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On this episode of On The Tape Dan Nathan, Guy Adami and Danny Moses are making sense of the latest FOMC rate hike and the subsequent market rally (1:00). The gold market still has the attention of Guy and Danny, is that the real story of 2023 (15:00)? The guys try to figure out at what point they will admit they’re collectively wrong (20:00). Energy is seeing a pullback, but Guy thinks they keep going higher this year (23:45). After the break, we’re scratching our heads over the market’s reaction to Wednesday’s FOMC decision with Stuart Sopp, CEO of Current (29:34). What type of outlier event can bring this market back to a level-headed valuation (37:30)? New technologies like artificial intelligence will prove to be disinflationary, will that be enough to curb inflation for the next decade (44:45)? How is the current macro environment impacting Current (53:40).
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Show Transcript:
Guy Adami: [00:01:21] Danny Moses, I want you to bear with me for a second, okay? I’m going to read a couple of movie titles. I want you to think about this as I say it. Coming to America, A Few Good Men, Outbreak, Jerry Maguire. I want you to think about that. And I want you to think about the actor as you think about it. By the way, I mean to tell you that his father, Cuba Gooding Senior, was in a band called The Main Ingredient. And why I mention that is because in 1972, Danny Moses, their hit song was Everybody Plays the Fool Ain’t No Exception to the Rule. And I got to tell you something, Danny Moses and Dan Nathan and oh, by the way, you’re listening to the On the Tape podcast. I am Guy Adami, Dan Nathan, Danny Moses. In just a few minutes, Dan, we’re going to have a conversation with Stuart Sopp, the CEO and founder of Current. But before that, I have to do the mayor culpa because I am playing the fool right before your very eyes. As the S&P goes north of 4200 in a straight line on the back of what the market interpreted Danny as extraordinarily dovish comments out of Fed Chair Powell this week. [00:02:32][70.9]
Danny Moses: [00:02:32] Maybe we’ll see 4200 again. We are now 50 points under 4200. This may be the last gasp. I’m still trying to figure out what in the press release and or the narrative that was released by the Fed made us go this direction. I will tell you the one shocking thing to me and we previewed this going into the Fed that we thought would let him be hawkish, allow him to be hawkish, and then finally gain some type of credibility, was saying that financial conditions are still tight. And there was a great quote from Neil Dutta at Renmark Renaissance macro for those people out there. Let me just read this. Powell has said that the financial conditions have tightened considerably despite the fact that they have eased considerably, wrote Neil Dutta. The fact that he has said this is dovish in its own right. However, the odds are increasing that the Fed is declaring victory too soon. He had an opportunity yesterday and they didn’t take it and nothing’s changed. Fed from futures are the same. They were going to go another 25 or 50 over these next two meetings. The ten year to year, I would argue, is actually a little bit more bearish if I think about the ten year yields than the two. And that’s it. So my takeaway, we’re seeing a low quality rally out there and that’s fine. But something was triggered in these levered quant funds, so to speak, in these desk, and we know who those firms are. The most heavily shorted names have been targeted, the lowest quality names have been running one and the same, by the way. And that’s going to end. And so I don’t know what to say other than this is temporary. And I’m still standing by the fact that this is the bearish that I’ve been on the market. [00:03:58][85.3]
Dan Nathan: [00:03:59] This is where I disagree with that. Obviously, I’ve been very wrong for the last five, six weeks or so and so many different things here. It’s actually not that low quality of a rally. If you look at semiconductors, the SMH is up 25%. Apple is up 16% on the year. Microsoft’s up 10% on the year. Google is up 21%. Amazon’s up 35%. The list goes on and on here, Danny. And none of those makes sense to me because if we were concerned about valuations late last year, even after these stocks had already corrected, you’re only more concerned about them now, especially if you can’t not start to price in some sort of reacceleration of earnings and sales growth. And we know that margins just came off of all time highs. And we know that even though inflation readings are coming down, that some of those inputs are going to continue to weigh, most importantly, wages, even though they’re cutting jobs, are going to weigh on margin. So to me, I think that it’s not exactly the truth, that it’s a low quality rally. It’s just that it’s broad based and it’s actually been fairly fierce in the last week or so. And that’s the thing that makes me think it’s just kind of punctuated by the fact that Crypto’s rallied the way it has companies that are literally were destined to go to zero, whether it be your carvana or a bed, bath or some of those things are up 30, 40, 50% in a week. I mean that’s what really screams low quality. [00:05:20][81.9]
Danny Moses: [00:05:21] Yeah, no. And I was really referring to the last day and a half, sorry, when I was saying that all the stuff that’s now up, you know, 80 100% over 2 to 3 sessions, of course, Meta puts in cost controls, great new base. We talked about this before a couple of months ago. It’s moving from growth to value. It kind of found its way there and it’s getting a lift. But if you look at we talked about this a couple of weeks ago, staples were underperforming. Now we’re seeing pharma underperforming. We’re seeing I mean, I don’t follow the Dow, obviously, as much as the S&P is a barometer. But the reason the Dow has been down massively underperforming is look at those kind of name, the caterpillars, the Boeings, the mercs of the World United Health Care, which those aren’t sexy. So my point is the last few days have been violent on these low quality games. I agree with you. People had to start chasing eventually and they also had to start covering their shorts. Or they’ll also become a Melvin Capital. And I’m sure we’re going to hear over the next week of some funds which had to take down a lot of their gross exposure and they weren’t planning to do that. So they’re completely caught off guard. But their hands were forced because I’ve said this before, they’re running a business. [00:06:18][56.4]
Guy Adami: [00:06:19] It’s interesting, Deere & Company is another one of those stocks that just got basically taken out to the woodshed this week as well. You mention UNH these are not insignificant companies, but they’re being overshadowed by obviously some of the other things that we’re talking about, maybe rightly so. I don’t know. And I’m not trying to take myself out of this whole trying to paint the picture for some of the negative names. But I’ll say this right before our very eyes, the market has gotten itself really expensive. And even if you give the market $220 or so worth of earnings, now you’re still talking about an S&P that’s probably trading, I don’t know, 19 times. And then you start to unwind it and say, okay, $200 of earnings. Well, now you have an S&P right here north of 20 times. So something’s got to give because this is not an environment, in my opinion, that people should be paying up for in the form of multiple expansion. It doesn’t make a lot of sense because fed not fed, whatever. We’re still looking at a backdrop of companies laying people off of margins contracting, of revenues contracting, of earnings contracting. And for the life of me, I can’t figure out why the market is willing to pay a multiple that would only do in a growing growth environment. [00:07:28][69.5]
Danny Moses: [00:07:30] This is the handoff between the Fed going to the back drop and I think earnings to your point Guy coming to the forefront and eventually that handoff will matter. It’s a much longer baton handoff than I thought it was going to be. I thought I was going to be in the 400, it looks like it maybe 1600 or whatever the mile really might be, but it’s going to happen. And so I think you have a Han Solo moment here in Empire Strikes Back where I think. [00:07:51][21.9]
