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On this episode of On The Tape Dan and Danny are joined by Stuart Sopp, CEO of Current, to discuss what the Fed said (2:05), the consumer (5:30), the BOJ intervention (16:15), NYC rents plateauing (19:59), JPMorgan chart on the brink of a breakdown (23:38), turbulence in the markets (23:38), and what the term crypto winter means to Stuart (35:58). Later, Dan and Danny discuss what’s happening in Europe right now (48:23), why you shouldn’t be pressing stocks (51:45), and Danny’s NFL picks (55:22).
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Show Transcript:
Guy Adami: [00:00:00] CME Ad. [00:00:01][0.4]
Dan Nathan: [00:01:19] iConnections Ad. Hello listener you’re listening to on the tape. I am Dan Nathan. I am here with my co-host, Danny Moses. [00:01:26][7.0]
Danny Moses: [00:01:27] By the way, is Guy running in the election on Sunday in Italy? Why isn’t he back yet? What is going on? [00:01:31][4.2]
Dan Nathan: [00:01:31] Do you think, head to head versus Berlusconi [00:01:32][0.9]
Danny Moses: [00:01:35] He would crush him Guy Adami’s an Adonis [00:01:35][0.1]
Dan Nathan: [00:01:36] Yeah. All right. Well, Guy will be back next week, but in his stead, we have Stuart Sopp. He is the CEO and co-founder of Current. He has been a guest on this fine podcast. You’ve also been a guest on okay Computer. Stewart, welcome back on the tape. [00:01:49][12.5]
Stuart Sopp: [00:01:49] Thank you guys for having me. This is awesome. [00:01:51][1.6]
Dan Nathan: [00:01:51] Well, listen, we wanted to have Stewart this week. We planned this a while ago. Stewart is an ex macro trader. He traded globally. You were in what, Singapore? You were in Hong Kong, you were in London. You were last in New York at Morgan Stanley. You were a rates trader. You’re a currency trader, correct? Yep. So we’re going to hit the macro here. But Danny Moses. Yes, we just got to start with this Fed what the Fed said, I mean, what they didn’t say you and I have been doing this a long time. You have not traded actively, Stuart, in a very long time because you watch the markets very, very closely and you run a company that not a bank, but it is not a tech company. [00:02:20][29.2]
Danny Moses: [00:02:21] Thankfully, he’s not a bank because we’ll get to that where these debt sitting on people [00:02:23][2.7]
Dan Nathan: [00:02:24] We will get to that. But the action that we saw, not just in the stock market, in the currency market, in the yield market, commodities of anything which have been crazy actually seem really calm right now. Let’s just talk about we’re recording this Thursday into the close here. One other thing, people. I listen to a lot of podcasts. I listen to every podcast that we do. I listen on one in a quarter. I think we sound really good on one in a quarter. [00:02:45][21.0]
Danny Moses: [00:02:45] I talk pretty fast [00:02:46][0.3]
Dan Nathan: [00:02:46] Let’s talk, let’s talk. So let’s just talk at one in the quarter. Can we do that? Well, let’s, let’s do it. [00:02:51][4.6]
Danny Moses: [00:02:51] Going be one and a half. It was a spinal tap. You put it on 1111. Okay. I want to start out with this one. Watching the press conference yesterday [00:02:57][6.4]
Dan Nathan: [00:02:59] The press what? don’t they call the presser. [00:02:59][0.2]
Danny Moses: [00:02:59] The presser, right? Yeah. In a world where one man throws common sense out the window, enter stagflation. All I could think of when I saw their stupid dot plots again. Like, there’s no common sense here at all. They are taking down GDP and now they’re focused on PC, which is like the one thing you got to look at. But what are we doing? You have to get to 2%. Do you need anyone to tell you that’s happening? Let me just say this. If they had just aired the same way, his quote was, Hope for the best, plan for the worst. He didn’t do that during the transitory period where he was. He did the opposite. He waited and waited. So now he’s completely on the other side. There is no common sense here. I cannot believe that the Fed fund futures were correct, actually going into that meeting of four and a quarter ending at four and a half type number. I still don’t think we get there. Dan? Yes, I’m going to show you the five grand because there are. [00:03:44][44.8]
Dan Nathan: [00:03:44] Yes, you will. [00:03:44][0.4]
Danny Moses: [00:03:45] Not cutting in December. [00:03:46][0.7]
Dan Nathan: [00:03:47] Just so you know that sounds like a trailer for the Avatar movie that’s coming out that no one’s going to see this weekend. [00:03:51][4.1]
Danny Moses: [00:03:51] By the way, we will talk about shorting AMC anymore, but literally, yeah, that’s where you go to the movies for the remake of Avatar anyway, right? [00:03:56][5.2]
Dan Nathan: [00:03:57] Alright Stuart when you’re sitting even at your fine offices in flatiron, you’re running this company. You got a lot of things going on here. But I’m assuming that the old trader, the old macro trader in you is sitting in front of your screens. You’re watching CNBC on a day like yesterday. [00:04:11][13.8]
Stuart Sopp: [00:04:11] Absolutely. Yeah, almost more than that. Is that when you’re running a fintech, not a bank. Yeah, there’s a few moving parts in that. Of course, we have a savings rate. There’s liquidity being drained from the banking. And that’s why the network banking system and that’s why Jamie Dimon is always complaining is like there’s a risk here because for the first time in just over a decade, we’ve seen net deposits come out. And so he’s panicking and the system is panicking on the liquidity of the plumbing. I think that’s fair or at least semi fair. And then I think in terms of how it directly affects us, we’ve got like a VC community investing community and there’s no stability in the crossover funds. The people who just before IPO, you know, go fund those high growth companies all the way down to something like a series A, Series B, and there’s one thing they’re all focused on, and that’s inflation. And the reason why is because inflation affects the rates market, which affects the cost of capital, which affects the price of equities, which affects the public markets comps of the private companies of which we’re in. So it’s a human centipede of excitement that’s coming all the way down here. But it does ultimately affect the VC community, the private company. I mean, and more importantly for us, obviously, the fintech community for all those reasons, the funding reasons, as well as the products we’re offering to our consumers. [00:05:20][68.8]
Danny Moses: [00:05:21] And it’s changed so quickly. Let me just say this. Those are private companies, but I have no sympathy at all for people that own public companies that do not trade on fundamentals because they got what they, you know. [00:05:30][9.8]
Stuart Sopp: [00:05:31] Get what you deserve. [00:05:31][0.4]
Danny Moses: [00:05:32] Yeah got what you deserve. And so sell them like you don’t saying, Oh, we can get into those single names later, but something’s going to break here in the market, right? You can’t have these type of something’s going to break. Things are just feel like they’re cracking by the second. But something’s truly going to break here. I don’t know what that’s going to be. I’d love to get your thoughts on what it’s going to be. We have currencies moving everywhere. There’s just too much. [00:05:50][17.9]
Dan Nathan: [00:05:50] But it’s funny. So Danny has spent a lot of time in the podcast talking about some of like the kinks in the armor over the last year as it relates to consumer. He guy has said this for years and years and he and I’ve been doing fast money for over ten years together. He’s been doing it for 16 years, but he has this saying about the consumer never bet against their want to spend. It really is their ability to spend. And I think some of the things that, Danny, you’ve been highlighting for over a year, some of these models like a carvana model, which to you is just a subprime lending model wrapped up in a used car dealer or something like that. Talk to us a little bit about like. What you’re seeing from the consumer behavior of your users. [00:06:23][32.8]
Stuart Sopp: [00:06:23] Yeah, and very important for us personally at Current, but also maybe a bellwether, an indicator for the broader health of the economy. We’re banking probably the bottom two DSL tracks of America, people who are living paycheck to paycheck, trying to make it work, blue collar workers, primarily it’s inflation and it’s high inflation and they primarily spend on staples. So it’s gas, it’s shelter, it’s food, and that’s not going away. So basically they’re getting less for their money. The demand for credit is massive. We’ve seen that in the credit card numbers that have gone ballistic. We’ve seen it in the BNPL numbers that have gone ballistic. Now the CFB wants to come in and start regulating that as well. I think in the short term we have seen a focus on being smart about your money. So people are going, okay, if I go to this ATM and it charges $5, I’m not going to do that anymore. I’m going to go to the free ATM and we’ve seen that behavior shift. But what we haven’t seen is any cut down or cutback in spend on the things that they actually need, obviously. Right. So and they’re filling the gap with sort of easy, cheap ish debt at this first cut, I think a lot of companies are also well funded. So we’re in this sort of transition phase. We’re in this phase where everyone’s making do and so everyone’s pushing the boats out. And I think there’s a lot of fragility being built this year with our consumers, but also with the broader population. [00:07:33][70.0]
