$TSLA Tanks on Trump-Musk Spat + Where Will Danny Moses Go When The Volcano Blows?
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On the Tape.

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Welcome to the Risk Reversal Podcast. I'm Dan Nathan, joined by Guy Adami. Hi, Guy.

How are you, young man? How's everything going? I'm doing this. Today we got the all-important May jobs report. That would be the NFP. It was the final countdown. It is just before 9 a.m. right here. I'd say this is an emergency pod, but there was really no there there. It wasn't a big report, so we'll get your breakdown on that. We'll get the market reaction here because we are seeing yields up a little bit. We're seeing markets up a little bit, at least the futures for now. You and I are going to go through a few things that stuck out to us yesterday about this must

Trump sort of feud and what we think are some of the implications. But in the B block, you and Danny Moses of the On The Tape podcast fame had a little conversation. Give us a little preview here. We did. It's always fun to sit down with Danny. We had a far-reaching conversation. We went from obviously...

what we thought about the Fed, what we thought about what's going on in Japan, which, you know, by the way, I continue to think is a big deal. We talked about some of these BLS numbers and, you know, his thoughts on that. Talked about, obviously, the broader market and, you know, his thoughts on

how things have gotten to where they are in terms of this V reversal that we've seen. You know, Danny breaks it down and he obviously looks at things in a far less granular way than we do sort of from 30,000 feet. So it's always great to get his thoughts. And then of course we talked about the Belmont stakes, uh,

which will be run tomorrow in Saratoga. Pretty cool that the Belmont Stakes are in Saratoga and you guys could just Google that what's going on there. But guys, let's talk about this May payrolls number. Unemployment rate stayed flat. I think the number was just a smidge higher than folks expected. So, you know, you have this sort of number. There's nothing like kind of, you know, flashing red lights here. I know that we just got through

the bulk of earnings over the last two months or so. And we heard a lot of like from the C-level suite, a lot of uncertainty about capex and R&D and hiring and all that sort of stuff. The hiring stuff does not seem to be in these numbers just yet. You keep hearing though that this is something as we get into the summer, as you have this kind of tariff trade stuff drag on a little bit,

that's when you'll see this sort of kick up a little bit. We've already seen some job cuts, I think, in the last week or so. Procter & Gamble, Citigroup, we've heard from Microsoft in the last couple of weeks. I think there's been a little bit of Facebook and maybe that's just kind of trimming around the edges, but maybe some of these CEOs, you know what I mean, who've been around for a while, they know that it's easier to start to make small little cuts here and there before having to do, you know, kind of those ones that, you know, get big headlines, you know, further down, like the cut 5% of the workforce, that sort of thing.

Yeah, well, I think you're right to point that out. I think for the market enthusiasts out there, the bulls out there, this is a report they were sort of looking for. Not that great where the Fed comes out of play, not that miserable where things are deteriorating, sort of right down the middle, maybe a little bit better, maybe hot on sort of the wage side of the equation, which is probably why yields are slightly higher, but it's pretty much in line. And it

To me, what we're seeing is a continuation of what we see theoretically or not theoretically, seemingly in every administration, these revisions lower over the last couple of months. So I don't know how that whole thing works out. I mean, that's actually something that Danny talked about, these BLS numbers and the sanctity of the numbers, to use that word again.

But in terms of the report, you know, I guess it's, you know, status quo, 4.2 unemployment rate, something for everybody. But right now, at least the bulls, I guess, are breathing a sigh of relief. Yeah. So that's the equity bulls. But if you're a treasury bull, a bond bull, you're seeing yields up a little bit. So we see

4.47%. I just can't like stress this enough. And I get it. I see where the VIX is, you know, at what 17 and a half or so, or a little less than that. I see where the move index is that tracks the volatility in the treasury market, that sort of thing. That's down well off, you know, the highs that it was making a couple months ago. You see an S&P that's basically 6,000, you know, one in that, what, 150 points below those all-time highs made in February. And there are some disconnects here. And so

If you were to see data, let's say like, you know, we have CPI on Wednesday, right? And then we have the Fed meeting a week from that. I mean, if we start seeing yields get over four or five, we could get them towards 4.6 where they were right in early April or so. Will that be something that causes those folks that have no concern about equity prices or valuations? Will it cause them to rethink things? Because

Again, the Fed is not likely to move before September. And maybe if you keep having hot prints or decent enough job growth with wages where they are, whatever, maybe the Fed is gone for this year. I don't know. Like at some point, does that weigh on stocks? Yeah, I mean, well, I mean, I think you know how I feel about this. You know, I think they should be out of play for the foreseeable future. And when I say the foreseeable future, through the summer into the fall, unless something drastic happens, which happens,

Right now, it doesn't appear like that will. And even if the bond market were to sort of erode, there'll be people that think obviously a Fed rate cut will help it. I think it actually will do more to hurt it. But that's just me. I'm probably in the minority on that one. So I think they sort of stay the course. But to answer your question about bond yields, they're stubborn as hell. And I think that's got to be creating some consternation in this administration. I'm sure they look each day to see where yields are.