Guy Adami: [00:07:52] What’s that? [00:07:52][0.3]
Danny Moses: [00:07:53] The Han Solo moment. [00:07:53][0.8]
Guy Adami: [00:07:54] That’s Harrison Ford, right? [00:07:55][1.1]
Danny Moses: [00:07:55] Yes, the Han Solo moment, frozen in the thing. And Darth Vader sends him back to what’s his face and whatever. Anyway, you get frozen. Billy Dee Williams turned on him. That was the problem in that one Guy. But I think that’s how everything is at this exact moment. So this market’s going to pick a direction here. And to your point, I don’t think the direction is a follow on much higher from here. So again, I’ll stand by it. I think the earnings handoff is going to be painful. [00:08:16][21.0]
Dan Nathan: [00:08:17] You know, usually I kind of let you guys do the Fed thing here. And I got to tell you, I’m actually disgusted in the Fed. I’m the guy who’s actually pushed back. I’m actually disgusted in what I heard from Fed Chair Powell yesterday. I mean, when we talked about this, the level of certainty that we had that he should just stay the course, given what we’ve seen over the course of January, just stay the course as far as the statements, as far as the jawbone, we know how important the jawboning can be. Look at the rally that was just ignited. Look at the way Treasury yields sold off since those comments. He knew exactly what he was doing. He knew exactly what he was saying here. I actually think in a kind of egotistical manner, I think he did a victory lap. I was kind of pushing back for a while on all the criticism about the word transitory and how wrong they got everything. And Guy, you were the one over 2022 who were giving them credit for doing the things that they needed to do, normalize interest rates, run off the balance sheet and get to a point where we’re just not going to continue to make the same mistakes again. And we talk about late 2018 all the time. And back then you used to say in the first year of his term you thought he was doing the right thing, raising interest rates, trying to normalize them. And here we are, man, to let risk assets do what they do. And I know if you’re listening to this and I know if you listen to me, whether it be on fast money or whether it’s on MRKT Call or here, you know, that I’m fighting this because I’ve taken a lot of positions the other way. That’s fine. I can admit being wrong, but there’s no reason that he needed to allow market participants to perceive his view and that of the Federal Reserve that they were going to allow this stuff to reflate. Because the higher it goes right now, I’m just more convicted that we are going to go back and go retest those October lows, because if we haven’t learned anything about valuation, to your point Guy, and we haven’t learned anything about animal spirits and about the kind of disregard for valuation or the disregard for some of this crap in meme land, then we’re just setting ourselves up for another year like 2022 in the not so distant future. [00:10:28][130.5]
Danny Moses: [00:10:29] Dan I would say it’s great to have you on board to the dark side. On the dark side there. But listen to your point Dan. We’ve seen gold kind of sell off. We’ve seen oil kind of come off here. So you’re somewhere between a soft landing and nothing making sense. If you want to argue, the market can be higher because the Fed’s going to navigate a soft landing, fine. But I don’t think that would be the reason that oil would be down or even that gold who’s had a big run would be down at this point, or some of these other names that are out there. And I think that’s important because I think the market just fed on itself and I think it becomes psychological. And I’ve been on trading desk and you guys have as well, where you can be as disciplined as you want to be. You can have your valuations where you want to sell them when you want to buy, and when shit happens like this and the market goes crazy in either direction listen, your hand is forced and let’s not get carried away. I think that’s all this really is. And then when the market does settle back in and then breach back below where it started. A week ago and keep working its way lower. Potentially. That will be evident that what he did was a massive mistake. But until then, we just got to ride the ride and listen. If your duration is longer than a day, a week, a month or even a quarter, these are tremendous opportunities. [00:11:33][64.0]
Dan Nathan: [00:11:34] Let’s just say this. We’re recording this Thursday into the close. By the time you’re listening to this Apple Amazon Alphabet will have all reported. So when you think about that, we’re talking about what, $4 trillion in market cap. And I’m looking at Apple. Apple is up 3% on the day. Amazon is up 7% on the day. Alphabet is up 7% on the day. I mean, think about that, Danny. Coinbase is up 21%. You’re Carvana is trading near $15. [00:12:01][26.5]
Danny Moses: [00:12:02] Well, it was 20 about an hour ago. But yeah. [00:12:03][1.6]
Dan Nathan: [00:12:05] My point is this is absolute lunacy. [00:12:06][1.6]
Danny Moses: [00:12:07] So, Dan, I’ll just say this. If you were a portfolio manager, I say this all the time and you are measured beating your index and you have to make a decision. We know that 90% of these professional investors probably came in underweight, big tech into the year. You would probably say that that was accurate, right? So your point, we’re going into the three largest companies basically in tech. We have for the most part, they’re going to report it tonight if they don’t have a position tonight. And so to your point, it’s probably a sell the news event no matter what those numbers are, those companies are not as hard to predict as some of this other stuff. They’re much more consistent. You kind of get a read during the course of the quarter, how it’s going to look. So I’m not expecting any big surprises in either direction, but it is set up and they had to take positions because now tomorrow, if these things do run and they are not their their year, their quarter screwed and their year and now they’re way behind and chasing, I think that’s what it is. [00:12:54][47.1]
Guy Adami: [00:12:55] Danny, we’re also seeing ten year yields come in significantly. I mean, the moves we’re seeing is reminiscent of what we saw a year or so ago in terms of volatility. Nobody seems to be focused on the yield curve. I just want to touch on it briefly, which once again is probably going to approach 72 73 or so basis points inversion. Again, I happen to think it’s going to -1% in the form of three and a quarter for and a quarter, something like that. It doesn’t really matter the levels, but that’s where it’s headed. People are getting all jazzed up lower rates. There are a lot of people that think Fed cuts in the back half of this year. They all construe that as bullish. I just for the life of me don’t understand how any of that is particularly bullish. [00:13:39][44.0]
Danny Moses: [00:13:40] 2 year makes sense. That’s much harder to manipulate obviously it is what it is. It’s kind of has to target where the Fed’s going to be out two years from now and so forth. But the ten year, if you were a true bull in this market, you want to see ten year yields rising right now. That’s the irony in all of this. You want to see that because that would tell me, oh, maybe there still is going to be growth in the economy. Forget about the inversion for a second, which I totally agree with you. Yes, I’m looking here the ten year on FactSet 339 got as low. I think it’s 336 today. That’s not something that you want to see. If you believe in a soft landing, you think there’s going to be growth in the economy. You would want to see 375 380 and this inversion, right. I don’t know if you call it a de inversion that you’re not going to be seeing any time soon. So the 2 year makes sense to me. The ten year makes sense in my world because I think that things are going to be considerably slowing throughout the year. [00:14:25][45.0]