Dan Nathan: [00:07:34] It’s interesting. That’s the consumer. And on the corporate side, like you just said, I mean, corporate balance sheets are in pretty good spots, right? There was a lot of capital raised when money was free for a while. I mean Danny talk a little bit about that because you’ve been harping on these bnpl models and just really what you were seeing, because we started seeing kind of defaults. We started seeing default rates picking up before the markets really felt bad earlier this year or so. And so again, this push and pull between the US consumer that is clearly weakening on the low end. You highlighted this a couple of weeks ago. I mean, Walmart talked about a couple of weeks ago how they’re seeing a new consumer that they haven’t seen a high end consumer trading down a little bit. But are we about to see this in corporate earnings for Q3? When we see them rolled out over the next few weeks, we’ve seen some big preannouncements. We talked about a few of them last week or so. Is this start to seep into the corporates here? [00:08:25][50.5]
Danny Moses: [00:08:25] Well, the first thing is the buy now pay later bnpl, which I called short now cover later at the time, you’re starting to see the upstarts, the world, the affirms, the corners, which is private, raise money at a much lower valuation. There’s no artificial intelligence that works for lending. Vinnie always says, you cannot grow GDP. If you grow GDP over a period of time, you have underwriting problems. So no one’s reinventing the wheel there. So if you’re a consumer, you want to use it great. It’s a great source of capital. If you need it, you can do it. But I don’t believe those companies long term and now the banks that they use, the rent a banks that they use, the cross rivers, the world are pulling back. So now these companies are forced to balance sheet the loans themselves. That’s exactly what happened in the subprimes in 2005 and six when the big banks started to pull the funding from it. So let’s just put that in one category. So what we’re seeing now, behavior of consumer using miles to travel. Right. But someone tweeted at me about how do you reconcile the people going out? I’m like, I think we’re still in the kind of post-COVID celebration mode. Not everyone’s invested in the stock market, right? [00:09:19][53.7]
Dan Nathan: [00:09:19] Most people are not actually [00:09:19][0.0]
Dan Nathan: [00:09:20] People are out enjoying themsleves. Right. And so compared to the last cycles this cycle, every cycle is different, but this one is the most different. And why is it the most different? Because there’s no Fed coming. Rates are going one direction. There’s no incremental buyer, I believe, of assets, of bonds, of equities. Who is the incremental buyer of these things? Everything will have its price will move down. But as far as companies go and how they’re preparing, the good companies are preparing. They’re telling you what’s happening with the consumer. Walmart’s telling you in real time what’s happening with the consumer at FedEx is telling you what’s happening with companies, clients of theirs that’s going on there adjusting. Those are good companies. They’re going to be around. They’re going to be fine. Their quality. [00:09:52][32.1]
Dan Nathan: [00:09:52] But we haven’t seen it yet. That’s kind of the point, is that the thing that’s holding the stock market, the S&P 500, which is only down, what, 21 or so percent on the year, are a handful of stocks. So we just saw Microsoft and Google, which are more than three and a half trillion dollars in market cap. So two of the largest in the top five of the S&P and obviously the NASDAQ, they just made new 52 week lows. But Amazon and Apple, which are also about $4 trillion in market cap, they’re still up 20%. Now, there’s tons of stocks there, dozens and dozens of stocks in the S&P 500 that have been cut in half here. So it is a multiple thing on some of the largest weighted stocks in the major indices. [00:10:28][35.6]
Danny Moses: [00:10:28] It is. Can I back up and go to the Fed again for a second? [00:10:30][1.9]
Dan Nathan: [00:10:31] Yeah, we’re not done [00:10:31][0.4]
Danny Moses: [00:10:33] I think I’m just looking at I’m looking at the dot plot. [00:10:37][3.7]
Dan Nathan: [00:10:37] Okay, let’s do it. [00:10:38][0.7]
Danny Moses: [00:10:38] So I started this show. You started laughing at me 19, 20 months ago when I first mentioned to go whatever, Danny, you know, when and it is absurd because of how they use it. So they are now a GDP growth. So in June they were predicting 1.7% for 2022. They’re .2. Okay. Okay. Hello. For 2023, they were at 1.7. They’re at 1.2 unemployment. Somehow they think we’re only going to end up at 4.4% in 2023 and 24 based on what they’re doing. They’re just f ing clueless like I honestly. [00:11:07][29.6]
Dan Nathan: [00:11:08] Wait 4.4% unemployment off of a three and a half percent low. Do you think that’s low? [00:11:15][6.4]
Danny Moses: [00:11:15] Let me just say this, so in the last 75 years, I think Bank of America put this out today that you cannot have more than half a point increase in unemployment without a recession its never. [00:11:23][7.4]
Dan Nathan: [00:11:23] Rosey said that on our podcast months ago [00:11:25][1.5]
Danny Moses: [00:11:26] No but it’s asinine. My whole point is that why do you have to? And listen, I don’t necessarily I’m not bullish but at the same time common sense. Why do you have to hammer? Why can’t you just go 50? Why can’t you just take a pause? What’s the risk? I know what they think the risk is. They think it’s a wage price spiral that he was so excited to have credibility yesterday when anyone asked him a question, if you noticed, he would look down at his notes to answer certain questions like he would look down. I am as hawkish as I was in Jackson Hole. Make no mistake, I’m going to be here to do this. But something’s going to break here. Right. And let me just say this. I’m not a fan of economists in general because whatever. But the last non economist who run the Fed, he’s not an economist and guy if you’re not going to listen to so it doesn’t matter. But he is a Georgetown graduate degree. He’s a law degree from Georgetown. So that’s great. Princeton undergrad, right. But [00:12:09][43.0]
Dan Nathan: [00:12:09] Who Jay Powell? [00:12:10][0.4]
Danny Moses: [00:12:11] Yeah, smart guy, but not an economist. The lost non economist was replaced by Paul Volcker. Right? 1978 to 99. William G. William Miller. [00:12:17][6.6]
Dan Nathan: [00:12:18] William Miller, the protagonist and almost famous. [00:12:20][1.7]
Danny Moses: [00:12:21] Exactly. [00:12:21][0.0]
Dan Nathan: [00:12:22] I’m flying high over Wall Street with America’s hottest podcasters, and we’re all about to die. [00:12:26][4.6]
Danny Moses: [00:12:27] That’s perfect. Exactly. Right, right. That’s pretty good. [00:12:29][1.8]
Dan Nathan: [00:12:29] If you follow @SoppStu on the Twitter, he doesn’t have any, like, weird numbers,. He doesn’t have Walter Payton’s number after there. But you are a Fed critic. [00:12:39][10.6]
Stuart Sopp: [00:12:43] A little bit. I’m in good company. [00:12:43][0.2]
Dan Nathan: [00:12:44] Look through the Twitter there. There’s a lot there. What was your takeaway? And Danny made the point, okay, the policy errors were made in 2021. They kept their foot on the pedal for way too long and then the transitory nonsense, whatever, but now the aggressiveness. And really at this point, we’ve seen the stock market rollover, we’ve seen housing start to weaken. It feels like it’s going to get a lot weaker. So we won’t have that negative wealth effect for consumers. The last piece of the puzzle is that unemployment rate. That’s why I kind of stopped you on that 4.4%, because I’ve seen a lot of strategists say, listen, if they keep going to four and a half percent in Fed funds, we’re going to have high single digits. And that’s without a crisis. Think about the last two times that we had high single digits. Unemployment was the financial crisis and then the black swan event, which was the pandemic. So where should unemployment be? And this is really important pre-pandemic. You remember we were talking about things like universal basic income because the bots, the machines were going to take all the low end jobs. Well, the low end is where the wage increases have come. So I’m curious how you think about that. What are your major criticisms of the Fed right here right now and what they’re expected to do between now and the end of the year? And then this unemployment thing, I think is a really important piece of the puzzle. [00:13:54][70.7]
Stuart Sopp: [00:13:55] Yeah, right on. I think the Fed dare I said the Fed is political. I think everything’s political now. And the reason why I say I can back it up because Jay Powell basically held his foot off the gas while he got renominated back in December last year. And then all of a sudden, inflation wasn’t a problem until he got his renomination. And then he came clean once he got it and said, actually, we’ve got to get going. And so it was a political problem for, you know, this is the function of [00:14:18][23.0]
Dan Nathan: [00:14:19] So quick one, the next Fed meeting is November 2nd, exactly one week before the midterms. Do you think is there a chance that they basically get a little dovish? I mean, I’m not saying, you know, percent. Do you think so? [00:14:29][10.6]