And as they continue to sort of flatline to slightly tick up, they have to be saying themselves, this is not particularly good. Now, I don't know what mechanism is out there for them to sort of stem the tide. I know they can jawbone a lot. And I'm sure their conversations sort of in back rooms with Treasury Secretary Besson, some of these bankers saying,

Now, you got to pick up the slack here in terms of if there's no, if the Japanese and the Chinese are no longer incremental buyers, you got to sort of fill that void. I guarantee to a certain extent that's going on. But there are forces at work right now, again, in my opinion, that make yields go higher and

You said it. When is the market going to care? Well, I would have thought they would have cared already. There are a lot of people that say we've had rates at these levels historically, and we've obviously probably were here this time or so last year. So much ado about nothing. But again, it's the rate of change and.

when you have this debt to GDP yields matter. And when you're trying to finance that debt, it absolutely matters. And I think the market at some point will come to that realization. And it's not just me saying that's people a lot smarter than I am. They're talking about the same things. Yeah. And I think that, you know, as we kind of pivot a little bit to what's gone on, um,

you know, in the White House and not we're going to get to, you know, Trump's discussions with President Xi. I think that's actually really important. And at the end of the day, what happened yesterday with Trump and Musk, you know, maybe that was a bit of a sideshow. You know, maybe it was the sort of thing that wasn't really that important as you think about, you know, the stock market. If you think about

you know valuations you think about tesla as a really important company within you know the us economy and the like and obviously elon musk having his hands in in a lot of different pies right and really important pies if you think about it right so obviously spacex starlink are very important you think of x

and XAI and what he's been able to build at XAI in a very short period of time, right, to compete with the likes of an open AI or, you know, Google and some of that stuff. And then you think about, obviously, you know, Tesla, which, you know, to me is important, not because of the EV market here. It's important for a whole host of things in between the U.S. and China trade situation, right? How they have half their manufacturing in China and what that might mean

you know, in this trade war that is likely to remain protracted. So just, you know, the market did not like this tweet war yesterday, right? And it got pretty raw, you know, at some point. And we've seen Twitter wars before, you know, maybe it's celebrities and this and that, whatever. And people get really excited to see what happens because it's playing out in real time. But this is one as it was playing out in real time, had really big implications. And so I'm just curious, like, you know,

For me, guy, it was a little surreal to see this going on. This is the president of the United States with somebody who, forget about their relationship over the last year, is probably one of the most important and most impactful people on the planet and soon to be Mars. Like to see this happen, you know, we talk all the time about who's selling dollars, who's selling treasuries. You know, is this the end of American exceptionalism? Well, we had it playing out.

on the internet yesterday, which is the sort of thing that would lose... I mean, I lose confidence in our ability to be that kind of shining light on the hill or whatever when we have that sort of stuff going on. I thought... And we had Gary Cohn on Fast Money yesterday. And, you know, Gary was...

i don't want to say he was dismissive that's not the right word but i think he was far more relaxed in terms of what was going on and he took a sort of bigger picture approach and maybe that's the right way to look at things he obviously knows a lot better than i do but you know my initial take on this was when i saw it playing out in real time and i still feel this to a certain extent although quite frankly it's not playing out right now i thought you would see continued dollar weakness

I thought the equity market would suffer a little bit. And I thought the bond market potentially could sell off. Now, you're seeing a little bit of a self in the bond market, but it's not on back of what we saw yesterday. It's obviously on the back of this employment report. The dollars actually bounced a little bit from here, which is surprising to me. But

If you just sort of back yourself away and say, you know, what does the rest of the world look like? Look at this and think, you know, this was somebody in terms of Elon Musk that had to have some of the highest levels of security clearance, something you brought up yesterday. You know, what does this all mean? And does this escalate?

Or does this sort of get, I don't know, tamped down a little bit into cooler heads prevail? But with all that said, it's all out there now. And I think it obviously has implications for Tesla, the stock. We talked about that yesterday. I mean, that's pretty obvious. But what does it mean, if anything, to the equity market or maybe almost more importantly to the bond market and to the currency markets? And for now, at least, it doesn't seem to be having all that much impact.

Yeah. And again, yesterday when you're in the moment, it felt like you're seeing, you know, Tesla careen lower, losing hundreds of billions of dollars or at least tens of billions of dollars

And market cap in response to that. And, you know, there were no good outcomes. You know, like it's one of those things, you know, where something's when it's out of the bottle. Right. It's hard to put it back in. You know, is Trump going to look at this Twitter feed of Elon Musk and look at this? You know, these conspiracy theories about this, that or the other thing.

is Musk going to delete them. They're out there in the world. You can't bring it back. You know what I mean? So this rift is not something that is likely to be fixed anytime soon. And so if you have like this continue, you know, agitation on both sides, even if it's just simmering under the hood, it can't

be a good thing. You know, half of the losses in the S&P yesterday were the 14 percent losses in Tesla. You know, we have a handful of companies that are still dictating, you know, the way in which this market is going to go. That's how we get to the fateful eight. But, you know, the other thing that, you know, Gary mentioned. So Gary, former president of Goldman Sachs, chairman of IBM. He was the national economic advisor to Trump in the first administration. As you just said, he went in there with one mission to get tax cuts.

put forth, okay, and really do that for a whole host of reasons. I mean, his reasons weren't exactly the ones that I think got a lot of criticism at the time, you know, giving wealthiest people tax cuts. He really wanted to reorient the way that companies here in the U.S., you know what I mean, spend their money relative to, let's say, doing it around the world, right, repatriating dollars, refocusing some of that stuff. And he, like, obviously wants these things extended, right?

Earlier in the week, we were talking about the ability for these two things to get conflated because the tax bill definitely hit a bit of a snag, right? And you thought that this trade arrangement that was put forth two months ago and Trump thought it would be easy to kind of do, we know his kind of stance on trade wars and the like, and they're both kind of mired, right?

So that brings us to this call with President Xi yesterday that Trump gets off and says, it's great, right? And we know that that's probably, you know, they're kicking the can down the road a little bit here. So we have a deadline on a situation with reciprocal tariffs with the Chinese. We don't have any meaningful conversations going there. We have the tax bill stuck in the Senate.

