I Knew You Were Trouble When You Walked In

Greetings and welcome to Inside Baseball with Old Chester. Wow. I am Liam Allen with my friend Morris Sack. Welcome to the show. Good morning. Good morning, World. Good morning, New York. We have a lot of people in New York that listen. Good morning, Seattle. All right, we have a lot of people in Seattle and Canada. So greetings to all our friends that have tuned in every week for inside baseball with Old Chestnut, where we have sat here and jammed that two year down your throat, okay?

For two years we have sat here and started with fish. But not this week because things No, not this week. Not this week. Okay. And I was wrong. I was dead wrong. Anthony Peters called me out and said, Yeah, it might be a boring week, but And there was a but. And sure enough, when there's complacency in the market, and I think there's gonna be absolutely nothing to talk about on inside baseball, what happens? The news breaks. And all of a sudden, we've got a show. That gal.

Looks and brains, huh? And and brains. And like you have said so many times. The apple doesn't fall far from the tree. Okay. You are a perfect example of your daughters. I mean, it is just it is meant for inside baseball with all chestnuts. For anyone that has lived under a rock. this week or anyone that's new to the show. Okay. We

We stopped talking about it because we were perseverating about these idiot celebrities plugging crypto. We dragged Matt Damon. We took the blowtorch to Kim K and every one of them, those shills. Okay. And who comes along? Who comes along but the American treasure that is Taylor Swift? And Taylor says No, thank you.

She asked, are those a regulated security? And maybe she didn't say that. Maybe it was her father, former Merrill Lynch broker. Maybe it was her mother that worked in finance. But somebody said, uh-uh. And Taylor said, uh-uh. And what happened? The whole fucking thing melted down. And who's left standing? Who knew that it was trouble? My girl. Okay. And I said my girl, which leads me to the next aspect of this story that Morris will vouch for. And anyone that knows me in real life

I know I'm an internet micro celebrity, and there's my internet following. But people in in my real life, most of you listeners, You might not know that I have a deep affection for Taylor going back I can verify I can verify that he is my profile photo on Strava for fifteen years. And I changed it once fifteen years ago and there was blowback. People said, What happened to Taylor? She has been my profile. Okay, listen, fellas, okay. If girls and g and gals.

Girls and gals. Now this is a specific tip for the fellas out there because we have a lot of fella young men that listen that are dating. Look, if girls were interested in Pinochle. I would I would love Pinockle, okay? 15 years ago, if you went to a Taylor Swift concert, it's 40,000 women in giant stadium losing their minds.

Do you want to go to the Taylor Swift concert or do you want to go to the Guns N' Roses concert? You're going to the Taylor Swift show. You don't go to the fish show if you have an opportunity to go to the Taylor Swift show. The fish show is 40,000. Sweaty gross dudes, okay. The f the Taylor show is the kill zone, okay? I'm not stupid. Lady Gaga, Taylor Swift. If you you need to ha you need to oh and in with the women, okay? They need to trust you. And this is how you do it, okay?

My girl comes out and extinguishes the crypto, extinguishes the crypto shilling with one word. And it made me so fucking happy this week. And I just needed to herald, herald this.

gleaming beacon of righteousness in our society, Taylor Swift. Thank you. Can I ask you one question? Yeah. Who kidnapped my friend Liam Al? Dude, my wife got me going before the show. She goes, What are you gonna talk about?

week and I was like, uh I don't yeah. I was like, you know, I was like I was like, if Kathy Wood says robotaxis one more time, I'm gonna smash the television. And my daughter goes, Papa, why are you gonna smash the television? I was like, I can't talk about it now. I gotta go do the show, okay? Yeah. Yeah. So my wife got me going my wife got me going about I know we were And I know it was

politely requested us to requ to refrain from using specific names and firms. That's okay. No, that's fine. That's legal can fuck off on this one because I'm I'm just reading the news. I apologize, Mr. Solomon, but look. Well, look, I'm just reading the news, okay? She comes out and she puts a$2,700 price target, okay, on Tesla based on based on robo taxis and autonomous cars. Cassie. Cassie. The Tesla cannot drive itself, tax.

Kathy, the Tesla has a feature called summon that you're supposed to snap your fingers in front of the restaurant and the Tesla's gonna come get you. It can't do that yet. Okay, so the idea that that the that Morris is gonna drive to Westchester County Airport, leave the Tesla there, and then I'm gonna need a ride.

From Westchester downtown. So I'm gonna go on my app. The Tesla is gonna drive itself to Stamford, pick me up, then charge me a fare to drive me downtown, and then drive itself home to Westchester. Cassie, Cassie, come back. There's nobody in an ARC meeting that says you can't go on television and say this. Um Well, I'd say a couple of things. One is That will happen.

