466 00:25:26,320 --> 00:25:28,800 Speaker 2: and I'm a patriot, And all of a sudden he 467 00:25:28,880 --> 00:25:32,920 Speaker 2: became the red headed stepchild. So even there, the negative 468 00:25:33,000 --> 00:25:37,280 Speaker 2: coverage of Tesla by analysts that have had buy and 469 00:25:37,359 --> 00:25:40,800 Speaker 2: outperform ratings for five years on the stock was so 470 00:25:40,920 --> 00:25:43,639 Speaker 2: biased and so transparent it's illogical. 471 00:25:43,680 --> 00:25:45,439 Speaker 3: I just don't know what to say about it anymore. 472 00:25:45,440 --> 00:25:46,359 Speaker 3: It's just noise. 473 00:25:46,920 --> 00:25:49,359 Speaker 2: Doesn't surprise me that they want everything to look bad. 474 00:25:49,720 --> 00:25:51,720 Speaker 2: But at the end of the day, President Trump, the 475 00:25:51,720 --> 00:25:53,280 Speaker 2: administration of doing the right things. 476 00:25:53,720 --> 00:25:56,960 Speaker 1: What struck me watching Tesla over the years, is Tesla's 477 00:25:57,040 --> 00:26:02,760 Speaker 1: actually an information company with because the sheer volume of 478 00:26:02,840 --> 00:26:06,760 Speaker 1: data they're generating is so enormous that as you get 479 00:26:06,800 --> 00:26:11,440 Speaker 1: into artificial intelligence and you're looking for databases on which 480 00:26:11,480 --> 00:26:15,240 Speaker 1: your new artificial intelligence can train itself, Testa is going 481 00:26:15,280 --> 00:26:18,280 Speaker 1: to have an enormous advantage and just the sheer volume 482 00:26:18,520 --> 00:26:21,720 Speaker 1: of real data about the real world because their data 483 00:26:21,760 --> 00:26:23,879 Speaker 1: is not just theoretical. I don't know if that fits 484 00:26:23,880 --> 00:26:25,919 Speaker 1: at all your vision. I think of them as a 485 00:26:26,200 --> 00:26:29,200 Speaker 1: very interesting and very different long term play. 486 00:26:30,000 --> 00:26:31,800 Speaker 2: I agree with you one hundred percent, and I think 487 00:26:31,840 --> 00:26:33,879 Speaker 2: that's a great view and another angle to look at 488 00:26:33,880 --> 00:26:36,600 Speaker 2: the company. I mean not only an information company, as 489 00:26:36,600 --> 00:26:38,800 Speaker 2: you said, or a data company. But you're looking at 490 00:26:38,840 --> 00:26:43,720 Speaker 2: the battery technology, You're looking at reusable renewable technology. Now, 491 00:26:43,720 --> 00:26:46,800 Speaker 2: you're looking at AI robotics. Like the company is just 492 00:26:47,560 --> 00:26:48,600 Speaker 2: beyond exceptional. 493 00:26:48,640 --> 00:26:48,840 Speaker 3: Now. 494 00:26:48,920 --> 00:26:51,679 Speaker 2: I don't invest here in individual names. I'm in the 495 00:26:51,680 --> 00:26:55,439 Speaker 2: future space and I am macro top down, but I 496 00:26:55,480 --> 00:26:59,320 Speaker 2: would say that Tesla as the street has turned negative 497 00:26:59,359 --> 00:27:03,399 Speaker 2: and had been pressing the name for clearly political issues, 498 00:27:03,400 --> 00:27:06,240 Speaker 2: which is insane to me. I think Tesla right now 499 00:27:06,320 --> 00:27:09,600 Speaker 2: is probably at one of the most attractive levels. It's 500 00:27:09,640 --> 00:27:13,080 Speaker 2: a very attractive entry level for the name, and ironically 501 00:27:13,480 --> 00:27:16,040 Speaker 2: it's when the street has turned and is calling the name, 502 00:27:16,119 --> 00:27:18,520 Speaker 2: you know, on the brink of extinction. It's just insane 503 00:27:18,560 --> 00:27:20,760 Speaker 2: to me. But the company has a lot going for it. 504 00:27:20,840 --> 00:27:25,560 Speaker 