Individual Economists

ATM: Using Volatility to Rebalance Portfolios

The Big Picture -



 

 

At The Money: with Liz Ann Sonders, CIO Schwab (March 27, 2024)

The past few years have seen market swings wreak havoc with investor sentiment. But despite the volatility, markets have made new all-time highs. With high volatility the norm, investors should take advantage of swings to rebalance their portfolios. Or as Liz Ann Sonders describes it, “add low, trim high.”

Full transcript below.

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About this week’s guest:

Liz Ann Sonders is Chief Investment Strategist and Managing Director at Schwab, where she helps clients invest $8.5 Trillion in assets.

For more info, see:

Personal Bio

Professional site

LinkedIn

Twitter

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Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg.

 

 

 

Transcript

Barry Ritholtz: Since the October  2022 lows, markets have had a great run recovering all of their losses and then some, but valuations are higher and the market seems to be narrowing. How should long term investors respond to these conditions? I’m Barry Ritholtz, and on today’s edition of At the Money, we’re going to discuss what you should be doing with your portfolio.

To help us unpack all of this and what it means for your money, let’s bring in Liz Ann Saunders. She is Chief Investment Strategist and sits on the Investment Policy Committee at Schwab, the investment giant that has over 8. 5 trillion on its platform.

Liz, let’s start with the basics. How should long term investors be thinking about their equities here?

Liz Ann Sonders: Well, you know, Barry, shame on anybody that answers that question with any kind of precision around percent exposure. And that’s not just on the equity side of things, but broader asset allocation. I could have, a little birdie from the future land on my shoulder and tell me with 99% precision what equities are going to do over the next whatever period of time, what bonds are going to do, even what maybe real estate was going to do.

But if I were sitting across from two investors, one was a 25-year old investor that inherited 10 million from the grandparents. They don’t need the money; they don’t need to live on the income. They go skydiving on the weekend. They’re big risk takers. They’re not going to freak out at the, the first 10 or 15 percent drop in their portfolio.

And the other investor is 75 years old; has a nest egg that they built over an extended period of time. They need to live on the income generated from that nest egg and they can’t afford to lose any of the principal. One essentially perfectly high conviction view of what the markets are going to do. What I would tell those two investors is entirely different. So it depends on the individual investor.

Barry Ritholtz: So that raises an obvious question. Um, you work with not only a lot of individual investors, but a lot of RIAs and, and advisors. How important is it having a personal financial plan to your long term financial well-being?

Liz Ann Sonders: Essential. Absolutely essential. You can’t start this process of investing by winging it. It’s got to be based on a long term plan and it’s, it’s driven by the obvious things like time horizon, but too often people automatically connect time horizon to risk tolerance. I’ve got a long time horizon, therefore I can take more risk in my portfolio, vice versa.

But we often learn the hard way, investors learn the hard way, that there can sometimes be a very wide chasm between your financial risk tolerance, what you might put on paper, sit down with an advisor, establish that plan, time horizon coming into play, and your emotional risk tolerance.

I’ve known investors that should essentially on paper have a long-term time horizon but panic button gets hit because of a short term, uh, period of volatility or drop in the portfolio, then that’s an example of learning the hard way that your emotional risk tolerance may not be as high as your, uh, financial risk tolerance.

Barry Ritholtz: Let’s talk about that a bit. Everybody seems to focus on, let’s pick this stock or this sector or this asset class. Really, is there anything more important to long term outcomes than investor behavior?

Liz Ann Sonders: Absolutely. Too many investors think it’s, it’s what we know or somebody else knows or you know that matters, meaning about the future, what is the market going to do? That doesn’t matter because that’s impossible to know. What matters is what we do. along the way.

I enjoy these conversations because we get to talk about what actually matters. And it’s the disciplines that arguably are maybe a little bit more boring to talk about when you’re doing, you know, financial media interview. The bombast is what sells more, but it’s asset allocation, strategic, and at times tactical. It is diversification across and within asset classes. And then the most beautiful discipline of all is periodic rebalancing, and it forces investors to do what we know we’re supposed to, which is a version of buy low, sell high, which is add low, trim high.

Barry Ritholtz: Add low, trim high, add low, trim high.

Liz Ann Sonders: I almost, the reason why I have that sort of nuance change to that is buy low, sell high almost infers market timing, get in, get out. And I always say that neither get in nor get out is an investing strategy. All that is, is gambling on two moments in time.

Barry Ritholtz: And you have to get them both dead right.

Liz Ann Sonders: And I don’t know any investor that has become a successful investor that’s done it with all or nothing get in and get out investing. It is always a disciplined process over time. It should never be about any moment in time.

Barry Ritholtz: So we’ve been in the cycle where the Fed started raising rates and markets down. Um, became much more volatile. Now everybody’s expecting rates to go down. What do you say to clients who are hanging on every utterance of Jerome Powell and trying to adapt their portfolio in anticipation what the Fed does?

Liz Ann Sonders: Well,  to use the word adapt, expectations have adapted to the reality of the data that has come in, not to mention the pushback that Powell and others have shared. And even before the hotter than expected CPI report and hotter than expected jobs report, that the combination of those, brought the Fed to the point of Powell at the press conference at the, you know, January FOMC meeting saying it’s not going to be March.

But even in advance of that, we felt the market had gotten over its skis with not only a March 2024 start but as many as six rate cuts this year. The data just did not. Uh, support that. You know, that, that old adage, Barry, I’m sure you know it, of, of the Fed typically takes the escalator up and the elevator down.

They clearly took the elevator up this time. I think their inclination is to take the escalator down.

Barry Ritholtz: You deal with a lot of different types of clients. When people approach you and say, I’m concerned about this news flow, about Ukraine, about Gaza, about the presidential election, about the Fed. Do any of those things matter to a portfolio over the long term, or is this just short-term noise? How do you advise those folks?

Liz Ann Sonders: Well, things like geopolitics tend to have a short-term impact. They can be a volatility driver. But unless they turn into something truly protracted that works its way through You know, commodity price channels like oil or food on a consistent basis, they tend to be short-lived impacts.

The same thing with elections and outcomes of elections. You tend to get some volatility,  things that can happen within the market at the sector level. But for the most part, you’ve got to be really disciplined around that strategic asset allocation and try to kind of keep the noise out of the picture.

The market is almost always extremely sentiment-driven. I think probably the, the best descriptor of a full market cycle came from the late great Sir John Templeton around “Bull markets are born in despair and they grow in skepticism, mature in optimism, die in euphoria. I think that’s such a, a perfect descriptor of a full market cycle.

And what’s maybe perfect about it is there’s not a single word in that that has anything to do with the stuff we focus on on a day to day basis. Earnings and valuation and economic data reports, it’s all about psychology.

Barry Ritholtz: In order to stay on the right side of psychology, given how relentless the news flow is. We’re constantly getting economic reports. They’re constantly Fed people out speaking. We’re just wrapping up earnings season. How should investors contextualize that fire hose of information? And what should it mean to their buy or sell decisions?

Liz Ann Sonders: Tto the extent some of this stuff does drive volatility, use that volatility to your advantage. A lot of rebalancing strategies are calendar based. And it’s forced to be calendar based in the, in a situation like mutual funds that do their rebalancing at the last week of every quarter. But for many individual investors, they’re not constrained by those rules. And one of the shifts in a more volatile environment where you’ve got such a firehose of news and data coming at you and that can cause short term volatility is to consider portfolio-based rebalancing as opposed to calendar based rebalancing. Let your portfolio tell you when it is time to add low and trim high.

Barry Ritholtz: So in other words, it’s not like every September 1st, it’s, hey, if the markets are down 20, 25 percent – Good time to rebalance, you’re adding low and you’re trimming high.

Liz Ann Sonders: And that’s within asset classes too, whether it’s, uh, something that happens at the sector level or, you know, Magnificent Seven type action. And, and that’s just a better way to stay in gear as opposed to trying to absorb all this information and trying to trade around it to the benefit of your performance. That, that’s, that’s a fool’s errand.

Barry Ritholtz: What do we do in a year like 2022, which admittedly was a 40-year run since the last time both stocks and bonds were down double digits?

How do you rebalance or is that just one of those years where, hey, it’s literally a 40 year flood and you just got to ride it out?

Liz Ann Sonders: I mean, it’s obviously been a tough couple of years in terms of the relationship between stocks and bonds. And we do think that we are in the midst of a secular shift. For much of the Great Moderation era, which essentially represents the period from the mid to late 90s up until the early years of the the pandemic, you had a positive correlation between bond yields and stock prices because that was a disinflationary era for the most part. So as an example, when yields were going up in that era, it was usually not because inflation was picking up. It was because growth was improving.

Stronger growth without commensurate higher inflation, that’s nirvana for equities.

But if you go back to the 30 years prior to the great moderation, I’ve been calling it the temperamental era from the mid-sixties to the mid-nineties, that relationship. was almost the entire period, the complete opposite of that. You had that inverse relationship

Because bond yields, as an example, when they were moving up in that era, it was often because inflation was sort of rearing its ugly head again. Now that’s a very different backdrop, but it’s not without opportunity. In some cases it may be a benefit by taking more of an active approach both on the equity side of things and on the fixed income side of things.

The other thing to remember is that there’s the price component on the bond side of things, but there’s also the fact that you, you, you are going to get your yield and your principal if you hold to maturity.

So for many individual investors, much like we say, be really careful about trying to trade short term on the equity side of things, the same thing can apply on the the fixed income side of things.

But it’s, it’s a different backdrop than what a lot of people are used to.

Barry Ritholtz: So to sum up, there’s a lot of noise. There’s news, there’s Fed pronouncements, there’s earnings, there’s economic data. All of which creates volatility, and that volatility creates an opportunity to rebalance advantageously. When markets are down and you’re off of your original allocation, if your 70 30 has become a 60 40 because stocks have sold off, that’s the opportunity to trim a little bit on the bond side, add a little bit on the equity side, and now you’re back to your  allocation.

Same thing when markets run up a lot, and your 70/30 becomes an 80/20.  It doesn’t just have to be a calendar based allocation. You could be opportunistic based on what markets provide.

I’m Barry Ritholtz. You’re listening to Bloomberg’s At The Money.

 

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The post ATM: Using Volatility to Rebalance Portfolios appeared first on The Big Picture.

Home-Flipping Plummets As Profits Slump

Zero Hedge -

Home-Flipping Plummets As Profits Slump

By Michael Tucker of the Mortgage Bankers Association

Home flipping fell nearly 30% in 2023 compared to the year before, according to ATTOM.

The ATTOM year-end 2023 U.S. Home Flipping Report said 308,922 single-family homes and condos in the United States were flipped last year, down 29.3% from 436,807 in 2022 and the largest annual drop since 2008.

“In 2023, the landscape for home flipping across the U.S. became increasingly challenging,” ATTOM CEO Rob Barber said. “Whether the overall market has soared or seen just modest gains in recent years, investors have missed out on the action.”

Barber added that the sharp decline in the number of home flips likely reflected a combination of a tight supply of homes for sale as well as dwindling returns. “Either way, it will take some significant reworking of the financials for home flipping fortunes to turn back around,” he said.

The report also revealed that as the number of homes flipped by investors declined, so did flips as a portion of all home sales, from 8.6% in 2022 to 8.1 percent last year.

In another sign of down times for the home-flipping industry, profits and profit margins also sank on quick “buy-renovate-and-resell” projects. Gross profits on typical home flips in 2023 dropped to $66,000 nationwide (the difference between the median sales price and the median amount originally paid by investors). That was down from $70,100 in 2022 and translated into just a 27.5 percent return on investment compared to the original acquisition price.

The latest nationwide ROI (before accounting for mortgage interest, property taxes, renovation expenses and other holding costs) was down from 28.1 percent in 2022 and 35.7 percent in 2021, ATTOM said; the worst level since 2007.

Investors saw their profit margins decrease for the sixth time in the past seven years as the median price of the homes they flipped dipped slightly faster than the median price they had paid to purchase properties – 4.4 percent versus 4 percent.

Nationally, the percentage of flipped homes originally purchased by investors with financing increased in 2023 to 36.5%, up from 35.7% in 2022 and from 36.2% in 2021, ATTOM said. Meanwhile, 63.5 percent of homes flipped in 2023 were originally bought with cash only, down from 64.3 percent in 2022 and from 63.8 percent two years earlier.

Tyler Durden Tue, 03/26/2024 - 20:20

Florida Bans Social Media For Minors Under 14

Zero Hedge -

Florida Bans Social Media For Minors Under 14

Florida has just passed a new law prohibiting children under 14-years-old from having social media accounts regardless of parental consent.

Governor DeSantis was at the Cornerstone Classical Academy in Jacksonville, FL Monday, March 25, 2024, along with local and state leaders to sign into law Florida House Bill 3. Bob Self/Florida Times-Union

Under the law which takes effect on Jan. 1, 2025, social media companies must close accounts they believe to be used by minors under 14 - and must cancel accounts at the request of parents or minors. All information from the accounts must then be deleted, the Wall Street Journal reports.

Minors who are 14 or 15 will be able to obtain a social media account with parental consent. If a parent does not consent, accounts already belonging to teens within that age range must be deleted.

"Being buried in those devices all day is not the best way to grow up—it’s not the best way to get a good education," Governor Ron DeSantis (R) said on Monday during an event to celebrate the signing of the bill.

The new law doesn't name which platforms it applies to, however social media sites which rely on features such as notification alerts and autoplay videos are subject to it.

Supporters of the law have pointed to recent studies linking social-media use among young adults to a higher risk of depression and mental-health challenges. It can also make them vulnerable to online bullying and predators. -WSJ

"A child, in their brain development, doesn’t have the ability to know that they’re being sucked into these addictive technologies, and to see the harm and step away from it," said Florida House Speaker Paul Renner (R) at the same event. "And because of that, we have to step in for them."

In response to the law, TikTok says it has policies to protect teens, and will continue to work to keep the platform safe. Snapchat and X didn't respond to a WSJ request for comment.

Other states have seen similar legislation proposed, however the bills all stop short of Florida's total ban. In Arkansas, a federal judge blocked an age verification law for social media users and parental consent for minors' accounts.

In response to the Arkansas law, social media trade association NetChoice, of which Facebook parent Meta, TikTok and Snap, sued the state to halt the law. It has brought similar legal challenges in California and Ohio.

According to NetChoice VP and general counsel Carl Szabo, the Florida law "forces Floridians to hand over sensitive personal information to websites or lose their access to critical information channels," adding "his infringes on Floridians’ First Amendment rights to share and access speech online."

"There are better ways to keep Floridians, their families and their data safe and secure online without violating their freedoms," he added.

Florida expects to be sued over the new law, however Speaker Renner says he's confident it will withstand legal scrutiny.

"We’re gonna beat them, and we’re never, ever gonna stop," he said.

Tyler Durden Tue, 03/26/2024 - 20:00

Gen Z Males Are Rejecting Feminist-Friendly Ideologies

Zero Hedge -

Gen Z Males Are Rejecting Feminist-Friendly Ideologies

Authored by John Mac Ghlionn via The Epoch Times (emphasis ours),

In “All the Rebel Women: The Rise of the Fourth Wave of Feminism,“ the author, Kira Cochrane, suggested that this particular wave of feminism ”isn’t about making everyone around the table feel comfortable.”

Feminist activists take part in a choreographed performance on Dec. 7, 2019. (Yuri Cortez/AFP via Getty Images)

It’s about being disruptive, challenging, and changing the terms of the debate,” Ms. Cochrane said.

What debate is she referencing? One that largely revolves around men. More specifically, how toxic they have become. Not surprisingly, many men (and women) haven’t taken too kindly to this particular narrative. Young men are especially repulsed, and so they should be.

Last year, a report titled “The State of American Men 2023: From Confusion and Crisis to Hope” found that more than half of young males believe that men have it harder today than women. The report further unveiled significant levels of contempt for modern-day feminism, especially among male members of Generation Z. Yes, some in the “wokest” generation in the history of mankind are actively rejecting a core ingredient of wokeness. And who can blame them? Feminism, in its most current form, specializes in the demonization of masculinity. It regularly equates men with trash.

Some feminists would have us believe that men, especially straight, white men, are a danger to society, one that must be addressed and, in some cases, attacked.

Common sense (remember when it was a little more common?) tells us that if you keep bashing, berating, and belittling an entire group of individuals—or, in this case, half the country’s population—a response is inevitable.

A recent survey out of King’s College London clearly demonstrates this fact. On both sides of the Atlantic, it seems, millions of Gen Z men have had enough of feminist-friendly narratives.

Interestingly, however, the survey revealed that older males, when compared to younger generations, have a greater inclination toward progressive and feminist perspectives. In short, Gen Z males are more inclined than older baby boomers to believe that feminism has had a negative impact on broader society. In the UK, for example, one out of every four males aged 16 to 29 believes that being a man is more challenging than being a woman.

This data sharply contrast with the prevailing perception of men today in comparison to their “pale, stale, and male” predecessors. The research indicates that the general public tends to assume that it would be the oldest group of men who believe that women have already achieved sufficient equality. However, this assumption is clearly incorrect. Approximately 20 percent of Gen Z males believe that being a man will be significantly more difficult than being a woman in the next two decades, echoing the sentiments of young men in the United States. In contrast, this sentiment drops to only 9 percent for males older than the age of 60.