Guy Adami: [00:14:26] One of the things that’s happening and again today, notwithstanding, because there’s some funky price action, but more and more people are starting to wrap their head around the gold market. Something you talked about Danny for a while. Porter and Vinnie have discussed that as well. Dan And I’ve gone back and forth on this for a number of times, but there’s clearly something happening in gold, and I happen to think central banks again buying gold in record amounts this last year, year and a half levels we haven’t seen in percentage terms in 40 or 50 or so years. It has not manifested itself in the price until recently. I happen to think it continues. But gold going higher. Forget about inflation and what that means, what it means in terms of stability, central banks, all those things that we’ve been railing against. I think that’s the real story Danny Moses. [00:15:15][49.0]
Danny Moses: [00:15:15] Well, my thing on gold has been if you want to be bullish on the market because you believe the Fed’s going to stop soon and or reverse course and stop cute and all this other stuff, then you have to love gold that if you want to call it a pair trade. I mean, gold was outperforming somewhat on the market for the last several weeks. That’s what I’m talking about. Today’s a massive disconnect. So gold stopped. It went in reverse here. So just looking at it in a point in time, going from what, 1980, I think we had hit almost a high of intraday into 1925 here. I mean, that’s a big check back. So, yes, I still love it. I’d be adding on any weakness, but that’s what I’m saying, when the market doesn’t make sense. And that’s why I believe that Powell either intentionally misspoke or he’s misinterpreted or whatever, because you wake up today, nothing changed before 2:00 yesterday except the S&P levels and 2:00 today. [00:16:04][48.9]
Dan Nathan: [00:16:04] So. Question, guys. Okay, so let’s just say tomorrow, Apple, Google, Amazon, nothing that they say as far as their commentary or their guidance for the current period. Let’s say they don’t guide for the full year lead you to believe that we’re going to get. A down that leads to a 2023 recession. What do you do? Because we’ve had this massive run. The Nasdaq is up 16% on the year. The S&P is up, like I said, eight and a half percent or whatever. And let’s just say it just rips from here. Do we see a rotation out of energy, out of cyclicals, whether you want to call it industrials and some of these staples and stuff like that back into Mega-cap tech? Because that’s been my contention all along. We talked about this a couple of weeks ago. A lot of strategists or investors were saying, I wouldn’t cling to the prior leaders leading us out of this bull market. And my contention was there’s no other way that we actually have another leg higher out of this bull market if it’s not those mega-cap names leading the way, just from a sheer outperformance that we saw in energy and the like. So to me, what do you do then? Because it’s just off to the races. We were down 20% in 2022 after being up 28% in 2021. And that’s it. That’s the bear market we’re over [00:17:19][75.1]
Guy Adami: [00:17:19] We’re the first podcast in the history of podcast to talk about the main ingredient. Cuba Gooding. Cuba Gooding Jr. All his movies. Jerry Maguire, by the way. I love that movie. But the reason I brought it up is because everybody does play The Fool and I have clearly played that fool. But in order to believe what you just sort of laid out, you have to be, I think, even a bigger fool, because what you’re betting on is, once again, valuations not mattering. Growth not mattering. All these things that we seemingly talk about, the fundamentals of the market not mattering, in my opinion, in order for companies like and in video, which is currently trading around 20 times revenues around 50 times next year’s numbers, stock that is now rallied 100% ish from its low. You’re betting that you know what, Market forces don’t care. Valuations don’t matter. And off we go into the wild blue yonder as if nothing has happened, by the way, right before our very eyes. There is a slowdown going on in this country. There are layoffs going on. Companies revenues are basically contracting, margins are contracting. I encourage you to look at the Facebook quarter, which was fine, except that year over year, our contracted and all these things seemingly don’t matter. And if that’s your thesis, as you say, Dan Nathan, what have at it have added people. [00:18:44][85.0]
Danny Moses: [00:18:45] I know if it goes on for a couple more days, I will go from talking like this to talking just like this because I’m almost done at this point. So Dan I mean, so I guess you have to basically miss an interest payment to make your stock go up 80%. Prepare for bankruptcy to make your stock go up 100%. In the case of Bed, Bath Beyond and Carvana, I just looking at these names and as we sit here, Carvana is about to go down on day, then I just don’t see that situation happening. Could it run a little bit more? Sure. But if we could run of 4300, maybe I feel somewhat confident. I would’ve said very confident day ago that we have seen the highs in the S&P for the day and I think there’ll be a sell the news event, the three big boys tomorrow Dan. [00:19:23][38.0]
Guy Adami: [00:19:24] So at what point and the question I think people want to know and I’m sure there are people saying this, at what point are you being dogmatic. And I’m not saying you, I’m just saying in general, the three of us or people that have a similar view, At what point do you say, you know what, I’m just flat out wrong? Personally, I don’t think I’m there yet. I understand that this market has rallied since the beginning of December. By the way, I think it’s important to point out this is not back padding by any stretch. But back in June, we said, listen, we think the market can rally 18% from your tactical call. Happened the same thing in October, and it worked out really well. I thought that move lower in December would accelerate into the new year. That part’s been wrong. But I guess my open ended question is, at what point are we collectively wrong? [00:20:10][46.3]
Dan Nathan: [00:20:10] You know, that scene in The Wolf of Wall Street where Leo walks up to the podium and everyone thinks that he’s leaving, he’s going to resign. The Fed’s got him in there or whatever. And then he has this epiphany and he’s looking up at the crowd and he takes a moment here and he goes, I’m not leaving. And he goes, I’m not leaving. And then he gets involved. I’m not I’m not leaving, guys, okay? I’m sticking this one out here. Because honestly, in my 25 years in the business, I’ve never seen anything so fucking stupid in my life. And I mean that sincerely. And again, people can keep tweeting about it. They can keep putting the graphs up. They can show you all the bear market rallies in 2000, 2001 2002. They can do it again in 2008 into 2009. This is not going to be different, in my opinion. So I actually am a bit more convicted at this moment about what I think is going to happen here. And again, we talked about this a little bit over the last month. For some reason, the calendar change. And Danny you’ve mentioned this. We know how people get paid and we know that people will take greater risk early in the year. They got a lot more time to make it up or whatever. But there’s coalescing around this idea of a soft landing. And again, I think one thing that we do really well, although we all are collectively wrong maybe for different reasons right now, is we read the room, we look at sentiment. And we get it. I don’t press lows. So you’re going to say, okay, I wasn’t short in October. I wasn’t short in mid-June and I certainly wasn’t short in some other periods when we’re making new lows. But we never made a new low when we sold off after those highs in December here. And again, the fact that people just turn their sentiment because the calendar turn didn’t make a whole heck of a lot of sense for me. So to me, the jury’s still out on this one. And just because the stock market is up 20% from its lows that it made in October doesn’t make me turn my tide. And at some point I’ll be out because I can’t take anymore. But it doesn’t mean I’m getting long. [00:21:55][104.5]
