Guy, Dan and Danny discuss the problem with the Federal Reserve (0:1:00), #energy's epic decline over the last two weeks (9:24 - 12:31), why #Apple #earnings could be the #stock #market boogeyman (16:23), Dan buying shares of #Meta (21:10), the state of #semiconductor stocks (22:35), bank stocks getting bludgeoned (24:42), the crypto /Coinbase crash (28:18), why the next 2-3 months will be crucial for the stock market (32:30), Danny gives an update on Cannabis (38:14), and the wild week for #tesla (39:54).
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01:17 platform visit iConnections.io. So what we're seeing here is sort of the
01:22 aftermath. Now everything's starting to sort of go pear-shaped and again Federal
01:28 Reserve was begging for inflation for years. Well they got their inflation. Now
01:32 we're on the other side of the mountain Danny and they're trying to tamp this
01:35 down and in doing so look what's happened in the economy right before our
01:39 very eyes. All the economic data that's come out over the last couple weeks has
01:43 been in a word shitty and my sense is it's gonna get shittier and that's what
01:48 they wanted on the way in and now that's what they're trying to fix on the way
01:51 out and their ramifications for this and you know what upsets me the most and
01:55 people say why do you get so exercised about the Federal Reserve it's because
01:59 the people they screwed going in were the lower and middle class people and
02:03 the people getting screwed on the way out are those same people they're
02:06 getting on both ends and you know who wins? The top, the wealthiest they went on
02:10 the way in and guess what they went on the way out. You know why? Because they'll
02:13 go to their fucking cocktail parties this weekend and they'll laugh about oh
02:17 I paid six dollars a gallon oh I paid six and a half dollars a gallon and it
02:21 doesn't affect their life one iota and that to me that's what's heartbreaking
02:25 about this entire thing and you know what you can at me on Twitter it's all
02:29 at the feet of the Federal Reserve. I know I put a bad song in people's head
02:34 last week when I did the Barney cleanup I have another child song School of Rock
02:38 Conjunction Junction you've learned the thing that was you like I'm just a bill
02:42 how about demand destruction what's your function knocking down oil and goods and
02:48 services okay so the Fed didn't see the inflation coming transitory transitory
02:53 it's here here they come again they go raising rates raising rates companies
02:57 we've talked about this have already been telling us what's been happening I
02:59 saw this tweet this morning when I was looking at the global PMI number from
03:03 Liz Young let me just read this S&P global PMI survey indicates factory
03:08 production quote fell to a degree only exceeded twice in the 15-year history of
03:11 the survey at the height of the initial pandemic lockdowns in 2020 and the
03:16 global financial crisis in 2008 look out below and when you look through those
03:20 numbers not just the headline number it tells you what new orders are gonna be
03:23 it tells you it is telling us that slowdown is here we are here we're not in
03:27 a recession yet by definition but we are already they're saying it's gonna happen
03:30 in Europe in 3q 4q guy and I you and I differ a little bit I don't think that
03:35 you specifically think that this all falls at the feet of the Federal Reserve
03:40 all no I'd say easily 75% of it and my only point is just to kind of balance
03:45 this out a little bit and to push back is that when they wanted inflation above
03:49 2% what did we have going for us well we had a situation where technology was
03:55 seeping its way into every industry and by definition as you would say that's
03:59 just deflationary and prior to the pandemic I mean we were worried about
04:03 how we're gonna pay people if the jobs are gonna get automated and technologies
04:07 this deflationary force so to me again I think that there were some things in
04:11 play already and I think we're gonna go back to those guy I mean I really do I
04:14 mean we are right now gonna see a unemployment tick up that you guys
04:17 think over the balance of this year we're gonna go from 3.6% which was a 40
04:21 year low pre pandemic we're back there we got up to 10% and we're gonna find
04:25 ourselves really kind of grappling with some of these same issues again but
04:28 that's the thing Dan I think in the forecast for the Fed that they put out
04:31 again it's not all about the Fed but the forecast they put out I think they have
04:34 an employment at 4.1% next year you can check that correct me if I'm wrong but I
04:38 think it's gonna be potentially much higher than that companies are already
04:41 laying we saw new announcements today Netflix we're seeing announcements other
04:44 companies laying people off yeah it adds up you know and it adds up and those are
04:48 decent paying jobs too those aren't just low paying job JP Morgan in their
04:51 mortgage servicing unit a thousand people gone yeah so what's my problem
04:56 with them them being the Federal Reserve again you're right Dan technology is the
05:00 greatest deflationary force in the history of mankind I've said it a hundred
05:05 times on CNBC's fast money I've said it here the fact that I know that is
05:10 interesting the fact that they the Federal Reserve couldn't acknowledge
05:14 that is a real effing problem I'll say this because if they did acknowledge it
05:19 they would have seen wait a second we're fighting this one battle we have
05:23 deflationary forces but there was inflation everywhere else and they just
05:28 chose not to acknowledge it now it's coming to bite them in the ass in spades
05:32 now you'll say well their mandates are there the way that their methodology is
05:36 broken probably is but they're trying to fight a 2022 problem using a 1950s
05:42 playbook and that's a fucking problem in my opinion sorry to curse the other
05:47 problem is I think people are just so fixated on yields and to big input for
05:51 things so they can look at them but when you talk about the Fed on the brink of
05:55 losing control if they had any credibility when you have the two-year
05:58 move in one today yes a range of 287 to 310 in one day the 10-year 3 to 3 18 in
06:04 one day in 30 year 314 to 326 okay that tells you that they're not confident
06:09 that the Fed has a grip on anything we are going to go to a sustainable
06:12 inversion on the 210 we're within five basis points the three and five and
06:16 seven are already inverted to the ten but the the two is gonna go and we're
06:19 gonna start to realize what's ahead and what's ahead people stop focusing on
06:23 where yields are as an indication to buy the Nasdaq stocks right just lower yields