As the survey points out, when considering the age group of 16 to 29, 46 percent of women in this category believe that feminism has had a more beneficial impact on society than harm. This percentage is 10 points higher than the proportion of young men who share the same perspective (36 percent). Moreover, the survey notes that “among this age group, one in six (16%) men say feminism has done more harm than good, compared with one in 11 (9%) women.”

What is going on here? Why are so many Gen Z males—again, on both sides of the pond—rejecting feminist-friendly ideologies?

According to the academics responsible for the surprising survey, it may have something to do with the rise of Andrew Tate, a controversial, American British influencer who, in recent times, has become popular. A fifth of the Gen Z men surveyed hold a favorable view of Mr. Tate, who has a huge following in both the UK and the United States.

On a recent episode of “Real Time With Bill Maher,” social psychologist Jean Twenge discussed Mr. Tate, suggesting that his influence has had—and continues to have—an impact on young men. In particular, Ms. Twenge suggested that Mr. Tate’s influence has contributed to Gen Z males’ rejection of left-wing politics.

However, CNN’s Van Jones was quick to push back, arguing that this particular form of rejection has less to do with the pull of Mr. Tate and considerably more to do with the push of the left; to be more specific, the left’s effort, be it conscious or otherwise, to push young men away. Mr. Maher agreed with Mr. Jones, saying that just being a man today is considered “a little suspect.”

It’s important to note that being a man, in both the UK and the United States, was considered “a little suspect” long before Mr. Tate shot to fame. Sure, he was the most Googled man in the world in 2022, but prior to this, most people were not familiar with his philosophies and overall mindset. Even The Guardian, no fan of Mr. Tate, conceded that he should be viewed as a “symptom” of a much broader problem.

Commenting on the abovementioned survey, professor Rosie Campbell, director of the Global Institute for Women’s Leadership at King’s College London, said:

“This data shows it’s not just young men’s attitudes that stand out. For example, young women are much more likely than any other group to think ‘toxic masculinity’ is a helpful term, and are most pessimistic about the prospect of future progress on gender equality.

Let that percolate for a minute: Young women are “most pessimistic” about the future of gender equality and consider “toxic masculinity”—a truly heinous term—to be helpful.

From Birmingham, Alabama, to Birmingham, England, name one thing men are allowed to do that women are not. If you find yourself scratching your head, struggling to think of an answer, that’s because there’s nothing to name. Gender equality already exists, but young women, many of whom are blinded by illogical ideologies, can’t separate the facts from fictitious narratives.

Moreover, the term “toxic masculinity,” which was around a long time before Mr. Tate took the world by storm, is in no way constructive. On the contrary, it only serves to demonize an inescapable part of being a man. There was a time, not that long ago, when being a man and exhibiting masculine traits was something worth celebrating. However, in both the UK and the United States, those days appear to be long gone. To compound matters, the ideological divide between Gen Z men and women is fast becoming a gaping chasm.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Tue, 03/26/2024 - 19:40

Israel Unleashes Major Airstrikes On Syria & Deep Inside Lebanon

Zero Hedge -

Israel Unleashes Major Airstrikes On Syria & Deep Inside Lebanon

The Israel Defense Forces (IDF) confirmed on Tuesday another rare strike conducted deep into Lebanese territory. The strikes targeted "a military compound used by Hezbollah’s aerial unit" in the Baalbek District which is in the northeast of the country.

This marks the deepest Israeli strike inside Lebanon since the war began in the wake of the Oct.7 Hamas terror attack, at more than 110km from Israel's border.

Illustrative IAF file image: Flash90

The extent of casualties or damage remains unclear, but it follows a similar February strike on the Bekaa Valley some 100km from the Israeli border, which killed at least two people. There are growing fears that if such strikes become more regular, it will signify a bigger regional war could be opening up.

Hezbollah has lobbed several missiles against northern Israeli communities as well as the IDF base atop Mount Meron over the past days. The Mount Meron surveillance base is about 8km from the Lebanese border and has come under repeat attack over several months.

In the overnight and early morning hours there were also large-scale strikes against areas of eastern Syria. While Israel frequently attacks Syria, some Syrian government-affiliated sources laid blame on the United States. According to regional outlet The Cradle

Airstrikes targeted a number of areas in Syria’s eastern city of Deir Ezzor and its countryside on 26 March, resulting in numerous deaths and injuries. "At 1:49 AM, American aircraft carried out several simultaneous air strikes targeting a number of areas in the governorate and its countryside," Syria’s government-affiliated National Defense Forces (NDF) said, according to Sputnik.

The strikes targeted the Salhiya area in Al-Bukamal near the Iraqi border and residential areas in the Al-Mayadin and Al-Qusour areas in Deir Ezzor. 

But Israeli media has identified the IDF air force as behind the eastern Syria attack, reportedly targeting 'pro-Iran' assets. According to details in The Times of Israel:

The Israeli Air Force carried out airstrikes in the predawn hours of Tuesday morning in eastern Syria, targeting Iranian assets and operatives involved in a recent plot to smuggle advanced arms to West Bank terrorists, The Times of Israel has learned.

More than 15 people were reportedly killed in the strikes in the Deir Ezzor and al-Bukamal areas, close to Syria’s border with Iraq.

The strikes targeted assets belonging to Iran’s Unit 4000, the Special Operations Division of the Islamic Revolutionary Guards Corps’ Intelligence Organization, and the special operations unit of the IRGC’s Quds Force in Syria, known as Unit 18840, according to Israeli defense sources.

Various international reports have cited different casualty figures, but what is clear is that there were a series of large airstrikes. Iranian media said a Revolutionary Guard member was killed in Syria overnight.

Below: Israeli strikes in northeast Lebanon...

According to The Associated Press, civilians were among the dead, including women, children, and a World Health Organization (WHO) official

Dama Post, a pro-government media outlet in Syria, said the strikes targeted the provincial capital of Deir el-Zour that carries the same name, and the towns of Mayadeen and Boukamal. It said 20 people, including women and children, were among the dead.

The World Health Organization said one of its team members, engineer Emad Shehab, was killed in one of the strikes that hit his building. It said Shehab, 42, served as a WHO focal point for water, sanitation, and hygiene in the province since 2022.

Iran-linked insurgent attacks against US bases in Iraq and Syria have mostly quieted down of late, compared to their frequency and weekly occurrence last year in the wake of Oct.7.

In the meantime, any potential scenario where Israel were to move ground troops into southern Lebanon would likely spark a bigger war with Hezbollah, which could engulf all of Lebanon.

Tyler Durden Tue, 03/26/2024 - 19:20

'Serious Concerns' Raised About NY Judge's Trump Judgment

Zero Hedge -

'Serious Concerns' Raised About NY Judge's Trump Judgment

Authored by Jack Phillips via The Epoch Times (emphasis ours),

After a New York court reduced former President Donald Trump’s bond to appeal his civil fraud case, several legal analysts weighed in on the decision.

On Monday, a state appeals court agreed to hold off collection of the former president’s more than $454 million civil fraud judgment if he puts up $175 million within 10 days. If he does, it will stop the clock on collection and prevent the state from seizing the presumptive Republican presidential nominee’s assets while he appeals.

Greg Germain, a law professor at Syracuse University in New York, said that President Trump may have a strong case to challenge Judge Arthur Engoron’s ruling in February that he must pay $455 million in his civil fraud case.

I think the $175 million reduction ... shows that the appellate division has serious concerns about the validity of Judge Engoron’s decision,” Mr. Germain told Newsweek.

While he believes the judgment was “seriously flawed,” the professor said that President Trump will have a difficult time overturning the judge’s “findings that his financial statement was grossly overstated.”

The standard for the appeals court to review factual findings is ‘clearly erroneous,’ which means that there was no evidence in the record to support the judge’s findings. Engoron was very careful to cite to the record for his factual findings, which were very solid,” Mr. Germain said.

But the judge, he added, “made no attempt to determine what portion of the profit was solely due to the financial statement as opposed to other factors” before handing down his ruling.

The former president “has some strong legal arguments to make on appeal,” Mr. Germain added. “Unfortunately for him, I think he’s so focused on denying that he did anything wrong that the strong legal arguments may be lost in his unwinnable arguments on the facts.”

The former president has said he did nothing wrong, adding that he actually undervalued his net worth when communicating with banks and insurers at the center of the civil fraud lawsuit. He said that the case is politically motivated, and that both the New York attorney general and Judge Engoron are biased against him.

Meanwhile, a constitutional scholar said that the bond for an appeal should be been reduced to basically nothing.

“The Court of Appeals may have felt that they can’t prejudge the evidence, and so to reduce the bond further would have been heavy-handed,” George Washington University professor Jonathan Turley told Fox News on Monday. “I actually think they could have reduced this bond to virtually nothing, because the amount set by [Judge Arthur] Engoron was absurd.

In a post on social media, Mr. Turley wrote that the New York appellate court may “restore a degree of objectivity and restraint missing on the trial level,” referring to the Engoron decision. “Both Engoron and [New York Attorney General Letitia] James would have gained greater credibility if they recognized the obvious unreasonableness of the original demand,” he continued.

A former federal prosecutor now in private practice said that “judgments of this size are rare,” referring to the penalties imposed against President Trump. “What makes this one unusual is someone who is subject to an enormous amount of money and has to come up with it himself,” Joshua Naftalis said.

President Trump hailed the ruling and said he would post a bond, securities, or cash to cover the $175 million sum in the civil case. Ms. James’s office, meanwhile, noted that the judgment still stands, even if collection is paused.

Previously, the former president’s lawyers pleaded for a state appeals court to halt collection, claiming it was “a practical impossibility” to get an underwriter to sign off on a bond for such a large sum, which grows daily because of interest. The Trump attorneys had earlier proposed a $100 million bond, but an appellate judge had said no late last month.

Monday’s ruling came from a five-judge panel in the state’s intermediate appeals court, called the Appellate Division, where President Trump is fighting to overturn Judge Engoron’s Feb. 16 decision. Trump attorneys Alina Habba and Christopher Kise characterized Monday’s ruling as a key first step.

“We won,” Ms. Habba told Fox News on Monday. “You know, no ... we didn’t win. You know when we’ll win? When we get this all reversed, which is what’s gonna happen.”

The Trump attorney added that she was “so proud” of the appeals court’s decision because it gave her “a little bit of faith” in the U.S. justice system.

The Associated Press contributed to this report.

Tyler Durden Tue, 03/26/2024 - 19:00

Taiwan Conducts Drills Deploying US Patriot Systems In Face Of Chinese Intrusions

Zero Hedge -

Taiwan Conducts Drills Deploying US Patriot Systems In Face Of Chinese Intrusions

The Taiwanese armed forces on Tuesday conducted highly provocative anti-aircraft defense exercises in the face of Chinese military "intrusions" which have been occurring on a weekly basis. 

Importantly, the drills centered on deploying and operating US-made Patriot missiles and anti-aircraft artillery systems provided by Washington

Image via Asia Times

A military statement said the drills are a response to "incursions by Chinese Communist Party aircraft and ships into the sea and airspace around Taiwan" and added that "the air force will continue to increase the intensity of drills."

"The aim was to verify the command and control of joint air defense operations among the three branches of the military," the armed forces described.

Taiwanese President Tsai Ing-wen has meanwhile ramped up defense spending, and attended a ceremony Tuesday for the handover of two domestically made warships at Suao port.

"Over the past few years, we have steadily implemented defense autonomy with Taiwan-made warships being named, launched, and commissioned one after another at an increasingly rapid pace," Tsai announced at the event.

"These achievements repeatedly demonstrate Taiwan's capacity for domestic shipbuilding and proves our determination to safeguard our democracy and freedom," she added.

In the United States, lawmakers are taking steps to prepare for a potential future invasion by China's military of the self-ruled island backed by the US.

"Fears of possible conflict across the Taiwan Strait are spurring state-level legislation aimed to identify and mitigate the potential local impact of hostilities," Politico reported last weekend.

"Since the beginning of the year, lawmakers in Arizona, Nebraska and Illinois have introduced versions of the Pacific Conflict Stress Test Act — bills that impose checklists of potential local vulnerabilities in supply chains and infrastructure security if Beijing eventually uses force to 'reunify' with Taiwan," the report said.

The Chinese government, for its part, has long maintained that it desires the island to be reunited through peaceful, political means; however, at the same time frequent PLA military drills have projected the threat of force in regional waters.

Tyler Durden Tue, 03/26/2024 - 18:40

The State Of The Media's Double Standard

Zero Hedge -

The State Of The Media's Double Standard

Authored by Frank Miele via RealClear Politics,

I’m sure everyone has heard enough about President Biden’s recent State of the Union address, certainly enough to know that the mainstream media thought it was admirable of Biden to scream at the top of his lungs that Republicans are detestable worms.

You also probably heard enough from the media to be certain that Sen. Katie Britt, who delivered the response to Biden, is a lying, detestable Republican worm. But as humorist Will Rogers noted, if all you know is what you read in the newspapers (or in updated form, what you see on cable news), then you are woefully misinformed.

Take the media’s coverage of Biden’s extemporaneous remarks about the murder of Laken Riley that were prompted by a challenge from Rep. Marjorie Taylor Greene.

First of all, Biden got Riley’s name wrong, twice calling her “Lincoln” Riley. That was embarrassing and drew attention to the cognitive issues Biden has exhibited throughout his first term. But somehow, the mainstream media glossed over that and quickly focused on an entirely manufactured “news” story that seemed intended to reassure Democrats that Biden wasn’t channeling Trump’s border rhetoric.

As everyone knows by now, Biden referred to the man arrested for Riley’s murder as an “illegal,” which angered members of the radical left “Squad,” who insisted that Jose Antonio Ibarra should properly be referred to as “undocumented.” This was just a silly moment of political correctness, as both words mean the same thing: Ibarra had no immigration documents because he was in the country illegally.

Yet the mainstream media went to great trouble to explain that Biden “regretted” using the word illegal. Chances are most of the Democrat-leaning reporters who cover the White House sympathized with the Squad and were happy to see Biden essentially apologizing for the word he used to describe the alleged murderer.

Much more importantly, the media’s attention on the linguistic sideshow meant that virtually no news outlet covered Biden’s truly offensive reference to Laken Riley’s murder in the State of the Union. Here’s exactly what he said.

BIDEN: Lincoln – Lincoln  Riley, an innocent young woman who was killed.

GREENE: By an illegal!

BIDEN: By an illegal. That’s right. But how many of thousands of people are being killed by legals?

Do you see what he did there in that last line? He minimizes and devalues the murder of Riley by suggesting that her life is not important when compared to the “many… thousands” of murders committed by legal immigrants or other Americans. This is the latest, albeit incredibly awkward, manifestation of a Democratic Party talking point: The immigrants commit fewer crimes than native-born Americans. The social science on this is sketchy, and in any event, it begs the question of how many more violent crime victims exist because of the Democrats’ lenient criminal justice “reforms.”

Leaving that aside, Biden’s rejoinder was offensive for another reason. We simply don’t dismiss the brutal murder of one person by proclaiming that it is statistically irrelevant. Each precious human life has untold value to God, as it should to presidents, and Laken Riley, a vibrant nursing student beloved by her family and friends, would still be alive if Biden and his political party had not made it easy for Ibarra to be in the country illegally.

It was another story about the human toll of illegal immigration that caused outrage in the media about Britt’s response to the State of the Union.

If you were to listen to the talking heads, Britt’s speech was the worst act of political suicide since Alexander Hamilton agreed to a duel with Aaron Burr. It was certainly one in a long line of responses that brought humiliation on a well-intended speaker. Britt’s performance was cringeworthy as she tried to emote rather than orate her response, and she was effectively reduced to a caricature in a brilliant performance by Scarlett Johansson on “Saturday Night Live.”

If the media hacks had simply gone after Britt because of her awkward delivery of a speech that reads fine on paper, they would have met no opposition from me. But with their usual overreach and partisan slant, the finest minds in journalism instead attacked Britt for what they called her “misleading” anecdote of sexual abuse suffered by women who depend on the Mexican cartels to get them across the border.

The story itself is quite short:

“When I first took office… I traveled to the Del Rio sector of Texas, where I spoke to a woman who shared her story with me. She had been sex trafficked by the cartels starting at age 12. She told me not just that she was raped every day, but how many times a day she was raped. The cartels put her on a mattress in a shoebox of a room, and they sent men through that door, over and over again, for hours and hours on end. We wouldn’t be OK with this happening in a third-world country. This is the United States of America, and it’s past time we start acting like it.”

When the media discovered the identity of the victim who spoke to Britt, they claimed that Britt had tried to make it seem like President Biden’s policies were responsible for the woman’s abuse. But if any reporter could pass a simple reading comprehension test, he or she would see that Britt talked to a full-grown woman who revealed what had happened to her when she was 12. Since Britt talked to her sometime after her own election in 2023, and assuming that the woman was of the bare minimum adult age of 18, that would mean her abuse would have occurred no later than 2017, four years before Joe Biden took office.

In other words, there was no attempt by Britt to blame Biden for this woman’s plight. Instead, she was hoping to elicit heart-felt sympathy from her audience for the plight of young women who fall victim to sex trafficking as they make their way to the U.S. border.

Who could disagree with her? Only Democrats and media personalities who hate Republicans and Donald Trump. The fact that Trump was supposedly eyeing Britt as a potential vice presidential pick probably made her an irresistible target.