This is why the must thing is important because it started with him with tweeting kill the bill, right? And saying that he was gonna primary Republican congressman who voted for this thing, put it all together and you have a situation where the Chinese are just sitting back and saying let's let them eat themselves

from within. And then you look at Mexico and Canada who have not come to the table or EU that, you know, so I just don't think there's going to be a trade deal. And at a certain point that will weigh on U.S. corporate earnings. It's going to weigh on employment here. And then you have to ask yourself, where is the economy going to be in the second half of this year? Yeah. You know, it's interesting because Gary actually said when we talked to him on the show, you know, we were he didn't say we're burying the lead. But basically what he said was, you know, hidden within what happened today was the fact that

we have a trade deal in place with Chinese. Now, again, I don't know that to be the case. And he obviously said, you know, he doesn't know the language around it, but I guess he was sort of encouraged by some of the rhetoric that came out from both sides. But to your point, and I think the point is a good point. If you're the Chinese, uh,

Why would you be in a negotiating position with a country that seemingly now is fighting amongst itself? And when I say that, I say that somewhat metaphorically, but I think you understand what I mean. I mean, they probably can afford to sit back and watch and see how this whole thing unravels or

you know, maybe they use this as a time potentially of weakness here to actually forge out a deal. I don't know. What I said earlier in the week, though, was after President Trump tweeted out, I think at two in the morning a few days ago that, and I'm paraphrasing, President Xi is a tough negotiator. It's going to be really hard to get a deal done. I looked at that and immediately thought, here's somebody that's, you know,

under-promising he's going to over-deliver because he'll come back and say, despite the fact that he's a tough negotiator, we're able to hammer out a deal and everything sort of goes on its merry way. And to a certain extent, that's playing out. But your point again, in terms of how this thing gets mired and what it means for corporate earnings, because that's really our sole focus here. What does it mean for the market? Yeah, I just think it extends that

heightened uncertainty, because there's always uncertainty, the heightened uncertainty, probably out now through the fall is my instinct. And I think, you know, Gary thought similar in terms of when this thing would probably get done. Yeah, I was just surprised that he actually used the term trade deal with China. And it goes back to my response was that, you know, in March of 2018, that was the first time that, you know, President Trump, then President Trump,

and the first admin put tariffs on China. We didn't have a phase one agreement until January 2020. And by all accounts, they didn't really follow through with a lot of that because of COVID and a new administration came in. So again, I wouldn't be holding my breath for a deal.

with China, but guys, let's just hit a couple sectors really quickly before we get out of here. Broadcom reported after the close, pretty astounding. Okay, so this is a company that, you know, some of their customers are the biggest hyperscalers, obviously also Nvidia's biggest customers. The stock closed at an all-time high yesterday. It was up from $140 in the lows in April

It closed yesterday basically at $260. I can do that math. It's up more than 85%. You know, it's not particularly a cheap stock. We know that they have competition, as I said, from NVIDIA. They're trying to obviously take market share from NVIDIA as the generative AI. Some of the capabilities and the demands change as you kind of get further along, you know, in some of the kind of workloads and compute needs and that sort of thing. But to me, the expectations were massive. The stock is

literally down one and a half percent right here. And that's pretty shocking to me. The quarter was good. The guidance was fine. I think if you're looking around and seeing some of the kind of, you know, descriptions of kind of what they laid out, it's like it was underwhelming given where the stock is. How do you kind of square that circle where, you know, the stock has literally gone parabolic. It's outperformed almost every other stock in the entire market. And it's over a trillion dollar market cap and it's only down two percent.

Yeah, I thought it would be down more. I thought the quarter was fine. But, you know, when you have that kind of move over that period of time, you really have to say some extraordinary things, in my opinion, to get that move to continue. And I don't think they necessarily did. To me, it's sort of similar to the quarter that NVIDIA reported, you know, good quarter, but

Is it good enough given all the factors that we've talked about? And listen, Nvidia is sort of nowhere right now. It's probably trading around the same level it was when they reported earnings. And I'm surprised Broadcom is not lower. Now, there are a lot of analysts, I think, that are probably going to rejigger their numbers and take a look at things. I know we had a couple upgrades earlier in the week.

And listen, it's still an extraordinary company, but this is my sort of two cents. We traded up to levels that we probably saw ish in the middle of December when you had that huge move to the upside. You mentioned that subsequent sell off. And here we are basically right back to those levels. So if we start to see weakness around the edges and there's a potential for that, if the tape starts to roll.

You know, you're going to be talking about, you're going to be people talking about the double tops are created from the December high and obviously what we're looking at today. And I'm not saying this thing is going to necessarily get back to the levels that we saw in April, but a 50% retracement of that move, I don't think is out of the realm of possibility. All right. The other one really quickly before we do get out of here, let's look at retail for a second. Costco yesterday closed down, uh,

a little more than 3%, close to 4% actually, which is a huge move for a stock like this. They reported comparable source sales for May. Expectations were for 4.7%. It came in at 4.3%. You know, some of the commentary in and around, um,

you know, trade and tariffs and the like, and, you know, the consumer is that they're kind of holding firm on price. But when you think about that, and we heard from the dollar stores earlier in the week or over the past week, they keep talking about a trade down. You wonder if you're trading down, use this expression all the time from Walmart and Costco. It is saying something about the U.S. consumer.

100%. And the conversation we've had now seemingly since the dollar stores talked about it over a year ago in terms of the trade down that they were seeing. And as you said, historically, people trade down to those names and then people were trading down from those names. So it really makes you wonder what's going on with the consumer. I think I sort of have a handle on it, obviously.

The stock market doesn't seem to care. In terms of Costco, I mean, quarter is what it is. It's a valuation thing, but it's always a valuation thing. So when you come out with earnings that are in line slightly better, you really have to say some, again, great things in order to keep the move going. Now, again, just like we talked about with Broadcom,

This is Costco, a name that probably made its all-time high around Valentine's Day of this year. You saw that stock go from, I think, $1,078. I think the stock, if I'm not mistaken, Dan, traded all the way down to $900, a little below $900 today.

by the middle of March or so. And now here we are back to those levels. If we were to fail here, it's not going to be unlike what I think in Broadcom. So there's a very good chance if you've been looking for an entry point, you're going to get a lot better one than it's currently trading at. Yeah, to your point, I mean, Costco is not generally...

a volatile stock despite that premium valuation and the like and people will point to that recurring revenue from the membership model and the like but that move that you're talking about in march it closed down six percent that day of its earnings that is not the sort of move that you see in costco if it's not like a covid like crazy period or you know some sort of recessionary environment so that's definitely one to keep an eye on and then on the flip side uh discretionary lululemon

It's down 20, I think it's down 20 some percent right here. Is that more company specific? Is it more a consumer that's getting a little bit more choosy? Because we just talked about that, obviously. And this is maybe a different consumer than a dollar store consumer or a Walmart consumer because they're paying $125 for a pair of yoga pants, that sort of thing. But that is a massive move for a company that I think has generally been one that people think is a category leader.