Stuart Sopp: [00:14:30] Hundred percent they’ll talk it. They won’t do it. Maybe they’ll talk it. Everything’s got out of control. I think Stan Druckenmiller said that. And it’s one of his stats that when inflation crosses 5%, we have never seen a Fed funds rate that hasn’t gone above it. So you going to have to hope that it comes down to four. You’re talking about things breaking. We’re not pricing out some really bad things happening here. They’re not coming to save us if their primary mandate, they’ve got dual mandate. So they’ve got the inflation mandate, which is primary, in my view. And then on unemployment, full employment, they’re going to kill employment. They’ve already said they would over inflation. So they just going to keep going until they get it under control. And also, when you talk to economists, the smart guys, these central bankers and the rest, they kind of really don’t know how inflation works, right? They still kind of don’t know. And so they’re playing with the system. And so hopefully it’s about now, maybe it’s done now and maybe the next 75 or 125 is too much and they can unwind it quickly. But we just don’t know. And I think the uncertainty going into it from this point on, from this hike on this is where I get really, really scared and uncertain. This is the most dangerous part, I think. [00:15:29][59.6]
Danny Moses: [00:15:30] I agree. And I would say this like I’m not going to waste any more emotions like hating on this is what it is. I’m going to adjust to what they’re doing. Yeah, I’m going to let fundamentals play out long. You’re going to be right in the longer term, you have to deal with this volatility. So I’m not looking for them to panacea. I’m not looking for anything to happen. So what am I going to do now? I believe we’ll talk about this later, that the long term yields for the U.S. are close to peaking here. And now, if they’re not, I’m still willing to buy them here knowing that I think they’re going to come down here. [00:15:56][26.4]
Dan Nathan: [00:15:56] So high treasuries, short yields really quickly for the listener. And again, just, you know, I mean, I’ve done that. I bought the GOVT. It’s the iShares U.S. Treasury ETF. So if you’re buying that, you’re making a bet that yields come down. Another way to do it would be the TLT. You and I talked about it on a market call earlier in the week. Yes, the TLT is the 20 year U.S. Treasury ETF. So you want to be careful here because those kind of near-term rates might stay well bid, but the long term ones. Reflective of growth or slowing growth are the ones that are probably going to come in first that. Danny, I just got to ask you this, though, because we just saw the ten year U.S. Treasury yield breakout above that prior high from a few months ago, a three and a half percent. And it broke out in a meaningful way in my buddy B.K. Brian Kelly from Fast Money was talking about this on our call earlier today, the BOJ intervention and what we’re seeing now. Talk a little bit about that because that changes the complexity. Talk about what it means when you have these central banks selling U.S. treasuries. [00:16:49][52.4]
Danny Moses: [00:16:49] Well, for the first time since 1988, BOJ is actually intervening and buying the yen. That’s the first time. Now their entire reserves is just over $2 trillion, I believe. So. I think the world global currency trading is 6 trillion a day. So they have a little bit to fight for, but not a ton. So I think the yen went from 145 to 140. I don’t know where it’s sitting now. Does that thing weakens again? Weakens when it goes higher for everyone out there. If it goes back to 145, 146, again, these are the things that could break in the system. But you have everyone around the world. Not everybody, not China, not Japan raising rates, except for them, basically. And so all the other currencies are getting dismantled. Japan imports basically everything. [00:17:25][36.2]
Stuart Sopp: [00:17:26] All their fuel. [00:17:27][0.4]
Danny Moses: [00:17:27] Food, their energy, everything. So they’re at this point. Now, Kuroda, who runs Bank of Japan, came out yesterday and said we’re not raising rates, but then today they come out. So it’s a lot of talk, it’s a lot of whatever. But that’s what scares me, is once you get an announcement like that, if it doesn’t work and doesn’t hold, this is where things can possibly be. [00:17:43][15.7]
Dan Nathan: [00:17:43] Right and just really the knock on effect when you see the ten year breakout like that, what was the knee jerk reaction? The futures got nailed. This is pre-opening when that headline came out. So U.S. stock futures, that is. [00:17:53][9.8]
Stuart Sopp: [00:17:53] I think we’re entering this zone where the market has this recursive or reflexive feedback loops centered around exceptional breaks and dislocations in asset classes and the relative correlations to them, and something like a Kuroda and a Bank of Japan saying, Hey, actually we can’t afford our fuel anymore. And to heat housing, we’re an export nation. Also export a bunch of cool stuff like. [00:18:14][20.5]
Dan Nathan: [00:18:14] Walkmans and stuff like that. [00:18:15][1.0]
Stuart Sopp: [00:18:15] Yeah, like Toyota’s and stuff. Yeah. [00:18:17][1.6]
Dan Nathan: [00:18:18] That was a guy’s joke. Sorry about the dad joke. [00:18:20][1.9]
Stuart Sopp: [00:18:21] Okay, okay. Casio watches or whatever they do. But on balance, they’re just saying this is terrible for us, but can they really plug that hole? And so I was on this podcast a few months ago and I said, Look, watch out for the dollar wrecking ball. We’ll see 3600 on the S&P. And here we are. [00:18:33][12.8]
Dan Nathan: [00:18:34] We kinda nailed it. [00:18:34][0.7]
Stuart Sopp: [00:18:35] We kinda nailed it and that can’t be good. What I do think is we’ve already seen that bear market rally. We’re going to 2900. We’re going to I think we’re going to overcrowd. Yeah I think we now over I don’t think it’s a straight line so don’t go out there and buy puts. Yeah. Because you look at the VIX, VIX isn’t moving because everyone’s buying puts. It’s like the world’s most amount of buying a put so so yeah that’s not the. [00:18:54][18.4]
Dan Nathan: [00:18:54] Wait to your point is the smart money has it right hedge funds are all beared up. That’s one of the things that’s really interesting. Danny, you see these I, you know, these kind of bubble sentiment sort of things. And they’re reaching heights back till 2008 levels. But you have a VIX that just stuck out here at like 25, 26, 27 or something like that. So the smart money and I’m doing air quotes here, people, you can’t see me, they’re already hedged up. [00:19:17][23.4]
Danny Moses: [00:19:18] It all comes down to leverage. It comes down to leverage on the corporate market. On the hedge funds. And when you take leverage down and you degrowth it has a very destabilizing impact on the markets and you have these type of moves in the S&P and other assets that you see. The one thing was interesting that the Fed did say was asked point blank about would you actually go outright and sell mortgage backed securities? And it was actually very ready for that question was, nope, not going to do it, nope, nope, not going to do it. But at the same time, he said until he sees rents come down, he’s not going to assume that rents are going to come down. As far as shelter costs go, my whole point is that common sense tells you that with rates up here that housing is slowing and it’s going to have [00:19:52][34.0]
Dan Nathan: [00:19:53] With housing though price isn’t coming down. And rates obviously, mortgage rates, the 30 year above 6% doesn’t only mean that rents are going to go up the demand for rent. And that’s something that that’s your backyard as far as your consumer a little bit. [00:20:02][9.3]
Stuart Sopp: [00:20:02] Exactly right. Yeah. So a large percentage of our consumers are renters. We focus on a younger demographic they’re trying to save to get into housing, but they’re at the stage where they’re primarily renting, seeing much more pain. I think what’s going to happen is more transitions for going back home, living with the parents, trying to share with the friends, all those things. [00:20:18][16.3]
Danny Moses: [00:20:19] So let’s talk about New York rent. I realize that there’s other cities in the country. I realize that, you know, Seattle, L.A., Miami, Florida is its own thing. And we’ve been talking about this on the show for a year over year. The housing thing has been very secular where it’s been. Right. It’s been very people moving to Florida. There’s a secular move there, etc.. We know that New York, you can pretend. Yeah, Google’s here. Yes. Tech companies have come. At the end of the day, it’s Wall Street that drives it is that’s what drives the commercial real estate. It drives the residential real estate where you start to see things like Citrix debt getting hung and an 800 700 human to write down and billions more behind it on several other deals. That’s common sense to me. So there’s an article actually today in the Times of the Journal about New York rentals have finally plateaued. And I’ve always said how Wall Street centric some of these investors are in Boston, in New York. They only see what’s going on around them. Those are the people that are managing the money. They don’t tend to take a broader picture. And when it hits home and that’s why it took so long in 2005 and 2006 to seep into people because it was the last cities to really get hit. They weren’t paying attention what was going on in middle America. Is my life changing. [00:21:19][59.9]
Dan Nathan: [00:21:20] We saw you in the strip bar in the movie the big short. Oh we did. [00:21:23][3.1]
Danny Moses: [00:21:23] I did see. Yeah. You know what they said in there. What? Let’s welcome Dan Nathan. Front page of Dan Nathan. Happy birthday. [00:21:29][5.4]
Dan Nathan: [00:21:29] No, no. But that’s a really that’s a you made this point a lot. And I think it’s interesting because Guy and I, we’ve been sitting on a set in midtown Manhattan in Times Square, talking about markets, talking about the economy from that very perch that you’re talking about. And sometimes that’s where all the strategists, all the economists that we’re all the hedge fund guy for the most part. And we all tend to look and see what’s exactly in our backyard. I want to go back to Stuart’s 2900, not in a straight line and not investment advice, but as he says. So Danny, you were saying things that you are doing, so you’re interested in TLT So you’re interested in making or expressing a view that U.S. Treasury yields are going to come in. What’s your time horizon on that? Let’s say the ten year that just broke out at three and a half, if it were get, it was a two and a half, three months ago. [00:22:11][41.9]
