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Speaker 2: Well, it does kind of feel like twenty twenty one,
Speaker 2: at least some vibes. With memestocks and Crypto back in
Speaker 2: the spotlight. Cole Shares more than doubled amid an influx
Speaker 2: of mentions by retail traders on social media, with the
Speaker 2: stock price soaring as much as one hundred and five
Speaker 2: percent when the equity market opened today, and then there's
Speaker 2: Open Door Technologies. It jumped as much as one hundred
Speaker 2: and twenty percent yesterday. It extended its gravity defying rally
Speaker 2: from last week. Investors continue to pile into the stock
Speaker 2: that has found a sudden fandom among retail traders and
Speaker 2: social media platforms.
Speaker 3: I mean, this is when that is certainly on our radar.
Speaker 3: One of the reasons Open Door has been moving is
Speaker 3: due to Eric Jackson He's the founder of Toronto based
Speaker 3: hedge fund AMJ Capitol. He made a series of posts
Speaker 3: on X encouraging buying, and Eric joins us from Toronto
Speaker 3: on this Tuesday. Eric, good to have you here with us.
Speaker 3: Do you, first of all, take issue with this being
Speaker 3: open Door a meme stock?
Speaker 4: Yeah?
Speaker 5: I think Carol that all the meme stocks from twenty
Speaker 5: twenty one were dumb businesses. I couldn't understand it at
Speaker 5: the time why retail traders were getting so wrapped up
Speaker 5: in AMC, GME, and BlackBerry. I think those were the
Speaker 5: big three, Like those are all like walking dead businesses.
Speaker 5: So when I got into open Door and then I
Speaker 5: first started tweeting about it last Monday, it's hard to believe.
Speaker 5: It feels like a cent where you ago like two
Speaker 5: forty five. Like I got into it because this is
Speaker 5: a real business and it's got a real platform that
Speaker 5: it's built, and it's definitely fallen on hard times. That's
Speaker 5: why the stocks down like ninety nine percent or whatever
Speaker 5: it is from its all time highs. But I just
Speaker 5: think that the market got overly pessimistic about it. And
Speaker 5: I've seen this movie before with Carvana, Like that's one
Speaker 5: of the one of my like you know, greatest.
Speaker 4: Heads on my wall. I guess you know from the
Speaker 4: past is.
Speaker 5: That I got into Carvana early, not at three dollars
Speaker 5: and fifty cents, but at fifteen dollars, and today it's
Speaker 5: like close to four hundred. And I just see so
Speaker 5: many similarities between these two businesses, and all, you know,
Speaker 5: people just get overly a prisoner of the moment, pessimistic
Speaker 5: about these companies, and everyone's negative Nelly, and everyone loves
Speaker 5: to dance on the grave and say that these companies are.
Speaker 4: Circling the drain.
Speaker 5: Nobody would have believed that, you know, at three fifty
Speaker 5: that Carbona was going back to four hundred. Nobody now
Speaker 5: that at you know, it was seventy cents last Monday.
Speaker 5: Now it's whatever it is three bucks today, that this
Speaker 5: thing is I think going to eighty two bucks.
Speaker 2: Yeah, okay, so let's talk about that. It's two dollars
Speaker 2: and eighty cents right now, down about twelve thirteen percent
Speaker 2: as we speak, just on the day today, you have
Speaker 2: a price target of eighty two dollars.
Speaker 6: That's pretty wild.
Speaker 2: Make your case to us on why you see it
Speaker 2: moving that high.
Speaker 5: Well, I mean, I'll be even wilder, tim, I think
Speaker 5: today it should be trading forty bucks. You know, it's
Speaker 5: it's you know, like basically that if you look at
Speaker 5: go back and look at Carvana. Okay, use this as
Speaker 5: a comparison to open Door. Both of these companies they're
Speaker 5: trying to e commerce SAFFI some niche that hasn't been
Speaker 5: e commerce suffied before. For Carvana, it was buying and
Speaker 5: selling use cars. For open doors, buying and selling homes.
Speaker 5: It's a huge business obviously in both cases, a national
Speaker 5: business where just having like one or two or three
Speaker 5: percent market share nationally, you know, is talking billions and
Speaker 5: billions of dollars and power because it's all so fragmented today, uh,
Speaker 5: you know, with the dealers in the car industry and
Speaker 5: with the agents you know, in the real estate industry.
Speaker 5: And basically you need a lot of debt to run
Speaker 5: both of these businesses.
Speaker 4: And so the problem that both of these.
Speaker 5: Businesses came you know, came upon is that although they
Speaker 5: were flying high in the COVID you know, pre COVID
Speaker 5: and then uh briefly post COVID era, when interest rates
Speaker 5: were low, when Powell started raising rates, Uh, suddenly investors
Speaker 5: got nervous, and these stocks crashed, and and the assumption
Speaker 5: was that it's they're just gonna they're going to go under,
Speaker 5: they're going to file for bankruptcy. So their price as
Speaker 5: if they're going to go bankrupt. And I don't believe
Speaker 5: that's true.
Speaker 4: Uh, Carvana.
Speaker 6: You know.
Speaker 5: In fact, I was on a podcast in June of
Speaker 5: twenty twenty two with Josh Brown and Michael Back where
Speaker 5: I call both like I said, both would turn around
Speaker 5: Carvanah did and h open Door did it it was
Speaker 5: dead wrong, Like it took a lot longer for them
Speaker 5: to get to the point where they're about to turn profitable.
Speaker 5: But they are about to turn profitable.
Speaker 3: So for open Door, do you expect to inject and
Speaker 3: invest more money into it and then take a profit
Speaker 3: or because it sounds like you've done the research, looked
Speaker 3: at the business, maybe talk to the company that this
Speaker 3: is more of a long term buy and hold strategy
Speaker 3: for you.
