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I tend to be sort of in the Stevie Cohen Camp it's not like the bottom is going to fall up but there's like a lot of
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room for concern I guess is the best way to put it Nick I don't know if you can find that clip that at fi but he had a
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very precise summary of how he saw the world and I I I frankly just agreed with everything that he was saying so he he
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probably can say better than I when you take a brew of tariffs on top of that we
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have slowing immigration and in addition now have Doge I mean that's austerity we
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think growth is going to slow to 1 and 12% from 2 and 12% in the second half and so I'm actually pretty negative for
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the first time in a while and it may only last a year or so but it's definitely I think the best gains have
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been had and and wouldn't surprise me to see a significant correction I think a couple of very specific thoughts the
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first is that you're starting to see this compression of the mag 7 towards everybody else so this is the
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forward PE of these guys and so what you're starting to see is everybody else starting to capture back some of the
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ground people are processing what the real upside of of the mag s is now if you go to the other
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chart what this starts to show you though is that mag7 is really price to Perfection and so you have to believe
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that the world kind of stays the way that it is otherwise you're going to have some amount of of mean
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reversion so I think the stock market on the margin is a little expensive and not
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particularly that attractive second the bond market has basically said okay we are going to give you credit that doge
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is going to work and that tariffs are going to work so we've had some pretty meaningful compression in the 10e which
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I think is really interesting I think it's very good for bessent and for Trump and I think I've mentioned this before
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but we got to go in and you know refinance 10 trillion dollars in the next six months
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so you could see this thing maybe even get under 4% if we gets a good string of data the real problem I think though is
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that if you look back and say what does this look like the example that I would give you
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guys is in 2010 in the United Kingdom the deficit as a percentage of GDP was 10% and the UK government embarked on a
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multi-year austerity plan and they said we're going to get the deficit as a percentage of GDP back in line and
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ultimately by 2016 it got to 3% which is where we are trying to get to and right
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now we're a little bit under 7% we're trying to get it to 3% so it's interesting to ask what
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happened and there the bond market gave the UK government a ton of credit so they kept rates relatively low and they
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brought them back from where they were that seems like What's Happening Here Yeah the stock market the stock market
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kind of went sideways to a little bit down let's see what happens here but the real big thing is in the UK all of this
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created tremendous dissatisfaction and you had brexit so I think the question that I
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have is if we go through a prolonged austerity program and the frustration amongst the
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American populist builds what's the release valve there the release valve was Voting to leave the EU here it's not
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quite it's not obvious to me what a releas electing Trump was step one and I don't know if there's something even
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more populist than Trump other than no I I think he is the mechanism of implementing the austerity I think
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people want this austerity just the question is what happens when the actual byproducts of that austerity are felt by
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people for six or seven years I don't know what the answer is you've been talking a little bit about this I don't
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if was a couple weeks ago you were tweeting about the great reset Theory and there's you know whatever that is
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the third or fourth turning people have been talking about you want to uh maybe encapsulate your thoughts I think you
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have to figure out what the goal is so one goal is you could say that the Republicans want to
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have consistent political power right that's a reasonable goal the Democrats want that too right a different goal
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would be to do what freeberg said we're going to go and take the lumps because we are going to defend the dollar and
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The credibility of the United States we're just going to make sure that structurally it's sound and take the
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pain that's necessary to reset that could be a goal I think the reality is something in the Middle where you can't
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be in one camp and you can't be in the other because I don't think you can get anything done and somewhere in the
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middle I think the thing that I have been thinking about is when will somebody sniff
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out what the great Coalition is that preserves political power whether that's the Democrats or the
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Republicans the reality is that you will have a consistent majority if you get three cohorts of people together cohort
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number one are the people that frankly don't have many assets and are the working in Middle Class meaning they
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don't necessarily own homes they don't necessarily have investments in the stock market so they don't particularly
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care about what's happening there okay that cohort dominates there was a clip of
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a discussion at Harvard just this past week about the different political coalitions that voted for Trump versus
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kamla Harris the most important takeaway that I took from it is that if you make
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$100,000 or more a year you're a reliable Democratic voter if you went to college you're a reliable Democratic
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voter everything else is a reliable Republican voter but the thing to remember is that bucket of everything
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else is growing faster than that first bucket so you have this Coalition of the asset light working in middle class and
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then you have other people patriotic business people and patriotic business owners and Technology people that care
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about Innovation that Maga has been able to correct into a coalition my point is if that is the
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consistent reliable thing that cements political power multiple elections from now and we've seen this before in the
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past where Republicans can go on a three-term run or you know a four-term run Democrats have as well in the past
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it is bad news for the stock market and it is bad news for asset owners because it doesn't reward the constituents back
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to Freed Brook's point so if you are going to feed your constituents and your constituents don't own stocks and your
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constituents don't own homes or they are so wealthy that they can be inoculated from a massive draw down in those asset
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categories what do you think the winning strategy is that is my rough working version of
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what our version of brexit is right so if you have many many years of austerity what
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does it really result in I think if you want to cement political power I think it
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requires a walking down of these asset markets in a meaningful way that's stocks and that's real estate and I just
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don't see any other way around it fascinating the good news is I think from my perspective is but by the way
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sorry last thing I would say that's a total Theory and I could change my mind as I get more data but I'm just saying
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like I'm just trying to work through the possibilities and in the distribution of
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outcomes that's sort of where my head's at right now