Okay. It ain't gonna happen in the next twenty-five years. Thank you. Okay. I'm cool. We're in line. Can we do that? Okay. Yes. But what I would like to do is You and I are on either end of the bipolar spectrum right now. I'm on the Debbie Downer side, you're on the hopped up side. Um The thing I wanted to point out about Kathy Wood, okay. Um, first of all, she's crazy. And um she's either uh What's the word I'm looking for? She's either completely ignorant.

Or she's a con artist. And I yeah I w I will explain to you why. But I wouldn't invite you just to take a a picture or take a a YouTube of Elizabeth Holmes spieling about Theranos and Kathy Wood talking about um Uh yeah, whatever Tesla. Okay. Now um you know you can have your own opinions. You can't have your own facts. And so um you sent me this thing over during the week about the price target. And there was something in there

That they gave a matrix of where they saw prices. And in there was a term that uh um not quite as uh Interesting as a Minsky moment, but she said they ran Monte Carlo simulations. Now, again. Boiler plate explanation I'm not great with math, but I've used Monte Carlo simulations. I swear you talked about it on the show. I swear. I I may have. Okay. So so if you go to this web browser thing called Google.

If you look up Monte Carlo simulation is a mathematical technique that predicts possible outcomes of an uncertain event. Okay. Computer programs use this method to analyze past data. And predict a range of future outcomes based on a choice of action. Okay, so the first thing is it's using past data. So Tesla was at a dollar. And it went up to what? A thousand? Yeah, exactly. Yeah. Or something. Okay. Yeah. So I I I mean, if you think it's gonna go from wherever it is now up a thousand times.

Best of luck to you. But the reason I cry bullshit is When putting together a Monte Carlo simulation, are you familiar with that quote? There's three types of lies. Lies, damn lies and statistics. Yeah, of course. Well so Um once again, Google. What are the five steps in a Monte Carlo simulation? The technique breaks down into five simple steps. Setting up a probability distribution for important variables. That's what we call an assumption.

Building a cumulative probability distribution for each variable. Again, assumption. Establishing an interval of random numbers for each variable. Okay, well that's a random number generator. Okay, fair enough. That's fair. Creating generating random numbers and then actually simulating a series of trials. So When we were involved in the early stages of learning how to program a computer, we had this thing called garbage in, garbage out. So basically, um She's trying to use sophisticated terms.

To make it sound like they've reached a conclusion. Now, Cheryl and I were out to dinner last night with uh Travis and his wife, Katie. And we were talking about how Uh Shaw and I took marketing together at University of Illinois and how um When we walked into the uh final exam room, the teacher saw that we were sitting next to each other, and the teacher knew that we

uh we're in a relationship. So I forget whether they moved Cheryl or whether they moved me, but they set us apart by like 30 yards, right? Yeah. Yeah, yeah. Okay. We both... got the exact same score. I could've told you. I could have told you. So so marketing. So one of the things they teach you in marketing is sort of like the super califragilistic. It's like tied with X-11 cleaning power. And that's supposed to trick people. So this Monte Carlo simulation is i incorrectly applied.

Well anyway, we could go on and on, but you know, once again there It's Wall Street and and this could be the theme of the show, maybe. I got I kind of cranky and I got a lot of things that I would like the opportunity to get off my chest.

Because it's all about me, right? Yeah, I'm done. I'm done for I just want to do my bit in the beginning rather than the end. No, that's okay. And you can do it at the end too. I I love seeing you all wound up. Um but uh uh Y there's just so much that's just so blatantly wrong and it gets tolerated. left and right. So we're I just wanna know. I wanna know, like go ahead. You talk Okay. Well so um we had a very interesting episode last week where I believe

And I I don't know if it's a quote, but I said something along the lines of I stake my reputation that there's a big seller of gold. Did right? Yes. Not not twenty-four hours later. The financial times. does an article about how Russia is smuggling gold into Switzerland to sell it. When everyone's when everyone's telling me no, Russia's buying gold. Okay. So

Kudos tock on that one. Also, you you also said in an email, you said, It's good to see that my tape reading skills are still good, dude. Yeah. That is that really captured it. Like you You think these people nowadays dude, you think these kids nowadays can read tape the way that you do? No fucking chance. So I dude, I respect Bob Cobb. I love Bob Cobb. Bob Cobb is an integral part of the show.

