On this episode of MKT Call Guy Adami and Dan Nathan speak at the Zeta Live conference about the unstable conditions impacting the stock market.
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00:00 >> Hello, everyone.
00:02 I am Dan Nathan.
00:04 This is Guy Adami.
00:05 You might recognize him from CNBC's Fast Money.
00:09 I also do that fine program with him.
00:12 We recognize that this is the lunch hour, but I've been here moderating a couple panels
00:17 throughout the day, and we thought, you know what?
00:20 Guy and I, every day, Monday through Thursday at 1 p.m. Eastern, we do something we call
00:26 the market call, and we're like, why wouldn't we do it from here?
00:30 We'll talk a little bit about the markets, what's roiling them, the economy, and some
00:36 of the cross currents that we're seeing, and how this might all affect some of the people
00:41 out here in the audience who are very focused on a lot of these inputs that, you know, are
00:47 going to affect major business decisions at all your companies and how you guys choose
00:51 to spend.
00:52 So Guy Adami, welcome to Zeta Live.
00:54 I've been here all morning, and it's been a fabulous event.
00:57 How you doing, buddy?
00:58 This is, I mean, I'm usually the least cool person in a room, but I'm clearly the least
01:02 cool person in this room.
01:04 So it's great to be here, and thanks.
01:06 And we want to talk about what's roiling the markets and what's changed over the last six
01:10 or seven months, because for the layperson that doesn't watch this every second of every
01:16 day, clearly something has changed since the fall of last year.
01:19 No doubt about it.
01:20 I mean, you and I, we are charged with speaking about what's going on in the markets, but
01:25 also kind of demystifying a little bit about how stuff in the economy affects the markets,
01:30 how it affects people's finances in general.
01:34 And you know, right now, we're in one of those periods where it feels like a lot of different
01:39 pieces of someone's financial puzzle are all kind of coming together.
01:43 We're seeing the stock market lower.
01:45 We're seeing housing start to roll over.
01:47 We're seeing interest rates go higher.
01:50 You know, we've seen all of these inflationary inputs.
01:52 I mean, this is all coming together right now.
01:54 Put in some context how you think about what the current environment is, economic environment,
02:00 relative to past periods leading into, let's say, you know, recessions or bear markets.
02:06 You know, what's changed for me over the last eight or nine months, and if you watch Fast
02:11 Money or CNBC, you'll know that I'm not the biggest Fed lover.
02:14 As a matter of fact, I've said, and I'll say here to you folks, amongst the many villains
02:19 of the 21st century, and there are many, central bankers are going to be at sort of the top
02:23 of that list.
02:24 And not because they're bad people, but history is littered with disastrous outcomes born
02:28 of good intentions.
02:29 And if you indulge me for a second, Dan, as I do, October 8, 1871 was the day of the Great
02:36 Chicago Fire.
02:37 On that day was a fire in Peshtigo, Wisconsin.
02:40 And to this day, it was the deadliest fire in the history of the United States.
02:45 Depending on what textbook you read, anywhere from 1,500 to 2,000 people died.
02:49 And born from that fire was the National Forestry Service, and their task was fire sequestration.
02:55 And why?
02:56 Because fires are destructive, they're unsightly, and obviously in this case, they're deadly.
03:01 So if they could somehow tamp down these forest fires, we would be better for it.
03:06 And they were able to do that for a period of time.
03:08 But what they learned is a forest fire is a natural part of the cycle.
03:14 And in order for new trees to grow, old trees need to burn down.
03:18 And trees that had been impervious to fire were now falling victim.
03:22 So great intentions, disastrous outcomes.
03:24 I mention that because in the 1980s, Alan Greenspan came up with this great idea that
03:29 wait a second, I can alchemy out the recession part of the business cycle.
03:34 And he was right.
03:35 And for a period of time, that worked.
03:37 But I'm going to be 59 years old, and when I was a kid, there was a commercial, "It's
03:41 not nice to fool with Mother Nature."
03:43 And that's what they were trying to do.
03:45 And Mother Nature will get his or her revenge at some point.
03:48 And again, that's what we're seeing now.
03:49 I think we're paying for the missteps of excess of 13 years of central bank largesse, not
03:56 only here in the United States, but across the world.
03:58 And it's all coming to a head at the same time in history.
04:01 Well, did you say 13 or 30?
