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the thing that we haven't talked about is with all of the tariffs with all of the
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financing questions with all of the recession questions short-term rates long-term rates the one thing that we
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haven't sufficiently talked about it's not really in the press but it needs to be talked about is there is a tremendous
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amount of corporate debt that supports these businesses today and you would say well if long-term rates go
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down there's no real risk but the tariff picture actually impacts revenues right
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and the problem with that is that there's a lot of companies that have debt covenants tied to revenue and ibida
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and so this is what I spoke about at the beginning of January which is the one risk that is
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uncontrollable is what happens to corporate debt and could we see a wave of defaults and a wave of action nick
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you may want to just play the clip and we can talk about what we can do about this this was my pick for the best
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investment idea go ahead all right here we go from What do you got so let me preface this by
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saying that this is a pick that 92 times out of 100 goes to absolute zero and six
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out of the remaining eight times you make 10x extra money and then the final two times you make anywhere between 100
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to a,000 extra money this is a loser trade but I would be long CDS so what am I buying i am buying
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insurance i'm buying insurance using credit default swaps i'm buying what's called protection that there is no
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default event in 2025 i would like a little bit of an insurance policy in 2025 so that the men and the women that
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we have voted in have the chance to do their work in peace i think that there is a small chance of some volatility
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next year i hope it doesn't happen i hope that this trade loses money but if it hits it will be the best performing
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asset of 2025 and I just want to be clear this is not something I think will happen it's not something I want to
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happen but I do think that if you look back in terms of just the tonnage of dollars you can make and the massive
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risk asymmetry that it presents to you when you look at the concentration of the S&P when you look at just the total
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gross amount of debt that we have when you look at rate spiking all of these things say having a little insurance may
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not be a bad thing it has hit nick you can show the CDS graph so this thing for every billion
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dollars of risk you would have put on every billion dollars that you put on would have cost you about a million
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dollars and that million dollars would have made you about $7 million in about 3 months did you put it on i'm not going
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to comment on my my trades Jason oh okay but we tal we talked about it off air already but if you did put it on does
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that mean you're taking us all to Italy this summer no what's happening here are
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you getting a boat for us to record from the all-in yacht no but there may be some boats for sale if this trade keeps
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going this way oh why is this important the CDS actually represents the structural risk in the United States
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private economy in the corporate economy and so Nick if you just put it back on so when you see these spreads blowing
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out this is actually a very important warning sign and this is actually a thing that I think Scott understands
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well Howard understands well i think they'll translate this to the president if I have an opportunity to explain it I
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will but this is a really important market to pay attention to this is what was the canary in the coal mine for the
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great financial crisis this was the stuff that showed us that there was a big default event happening in the
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mortgage side of the market but then that spilled over to the broader economy and so the tariff picture and the
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recession picture will get played out in this chart and I think it's something that folks can and should probably pay
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tremendous attention to because I think now that this trade is in the money the question is I don't think we want this
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to happen that one sigma two sigma event where all of a sudden this trade returns
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a,000x is really