06:27 things are slowing and so we've talked about a Dan is harped on this you guys
06:30 have the S&P earnings estimates for 2022 are high by probably 10% at this point
06:35 at a minimum because the back half is gonna be slow yes people will look to 23
06:39 to start to guide them at the farther we go down in 22 but I think it's a fool's
06:43 game right now buying and selling like I said by quality stocks when they're down
06:47 right you will be fine over a long period of time by doing it don't try to
06:50 game getting back into the shit and the junk and the meme stocks as well to
06:54 where the 10-year yield is because what it's telling you is that things are
06:57 slowing this long dramatically the feds gonna overshoot here they're gonna go
07:00 at least 50 in July and I actually think there's a chance Dan and already have
07:04 $5,000 better than a cut in December I know it probably won't happen but
07:06 there's a chance they'd pause in September and a pause in September people
07:10 like yay but why would they be pausing they'd be pausing because it's so bad
07:13 and things have slowed down dramatically how do we get out of that cut rates
07:17 let's play it out let's game it out and say they pause in September you know
07:20 what's gonna happen again all these commodities now under pressure they're
07:24 gonna reaccelerate to the upside so the inflation that they're trying to combat
07:28 maybe they'll fix it for a couple months it's gonna come right back so they have
07:31 penned themselves into this corner that there's no way to extricate themselves
07:35 from that's just my opinion and again this is something we were talking about
07:39 literally for years this path was so clear to I think Danny I know you I know
07:43 me Dan you've had some thoughts one way or another about this but it was crystal
07:47 clear to me that we're going down a path that they couldn't get themselves out of
07:50 and now here they are now I don't know what happens to the market on the back
07:53 of that I happen to think here on this Thursday as we're taping this I think
07:58 the market could rally eight or nine percent from here in the S&P 500 I think
08:01 we can get up to 4100 over the next few weeks and then we'll see what happens
08:05 when the granddaddy of them all Dan Apple reports at the end of July so do
08:09 you guys think that the buildup in retail inventories what's likely a
08:13 buildup in semiconductor energy you guys think that's inflationary or
08:16 deflationary so I'll take the other side of that I think that when the Fed pauses
08:21 in the fall it's going to be because they had the fastest rate increase of
08:25 basically 3% Fed funds in any time period in the last I don't know 100
08:30 years or something like that and so if we know that it takes what six to nine
08:34 months for those increases to work themselves into the economy Danny's
08:39 shaking his head I'm gonna say that they have to pause they were also going to be
08:43 running off their balance sheet so they run the risk of actually over tightening
08:46 if they don't do that I just think that we're gonna find ourselves in a
08:49 situation where I don't think inflation is gonna reignite and a lot of these
08:53 things that have already broken I mean like I think we're gonna talk about
08:55 energy I think we've seen it wheat we've seen it in copper we've seen it in a lot
08:59 of industrial metals I think there's a really good chance that literally
09:02 inflation expectations were at their height when the Fed started raising in
09:06 March and therefore we're gonna see a moderation of this going forward and
09:10 then again I think we're gonna get back to that pre pandemic GDP average of about
09:14 2.2 percent prior to the pandemic for the 10 years 2.2 percent they were trying to
09:18 get inflation above 2% we know where yields were there were too low for too
09:22 long and I think there's a really good likelihood that things get normalized a
09:26 year or so out after the pandemics over right two comments we're only at 150 to
09:30 175 range okay so what CME Fed funds tracker pricing 360 now at the top of
09:36 the cycle versus 4% a week ago so it's down 40 basis points I don't think we
09:39 ever get to three six that's okay that's my pretty so one thing that's being
09:43 overlooked here is war in Ukraine and when I say war in Ukraine it's no longer
09:48 about Ukraine Russia's about to go into Estonia and no one's paying attention
09:52 they fired some warning shots over they made a comment Putin had a comment on
09:55 June 10th which said Peter the Great in 1704 conquered Narva which is the
10:01 Russian-speaking town in Estonia it seems now is our turn to get our lands
10:04 back now he's doing exercises that is a NATO member right let me compound that
10:09 onto something else because we I can't predict geopolitical things but no one's
10:12 paying attention Germany is now at 58% of their natural gas storage capacity
10:17 but now entering I guess stage two of three of them basically rationing so now
10:22 we're in end of June July starts thinking about the next winter month so
10:25 let me just counter Dan's point a little bit I think where there's going to be
10:28 some major issues and some things yes will absolutely come down in the
10:31 inflation but certain things may stay high Europe's in deep shit and they're
10:34 deep shit you're seeing it in their numbers now they're a little bit worse
10:37 than ours in terms of things long but imagine this situation they go into an
10:40 eight so that's being underpriced a little bit and that can cause recession
10:43 now I think the ECB will react and do what they have to do to stimulate the
10:47 economy so I can counter some of that but I just wanted to mention that because
10:50 no one's talking about it at all and I think it's worth mentioning I'll say
10:53 this as well so people say Europe's not a big deal well when you combine the
10:57 Euro nations whatever it is 1819 countries it's the largest economy in
11:02 the world and we're in a country of 350 million people they're collective of
11:06 about 450 million people and I agree with you and I'll just say this in terms
11:10 of the Putin thing I missed that day of geopolitics in college but I'm just
11:14 gaming it out in my mind just the little knowledge I have about this man losing
11:19 to Ukraine is a slap in the face it's an embarrassment losing to NATO he could
11:26 probably live with that I tried to take him on I failed but at least I tried to
11:30 restore the Soviet Republic or the Russian Republic or whatever is in his
11:35 mind so what's my point if you can bring NATO into this knowing full well he will
11:40 lose he'll absolutely try to do that well let me just add one thing on this
11:43 because it's important you mentioned how big Europe is Germany is the largest
