They Don’t Pay You at Halftime and a Conversation with Bill Pulte

Bullish Studio

Guy, Dan and Danny discuss the worst first half for the #sp500 since 1970 (1:47), the #crypto crash (11:53), what the mid-term #elections could mean for the #stockmarket (15:53), an interview with Blackstone’s Joe Zidle on CNBC’s Fast Money (20:31), what Dan is buying right now (28:18), the energy space (34:12), what’s happening with Elon Musk and Tesla (38:21). The co-hosts interview Bill Pulte and talk about Twitter #philanthropy  (48:04), the #Pulte family (52:45), #bitcoin  (1:00:53), and #homebuilders  (1:12:14).

Transcript

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00:01:17 platform visit iConnections.io. In 1974 there were a bunch of great movies. One

00:01:25 of the most underrated movies of that year starred one James Caan. It was

00:01:30 called The Gambler. Paul Sorvino was in that movie. Lauren Hutton, if you recall,

00:01:35 was in that movie. The reason I bring it up is because James Caan played the

00:01:39 aforementioned gambler. His name was Axel and he made a series of bets and he was

00:01:44 out in Las Vegas and he was listening to these games and at halftime he was up

00:01:50 big on all of his bets. He subsequently left thinking that he was going to be a

00:01:55 winner only to find out that all his teams lost. The point is, and one of the

00:01:59 lines from the movie Dan Nathan is, "They don't pay you at halftime Axel." And here

00:02:05 we are at halftime in the market and although a lot of the things that we've

00:02:09 been talking about are playing out, they don't pay you at halftime. So there's a

00:02:13 lot of runway left in this year, but I think first and foremost, it would be

00:02:17 interesting to go back and sort of look at some of the things that have happened

00:02:19 over the last six months. Well, it's interesting, right? So if you were a bear

00:02:22 coming in this year and you look at the S&P 500 limping into the close of this

00:02:27 quarter down what 20 or so percent, we're gonna close in a technical definition of

00:02:32 a bear market. The Nasdaq is down about 30%. There's no victory lapse right now.

00:02:36 When you think about just all of the cross currents in the economy and you

00:02:40 think about so many parts of the stock market that have been correcting for

00:02:43 over a year, many since their highs in Q1 of 2021, the broad market, the major

00:02:50 indices don't really reflect the sort of devastation that's going on in large

00:02:55 parts of the market. So in some ways you're gonna have to wait until the

00:02:59 fourth quarter to get paid if you're the gambler playing for an all-out

00:03:02 destructive period as it relates to equities. And I know that Liz Young gave

00:03:06 us this stat guy earlier in the day when we were speaking to her that she said

00:03:10 the average decline in a recession for the stock market is like 30% or so and

00:03:16 we're very likely to be in a recession and so down 21%. Talk to me when the S&P

00:03:21 has round-tripped all the way back to its pre-pandemic highs from February 2020

00:03:25 which is just below 3,400 which would be a 30% peak to trough decline. Then you

00:03:29 can start talking about how we bought them. Danny, was this time last year you'd

00:03:33 started to bring up the term that everybody's heard of but very few people

00:03:37 were talking about the time stack inflation and so many things that you

00:03:40 were talking about last summer have absolutely come to fruition and Dan

00:03:44 said we're not here to take victory laps. No, we're not. What we are here to do is

00:03:48 sort of point out what's going on and what we think is going on moving forward.

00:03:52 So your calls have been prescient in a word all playing out right before our

00:03:56 very eyes. My question now is how does the rest of the year sort of play itself

00:04:00 out because right now there's many cross currents in the market as I've seen in

00:04:04 quite some time. Yeah I would just add to the first half pain was not just about

00:04:08 the stock market it's about the bond market and so there's really nowhere to

00:04:11 hide as the cost of everything was getting more expensive at the same time.

00:04:13 So you started out with movie The Gambler which is near and dear to my

00:04:17 heart. I was watching Powell speak yesterday or actually that's not true I

00:04:20 didn't watch it speak. I heard about him speaking and then I watched the

00:04:23 recording at this ECB forum on inflation and reminds me of Princess Bride. The

00:04:27 great Vizzini played by Wallace Shawn right. Inconceivable. Remember the whole

00:04:31 thing right. So his quote in Princess Bride was you felt victim to one of the

00:04:35 classic blunders never get involved in a land war in Asia. That made about as much

00:04:39 sense as what Powell's quote was yesterday which was we understand better

00:04:43 how little we understand about inflation. I mean he should resign honest to God.

00:04:48 That is the head of the Federal Reserve. Say what you want about the Federal

00:04:51 Reserve. The fact that he says that is nuts and he said again I will hike into

00:04:55 recession. I will hike into a slowing economy because I'm not gonna make a

00:04:58 mistake on this end. Meanwhile every single data point that's coming out

00:05:02 right now. Inflation still high very high. It's inching lower but the economy is

00:05:07 literally grinding to a halt. Retail sales are dropping off of a cliff.

00:05:11 Gasoline we already talked about demand destruction and guy I'll get to what I

00:05:15 think is gonna happen in the second half here in a minute.

00:05:17 Demand destruction is hurting the price of oil. We said that's gonna be a

00:05:20 conflict of whether to own energy stocks or not. What does that really mean? But

00:05:23 again not once has he said I am paying attention to the S&P 500 companies and

00:05:28 what they're telling us. So today as we sit here it's Thursday afternoon nearing

00:05:32 the close. Last day of the first half of the year. What's gonna happen tomorrow

00:05:35 night? Here's my prediction. This is how we're gonna start the second quarter.

00:05:38 Friday night holiday weekend dirties. That's what you call them okay. Friday

00:05:43 night dirties with a holiday weekend. They're the best time. So you have a lot

00:05:46 of companies which will be able to tell you within five or ten percent exactly

00:05:49 where they stand on the quarter. They're gonna release Friday night. So I don't

00:05:52 know how many we're gonna get but we're gonna get them tomorrow night. So guy

00:05:55 that's how it's gonna start and why the Fed or Powell whether it's not a

00:05:59 common-sense element to this and again money was free for too long. I'm not

00:06:03 disagreeing that they should be raising rates or cutting back liquidity to the

00:06:05 market but Christine Lagarde said yesterday when he said that she goes

00:06:09 well I'm gonna go slower because I think things are gonna slow down. I mean

00:06:13 there's no excuse for pumping as much money as we did globally but that being

00:06:16 said it's a drug we need to wean off of not just come off straight away. So

00:06:19 that's how we're gonna start guy in the second half. Second quarter numbers are

00:06:22 gonna be bad. We will officially be in a recession when second quarter GDP comes

00:06:26 out in a month or so and if not and if it's 0.1% growth who gives a shit. It

00:06:31 feels like we're in a recession we're in a recession people are cutting back. So

00:06:33 recession happens second quarter is gonna be puke for a lot of companies. I

00:06:37 think the market gets to it blows in the third quarter. I think in the third

00:06:41 quarter July August September I think we will hit I'm not gonna try to give a

00:06:44 number but it'll be the low three thousands on the S&P is what I think

00:06:47 happens and I think that's where we find now we may flatten out for a long period

00:06:50 of time and bob around that level but that's what I think is gonna happen and

00:06:53 the reason I say that is I think the Fed will blink I think they will stop and

00:06:58 again I'm not saying that's the right or wrong thing to do I'm feeding on the

00:07:01 animal spirits of the market and what that means and so guy I see a very very

00:07:05 choppy summer. We've seen those Augusts in a couple of times in the last 10

00:07:09 years which have been just brutal. I think we're gonna see that again and

00:07:12 it's gonna be a rocky road and I think we're inverting as we speak. Who cares

00:07:15 about the definition of a recession and who cares about definition of inversion

00:07:19 so it's three BIPs for four basis points between the two and the tenure I don't

00:07:22 need that stuff to happen to tell me what's happening but things are gonna

00:07:25 get bad and may actually feel worse than it actually is for a period of time and

00:07:29 that's when I think we bought them some time in the next three months. So this a

00:07:32 bit of a rhetorical question because I do think I know the answer to it but

00:07:35 isn't this exactly what we need to reset the system I mean isn't this two steps

00:07:39 back exactly what we need to take three steps forward because the path we had

00:07:43 gone on for so long was unsustainable and at a certain point something like

00:07:47 this in my opinion needed to happen in this reset almost by definition whether

00:07:51 it happened too late or not I don't think it's the point now it's happening

00:07:55 so isn't this what we need to sort of get to the other side of this entire

00:07:58 thing? It is but the one thing I did mention there and it's just I can't put

00:08:02 a price on it is geopolitical risk has never been greater both in the United

00:08:06 States and outside the United States right things feel very unsettled

00:08:10 everywhere and that element of that risk adding into the market only makes it

00:08:13 harder to feel comfortable in a position or to feel like the government's got

00:08:17 your back and you think about what's going on in crypto right now and what's

00:08:20 happening right now now people are begging that there was government

00:08:22 intervention they wish it was regulated to protect them billions are going out

00:08:26 the door vanishing and so these things are all occurring in real time and we

00:08:29 can't just hit the pause button and I always joked about crypto people wanted

00:08:33 the stock market to trade 24/7 please people love that crypto trades 24/7

00:08:37 please believe me talk to any crypto professional out there right now they

00:08:40 would love to not have to be salt trading for a day or two so Danny the

00:08:44 way you're talking about how bad things are you're really talking about some of

00:08:47 the financial conditions and as it relates to markets too and guy I'm just

00:08:51 curious your thoughts here because if you're just the average sort of investor

00:08:55 out there and you're feeling these inflationary pressures in your personal

00:08:59 consumption whether it be food whether it be energy you've had the benefit of a

00:09:04 solid balance sheet for the most part a lot of America have during the course of

00:09:08 the pandemic and coming out of it we hear that corporate balance sheets are

00:09:11 really good shape we know that there are pockets of over exuberance and

00:09:13 overbuilding and all that sort of stuff but if you were just that average

00:09:17 American consumer and investor and you're looking at the S&P 500 down 20%

00:09:23 so let's say it's your 401k or whatever are you panicked yet does it feel

00:09:27 horrible do you know that many people who are out of work yet you know any

00:09:30 people who've canceled the vacation because they were spending too much on

00:09:33 gas at the pump so I'm curious because we stare at these screens every day we

00:09:37 overthink all of this we talk about it a lot has it seeped into everyday

00:09:41 Americans and then let's also remember here that it's been a kind of fucking

00:09:45 crazy couple years for we're used to or conditioned to a sort of very volatile

00:09:50 lifestyle right now I'm with Danny on the geopolitical thing I think it's

00:09:54 completely underappreciated by the market but in terms of does it feel like

00:09:58 capitulation has it made its way into everyday America you know the definition

00:10:03 of a recession is your neighbor lost his or her job the definition of a

00:10:07 depression is you lost your job and we haven't obviously gotten to that point

00:10:11 yet but listen we're getting seemingly day by day closer and I think my push

00:10:16 back all the time is what difference does it make if we're in a recession not

00:10:20 in a recession does it really make a difference in terms of the market and

00:10:23 some of the pushback I get maybe correctly so is that definition if in

00:10:28 fact we are there statistically might give companies air cover to do things

00:10:33 they probably should done a while ago and that's problematic so are we at the

00:10:36 forefront yeah in terms of answering your question should people panic I mean

00:10:40 that's such a difficult word to assess people use that word I think they

00:10:45 associated always with selling and I would submit and I've done it for years

