The Ridiculous Reality Behind the Fed’s Latest Rate Cut
The Fed says it’s “flying blind,” but somehow keeps reaching for the autopilot. In this episode of The Higher Standard, Chris, Saied, and Rajeil break down the latest 25-basis-point rate cut and the confusing logic behind Jerome Powell’s “data-driven” decision-making... made without, well… the data. From the Beige Book to balance-sheet shrinkage (and yes, the jokes write themselves), the guys dissect how the Fed’s moves are shaping jobs, mortgages, and the markets. All while Powell looks like he’s literally in bed with A.I.
➡️ Picture J.P. himself, post-press conference, lounging in a robe, cigarette in hand, with a grinning robot by his side. It’s the perfect metaphor for an economy seduced by artificial intelligence and easy money. Meanwhile the rest of us wonder who’s really in control. The team dives into the absurdity, the economics, and the existential dread of our new robot overlords, all with the wit, sarcasm, and brutal honesty only The Higher Standard can deliver.
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🔗 Resources:
Fed Cuts Rates by Another Quarter Point, but Future Cuts Are ‘Far From’ Certain (The Wall Street Journal)
Repo and Reverse Repo Agreements (Federal Reserve Bank of New York)
⚠️ Disclaimer: Please note that the content shared on this show is solely for entertainment purposes and should not be considered legal or investment advice or attributed to any company. The views and opinions expressed are personal and not reflective of any entity. We do not guarantee the accuracy or completeness of the information provided, and listeners are urged to seek professional advice before making any legal or financial decisions. By listening to The Higher Standard podcast you agree to these terms, and the show, its hosts and employees are not liable for any consequences arising from your use of the content.
Transcript
You know what?
Speaker A:I pre planned out today's show.
Speaker A:Gang.
Speaker A:Gang.
Speaker A:No, I wasn't gonna do that.
Speaker B:Why not?
Speaker A:I pre planned that.
Speaker A:I was gonna say it was such an amazing experience to do a live today without you on it.
Speaker B:Oh, I was squarely focused today on the live stream.
Speaker A:You were.
Speaker B:Although why does he always.
Speaker B:Why is he always lead with that?
Speaker A:Lead with what?
Speaker B:He always does every time?
Speaker A:Who?
Speaker B:Today the FOMC got together, and we're squarely focused on reaching our dual mandate.
Speaker A:Oh, yeah, yeah, yeah, yeah.
Speaker A:I think.
Speaker A:You think?
Speaker A:I think he thinks if he says.
Speaker B:People are gonna believe it.
Speaker A:Oh, they are squarely focused on their dual mandate.
Speaker B:Just like.
Speaker B:Welcome back to the number one financial literacy podcast in the world.
Speaker B:This is the higher standard.
Speaker B:Sitting in front of me is my partner in crime in a very sexy T shirt.
Speaker B:Christopher Nahibi.
Speaker A:Yeah.
Speaker A:Sitting across from me, my partner in crime is crime or time.
Speaker A:Did you do crime?
Speaker B:No, I do crime.
Speaker A:You do time, partner in time.
Speaker A:I don't know.
Speaker B:Because I do the crime, you do the time.
Speaker A:Probably true.
Speaker A:In the exact same shirt, although slightly more faded in mine.
Speaker B:Yeah, exactly.
Speaker B:It's pre fade.
Speaker A:The one.
Speaker A:The one and only.
Speaker A:Say Omar, everybody.
Speaker B:Thank you.
Speaker B:My man is sitting behind the desk in the production suite.
Speaker B:We have the fighting.
Speaker B:Fuji and Rajeel.
Speaker B:What's up, my guy?
Speaker A:Welcome back.
Speaker A:I'm back.
Speaker A:Well, he's back.
Speaker B:He didn't quit on us.
Speaker A:Thank you.
Speaker B:People were worried, bro.
Speaker A:Yeah, they were worried.
Speaker A:People were like, oh, they lost another one.
Speaker B:What'd they do to this one?
Speaker A:Yeah.
Speaker A:Damn it.
Speaker A:So, Rajeel, just by morbid curiosity, did you.
Speaker A:Did you watch the last episode at all?
Speaker B:I watched introduction just to see how I would be introduced, but there was no one here.
Speaker B:No comment on that.
Speaker A:Yeah, I got a lot of people saying that was funny as hell whenever we flashed over to Rejeel in AFD space.
Speaker A:Yeah.
Speaker A:We also did it at the end of the show to just let you know that we.
Speaker A:We brought you in and took you out.
Speaker B:So today, episode 307, we're getting into.
Speaker B:We had the fed rate cut day today.
Speaker A:That.
Speaker A:Which was what the topic of the live was is that we were going over the interview, and I think a lot of people ask questions about this.
Speaker A:They say, chris, why do you call it the press conference?
Speaker A:And the.
Speaker A:The actual, you know, an announcement?
Speaker A:Like, why don't you just cover one or the other?
Speaker A:It's because the.
Speaker A:The announcement is kind of a foregone conclusion.
Speaker B:It was already understood.
Speaker B:Right.
Speaker B:Chicago Mercantile Exchange had booked it for basically 99 chance that they were going to be cutting rates by 25 basis points.
Speaker A:Well, more so than just that.
Speaker A:It's one of those things that I think people.
Speaker A:It's lost on a lot of people if they're gonna cut 25 basis points this time like they did last time.
Speaker A:Even the narrative is almost identical.
Speaker B:Yes.
Speaker A:Like he's literally just taking the same speech as last time and they'll redline it and cut out a couple of words here and there.
Speaker A:Literally it's no more than five or six in some cases.
Speaker B:Right.
Speaker A:And then he'll give that speech.
Speaker A:It's really the question and answer session later on.
Speaker B:Right.
Speaker A:The volume of, of real value comes from.
Speaker B:Especially this time around.
Speaker B:Because this time around he was essentially flying blind.
Speaker B:Right.
Speaker B:Relying on a lot of surveys.
Speaker B:Right.
Speaker B:In the beige book.
Speaker B:No, I mean there's a lot of reports that he, They.
Speaker B:I should say they did not receive because BLS only has one essential worker currently working at the moment.
Speaker B:Yeah.
Speaker B:And a lot of furloughed employees.
Speaker B:So that, that was going to be interesting.
Speaker B:Right.
Speaker B:What, what are you going to do for the next meeting?
Speaker B:Next meeting, December 10th.
Speaker B:We don't know how long these employees are going to be furloughed.
Speaker B:I'm skating around certain terms and words very carefully here.
Speaker B:You see what I'm doing?
Speaker A:Yeah.
Speaker A:I am.
Speaker A:I'm going to call it now.
Speaker A:The December meeting is probably going to be one of the more controversial meetings of, of this year in this rate cutting cycle.
Speaker B:The final meeting of the year.
Speaker A:Yeah.
Speaker A:I think it's going to be a big one.
Speaker A:Or a big one, depending how you like to use the word.
Speaker A:And I think the reason why is there is clear dissension amongst.
Speaker A:Amongst the ranks.
Speaker A:But look, what does all of this mean for you?
Speaker A:And what should you expect?
Speaker A:That is what we are going to unpack on today's episode.
Speaker A:We're going to open it up like the flower that is Saeed's heart.
Speaker A:Oh, you're so sweet.
Speaker B:You're so sweet.
Speaker B:So from the beginning of the hiking cycle to now the.
Speaker B:We're officially in the rate cutting cycle.
Speaker B:We in.
Speaker B:In between that we had the long holding the long pause, if you will.
Speaker B:And now we're, we're.
Speaker B:We're getting to the point where not only are they cutting rates, so I think we're now officially at 150 basis points that have been cut.
Speaker B:So.
Speaker B:Right.
Speaker B:You know, they're at between a range of 3.75 to 4%.
Speaker A:Right.
Speaker B:And now you're entering the Territory of what?
Speaker B:Which is arguably it's, it's debatable.
Speaker B:There's never going to be a clear cut answer of what the neutral rate is.
Speaker B:It is, but everyone from the longest time has.
Speaker B:We're pointing at it's somewhere between 3 to 4%.
Speaker B:Right?
Speaker A:Yeah.
Speaker A:So I mean a big range for the context of what they're doing here.
Speaker A:So let's, let's give a little bit of timeline, some historical context and then there was definitely two different narratives if you caught it, that Jerome Powell had today in the press conference.
Speaker A:One, he suggested that the.
Speaker A:That more than half of the FOMC believes we are at that neutral hold right now.
Speaker A:Okay.
Speaker B:Which is which.
Speaker B:Which would signal what?
Speaker A:That you're not gonna need more rate cuts.
Speaker A:Right.
Speaker B:But prior to this, prior to that meeting today, the Chicago Mercantile Exchange had booked a 92 chance of another rate cut in December.
Speaker A:That's right.
Speaker A:And I think there's some controversy there.
Speaker A:There was two different opinions outside of the.
Speaker A:The.
Speaker A:It's not unusual to have 1 dissension but certainly 2 dissensions would be a bit unique.
Speaker A:But dissensions in different directions.
Speaker A:Mirin, who is the current executive branch most recent appointee and he has been somebody who's been very aggressive on rate cuts.
Speaker A:He said he wanted 50 last time he said he wanted 50 this time he dissented.
Speaker A:He was the outlying opinion.
Speaker A:And there was another one, I think it was Jeff Schmidt from the Kansas City.
Speaker A:He, he wanted to hold rates still, which ironically was the gentleman from JP Morgan Chase, David Kelly.
Speaker A:I believe it was his perspective as well that he thought you should hold rates.
Speaker A:And I'll explain why that actually might not be a bad strategy which flies in the face I think of the majority opinion.
Speaker A:But I actually tend to agree with it.
Speaker A:I'm not sure that cutting rates at this time was a good idea.
Speaker B:Okay, yeah, we'll get into it.
Speaker A:Let's get some historical context.
Speaker A:And obviously this is all designed to not only help you at cocktail parties because people go to those still.
Speaker A:Yeah.
Speaker A:But to really help you understand what this means for you and your financial future because there are some outlying questions that have never been answered and to this day we don't know the answer to.
Speaker A:And we're going to get to those as well.
Speaker A:This cutting cycle started and all moved since the peak.
Speaker A: % set in July of: Speaker A:That's a long ass time at high interest rates.
Speaker A:And I'm going to talk later in the show about how this has impacted things in a way that we don't fully understand.
Speaker A:And it's kind of the reason we're seeing such weird responses economically in the market.
Speaker A:For example, the vix, the fear gauge rising.
Speaker A:People are more afraid for their financial futures as indicated by the vix.
Speaker A:At the same time, the stock market is surging.
Speaker A:Right.
Speaker A:If people are making more money because the stock market is increasing, it's a more profitable economy and it seems more prosperous people shouldn't naturally be afraid.
Speaker A:Then you throw in the fact that the job market seems soft and cushy.
Speaker B:Right?
Speaker A:Yeah.
Speaker A:The opposite of what we're deal is today because we're jealous.
Speaker B:So skinny now my man's shedding weight.
Speaker A:Yeah.
Speaker A:210, right?
Speaker B:My guy.
Speaker B:Good job.
Speaker B:I got jump on the train.
Speaker A:Here.
Speaker B:People lose weight all around me.
Speaker B:I'm like, man, I'm not going to.
Speaker A:Make fun of doing it.
Speaker B:Everyone's doing.
Speaker B:All the cool kids are doing it.
Speaker B:I gotta get out here.
Speaker B:Six.
Speaker A:I mean, yeah, we don't support the use of drugs that are not prescribed on this show.
Speaker B:No, we don't.
Speaker B:None of the stats of press.
Speaker A: e of the cycle, it started in: Speaker A: ,: Speaker A:We kicked it off in a big way.
Speaker A: ,: Speaker A: ,: Speaker A: Cuts in: Speaker A:September we saw one for 25 basis points.
Speaker A:October, you now just got one for 25 basis points.
Speaker A:Bringing us to where we're at today.
Speaker A:Like Saeed mentioned, 150 basis points off the peak right now.
Speaker A:For context and color, an important thing to remember is there were two polar extremes that are important.
Speaker A:One, we came off of artificial intra deflation or for about 14 years where we had rates at near zero.
Speaker A:Typical recessionary economies and prosperous economies have about seven to 10 years from peak to peak, from trough to trough.
Speaker A:And if you think about this as a parabolic curve, it starts at the bottom, it goes up, it comes back down to the bottom.
Speaker A:That is one peak at the top of the curve.
Speaker B:Historically speaking, that's what I guess the US economy was used to seeing, right?
Speaker A:That's right.
Speaker A:Historically, yeah.
Speaker A:And he saw almost double that with the artificial intra deflation.
Speaker A:And that creates a prolonged period of prosperity and this prolonged period of what seems like this continual rise up in home prices and the stock market in assets.
Speaker A:To make it very simple and I.
Speaker B:Think this vernacularity, the Justification was back then to not allow things to get too frothy.
Speaker A:I don't think they were thinking that way at all.
Speaker B:This is just the way things are going to be moving forward.
Speaker B:We can hold interest rates this low for this long because everything seems to be fine.
Speaker A:There could be conspiracy theory.
Speaker A:I think you just had a very different perspective on economic policy.
Speaker A:Got carried away.
Speaker A:I think a lot of people were afraid of what happened during the great financial crisis happening again.
Speaker A:You have to understand that not only were home prices essentially eviscerated during that, but there was also this fear because people's 401ks were wiped out.
Speaker A:A lot of people that are nearing retirement, we're talking about the great wealth transfer, which is supposed to go from one generation to the next.
Speaker A:We haven't seen, we covered that on a previous episode.
Speaker A:I think it was 302 or 303.
Speaker A:I think people were afraid of so many people from that generation having impacts that they started to do things defensively.
Speaker A:And I think that it's a very different economic time today.
Speaker A:I don't know that you had the level of prosperity.
Speaker A:Certainly you didn't have all time highs in the market then.
Speaker A:So people were a little more cavalier.
Speaker A:But the political zeitgeist, whether you like it or not, drove a lot of those decisions.
Speaker A:And that's a problem.
Speaker B:Yeah.
Speaker B:We had Jamie Dimon recently come out and say the stock market seems to be overvalued.
Speaker B:We, we've had Jerome Powell say asset values seem to be inflated.
Speaker B:Right.
Speaker B: e digging, you look at, since: Speaker A:Right.
Speaker B:Real estate's up approximately 28% nationwide.
Speaker B:I know real estate is more of a region thing, but nationwide up 20.
Speaker A:Over the course like the last six years, it's up like almost 50%, right?
Speaker B:Yeah, exactly.
Speaker B:Cryptocurrency up over 2,000% since then, my personal favorite.
Speaker B:And gold up over 200%.
Speaker B:Meanwhile, median household incomes only up 22%.
Speaker A:Yeah.