Now, to be clear, there was one implicit error in the story Britt told. The abuse that Britt recounted actually took place in Mexico, and Britt’s reference to a “third-world country” suggests she didn’t know that. If so, that’s on her. It should have been obvious that most, but not all, of the sex trafficking of women making their way north from Colombia takes place before they arrive in the United States. But that is no reason to try to deflect attention away from the truth of what Britt was saying about the dangers facing women who are enticed north by Biden’s open-border policy.

Instead of condemning the cartels, however, the legacy media went after Britt. When she responded by explaining that her anecdote was accurate, and that the timeline proved she never intended to claim Biden was responsible for the woman’s rapes, the media was ready with its all-purpose continuation of the smear. As NBC reported it, “Sen. Katie Britt attempts to clean up her misleading State of the Union response.” But it wasn’t misleading at all, and she wasn’t attempting to “clean up” anything; she was attempting to educate the Fake News Media. An impossible task.

So, if you want to know what the State of the Union is, you don’t have to look any further than the double standard the media used in reporting the speeches by Biden and Britt. As we enter the 2024 election season, we citizens must pledge to look beyond the biased headlines and treat the national media with the distrust they have richly earned. Remember, if all you know is what you read in the newspapers or saw on cable news, you are being played for a fool. Get the facts for yourself, and then make up your own mind.

Tyler Durden Tue, 03/26/2024 - 18:20

Pump-Prices To Hit $4 A Gallon As "Real Sleeper Risk" For Oil Market Looms

Zero Hedge -

Pump-Prices To Hit $4 A Gallon As "Real Sleeper Risk" For Oil Market Looms

US oil prices have recently jumped above the $80 a barrel mark - the highest level since late 2023, sending worrying signals to the Federal Reserve and overly anxious White House. 

The surge in WTI has pushed wholesales gasoline prices up...

And worse, pump prices are set to accelerate even higher in the coming months to an average of $4 a gallon, which would be the highest level since the summer of 2022, according to Bloomberg, citing new data from AAA Automobile Club. 

A combination of issues is pressuring futures and pump prices higher, including the transition to summer-grade gasoline and strained domestic refineries, as well as concerns about shrinking global crude product supplies while Ukraine attacks Russian refineries. 

As we explained in the note titled "Dominoes Falling As Biden Admin Deals With Twin Energy Crisis In Russia, Middle East," traders have been spooked by refinery outages across Russia due to Ukranian drone attacks. In the Middle East, traders are increasingly worried that Iran-backed Houthis could be several steps away from targeting Saudi refineries.

And now it should make a whole lot of sense why the Biden administration pleaded with Ukrainians to stop drone attacks, along with the White House pushing Vice President Kamala Harris out on ABC News on Sunday to warn Israel publicly not to launch a counteroffensive against Hamas in Rafah - because increased chaos on that side of the world would stoke higher crude prices - and bad timing for the administration, just ahead of the US presidential election in November. 

Devin Gladden, a spokesperson for AAA, which tracks gasoline prices, warned higher pump prices will force the working poor to make "lifestyle changes and be a focus in November's presidential election." Higher pump prices will also make Americans realize how much Bidenomics has failed. 

Higher pump prices will also complicate the Fed's fight against the inflation monster and likely delay rate cuts this summer, which would undoubtedly upset markets. 

This comes as the administration is trying to refill the nation's Strategic Petroleum Reserves after releasing a record amount to control last year's summertime gasoline price surge. 

Since the administration is busy refilling reserves, it has exhausted some of its war chest to control price spikes this spring and summer. 

"If pump prices keep rising, SPR refills will stop automatically. While one cannot rule out another SPR release, the real sleeper risk is the Biden administration would revive threats to restrain US gasoline and diesel exports, especially if a storm disrupted refining capacity. The market, policy, and geopolitical implications of restricting product exports would dwarf those of the LNG pause. Supersize it and add fries," Scott Modell, CEO at Rapidan Energy Advisors, wrote in a statement. 

Tyler Durden Tue, 03/26/2024 - 18:00

"The Squad" Earmarked $224 Million Since 2023 – Led By AOC, It's Pork Barrel Spending By The Democratic Socialists

Zero Hedge -

"The Squad" Earmarked $224 Million Since 2023 – Led By AOC, It's Pork Barrel Spending By The Democratic Socialists

Authored by Adam Andrzejewski via OpenTheBooks substack,

“The Squad’ is a group of ultra-left wing Congressional socialists which has been the toast of so-called “progressives” for the last several years.

Its members might promise a worker’s paradise, in which government “withers away,” in the words of Vladimir Lenin, but for now they are only too happy to direct government largesse to the folks back home.

In fact, The Squad members have earmarked $224 million and many absurd pet projects since 2023. 

Download the full database of The Squad’s 2023 and 2024 earmarks here.

Our figures include the earmarks in the most recent $1.2 trillion spending bill from last week.

It’s a stunning display of logrolling – deep inside the status quo – they say they hate as a tool of capitalist oppression.

The Squad maxed out their pork in 2023 and 2024. Their 215 earmarked projects cost the rest of us (overwhelmingly non-socialist) U.S. taxpayers $224.1 million. Every dime was borrowed against our national debt.

New York’s Alexandria Ocasio-Cortez (D-NY), AKA, “AOC,” who last week did not know that “RICO” names a crime, is The Squad’s most prominent voice. She is celebrated as a “socialist superstar” by the Democratic Socialists of America.

Representative Ocasio-Cortez earmarked $1.2 million for a new building for the International Muslim Women’s Empowerment Project. Its founder teaches a “hijab grab” self-defense move involving a “kick to the groin.”

And then there’s the $500,000 for the Billion Oyster project in her district. Rich people eat oysters. However, the law prohibits anyone from either fishing or eating oysters in the Hudson River. So, this is only an engineering project for eco-marginalized people in Queens.

Other Squad members are Jamaal Bowman (D-NY), Cori Bush (D-MO), Greg Casar (D-TX), Summer Lee (D-PA), Ilhan Omar (D-MN), Ayanna Pressley (D-MA), and Rashida Tlaib (D-MI).

The Squad Practices Race-based Earmarking

Squad members shoveled some pretty stinky stuff into spending bills. It appears race-based legislating is OK if a progressive does it:

  • $850,000 to create jobs for the Black community near George Floyd Square, whose death in 2020 “added to the stress faced by the community and increased the need for support and stability in housing and commerce.” Patron: Congresswoman Ilhan Omar.

  • $1.7 million to help the Environmental Leaders of Color build a “green tech park.” The group’s goal is to “assist marginalized communities in preparing for climate change’s adverse effects … so that they can thrive like healthy plants in their natural ecosystem.” Patron: Congressman Jamaal Bowman.

  • $1 million for the Immigrant Opportunity Center expansion. It’s run by CAPI USA, a nonprofit that “guides refugees and immigrants in their journey toward self-determination and social equality.” Patron: Congresswoman Ilhan Omar.

  • $1.35 million to New Immigrant Community Empowerment, a nonprofit that advocates for citizenship for all illegal immigrants. Patron: Congresswoman Alexandra Ocasio-Cortez ($500,000). The group received another $850,000 this year from Rep. Grace Meng (D-NY).

  • $1.5 million to build special grocery stores and education facilities for Black farmers in the community of St. Louis. Patron: Congresswoman Cori Bush.

  • $1 million for the San Antonio College Empowerment Center, which runs an Undocumented Student Support Program to help immigrants enroll in the school. Patron: Congressman Greg Casar.

The Squad’s Green Earmarks

Congresswoman Ocasio-Cortez introduced her Green New Deal, in 2019. It’s the focus of 21 earmarks to build green infrastructure, move away from fossil fuels, and involve minority communities in climate policy. She and her colleagues find ways to get us to pay for their policy preference, such as:

  • $1 million to build “a network of intergenerational, trauma-informed waterfront green spaces.” The project already received $792,000 in 2022 earmark funding. Patron: Congresswoman Ayanna Presley

  • $466,000 to improve the energy efficiency of a St. Louis homeless shelter. Patron: Congresswoman Cori Bush.

  • $4 million to build an “industrial green beltway” in Dearborn, Michigan. Patron: Congresswoman Rashida Tlaib.

  • $500,000 from Ocasio-Cortez will build an oyster reef to “address longstanding environmental justice inequities facing underrepresented communities in Queens.” Oyster habitats in New York have been damaged by pollution and harvesting them for food is illegal.

  • $850,000 to repair a bridge that “connects minority environmental justice communities” in Pennsylvania. Patron: Congresswoman Summer Lee.

  • $2 million for Everett, Mass. to build a park for “low-income BIPOC residents” to “stay cool during increasingly hot summers.” (“BIPOC” is an acronym for “Black, indigenous and other people of color.”) Patron: Congresswoman Ayanna Pressley.

Stopping Insane Earmarks. Or Not.

In 2024, when it got too insane, Republican members of the House finally got serious and cut a few of the whacky earmarks.

For example, Rep. Pressley’s earmark to build affordable housing for LGBTQ seniors did not make it into the final House bill.

However, in the second minibus bill, Pressley was able to add back $850,000 for LGBTQ “The Pryde” senior housing by moving the earmark to the U.S. Senate. Pressley called Republicans homophobic for attempting to eliminate her LGBTQ earmarks.

Background

From time immemorial, politicians of every stripe have used their positions to benefit those who sent them to D.C., while sticking taxpayers with the tab.

Congresspeople all play together in the sandbox, promising not to rat each other out for some strikingly goofy – or downright weird – local spending. Things got so out of hand 15 years ago, that a bi-partisan coalition led by former U.S. Senator Dr. Tom Coburn (R-OK) and President Barack Obama actually banned earmarking for ten years.

It didn’t last.

Regardless of what you may have heard about GOP hate for former U.S. House Speaker Nancy Pelosi (D-CA), three years ago, the House Republican caucus, in a secret vote, joined Speaker Pelosi and the Democrats to reinstate earmarks.

That moment of fiscal fealty was replaced by the naked need for pork, and in the instance, a new alliance with the Speaker.

And so, we have more tabs to face than a diet soda aisle at a big Costco.

In 2024, the so-called “minibus measures” contained 8,051 earmarks totaling $15.7 BILLION TAXPAYER DOLLARS. In 2023, the year-end omnibus was stuffed with 7,510 earmarks worth just over $16 BILLION TAXPAYER DOLLARS.

Congress must disclose earmarks online. However, it posts them in hard-to-review PDF files. (Our team at OpenTheBooks.com converts those files into Excel spreadsheets to more effectively parse what they are hiding.)

When Congress knows what it is doing is wrong, it always makes it a bit harder to find.

In all too many ways, earmarks – from both Democrats and Republicans -- are no exception.

Next week – “The Freedom Caucus Decides It Is Free to Earmark”

Tyler Durden Tue, 03/26/2024 - 17:40

State Farm Insurance Drops 72,000 California Properties

Zero Hedge -

State Farm Insurance Drops 72,000 California Properties

State Farm will not renew approximately 72,000 property and commercial apartment policies, of which approximately 30,000 will be for 'homeowner, rental, rental, residential community and business owner insurance,' and the remainder of which are for commercial apartment policies, the Sacramento Bee reports.

Last May the company announced that it would stop accepting applications for property and business properties due to higher construction costs, growing risks from wildfires and other catastrophic events, and challenges related to how it insures its own business.

Last week, the company cited those challenges in an announcement, along with "the limitations of working within decades-old insurance regulations."

California says it's fixing the issues, with Insurance Commissioner Ricardo Lara announcing upcoming regulatory changes that his office says "will improve conditions for the overall market."

According to spokesman Michael Stoller, State Farm's decision "raises serious questions about its financial situation — questions the company must answer to regulators."

The action was taken by State Farm General Insurance Company, which sells homeowners insurance in California. The company acknowledged the department’s proposed changes and vowed to continue to work with the agency to “establish an environment in which insurance rates are better aligned with risk.”

In December, the department approved a 20% average rate hike for the company’s homeowner insurance policies. -Sacramento Bee

The insurer says it will begin canceling policies in July for homeowners, and August for commercial properties, which will occur on a rolling basis over the next year. 

The move comes two years after AIG pulled out of the Golden State over wildfire risk.

Tyler Durden Tue, 03/26/2024 - 17:20

The Predictable 2024 Biden Non-Campaign

Zero Hedge -

The Predictable 2024 Biden Non-Campaign

Authored by Victor Davis Hanson,

Joe Biden reportedly is weirdly asking the Ukrainians not to strike Russian oil facilities, despite the military utility of such attacks.

Why?

Not because he fears a wider war since he sent no such request in the prior two years of fighting.

Apparently, it is the same reason why on the eve of the 2022 midterm elections, Biden began draining the Strategic Petroleum Reserve (down to 360,000 million barrels, from a high of 631,000 at his inauguration) to get cheaper gas prices right before the voting.

Biden further campaigned in 2020 blasting Saudi Arabia as a “pariah” nation. But by early 2022, he was courting the Saudis, the Venezuelans, the Iranians, and by default the Russians to pump more oil.

The message?

In non-election years, Biden & Co. blast fossil fuels as doomed and dirty. In election years they beg others to pump the icky goo to surfeit.

So at least until November 2024, expect surreal petroleum-fueled restraint as Iranian surrogates freely hit more U.S. targets.

Venezuela without worry will threaten its neighbors.

“Pariah” Saudis for a while longer stay our new old “strategic” partner.

The “murderer” Putin’s oil is off-limits.

Secondly, the “ultra-MAGA” and “semi-fascist” Trump becomes “broke Don” who is foreclosed upon and who planned an “insurrection” and “civil war” on January 6, after “praising” racists in Charlottesville, and damning dead GIs as “suckers”.

Thirdly, Biden will give lots of free stuff to win votes.

So despite a $35 trillion national debt, expect massive new student loan debt cancellations and amnesties before November.

After 10 million illegal entries, anticipate sudden tough but otherwise empty Biden gibberish, about “securing the border.”

There will be louder cries for Israel to stand down and essentially resuscitate Hamas.

So here again are the Biden’s talking points in 2024:

  • Gloat that Trump is broke and a crook and headed to jail—at least according to legal geniuses like Alvin Bragg, E. Jean Carroll, Letitia James, Jack Smith, and Fani Willis.

  • Blame Trump for all the things Biden did that wrecked the country in 2021-4.

  • Hand out amnesties, pardons, free stuff, and windfalls to the electorate in “you get it now, they pay later” fashion.

  • Assure wavering blacks, Latinos, and Jews that Trump is a racist and an anti-Semite.

  • Do not mention soaring food and gas prices, a destroyed border and a stampede of illegal aliens, high interest rates and mortgages, an epidemic of homelessness and violent crime, and the world turned upside down in Ukraine, the Middle East, the Red Sea, the Philippines, Haiti, and Taiwan.

  • Claim a “feisty” and “supercharged” Joe is “raring to go” and “can’t wait” to hit the campaign trail to “take on” Trump because he has never been more “in charge,” more “dynamic”, and more “cocky”.

Tyler Durden Tue, 03/26/2024 - 17:00

WTI Extends Losses After API Reports Large Crude Build

Zero Hedge -

WTI Extends Losses After API Reports Large Crude Build

Oil prices dipped lower today, consolidating just off five-month highs.

"WTI crude oil and Brent crude oil front month futures trade steady after both climbing 1.6% on Monday as Ukrainian drones hit another Russian oil refinery, adding to the list of casualties of Russian refining infrastructure, which according to (Goldman Sachs) has knocked out an estimated 900,000 barrels per day of refining capacity," Saxo Bank noted.

Expectations were for a third weekly crude draw in a row and an eighth weekly decline in gasoline stocks...

API

  • Crude +9.34mm (-1.2mm exp) - biggest build in six weeks

  • Cushing +2.39mm

  • Gasoline -4.437mm (-1.7mm exp) - 8th straight weekly draw

  • Distillates +531k (+100k exp)

Against expectations of a small draw, API reported a surprise significantly large crude build and stocks at the Cushing Hub rose notably. Gasoline stocks fell for the 8th week in a row..

Source: Bloomberg

WTI was hovering around $81.50 ahead of the API print and legged lower on the surprise crude build...

And finally, as gasoline stocks decline, wholesale gasoline prices imply pump prices are going much higher...

Source: Bloomberg

Not a good sign for Powell or Biden...

Tyler Durden Tue, 03/26/2024 - 16:40

Global CBDC Rollout Continues Apace

Zero Hedge -

Global CBDC Rollout Continues Apace

Authored by Kit Knightly via Off-Guardian.org,

Terror attacks in Moscow, ongoing genocide in Gaza, and cancer in the Royal family are dominating the headlines.

Meanwhile, on the financial back pages, all over the world the implementation of Central Bank Digital Currencies draws nearer.

China, whose digital Yuan was the major flagship CBDC, is in the middle of an immense trial covering over 25 million people. This week they released new guidelines for tourists using CBDCs for the first time.

A journalist for the crypto-focused DLNews wrote of her experience using it, and while functionality might seem limited right now we should note that she talks up the “de-dollarization” aspect of CBDCs, aligning digital currency with the “multilateral world” plan.

Hong Kong has its own CBDC program, the second trial stage of which launched last week. They are developing the ability to use “tokenised deposits” to add $160bn to their GDP.

In Europe, following late February’s Digital Euro Conference (DEC24), the European Central Bank has announced the development of the “digital euro rulebook”.