Yeah, they were. Jeff Mackey used to say specialty retail is where hope goes to die. And Lululemon, regardless of what you think, is specialty retail. And of course, the problem is

They were their own category for a period of time. Competition has come in a myriad of different places, and that's hurting them. And that's just the way things happen in the space. It's happened over and over again. If you want proof positive, go back and see what happened to Under Armour many years ago, where they were on that same sort of upward trajectory until competition came. And maybe they sort of got out of their lanes a little bit in terms of businesses that they pursued.

but i think the same thing is going on with lulu lemon now in terms of levels you know karen last night was surprised of the magnitude of the loss i i'll be honest with you i really wasn't all that surprised but you know you go back and look in august of 2024 when everything traded lower uh this was a stock i think that traded down about 230 or so we had the subsequent bounce into january up to about 415 dollars the stock almost doubled over that period of time

Then we had the subsequent drop into April, like everything else, right back down to those levels. Right now, the stock is indicated in the 270s. I will tell you, Dan, and I think you agree with this, if we start to test those prior lows, it's not going to hold this time. So there are a lot of people that think Lululemon goes lower, a lot of analysts that actually think their best days are over. I'm probably in that camp in terms of the stock.

This is a critical few days of trading for the shareholders of LULU. Yeah, and what's interesting to me about the stock market in general, there's a general sense of complacency as it relates to the broad market. But when it comes to individual names, I think investors are shooting first, asking questions later. So to me, I just think this Tesla story today is going to be really interesting to keep an eye on. Yesterday, the stock was down 47 points. It was down 14%. Right now, Guy, it's only indicated up

$10. Okay. So that's three and a half, 4% or something like that. If that thing fails, I do think the market probably follows it because it's saying something about sentiment towards, you know, the, just a broader picture about policy politics and what's going on with the economy and our ability to get things done. So that's what I'm most focused on here. Guy Dami, you and Danny Moses had a great conversation. It's going to be here after the break.

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A very warm welcome to the Risk Reversal Podcast. Of course, this is Guy Adami. And today, special guest we have with us, Danny Moses of the On The Tape Podcast. Danny has had some extraordinary guests over the last couple of months. Peter Buchvar, I think the latest. And next week, Danny, what do you got on tap?

Dennis DeBuscher. And I was hoping that the Knicks would still be alive, like a game five or six or something so that he could talk. Cause obviously, uh, we know who his father was and so have him. And then, uh, Lawrence McDonald, Larry McDonald, uh,

from the bear traps. So a lot of good guests coming up here, Guy. No, and it's been great. I've enjoyed listening to it. I know the folks on the feed have enjoyed it as well, but I'm glad it's the two of us because we can drill down on some things that we both find interesting and hopefully our listeners and viewers will as well. So as we're sitting here, Danny, we have an S&P that's effectively back to 6.5.

And that move since early April, I think has been historic and historic fastest sort of reversal we've seen since the financial crisis of '09. So let's start there in terms of the magnitude of this move. I will tell you, and I'm not patting myself on the back because I've been wrong a lot as well, but I thought we would bounce in early April, but I never thought we would bounce to the magnitude that we have now. So let's start with the broader market.

Listen, even during the sell-offs in April, the flows were still coming in from retail. That was the one thing that didn't obviously break. So there's still a lot of confidence in either the longer term or even the shorter term outlook. Peter Bookvar talked about that exactly on the podcast yesterday. So Peter Bookvar came on and recorded on February 18th and was released on February 19th, literally the high of the S&P. The title of his report was, are the Mag 7, the Canary, and the Coal Mine? And he was dead right there.

right. He says, if people are worried about us as a trading partner, there was talk of tariffs, but we didn't see the tariff plan yet at that point. Then how are they going to express that? Well, they've been expressing owning dollar through the MAG7, right? Big liquid names that have growth. So go to that point. We sold back off. We rallied again. The truth, guy, is the majority of those MAG7 had decent earnings and above the rest of the S&P. Obviously, it is still what drives the S&P from an earnings perspective. So there's enough reason or excuse, guy, I

could say that you could still believe. That being said, the impacts of this on again, off again tariff stuff is going to have an effect on 2Q and 3Q earnings for sure. We've already seen companies start to guide towards that. S&P numbers, I think everybody thinks are too high, but they're willing to look past that, right? And the big overriding factor guy here, I think is the Fed here. And I know that Fed fund futures, there's zero chance of a cut, you know, the meeting in two

two weeks or so and you know 20 30 percent following that and so forth and two cuts for the end of the year however the rhetoric is heating up again on Powell the data is coming in now now everyone wants bad numbers and I'm going to get into that in a minute guy just on numbers in general can you rely on them anymore so now I think we've shifted so I guess guy in a nutshell

People are now, you know, whether you want to call it taco or whatever you want to call it, looking through, they're willing to look past this noise. I'm personally not because I actually think we're having the impact of the Doge cuts on jobs. So I'm going to play the bottom up game here and not which may be wrong, but fund flows are still dominating. Yep. And listen, that's been a driving force, you know, outside of a couple of weeks here and there. I mean, those fund flows are undeniable and obviously extraordinarily powerful because they seemingly override the

everything else but you know i want to talk about something that i heard last week and i continue to sort of harp on this because i was sort of taken aback by the commentary out of jamie diamond

on Friday of last week when he effectively said that, you know, there's another hiccup coming, I'm paraphrasing, in the bond market. And he says, I'm telling you, it will happen. So he's pretty convinced we're going to see another round, I think, of uneasiness in the bond market, suggesting yields will go higher. Now, he couched it a little bit by saying, I don't know if it's going to be in the next six months or the next six years, but I think somebody in that seat has to take that approach. But he's clearly concerned about

about another sort of mishap in the bond market. I will tell you, I am as well. I think the only thing that's keeping rates lower is the softening data here in the United States. And that makes sense. So in an odd way, people that want rates lower are rooting for softer data and potentially what you just talked about, you know, bad news on the job front. But there's this push and pull around sort of the four and a half percent level

