1 00:00:02,440 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,240 --> 00:00:11,280 Speaker 2: Well about I think about fifty to sixty percent of 3 00:00:11,640 --> 00:00:16,400 Speaker 2: CI debt is held by the CNBS market, So that's 4 00:00:16,400 --> 00:00:20,480 Speaker 2: an investor problem. That's not my problem, that's somebody else's problem. 5 00:00:21,280 --> 00:00:25,800 Speaker 2: And then maybe forty percent is held by banks. Very 6 00:00:25,840 --> 00:00:28,680 Speaker 2: little of that is held by large banks as a 7 00:00:28,720 --> 00:00:31,800 Speaker 2: percentage of their of their assets. You know, some regional 8 00:00:31,840 --> 00:00:40,479 Speaker 2: banks have significant risk, and it's a problem, but you 9 00:00:40,520 --> 00:00:42,879 Speaker 2: know they're able to pull shtick, you know, as we 10 00:00:42,960 --> 00:00:45,400 Speaker 2: always like to say, maybe there's a rolling loan catches 11 00:00:45,440 --> 00:00:48,120 Speaker 2: no loss. I mean, they just roll it until they 12 00:00:48,120 --> 00:00:50,960 Speaker 2: can't roll it anymore. So, you know, commercial real estate 13 00:00:51,040 --> 00:00:55,200 Speaker 2: is a problem that's sort of glacial in that way. 14 00:00:55,360 --> 00:00:58,920 Speaker 2: You know, they'll be restructurings. Banks will have issues, some 15 00:00:58,960 --> 00:01:00,760 Speaker 2: regional banks, I mean, and I don't know if any 16 00:01:00,960 --> 00:01:02,720 Speaker 2: regional banks will go under or not. But it's not 17 00:01:02,760 --> 00:01:04,800 Speaker 2: a systemic It's not just not a systemic issue. 18 00:01:04,880 --> 00:01:09,440 Speaker 3: If I think about the biggest problems facing us. Unfortunately, 19 00:01:09,480 --> 00:01:12,880 Speaker 3: I know that you don't care that much about the 20 00:01:13,080 --> 00:01:18,039 Speaker 3: federal deficit and debt. But how calm, like if we're 21 00:01:18,200 --> 00:01:20,960 Speaker 3: billion dollars a month in servicing costs. 22 00:01:21,160 --> 00:01:22,400 Speaker 2: I'm gonna take on my violin. 23 00:01:22,600 --> 00:01:26,039 Speaker 3: Okay, but more than the military, okay, sometimes so can 24 00:01:26,080 --> 00:01:26,560 Speaker 3: I can. 25 00:01:26,600 --> 00:01:28,240 Speaker 2: I like to take a couple of Number one, I'm 26 00:01:28,240 --> 00:01:30,280 Speaker 2: gonna I'm gonna put you in the camp of what 27 00:01:30,319 --> 00:01:32,160 Speaker 2: I like to call the OI, the deficit crowd. 28 00:01:32,319 --> 00:01:35,800 Speaker 3: Yes, I'm there, I'm ready, You're there, Me and Lisa. 29 00:01:35,959 --> 00:01:42,680 Speaker 2: I'm not an economist, but I understand arguments, and literally 30 00:01:43,080 --> 00:01:47,160 Speaker 2: every single word that people are uttering about the deficit 31 00:01:47,240 --> 00:01:51,559 Speaker 2: today has been uttered by somebody for forty years now. 32 00:01:51,720 --> 00:01:55,120 Speaker 2: In my business, being too early is being the equivalent 33 00:01:55,160 --> 00:01:59,120 Speaker 2: of being wrong. But I've been he too early. I've 34 00:01:59,120 --> 00:02:01,720 Speaker 2: been two years to early. I've been forty years too early. 