Danny Moses: [00:22:12] Yup I think over the next month I think we’ll see that high here [00:22:14][1.7]
Dan Nathan: [00:22:15] Could it be though could be into this political dovish commentary. On November 2nd, there’ll be a trial balloon floated in the Wall Street Journal. That’s how this happens. And then you’ll see yields peak out. You’ll see the dollar, the U.S. dollar come in a little bit. Right. Okay. Maybe back to trend. What else you got, Danny? [00:22:31][15.5]
Danny Moses: [00:22:31] Let me ask you a question. What economic data point could possibly come out now that could create any more hawkishness that is existing? I don’t think [00:22:38][6.8]
Dan Nathan: [00:22:38] Well, the CPI, PC be like, oh. [00:22:40][1.8]
Danny Moses: [00:22:40] But I’m saying on a relative basis to this terminal value where, where they think rates are going to be like to me that’s kind of done. So if I think about it that way, I don’t think they can get any more hawkish. So now what’s going to happen? We are going to have so many dirty Friday night dirties coming out on bond. It’s going to start this Friday, I would think into the quarter going into the holiday week, eight Days of Atonement, which I’m first in line to atone for a lot of things. A lot of. [00:23:03][22.7]
Dan Nathan: [00:23:03] Wait which holiday are we selling and what do we buying. You can just be really quick because I just Stuart doesn’t seem to be in tune with you know people are trading strategies. [00:23:12][9.0]
Danny Moses: [00:23:13] But my point is that but my point is that now’s the time, right? Lay it out there, give your preannouncement out and said it. So what I’m saying is I think fundamentals again will win in the end of the day. And so I’m confident that over time we’ll start to obsess on the Fed. We can be angry and whatever and think they’re wrong, but it is what it is. They’ve given you the setup and now we know you look at companies that have a lot of debt on their balance sheet. You look at companies that you have to refinance, you look at deals that are out there that are getting hung, you know, hundreds of billions. [00:23:37][24.2]
Dan Nathan: [00:23:37] Alright so deals getting hung. Can I break in here for a second? Okay. Again, you worked at a few investment banks and [00:23:42][4.4]
Danny Moses: [00:23:42] Explain to the audience what I mean when I say deals get well. [00:23:44][1.7]
Dan Nathan: [00:23:44] I mean, so basically a lot of these banks committed a lot of capital for LBOs or private equity deals or whatever. And now they’re trying to like re cut them taking losses basically because. [00:23:52][7.9]
Danny Moses: [00:23:53] Not just taking losses, balance sheet ing the loans themselves. [00:23:55][2.1]
Dan Nathan: [00:23:56] Correct so they were warehousing with them. Exactly. All right. So here’s one thing. It’s really interesting. Look at JPMorgan. I harp on this a lot. This stock is down nearly 28% on the year. It’s the worst acting major U.S. bank. So that’s a large money center on a relative basis. Wells and Citi and Bank act much better. That’s just over this last period or whatever this chart is about to break down. 110 is a level here. Stu, put your hat on here. Look at my fine FactSet chart here. [00:24:21][24.8]
Stuart Sopp: [00:24:21] You don’t have enough candlesticks on here. Hold on. Not enough to. [00:24:23][2.5]
Dan Nathan: [00:24:24] See that gap going back to late 2020 here. Okay. That’s a gap down to 105 is coming in a theater near you, what does that mean, to you, if the largest bank of the world and they haven’t had any charge off, they haven’t. There’s no GFC stuff going on here. Right Danny, you’ve been saying this, the banks are well capitalized, good shape. Why does this bank act so bad? [00:24:45][20.8]
Danny Moses: [00:24:45] Because I say when you look at the XLF, stop trading ETFs and look it like every bank is. [00:24:50][5.1]
Dan Nathan: [00:24:50] You don’t like the fact the largest holdings Berkshire Hathaway in the XLF. [00:24:52][2.0]
Danny Moses: [00:24:53] That’s you should just own that I mean you want to own in a rising rate environment they you know they’re for they own energy that’s the whole point. Then it’s like go buy Berkshire. Yeah, the Wall Street banks are different than. So Wells Fargo. Yes, they have some Wall Street aspects, but they’re a consumer bank. Bank of America who got hung on the Citrix deal. Goldman Sachs got hung on the Citrix. So we know what’s in that. So what are the earnings going to look like? So the debt issuance money’s been free now for it’s not free anymore. Money was free for 12 years, like it’s not free anymore. So everything changes. That whole readjustment of people understanding what that looks like, loan loss reserves on the consumer side of a bank right write offs on the corporate side of a bank. What that means Stewart’s going to see firsthand some of the smaller private companies that will get funding. Yeah, but if they didn’t model it correctly, they’re going back and rebuilding their models based upon our discount rate. We’re in a new, new. And that’s what we have to kind of adjust down to. So I like to look at these things on the banks overall, but then you got to do bottom up on each of them. And again, when the S&P does go to 2900 and I’m with you, I think it gets near 3000 and yeah. Arizona or point the other side. What do you want to own when they throw everything out of there. Right. Coming back and that’s what I think is important right now to understand. [00:25:54][60.5]
Stuart Sopp: [00:25:54] Yeah, I think it’s important to look at what is leading from a low say we’re right 2900s of 3300 somewhere there. Don’t come ready. But we’re right. [00:26:02][7.8]
Dan Nathan: [00:26:02] You’re not wrong. [00:26:05][2.7]
Stuart Sopp: [00:26:06] But yeah, but it’s important to look at what leads out of that. You know, it’s old equity trading theory, right? So if it’s defensive or energy or anything like that, it’s like, all right, maybe not. We just throw on this bull trap rally. I’d want to see some high tech come out and some of the bigger techs before. First. You’ve already mentioned it. As we said in this hour, you’ve got to see some of these generals, these big tech companies, layoffs. They’ve got to do something now. What I heard is they have a 13% attrition per annum. And so at the moment, in their mind, what they’re trying to do is say, hey, we’re just not going to replace. So we’ll see a 30% contraction and we’ll do this for about a year and a half. We have a 20% effective reduction in force by not actually doing anything and pissing anyone off. And so they’re not really hiring. Of course, they’ll have certain people, but they’re not really hiring broad based. And so that’s their mindset right now. Now, if the Fed pushes everyone out and this Dovish thing in the next couple of weeks doesn’t really work and stick, I think they’re going to have to capitulate into the new year and start maybe actually removing some people. And that’s when they’re doing it, because the earnings, that’s all the dirty stuff that you’re talking about. They’re going to have to reprice some of these big large cap equities, Apple and the rest of it. Then we start to see that slide into the low and then you want to see how they behave from this. [00:27:10][64.4]
Dan Nathan: [00:27:10] And we know the way markets work. I mean, they will move ahead of those actual events happening. And so, again, I do think that in this late October period with Q3 earnings and Q4 guidance, I think there’s going to be a couple bombshells. I think it might be a microsoft I’m not exactly sure. But if you look at like a Meta which just announced that they are going to do a rif, for all intents and purposes, 10% of their workforce. Some people would say after the hiring, they had headcount growth of north of 20% a year for like a couple of years or something. They probably have more to go. It just seems like a lot of those massive hires over the last few years or so, we’re going to see that coming. And again, if you can’t control a lot of the other input costs and you’re starting to see weakening demand, the one thing you could do is lower your headcount a bit. And so to me, I think the stock market has a chance of capitulating. The pre-pandemic high was 3430. Yeah. So maybe we overshoot it to your point in a little bit. [00:28:03][52.4]
Danny Moses: [00:28:03] Yeah, but this time of year is always a little bit dicey. [00:28:05][1.8]
Dan Nathan: [00:28:05] So let me ask you this, Danny, because I’m looking at in Stuart, we had a fireside chat. I was in your offices earlier in the week. [00:28:10][5.1]
Stuart Sopp: [00:28:10] Thanks for coming. [00:28:11][0.3]
Dan Nathan: [00:28:11] Yeah, no, it was awesome and it was great to meet. I know a lot of your team, but it was great to meet a lot of the people who work there and some of the questions that they had. And one of the points that I wanted to make is that a lot of people who are working hard, they have their heads down. They, you know, they have their jobs and they have their families and they’re doing the stuff that they do. They look at the stock market as a monolith. They think of the S&P 500. Some people are still quoting the Dow. I don’t know why. And so people, if you’re in tech, you may be just focused on the Nasdaq. And if you look at those major indices, there are dozens and dozens of stocks that have crashed like for all intents and purposes are down 70, 80%. They feel like October 2002, if you had bought Internet stocks into that. But they’re probably sitting around, well, it feels really bad because I bought the stock because my pal worked over there or this there or whatever, and it’s down 80%. But why is it that the stock market’s only down 21% or something like that? And so I think that’s a really good point, is that it’s only going to take a handful of stocks to really let us know to ring the bell that we might have capitulation. Is that fair? [00:29:08][56.6]