Danny Moses: [00:21:55] Yeah, I’m not even either. I’ll be cheering in the crowd with you on that, Dan. And I would say when you see stuff like the Adani Group, the Indian conglomerate Hindenburg, writes a short report and it loses over $100 billion in value, I think is the number that’s lost already where Credit Suisse and Citigroup stop allowing borrowing against the debt and people’s accounts. I mean, how quickly something unravels. That’s an un meme able stock rally in terms of U.S. investors being unable to buy it and rally it back. But that should kind of scare people, that Hindenburg, I’m sure they’ve done their work. I didn’t read the full report. When you start to read through it, you read how vulnerable kind of a model like that as well. We have worse models over here on a fundamental basis that have rallied 1500 percent. So to me, it’s just duration. And if you have the time to hold these things and you manage your money correctly, there was a time yesterday where a guy and I spoke this afternoon making sure that we were both so on planet Earth, there was a time we were just at this conference where iConnections down in Florida and we were sitting around a table. It was Porter, Jim Chanos, Mike Wilson, Cameron Dawson, and maybe I just flock to the Bears, I’m not sure. But to me it just was common sense of the thought process and kind of how we’re looking. And that doesn’t mean that things can’t go parabolic for a period of time. So listen Qs and Ks and do your work. And over a longer period of time you’ll be fine. But don’t chase the crap people. [00:23:08][73.0]
Guy Adami: [00:23:09] Couple of things on my radar screen. And again, this is going to come back to Dogma. When are you wrong? I don’t think it’s coincidental that Chevron, on the day they announced a 75 billion with a B dollar buyback, that’s effectively the day the stock made an all time high. I want to say the level was 186. As we sit here, the stocks changed about 168 or so. So not a huge pullback, but a pullback nonetheless. We’re seeing the same thing to a certain extent in OIH we’re seeing some of the downstream plays selling off a bit and maybe that’s rotation. Danny. I’m sure that’s obviously part of the equation. But I will say this, I think that was a top in Chevron, but I don’t think it was the top in Chevron. And I’m pretty convinced that regardless of what crude oil does and I’ve said this 100 times, I think energy stocks will continue this year. That thesis is being challenged early on, but I don’t think it’s going to be proven incorrect for the remainder of the year. What are your thoughts on energy Danny? [00:24:10][60.5]
Danny Moses: [00:24:10] Yeah, I think you’re seeing a little bit of a rotation, as you just mentioned, and Dan talked about it before. Can energy maintain an overweight for a long period of time and they found a reason to leave it. I mean, the quarters were obviously solid. The cash flows are amazing. Yeah they didn’t make all the numbers on the earnings side, but it’s so large and big that’s hard to ignore. So I think you’re getting a little of that around the margin. But if you actually believe that energy stocks are a sell here, one of the only reasons I can think would be that global energy demand starts to dwindle. What would cause global energy demand start to dwindle. And we obviously had the China, quote, reopening. So we’re seeing a little bit of acceleration there. It would be a sustained slowdown in the global economy, which would tell me that I’d much rather be short the S&P than energy from these level. So, again, pick and choose. I do think you’re going to see a ton of M&A here in the energy sector over the course of this year. A lot of these bigger companies will use their cash and obviously rich stock to go buy things. And so I think that’s going to be an area, I think to make money in many ways. But listen, timing is everything. You buy the quality, energy, danger, decent levels that are returning capital and you’re going to be fine. [00:25:09][58.8]
Guy Adami: [00:25:09] We’re not politics here, but I’ll bring this up for the sake of bringing it up. And it’s again, percentages are a little bit different. But Chevron announced a $75 billion stock buyback, which was approximately 20% of their market cap, a very significant number, a very significant part of their market cap. This week, Facebook announced a $40 billion stock buyback, which percentagewise is significantly less. It’s probably 10% or so of Facebook’s market cap, depending on where the stock price is right now, but still a meaningful number. The administration got themselves a little exercised on the back of Chevron because they’re a big energy company. Gas prices are high. They should be doing research and development. They should be pulling oil out of the ground. They should be refining gasoline, all those things. And they’re screwing the American public. Nobody seems to give a shit about Facebook announcing a $40 billion stock buyback. So if we’re the capitalist society that we pretend to be what’s going on here, we can demonize one industry and we just don’t give a shit about another one, which, by the way, in some ways is probably just as detrimental to the public as fossil fuels are. [00:26:23][73.2]
Dan Nathan: [00:26:23] Yeah. You’ve been saying that matter should be part of this whole ESG conversation for a long time. One thing was interesting. There was a tweet. We’ll put this in the show notes is from at Modest Proposal one. This was from, I think in the fall, but it was, quote, tweeted by Bill Gurley over at Benchmark. And the comment from October was, I am once again begging CEOs and CFOs to stop rationalizing share repurchases. We are repurchasing stock. This is in quotes to offset a portion of dilution. There is no bigger red flag on capital allocation competency. And I think it is interesting. So Bill Gurley, legendary VC, he said, not just CEO, CFO, I, I met board members who think buying back stock to offset SBC that share based compensation is somehow intelligent. It’s financially ignorant, a silly parlor trick. So to me, what’s interesting about this conversation is we haven’t heard about buybacks in a little while here, and so we’re starting to hear about it in the energy space. You’re hearing about companies like Meta trying to put a floor into it. And here you have a prominent VC who’s been arguing against it for many of his companies who have gone public, have not probably reached profitability or a level of profitability yet that justifies buying back [00:27:27][64.7]
Guy Adami: [00:27:29] I agree. Different conversation. If you want to eliminate stock buybacks, that’s fine. Have a conversation. Vote on it. I totally get it. I’m all for whatever the outcome is. But don’t come out and say one industry can do it and another industry can’t do it because you feel one industry is on the moral high ground and the other one is not. That to me is completely asinine Danny [00:27:50][20.7]
Danny Moses: [00:27:50] In the middle of the presser for PAL yesterday, I should have mentioned there was the first quote, debt ceiling meeting between McCarthy and Biden, and they came out and said, oh, it went well, we kind of know what we all need to do. Yeah. And so I think that actually was a reason. If you want to say, oh, I told you the debt ceiling would be a big issue, which I think it will be down the road. But I wanted to mention that as well, because I think that added some fuel on the bulls fire yesterday afternoon as well. [00:28:13][23.0]
Guy Adami: [00:28:14] When we come back, a conversation with Stuart Sopp, CEO and founder of Current. [00:28:19][5.0]
Dan Nathan: [00:30:27] All right. Welcome back. We are at Current global headquarters. Many of our fine listeners of this podcast know that’s where we are going to be domiciled here in 2023. And Guy and I are here today with our good friend Stuart Sopp. He is the CEO and founder of Current. And welcome, I guess, to your fine offices. [00:30:44][17.4]
Stuart Sopp: [00:30:45] Thank you. It’s nice to be here. And it looks amazing, right? Do you guys sleep here? [00:30:49][4.0]
Dan Nathan: [00:30:49] No, we don’t sleep here. We have a proper studio here. And actually, Guy Adami has spent more time in New York City since we moved into Current than he has in a very long time since the pandemic started. [00:30:59][10.1]