But it was it him that said one could argue that it trades well? I I I if it wasn't Bob I'm not sure. Somebody said that and it was a little bit of pushback. But when I when Morris says he can read that tape, and you said every day when that big drop, that's a seller. I'm I'm I'm sticking with you on this one, man. Well, I I I don't know whether gold's going up or down, but Russia's selling gold. And as Leslie likes to put and I paraphrase Guns and tanks cost money. And I know that.

Russia's selling oil. But you know, when Robbie and I went to Russia back in nineteen Something, I forget at this point. Yeah. It might have been two thousand. Okay. Uh no, it was in the nineties. Um We knew they were lying. You could tell the numbers didn't add up. So the fact that they say they're buying gold when they're selling it, well, if I was selling something

I I wouldn't tell people I was selling it till I was done. And if you were Russia, you'd rather sell gold than oil, I think. I think the gold is easier to sell secretly than the oil. It's you know, where the oil is A different kind of commodity that moves around. Look at the market. I can either go and sell my oil at sixty with all those sanctions, or I can secretly do it in the gold market, which has been in that range for a year or two. I'm I'm sure they're doing everything, right? Okay.

So uh anyway, I I I took great pride in in making that counter counter counter call. S on a sad note, I think we also talked about building a building in New York and how you gotta knock down a fucking parking garage and this is always a disaster. And then a fucking parking garage collapsed in New York City. Incredible. Putting too many UVs on the roof. Yeah. Yeah. Um, but what I would like to pick up is this. Sing as

People are burned out on talking about how Bitcoin's gonna fix the world. The new uh spiel is artificial intelligence. Okay. So my friend Peter's listening in Switzerland, who's all about the AI, give old chestnuts Three minutes of your time. Okay. So um You will recall in a recent episode I talked about how I engaged a young man who we will call Eddie and talked about how you fly

an airplane and is there a way that we can, you know, minimize okay. So lo and behold, a newspaper c article comes out. Let me see if I can find the fucking thing. Um Uh I'm sorry. I just here here we go. Air Air New Zealand looked to artificial intelligence to shave miles off of light. Dude, I thought it was the onion I I thought it was a joke. I thought it was a listener sending in a joke. So so this is so much better than it sounds. You're not going to believe this.

So um first of all I want to remind people of this thing called the Gelman amnesia. Basically, it means if you read a story in the newspaper and you happen to know something about it and you realize that the guy writing the article doesn't know anything, and then you move on to the next article, but now you assume this guy knows? Okay. So basically the Air New Zealand article

is talking about how they're going to use airspeed, altitude, temperature, you know, to figure out ways to okay. Which first of all was Something this young man who we'll call Eddie solved f four years ago. That's number one. Number two. Um, there is an invention that already exists. on uh airplane uh uh engines, uh jets called the called D. I know what you you know what that is, but for the listeners, it's called a digital uh electronic engine control. Okay. Now they're on pretty much every

Jet engine manufactured now. Okay. And what they do is they record all of these metrics that we're talking about. And they get sent into the engine manufacturer and they're used to determine whether the engine's running efficiently, if there's potential problems. Okay, so on and so forth. That was invented in nineteen eighty-one. Um and it showed up. on the learjets, which is something we know a bit about, on like an engine, let's say, for example, TFE 731, which is sort of the workhorse

kind of engine. So I know we had a jet and maybe The model we had was a nineteen ninety when we bought it in 2000 and it had it had DEKs on it. Yeah. So so it already gone from NASA. Yeah. Okay. So this concept of artificial intelligence. I mean I get it, but What are we doing here? We're we're we we already know how to do these things. Yeah. And and the the the final thing I want to say about artificial intelligence, and I know, I know everyone's gonna go, it's an easy fix.

But I've typed my name 10,000 times into my iPhone. And whenever I type the word Morris, there's never First of all, it never autofills. Right. And secondly, when I hit Morris West S space, SACS never comes up as an option. Incredible. Incredible. Um one of our tell us how to fix that. Email us, one of the nerds needs to tell us how to fix I don't want to know. I've been hearing about this shit for so long now. It it when I was at the Deutsche Bank.

Cobbled together was this artificial intelligence thing where instead of writing a You'd pick up a phone and you would say, buy 55 years, 98, 27 plus Canter Fitzgerald. Put in account three. Okay. Never got it to work. Not once. Okay. Amin. Years ago.

somebody who was deep into this thing told me, You traders, you're gonna be out of a job because these computers are smarter than you. I know. Okay. Well, in some cases I think some of these algorithmic things have done pretty well. But There's a whole cast of characters out of there that clearly are their intelligence is artificial. Yeah. Okay. Yeah. Yeah. Yeah. Yeah. Um, but the the m the most interesting and poignant one for me was I had a doctor.