Speaker A:And I brought this up in the live stream earlier today too.
Speaker A:I think this is a meaningful and important comment to make.
Speaker A:Like, look, yeah, you can solve a lot of this by paying employees more.
Speaker A:Right.
Speaker B:But so now we're.
Speaker A:But that's not reality.
Speaker B:It's, it's.
Speaker B:I think, I think now it's, it's getting to the point where.
Speaker A:No, no, no.
Speaker B:We're not just in this AI bubble.
Speaker B:It feels like a lot of things are starting to become too frothy.
Speaker A:We're deal at the bottom of the show notes towards the bottom.
Speaker A:There's a list of companies that I think I put there.
Speaker A:Is it still there?
Speaker A:You want to drag that on the.
Speaker B:Screen real quick while he drags it on the screen.
Speaker A:He's got it.
Speaker A:He's already.
Speaker B:What, what, what scares me with this.
Speaker A:Right.
Speaker B:Is okay, whammy.
Speaker B:If anything is, if anything, if anything is a bubble.
Speaker B:What do bubbles do?
Speaker B:Right.
Speaker B:They sent, eventually pop.
Speaker B:And that's normal in a healthy economy.
Speaker B:Right.
Speaker B:Like it happens, it's just part of the cycle.
Speaker B:Right.
Speaker B:It happens.
Speaker B:Now the fear is when the bubble gets too big.
Speaker B:Right.
Speaker B:And things start coming down way too fast with us now reaching this rate, new rate cutting cycle and the Fed now saying, okay, we're done with the quantitative tightening portion.
Speaker B:This is something that I wanted you to help explain to everybody because I'm seeing a lot of people talk about this thinking that, no, we're now jumping into quantitative easing, meaning, you know, we're not, we're going to start printing, printing the money.
Speaker B:But they went out and they said, they openly said, and Jerome Powell said at the post game press conference that the balance sheet runoff is over.
Speaker A:Yeah.
Speaker A:So we're going to get into a section tonight.
Speaker A:Later on in the episode, we're talking about quantitative tightening.
Speaker A:Explain what that means because I think we throw out a lot of turners and people are like, oh, tightening makes it tighter.
Speaker A:Oh, I know what that means.
Speaker A:And they don't.
Speaker A:Yeah, we're going to break that down.
Speaker A:We're going to talk about quantitative easing, we're going to talk about the repo line and banks liquidity.
Speaker B:Before we do that, how does that impact everybody?
Speaker A:Yeah, before we do.
Speaker A:This list was interesting to me.
Speaker A:UPS 48,000 employees, laid off Amazon, they thought it was up to 30,000 employees, but it's actually 14,000.
Speaker A:Intel 24,000 Nestle 16,000, Accenture 11,000 Ford 11,000.
Speaker A: Microsoft: Speaker A:And Meta's been interesting.
Speaker A:They've been kind of sneaky.
Speaker A:They've been doing this on a quarter by quarter basis to not have a high number.
Speaker A:Thank you, Rajil.
Speaker A:And the reason why that's important is you have to understand that the job market is being impacted in a meaningful way.
Speaker A:And part of the rhetoric we saw today with the FOMC was clear they are concerned about the stability of employment.
Speaker A:Now, I disagree heavily with a lot of what Powell's justification for the decision was, but I agree with the ultimate decision to focus on jobs a little bit.
Speaker A:But then I lean heavy into David Kelly's camp where I'm not sure that a rate cut right now is warranted.
Speaker A:You're protecting jobs with outdated data.
Speaker A:You know, the job situation is worse than.
Speaker A:Then you're getting the data for anyway.
Speaker A:Just because it's a lagging figure.
Speaker B:It's right, exactly.
Speaker B:So don't you think if that's the case, if the job figure is worse than what's actually being reported, and then essentially they should be cutting because it's a lagging indicator and it takes time for these things to work itself into the system.
Speaker A:Jerome Powell, when asked about this, blamed two things.
Speaker A:He blamed immigration policy right now, which I think is actually kind of asinine.
Speaker A:I think employment should be better if more people are leaving the country.
Speaker A:We're forced to leave.
Speaker A:And I'm not endorsing.
Speaker A:I think it's terrible.
Speaker A:We're doing right.
Speaker A:But that being said, that is supply and demand.
Speaker A:Right?
Speaker B:You got to be careful.
Speaker B:You get painted out.
Speaker A:This is what he said in his press conference.
Speaker A:Okay, look at the camera.
Speaker A:This is what Jerome Powell said.
Speaker A:But I disagree with that.
Speaker A:I don't think that's driving the job numbers that we're seeing.
Speaker A:A lot of those companies that I just read out, those are not where a lot of these immigrants are coming from.
Speaker A:I mean, sure, there's some, but not all of them.
Speaker B:What was the other tariffs?
Speaker A:No, the other thing he, well, he blamed tariffs a tiny, tiny bit, but the other thing he blamed it on was seasonality.
Speaker A:And I'm again, these two things should be propping up the job numbers currently.
Speaker B:Right now where we are.
Speaker B:Right.
Speaker B:Because a lot of people take on seasonal jobs.
Speaker A:And then he says seasonality and seasonal jobs.
Speaker A:But it's like, bro, you don't have the updated data, A, from the BLS Bureau of Labor Statistics, and B, you know, it's lagging data anyway, so you're not going to get that data till next quarter.
Speaker B:So you know how I, I realized that I've become a nerd with all this?
Speaker A:Just now.
Speaker B:Just.
Speaker B:Just now?
Speaker B:Yeah.
Speaker A:Today I was wearing matching shirts.
Speaker B:I was, I was, I was, I was matching hat.
Speaker B:I was triggered from the post game press conference.
Speaker B:He said, he said that the tariff.
Speaker B:Tariff.
Speaker B:Tariffs that get put in place and whatever inflation gets caused because of it is probably transitory.
Speaker A:Yeah.
Speaker B:Hey, guy, listen, if there's one word that should leave your vocabulary.
Speaker B:Transitory.
Speaker B:Transitory.
Speaker B:This is.
Speaker B:This is you.
Speaker B:This, you.
Speaker B:Cause a portion of this is Your fault.
Speaker A:Were you turned in when I was in the girlfriend references?
Speaker A:Oh, yes.
Speaker A:Yeah.
Speaker B:Yeah, I was.
Speaker A:The one I made was like you can't walk in and see your wife cheating on you and then go, we need to talk this out and figure out if you were cheating on me or not.
Speaker A:Yeah, I'm not sure.
Speaker B:Were you in the right mental space?
Speaker A:Yeah.
Speaker A:Was that really you or was that AI?
Speaker B:Yeah.
Speaker B:Right.
Speaker A:I'm not sure.
Speaker A:Right.
Speaker A:It was such a weird.
Speaker A:He's made some weird ass comments and I was calling him out in real time.
Speaker A:If you missed it, go back.
Speaker A:It's.
Speaker A:It's actually posted so you can see it.
Speaker A:So number two, we're going to talk about tonight, balance sheet runoff ending December 1st.
Speaker A:The mechanics and why it matters.
Speaker A:As Saeed brought up.
Speaker A:So now is as good as any time.
Speaker A:So what changed up to November 30th?
Speaker A:The Fed was still letting some Treasuries and MBS roll off mortgage backed securities.
Speaker A:Mbs.
Speaker B:So one thing that the listeners should know, if you didn't know, that the Fed injects money into the system, right.
Speaker B:By buying up Treasuries.
Speaker A:Right.
Speaker B:And that's one way that they can turn if, if you've ever heard somebody talk about, you know, the Feds printing money or injecting money into the system, right.
Speaker B:The turn, turning the money printers back on.
Speaker B:That's what, that's what they're doing.
Speaker B:That's how they're carrying it out.
Speaker A:So for this part of the episode, I'm going to take a bit of a different tact.
Speaker A:Normally we explain the concept and then get into the detail.
Speaker A:On this one, I want to get into the detail because it came straight from the press conference and then explain the concept as simply as possible.
Speaker A:And because I'm a moron, it's going to be real simple.
Speaker A:Okay?
Speaker A:So starting December 1st, the Fed will reinvest all principal payments, I. E. No further net shrinkage of the portfolio.
Speaker A:Because nobody likes a shrinking.
Speaker B:No, honestly.
Speaker B:Honestly, shrinkage is not a good thing.
Speaker B:Nobody who likes shrinkage.
Speaker A:And if you're a man, you can relate, right?
Speaker A:You wish it were bigger.
Speaker B:Honestly.
Speaker B:Not man or woman.
Speaker B:I feel like a lot of people don't like shrinkage.
Speaker A:But you definitely don't want it to be smaller.
Speaker B:Don't want.
Speaker B:Who wants smaller?
Speaker A:I mean, yeah, sometimes you can be too big.
Speaker A:You know what I'm saying?
Speaker A:You know what I mean?
Speaker A:Okay, walk it back.
Speaker B:I tried to walk it back over there.
Speaker A:Being silent as hell.
Speaker A:Yeah, yeah.
Speaker B:He said pause.
Speaker A:Yeah.
Speaker A:All right.
Speaker A:So Treasuries roll over all maturities at auction from December 1st.
Speaker A:And what that means is you buy, you buy any type of treasury, there's a duration on it, meaning it expires on this date.
Speaker A:That means it has to be due and paid by that date.
Speaker A:The effective market is all controlled by this type of duration control.
Speaker A:And you're saying, Chris, what do you mean by duration control?
Speaker A:If I have a portfolio of assets that I'm buying that is cash or cash equivalent, think bonds, think Treasuries.
Speaker A:They're good for a certain period of time.
Speaker A:And the longer you have your mark, your money tied up, the more return you're going to get.
Speaker A:Yes, but you don't want all of your money to have a waterfall or basically it hits a wall and then it all comes due because you got all this money tied up.
Speaker A:Right.
Speaker A:So you try to space your money out accordingly to when you're going to need to use it.
Speaker A:So if you buy a shorter duration product and it pays you a little bit less money, but you have a longer duration product and it pays a little bit more money, you've averaged the money that you're making from an interest rate perspective.
Speaker B:Yes.
Speaker A:And the Fed is going to balance this activity by stopping the maturity.
Speaker A:So when they come due, instead of going out and buying more, they're going to reinvest it now.
Speaker A:So they're not going to shrink the balance sheet, they're going to keep the same size.
Speaker A:We're going to put that money in other places.
Speaker B:Right, Exactly.
Speaker A:Not to be confused with quantitative easing and quantitative tightening.
Speaker B:Yes, there's, I think, I think that's the confusion.
Speaker B:Right.
Speaker B:The confusion is, oh, they're, they're stopping the runoff.
Speaker B:That means they're going to put more on the balance sheet.
Speaker B:No, they could stop the b, they could stop the runoff and just continue to renew and stay right where they are.
Speaker A:And if you're confused right now, don't worry, bear with us, we will get there.
Speaker A:I will make all of this make sense.
Speaker A:And if not, you can email, say it at site at higher standard podcast.
Speaker B:But I will say, I will say I do have a prediction that eventually the quantitative easing will, they will be for their hand will be forced to have to do it, which is just going to cause a wide number of problems.
Speaker A:I don't know that they can because the asset implications, but we'll get there.
Speaker A:So the reserve has stopped the draining.
Speaker A:If you think about this as a pool, the banking system liquidity stabilizes.
Speaker A:Instead of gradually tightening, reinvesting into T bills was what Jerome Powell said he was going to do.
Speaker A:The Fed's portfolio maturity taking a little pressure off long dated treasury supply at the moment margin.
Speaker A:So basically saying that they're going to try to prop up the short end of the curve, the two year, the three year Treasuries, the stuff, the lower ending product and the longer end of the product is going to continue to rise over time, which is going to have the, the, the upward pressure on mortgage rates.
Speaker A:Common question I get when people hear this is like, well Chris, how does this play into mortgage rates?
Speaker A:Why don't you think they're going to go down?
Speaker A:Yeah.
Speaker A:And this is why is is a natural healthy curve.
Speaker A:Right.
Speaker A:A yield curve.
Speaker A:You get paid more money for having your money locked up longer.
Speaker A:So if your money's in 10 year treasury, it should pay you more than your two and three year treasury.
Speaker A:If we're trying to prop those up and your tenure should be above that, it's going to put upward pressure on mortgage rates.
Speaker B:Yes, exactly right.
Speaker B:I mean there should be less uncertainty with the near future than the long term future.
Speaker A:Right.
Speaker A:So markets do care about this because balance sheet runoff, I. E. Quantitative tightening, and again we're going to explain these terms, has been a stealth headwind for risk assets and funding ceasing runoff removes that incremental tightening even as policy rates are still restrictive.
Speaker A:Powell tied the decision to stability in money markets and balance sheet normalization goals.
Speaker A:What's important to note here is that when Jerome Powell says this, he's trying to be clearly articulate about what he's doing.
Speaker A:But what he's really not saying, but he is saying in a clear way, is he's no longer just relying on interest rate cuts to control monetary policy, the half of their dual mandate, but at the same time they're doing this while cutting rates because they're focused on the other side of their, their dual mandate.
Speaker A:Jobs.
Speaker A:Jobs were a big, big part of the equation here.
Speaker A:And I think that people go, okay, stabilize the monetary policy, but inflation is still kind of above their target and slowly creeping up.
Speaker A:And had jobs have been more stable and in line with what their expectation was for a healthy economy, they may not have cut because they want to see inflation continue to come back down.
Speaker A:The only way to do that is to keep their interest rates higher for longer.
Speaker A:Remember that rhetoric.
Speaker B:Yeah, higher for long.
Speaker A:Yeah.
Speaker A:So let's get into QT versus qe.
Speaker B:Yeah, let's go.
Speaker B:So qt quantitative tightening is when the Fed reduces the size of its balance sheet.
Speaker B:It does this by letting bonds like Treasuries and mortgage backed securities mature without reinvesting or selling them outright.
Speaker B:So think of it like if a bank has a loan to somebody, right?
Speaker B:And we'll keep it very basic and simple on a 30 year fixed mortgage, right.
Speaker B:And they just let that loan mature and pay off and then that money that they get for that, they don't go out and reinvest it, they just continue to sit on the capital, continue to sit on the money that, that they're receiving.
Speaker A:Right.
Speaker B:That's tightening, that's pulling money out of the system.
Speaker A:And quantitative easing.
Speaker B:Yeah, and quantitative easing is the opposite.
Speaker B:Right.
Speaker B:So the Fed expands its balance sheet by buying Treasuries and mortgage backed securities in large amounts.
Speaker B:These purchases add reserves to the banking system.
Speaker A:So think of quantitative easing as the money hose.
Speaker A:You're putting water into the pool.
Speaker A:Think of quantitative tightening as pulling it out.
Speaker A:Right?
Speaker A:The money vacuum.
Speaker A:You're taking stuff out of the economy.