04:03 I mean, when you think about it, it goes back really to when Greenspan took over in the
04:07 '80s in this kind of new posture that they had towards this.
04:10 And we've spent some time.
04:11 And I moderated a couple of panels this morning with some VCs, some practitioners in the marketing
04:16 space, some investors.
04:18 You know, I mean, what's really interesting to me is that, you know, 2020, no one saw
04:24 that coming.
04:25 That is the definition of what we call in our business a black swan event, right?
04:28 And so you've heard a lot of investors speak to it as a black hole.
04:32 And so when the Federal Reserve, the guy is just talking about, lowered interest rates
04:35 to zero, that was their playbook for every crisis leading up to that in the prior two
04:40 decades or so.
04:41 And then we had all this fiscal stimulus and none of it stopped and it kept on going.
04:46 And we saw, you know, a time where a lot of you were like thinking about budget decisions
04:50 and where to cut costs and all this sort of stuff.
04:53 You know, all of a sudden it went from being really defensive in 2020 to being really like
04:58 playing on the offense.
04:59 And so we saw a lot of, I guess what you'd say, irrational behavior, right?
05:04 And so this is kind of what you're talking about.
05:06 This is what we're, you know, we're paying for now in an economy that is about as uncertain
05:12 guy as I think you and I take out the pandemic as that you and I can remember.
05:18 And let's talk about the reason for that.
05:20 It's gotta be that if the Fed's playbook was always to lower interest rates, now they're
05:26 dealing with a different boogeyman and it's inflation and now they are raising interest
05:30 rates.
05:31 And we just saw, you know, Fed funds above 3% for the first time, the 10 year US treasury
05:35 yield, about 4% in a very long time, 30 year mortgage topping 7%, doubled in the last year.
05:43 So put that in some context here.
05:45 Well, we've never seen it in the history of this country.
05:47 I mean, the speed, the magnitude of which things have moved, people are dealing with
05:50 it now.
05:51 So it's not the absolute rate.
05:52 We've clearly been able to live with interest rates at these levels historically.
05:56 It's the speed with which we've gotten here.
05:58 I think it's caught a lot of people off guard.
06:00 Zero interest rates, free money makes everybody look like a genius.
06:03 I mean, I even look smart under that situation.
06:05 Even you.
06:06 But it's not the case.
06:07 And now people are learning the other side of that equation.
06:10 The other thing that free money does and zero interest rates, it makes people lazy and it
06:14 makes corporate America lazy.
06:16 And what do I mean by that?
06:17 Companies don't really have to focus on their business.
06:20 You buy back your stock, you pay a dividend, the stock goes higher, you look really smart
06:25 and you're not focused on really what's going on beneath the surface.
06:28 Now as the world has changed quickly and precipitously, people now need to focus on their business.
06:33 This happens to be a very good thing, by the way.
06:36 The problem is the pain to get to the other side is what we're feeling right now.
06:40 And it's not going to end anytime soon.
06:42 So I'm not playing stock market here, but you see the gyrations of the stock market
06:46 on a day-to-day basis.
06:48 And since November, when the Fed's playbook changed, that's when the tenor of the market
06:53 changed.
06:54 Yeah, no doubt about it.
06:55 I mean, I think it's for a lot of you who spend a lot of time, whether your company
06:59 that you're at is a publicly traded stock, it's probably a valuation that is a premium
07:05 to let's say the S&P 500, you feel the fact that when interest rates go higher, the value
07:12 of your company goes lower, having nothing to do with the core of your business.
07:17 And it's just simple math if you think about it that way.
07:19 We just haven't been in that period for a very long time.
07:23 All right.
07:24 So, Guy, you just mentioned that, okay, the Fed turned course late last year to battle
07:28 inflation.
07:29 Tech stocks in particular, high valuation risk assets, really started to turn well
07:35 before let's say the stock market felt kind of ugly.
07:38 Let's put some context into what you think is going on with the economy and what the
07:43 markets are saying.
07:44 Because a lot of people, they think about them as a monolith, as one thing, but they're
07:48 very different things.
07:49 And oftentimes, they can be telling you very different things at which stage you are in
07:54 a cycle.
07:55 Jerome Powell, sometime in 2019, 20, was asked a question about the stock market.
08:01 And I'm paraphrasing, so forgive me.
08:02 But he said something to the effect of in a zero interest rate environment, valuations
08:08 really don't matter.