Who I respect tremendously. And he told me in no uncertain terms, in five years. Not a single X-ray or MRI will be read by a human being. It will be read by artificial intelligence. Okay. Five years it hasn't Not hasn't moved at an RCH. Okay. Right. Right. Okay. So you you want to throw a lot of money at this stuff. Good on you.

Could you convince it that Skynet has come alive and wants to nuke the planet? I mean, yeah, maybe, but that's not intelligence. That's a mistake. Can I ask you about the computers? Can I ask you about the computers trading?

What do you wanna know? I wanna know if the algorithms take the emotional aspect out of it. Like in I mean I know the answer. Like in nineteen eighty seven you could feel what was happening on the floor, you know, like you could tell like Eric Seabot, you could there was emotion and you could feel

momentum. Like, does the computer just wet blanket all of that and now it's computer driven? Or can you still feel the emotion looking at the computer? Well, I I guess the the thing that the computer has done Has been these relationship trades. So, you know, if Ford goes up, then maybe General Motor is supposed to go up. I I think that's a great use for the kind of computer to keep things in line or certainly

Basket creation and and redemption, you know, like uh against an S P thing. But uh The other things the computer is good at is, for instance, like a press release will come out and guys will program it. To try and figure out whether it's bullish or bearish. And it'll give the computer authority to buy or sell based on that analytic, because the computer

reads pretty quick and it can right. You're talking about billionths of a second. Okay. Yeah. But you know I I I don't know that it's anything more than a human having an idea and telling a computer to uh uh execute based on the the human generated algorithm. I I could be wrong. I mean, you know, you've got these really, really sophisticated math guys that can look for patterns and try and uh you know, sort of a uh like a chalk eye on steroids. But um I I just You know, um

Once again, one of these guys sent me this thing. He he uh had like three articles and he sent the articles to this GPT chat or something like that. And it and it and it summarized. It's summarized. And uh I think that's great, but um I know. I'm guessing how long it was ago, but uh A person I know was in high school and they submitted a term paper or a paper early on in the in the school year. And the paper came back with an F on. And it turns out, and this is like 15 years ago.

There were programs that could read papers And determine whether there was plagiarism. Yeah. So I guess you know fifteen years a long time. Yeah. So the fact that something can take a few articles And cobble something together. No, I'm just fascinated by like the C bot floor and that open outcry and that sort of like the trading that went on then versus just the computers. Like I just I'm just fascinated like how that that emotion And that that energy and that buzz.

It can just be awful. Like it's just gone, you know? Well, it it isn't, right? I mean, you you heard me tell you I could tell by looking at the tape somebody was selling. Now, was that luck? Yeah, it might have been luck, but I mean You know, now you're talking about luck being a three or four standard deviation event. I mean we've had How many podcasts? 110 podcasts? Yeah. And of those 110, how many times have I said I'd stake my reputation on something?

One. Yeah. And and the next day, um the F T does an article about it. I mean, it sounds like I'm bragging, but the fact of the matter is, you know, that that's a human

you know, process that goes on. Now can can a computer do that? I mean I fuck, I don't I don't know, but I'm All right, all right. Speaking of bragging, I gotta stop you. I'm gonna get you. I got an email this week, all right? Email guy emails the show, blah blah blah. He works with a guy.

I told him I listened to a show, Inside Baseball, Old Chestnut, guy named Morris Sachs. And the guy texts him back and he says, yeah, Morris was the biggest hitter in the global rates for a long time. Were you the biggest hitter in the global rates market for a long time? Duh. Okay. I know Morris is a big deal, but was he literally the biggest single trader in the world?

I I don't I don't you're not gonna d you can't deny it? Well let me let me let me reframe. Yes, it's a yes. Okay. Th the answer is no. Okay. Fine, fine. But but to define it, okay. I think it's debatable that for that period of time when I was at Greenwich. between me and the rest of the guys in the group. Okay. Arguably we ran the largest proprietary arbitrage book in the world. I I think I think that's uh arguable. And the reason I come to that is um for instance

I don't know how many positions we had. Probably almost a position in every issue, Treasury. Long and short. Now we had we had a rule. We wouldn't be short more than ten percent of an issue. And we had a law. that we wouldn't be short more than fifteen percent of an issue. Understood, yeah. So okay. Then we had positions in two-year, five year, ten-year, and thirty-year futures.

And I could tell because those aren't from Russia or China, those are from the Chicago Board of Trade. So those were facts. And I knew the percentage of the open interest. That we had, which I will not disclose here. But you know, we had enough of that open interest. I don't think anybody could have been bigger.