Danny Moses: [00:29:08] Yeah, I agree. And we talked about this before. If your shorts are working and you find yourself owning a lot more of these, quote, high quality companies, the commanders, the captains, whatever you want to call them that are out there, you realize that you actually have to start taking them down because they actually become bigger. The way math works, they should become bigger as a percentage your portfolio. So it’s not that they’re not good companies. But again, I want to say one more thing on this Citrix deal, because I think it encompasses everything that happened. It was a $16 billion LBO they were taking it private, just over a hundred bucks a share. They announced it in January. So in January, if you remember, like we hadn’t raised rates yet. [00:29:41][33.4]
Dan Nathan: [00:29:42] You know, it also happened in January Microsoft paid $70 billion for activist. [00:29:46][3.9]
Danny Moses: [00:29:46] Where’s Barry Diller? But don’t get me out of that. [00:29:48][1.8]
Dan Nathan: [00:29:49] Options trading in front of that? [00:29:51][2.2]
Danny Moses: [00:29:53] He’s a prolific options trader. [00:29:53][0.5]
Dan Nathan: [00:29:54] Well, there was also and there was Tomo Brava, a PE firm. They were buying software companies at big multiples. Well, here’s the thing. Adobe just paid and we talked about $20 billion. You know, for a company, it’s still happening. [00:30:04][10.7]
Danny Moses: [00:30:05] No I know. But there’s one thing to do it with debt and nothing to do with stock and cash for the whole new year. So anyway, the debt was eight and half billion of debt, which is going to be brought in. So she’s it’s the debt got priced at $0.91 on one tranche and $0.84 on another six or 7 million with the banks themselves taking down the majority of it. And Elliott, who was the leader of the LBO on Citrix, taking $1,000,000,000 themselves. Vista, I don’t think, took anywhere. They were partners with them as well. But when you think about that, to me it encompasses, okay, money was free. You can get away with those deals. Those deals are gone. There is a price for a deal, but it doesn’t exist there because now with rates where they are and a company’s cash flowing, that’s great. But the numbers all change and that’s the whole point about repricing risk when rates move higher. It’s that simple. It’s just math. And so that’s why Stuart is right on 2900, or close, because the rerating is going to happen. People are going to realize it’s not a quick cycle, it’s a secular move here. We’re out of a 12, 13 year phenomenon and the Fed is actually selling treasuries. Right. But that being said, we’re going to invert more. And I do believe I’m a buyer of the ten, the 20 year bonds, two year. It’s going to be tough to move right now until the Fed actually does have a pivot, given it’s still catching up to where it might go. But the higher the chair goes, the more certain I am that the ten year yields are going to drop, because the more certain I am of funding costs and what that’s going to do. Right, Stuart. So, I mean, your thoughts on that? I mean, is that logical? Nothing in this market is logical, but. [00:31:23][78.2]
Stuart Sopp: [00:31:23] It was unfair on the way up and it was unfair on the way down. So someone said to me the other day, when there’s free money, you get paid for future cash flow returns. Then when there’s a cost of money or a decent cost of money, you get paid for cash flow returns today. And so everyone’s got defensive and they’ve had to rewrite their models, like you said. And so this is a massive digestion problem whereby we’re just really swallowing, swallowing it here. And I think the Fed, we’ve already said it a couple of times, the Fed is on the wrong side of this trade, and it’s the first time we’ve had a policy error for a long time. Then we have globalization, we have macro events. We’ve had an oil shock plus a potential nuclear war in Europe on the doorstep of Europe. And so I’m sure that Ukraine that’s going stuffs European now. Yeah, yeah, it’s probably Europe and so we just not seen the confluence of these factors while ever right. And so everyone’s looking at things going, they’re just not being frightful enough. They’re being conditioned in the way that things will just V-shape and be fine. And I think it’s worth selling fear and all the rest. It’s just worth thinking. Okay, maybe it isn’t just perfectly fine. We should prepare for some of these deeper retracements. [00:32:23][59.2]
Danny Moses: [00:32:23] I agree with you. When you have peas that were trading north of 20 price earnings multiple on the S&P, we’re drifting now in the high teens Dan I don’t know where we sit right now on 22 numbers. Exactly, 17 times, probably not four 12. And you’re saying all that was predicated on rates being kind of low because you’d have to go back and look and I don’t have in front of me, Dan, you could probably get to it, but when rates were this high, what was the p e multiple on the S&P? What does it look like? And I know it’s going lower. So the question is, when do we get to the cycle where we build all of this in where companies have adjusted their business models, where the consumer’s kind of. Okay. And to your point, Stuart, it’s probably in 23 at some point. [00:32:58][35.0]
Stuart Sopp: [00:32:59] Q2, Q3. [00:32:59][0.4]
Danny Moses: [00:33:00] I think. Right. So when you start to look at what that trough maybe that’s the trough earnings because the Fed, as we know, probably cutting sooner than we think. But that’s another bet down for another day. But that’s coming. They’ll start to advance on lower say, okay, you’ll pay a premium multiple when you think you have the trough earnings, but I don’t believe we’re anywhere. So just to keep it general, if we’re 215 or $220 per share on the S&P 500 or somewhere in that realm, I believe we make it towards the 200 level. I believe we get to a height of mid-teens, 14 or 15 multiple, which is where you get your 2800 to 3000. And from there, we’ve got to see how this thing plays out. But to your point factor in all the geopolitical stuff going on, I can’t remember a time when I’ve been an adult where things have been worse or more unsettled. That’s the other problem here. And so there’s a lot of things you have to wait. Yes. Professional investors get paid to put money in the market. They get paid to allocate overweight certain sectors. Then there’s retail and then there’s hedge funds. It’s everybody else. So everybody has a different angle on where we’re going. So, you know, it’s interesting. [00:33:52][52.6]
Dan Nathan: [00:33:53] You know its interesting I always think that Tim Cook or Satya Nadella,. [00:33:55][2.2]
Stuart Sopp: [00:33:58] Tim Apple. [00:33:58][0.0]
Dan Nathan: [00:33:58] I think that they would almost be doing Jay Powell a big favor with like a material guide down for like next quarter [00:34:05][7.2]
Danny Moses: [00:34:07] But Dan we already tried that, Oh because it’s everyone owns it [00:34:08][0.9]
Dan Nathan: [00:34:09] What I’m saying because passive and you like to you know talk about that think about how many ETF funds or how the. [00:34:14][4.7]
Stuart Sopp: [00:34:14] Mike Green professor plum situation where it’ll just unwind one day. [00:34:18][3.7]
Dan Nathan: [00:34:18] Well I mean but think about if they were to like just reset the stage. That’s how you get that S&P multiple down to mid to low teens and then you’re doing the favor on the stock market. Housing is going to do what it is. It gives them a path forward to take their pedal off the metal a little bit, in my opinion. [00:34:33][15.2]
Danny Moses: [00:34:34] Listen, there’s a lot of Fed experts out there that have worked at the New York Fed that understand the plumbing of the system. I won’t get wonky here, but something’s going to break here because Stuart brought up a point here at the very beginning about deposit rates have to start to move higher. People will start to pull money out of the banking system. That has repercussions. You don’t think about it that way. But when you leave the deposits and there’s right in cash leave so something might break in the reverse repo market. That’s Guy’s favorite thing. He won’t listen to this. He won’t remember it. But [00:35:00][26.7]
Dan Nathan: [00:35:01] Say whatever you want. [00:35:01][0.1]
Danny Moses: [00:35:01] Something is going to happen there. That may be where it ends up happening. Right? Because you’re just going to have just a crazy volatility right now, an uncertainty going on. And so I don’t know if that’s what it’s going to do to your thoughts. [00:35:10][9.1]
Stuart Sopp: [00:35:11] It’s so hard to know what’s going to break, isn’t it? And I’m probably in my most uncertain stage of this secular bear that we’re seeing. Also on the positive side, I don’t think it’s over is important to remember. I don’t think this is over for the world or over for America. I think there’s a repricing for assets. It’s a deflation of these things. We spent too long pumping them up. I think it’s actually relatively healthy because whoever’s left, it’s going to be great. So I think that’s important to remember in terms of what shoes going to drop this so many. I think the banking system is one of them, but they’re normally pretty healthy because of those capital ratios significantly different. [00:35:41][30.3]