08:09 And actually, that's true.
08:11 Nobody cares about valuations and nobody cared about valuations up until November, December,
08:16 January of this year.
08:18 When the world changes, people start to focus on it.
08:20 Now, for example, and I'm not looking to play stock market here, but Nvidia is a great
08:25 company.
08:26 It's a groundbreaking company.
08:27 They're well ahead of the curve in terms of what they're doing.
08:31 In November of last year, that was going to be the next $1 trillion market cap company.
08:36 Not by their fault.
08:37 The market participants bid that stock up to those levels.
08:41 So the move 65% lower or thereabouts has nothing to do with Nvidia, the company.
08:47 They didn't forget how to do what they're doing.
08:50 It's just the market coming to the realization that, hey, wait a second, those valuations
08:54 made no sense.
08:55 What has changed?
08:56 The focus on valuations in a rising interest rate environment.
08:59 The economy is what it is.
09:01 And I say it all the time.
09:02 When the market was doing well, the chasm between the market and the real economy had
09:07 never been wider.
09:08 Now we seem to be narrowing that gap.
09:11 And as painful as it is, it's an important part.
09:14 Yeah.
09:15 So when you think about that on a single stock level, I mean, you just mentioned Nvidia,
09:19 which was a $700 billion market cap company.
09:22 It is a hardware company for all intents and purposes.
09:25 It was trading north of like 30 times sales.
09:27 I mean, in our lifetimes, we've never really seen that sort of valuation on that sort of
09:32 metric.
09:33 The flip side of that, and Guy said that was what investors were willing to pay for that
09:37 company or for that stock.
09:39 On the flip side of that, there's meta.
09:40 Okay.
09:41 So a year ago this time, it was called Facebook.
09:44 The ticker was FB.
09:45 Now the ticker is META.
09:48 And they changed the name.
09:49 That was also a $750 billion market cap company.
09:53 It did not suffer from some of the same valuation ills that Nvidia did, but that stock is also
09:59 down 60% on the year.
10:00 And you think about it.
10:01 These are hundreds of billions of dollars in market cap that investors got wrong in
10:06 just less than a year.
10:08 I mean, like really wrong.
10:09 So how can we be in a stock market where that sort of divergence can happen and so many
10:16 people who are so loaded up on these sorts of stocks, how can they be this wrong, Guy?
10:20 Yeah, well, a lot of it has to do with sort of this advent of passive investing, which
10:24 became sort of de rigueur over the last decade or so.
10:28 And you know, when the market's going higher, passive investing is great because things,
10:34 you know, everything seems to going high.
10:35 Everybody feels smart about things.
10:37 My concern all along has been when passive investing becomes active, it's not going to
10:43 be active on the way up.
10:44 It's going to be people getting out of things that they didn't even realize that they own.
10:48 So the world has definitely changed a little bit in terms of medicine, you brought it up.
10:52 A lot of their problems were self-inflicted wounds without question.
10:56 And you're talking about a company that makes sense on valuation.
10:59 Absolutely.
11:00 But you also see the other side of this.
11:02 The other side of the frenzy is what we're feeling now.
11:05 There's the old saying on Wall Street, the market takes the stairs up and the escalator
11:09 down and you're seeing that exactly play out before our very eyes.
11:12 It's the elevator down, people.
11:15 The elevator down.
11:16 Escalator up, elevator down.
11:17 Stairs up, elevator down.
11:18 You said escalator.
11:19 I think he said escalator.
11:20 We'll go to the videotape.
11:21 You know what I meant.
11:22 No, but what's really...
11:23 You've got to call me out in front of these people.
11:26 Sorry.
11:27 I just wanted to...
11:28 Johnson, move.
11:29 By the way, I got a great story for you people.
11:31 I mean, so Erin Burnett is a dear friend of mine.
11:33 I don't know if you watch CNBC.
11:34 She was there, one of the first people I met at the network.
11:37 And there was a guy that used to come on the network.
11:40 His name was Hugh Johnson.
11:45 And she introduces him one day, and I'm watching this on TV live, and she goes, "I'd like to
11:49 bring on Hugh Johnson right now as our guest."
11:53 My face dropped.
11:54 So I immediately, "Erin, I don't know if you know what you just did, but you just called
11:57 this guy Hugh Johnson, which I just did to you here in front of these people."
12:00 And I was a Hugh Johnson.