11:46 obviously fifth largest economy in the world so when they say rationing they're
11:50 talking about to their companies imagine if you're an auto manufacturer in
11:54 Germany or whatever and you say okay you can only produce X because we're
11:57 rationing energy Putin knows this I mean he's been using this as a weapon for
12:01 years the Nordstrom one pipeline which is active - never got built they're
12:04 already cutting that's what's happening here just so everybody that's listening
12:07 understands that this is a big issue people are gonna know it's not it is and
12:10 so something to look at because it has a direct impact on us no question I'll say
12:13 this as well again politics bore the shit out of me and it doesn't really
12:16 matter one way or another what my politics are my politics bore me but
12:20 every time President Biden says Putin's price hike I'm not really sure who's
12:26 talking to him who's sort of in his ear but who does that benefit Vladimir Putin
12:31 I mean he loves that I am taking on the United States and I'm ramming it up
12:35 their ass by myself so every time he utters that phrase that's just one more
12:40 feather in Putin's cap yeah I think what's really clear the Biden might have
12:44 also missed that day in geopolitics 101 their messaging in and around the energy
12:49 situation has gone from bad to worse it really makes you feel like they don't
12:52 have a great handle on it guy you were jumping up and down in late November
12:56 when they said they were gonna tap the Strategic Petroleum Reserve this is not
12:59 exactly what it was meant to do you also said it was just really not something
13:03 that was gonna make a big difference one way or another well here we are they're
13:07 talking they go back and forth with their policy about what they want to do
13:11 about it and they get it I believe they have good intentions just you know I
13:14 don't think they want US citizens paying $5 a gallon and have it cut into their
13:19 disposable income by any means but to your point it's also a political thing
13:22 as we get closer to the midterms there's nothing that they can do or say right
13:27 now that will change the course for the midterms and how people feel about
13:30 inflation which makes them feel vulnerable about their economic
13:34 situation so again I think from threatening windfall taxes the big oil
13:38 companies to doing tax holidays on oil I mean the list goes on and on it's back
13:43 and forth it's like a ping-pong game that I don't think is serving them
13:46 particularly well at all now say this and Amanda just texted us to us and this
13:50 is again Thursday afternoon but at 23.7 percent loss this is the third worst
13:57 two-week over the course of ten trading days drop for the S&P 500 energy sector
14:02 over the last 40 years I mean so if you think about it maybe some of this is
14:07 starting to work maybe some of this Fed jawboning and subsequent action is
14:12 starting to work the question is again how long and how sustainable is it going
14:17 to be because I believe maybe incorrectly it's a supply-demand
14:21 fundamentals for oil still favorite to the upside we had really similar
14:25 dynamics into the financial crisis in a lot of ways we didn't have the
14:28 geopolitical situation but we did have China undergoing back in 0809 a huge
14:34 fiscal stimulus and that was one of the things that caused that spike in
14:37 industrial commodities we've been talking about this for a couple of weeks
14:41 so you have the SPR you have a tax holiday and then you have Biden going in
14:45 a couple weeks to see MBS and again that might have been all you needed to do to
14:50 understand that the administration was at least very focused on getting the
14:54 price of oil down which optically does something for them politically one way
14:58 or another I don't know if it's gonna help consumers at the pump though listen
15:01 it last in first out for these investors that chased obviously energy at the top
15:04 they couldn't take it anymore they were underperforming all their indices
15:07 because they were underweight all they went to overweight they're like shit I
15:10 knew it now they're probably over sell it to the downside and get out of these
15:13 positions quickly right so that's been going on the market is now taking money
15:17 out energy and sticking it into as Dan you just but do they come back though
15:20 Danny if you think about it because the XLE which we know 40% of the Chevron and
15:23 Exxon is down 25% since June 8th the day that Exxon made a new all-time high I
15:29 will tell you why they come back yeah from what level I do but they will
15:32 stabilize when we start reporting second quarter earnings what sector is gonna
15:35 look the best I get it things are priced off future but remember a lot of these
15:39 models that are built on these companies they don't have a hundred twenty four
15:42 dollar oil in them they have 80 90 95 so if you look out on the curve and where
15:46 these stocks can trade who's gonna be returning the most capital potentially
15:49 see energy companies who have the best balance sheets right now the energy
15:52 company so unless oil goes down below 90 85 80 and we start talking about a real
15:57 and what would cause that to happen obviously would be just a massive
16:00 recession in my opinion then I think you can still own them so but you think
16:02 we're gonna have a massive recession I mean I think we're gonna have a
16:05 recession I don't think we're gonna have a massive recession we're gonna have a
16:07 recession yeah stock market going to 3200 doesn't necessarily mean a massive
16:11 recession it means that we're probably in one not how big it's gonna be but
16:14 listen the one thing you said earlier - I want to comment you talked about
16:18 quantitative tightening the the allure the nine trillion bogeyman it's a big
16:22 shadow over everything in the market and so every time the Fed does something in
16:26 the back of people's mind is oh yeah but they're also gonna be selling treasuries
16:29 unwinding treasuries and selling mortgage-backed securities and has an
16:32 impact that's where I think I said it all along that's where the Feds made
16:34 their biggest mistake in my opinion and listen I don't want them to be dovish
16:38 for the same time they didn't have to pull that right away we pivot from the
16:41 Fed here because you know we're talking about markets and the markets at least
16:44 the stock markets made up a bunch of stocks it's actually made up of a small
16:48 handful of stocks right the S&P 500 25% of it is about six or seven stocks that
16:52 we talked about a lot and those six or seven stocks make up basically 50% of
16:56 the weight of the Nasdaq 100 and I think from here on out if you think about where