2: And look Elon Musk, he's so highly functioning that this 505 00:27:25,680 --> 00:27:27,880 Speaker 2: whole play was to pull him from Doge. 506 00:27:28,280 --> 00:27:30,639 Speaker 3: They wanted him out because they feel like he is 507 00:27:30,800 --> 00:27:31,520 Speaker 3: the tip of the. 508 00:27:31,480 --> 00:27:35,920 Speaker 2: Spear in uncovering the waste, fraud and abuse. So maybe 509 00:27:35,920 --> 00:27:38,280 Speaker 2: they accomplish their goals. As he announced it in the 510 00:27:38,320 --> 00:27:41,359 Speaker 2: earnings culture as of May, he would be stepping back. 511 00:27:41,720 --> 00:27:43,760 Speaker 2: I think he leaves a capable team in place, and 512 00:27:43,800 --> 00:27:47,240 Speaker 2: I think that that's irrelevant. The company, yes, to your point, 513 00:27:47,359 --> 00:27:51,439 Speaker 2: is multifaceted. There's a ton there, led by one of 514 00:27:51,440 --> 00:27:52,960 Speaker 2: the all time geniuses in history. 515 00:27:53,080 --> 00:27:54,680 Speaker 3: You can't really argue that point. 516 00:27:54,920 --> 00:27:59,479 Speaker 1: People don't notice. But SpaceX continues to grow and evolve, 517 00:28:00,119 --> 00:28:04,160 Speaker 1: Starlink continues to grow and become more profitable. Neuralink may 518 00:28:04,200 --> 00:28:07,159 Speaker 1: have breakthroughs that are extraordinary within the next year. I 519 00:28:07,200 --> 00:28:10,119 Speaker 1: tell people he's sort of a cross between Henry Ford 520 00:28:10,119 --> 00:28:12,919 Speaker 1: and Thomas Edison. I mean, the sheer scale of his 521 00:28:13,359 --> 00:28:16,919 Speaker 1: ability to think things through is really pretty bizarre. You 522 00:28:16,960 --> 00:28:19,480 Speaker 1: don't see these things more than once or twice in 523 00:28:19,520 --> 00:28:20,160 Speaker 1: a century. 524 00:28:20,560 --> 00:28:20,919 Speaker 3: Agreed. 525 00:28:21,119 --> 00:28:23,840 Speaker 2: I love the fact to that point exactly, that the 526 00:28:24,160 --> 00:28:27,280 Speaker 2: analysts are saying, well, he's taking too much time on Doge, 527 00:28:27,520 --> 00:28:29,159 Speaker 2: he's not paying attention to Tesla. 528 00:28:29,480 --> 00:28:33,879 Speaker 3: He's running five five massive companies. No one has a 529 00:28:33,880 --> 00:28:34,560 Speaker 3: problem with it. 530 00:28:34,880 --> 00:28:38,160 Speaker 2: But he steps into Doge and he's working with President Trump. 531 00:28:38,160 --> 00:28:40,200 Speaker 2: All of a sudden, he can't do that. That one 532 00:28:40,240 --> 00:28:41,960 Speaker 2: ship was one too many on the board. He's not 533 00:28:41,960 --> 00:28:42,840 Speaker 2: going to be able to handle this. 534 00:28:43,560 --> 00:28:46,360 Speaker 1: In general, what are you telling your clients about the 535 00:28:46,400 --> 00:28:47,280 Speaker 1: markets right now? 536 00:28:47,920 --> 00:28:52,160 Speaker 2: My clients understand that my view for the intermediate term 537 00:28:52,200 --> 00:28:55,200 Speaker 2: and longer term here is that we have lower lows 538 00:28:55,240 --> 00:28:58,080 Speaker 2: to make before we recover and start to move higher 539 00:28:58,120 --> 00:29:02,200 Speaker 2: from our previous peak. With that said, my technical model 540 00:29:02,280 --> 00:29:04,520 Speaker 2: is giving me a positive, a neutral, or a negative 541 00:29:04,600 --> 00:29:07,240 Speaker 2: on all of my asset classes in the universe. The 542 00:29:07,920 --> 00:29:11,800 Speaker 2: investors know that we may not be participating on these 543 00:29:12,000 --> 00:29:15,880 Speaker 2: rallies as we're seeing today, but I am more inclined 544 00:29:15,920 --> 00:29:19,640 Speaker 2: to be selling my negative calls because that's the greater. 