Speaker 4: Which is it?
Speaker 5: Well, I've been fortunate to be early on a bunch
Speaker 5: of companies, like I was like really early on Ali
Speaker 5: Baba even you know back in twenty nine and ten,
Speaker 5: when it was still a private company, it was value
Speaker 5: to ten billion. I thought it was going to go
Speaker 5: up Carvana, you know some other ones. Like what I've
Speaker 5: learned Carol is that you know, like it's always hard
Speaker 5: to not avoid the temptation of firing up the terminal
Speaker 5: or turning on business TV and getting emotional about the
Speaker 5: macro headlines of the day and get shaken out of
Speaker 5: these positions. And sometimes when you know, these these companies
Speaker 5: are pretty rare, you know that can truly hundred bag
Speaker 5: or hundred acts, right, but like, you know, it's so
Speaker 5: easy to get shaken out of these positions or like
Speaker 5: in the case of Carvana, like I got like I said,
Speaker 5: I got into it at fifteen, I would say I
Speaker 5: got out of it. You know, the bulk of my
Speaker 5: position in around like probably one thirty one forty one
Speaker 5: fifty somewhere in there. And I'm thinking, oh, I'm so smart.
Speaker 5: I mean ten x my money. Pat myself on the
Speaker 5: back here, you know, and I know this company really well.
Speaker 5: I still was optimistic about Carvana, and still i'm today.
Speaker 4: But I thought, like, I'm just going to trade it,
Speaker 4: trade in and out.
Speaker 5: And you know the truth is, you don't make as
Speaker 5: much money as is if you do nothing and just
Speaker 5: let it sit there. So I'm not like jumping into
Speaker 5: add more, Carol, but you know, because I want to
Speaker 5: see how the things play out. But I you know,
Speaker 5: I'm going to try to avoid that temptation and just
Speaker 5: sit and do nothing.
Speaker 3: How much eighty can you give us an idea? How
Speaker 3: much you have put into it? And is it all
Speaker 3: your money? Is it investor money?
Speaker 4: Well, I run a fund, Carol, it's a it's a
Speaker 4: it's a small fund.
Speaker 5: Frank with you guys, It's like I had a huge
Speaker 5: I had a huge billionaire that basically it was like
Speaker 5: a cornerstone investor for me in twenty sixteen seventeen when
Speaker 5: I started EMJ Capital. And so I like the way
Speaker 5: you think, Eric, you know, you look at companies differently.
Speaker 5: You find these like little hidden jewel companies. How about
Speaker 5: I give you some money to manage? And it did
Speaker 5: and did great, like it was kind of like a
Speaker 5: Kathy Wood type arc, like twenty seventeen up to you know,
Speaker 5: probably February twenty twenty one was amazing, shot the lights out,
Speaker 5: and then twenty one and twenty two I got crushed
Speaker 5: and I didn't diversify my.
Speaker 4: What do you call it?
Speaker 5: Customer base you know, and so like ninety nine point
Speaker 5: five percent of the capital and the fund was this
Speaker 5: billionaire and he took it out, and which was this
Speaker 5: is right, and you know's so friendly with him. But
Speaker 5: I was sort of like left scrambling and trying to
Speaker 5: figure out what to do, and so kept the lights on.
Speaker 5: Pivoted to think building a team to build AI models,
Speaker 5: you know, but you know have been it's been hit
Speaker 5: and miss the last few years. And then it was
Speaker 5: only like probably you know, three months ago that I
Speaker 5: realized like, hey, you know we're doing you know, I
Speaker 5: keep finding these companies.
Speaker 4: Why don't we just sort of go all in on that.
Speaker 5: Let's let's get the aim Allels totally focused on finding
Speaker 5: these hundred baggers before the fact. So the remaining capital
Speaker 5: we have, which a few million we put in, you know,
Speaker 5: obviously we didn't put it all into open Door or anything.
Speaker 4: We have other positions. There's sort of like five key
Speaker 4: positions that.
Speaker 5: I have right now, iron cipher mining, BTQ technologies, and ethereum.
Speaker 6: Those are the kind of the yeah big five.
Speaker 5: Fused on and uh, you know, we'll see where we go.
Speaker 5: And you know, all I got is my reputation guys you.
Speaker 3: Know right, no, no, no, we get now.
Speaker 5: I've got I've got I've got you know, I've got
Speaker 5: people you know whatever calling up or emailing and saying,
Speaker 5: you know, this is great.
Speaker 4: You know, we want to get behind you, so we'll
Speaker 4: see where it goes.
Speaker 2: It seems like a lot of folks on social media,
Speaker 2: a lot of folks are on social media are getting
Speaker 2: behind you. Have you talked to Tamath poly Hapatilla at
Speaker 2: all about this? He is, you know, a had famous
Speaker 2: involvement with open Door back when it went public.
Speaker 5: I haven't talked with him. I email, but I texted
Speaker 5: it or not text, I tweeted him. I tweeted him
Speaker 5: when you know, when this thing got started last week,
Speaker 5: because obviously I think it would be a tremendous a
Speaker 5: redemption arc.
Speaker 4: For Chamoth to come back into this stock.
Speaker 5: I don't think he has anything to be ashamed of
Speaker 5: it being involved with with open Door to begin with,
Speaker 5: or any of the co founder like Keith or Boy
Speaker 5: is a guy who kind of you know, was wrote
Speaker 5: the business plan originally. I think he's like one of
Speaker 5: the smartest guys out there. Everybody was associated with this
Speaker 5: company was you know, it was it was a good company.
Speaker 5: You know, it's just a ma you know, the Macro
Speaker 5: changed and the rates rose and stuff, and so I
Speaker 5: don't think I don't think Tremoth has anything to be
Speaker 5: ashamed of. But I think it would be amazing if
Speaker 5: he came back in on the ride to eighty two,
Speaker 5: which would double the all time highs which is previously
Speaker 5: thirty nine bucks.