Guy Adami: [00:31:00] And this is a beautiful office space. I mean, we’ve met so many of the people that work so many of your coworkers. I’m not going to call them employees. They’re coworkers at Current. It’s a wonderful organization As we sit here, since the lows we saw in December in the market and you’re markets guy , first and foremost, we’re probably up some 500. S&P handles, S&P 4200. We had a Fed meeting yesterday, a two day Fed meeting that ended yesterday. Jerome Powell comments subsequent Q&A market clearly loved what he had to say. But that chasm and we talk about it all the time between the haves and the have nots, that’s not narrowing, that’s widening. And you see it right before your very eyes. [00:31:39][39.0]
Stuart Sopp: [00:31:39] I do. I do. From a market point of view, there’s a bit of pain. I think I was on here saying it’s going lower for a little bit longer. I think I got it caught up with everyone else. It looks like maximum pain from the meeting yesterday, at least from his speech. I think he mentioned disinflation for 13 times. I thought it was 14. Yeah. So clearly a pause from a markets point of view, am I right? That’s what it looks like. [00:31:59][20.1]
Dan Nathan: [00:32:00] Do you think this ss this him taking a victory lap of the transitory thing? No, I mean that sincerely. Well, no, because they were saying transitory all of 2021. So I guess my point is, is like we had that spike in inflation last year when Russia invaded Ukraine and things went parabolic, but they’ve come in. So now when you look at these inflation readings coming in, my point is he hadn’t said the word disinflation in a very long time. I’m wondering if it’s literally just his ego gave you the best. He also said that I used to do this in markets. Remember that? Did you hear that? Like one of the things. So I’m just curious what you think about that a little bit, because to me, it seemed a little bit contrived. And that’s the thing that market participants are hitting on because the orgy of buying that we have seen the sell off in yields, weakness in commodities just in the last 24 hours just feels like people are buying whatever he was laying out. And Guy and I were fairly well convinced that if he had his wits about him, he would have stayed pat on the hawkish bit because the last thing he wants to do is see the inflation of a risk asset bubble at this point. [00:33:01][61.3]
Stuart Sopp: [00:33:01] Yeah, I’m kind of with you. I haven’t thought of it like that, and it kind of makes sense. Yeah, because I thought the same thing if I was him, which I’m clearly not the Fed, but I would have done 50 and kept it probably even more hawkish. But 25 and hawkish was probably the narrow path that everyone thought he would do. So it kind of doesn’t make sense in many ways. I think the markets were ready to buy those tax loss harvesting from a consumer standpoint, so people who’d probably sold you have to wait 31 days, whatever it is, in December into Jan maybe got caught wrong footed and things like that. And I think there’s a lot of money in savings from, like you said before, haves and have nots in America. We all know wealth disparity when you’re seeing Fed funds rate at four, four, three quarters, you’ve got trillions of dollars of wealth created every year and people are just ready and waiting to go into something. And of course, the money market funds have all been churning since his meeting yesterday. [00:33:48][46.3]
Guy Adami: [00:33:48] So it’s positioning to your point, and again, you did this for a long time, so you understand sometimes market participants get themselves off sides, but at a certain point that offsides and gets to equilibrium and then things start to sort of make sense again. You were a currency guy for a long time. Some of the moves we’ve seen in currencies have been out of control. I will tell you, the Bank of Japan, in my opinion, and you know this, they intervene in their currency, I want to say three months or so ago because the yen was just depreciating at such a rapid pace, that seemed to work. Subsequent to that, they came in and effectively intervened in their currency yen vis a vis the bond market with yield controls. So you see central banks again running amok, currency moves we haven’t seen in quite some time. You start to put all those things together. What does that mean to you? [00:34:38][49.7]
Stuart Sopp: [00:34:38] Well, the currencies are kind of hitting their limit against the dollar. I think the Dixie DXY, went 101 whatever is 50 and then you’ve got cable at 122 and change something like that and you’ve got your dollar back at that 110 level. So you’re hitting those previous low points. I think we’re a hundred points away in the S&P 4300. I think we hit that. [00:34:57][18.1]
Guy Adami: [00:34:57] I think that was the I think the August high took us up to 4280. I’d have to go back and look. But ish. [00:35:02][5.4]
Stuart Sopp: [00:35:03] Yes, somewhere there. And then in Bitcoin, you’ve got the 25,200 level. And so we’re really testing technically, I think we’ve seen a short positioning squeeze from those comments that Dan has said. Maybe that’s what he was doing. Maybe it was just getting rid of the shorts in some way. You remember the old Bullard comment that comes like two days later on the weekend, on a Friday night that says, oh, just kidding, we’re really [00:35:24][21.0]
Dan Nathan: [00:35:25] So let me ask you this, though, because you’re in tune with the markets, but you’re also in tune with the consumer and consumer that actually was sucked into some of the silliness in and around crypto over the last few years, some of the silliness around SPACs coming to market or some of the silliness about unprofitable tech companies trading at 50 times sales in the public markets. What makes me nervous here is how underinvested for the long term many younger sort of investors might be and how they get sucked into the worst stuff. And when I look at my FactSet screen right here, I see stocks like Carvana up 30% on the day. Or Bed, Bath and beyond that just missed. By the way, also a tenant in this fine office. But that also just missed an interest payment. And literally you already said that they are going bankrupt, but that stock is up 100% in a short period and there’s insanity going on again. And so to me, I’m just you’d see I’m a little fired up here. I’m obviously one of those shorts and I’m in totally take it out yet you’re in touch with your consumer here. What does that make you feel like? They’re getting sucked into the worst crap and they finally have an alternative. You guys have a savings account with 4% on it, literally. Remember, Tina, that’s gone. [00:36:33][67.8]
Stuart Sopp: [00:36:33] Yeah, that’s right. So I currently primarily bank people are living paycheck to paycheck, which is increased 3% year on year, another eight or 9 million people. The dynamic of that is interesting, though. Eight of those 9 million have a payroll of something like $100,000. And so inflation has really bitten and it moving people from the middle class maybe a little bit lower here. And so the pain is real, job losses are real. And to the Fed and some market participants, this is all kind of a game, right? These are just numbers. But the reason why unemployment so robust is because people are pulling down future wage and potential earnings through debt and credit, trying to live paycheck to paycheck, trying to fill that gap and are sort of hoping and praying for a soft landing. I mean, Jay Powell says we’re going to get it. Hopefully he’s right. [00:37:16][43.0]
Guy Adami: [00:37:17] Yeah, well, they’re definitely threading the needle right now through the lens of the market. But again, haven’t have nots. The wealth gap continues to widen. I mean, it’s really unfortunate and I’ve said this before and I’ve gotten a lot of pushback, but for 10, 12, 15% of our fellow Americans forget about recessions. I mean, they hear recession, a sense of, geez, I wish we were in a recession, because for those people, it’s late 1920s, 1930s. And that’s just is what it is. People can argue, but the facts are the facts. What, though, in terms of the possible derailing of this entire thing, what’s out there on your horizon? I know looking at your notes, you have war with a big question mark, that exclamation point. But that’s something that I’ve talked about for a while. I think people are underestimating potential for China. Taiwan, by the way. I also think people are underestimating the potential for war within Congress on the back of this whole debt ceiling thing as well. [00:38:10][53.4]