Speaker A:And by doing that, these two mechanisms are really important in how you drive a little bit of monetary policy.
Speaker A:Obviously the, the interest rate is the, the biggest way of doing that, but this certainly is a part of that.
Speaker B:Right?
Speaker B:And, but the problem, the problem for them is there was so much money injected into the system and so many companies were sitting on so much cash.
Speaker B:Right.
Speaker B:That even the quantitative tightening that they were doing, I mean, I don't.
Speaker B:Look, we're still fighting this inflation problem.
Speaker B:They still haven't gone back down to their, you know, 2% mandate.
Speaker B:Right.
Speaker A: right, during the crisis like: Speaker A:They, they encourage lending and investing and risk taking.
Speaker A:Whenever you go through a quantitative easing period, right, you're flooding the market with money.
Speaker A:Go lend this money out.
Speaker A:Go, go do these things.
Speaker A:This drives asset prices up, right?
Speaker A:You go through a prolonged period of doing this for, I don't know, 14 years.
Speaker A:Yeah, right.
Speaker A:What does that do?
Speaker A:It drives asset prices up higher than they've ever gone before.
Speaker A:Because you've done this for almost twice as long as you've gone and done this before, right.
Speaker A:And because of this really free fiscal liquidity policy, we've seen repercussions of this.
Speaker A:What are the repercussions, you might ask?
Speaker A:The stock market at an all time high.
Speaker A:Real estate home prices at an all time high.
Speaker A:But not only are they at an all time High.
Speaker A:The cadence with which they've increased has been very, very fast.
Speaker A:Because you combined quantitative easing with hyper low interest rates.
Speaker A:You combine hyper low interest rates and quantitative easing with financial stimulus and you create a Molotov cocktail of problems.
Speaker A:And the problem is, is now it's sticky.
Speaker A:Just because you slow and or stop this does not mean that the value is going to stop going up.
Speaker A:Because all this extra money you pumped into the system for way longer than you had historically.
Speaker A:Well, guess what?
Speaker A:It takes time to drain out.
Speaker B:Yeah.
Speaker A:Just like draining a pool.
Speaker A:You drain a pool with a garden hose, which is effectively what we're doing here.
Speaker A:It's not going to go down quickly, which was why you see asset prices continue to keep their vector, their trajectory up.
Speaker A:Yeah.
Speaker A:And they're not coming back down.
Speaker A:And this is why people fear for a bubble.
Speaker A:And it's also the logic of why you see sophisticated investors have their fear rise on the vix.
Speaker A:The fear gauge, while the stock market's still going up is that they're saying to themselves, like, this is great for us.
Speaker A:Yeah, but how long can it last?
Speaker B:How long exactly?
Speaker B:And if now, like we, like we said at the top of the show, we've entered this rate cutting cycle and now this next, this next meeting in December will be very telling as to what happens.
Speaker B:And if they continue down this path of cutting rates, then, you know, asset values are only going to continue to inflate.
Speaker B:Right.
Speaker A:There's also a psychological impact here which I think is lost on a lot of people.
Speaker A:A lot of our demographic is a younger user as a younger listener.
Speaker A:Right.
Speaker A:And that demographic is going to be hyper focused on the period of time they grew up and experience business.
Speaker B:Yeah, it's true.
Speaker A:You got out of college at 18 and you worked for, call it 14 years.
Speaker A:Let's just say you got out at the beginning of this cycle and now you're 32.
Speaker A:Right.
Speaker A:Let's say maybe 30.
Speaker A:You might feel like a very successful, accomplished business person.
Speaker A:And you know what?
Speaker A:You may have ridden the wave of one of the, frankly, the most prosperous economies in American history, but you haven't been tested.
Speaker A:And I'm not saying that to scare anybody or make anybody feel any type of way, but what I will say is it has created a tremendous amount of ego.
Speaker A:It's also part of the reason, and I know it's weird to think that monetary policy, fiscal policy, politics and all these things have bled into social media, AKA attention media, but it's also part of the reason you now see all these influencers with such massive bravado.
Speaker A:Didn't matter if you were a fitness influencer who was training people.
Speaker A:Didn't matter if you were living in Bali and you were a light healer.
Speaker A:Pausing for emphasis.
Speaker B:Yeah.
Speaker A:Didn't matter if you were telling people how to be an alpha bro.
Speaker A:They got this ego because it all came to them so much easier because of the liquidity in the markets and because how available people had money to spend.
Speaker A:People aren't going to spend money on your $10,000 high ticket sale, your course for mentorship or your mastermind unless they were provided this by guess what, Asset values being propped up, stimulus coming in and extra liquidity being, you know, rooted to them.
Speaker B:Right.
Speaker A:But at some point in time, people stop spending money on these things because it doesn't make economic sense for them anymore.
Speaker A:They stop the quote discret discretionary spending.
Speaker A:That's gonna be a buzzword for a lot of people listening to the show is when does consumer discretionary spending pull back?
Speaker A:Because when that happens, we've got a problem.
Speaker B:Yeah.
Speaker B:And we know just based on the data that's coming out for household debt, a lot of people are bridging the gaps with credit cards.
Speaker B:Right.
Speaker B:So consumer, consumer spending is largely being propped up by credit card debt.
Speaker A:And one of the things you heard on multiple times on today's Q and A session with Jerome Powell was he referenced barbell economies.
Speaker A:We talked about this in the show multiple times.
Speaker A:The, the wealthy in America are carrying the consumer discretionary spending of the effectively the entire economy.
Speaker A:So it actually makes it look like the lower and middle class are spending more than they are because the upper class, the, the holders of the most amount of money are spending more money than everybody else and the average is getting pulled up.
Speaker A:Yeah.
Speaker A:So it is definitely a barbell economy, meaning that there's.
Speaker A:We're really wiping out the middle class in this process.
Speaker B:Yeah.
Speaker B:But what is.
Speaker B:So what right now with today we had another rate cut.
Speaker B:Does that, does that help the economy in your opinion, or is this just delaying and inevitable?
Speaker A:I think it needed to be done on some level, but I don't think it need to be done so fast.
Speaker A:I know the reasons why the market feels that way.
Speaker A:And as somebody who gains a benefit in the businesses that I'm in by seeing the rates go down, I like it on a personal level.
Speaker A:But do I think it's the best thing for the economy?
Speaker A:I would have liked to see them wait until December to make this rate cut.
Speaker B:Yeah.
Speaker B:I mean, they had all the reasons.
Speaker A:Right.
Speaker B:They had everything in their favor as far as data goes to be like, listen guys, it would be unreasonable and illogical for us to make these decisions based on us not, not having some of these data points.
Speaker B:And I mean, everything that they've said up until now has been, look, we're data driven, we're data dependent.
Speaker A:But you also are openly saying that you don't have the data.
Speaker A:I mean, he made several references to the data we have available.
Speaker A:What we have.
Speaker B:Yeah.
Speaker A:On, on today's, you know, press release in the conference.
Speaker A:Well, okay, yeah.
Speaker A:If you're saying you're data dependent but you don't have a full view of the data, why are you making decisions the exact same way?
Speaker B:Right.
Speaker A:Am I crazy?
Speaker B:No, no, you're not.
Speaker A:You know, and then here's.
Speaker A:I'm going to make a prediction here, right on the show and I want it because five months now from now you'll be able to say I was right or wrong.
Speaker B:Oh, okay.
Speaker A:I have a feeling that what Jerome palace, four, four decisions left, four rate cuts left in him, possibly.
Speaker A:Oh yeah, there's four FOMC meetings that he's going to have a press conference.
Speaker B:Until, until his term is done in May.
Speaker B:In May, yeah.
Speaker A:Right.
Speaker A:So when his term is done in May, the FOMC is up for reelection for additional five year terms.
Speaker A:You've already got the current administration's representative in Mirren being hyper aggressive on rate cuts.
Speaker B:He wants it.
Speaker A:Yeah, right.
Speaker A:You've got some dissension amongst the ranks and Jerome palace effectively suggested that there was a pretty healthy amount of disagreement and over half of them favored possibly staying where we're at today after this rate cut.
Speaker A:So clearly there's a softer tone in my mind as to what may or may not come, which is why I think the December meeting is gonna be the most controversial one of the year and the most controversial one we've seen in some time.
Speaker A:That being said, I'm gonna predict now that Jerome Powell is going to be much more politically motivated and much more, much less amenable and much more clear with his thoughts in the economy as we approach those remaining rate cuts because he knows there's more than likely going to be somebody put in place who's going to proffer up additional rate cuts faster.
Speaker B:Yeah, yeah, right.
Speaker B:But that's not going to be.
Speaker B:And we've gone over the, in the show before that it's not solely there, you know, under their discretion.
Speaker B:No, no.
Speaker B:So what does happen until then?
Speaker B:It should be, should be very interesting.
Speaker B:I don't see him cutting rates Every, at every single meeting I do see either at the next one a hold for another several months.
Speaker B:That's just my personal opinion because I think that they're, they're really at risk of, you know, starting inflation to go back up again.
Speaker B:I think there's a real, real fear, and there should be a real fear of that, which is now going to only cause this problem to get, you know, become much longer.
Speaker A:So the market impact here, QE makes money cheap and plentiful.
Speaker A:Risk assets love it.
Speaker A:Right.
Speaker A:So people who have assets that are at risk, you're taking gamble, you're betting on the markets.
Speaker A:You're people who are risk, you know, favorable.
Speaker A:They love it.
Speaker A:Yeah, those people have been profiting and those, those people who generally take on the risk like that are also the same people who have the egos who go on social media and talk about how amazing they are.
Speaker A:Right.
Speaker A:Quantitative tightening makes money scarce and expensive markets typically hate it.
Speaker A:So all the talking heads you see on cnbc, everybody they bring on these panels, almost all of them is in the space of the risk assets market.
Speaker A:They're in the stock markets.
Speaker A:That's their subject matter, expertise.
Speaker A:That's what they do.
Speaker A:Right.
Speaker A:So it's going to be very rare that somebody who's market driven is going to say, oh, we need quantitative tightening to solve this problem.
Speaker B:Yeah.
Speaker A:But the fact of the matter is that might be part of the resolution.
Speaker A:But there are some mechanics here which make quantitative tightening very difficult.
Speaker A:Because Jerome Powell didn't talk about kind of the back end of what's really going on here.
Speaker A:Okay.
Speaker B:Which is what?
Speaker A:So QE absolutely pushed pricing up and that's how we got the home values, the market values that caused this problem.
Speaker A:But it wasn't the only engine.
Speaker A: heet is still gigantic versus: Speaker A:They bought so much in assets and put it on the Fed's balance sheet to the plumbing and the market stability limits how far QT can run.
Speaker A:The banking sector has lines, repo lines, liquidity they need in the system.
Speaker A:And because they need a certain de minimis amount of liquidity in the system, you're limited as to how far down you can go.
Speaker A:Because we have things like the repo line, okay, where banks can go and tap this line to bridge their overnight liquidity needs.
Speaker A:And if there's more people who have needs for more money from the banks, that means the Federal Reserve banks Need to hold more money.
Speaker B:Yeah, but we've talked about this, right.
Speaker B:We've talked about on the show where, you know, I wouldn't be, I wouldn't be surprised if the Fed viewed it as, you know, maybe if there was a reduction in, you know, community banks out there that might not be necessarily better.
Speaker A:You're going to see that now.
Speaker A:You're going to see M and A activity.
Speaker A:You're going to see that now because for a long time banks profits were down because of their margin compression.
Speaker A:And now we're going to see banks start to consolidate.
Speaker A:You're going to see all those local community banks you see in your neighborhood, you're going to start seeing them disappear over the course of the next five to ten years.
Speaker A:Yeah.
Speaker A:Not all of them, but a lot of them are going to consolidate.
Speaker B:Yeah.
Speaker A:Because they're all, they were all looking to get out before the quote contagion period a couple of years ago.
Speaker A:Now is where you're going to see it start to play out where banks mortgage rates are going to come down.
Speaker A:So let's play this out from a business perspective.
Speaker A:As the Fed cuts rates, here's what happens.
Speaker A:Your deposit pricing goes down.
Speaker A:Your interest rate you're getting on your deposit accounts, your high yield savings accounts, that's going down right now, right tomorrow.
Speaker A:Okay.
Speaker A:But your loans, your loans that you're paying them on, that ain't going down until the next time you refinance or you buy something.
Speaker A:Right.
Speaker A:So that means their profits are going up.
Speaker B:Yeah.
Speaker A:And you might say, well Chris, our mortgage rates gonna go down.
Speaker A:No, they're stay up.
Speaker A:You want to know why?
Speaker A:Banks are going to try to recapture the lost profit and increase their earnings to get back to where they were because they had margin compression, meaning they were making less and less money because interest rates were super low on loans and interest rates were super high on deposit pricing for a long time.
Speaker B:Right.
Speaker B:Especially after that contagion period.
Speaker A:Right.
Speaker A:So they're going to try to widen that back up.
Speaker A:And as they widen that back up, what do we know from the show?
Speaker A:As companies make more money, their value, the company's value, it's market capitalization goes up.
Speaker A:And as market capitalization goes up, people are willing to pay more for it.
Speaker A:So all those bankers in the banking sector who are looking to get out at a high multiple, people paying more for their company.
Speaker A:Yeah.
Speaker A:They're going to start saying, okay, I'm in my 60s, I want to go get some Mai tais and sit on the beach, I want to sell, let's get out of here.
Speaker B:Yeah, yeah, yeah, yeah.
Speaker A:And that doesn't touch on the whole private equity component.
Speaker A:And you know, the capital that's been out there flowing around.
Speaker A:We talked about on the previous shows about private equity and their play.
Speaker A:But there's a lot of money during this really free money period where interest rates are hyper low, that hasn't been paid back to investors and they got to start paying that back.
Speaker B:Oh, exactly.
Speaker A:So there's other motivation to do that as well.
Speaker B:And there was so much of that money going around that literally private equity was looking around at.
Speaker B:Okay, what else can we get into?
Speaker A:Hey, Regid, you want some money?
Speaker A:What kind of company you got, bro?
Speaker B:Yeah, hey, can you just say the word AI a hundred times and we'll make sure it happens?
Speaker A:Hey.
Speaker B:Seriously.
Speaker A:So I want to point out some of the differences in QE at high asset prices and why scale matters here.
Speaker A:When the Fed buys Treasuries and mortgage backed securities, it removes duration.
Speaker A:And we talked about duration, what that means how long they're holding the assets on their balance sheets right from the market and floods the banks with reserves.
Speaker A:That pulls long term rates down.
Speaker A:Right.
Speaker A:The 10 year down and mortgage rates vis a vis a proxy come down.
Speaker A:And what happens?
Speaker A:It pushes investors out the, out on the risk curve.