17:00 the S&P is it's down about 20% of the year and the Nasdaq's down a little less
17:05 than 30% of the year very near the lows trying to put in a little bit of a
17:08 bottom I think it's interesting again Thursday into the close here we're
17:12 seeing a lot of these Nasdaq names that have been very hard hit down 60 70 80
17:16 percent squeezing for instance here's just a name JP Morgan upgraded
17:20 snowflake today a stock that trades at 20 times sales but it's up 10% right I
17:25 can go down a list I see data dog up 10% I see Z scaler up 10% I see Roku up a
17:31 lot Twilio up 10% so we're getting a big squeeze but we're also seeing big
17:35 tech we're seeing Microsoft Apple each up 2% and Amazon up three and a half
17:39 percent or so these companies and what they have to say about the current
17:44 situation forget the last three months in the back half of the year that's
17:47 really gonna determine I think the course of employment if they're having a
17:51 hard time they're gonna look to cut costs and we're already starting to see
17:53 that and then also it's gonna be CapEx spending and that's it that's the thing
17:58 that matters over the next month I agree with you so let's talk about the reasons
18:02 why I think this is happening again we talked about it earlier 10-year yields
18:06 have come off almost 50 basis points five zero closer probably 45 but I'm
18:12 rounding up a little bit for a sense of drama here so as rates have come down in
18:17 the 10-year I think people are saying wait a second the reason why we sold out
18:21 of a lot of these high valuation names was on the fear of rates if rates move
18:25 is gonna abate maybe we should get backed into them that's what I think
18:29 we're seeing here on top of which to your earlier point about energy people
18:33 are clearly fleeing energy giving that statistic I gave a few minutes ago it
18:37 all makes a lot of sense to me and I think it's gonna continue to play out
18:41 over the next month or so into Apple earnings and I think that's gonna be
18:45 your boogeyman bogeyman Humphrey Bo whatever the hell it is it's gonna come
18:50 in the form of Apple on or around July 26th reporting whatever quarter they
18:55 report but the guidance they give I think that's what's gonna break
18:58 everything and a lot of people think Apple 200 I'm not one of those people I
19:02 do think Apple 215 and I think that would correlate to the next leg low in
19:07 the broader market Danny listen I think if Apple's gonna miss it's before July
19:11 26 because they're not dumb enough to wait they're probably pre no it's
19:14 interesting I don't mean to cut you off that's really interesting and if that
19:17 happens I don't know if that's better or worse so it's interesting you say that I
19:21 just think that they've seen what's going on with that and they have a
19:23 pretty good grip on their business and they can use whatever excuse and maybe
19:26 it's a by the news event go back to January 2nd 2019 remember there was a
19:30 huge growth scare globally and that was one of the reasons why the stock market
19:33 had been selling off in q4 and remember China was really at the epicenter the
19:37 first trading day of the year Apple pre announced after the close the stock was
19:42 down big in the aftermarket and then that was it and go look at the chart
19:46 from January 2nd 2019 so to your point I think that yeah the stock has come down
19:51 from 180 it was traded as low as what 129 or something like that there's a
19:56 whole host of other names though that are really having a tough time with
20:00 supply chains that had basically been indicating for the better part of 2022
20:05 that they were doing okay with it Apple was one of them Tesla was obviously one
20:09 of them and I think that this is probably the quarter where the least
20:12 have to acknowledge how difficult the current period is and how it's gonna be
20:16 for the back half of the year so not to think we're all doom and gloom here
20:20 something caught my eye today being Thursday Wall Street Journal article
20:24 saying the following our value stocks Danny Moses I'm curious your take
20:27 Facebook and I'm always gonna call it Facebook if you don't like it listen to
20:32 another podcast Netflix and PayPal thoughts on that yeah so the footsie
20:37 Russell they're gonna do the rebalance tomorrow at the end of the trading day
20:41 and they have a value fund and they have a growth fund and these three stocks
20:45 that you mentioned PayPal meta and Netflix have been in Russell growth so
20:49 they're gonna take a lot of their stock out of Russell growth that's left some
20:51 in there they're gonna be Russell value and they base it upon growth forecasts
20:56 and sales and price to book value well put that in perspective PayPal is now
21:00 three times book I think was eight or nine times book at one point at the high
21:03 so I don't know how you they feel about it but if you're a value investor and
21:07 again I talked about this line because I think retail investors need to
21:10 understand how these mutual funds you control a ton of money how they get paid
21:13 they get paid to outperform so now if you're Russell value is your mark
21:18 indice II that you need to beat to get paid now you're gonna have to make a
21:21 decision is PayPal do you want it in there what is it and so it's interesting
21:24 though that tells the story of the market overall kind of growth to value
21:27 of what's been going on I bought a little meta Facebook sorry guy today it
21:30 made a new 52 week low yesterday I think the downside is probably to that 2018
21:36 low maybe it's like 120 or so the stock currently trades at existing consensus
21:41 of 15% EPS and 15% sales growth next year eleven and a half times 80% gross
21:45 margins and to me that's value so you'd have to tell me that 2023 estimates are
21:52 way too high and the margins are gonna come in for that not to represent any
21:56 sort of value this is a hundred and twenty five billion dollar revenue
21:59 company PayPal you just gave the stats versus book it's three times now I
22:03 bought that last month that stock was 311 paid 80 I bought a little more at
22:07 72 this week so my point is is like those stocks have been under pressure
22:11 and Netflix this week all of them making 52 week lows I wonder if has something
22:14 to do with the rebalancing into it and might we see a pop in those and they
22:18 really are trying to bottom and they're the sort of ones where I think you guys
22:21 we've all traded through bear markets at some point bad news is not enough to
22:26 have stocks that are down 70 or 80 percent go down anymore they start going
22:29 up on that sort and I wonder Danny is the arc trying to balance it is it
22:32 trying to bottom the S&P made new lows okay this week right and the arc didn't