35 00:02:02,280 --> 00:02:07,000 Speaker 2: So clearly that it's more complicated than the deficit people 36 00:02:07,920 --> 00:02:11,919 Speaker 2: like to say, you know, is there a point where 37 00:02:12,360 --> 00:02:16,200 Speaker 2: it becomes an issue? Sure, but you know how you'll 38 00:02:16,200 --> 00:02:18,640 Speaker 2: know instead of on a day like today where the 39 00:02:18,680 --> 00:02:20,520 Speaker 2: ten year is down, how many basis points is it? 40 00:02:20,560 --> 00:02:24,280 Speaker 2: Do just eleven? You'll walk in and it'll be up 41 00:02:24,360 --> 00:02:27,800 Speaker 2: fifty and you'll say, oh, you're the deficit, and then 42 00:02:27,840 --> 00:02:30,079 Speaker 2: it'll be relevant exactly. 43 00:02:30,200 --> 00:02:32,239 Speaker 3: This is exactly the same as housing, right. 44 00:02:32,160 --> 00:02:38,120 Speaker 2: You know, forty years forty years long time. It's really 45 00:02:38,480 --> 00:02:40,960 Speaker 2: just a very, very long and the argument as to 46 00:02:41,000 --> 00:02:43,200 Speaker 2: why I think it's just not that relevant. Excuse me 47 00:02:43,240 --> 00:02:50,799 Speaker 2: my ear piece, you don't need you, is that it 48 00:02:50,840 --> 00:02:55,360 Speaker 2: has to be that the fear about the deficit causes 49 00:02:55,400 --> 00:02:59,079 Speaker 2: people to start to walk away from the dollar. That's 50 00:02:59,120 --> 00:03:02,320 Speaker 2: the feedback loop. So let's think about that for a second. 51 00:03:02,720 --> 00:03:05,560 Speaker 2: Why is the dollar the reserve currency of the world. 52 00:03:05,639 --> 00:03:09,400 Speaker 2: It's actually very simple. Big money has to park its 53 00:03:09,440 --> 00:03:12,000 Speaker 2: money somewhere, and they're only going to park it in 54 00:03:12,040 --> 00:03:15,880 Speaker 2: the most liquid, safest bond market in the world, and 55 00:03:15,880 --> 00:03:21,400 Speaker 2: that's the US government bond market. Until there's actual replacement, 56 00:03:23,919 --> 00:03:26,519 Speaker 2: the US dollar will be the reserve currency of the world. 57 00:03:26,520 --> 00:03:29,480 Speaker 2: And what you're talking about is just going to be academic. 58 00:03:29,800 --> 00:03:34,760 Speaker 2: It's not China, it's not Europe. You know, no offense 59 00:03:34,800 --> 00:03:37,160 Speaker 2: to all your crypto people, it's not going to be crypto. 60 00:03:38,720 --> 00:03:41,600 Speaker 2: So until somebody can show up and show me some 61 00:03:41,640 --> 00:03:45,480 Speaker 2: replacement for the US government bond market, I'm just not concerned. 62 00:03:45,920 --> 00:03:47,880 Speaker 1: And it remains to be seen if that will happen 63 00:03:47,920 --> 00:03:50,520 Speaker 1: in the next forty years. But before we get there, 64 00:03:50,560 --> 00:03:53,120 Speaker 1: I do want to talk about the state of shorting. 65 00:03:53,160 --> 00:03:55,280 Speaker 1: Of course, you were in the Big Short Steve Carell 66 00:03:55,320 --> 00:03:58,400 Speaker 1: played you great movie, But it feels like this on. 67 00:03:58,400 --> 00:04:01,680 Speaker 2: My tombstone already, by the way it's carved in. 68 00:04:02,960 --> 00:04:05,400 Speaker 1: But in any case, it feels like the state of 69 00:04:05,440 --> 00:04:07,640 Speaker 1: shorting in this market. This just feels like an environment 70 00:04:07,680 --> 00:04:10,960 Speaker 1: where companies won't die. And you see these high valuation, 71 00:04:11,120 --> 00:04:14,240 Speaker 1: high flying stocks, and it just feels like there's a 72 00:04:14,280 --> 00:04:16,440 Speaker 1: lot of temptation out there to short. But how are 73 00:04:16,480 --> 00:04:17,839 Speaker 1: you thinking about short selling? 