Speaker A:Equities and credit people are willing to go riskier investments for longer and we've seen that the last several years.
Speaker A:But those risky investments that are held for longer, we're now in longer, we're at longer.
Speaker A:People want out.
Speaker A:Right, Exactly.
Speaker B:I need some of that.
Speaker B:I need to recoup some of that.
Speaker A:Yeah.
Speaker A:Central banks and academic work consistently find QE cuts terms and lifts asset prices.
Speaker A:Right.
Speaker A:So there, there's a premium to all this and it causes the market to bubble up.
Speaker A:We've seen that.
Speaker A:That's money into the system.
Speaker A: billion in: Speaker A: trillion in: Speaker B:Come on, bro.
Speaker B:Yeah, we did the graphic on trillion.
Speaker A:You went from early days Amazon Bezos to what Elon Musk wants to be paid.
Speaker A:Right?
Speaker A:Yeah.
Speaker A:So I'm just, just saying there's a difference, Right?
Speaker A:You know, one sells books, one's got robots.
Speaker B:Yeah, yeah.
Speaker B:And yeah, one sending stuff to outer space.
Speaker B:Yeah, he's talking about how he could, he wants to devise a plan to where he could, you know, transport people all around the world, anywhere in the world in 45 minutes.
Speaker B:Oh yeah, I saw that.
Speaker B:It's pretty cool.
Speaker B:Just like, hey, the.
Speaker B:I just had to have that.
Speaker A:I Brigil.
Speaker A:Get closer to the mic.
Speaker A:Put it in your face hole.
Speaker A:What are you doing?
Speaker B:Put it on your face, close it.
Speaker A:To the mic, let's go.
Speaker A:Yeah, I'm look at you until you do this.
Speaker A:Yeah, yeah.
Speaker B:You saw it too, right, Regil?
Speaker A:Yeah, closer, closer.
Speaker B:But think about this.
Speaker B:Would you ever do this?
Speaker B:What would you ever do that?
Speaker B:You would do it.
Speaker B:I know you would do it.
Speaker A:Ah, I don't know, man.
Speaker A:Here's the thing is I'm not saying.
Speaker B:That here to Australia in 45 minutes.
Speaker A:I would love that.
Speaker A:That that's a 16 hour flight right now from us.
Speaker B:Yeah, right.
Speaker A:I don't know that that's safe, honestly.
Speaker B:Rather just not go.
Speaker A:Yeah, can you imagine, like you hit a bird and then what?
Speaker A:Yeah, I know you're going into the stratosphere, coming back down, you know, but like, there's got to be some birds on the way, right?
Speaker A:Way on the way down.
Speaker B:An asteroid maybe.
Speaker A:Look, I've seen SpaceX.
Speaker A:Some rockets go up, they come back down, they get caught.
Speaker A:It's beautiful.
Speaker A:Some of them explode.
Speaker B:Yeah, yeah, yeah.
Speaker B:But I've heard people justify this.
Speaker B:It's like, okay, well, you have to, you have to push it to the limit to see what can explode or what will explode.
Speaker A:I agree.
Speaker A:You get, you guys, you don't push it to the limit.
Speaker B:You don't wanna, you don't wanna never have nothing explode, right?
Speaker B:Because it's like you don't know what, what could explode.
Speaker A:That's a very valid point.
Speaker A:Except I would like to be the thing that does not explode.
Speaker A:No, no, that's my, that's my prerogative.
Speaker A:Okay.
Speaker B:Of course.
Speaker A:I don't want to be on stuff that explodes.
Speaker A:Yeah, this is the same kind of guy.
Speaker A:I won't go to like a carnival or something.
Speaker B:What about the one that, what about the one that Jeff Bezos was doing for what was it Blue or Origin?
Speaker B:Yeah.
Speaker B:Would you have done that where you.
Speaker A:Shot up into space, you float for.
Speaker B:A little bit, just look outside the window and then you come back and.
Speaker A:I know what he did.
Speaker B:Honestly, I still wouldn't do that, bro.
Speaker A:The Jedi mind games that he played with all of us by sending Lauren Sanchez up there?
Speaker A:I want to see her.
Speaker A:I want to see the actual like, footage of her on the way up and on the way down.
Speaker A:Yeah, yeah, no one's seen that footage, right?
Speaker A:For all I know, that was the real Mars landing.
Speaker A:She's up in there going Whoo.
Speaker B:Right as the Elon Musk has proposed using SpaceX Starship rocket for hypersonic long distance travel on Earth, aiming for trips like New York to Shanghai in under an hour.
Speaker A:Okay, can.
Speaker A:Can we just.
Speaker A:You said he wants to use a starship rocket.
Speaker A:He wants you to ride a rocket.
Speaker B:Hey, hold on, Elon.
Speaker B:Before you go start messing around with all this, just hook your boy up with some Starlink.
Speaker B:Honestly, why aren't you offering Starlink one.
Speaker A:Tetra by upload download before you shoot me on rockets?
Speaker A:That's all I'm saying.
Speaker B:That's all I'm saying.
Speaker B:You'll gain my trust if you can give me Starlink in Anaheim.
Speaker B:How about that?
Speaker A:I gotta be honest, I'd rather be teleported someplace because if I die during teleportation, I'm not lighting on fire.
Speaker A:Yeah.
Speaker A:I don't want to blow up on a rocket.
Speaker B:No, obviously.
Speaker B:Can you Rocket man?
Speaker A:Yeah.
Speaker A:Can you imagine that?
Speaker A:That's your obituary, Chris.
Speaker A:And he be dying while riding a Starlink rocket.
Speaker A:Yeah.
Speaker A:I mean, people could be like, in 100 years now, they'd be like, read my obituary and go, I love you, dog.
Speaker A:Why was he riding a rocket?
Speaker B:Why was he riding.
Speaker B:Exactly.
Speaker B:I love you, dog.
Speaker B:But like, yeah, I let the first week go, we'd mourn, but then I'd have to.
Speaker B:I'd have to roast you pretty hard for it.
Speaker A:Yeah.
Speaker B:You earned every bit of that.
Speaker A:I always wanted to ride them.
Speaker A:Rocket.
Speaker B:Ye.
Speaker B:There you go.
Speaker B:That's what you get.
Speaker B:So many puns over there between his legs.
Speaker A:Yeah.
Speaker B:For so many.
Speaker A:The pocket rocket.
Speaker A:The pocket.
Speaker A:And congratulations, you can't advertise this one.
Speaker A:Sensational.
Speaker A:What is it?
Speaker A:What's the.
Speaker A:The.
Speaker A:You think you have free speech.
Speaker B:Yeah.
Speaker A:And then you realize you only have free speech that Google allows you to have.
Speaker B:Right, Right.
Speaker B:Until.
Speaker B:Until you want to advertise and then it's like, no, you cannot.
Speaker A:Yeah.
Speaker A:For those of you who don't know, we have a parental discretion advisory on our podcast.
Speaker A:Not only on all of the video streaming platforms, but certainly the audio streaming platforms.
Speaker A:And I thought that was enough.
Speaker B:Yeah.
Speaker A:We have a disclosure.
Speaker B:Yeah.
Speaker A:On the podcast, because you know what?
Speaker A:We say some stuff sometimes that could be shocking.
Speaker A:Right.
Speaker A:But, like, nothing that I really feel is shocking content.
Speaker B:No, no, no.
Speaker A:Our channel on YouTube has been labeled as shocking content, and it often prevents us from advertising because apparently we are offensive.
Speaker A:You.
Speaker B:You.
Speaker A:Largely me and.
Speaker B:And Rajeel.
Speaker A:Honestly, there's no world where he could even be offensive.
Speaker A:If you tried, I swear he would call Somebody a name and giggle afterward.
Speaker B:I'm just kidding.
Speaker A:Yeah.
Speaker A:But I'm just trying to say, like, look, here's the thing is I don't.
Speaker A:I don't feel like Google should be.
Speaker A:And I know what it is.
Speaker A:It's a money game.
Speaker A:Right?
Speaker A:Like, they, Their advertisers don't want certain words or certain discussions over certain topics to advertise their products on.
Speaker A:So they don't want to pimp our podcast.
Speaker A:It probably shouldn't say the word pimp, but pimp our podcast to them because we say some stuff that's a bit unfiltered.
Speaker A:Right.
Speaker A:But at the same time, you're going to limit our channel growth because we're honest and we talk like everybody else does, but we're just gonna.
Speaker A:The advertiser, everybody else wants to ignore it.
Speaker A:Yeah.
Speaker B:We talk like the people I need.
Speaker A:Black rifle coffee on the show.
Speaker A:They don't give a damn what I say.
Speaker A:Right, exactly.
Speaker B:That's why.
Speaker A:That's.
Speaker B:The advertisers and the sponsors need to come out straight to the people that are keeping it real.
Speaker A:I know, it's so.
Speaker A:It's so disingenuous, but, you know, hey, I'm here for it.
Speaker B:We still love you, Google.
Speaker A:Yeah, we don't have to stop because.
Speaker B:You'Re going to read the transcript.
Speaker A:Read the transcript and then tell it.
Speaker A:So those who don't know, I was.
Speaker A:I was complaining to Google vis a vis Google Ads about us in our show, and they literally highlighted all the expletives from the last episode.
Speaker B:You said it here, here, here.
Speaker A:At 29 seconds, you said this.
Speaker A:And I'm like, oh, did I say that?
Speaker A:I went back and listen to it.
Speaker B:I'm like, damn it, I did.
Speaker A:Yeah, sorry.
Speaker A: ight, so let's talk about the: Speaker A: nking its balance sheet since: Speaker A: rolls around, and by late: Speaker A:If somebody were to call here and I know someone's going to say, hey, I saw the big short.
Speaker A:This is not quite the same thing.
Speaker A:They just want to give banks quick access to liquidity.
Speaker A:And there are several other places to get it.
Speaker A:But this repo line has become the predominant one in recent years.
Speaker B:The banks of all sizes, more for.
Speaker A:Community, regional banks, but certainly for banks of all sizes.
Speaker A:Yeah, okay.
Speaker B:All right.
Speaker A:Yeah.
Speaker A:The, The G sibs, the globally systematic, important banks typically have Other mechanisms and higher requirements.
Speaker B:Oh, you're telling me Jamie Dimon has other levers that he could pull.
Speaker A:You don't have to play by the same rules.
Speaker A:He out here doing his own thing.
Speaker B:Makes sense.
Speaker A:Yeah.
Speaker A:Okay.
Speaker A:I hear talking about the cockroaches.
Speaker B:The cockroaches are gonna come out.
Speaker B:That's what he said.
Speaker A:Say something like that.
Speaker A:He did.
Speaker A:You know, it's crazy when you're so influential in a space.
Speaker A:Yeah.
Speaker A:That you can talk trash on it and everybody thinks it doesn't apply to you.
Speaker B:Yeah.
Speaker A:Right.
Speaker B:He's talking.
Speaker B:He's literally talking about his peers.
Speaker B:And his peers are still going to come meet him.
Speaker B:Hello, Mr. Diamond.
Speaker B:Nice to meet you, Mr. Diamond.
Speaker A:It's like this banking industry is so corrupt.
Speaker A:I don't trust any of these dudes.
Speaker B:Yeah, all the cockroaches are gonna come out.
Speaker A:Aren't you a banker, Jamie?
Speaker A:But I'm not like them.
Speaker A:They're not like us.
Speaker B:No, they're not like us.
Speaker A:Where do you get a banking reference in a Kendrick Lavar?
Speaker B:You ain't going to get anywhere else.
Speaker A:That's only the higher standard.
Speaker A:Right.
Speaker A:So then unexpectedly, overnight repo rates exploded from about 2% to 10% plus in a single day.
Speaker A:Translated loosely, this meant that banks suddenly didn't have enough spare cash to lend each other overnight.
Speaker A:The overnight borrowings.
Speaker A:The Fed had to step in with an emergency repo operations to calm things down.
Speaker A:Right.
Speaker B:I don't think a lot of people realize that this is how banks operate.
Speaker A:I think some people do and they think that there's like this perpetual money glitch that's built into banks.
Speaker A:It's not quite that simple.
Speaker A:But yeah, there's a lot of support for the Federal.
Speaker A:From the Federal Reserve, fractional banking and whatnot.
Speaker A:Yeah, yeah.
Speaker A:That whole conversation is.
Speaker A:There's a lot of hyperbole built into some of the things that people say here.
Speaker A:But suffice it to say, banks can borrow a lot and leverage is part of the game.
Speaker A:Right.
Speaker A:So this became problematic as you might imagine the moment that the Fed.
Speaker A:The Fed had an important lesson here.
Speaker A:The symptom, the system can go from ample reserves to not enough very quickly.
Speaker A:You don't know when you cross that line until something breaks.
Speaker A:So now people.
Speaker A:People start looking at QT a little differently.
Speaker A:Right.
Speaker A:You can't just run the money out of the system.
Speaker A:And that's what we saw the Fed do today.
Speaker A:The Fed can't safely drain liquidity below a fuzzy threshold of.
Speaker A:Call it about 2.5 to $3 trillion in reserves today.
Speaker A:So going back to that, you know, 900 billion.
Speaker B:Okay.
Speaker A:That's effectively 3x at a minimum of where we were then.
Speaker A:Okay.
Speaker A:So you have to keep more this, you're only, you're limited as to how much you can run this down from a Fed monetary policy perspective, which is why you haven't seen them really utilize their balance sheet to change the economy.
Speaker A:It's just been the Fed funds rate.
Speaker B:So we talked about this on previous episodes where, you know, part of what banks do is when they're holding on to a lot of cash, they're just, banks are like everybody else.
Speaker B:They're not just going to sit on the cash, they're going to invest their cash.
Speaker A:Right.
Speaker A:And then investments, usually securities or stock.
Speaker B:Securities or stock or treasury or Treasury Treasuries.
Speaker B:Right.
Speaker B:And whether they're short term or long term, I don't know what they tend to favor or if they like to balance them all out.
Speaker B:Right.
Speaker A:But keep on.
Speaker A:A bank that's of suitable size and scale will have a treasurer whose sole job it is to manage their cash in this way.
Speaker B:Right.
Speaker A:They're going to have some longer duration product that pays a little more and some shorter duration product pays a little less.
Speaker A:But they need to have access to, to this and they manage the maturities of that debt.
Speaker A:So they want to know when it's rolling off and when they can redeploy that capital in other places.
Speaker A:Right.
Speaker A:That's the sole job.
Speaker A:I mean there's some other functions, but it's primarily the job of a treasurer.
Speaker B:So think about it.
Speaker B:So prior to the rate hiking cycle where Treasuries and then ultimately followed suit and started to, you know, creep up and banks had all these, you know, low Treasuries on their books and unfortunately had these undervalued Treasuries and unrealized losses against them.
Speaker B:Right.
Speaker B:That people were counting against them.