In Sweden, the Riksbank’s e-Krona program published its final report on its CBDC pilot a few days ago. Coin Telegraph reports they working on making its CBDC available offline.

The Central Bank of the UAE announced they are launching their own CBDC pilot a few days ago.

That’s just the technical developments, saying nothing of the ongoing propaganda campaign.

As I already said, in order to appeal to the anti-Imperialist left, we’re being told that CBDCs will help the world “de-dollarize”.

Another angle is that CBDCs will help developing nations prosper.

For example, BusinessMagnates.com reports that CBDCs will help “revive Latin American economies”.

All this is just from the past week. It goes on and on and on.

The only slight hold-out seems to be the US, where CBDCs remain somewhat contentious.

The e-dollar has stuttered along in progress compared to the rest of the world, with contradictory reports from officials emerging all the time.

This could be genuine opposition from US Imperialists due to the threat of de-dollarisation, it could be a natural response to a far more cash-based economy than most of the developed world, or it could be a deliberate propaganda campaign designed to promote CBDCs in anti-America quarters.

Of course, it’s an election year state-side, and Presidential candidates Donald Trump and Robert Kennedy Jr have both come out against CBDCs. While RFK jr is doubtless sincere, this would not be the first time the “deep state” has tried to discredit an opinion by having Trump endorse it.

But America or no America, the global CBDC roll-out is coming.

According to the Atlantic Council’s CBDC Tracker, 134 countries representing 98% of global GDP are currently working on their own digital currency.

While an Atlantic Council report from March 14th underlines the importance of “interoperability”:

Central banks and international financial institutions are realizing that uneven and dispersed technological advancements in digital currencies could actually create further fragmentation of the financial system, deepen digital divides, and create systemic risks. This would undercut the premise of digital currencies, which are supposed to create more efficiency in the existing system. Fortunately, there are some new models of interoperability across borders.

Interoperability isn’t just an important part of the CBDC plan, according to the Atlantic Council, it is the whole point.

Just yesterday, reported by Business Wire, SWIFT published their findings on “Seamless Introduction of CBDCs for Cross-Border Transactions”:

Interoperability is critical to Swift’s strategy for instant and frictionless transactions. The cooperative has focused its innovation agenda on interoperability between digital currencies and tokenised assets to overcome the potential risk of fragmentation, caused by the development of digital currencies on different technologies and with different standards and protocols. Swift’s solution has already been shown to enable cross-border transfers and connect CBDCs on different networks with each other, as well as with fiat currencies.

As we wrote in 2024: The Year Global Government Takes Shape, interoperability is the name of the game – there is no real practical difference between 195 interoperable digital currencies and one global currency.

Global currency is coming. It’s not on the front pages, but that’s hardly surprising.

Tyler Durden Tue, 03/26/2024 - 16:20

Stocks Drop As 'Soft' Data Slumps, Trump's 'Wealth' Pumps'n'Dumps

Zero Hedge -

Stocks Drop As 'Soft' Data Slumps, Trump's 'Wealth' Pumps'n'Dumps

'Soft' data slumped today: Consumer confidence crumbled and there was a regional Fed rout - Philly Fed Services was really ugly, Richmond Fed Manufacturing was ugly, and Texas Services was negative for the 22nd straight month...

...as 'hard' data improved with durable goods orders rebounding and home prices accelerated once again (but that is offset by a decline in core shipments, which will weigh on GDP)...

Source: Bloomberg

The STIRs market focused on the bad news and pushed rate-cut expectations modestly higher (dovish)...

Source: Bloomberg

The stock market initially loved it either way - bad was good and good was good - but the majors could not hold on to their overnight highs and late-day sell programs took all the majors red on the day...

That is the 3rd down day for the S&P 500 in a row.

There were two sell programs in the last 30 mins...

Source: Bloomberg

Another day, another opening short-squeeze faded...

Source: Bloomberg

Mag7 stocks were dumped late on spoiling the party...

Source: Bloomberg

The longer-end of the bond curve outperformed today (with the short-end modestly higher in yield) with 30Y -2bps on the day, helped by a strong 5Y (record size) auction. The stronger than expected durable goods orders print snapped yields to yesterday's highs but the soft-date weakness (and the auction) wore yields lower as the day went on...

Source: Bloomberg

After yesterday's big surge (on net zero ETF inflows), bitcoin held on to the $70,000 level today...

Source: Bloomberg

The dollar ended practically unchanged, rallying back from modest weakness overnight...

Source: Bloomberg

Spot gold prices surged up to $2200 intraday before giving a lot of the gains back to end marginally higher....

Source: Bloomberg

Oil prices dipped ahead of tonight's API inventory data...

Source: Bloomberg

Finally, Trump Media & Technology Group (DJT) rocketed higher today... only to be dumped late on, erasing half of the day's gains...

Source: Bloomberg

...with the company with barely any revenues now worth almost $10BN at its peak today, according to Bloomberg data...

Source: Bloomberg

...and Trump owns 69% of it (but is unable to sell... yet).

Tyler Durden Tue, 03/26/2024 - 16:00

Activist California Judge Tosses Musk's X Censorship Lawsuit Against Dark Money 'Anti-Hate' Group

Zero Hedge -

Activist California Judge Tosses Musk's X Censorship Lawsuit Against Dark Money 'Anti-Hate' Group

A California judge has tossed out a lawsuit from social media platform X against the Center or Countering Digital Hate, contending that X is not entitled to seek restitution against the organization because third-party advertisers left the platform following CCDH's campaign against it.

The lawsuit alleged that CCDH had unlawfully accessed and scraped data from X in order to conduct misleading studies that found a rise in hate speech following Elon Musk's acquisition of the social media platform in late 2022. The company says CCDH has "cherry-picked" posts ot drive advertisers away, resulting in tens of millions of dollars in losses.

"This case is about punishing the defendants for their speech," said judge Charles Breyer in California, citing a Nov. 2023 Reuters survey that found "social media researchers have canceled, suspended or changed more than 100 studies about X" as a result of Musk's policies as CEO.

Breyer also insinuated that X filed the suit "perhaps in order to dissuade others who might wish to engage in such criticism."

CCDH CEO Imran Ahmed celebrated his win, saying in a post-decision statement that "The courts today have affirmed our fundamental right to research, to speak, to advocate, and to hold accountable social media companies for decisions they make behind closed doors that affect our kids, our democracy, and our fundamental human rights and civil liberties."

CCDH is a dark money nonprofit with an outsized influence over the digital advertising space and political sphere, which popped up seemingly out of nowhere.

X responded to the ruling, posting: "Today a federal court in San Francisco issued a decision in the case X brought against the Center for Countering Digital Hate for illegally obtaining platform data to create misleading research. X disagrees with the court's decision and plans to appeal."

Meanwhile, Musk - who has called CCDH a "truly evil organization that just wants to destroy the first amendment under the guise of doing good!" did not immediately respond.

As Paul Thacker noted in October in Tablet, Ahmed - a former British Labour party operative, released a report in 2021 about online misinformation that quickly reached the pre-Musk Twitter regime, and was used to silence divergent opinions - including those of Robert F. Kennedy Jr., who the report named as one of "The Disinformation Dozen." The report was then cited by by the Biden administration.

CCDH also targeted ZeroHedge with a false report initially claiming that we were demonetized by Google for peddling hate speech, when in fact the CCDH took passages from our comments section and claimed they were the views of ZH. The report was laundered through NBC's "verify" fact check unit. NBC News was internationally condemned for going after a rival using CCDH research, and written by a 25-year-old (trust fund) UK journalist who has since bounced around various outlets without much in the way of actual journalism to show for it.

Tyler Durden Tue, 03/26/2024 - 15:45

Transcript: Liz Ann Sonders, Schwab

The Big Picture -

 

 

