Today’s episode of “Speak Up with Anthony Scaramucci” features special guest Ron Insana, Chief Market Strategist at Dynasty. Dive into an enlightening discussion on the current economic landscape as we explore key topics, including the perception versus reality in today’s economy, recent Federal Reserve decisions and their impact on inflation, and a forward-looking analysis for 2024.
Anthony Scaramucci 0:25
Right. Well, welcome back to the show. This is speaking with Anthony Scaramucci, also known as the mooch. What a great reception we’re getting and thank you, everybody. Lots of voicemails, emails, great questions. And also great engagement online. So I’m at Scaramucci on Twitter are now known as x. If you need me hit me there. I’ll respond quickly. Just mentioned the show. Speak up with Anthony Scaramucci. You want to talk to us it’s nine to the mooch. So that’s 928-436-6624 Joining me today now I am not going to tell you how far back I go with Ron Insana because I’m lying about my age. Ron is now an elder statesman. I’m a New pup in the industry. But well, I think we know each other for three decades. Mr. Insana is the chief market strategist at Dynasty, a company I know well, sure shall Penny’s company. Obviously, you can give me the opportunity. Talk a little bit about dynasty Ron, but you’re also a senior analyst at CNBC. And last week on the screws, literally like Obama deer, you landed right on what the Fed was going to do this week. And I want to applaud you for that. And if you don’t do that, I’d like to start there, that the Fed decision why they made that decision, what you think about near term and long term inflation? And where’s Jerome Powell going these days? So
Ron Insana 1:58
Anthony, thanks, look, I mean, we can also probably call this segment Sicilians in suits, but that might be for another show and another time.
Anthony Scaramucci 2:04
That’s a bloody it’s a bloody and more gory show than the one you and I are about to perpetrate. Yes. Look, thanks.
Ron Insana 2:11
Thanks for that acknowledgement. I mean, I’ve been of the mind that a lot of economists incorrectly were comparing this post pandemic periods of the 1970s. And then inflation was not going to be a long term phenomenon that lasted as it did from 1966 to 1980, where we’re at 13%, inflation 11%, unemployment, 20% interest rates, I thought this was really a post pandemic environment and the Fed ultimately was going to capitulate, recognize that inflation is falling faster than their forecast, I wasn’t sure that they were going to tell us that they were going to stop raising rates. And I certainly wasn’t of the mind that they were going to tell us or Telegraph that they were going to cut rates next year, which is what they did this week. And that that part was surprising. It is what I ultimately thought they would do for the very reasons that I said, the economy slowing, inflation is falling faster than they thought, you know, there’s a wall of commercial real estate debt coming due that needs to be refinanced next year. And so there’s a lot of reasons why the Fed will be cutting and 2024. And I think now that they’ve acknowledged that and effectively set the stage for this pivot in policy, it’s a pretty important moment for investors to recognize.
Anthony Scaramucci 3:17
Why telegraph though, because I know that Chairman Powell is worried about bubbles. He’s worried about over exuberance. You and I have been talking about that word, irrational exuberance since the mid 1990s, December 2 1996, December 2 96. And I know it well, I’m going to tell you why. I started my first company. I left Goldman Sachs on November 30. I started my company on December 1, and we had a mini crash on December 2, and I was panicked. I was panic fraud. So I remember well, because of this exuberance, though, why telegraphing? Why show your cord so Marcus reaching all time highs, we’re experiencing a full blown Santa Claus Rally? Is he worried that he’s brewing a bubble with the telegraphing.