00:10:49 on fast money and I've done it here on the podcast that we see panic to the

00:10:53 upside as well and until recently I think a lot of the panic that we've seen

00:10:57 over the last couple months has been to the upside in the form of these six

00:11:01 seven eight hundred point updates seemingly out of nowhere now we're

00:11:05 starting to see potentially a little bit about panic on the downside but should

00:11:10 the everyday person pant no you obviously staying the course has been

00:11:15 the right course of action for decades and it's going to be the right course of

00:11:19 action now but what it should allow you to do almost force you to do is

00:11:24 understand what you own we talk about that all the time and understand what

00:11:29 your expenses and what your lifestyle is like and maybe instead of worrying about

00:11:33 what the other guy and gal is doing which I think has been such a huge

00:11:36 problem in this country for so long focus on what you're doing at home one

00:11:40 of the interesting things I'm reading is that it may backfire this working

00:11:43 remotely and the reason I say that as companies obviously are figuring out how

00:11:47 efficient or inefficient some of their systems are by people that aren't coming

00:11:50 into the office and I think you're gonna see people start to come into the office

00:11:54 more out of the insecurity of that so I think we're gonna see a little bit of a

00:11:58 change here people that want to have face time guy to your point about

00:12:00 definition of recession depression whatever I don't think people are gonna

00:12:04 wait I think that's gonna change quickly because people if they're not connected

00:12:07 physically sitting next to somebody just changes and it makes you more insecure

00:12:10 so I think that's gonna happen one of the areas that I think we need to

00:12:14 discuss and not so much the value of Bitcoin and aetherium and all this stuff

00:12:17 is the amount of leverage that's in the crypto system so when the world blew up

00:12:20 in 2008 and 2009 it was because the government had no idea how levered all

00:12:26 these mortgages were in prepackaged and all these different things right CDOs

00:12:29 and all the stuff I think that because crypto is unregulated we're now seeing I

00:12:35 mean I don't even add up the amount of billions that are disappearing by the

00:12:37 day or the bailouts or the leverage and these lending platforms like Celsius and

00:12:41 thank God for SPF a 30 year old genius from MIT that's gonna come in and save

00:12:46 the day and buy things up at pennies on the dollar I don't know all I'm saying

00:12:49 is this is having reverberation much bigger I just say I think of Bitcoin as

00:12:53 a 600 billion dollar 800 billion our entity I think of aetherium as a three

00:12:57 to four hundred million to wherever these things are at this point but I

00:13:00 didn't take into account the contagion that exists because if you start to add

00:13:03 up the leverage on the all these platforms even if it was a quote fake

00:13:07 money that just existed in the ether it existed on people's balance sheets and

00:13:11 it's disappearing by the second I'm just a push back for a second go ahead because

00:13:14 listen it's global though when you think about our stock market is really focused

00:13:18 on a US investor set and so that's one of the reasons why I just pushed back a

00:13:22 little bit about the leverage in the crypto system and the thought that it's

00:13:25 so concentrated here so let me push back on that so there are jobs being rescinded

00:13:31 kids that just got out of college that were going to work at blockchain where

00:13:34 they believe it or not I mean this technology is gonna be here to stay what

00:13:36 form it's gonna be those jobs are disappearing by the second so you want

00:13:39 to talk about where there is a depression and where things are

00:13:41 happening it's that particular area and it doesn't take much my point is that

00:13:44 even if that's one to two to three percent of people's portfolio some

00:13:48 people at 70% those are the doctor those are the same people who are 90%

00:13:52 and AMC but it is a confidence factor in the markets and I think those people

00:13:56 equate crypto exchanges and these things sometimes with investing and with the

00:14:02 market and these things were shells but it was the same thing with people after

00:14:05 the financial crisis and it was the same thing with the people after the dot-com

00:14:08 bus I just think when we really do the postmortem it's gonna look the same as

00:14:12 those things I agree but I think in real time my point is it's adding a lot of

00:14:15 fuel right now to the fire and just the lack of confidence people Dan are gonna

00:14:20 group them together for now if they're gonna say they're gonna think stock

00:14:22 market crypto market whether there's a group of investors that think of it that

00:14:25 way we talked about the gamification a year and a half ago when we started this

00:14:29 we talked about how people view it and my point is it it's a con game it's a

00:14:32 confidence game in terms of how people want to get back in and I'm saying

00:14:35 structurally the confidence has disappeared from that market and what I

00:14:38 mean is that I think that's gonna hurt the average retailer so it's just

00:14:42 another thing that we have to deal with and I agree it's like the dot-coms in

00:14:45 2001 2002 they were going to go to zero there except for the fact there is no

00:14:50 regulator backing this it's this SPF character that's gonna quote come in and

00:14:54 save the day and tether hasn't imploded yet I guess the point is is like okay

00:14:58 it's fine there's only a half a dozen cryptos that really matter and I know

00:15:01 you're focused on these stable coins and you're saying what's the leverage there

00:15:04 I'm looking at a bunch of stocks in the tech market these are products and

00:15:08 services we use every day that we're not particularly worried they're gonna be

00:15:11 disintermediated by blockchain technology so here's a deal Facebook

00:15:15 meta is down 60% Netflix is down this is on the year 71% Lyft is down 70% I mean

00:15:22 the list goes on and on PayPal down this Shopify is down 80% so there's plenty of

00:15:26 much bigger market cap companies that are gonna be more affected on the

00:15:31 employment front on the wage growth front so to me I actually think cryptos

00:15:34 a bit of a sideshow I don't give a shit about it I'm long a little ETH and a

00:15:37 bundle Solana unless you are right unless tether breaks and then we see

00:15:42 what the knock-on effects are I just still don't think that it's just that

00:15:45 big of a thing can I say one last thing crypto will move on I said this for

00:15:48 years why aren't the good actors calling out the bad actors why where are they

00:15:53 like you believe in your industry speak up say something like a range is frozen

00:15:57 right now so I just wanted to add that part to that makes sense you've been

00:15:59 making that point I think that's fair you know what also is gonna come up and

00:16:03 we don't necessarily talk politics here but only through the lens of what it

00:16:07 means for the market and before you know it both of you guys know this we're

00:16:11 gonna be talking about midterm elections and the impact they could potentially

00:16:15 have on the market and I think the impact for this midterm elections

00:16:19 probably as large as it's been that I can remember because I'm thinking about

00:16:23 it now and I don't remember ever thinking about it in terms of the market

00:16:27 for a while but I'll say this Danny you mentioned geopolitical risks there's so

00:16:30 much you know the polarization here at home is such that I think regardless of

00:16:35 the outcome of the midterms people are gonna be pissed off with that said it's

00:16:39 gonna have huge market ramifications as well and like it or not if there were

00:16:43 let's just say some red wave in November one has to wonder could that be the

00:16:49 turning point for the market again not asking your political thoughts just in

00:16:53 terms of history and that playing out Dan listen that first term midterm we

00:16:57 have a lot of data on that and I'm hard-pressed to think that anything other

00:17:00 than a red wave happens here just look at Biden's approval ratings and I think

00:17:04 that it could only get better here I think for the markets or the idea that

00:17:08 we don't have a White House and a legislative body in the same camp here

00:17:13 and I think the approval ratings are telling you all you need to know about

00:17:15 Congress and the job that they think they're doing so in some ways might we

00:17:19 have a crescendo into the fall and to Danny's point I mean listen at some

00:17:24 point there's gonna be a 20% rally off of a low and the lower we go the more

00:17:29 we're likely to rally off of that low and if sentiment gets really bad into

00:17:33 that and the polls are showing this and we know that there's a couple tape bombs

00:17:36 out there that could be a positive thing if we were to see some sort of

00:17:40 de-escalation in the situation with Ukraine a lot of things could align for

00:17:45 a big market rally and they might not have a whole heck of a lot to do with

00:17:48 politics at least the course in which they're going but it might be a

00:17:51 signifying some sort of change for let's say as we get into 2023 and we know that

00:17:56 investors love to turn the page they love to turn the calendar and that will

00:18:00 start to happen late q3 early q4 to your point Danny yeah listen we're over 30

00:18:05 trillion in debt GDP is contracting so you're less than 20 trillion in GDP

00:18:10 you're north of 30 trillion in debt so to think that quote tax cuts are great

00:18:14 or that's gonna be a stimuli maybe there'll be something they'll bring

00:18:17 forward the thought of it may rally the market versus the actual that possibly

00:18:20 occurring or what may or may not occur I think we have a lot bigger issues in

00:18:23 this country than just the stock market at that point but still again it's an

00:18:27 excuse you're right and normally in that two-year cycle when you have opposite

00:18:31 parties controlling Congress and controlling the White House that people

00:18:33 like stalemates they like when nothing can happen I mean that's normally the

00:18:36 recipe for buying the market so we'll see what happens but it's setting up for

00:18:40 extremely ugly summer for sure so many of these things I find fascinating and I

00:18:45 rail about the bond market seemingly every day for years and I think a lot of

00:18:49 people coming around to the way I think Danny we think about these things in

00:18:53 terms of just the volatility and one of the points that I've made if rates were

00:18:57 to go higher from here let's just say as of this taping 10-year yields are just

00:19:02 3% for a round number you know I think rates went meaningfully higher I think

00:19:06 that's negative and I think if rates go meaningfully lower which by the way I

00:19:10 think could potentially happen Danny I think you're in that camp as well I

00:19:13 think that's negative how does that shake out how are you looking at the

00:19:17 bond market now given everything that's transpired over the last six months I

00:19:21 think it really has to do with quantitative tightening and what the Fed

00:19:25 really does do they do what they say they're gonna do do they pull that back

00:19:28 or not I think that holds the key because we already saw mortgage-backed

00:19:31 securities go out way before they even started doing any of this quantitative

00:19:35 tightening why because once the big buyers in mortgage land knew the Fed was

00:19:39 no longer there they were gonna sell ahead of them it's why mortgage rates

00:19:42 have gone up so much Powell doesn't seem to carry likes it right now he wants the

00:19:45 economy to go into recession literally quote yesterday that's what he wants to

00:19:49 keep seeing so I'm convinced that we're gonna be in a inverted yield curve and

00:19:53 I'm not talking to bibs for bibs I'm talking 20 30 40 basis points and that's

00:19:58 just not a great recipe that by nature will slow things down banks don't like

00:20:02 to lend when the curve is like that because it's hard to make a lot of money

00:20:05 doing that so the other issue guy we have to deal with is the one thing

00:20:09 happening right now is people that have home equity loans credit lines or

00:20:13 whatever the consumer I know it's not a huge amount

00:20:15 LIBOR plus or SOFR plus whatever you're switching to is up a lot and I don't

00:20:21 think people realize now when they're carrying an extra balance or whatever so

00:20:24 it's not just the mortgage rates it's consumer discretionary spending gonna

00:20:27 continue to get hit here I believe that the 10-year yield is gonna go much lower

00:20:31 from here and to your point guy neither is good I would actually argue three

00:20:35 and a half to four percent is healthier than two to two and a half percent on

00:20:38 the 10-year if I woke up and you said Danny the 10-year yields at 2% where's

00:20:42 the stock market verse the 10-year yields at 4 you wanted to ask me which

00:20:45 one has the higher stock market 4% has the higher stock market not to Dan we

00:20:49 had Joe's idle from Blackstone on fast money a few months ago and he was

00:20:53 talking about the housing market and obviously Blackstone might be the largest

00:20:58 participant in the US housing market in the country and you push back pretty