74 00:04:18,480 --> 00:04:21,560 Speaker 2: I don't shure it for clients at all. I short 75 00:04:21,920 --> 00:04:24,520 Speaker 2: any bitty little bit for myself once in a while. 76 00:04:26,880 --> 00:04:28,960 Speaker 2: I mean, what I would say to people is number one, 77 00:04:29,680 --> 00:04:33,080 Speaker 2: a couple of rules about shorting. Shortening of stock purely 78 00:04:33,120 --> 00:04:37,760 Speaker 2: because you think it's expensive is a death wish. You 79 00:04:37,880 --> 00:04:40,880 Speaker 2: have to have a fundamental reason to be short of stock. 80 00:04:42,080 --> 00:04:45,440 Speaker 2: You know, isn't vity expensive? I mean, yeah, it's expensive, 81 00:04:45,520 --> 00:04:48,560 Speaker 2: but earnings have tripled, so you know, you could have 82 00:04:48,560 --> 00:04:50,720 Speaker 2: made that argument a year or so ago and then 83 00:04:50,760 --> 00:04:56,000 Speaker 2: earnings doubled or triple whatever they did. So look, I 84 00:04:56,000 --> 00:04:59,600 Speaker 2: think the economy is fine. Is it slowing to a 85 00:04:59,640 --> 00:05:02,840 Speaker 2: little bit? It sure, our delinquencies up a little bit 86 00:05:02,880 --> 00:05:08,279 Speaker 2: in consumers, Okay, but there's no fundamental case to be 87 00:05:08,360 --> 00:05:11,440 Speaker 2: massively short things. I mean, are other individual stories. Maybe 88 00:05:11,440 --> 00:05:14,000 Speaker 2: you could short here and there. Sure, but but to 89 00:05:14,480 --> 00:05:19,159 Speaker 2: go after you know, the market, I think it's insanity. 90 00:05:19,200 --> 00:05:22,360 Speaker 3: But you know we have the DOJ going after short sellers. 91 00:05:22,400 --> 00:05:24,799 Speaker 3: I mean, don't they serve an important person. 92 00:05:24,839 --> 00:05:27,640 Speaker 2: To serve an important purpose. I don't understand whether the 93 00:05:27,680 --> 00:05:29,279 Speaker 2: do goes after short sellers. 94 00:05:29,320 --> 00:05:30,840 Speaker 1: The other thing to it, I believe you were one 95 00:05:30,960 --> 00:05:33,120 Speaker 1: short Tesla for a certain amount of time too. 96 00:05:33,200 --> 00:05:34,640 Speaker 2: What would the lessons learned there? 97 00:05:34,680 --> 00:05:37,600 Speaker 1: Because you've seen so many people get squeezed on trying 98 00:05:37,600 --> 00:05:39,120 Speaker 1: to short that stock in this market. 99 00:05:39,240 --> 00:05:43,000 Speaker 2: I've been shortened, I haven't been shorted. It's a look 100 00:05:43,040 --> 00:05:45,320 Speaker 2: you can. I think you get at times short tesla 101 00:05:45,400 --> 00:05:51,320 Speaker 2: when the fundamentals are deteriorating, and then then people stop 102 00:05:51,400 --> 00:05:54,320 Speaker 2: focusing on the fundamentals and they start talking about, you know, 103 00:05:54,400 --> 00:05:57,760 Speaker 2: the dream of auto taxis or AI or whatever, and 104 00:05:57,800 --> 00:06:00,600 Speaker 2: then then it becomes impossible. So Test is not a 105 00:06:00,640 --> 00:06:02,120 Speaker 2: stock to be short long term at all.