545 00:29:19,480 --> 00:29:22,200 Speaker 3: Move for me. These moves will reverse quickly. 546 00:29:22,240 --> 00:29:24,920 Speaker 2: For as aggressive and attractive as they are, they will 547 00:29:24,960 --> 00:29:28,360 Speaker 2: reverse quickly to the downside. So they understand that we 548 00:29:28,440 --> 00:29:32,280 Speaker 2: are basically playing the market flat to short until our 549 00:29:32,320 --> 00:29:35,520 Speaker 2: downside targets are achieved, and then we'll start to play 550 00:29:35,560 --> 00:29:38,120 Speaker 2: the market on the recovery. And again with that v 551 00:29:38,240 --> 00:29:41,200 Speaker 2: spiked recovery, where those investments are now acknowledged and starting 552 00:29:41,240 --> 00:29:43,600 Speaker 2: to take hold, I'll start to turn and I'll see 553 00:29:43,640 --> 00:29:46,960 Speaker 2: my intermediate and long term signals start to flatten out 554 00:29:47,000 --> 00:29:49,600 Speaker 2: and become more bullish, and then I can start playing 555 00:29:49,640 --> 00:29:52,880 Speaker 2: the daily trades higher. I've been playing the market flat 556 00:29:52,920 --> 00:29:55,960 Speaker 2: to short since December, and I can tell you that 557 00:29:56,240 --> 00:29:58,920 Speaker 2: for the year to date, we're up going on forty 558 00:29:58,960 --> 00:30:02,719 Speaker 2: percent now, So the investors are happy. I'm happy, and 559 00:30:02,800 --> 00:30:04,760 Speaker 2: I think that there's a way to make money in 560 00:30:04,800 --> 00:30:07,280 Speaker 2: both directions as long as you can look at the 561 00:30:07,320 --> 00:30:10,720 Speaker 2: market objectively and have a process that works, which thankfully 562 00:30:10,760 --> 00:30:14,440 Speaker 2: I do. The problem that investors run into and funds 563 00:30:14,480 --> 00:30:17,719 Speaker 2: run into is they're trying to manage on a fundamental 564 00:30:17,760 --> 00:30:20,760 Speaker 2: model which is broken, so then they grasp at straws 565 00:30:20,760 --> 00:30:23,360 Speaker 2: because there is no earnings growth. You don't know what 566 00:30:23,440 --> 00:30:25,040 Speaker 2: the numbers are going to be. You don't know what 567 00:30:25,080 --> 00:30:29,040 Speaker 2: the guidances and the model falls apart. So for me, 568 00:30:29,800 --> 00:30:33,480 Speaker 2: investors understand right now, I am neutral to varish. I'm 569 00:30:33,480 --> 00:30:36,120 Speaker 2: not chasing these rallies. I'm a seller of these rallies. 570 00:30:36,560 --> 00:30:39,080 Speaker 2: But when my model tells me, Okay, the dust is 571 00:30:39,120 --> 00:30:41,960 Speaker 2: cleared and we've bottomed, and I may be in a 572 00:30:42,040 --> 00:30:44,400 Speaker 2: month to a quarter behind that, I may not jump 573 00:30:44,400 --> 00:30:47,440 Speaker 2: in as soon as there's a turn. But they realize 574 00:30:47,480 --> 00:30:50,240 Speaker 2: they'll start to see on the monthly quarterly statements to 575 00:30:50,400 --> 00:30:53,760 Speaker 2: long exposure as this thing bottoms out and my model's 576 00:30:53,760 --> 00:30:56,480 Speaker 2: telling me it's time to start to take some long exposure. 577 00:30:56,920 --> 00:30:59,920 Speaker 1: You're certainly very smart and you certainly know a man 578 00:31:00,200 --> 00:31:04,720 Speaker 1: some mount about the economy. How can people get your newsletter? 579 00:31:05,640 --> 00:31:10,200 Speaker 2: So my newsletter is out at Islandcapitalinvestments dot com. 580 00:31:10,560 --> 00:31:11,640 Speaker 3: It's a free newsletter. 