00:21:02 hard and I said on the show that clearly Joe was talking his book but in the case

00:21:06 of this they are putting their money where their mouth is but I think you

00:21:09 were prescient enough to point out that hey wait a second there's so many shifts

00:21:13 going on beneath our feet that nobody's taking in consideration by the way we're

00:21:17 gonna talk to Bill Pulte about these things in a few minutes but you've been

00:21:21 ahead of the curve clearly on the housing market now everybody's starting

00:21:25 to come around to your way of thinking thoughts of how important that is in the

00:21:29 next six months of the year well it's funny at the time I mean Joe's been a

00:21:32 great guest on fast money for a long time and Blackstone those guys are

00:21:35 really smart and I just thought it was interesting because he is basically

00:21:39 helping to dictate their house view guy you've talked about this on many

00:21:42 occasions they're one of the biggest buyers of residential housing in our

00:21:46 country and if you don't think that their move into that part of the market

00:21:50 at the time in which they did given the weird dynamics of the pandemic from a

00:21:54 migratory standpoint people moving out of the cities that sort of thing that

00:21:58 does not give me confidence that a company like Blackstone is buying large

00:22:03 swaths of the housing market and keeping prices bid up the other thing that I

00:22:07 just didn't agree with is that he thinks that housing I could come in because

00:22:11 we're at these kind of levels and we had this extraordinary period of low

00:22:14 interest rates but he didn't see unemployment ticking up and I just don't

00:22:18 know how those two things can live in the same economic universe when we see

00:22:22 what's going on with yields we see what's going on with sovereign balance

00:22:25 sheets we see what's going on with inflationary pressures and what to me

00:22:29 seems very obvious for a very long time is that when I hear people say that we

00:22:34 are at 40 year lows in unemployment and I tell you why it's gonna be different

00:22:38 this time why it can't tick up I'm like that's it that's the point and so we had

00:22:43 David Rosenberg of Rosenberg research on a few weeks ago and he was giving us

00:22:47 some data about when you have unemployment tick up three or four

00:22:51 tenths of a percent off of a multi-decade load he's going back to a

00:22:55 hundred years of history the knock-on effects for the economy are devastating

00:23:00 and then you throw in the point that we have a situation where the Fed has to

00:23:04 raise they have to be hawkish now I know Danny you think they're gonna pivot and

00:23:06 guy you do too and I don't disagree with that I think the pivot that comes in the

00:23:10 second half of this year is not going to be a rate decrease if they lower rates

00:23:14 after going from essentially zero and Fed funds what should be 3% by the time

00:23:20 they pivot in the fall what sort of credibility do I need to redo the quote

00:23:24 he said yesterday again I mean seriously think about the quote I agree with you

00:23:27 listen should they know but you know what it is this economy is slowing

00:23:31 because of inflation not because of prices of things right now

00:23:35 feds rate hikes are just getting in to the economy now okay totally and they

00:23:39 haven't even started oh I do and I are in the same camp so just to put a bow on

00:23:43 guys question the fact that a place like Blackstone has a house view that was

00:23:49 articulated by Joe's idol and Amanda you can put that interview in the show notes

00:23:53 here tells me that they have not had their reckoning yet about how their

00:23:57 house is in order and the things that they see the downside that could happen

00:24:01 in the US economy where I get a little exercise is we can spend a lot of time

00:24:04 talking about stable coins and all this crap this is where people should be

00:24:08 focused on and we've been talking about it why are the banks been

00:24:12 underperforming the way that they have from the heights the banks topped out

00:24:16 before the Nasdaq did in q4 of last year right cuz credits turning all right but

00:24:20 but but but credit hadn't turned yeah but the market's smart but the price

00:24:24 action in the banks were well people to cover banks are nerds small part of the

00:24:27 market is smart trust me people to cover banks are nerds they're projecting way

00:24:30 out there are utility stocks for the most part they have a dividend they have

00:24:33 a buyback they have credit reserve it's very easy actually analyze a bank it's

00:24:37 very predictable you can't predict losses that might come from nickel

00:24:40 certain times you can't predict so the stocks though didn't benefit they

00:24:43 benefited for a short period of time as they released all those reserves that

00:24:47 they had from kovat and the rate curve was steeper the Fed hadn't raised yet

00:24:50 and we were going out and it was steepening it was steepening and then

00:24:53 it all kind of ended like we said last week I mean there have been warning

00:24:56 signs screaming and silence for a year and a half and the fact is the S&P is

00:25:01 only down 21% at the end of q2 here we had a monster year in the S&P last year

00:25:07 we had a monster year in 2020 the year that we actually had a crash and a

00:25:12 recession and a pandemic and so 21% lower on the S&P is not enough to cure

00:25:18 all those ills I've said this again the market shot up much higher than it

00:25:22 should have this 20% that counts as a correction or 30% off it's bullshit to

00:25:26 me that was an irrational number that was in q4 it never should have been it

00:25:29 look where the market was in q3 use that as your correction number and that's why

00:25:33 I think you get to that 32 3300 number in the S&P and I want to make one

00:25:37 comment on your blackstone and all these large and don't listen I know smart

00:25:40 people great company whatever they have to find a place to put their money to

00:25:44 work they're doing in hundreds of billions of dollars right why so they

00:25:47 can go raise another fund and keep that money it works but then they should keep

00:25:50 their strategists at home and now talk about you're gonna come on CNBC and

00:25:54 you're gonna say that I think the housing market's gonna be okay and I

00:25:57 don't think unemployment is gonna tick up but I think inflation is gonna stay

00:25:59 high and rates are gonna go higher that was the sum of what he said to us and

00:26:03 none of it makes any sense it's about as nonsensical is what you said he's

00:26:07 talking to all said yesterday actually guy was brilliant guy said well he's

00:26:10 obviously talking his book right he is talking to somebody and you weren't

00:26:13 doing it in a snarky way either no and not at all I mean you know people who

00:26:17 think that term it's like a term of derision or so not at all I mean he

00:26:20 should be talking his book because they have obviously not billions probably

00:26:24 close to a trillion dollars or so behind it so when I say that I was saying that

00:26:29 here's somebody that's actually putting his money where his mouth is and we can

00:26:33 talk about this in a second but I'll say this for me the last six months or so

00:26:37 it's been a real great learning experience and you get to a certain age

00:26:40 you don't think you learn new things but I clearly have and I remember you saying

00:26:44 Dan specifically back earlier this year it's not coincidental that Blackstone

00:26:50 the stock topped out at 149.78 if memory serves towards the end of November of

00:26:56 last year and it's because we sit here right now it's either side of 90 bucks

00:26:59 that's a pretty significant move it coincides obviously with the Fed pivot

00:27:04 but the housing market starting to give it up as well then you sort of look at

00:27:07 where the home builders top that we'll talk to Bill Pulte about that as well

00:27:10 and it all starts to make sense only in retrospect I get it but at the time if

00:27:15 you go back and look the signs were so clear but for me at least specifically

00:27:21 me either I chose not to see them or I just completely miss them entirely you

00:27:26 know why you can't meme a builder stock you can't meme a bank stock they're

00:27:31 unmeanable they're actually economically balance sheet oriented companies that's

00:27:36 the one thing that's why they're rational stocks let me just say this

00:27:39 talking your book everyone should rest assured that S&P global ratings remember

00:27:43 that rating agency along with Moody's that didn't have down home prices in

00:27:47 their forecast in 2008 9 and 10 they're saying that economic momentum will

00:27:51 likely protect the US economy from recession in 22 those are not the kind

00:27:55 of things that you want to see or hear you want to hear them say we're going

00:27:58 into depression that's a sign to buy Wall Street economists it's up now to

00:28:01 44% think we're gonna have a recession what does a Wall Street economist gain

00:28:05 by coming out and saying we're going into recession they lose their job so

00:28:08 those are things you want to see 80% people get it built into the market and

00:28:12 that's what I mean I think we're gonna have this washout here over the course

00:28:15 of the summer and I think it begs people to be in yes cash is underperforming

00:28:19 inflation I get it but I don't think now's the time to be diving into the

00:28:23 market now if someone pre announces on a Friday night dirty and we open up

00:28:26 Tuesday in the market it's overreacts down 30% you know buy it so I want to be

00:28:29 really clear about this and I think if you're listening to this podcast you've

00:28:32 been listening to us for a while you're listening down the day you know what

00:28:35 you've heard our commentary in a lot of different ways and I've been decidedly

00:28:38 negative we've all been very negative on the economy and the outlook for it and

00:28:42 the pace in which it might have recovered given the post pandemic period

00:28:46 which really never materialized but we've also pointed out in all of our

00:28:50 different let's call them expertise where we see risk that's not being

00:28:54 appreciated since we started so we've done that I will tell you this so I'm

00:28:58 starting to pick at things I grew up as a trader as you guys did short-term

00:29:02 momentum driven stuff catalyst driven stuff or whatever I'm actually for the

00:29:05 first time in a very long time I think the disconnect that we're seeing in

00:29:08 parts of the stock market forget the other stuff I'm not smart enough to deal

00:29:12 with FX and rates and all that sort of stuff I have to go back 20 years or go

00:29:17 back to the financial crisis and I wasn't so focused on financial oriented

00:29:21 products that to see what I think are some multi-year opportunities right now

00:29:24 so talking about buying things guy you and I were just talking about this

00:29:28 earlier today on Thursday is like okay some of these stocks that are down 70 80

00:29:31 percent and companies that you think are gonna be around and they have

00:29:34 opportunities whether it be outside the US and just over appreciated and I'll

00:29:38 just throw a few of them out there I started picking at and I'm just gonna

00:29:41 add a couple more names I told you last month snap PayPal today I bought a little

00:29:46 Netflix last week I bought a little Facebook meta I don't think I've ever

00:29:49 bought that stock other than a cover short so to me I'm looking at

00:29:52 multi-year time horizons and I'm fully prepared for another gap on a headline

00:29:57 downgrade to guidance you know you mean at some point for the balance of this

00:30:00 year but you gotta start somehow no one can just put their finger on what they

00:30:04 think the bottom is so to me that's kind of my mindset but I also agree Danny

00:30:07 it's gonna be a long slog there's no V reversal even when the Fed pivots we're

00:30:12 gonna have a short covering rally people aren't gonna believe it even at 10 15

00:30:16 percent higher off of a low people are gonna start laying into it and coming up

00:30:19 with reasons why we're gonna make new lows and that's the mistake that I'm not

00:30:23 gonna make again is that if the S&P is down 40% I don't mean again I'm not

00:30:28 gonna be pressing that someone else can have that down 50% because the likelihood

00:30:31 that the S&P without a global meltdown is gonna be down more than 50% in the

00:30:37 next couple of years from that high that we made just last year can we all agree

00:30:41 that that's not particularly likely Oh Danny can't got you go you go for it he

00:30:46 can agree no listen certain names I can totally agree with I'm not gonna try to

00:30:49 predict the market I'm not but you asked me where I think things are going

00:30:52 absolutely you think the S&P can be down more than 50% from the high that it made

00:30:57 in the first week of January this year do I think it could be a 2400 it is a

00:31:00 pop-in March 2009 do you believe that anyone in December of 2008 thought in

00:31:06 March 2009 the S&P would hit 666 no it didn't was it the buying opportunity of

00:31:11 a century yes and you know what happened you know when it bottom when housing

00:31:14 starts I was in a meeting with an economist he said listen here's the math

00:31:18 you can't damage housing any more than it is there's no starts it's a finite

00:31:23 amount of homes that now have so here's the demand unless you think that people