Okay. So were we the biggest traders in the world? No, I I I think you know we probably got dwarfed by some of these pension funds. And once again, uh it depends what your metric is. We didn't have the biggest. outright exposure. Meaning if if interest rates went up a hundred basis points, we weren't gonna make you know five billion dollars or something like that. But but we we were i in our day, uh You know, not yeah, I think the the the thing I'm most proud of is anybody can be big.

Okay. We survived. for a long time and we survived long-term capital, we survived Orange County, we survived 9-11, we survived uh the global financial crisis. Um well but what we didn't survive was the World Bank of Scotland management. Yeah.

So I'm I'm I'm I'm very flattered. Thank you. All right. Well he well that was just that was just the the the appetizer for the entree question, which was when you're trading that big. Is it harder to get positions on and off because everyone else can see you enter and exit the market? I know you've touched on that, but Can you well that that's a great question? Yeah. So um you know, I've poked fun at Bill Ackman because he would go out and he would say he was shorting herbal life. Like

I I would claim you could tie me up and stick pins under my fingernails, and I'm not telling you what issues I'm short. Right. Yeah. Yeah. So um The the thing we worked exceptionally hard at is not letting no people know what our positions were. So in the government bond market, that's very easy because it's supposed to be a blind

brokerage from but of course the brokers are human and brokers are brokers. So they would tell people what other people were doing. I remember you saying it's steamboat and or what the bro Yeah, right, right. Yeah. So um we would work hard at getting positions on and off. uh in in covert ops. Even to the extent that I mentioned, you know, we discovered people we worked with were going through the garbage to see what the

So um that's the thing about keeping the positions private. Okay. Because if somebody knows what you have. uh then they can especially when you're short. When you're long, it's a whole nother world. Okay. Um the question about getting into and out of positions is Um that's something that is Way more. art than science. Right? There's times

There's different types of trades you can do. There's there's uh like futures are a good example, that they're quarterly. So, you know, the positions, uh the contracts expire. So you you either have to take them off. You have to take or make delivery or you have to roll to the next contract. And um so that that creates liquidity event that

you have to be prepared for. And so we would try and set trades up where we knew that Either there was going to be liquidity created for us, or we could force. there to be liquidity. And so for an example, let let's say we I I probably get this wrong because I'm doing it off the cuff, but let's say we were long a futures contract and um we went out and not only did we own the futures contract, we owned the cheapest to deliver. So we knew that either

the person had to buy the futures contract back and push it up. Yeah. And we could sell by something else. Or they would buy the cheapest to deliver, which would de facto push the futures prices up. That that would be an example. Or If you knew uh the belly of the curve, let's say the seven-year note was really expensive.

So you would want to sell seven years and hedge it by buying a five year and a ten year. So it's a th a butter we call it a butterfly. Right. But you would know the seven year auction was coming. So you could sell a bunch of seven years. three weeks before the auction, two weeks before the auction, then when the auction would come The tendency is to cheapen it.

because the supply is coming and you could cover it either before the auction, in the auction, or after the auction. And so you would really need to uh um make sure you had liquidity events. But but most importantly, most importantly, you you had to be right. Yeah. Because if you were wrong, um you did not get to pick the price that you got out at. The market took you out and it was always

at the worst price.'Cause that's that's finally where the liquidity got created. It's amazing. And so That's why when you when you listen to guys like especially Munger and and and Buffett and um They talk about, you know, making fewer trades.

Right. Because if you're wrong, and I know they're rarely wrong. And they have staying power that much most people don't have. But when you're wrong and you're big, it's a problem. And so the fewer the fewer um uh decisions you make, I think the safer you are. One of the uh bones I have with one of our our mutual pals is he does a lot of trade. And you know, I think Uh that's his style. That's fine. I'm much more or we

When I say I and by the way, the comment about being the biggest is yada yada. I know I I I just part of a team. Okay. And and but um No, nobody nobody's been more clear about being a part of the team than you. And you've always said the guy's sitting with you and you've all you yes, we know. Okay. So, um You know, the one thing I like about uh people trading fewer positions and larger positions is to me that's a uh A a sign of confidence. Capability.

Um you know there's a uh a woman who uh I used to subscribe to. I know let's skip it. Let's skip it. Well I I I'm not gonna mention the name. Okay. But I I I I I just wanna bring this up because I I do think it's it's instructive. And if I get halfway through and you tell me to shut up, I'll shut up. I was gonna bring it up too. So go ahead. You're right. It's your sh it's your idea. Incredibly bright person

Okay. Great with the macro stuff. But runs these minuscule portfolios of buying, you know, fifteen shares of this and eighteen shares of that. And I I you know, I just don't I I don't I I that's not I I mean I'm I'm the guy that, you know, saw there was a problem in Chernobyl, had very little money. and went out and bought all the wheat they'd let me, right? I mean, and and I'm not like this huge macho, at least I don't think I am. It's just like you don't get that many opportunities.