22:36 dark didn't break last month's arcs one stock at this point but let me just say
22:39 Russell Russell growth down 29% year-to-date Russell value down 13% I
22:43 think massive difference any of these tech names I know you've been on the
22:47 energy trade is anything piquing your interest at all if you're thinking out
22:50 like three to five years I think Facebook and PayPal I've always liked
22:54 PayPal I mean it's a great these companies aren't going anywhere a lot of
22:56 companies out there that are down 80% that will be nowhere they'll be gone in
22:59 five years these companies will not be so you got to pick your poison and Dan
23:03 you talk about dollar cost averaging into things yeah dog not a bad time to
23:07 probably yeah well just just to be really clear and guy you like the
23:10 Netflix story for years and years as long as I can remember doing and you
23:13 said this probably a hundred times on fast money never bet against Reed
23:16 Hastings he's nailed a bunch of really key pivots there in probably this is the
23:20 most important one ever when you think about the competition but here's a stock
23:23 right now if you want to start looking at 2023 estimates gap earnings are
23:28 expected to be up 11% the stock trades at about 15 times so this stock has
23:32 never been that cheap expected revenue growth of maybe 10% or so I actually
23:36 think you could see the move into ad based model capturing some of the subs
23:42 who are not paying I think that could be a reacceleration in growth for this
23:46 company I agree with that I think Netflix for the first time in a long
23:48 time you can make a pretty compelling case on valuation because I don't think
23:51 Netflix is going anywhere anytime soon and I do think Reed Hastings will figure
23:55 out another name that caught my eye today sort of on the positive side of
23:58 things Qualcomm today made a multi-year low down to 118 and change levels we
24:04 haven't seen literally for two and a half years or so I can make a very
24:07 compelling case for Qualcomm on evaluation a name that everybody loved
24:11 six months ago when I was trading north $190 and still had a decent valuation so
24:16 a lot of these names have been taken out to the woodshed that are not going
24:19 anywhere they just I think to a certain extent they've been a victim of their
24:22 own success go back to Apple for a second and Qualcomm there are firms out
24:26 there that pay to find out exactly how many chips are coming off the assembly
24:31 line what the orders look like how many hours these factories are running so you
24:35 already know Qualcomm that's a trading down because we know things are slowing
24:39 to dance point to your point maybe it's a by the news event once it happens so
24:42 when Apple reports don't worry there's a lot of hedge funds that have people out
24:45 there that pay for these services to try to find get in much information they can
24:49 so again to put everything on Apple I don't know but to your point guy you're
24:53 looking at a stock right now maybe it has a little bit downside but we know
24:55 that semis are always the most cyclical plays on the economy right that we know
24:59 that all right so we hit energy stocks crude 105 integrators are down 25%
25:05 trailers down 30% another group that's really caught my eye even though I'm
25:09 seeing a lot of stuff flash green into the clothes here a lot of the tech stuff
25:12 we just talked about bank stocks act horrible so JP Morgan is a couple
25:16 percent from multi-year low actually there's a gap going back to late 2020 I
25:20 think it's between a hundred and one ten or so stocks just above 114 here Deutsche
25:25 Bank not a name that we talk a whole heck of a lot about their North American
25:28 operations have been absolutely dismantled over the last couple years
25:31 but it's down 12% bank stocks are saying something we know that we have these
25:33 stress tests coming out after the close day again probably a non event if there
25:37 was anything bad there disaster for any of the individual names I'm just saying
25:40 so we got bank stocks acting that way we got energy stocks acting very poorly
25:45 industrial stocks not acting well guy you mentioned this to me earlier we were
25:49 talking about so the resource names FCX is down what 15% in three trading days
25:54 look at where cat and deer are trading so there seems to be stuff that's like
25:58 very sensitive to a slowing economy that act really poorly and the stuff that's
26:03 working right now is the stuff that's been bludgeoned and the valuations have
26:06 been reset what does that mean to you guys can we make a near-term bottom guy
26:10 you said eight to nine percent in the S&P 500 and to your point if everybody's
26:14 anticipating some huge misses from huge market leaders then by the time we get
26:19 that news we probably don't get hit so hard and we probably rally out many
26:23 crosscurrents here I mean you mentioned Caterpillar let's talk about that real
26:26 quick multi-year low probably two and a half year low made a 52 week low today
26:31 today being Thursday south of a hundred and eighty dollars and you just look at
26:35 valuation say how can this be I think what the market is saying is guess what
26:38 all this perceived growth that you're gonna have it's gonna stop on a dime and
26:42 we'll see how that plays out but the cross currents of the market are such
26:46 that Caterpillar is telling one story to your point Dan these banks are flashing
26:51 red I don't know if people really realize what's going on with Danny we've
26:55 talked about credit being a concern again I bring up the HYG all the time
26:59 which seemingly has stabilized in the short term but it's something you have
27:03 to watch so if industrials are saying something if banks are saying something
27:08 but in near term we're gonna get this round the S&P there are a lot of weird
27:11 things are about to happen over the next three or four weeks so you're saying
27:14 warning bells are screaming in silence that is a brilliant lyric from the song
27:19 she from Green Day Danny give it to us on the banks here a little bit because
27:22 aren't you like the big short guy everything that's telling us is a
27:24 recession you just named all the sectors that are under perform those are the
27:27 leaders in a recession on the way down that's what it is but isn't it
27:29 interesting though that the banks have been selling off for months and months
27:32 and energy was going the opposite and now they're becoming very correlated
27:35 because the credit tailwinds are gone that's where I was going you know so the
27:38 buildup in credit is here Ford speaking of Ford which is down by the way year to
27:43 date is down 45% okay they made a comment yes we're having issues with