00:31:27 are leaving or fleeing whatever the numbers at that point made sense

00:31:29 literally it was the day the S&P bottom so to your point Dan you got to be

00:31:34 willing to take a chance to be early but if you're buying quality companies where

00:31:38 I agree with you a thousand percent who gives a shit if your time horizon is

00:31:41 three five years great if your time horizon is a quarter or two months one

00:31:45 month you're playing with fire oh yeah but guy give it to me here because the

00:31:48 S&P 500 from its highs in 07 to its lows in 09 sold off 58% we know that

00:31:53 financials were a big part of that in the S&P from its high in 2000 to its

00:31:58 lows in 02 I think sold off 51 or 2% or something like that now obviously the

00:32:02 Nasdaq was down 80 some percent almost 90% so I guess my point is sooner or

00:32:07 later if you have investable capital if you avoided a lot of this disaster a lot

00:32:12 of the palpitations in the economy have already started to play out here right

00:32:17 it's not like it hit us like a ton of bricks all the sudden in late 08 or

00:32:21 something like that so I just think that's what's different to me and I do

00:32:25 think that what leads us out of this economic period but also this market

00:32:30 period are gonna be some of the same leaders of the last bull market if you

00:32:34 will and so to me there's nothing in the private markets there's nothing in

00:32:37 blockchain that tells me that the existing incumbents are about to be

00:32:42 massively disintermediated so I look at the world right now if things were just

00:32:46 to continue on current course again obviously have no idea what any

00:32:50 ancillary events are gonna be but just current course I can make a very cogent

00:32:55 argument and I think we've done so for months now that the ultimate landing

00:33:00 spot for the S&P is 3200 if you think about it in terms of the math that would

00:33:05 be a 33% peak to trough decline from the all-time high we saw 4818 or so I think

00:33:11 it was earlier this year or maybe late December but you understand what I'm

00:33:15 saying six or so months ago so that makes sense the math around that makes

00:33:20 sense in terms of what the right multiple in this environment is and what

00:33:23 I think earnings are gonna be and I think that to me is the opportunity

00:33:28 probably to get in the market in a meaningful way

00:33:31 Danny's potential for that cutting in half I mean it's clearly out there if

00:33:36 you look at what's going on globally with central banks right now you look at

00:33:40 global debt to GDP north of 300% I mean these are ridiculous levels in rising

00:33:47 interest rate environments around the world and the potential for a credit

00:33:50 blow-up is absolutely out there without question you saw what happened with

00:33:54 Deutsche Bank over the last couple weeks I mean people say Deutsche Bank is

00:33:58 Deutsche Bank specific okay I'll buy that until I don't so is there systemic

00:34:03 risk in the system potentially but there's a credit event out there that is

00:34:07 potentially gonna happen and quite frankly I think there's probably a 20-25%

00:34:12 of that happening if there is a credit event I don't think that 2400 level that

00:34:17 Danny just pointed out is out of the realm of possibility.

00:34:19 I agree we don't know what that's gonna be but there's certainly gonna be blow

00:34:22 ups in a down economy tide goes out there's a lot of shit sitting there and

00:34:26 it will be bad the one area I think that continues to be a struggle I think for

00:34:30 all of us is energy and we're seeing now what demand destruction is doing to oil

00:34:35 on the margin because certainly there's no geopolitical reason that oil should

00:34:38 be down but this is just waning demand a little bit and I don't know how long it

00:34:42 lasts and I think that will be a sector I do believe that should be bought on

00:34:45 weakness I think these stocks should be bought on weakness over time only

00:34:48 because they're gonna screen so well and so we do come out of this Dan and people

00:34:52 have belief in the market again that would mean that people think the economy

00:34:54 may start picking back up again and unless oil is under 85 or $80 I still

00:34:58 think that energy is a place that you can be not a huge allocation here and I

00:35:02 know people came in last in first out and bought at the top and then have sold

00:35:06 here a little bit but I feel like that sector is gonna bottom out and I think

00:35:09 that's the one to watch it's gonna tell us a lot about the economy that I really

00:35:13 do from a demand destruction I'm looking at weekly I told you guys when we open

00:35:16 the show weekly gasoline demand people are going to the pump they're not

00:35:20 filling the car up they're down it's negative so people are it's taking a

00:35:23 bite out of people's wall and that's really what we're seeing right now and

00:35:26 just in terms of the energy conversation Dan and I'm just gonna throw it back to

00:35:29 you you've had a wonderful call in terms of you didn't think it was sustainable

00:35:33 in terms of WTI and the price appreciation and that's coming to

00:35:36 fruition I'm confused in energy here I can make a very coherent argument why

00:35:42 the stock should be significantly higher and then you look around the landscape

00:35:47 and look at these companies that in large part could go the way of the dodo

00:35:51 bird five to ten years from now and say how do you invest in these names that

00:35:55 probably aren't investing in themselves so the cross currents for energy are

00:35:59 severe with that said again status quo I think these energy names given a 35 40

00:36:06 percent declines we've seen in some of these names are just too cheap in this

00:36:10 environment and you mean the drillers in just a short period of time absolutely

00:36:14 not only just the drillers but even the big cap integrated names are down

00:36:17 significantly over the last couple weeks not nearly commensurate with the

00:36:21 move in the underlying commodity we spent some time over the last I don't

00:36:25 know six to nine months talking about just what's leading what right is it the

00:36:28 commodity or is it like the underlying we've seen to some dispersion in the

00:36:32 price action and some of them guy you've made a really good case for a long time

00:36:35 of the under investment and the changing supply-demand dynamics and I am no

00:36:39 expert as it relates to the energy thing I just feel like crude is probably gonna

00:36:44 go the way of a lot of other commodities that we've seen that they've already

00:36:47 signaled that they've kind of peaked and we've seen that in copper we've seen it

00:36:51 in steel we've seen it in wheat we've seen it in a bunch of other commodities

00:36:55 so to me crude topped out on that parabolic move in early March it tried

00:36:59 to get back up there and now it's broken that uptrend that's been in place since

00:37:03 early December after the Biden administration tapped the strategic

00:37:06 petroleum reserve so to me it really feels like divorced of fundamentals of

00:37:10 some fundamentals that a lot of smarter people than me feel feels like the

00:37:14 momentum is broken and maybe the stocks start to firm up and act better to your

00:37:18 point about the companies in the investment that we might see in them

00:37:22 because the whole ESG thing has been turned upside down by a global pandemic

00:37:26 by deglobalization by a break in supply chains by a shooting war listen Europe

00:37:32 is getting off their reliance on Russia that's one thing that's happening no

00:37:35 matter what I'm not getting our energy they're not getting off yet no they're

00:37:38 trying to get off by rationing I mean looking out years oh yeah that's trades

00:37:42 done so there's gonna be a glut in Russia and so I just feel like in the

00:37:45 future there's probably better parts of the market I think that energy is gonna

00:37:49 go back to being a low single-digit percentage the S&P but let me just say

00:37:52 this I'll end with this we can tie a bow on this is that second quarter is now

00:37:55 coming to a close so I'm gonna start to look at which stocks are gonna put up

00:37:58 good numbers in which you can have momentum the energy stocks are gonna

00:38:01 crush it again in the second quarter so you can sit there hold your nose you can

00:38:04 put a blindfold on and not want to buy them my point Dan is that there's no

00:38:07 models for 110 120 or the models are really 80 85 and my point is that you

00:38:13 got to go a lot lower before you can say these stocks don't make sense and I'm

00:38:16 just saying and I'm not heavy in the names at all I'm just saying pockets in

00:38:20 the market where you can be safe and earn it decent dividend with a lot of

00:38:23 stock buybacks with very little risk and I would just say this if all goes below

00:38:27 $70 we have reached the Great Recession potentially depression so forget about

00:38:33 everything else at that point that's all we can wrap that up so I don't want to

00:38:36 dwell on this we've gone 40 minutes now without talking about Tesla I mentioned

00:38:41 Tesla god damn it as we sit here once again it has a 600 and change handle on

00:38:48 it and it's fascinating to me that since their last quarter when the stock traded

00:38:54 almost $1,100 a share you've had some bounces along the way but it's

00:38:58 effectively been upper left to lower right and I think they say the tides

00:39:02 going out well the tide appears to be going out we haven't heard from Elon

00:39:06 Musk on Twitter for quite some time there's some strange things going on

00:39:09 there Danny I'm not looking to wind you up but it's happening right before our

00:39:12 very eyes. Something happened in here. Can I say one thing really quickly Danny

00:39:17 before you go into it I actually feel like the fact that Elon Musk has not

00:39:21 tweeted since June 21st okay so it is June 30th right now I think any comment

00:39:27 that we make about his proof of life I think they won't age well I actually

00:39:32 feel like if you want to be snarky and I'm not saying you I'm saying you want

00:39:35 to tweet something smarky it's actually might look really bad I think this guy

00:39:39 who has been addicted to tweeting whether they be dumb memes about

00:39:43 whatever whether they be his actual stuff about his business which you would

00:39:47 say a lot of it should be fact-checked or this and that whatever he desires this

00:39:51 attention something must be going on right now for him to be off this

00:39:55 platform for nearly 10 days. Yeah it could be a bender it could be a lot of

00:39:59 things listen they just laid off 200 people in an office closed an office in

00:40:02 California what was that office in charge of autopilot what is the

00:40:06 government investigating these crashes what was the recommendation by the

00:40:10 government the NTSB the NHTSA is that something's got to be done they had

00:40:14 exponentially higher rate of accidents Gary Black can wax poetic about what the

00:40:19 freaking deliveries are gonna be who cares what the deliveries are gonna be

00:40:22 in the second quarter this thing doesn't trade on fundamentals it doesn't matter

00:40:27 it incrementally trades on various news points which by the way every item has

00:40:30 been extremely negative and I'll tell you you didn't ask me but Danny when is

00:40:34 the market bottom I've been saying it for years it bottoms when this thing

00:40:37 gets taken to the woodshed finally because that tells me the froth is

00:40:40 completely out of this market and Carter's note yesterday Carter Braxton

00:40:43 where I saw your little market call with his diamond triangle to the down that

00:40:46 got y'all geeked out so he put a note out after that saying he sees 450 and I

00:40:50 will just tell you this from a psychological standpoint I know you

00:40:53 think lower no no but if you see 450 you're gonna see 100 but November 2020

00:40:57 the stock had actually broken from its highs it was down at least 20 some

00:41:00 percent or something and the S&P announced that it was going into the

00:41:04 S&P 500 and the stock doubled in a matter of months I mean what's like

00:41:07 parabolic so I think psychologically getting back to that 400 level makes

00:41:11 sense I think Carter's target was 450 to put this point again if they're

00:41:15 negotiating with the feds over whatever the fact that he has been off this

00:41:19 platform for 10 days given his need for attention something's going on did you

00:41:23 see Larry Ellison's comments about leaving the board no there were none oh

00:41:26 that's why there's clearly something going on you point about deliveries I

00:41:30 think the number for fiscal 22 expected is 1.39 million deliveries or something

00:41:35 and we're gonna hear from Tesla over the next couple weeks in terms of earnings

00:41:39 and I don't know if it matters necessarily but there's so many strange

00:41:43 things going on and it's not a Tesla story per se in my opinion but what does

00:41:48 it mean to the broader market because that's been such a sentiment stock for

00:41:52 so long and it's a big part of the S&P 500 it's a huge part we were looking at

00:41:56 the consumer discretionary ETF the XO why it's 18% of that and you don't even