Speaker 1 4:06
I think bubbles… You know, bubbles are different, as you well know. And the bubbles are different types of things, right? They require a whole host of different ingredients, not the least of which is first, you know, something around which we want to bubble which very, very well may be something like aI but it’s early requires, you know, some disbelief, and it requires very easy money, then it requires a lot of public participation. And then everybody needs to be on the same side of the boat at the same time. I don’t think we’re there yet. There’s, you know, $5 trillion in cash on the sidelines and true. In the last couple of days, some retail money has come into the market. The Dow has hit a new all time high. The s&p and NASDAQ are within striking distance. But look that’s been a function of the market discounting an end to the Feds rate hiking cycle now for several months since they went on pause. And so I think it’s a rational response to the notion that rates are peaking which is the cost of capital comes down Do risk assets like stocks and long term bonds look better other assets, whether it’s crypto or something else, also gold getting a boost from these things. So I don’t I don’t think we’re, I don’t think he’s easing financial conditions. So significantly by acknowledging the reality of where we are in the cycle. And I also think he’s trying to cushion the blow in the event that they’re starting to shift their gaze from inflation, which appears to be under control to the risk of recession next year. And so if they’re trying to achieve that goal, you know, that unicorn goal of of a soft landing in the economy, that’s why they’re making the shift. And I imagine that’s why they’re telegraphing it, they’re saying, okay, look, we kind of hit our target. Now it’s time to make sure that the economy stays on course.
Anthony Scaramucci 5:44
He’s saying 75 basis points next year that feels like what the cuts gonna be. Do you think he means that? Do you think it’s 50? Do you think it’s 100? basis? Points? 100. Do you think it’s more? Yeah, I thought based on watching your interviews from last week, I think you think they’ve got a cut more? Is that front end loaded and 24 back and loaded or older?
Ron Insana 6:07
I look. So you know, this old expression, right? That typically interest rates go up and escalator and come down in an elevator. This time they went up in an elevator and they might come down in an escalator. Right, because the Fed did so much so fast, even relative to what was happening in the early 1980s. Yeah, I think they’re going to be more judicious in their cuts. But I think as you look at a couple of these different things, it’s commercial real estate debt, multifamily housing debt, consumer credit debt, where delinquencies are now starting to rise towards recessionary levels. Same with auto loans. And then you look at, you know, the wall of federal debt that needs to be refinanced. And then on top of that, once they start cutting interest rates and Brent mortgage rates down significantly, they’re going to unleash the supply of homes that are simply off the market right now, because buying a house is unaffordable, once that supply hits the market, that’s going to put more downward pressure on inflation, because the shelter cost will come down. And I think they’re really trying to work this through. And I don’t think three quarters of a point will be enough to get mortgage rates down to a point where, at least on the residential real estate side, things will be affordable enough until they’ve taken them down 125, maybe even 150 basis points over time.
Anthony Scaramucci 7:18
Well, I think I think it’s well said, I think that the thing that I’m concerned about, is perception becomes reality in the economy sometimes. And you and I look at the economy, I look at the economic dashboard, it looks great. You’re, you’re flying, everything seems okay. You’ve got Goldilocks indications on the dashboard. I’m cool with it. You’re cool with it yet when you ask people, the man and woman on the street, how are they doing? Their say, no, no, I’m not doing well. My disposable income has been crimped energy prices are down recently. But the last two years explosion in prices has crept my savings hurt my consumption. Most people are giving a letter grade C minus to the Biden administration, which they have to be upset about because the dashboard looks great. And you could hit that unicorn. So my question is perception versus reality in the economy run? And how much fear Do you have that perception could become reality? Yeah, I’ve
Ron Insana 8:18
never so divided. The word vibe session has been getting a lot of attention in the last few weeks that the notion that we can have a psychological recession, I’ve been doing this almost 40 years now. And I’ve never actually seen that happen. Now, the way I’ve seen data cut around polls and other consumer sentiment readings. Easy
Anthony Scaramucci 8:37
go a little easy on aging us out.
Ron Insana 8:41
You’re younger than I am, man.
Anthony Scaramucci 8:42
Unless you’re gonna be Charlie Munger. And
Ron Insana 8:46
I’m not I’m not ready to depart the stage.
Anthony Scaramucci 8:48
Ages out. Okay, but keep going.