12:02 But I think the point of that prior story is that one was what investors were willing
12:07 to pay.
12:08 The other one was mis-execution, and sometimes you can have the same result in the stock
12:11 market.
12:12 Is that fair?
12:13 That's actually a really good segue.
12:14 Erin Burnett was on CNBC a day in August of 2007, and she was on with Jim Cramer.
12:21 Remember this?
12:22 And this is like, if you just Google it, it's gonna come up immediately, and it's had millions
12:26 and millions of views.
12:27 But Jim Cramer was going crazy.
12:29 It was like 2 in the afternoon, and it was like a Friday, and the stock market was just...
12:34 We were still in a bull market.
12:36 The stock market did not top out until November of 2007.
12:41 But Cramer is sitting there throwing things, and more so than usual, right?
12:45 They know nothing, Rand.
12:46 He was actually yelling about the Fed 15 years ago that they weren't doing easy monetary
12:53 policy at the time because some of the plumbing in the financial system was starting to make
12:58 him and some other people a little nervous.
13:00 Now, it's really interesting, the prodding on national TV to try to get the US Federal
13:06 Reserve chair to do something to ease monetary policy.
13:09 Look at what's going on right now.
13:10 Now, listen, that was months before the stock market topped out, and it was almost two years
13:16 to when the stock market bottomed out.
13:18 The S&P 500 got cut in half from the November 2007 highs to the March 2009 lows.
13:25 Now what's going on is that we have a Fed who's only had one pitch, right, for 20 years
13:30 or so, and they're doing the exact opposite.
13:33 And that's the thing, I guess, if you listen to Guy and myself and Danny Moses on our podcast
13:37 on the tape, please check it out, people.
13:39 Or you watch us Monday through Thursday at one o'clock live on Market Call.
13:43 I mean, we're not trying to be perma-anything, and I want you to explain this a little bit.
13:47 We're trying to kind of point some things out that we've seen over time, a little pattern
13:52 recognition, but also sometimes go a little bit against the conventional wisdom.
13:56 So talk to us a little bit about that.
13:58 It's interesting.
13:59 So you get labeled certain things.
14:00 I think we have a society of lazy people.
14:02 This audience is obviously the exception to that rule, but as in general, people make
14:07 quick decisions and you get labeled.
14:09 So Dan is labeled the perma-bear, or I'm always negative Nancy or something like that, and
14:13 it's just not true.
14:15 It's very easy to go on network TV every day, put the pom-poms out, say everything's great,
14:20 the market's going to go higher.
14:21 There are no ramifications necessarily if things go pear-shaped, because you're in it
14:26 with everybody else.
14:27 Everybody's bullish, that's great.
14:28 You're American, you're waving the flag.
14:30 I've had people tell me it's unpatriotic to be bearish or to point out some of the things
14:35 that go wrong, and that's just the world that we live in.
14:37 So we're just trying to show the other side of what a lot of people will say.
14:42 Sometimes on the network, if you watch, anytime you hear the word "opportunity," I can say
14:49 without equivocation that the word before it will be "buying."
14:53 It's always a buying opportunity.
14:55 And again, really no ramifications for that, because at the end of the day, five, ten years
15:00 later you're going to prove to be correct.
15:02 You never hear "selling opportunity."
15:04 The world's changed over the last eight or nine months, and as it turns out, November,
15:08 December, January was a selling opportunity.
15:11 Now you have to look at the world and say, "Okay, where are we?
15:14 What do valuations look like?
15:16 What's the economy look like?
15:17 What's the global economy look like?
15:20 And when is this Federal Reserve going to stop?
15:21 And more importantly, what's going to be the catalyst for them to stop?"
15:25 And the catalyst is likely to be a very quickly weakening economy.
15:30 And we know that the issues in China, the lockdowns that continue there, we know that
15:35 the disrupted supply chains, we know the crazy moves that are going on in currencies.
15:40 We have a shooting war in Eastern Europe that is disrupting energy supplies.
15:44 And really what that's going to do is really crimp consumer spending.
15:48 If you're spending more to heat your home, you have to make decisions about that.
15:52 So these are all things that are kind of really tied in.
15:55 And sometimes, you know, the stock market or the FX market or the commodities market,
16:00 these are the lenses in which these things are playing out, which for us makes sense
16:05 to think about.
16:06 And that's all we've ever done professionally.