00:42:00 like so think about it it's an inconceivable I one quick point about

00:42:03 him so he started the month on June 3rd by saying that he has a really bad

00:42:07 feeling and paraphrasing about the economy which was by the way was after

00:42:11 what he recorded May 30 for rats so the mate and that's what I was gonna say so

00:42:15 when he said that giga Berlin and giga Austin were money-burning furnaces that

00:42:20 came out in mid June correct okay but he had already said that right Ellison left

00:42:25 in the middle of all of that yeah Ellison left then they announced layoffs

00:42:29 then he went back and forth salaried workers not salary workers whistle

00:42:32 blowers got fired for complaining about working conditions keep going suing them

00:42:35 I mean like this is all happening in June and the report from the from the

00:42:38 government came out about the safety record of this stuff and full self

00:42:42 driving does not exist they charge $10,000 for a product that does not

00:42:45 exist if they have to repay if that's what this is about they have to repay or

00:42:48 take them from cars or compensate people so then some of the banks that said

00:42:53 they were gonna provide the debt for his Twitter acquisition said maybe not so

00:42:57 all of this is going on the lower his stock goes the more commitment that he

00:43:02 has to do to an equity standpoint it just seems like a big heaping pile of

00:43:06 shit quickly I think the only reason why the media is not talking more about it

00:43:11 is because there have been bigger stories to talk about not least of which

00:43:14 the broader market and other things but clearly there's something going on so

00:43:19 for me it bears watching without question and it's not a Tesla thing per

00:43:23 se but what does it mean in terms of the ramifications for the broader market I

00:43:27 think you absolutely have to take that into consideration you listen the way it

00:43:30 works normally not just with Tesla per se but large companies it is a huge

00:43:35 company the government doesn't want to be responsible for effectively being

00:43:38 blamed for putting a company out of business or really damaging right what

00:43:42 they do do is they wait for it to get crushed and then they come after it you

00:43:47 see that all the time you see government file lawsuits on companies that commit

00:43:50 fraud the fraud comes out but the frauds already come out and the stocks already

00:43:54 $2 from 12 then they say oh DOJ suing SEC coming after this and the other I

00:43:59 mean look at some of these other EV companies right which have come out which

00:44:02 tried to follow the Musk playbook they're all $1 $2 $6 whatever they might

00:44:07 be they're gone right so he's just self-fulfilled himself to this position

00:44:10 so we'll see what happens we like to end on sort of some high notes I will tell

00:44:14 you that in terms of sectors and stuff you look at the health care sector and

00:44:17 for me this will be a continued theme the rest of the year health care is hung

00:44:21 in extraordinarily well when you look at the big cap pharma names names like UNH

00:44:25 and such I think these names are gonna be not only extraordinarily defensive

00:44:30 going forward but actually taking play offense with them as well so for me at

00:44:34 least through my lens that's something to watch in the second half Dan yeah the

00:44:37 only thing I just say is that on June 8th when Exxon was making a new all-time

00:44:41 high I think the fever pitch about energy sector and the excitement around

00:44:45 it and the changing dynamics and the valuations and the increased investment

00:44:49 that we're gonna see and all that sort of stuff I remember being on the set of

00:44:52 fast money and we had Brian Sullivan was filling in for Melissa Lee and Brian

00:44:56 that is his beat energy and we had some strategist on from RBC which is very

00:45:00 focused on that sector and they had just come from a conference that they held

00:45:03 and they literally were like jumping out of their seats and I'm like guys new

00:45:08 all-time highs after everything we've been through in Exxon from 14 I'm like

00:45:12 this is not making me particularly excited so everybody got all in on one

00:45:16 side of it what happened the XLE which is 40% Exxon and Chevron sells off 25% in

00:45:21 a straight line over the next couple of weeks so to me I get a little nervous

00:45:24 when we start focusing too much on the defensive areas we saw it utilities we

00:45:29 saw it in staples this is all in the last month and my last point about that

00:45:32 is when we start seeing investors come to their senses about defensive areas

00:45:37 that they think are cheap and they should be that's usually when we see

00:45:41 correlations go to one that's what we saw in June and that's why also I think

00:45:44 that this rally that we saw off of the lows this month was the weakest one that

00:45:49 we've seen over the course of 2022 it does feel like something's about to

00:45:53 happen here I thought we were ending on a positive note guy you in particular

00:45:57 you had a great call off of the lows Danny you try to get constructive on

00:46:01 some stuff I also did my time horizons a bit longer and just my scar tissue about

00:46:07 bear market rallies is not one that they really should be played for more than a

00:46:11 few days or a week that's just my experience trading in the financial

00:46:15 crisis trading in the post comm bubble if you are bearish it feels like

00:46:19 absolute dogshit to get caught long in a bear market rally when it fails well

00:46:23 anytime you can use the word dog shits good way to end we're 18 months into our

00:46:27 podcast and you know we've done a lot of really interesting things but given

00:46:31 what's going on in the world I feel like we're just getting started the second

00:46:34 half of this year is gonna be fascinating gonna be a lot of

00:46:36 opportunities hopefully we're able to present them to you in this format Dan

00:46:42 Nathan and Danny Moses but when we come back we're gonna have one of the great

00:46:47 philanthropists here in the United States Bill Pulte join us on the tape

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00:48:56 important disclosures at masterworks dot IO slash disclaimer Bill Pulte is CEO at

00:49:03 Pulte Capital and the Blight Authority he's also the inventor of Twitter

00:49:07 philanthropy a concept of direct giving on social media Bill has received many

00:49:13 accolades in his life including being named in Forbes magazine's 30 under 30

00:49:18 list he's passionate about entrepreneurship his community and the

00:49:23 belief that there's strength in numbers he is the grandson of the founder of

00:49:27 homebuilding giant Pulte group so every once in a while on Twitter somebody

00:49:33 follows me and I'm like holy shit that person followed me for example recently

00:49:37 Niels Lofgren of the E Street Band followed me I thought that was pretty

00:49:42 cool Miami Steve Van Zandt people like that professional athletes I'm always

00:49:46 fascinated but a few years ago out of the blue seemingly somebody followed me

00:49:50 that I was really taken aback because I've obviously heard of the company I

00:49:55 knew the man and took a little time but we became I want to say Twitter friends

00:50:00 but I consider more than that and I got to tell you something if you don't

00:50:03 follow Bill Pulte on Twitter you're doing Twitter wrong I think he currently

00:50:07 has about 3.2 million followers but that's not the reason why the reason is

00:50:12 he's taken philanthropy to a new level and we're going to talk about that but

00:50:16 it's a great deal of honor that we welcome Bill Pulte to on the tape Bill

00:50:20 how are you? I'm great thanks guys for having me. Now thanks for joining us and

00:50:25 let's get into philanthropy real quick because I think that's really important

00:50:29 I don't want to bury the lead here but what you've done with what you call

00:50:32 Twitter philanthropy with your I think you call them your basically your

00:50:36 teammates it's really extraordinary the amount of money you've given away and

00:50:41 the amount of people you've given money to. Yeah we believe that the future of

00:50:45 philanthropy is going to be direct donations given to individuals cutting

00:50:49 out the red tape cutting out the overhead cutting out the fancy balls and

00:50:53 really just trying to go ahead and send money to people who are in critical need

00:50:57 so guy what we do every day is basically we get on Twitter and through

00:51:01 teamgiving.com as well as my Twitter we give to people who are dying of cancer

00:51:06 people who can't afford rent because they're out of work due to chemotherapy

00:51:09 people who don't have teeth people who need diabetes pumps but can't afford it

00:51:14 these are the things that in my opinion technology should be used for and

00:51:18 there's such hate such division in this world right now that to me it's like we

00:51:23 use technology for all this hate why aren't we using it for some of that good

00:51:27 so that's what we try to do and we try to keep it entertaining at the same time.

00:51:31 You do an amazing job and you mentioned the hatred that we all get on Twitter I

00:51:35 think at a certain point we all are subject to it but even when you're doing

00:51:39 the right thing you're succeeding at doing the right thing there's still

00:51:43 people that push back I know it's got to frustrate you but how do you combat the

00:51:46 trolls that we all seem to endure? Well what I learned a long time ago was that

00:51:51 you really have to push back on these people because if you don't then it can

00:51:54 become a problem and so I try to address it straight up and so for example if

00:51:59 somebody says to me well you know you gave this guy thousand dollars for his

00:52:03 teeth you should have bought him a house as well that's just a ridiculous comment

00:52:07 that people make it's not even the person saying it because the person who

00:52:10 doesn't have teeth they don't need a home in addition to teeth they just want

00:52:13 to have teeth so they can smile so I try to call out these trolls and I think

00:52:17 it's actually pretty effective because what we're doing in my opinion is so

00:52:21 positive that we just have to address those who are hating on it because often

00:52:25 the people who are hating on it frankly they have teeth they're not dying of

00:52:29 cancer they don't need diabetes insulin pumps it's only the people who don't

00:52:33 need those things that find some way to bitch and moan about everything under

00:52:37 the Sun. A lot of these people I wouldn't even think have the means to be on

00:52:40 Twitter I mean yes they have a cell phone but it's not something they engage

00:52:43 in so if they're not on Twitter how do you bring them there in order to make

00:52:47 this transaction work? It's a great question I mean look I'm only trying to

00:52:51 do one piece of the whole puzzle in my little corner of the universe and so far

00:52:55 I have about a million seven teammates as I call them on Instagram so I have a

00:52:59 fairly large following on Instagram but I haven't found that many of these other

00:53:03 social networks are as viral and where people can really put their needs out

00:53:08 there for instance like on Instagram how would you be able to show for example a

00:53:12 photo that you don't have teeth it's easier to do that on Twitter so I

00:53:15 definitely don't have all the answers we're definitely not solving the world's

00:53:19 problems here well we're just trying to our part in that corner of the universe

00:53:22 which happens to be a growing universe I mean I think Twitter is going to continue

00:53:26 to be bigger and bigger over time and so hopefully we are able to get to more and

00:53:30 more people. Luke 1248 to whom much is given much is required and I'm not

00:53:34 suggesting you've been given anything but I think you would acknowledge that

00:53:38 you're fortunate in so much as the family that you grew up in can you speak

00:53:42 to your family Pulte Homes changed their name I think in 2010 to Pulte Group but

00:53:46 the company was I think founded in 1950 so it's 72 years old extraordinary if

00:53:52 you think about it can you speak to sort of the origins and how important your

00:53:55 family's been along that and I'm really interested if you really want to drill

00:53:58 down because we have the forum to do it here. Sure so my name is Bill Pulte the

00:54:04 founder of Pulte Homes was my grandfather where I was very close with

00:54:06 his name was Bill Pulte and so it's often not worth convincing people but

00:54:10 believe it or not 15% of my net worth was inherited 85% I actually made

00:54:15 through doing essentially leveraged buyouts in the building products

00:54:19 industry and I'm still doing that day in and day out I have eight portfolio

00:54:23 companies out of college I went and worked in private equity and so I

00:54:26 learned how to do essentially leveraged buyouts right out of college and that's

00:54:29 what I've been doing. Now in 2014-2015 I have new approach my grandfather we had

00:54:36 been working with each other for a few years the founder of Pulte Homes Bill

00:54:39 Pulte my grandfather and we had been talking and doing a bunch of different

00:54:44 things I had a bunch of as I mentioned portfolio companies in the building

00:54:47 product space obviously he was a genius especially when it came to designing