Ron Insana 8:50
So yeah. So like, I don’t think psychological recessions have ever taken place. In my experience. I think what’s going on right now. And this is from all the data that I’ve seen around the polling. When you ask people about the national economy, they’re generally pretty bearish about it. When you ask them about their individual situations, they say they’re doing fine. Yes, they realize that the overall price level post pandemic has risen about 19 or 20%. But as you said, energy prices are falling pretty hard. We’re seeing food prices last month, we’re down almost 5%. Those things are starting to normalize wages are growing faster than inflation. And then beyond that interesting graphic that I saw this week. A lot of the opinions about the economy cut along political affiliation lines. So if you’re Republican right now, you think the economy’s horrible. You think it was better under Trump, if you’re a Democrat? Quite the opposite is true. So I think there are narratives on both sides to which people subscribe, that don’t necessarily reflect economic reality. And so I think that it’s an unusual scenario. I haven’t seen this too often. Excuse me, but it does. And the chart that I looked at this is really been true since after the Clinton presidency. When you look at the Clinton years, Republicans and Democrats generally agreed that the economy was great after Bill Clinton is when you see this political divide really starts to take place over perceptions about the how the economy is doing. And whichever party in power got either credit or blame from the other side, with respect to how things they believe we’re playing out at the national level, as opposed to their own personal experience.
Anthony Scaramucci 10:28
So you like the stock market here, you’d like to market in? 2024? Yeah, look, I mean, 2024?
Ron Insana 10:36
Yeah, you know, they say that they never ring a bell with a bull market. And as soon as the Fed stopped raising interest rates, the bell rang, right. And we’ve seen a rip in the upside of
Anthony Scaramucci 10:45
many of rang before it right, because some of the market participants were like, hey, they have to if you look at the data, you are an AI investor, I think at least I believe you are I hear you talking about
Ron Insana 10:55
and attention to it a lot. Yeah. Attention to a whole lot.
Anthony Scaramucci 10:58
I love AI. There’s people in my family that hate AI, they listening to my monster worried that we’re gonna have Skynet and five years, things like that. Yeah, I’ll talk about AI and investing for a moment. But then also talk about AI and its impact on the economy, in terms of the improvement in productivity, economic innovation, efficiency, cost savings, etc.
Ron Insana 11:21
So as Groucho Marx used to say, I’ll take the second question first, that productivity enhancement that’s going to come from AI, and we’re already starting to see it the adoption rates for artificial intelligence, and its uses in a wide variety of businesses, whether it’s straight tech, or whether it’s fast food restaurants, what we’re seeing it be deployed, for order flow for delivery of the food inside or outside the restaurant, using large language models and natural language processing to take in orders without having somebody to stand in the window and do that all of this stuff is happening very, very quickly. And it’s productivity enhancing, as you say, it increases efficiency and ultimately improved profitability for a wide variety of different businesses, including our own in financial services, you’re going to start to see AI assists for advisors, for individual investors and for others, and you’re gonna see that rolled out now, Are there risks? Certainly, you know, they haven’t solved the hallucinate hallucination problem, which at GPT, you can get bad answers, because they call bad data, when they’re gathering all this information that needs to be solved, whether or not you know, the Skynet analogy, which is brought up a lot, you know, when are we going to see a terminator type experience? You know, that’s something for National Security and Defense Department officials to really, I think, get their minds wrapped around, I’m not skilled enough in that area, to say whether or not that’s a real risk. People are talking about within five years AI matching or exceeding human intelligence. When
Anthony Scaramucci 12:46
will the first novel, fiction book, best selling fiction book be written by AI?
Ron Insana 12:54
Well, you know, to a certain extent, Jurassic Park was kind of a prequel to that in the sense that chaos theory was something that Michael Creighton, a personal friend of mine had had worried about. And when you get uncontrollable unstable systems, you get unexpected results. And I think so that the prequels are already out there. And I think that next wave is going to be yes, something that that takes place that becomes completely uncontrollable, and to a certain extent, look, even 2001 Space Odyssey was was going dead dating back even further.