So wait for your pitch. Mm-hmm. And when you get these things where you get shit all over the I just don't I I just fall back to the The monger Buffett concept of, you know, you what did he say? You get a ticket with twenty punches in it, and those are the most trades you can make in your life and something like that. There's something there's something along those lines. And I think I think they got it dead right. I I think the reason they're successful, besides the

uh funds rate dropping from twenty percent to zero. Which a little bit of a tailwind. Not bad. Uh um Warren Buffett, I told you I read that letter he wrote to Catherine Graham in nineteen seventy-five. I I didn't read it in nineteen seventy-five, but that's when he wrote it. And and he he talked about the things that ultimately matter, which is, you know Liquidity.

But most importantly, compound interest. And I keep coming back to this thing. And I I think and and I have a a litany, and I probably won't get to it today, of ways that Wall Street Steals money from its client. I I I want to give you a couple of examples, but you know, if you like banging shit back and forth, I get it. you know, it's gotta be more fun than playing um Grand Theft Auto four, right? But uh, you know

If you think you're gonna make a living at it, I can assure you you're not. Uh the example being the article Uh did I send it to you? Apparently these guys trading these zero-day options. Let me see if I can find it. They they lose on average. 300 and they lose three hundred and fifty eight three hundred and fifty eight thousand dollars per day. Yeah. Per day. Yeah, it's amazing. That's a bit offer spread. Yeah. That's that's paying Ken Griffin's.

Common charges. Happily. And they love it. Yeah, they love it. Yeah. Yeah. Um What's the advantage individual investors have, right? They have time on their side. Yep. They have compound. Okay. The the re the the guys who do it for a living, they don't they don't have that advantage, right? They gotta go in, they start from scratch, but they have they have a lot of tools. which the the retail guy doesn't have. Mm-hmm. Um and I don't think all of them are entirely

entirely legit. You know, there's there's lots of skullduggery that goes on. I don't know if this caught your eye and um I'll just uh mention it because I had it forwarded to me by somebody. Uh I'm gonna omit the name, but this is the Commodity Futures Trading Commission. Release number eight six eight five dash two three. CFTC orders XYZ to pay$15 million for violations of swap business conduct standards.

So the firm admitted that for nearly all same-day swaps executed in 2015 and 2016, it either failed to disclose any uh type of situation or fail to disclose an accurate explanation, which is in violation of the CFT regulation. So a fifteen million dollar Civil monetary penalty. Okay. Explain to me if you're no listen, this is heartfelt, okay? Which is rare for me. If you're a salesman covering client, okay, and you know You're doing the client a disservice.

To the extent that the CFTC finds your firm$15 million. How do you I don't know how do you look yourself in the mirror? You're a fucking criminal. Yep. I honestly. Yeah. If it was fifteen thousand bucks You could say, Hey, you know We took some liberties with our female guests, yada yada yada. Fifteen million dollars, that's more than a blowjob. Yeah. Comment, right? So I I I I find that I find that

Horrible. And, you know, going through my career on Wall Street, and I, you know, I don't want to eat up the whole hour on this, which we certainly could, but the stuff I've witnessed over time. Um you know, when I worked in the grocery store in high school, they called that Shrinkage. Yep, shrinkage. You know, like you got hungry, so you da you damaged a box of cookies. Pillage. But you couldn't Yeah, pillage. Yeah. Um this stuff goes on

all the time. And the fewer number of trades you do, okay, the less chance they got to get their beacon there and steal from you. Yeah. And uh Um, you know, I'm getting a little bit older and a little bit crankier. But I mean at some point uh I don't understand why a fifteen million dollar fine. Okay. Yeah. Is is gonna fix a firm that has a market cap of of billions of dollars. I don't I don't understand. And you know who I I blame? I go back to the same thing. I blame the board of directors.

Because, you know, that's something like that, a head should roll. Because there the w where's the where's the evidence that You know, as a firm, we cannot allow this to happen. There there there there there is none. And um th I once again, and I'm surprised I've been referring back to these two old guys so much, but um

Charlie Munger gave a speech. It was either I think it was like Stanford Business School or Stanford Law School or Harvard, something like that. And it was it's like twenty or thirty pages. Mm-hmm. But it is. It is. Required reading. And one of the things he goes in there and talks about is like I'm paraphrasing from memory, but it's basically like you have this old lady working for you and

And she gets caught stealing something and she swears up and down and it was the first time she'd ever done it and she'd never do it again. And Charlie's like cashier her. I guess which means fire her. And the logic is it probably was

And even if it was the first time, it won't be the last time. Totally. Right? And so you have this stuff going on left and right. And um well, you know, where's the one of our friends, and I don't know that he would be comfortable with me saying his name, but he he reminds me of a story he told when he was on the floor working for a guy. And the guy basically robbed six hundred grand. And he got fined sixty thousand bucks.