16:08 But I want to bring it back to some of the people in the audience here, because you have
16:12 to make kind of real time decisions about how you're deploying capital, whether it be
16:18 for building your brand, acquiring customers.
16:20 I mean, things that are really important to kind of growing your revenues, right?
16:24 And ultimately, hopefully, your earnings if you're not there yet.
16:27 And so, you know, Guy, we talk about this all the time.
16:31 When we hear the term peak as it relates to markets, as it relates to the economy, I actually
16:35 think of it as not a bullish thing.
16:37 When I hear about peak margins, you know, S&P 500 earnings, you know, margins have just,
16:43 you know, hit an all time high.
16:45 Talk a little bit about that, because one of the things about inflation is that all
16:50 of these inputs that are causing companies' profit margins to be lower than they were
16:55 a year ago, ultimately, companies with pricing power, as you guys know, will be able to pass
17:00 through a certain amount of those increased costs.
17:02 Others over time will not be able to do and then they have to make decisions about how
17:07 they're spending their money.
17:08 So it's interesting, you know, it's CMOs or when you're in that seat, when things are
17:12 going really well, and again, not directed at anybody in this audience, but this is across
17:18 a swath of things, you don't have to be discerning, right?
17:21 You can just sort of throw money at different things because it doesn't matter.
17:24 When things start to get a little dicey and things go a bit pear-shaped, you have to be
17:28 a bit more focused.
17:30 That happens to be a good thing, right?
17:31 Focusing on where you're spending your money and what makes sense and where you're going
17:35 to get your return on investment.
17:36 So that's the, I think that's the environment that we find ourselves in right now.
17:40 In terms of peak, when you turn on the television here, you know, peak margins, peak earnings,
17:46 you're right.
17:47 I mean, that sounds like a great thing, but if you think about it by definition, you get
17:50 to the top of Everest, there's no place else to go.
17:52 You got to go back down and that's what we're seeing right now.
17:55 So it's painful getting there.
17:57 I made this analogy the night you actually jumped in really well.
18:00 I asked Melissa Lee, you know, you go to brunch, what do you order?
18:02 An omelet and how do you get, what do you do before that omelet?
18:05 You said get three mimosas.
18:06 It was actually a great line by you, but you have to break a few eggs.
18:09 And we're in the breaking a few eggs portion of the omelet.
18:13 So it's interesting.
18:14 And I think that there's probably a lot of diverging views in among the audience here
18:18 on that front, you know, in a couple of panels that it was on this morning.
18:21 I mean, when you're talking about what's different this time is that you just use the term ROI,
18:26 right?
18:27 And especially when it comes to marketing dollars, I mean, like we're here at Zeta Live and that's
18:31 the point of this business.
18:32 That's why it exists, right?
18:33 To kind of help publishers, help advertisers, help brands kind of figure out how they're
18:38 spending, right?
18:40 And how effective it is.
18:42 And I think you can apply that to technology across a lot of different business processes.
18:47 And that's why, again, you know, you might find ourselves after a recession that needs
18:52 to come to the normal course of like, you know, capitalistic cycles, you know, companies
18:57 become more productive, right?
18:59 And so Guy and I think about it through the stock market.
19:02 You see companies that have leverage and get that sort of stuff.
19:06 Talk a little bit about that because again, you know, trying to figure out what the next
19:10 big winners are in a market is really hard to do.
19:14 But the way companies kind of execute in bad times or difficult times is really important.
19:19 And if you listen to some of the most successful entrepreneurs, CEOs, they will tell you, and
19:25 I've heard him or her say these things over the last year or so that as painful as it
19:30 was working through COVID and trying to deal with it and navigate it, it was so important
19:35 to their business because it really forced them to take a very critical look at what
19:39 they were doing.
19:40 And you start to run your businesses better.
19:42 And I'll give you a real life example in terms of what we're seeing in the energy space.
19:46 I mean, big oil obviously in this country was, you say what you want, I mean, was clearly
19:52 had a bullseye on their collective back.
19:54 ESG investing came in.
19:56 It almost forced them by definition to run their businesses better.
20:00 Now these energy companies are as well run and as well capitalized as they've ever been.
20:05 But they needed to go through a difficult time to get there.
20:07 So again, for you folks, we are now live, you live through it during COVID.
20:13 Now you're living it through a market cycle, but it will make you better, I think in the
20:16 long run.