I still think yields go higher. I think they go higher for the wrong reasons. And at some point, I think it's sort of market negative. But what was your take on that and sort of drill down on some of those comments? Yeah, listen, everything you said, I agreed with. Unless he runs the largest bank in the world, he sees it all. And he always tells it like it is. He doesn't sugarcoat it. And he doesn't play politics for the most part. So listen, if rates go up, you just said it, you nailed it for the wrong reasons. We're screwed. So to think that the economy is going to slow and

and that we're going to be able to cut rates because of that. To not think that the economy is slowing will override the impact of the Fed cutting rates, I think is the wrong way to look at it. Because if we are in a slowdown and we do go towards a recession, tax receipts are lower, everything else is lower, kind of blows that whole model up in terms of economic growth. So I've been a proponent of, listen, these rates are fine right now where they are on the 10, if you believe we're going to have

solid economic growth and inflation continues to kind of come down a little bit at the margin so we're kind of in this period of time so careful what you wish for so if you do have actually slower economic growth i don't think that's a good thing guy because i think that the fed cuts will be short-lived in terms of uh people's euphoria surrounding it you know a couple years ago year and a half or so ago and again typically in our world early is wrong but in this case early was right you know you were talking about the potential given what you were seeing

for stagflation to sort of rear its ugly head. And I think it was 12 or 13 months ago,

Jerome Powell was asked a question in one of these pressers about stagflation, and he sort of cheekily said, and I think he thought he was being amusing, he saw neither the stag nor the flation. And that proved to be funny, but it also proved to be incorrect because as we're sitting here today, you have a lot of people talking about exactly that. And of all the things the Fed, I think, worries about, stagflation is probably at the top of the list because

You pull one lever and something else breaks and you pull the other lever and the flip side. It's one of those things that's very hard to sort of get yourself out of. So thoughts on that. Is that all coming to fruition?

I think so, but we've already had periods of it and we've seen it obviously over in various parts of Europe. We've seen it in Japan potentially. Now we're actually seeing it there where their hands could be tied. But here's the thing, Guy. Market needs to trade where it naturally should. We haven't had that since 2008. And so if Scott Besson is in there, God bless him, trying to keep 10-year yields down because he knows he has to issue just a lot of bonds.

It feels like most of it is artificial in terms of, all right, can we restart some type of QE? Can we reinvest runoff from mortgage-backed securities into treasuries? The problem with all of this, guys, the debt to GDP globally is just too high and we won't go into gold. You and I have talked about it ad nauseum, but it is the byproduct and so is Bitcoin of all these things that we're talking about that could go wrong. That's where money, I think, is going a little bit. So the answer is that we are, I'd like to see the market trade at natural levels and we haven't had that in

in 17 years. And there's a generation of traders that don't know it. And it just is what it is. It's not their fault. They just don't know what it looks like for the Fed not to have your back. Back to your first question you asked me five minutes ago. The Fed put us alive and well in various forms. But I believe that we are, if you were telling me the market back to where it was, I wouldn't have thought we would have recovered to this point. Honestly, I'll give you that.

But I don't think there's much upside from here, Guy. I don't know how you look out and assume that we can trade at 22, 23 times forward earnings at this point. It actually might be 26, 27 times with so much uncertainty in the world. Well, you know, but that's what it is. I mean, it's multiple expansion. I mean, I'm surprised by the earnings reports.

But I'm more surprised by the fact that people are willing to pay up in terms of a price to earnings that at 21.5 or 22 times where we are right now is historically at the upper end of the boundary. And that is in the best of times. So if things are slowing down, that is obviously to me somewhat excessive. And all those things that we talk about, all those metrics that we talk about, whether it's a CAPE ratio, which is trading twice the historical norm or the Buffett indicator, which is right back around 200%.

Or just the price to earnings, which we just talked about. I mean, they're all flashing red. None of them, again, are timing indicators. You say it all the time, and I will reiterate that. But

But it gives the market, in my opinion, less and less of a cushion on the downside and less and less room for error. Now, since you mentioned gold, let's briefly talk about it because Peter talked about both gold and silver, I think, recently. And all of a sudden now silver is on its horse. There's clearly something going on in the gold market. And I've said this to you and I've said it on different shows before.

all these central banks are basically hedging their ineptitude and by the way good for them because it's the one thing they seemingly have gotten right so i think the gold move continues i obviously think the broader market doesn't seem to care about it but at some point i think it does i agree every dip is a buying opportunity platinum is now on its horse and that's for other reasons there is there's demand for for hybrid vehicles which peter pointed out as well so platinum silver they're all kind of

catching up here kind of to the gold trade and just the commodities in general. Right. And so I think that continues, Guy. I don't see a change in that at all. So every dip to me in gold is a buy. Geopolitics have gotten incrementally worse, unfortunately, every week. Nothing's getting resolved. So I feel like the world is hot. Let's talk about some of the theater that's going on in Japan, because

You and I seemingly the only people, actually, I shouldn't say that. There are more and more people coming around to the fact that there's a bit of a powder keg going on in Japan in terms of their currency and in terms of their bond market. I think they have an inflation. They have a lot of problems. And they're trying to pull some levers as well. And the moves we're seeing in dollar-yen, these intraday moves,

I mean, it seemingly moves a percent, a percent and a half up and down almost on a daily basis. I had Mike Novogratz on the podcast a couple of weeks ago. He thought that dollar yen could get down to 130. I'm sort of in his camp.