Stuart Sopp: [00:38:11] Yeah, that’s the gift that keeps on giving. Ever since I’ve been in the market, I’ve heard that debt ceiling threat from both sides over decades. So I don’t think that ever goes away. And we saw the platinum trillion dollar coin argument. That thing got raised, I think, 15 years ago. And Janet Yellen was obviously involved in that rumor back in those days. So I think some of those things have been going on for a while. I’ve got war written down here because if we are in a deep recession and the markets are now looking through everything and believing the Fed or at least not testing the Fed anymore to get a deep recession is outlier events. You just mentioned the couple we’ve seen mobilization in and around Belarus and Ukraine. We just saw a bunch of tanks and a bunch of things. So Ukraine for a reason. They’re clearly there is and I’m not privy to and I think we got Palantir here in the building to show they need. [00:38:52][41.1]
Guy Adami: [00:38:54] You’re paying attention to what’s going on. I mean, there’s clearly going to be a real escalation at some point. [00:38:57][3.2]
Stuart Sopp: [00:38:57] Yeah. So is is it millions of people? Is it a double sided war with China going to Taiwan? So deep recession, You got to look at those geopolitical things for now. I think for the big destabilizing shocks that could affect the outcomes that are priced into the market, I think other than those you’re looking at unemployment, really that’s especially close to our business and our heart. So we service the sector of living paycheck to paycheck. If we start seeing more than white collar jobs being lost because obviously Meta Google, Amazon primarily are white collar jobs that have been going and it hasn’t affected blue collar yet. And so we’ve had robust numbers, we’ve had robust growth still, and we’re still solving that problem of early liquidity and we’re building our credit, building products and lending later this year as well to help make sure that we’ve got them at the right time. [00:39:37][40.2]
Dan Nathan: [00:39:38] It’s interesting. And Guy says this very succinctly all the time. I mean, we’re charged with looking at markets, the economy through the lens of just breaking down, demystifying this sort of stuff where people are spending less time thinking about it. When you hear this last piece of the puzzle that the Fed had been solving for was rising unemployment, which is crazy. And we try to do that in a very sympathetic way. We know that these are people’s livelihoods. So we have had wage growth, which again, we know that is a stickiest part of inflation. And when you look at all these other inputs that have come down, we did see and you just mentioned, that’s primarily been higher end tech workers, white collar jobs. Triple M a couple of weeks ago cut 2500 and they specifically said manufacturing jobs. So what would define a soft landing is that unemployment at 4% or something like that, because a lot of people were calling for five, maybe 6% unemployment on a recessionary environment here. And I wonder if you have to give second thought to the fact that maybe there’s a path to 4% unemployment. Maybe that makes sense because pre-pandemic the 40 year low was three and a half percent. We were right there right before the pandemic in 2019. [00:40:43][64.9]
Stuart Sopp: [00:40:44] Yeah, unemployment is tricky because we got to look at the participation rate as robbing us. I think you have to take that in combination because I think the Fed’s in a tricky spot there, or the world is in a tricky spot because of death and all that other stuff it’s been unkind to how many people have obviously died over the last few years and you’ve got people retiring. So it’s really hard to move that unemployment rate without really destroying the economy and the Fed is like pushing it and they’re like, Oh, it’s not moving. [00:41:07][22.9]
Guy Adami: [00:41:07] I’m going to stop you for a second, because that’s exactly right. They continue to make the same mistakes over and over again. Inflation. They begged for inflation for years. Yeah, inflation was right there in front of their face. They chose not to acknowledge it, thinking they could control it once they got it. Clearly that was wrong. So if in fact and is taken a victory lap piece for shit number one. Number two, though, they want unemployment to be 5%. They haven’t stated that, but they absolutely want it. And the fact that it’s not moving, they will continue to scratch their collective heads and they will continue to push to that until it gets there. Again, thinking they can control it and they won’t be able to. A recession isn’t a possible outcome. It’s the desired outcome for these guys. [00:41:53][45.4]
Stuart Sopp: [00:41:53] Yeah. I’ll give you an example that ties up a couple of these threads. I think Intel this week announced that they were cutting salaries, cutting salaries as well as probably some job losses. And I think it was the CEO, 30% VP’s 20%, directors were ten, and then everyone else was five. So the exact white collar, the people who are on the most money, it’s about a numbers game. On the other side, you’ve got Walmart increasing hourly paid workers from 12 to $14. On the other side. Then you’ve got the McDonald’s workers also looking at this right now. And so you’re seeing where you need volume is, where you need the numbers, working class and all the stuff they’re getting paid increases as increasing. And we’re trying to get rid of the mix shift. It’s a mix shift from white collar to blue collar work. And I don’t know if there’s a delay in that and all that stuff, but I think it shows you the mix of the workforce is just as important as the absolute unemployment number. So I don’t know if the Fed. [00:42:40][47.1]
Guy Adami: [00:42:42] I don’t think so. I agree with you 100%. I mean, they don’t understand the components of these things, how they work. They’re living in their 1950s playbook. It’s true. And it’s they’re trying to implement it in 2023. That makes zero sense. [00:42:56][14.4]
Stuart Sopp: [00:42:57] Capital controls next, right? 1940s, 1950s. [00:43:00][3.3]
Dan Nathan: [00:43:01] But it is interesting, though, and Chipotle, they just announced that they’re going to hire 15,000 workers in North America. So it’s this weird barbell approach. One thing I’ll say and going back to your notebook there. War. Think about this. Think about the disruption that we had, the supply chains. Think about energy and national security terms. Think about chips as far as national security terms. Think about the IRA and the basically the incentives there to reshore some of these jobs. We’re going to have economic war first with China. And you think about globalization, what that means to jobs and wages. So I guess that’s part of it is like, I don’t know, maybe they got some of these inflationary inputs on the energy side and some of these shipping and some of these other things. Maybe it’s that reshoring of jobs that are going to keep wages pretty high for U.S. workers. And I don’t know, Guy, you’ve said this on many occasions we might see another spike in inflation because 100%. [00:43:54][53.6]
Guy Adami: [00:43:55] If you think about it, deglobalization by definition is inflationary. The reason why I think they’ve tried to be as stringent or whatever word you want to use in terms of some of the rhetoric is because they don’t want to make the same mistakes they made literally 50 or so years ago, thinking you have inflation defeated, only to have it come back roaring back in the ensuing year. I think there’s part of that. People say the 72 analog doesn’t play. That’s fine. It’s sort of does, number one. But the fact that there is this notion that they can thread this needle, it baffles the mind, by the way. On top of which, they’re trying to reduce the balance sheet that at one point got either side of $10 trillion. I mean, I don’t think the market is fully pricing that in as well. And as I said before, on an earlier show, we did right before our very eyes, Stuart, the market went from trading at a historic market multiple to once again pushing towards 20 times, which is expensive historically even more expensive in the environment that we find ourselves in. [00:44:58][62.5]