Speaker 2: Eric, forgive me for being blunt about this question, but
Speaker 2: if you look at your Twitter feed, there's just a
Speaker 2: it's like all open door. I mean, I had trouble.
Speaker 2: You're spending a lot of time I'm retweeting and interacting
Speaker 2: with folks on there, and I understand that's part of
Speaker 2: the game these days, but maybe a critic could see
Speaker 2: that and say, you're really trying to just pump this
Speaker 2: stock up at this point, defend it on its fundamentals,
Speaker 2: and convince people that this is not, you know, for
Speaker 2: lack of a better term, pumping it up and then selling.
Speaker 4: I don't know what to tell you, guys.
Speaker 5: I mean, unfollow me, tim if I'm bugging you, mute
Speaker 5: in or block me.
Speaker 4: And I'd say that to anybody else.
Speaker 5: I think anybody who knows me knows I'm not a
Speaker 5: pumper or whatever I have been.
Speaker 4: Obviously, I've been inundated, called a pump and dumper, a grifter.
Speaker 4: Jim Kramer said this was a parlay yesterday. I don't
Speaker 4: know what that means.
Speaker 5: You could explain it to me, you know whatever I mean.
Speaker 5: I mean, people are you know, they're not familiar with
Speaker 5: the Open Door story. So whatever they want to sit
Speaker 5: back behind their anonymous Twitter feeds and cast dis versions.
Speaker 4: I don't care.
Speaker 5: I'm here to make I don't have I got to
Speaker 5: feed my family. I got to grow this business. I
Speaker 5: got to do well for my investors. And if people
Speaker 5: want to take shots whatever, you know, you know, I
Speaker 5: just don't have time for it. I really love the
Speaker 5: community that we've built. I mean, it's it's amazing. This morning,
Speaker 5: I was retweeting all these people from you know, you
Speaker 5: name it, Turkey, Korea, Japan and Africa, Nigeria, Brazil, I mean,
Speaker 5: everyone around the world, and they're all in on Open Door.
Speaker 6: Yeah, you know, I don't know.
Speaker 4: That it's going at eighty two. I don't know. I
Speaker 4: don't know.
Speaker 5: Crystal Ball, I was, you know, I don't know, you know,
Speaker 5: I might be wrong. I was wrong for many many
Speaker 5: years about open door. But I don't think I'm wrong
Speaker 5: right now. I think now's the time this thing is
Speaker 5: turning and you can either get in make a lot
Speaker 5: of money or not. And I got people already telling
Speaker 5: me how much money they've made and it's life changing
Speaker 5: and all this that's fantastic.
Speaker 4: I mean, it doesn't doesn't help me, but it not
Speaker 4: be for that. He was a community Eric, you did sea,
Speaker 4: we learned together.
Speaker 3: No, I hear you. You said you're hoping to hold
Speaker 3: on to it, like that's your plan. But I mean
Speaker 3: if all of a sudden the stock took a downturn,
Speaker 3: I mean it's a two dollars eighty percent stock, so
Speaker 3: I'm not quite sure what kind of downturn. But is
Speaker 3: there something that you would quickly change your thoughts or
Speaker 3: you're going to ride it even if it rides down
Speaker 3: a lot.
Speaker 4: I can't say I'm going to ride it forever, Carol.
Speaker 3: I mean not foreverbody. I mean, if it went down
Speaker 3: fifty percent, would you stay with it?
Speaker 4: I think it's less about the percentage drop.
Speaker 5: I mean there's obviously going to be volatility, especially in
Speaker 5: the early days of these of these kinds of names
Speaker 5: and you know, they report rings in a couple of weeks,
Speaker 5: so you know, if it's a terrible report, I mean
Speaker 5: the thing would you know, would would have a negative
Speaker 5: reaction to the to the downside and then reverse to
Speaker 5: the upside if it was good news.
Speaker 4: I think there it is going to be profitable, and I.
Speaker 5: Think it's going to be the start of a string
Speaker 5: of profitable quarters, which is what.
Speaker 4: Needs to happen for this thing to get up to
Speaker 4: eighty two.
Speaker 5: But you know, one thing that's different about oupen Doors,
Speaker 5: like there is more diverse.
Speaker 4: Opinion about management.
Speaker 5: I think with Carvana, Like obviously everybody on Twitter and
Speaker 5: Wall Street hated it, but if you talk to people
Speaker 5: that actually knew the business, and I think people really
Speaker 5: admired the CEO, Ernie Garcia and the management team, and
Speaker 5: they those guys bought a lot of stock when Carvana
Speaker 5: was low, right before it bottomed. Nobody's done that here
Speaker 5: at open Door, which is the norm for most of
Speaker 5: these I mean most times these insiders, you know, they
Speaker 5: just don't.
Speaker 4: Brian Armstrong from Coinbase, you never bought a share from
Speaker 4: the time he went public at four hundred down to
Speaker 4: thirty eight back up again. Yeah, sales zone by house
Speaker 4: in La.
Speaker 5: So, but there's more controversy about the management here at
Speaker 5: Open Door TEMP. Not to cut you off, you know,
Speaker 5: some people think Carrie Wheeler, who's the CEO, is great
Speaker 5: and some people don't. And so if I discovered three
Speaker 5: months from now, the gosh, I don't know about her.
Speaker 5: I mean, you know, one thing I might think about
Speaker 5: is like, what's the chance of an activist coming in here?
Speaker 5: Which I think is very high, So that might keep
Speaker 5: me in. But if I concluded, like the management's terrible,
Speaker 5: I can't standard anymore, then.
Speaker 4: Obviously I have to exit. I don't think that's going
Speaker 4: to be the case.