Speaker B:Are they going to be safe as they let these things run off and now, you know, they don't go back into that game.
Speaker A:So I think what you're kind of loosely alluding to is the unrealized losses that were in a lot of the bank's balance sheets and you had these in a number of different places.
Speaker A:Not only their stock investments, which is what effectively took Silicon Valley bank down.
Speaker B:As long as they don't realize it, are they going to be okay?
Speaker A:As long as you don't have a capital call, a headline risk or something that calls people to the carpet to try to get all their money out at the same time.
Speaker A:Okay.
Speaker B:As long as you avoid that headline risk.
Speaker B:Yeah.
Speaker A:And there's only so much you can borrow.
Speaker A:But the crazy thing about being a bank is they're not dissimilar from you, me, anybody else.
Speaker A:Right.
Speaker A:Like the old saying is, is, you know, you can always get money until you need it.
Speaker A:Yeah, yeah, right.
Speaker A:And the reason why is like, banks can borrow from all these lines of credit, whether they're pledging to the Federal Home Loan bank or to these repo lines of the Fed Federal Reserve Bank.
Speaker A:The problem for them is, is as your bank starts to deteriorate financially, they cut those lines back, limiting your liquidity and your access to additional capital overnight.
Speaker A:Right.
Speaker A:So then you as a bank get, you know, kind of pressure points all the way around you until you're eventually choked out.
Speaker A:Right, right.
Speaker A:So it isn't.
Speaker A:Is like free money like everybody thinks it is, that there's rules, limitations, and there's lots of checks and balances in the system to ensure that money, because it's public money, doesn't get wasted.
Speaker A:Yeah, yeah, yeah, right.
Speaker A:The fdic, the whole point of the Federal Deposit Insurance Corporation is to ensure the deposits so that you, the people.
Speaker A:The people have, you know, a faith and confidence in the banking sector.
Speaker B:Yeah, yeah, yeah.
Speaker B:Okay.
Speaker A:And that's a really important part of this whole thing.
Speaker A:So the Fed can't safely drain this liquidity.
Speaker A:That's why they built this standing repo facility.
Speaker A:Now, something that you might hear known as the SRF, but it's the repo facility.
Speaker A:Right.
Speaker A: In: Speaker A:And they encourage banks to tap it.
Speaker A:Post contagion period, all these banks started to fail.
Speaker A:So banks were all going in and they were telling them, they were calling them up, saying, hey, hey, hey.
Speaker A:Borrow overnight.
Speaker A:Yeah, borrow overnight.
Speaker A:Borrow overnight.
Speaker B:Okay.
Speaker A:They made the borrowing very attractive and they created this, like, teat.
Speaker B:Okay.
Speaker A:Everybody wanted to suck on that tea because you say, hey, you can have some tea.
Speaker A:You should have some tea.
Speaker A:You need some tea.
Speaker B:It's good for you.
Speaker A:So now you're like, it's midnight, it's nutritious.
Speaker A:I want some tea.
Speaker A:Give me some tea.
Speaker A:I want to do in the E. I didn't though.
Speaker B:Almost.
Speaker B:So a lot of nutritional value.
Speaker A:You've got to provide graphic imagery to really convey the emotion.
Speaker B:They gotta understand why.
Speaker B:Right, Exactly.
Speaker A:I'm just.
Speaker A:Look, I guarantee you someone somewhere is going to get into a conversation with someone and go, oh, yeah, this is a teen example.
Speaker B:This is.
Speaker B:This is.
Speaker B:This is what they were talking about.
Speaker B:Right?
Speaker A:Think back, let me Explain the repo facility to you, America.
Speaker A:It's about teats, right?
Speaker B:So, and this was something that wasn't always popular.
Speaker B:This is not how it was always done before, but over recent years or how, like how long would you say?
Speaker A:There was always a need for it on some level, but it certainly grew to a large size and then the dependency on that as a facility, you know, started to creep up.
Speaker A:There's a lot of people who had money there, I think a lot of banks.
Speaker A:So a lot of people.
Speaker A:There's a whole cohort here.
Speaker A:Okay.
Speaker A:And I'm just going to call this what it is and I'm going to get all sorts of flame for it.
Speaker A:So I'm sure I'm going to make this a clip on X.
Speaker A:People were like, there's, there's a bunch of bank nerds, okay?
Speaker A:And I mean this with like love and respect because I'm one of them.
Speaker A:But there's a lot of like banking nerds on social media who are like bank analysts who use, you know, fake names and they kind of blend into the bots and they have whatever, you know, BS handles and they do all these things they couldn't do behind a real name in a authenticated account.
Speaker A:Right.
Speaker A:They talk all the.
Speaker A:Yeah.
Speaker A:And they all think they're savants when it comes to the banking sector.
Speaker A:So what they'll do is, is, you know, someone will post something, they'll go, oh, look at this bank.
Speaker A:Look at how much they're borrowing from the Fed on the repo line.
Speaker A:They must be in trouble.
Speaker A:Ooh, they're borrowing all this money overnight.
Speaker A:And it's like, bro, the Fed called me and told me to do it.
Speaker A:What you talking about?
Speaker B:Right?
Speaker A:Yeah, but you can't say that publicly.
Speaker B:True.
Speaker A:Right.
Speaker A:Because even if you're not a publicly traded institution, you still have a fiduciary responsibility to keep that non public information to yourself.
Speaker A:And they're not privy to the financial decisions that you're making.
Speaker B:True.
Speaker A:So you got all these guys who are like going around looking all this stuff and there's always buzzwords in this sector and damn it, there's another one going around right now that's just bothering me.
Speaker A:I mean, it's not one thing, it's another.
Speaker A:And there's always these buzzwords that.
Speaker A:So I'll give you some great examples and I'll give you, I'll get to the one that's going on right now.
Speaker A:Number one, everybody's talking about rare earth right now on cnbc.
Speaker A:Okay, you go on to cnbc.
Speaker A:Ooh.
Speaker A:Are you in Rare Earth?
Speaker A:Rare Earth?
Speaker A:Oh, my God.
Speaker A:Are you in Rare Earth?
Speaker A:Okay, let me tell you about Rare Earth Earth.
Speaker A:Okay?
Speaker A:They talked to a woman who ran a rare Earth company who's got like seven employees the other day.
Speaker A:I'm like, y' all struggling that hard to find somebody to talk to?
Speaker B:Okay.
Speaker A:And even during her interview, she's like, I can't believe I'm here.
Speaker B:I'm like, me neither.
Speaker B:Right, right.
Speaker A:But that.
Speaker A:That's the new, like, buzzword that everybody's kind of jumping on because there's some government reasons and we're trying to bring everything back onshore and tariffs and all this other stuff.
Speaker A:So you want to get minerals and products from the United States, whatever.
Speaker A:Okay, fine.
Speaker A:Then there's.
Speaker A:I think it's non.
Speaker A:There's the.
Speaker A:I can't remember the actual vernacular.
Speaker A:It's like a four letter abbreviated thing.
Speaker A:But basically, the new.
Speaker A:The new buzz is like, banks that have loans to non financial institutions.
Speaker B:Okay.
Speaker A:Like mortgage servicers and mortgage companies and stuff like that.
Speaker B:Okay?
Speaker A:So now all these bank nerds on X are going through, going, oh, my God, look at this exposure to this mortgage.
Speaker A:This bank's gonna fail.
Speaker A:And you're like, based on what?
Speaker B:Right?
Speaker A:Based on what?
Speaker B:Yeah, exactly.
Speaker A:Because it's a buzzword now.
Speaker A:And you think you know everything.
Speaker A:And here's the sad part.
Speaker A:If you're the bank, you can't even def.
Speaker B:Right?
Speaker A:Like, I see this on Twitter and I've been attacked on Twitter.
Speaker A:You can go on Twitter X right now and you can go look at it and you can see all the stuff that I responded to casually.
Speaker B:Yeah.
Speaker A:Usually it's just an eggplant emoji, but every once in a while.
Speaker A:But, you know, it's just.
Speaker B:Oh, they know they could.
Speaker B:They could take a shot and poke at the bear and because they want.
Speaker A:You to say something you can't say.
Speaker A:So they go, oh, my God, look, Chris, that's what you shouldn't say.
Speaker A:Yeah, I'm gonna call the SEC right now.
Speaker A:And I'm like, from what, your anonymous account chief?
Speaker B:Yeah.
Speaker A:Right now, what you're gonna do?
Speaker B:Yeah, yeah, yeah.
Speaker A:You know, Big Willie 45.
Speaker A:Is that what you're gonna do?
Speaker A:Big Willie?
Speaker A:Big Willie style?
Speaker A:And it's like they all come off like, ah.
Speaker A:Like some of them are very educated, so I'm not knocking all of them.
Speaker A:And some of them are very articulate, but at the same time, it's become like this meme troll game.
Speaker A:This is why so many people that get high up in companies.
Speaker A:Just don't actively use social media because people are trying to bait you.
Speaker B:It's kind of gross, man.
Speaker A:It is gross.
Speaker A:You know, I'm at the point now where I firmly believe.
Speaker A:And this is.
Speaker A:This is a real number.
Speaker A:I've thought this through.
Speaker A:80%.
Speaker A:80% of social media is not real humans.
Speaker A:Bots.
Speaker A:Bots has to be.
Speaker A:Right?
Speaker A:Controlled by one person or one group.
Speaker B:It's gotta be, dude, it's gotta be.
Speaker B:I believe it.
Speaker A:You can't have people this stupid.
Speaker B:No, I mean, it's not that, okay.
Speaker B:When they're the anonymous accounts sometimes and.
Speaker B:And they're really going in and poking the bear like this.
Speaker B:I don't feel like this is a bot.
Speaker A:Have you ever.
Speaker A:Look, this is a personal favorite of mine.
Speaker A:Rajeel, I hope you've done this.
Speaker A:I hope everybody listening to the show does this at some point in life.
Speaker A:I will bring some joy to your day.
Speaker A:Okay?
Speaker A:Okay.
Speaker A:I'm gonna make everyone's life better.
Speaker B:Comment section.
Speaker A:The comment section is sensational.
Speaker A:But that most people stop there.
Speaker B:That's where I stop.
Speaker A:And you're missing out on the good, good.
Speaker A:Really?
Speaker A:Oh, yeah.
Speaker B:Forums.
Speaker A:You're stopping short of the orgasm.
Speaker A:Okay?
Speaker A:You're not.
Speaker A:You're not getting there.
Speaker A:You're not climaxing.
Speaker A:Okay?
Speaker A:So here's what I like to do.
Speaker A:Okay?
Speaker A:So recently, I think it was complex, posted a picture of Megan Fox at some reunion for some movie she did.
Speaker A:Okay, Right.
Speaker A:And then somebody else's account that I followed.
Speaker B:Who.
Speaker A:Who goes into the comments section.
Speaker A:He did this thing that he always does is he'll look at the negative comments that people make.
Speaker A:Okay.
Speaker A:And then he'll go look at their profile pictures, okay?
Speaker A:Their.
Speaker A:Their pages.
Speaker A:It is wild, bro.
Speaker B:And then what?
Speaker B:What is it?
Speaker A:So all these people were track.
Speaker A:This is what he does.
Speaker A:He does with athletes, but he did it on this one.
Speaker B:You have the audacity to leave this negative comment if you're like this.
Speaker A:She's not that hot.
Speaker A:And you go to their page and you're like, bro, she's 10x better than you, at minimum.
Speaker A:I mean, look.
Speaker A:Oh, like, her implants are so raw.
Speaker A:And you're just like, who made you the judge?
Speaker B:Yeah.
Speaker A:And it's like, you look at these people's profiles and you're like, either you're not a human.
Speaker B:Okay, Honestly, how do we get to this point, though?
Speaker B:How do we get to this point where there's a satisfaction that people feel when they're so unhappy with their own personal life that this is what they resort to.
Speaker A:Extremism.
Speaker A:We got some extremism.
Speaker A:Extremism creates factions.
Speaker A:Factions create loyalty.
Speaker A:And then you start defending something solely because you feel like you have to defend the loyalty of what it is that you're your allegiances to.
Speaker A:And then you just fight regardless.
Speaker A:I mean, you see this in politics all the time.
Speaker A:I. I can't.
Speaker B:I know this isn't a new phenomenon, but I'm just saying, like, it's just so gross to me.
Speaker B:Right.
Speaker A:Yeah.
Speaker B:And it's, it's this type of, of culture.
Speaker A:It's always been this way, though.
Speaker A:It's just visible now.
Speaker B:Yeah.
Speaker A:It's visible to the masses.
Speaker A:I mean, so.
Speaker A:And the crazy part about this is, is like, you don't have to believe in conspiracies.
Speaker B:It's so unhealthy too.
Speaker A:There's corruption.
Speaker A:Oh, dude.
Speaker A:It's wildly healthy, but it's unhealthy for the kids, man.
Speaker B:Man.
Speaker B:Yeah.
Speaker A:Like, I look at our kids and I think to myself, like, this trickles.
Speaker B:Down to them, you know, eventually at some point.
Speaker B:Right.
Speaker B:And this is the conversation that I had, I actually have, of my wife's friend's husband.
Speaker B:I sat with him at a baby shower a couple months ago and he's got a pretty high position at Blizzard, right?
Speaker A:No, right across your place.
Speaker A:Yeah, yeah, yeah.
Speaker B:Ball so hard.
Speaker B:And he actually, he may have moved on from that position, but he.
Speaker B:Anyways, he was there in the gaming, in the gaming industry for a long time.
Speaker B:And I was telling him, like, look, I have a really hard time allowing my son to play online games.
Speaker B:You know, I.
Speaker B:He does play Minecraft.
Speaker B:I let him create and explore, but I'm not ready to introduce him to that world where he can interact with other people.
Speaker A:Scary.
Speaker B:Very scary.
Speaker B:Right?
Speaker B:And he's like, look, I understand, I understand the concern, but what you also have to keep in mind is you have to teach them how to navigate this world safely.
Speaker A:Yeah.
Speaker B:As early as possible.
Speaker B:Because you don't want this to be a foreign concept of when he's a teenager.
Speaker A:So my wife and I had this conversation because Roblox became a big problem, bro.
Speaker B:The Roblox situation is out of control.
Speaker A:It's disgusting.
Speaker B:Right.
Speaker B:I've seen people literally create new profiles go online, and within seconds they.
Speaker B:You could literally spot, you know, all the.
Speaker B:The creepers.
Speaker B:We'll call them creepers.
Speaker A:Yeah.
Speaker A:Well, so this is a problem 100%.
Speaker A:So we got.
Speaker A:We just deleted the app.
Speaker A:But then I tried to sit our son down, who does play Minecraft.
Speaker A:And articulate some of this to him without being overtly, like, informative.
Speaker A:Yeah.