Stuart Sopp: [00:44:58] Yeah, if you look at that mix I think I mentioned on a previous podcast, you take out the top five stocks, it’s a multiple of like I think it’s like 13, something like that. On your note, on a couple of things, we’ve had a pretty cool summer. If you get this very cool summer, which is obviously in New York, it hasn’t snowed and all the other climate change things aside, that’s obviously helped Europeans because it’s been global. It’s obviously helped the US and its ability to sell gas back over there if they need it. And so we’ve had a deflation or a deflation tailwind like by the grace of God. Jay Powell and also the Europeans, the Germans and everyone else has had this amazing time. When it was if it was a cold winter, we’d be in a very different spot. And I think that’s one part. The other part is China woke up, they woke up and injected a metric ton of liquidity into the markets, and that’s now making its way through, as well as some of the Fed metrics. And liquidity was starting to turn sometime in October when we had the U.K. event. Remember the U.K. pension event? Yeah. They started twiddling the knobs of liquidity in the US repos and all that stuff. They were like, okay, we don’t about the UK. Let’s not be too hard on the cutesy stuff. Then you have China and Japan and guess what you have now? The short squeeze, tax loss relief and all the retail getting knocked out. And with the tailwind. [00:46:09][71.1]
Dan Nathan: [00:46:10] The short squeeze are just dummies like us. I’m hoping retail’s not short stuff. I think they’re the ones ripping some of this stuff up. Here’s another thing. You’re the CEO, co-founder of a fintech company, obviously, Trevor, you’re CTO. Are you guys spending some time because these large language models, some of the stuff AI they’re also actually disinflationary when you think about it? Are you guys thinking about some of this stuff? Is it making its way into fintech a little bit? [00:46:34][23.6]
Stuart Sopp: [00:46:34] It will make its way. I think it will be through third parties. First, large language models are going to be helpful for very large companies with large sets of data that typically talk to consumers. There’s a natural thing there with a member experience, you know, CSDs, things like that, ability to do sales fairly digitally, We don’t really do that, right? We have adverts, we have marketing, we have a growth team and I think there’s something there that will happen. I think fintech will be a large recipient from third parties using these things, and that’s deflationary in terms of costs. You need less people. I think again, it’s another white collar wrecking ball, creativity, copywriting, those kind of things just changes the game. Now my question would be, is it really creative if everything reverts to that mean of whatever the AI pumps out? [00:47:18][43.5]
Dan Nathan: [00:47:19] But is it, you know, pre-pandemic we were talking about like universal basic income. We were talking about how just a lot of these jobs were going away. Think about almost every initiative that Amazon is doing, drone delivery and this and that, whatever. And then you think about guy and I was just at a conference down in Florida and we had Jim Chanos, who’s famed short sell noted short selling, we’d say. Right. And we were talking about some of these models, these delivery models that were just subsidized by VC. He mentioned DoorDash, for instance, like they’re ten years in and they’re still losing money. We’re thinking about some of these other things like Snapchat on the consumer side, they’re still losing money. They’ve been public for five or six years or something like that. And so when you think about a lot of these sorts of AI potential advancements into other industries, they’re going to be deflationary in a massive sort of way. [00:48:04][44.8]
Guy Adami: [00:48:05] You’re 100% right. And the problem that I was bringing up for a long time and whether it proved to be correct and it doesn’t matter, there was inflation in all the wrong places and they were measuring inflation to your earlier point, Stuart, in this sort of amalgam, but not take into consideration the components that got us there. I mean, some of the inflationary things that were going on were being offset by what you just said. Technology is the biggest deflationary force in history and they just, I guess, couldn’t wrap their head around that. So we want inflation. We want inflation. I’m screaming already got it in all the wrong places. Be careful what you wish for. And I think it’s sort of playing out maybe a little bit in reverse now. I mean, there’s so many strange things happening in the landscape. And again, to think that this whole thing through, at least the lens of what we look at, the market can be rectified by a 18 and a half, 20% peak to trough down in the S&P, 33% in the NASDAQ. [00:49:01][55.8]
Dan Nathan: [00:49:01] I don’t think. But that’s I think so, Stuart, think about this in 2021 and granted, crypto had rolled over SPACs, unprofitable tech, lots of pockets of risk assets had already been correcting. The S&P closed on its debt as high as in 2021. It was up 28%. So the guy’s point that the S&P 500 was down only 20% last year in 2022 and now one month into the year and it’s up 9%, it feels like we are not going to learn any of the lessons that we should have buy in. Granted, Black Swan of that, that’s what happened in 2020 and 2021, but we threw $5 trillion at it. If they’re not going to reduce that balance sheet and if they’re not going to normalize interest rates, which they wanted to do in 2018 but got spooked by the stock market in Q4, what are we learning here? [00:49:50][48.5]
Stuart Sopp: [00:49:50] I don’t think we’re learning. I think it’s a liquidity game for them. You look at the S&P over to one of those. They’re not great. Absolutely great. I guess it’s like a kind of a chart crime. But it gets to the point that if you print 40% of US dollars ever created in the last two years, it’s really hard for equities to come off. And so I think this last month’s excluded because we can be biased from those recent moves that’s generally what’s happened is that we’ve just printed a lot of money and some of that money is starting to come back into the market. Did you see that Treasury graph that the Treasury came out with basically forecasting printing money at almost exponential rate. [00:50:21][31.0]
Guy Adami: [00:50:26] Is that the Stephanie Kelton model, or is that the Olivier Blanchard model? I mean, the whole MMT crowd is back, is what you’re saying is back? I mean, there are no ramifications. I mean, you know, and I know there are ramifications for that. By the way, the people that get screwed, I won’t use the other word that I wanted to use in large part are the people that they think they’re trying to help. It really is your client base. I mean, those are the people that get EFT on the way in, without question. When rates are lower and cash is free, it’s not the lower and middle class that gets helped. It’s the upper class. That’s right. You know who gets helped on the way out? Inflation. All the people that own assets. And the assholes that go to the cocktail parties on Saturday night and laugh about. Oh, I paid $6 a gallon this weekend in my Beverly Hills gas station. What did you pay? And it’s a fucking punch line. But the people that get hurt are the people that are on the middle and lower class. [00:51:17][50.8]
Stuart Sopp: [00:51:17] That’s a 100% right. [00:51:18][0.8]
Dan Nathan: [00:51:18] Well, the only thing is that what’s different this time, guy, is that when you think about the trillions of dollars that the Treasury and the Fed threw at again, this black swan pandemic, TPP was to keep people employed, was to keep them financially solvent. It did do that. And so the backside of that was that we had this spike in inflation. And to your point, yes, gas at the pump hurts like there’s a whole host of other things that hurt. But we also saw the wage inflation. So now all of a sudden, though, you can have a 4% savings account, too. So I think the jury’s still out with three and a half percent unemployment, wage growth that we’ve had and the solvency in which it took to do it. So, I mean, to me, that story, yes, in 2010, at the fancy cocktail parties, people might have been doing that. They might have been doing it back in oh five as they’re buying their third homes and everything like that. I’m not sure that’s going to be the case in 2024. [00:52:13][55.2]