Speaker 2: Eric, Before we let you go, other stocks that you
Speaker 2: are buying right now that you're holding right now, what
Speaker 2: are people missing when? What are you getting earlier today?
Speaker 4: Tim hot off the presses. I tweeted this out already,
Speaker 4: So this.
Speaker 5: Is I bought some iron ir e N and Cipher CifR.
Speaker 5: Both of those are bitcoin miners, make a lot of
Speaker 5: money from that, but they're more excitingly there.
Speaker 4: They've moved. They're kind of like a Core Scientific and
Speaker 4: just you know Core.
Speaker 5: We've bought Core Scientific recently, but it was kind of
Speaker 5: a lousy price for core. Scientific Iron and Cipher are
Speaker 5: way bigger, have way more kind of energized gigawatts that
Speaker 5: are coming online in the next year that somebody like
Speaker 5: an Oracle or a Meta or you know, Google has
Speaker 5: to do a deal with. So I like those, and
Speaker 5: I like BTQ Technologies. BTQQF is a ticker. It's still
Speaker 5: an no TC ticker. I bought it a twenty one
Speaker 5: cents in December with like five bucks, so it's been
Speaker 5: a thirty bagger for me so far. But I think
Speaker 5: it's gonna meet the criteria and be hundred bagger when
Speaker 5: it all said and done.
Speaker 2: All right, always looking for the diamonds in the rough,
Speaker 2: no matter no matter how low the prices are. Hey, Eric,
Speaker 2: appreciate you taking so much time with us this afternoon.
Speaker 2: It's great to check back in with you. It's been
Speaker 2: quite a few months, so we love it that you
Speaker 2: took the time. Eric Jackson is the founder of the
Speaker 2: Toronto based hedge fund E MJ.
Speaker 6: Capitol.
Speaker 2: I would never block him on Twitter. I still follow
Speaker 2: you on Twitter. Yeah, check out his twitter feed too,
Speaker 2: because he does share a lot of what he's working
Speaker 2: on here as well.
Speaker 3: Yeah, pretty clear I'm pretty transparent and stuff out there.
Speaker 1: You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 2: Back to a headline that you mentioned just in the
Speaker 2: last few minutes, Carol SpaceX says warrant investors that Elon
Speaker 2: Musk could return to politics. Musk may serve in similar
Speaker 2: roles to his previous position as senior advisor to President
Speaker 2: Donald Trump, and devotes significant time and energy to such roles.
Speaker 2: This according to documents, It's great to have back with us.
Speaker 2: Bloomberg Business Week a senior reporter, Max Chafkin. Max is
Speaker 2: the co host of the Everybody's Business in Elon Inc. Podcast,
Speaker 2: also the author of the Concherrion Peter Tiel in Silicon
Speaker 2: Valley's Pursuit of Power. He's here in studio with us.
Speaker 4: Expect to have you back in this as much as
Speaker 4: we love it.
Speaker 2: I feel like you knew something here when you told
Speaker 2: us that you know, never say never when it comes
Speaker 2: to Elon Musk and staying out of politics.
Speaker 7: I mean this is one of these things, where in
Speaker 7: any investors learning this from the risk factor statement of
Speaker 7: the prospectus is a little bit behind the curve. It's
Speaker 7: been pretty obvious for about a year that Elon Musk's
Speaker 7: political activities have a bearing on his businesses, and but this,
Speaker 7: of course is an acknowledgment of that. And also, I
Speaker 7: guess tim as you're kind of hinting, maybe a suggestion
Speaker 7: that Musk has plans to re enter the four although
Speaker 7: he's he's sort of said as much on Twitter, you know,
Speaker 7: a week ago, and he launched the America Party, all.
Speaker 3: Right, But does this take it to if he's putting
Speaker 3: this language in the tender offer for SpaceX, I mean,
Speaker 3: does it kind of make it even more formal or official?
Speaker 3: I mean, does it take it to another level?
Speaker 7: I mean, we saw these risk factors. I'm less familiar
Speaker 7: with them as they apply to private marketing fundraising, but
Speaker 7: of course they do show up in public market fundraisings
Speaker 7: as well, you know, on quarterly reports, annual reports. I
Speaker 7: just had a quick peek at the last Tesla earnings
Speaker 7: release back in April. It had two new risk factors,
Speaker 7: one related to essentially perceptions about the stability of the
Speaker 7: management team kind of a wordy way of saying negative
Speaker 7: stories about our CEO and another about tariffs and.
Speaker 4: Hosts of other things.
Speaker 7: So, I mean, I think this is more an acknowledgment
Speaker 7: of something that is that Musk himself has talked about,
Speaker 7: and this is not I mean, maybe this in some ways,
Speaker 7: I guess this is confirmation that people inside of SpaceX
Speaker 7: are aware that Elon Musk has discussed very recently plans
Speaker 7: to continue his political journey, and this is a reflection
Speaker 7: of that.
Speaker 2: But how that journey could look might be a lot
Speaker 2: different than what that journey was over the last year
Speaker 2: or so, given thus all out oh absolutely that he's
Speaker 2: had with President Trump. Do you think it would take
Speaker 2: the form of a new political party in supporting candidates
Speaker 2: perhaps Democrats and Republicans who maybe want to slash the deficit.
Speaker 4: Well, we've talked about this a lot.
Speaker 7: We've talked about this here Simon, also on the Elon
Speaker 7: Ink podcast. I think there's a I think there are
Speaker 7: reasons to be somewhat skeptical of a political party in
Speaker 7: the formal sense, like another effort to start like a
Speaker 7: reform party or some true alternative. I think the idea
Speaker 7: of Elon Musk somehow trying to formalize this political movement,
Speaker 7: you know, in the same way that the Tea Party
Speaker 7: is not an actual political party, it's like a constituency
Speaker 7: of voters. You could imagine something like that. And what
Speaker 7: must said is, you know, or hinted at, at the
Speaker 7: very least, is a plan to back certain candidates in
Speaker 7: the Senate and in Congress and then try to use
Speaker 7: that to be, you know, as a sort of point
Speaker 7: of leverage in negotiations over over bills and so on.