And I know you know this, but it was last August that our equity markets sort of fell apart in a pretty meaningful way on the back of that whole yen unwind trade that happened in a pretty swift fashion. And I don't know if history is repeating itself, but Japan is absolutely worth watching here.

Well, you've seen now over the last few years when they took their foot off the pedal as far as the Janet Jackson yield curve control, which we talked about at the time, what happened when natural market forces allow the market to trade at a certain level. All right, we're going to go to 50 basis points. All right, we're going to go to 1%. You know what? We're going to uncap it on the 10-year. I think we've gone up to 150 wherever we sit now.

They have a lot of debt, Guy. Way worse than the United States, right? So they have issues. They have to get their own house in order. They're the largest holder, foreign holder of U.S. Treasuries. That has an impact on us. And we won't go through all the iterations. Again, Peter Bookvar went through this in detail on the On The Tape podcast yesterday. I would tell people to go listen on why it really matters.

You make a great point. When the yen trades 141 to 146 back to 143, that's a lot of volatility in a currency. It just is. And it has repercussions for global financial markets. It just does. And we've been through this, to your point, last August. All of a sudden, it mattered for a day or two, and then it didn't matter. Well, these are volcanoes, right? And whether they erupt or not or sit there for a period of time, we saw what happened. You were in Mount Etna the other day running down the mountain.

mountain in Italy. I was not one of those people, but I was there doing a Mount Etna tour. I would have been one of those people running down. That was a crazy video. But anyway, that's what it feels like. It feels like volcanoes that may not erupt. And then when they erupt, you got to run down the mountain and figure it out. Did I get my frozen in ash? What's happening here? So anyway, that's kind of where we are, Guy. And you have a lot of volcanoes around the world and they just percolate. And when they go off,

It's things get resolved and we just pass it right through the, you know, the growth of money supply. We won't go into all of that here. So a lot of things out there, but I guess all things being equal as we talk about and circle around the globe, even with the policies that we put in place here that I think are detrimental potential to us businesses, us remains the sexiest game in town. What I'm most surprised about guy is, and I argue this all the time. If you're in the camp that we're not going to go into recession, the economy is going to be fine. How you don't own energy is,

stocks is beyond me. I'm sorry. I absolutely want to talk about energy stocks, you know, without question. But let me just tie a ribbon on that. The Japanese had the worst bond auction, I think, a week or two. And I'm sure Peter brought this up since 1987, right? But there's definitely, to your point, there are fissures out there. And they've had some good ones. They've had some bad ones. And I think that's exactly what the market is trading on. But I think your metaphor about a volcano is exactly right. And

Once it explodes, I mean, there's no room to hide. And we saw that last August for sure. So let me finish off on the Japan thing. What they did last night was they talked about

cutting back on the tapering. So cutting off on tapering, which is what we've done here, by the way, on QE, that was enough to kind of just calm the markets. That works only for so long, guys. I agree. Well, what hasn't worked, but I think to your point, what will work, and listen, pockets of work, is this energy trade that you were just talking about. So people, I think people sort of look at the underlying commodity, obviously crude oil, and say, well, if crude's under pressure, it's very hard for these companies to do well. The reality is,

the valuations more than the cheap valuations more than make up for it, I think, number one. And these are just better operated companies than they were five or 10 years ago with better balance sheets. And the fact that the market just sort of sweeps them aside for some of these other names and maybe correctly over the last couple of years. But at some point, there's going to come this realization that, wait a second, energy is actually a good place to be. Yeah, again, I'm sorry to keep talking about the Peter episode, but he gave kind of five stocks that he would

own right now. And the point he made was these energy stocks are not just exposed to oil, they're exposed to natural gas and natural gas has done fairly well here. So he likes Diamondback Energy, FANG, BP Shell, EQT, and Noble Energy are kind of the names that he's kind of highlighting. And the balance sheets are all in great shape, guys. There's been a ton of M&A over the last five years. The rig count is dropping. It is what it is. It's supply and demand. And you're not going to tell these companies to drill when oil goes to 50%

50 bucks if it does go there. But I just think these stocks are being ignored. And so you could have a flat S&P. This is why shorting the S&P or trying to pick a level doesn't necessarily work. You can just have a massive

rotation out of kind of the mag seven into energy. Although I think the market does trade down on that over all the S&P if that happens. But energy continues to be, I believe, the most underweighted sector by the large portfolio managers that run the world. So yeah. And again, I guess I understand it to a point. I mean, in terms of percentage, the S&P 500, it's minimal. It's nominal at best. I mean, it used to be obviously a much bigger portion no longer, and maybe rightly so. And maybe that's one of the reasons people don't look at it. But

if you're just looking for places where there's still value, I mean, it comes into form a lot of these energy names. And, you know, you mentioned EQT for those playing our home game,

E Q T is the E in my tube acronym. And I think year to date, that's probably up about 20 or so percent. I think there's room to the upside as well. So I'm with you and Peter, but I guess it comes down to what's going to, what is going to be the catalyst of Fannie? Is it going to be a sort of a Exodus out of the name? So we talk about all the time, like, what do you think the catalyst will be for the energy trade?