Stuart Sopp: [00:52:14] Just on that point, I think you’re largely right. Wages have gone up. They haven’t gone up as much as inflation. And so two guys point from the 1940s capital control era. Maybe there’s a mix between the 72 thing and the 1945 to 54 thing. Maybe we are seeing some similarities. And so the reason why that was such a tough period after World War Two is because savers basically got robbed. All the savings got robbed. So white collar workers losing their jobs and their savings, everyone’s running into an I bond or a savings rate that’s three and a half, 4%. And they’re like, thank God, risk free. You’re losing to two and a half. [00:52:49][35.0]
Guy Adami: [00:52:50] Eating away I mean, it’s to your point, I’m interrupting. I don’t mean to, but still looking at negative wage growth, I mean ish, depending where your inflation number is, it’s negative wage growth. You can talk about wage increases all you want and then keep it up. [00:53:05][15.0]
Stuart Sopp: [00:53:06] That’s right. That’s even for just we’re focused on people who can probably afford to live and all that stuff and not put in a distressed position as is. Now that when you’re talking about primarily Current customers and people and consumers, we’re trying to help here the 168 million or two thirds of Americans that now live paycheck to paycheck. They’re looking to eat, they’re looking to balance their bills, they’re looking for shelter, things like that. And that’s really hard. They don’t have the flexibility. Like being robbed on your savings is one thing, right? Yeah, They are starting to have wage price power. They’re able to edge that up, but it’s not making the difference. That’s why we’re seeing the consumer credit numbers and all this free debt going absolutely bananas. [00:53:40][34.1]
Dan Nathan: [00:53:41] Yeah, well, Guy’s been making this point and he just said it there. You didn’t say exactly what it was. You said that they’ve been measuring inflation in all the wrong places. So when you think about health care, you think about education, you think about housing and those three things. To your point, and I’m seeing this point to you Guy is like they’re not getting better. So if gas at the pump is below 3% and egg prices finally come down and all, that’s fine, fine, fine. But your point is, even if wages stay bid and the unemployment rate stays low, we still have this other side of the inflation coin. [00:54:10][29.3]
Stuart Sopp: [00:54:11] I just think inflation, at least for this decade, the rest of the decade, is just going to be meaningfully higher. All the reasons that you’ve mentioned, globalization isn’t going away. So we’ll need energy security, food security and actual physical security if we keep having wars. America is extremely well placed. There’s lots of well-respected people. I have an opinion on that. And so America will be, by and large, better. But we may see other parts of the world absolutely in some serious trouble over this coming years. [00:54:37][26.4]
Guy Adami: [00:54:37] We’ve sort of danced around it. But what does it mean for your business and how you look and how you plan out? Because, yeah, each year has had its own very unique set of circumstances. And 2023 is going to be no at least in the first whatever, 32 days of it or so, it’s not going to be any different. [00:54:54][16.9]
Stuart Sopp: [00:54:55] Yeah. Firstly it’s very focusing. As a company your startup is already hard enough and then you’ve got public markets being roiled, you’ve got the private markets and the funding environment being roiled, which is somewhat of a lagging indicator to that in some ways. And then what you’re trying to do is predict the macro and consumer outcomes and then fit and build a product timeline and roadmap to address those problems before they start eventuated for us is we started credit building product that we’re going to launch in Q2 and then we’ll do some safe lending like affordable lending. That’s not gouging and all those other things to the people that can afford it on our platform. And so we’re really excited about helping people rebuild their credit, starting to get something back. And we’ve got some nice differentiating features on that will be launched later this year. [00:55:38][43.5]
Guy Adami: [00:55:39] So you see the president came out and not political. I’m just pointing it out when he’s talking about credit card companies effectively gouging the customer. If you’re late, you have to pay a $31 fee. And he’s correct in saying it doesn’t cost these companies $31. So that probably sets you up very nicely for what you’ve been building. [00:56:01][22.6]
Stuart Sopp: [00:56:02] That’s right. I think he’s suggesting moving it to eight bucks or something like that seems totally fair. Look, here’s the other thing, is that these companies, maybe it does cost them 32 bucks. So officially. [00:56:11][9.2]
Guy Adami: [00:56:12] If that’s the case, then it means you’re more valuable than you probably realize that you are. [00:56:18][5.8]
Stuart Sopp: [00:56:18] That’s right. I mean, we build our own core, which when you look at existing incumbent financial institutions, they spend some like in our business and banking business, spend something like 12 bucks a month per account just on technology alone and then add on all the other stuff. And of course, for us, it’s like sense because we’ve built all this in-house. And so that’s deflationary for the financial industry. And we’re going to go and do the same thing like we did to banking into lending and credit going from 23 on, which we’re really excited to be able to take some of that inefficiency, I should say, from the market back into Current and then back in value to our consumers. [00:56:51][33.1]
Guy Adami: [00:56:54] So the disruption. Maybe this is a tagline. I mean, these companies, they’re not ripping off their customers. They’re just so inefficient that that’s what they need to charge. That’s right. So the president’s right on a number. He’s wrong on the reason here at Current. That’s the value prop right here. They just don’t know what we’re doing there. We know what we’re doing here, don’t it? It’s. It’s crystal clear. [00:57:20][25.9]
Stuart Sopp: [00:57:21] Yeah, that’s right. So this is just natural market forces. I mean, admittedly is from the president, but there are natural market forces that would have come through anyway, namely us. And so we saw this. And again, I’m not trying to be political, but you saw Elizabeth Warren over several years say, hey, banking should be free and there should be no fees. And I was like tagging her on Twitter going, Hey, look at Current, we’ve already done it, you know, so so there are market forces that are there. Technology is deflationary. We are part of that wave. When you think macro and you sit back out, you think, is this the end of the world? It’s not on the long term. There is Chat GPT three, There is the stuff that we’re building out current here that will continue to see productivity gains for various niches in the country, in the world. [00:58:02][41.9]
Dan Nathan: [00:58:03] All right. Well, listen, Stuart, it is our sincere pleasure Gu. And I get to speak to a lot of CEOs, a lot of people who just have their finger on the pulse of markets and stuff like that. Rarely do we have the chance to actually have the combination of an entrepreneur, an operator who’s running a company in a difficult environment, but also have the sort of insights that you do about markets and obviously the economy. And we love being here in Current’s headquarters. We love you coming by and having these chats with us [00:58:29][26.2]
Guy Adami: [00:58:30] And the fact that he looks like you could be the rhythm guitar player for the Allman Brothers just to me just puts him over. So that’s the cherry on top. The whole look, the whole thing. Like you could be out there with Warren Haynes and Dickey Betts and the whole crew of the brothers, and you’d fit right in there. [00:58:46][16.6]
Stuart Sopp: [00:58:46] I wish I could play the guitar. That’s the next challenge. [00:58:48][1.7]
Guy Adami: [00:58:49] Thanks, Stuart. It was a lot of fun. [00:58:50][1.1]
Stuart Sopp: [00:58:50] Thank you. [00:58:51][0.3
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