00:54:51 products in homes so we worked on my countertop business we did a charity

00:54:55 together as well and slowly but surely we just really hit it off and not to say

00:55:00 when I was a kid that I didn't hit it off with him but he has 14 kids he has

00:55:03 25 grandchildren none of them were in the family business at all none of them

00:55:07 and I was fortunate to really hit it off with him and we got talking about his

00:55:12 business and he says man I wish you were older because I probably would have

00:55:15 figured out a way to have you be in the business and around this time and Danny

00:55:20 knows this we were running in a situation where the stock was stagnant

00:55:24 they'd traded up to about 45 $46 in the peak right before the global financial

00:55:29 crisis and then it had crashed down to $3 and change and then it had rebounded

00:55:33 like a lot of the builders up to about $17 a share but the stock price was just

00:55:37 really really stagnant and so I got to frankly really lead that charge with my

00:55:43 grandfather and some of the other Pulte Homes executives to turn that business

00:55:47 around we really started to do our due diligence in terms of really coming up

00:55:51 with a game plan what we were going to do starting in kind of 2014 2015 by 2016

00:55:56 my grandfather was fully on board with it so we kicked out the CEO at the time

00:56:00 we put some new directors on the board I went out and located Elliott Management

00:56:05 which interestingly Elliott huge activist fund they're usually on the

00:56:09 opposite side of families in this case they were actually a proponent of the

00:56:12 family so that was kind of new for everybody involved my experience with

00:56:15 them was great working with them guys like Danny and other people supported

00:56:19 that whole movement and you know I feel very passionate about it I mean

00:56:22 obviously it's my name it's a fortune 500 company it was the number one home

00:56:26 builder in the country now it's number four but we're gonna keep trying to help

00:56:30 it in any way we can I remember meeting you guys obviously we talked about this

00:56:33 when Porter and Vinny were on the spaces that we had a couple weeks back and you

00:56:37 came in there and it was so genuine and I think that's the one thing that I would

00:56:41 say about you certainly the work that you do for people giving money away is

00:56:45 that you're genuine and you actually care and you come across that way and

00:56:48 that resonated with us and I remember the stock it was 2016 it was you're

00:56:52 right it was between kind of 14 and 19 trying to find its direction and

00:56:55 eventually it certainly found a direction higher much higher no it's

00:56:58 come off here we had rates move higher and things in building we can talk about

00:57:01 that later but certainly it found its footing and I think the culture of the

00:57:05 company with your grandfather and I know your father was a builder down in

00:57:09 Florida but was not involved directly in Pulte but I think just the

00:57:11 understanding of the business resonated and that's key I don't care what

00:57:15 industry you're in I don't care what you're managing I think we always talk

00:57:19 about meeting CEOs meeting board members and you guys came across as clear honest

00:57:24 people and to us that was the most important I think for homes more for us

00:57:27 and her firm we kind of rented them no pun intended as trades because they are

00:57:32 so cyclical not as bad as airlines but they are cyclical and you got to pick

00:57:35 your points it was no question that that was a great point to enter and I think

00:57:38 you helped us make a lot of money so I appreciate that I wanted to go back to

00:57:41 you and I both had dreams of being sports broadcasters and when I looked

00:57:45 you went to Northwestern the number one broadcasting journalism school in the

00:57:49 country sorry Syracuse sorry Dan and then you ended up obviously going into

00:57:53 private equity doing other things I had the same experience I was gonna be a

00:57:55 sports broadcaster and then I found out all my friends from college at Emory

00:57:59 were moving up to New York and I'm like well I guess I'm going there that seems

00:58:02 like more fun than covering high school football in Iowa or something so similar

00:58:06 it's funny how he seems come back but I think one of the reasons I'm guessing

00:58:10 you wanted to be sports broadcasting is you're energetic you're passionate about

00:58:13 everything that you do and all the side businesses that you had in college and

00:58:16 all the helicopter license that you got because you were inspired by Jack Bauer

00:58:20 in 24 you're that kind of person and if everyone else was like you this world

00:58:24 would be a much better place and I just wanted to say that I think you're a

00:58:27 great role model I think in business and both personal for really setting the bar

00:58:31 for people to look up to well thank you and you did your homework Jack Bauer I

00:58:34 hadn't thought about that in a while but yeah that sounds great and I appreciate

00:58:37 it and we get a lot of heat people say oh you should be doing more honestly I'm

00:58:41 just trying to do my little piece mother Teresa said something and I'm in no way

00:58:44 I'm like the opposite of her but mother Teresa said something like you try to

00:58:48 throw a rock in a pond or something and the waves reverberate that's all we're

00:58:52 trying to do with Twitter philanthropy is just vibrate the surface area of the

00:58:55 world for charity and philanthropy so Bill you get a ring you hear that these

00:59:00 guys from Seawolf Danny Vinny and Porter the movie the book they're already out

00:59:03 the big short these guys made their bones right shorting the US housing

00:59:08 market how did it feel when you heard that these guys are interested in

00:59:12 getting long Pulte home and obviously it sounds like you were very integral and

00:59:17 repositioning the company in the post financial crisis yeah I think it was

00:59:20 only me and Wall Street analysts who went met with the guys and I was I don't

00:59:24 know Danny I think I was 26 or 27 at the time so if I didn't know a lot now I

00:59:28 definitely didn't know a lot then but that was some good times and I was

00:59:32 obviously I was nervous I think we had seafood for lunch and I'll tell you I

00:59:35 went and met with probably hundreds of investors I had already met with Elliot

00:59:39 by that time and everything and nothing against the guys at Elliot but the

00:59:42 questions that Danny and his team were asking me what about this what about

00:59:46 that I think I answered them correctly because my interest in the business is

00:59:50 genuine and that came across and so you guys obviously took a leap of faith and

00:59:54 I appreciate that we always had a rule and we were notorious for being quote

00:59:58 short sellers but I think really notorious for being skeptical and 80% of

01:00:02 the time we couldn't get a meeting because either companies would assume we

01:00:05 were short and so they didn't want to talk to us but that to us was always a

01:00:08 red flag and to be perfectly honest we were not short Pulte at the time at all

01:00:12 that I know 100% as a matter of fact I think we were probably long it but

01:00:16 my whole thing is if you're short a company and I'm a CEO of the company and

01:00:20 I have nothing to hide and I would go into that meeting as fast as I could to

01:00:24 talk about the thesis and why I may be wrong and conversely if we're long a

01:00:28 company and I would want to talk to the largest short sell I would go find a

01:00:31 short seller to find out what I might be missing so I think we garnered a lot

01:00:34 from each other in that meeting but like I said a few minutes ago I think the one

01:00:38 thing that came across and I think that you were only 26 or 27 at the time it

01:00:42 was a huge advantage you had no scar tissue you didn't know enough to know

01:00:46 about what maybe it transacted on Wall Street at the time or how home prices

01:00:50 were so crucial to everyone's thesis across all financial products in general

01:00:54 and that's what I think was so great about it is you kind of came in there

01:00:57 eyes wide open and so do we so my grandfather I think he was 79 or 80

01:01:01 years old God love him but he wasn't a spring chicken anymore and I knew that

01:01:06 at some point he'd passed away and he's now passed away but I had to get the job

01:01:09 done and I had to get it done before he passed away so to me there was no choice

01:01:13 I'll say this though it's been fascinating because to your point about

01:01:17 people and not going to meet with investors and stuff is they'll go with

01:01:21 the pre-screened investors they'll go with the safe people the public company

01:01:25 CEOs but it really takes in my opinion a very confident public CEO somebody who's

01:01:30 confident in themselves to go and meet with somebody like yourself because

01:01:34 these guys are making 10 15 20 million dollars some cases more than that per

01:01:39 year so for them to go into that room with you guys even though the seafood

01:01:43 look great a lot of these public CEOs they hide under their bedsheets because

01:01:47 they don't want to get questioned you never know who's gonna emerge in the

01:01:50 crypto world and I gotta tell you we've been doing fast money as Danny's

01:01:53 unfortunately come to know for the last 15 and a half years and we only started

01:01:57 talking about Bitcoin I think in earnest somewhere in the middle of 2017 ish but

01:02:04 you were long before that I think you started getting into Bitcoin around

01:02:07 2015 or so Bill so I'm curious what was the catalyst for you you're a

01:02:12 Midwestern guy you're not obviously from one of the coast you're not sort of

01:02:16 groomed in that classic sense of you know the technology people from the West

01:02:21 Coast or some of the high-flying bankers out here on the East Coast yet Bitcoin

01:02:25 captured your fancy almost seven and a half years ago. Well I'll tell you this

01:02:29 one of the things that really increased my conviction in Bitcoin and I do think

01:02:33 that it trades obviously very volatilely and I think it's a commodity who knows

01:02:37 if it'll be a currency one day but that's just my opinion but guy when I

01:02:41 saw the virality of Bitcoin on Twitter I said to myself wow this thing is going

01:02:47 places and this I don't know this is probably when I said $3,000 a coin and

01:02:50 what I mean by the virality is especially when you have a bigger

01:02:54 account which you guys all do you know you get to see things that are happening

01:02:58 in the world at scale and you get to see how people react to things at scale and

01:03:02 my conviction has only grown in Bitcoin over the years. I remember this guy I

01:03:07 started really giving out Bitcoin over the internet meaning sending it to

01:03:12 people in 2019 and I'll say this the frequency by which people are

01:03:17 communicating with it in the beginning people were very skeptical now it's just

01:03:21 normal. So here's my view on Bitcoin and I'm curious as to your thoughts I think

01:03:24 Bitcoin was born out of this concern that central banks globally were running

01:03:29 amok and was a fear of fiat currencies all exploding simultaneously and that

01:03:34 was true for the lion's share of the life of Bitcoin that was absolutely true.

01:03:38 I don't think it's coincidental Bill I'm curious as to your thoughts that Bitcoin

01:03:41 topped out in the fall of last year around the same time our Fed pivoted

01:03:45 from being extraordinarily accommodative to extraordinarily hawkish and trying to

01:03:50 fight inflation finally. What are your thoughts on that because I do think at a

01:03:54 certain point this Fed will pivot once again and I happen to think that's gonna

01:03:57 be the green light for Bitcoin to go higher. Yeah to me I think there's two

01:04:00 things there's the use case for Bitcoin and then there's the price of Bitcoin as

01:04:04 it relates to what you're talking about in terms of the Fed pivot raising

01:04:07 interest rates obviously that's going to materially affect the price. From my

01:04:11 perspective just from a philanthropic perspective and from a I call it

01:04:15 virality Mr. Beast who I've worked with quite a bit the big youtuber he's

01:04:19 taught me a lot about how to make things go viral and how to get the large

01:04:22 audiences interested in it. From a use case perspective guy I will tell you

01:04:27 this if Twitter continues to take market share internationally and even if

01:04:31 Twitter doesn't I think that the use case for Bitcoin will continue to

01:04:35 expand. Now you say Bill who the hell's really using Bitcoin? You go to these

01:04:39 third world countries you look at the people in Africa you look at the people

01:04:43 in Brazil you look at the people in South America who are all messaging me

01:04:46 every day on Twitter and many of them get wiped off because they're they're

01:04:51 viewed as bots but some of these are actually human beings. I mean the use

01:04:55 case for Bitcoin to me is to take a lot of these impoverished countries out of

01:05:00 poverty that are dependent on these corrupt dictators for currency and

01:05:04 whatnot. Now I know there's a lot of controversy around Bitcoin and the El