Anthony Scaramucci 13:29
But I’m really talking about the computer itself. Yeah, types out and prints a 300 page novel.
Ron Insana 13:37
Oh, you mean actually producing human content? Yeah, well, they’re gonna be some probe, as we know from the writer strike, and the actor strike, they’re going to be some prohibitions on that it can already be done. Whether or not it’s actually writing a book on its own, versus stealing a ton of IP from the internet and taking in all the data that other writers have used to create great works of literature, and then putting it into a format that can be recognized by the system. I think that’s the open question. When will it have the intelligence to write with emotion? And right from experience? I don’t know when that happens. I think that’s still a ways off.
Anthony Scaramucci 14:15
While I punched into my iPhone. Please write me a poem about Ron and Sonic Good God. And I gotta tell you came out. You’re very they’re very well liked by these machines. Okay, so it’s good to hear. Yes, it is a very flattering poem, that the machine was like a love poem, actually. So maybe
Ron Insana 14:36
it’s funny because my wife doesn’t publish much. So yeah,
Anthony Scaramucci 14:39
well, maybe well, maybe we’ll post it in our graphic section. At some point during the show. I want to go to your outlook in 2024. You tipped your hand a little bit your positive. Tell us what you think happens in 2024.
Ron Insana 14:52
So I mean, if we’re just going to do some fairly boilerplate analysis, right. We know now that the feds very likely to ease my late friend, Marty’s wife yours as well. You said don’t fight the Fed don’t fight the tape. Tape is favorable the Feds about to become favorable if it’s not already. And then you have the presidential election cycle third year, typically the strongest fourth year is the second strongest. And if you have the Fed easing next year, that’s good for risk assets of really all kinds. And then, you know, listen, I don’t think politics will be an issue per se for the market next year. I think in 2025, it might be a different story. We don’t know who inhabit the White House, we don’t know the composition of Congress. And we also know in 2025, the Trump tax cuts expire, and they’ll have to either be extended the assault cap might have to be lifted or altered. You know, there’ll be a lot of moving parts come 2025 Next year, if we can get through it without a government shutdown, if we can get through the appropriations process, get all our bills passed, get Ukraine money, get Israel money, get Taiwan money, then, you know, it’s kind of a gridlock type environment. So I think from that perspective, you get the Fed as a tailwind economy, probably slowing down inflation coming down. That’s an environment that that’s pretty good for risk assets, you know, long term treasuries. Um, there probably be some places in private credit that will be interesting at that. Not to be too far in the weeds, but at the upper end of the capital structure where you have, you know, collateralized, senior secured loans, those things will probably be a decent investment as well. So I’m reasonably optimistic that from a market perspective, next year’s Alright, maybe not as good as this year, like we’re up 20% Plus in the s&p, right, almost 40% in the NASDAQ.
Anthony Scaramucci 16:34
After a brutal 2020 It’s extremely brutal. 2020. So you know, we’ve had a little bit of a rebound. Yeah, before we go to mooch, you and we’re going to take some questions from the audience. I’d like you to chime in on both give me one or two predictions.
Ron Insana 16:50
I think Joe Biden wins the White House, okay, by the narrowest of margins. And I think we have a mild recession in the
Anthony Scaramucci 16:59
naked through the term because he is he is he our president handing over the reins, January 20 2029.
Ron Insana 17:10
I think if he gets reelected, he stays in.
Anthony Scaramucci 17:12
Okay, it makes it so he’s I guess, the health and vigor and energy to make it
Ron Insana 17:17
Yeah, you know, I talked to Anthony, and I’m sure you do this as well. I mean, I talked to people on the FDR
Anthony Scaramucci 17:21
did as well, you know, we’ll see. Yeah, I
Ron Insana 17:23
talk to people who buy. I pray for his health.