Speaker 7: And I think, you know, there's something to be said
Speaker 7: for that, right if he if he were able to say,
Speaker 7: peel a few Republican Senat or House votes away like
Speaker 7: that would give him more leverage over Trump than he
Speaker 7: has now. There are also reasons why this could could
Speaker 7: backfire spectacularly.
Speaker 3: All right, let's just remind everybody, as Max has been
Speaker 3: reminding us that you know, he has talked about, you know,
Speaker 3: kind of staying exposed to politics or staying in politics.
Speaker 3: We're talking about Elon muskinback. Here's what he had to
Speaker 3: say on May thirtieth from the Oval Office.
Speaker 8: Well, I expect to continue to provide advice at whatever
Speaker 8: the president would like advice and helps you if he
Speaker 8: I mean, yeah, it's I expect to remain a friend
Speaker 8: and an advisor, and certainly if there's any President wants
Speaker 8: me to do, I'm at the President Service.
Speaker 5: All right.
Speaker 3: Again, that was Elon Musk there with Donald Trump, the
Speaker 3: President of the United States, back on May thirtieth. So Max,
Speaker 3: if we read something like this, I mean, who knows
Speaker 3: is it going to be?
Speaker 2: What was that the day with the black guy? I
Speaker 2: just I just wanted to that was parenting Mishap.
Speaker 4: Yeah. Sorry.
Speaker 2: The reason I asked is because you were on our
Speaker 2: program yesterday, that old big take. It's the cover of
Speaker 2: Bloomberg BusinessWeek. The issue is on my desk, right, and
Speaker 2: this is all about this.
Speaker 7: This is like the financial filing equivalent of a black guy, right,
Speaker 7: an acknowledgment that this that the that there is risk
Speaker 7: here and risk for his companies. I mean, just now,
Speaker 7: as we're talking about this, Musk has been tweeting sort
Speaker 7: of semi taunting, uh, the Trump administration over reports around
Speaker 7: the Golden Dome, reports that the Defense Department my look
Speaker 7: for alternatives to SpaceX. So he's obviously moving into a
Speaker 7: sort of different position and relative to the Trump administration.
Speaker 7: I'd say it's kind of similar to the one he
Speaker 7: had with the Biden administration, although of course Musk's politics
Speaker 7: have changed quite a lot since then.
Speaker 3: Yeah, I guess that's what I was curious, Like, you know,
Speaker 3: is it that he's gonna go back and become buddy
Speaker 3: again or like, we just don't like in what form,
Speaker 3: or is he kind of like this and just figuring
Speaker 3: out a different involvement.
Speaker 4: And well, I mean, I.
Speaker 7: Think Musks has carved out an identity that puts him further,
Speaker 7: that puts him to the right of President Trump on
Speaker 7: a whole bunch of issues. You know, you brought up
Speaker 7: the deficit. But of course he talks all the time
Speaker 7: about you know, identity politics, about about sort of cultural issues,
Speaker 7: always uh, you know, talking to taking a more or
Speaker 7: less right wing position, and that's kind of where his
Speaker 7: fandom is. And that that to the extent that he
Speaker 7: has a political platform, I'd expect it to be, you know,
Speaker 7: a right wing platform, further to the right than the
Speaker 7: Republican Party for sure. But of course there's also an
Speaker 7: element of self and right where a lot of his
Speaker 7: positions coincide with the interests of his companies. His companies,
Speaker 7: as I've said a bunch of times on this program,
Speaker 7: and others, you know, are are either heavily regulated by
Speaker 7: the US government or dependent on government contracts. So it's
Speaker 7: going to be my guess, and my supposition would be
Speaker 7: some combination of Musk's you know, own political interests and
Speaker 7: fixations along with you know, self interested policies. So you
Speaker 7: could imagine very conservative on cultural issues perhaps, but probably
Speaker 7: like a little bit less conservative on the question of
Speaker 7: funding you know, green technology companies and so on, because
Speaker 7: of course that's what Tesla is to some extent.
Speaker 6: We'll see.
Speaker 3: I don't know, yeah, day by day.
Speaker 2: Hey, this is a great story though, Dana Hall, Lauren Grush,
Speaker 2: I'd love those SpaceX warning investors that Elon Musk could
Speaker 2: return to US politics Max before we let you go?
Speaker 2: Is this more the lawyers covering themselves than it is
Speaker 2: an indication that Musk is going to have a new adventure.
Speaker 7: I like it, Yeah, I mean, I think more or less,
Speaker 7: And I think anytime you see something like this in
Speaker 7: a filing, obviously, lawyers as much as Musk has a
Speaker 7: state view that is not super positive about lawyers. My
Speaker 7: assumption here is that you know this is this is people,
Speaker 7: the lawyers and investor relations types trying to cover thea.
Speaker 3: He signed off on it, of course, right, yeah, so
Speaker 3: he's all in on this as well.
Speaker 6: Shares a tesla.
Speaker 3: By the way, they're up about one point eight percent.
Speaker 3: So one of our metrics on this, hey be ready,
Speaker 3: have your pager or whatever the heck ready because we.
Speaker 4: May nice I know, I know, the max signal.
Speaker 3: Your starlink up and running, because we may reach out
Speaker 3: to you again.
Speaker 4: Of course.
Speaker 3: That is Bloomberg Business Weeks Senior reporter Max Chafkin. He's
Speaker 3: co host of the Everybody's Business and Elon Inc podcasts
Speaker 3: and the author of The Contrarian.
