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I tend to be sort of in the Stevie Cohen
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Camp it's not like the bottom is going
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to fall up but there's like a lot of
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room for concern I guess is the best way
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to put it Nick I don't know if you can
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find that clip that at fi but he had a
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very precise summary of how he saw the
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world and I I I frankly just agreed with
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everything that he was saying so he he
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probably can say better than I when you
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take a brew of tariffs on top of that we
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have slowing immigration and in addition
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now have Doge I mean that's austerity we
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think growth is going to slow to 1 and
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12% from 2 and 12% in the second half
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and so I'm actually pretty negative for
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the first time in a while and it may
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only last a year or so but it's
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definitely I think the best gains have
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been had and and wouldn't surprise me to
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see a significant correction I think a
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couple of very specific thoughts the
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first is that you're starting to see
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this compression of the mag 7
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towards everybody else so this is the
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forward PE of these guys and so what
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you're starting to see is everybody else
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starting to capture back some of the
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ground people are processing what the
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real upside of of the mag s is now if
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you go to the other
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chart what this starts to show you
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though is that mag7 is really price to
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Perfection and so you have to believe
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that the world kind of stays the way
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that it is otherwise you're going to
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have some amount of of mean
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reversion so I think the stock market on
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the margin is a little expensive and not
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particularly that attractive second the
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bond market has basically said okay we
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are going to give you credit that doge
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is going to work and that tariffs are
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going to work so we've had some pretty
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meaningful compression in the 10e which
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I think is really interesting I think
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it's very good for bessent and for Trump
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and I think I've mentioned this before
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but we got to go in and you know
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refinance 10 trillion dollars in the
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next six months
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so you could see this thing maybe even
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get under 4% if we gets a good string of
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data the real problem I think though is
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that if you look back and say what does
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this look
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like the example that I would give you
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guys is in 2010 in the United
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Kingdom the deficit as a percentage of
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GDP was
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10% and the UK government embarked on a
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multi-year austerity plan and they said
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we're going to get the deficit as a
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percentage of GDP back in line and
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ultimately by 2016 it got to 3% which is
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where we are trying to get to and right
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now we're a little bit under 7% we're
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trying to get it to
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3% so it's interesting to ask what
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happened and there the bond market gave
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the UK government a ton of credit so
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they kept rates relatively low and they
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brought them back from where they were
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that seems like What's Happening Here
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Yeah the stock market the stock market
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kind of went sideways to a little bit
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down let's see what happens here but the
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real big thing is in the UK all of this
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created tremendous
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dissatisfaction and you had
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brexit so I think the question that I
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have is if we go through a prolonged
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austerity
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program and the frustration amongst the
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American populist builds what's the
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release valve there the release valve
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was Voting to leave the EU here it's not
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quite it's not obvious to me what a
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releas electing Trump was step one and I
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don't know if there's something even
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more populist than Trump other than no I
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I think he is the mechanism of
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implementing the austerity I think
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people want this austerity just the
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question is what happens when the actual
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byproducts of that austerity are felt by
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people for six or seven years I don't
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know what the answer is you've been
00:03:57
talking a little bit about this I don't
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if was a couple weeks ago you were
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tweeting about the great reset Theory
00:04:03
and there's you know whatever that is
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the third or fourth turning people have
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been talking about you want to uh maybe
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encapsulate your thoughts I think you
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have to figure out
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what the goal is so one goal is you
00:04:20
could say that the Republicans want to
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have consistent political power right
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that's a reasonable goal the Democrats
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want that too right a different goal
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would be to do what freeberg said we're
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going to go and take the lumps because
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we are going to defend the dollar and
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The credibility of the United States
00:04:41
we're just going to make sure that
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structurally it's sound and take the
00:04:44
pain that's necessary to reset that
00:04:47
could be a goal I think the reality is
00:04:48
something in the Middle where you can't
00:04:51
be in one camp and you can't be in the
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other because I don't think you can get
00:04:54
anything done and somewhere in the
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middle I think the thing that I have
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been thinking about is when will
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somebody sniff
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out
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what the great Coalition is that
00:05:09
preserves political power whether that's
00:05:12
the Democrats or the
00:05:14
Republicans the reality is that you will
00:05:17
have a consistent majority if you get
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three cohorts of people together cohort
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number one are the people that frankly
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don't have many assets and are the
00:05:30
working in Middle Class meaning they
00:05:32
don't necessarily own homes they don't
00:05:34
necessarily have investments in the
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stock market so they don't particularly
00:05:38
care about what's happening there okay
00:05:40
that cohort dominates there was a clip
00:05:43
of
00:05:45
a discussion at Harvard just this past
00:05:48
week about the different political
00:05:49
coalitions that voted for Trump versus
00:05:51
kamla Harris the most important takeaway
00:05:53
that I took from it is that if you make
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$100,000 or more a year you're a
00:05:59
reliable Democratic voter if you went to
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college you're a reliable Democratic
00:06:04
voter everything else is a reliable
00:06:07
Republican voter but the thing to
00:06:09
remember is that bucket of everything
00:06:10
else is growing faster than that first
00:06:13
bucket so you have this Coalition of the
00:06:16
asset light working in middle class and
00:06:20
then you have other people patriotic
00:06:22
business people and patriotic business
00:06:24
owners and Technology people that care
00:06:26
about Innovation that Maga has been able
00:06:29
to correct into a
00:06:31
coalition my point is if that is the
00:06:35
consistent reliable thing that cements
00:06:37
political power multiple elections from
00:06:40
now and we've seen this before in the
00:06:42
past where Republicans can go on a
00:06:43
three-term run or you know a four-term
00:06:45
run Democrats have as well in the past
00:06:48
it is bad news for the stock market and
00:06:50
it is bad news for asset owners because
00:06:52
it doesn't reward the constituents back
00:06:54
to Freed Brook's point so if you are
00:06:56
going to feed your constituents and your
00:06:58
constituents don't own stocks and your
00:07:00
constituents don't own homes or they are
00:07:04
so wealthy that they can be inoculated
00:07:06
from a massive draw down in those asset
00:07:10
categories what do you think the winning
00:07:12
strategy
00:07:13
is that is my rough working version of
00:07:18
what
00:07:19
our version of brexit is right so if you
00:07:22
have many many years of austerity what
00:07:25
does it really result in I think if you
00:07:27
want to cement political power I think
00:07:29
it
00:07:31
requires a walking down of these asset
00:07:33
markets in a meaningful way that's
00:07:36
stocks and that's real estate and I just
00:07:38
don't see any other way around it
00:07:39
fascinating the good news is I think
00:07:42
from my perspective is but by the way
00:07:44
sorry last thing I would say that's a
00:07:45
total Theory and I could change my mind
00:07:47
as I get more data but I'm just saying
00:07:49
like I'm just trying to work through the
00:07:51
possibilities and in the distribution of
00:07:53
outcomes that's sort of where my head's
00:07:54
at right now