Danny Moses: [00:35:42] Although they’re now getting eaten by LBO debt. But. Yes, yeah. [00:35:44][2.3]
Stuart Sopp: [00:35:45] Right. Yeah. Yeah, that’s that’s a good point. And so what you look at Goldman Marcus, great conflation of consumer and Wall Street stuff, and they came out with billions of dollars of losses on both sides. [00:35:55][10.2]
Danny Moses: [00:35:55] Well, let me say, Dan, before you go, and I’m only going to talk about meme stocks for 2 seconds. Go ahead. 5 seconds. I know I always say I use them as a barometer. People, please listen to me. If you think Bed, Bath and Beyond is getting debt done at any price, that’s reasonable, do you really believe it? So those models. Yeah, you can do either traded if I just get my money back, sell it. Yeah, sell it. [00:36:15][19.7]
Dan Nathan: [00:36:15] All right. So so we’ve seen. [00:36:16][0.8]
Danny Moses: [00:36:16] Not even a nominal. [00:36:17][0.4]
Dan Nathan: [00:36:17] But this is a good segway. Okay. This is the last point. We’re going to let Stuart get out of here. We’ve seen meme stock gets killed. We’ve seen SPACs get killed. We’ve seen crypto get killed. We’ve seen NFTs and that stuff is done. It’s over for now. Stuart and I have had some really good conversations on crypto, his origins. He and his co-founder, Trevor Marshall, they go back, they read the Bitcoin whitepaper when they were still trading currencies at Morgan Stanley in 2011. You know, so 11 years ago, these guys, they believe in a lot of stuff. Danny has been a critic of a lot of it. You’ve acknowledged that there’s stuff there. You don’t go from nothing to $1,000,000,000,000 in market cap and then all the VC capital and the stuff that’s being built around the ecosystem and at its highs, it was what, two or 3 trillion or something like that. Now we’re below a trillion. So talk to us a little bit how you’re thinking about it, because again, you’re there. But what does the term crypto winter mean to you? [00:37:08][51.3]
Stuart Sopp: [00:37:09] I’ve seen a few of them now, so typically Bitcoin. I’ll just talk about that briefly. We had the ethereum emerge. Yep. So like yeah, that was that. So by the rumor sell the fact that’s another, another. Good. [00:37:19][9.9]
Dan Nathan: [00:37:19] So just so Trevor is going to be on okay computer early next week we’re going to talk about the merge. [00:37:23][3.4]
Stuart Sopp: [00:37:23] Okay, great. So I won’t say anything else so spoiled by this point. You know, bitcoin to me, I think it went through a few things in my mind, which was, hey, it’s a payment thing, it’s new money. And I think we all settled on digital gold and I think that’s where we’ve come out at. [00:37:37][14.5]
Dan Nathan: [00:37:38] Does it bother you that, like, real gold is is in the shitter? [00:37:41][2.3]
Stuart Sopp: [00:37:41] Not really. I mean, I’m long, some. [00:37:43][1.4]
Danny Moses: [00:37:43] High five [00:37:43][0.0]
Stuart Sopp: [00:37:46] Yeah yeah. I also a minus which is stupid but yeah but I do [00:37:50][4.1]
Dan Nathan: [00:37:52] What’s your address [00:37:53][0.3]
Stuart Sopp: [00:37:53] I’m not telling. And I just think go. [00:37:57][4.0]
Dan Nathan: [00:37:58] It’s actually not worth it for me to like kind of like you. [00:38:00][2.5]
Stuart Sopp: [00:38:00] You’re rich you’re so rich [00:38:01][0.4]
Dan Nathan: [00:38:01] No no at this point. Where is it Danny at 1500 or six [00:38:04][2.5]
Stuart Sopp: [00:38:08] No, it’s right back. [00:38:09][1.3]
Dan Nathan: [00:38:10] So gold miners. [00:38:11][0.7]
Stuart Sopp: [00:38:11] What I was trying to say is Bitcoin is a dollar debasement hedge. It’s not an inflation hedge. It’s not. [00:38:18][6.2]
Danny Moses: [00:38:19] People thought it was. Were you one of the people that thought it was [00:38:21][1.9]
Stuart Sopp: [00:38:21] Never did. Okay. So because I was a currency trader, so I know the thing. Yeah. Okay. So basically what it was was free money, dollars going to zero. We’re re rating the dollar rate. So was. [00:38:31][10.3]
Danny Moses: [00:38:31] The Fed prints, the Fed. [00:38:32][0.7]
Stuart Sopp: [00:38:32] The Fed Printing Yes. Yeah. And so when we monetize it, in theory, after this dollar rally is over, in theory, it depends on what everyone else is doing. The dollar should crash. It should crash at some stage, like a lot, go down to $0.60 from like 110 and 120 wherever we end up. And so that’s what Bitcoin is right now. Look, it can be other things later on in the recipe, but I think that’s what it’s primary uses. So until we finish raising, until we’ve finished killing inflation, it’s really hard for Bitcoin to rally much more than a bear market rally. I think yeah, maybe everyone talking 13, 12, 13. Okay, it’s just positioning. And so we’ll pop to 25 again or 28. [00:39:05][32.6]
Danny Moses: [00:39:05] But what does that mean, 12 or 13 K on A So it goes down from a 350 billion market cap down to 190. What does that mean what I’m saying? So can you put a value, you know, can you put a value on. I’m at this serious question. [00:39:17][11.2]
Stuart Sopp: [00:39:17] Yeah. So I think when I started in the Bitcoin game all those years ago, the main thesis was and it got perverted over time was that gold was like 5 trillion at the time [00:39:27][10.0]
Dan Nathan: [00:39:27] And went to ten, [00:39:28][0.1]
Stuart Sopp: [00:39:29] Of the time. But then right so 2011, 2012 and the theory was like, look, this could displace some of that market cap. And so could it be like a three or 4 trillion market cap asset and digital gold? And look, we got pretty close on this bull market wave up, but I don’t think we’re going back there until we have some of the same dynamics. So on the way down, I think 13 K Sure. But like I think where you’re trying to go with it is why not further, right? [00:39:53][24.2]
Danny Moses: [00:39:54] Why not. You know, I think five, k, ten and 15k. [00:39:57][2.9]
Stuart Sopp: [00:39:57] To be honest, there is no good answer other than I think the Bitcoin community tends to not be shaken out of those longs. So you would need like people to go short and to borrow to really drill it through this. [00:40:07][10.1]
Danny Moses: [00:40:07] So when I look at ethereum and again I’m not pretend I was never bullish on I’m I’m not the guy that says I told you so at all. I believe that because it’s out of my element. But if I think of ethereum right here is $160 billion company. There’s actually applications and things being built to use it. Bitcoin’s not there’s nothing really being done right. [00:40:24][16.7]
Stuart Sopp: [00:40:25] You talk about utility and value. The utility and value of bitcoin is digital gold, meaning in countries and places where their currencies have been debased like Argentina. Or you need to leave Russia because you don’t want to [00:40:35][10.1]
Danny Moses: [00:40:35] The whole reason of it started was money laundering and back. And you know what, Silk Road. No, I’m. [00:40:41][5.6]
Dan Nathan: [00:40:41] One of the first use cases, that’s a use case. [00:40:45][3.6]
Stuart Sopp: [00:40:45] The Internet was porn. I mean, like, yeah. [00:40:47][1.6]
Danny Moses: [00:40:47] No, but that’s great. You know, Bill, whatever. [00:40:48][1.4]
Dan Nathan: [00:40:49] You’re more porn. I’m more cat photos. But here, here’s one of the things I would say to you. I actually buy the digital gold. I don’t buy the payments aspect because because here’s the thing and this is a shameless plug. I use current. My kids are off at school. Okay. I don’t have a problem. [00:41:04][14.5]
Danny Moses: [00:41:04] I use current. [00:41:05][0.4]
Dan Nathan: [00:41:11] Yeah, but, but, but but not that. No, but my point is, is like those rails work really well. It’s cheap and. And you know what? And they have a safe out there and you know all all that. My point is, I never bought the payments thing because and he’s going to say we’re well banked here in the U.S.. It really is in other places. But I do if you were inclined to buy gold, I’d much rather own bitcoin in a wallet on my iPhone than physical gold wherever you own it and pay to store it or the GLD [00:41:42][30.7]
Danny Moses: [00:41:43] Stuart ne last question on this. So I’ve been harping on tether since we started. Okay. There’s obviously something wrong there. I mean, it doesn’t take. So does that mean anything? Because every time I ask a Bitcoin bull if this is, it turns out to be a fraud. We know that from an attestation perspective. They don’t have what they say they have. They have some cash, but they don’t have near. [00:42:00][17.9]
Stuart Sopp: [00:42:01] They have. [00:42:01][0.2]
Danny Moses: [00:42:01] What does it do? What does that mean? No one can explain to me what that means of this token. What does it mean. [00:42:05][3.9]
Stuart Sopp: [00:42:05] Yeah. So if tether goes down kind of thing, like. [00:42:07][1.7]
Danny Moses: [00:42:07] Literally they go Luna even. [00:42:08][0.6]
Stuart Sopp: [00:42:08] yeah. So bitcoin’s going down a lot. [00:42:11][2.3]
Danny Moses: [00:42:11] So that’s going to happen. [00:42:12][0.7]
Stuart Sopp: [00:42:12] Yeah. Yep. Yeah. That’s why I said I think I. [00:42:14][1.8]
Danny Moses: [00:42:16] I still think it’s going that question, Stuart, of a lot of like long term Bitcoin bulls who will never actually admit to that. [00:42:21][5.3]
Stuart Sopp: [00:42:23] It will go down. [00:42:23][0.3]
Danny Moses: [00:42:23] But Stuart, why don’t the true bitcoin and I know it’s here to stay bitcoin no matter what the value is, if it’s a thousand oh God, whatever it is, it’s here to stay. But why don’t people talk about it more about what it does to the architecture? Because some people, it doesn’t mean anything. It’s a positive, because if that turns out to be a fraud, people will then go buy actual bitcoin as opposed to buying that tether. [00:42:42][18.3]