27:47 supply chain they're seeing auto delinquencies they have a huge finance
27:50 unit tick up well they're seeing it tick up cap one seeing it tick up to
27:53 everyone is saying it obviously tick up and rates and the spread on the 210
27:57 coming in like this are not good for the banks we know that we're starting to see
28:01 these weird crypto loan losses in various places we're seeing more losses
28:04 and now in the energy trade right can you imagine if that comes down there
28:07 could be losses in there somewhere but like I said last week you don't have to
28:11 own them right now the banks there's no reason to own them so you money looking
28:15 for a home you're right go into the down 80% companies that have a real business
28:18 not the ones that don't and get having excuse to do it so it's markets doing
28:22 actually that's a rational part of the market the builders we've seen at some
28:25 point those will be a buy right coming out seen housing starts we've seen
28:28 mortgage apps we've seen everything is telling us that things are slowing
28:30 dramatically except the guy that was testifying in Washington for two days
28:34 you've mentioned things that are sort of alarm bells look at what happened in
28:37 Bitcoin over the weekend I mean Bitcoin traded down to I think seventeen thousand
28:43 five hundred on Saturday or Sunday subsequently bounced but again I don't
28:47 think it's coincidental for the hundredth time that it topped out around
28:51 the same time our Fed pivoted in November and then when you heard out of
28:55 the Swiss National Bank last week which was the reason I think the stock market
28:59 sold off as aggressively as it did on Thursday that 50 basis point hike out of
29:04 the Swiss National Bank was absolutely a warning sign and I do think that's the
29:09 reason that Bitcoin took this next leg lower now I'll say this if you think
29:14 Danny this Fed is gonna pivot once again late fall early winter of this year well
29:19 to me that's gonna be the green light for all things crypto and quite frankly
29:24 I think for all things gold as well yeah I mean Seth Klarman put out I guess he
29:28 gave an interview at Harvard that he thinks nobody should own crypto and
29:31 people should own gold as part of the portfolio gave a great thesis you guys
29:34 should look up on that interview but you have these exchanges shutting down left
29:37 and right in crypto right so obviously from a confidence perspective it's been
29:41 dwindling and you look at coinbase which I don't know what it's doing today but
29:44 it's up 13% it's up 13% of 58 83 58 83 wonderful seven but it's doing great but
29:51 finance cutting their Bitcoin commissions to obviously zero I mean
29:55 that's a huge hit for them potential right man Jim Chano's who's been short
29:58 this thing the whole way down and that was one of the things competition and
30:00 obviously compression of fees listen I mean I think one of the things that's
30:03 really clear is that when the coins are going down 10,000 at a clip Bitcoin in
30:08 particular people are trading less and it really is about liquidation Danny did
30:12 you think I know that you've been tracking a lot of this meme stuff and we
30:15 could just throw crypto in there did you think the price action that guy just
30:19 talked about when you see a straight line down by 7,000 on the 30,000 number
30:23 in Bitcoin that feels like a capitulation a little bit you think we
30:27 did it I'm the wrong guy that the underbelly of that sector is something
30:30 I'll never truly understand how things and stable coins get printed and the
30:34 only reason I bring it up is it really does speak to speculative retail pervert
30:37 that's the only thing that I care about I was thinking about that over the
30:40 weekend call it trillion and a half dollars two trillion that's been wiped
30:42 here the cycle and you think about the dot-com that's really where the dot-com
30:46 a lot of the dot-com stories are pets calm it was a token you know people
30:49 retail looking for a quick hit then losing all their money and so forth I
30:52 just think from a confidence perspective in the sector it's been harmed and I
30:56 think to get a real institutions to come in and start buying here that may take a
31:00 little bit more than just the Bitcoin price is being lower quickly about the
31:04 absurdity of this market since you mentioned coinbase coinbase is up
31:08 approximately 45% from its recent 52 week low of about $41 there about
31:15 currently trading either side of $59 say wow what a move that is for
31:20 perspective though this was a $368 stock we're talking about a 45% move to the
31:27 upside and it's still think about where it is in comparison to where the all-time
31:32 high was the market is so broken in my opinion the mechanisms out there and
31:36 this just is one anecdotal thing that speaks to that exactly listen they're
31:40 gonna lose two billion dollars this year coinbase I mean that's the number so my
31:43 point is this if you want exposure to crypto don't do it in coinbase find
31:48 something else whether it's Bitcoin or aetherium or whatever it might be maybe
31:52 it's different company that doesn't have all the rags in that basket right a
31:54 little bit so I don't understand the where coinbase still trades it's funny
31:57 I sent this to Chino's I slid into his DMS yesterday it was a tweet from Ryan
32:02 Selkis who's the CEO founder of a company called Masari it's actually a
32:05 really good data company as it relates to crypto they have a cool app and I've
32:08 actually enjoyed using it but he tweeted yesterday coinbase at 14 billion is one
32:13 of the dumbest things I've ever seen in the public markets rivaled only by Apple
32:16 trading at 50% above its cash balance in 08 I can't even believe boomer miss
32:21 pricing is going to cause me to move money into the stonk market so here's a
32:26 guy who's all in on the crypto trade he's built a digital platform for
32:31 practitioners in the space it's the fact set if you will of crypto and he's
32:36 saying coinbase was crazy mispriced and he's gonna take some of his crypto and
32:41 move it into a centralized stock trading platform and buy some coinbase okay good
32:46 for him you know it's interesting though I don't want to mean to be
32:49 melodramatic here but for some reason I happen to think the next month month and
32:54 a half might be the most important period of time for this market in quite
32:57 some time and I'm just gonna throw that out there the markets trying to deal
33:01 with a lot of things here we have fourth of July holiday coming up these holiday
33:05 shortened weeks typically we sort of grind higher for whatever reason that
33:08 just seems to be how things work out but as we get into earnings towards the
33:13 middle end of July and we start to hear from these companies we start to get