20:17 And I think it'll make your businesses better as well.
20:19 Yeah, that's true.
20:20 Hey, I just want to give a heads up.
20:21 If anyone has a question because these mics are like this, you can just give me a high
20:26 sign and ask CNBC's Fast Money guy, Dami, a question.
20:30 So guy, you've been doing fast money for what, 37 years?
20:34 Tim likes breaking my balls.
20:35 You know, it's really funny.
20:36 I am the old guy in the room.
20:38 Okay, just full disclosure, I will be 59 years old in December.
20:41 So it's not...
20:42 Actually, just so you know, I mean, since you brought it up, Brad Pitt and I share the
20:45 same birthday.
20:46 And I guarantee he's somewhere in Soho right now saying, "Guy, Dami and I share the same
20:50 birthday."
20:51 Please continue.
20:52 And he's not doing that.
20:54 But you know, guy, I don't know if you noticed, he was limping on his way up to this podium
20:59 and I just saw Brad Pitt.
21:00 Yeah, all right.
21:01 So yeah, okay.
21:02 So another funny guy.
21:03 We're in Sicily, not Italy, Sicily.
21:05 We were there for 10 days.
21:06 My wife and I had our 25-year anniversary.
21:08 We went to Mount Etna.
21:09 If you haven't been, I encourage you to go.
21:11 It's just a stunning place.
21:13 But we get to the lava fields and I take a bad step and I literally almost...
21:17 I thought I broke my ankle.
21:18 Kind of the worst place in the world to take a bad step at a lava field.
21:22 Well, that's the story of my life.
21:23 But since...
21:24 So now it's a little swollen.
21:25 It's coming down.
21:26 But you know, my wife actually said to me in the airport a couple of days later, "Do
21:29 you want me to get one of those wheelchairs?"
21:31 And I said, "I'd rather effing die than get in a wheelchair in an airport.
21:35 I'm not going to be that person, just so you know."
21:38 But you brought it up.
21:39 Yeah, I did.
21:40 All right.
21:41 Let's just kind of like take a couple topics here because I think a lot of people who are
21:46 not staring at their facset machine every day, they think about the Dow Jones Industrial
21:51 Average.
21:52 We don't really quote that.
21:53 That is not a particularly useful index.
21:55 It's 30 stocks and it's price-weighted.
21:58 The S&P 500 is 500 stocks and it's market cap-weighted.
22:02 And really fascinating today, Apple is the largest market cap company in the world.
22:07 It was nearly $3 trillion.
22:09 We've never had a market cap company of that size before.
22:13 Today, the stock is down on a brokerage company's downgrade 5%.
22:19 Do the math on $2.3 trillion market cap.
22:22 You know how many companies in the S&P 500...
22:24 So it's down $100 billion.
22:25 Do you know how many companies in the S&P 500 have a market cap of $100 billion?
22:30 I think it's less than 50.
22:33 So we live in a world now where your financial assets, whether it's your 401(k)s or your
22:37 IRAs or whatever you're choosing to kind of invest on a short-term basis, they're subject
22:43 and got to use the expression of passive investing.
22:45 I mean, the top five or six stocks in the S&P 500 make up nearly 30% of the weight of
22:52 this index of 500 stocks.
22:54 Those same five or six stocks make up more than 40-some percent of the NASDAQ 100.
22:59 Talk about that a little bit.
23:01 When the people out here, they hear the down, but they're really invested in Apple, in Google,
23:08 in Amazon.
23:09 Whether they realize it or not, I mean, whether you realize you own these stocks or not, if
23:12 you're in the market in some capacity, chances are you do.
23:15 And it's interesting just to do that exercise at some point to try to understand what in
23:18 fact you do own.
23:19 And again, not to cast aspersions, Apple's an amazing company.
23:23 And you'll hear people say, "You own Apple for the long term, you don't trade it."
23:27 Meanwhile, Apple's a company that over the last five or six years has had 30 to 40% peak
23:31 to trough declines, I think five or six different times.
23:34 And we're seemingly in the midst of one now.
23:36 So Apple is not impervious to market downturns as well.
23:41 What's interesting is though, and I've learned this over the years and I knew it intuitively,
23:47 if you ask somebody, "Would you be willing to own Apple?"
23:49 If Apple is trading $170 and I said, "You can own Apple at $142," people would say,
23:54 "Sign me up."