Speaker B:They're not going to understand.
Speaker B:Yeah, yeah.
Speaker A:And then I thought to my.
Speaker A:And so Joanna, my wife, and I had the same conversation where we were like, okay, look, like at some point in time, you can't separate him out from the world entirely.
Speaker A:You've got to give him the skills to be able to differentiate good and bad.
Speaker A:Right.
Speaker A:You don't want him to be naive.
Speaker B:No, this is.
Speaker B:And this is a really good point.
Speaker B:Right?
Speaker B:Because literally we're.
Speaker B:I'm having this.
Speaker B:This goes into everything, like sports, too, Right.
Speaker B:I remember enrolling our kids in Jiu Jitsu and also now coaching them in basketball and coach my daughter from the sidelines in soccer.
Speaker A:Right.
Speaker B:Is you can't shout out at them and tell them what to do because they're always going to rely on you to make the decision for them.
Speaker A:Oh, yeah.
Speaker B:They have to learn to make those mistakes.
Speaker B:Right.
Speaker B:And think on their own.
Speaker B:Right.
Speaker B:So I was literally.
Speaker B:I was coaching Adam and Jiu Jitsu back in the day because no one wants to see their son get their, like, ass kicked.
Speaker A:Right?
Speaker B:And I'm seeing him, like.
Speaker B:And I'm like, hey, Adam, hit him with the move.
Speaker B:And then the coach had to walk over to me is like, hey, if you do this for him, he's not thinking this through.
Speaker B:You have to let go.
Speaker A:Yeah, right?
Speaker B:And I'm like, that makes complete sense.
Speaker A:Carter went to Jiu Jitsu for a long.
Speaker A:Jiu Jitsu for a long time.
Speaker A:And in some martial arts stuff, I think Ryan went with.
Speaker A:With Carter, Jill son for a while, too.
Speaker A:And it.
Speaker A:It's.
Speaker A:It's hard to watch.
Speaker B:Yeah.
Speaker A:And you as a parent, naturally, like, you know, roll over, roll over, you know, and you want to be like, you know, rear naked choke.
Speaker B:Yeah, take his back.
Speaker B:He's not blue, so.
Speaker A:But you want to do that stuff.
Speaker B:But same thing with gaming, right?
Speaker B:It is.
Speaker A:It is.
Speaker A:And that's the scary part.
Speaker A:And, like, so I think this through because I know what my wife and I do as adults.
Speaker A:You know, last night we were sitting in bed.
Speaker A:This is a real story, okay?
Speaker A:And I don't want you guys to visualize anything.
Speaker A:We were all fully dressed, so we were sitting in bed, right?
Speaker A:We're getting ready to go to bed, and.
Speaker A:And I look over, she's on her phone, and I'm on my phone, and I'm like, yo, this is.
Speaker A:This is, like, normal, like today, but it's not normal at all.
Speaker B:How do you feel about it, there is a work for it called phubbing.
Speaker A:I'm sorry, what now?
Speaker B:Fubby.
Speaker B:Yeah.
Speaker B:Why are you fubbing, bro?
Speaker A:Are you with me?
Speaker B:Hey, you'll be flubbing.
Speaker B:Oh yeah.
Speaker B:You'll be fuzzing.
Speaker A:We'll be fubbing.
Speaker B:Yeah.
Speaker B:I know.
Speaker B:When you guys are just on your phone instead of conversating with each other, bro.
Speaker A:I've been, I've never heard that.
Speaker B:Oh, I've never heard that term.
Speaker B:But like you see it at restaurants all the time.
Speaker B:You walk into a restaurant and literally couples are out there sitting and they're both on their phones.
Speaker B:Fubbing involves what?
Speaker B:Fubbing was ignoring someone.
Speaker B:Not ignoring.
Speaker B:Prioritizing your phone.
Speaker A:Yeah.
Speaker B:It is the act of choosing to look at your phone instead of engaging in face to face interaction.
Speaker A:That's so true.
Speaker B:I mean, this is so common.
Speaker B:This is not new.
Speaker B:But it's.
Speaker A:Yeah, but it's weird, dude.
Speaker A:I don't like it.
Speaker B:I hate it.
Speaker A:Let me, let me give you, let me give you both something I wanted because this, this is a trip to me.
Speaker A:And I, I, I love technology.
Speaker A:Like I love, yeah, yeah.
Speaker A:But I love technology in a way that I want it to enhance the human experience.
Speaker B:Okay.
Speaker A:Right.
Speaker A:So to me, there are some parts of technology that do not enhance the human experience.
Speaker A:And there's certain parts of enhancing the human experience actually take you away from being human.
Speaker A:So, and I'll give some examples here.
Speaker A:Do I like the idea of AI being tapped into my brain?
Speaker A:Not unless it's going to give me functionality that I lost.
Speaker A:Okay.
Speaker A:Right.
Speaker A:If I can't walk, great.
Speaker A:If I have some cognitive disability or some vision problem, great.
Speaker B:Right.
Speaker A:But if I just want to have access to everything, be the smartest person alive, I think I lose humanity in doing that.
Speaker B:True.
Speaker A:But when it comes to today and everyday stuff, I love the idea of the meta display glasses.
Speaker A:Right.
Speaker A:I love the idea of the Apple watch and tracking my metrics.
Speaker A:And the criticism of that is you don't want to be a slave to the data.
Speaker A:I get that, I do.
Speaker A:But I think the idea of tracking what I do and knowing my body and being healthier is important to me.
Speaker B:Of course.
Speaker B:Dinner?
Speaker B:Of course.
Speaker B:Yeah, yeah, absolutely.
Speaker B:So if you use it, if you use it for, for those purposes.
Speaker B:Yeah.
Speaker B:But I feel like there is a give and a take and sometimes it's, it's happening to us subconsciously.
Speaker A:And where's the inflection point though?
Speaker A:Where's too much?
Speaker B:Where's, where's, where's too much?
Speaker B:Literally you could be sitting Like, I can come into the studio today, right?
Speaker B:And I'll be like, bro, check out this new Sora 2 video.
Speaker B:How hilarious is this?
Speaker B:Right?
Speaker A:Yeah.
Speaker B:And without you even reacting, you already got in your mind the Sora 2 video that you remember, and you're.
Speaker B:Let's move on to this.
Speaker B:Let me show you the one that I saw.
Speaker B:Whereas, like, back in the day, do you remember there was that website, Ebomb's World?
Speaker A:Yeah.
Speaker A:Yeah.
Speaker B:You remember that?
Speaker B:I remember somebody introducing that to me for the first time.
Speaker B:It's like, it was like, I don't know, a shocking video or something funny.
Speaker A:Right.
Speaker B:And they.
Speaker B:They showed it to me.
Speaker B:And I remember we saw it and then we all sat and talked about it and laughed about it.
Speaker B:It's like, okay, we're engaging, right?
Speaker B:So that's enhancing our life.
Speaker B:But now it's gotten to the point where you show me something shocking.
Speaker B:Let me show you something shocking.
Speaker B:Let me one up you.
Speaker A:Yeah.
Speaker A:Rogan does this with his boys where they.
Speaker A:They do it and he even admits it's sick.
Speaker B:It's.
Speaker B:Yeah.
Speaker B:It's disgusting.
Speaker A:It's.
Speaker A:Yeah.
Speaker A:But here's my problem is, is there's only so many red dots on apps on your phone you can attend to in a day.
Speaker B:No, I know.
Speaker B:Yeah.
Speaker A:You know, and everybody's gamifying their apps in.
Speaker A:In the way they're communicating with you.
Speaker A:So everybody's trying to get your attention.
Speaker A:And it's.
Speaker A:It's attention media now, not social media.
Speaker A:But it's not just that.
Speaker A:It's everything around you at all times.
Speaker A:Yeah.
Speaker B:And it's all falling into.
Speaker B:And it's.
Speaker B:Try.
Speaker B:Honestly, we all see it as them tracking our data.
Speaker B:Right.
Speaker B:But really what they're tracking is our behaviors.
Speaker A:Really building models of us.
Speaker B:Yeah, exactly.
Speaker A:Right.
Speaker A:You see this LinkedIn recently, this whole thing that came up, everyone's talking about deleting their account before November, I think, like 10th or something.
Speaker B:Oh, no, I didn't hear about this.
Speaker A:So.
Speaker A:And I don't know, I haven't vetted this, so grain of Salt, but apparently LinkedIn is scraping everybody's profiles to get all of their background information and all of, like, their resume and everything else to be able to sell that data and build models off of it.
Speaker A:So think about this.
Speaker A:I want to know what the education pedigree is for.
Speaker A:Everybody lives in Orange County, California, that has, you know, this professional background.
Speaker A:I mean, when you combine that and people put this on there voluntarily and making it look cool.
Speaker A:Because that's the new resume.
Speaker A:Right?
Speaker A:Right.
Speaker A:So then you can scrape that.
Speaker A:Why should I?
Speaker A:There you go.
Speaker A:Delete my account before November 3rd.
Speaker A:Under the new terms of service.
Speaker A:On November 3rd, LinkedIn takes a snapshot of everyone's entire profile, all personal data, including personal messages, geolocation and photos and videos, and uses it to train its own.
Speaker A:For now, AI LLMs, learning language models and vaguely will pass your personal information onto third parties at LinkedIn's discretion for research and AI training purposes and to prevent you breaking laws.
Speaker A:Question mark.
Speaker A:Actually, in the terms of service, and not to mention, LinkedIn will be able to sell personal data in and of itself.
Speaker A:And I don't know if you've ever.
Speaker A:As an executive public traded company, I probably got more of this than most.
Speaker A:And this is not a brag.
Speaker A:It's aggravating.
Speaker A:Sorry, I know.
Speaker A:Time stamp.
Speaker A:No, no.
Speaker A:102, baby.
Speaker A:It's aggravating because what happens is you get, you get people trying to contact you and they're, they're using your personal information against you.
Speaker B:Oh, okay.
Speaker A:For us in particular, especially the three of us, our voices are on a podcast weekly.
Speaker A:There's a breadth of information out there.
Speaker A:Our images are in 4K in front of people.
Speaker A:This stuff's out there.
Speaker A:If somebody wanted to create an AI version of us, they could.
Speaker A:And Rajille, you may not know this, but when Saeed and I started the show, part of the draw of this show, and we talked about this in my garage back in the day, was we knew that AI was going to grow to a point and this technology to grow to a point that should something happen to Saeed and I, our kids would have a baseline of who and what we were.
Speaker A:They would hear our conversations, they would understand.
Speaker A:Because you think about the parent like your grandparents.
Speaker A:Right.
Speaker A:Like you might have a memory that's imprinted on you as a parent of your grandparents.
Speaker A:And that's sensational.
Speaker A:Yeah, but that wasn't their entire personality and that wasn't how they thought.
Speaker A:Right.
Speaker A:We can leave our kids this insight into who we were and how we thought in a way our parents never could.
Speaker B:Yeah, exactly.
Speaker A:And we knew when we started the show, success or failure, that the longer we did it, the more.
Speaker A:Think about this.
Speaker A:Think about your kid coming in like 10, 15, 20 years.
Speaker A:God forbid something happens to one of us.
Speaker A:And they can see hundreds of hours of dad.
Speaker B:Yeah.
Speaker B:Oh, yeah, yeah.
Speaker B:I mean, I, I would like for us to eventually go back to like two episodes a week.
Speaker B:Right.
Speaker B:Where we could have, you know, more conversations.
Speaker B:I mean, we have these conversations from time to time.
Speaker B:Where we talk about real world stuff.
Speaker B:But these are the types of conversations, too, that I want them to also lean on and learn from.
Speaker A:They're valuable, right?
Speaker B:There's.
Speaker B:They're super.
Speaker B:They're super valuable because I remember when my first was born, holding him in the hospital room and even again with my daughter thinking to myself, oh, my God, there are so many lessons I want to teach you.
Speaker B:Right.
Speaker B:But at what time?
Speaker B:You know, and you have to, like, literally hope that it comes to fruition that you can actually, you know, see that through.
Speaker B:So.
Speaker B:Yeah, this is, this is an amazing gift to give them one day.
Speaker A:Yeah.
Speaker B:So I actually saw a video earlier today about this son finding a video of him, his dad giving him the Call of Duty game.
Speaker B:Okay.
Speaker A:And.
Speaker B: like, his dad passed away in: Speaker B:Oh.
Speaker B:Oh, you got it right here.
Speaker B:Oh, wow, look at this.
Speaker B:Oh, my gosh.
Speaker B:Just that hug right there, you know?
Speaker A:Yeah.
Speaker A:Rocking it.
Speaker A:The.
Speaker A:The Bluetooth headset.
Speaker B:Yeah.
Speaker B:Pen inside the polo.
Speaker B:Old school.
Speaker B:Easy, G. Dang, man.
Speaker B:Yeah, man.
Speaker B:You never know, right?
Speaker B:That's right.
Speaker B:You never know.
Speaker A:Well, I had a lot more to go into with the banking stuff, but frankly, it's been a long day and the press conference was interesting.
Speaker A:I do want to hit some highlight points that I think are valuable for everybody listening and thinking about this as we go through.
Speaker A:The FOMC is really limited on what they can do from a quantitative ease and quantitative tightening position now because of the banking sector, and there's a whole reverse repo line, like how much they.
Speaker B:Can help fix the problem and what.
Speaker A:How much they can help fix the problem with things outside of interest rates.
Speaker A:But they're at a really weird paradigm now, and we've talked about it a lot on the show and there's no, no reason why we shouldn't talk about it now.
Speaker A:And that paradigm is jobs seem to be in jeopardy.
Speaker A:We all feel that it's real.
Speaker A:You know, it.
Speaker A:They can say what they want.
Speaker A:Data wise, it's real, it's meaningful.
Speaker A:Rajill, I don't know if you know this.
Speaker A:Have you seen around a neighborhood, there's that little robot rolling around?
Speaker B:Oh, yeah, there's a few.
Speaker A:What are those?
Speaker B:Robots deliver food.
Speaker B:No, no, they don't.
Speaker B:They don't have the.
Speaker B:The cooler.
Speaker A:I think they're security or something.
Speaker B:I think so too.
Speaker A:Yeah.
Speaker A:Security, yeah, because they have a blue light on them.
Speaker B:There's this new robot that's now being sold that can do your household chores too.
Speaker A:Yeah, I think is what it's called.
Speaker A:Yeah.
Speaker B:Neil Neo.
Speaker B:Yeah, yeah.
Speaker B:Matrix.
Speaker A:No, I mean come on.
Speaker B:That's what they went for.
Speaker A:But that also scares the hell out of me.
Speaker A:You seen the thing, dude.
Speaker B:And then they'll come to your house and train it.
Speaker A:Yeah, I don't want that.
Speaker B:Why would I want that?
Speaker A:No, this is what I mean by does not enhance the human condition.