33:17 guidance while this Federal Reserve is trying to hike rates while they're
33:22 trying to reduce their balance sheet to me that sort of lines up for a pretty
33:25 perfect storm so again just to reiterate I do think for the next three or four
33:30 weeks this market can have a significant rally I just don't know what's gonna
33:33 happen once we culminate with earnings starting in middle to end of July and
33:38 I'll say this I think you absolutely have to look at everything you own right
33:42 now with a fine-tooth comb because the world's gonna look a lot different I'd
33:46 believe come August and September yeah and the Fed meetings July 27th again I
33:50 hate putting it all in but that's is what this market is trading day after
33:54 Apple's earnings I believe apples to 26 don't quote me on that here's another
33:58 point that's really important because again we've traded through bear markets
34:01 when the Nasdaq topped out in March of 2000 it sold off to its lows or then a
34:06 low 40% in June just in a matter of months and then it rallied 40% the point
34:11 is that you're gonna see some absolute face rippers here and I think any
34:15 strategist who comes on CNBC or that you're speaking to you see a tweet or
34:19 something that says the bottoms in that's it it's just not gonna be it you
34:23 can't work off the sort of excesses and then have all the cross currents that we
34:26 have right now globally not just here and think that there's gonna be some
34:31 sort of V bottom so again I just don't think that the Nasdaq down 30% of its
34:35 lows and the S&P down 22% of lows is gonna be the thing that encompasses
34:40 everything that we've experienced in financial markets and the economy over
34:44 the last few years that's gonna rectify it no fucking way do your work I mean
34:48 like I said I do think we're headed much lower I do think the S&P will get down
34:51 3200 if not lower at some point during this quote cycle guy you mentioned the
34:55 next two to three months are crucial I don't see anything that doesn't mean
34:59 individual stocks can't go up it doesn't mean you can't own a lot of
35:01 stocks that have been absolutely punished we'll start showing some
35:04 relative strength that was kind of the point about some of those names like
35:06 down 60 70 80 percent and the only only way to take a multi-year time horizon is
35:12 by dollar cost averaging and I'll just say this two years out three years out
35:16 the Nasdaq could be a double easily from here but try to find the stocks that you
35:21 actually believe in that you think are gonna be around in two to three years
35:24 that could be up to three or 4x and Facebook is probably one of them snap is
35:30 probably one of them PayPal is probably one of them and that's the way I'm kind
35:34 of thinking about it because again I think that's why so much money moved
35:38 into crypto over the last five or six years because of the potential for
35:41 exponential returns that don't exist really in the stock markets unless you
35:45 have market dislocations like we just had then you just hit the nail on the
35:49 head I don't know if you realize it but no one's patient like that this market
35:53 has all been about gamification spit out immediate gratification and immediate
35:56 returns no one is thinking like you're saying they're in they're out they're
35:59 selling at the lows they're buying back at the highs I get it those aren't the
36:02 people that are gonna be driving this market longer term but when you see
36:05 these type move that behavior coming into this market and my point is that
36:07 the professional money managers to your point that will start buying these names
36:11 that you just mentioned over time and building a base and taking the
36:14 opportunity they're not paid on absolute return they're paid on relative return
36:18 so if you can find those winners and that will be a self-fulfilling prophecy
36:21 but it's gonna be rocky here for the next couple months for sure all right
36:24 when we come back we're gonna get Danny on two areas of the market that are near
36:28 and dear to his heart cannabis for one and Tesla the other
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38:37 masterworks dot IO slash disclaimer before we get to Tesla I know you're
38:44 chomping at the bit Danny we have a question from one of our listeners
38:46 actually a dear friend of my Paul Maloney asks would love to have demos
38:51 update later this week which is now today on msos which is right in your
38:57 ballywick in the cannabis space Danny that's the advisor shares pure us
39:00 cannabis ETF which is let's see down for the year 56% cannabis is held by retail
39:07 investors not institutional by law because they don't trade on exchange and
39:10 so a lot of these institutions can't so we need to sell off in the market in
39:13 general cannabis is more than likely gonna go with it unless you have a
39:17 reason to go out and buy cannabis which would be some legislative win like the
39:21 safe act getting passed which has gotten pushed and pushed and pushed and just
39:24 yesterday found out that it's coming out of the China compete so it's no chance
39:27 to pass in another bill and it's gonna be attached to something so very
39:30 confident it'll get passed before you're in but people like why do I need to own
39:34 this stuff right now I get it it's been frustrating as hell and these companies
39:37 are doing fine I'm not saying they're outperforming but the industry from
39:40 macro perspective is growing and if you talk to any alcohol executive or any
39:44 drug executive out there they're watching the sector closely they love it
39:48 they fear it at the same time it's taking market share from them for various
39:51 uses whether it's pain medication or whether it's sleeping or whether it's
39:55 just out entertaining yourself and drinking two glasses of wine instead of
39:58 four and having an edible it's here brands are starting to emerge and so
40:01 it's not going away the question is how do you play it for better for worse this
40:05 MSOS has been kind of one of the broader ways to kind of play it it's not cheap
40:08 it's expensive to trade I'd hold it here I think I don't think there's much
40:12 downside from here especially get any type of pop in the market in general I
40:16 think these things will take back off but again it's been caught in the retail
40:19 head when they haven't done themselves any favors at all on the other side when
40:22 Tesla reported their last quarter the stock closed I think the day around a
40:26 thousand dollars they reported what was in my opinion heroic quarter and I've
40:30 said it it was the quarter that if you were long Tesla you were waiting the
40:33 last three years to hear and you got it in the aftermarket and ensuing day the