23:56 Then it gets to $142 and the reasons that it got there are typically scarier than they
24:00 thought they'd be and everybody sort of backs up.
24:03 One thing that's made me quasi successful over the years, and I use quasi, is that I'm
24:08 really not that emotional.
24:10 I mean, as human beings, we're emotional animals, great things.
24:13 Your daughter does really well in school, you have a great day.
24:16 Bad things, maybe somebody dies in the family.
24:19 So we're the sine curve of emotions.
24:21 For whatever reason, I've never really lived that life.
24:23 I'm sort of a flatline, as you've gotten to know over the last 15 or so years, which makes
24:28 me a really shitty human being, but it makes me decent at what we do because it's so important
24:33 to take the motion out of the equation when you're looking at these things.
24:36 So if you have a plan and investing and whatever it is, it's that old saying, "If you fail
24:41 to plan, you plan to fail."
24:42 Well, it's true in trading as well.
24:44 So if Apple, for example, since you brought it up, is a name you've been dying to own,
24:48 you sort of plant your flag in the ground and say, "If it trades here, I don't give
24:51 a shit if the sun is exploding, I'm going to buy the stock."
24:54 Yeah.
24:55 So let's just put some context around where the stock market is.
24:58 We get this question all the time from people who are not in it every day like us, staring
25:02 at the screens and investing and trading.
25:04 Trading and investing, two very different things.
25:06 I'm sure you guys have all learned that the hard way a little bit.
25:09 But when you think about where we are right now, the S&P 500 topped out in January 2nd
25:14 of this year and it's down, what, 24% or so.
25:18 The NASDAQ 100 is down about 31%, 32%.
25:22 And so no one's declared that the US economy is in a recession yet, clearly in a recessionary
25:29 environment.
25:30 And we're very likely to be in one in 2023.
25:33 And to Guy's earlier point, a recession, it's not a four-letter word.
25:38 I mean, I would think many of you people who are operators at companies, it actually will
25:42 provide a very unique opportunity to cut some fat, to kind of rejigger some of the things
25:47 that you were...
25:48 There's going to be a lot of opportunities to kind of get more efficient.
25:53 But as it relates to the stock market, no one knows where it's going to go.
25:56 But the average kind of stock market decline from a high during a recession has been about
26:02 30% in the post-war era.
26:04 And if you take out the 2020 decline, it was a recession, it was a bear market, it happened
26:09 very quickly during the pandemic, it was 35% peak to trough.
26:13 But you got to remember this, the Federal Reserve and the US Treasury threw $4 trillion
26:19 at that, $4 trillion.
26:20 At the time, I think the US stock markets, okay, let's think in its totality, Guy, did
26:25 it get as low as like $22, $23 trillion or something when it was down 35%.
26:30 So the average peak to trough decline is 30%.
26:33 And if you look at the post-hotcom highs from 2000 to the lows in '02, the highs in '07
26:38 during the financial crisis to the lows in '09, the S&P 500 got cut in half.
26:42 So Guy, the question is a trillion-dollar question.
26:46 What's different this time?
26:48 How do we get out of something?
26:50 We can't do what we did in 2020, we can't throw trillions of dollars at it.
26:54 It's global now also, okay?
26:57 What's different this time?
26:58 Why is it that the S&P could bottom anywhere near where we are right now, down 25%?
27:03 Well, what's different this time is right now, US debt to GDP was, I think we peaked
27:07 at around 140-something percent, levels we've never seen in the history.
27:11 Global debt to GDP, it's some absurd rate.
27:13 So you have this global debt problem that in a rising interest rate environment, it's
27:17 very difficult to extricate yourself from.
27:19 So that's different this time.
27:21 Inflation, which has not been a problem anywhere on the planet other than Venezuela and Zimbabwe,
27:26 is clearly the problem now.
27:27 If you want to look proof positive, the numbers out of Germany, which is the fifth largest
27:31 economy in the world this morning, were eye-opening.
27:34 And there are a lot of central banks that need to do a lot of work to sort of cut.
27:38 There are people in Europe right now, there are people in Germany, and I'm not trying
27:41 to be hyperbolic, it just happens to be true.
27:43 They're going to have to make a decision in a couple months, do I heat my home or do I
27:46 feed my family?
27:47 I mean, that's pretty existential shit, and that's what's going on right before our very
27:51 eyes.