And the traders and the trader said to my friend, I'll do that trade all day. Six hundred for sixty? Yeah. No jail no jail time? I I I I don't know. I I I I don't know. Where's Gary Gensler? Can we take can you wanna put Gary Gensler in your in your crosshairs for a minute? Well, I I actually actually it seems as if he might have grown a pair. Okay.

Because he and I didn't have a chance to do the deep dive. I I had some um personnel issues I needed to deal with this week. Yes. But not personal issues, personnel issues. And um What does that mean? What does that mean? What does that mean? Somebody get fired? Um as I was saying This is where Amy says, I guess he didn't want to talk about that.

Um Gensler, the deep dive. Gensler. He said he was in Congress and they're like, Why are you going after these people? And he's like, Because we don't have any We don't have any regulations in place. And by the way, they don't follow regulations anyway. Yeah, yeah, yeah. So it at least the fucking guy's doing something. Okay. Which is which is which is great. What I really was delighted to see, and I I lost track of it.

But all I remember early on with the Bitcoin thing is everyone telling me how it's perfectly safe, it's completely untraceable, yada, yada, yada. Now apparently the government has hired this firm, they can go and they can find the Bitcoin, they can take the Bitcoin. Um so uh I I I wanted to weave that in with the uh The um the stealing of the gold up in Toro Toronto.

And and I is a side note, uh this this is we're gonna have to r redo this whole fucking shop. This thing's a disaster. One of our correspondents up in Canada uh signed up to get an MRI. Okay. Like a routine MRI. Yeah. They they got a date three years from today. No. No. Three years. Three years. Three years. Yeah. I mean it's awesome. Hey. Good morning. You wanna buy a car in Russia? It's ten years. Oh three years. That's from sources believed to be reliable but cannot be guaranteed. Yeah. Yeah.

Incredible. So um anyway, the weather sucks here again. It's brutal, dude. Well welcome back to the spring. Um you want to talk about the credit scores and the mortgages? They got a lot of that got a lot of headline news on Tell me, I I missed it. Um if you have a credit score of seven fifty, you're gonna pay a one percent fee. And if you have a credit score of six fifty, you're gonna get one percent waived or something like that. So the incentive is to have a lower credit score.

Okay. Is that because of one of Biden's Yep, executive order. Executive order, May first. It's gotten a lot of traction. I haven't read about it in detail, but from from first glance it You're subsidizing uh bad loans with good loans and good loans are gonna be a pay a fee and they're gonna extend mortgages to people that shouldn't have uh a mortgage and what? That worked out great last time. Bingo. Exactly. That's yeah, exactly. Exactly. What what I will tell you uh in regarding uh

Debt. Mm-hmm. Okay. As a uh uh a dilettante in the New York real estate market, um I continued To see the fact that unless you are Pristine Bauer. you're you're not getting money from a bank. And so we're quickly going to morph to the situation that existed after the global financial crisis. You're gonna have the pristine bowers. Who can get money at you know now it'll be sulfur instead of LIBOR? Yeah, yeah, plus the spread. And then you'll have to go to the hard money lenders.

So um it'll be like you can either borrow money at three or four percent or not anymore, like five or six percent, or twelve or thirteen percent. And um and and just like Kathy Wood was talking about, the um the positive side of her losing money was the capital losses you can offset against future gains. Yeah. J Jonathan Gray of Blackstone who owns the hundreds of billions of dollars of commercial real estate was saying, well, the good news is the low occupancy rate.

Kind of keep people from developing real estate. Um so if everything else falls through, then maybe. Yeah.

Um yeah. I I you know, I I feel like I had a whole lot more to talk about, but you know about you wanna talk about inflation dying off? You wanna talk about the Fed hiking? No. Well I I I mean, I'm really in the Lacey Hunt school. I I do think the money supply dropping, I do think the lending standards I do think the quantitative tightening. I mean, just to be succinct. this thing the economy's dead. It just doesn't know yet. And uh to reiterate what I said last week, I don't think

the US Treasury occurs all that wrong. Um We have to have to have to get the curve to be positive because I'm more convinced than ever that an inverted curve is a destroyer of economic growth. And the the problem, if there's gonna be a problem is if inflation doesn't come down. If inflation stays up here, then it's gonna be a fucking debacle. Because either the Fed is gonna hold the line

And I have no opinion on whether they will or not. But if they hold the line, you're talking about a real massive problem. And if they cave, Okay. The long rates are gonna spike. and uh the curve will get normal that way. But, uh, You know, I I I kind of s go with the Lacey Hunt and the drop, the epic drop in money supply. You even pointed out to me some of these regional surveys. Look, did is gruesome the word you used? Grim.