The transcript from this week’s, MiB: Liz Ann Sonders, Schwab Chief Investment Strategist, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, SpotifyYouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

~~~

This is Masters in Business with Barry Ritholtz on Bloomberg Radio

Barry Ritholtz: This week on the podcast, what can I say? I have the delightful Liz Ann Sonders on. She is the chief investment strategist and member of the firm’s Investment Committee at Schwab. The firm has eight and a half trillion dollars on its platform. We’ve been working with Schwab for a long time. Liz Ann was one of the earliest guests on the show, and we reminisce a little bit about that, that first appearance. I don’t know what else to say about her. She, she’s so insightful and so knowledgeable and has such a wonderful perch overseeing, you know, eight and a half trillion dollars of both individual mom and pop investors, advisors. They’re the biggest platform as a custodian for advisors. My disclosure, my firm also uses them, and she just sees the world from a place that not a lot of people in the industry get to do. Not only do they have a giant research team, but she gets to see fun flows.

She gets to see a huge amount of activity from the inside, and she, on a regular basis, speaks to investors, speaks to advisors, speaks to institutions. She is as much in the mix, in the thick of what’s going on in the world of investing as anybody. And that combination of her unique perch and perspective and her deep experience, a as either a fund manager or a strategist for the past 38 years unparalleled in the world of investing. I, I, I found this conversation to simply be delightful. And I think you will also, with no further ado, Charles Schwab’s, Liz Ann Sounders. I listened to the first conversation we had. It’s like the second year I was doing this. It was 2015. You were great. I was awful.

Liz Ann Sonders: That was not the first time we met. I remember that conversation nine years ago, but that was not the first time we met.

Barry Ritholtz: The first time we met was my first time doing television. I remember that in a tiny little room around a round table with Larry Cudlow. And I’ll, I’ll never forget, banging down two diet Cokes, walking out the door to go to the men’s room, and the producer grabs me, let’s go. We’re we’re live. And that was it. I sat there for an hour with my back teeth floating and that I, I remember a friend said, you’re fidgety. Don’t move around. Don’t just pick a spot to look. And the spot was your front teeth, which are perfect and white and still perfect and white. Well, and I know why. Well, now I know why.

Liz Ann Sonders: In between that time that we first sat down and did this. And then, this is a
couple years ago now. We live in Naples, Florida, and it was the night before Thanksgiving. We walked out of a restaurant and I just walked off the curb the wrong way. Oh, and the first thing to hit the pavement,

Barry Ritholtz: Your teeth!

Liz Ann Sonders: My teeth.

Barry Ritholtz: So those are not…

Liz Ann Sonders: Now parts of it. It shipped the part of the right front tooth and the tooth
next to it. And fortunately my sister’s next door neighbor was a dentist. And he went in Thanksgiving morning and really, and fixed it. Yeah.

Barry Ritholtz: You know, I t-boned a car. I was the t-bonee — right in front of my dentist’s office. And when I called the next morning, say, Hey, I chipped my front tooth, I need it fixed. They, they said, oh, you too. There was a bad accident in front of here. Yeah, that was me. My, my wife was really upset. I totaled her car at like five miles an hour. An SUV plowed into us.

Liz Ann Sonders:  Totaled, totaled with five miles an hour.

Barry Ritholtz:  So I was making a left. The person behind me thought I was going straight
and tried to pass me on the left. Oh yeah. So literally I made a left, right into them. And it’s funny ’cause that was a pandemic purchase, a very inexpensive 2017 Panama four s, which everybody walked away. I mean, we were a little banged up, but, you know, a giant SUV just crunched us. And what’s terrible is when you see the car afterwards and you see the driver’s door, like, holy cow, how did I just Walk

Ann Sonders: How did I walk away from thsat

Barry Ritholtz: That was like, geez, whenever people say you don’t need to buy a new car, it’s like, I want the latest greatest With airbags

Liz Ann Sonders: with 177 airbags, seat seat

Barry Ritholtz: Seat belt Tensioners. By the way, the airbag come down. You can’t see. It was so
disorienting. ’cause I’m trying to turn the wheel and wheel wouldn’t

Liz Ann Sonders:  I can’t imagine driving in a car without a seatbelt on. You know, be, before we started this, Barry, we were talking about our age and baby boomers. When, when I was brought home from the hospital in 1964, it was in my mom’s lap.

Barry Ritholtz: I’ll tell you, I’ll take that a step further. My dad had this giant, I’m, I’m trying to, it was it an Impala? And we used to lie on the rear deck. Oh yeah. Under the back window. Oh yeah. Like if, if there’s an accident, you’re a projectile right out the windshield

Liz Ann Sonders:  We had a station wagon. We’d go from northern New Jersey to
Brooklyn to visit grandparents and sleeping bags would be laid out in the, the back.

Barry Ritholtz:  And now you can’t take a kid home from the hospital without the right. Not
just a car seat has to be the right kind

Liz Ann Sonders: I’m not saying what was going on back in the sixties was the right thing.

00:05:46 [Speaker Changed] It, it toughened you up. You go through a few windshields, you know, you
learn to dust yourself.
00:05:50 [Speaker Changed] Fortunately, haven’t had that. Right.
00:05:52 [Speaker Changed] Alright, let’s get serious. So everybody knows you as the Chief investment
strategist at Schwab, but let’s roll back to the, to the early part of your career. You get a BA in economics
and poli sci from the University of Delaware. What was the original career plan?
00:06:10 [Speaker Changed] I didn’t have one. None. Well, not in college, no. In fact, what started as
that double major ultimately morphed into the official degree being in international relations. But to be perfectly honest, i I I, I just decided to, to study a couple different areas that were very broad brush because I, I didn’t know what I wanted to do when I graduated

00:06:32 [Speaker Changed] International relations. So you go to the Kennedy School and then become a diplomat.

00:06:36 [Speaker Changed] What is, you know, I, I, I thought about going to graduate school right away for political science. I looked into American University and then I thought to myself, I don’t know what I wanna do yet. So all I knew throughout the latter part of my undergraduate years is that I wanted to live and work in New York City. That was the dream without a lot of specific, did you grow up born in Bay Ridge, Brooklyn, then early part of childhood in Morristown, New Jersey, then outside of Philadelphia and Westchester, Pennsylvania. Then of course went to Delaware and then New York City for 12 years. And then Connecticut raised our kids in Darien, Connecticut. And now I’m based in Naples, Florida.

00:07:17 [Speaker Changed] Right. Do you have the little golf cart and your puttering?

00:07:20 [Speaker Changed] No golf cart. Not quite there yet, but a Vespa.

00:07:22 [Speaker Changed] Okay. Yeah. Oh, that’s fun. So, so you come outta college, how did you end up at Avatar Associates working with Marty’s wife?

00:07:30 [Speaker Changed] So I, I interviewed a across the spectrum of industries, and they were all interviews for grunt positions, entry level positions. But I, I had interviews at a few Wall Street firms, both large and small. I think I interviewed at a marketing firm and ad agency because I, I didn’t know what I wanted to do, but I had some familiarity with Marty because in college, one of the, the courses that I took a requirement was, in addition to reading the Wall Street Journal, every day was understanding what had happened in the, the world of financial markets throughout the week. And I had a professor give me a little sort of hint. He said, Hey, just watch Wall Street week on PBS on Lewis Friday. Kaiser Lewis Ru Kaiser at eight 30 to nine o’clock. Then, you know, you go out and you start your, your weekend. And I did, and Marty was on that show really from its inception in the early 1970s.

00:08:20 [Speaker Changed] Was the original finance show. That was before there was three or four
different, that’s financial news networks. And

00:08:27 [Speaker Changed] It was mostly millions of, of viewers every week. It was that era’s version of must see TV on the subject of, of the market. So I had some familiarity, but in advance of the interview, I also did more research on Marty on his side of the organization, which was the mutual fund, hedge fund investment newsletter side. And then the avatar side that I ultimately joined, which was the institutional money management firm at Barry. As a reminder back in 1986, the process of doing research on a person or a firm, there was

00:08:59 [Speaker Changed] No, you didn’t just Google ’em?

00:09:01 [Speaker Changed] No, there was no Google, there were no computers. There was no internet. So I was in the library with the microfiche machine. I remember that machine and literally turning the crank and reading newspaper articles. So I had some background and had two interviews. And honestly, just the voice inside my head said, this feels right.

00:09:21 [Speaker Changed] You are there for 13 years, 1986 to nine, nine to nine nine. That was the
great bull market. Yep. Tell us a little bit what it was like during that period and then we’ll talk about
what it was like working with Marty’s y the late great Marty’s y.
00:09:37 [Speaker Changed] So again, I was on the avatar side of this y avatar broader organization,
which was institutional money management, managing money for a lot of large corporate plans and
foundations and endowments. And I was a portfolio manager, so I was doing bottom up research and
picking stocks. But it was with, with the context of the top down analysis that, that Marty brought to the
picture, I learned throughout that 13 years. And, and part of the reason why I took advantage of an
opportunity that presented itself to move over to us trust was I was much more interested in and
fascinated by the top down and not the bottom up. I, I didn’t love picking stocks. It, it just, it wasn’t
where my passion was. So my, my observations were more keen on what Marty and his models were
doing in the context of the big picture and monetary policy analysis and investor sentiment and
behavior. And that was where I really found my passion was in that top down analysis.
00:10:42 [Speaker Changed] So, so let’s talk a little bit about Marty’s swag. One of that era’s most
famous investors and traders, the technical crew know him for the zweig thrust indicator. He created
the put call ratio. Yeah. But he’s also the guy who coined the phrase, don’t fight the Fed, the Fed. Tell us a little bit what it was like to work with Marty’s wife.

00:11:07 [Speaker Changed] I adored Marty, you know, rest in peace. He was quirky. He could have a temper, but never about the big stuff. It was more about the little stuff. If he couldn’t find his pencil and, you know, he would toss a phone, but he was really sort of warm and fuzzy, but had that, he was always sort of anxious and nervous. And a lot of people who just observed him from afar took it as well. He is just, he’s just bearish all the time. It wasn’t the case. I mean, he was essentially market timer, for a lack of a a better word. He wasn’t tactical asset allocator.

00:11:43 [Speaker Changed] And one of the more rare successful market times

00:11:47 [Speaker Changed] Unbelievably successful. And it had to do with the discipline of the models that he used and how he segmented economic liquidity, investor liquidity, and then technicals and and breath conditions and understood how they melded together. And they, you know, there, it wasn’t the history of, of working for him wasn’t without some periods that he didn’t quite nail. But, but the big ones he really nailed.

00:12:12 [Speaker Changed] When I was early in my career, I read the book Winning on Wall Street,
which I think came out in like 95 or 96.

00:12:19 [Speaker Changed] Well, the original one came out earlier than that, but there were, there
were additions that, okay, that followed that. But it’s still a must read. A and,
00:12:27 [Speaker Changed] And my takeaway from that is market timing is one part science, where
you’re crunching numbers and looking at history, but you can’t get away from one part art where after
you’re watching the markets for decades like him, there’s a an intuitive feel where just something starts
to smell wrong. Correct. And when the data lines up and your spidey sense starts to tingle, and he never
quite said it that way, but I very much got the sense that all the data was there to buttress the fact that,
hey, I’ve been watching markets for 50 years and something wicked this way comes
00:13:08 [Speaker Changed] The, the gut instinct was extraordinary. It was always, again, in the context
of the models that he was very disciplined about. But there was that just added little piece and certainly
came into play with regard to what essentially was his crash call.
00:13:24 [Speaker Changed] So let’s talk about that. So he, he’s a regular on Wall Street Week with Louis
Ru Kaiser. I could still see the dollar sign in the street, the s for the street, the s the street in the, in the
logo, the Friday before Black Monday. He goes on Ru Kaiser, what does he say?
00:13:42 [Speaker Changed] The structure of the show with Lou would come out and he would do 10
minutes or so of a, a monologue. And it was really brilliant writing. He wrote them all himself. There,
there was humor, there was great intelligence on what had happened in the market. There was really
important reminders around what matters and what doesn’t. And he was just sort of a calming force
and influence, especially during tumultuous times. But then he would walk over to the table where at
the table was Lou and the three regular panelists that were on that evening. And there was 21, 2, 3
panelists on an ongoing basis. And he would have a conversation with each panelist, and then all four
would go over to the sofa area and interview the special guest for that night. So this was the middle part
of the show where he was talking to the panelists and Marty was his typical, and I think Lou said, boy,
you sound a little troubled, do you think we have a bear market? And Marty basically said, no, I think the
market’s gonna crash. And, and then he went further to talk about the, the nature of what it would look
like, the, the probability that it would happen. But then there would be a retest. But then once you had
the retest, the decent chance that you’d be off to the races again, pretty
00:15:02 [Speaker Changed] Much exactly what
00:15:03 [Speaker Changed] Happened. Exactly what happened.
00:15:04 [Speaker Changed] Like not just, oh, the market’s gonna lose some points on Monday. He laid
out like the next six months and it’s exactly what happened.
00:15:11 [Speaker Changed] And it had to do with the interest rate backdrop at the time and tighter
monetary conditions. But also the spidey sense, to your point around the, the innovation of the time of
portfolio insurance and, and felt that that was sort of unwinding and wasn’t going to represent the
insurance that a lot of people thought. And, you know, he was on, on that the hedge fund side of the,
the dual organization. So could be, could swing for the fences a bit more than, than we could on the
institutional side. And, and I don’t remember the exact percentages, but was very aggressively long
heading into the, what the pre crash peak was in August. And then started aggressively both selling and
moving to the short side of things, heading right into the weekend before the, the crash. And we did
something similar on the institutional side, not the same extreme, but close to, fully invested to very,
very low equity exposures.
00:16:12 [Speaker Changed] And people may not remember 1987 was at least up and through
September was a robust year in the market. We were up like 30 or 40%, like a really substantial gain.
And despite the 22.7% crash, I think we finished the year like up 1%, something
00:16:32 [Speaker Changed] Like one, I think it was 1.8%. And you know what Barry, I’m glad you
mentioned that. So indulge me if you would Sure. On a tangent here, one of the things that I have never
done, and no one at Schwab has ever asked me to do, is what I think is the silly exercise of things like
year end price targets right Now, in part that’s a way for institutional strategists to be measured against
one another. And the sort of narrative embedded in that, I suppose might matter to institutions, but our
eight plus trillion dollars of client assets are for the most part individual investors. Right? 1987 is a
perfect example of that. If I, at the beginning of the year had said the market is going to be up less than
2%, that might have sent the impression that it was gonna be kind of a boring year and could have
patted myself on the back at the end of the year. But the path that the market took to start at the year
and then ended up 1.8% was nothing resembling what one might infer if you had just heard the year end
price target of essentially a flat market.
00:17:39 [Speaker Changed] So I, I love the mental exercise that Wes Gray of Alpha Architect does. Hey,
if you knew with perfect clarity, if that bird landed on your shoulder and told you here’s where equity
prices are gonna be in 10 years, position your portfolio for that. He says even God would get fired as a
portfolio manager. ’cause the drawdowns right, can be so vicious. And what do you mean you’re fully
invested? The market is down, you know, 30, 40%, you didn’t see this coming.
00:18:13 [Speaker Changed] When markets are going up, the benchmark is either an index like the s and
p 500 or you know, someone you know that’s making even more money than you are. But it’s amazing
how quickly the benchmark turns into cash or a positive return when markets are going down.
00:18:30 [Speaker Changed] So let’s talk a little bit about a day in the life of a chief investment strategist
at an $8 trillion firm. I have to assume every day is a little different.
00:18:39 [Speaker Changed] I was gonna say depends on the day. So
00:18:41 [Speaker Changed] Take us through a typical day. What’s it like? Well,
00:18:44 [Speaker Changed] There is probably nothing typical a about a day, but on the rare occasion
where I have a decent block of time where I am not on camera or traveling, I do a lot of research. I
remember when my daughter was in middle school and she’s 24 years old analysis, and she’s the
youngest, it was a long time ago, the school had a career day and I was asked to come in as one of the
representatives to have kids rotate through the classroom they assigned you to and talk about what you
do, particularly for a job like mine. The directive from the principal was try to get the seventh graders to
understand what you do. So I I started by saying, well, basically I read, write and talk. So that’s what I
spend my typical day doing is some form of reading, writing, and talking. And the, the, the reading part
is the digestion of just a, a, you know, fire hose of information and proprietary research, internal Schwab
research, all the research that I get from the variety of research sources that we, we have analyzing
data, analyzing every economic report that comes in, everything happening in the market on a day-to-
day basis, even though I don’t take a trading approach just looking at technicals and, and breast
statistics and leadership and factor analysis, et cetera, et cetera.
00:20:00 And then I, I spent a lot of time both literally and figuratively on the road talking to our clients,
both their retail clients as well as advisor services. Now in this post covid I environment, it’s, it’s not
quite as much as used to be the case in terms of travel to do in-person events. It’s maybe 60% back in
that direction. But we’ve all adopted to the use of,
00:20:24 [Speaker Changed] Isn’t that a better balance? Doesn’t it seem
00:20:25 [Speaker Changed] Like it’s a better balance and it’s sufficient, right? I used to, I used to go over
to Asia once or twice a year to see many of our clients that are based over there. And the trips would
involve some combination of Hong Kong, Shanghai, Beijing, maybe Singapore. And I would do a
breakfast event, a lunch event, a dinner event. The dinner events might have up to 150, 200 people
smaller other events. But at the end of a trip it was, you know, a brutal travel trip, right? I might have
interacted in some form with several hundred clients. I now do a quarterly webcast for those same
clients. And there have been webcasts on which we’ve had more than 5,000 wow clients. So there is an
efficiency to to, to continue to weave that in.
00:21:11 [Speaker Changed] There’s no substitute for the face-to-face, but sometimes it’s like, do I really
need to go here? Right. To meet with 30 people. Right. It just seems so, so some of the takeaway from a
little bit of zoom, a little bit of webcasts have become, hey, we, we can be more efficient and more
productive. Absolutely. All these tools existed 10 years ago. The pandemic seems to have forced
adoption accelerated, right?
00:21:38 [Speaker Changed] Absolutely. Absolutely. And then as you and I sit here having this
conversation, a relatively new component of my day-to-day activity is I now co-host a, a podcast.
00:21:50 [Speaker Changed] I know that. Yeah. So how, how are you enjoying that?
00:21:52 [Speaker Changed] Love it. Absolutely love it. So we launched it, I think it was November of last
year. I co-host it with my colleague Kathy Jones, who was our chief fixed income strategist. So she’s my
counterpart on the fixed income side of things where my bias is on the equity side of things. And we
have just very open, honest conversations, sort of, you’re a fly on the wall hearing what we would talk
about. It’s very unscripted about what’s going on in the markets. And we talk about the fed and
economic data and what’s ahead for the week. And we typically also have guests both internal and
00:22:26 [Speaker Changed] External. Weekly. You’re doing it weekly?
00:22:27 [Speaker Changed] We’re doing it weekly. It, it drops on Fridays, it’s audio only. So we can have
external guests, internal guests, every, any people can be wherever they are. And a wide range of guests
that we have had. We, we had Claudia Sam, we had Al Rabel talking about commercial real estate. We
had Dali lens of real estate fame talking about residential real estate. We’ve had internal guests like our
own Mike Townsend talking about what’s going on in Washington. So that’s been an absolute blast.
00:22:58 [Speaker Changed] Isn’t this, not to toot my own horn, but isn’t this just such a pleasant
format? Absolutely love it. It’s not three minutes. Right? There’s no camera in your face. You know, the
world is not black and white and investing especially has so many shades of gray. And to develop really
have a decent explanation as to what’s going on. Five minutes really is doesn tight to doesn’t cut to
right. It really is. So to, to go into that Sounds great. And I, I love that description of what you do is
reading, writing, and talking is really is great. I wanted to ask you something. You mentioned all of the
internal Schwab clients. You have advisors, you have individual clients, like I would love to be let loose
on that data Yeah. To see what they do, right. In response to markets. How do you look at the behavior
of whether it’s professional or institutional or just mom and pop traders? Do you guys monitor that and
say, oh, absolutely. Here’s the sentiment. It looks like people are starting to get really panicky.
00:24:08 [Speaker Changed] We do. And there are a variety of forms that we disseminate that type of
information out into the public sphere, which is not something I do formally. There, there are groups
that put that together. But I, I have access to the information and, and you’re right, particularly as it
relates to the sentiment side of things. I have been a sentiment watcher for my 38 years in this business,
learning a lot about the power of sentiment from Marty’s wag. But I think it’s important to look at both
attitudinal measures of sentiment and behavioral measures of, of sentiment and behavioral measures
with eight plus trillion dollars of client assets.
00:24:44 [Speaker Changed] Someone’s gonna be acting out when they shouldn’t.
00:24:46 [Speaker Changed] It’s, it’s probably a, a pretty good eye into the sort of psyche and behavior
of individual investors. So it, it is absolutely something that I incorporate in the analysis in addition to
broader metrics that go beyond just Schwab things like fund flows and obviously the put call ratio and
other ways to measure the behavior of investors. But it’s in conjunction with those more attitudinal
measures. And that comes from sources like a a I I, American Association of Individual Investors. But
frankly, a lot of the attitudinal measures of sentiment I pick up just from talking to our clients being on
the road. That’s where the spidey sense, the right the gut feel comes in. And now being very active on
social media too. Particularly Twitter slash x by the way, I am not active on either Instagram or
Facebook. However, a very troubling huge rash of imposters on those platforms of me not just trying to
get followers.
00:25:47 [Speaker Changed] Yeah, I was kind of surprised you were, you’re
00:25:49 [Speaker Changed] Pitching, pitching things like you’re
00:25:51 [Speaker Changed] A big bitcoin advocate
00:25:52 [Speaker Changed] Instagram, apparently. That is not me by the way.
00:25:56 [Speaker Changed] Not not on Facebook, not on
00:25:57 [Speaker Changed] Instagram. I’m not on, I’m not active on Facebook. I’m not, and I’ve had a
rash of imposters on Twitter as well. I was
00:26:03 [Speaker Changed] About to say, you know, Elon Musk is touting grok as their ai and I would
never subscribe to that until they were able to demonstrate, hey, grok has gotten rid of all the spam