Speaker 1: This is the Bloomberg Business Week Daily podcast. Listen live
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Speaker 3: Our next guest certainly familiar to our Bloomberg audience and
Speaker 3: has to take all of these big macro factors into
Speaker 3: account when thinking about the financial markets and figuring out
Speaker 3: what might be the possible impact. Great to have with
Speaker 3: us Monica Garrish, she's executive director, head of US Policy
Speaker 3: for Morgan's Stanley Wealth Management right here in studio. Good
Speaker 3: to have you here. There is a lot coming at
Speaker 3: investors and strategists to trying to figure out our way
Speaker 3: forward when there's still a lot of unknows. So I
Speaker 3: am curious, first of all, with the pressure on Fedcher J. Powell,
Speaker 3: do you believe he could step down early?
Speaker 9: I think it's up to him right the decision. There's
Speaker 9: no rule that says like he can't. In our view,
Speaker 9: we do think that he's likely to see the term
Speaker 9: out is only eight more months, right, So this is
Speaker 9: important to keep at the forefront of this narrative. It's
Speaker 9: also important, I think, to Vissent and others to have
Speaker 9: stability within treasury markets. So that is a critical factor
Speaker 9: in all of this visit.
Speaker 3: So why does this Treasury secretary though sometimes seem to
Speaker 3: put pressure on Fedcher.
Speaker 9: Well, that's because you have a president that's looking for
Speaker 9: a lower ten year rate. You know his background. You
Speaker 9: got to remember he's a real estate guy, and having
Speaker 9: you know, more combinative lending policies is right in line
Speaker 9: with that.
Speaker 3: So, but the Treasury Secretary is no stranger to Wall
Speaker 3: Street and understanding the importance of the FED chair, I mean,
Speaker 3: I mean for him alone, I think it's kind of interesting,
Speaker 3: or is it?
Speaker 9: I mean, which is why I think I want to
Speaker 9: agree with you and then and that it is interesting,
Speaker 9: But he's important. And then he was a big voice
Speaker 9: of reason when it came to the initial tariff announcements
Speaker 9: for example, right he came in, he essentially coached the
Speaker 9: president through, especially when treasury markets became unstable. So you
Speaker 9: have to remember that this is also something that is
Speaker 9: still top of mind for him. So I think what
Speaker 9: he's trying to do is balance policy priorities. But the
Speaker 9: president wants versus what is good for the markets.
Speaker 2: In your view, what is more important to the markets
Speaker 2: an independent reserve or clear trade policy, independent federal reserve?
Speaker 9: I would say, right, as far as being able to
Speaker 9: work with the committee, right and actually you know, come
Speaker 9: up with the decision on the dot flot right of
Speaker 9: where they're going.
Speaker 2: Would you say that independence has been threatened over the
Speaker 2: last few months by the president.
Speaker 9: I wouldn't say it's been threatened. You're what you're looking
Speaker 9: at as a President who continues to voice his personal opinions,
Speaker 9: Powell has continued to do his job right the way
Speaker 9: that you know he feels is the correct, you know
Speaker 9: order right in an independent fashion. You have the Supreme
Speaker 9: Court case that essentially created a carve out for the
Speaker 9: federal reserves specifically so for further you know, adjudication if necessary.
Speaker 9: So I don't think this is a one and done,
Speaker 9: but I would really like to change the conversation to
Speaker 9: the tariff piece because even though I think that having
Speaker 9: you know, a stable FED is maybe more important for
Speaker 9: the economy at least from a market's perspective, if we're
Speaker 9: thinking about a terriffts that's going to have a huge
Speaker 9: impact longer term, potentially on the inflationary piece, which ties
Speaker 9: in to that interest rate are And.
Speaker 3: Don't hate me because I want to go back there,
Speaker 3: because can the FED chair and the FED and the
Speaker 3: FOMC really determine the right policy before knowing exactly what
Speaker 3: all the tariffs and trade you know what I mean?
Speaker 3: Like until they know the specifics on the tariffs that
Speaker 3: are going to be imposed, Like, can they really determine
Speaker 3: the right policy and are they smarter to say, let's
Speaker 3: hold off a bit a bit because if they're not
Speaker 3: as onerous and growth picks up and inflation picks up, right,
Speaker 3: they don't want to cut rates raise rates, right, that
Speaker 3: would be maybe more problematic perhaps for a market, right.
Speaker 9: That you were just I just want to say, you know,
Speaker 9: in here in this discussion, you were talking about this
Speaker 9: desire to hold rates low. I think that if you're
Speaker 9: looking at the FED, they're in a homeostasis right now
Speaker 9: because of all these factors.
Speaker 7: Right.
Speaker 9: The data hasn't led them completely to a place where
Speaker 9: we have core economic weakness. We're seeing some initials so
Speaker 9: you know, soppening in that and some of the data.
Speaker 9: We have to see how that all pans out. We
Speaker 9: have to wait till August first to get all of the.
Speaker 2: Tariff news in so on that would you say that
Speaker 2: why would you say the tariffs haven't necessarily been inflationary
Speaker 2: at this point? Whereas three months ago in our studio,
Speaker 2: Guests after guests was saying, just wait for to see
Speaker 2: the inflationary effects of this.
Speaker 4: It hasn't happened.
Speaker 9: So you had pull forward and demand, right, you had
Speaker 9: so fliers ordering ahead of time, you had a full
Speaker 9: inventory restock. What we're seeing is that inventories are starting
Speaker 9: to fall off as soon as those new orders come in.
Speaker 9: Right at that higher level, that can be inflationary. Right,
Speaker 9: It's going to be costs shared both with the company, right,
Speaker 9: the business and the consumer. The other thing I want
Speaker 9: to note is that the dollar is actually down about
Speaker 9: ten percent from the beginning of the year. What that
Speaker 9: means on the import front is it weaker dollar means
Speaker 9: you are paying higher import costs. Doesn't matter what the
Speaker 9: average effective rate is, your import costs are now higher
Speaker 9: on a nominal basis. So again, that is also inflationary,
Speaker 9: which is why I think I think it is you know,
Speaker 9: a suit of the FED to hold off and see
Speaker 9: where the data takes them.