40:38 stock traded up to a thousand eighty or thereabouts since then it made a recent
40:43 low of six twenty eight thereabouts a couple weeks ago as we sit here right
40:47 now the stock is either side of seven hundred dollars Danny Moses again pretty
40:51 precipitous drop all things being equal in Tesla over the last month and a half
40:55 two months yeah listen a lot going on a lot of noise related to must personal
40:59 involvement with Twitter what that meant for his stock how much stock he has sold
41:02 he's actually saved a lot of money he could pay the billion-dollar walkaway
41:05 fee in Twitter and he saved money by selling Tesla where he did a couple
41:08 billion dollars at this point but I think it's more than that I think it's a
41:11 disconnect between his employees you're seeing people get laid off not a growth
41:15 company stocks don't trade that multiple if you're laying people off and then Dan
41:18 he gave this interview on YouTube to the Silicon Valley Motor Club or whatever on
41:22 what turned out to be what May 31st and that's another reg FT violation which
41:27 leave it at that feels like it was a K material because Dan can you read exactly
41:31 what he's a couple things here you know he talked about these two plants that a
41:34 lot of bulls have been pointing to giga Berlin and then the factory in Shanghai
41:38 and then obviously Austin and he referred I think specifically to Berlin
41:43 and Shanghai as money-burning furnaces that they're losing billions of dollars
41:48 and this has been a huge pillar of the bull case that their ability to produce
41:52 in those areas now let's be frank European demand for those EVs are
41:56 probably not particularly great at the moment if they're in a recession and
41:59 then China Shanghai in particular has been locked down so production issues
42:02 there I do think Danny just as you know I see this hitting the tape here and I
42:05 can't see what it says Tesla files definitive proxy statement with SEC that
42:10 just hit the tape at 406 as we're sitting here I'll just say this about
42:13 the stock guy it's really interesting on a day like today we just talked about
42:16 how squeezy a lot of things in the Nasdaq are Tesla goes down on the day I
42:21 mentioned this on fast money last night if you go back the last two weeks of the
42:26 last four quarters you know how he sends out this rah-rah email things are really
42:30 hard we got to pull together and make the quarter and then the stocks have
42:33 ripped the last two weeks of the last four quarters so it'll be interesting to
42:37 see if that can get going into quarter end here it doesn't really feel like it
42:41 wants to it's trying to put a little bit of a bottom in and around this 700 bucks
42:44 but again there's so much noise and then to your point Danny is like sooner or
42:48 later man when he finally guides down and the numbers for the balance of the
42:53 year just way too high it was all out there in plain sight it's just nobody
42:57 was calling on and that's a big issue you have it seems like the sell side
43:00 does not do a good job putting his feet to the fire and where's the press on
43:05 this one it's like it's unreal everyone's been censored Wall Street's
43:07 been censored because you don't want to not get those fees that may come some
43:11 newspapers Russ Mitchell LA Times writes a lot on it no one paying attention I
43:15 just don't know what it's gonna take but by being said I said it from the very
43:18 beginning as I go through this proxy I'll know this markets are gonna act
43:20 more rational when something like that gets cracked it is what it is it's been
43:23 frustrating on the short side but more frustrating to me on a believer in
43:27 capital markets and that it's just not seeing it act that way. Alright so let's recap
43:30 here a little bit we reset the stage here I think again you guys have been
43:34 very constructive on energy but I know for the last few weeks you've been
43:37 saying that I would not be piling in the sentiment seem to be all one way guy
43:41 you've been thinking that the stock market is gonna put in one of those face
43:45 rippers of bear market rallies you think we go lower but you think we go lower
43:49 from higher levels here and I guess if we're thinking about it so rates coming
43:53 in right now really quickly okay so guy you just mentioned we basically got to
43:56 three and a half percent in the ten year we're about three percent right now we
44:00 started q2 you know where the ten year was two percent which is pretty
44:04 fascinating so where could the ten year come in and what would it mean for
44:08 stocks if it were to come in let's say to 275. Yeah I want to be clear in the
44:12 short term I'm very constructive I do think we're gonna get one of these
44:15 grind higher rallies where it's gonna force people to say the bottom was put
44:19 in they're gonna get just browbeat into that and I can understand that I've been
44:23 on that side of the equation what are lower rates mean in the short term the
44:27 market will perceive them as bullish I think it's anything but to answer your
44:32 question I think the ten-year yield can go down to two point seven five percent
44:37 I think the two-year yield can vacillate anywhere between 310 and 320 you can do
44:42 that math Danny Moses that's a pretty steeply inverted yield curve yeah I
44:47 think that's what we're gonna see and I think the ten-year could pierce
44:49 certainly below 275 and maybe to 250 as inflation expectations come down and the
44:54 Fed still decides they need to go a little bit just to make sure we'll have
44:57 a big inversion and probably a recession I think we have a recession regardless
45:00 but we'll see what happens you know where I stand a year end with Dan's five
45:03 grand no we do and we got sports coming back we got the NBA draft we'll talk
45:07 about next week we'll talk all things hockey Knicks all that shit but I think
45:11 just to wrap it up constructive but folks I think now more than ever is a
45:16 time to be very attentive as to what's going on in the world I do think the
45:21 next month and a half is going to be critical hopefully we've guided you
45:24 towards this period of time and we'll be with you next week on the tape thanks
45:30 once again to CME group for sponsoring this episode of on the tape if you liked
45:35 what you heard make sure you hit follow and leave us a review it helps people
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45:54 the tape is a risk reversal media production this podcast is for
45:59 informational purposes only all opinions expressed by me and Nathan guy Dami Danny
46:04 Moses and any other participants are solely our opinions and should not be
46:08 relied upon for specific investment decisions
46:12 (roaring)