bots and it’s gotten rid of all the, like, I’m constantly reporting fake berries. I’m sure you have people
reporting. It’s constant. It’s constant. And how could constant they not, it’s so easy to identify. Well, if AI
can’t do that, then AI is worthless.
00:26:32 [Speaker Changed] It is. And it it drives me crazy that, eh,
00:26:36 [Speaker Changed] It’s going away. Anyway, Twitter circle
00:26:37 [Speaker Changed] That somebody will think it’s me, right? And it’s somebody, it’s an account
with, you know, seven followers
00:26:45 [Speaker Changed] And, and nine
00:26:46 [Speaker Changed] Not, not that, not that I’m, I’m, you know, Taylor Swift, but I have
00:26:51 [Speaker Changed] To be fair, your call on Dogecoin using the handle, Liz an Saunders’s 9 7 3 1
4 6 9 Oh well good for her. Was pretty well timed. Good
00:27:02 [Speaker Changed] For her. Good for her or him or it or whatever. It
00:27:05 [Speaker Changed] It’s a North Korean
00:27:06 [Speaker Changed] Yeah. Stand factory. So for, for people who might not have been following
the actual me, it’s at Lizanne Saunders. There’s, there’s no e at the end of Ann. There’s Saunders is not
spelled with a z There’s no numbers added to it. There’s, it drives me crazy, but,
00:27:24 [Speaker Changed] And it’s, it should be one of those things that are just so easy to fix and he is
otherwise distracted.
00:27:33 [Speaker Changed] So, so it is something that, that I to Yeah. That
00:27:35 [Speaker Changed] That’s pretty. And I remember when you first, when we, when we spoke
last time, 2015, I
00:27:41 [Speaker Changed] Think I had
00:27:42 [Speaker Changed] Just started,
00:27:43 [Speaker Changed] Just joined Twitter Yeah. In
00:27:45 [Speaker Changed] 2015. And now for people who don’t follow Liz Ann Saunders, but you
should and I retweet you on a regular basis. Thank you. You put up some really nice charts, some good
tables. Everything is databased, everything is fact oriented. It’s none of the stuff that I see from you. And
this is why I appreciate your feed is, you know, I really think the market has another leg up here about
10, 15%. Then we get a pull. There’s none of that crap.
00:28:09 [Speaker Changed] There’s none of that. It’s just because I, you know why I don’t know. I can’t
do that. That’s right. And by the way, nobody, nobody can knows Right. Nobody can do that. It’s not
what we know that matters. Meaning about the future, what the market’s going to do. It’s what we do
along the way. Right. It’s, it’s as simple as that.
00:28:24 [Speaker Changed] It it’s a little bit of a stoic philosophy. You can’t control the world. Yeah. All
you can control is your reaction behavior to what happens, your behavior. Yep. And that’s very
challenging for people to accept. Oh,
00:28:36 [Speaker Changed] Fear and greed are really, really powerful emotions. Yes. And especially as it
relates to our money. ’cause we care a lot about our money.
00:28:45 [Speaker Changed] So let’s talk about fear and greed. Let’s talk about 2022 and 2023. 22 is a
tough year. We sure was. We had double digit declines in, in fixed income and equities. I think the s and
p was down about almost 20%. The NASDAQ was down about 30%. What was 2022 like for you, dealing
with a lot of clients and investors concerned about what was going on.
00:29:12 [Speaker Changed] You know, one of the most interesting things about 2022 was to, to tie this
into the sentiment conversation that we just had and, and the differential times between behavioral
measures of sentiment and attitudinal measures of sentiment. I’m sure you remember the, the first big
whoosh down into June of 2022 that yes, at the time was the hope for, okay, maybe this is the washout
point in part because some sentiment measures were at extremes. A a i i, I don’t remember whether it
was exactly around the low of June, but sometime in that spring, early summer period, the percentage
of of bears in the weekly A A I I survey went to a record high and commensurately the percentage of
bulls went to a record low, but it wasn’t matched by the behavioral measures. In fact, A A I I, in addition
to their weekly, are you bullish? Are you bearish? Are you neutral survey they also track the equity
exposure of their same members.
00:30:09 [Speaker Changed] That’s my favorite data point of
00:30:10 [Speaker Changed] Theirs. And at the time where you had record high bearishness record low
bullishness, the equity exposure was only slightly off an all time high. So that was a classic example of
what they, what they’re saying and what they’re doing are sort of diametrically opposed. Fast forward to
the October 20, 22 period, there was a little more of that across the spectrum. Washout, the puke phase
as I like to call it, using, you know, a very technical term. That was also a period where because the
magnificent seven or the grade eight, you know that the small handful of tech,
00:30:46 [Speaker Changed] Now
00:30:47 [Speaker Changed] It’s the was four. Now right now it’s getting shrunk that those stocks were
dragging performance down. But what was interesting about the October low was what was going on
under the surface. So the indexes at the October low had taken out their June low, but under the
surface you were seeing much improved breadth, you know, positive divergence to use technical term.
And that was a more compelling point in the market. Again, the message from us wasn’t, the bottom is
in, but the message was this looks more compelling than what was happening in June because you had
that sort of double wash out in sentiment. And you had that under the surface improvement in, in
breadth where even though, you know, the generals were retreating, there were more soldiers kind of
approaching the front line
00:31:36 [Speaker Changed] And, and the October, 2022 lows were slightly below the June lows. Right.
And so the technicians will say that’s a a a double bottom. But I recall seeing some people say, uhoh, oh,
we’re gonna start a whole new leg down over here. And it’s, it’s hard to see that with sentiment that
negative.
00:31:56 [Speaker Changed] Not only that, but again, the fact that breath under the surface was con
improving was
00:32:00 [Speaker Changed] Constructive. Yeah. And you know, same thing at my firm. We’re not
market timers, we’re not traders in my personal account. I went out and bought a bunch of QQQ calls
and spider calls just to play around and Russell 2000 calls, spiders did well, Russells did nothing. Yeah.
And the QS crushed it over the next year. But that has to be a challenging period. What sort of calls and,
and do get panicky conversations with investors.
00:32:29 [Speaker Changed] You know, one of the, one of the differentiations that, that I’ve observed
over my many years at Schwab is during some of the really tumultuous eras, 2022 may be not as
significant as the covid decline or certainly the global financial crisis is there is a pretty direct correlation
between the ability with this withstand volatility and tough market environments with whether you sort
of have a disciplined strategic asset allocation plan, right. Versus more of the day traders, the wing it
kind. That’s where you see the bigger emotional swings versus our clients that have taken that what we
sometimes call an advised approach where they, they’ve got that long term plan, they have a financial
plan, they’ve got a strategic asset allocation structure that is tied to everything personally about them.
That they, they have the disciplines around diversification, periodic rebalancing, and they tend to ride
through the tougher times much better than the kind of wing IT type investors.
00:33:35 [Speaker Changed] So let’s flip it on its head 2023 s and P 500 up almost 25%. The Nasdaq up
more than double that. What do you do with people who suddenly become uber bullish and hey, this is,
this is a new something. We have to be in it to win it. How do you deal
00:33:53 [Speaker Changed] With that? Well, a, a year, like last year, the breed summit was so dominant
by such a small handful of names, it got less extreme as the, as the year concluded. But at around the
midpoint of last year, you not only had the magnificent seven accounting for more than all the
performance, but you had a record low percentage of the index outperforming the index itself.
00:34:17 [Speaker Changed] 145 stocks did better than 25%, 144 stocks in the s and p 500 if I’m
remembering correctly. Right. Outperforming index
00:34:27 [Speaker Changed] Itself. Well there, there’s lots of ways to which is low to look at that. So at,
at, at the low point of last year, even today, if you look at the percentage of the s and p that has
outperformed the index over the past 12 months, it’s only 12%. That’s close to an all time low. If
00:34:44 [Speaker Changed] You, so wait, gimme those numbers again. 12,
00:34:46 [Speaker Changed] 12% of the overall s and p 500,
00:34:49 [Speaker Changed] So you’re talking 60 stocks right.
00:34:52 [Speaker Changed] Have outperformed the s and p over the prior 12 months. Now if you start
to shorten that 12 months, it gets better. So right now it’s around 40% of the index has outperformed
the index over the past month.
00:35:05 [Speaker Changed] Really? Yes. That’s much broader. Much broader. ’cause all we hear is
people saying the market is narrowing, this is how bulls end, it’s just seven.
00:35:13 [Speaker Changed] It’s why it’s broadening. So
00:35:14 [Speaker Changed] It’s going the other way. So
00:35:15 [Speaker Changed] That’s destructive. Yes. It’s even just among the magnificent seven. Now
last year, so that moniker came because those were the seven largest stocks, right? In the s and p and in
the nasdaq. They’re not the seven largest anymore. Six of them are still the sixth largest. Pat Tesla has
dropped down. Right. It’s kind of bouncing between the ninth and the 10th spot. So leapfrogging Tesla
has been Berkshire Hathaway, Eli Lilly and Broadcom has been, you know, kind of breathing down
Tesla’s neck. Last year they were the seven largest stocks consistently throughout the year. They weren’t
the seven best performers, but they were all strong performers, double and triple digit. You only had to
go down to the 63rd ranking within the s and p 500 to capture all seven of those names. Year to date, as
you and I are recording this, three of the seven stocks are ranked year to date performance in the
bottom quintile. So they, they, four of them have a, three of them have a four handle in terms of the
ranking. So
00:36:10 [Speaker Changed] That’s Tesla,
00:36:11 [Speaker Changed] Tesla, apple, and alphabet. Hmm. Now Nvidia is still the best pouring stock,
but you’ve got this massive spread in terms of, of performance among just that group of names. And you
have these sort of stealthy breakouts happening in areas like industrials, even to some degree in
financials and I, which have
00:36:30 [Speaker Changed] Been giant laggard for right.
00:36:32 [Speaker Changed] Forever. But, you know, sectors and groups and categories. There’s
rotation, I think all elses l that’s, that’s a healthy thing. I think still a bit more work needs to be done. But
in terms of, back to the original part of your question, you know, how do you navigate this? First of all,
understand what’s actually going on in the market. Understand that indexes can often paint a very
different picture versus if you look under the surface. And that’s why in, in my latest report, I, I said that
this may be more of a duck market than a bull market.
00:37:01 [Speaker Changed] That’s, that’s a que literally a question I have expl, I love the metaphor of a
duck. Explain what
00:37:07 [Speaker Changed] That means. So I, it was, i I I guess is the, the quote originally is attributed to
Michael Kane who talked about a duck being very calm on the surface, but paddling like the dickens
underneath. And to put some numbers behind what I mean in this context, that both the s and p and the
Nasdaq are, are still trading around all time highs within the case of the SP no more than a 2%
drawdown from a year to date high maximum drawdown. And it’s a little bit worse, it’s 3% for the
nasdaq, but that’s at the index level. Lemme just use the NASDAQ as an example of this. And as you and
I are doing this first weekend in March, we’re not very far into the year, but the average member,
NASDAQ member maximum drawdown from year to date highs is negative 22%. That’s
00:37:49 [Speaker Changed] Big. It’s
00:37:50 [Speaker Changed] Big. That’s bear market level decline. So there’s a lot more churn going on
under the surface. And I think especially in this environment, you wanna understand what’s going on
under the surface, not just make assumptions about the market at the index level because of what has
been that bias in terms of performance to just a, a relatively small handful of names.
00:38:13 [Speaker Changed] So those data points that you bring up are really quite interesting because
there has been an increasing course of people talking about passive flows and indexing are destroying
price discovery. You know, David Einhorn a few weeks ago said, passive is destroying value and it’s
damaging market structure. You are essentially making the case that there’s plenty of price discovery,
that it’s not uniform. That money isn’t just flowing into names blindly. Right. If Apple Alphabet and Tesla
are in the bottom quintile of performers when they are amongst the top 10 biggest stocks that really
contradicts, oh no, it means there’s other, it just flows.
00:38:57 [Speaker Changed] There’s other stuff going on. It’s not
00:38:59 [Speaker Changed] Just fund flows into indexes.
00:39:01 [Speaker Changed] Now passive did just surpass active in terms of the amount of money in
passive ETFs and, and funds versus active that just happened at the end of, of 2023. But dispersion is up
and correlations are way down. And I think that that’s supportive of active and that is not me saying sell
all your passive vehicles and back up the truck and load up on active. We have always for years thought
there’s a home for both active and passive,
00:39:30 [Speaker Changed] Poor and satellite
00:39:31 [Speaker Changed] In, in portfolios. Right. The point is more that active in general and broadly
has just not been playing on a level playing field with passive. I think that’s improving. And it’s, you’re
right, there is price discovery. Again, a lot of that has to do with the return of the risk-free rate and an
environment in, in the Zer era where
00:39:50 [Speaker Changed] Competition with bonds, you mean by
00:39:52 [Speaker Changed] Return of the, and just, you know, the, the Zer era 0% interest rate, that
was the support for zombie companies and companies that really had no business, you know, existing.
And I think with that return of the risk free rate, it is, it has brought about more price discovery. It is
represented a, a reconnection of fundamentals to prices. Not every day, not every week. You still get
these, you know, cap driven concentration problems in the market like last year. But that’s starting to
ease a bit. And if you’re only looking at the index level and you see certain ugly days, I think the real
story, which is arguably a more optimistic story, can often be found under the surface. Not on the
surface.
00:40:37 [Speaker Changed] Huh. That, that’s some really fascinating stuff and I, I love that perspective
of here’s what the chatter is saying, but when we look at the data, it’s telling you something else.
Alright, last question on Schwab. You’ve been there I think later this
00:40:52 [Speaker Changed] Year, 20, 24 years.
00:40:54 [Speaker Changed] So your next year is 25 years. Yes. Yes. That longevity, first of all is unusual
days, well,
00:40:59 [Speaker Changed] Two, two days for all intents and purposes. Two jobs in 38 years,
00:41:03 [Speaker Changed] Not, not too bad.
00:41:04 [Speaker Changed] Right? So that’s not common on Wall Street. I think
00:41:08 [Speaker Changed] It’s definitely increasingly rare. Yeah. The, the question is, tell us what’s
kept you at one place for a quarter of a century?
00:41:18 [Speaker Changed] A lot of it has to do with the culture and I, I give a tremendous amount of
credit to the man behind the firm, Charlie Chuck Schwab. Yeah. And who is still with us. And he’s still a
pretty active chairman and I know him personally as well as professionally. And, and his vision of what
Schwab should be and has turned into is it really, I think, separates us from maybe the, the typical Wall
Street firm because you know, our, our sort of marketing tagline of sorts of through client’s eyes is, is
actually legitimate. And I think the perspective of the individual investor, what they maybe not want,
but what we know they probably need is just very different than the institutional world. And I, and I
think approaching investing through the eyes of individual investors is, is just a sort of different ball
game. And, and there was, there was nobody that preceded me in this role.
00:42:14 So when Schwab acquired US Trust in 2000, it was only 10 months after I had joined us Trust
Chuck. And, and our, our CEO at the time, Dave Patrick came to New York to meet all the US Trust
executives and they sat down with me and said, we want to create this role of chief investment
strategist. Any interest, I’m making a longer conversation very short. I said, yep, hell yeah, count me in.
And the rest is sort of history. But they, they, they gave me a lot of free reign to, to sort of create this,
this role, but with my full knowledge based on what I know was their mission around the organization of
this is through individual client size. And that’s, it’s a reason why we don’t try to do things like market
timing or year end price target. It’s about long-term planning and strategic asset allocation and, and just
understanding how markets work and how behavior comes into the mix. So it’s just been a great
platform for me and I love it. I I hope I’m there for a lot
00:43:15 [Speaker Changed] Longer. Another 25 years. I,
00:43:16 [Speaker Changed] Well, hmm, boy, that would be interesting. Yeah.
00:43:19 [Speaker Changed] Well, so, so let me,
00:43:20 [Speaker Changed] I’d be my mom’s age then. So,
00:43:21 [Speaker Changed] So you mentioned the culture at Schwab. Let me share a perspective. I I
don’t know if I ever shared this with you. So my firm launched in 2013 with very little money. TD was our
custodian. And
00:43:40 [Speaker Changed] I think I’ve heard of TD right
00:43:42 [Speaker Changed] Now part of Schwab. That’s right. And the first couple, and we just, the
reason we did that is our, our prior firm, the clients were custody to TD and it made it just a single letter,
you know, LOA in order to, to transfer the accounts over. And it took us about a year or two after you
hear it for the hundredth time, where we would go on a road trip. So we were a small shop, but you
know, between our media exposure and everything else had a national footprint. And we would go to
Seattle or San Francisco or Chicago or Austin, Texas. And after you hear it, like the 19th time, Hey, we
love you guys. I would love to have you manage our portfolio, but we’ve been with Schwab and we’re
not leaving them as our custodian. Let us know as soon as Schwab is one of your platforms, you know,
you can only only have to hit me over the head with a hammer 14 times before I’m like, Hey,
00:44:43 [Speaker Changed] Maybe I should, maybe
00:44:44 [Speaker Changed] We should. And now we have, I think we have, I’m doing this off the top of
my head, you know, 4 billion plus on the Schwab platform from essentially nothing. Well, thank you 10
years ago on behalf of Trump. Well, you guys have been a great part. You know, I don’t, again, I always
like to disclose things, but it, it was, it was dumbfounding in the beginning where it’s like, I don’t
understand they’re custodian why people?
00:45:07 [Speaker Changed] No, it’s a partnership. I’m glad you started to use that
00:45:10 [Speaker Changed] Word. And that’s what we ended up learning is, oh, the culture at Schwab
and the way they do things. This isn’t just, hey, leave your money with us, we’ll send you a statement
every quarter. And that was it. It’s a very different relationship. And to Chuck’s credit, you guys created
something that did not exist amongst most custodians. Correct. Beforehand, am I
00:45:33 [Speaker Changed] Overstating this or no, no, not at all. And, and, and we are, you know, by far
the, the largest in terms of not just custodying assets for the RAA community, but representing that
partnership in, in everything from research and trading and succession planning. It it is, it’s an important
part of our business for sure.
00:45:54 [Speaker Changed] Let’s talk a little bit about the markets and the economy today, starting
with, all right, we’re at all time highs in the nasdaq, we’re at all time highs in the s and p 500. I’ve heard a
bunch of people on TV come out and say, oh, you know, this makes me nervous. What does the data say
about what all time highs in, in broad indexes mean for the next couple of quarters? Well,
00:46:19 [Speaker Changed] Starts two years that have a lot of momentum do tend to carry through, but
there’s, with, with any data point like that, if you’re looking at aggregate data or averages, there are
always exceptions to sure to those rules. And as we already talked about, there’s been a lot more churn
under the surface than when you pick up, if you’re only looking at index level. But to say that this has
been a unique cycle, both on the market side of things and the economy side of things, is the ultimate
understatement. And I, I think that to be an analyst of, of the market. And, and one of the nice things for
me as strategists at Schwab is that I get to wear the two hats of both market strategists, but also
economist. We don’t have a separate chief economist and I like that because I get to marry the, the
views, I’m not beholden to somebody else’s view on the economy.
00:47:05 And on that front, the, the nature of this economic cycle helps to explain why we’ve had so
many funky things happen in terms of the market cycle. And it’s the, we’ve been using the, the rolling
recessions terminology because that’s actually what has happened in the, the early part of the
pandemic, during the stimulus fueled piece of that cycle. That all of that stimulus was essentially
funneled into the good side of the economy because we had no access to services. That was the
breeding ground of the inflation problem with which we’re still dealing. But we subsequently went into
recession like conditions for many of those goods oriented categories like manufacturing and housing,
housing related, a lot of consumer oriented products and goods that were big beneficiaries of the
lockdown phase. And we’ve gone from hyperinflation to disinflation to some deflation based on certain
categories of goods. But of course we’ve had the later pickup and offsetting strength on the services
side. And you’ve seen that roll through in terms of market behavior too. And it just makes this backdrop
kind of a, an apple compared to history’s oranges. And I, I think we, we have to be mindful of that when
trying to gauge where we are in the market cycle, where we are in the economic cycle. It’s just a, it’s a
very unique period.
00:48:19 [Speaker Changed] Any other historical parallels that come up? I personally hate the 1970s
parallel because you certainly know the employment picture, the inflation picture, the geopolitics,
everything was just so much worse than what we’re dealing with today.
00:48:35 [Speaker Changed] It’s a very, very different backdrop relative to the 1970s. I guess the only
comparison that we’re witnessing right now is the desire on the part of the Fed and maybe Powell in
particular, to not repeat the mistakes of the 1970s in terms of monetary policy, premature, you know,
hanging of the victory banner easing policy only to see inflation sort of rear its its head again. So I think
that is maybe one similarity in terms of what the playbook is for the Fed. But I totally agree with you
that the nature of what was driving inflation, the backdrop in terms of geopolitics and demographics
and labor versus capital is not a mirror of what we’re experiencing right now. But I think the Fed took
some lessons from, from the mistakes back in that era.
00:49:20 [Speaker Changed] If you are looking for parallels, and I, I think you’re right. There’s, this is
totally unique, but the immediate period after World War ii hundred percent is kind of similar. You have
all these GIS returning and all this pent up, Hey, we couldn’t do all these things and a spike in inflation
that came down, unemployment collapsed. ’cause you had all these people coming back to work. It’s not
perfect.
00:49:47 [Speaker Changed] No, but I think you’re right. It was, it was a military war, not a health war.
Right. Which was the case this time. But it had some of those same characteristics in terms of supply
demand imbalances and the drivers of, of inflation. Obviously there are plenty of differences. Sure. Not
least being what happened on the other side of it with which, you know, massive amount of military
personnel coming back into the private sector and into the civilian workforce and the rebuilding of the
global infrastructure. That is one era that I have used often as a, as a reference point with that
differential being military war versus health
00:50:26 [Speaker Changed] War. So let’s talk about some of the other differentials. ’cause I think
they’re informative. Not only did we bring a lot of technological usage forward or things that existed,
look, we’ve had FaceTime for 15 years. It’s not like it’s new and screen shares and o other things like
that. But they just became more widely adopted. It
00:50:46 [Speaker Changed] Was forced adoption because we had to Right. Had no choice. We had no
choice. Yeah.
00:50:49 [Speaker Changed] But, but today we have office buildings that are not running full occupancy.
Return to office has been, you know, we’re 60%, 70% back. You have a lot of hybrid work, you have a lot
of people working from home. How does this affect how you perceive the economy? What does this
mean for things like, hey, commercial or residential real estate investing?
00:51:13 [Speaker Changed] Yeah, so, so commercial real estate tends to get thought of too.
Monolithically commercial real estate is a very broad category, obviously. Right? And it’s inclusive of not
just the world of offices, but you know, multifamily residential and warehousing and retail and