Well, unfortunately, it could be higher oil, just getting people to pay attention to it. That's just the trigger that people, oh, higher oil, I got to own energy names, what it is, or something happens in the Middle East. So that could be certainly a factor. I think money coming out of some of the large tech names potentially going to find a home. And Guy, you and I know how this works. So if the sector is very underweighted and you're a large portfolio manager, and you've been overweight tech and underweight energy, and energy starts to work and tech doesn't, you have to start to

pile in quickly and price won't be an issue. It'll just be like, let me, so I'm willing to wait knowing many of these companies pay decent dividends as well, guy. And it, you know, within the energy sector, the balance sheets are healthy. And to me, again, if your theme and your thesis is the economy's fine, then I think you got to own them and they're going to have their day guy. Listen, how does it work? Every time they go up 20, 30% before you can take a breath and, and cause nobody was there. And then everybody becomes an investopedia energy expert overnight. Well,

I've seen that before. And the other thing, and this is all sort of, I think they're all somewhat related, excuse me, but the home builder stocks have been under significant pressure for the last few months, and I think correctly so. And

I'm of the belief that as much as people want to call it a rate story, it's more to me a slowdown story, number one, and potentially an unemployment story, number two, because if the unemployment rate starts moving up in the way that I think it will, I think almost by definition, you're going to see more houses come to market. And this home builder trade that was sort of built on lack of inventory will unwind very quickly. So I think that's what we're seeing. But you've seen something else. Home remodeling bond sales,

people are voiding moving for a myriad of different reasons not least of which you know a lot of people are locked into 30-year mortgage rates sub three and a quarter percent so why did that catch your attention so my buddy oliver weiner who i worked with for years various student investors sent me this article this morning because he knew that i would find it interesting and so the the there was an article in bloomberg home remodeling bond sales surges americans avoid moving we'll put that obviously in the notes and so of course wall street has found their way to a new product

than housing. So to your point, the positive for this in the market in housing is really, so there's a lot of equity built into people's homes. So they don't want to, they have golden handcuffs, so to speak, because their long-term mortgages are locked in at 3% or whatever it might be. But their LTV might technically be 30% at this point, guys. So if they need liquidity, they can tap it. Home equity on a HELOC, as we call it, or a second mortgage you can take out. There's also a new product, Guy, where you're selling a portion of the future value of your home. That's where things start to get dicey. That's almost a reverse mortgage of some kind. So

The product is growing. I think it was 18 billion backed by these loans last year, and I think it's going to grow again this year. It's just something to keep an eye on. Annali Capital is involved in it. Mr. Cooper is involved in it. Listen, Wall Street sees a chance to come up with a new product. Guy, there's no issues right now in it, so I'm not saying this is going to blow up anytime soon.

Securitization means dollars to Wall Street. And so it's something to keep an eye on. And so I guess what I'm saying is the offset from the economic impact of the housing market not contributing to GDP is potentially offset by the amount of liquidity that people can tap in their homes. And of course, Wall Street is going to make it function in a certain way. Listen, not only people tapping into HELOCs and listen, I guess they should for all, you know, by all means, they're also tapping into 401ks and

you know the question is are they doing it because they can and i'll ask you this question or because they have to which and look i know the answer to these questions are typically a little of each but one is typically more than the other i'm sort of in because they have to camp uh for a lot of different reasons you know where do you find yourself on that listen angelo gordon is estimating that it's a two trillion dollar market particularly

potentially. Now, that assumes home prices are flat. If home prices come down, obviously, that comes down. So the answer is yes, Guy. And I don't know the makeup. There weren't as many arms out there in the last few years. People locked in for longer, about 10, 15, 30. But every year that goes by, you're coming up for recess for people that locked in five, seven years ago. So I'm not sure, Guy. I don't think this is going to be the driver or the issues that are going to hamper the economy or the market this time around. I think it's private credit. That's a whole other

episode we can go into and by the way who's coming into the space private credit i mean so let me ask you this and you just said it you don't see anything structurally wrong necessarily you don't see any necessarily systemic risk here but you see the beginnings of something is this similar to what you guys saw in terms of just connecting dots you know back in 07 08 09 well if you shift back to private credit i would say here are the similarities

So what were the banks doing? The banks were providing lines of credit or warehouse lines to mortgage companies to go produce mortgages, to then sell them back to Wall Street so they could package them and put them in the form of CDOs, right? That's how the machine worked. When the mortgages started to underperform, what happened? The banks cut off those lines and then the mortgage companies were stuck with those mortgages on their balance sheet and then they went bankrupt because they couldn't offload them anymore. So that machine obviously keeps going. We're nowhere near that level necessarily, anywhere near that level

actually in private credit, except banks are lending to private equity to go out and get these deals done and all this other stuff. If bonds or if these deals start to underperform,

inevitably the banks will cut back the lines of credit that they're offering. So it's the same mechanism guy, right? Is because what are they doing? They're taking those and they're selling them to pension funds or selling them to insurance companies. And what are they doing also? Putting them on the retail channels. So these large investment banks, all of a sudden retail wins, right? Guess what you get? You get to own private credit. And guess the fees that you're paying. They're more than 2% guy when all the fees are factored in that retail investors are now paying. So anytime you see it get to the retail investor, a product,

you know that you've gone through the other channels. So that's the stuff I watch that scares me. That's behavioral finance 101 to me. And so that's what I'm watching on that end. But again, let me just say this guy, this is very important, I think, for people to understand. The reason that the mortgage market took so long to quote implode from the signs that we saw to when it actually did was the invention of new mortgages, ninja loans, 228s, 327s,

subprime mortgages were pre-paying at such a rapid pace. People said, "This time is different. Subprime is different this time." Well, loans are being modified as we speak within private credit. They're picking, they're just not up to the standards that banks had traditionally lent to. So again, don't compare the two, but they rhyme, right? But they don't necessarily repeat, but it is gonna be an issue at some point.

With you, and I think I'll say this, and I think you probably agree with it. I think as fast as things happened in 07, 08, 09, I think things just happened faster in today's world. So if you're catching glimpses of this, which you are, I think you could start to see things accelerate in a way that, again, I want to be clear, nothing to sort of be worried about yet, but the market should sort of be...

aware of without question, understand how quickly things can happen. Real quick before we sort of go to a different subject near and dear to your heart, retailers, and again, you were early and right about a number of different things, not least of which Walmart. Now, the concern around the Walmarts and the Costcos might be valuation, but one thing is crystal clear to me. I mean, they are winning in this environment and winning in a meaningful way. I guess my question to you, does that winning streak continue?