Speaker A:No, okay, I know this is iRobot argument.
Speaker A:That's fine.
Speaker A:Will Smith pre slap.
Speaker A:But you know, we can talk about Will Smith pre slap.
Speaker B:That was the cool one.
Speaker A:You know what I would love to see?
Speaker A:Do you know what?
Speaker A:I hope someone from Will Smith's camp listens to this show because I gotta.
Speaker A:I got a solution to this problem for everybody.
Speaker B:What to fix?
Speaker A:I like.
Speaker A:I liked Will Smith's movies.
Speaker A:Okay, you liked Will Smith's movies?
Speaker B:Okay.
Speaker A:Love.
Speaker A:Okay.
Speaker B:No, I didn't just like love them.
Speaker A:Okay, one okay.
Speaker A:One X Neo is twenty thousand dollar home.
Speaker A:That's all it is.
Speaker A:Twenty thousand dollars.
Speaker B:Dang.
Speaker B:Bro ball so hard.
Speaker A:No, no, I just expected like that's all it is.
Speaker A:I mean, come on, man.
Speaker A:In a robot, you with like a face and hands and you can water plants and stuff.
Speaker B:To do what?
Speaker B:Bro, bro, you can't water your own plants.
Speaker A:You're the housekeeper.
Speaker B:No, don't.
Speaker A:Oops.
Speaker A:Yeah.
Speaker A:Damn it.
Speaker B:But I'll say this.
Speaker B:I did.
Speaker B:I did, okay?
Speaker B:I did.
Speaker A:I.
Speaker A:How much does the housekeeper cop cost per month?
Speaker B:I've come once a.
Speaker B:Once a week, probably no less than 150, 180 bucks a month.
Speaker B:Twice a month, probably 300.
Speaker A:I would assume twice a month.
Speaker A:I don't know.
Speaker A:We have one that comes I think twice a month.
Speaker A:I have no idea.
Speaker A:You have no idea how much.
Speaker A:There's questions you don't want to ask.
Speaker A:Yeah.
Speaker A:Okay, so I just don't even ask.
Speaker B:Yeah, yeah.
Speaker A:Wonderful Ukrainian woman, sweetheart.
Speaker A:I love this lady.
Speaker A:I accidentally scare her a lot.
Speaker A:I'll come home early.
Speaker B:She's like, oh my God.
Speaker B:Oh really?
Speaker A:Oh yeah.
Speaker A:She's a beautiful lady.
Speaker A:Yeah.
Speaker A:But this robot scares the hell out of me.
Speaker A:Look, why'd you give it eyes like that?
Speaker B:Dude, I know that's.
Speaker A:Honestly give it a mouth, man.
Speaker B:It looks like it's ready to go fencing.
Speaker A:Yeah, I don't like that.
Speaker B:Like it.
Speaker B:Just pick up a sword.
Speaker A:I woke up with that thing looking at me.
Speaker A:That's you.
Speaker B:You've seen the videos of the.
Speaker B:Of the robots that they've been working on.
Speaker B:They just go rogue and.
Speaker B:Yeah, yeah, you know, say what makes Me feel like.
Speaker A:And here's the problem, okay?
Speaker A:Every once in a while I have beef with AI.
Speaker A:Like, I'll be on Chat.
Speaker B:GPT.
Speaker A:Chat.
Speaker A:GPT will get sassy with me.
Speaker B:Chat CBC gets assassin.
Speaker A:Yeah.
Speaker B:Oh, I showed you the.
Speaker B:I read you the.
Speaker B:What happened on this show.
Speaker B:Right?
Speaker B:Or it got sassy with me.
Speaker A:It's just I don't want this robot against.
Speaker A:Hey, yo, robot.
Speaker A:Make me some dinner.
Speaker A:Nope.
Speaker A:Yeah.
Speaker A:You only paid $22,000 for me, right?
Speaker B:That's an upgrade.
Speaker A:Yeah.
Speaker A:Chief should have bought the deluxe model, right?
Speaker A:You know what's going to happen like this.
Speaker A:We're getting too far into this dystopian future now.
Speaker B:Yeah.
Speaker B:And what if he goes, let me sleep in the same room as you.
Speaker A:Yeah, I'm going to watch you sleep.
Speaker A:Nope.
Speaker A:No, no.
Speaker A:You're downstairs, bro.
Speaker B:That's the only way I want to.
Speaker A:I want a cage.
Speaker B:I got to protect you.
Speaker A:Like, I don't want that thing rolling around at night on its own.
Speaker B:I know.
Speaker A:Did you fart, sir?
Speaker A:Like, I don't want that.
Speaker A:Are you.
Speaker A:Are you having digestive issues?
Speaker A:You know what?
Speaker A:You can go back to your cage.
Speaker B:Yeah, you're right.
Speaker A:I'm crate trained that thing.
Speaker B:You're late on your schedule.
Speaker B:You should have gone to the restaurant by now.
Speaker B:What happened?
Speaker B:What's going on?
Speaker A:I need you to wait in the garage.
Speaker A:Okay?
Speaker A:Neo, just let me know.
Speaker B:But imagine, you know that's how they're going to start selling this stuff is they're going to use fear.
Speaker B:Yeah, well, I mean, they're going to use prevention.
Speaker B:Baymax.
Speaker B:I. I feel Baymaxes.
Speaker B:You see a Baymax?
Speaker A:I see Baymax is fat.
Speaker A:And fat is cute and.
Speaker B:And really nice.
Speaker B:Honestly, Baymax was probably like one.
Speaker B:One of the greater characters of Disney.
Speaker A:Yeah.
Speaker A:But Baymax is also a giant balloon.
Speaker A:You can stab Baymax and he gonna.
Speaker A:He ain't gonna do a new.
Speaker A:No, he won't.
Speaker A:Yeah, the other robot was jacked.
Speaker B:Yeah.
Speaker B:Honestly, it was jacked.
Speaker A:I can't have that Bruce Lee looking robot in my house.
Speaker A:Dang.
Speaker A:It's just not.
Speaker A:Not the same thing.
Speaker B:Not happening, bro.
Speaker A:No.
Speaker A:Shout out for the Baymax reference though.
Speaker A:Yeah.
Speaker A:So, you know, you see these robots rolling around a neighborhood, right?
Speaker A:And you know, the unemployment's a real thing.
Speaker A:Okay.
Speaker A:Yeah.
Speaker A:You know that.
Speaker A:You know, that was somebody's job.
Speaker A:I'm assuming it's a security robot.
Speaker A:Regil and I are kind of on the same page there.
Speaker B:Yeah, I think so.
Speaker B:Because it's usually on the corners.
Speaker A:Yeah.
Speaker A:And I've seen it just rolling on the neighborhood.
Speaker A:Okay, that's weird.
Speaker A:So did somebody normally roll around in like a, an older car like with a little security magnet thing on the side of it and like stayed up all night long and that person doesn't have a job.
Speaker A:Now is that we're doing right?
Speaker B:I mean Amazon recently came out and said that they plan on replacing 14,000.
Speaker A:No more way more than the original quotes are.
Speaker A:30,000.
Speaker A:They're only doing right now 14.
Speaker A:14.
Speaker A:Yeah.
Speaker B:But they're gonna do more and more.
Speaker A:Yeah.
Speaker B:With robots.
Speaker A:Yeah.
Speaker B:I mean.
Speaker A:So you can't tell me that unemployment is going to stay stable.
Speaker A:And I think that's disconnected on one hand.
Speaker A:Okay.
Speaker A:We the market say great.
Speaker A:The stock market's lifting the all time highs because of AI technology.
Speaker A:Nvidia is at an all time high for a stock with their market cap 5 trillion.
Speaker A:I think whatever it was and just made me nauseous this morning.
Speaker A:Okay, fine, whatever.
Speaker A:All right.
Speaker A:But then you go oh the job market's fine.
Speaker A:It's a little weak.
Speaker A:Yeah.
Speaker A:He blames immigration like bruh, come on, stop my guy.
Speaker A:It's holiday.
Speaker B:Do you feel like seasonal?
Speaker B:Do you feel like there's people out there that are like almost banking on an AI bubble?
Speaker B:So be it could and pops would like they feel like.
Speaker A:You mean is there a Michael Burry who's going to short the AI bubble market?
Speaker B:No, no, no, no, no.
Speaker B:Actual, actual everyday middle class, lower income class people that are praying for an AI bubble.
Speaker B:So they, they feel like my job is safe.
Speaker A:Maybe.
Speaker A:Yeah.
Speaker A:I mean here, here's the problem though is, is that we somebody made this argument today.
Speaker A:It's actually on the, on the, on the live that I did.
Speaker A: late: Speaker A:And to that I say is it different?
Speaker A:Yeah.
Speaker B:The way they kind of do it right.
Speaker B:Like they, they borrow money to pay this other tech company and it's all kind of like they're putting money into each other.
Speaker A:That was the original show notes for today but I pulled it out because I pull out but I, I actually took a different tact on the show I think is valuable to talk about.
Speaker A: the problem is if unlike the: Speaker A:Yeah.
Speaker A:You were bet you're betting on speculative technology that may not be profitable at some point in time and that had a large play in what happened.
Speaker A:But the End conclusion is the same with these companies that are profitable.
Speaker A:If you can't deliver on the promises that you have made from your technology, profitable or not, you're going to have stock market problems.
Speaker B:Do you think that there, any of these companies, do you think they might be slow playing the introduction?
Speaker B:Because it's like, this is, it's kind of bad pr, bro.
Speaker A:One trillion percent, right?
Speaker B:It's like this is a, this is not a good look, right?
Speaker B:For, for Amazon to come on, be like, hey, 30,000 of y' all gonna lose your jobs to robots.
Speaker A:Oh, they're all slow playing this.
Speaker A:Are you kidding me?
Speaker B:Right?
Speaker A:Okay, let's, let's be honest here.
Speaker B:Meta.
Speaker B:Meta recently laid off 600 employees in their AI space last week.
Speaker B:And they're, I think I sent you like they have some crazy like severance package for them, but they're giving them a month's notice to look for other internal positions.
Speaker B:So that's the, that's the PR move, right?
Speaker B:It's like we're going to give you a chance to find something within the.
Speaker A:Company, which is fine for Meta, but I'll use Amazon as a better example.
Speaker A:Okay.
Speaker A:So you'll see what you can find here.
Speaker A:Because I didn't actually do this homework, but I can, I can guess.
Speaker A:They're going to lay off 14,000 employees, largely replaced with technology and robots.
Speaker A:Right?
Speaker A:Right.
Speaker A:Those robots in that contract didn't happen in a month.
Speaker B:No, this is thought out a while ago, right?
Speaker A:If you're getting rid of 14, 000 employees.
Speaker A:There was a board meeting.
Speaker A:Okay.
Speaker B:Oh, good call.
Speaker A:There was internal committees.
Speaker A:Yeah.
Speaker A:There was a strategic planning committee that probably got put in place or there was some kind of project management overseeing this.
Speaker A:There was a vendor that got introduced through vendor management.
Speaker A:They went through a lot of corporate red tape to get this done.
Speaker A:Valid point.
Speaker A:So they knew this was coming for a long ass time.
Speaker A:Not to mention someone had to manufacture and program the models on these robots, which didn't happen overnight.
Speaker A:They didn't just go like, hey man, plug that in.
Speaker A:It'll work.
Speaker A:You know what I mean?
Speaker B:Like, yeah, it's like a universal, it's not a universal remote control.
Speaker B:You just turn it on.
Speaker A:Yeah.
Speaker B:Point it at the tv, damn it.
Speaker A:Connect it to the WI fi like it was.
Speaker A:It wasn't like that.
Speaker A:You know what I mean?
Speaker A:So I, I don't know what, what people think was happening.
Speaker A:So are they slow playing it?
Speaker B:Hell yeah.
Speaker A:The online retailer began laying off employees across multiple divisions as part of a plan first reported on Monday by Reuters to cut as many as 30,000 employees.
Speaker A:The company has not confirmed the broader layoff plan, but there is one.
Speaker A:But in a company wide email indicated further cuts were in fact planned because those committees.
Speaker A:And this is again, by the way.
Speaker B:By the way, these jobs were.
Speaker B:Corporate workforce.
Speaker A:Amazon said on Tuesday it reduced its global corporate workforce by about 14,000 employees, with more cuts expected next year and a major shakeup driven in part by adoption of artificial intelligence at the tech giants.
Speaker A:There you go.
Speaker B:Corporate workforce is crazy, bro.
Speaker B:They're, they're, they're saying like, no, no, not, not the people in the warehouse that are going and getting packages and.
Speaker B:No, no, no people doing corporate jobs.
Speaker A:Can you imagine a dude being on, like getting a severance package, saying, you're out and you, you got to work like a couple more weeks, right?
Speaker A:Yeah.
Speaker A:And then you see the robot coming in as you're going out.
Speaker A:Hey, man, I'd.
Speaker B:You did.
Speaker B:I don't even want to joke about.
Speaker A:They got his batteries.
Speaker B:This is bad.
Speaker B:This is so messed up.
Speaker A:You just wanted to rain so bad.
Speaker A:It's so bad.
Speaker A:Hope you're waterproof, dog.
Speaker B:Oops.
Speaker B:Yeah, oops.
Speaker A:Yeah, this is, this is not good.
Speaker B:Right?
Speaker A:And I'm just saying, like, this is going to become a more common thing.
Speaker A:And this didn't happen overnight.
Speaker A:Amazon.
Speaker A:Bezos knew this a long time ago.
Speaker A:Probably when he was.
Speaker A:Instead of shooting his wife in his face.
Speaker B:Yeah, that's probably what he was thinking.
Speaker B:That's what he was thinking about.
Speaker A:Hey, Lauren, go up there.
Speaker A:I gotta do some homework.
Speaker A:Yeah.
Speaker A:You know, he knew.
Speaker B:Gotta put in some ot.
Speaker A:Yeah, he.
Speaker A:This somebody.
Speaker A:And the sad part is somebody got a promotion for this.
Speaker A:That, that's the problem.
Speaker B:Somebody got it.
Speaker B:Somebody got a fat bonus.
Speaker A:Somebody got a bonus because they.
Speaker A:You know what, Sam, you were right.
Speaker A:We don't need all those people at all.
Speaker A:Those people are unemployed because of you.
Speaker A:But this company is more profitable.
Speaker B:Yeah.
Speaker A:Here's a couple hundred thousand dollars more.
Speaker A:And Sam's gonna go home, talk to his wife.
Speaker A:Hey, honey, I got a big check.
Speaker A:She's like, great.
Speaker A:Everybody hates Sam now.
Speaker B:See?
Speaker B:And look, okay, so the argument for him is I have a fiduciary responsibility to my shareholders.
Speaker B:That's why I'm doing it.
Speaker B:Right.