Speaker 4: HM.
Speaker 3: So net net do all of this in terms of
Speaker 3: what the longer term impact? Do you have a good
Speaker 3: feel about? I don't know, you know, I feel like
Speaker 3: we go from day to day in terms of what
Speaker 3: comes at White House, which is fair and probably accurate,
Speaker 3: But I'm just curious do you have a better feel
Speaker 3: of Like, by the end of the year, Yeah, there'll
Speaker 3: be some higher tariffs, but maybe not so onerous, and
Speaker 3: you know, we'll start to see growth Quebec Like how
Speaker 3: are you kind of gaming this out?
Speaker 9: So you're gonna have a baseline of ten percent on
Speaker 9: no matter country, right, on any country that you don't
Speaker 9: have a fund, just a lot higher than what it was, right,
Speaker 9: a lot higher, right, So at least three times higher.
Speaker 9: So if we're looking at the average effective rate right now,
Speaker 9: it's about twelve to fifteen, depending on how you're counting.
Speaker 9: You know, if you look at the most recent deal,
Speaker 9: I think with the Philippines, right, that's a nineteen percent
Speaker 9: tariff just off of the twenty. So while we're seeing
Speaker 9: some capitulation right and some negotiating downward, we could be
Speaker 9: at some of the same recivirocal levels that we saw
Speaker 9: on Liberation Day. I think that would be a surprise
Speaker 9: to the markets. You might get some interim volatility and response,
Speaker 9: but then it becomes an idiosyncratic risk and sorting through
Speaker 9: which sectors and industries can be most impacted.
Speaker 3: Yeah, I mean yeah, it's just there's as you say, right,
Speaker 3: each market, each country, each industry. It's really specific, and
Speaker 3: so there's a lot of detail in terms of figuring
Speaker 3: out the impact. Monica, thank you so much, really appreciate you.
Speaker 3: Monica Garrish, she is executive director, head of US Policy
Speaker 3: at Morgan's Stanley Wealth Management, joining us here in studios.
Speaker 1: Live weekday afternoons from two to fiveys. During that listen
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Speaker 3: All right, TikTok, everybody, About eighteen minutes to go intil
Speaker 3: we wrap up the trade on this Tuesday, July twenty second,
Speaker 3: Carol Master Tim Steneveek here in our Bloomberg Interactive Brokers studio,
Speaker 3: looking at probably another record for the S and P
Speaker 3: five hundred if we continue at this level, sixty three fourteen,
Speaker 3: up about just shy of nine points one hundred and
Speaker 3: ninety two points higher on the Dow Jones Industrial average.
Speaker 3: We've seen big tech under some pressure today ahead of
Speaker 3: big tech earnings getting underway. We'll get a couple of
Speaker 3: big ones tomorrow after the closed Nastak one hundred and
Speaker 3: ten right now, down about ninety two points off our
Speaker 3: best and worst levels of the session.
Speaker 2: Let's see what Leo Kelly has to say about all this.
Speaker 2: He's founder and CEO of Verden's Capital Advisors, more than
Speaker 2: four billion dollars in assets under management. He joins us
Speaker 2: from Hunt Valley, Maryland this afternoon.
Speaker 6: Are we we're going to kind of a weird place?
Speaker 2: I think, and I think Carol agreed.
Speaker 3: We're feeling kind of weird.
Speaker 6: We're feeling a.
Speaker 4: Little weird because I can to tell you we.
Speaker 2: Got the crypto market doing its thing, four trillion dollars
Speaker 2: in assets as of last week, bitcoin around a record
Speaker 2: new record close two hundred and twenty thousand dollars per bitcoin.
Speaker 2: The meme stocks are meaning to their meaning. It's a
Speaker 2: little crazy.
Speaker 7: Yeah, yeah.
Speaker 2: Tariffs are on the horizon here and those are going
Speaker 2: to hit on August first unless something changes. What am
Speaker 2: I missing here?
Speaker 10: Well, you're not missing that. It's weird. It is, and
Speaker 10: it has been really for a few months.
Speaker 4: Right.
Speaker 10: So April second comes along and we have the tariff tantrum,
Speaker 10: which was shocking in of itself. I mean, imagine for
Speaker 10: a minute being surprised that Donald Trump is going to
Speaker 10: pull a hard line to negotiate with that should be
Speaker 10: expected not to be surprised by it. And so we
Speaker 10: have this dramatic impact in the market, which is immediately
Speaker 10: turns around and we make new highs.
Speaker 6: I think the tariff thing gets done.
Speaker 10: What I think people have to do is take a
Speaker 10: step back and ask the question, what's important right now?
Speaker 6: What is it we should really be focused on.
Speaker 10: Should we be focused on whether the tariffs are fifteen
Speaker 10: percent or twenty percent, or just that they're going.
Speaker 6: To get done and they will get done.
Speaker 10: Should we be focused on whether or not Jerome pal
Speaker 10: is the next FED president, or whether or not rate
Speaker 10: are going higher or lower? And if they go lower,
Speaker 10: will that stimulate inflation? We think it will. And then
Speaker 10: the intermediate term, you know, are we bullish or bearish? Well,
Speaker 10: we're actually pretty bullish. There's a lot of investment coming
Speaker 10: to the US. You know, we have earnings are starting
Speaker 10: to gain a little momentum. AI productivity is going to
Speaker 10: be significant, So there's reasons in the intermediate term to
Speaker 10: be bullish. And there's a lot of volatility I think
Speaker 10: headed in front of us in the fall. So yeah,
Speaker 10: it's weird because it feels a little scary in the
Speaker 10: very short run, and yet so many reasons to be
Speaker 10: bullsh in the intermediate term.