Well, you're seeing it now filter through the dollar general. We've seen the earnings come through. I know the stocks are acting a different way, dollar general, dollar store, but you're seeing the high income consumer start to trade down a little bit. I think that's going to continue. And the massive economies of scale that Walmart has, again, I'll say it again, I'm not long in anymore, guy. I've been out of it probably for the last five or 7%. I will not short that stock because

because valuation is not a good reason to do it. There's other ancillary businesses, which they have, which aren't even ancillary, they're e-commerce businesses growing quickly. So there's other things that Walmart is doing. And if the economy does slow, I actually think it's gonna be very defensive at that point because you'll even get more of a trade down potentially. So Walmart's still a place to be guys, just hard to get excited about it at where we 40 times, I think at this point, numbers roughly on that. But I wouldn't necessarily sell it if I was a portfolio manager that I had to allocate something in retail.

on the day of the kentucky derby you were in the paddock and i texted you and you told me who you thought would win the race and that was what 20 or 19 20 i mean 20 horses in the race so obviously i mean you can do that math but some horses are more favored than others but you chose the winner of that race good on you as they say

you also did a good job in the preakness obviously you had interest in a certain horse but i also think you were pretty clear who you thought would win that race as we sit here um as people are listening they have time to bet on the third leg of the triple crown of course the belmont stakes which for the second year in a row is not taking place in belmont racetrack but out in saratoga the spa as they say as they fix up belmont which will be back next year

So thoughts on that race, because your prognostications in the stock market are wonderful. They're also wonderful on the dirt track that horses run around. Well, I appreciate that. And I want to talk one thing gambling before we get to that. And that is what's going on with Kalshi and Kalshi's event contract contract.

company everyone knows about once trump won they decided they were going to basically do sports gambling they launched it on the super bowl um it's taken off ever since um you have crypto.com you have robin hood now offering some of these events you know on their platforms um i'll just note this the calci 80 now of what they take is in sports and the head the cftc um

on the CFTC is a board member at Koushi. He says once he's nominated, he'll give it up. Donald Trump Jr. is an advisor to Koushi. Here's the problem, guy. You know, I've been on these gambling stocks long for a period of time, not on DraftKings per se recently, but certainly FanDuel, Flutter, and then Genie.

genius sports it's a big problem for these companies because calci is now able to go to texas and california the markets that are off limits right to these traditional gaming companies and it's starting to have an impact and so 85 million dollars or 86 million dollars was bet on the masters on calci i know that doesn't sound like a lot

But I think it's going to get worse for these companies. And until something's done regulatory wise, it's an issue. So and by the way, I mentioned that because Kalshi is not taking horses yet. But I think it's a matter of time. And, you know, in terms of DraftKings, you had that Illinois headline the other day as well. So, I mean, yeah, there's some headwinds for sure. Yeah, effectively, the tax rate in Illinois is 50 percent now with these extra fees that they want to charge. And they'll pass it on to the consumer and all that stuff. So, you know, it's a shame. Listen, you can have an opinion on sports gambling. I totally get it.

But these companies went through the right channels to get approval, and it's a big state revenue source, right? So these states have got to be asking themselves, hold on a second. These event contracts are coming in my states, and some of these states have banned it, but Couchy's not listening. And they're saying, hold on a second. You can't do this because we were counting on this regulated regime. Anyway. Okay. On to the Belmont stakes. Yes, sir. So, again, big key here is it's running at one and a quarter. Okay.

up in Saratoga. So traditionally, the Belmont is one and a half miles. And so that's why it's the quote triple crown because it's the hardest one. One and a quarter derby, one and three sixteenths Preakness, and then one and a half miles for Belmont. So even if there was a triple crown winner, it would have an asterisk.

next to it guy. And so with that being said, there's eight horses that are running. Our horse, one of our horses that scratched the Kentucky Derby, Rodriguez is a three horse. He's currently six to one. Remember that's a Baffert horse. Mike Smith will be on him this time. I really like him. He's run five times. He's hit the board all five times. So I like him in this race. Sovereignty at two to one who won the Derby.

basically did not run the Preakness, shipped to New York literally right after the Derby. To me, Sovereignty's the horse to beat. Obviously, like our horse, Rodriguez. Sovereignty's a two horse. He's two to one. And to your point, Journalism, which came from way behind and won the Preakness and came in second in the Derby. So you have the Derby winner, the Preakness winner lined up. All the money's on those two. Journalism right now is the favorite. I think when that race goes off, Sovereignty will be the favorite. So I like the two, three exact box with Rodriguez. You can throw in the seven Journalism, could hit the board and

paisa everyone's putting money on here who basically got into the derby uh there was 19 horses actually the derby guy because there was two scratches including ours and so he was actually one of the ones that got in because they ran a decent race so people like that horse as well um one note guy i think this is really key i like to look at horses that have run at saratoga as a two-year-old as crazy as it might sound i think that horses are very smart animals i know where they were sovereignty ran there was a two-year-old at six furlongs okay

that's so a mile is eight for a long so you can do the math a mile and a quarter is basically 10. in that race he was came out of the 10 hole and he was got bumped around on the outside and when it finished he was coming up the fastest he would have won it if it was a a mile even so anyway i think again that adds to kind of what i think sovereign you can do here so i see that that's why we ask you you break things down so two three exact the box

Uh, two, three, what was the other number? Two, two, three, seven is journalism, but seven throw that maybe a trifecta two to win. Uh, you know, you don't bet a play. You don't bet a show at a horse is two to one. You can do when I would, I wouldn't do place, but I like sovereignty in Rodriguez. So.

I love what you're doing. I love your work. You know, I'm a fan. Love when you're on Fast Money. I love when we get to chat. I love what you've done with the On The Tape podcast. I love you too, Guy. I don't love your hair, but that's another conversation. I'm in the studio for some reason versus at the home studio, what I'm looking at. So yes, I need that. Ladies and gentlemen, thanks for joining us. We'll be back next week. Obviously, Danny, you're the man. We'll talk to you soon. Thanks, Guy.