healthcare facilities, et cetera. So we can’t paint commercial real estate with one broad brush. There are
segments within Siri that are quite healthy versus say office. And even within office of course, big
differentials in terms of urban versus suburban. Certain regions in the country are, are doing much
better. There’s the different parts of the country have larger percent that have gone back into that more
typical office structure. And then of course the exposure to commercial real estate, which is yes, down
into the smaller regional banks, many of the same banks that that suffered the most from last year’s
mini banking crisis. But even there, there’s a, you know, a vast array in terms of maturity schedules and,
and what type of, of commercial real estate exposure on our podcast, one of the recent guests that we
had on that I interviewed, it’s actually a friend of mine, Al Rebel, who is the founder and CEO of Kane
Anderson, a big huge private equity private real estate company.
00:52:24 And although they’re specifically more involved in student housing and and senior housing,
he’s an expert more broadly. And I asked him at the outset of the interview, I said, let me ask you an
expert, and I’m not an expert, a question about how I’ve been terming it. Have I been describing it? And
feel free to tell me you’re dead wrong, Lizanne. I think it’s, this is not a LeMans kind of problem. It’s
more of a slow moving trade wreck or a, a simmering problem over time. And fortunately for me, he
said, yes, that’s I think, an apt to descriptor. That doesn’t mean the problems aren’t still ahead of us, but
it’s over a more graduated period of time. And with some of the carnage will come opportunities. And
that was maybe a more interesting part of the conversation is some of the sort of dis distressed firms
looking at this as an eventual opportunity to come in and acquire some of these properties, you know,
significant discounts. So with carnage comes opportunity.
00:53:17 [Speaker Changed] I’m glad you brought up private equity because during the era of zero
interest rates when you couldn’t really find any sort of yield in the public markets, private equity, private
debt
00:53:30 [Speaker Changed] Venture.
00:53:31 [Speaker Changed] Right. Pretty, pretty good numbers. Seven, eight, 9% yield versus two, 3%.
Now that the risk-free rate is in the threes or fours and muni bonds are giving you the tax equivalent of
depending on the state, six, seven, 8% yield. How do you think about private equity?
00:53:50 [Speaker Changed] Yeah, it’s not my area. So I’m gonna, I’m gonna answer the question by
tying it back to something that is, I, I spend more time thinking about. To the point you made in the
early part of asking that question was what was a shift in the zero interest rate environment by many
investors that were looking for anything resembling a decent yield and it forced them just out the risk
spectrum, right? Whether it was to riskier segments of the fixed income market or into the publicly
traded equity markets, or to your point into the private markets, be it private equity or venture. And for
many of investors, they, they weren’t really comfortable with that kind of risk. And it’s not just the risk,
but for many of investors, it’s the transparency and liquidity that they had to give up. Now we have an
environment wherein essentially hold to maturity risk-free treasuries and things like, you know, money
market funds, a lot of money has, has gone back in that direction. On that note, and this is somewhat
tangential, but I think it’s important too many people view the $6 trillion that’s sitting in money markets
as some, maybe not imminent, but some huge source of, of funding for the equity market.
00:55:06 [Speaker Changed] Cash on the sidelines.
00:55:07 [Speaker Changed] On the sidelines, right? I, I think, I think a lot of that money is actually
probably fairly sticky. It’s money that represents the cash needs or the, the, the liquidity side of, of asset
allocation. And isn’t sitting there just waiting to go into riskier assets, be it public equity markets or
private. I think a lot of that is probably fairly sticky
00:55:29 [Speaker Changed] And it migrated to money market funds because of the five, whatever, 5.3%
yields after a drought of decades of not getting any sort of yield that’s, Hey, I could earn a real rate of
return relatively risk free. Great. I’m going to reduce my risk profile. Right. And, and capture some of
this. That’s a great thing. I I’ve never really understood that cash on the sideline. The, the other thing
that’s related, and, and you might see it from your perch at Schwab, whenever we people talk about
fund flows, look at all this money flowing into equity funds are flowing out. It seems like it’s a year
behind what the market’s doing. The market crashes and then there are fund flows out. Look at 21 or
23, even as the market is rallying, the funds are flowing in the opposite
00:56:22 [Speaker Changed] Direction. It’s performance chasing up and down. That’s, you know, as old
as the day is long.
00:56:26 [Speaker Changed] It’s just that simple. It’s just performance chasing.
00:56:29 [Speaker Changed] And you know, the other thing about the $6 trillion that’s in money market
funds is yes, that’s an all time record in level terms, but relative to total stock market capitalization, it’s
nowhere near a record. So you have to be careful, first of all, number one, I think it’s a mistake to our
point that we just made, that this is not sort of short-term cash on the sidelines, that it’s just itching to,
to jump over onto the equity side of things. But even if you make that assumption, the firepower has to
be put in the context of share of market capitalization and there it’s nowhere near a record high.
00:57:03 [Speaker Changed] That’s really interesting. So we’ve talked a little bit about the Fed. We
haven’t really delved into too much about inflation. You hinted at it before and CPI peaked in June,
2022. How do you look at where we are today in the first quarter of 24 and what does that mean for
people’s portfolio?
00:57:22 [Speaker Changed] So we, we think the disinflation trend is still largely intact, but it doesn’t
mean it is linear. And we’ll quickly get down to the fed’s 2% target. Obviously there’s a lot of
components within inflation metrics, not to mention lots of ways of measuring inflation. And we can talk
about the fed’s preferred measure of PCE and then there’s core PCE or super core, super core, you
know, X shelter. And there’s the differentials in terms of how things like the shelter components are
measured and calculated and what share they represent of metrics like CPI versus PCE. I’d say one of the
more important things that has happened this year is number one, Powell and other members of the
Fed have emphasized more the rates of change, the three month rate of change, the six month rate of
change. And then specifically in the 60 minute interview that Powell did following the January FOMC
meeting, he, he started talking more about the 12 month rate of change.
00:58:23 I think that that was a way to almost quantify the notion that they wanna make sure that if and
when inflation comes down to or near the target, that there’s sustainability to that. That it’s not just a
sort of a, a quick shot down and they, they fear the risk of it moving back up again in terms of what’s
happened very recently is that not only did we have the hotter than expected January CPI report for
both CPI and PCE, the three month rate of change has turned back up. The six month rate of change has
turned back up. The 12 month hasn’t yet. But based on how these things work, right, if three month is
moving up, six month is moving up, 12 month is probably going to start moving up. And that, that’s part
and parcel of why the shift has occurred from a march start to then it was a may start, maybe it’s not
until June and you’ve really condensed the expectation around the number of rate hikes.
00:59:16 Not to mention that there are a few strategists out there more recently that are saying maybe
they don’t cut at all this year. I think the market definitely was way over its skis earlier in the year when
it expected not just a march start, but six rate cuts. There was just nothing in the data that the Fed is
supposed to be monitoring on either side of their dual mandate. That suggested such an aggressive
pivot. And I would also say to a lot of investors, I was saying at the time, be careful what you wish for. If
you think after the most aggressive tightening cycle in 40 years, that in short order they’re gonna pivot
to an aggressive rate cutting cycle. The background conditions supporting that are probably not what
you would wanna see either as an economic participant or as a market participant.
00:59:55 [Speaker Changed] So you wear an economics hat, I have this discussion all the time with
people. Someone said, imagine how great the economy would be if oil was $30 a barrel. And I said, Hey,
if you want $30 a barrel oil, you need a really deep recession. Yeah. Global. It, it doesn’t happen out of
context. You the idea of careful what you wish for, right? You want six rate cuts, that means the
economy is, is
01:00:19 [Speaker Changed] Recession
01:00:20 [Speaker Changed] Is having a hard time. Yeah. So, so since, since we have you wearing the
economist hat, where’s my recession? I was promised recession. Oh,
01:00:28 [Speaker Changed] We had the rolling recessions,
01:00:30 [Speaker Changed] But I was promised a full recession in 22 and then 23. And not only did we
not have a recession, unemployment fell to the mid threes. GDP is robust. When you look around the
world, this isn’t all right, everybody is with the cleanest shirt in the hamper. It’s not that we have a
robust growth economy and the rest of the world does not, doesn’t seem to be keeping keeping
01:00:56 [Speaker Changed] Up with us. So here’s what, here’s what happened. It’s in the context of this
whole notion of, of the roll through when we had the individual sectoral recessions in manufacturing
and housing and housing related and a lot of consumer rent and products. And it did end up with
negative GDP for the first six months of 2022. Right? The reason why
01:01:14 [Speaker Changed] Negative on a real basis, right? On a real basis nominal basis. It
01:01:17 [Speaker Changed] Wasn’t, it wasn’t, but you had, and, and not that back to back negative GDP
quarters is the definition of a recession. It’s not, it never has been the definition of a recession.
01:01:25 [Speaker Changed] Thank you for saying that. I, I’m
01:01:26 [Speaker Changed] Shocked and when people say, well, the traditional or the typical, it’s not.
The NBER has been the official arbiters of recession since the mid 1970s and two quarters in a row of
negative GDP has never been the definition, the key line perhaps within that much more comprehensive
definition that the NBER uses, that helps to explain why six months of negative GDP ultimately wasn’t
declared a recession. Again, not because it was two quarters in a row, but the key part of the NBE R’S
definition is spread across the economy. The weakness that led to the first half of 2022, having no real
growth in the economy was concentrated. It was concentrated on the good side of the economy
manufacturing. We had the offsetting strength in services services, a larger employer by far helping to
explain the resilience in the labor market. The services components of inflation are stickier by nature,
including the, the shelter components helping to explain the roll through in inflation.
01:02:23 And again, it’s just another example of the unique nature of this cycle. So I think when I look
forward, I think, okay, so if and when services has their day in the clouds and, and, and we start to see
more than just some cracks that we’ve started to see, like an ISM services employment component,
going back into contraction territory, what you may get is you, you have a roll through of recoveries in
areas or at least stabilization that have already taken their hits. A lot of people, if view no landing as best
case scenario, there’s going to be a landing, you know, at some point the plane lands. But I, I do think a
near term no landing scenario might also mean a no cutting scenario. And then the question, which I
don’t know that I have an answer to is what exactly has been propelling the stock market? Is it the
prospect of easier monetary policy or is it that growth has more than hung in there and that translates
to better top line growth, better bottom line growth? Maybe a little bit of both, but it’s hard to sort of
isolate one or the other is the key driver.
01:03:23 [Speaker Changed] I’m so glad you brought that up because anytime I’m at a dinner party, I’m
at a barbecue, I’m somewhere and the dominant narrative is thrown at me. So what happens to the
markets if the Fed doesn’t cut sooner or later? And my answer is always, why do you think that
whatever that news headline is, is what’s driving the markets? First of all, there’s a hundred factors or a
million
01:03:48 [Speaker Changed] A million factors, right?
01:03:50 [Speaker Changed] And second, just because it’s on TV or online or in the newspapers doesn’t
01:03:55 [Speaker Changed] Mean I I love that and I, you know, I know it’s the, the job of journalists. If I,
if I’m doing an interview on the phone with a print reporter or if I’m going on a TV program, and
especially if questions are concentrated around what the market is doing, you know, that particular day,
right? And the question is always some form of, you know, what drove the market today or, or what
turned the market at, you know, midday as if the market is sort of this inanimate thing that just sits
around waiting for one particular news headline. And on any given day, any given week, if you just
change the sign on what the market was doing, I could come up with plenty of things to point to to say,
this is why the market boomed today, or this is why the market went down. It is kind of silly, but, but,
01:04:41 [Speaker Changed] And no one likes the answer. How do I know? Right? People are not
satisfied with that.
01:04:45 [Speaker Changed] I I, I try more often than not to answer questions especially that are about
sort of, what’s the market gonna do with I have no idea. And then sometimes I pause for a fact like that.
Well, that’s the truth. I I assume you’re gonna have follow up questions for me. And that’s not what the
listeners or the viewers wanna hear. I don’t know, but anyone answering that question, that’s the
honest answer. I dunno.
01:05:06 [Speaker Changed] A hundred, a hundred percent. And people don’t realize it makes the
matters worse. The journalist writes up the, the story, someone else writes the headline and they’re
looking for the clt most salacious percent thing to pull out. How many times have you read a story
where you read the headline and the story is not do and the story has nothing to do with that headline?
Do it right. Hundred percent. It’s really true. I don’t know is probably the most underused phrase on
Wall Street. And it really should be because you know, first of all, it’s great when you’re do it on live tv,
you get a question. So where’s the market gonna be in a year? I don’t know. I don’t know how, how,
how am I supposed to know? Nobody knows. Nobody knows. It’s, it’s,
01:05:45 [Speaker Changed] And again, like 1980 seven’s example, even if you nailed 1987 and said it’s
flat, the market’s not gonna do anything. No one’s gonna believe, oh yes it is, the market is gonna do a
lot. It just right. It’s not gonna end the year with much to show for it.
01:05:57 [Speaker Changed] That, that’s really funny. So given everything we’ve said about the markets,
the duck paddling underneath, what’s going on below the surface, how should investors think about
forward expectations? What, what should they think about, Hey, you know, we’ve been seeing this,
2010 is the market, what do we average 13, 14% a year, even with some bad quarters in that the rest of
2020 was amazing, 21 was huge, 23 was huge. Here we are starting out 24 strong. At what point should
investors begin to moderate return expectations?
01:06:33 [Speaker Changed] Well, the discipline of rebalancing keeps you in gear in perpetuity without
having to figure out, okay, is this the moment I wanna lessen risk in my portfolio or take more risk in my
portfolio? But I think the two key risks right now have more to do with called the internals of the market
than anything out there that we’re observing as risks. Obviously, you know, geopolitics and the election
and black swan risks are always the potential, but I think sentiment and valuation. Now, the one
important caveat around saying sentiment and valuation are a risk in this case, meaning sentiment’s
gotten pretty frothy, both attitudinal measures and behavioral measures and valuation is fairly stretched
as the important caveat is neither even at extremes represents anything resembling market timing tool.
As we all learned in the 1990s, valuation can get stretched and sentiment can get stretched, and that
can last for years.
01:07:24 What it does is set up maybe a risk factor to the extent there’s a negative catalyst when you
sort of have everyone on one side of the boat and you’re priced for perfection. But again, that
environment can last. But I would certainly put both of those in the risk column. In terms of what could
the potential negative catalyst be that could cause a contrarian move relative to optimistic sentiment?
Well, we’ve already talked about a lot of them. It, it could be something outsized in terms of inflation or
the Fed policy, you know, reaction function, geopolitics is ever present. Given that 2023 was a very low
volatility year, you’ve got the likelihood of mean reversion and you throw the election into the mix as a
potential volatility driver. I don’t think that’s a stretch otherwise, I think you stay up in quality within the
equity portion of the portfolio. I think factor based investing makes a lot more sense than monolithic
groups of stocks or even maybe at the sector level, investing based on characteristics and looking for
quality companies with strong balance sheets and ample interest coverage and strong free cash flow
and positive earnings trends and revisions and, and apply that analysis across the spectrum of sectors
and even cap ranges, really
01:08:31 [Speaker Changed] Informative and insightful. Let’s jump to our speed round. Our favorite
questions that we ask all of our guests starting with tell us what’s entertaining you. What are you
watching or listening or streaming these days?
01:08:44 [Speaker Changed] So I don’t read a lot of books. Every once in a while I’ll listen to them, but
I’m a big podcast listener, aside from our own and yours, I’ve always been a fan of Masters
01:08:54 [Speaker Changed] In business. I always tell people, you don’t have to mention this. No,
01:08:56 [Speaker Changed] No, no. I I I’ve been a regular listener of Masters in business in podcast form
and listening to you on the, on the radio. So I
01:09:02 [Speaker Changed] Even in the beginning when it in
01:09:04 [Speaker Changed] Terrible, even in the, I’m a long time fan. No, well ’cause I was a guest sort
of in the beginning, right? So you
01:09:08 [Speaker Changed] Weren’t sort of, you were one of the, the early guests. I, when I couldn’t get
anyone on, I worked my way through my personal phone book and then
01:09:17 [Speaker Changed] Well, you couldn’t get anybody on. You got me on.
01:09:20 [Speaker Changed] Yeah, no, no, seriously, the general response to requests was no, when I
asked somebody I knew personally. I don’t mean you weren’t anybody. When I asked someone I knew,
all right, I’ll do you a favor. ’cause really nobody’s paying attention to this. That was then now’s 10
million a
01:09:39 [Speaker Changed] Year. But I’m, but I am, I am a fan. Grant Williams has a few podcasts and
he always has really fascinating guests on
01:09:46 [Speaker Changed] Very eclectic mix of people.
01:09:48 [Speaker Changed] Very eclectic mix. But I like that it, it’s often macro focused. And there’s a
number of other podcasts sporadically that I’ll listen to outside of the world of finance. I’m a big
Smartless fan. Oh sure. I mean, they’re just so funny and, and so lovely and brilliant. And so
01:10:03 [Speaker Changed] That’s, I think they just sold that, that for an ungodly amount of money too.
01:10:06 [Speaker Changed] Yes, good for them.
01:10:07 [Speaker Changed] Good for them. Good for them. Yeah, that’s,
01:10:09 [Speaker Changed] That’s it. And then streaming, I guess the one that I’m in the midst of now is
Feud Capote versus the Swans. Really? Yes. So it’s, it’s not a documentary, but it’s, you know, based on
true stories, but with great actors playing parts and it’s multi episode. And so that’s, that’s a good one
that I’m into right now.
01:10:28 [Speaker Changed] So I kind of know the answer to this question, but I want to ask in any way
for anyone listening this deep into the podcast, tell us about your early mentors who, who shaped your
career.
01:10:38 [Speaker Changed] So Marty’s wi clearly, obviously
01:10:40 [Speaker Changed] Right,
01:10:41 [Speaker Changed] Lewis Ru Kaiser in terms of my entree into the world of television and
learning what matters and what doesn’t matter. And I I got it. Chuck Schwab,
01:10:51 [Speaker Changed] I know you, you said you’re, you’re too busy reading research reports to
read a lot of books in addition to winning on Wall Street by Marty Zweig. Any other books you would
recommend to someone interested?
01:11:00 [Speaker Changed] Yes, so the, one of the best books I ever got about investing was given to be
my Marty when I started in the business in 1986. And it’s a little book, it’s paperback, a lot of people
have probably heard of it, but reminiscences of a Stock Operator, of course. It’s just so fabulous. And I
also like, and it’s similar in its sort of size and structure with paperback, where are the customer’s
yachts? So those are my two. And then, you know, winning on Wall Street, you know, I gotta plug
Marty’s book and that, that still resonates even today, right now, at times I’m listening to a book and I’ll,
I’ll listen to, you know, 15 minutes at a time and then not listen to it for months and months is by
Nathaniel Filbert. And it’s just the history of Nantucket where oh really? Which is my place. I spend parts
of the summer and about the, the era from the 16 hundreds into the 17 hundreds when it was the
whaling capital of the, the world. And so that’s a,
01:11:49 [Speaker Changed] I’m gonna share a book with you only because you are now in Naples. I just
finished reading Bubble in the Sun, the history of Florida real estate Booms and busts. Ah, and the
theory is the Florida real estate boom in the twenties is the biggest migration in US history and its
collapse was one of the factors that led to the Great Depression. It, it’s an deeply researched, absolutely
fascinating. Remember that. All right, good. I think you would really
01:12:19 [Speaker Changed] Appreciate that. I’m gonna add it to my list,
01:12:21 [Speaker Changed] Our final two questions. What sort of advice would you give to a recent
college grad interested in going into finance or investment?
01:12:30 [Speaker Changed] I would say, and this is advice I would give to a college grad, going really
into just about any industry, but I think maybe finance a little bit more too many college grads than
coming into finance. It’s about, well, what did I learn in college? What courses did I take? To fairly
honest, it doesn’t matter. You’re not, you’re not bringing something into the mix that the company
doesn’t already know. So the the more broad advice I always give to people who are starting out and
they’re going through the interview processes, there always seems to be this strong desire to come
across as interesting, be interested, focus more on being interested than being interesting. Huh,
01:13:05 [Speaker Changed] Good advice. And our final question, what do you know about the world of
investing today? You wish you knew 36 years ago when you were first getting started
01:13:15 [Speaker Changed] To start early and young?
01:13:17 [Speaker Changed] Start early and young. Yep. The power, the magic of compounding.
01:13:20 [Speaker Changed] The magic of compounding. And, and even if it means sacrificing a little of
the pleasures when you’re much younger and you’re trying to divide a very small amount of money into,
you know, fun versus savings versus work is, is starting early is just so powerful. Even if it’s just putting it
in some version of savings.
01:13:39 [Speaker Changed] Lizanne, this has been just absolutely delightful. Thank you, thank you. My
pleasure so much for being so generous with your time and allowing me to really improve on our first
conversation, which in preparation for this I listened to and was just utterly mortified. Oh, not
01:13:56 [Speaker Changed] I disagree with you now. I didn’t,
01:13:57 [Speaker Changed] Not because of you, because Sumit,
01:13:59 [Speaker Changed] I didn’t listen to the whole thing at your suggestion. I listened to the first,
just the opening five or 10 minutes and, and I still remember it like it was yesterday.
01:14:08 [Speaker Changed] I, I remember sitting in that darkened room room around that round table,
you, me and Larry. Literally my first television appearance, I wanna say that was like oh three.
Something crazy like that. Yeah, it might have been. So anyway, we have been speaking with the
delightful Lizanne no e Saunders Chief Investment strategist at Schwab, helping to oversee over $8
trillion on their platform. If you enjoy this conversation, well be sure and check out any of our previous
500 discussions we’ve had over the past 10 years. You can find those at iTunes, Spotify, YouTube,
wherever you find your favorite podcasts. Be sure to check out my new podcast at the money short, 10
minute questions and answers with experts about your money. I’m really enjoying doing this podcast to
just get to the meat of an issue. 10 minutes. You can find those in your Masters in Business Feed. I
would be remiss if I did not thank the crack team that helps us put these conversations together each
week. Robert Bragg is my audio engineer. Atti ValRun is my project manager. Anna Luke is my producer.
Sean Russo is my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on
Bloomberg Radio.

 