Speaker A:He was probably hired to do that.
Speaker A:Yeah.
Speaker B:So.
Speaker B:Or even Jeff Bezos, I'm saying, right?
Speaker A:They got group think, right?
Speaker A:You get these, these committees together, get project meetings together.
Speaker A:You get these third party vendors that are supplying the robots they're not building themselves.
Speaker B:I know.
Speaker B:Yeah.
Speaker B:I Don't know, man.
Speaker B:For me, it's like, who's going to.
Speaker B:Like, when are people going to step up and try to do the right thing for the people?
Speaker B:Right?
Speaker A:Like, see if you can get the robotics Amazon Robotics factory or Amazon Robots in the.
Speaker A:In their warehouse or something like that.
Speaker A:I guarantee.
Speaker A:Have you seen this?
Speaker B:No, I've seen some, but.
Speaker B:What do you mean?
Speaker A:This is crazy, bro.
Speaker B:What.
Speaker B:What are they doing?
Speaker A:It's.
Speaker A:It looks like some kind of a Disney movie from a dystopian future.
Speaker A:Like Wall E. Okay.
Speaker B:Oh, yeah.
Speaker B:The way they're just going up picking.
Speaker A:Look at, look at.
Speaker A:Come on, man.
Speaker A:There's two dudes in that giant 10, 000 square foot space.
Speaker B:Yeah.
Speaker A:Those dudes are operating forklifts.
Speaker B:Yeah.
Speaker B:And it's honestly robotic, palletized.
Speaker B:And here's the problem.
Speaker B:The problem is the people have.
Speaker B:The people spoke.
Speaker A:Look at the robot.
Speaker A:Look at the top right, top, top.
Speaker A:Right there in the top right there.
Speaker A:Yeah, that's a robot.
Speaker B:That's Wally, bro.
Speaker A:That's what.
Speaker A:First of all, that's Wally's big brother.
Speaker A:Just to be clear, this is way less scary than Neo that goes in your home.
Speaker A:Honestly, I could roll with this dude.
Speaker B:I could roll.
Speaker B:Yeah.
Speaker B:No fingers.
Speaker A:Yeah.
Speaker A:Come on.
Speaker A:No, but the quality takes off his face mask.
Speaker A:It's literally a Terminator.
Speaker B:So the problem is.
Speaker B:The problem is.
Speaker A:Yeah.
Speaker B:People complaining about these large tech giants doing something like this and replacing humans with.
Speaker B:With robots.
Speaker A:Go to that.
Speaker A:Yeah.
Speaker B:Look like it's the pot calling the kettle black.
Speaker B:Okay.
Speaker B:Because a lot of mom and pop shops went out of business.
Speaker A:Crazy.
Speaker B:A lot of mom and pop shops went out of business because everybody wanted that quick delivery.
Speaker A:I'm not going.
Speaker A:I want the quick delivery to.
Speaker A:I get salty.
Speaker A:Jill, I don't know about you.
Speaker B:Yeah.
Speaker A:Honestly, I can't get it the next day.
Speaker B:I'm upset about a lot of people.
Speaker B:Like, man, after that mom and pop shop, I wanted to.
Speaker B:I want it.
Speaker B:You know what it is?
Speaker B:I want prime delivery.
Speaker B:Deliver tonight.
Speaker A:Here's.
Speaker A:Here's a question mark for society.
Speaker A:We're also hypocrites because we're lazy.
Speaker A:We want it tonight, we want it tomorrow.
Speaker A:We want that fast delivery.
Speaker A:So we encourage this.
Speaker A:But you can get in your car and go to the grocery store, dog.
Speaker A:Yeah, you can go drive to Best Buy, but you're like, I don't know what time.
Speaker A:They're close.
Speaker A:I gotta go and talk to people.
Speaker B:I'm down to making a commitment to not buy stuff off Amazon if you are.
Speaker A:Nope.
Speaker B:Come On.
Speaker B:Let's do it together.
Speaker A:Here's the problem, bro.
Speaker A:Even if I make that commitment, my wife has got, like.
Speaker A:She's got a relationship with Amazon delivery drivers.
Speaker A:They know her.
Speaker A:Like, they tie.
Speaker B:What's up, dog?
Speaker B:They got handshakes.
Speaker A:They gotta click.
Speaker A:Yeah, yeah.
Speaker A:They know, right?
Speaker A:They come to my house, they know what's up.
Speaker B:Oh, man, that's too late.
Speaker A:Yeah, that.
Speaker A:That.
Speaker A:That train.
Speaker B:That ship is.
Speaker B:Yeah, that trains.
Speaker A:We can build a commune, go out to mountains, down, have our own little space.
Speaker B:You're not down, though.
Speaker A:I would love.
Speaker B:I've always loved Big Bear.
Speaker B:I'm down.
Speaker A:I don't go Big Bear because you know why?
Speaker B:It's just.
Speaker B:It's got enough there to where, like, it's like, you're safe there.
Speaker A:I want to buy a ranch in, like, Tennessee or Texas or some places, you know.
Speaker B:Really?
Speaker A:Yeah.
Speaker B:I never took you as a.
Speaker B:That's a.
Speaker B:That's going the opposite way for you, bro.
Speaker A:I was born in Oklahoma.
Speaker A:What kind of goofy ass comment is that?
Speaker B:What are you talking, bro, You've been literally living at the same place.
Speaker A:You can't take the hood out the boy.
Speaker A:Boy?
Speaker A:Really?
Speaker B:You would buy a ranch and you're.
Speaker A:Whittling wood with my grandfather on the porch.
Speaker B:Stop it, man.
Speaker A:He gave my first Swiss army knife.
Speaker A:That's a real story.
Speaker A:You're not going to.
Speaker B:Fact, no.
Speaker A:You're judging me based on.
Speaker A:In the way I look, and I don't like it.
Speaker A:I'm judging you hard right now.
Speaker B:When was the last time you did.
Speaker A:I will wood?
Speaker B:Yeah.
Speaker A:When?
Speaker A:Last night.
Speaker B:Can't give you that respect, bro.
Speaker A:Yeah.
Speaker B:Well done.
Speaker B:Hour 19.
Speaker B:I. I got.
Speaker B:I said I was going to do one thing, and I don't know if he's going to.
Speaker B:If he stuck around to hear the whole episode, but I'm gonna make sure that I keep through on my promise.
Speaker B:Shout out to Stephanie Marin.
Speaker B:I've been getting.
Speaker B:She left us a comment on the.
Speaker B:On the last episode and.
Speaker B:Oh, thank you.
Speaker B:Oh, you pull it up.
Speaker B:There you go.
Speaker B:She said, I've been getting my paycheck as someone in the military, but afraid that it's limited.
Speaker B:I'm afraid to invest or do anything with my money right now if I don't know when my next paycheck is coming or if Steph.
Speaker B:So we.
Speaker B:I saw you responded to this comment, too.
Speaker A:Thank you for your service.
Speaker B:Yeah, we want to first make sure that we thank Stephanie for her service.
Speaker B:I misspelled.
Speaker B:I said Steph Stevens.
Speaker B:My bad.
Speaker B:But, yeah, it's Messed up.
Speaker B:It's.
Speaker B:But it happens.
Speaker B:It's out of respect.
Speaker B:We do this on the show on purpose.
Speaker B:People misspell my name.
Speaker B:Stephanie doesn't realize this, but this is.
Speaker A:Can I call you homar?
Speaker B:Yeah, you call me home, that's totally fine.
Speaker B:Right?
Speaker B:But look, fear is natural right now I think, I think this, the feeling that Stephanie's feeling is, is, is common.
Speaker B:We, we get a lot of comments, a lot of DMS like this.
Speaker A:30 days of people not getting paychecks, man.
Speaker A:Right, but what was somebody working in the military?
Speaker B:What was this?
Speaker A:Your job is to defend this country and you don't know if you're gonna get paid, right?
Speaker A:What, what's wrong with this place?
Speaker B:That it's, it's, it's wild.
Speaker B:So as long as you want, the.
Speaker A:People who make the decisions are wearing suits, sitting in Washington D.C. like, I mean, honestly, that's, that's wrong.
Speaker B:A little disconnected.
Speaker B:Absolutely.
Speaker B:But look, as long as the high interest debt is, is paid down or paid off, right?
Speaker B:What I, what I said at the top of the show, I thought about Stephanie when I was, when I wrote this stat.
Speaker B:And I want to revert back to it now.
Speaker B: Look, since: Speaker B:Crypto, even though your boy doesn't like it, up 2,000% and the gold is up 200%.
Speaker A:Yeah, right.
Speaker B:Look, you gotta invest, right?
Speaker B:If anything, household income only went up 22%.
Speaker A:Yeah, here's the problem.
Speaker A:Let's disconnect with that comment.
Speaker A:And I, I agree with you and you know I love you for it.
Speaker A:And you know that that's our show theme.
Speaker A:But we are now at this point where people don't have enough money to get by, much less invest.
Speaker B:No, no.
Speaker A:That's why I don't like, like Caleb Hammer show where he just like goes at people for their way they're spending.
Speaker A:And I understand the draw, the assumption.
Speaker B:The assumption was made because this person said I'm afraid to invest.
Speaker B:So I'm assuming, I'm assuming they're, they're, they're surplus income, right?
Speaker B:That, that doesn't need to go towards bills.
Speaker A:I started when I started, I started with 50 bucks a month.
Speaker A:Month in a, an investment account investing in low cost index funds.
Speaker B:After you had the emergency fund built out?
Speaker A:Actually at the time I was still in the process of doing it, but all I could spare was 50 bucks a month.
Speaker A:And then after the emergency fund for me, which was six months of all my expenses in a cash account, I started pivoting.
Speaker A:Yeah.
Speaker A:But I will say when you get to a certain point and you have access to, like, margin lines of credit and home equity lines of credit, then your.
Speaker A:Your reserve fund pivots to a different place because of that, because you have a little more liquidity, freedom.
Speaker A:That being said, it's 50 bucks a month, man.
Speaker A:Just start there.
Speaker B:I'm going to be completely honest with, with the listeners on the show.
Speaker B:I'm no longer currently in a position to where I could.
Speaker B:Can afford to currently continue invest because I. I've been helping family out, and now I myself have to take my own advice and start building up my own reserves.
Speaker B:Right.
Speaker B:So the goal is to.
Speaker B:Look, this lesson goes for everybody, right.
Speaker B:Even.
Speaker B:Even myself.
Speaker B:So build the reserves first if you can.
Speaker B:Six months, ideally.
Speaker B:I know that seems like a tall task, right.
Speaker B:But okay, start off here.
Speaker B:We said it on the show before.
Speaker B:Start off building enough to replace one paycheck, right?
Speaker B:And then you.
Speaker B:And then you double that, and then you continue to move on that.
Speaker B:And then eventually you invest because you look, you don't want to be sitting on the sidelines sitting on cash.
Speaker B:And then, you know, your buying power just goes out the window over the years.
Speaker B:You, at the end of the day, you have to invest.
Speaker A:Yeah.
Speaker A:And I think investing, and I know this is going to sound obvious, but the momentum you get from investing isn't just the money you see in your account going.
Speaker A:It's the feeling you get of momentum that you have physically.
Speaker B:Yes.
Speaker A:You know, things in motion tend to stay in motion.
Speaker A:What I tell a lot of people is like, you don't want to go to the gym.
Speaker A:It's fine.
Speaker A:Go to the gym and do like, the easiest thing there.
Speaker B:There you go.
Speaker A:You know, like, you don't.
Speaker A:You don't want to go.
Speaker A:Cool.
Speaker A:Go to the gym and walk.
Speaker A:I guarantee you there's a probability, however big or small, that you might do a little bit more than that while you're there, because you're like, I'm here, I'm here.
Speaker B:I might as well.
Speaker B:Yeah, I might as well, you know, do some squats or, you know, hit the bench press.
Speaker A:I.
Speaker A:There are.
Speaker A:There's been countless times over the course of the last several, you know, years where I literally have walked into a gym, been like, I don't feel like working out.
Speaker A:I'll walk today.
Speaker A:I just got on treadmill, put the incline, like four and a half, speed like three and a half or four, and I'll just walk.
Speaker A:Listen to a podcast if I feel like Lifting weights.
Speaker A:I will.
Speaker A:If not, I'll just double up what I was going to do in the treadmill to like 40 minutes and I'll go home and I'll think to myself, like, hey, my body wasn't in it today.
Speaker A:That could be because you didn't sleep well.
Speaker A:It's because you mentally, you know, disconnected.
Speaker A:Whatever.
Speaker B:Probably you will.
Speaker A:Investing is the same way.
Speaker A:You just, just start with 50, start with 25.
Speaker A:Whatever you start with, just start.
Speaker A:There's no minimum you can.
Speaker A:Robin Hood right now was zero.
Speaker A:I mean, you can start with anything you want.
Speaker B:Yeah, there you go.
Speaker A:You know, go into those accounts and just start investing, making decisions.
Speaker A:And what it'll also do is it'll emotionally tie you to the markets.
Speaker A:You'll have a reason to stay connected to the markets beyond just our show and three sexy dudes talking to you on microphones.
Speaker A:But, you know, you're going to wind up in a situation where you go, okay, I'm invested in Voo.
Speaker A:It's Vanguard's low cost index fund, S&P 500.
Speaker A:I want to see what the S&P 500 is doing.
Speaker A:I'm going to check and see what's going on.
Speaker A:Oh, it's s. P500 is carried by the AI stock.
Speaker A:So I should probably listen in with Saeed and the guys talking about this because that impacts me now.
Speaker A:And, and that's important for you.
Speaker A:If anything, it gives you some type of connection to the markets that'll keep you invested and then over time that'll make you want to invest more because you get more and more confident.
Speaker A:Yeah.
Speaker B:And don't let the fraud, the current froth in the economy scare you because look, we talked about it, where things are going.
Speaker B:I still think that there's still room to grow.
Speaker B:And even if it doesn't grow and it does take a hit, it will, it rebounds and eventually, you know, you go back up because you're playing the long term game here.
Speaker B:We're not, we're not sitting here telling you you're 10x in your money next year, right?
Speaker A:No, no, no, no.
Speaker A:I mean, that's Grant Cardone.
Speaker A:Yeah.
Speaker B:You can 10x your mind, listen to this podcast, but there you go.
Speaker B:There you go.
Speaker A:Yeah.
Speaker A:If there's a way to 10x your growth in a single year, I've yet to find it in my adult life.
Speaker A:And good for those of you who have or claim to have have or paid $80,000 to somebody to tell you they have, have, that ain't us.
Speaker B:That ain't us.
Speaker B:We don't need extends.
Speaker B:You got anything, Rajil?
Speaker B:No, no.
Speaker A:We just need prevention.
Speaker B:Good night, everybody.
Speaker A:Bye.