01:05:09 Salvador guy is doing you know maybe he's gone to the full other end of the

01:05:12 spectrum but my point being is if you're in some remote village in Africa would

01:05:16 you rather have somebody send you electronically Bitcoin or the local

01:05:19 currency in terms of preserving your wealth and that to me I think is the

01:05:24 biggest thing for Bitcoin and frankly something that can drag people out of

01:05:29 poverty. Bill I would just add one thing and you know the debate very well and so

01:05:33 it really is right now for a lot of people in these third world countries is

01:05:37 not easily accessible to the banking systems that exist and so your point

01:05:41 about the depreciation of local currencies in some of these third world

01:05:45 countries is also an issue. I also think there's two kind of mindsets is it going

01:05:48 to be something that the unbanked can tap and kind of enter this global

01:05:53 financial economy that exists in the developed world or is it really

01:05:58 something else that is a store of value that can help as you say pull people out

01:06:02 of poverty. Right now it seems like we're still in really early phases of all of

01:06:07 that. There's just been experiments guy just mentioned back in 2017 here in the

01:06:11 States there was this retail frenzy and with it came ICOs and a bunch of scams

01:06:15 and then we had this long crypto winter and then we have finally institutions

01:06:19 come in and start seeing other sovereigns start taking a look at it

01:06:23 you're seeing a lot more development in and around it and still to your point it

01:06:26 still has the promise. We've talked to Michael Saylor on numerous occasions guy

01:06:30 and myself over the last year and a half or so and this is his long-term vision

01:06:35 also but then again you get to a point it was like the on-ramps aren't that

01:06:39 easy there's still a lot of scams we're still really early on and it's kind of

01:06:43 funny this is all developing in front of our eyes here and a lot of people would

01:06:48 say hey listen PayPal works pretty good too. What are you saying to the naysayers

01:06:51 now that we have Bitcoin at 20,000 down from 69,000 in a matter of seven or

01:06:58 eight months or so? Well again that's the price frankly I think the price could go

01:07:02 down way more but I think that's independent of the use case to your

01:07:05 point we don't know how the future is gonna unravel people could say well the

01:07:09 use case is bullshit for Bitcoin to which I would say the two things that

01:07:13 I'm watching in terms of the use case for Bitcoin and you're saying with the

01:07:16 on-ramp and I think it's a great question is I would watch Jack Dorsey

01:07:20 and what he does in Africa and then I would watch Elon Musk and with these

01:07:24 satellites because this may sound crazy but in five or ten years maybe not so

01:07:29 much where if Jack can get into Africa and get into these other places and

01:07:33 create those on-ramps with those banking institutions Bitcoin might have a very

01:07:38 very promising future almost as a global reserve currency. Now you could say

01:07:41 that's bullshit but is it a possibility or a probability I don't know I'd like

01:07:46 to think it's more of a probability than in five or ten years those on-ramps have

01:07:49 been built the Jack Dorsey's and the Elon's of the world have penetrated I

01:07:53 mean Jack Dorsey was gonna go move to Africa for a year now a lot of people

01:07:56 made fun of him but the guy's worth a lot of dough for a reason I think so I

01:08:00 just would keep an eye on him. So Bill I know your grandfather passed away I

01:08:04 think in 2018 if I'm not mistaken. Yes. Later stages of his life but I would

01:08:09 love to know what he thought about Bitcoin if he had a thought on that the

01:08:11 reason I asked that is because traditional finance people certainly

01:08:15 guys that build with their hands probably think what is this thing so

01:08:18 that's my first question my second question is a lot of bad actors as Dan

01:08:22 just mentioned within Bitcoin and the problem I have right now and with all

01:08:26 these stable coins and tether is I don't see enough of the people that truly

01:08:30 believe in Bitcoin to the example that you're giving calling these people out

01:08:34 more and these frauds and these lending platforms I mean we've had every other

01:08:38 day there's been billions of dollars that are absconded with or that turned

01:08:42 out to not be really on account so first question and then the second question

01:08:47 did your grandfather ever get to really see Bitcoin or have an opinion on it I

01:08:50 love to get that well I think that he wouldn't necessarily understand

01:08:54 computers the way that we all would and he definitely didn't I can't tell you

01:08:58 how many times I tried to get him to use email and those type of things but I

01:09:01 think generally speaking the principles of Bitcoin I think why it's so

01:09:04 attractive and again it gets to the anti-corrupt nature of it now yes you

01:09:08 could say that there are human beings who use Bitcoin for corrupt purposes

01:09:12 like these crazy yields and all these things but I would argue that Bitcoin in

01:09:16 and of itself is not corrupt and so I think that my grandfather would really

01:09:20 like that being a Depression era boy seeing the corruption I mean even saw it

01:09:25 at multi homes how the CEO he used to say power corrupts and absolute power

01:09:29 corrupts absolutely and that's what often happens with a lot of these public

01:09:33 company CEOs and so the idea that there's not somebody who can

01:09:36 theoretically corrupt Bitcoin I think is extremely attractive and then your

01:09:41 second question I think that that's why I have more respect for the Elan's and

01:09:47 the Jack Dorsey's and I know Elon's hype and dogecoin and those type of things

01:09:50 but these guys who are buying this Bitcoin on this tremendous leverage and

01:09:55 these yields and this kind of stuff to Dorsey's credit at least I don't know

01:09:58 what Elon does I don't think that they're leveraging the Bitcoin that's on

01:10:02 their balance sheet but Dorsey's always been really consistent said hey look

01:10:06 Bitcoin is the gold standard don't believe all these other ICOs I don't

01:10:09 know if you saw but he came up with this web 5.0 to mock web 0.3 point oh so he's

01:10:14 trying to call bullshit out on a lot of these ICOs and scams so I agree I wish

01:10:19 people would be doing it more but I'm sorry but if people are gonna be putting

01:10:23 in their money into these kind of leverage vehicles and keeping their

01:10:26 money on exchanges I mean at some point people got a smart enough for themselves

01:10:30 I think you know bill we get pretty granular in terms of the market on fast

01:10:34 money we do it obviously on the tape here your views from 35 40,000 feet are

01:10:40 much different I'm sure there's some similar views as to what we have but

01:10:43 what are your thoughts I know the economy in the market are two different

01:10:46 things but just if you can sort of wax poetic about what you're seeing and what

01:10:50 you think is going on right now well and Danny mentioned the GFC and Dan was also

01:10:54 mentioning it a lot of people look at that as a crisis I looked at it as a

01:10:57 huge learning experience for the housing industry and I think all the big home

01:11:01 builders learn that lesson their balance sheets are very strong I don't know if

01:11:05 you guys know this and Danny you may know this but the builders around 2000

01:11:10 had about 10% of the market share the big builders today they have over 30% of

01:11:14 the market share and it's very hard to build new homes after the great

01:11:19 financial crisis it was very hard to get financing for new homes and so I guess

01:11:22 what I'm saying is I share many of the same concerns we do about the slowing

01:11:26 growth the rising inflation but I would just say structurally I think the

01:11:30 builders and Danny I'd be curious as to your perspective are in much better

01:11:33 shape because they learn those hard lessons but I think that you're gonna

01:11:37 start to see an economy that's gonna slow down I think it's been slowing down

01:11:40 frankly I've been out of the market since about January I've got I guess I

01:11:44 call it luck I've been a hundred percent cash since January so I guess I got

01:11:48 lucky on that one but you know that's my perspective. Well real quick before you

01:11:52 say you got lucky I also know that you reach out to a lot of people I know that

01:11:55 because you've reached out to me over the years you know what are your

01:11:58 thoughts on the market you ask very thoughtful questions in terms of what

01:12:01 I'm seeing so I think harder you work the luckier you get and I think to a

01:12:05 large extent that luck was based on a lot of different conversations you have

01:12:08 had over the years maybe you can speak to that as well because I know you do

01:12:11 reach out to a lot of people. Yeah I mean I had pretty much a hundred percent of my

01:12:15 net worth and accused I had like a 15 million dollar position in Tesla which

01:12:19 was just ridiculous for me to have and I sold that damn near the top as well I

01:12:23 kind of momentum traded those things I made a bunch of money this year and last

01:12:27 year but I've really got an appreciation for kind of the growth and inflation

01:12:32 and some of the Ray Dalio stuff and the stuff being in rate of change terms and

01:12:36 the slowdown I'll tell you this too one of the things my grandfather was used to

01:12:39 tell me was housing is the first to go out and it's the first to come back in

01:12:43 and so when I started to see the kind of softness in the middle of last year in

01:12:49 fact I remember I was telling my dad because Pulte stock was at $62 a share I

01:12:53 said wow because that was damn near the peak but when I saw the builders start

01:12:58 to take a haircut first and then I saw some of the growth and inflation data

01:13:01 that's what got me to just say get me out of these queues and can be out of

01:13:04 the Tesla we've talked about on the show many times that builders were the only

01:13:09 rational sector at the time they were actually showing us what was happening

01:13:12 at the time or what was going to happen so you're a hundred percent right and we

01:13:16 always look at the bond market as kind of the indication for equities but I

01:13:19 think housing has both inside of it right it did it in 2018 as well then the

01:13:23 builders actually let it back out because people were saying oh we going

01:13:27 into recession back in 18 when the Fed blinked yeah but I think that the cost

01:13:30 of materials for the builders was hitting them first while the housing

01:13:33 market was still apparently strong so the margins were getting squeezed and so

01:13:37 builders were caught in a predicament I mean they could certainly sell on SPAC

01:13:40 and do this but they would have to build and I think their costs were going up so

01:13:44 dramatically that they took a pause and I'm sure you were sensing that and got a

01:13:47 feel for that which was the impact we're seeing now that the Fed was misreading

01:13:51 inflation and I've seen you quoted that you did not ever believe it was

01:13:54 transitory you thought it was sticky and so good on you you were right on and I'm

01:13:58 sure that helped you in your thesis of getting out of the market in general

01:14:01 that people were underestimating but the one thing I think and I know you're a

01:14:04 young guy but you grew up and you were a teenager when the global financial

01:14:08 crisis hit but you've seen what the Fed has done and what the Fed has done in

01:14:12 terms of pumping money into the system had a direct impact and a tailwind for

01:14:16 housing specifically one by buying mortgage-backed securities which keep

01:14:19 mortgages cheap and two by buying treasuries which in effect keep

01:14:22 everything cheap and a bailed out the mortgage bond market in 2020 the last

01:14:27 two years of housing would have been a disaster correct and so all that wrapped

01:14:31 up into one I think you're not giving yourself enough credit for really having

01:14:35 your finger on the pulse there so you're way beyond your years and you're much

01:14:38 more sophisticated than 95% certainly of the people at your age and probably 90%

01:14:43 of the people that are out there trading and the problem we're having right now

01:14:45 in this market is there's a whole generation and they're actually your age

01:14:49 and the average age on Robin Hood is 32 years old and it's dropping by the

01:14:53 second because people are leaving the platform or they're losing their money

01:14:55 but the point is that they hadn't seen a cycle yet and I just think your

01:14:59 grandfather and your family instilled and you were very observant and I think

01:15:03 that's a real key component of this understanding the markets most people

01:15:06 think that I inherited my money and stuff and it's almost not even worth

01:15:09 convincing people of so I appreciate you recognizing that though it's definitely

01:15:13 not worth trying to convince what I've learned on Twitter is people are so dug

01:15:16 in it really doesn't matter what you say they're convinced regardless and it

01:15:20 becomes somewhat futile but what's not futile I don't think is serving the