581 00:31:11,680 --> 00:31:15,240 Speaker 2: You can see all of my deck, my investment process, 582 00:31:15,800 --> 00:31:18,360 Speaker 2: and you can sign up for free for the newsletter there. 583 00:31:18,680 --> 00:31:24,120 Speaker 2: I'm also on exit at CMT Underscore Anthony, that's Charted 584 00:31:24,120 --> 00:31:27,719 Speaker 2: Market Technician Underscore Anthony. I have all of my media 585 00:31:27,760 --> 00:31:30,720 Speaker 2: out there. I have the podcast out there with Ejantoni 586 00:31:30,800 --> 00:31:34,840 Speaker 2: Policy and profits. The newsletters posted every morning and then 587 00:31:34,880 --> 00:31:37,000 Speaker 2: as I see something during the day, I may throw 588 00:31:37,040 --> 00:31:39,240 Speaker 2: something out just to give a heads up, but I'm 589 00:31:39,240 --> 00:31:42,560 Speaker 2: definitely out there. The information is free. I like to 590 00:31:42,600 --> 00:31:45,800 Speaker 2: share that information and be open with it. I'm actually, 591 00:31:46,120 --> 00:31:48,800 Speaker 2: mister Speaker going through a cap raise effort now and 592 00:31:48,880 --> 00:31:52,080 Speaker 2: a restructuring of the fund, so hopefully in the next 593 00:31:52,560 --> 00:31:55,360 Speaker 2: three to four months, I'll be launched in a different form, 594 00:31:55,400 --> 00:31:58,400 Speaker 2: potentially with a different name, but it'll all flow back 595 00:31:58,440 --> 00:32:02,120 Speaker 2: towards Island Capital Investments DO and at CMT Underscore. 596 00:32:02,160 --> 00:32:05,720 Speaker 1: Anthony, I must say this has been very impressive. I mean, 597 00:32:05,760 --> 00:32:09,960 Speaker 1: I really appreciate your knowledge of the market and your 598 00:32:10,000 --> 00:32:13,080 Speaker 1: candor and the model that you use. I want to 599 00:32:13,120 --> 00:32:15,960 Speaker 1: thank you for joining me. I do encourage our listeners 600 00:32:16,200 --> 00:32:20,040 Speaker 1: to check out your website at Islandcapitlinvestments dot com, which 601 00:32:20,040 --> 00:32:21,840 Speaker 1: I'll tell you flatly I am going to sign up 602 00:32:21,880 --> 00:32:25,480 Speaker 1: for this afternoon because I very much agree with your 603 00:32:25,520 --> 00:32:28,920 Speaker 1: general approach to the economy and thank you for joining us. 604 00:32:29,520 --> 00:32:31,400 Speaker 3: Thank you for having me as an absolute pleasure. 605 00:32:35,000 --> 00:32:37,760 Speaker 1: Thank you to my guest, Anthony Esposito. You can get 606 00:32:37,760 --> 00:32:41,719 Speaker 1: a link to his company website, Islandcapital investments on our 607 00:32:41,760 --> 00:32:45,560 Speaker 1: show page at newtsworld dot com. Newsworld is produced by 608 00:32:45,560 --> 00:32:50,120 Speaker 1: Gaglish three sixty and iHeartMedia. Our executive producer is Guarnsey Sloan. 609 00:32:50,680 --> 00:32:54,200 Speaker 1: Our researcher is Rachel Peterson. The artwork for the show 610 00:32:54,240 --> 00:32:57,440 Speaker 1: was created by Steve Penley. Special thanks to the team 611 00:32:57,440 --> 00:33:00,880 Speaker 1: at Ginglishtree sixty. If you've been enjoying new World, I 612 00:33:00,920 --> 00:33:03,640 Speaker 1: hope you'll go to Apple Podcast and both rate us 613 00:33:03,640 --> 00:33:06,960 Speaker 1: with five stars and give us a review so others 614 00:33:06,960 --> 00:33:10,160 Speaker 1: can learn what it's all about. Right now, listeners of 615 00:33:10,200 --> 00:33:14,280 Speaker 1: Newtsworld can sign up for my three free weekly columns 616 00:33:14,520 --> 00:33:18,840 Speaker 1: at gingrichree sixty dot com slash newsletter. I'm newt Gingrich. 617 00:33:19,200 --> 00:33:20,160 Speaker 1: This is Newtsworld.