Speaker 3: All Right, I just got to take a step back
Speaker 3: because I think last time you were on with us
Speaker 3: LEO was in mid February, So what a long, strange
Speaker 3: trip it's been for us, Doc, So I'm just curious
Speaker 3: you kind of walked us through some of the stuff
Speaker 3: right in terms of the imposition of tariffs by President
Speaker 3: Trump and backing off. What has the last five min
Speaker 3: months been like for you and managing money for your
Speaker 3: clients been interesting?
Speaker 10: So we have We've been holding cash and lieu of
Speaker 10: long bonds, so.
Speaker 6: We've had cash.
Speaker 10: We have been extremely disciplined in rebouncing portfolios and not
Speaker 10: letting the hot stuff go too far and get too
Speaker 10: far out of kilter. So we had some dry powder,
Speaker 10: and to be fair, over the last couple of years,
Speaker 10: we've been waiting on volatility to put money to work.
Speaker 10: So when April hit and we had this volatility and
Speaker 10: this pullback, we were very active in that moment. And
Speaker 10: so for us this year has been active. It's been
Speaker 10: active from the standpoint of executing when the volatility has
Speaker 10: hit and then maintaining discipline as we go through this.
Speaker 10: And we're continuing to tell clients that more volatility is coming.
Speaker 6: But we're a little more bullish than we've been in
Speaker 6: years past.
Speaker 10: And years past we've been a little hesitant to jump
Speaker 10: into the volatile moments.
Speaker 6: We're not anymore.
Speaker 10: We're buying into volatility because we do think the intermediate
Speaker 10: term looks pretty good.
Speaker 2: Well, you know, volatility, that was certainly something that we
Speaker 2: saw in April, but things have been really calm over.
Speaker 6: The past few weeks.
Speaker 2: What how opportunities have you seen of late or are
Speaker 2: you still sitting on the sidelines waiting for things to
Speaker 2: move lower.
Speaker 10: Well, I would say this, there's a couple of things
Speaker 10: that are going on over the last several weeks. One,
Speaker 10: valuations are starting to get stretched again, especially in the
Speaker 10: hot stocks, right the big tech stocks, And so I
Speaker 10: think if the market continues to move higher at this pace,
Speaker 10: our next move would be to reduce again because our
Speaker 10: allocations will get out of we'll get out of sync.
Speaker 10: But there's still areas in the market invest small mid
Speaker 10: cap stocks still look pretty reasonable. International stocks made a
Speaker 10: big move. You might recall here last year we were
Speaker 10: big proponents of international stocks. We have been overweight. They've
Speaker 10: made a big run this year, so we're a little
Speaker 10: out of uh, you know again out of allocation on
Speaker 10: that as well. And in the private markets, there's still
Speaker 10: a lot of opportunity in private private equity investing, private credit.
Speaker 10: There's some interesting energy plays out there. So we're always
Speaker 10: active in the markets, just not always in the S
Speaker 10: and P.
Speaker 6: Five hundred.
Speaker 3: Well that's always going to ask. I mean, you know,
Speaker 3: increasingly everybody's been talking about the private markets, and so
Speaker 3: you know, for folks who focus on the public markets,
Speaker 3: you know, you do wonder what you're missing, or you
Speaker 3: probably know what you're missing. Increasingly, are you, for your
Speaker 3: client base, Leo more interested in the private markets that
Speaker 3: that's where you can kind of really juice performance versus
Speaker 3: the public markets.
Speaker 6: Well, we have been for a long time.
Speaker 10: So we've been we've been longtime players in the private markets,
Speaker 10: and we continue to put a lot.
Speaker 6: Of focus around that.
Speaker 10: I think think there's some caution that we have to
Speaker 10: warn folks about when they start looking at the private markets.
Speaker 10: This democratizing private investments, especially with the new law that
Speaker 10: was just passed that allows these private investments to go
Speaker 10: in the form one ks and IRA accounts. There's going
Speaker 10: to be folks chasing return and private investing is great
Speaker 10: if you do a few things. One you have rigorous
Speaker 10: due diligence. That's really important. Two you have to diversify
Speaker 10: the portfolio over vintage and style. Too many times people
Speaker 10: get excited about one or two hot dots and they
Speaker 10: sound great and they have great past performance returns and
Speaker 10: they'll throw a lot of money. Well, in the private
Speaker 10: equity world, that could be very dangerous because it's ill
Speaker 10: liquid and you get stuck for a long long time.
Speaker 6: It's not like a stock market that goes.
Speaker 10: Down and then pops right back up and you can
Speaker 10: wait it out. With the private markets, you can be
Speaker 10: sitting on that for a long time. So I think
Speaker 10: folks have to be aware of the illoquate nature of it.
Speaker 10: So you have to allocate correctly, not just how much
Speaker 10: you put in private markets, but per deal and per vintage,
Speaker 10: meaning what year you're buying into. It takes I mean,
Speaker 10: Carol takes five to seven years to build a good
Speaker 10: private equity portfolio. So it's just not something you can
Speaker 10: just jump in and do.
Speaker 7: No.
Speaker 3: I totally understand and I mean, we've talked a lot
Speaker 3: about private equity, the difficulty in kind of getting out
Speaker 3: in the last few years, so people are trying to
Speaker 3: figure out their portfolio.
Speaker 1: We got to run.
Speaker 4: Leo, good do you talk to with you again?
Speaker 3: Be well, we'll talk soon.
Speaker 6: Always always good to be with you guys.
Speaker 3: Thank you all right, Leo Kelly. He's founder and CEO
Speaker 3: Verdon's Capital Advisors. They've got about four billion in assets
Speaker 3: under management. Joining us once again from Maryland.
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