01:15:25 public in politics I guess you get the politicians you deserve in this country

01:15:29 and that's on both sides of the aisle right now I mean I could rattle off ten

01:15:33 names both Democrat and Republican that I'm hard-pressed to believe would be

01:15:37 elected dog catcher let alone congressman or woman with that said you

01:15:42 seem like somebody that would be a perfect candidate for something mayor

01:15:46 governor senator those types of things you're shaking your head no but I think

01:15:50 you could do an extraordinarily great amount of things for a large group of

01:15:54 people in that type of forum any thoughts on that my goal really is to

01:15:59 it's kind of like my grandfather did with Pulte Homes where started out with

01:16:03 one home and then a subdivision and then productionized it I'd like to do that

01:16:07 with philanthropy I believe that Social Security Medicaid and you guys know the

01:16:11 numbers better than me I don't know how we're gonna afford this stuff going

01:16:15 forward in the country and so to me call it a safety net you could call it

01:16:19 whatever to me it's like if we can figure out a way where people can donate

01:16:23 to each other that can have a tremendous impact on helping people so that's

01:16:28 really where my interest is I see these politicians and stuff number one I don't

01:16:32 even know how much they can get done I mean you guys tell me what you think but

01:16:35 I don't even know how much they can get done and number two is it's just a

01:16:38 miserable way to live you don't get anything done most of the time and then

01:16:42 it's just filled with such hate. Now I hear you what you can and can't get done

01:16:46 and a great way not a great way to live you live in a pretty cool life can you

01:16:50 speak about other than the philanthropy other than things you got going on talk

01:16:55 to me about Bill Pulte the husband and what you have going on in your life. Yes

01:16:59 I got two kids two year old and a four year old two girls so very excited about

01:17:03 that my wife and I got married about five six years ago so just starting a

01:17:07 young family and doing that and that's why I was happy you know I said it was

01:17:11 luck but watching the housing and then seeing growth slow down especially with

01:17:15 a new family and we want to have more kids and we live a pretty nice life

01:17:19 where do you guys think that people can invest right now I mean other than cash.

01:17:23 Well first things first Bill a little pro tip here I don't know if your wife

01:17:27 is gonna listen to your podcast here but about five or six years ago married I'm

01:17:32 just gonna tell you you want to tighten that up a little bit I've been married

01:17:35 for 22 years I like to be specific as possible okay on that one. Five years

01:17:41 five months how about that. There you go well interesting to hear that a lot of

01:17:45 your investable capital was in the queues last year and it seems like obviously

01:17:50 some of your age group you've grown up with some of these companies that have

01:17:53 dominated the Nasdaq 100 if you will and then obviously Tesla and I also

01:17:58 understand why Tesla and Elon Musk capture the imagination of people let's

01:18:04 say who came up it let's say in the 90s or something like that in many ways he

01:18:08 appears to be a visionary as it relates you mentioned the satellites but also

01:18:11 really trying to transform the electric grid and obviously space and all that

01:18:16 sort of stuff so I get it and I'll let Danny in on that if he wants to say

01:18:19 anything in and around that but one of the things that I find really

01:18:22 interesting about the Nasdaq 100 is that I think when we come into this next leg

01:18:27 of a bull market whether that's six months from now a year from now two

01:18:31 years from now who knows I don't really see anything in the public markets right

01:18:35 now that are going to displace the importance of those top five or six

01:18:39 stocks Microsoft Apple Google Amazon meta and those five stocks make up 25%

01:18:45 the S&P 500 they make up more than 40% of the Nasdaq 100 so I actually think

01:18:50 the QQQ is very interesting here I think that especially as we get longer into

01:18:55 this bear market there's dozens of stocks in the Nasdaq 100 are down 60 70

01:19:00 percent or so so they've just had over valuation reset some won't come back

01:19:05 some of them won't but you're gonna get plenty of them that are up to 300% in a

01:19:09 few years and then you'll probably have the mega cap names continue to lead to

01:19:14 the upside so to me I actually think the QQQ is very interesting I think it's a

01:19:18 way to really get a diversification between the tech monopolies which I

01:19:22 don't think are really gonna be regulated ever we've been talking about

01:19:25 the potential or the fear of regulation for a long time and to your point about

01:19:30 politicians they just don't seem to have their act together or actually even know

01:19:34 how to regulate these companies and so to me that seems like an interesting

01:19:37 place to be I'd be interested to hear if there's a price in which you'd ever buy

01:19:41 back into Tesla there is I definitely would again maybe I come at this from a

01:19:45 little bit different of a perspective maybe it's frankly not having all the

01:19:49 experience that you guys have around guys like an Elon but I bought a Tesla

01:19:54 do any of you guys have a Tesla you're asking the wrong crew I did though out

01:19:58 of spite I bought a Mustang Mach-E a Ford last year fully electric I loved

01:20:02 it it was an amazing car and I think it's actually compared to let's say the

01:20:06 lower end Tesla's and I've driven them I've ridden in them I think it blows

01:20:10 the doors off personally my generation and not that much older but a lot of my

01:20:16 generation doesn't know those cars doesn't know the cool cars of the 50 60

01:20:20 not that that was your era or 70s 80s even the 90s so you know I think to a

01:20:25 lot of people my age anyway it's simple it's straightforward who knows about

01:20:29 this full self-driving I mean I kind of like using it sometimes frankly don't do

01:20:33 that you're too important to society don't do that and Bill please do me a

01:20:36 favor I'm gonna give you my phone number just before you buy back stock just call

01:20:39 me please if you ever listen to me again if you value my opinion at all let's

01:20:43 have a discussion on that let me ask you this like an Elon for example anybody

01:20:48 who can figure out how to land a rocket ship on a barge I mean that guy's not a

01:20:51 dumb person right can I push back in a second here so did Elon do that you know

01:20:56 he's not an engineer right and I think there's this hero worship about him

01:21:00 doing all these different things okay you just said you're married for five

01:21:04 and a half years you have two kids are two and four years old you're a devoted

01:21:07 father you're devoted husband you run a business you run a charity you're active

01:21:12 on Twitter how much more time do you have do you have time to run three

01:21:16 companies experiment on these other things live tweet your life all day I

01:21:20 think he's full of shit I honestly think that we're gonna see that he is that man

01:21:25 behind the curtain that a lot of people suspected for a very long time I just

01:21:29 don't believe that he is the one who figured out how to send a rocket to

01:21:33 outer space and landed on a dime in the middle of the ocean or something like

01:21:37 that John Doerr was in an interview with Kara Swisher on her podcast sway on New

01:21:42 York Times a couple weeks ago and he said that Elon Musk has single-handedly

01:21:46 advanced the move towards EVs by five years now do you think that's the sort

01:21:52 of thing that we should all get down on our knees and revere don't you think it

01:21:56 was kind of moving along anyway and I make that point that that guy has been

01:21:59 for 50 years one of the best investors in the world and he's giving him props I

01:22:03 just think that if he got hit by a bus tomorrow and I'm not wishing that on him

01:22:07 and didn't exist I think all the stuff in space and satellites in electric

01:22:12 vehicles in Dogecoin it would all still exist it would also be moving forward

01:22:16 bill just before you answer I just want to let you know he didn't start Tesla

01:22:19 need to invent the car none of that it was started before and he came in and

01:22:22 took it over I just want to make that clear and one other thing if I told you

01:22:26 a Pulte homes was building a house that generated its own air-conditioned

01:22:30 generated its own heat you know was a fully whatever it was when you sold a

01:22:33 house and I bought the features that were supposed to do X it was such a cool

01:22:37 house so much ingenuity associated with it I fell in love with kind of the

01:22:41 concept and I bought the house but nothing worked like I thought it was

01:22:44 supposed to and these all these additional things didn't work like they

01:22:48 were supposed to and I realized there's other homes being built now in the next

01:22:51 three to four years which will have the technology that he's talking and will be

01:22:54 run better and anyway not to draw a comparison the point is I'm with Dan

01:22:57 that I think he sold a bill of goods here but more than that he's hurting

01:23:01 people you could argue that by him purporting that they have full

01:23:04 self-driving capabilities I don't know if you saw the documentary anyway Dan

01:23:08 just sent me down a path I didn't even know we were gonna get into Tesla today

01:23:11 I cut you off go ahead I am definitely not on my knees for Elon Musk so point

01:23:16 number one point number two all you asked me was would I buy back the stock

01:23:20 answer was yes because it's a momentum play and at some point maybe it will be

01:23:26 interesting so I just want to be totally with that so before we get out of here

01:23:30 I have a little anecdotal thing and then I'm curious as to your thoughts so a few

01:23:33 years ago is on a plane I had my ass in a seat a family comes on the plane the

01:23:38 husband was sitting in one row the wife and the two kids in another row so I

01:23:42 turned to the husband I said listen if you want to sit next to your wife I'll

01:23:46 move I'll do whatever you need for me to do in order for you to be with your

01:23:49 family and they were able to do that I had no idea who the guy was the next day

01:23:53 I got a call from CNBC and said somebody wants your contact information is that

01:23:57 okay I said absolutely it was Doug yearly and I know you know who Doug is

01:24:01 so he's obviously the CEO of Toll Brothers and he was just so thankful he

01:24:06 happened to be watching the show over a course of a few years which I always

01:24:09 found fascinating but Toll Brothers was created by Robert Toll I'm sure your

01:24:14 grandfather and those guys probably had a lot of really interesting

01:24:18 conversations did he ever fill you in on some of the things they were talking to

01:24:21 their contemporaries about because all these companies were built effectively

01:24:25 by one person. Well not only did he tell me those stories but I was fortunate

01:24:30 especially in the last 10 years or so to get to know a lot of those people

01:24:33 personally so gotten to know Bob Toll gotten to know Stuart Miller of Lenar

01:24:39 and many of the other peers I don't know if you know this but you look at Eli

01:24:43 Broad you look at Lenar Miller which was Stuart Miller's dad you look at Don

01:24:49 Horton Bill Pulte Bob Toll Dwight Schara these guys they were all part of that

01:24:54 generation and Dwight Schara just stepped down as chairman of NVR I don't

01:24:58 know if you saw that last month so that's kind of a changing of the guard

01:25:02 so to speak in the home building industry and it'll be really interesting

01:25:05 to see what happens for the next generation. Bill we've loved having you

01:25:09 on you've been extraordinarily generous with your time and you're also

01:25:13 extraordinarily generous with your wealth and the wealth that you created

01:25:17 for yourself and I think that's important to bring up once again so

01:25:19 thank you so much Bill Pulte for joining us on the tape. Let me know when I can

01:25:23 get back in the market right Danny and Dan? You got it.

01:25:26 Tesla hits double digits it'll be your sign but we'll keep in touch for sure.

01:25:29 Thanks Bill. Thanks once again to CME Group for sponsoring this episode of On

01:25:35 the Tape. If you liked what you heard make sure you hit follow and leave us a

01:25:40 review. It helps people find our show and we'd love hearing from you and we also

01:25:44 want to hear from you via email at on the tape at risk reversal dot com any

01:25:50 time of the day. Follow and connect with us on Twitter at on the tape pod and

01:25:54 we'll see you next time. On the Tape is a risk reversal media production. This

01:26:00 podcast is for informational purposes only. All opinions expressed by me, Dan

01:26:04 Nathan, Guy Adami, Danny Moses and any other participants are solely our

01:26:08 opinions and should not be relied upon for specific investment decisions.

01:26:14 [BLANK_AUDIO]

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