27:52 So you can cast blame all you want, you can say it's Putin's inflation and all that stuff.
27:56 We were headed down this road regardless, that just sort of sped things up.
27:59 So that's what's different this time.
28:01 Yeah, no, I agree with that.
28:02 Well, listen, we appreciate all this market talk.
28:04 I just wanted to hit one other thing that you guys might find interesting here.
28:08 One of the themes that at least I've heard this morning upstairs in some of the panels
28:12 is like, okay, things are uncertain, it's an odd market, you got to really figure out
28:16 how you're spending, where you're spending from a marketing perspective.
28:20 You know, Guy and I, and maybe you guys will find this kind of interesting, you know, Guy
28:22 and I were not meant to be media people.
28:24 We were traders.
28:25 Guy came up at Drexel Burnham and Goldman and I started on the hedge fund side of the
28:29 business and worked at a big bank.
28:30 And we just happened to find our way at CNBC, trying to do what we do here.
28:35 And it's been an amazing opportunity for us.
28:38 You've been doing it for 15 years, I've been doing it for 13 years.
28:40 But you know, a couple years, like right before the pandemic, actually, you and I started
28:44 thinking about doing some direct to consumer content, right.
28:48 And then as the you know, the pandemic happened, and no one knew what was going to happen.
28:51 And we were doing our show remote from our living rooms, that sort of thing.
28:55 Guy and I started a company called Risk Versa Media.
28:58 And we said, Hey, listen, you know, TV is amazing, that that that outlet is amazing.
29:02 But like, you know, when you think about social media, and you think of the connectivity,
29:05 you think about, you know, all of this idea about creating communities and that sort of
29:10 thing.
29:11 We're like, you know what, we have so many people, hundreds of people, you know, a day
29:15 tweet at us when we're on TV, let's kind of figure out how to do this with a viewer, you
29:20 get a more personal relationship with the content, where they feel like they're part
29:24 of it rather than being spoken to on a TV.
29:27 So we started a podcast called on the tape, we have a partner named Danny Moses, guy was
29:31 prominently featured in the big short, we do that once a week, people like the long
29:35 form thing, they want to walk their dog and listen to us for 45 minutes, or we do this
29:40 live streaming thing that we're doing right now market call that comes to YouTube live,
29:45 Twitter live, you know, that sort of thing.
29:47 So we just think it's really fun.
29:48 We've had this amazing opportunity to partner with amazing brand CME group, it's the largest
29:53 futures exchange in the world $65 billion market cap company.
29:57 So fine, tasty trade, back set is an amazingly, you know, we use all of their products, we've
30:03 been using their products for 20 plus years, and they've entrusted us with their brand
30:08 to be adjacent to our content.
30:09 Speak to that really well.
30:10 What's interesting is it's not performance based.
30:12 I mean, they want the proximity, whatever word you use, you know, they want to be associated
30:17 with the brands that we've been creating.
30:18 And they found it to be really creative for what they're trying to do as well.
30:22 And it's been a great partnership.
30:23 And we've had now these companies sign up for not only the remainder of this year, but
30:27 for remainder of next year as well.
30:28 So they're obviously finding some value in what we do.
30:31 So and I think it is helpful what we try to do.
30:35 The mistake that I think a lot of people make, and I don't have to make this mistake, because
30:38 I'm not that smart in the first place, always trying to prove how bright they are.
30:41 But the people that can synthesize very difficult, esoteric, you know, sometimes boring topics,
30:49 and make them accessible to people, those are the ones that are getting it done.
30:52 And I think to a large extent, that's what we've been trying to do.
30:54 I just thought that you guys might find that an interesting anecdote again, and we still
30:58 do fast money, we're going to do it tonight.
31:00 And we love it.
31:01 And you know, the people we meet the topics we get to talk to the exposure it gives us
31:04 is amazing.
31:05 We just think it's a great barbell approach.
31:07 And then we think this is where media is going.
31:09 And we think this is where brand sponsorship is also going.
31:12 So listen, thank you to David Steinberg and his whole team at Zeta for having us here.
31:16 I've really enjoyed being here today and being participating in these panels and amazing
31:20 to have Guy Adami here with me at Zeta Live for Market Call Live.
31:25 So thank you guys very much for being here.
31:26 Thanks, everyone.
31:27 (audience applauding)
31:30 (upbeat music)