Stuart Sopp: [00:42:42] I’ve got an easy answer for that. It’s it’s religion. Yeah. And so when you have a god, you cannot blaspheme and say [00:42:49][6.9]
Dan Nathan: [00:42:50] But that’s a great segway because we’re going to be talking about Tesla in the next segment. Oh yeah. Oh, yeah. Still public. [00:42:54][4.5]
Danny Moses: [00:42:55] no LBO come in for that one. [00:42:57][2.0]
Dan Nathan: [00:42:57] Yeah. No, but here’s a deal. I think it was kind of a really interesting week and I just saw a stat. So we’re a few minutes into the close here. You know, the S&P is going to close down 60 bips or so. The Nasdaq is going to closed down a %. These are two consecutive down days. So the day that the Fed reported and the day after, I don’t think that’s a common occurrence here. So I think this has to do with a rate breakout. If we didn’t see the ten year do what it did this morning because of the BOJ intervention, stocks would be green right now and we would. [00:43:25][27.7]
Stuart Sopp: [00:43:25] Bitcoin’s green. Bitcoin is up 5% and it’s not looking at the same. It’s correlated but not looking at the same. [00:43:30][4.9]
Dan Nathan: [00:43:30] And that’s a really good point. And I think you agree with this and I know guy does is like keep bitcoin on your board no matter whether it’s 19000 or 13. Because when it does stage that rally, it might be saying something about what the Fed’s next move is. [00:43:43][12.9]
Stuart Sopp: [00:43:43] Especially on the weekends. [00:43:44][0.6]
Danny Moses: [00:43:45] You know, Dan, today’s the first day. [00:43:46][0.9]
Dan Nathan: [00:43:46] When people don’t have other ways to express this. [00:43:48][2.0]
Danny Moses: [00:43:48] Do you notice a change in the weather outside? It’s cold and rainy. Yeah. What’s the first day of fall? Everything’s changing. We’re into a new. Yeah, new season here. Paradigm. [00:43:55][6.9]
Dan Nathan: [00:43:56] Alight? Well, here’s the deal, Stuart Sopp is a very good friend of mine. He’s become a good friend of yours, and he’s going to be popping in here and doing these sorts of convos because we are just hardcore Wall Street guys. You’re like a recovering Wall Street guy trying to get over a proprietor and all of these macro issues are really important to the company that you are building and the people that you were serving. So we really appreciate you coming on with us. Stuart Soppe on the tape. Danny Moses You were just in a mood and I will say this, my friend Tommy, our friend Tommy Veitor, he’s been on the pod before. He texted me earlier today. He said I could almost see Danny Moses in this environment with, like, this weird backlit light looking this. I think I want to end on this point, this really important Danny and Guy and myself we’ve been unusually bearish, I think, since the day we started this podcast in January of 2021. We’ve gotten a lot of things right. We’ve got plenty wrong here. And let me tell you something. If you think that we are perma this or perma that or whatever, we take no pride. There are no victory laps because we know that a lot of people who are listening to these podcasts are actually getting hurt on days like today. So speak to that a little bit. Danny we don’t like being ridiculed when things are feel really great and we’re trying to point out what could go wrong. But when it does go right, we take no joy in it. [00:45:10][74.2]
Danny Moses: [00:45:10] Porter said it when we were in California. I’m just a realist. You just got to be a realist here. It’s not about me. I would do anything to be bullish. I would love to wake up and be bullish. There’s very few times in the last 13 years, right. [00:45:21][10.8]
Dan Nathan: [00:45:22] That’s not a 2022 thing for you that. [00:45:23][1.1]
Danny Moses: [00:45:23] I don’t think is right. [00:45:24][0.4]
Dan Nathan: [00:45:24] 22 in Stuart. [00:45:24][0.5]
Danny Moses: [00:45:25] And Stuart, 22 people out there. But Dan in all seriousness to your point, like I want to help people with the experience that we have, the three of us and even Stuart coming in here understanding, having traded the stuff before what we’re seeing and make try to make it make sense because that’s all we’re trying to do or not does. No. By the way, if you notice I don’t victory lap I own up to what I don’t I just is what it is it’s a market and that’s what makes a market. And I love the markets you cited. So I keep saying there’s going to be a tremendous opportunity on the long side. And I said last week, going into the Fed, I go if there is any rally which lasted 10 minutes after the Fed, but use it as a time to sell things that, you know. And then same token, when you have sell offs like this and you know that you have a short you don’t get rid of because you’re negative, everything has its price. So anyway [00:46:07][41.9]
Dan Nathan: [00:46:07] Yeah, well, I’ll just say this. I hope we’re gaining some steam with Vinny and Porter. I think our listeners love when you have I think there’s a meme that’s emerging some of our listeners, what are we doing? What are we doing? What are we doing? So, Vinny Porter, if you’re. The thing. I know you are. Get your asses in the pod. Let’s go. Let’s do this for the market. Final word here, brother. [00:46:24][17.2]
Stuart Sopp: [00:46:24] I would just like to say. Yeah. Recovering Wall Street guy turned business builder. And I looked at all the stocks and all the currencies as numbers, as betting. Now I’m on the side and it’s real. These are people’s real lives. They dedicate their lives to building value and companies for society, and now they’re losing. So it’s not just the investors, it’s the people out these companies. And so it’s become very real for me on this side. And it’s very humbling to be the long only side [00:46:48][23.2]
Danny Moses: [00:46:48] Sounds so much better with that accent I’m in [00:46:50][1.5]
Dan Nathan: [00:46:51] You the way about to be beard and that’s really good. All right. Well, listen, Stuart, thanks for joining us. But all right, listen, when we come back, Danny and I, we have a few bits and bobs to finish up. Maybe your NFL picks, maybe I take the other side of one of those, will say. [00:47:02][11.3]
Danny Moses: [00:47:03] Wow cocky. [00:47:03][0.3]
Dan Nathan: [00:47:03] All right. Stick around. [00:47:04][0.5]
Guy Adami: [00:47:06] CME ad [00:47:07][1.0]
Dan Nathan: [00:48:31] iConnections Ad. Masterworks Ad. All right, we’re back. That was fun. Stuarts. Stuart’s the man. Good. Yeah, he’s good. All right, let’s talk about. We’d started out by saying Guy, Sicily. You think he’s ready for something? Yeah. There’s a lot of stuff going on in Europe right now. And I think that one of the things when we talk about I mean, Stuart mentioned this I mean, this news Putin’s speech mobilizing 300,000 troops and threatening nuclear war. It all seems like that is the thing that might have this thing mean revert. Does that make sense? A little bit, because I think we made this point and Vinnie made this point last week on the pod that there could be a coup. And I thought that was a low delta thing or whatever. But back a guy like Putin in the corner and you’re going to sort of get the threats that we got this week. Is that fair? [00:50:06][94.8]
Danny Moses: [00:50:07] Yeah. [00:50:07][0.0]
Dan Nathan: [00:50:07] Yeah. [00:50:07][0.0]
Danny Moses: [00:50:08] I mean, Russia’s not backing down. They may not be able to do anything at this point, but they’re not backing down. There’s now unrest in Russia, arresting people left and right for all these protests. Italy has their elections this weekend. Yeah, I don’t think anyone’s paying. I mean, people are paying attention. [00:50:20][12.4]
Dan Nathan: [00:50:21] So talk to us, Draghi stepped down. [00:50:22][0.9]
Danny Moses: [00:50:23] As Draghi stepped down. We talked about that on the market call the other day. I find that ironic since he was running the ECB at the time. [00:50:28][5.8]
Dan Nathan: [00:50:29] But the risk is that you have a government coalition that is formed in a prime minister that is more far right and then less supportive of the NATO’s action in. [00:50:39][9.7]
Danny Moses: [00:50:39] Yeah. They can say one thing and do another. We’ve seen a lot of politicians. I mean, they support Hungary, they support leadership scary Yeah, exactly. So it’s a little scary over there, especially where the economy is going right now and where rates are going right now in Italy. They’re going to need funding. So if they start to isolate themselves more. I’m no political scientist, but. [00:50:59][19.4]
Dan Nathan: [00:50:59] You are not. [00:50:59][0.2]
Danny Moses: [00:51:00] I’m not a scientist. My point is that, again, you have to start to fact that in when you start to wonder what’s going on in the stock market is the be all, end all for U.S. earnings? No, but it does create, obviously, a change in risk assets across the globe. [00:51:11][11.3]
Dan Nathan: [00:51:11] And to Stuart’s point, that I think the dollar could crash. Okay. So like, for instance, the euro has been under extreme pressure for obvious reasons. But if we were to see some sort of reversion, if we were to see things kind of chill out a little bit. Okay. Let’s talk a little bit about Germany here. Obviously, you see lots of headlines on the tape, what Macron saying about in France about energy. The U.K. has talked about subsidizing or putting caps on energy. What’s Germany doing here? [00:51:37][25.3]
Danny Moses: [00:51:37] They nationalized Uniper, which is like one of the largest power companies. Right. So they can make sure that they can get the power that they need and the natural gas that they need for the winter. [00:51:45][8.3]