Grab yeah yeah Philly Fed. Uh thanks for who somebody sent that to me. Philly Fed manufactur uh Philly Fed business outlook. Okay. Look like a crypto chart down. The the one chart that I clipped. uh that resonated with me was one of the things you would see that was a great leading indicator of weakening Employment would be the number of people applying for disability through Social Security.

Because it's like, oh my back, my back hurts, I can't work, right? My neck hurts, I can't work. And apparently that is starting to go parabolic. And um you know that's one of those things I I remember years ago, like a zillion years ago, they used to count the shipments of Christmas pa wrapping paper. Yeah, yeah. Claiming like, well, you know, the stores know how many gifts

And and then you know, that got hooted. Okay. And uh I don't know where we came out with that, but I do remember the uh disability stuff was a good uh indicator. And again again, I I Didn't consolidate all of them, but I really like the regional surveys because they're pretty simple. Yeah. And uh uh

Yeah. Did you uh cat catch any of the fish show last night? No, it's past my bedtime. Run the west coast. I I no, no no no. I No, so you you didn't do what I did, which is get up at three thirty and listen to it? No, I got up at six thirty'cause my daughter was crashing around doing god knows what. I don't know what's going on, but they got a problem with the mix.

Okay, we're not gonna be we're not gonna be spoiled entitled fish fans like we were Monday, Tuesday, Wednesday, because the fish fans displayed some deplorable behavior. Some of those people who, dude, you're so lucky to see your living, your idols. You get to see them live. You get to see that you get the show dropped off at your doorstep on your phone the next morning. And they have the nerve. So to whine and dude like us.

Like I mean, I was guilty. I was annoyed I didn't get the song. But again, they they took it too far complaining. All right, here's what happened, people. Fish does the fish has an app. Fish plays a concert on Tuesday night. The concert is available on Tuesday morning. Every concert they've ever played, a thousand concerts is available on the app.

They played a show on Tuesday night. They did a historic 44-minute long tweezer. So the buzz is, you gotta hear the 44-minute tweezer. For the first time ever, the show doesn't upload the next morning. Okay, technical difficulties. That's weird. It's the one show everyone's been waiting for. It doesn't come for like a day or two. Three days go by, no show. And the comment sections, and now they're leaving reviews on other shows, just nasty, snarky stuff. And it was, it was a little annoying, but

Then they went after the mixer. Okay. And this is where they ruined it for me. Dude, I I was deaf to that. I was blind to that. I was completely oblivious to the sound. I was like, oh yeah, I can like, all right, now I hear too much crowd noise. Now I can't hear Mike. And the and yes, the mix is atrocious.

So that guy should be fired, all right. When the whole entire cult of people is like mixed guy sucks and now he's ruined I didn't I didn't I didn't realize that. All I know is at four thirty this morning. I i i it's like all I can hear is the hi-hat symbol. Thank you, snare drum. Dude, I hear crowd noise. I hear crowd noise that I don't want to hear about. And apparently he's made the mistake of like bragging about how he uses 11 different mics to do the mix.

And obviously other pro mixers are in the comments like, look at this jabroni. That's the worst thing ever. Here's a good mix. This is a top quality. So I go back and I listen to like one of the Baker's Dozen shows or whatever was a pro awesome. Right, yeah. I listened to last night, and I'm like, god damn it, it does sound bad. So again, we are spoiled. Imagine like

Imagine you could listen to Jimi Hendrix concerts the morning after and you're gonna complain about the mix, okay? So like that's what we're doing here. Um Okay. You know what? I I beg forgiveness and um But you're right you're a hundred percent right though. You know, you're talking about a guy who's almost 63 and for all intents and purposes deaf. And if I can tell him if I can tell the mix is off. By the way, so next week, for those of you

Who've been asking, we're gonna talk about baseball. Yankee yeah, yeah. Yankees, Mets, Kansas City Royals. Oh boy. All right, buddy. All right, pal. It's been fun. Like I said, there's nothing go like I said the week last week and two weeks ago. There's nothing going on in the market. I I know, but we got a contract. We gotta get paid, right? You get fired after this. Goodbye. Have a good day. Take care.