~~~

 

The post Transcript: Liz Ann Sonders, Schwab appeared first on The Big Picture.

TIME To Panic: Joe Biden's Campaign "In Trouble" Despite Obama Warning

Zero Hedge -

TIME To Panic: Joe Biden's Campaign "In Trouble" Despite Obama Warning

"Don’t underestimate Joe’s ability to fuck things up." -Barack Obama

With less than eight months before the 2024 election, the Biden re-election campaign is in big trouble. Not only is Biden lagging in the polls vs. Donald Trump, the border crisis he created by shredding all of Trump's Executive Orders on immigration has resulted in 10 million illegals flooding into the United States - which has left even Democrats livid.

Illustration by Klawe Rzeczy

What's more, Biden is quickly losing the support of young Americans, and the latino vote.

Things are so bad that TIME magazine has just devoted 3,700 words to let us know that Barack Obama 'warned' the Biden campaign last June that defeating Trump would be harder in 2024 (because no pandemic or hoax dossier to set him up?). Six months later, Obama 'saw few signs of improvement.'

Obama returned to the White House in December, with a 'more urgent' message: the re-election campaign was behind schedule in building out field operations, and that an 'insular group of advisers' in the West Wing was hamstringing the effort.

Now, it's really bad...

Three months later, the 2024 general election is under way, and Biden is indeed in trouble. His stubbornly low approval ratings have sunk into the high 30s, worse than those of any other recent President seeking re-election. He’s trailed or tied Trump in most head-to-head matchups for months. Voters express concerns about his policies, his leadership, his age, and his competency. The coalition that carried Biden to victory in 2020 has splintered; the Democrats’ historic advantage with Black, Latino, and Asian American voters has dwindled to lows not seen since the civil rights movement. -TIME

Meanwhile, Biden's inner circle is "defiantly sanguine" as a "fog of dread" descends on Democrats.

The rest of the TIME article is full of anecdotes of dissatisfied Democrats, particularly young voters such as 20-year-old Aidan Kohn-Murphy.

It has nothing to do, as many assume, with the President’s age. With palpable frustration, Kohn-Murphy enumerates the list of perceived policy “betrayals” as though they were “tattooed on the back of my hand.”

According to the report, GenZ voters "don’t understand why they should be compelled to cast their ballot for a candidate who has done so many things that are against their values," said Kohn-Murphy.

Losing the minority vote

In 2020, Biden carried 87% of the black vote. Now, he's polling at just 63%, a sharp decline. Meanwhile four years ago he won hispanic votes by a ratio of 2 to 1. He now trails Trump in that bloc.

Biden's support of Israel amid the Gaza war has "tanked his standing with Muslim and Arab voters," particularly in "must-win Michigan."

Overall, Biden’s advantage over Trump among nonwhite Americans has shrunk from almost 50 points in 2020 to 12, according to the latest Times/Siena poll.

"It boils down to voters of color, and those voters are pissed," said one former Biden campaign and White House official, who spoke on condition of anonymity. "I think it’s very likely he’ll lose."

What's more, nearly two dozen senior Democratic sources told TIME that Biden's "campaign mechanics, structure, and staffing over most of the past year are partly to blame as well."

While Obama was marching to re-election over the summer of 2012, his campaign head count topped 900. Despite plans to hire 350 new staffers, the Biden campaign ended 2023 with only around 70 paid employees, according to campaign finance filings.

Biden advisers don't care about the president's dismal numbers with young and nonwhite voters, as the "Biden brain trust" thinks they'll vote for him again regardless.

"We’ve reached out to this group of nonwhite and young voters earlier than any presidential campaign ever has," according to senior adviser Becca Siegel.

Good luck with that...

Illustration by Tim O'Brien for TIME Tyler Durden Sun, 03/24/2024 - 13:25

The Insanity In Our World Is Driven By Money Printing

Zero Hedge -

The Insanity In Our World Is Driven By Money Printing

Authored by Marty Bent via BombThrower.com,

Fix The Money, Fix The World

This chart has been making the rounds on Twitter this week and I think it’s a good image to send you freaks into the weekend with.

It’s easy to get swept up in the chaos of the day-to-day volatility that exists in our world. Recently, our minds have been inundated with headlines about illegal immigration, squatters and the degradation of private property rights, war across the world, small battles within the larger “culture war”, increasing prices, and the decisions made by central banks around the world. In the midst of all of this chaos it is important to take a step back and remind yourself of what lies at the core of most of these issues; the fact that we’ve completely broken money.

When you break money, the most important tool humans use to facilitate economic activity, a ripple effect of negative consequences begins to emanate from the root of the world’s engine. Those ripples create the momentum that leads to chaos that we are witnessing today.

Broken money leads people to store their value in sub optimal vehicles like housing. This drives the cost of real estate up unnaturally and increases the gap between the “haves” and the “have nots”. Sowing seeds of animosity. Seeds that, when left to germinate and grow via the further degradation of the money people use, blossom into ugly flowers of Anarcho Tyranny.

This has manifested in the trend of people claiming other’s houses by squatting in them when they are left unattended for an extended period of time. The preferential treatment that has been given to squatters over homeowners in recent years can be seen as the regime which controls the money printers throwing the plebs a bone as they struggle to get by, an attempt to push the productive class to violence against a state unwilling to respect private property rights, or a combination of the two.

Broken money incentivizes governments to allow their borders to be bum rushed by cheap laborers who will take low paying jobs that enable the systemically fragile economy to keep chugging along while simultaneously increasing the chaos that already exists and diluting the values that the natives of this country believe in.

The excess and decadence enabled by a world run on broken easy money allows people to live in a detached reality that leads them to push objectively false narratives. This is why there are running debates about gender and a retreat from merit based compensation.

All of this stems from broken money.

The chart above should act as a reminder to you all that the biggest problem in the world right now is the money. The chart above should also prove to you that the most powerful people throughout the economy are going to fight tooth and nail to protect the broken money because they benefit massively from the fact that it is broken.

Keep this in mind as the chaos increases and narratives begin to form around using bitcoin as money.

*  *  *

Get on the Bombthrower mailing list here and receive a free copy of The Crypto Capitalist Manifesto, which outlined all this. However, by the time you read this it may already be too late to sign up for The Bitcoin Capitalist Letternew subscriptions will be closed once Bitcoin hits a new all-time high.
Follow Marty’s Bent via TFTC.io

Tyler Durden Sun, 03/24/2024 - 12:50

US & NATO Issue Rare 'Solidarity' Messages After Moscow Attack As Death Toll Rises To 137; Bizarre Terrorist 'Confessions' Emerge

Zero Hedge -

US & NATO Issue Rare 'Solidarity' Messages After Moscow Attack As Death Toll Rises To 137; Bizarre Terrorist 'Confessions' Emerge

Russian state media has underscored that "partners and geopolitical rivals alike have joined the chorus expressing horror in the wake of the Crocus City Hall attack."

This has somewhat surprisingly included a statement of solidarity from Washington, as the death toll has has risen to 137 killed. "The United States strongly condemns yesterday’s deadly terrorist attack in Moscow," Secretary of State Antony Blinken said in a Saturday statement. "We condemn terrorism in all its forms and stand in solidarity with the people of Russia in grieving the loss of life from this horrific event."

Reports: The Burj Khalifa lights up in the colors of Russia and says: "UAE stands in solidarity with Russia."

Even NATO issued a statement of condolence, with NATO spokesperson Farah Dakhlallah saying on X that the Western military alliance "unequivocally condemn the attacks targeting concertgoers in Moscow." 

"Our deepest condolences to the victims and their families," she said, adding that "nothing can justify such heinous crimes." Pope Francis too has offered special prayers for victims on Sunday.

But still Western officials hit back at President Putin's attempts to link the terror attack, which ISIS-K has reportedly taken responsibility for, to Ukraine. Both the president and Kremlin officials have alleged the gunmen were trying to escape through Ukraine territory, utilizing a 'window' of support from across the border.

The fire which raged for many hours in the wake of the terror attack gutted the Crocus complex and part of the roof caved in. Below is stunning video of the aftermath:

UK Chancellor of the Exchequer Jeremy Hunt has told Sky News that Britain has "very little confidence in anything the Russian government says."

"We know that they are creating a smokescreen of propaganda to defend an utterly evil invasion of Ukraine. But, that doesn’t mean that it’s not a tragedy when innocent people lose their lives, when you have horrible bombings," Hunt said. Hunt further emphasized that London takes "what the Russian government says with an enormous pinch of salt… after what we have seen from them over the last few years."

Meanwhile Russia continues to investigate who was ultimately behind the attack as it currently has eleven people in custody, and among them are said to be the four gunmen.

Videos have emerged online showing some of their apprehensions as well as confessions, surrounded by several Russian security service personnel.

While Russian authorities are still very early in their investigation, the 'confessions' and claims and counter-claims which are still emerging remain bizarre and murky:

On Saturday, RT Editor-in-Chief Margarita Simonyan posted footage of the interrogation of one of the suspects. The man in the video claims that he went on the killing spree after he was promised 500,000 rubles ($5,400).

The suspect also claimed that his handlers had instructed him as to where the attack should take place. He said he was ordered to “kill people there… doesn’t matter who.” The suspect claimed that the terrorist act was organized on Telegram with an unknown person who provided weapons.

Russia has said the attackers are not Russian citizens...

The gunmen had later the same day of the attack been apprehended in Bryansk Region, "not far from the border with Ukraine," according to Russian official statements.

Amid an ongoing flurry of speculation over the circumstances surrounding the Crocus Hall massacre, and the question of whether state actors or intelligence services may be involved, more videos have emerged which appear to tie the attackers to the Islamic State.

Prior social media claims that asserted one or more attackers were Ukrainian appear to have been debunked. Various theories continue to be advanced, also by mainstream pundits. Independent journalists such as Glenn Greenwald have pointed out that there are many more questions than there are answers at this point, but an MSM narrative has already quickly solidified.

In a statement released Sunday, the Russian Investigative Committee detailed that "Four sets of combat ammunition, with more than 500 bullets and 28 magazines, and two Kalashnikov assault rifles, which the attackers were armed with, were confiscated from the scene of the tragedy."

The SITE Intelligence Group, which is often cited and relied upon in Western media, claims that the Islamic State through its official channels has "revealed the four fighters involved in the Moscow concert hall operation" and is "boasting" about its "fiercest attack in years." Russia has long been an avowed enemy of ISIS, especially after the Russian military intervention in Syria starting in 2015, when Putin joined Assad in battling jihadists in the war-ravaged country.

ISIS propaganda channels have reportedly released cell phone videos from the attackers themselves...

Meanwhile, the Russian government has continued to question what intelligence concerning the planned attack that Washington may have had ahead of time. In a March 7 emergency alert, the US Embassy in Moscow said it was "monitoring reports that extremists have imminent plans to target large gatherings in Moscow, to include concerts."

The embassy further urged all US nationals in the country to remain vigilant and "monitor local media for updates." The Kremlin has demanded answers and even raised the possibility of Western involvement, given also the current claims that the terrorists may have had a 'Ukraine connection'. 

Some of the newly released footage is extremely graphic, in one instance showing a man's throat being slit (the below is censored for online release):

Russian ambassador to the US Anatoly Antonov has on Sunday issued a statement saying that it was the United States which first destroyed anti-terrorism cooperation between the two countries. However, anonymous US intelligence officials who spoke to major US media outlets claim that Moscow was notified that a big terror act was going to happen. But Antonov has said "some things [in this cooperation] worked out… and it is all destroyed today through no fault of our own."

"We did not receive any notifications or messages in advance," Antonov told RIA. However, White House spokesman John Kirby has sought to clarify, "I’m not aware of any advance knowledge that we had of this."

Tyler Durden Sun, 03/24/2024 - 12:15

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