Dan Nathan: [00:51:46] Some sort of context here. Here’s a fully, really well-functioning capitalist country nationalizing one of their largest energy companies, putting. [00:51:55][9.3]
Danny Moses: [00:51:55] Putting in $8 billion into the company. And that’s a lot of money, right? Because you have to make sure. [00:51:59][3.1]
Dan Nathan: [00:51:59] So would you call this? Is this on the scale of TARP? Sort of. I mean. [00:52:03][3.7]
Danny Moses: [00:52:03] Yeah. I mean, listen, you’re not doing it for the stock market, right? You’re not doing it to the banks are functioning. You’re doing it so that your consumers are okay because there’s going to be unrest. I mean, they see what’s going to happen here. And so a lot of things have to go right. I guess, Dan, is what I’m saying in Europe for things to stabilize. And that’s I think that’s too much to ask over a short period of time. So I just think that’s one of those things you have to factor in when you look at the global macro picture of what’s going on and does it impact every company in the U.S.? No. Does it impact a lot of the multinationals? Yes. Because if you’re the CEO of a big U.S. multinational company. Right, you’re looking at European business. What’s your business in Italy? What’s your business in Germany? Do have a factor. Germany, as a matter of fact, European factories are now shutting down and they’re coming here to the U.S.. Right. They’re now manufacturing the U.S. great for labor. [00:52:45][42.7]
Dan Nathan: [00:52:46] It’s also inflationary. [00:52:46][0.4]
Danny Moses: [00:52:47] That’s exactly right. So I’m just saying there’s a lot of stuff going on. China, Taiwan, listen, there’s always stuff going on, but it just feels impossible right now [00:52:54][7.3]
Dan Nathan: [00:52:54] No doubt. All right. Before we get to your NFL picks in what I might take the other side of just real quickly, I had Carter Braxton Worth on the market call today with me, and we’re talking about the S&P 500 a little bit. And right now, where we closed today at 3764, we’re down about 12 and a half percent from that August 16th high and we’re down 21% on the year. And if you look at that June low at 3630, you look at the July low is like 3720. I mean, if you’re pressing stocks here, I just want to be really careful that pressing stocks here is not a great trade. I just want to tell you [00:53:32][37.6]
Danny Moses: [00:53:32] What a Carter said on the S&P. [00:53:33][1.0]
Dan Nathan: [00:53:33] Well, he kind of agreed with me that 100 point range between the July and the June lows, you could see some pretty decent support that would be down more than about 15% or so. And then you got to wait for a bounce. And I got to tell you, because there is no Fed meeting in October and we’re really going to be focused on the micro as far as earnings, that’s really where we could see if earnings are not bad or as bad because estimates have been coming down. And we saw this in Q2. This is what sparked the rally in the summer because estimates have come down, companies beat lowered estimates and then we started rallying because people thought it was as bad as it was. [00:54:09][36.2]
Danny Moses: [00:54:09] So, yes, it’s important to look at the S&P 500 its entirety. But you made the case earlier in the show and you continue to make the case that you have five or six companies that sell comprise a large amount and those companies are expensive. And all this stuff, again, it’s the stock picking. So when you start to look, stop looking at the 3700, the S&P, yes, it will control the money flows. It will do all that. But someone like a Cathie Wood at Ark. I mean, if you own that ETF, you’re an idiot. I’m sorry. You’re an idiot. Okay. Because she’s out there begging the Fed to stop for different reasons and other people because she knows it. And she’s been. I’m sorry, but I don’t mean to be rude. It is. What it is, is just because you’re not doing your work, because those aren’t the things that are going to bounce. You have to get over this. The days of stocks being able to go up 50 100% on nonsense. And by the way, while we’re talking about this with the SEC, who does absolutely nothing, who rumors came out today that they’re going to do nothing again about payment order flow again and all this stuff. It’s just a joke already. And that to me is upsetting, too. That’s a whole nother segment will do again. But in general, no one’s out there looking out for you as my point. Nobody you know what? They look out for you when these stocks are down 90%. Oh, let’s file a suit. What did this company do? Oh, they were projecting this. Oh, this CEO is making shit up. Oh, they said that’s when they help. They don’t help now. So you got to do your own work and be smart. But know what you’re. [00:55:21][71.5]
Dan Nathan: [00:55:21] I’ve actually bought a bunch of the stocks that are down 90% now. I’m long to snap. I’m long shop. I bought a little Lyft recently. I bought a little Zoom, believe it or not. I mean, some of these stocks, the market. But that being said, I short the QQQ tactically here. Okay. So to me, I’m on board. But those stocks to me are kind of getting washed out if we ever had a meaningful rally because people feel we’re going to pivot the way we did this summer. I own PayPal. I bought a little Nike today I fully expected in an average in I’m long CME I’m long a little FactSet I bought [00:55:50][29.2]
Danny Moses: [00:55:51] The game on the price was right where we were kids when you fake signal when you say oh well not that 107 show you where that red range would go up to levels you have to say stop in that range. You just did that. No, no. Well, stop. But the whole thing about this 3600 4200, the red thing is move down now. Okay. So it’s 3400 3900. Probably. My point is this. You’re not missing anything in this tape. I own it. My point is that you have to run out and buy the market here. [00:56:14][23.4]
Dan Nathan: [00:56:14] Is right but I’m sure you I’m short Tesla just bought the GOVT of the U.S. Treasury ETF and I’m sure you got to do something smaller. So think about that. I’m like, I’m kind of hedged, so I’m trying to pick some stock. You just said no. What you own? No, I like it. I’m not disagreeing. I guess. [00:56:28][13.9]
Danny Moses: [00:56:28] My point is that stop obsessing on the levels of. [00:56:30][2.0]
Dan Nathan: [00:56:31] I’m a trader and I have fun doing this. All right. Let’s talk a little bit before we get out of here, NFL So what’s your record on the year [00:56:36][5.3]
Danny Moses: [00:56:36] Two and three. Already have as many losses through week 12 [00:56:39][2.9]
Dan Nathan: [00:56:40] That’s crazy I know and I’m 2-0 against you, which is kind of weird [00:56:43][2.8]
Danny Moses: [00:56:43] Guy’s not around. [00:56:43][0.3]
Dan Nathan: [00:56:44] Reset stage here. I was down ten GS taking the other side of your bets last year. Yeah. When you went 27-3 It’s against the line in the NFL. Yeah. Okay, so what are you doing this week and why? And then I’m going to tell you what I will do against you. [00:57:01][16.8]
Danny Moses: [00:57:01] All right. God bless Jets. Love you, Vinny. But they had no right to win that game. Browns suck. Bengals are coming in 0-2 and thirsty right. They’re laying six. I take the Bengals over the Jets that’s one that’s. [00:57:14][13.6]
Dan Nathan: [00:57:15] An easy one. [00:57:15][0.4]
Danny Moses: [00:57:15] Okay. I’m going to this third week in a row. I’m going after Tom Brady as a favorite, remember? I won’t bet against him as an underdog. But that line opened up at two and a half Buccaneers favorite over the Packers. It’s down to one and a half. I think the Packers actually win that game outright. But I’m a buyer of the Packers plus one and a half in Tampa. That’s your 4:00 national game on Sunday. And the last one is the Cardinals getting three and a half at home against the Rams. The Rams almost let Atlanta come back and win that game. Again I’m always a believer in shorting the Super Bowl winner into the next year, but cards may have found something last week in that miracle win that they pulled off in Vegas. So I’ll take the Cardinals plus three and a half, the Packers plus one and a half and the Bengals laying six against the New York Giants. [00:57:55][40.4]
Dan Nathan: [00:57:56] Remember, Chris Berman. [00:57:56][0.5]
Danny Moses: [00:57:57] Of course. [00:57:57][0.1]
Dan Nathan: [00:57:58] The Bay of Pigs. Yeah, it was Tampa Bay. Yeah, this is Green Bay. [00:58:02][3.8]
Danny Moses: [00:58:02] Yeah. [00:58:02][0.0]
Dan Nathan: [00:58:02] I’m going to take Tampa Bay at home minus one and a half over the Packers for 500. [00:58:06][4.1]
Danny Moses: [00:58:08] Got it done. All right. [00:58:08][0.9]
Dan Nathan: [00:58:09] Yeah. All right, listen, people, we have a lot of fun. That was Stuart Sopp, Danny Moses. Next week, we are going to have Guy Adami back. Yeah, with us. Thank God. So stick around. Thanks for listening. Hey, you know, leave us a review or something in the podcast stores. People like it. [00:58:23][14.3]
Guy Adami: [00:58:24] Thanks once again to CME Group and I connections for sponsoring this episode of On the Tape. If you like what you heard, make sure you hit, follow and leave us a review. It helps people find our show and we love hearing from you can also email us at on the tape at risk reversal. Dot com any time. Follow and connect with us on Twitter at on the tape pod and we’ll see you next time. [00:58:47][23.5]
Dan Nathan: [00:58:48] On the tape is a risk reversal media production. This podcast is for informational purposes only. All opinions expressed by me and Nathan Guy, Danny, Danny Moses and any other participants are solely our opinions and should not be relied upon for specific investment decisions. [00:58:48][0.0]
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