Anthony Scaramucci 17:26
I’m just asking because, you know, he’s, he’s, he’s moving up the ladder as we all but he’s getting getting old by
Ron Insana 17:34
people who he who brief him on a fairly regular basis that he’s with it, that he’s not out of step, and that it’s a misperception that he’s, you know, he’s 81. I mean, you know, but we’ve,
Anthony Scaramucci 17:47
I think we’re talking to the same people, you know, those very same people have said to me, he is with it, but he’s got about five good hours a day. And so they have to manage his time. And you remember
Ron Insana 17:57
George Bush went home every day at 530. Yeah.
Anthony Scaramucci 18:01
Right. I mean, that used to scare me. And then I saw some of the things he was doing, and it was 230 I’m not sure Donald
Ron Insana 18:09
Trump put in a full eight hours as president neither watch a lot of television
Anthony Scaramucci 18:12
he got, he got up at 430. He gets to the Oval until about 1130. So there’s a lot of tweeting and commotion and yelling and screaming, you know,
Ron Insana 18:21
I think five good productive hours. Yeah, President, in my estimation is doing a very good job, particularly on the foreign policy front.
Anthony Scaramucci 18:29
I think he’s, I think he’s done a good job. And I think he’s underrated or they’re not doing a great job for the great job that he’s doing. He’s actually done a good job. Yeah,
Ron Insana 18:39
I think that’s been, you know, since I would say, since Hillary Clinton, the Democrats have done a horrible job on messaging, whether it’s in a campaign, or whether it’s an actual, you know, governance. I don’t think they’ve managed to be great salespeople. If and when they’ve done the right thing,
Anthony Scaramucci 18:59
you know, you know, I’m going to let you off the hook, because that is such a big bold prediction. We’re going with that one prediction, and I’m writing it down. I’m gonna hold it to you. And if you’re wrong, I’m going to ask Chad GBT to write a nasty poem with a love poem going right now, but we’re going to see if we can fire in a nasty one. We’re going to turn now to mooch, you standby. Questions abound here at Speak up with a mooch. And so the topic today is on renting versus buying, right? So this is the biggest deal to somebody like me, because unfortunately, I grew up in a blue collar neighborhood. I know Ron has experiences as well. Most of the people in my neighborhood were renters. My parents were renters until 1962 When they borrowed $5,000 From my mom’s dad, my grandpa, and they bought a six $10,000 house $11,000 mortgage Ron and sauna 30 years I think the interest rate at that time was about three and a half percent. Yep. So my dad had a mortgage burning party in 1992. Now, you may think these are small numbers, but my pops was making about 20 to $23,000 a year as a crane operator, and it was eating up a large part of his income. But let me tell you why. That house today is probably worth seven $800,000. Interestingly enough, Ron, you’ll appreciate this taxes on the NASDAQ about 17,000. So they’re, they’re more than what my folks had paid on the house. Why am I bringing all this up? When your rent it? Okay, if it’s temporary, you’re moving into a city to get a sense for the city or you’re, you’re up a college totally understandable. But if you’re going to plant roots in an area, you got to spring for the buying, you got to try to extend yourself a little bit. Now one thing we didn’t talk about, and I looked through this today, interest rates being up as much as they have been in the last couple of years at push the mortgages and push the differential up a lot. Yeah, I’ll put I recommend to people try to figure it out. Bite the bullet. You want to be an owner, not a renter. It’s a game changer in terms of creating equity for yourself. What say you run on song,
Ron Insana 21:23
I agree. 100%. And I have the exact opposite experience. And you did. So when I was two years old, we were living with my grandmother in downtown Buffalo. We sold her house apparently she gave my parents $8,000 To buy a $21,000 $521,500 house in a suburb of Buffalo, our monthly mortgage. And I knew this far too young in my life was $164. And I think at the time my dad was making about $6,000 a year and and we ended up owning that house till we moved to California. And by the time we were able to buy a house in California prices gotten so far away from us that my parents then rented for the rest of their lives and never built up that equity. So I agree with you that the equity in homeownership is extremely important. The way around the affordability question right now. And I’m just looking at mortgage rates today, the 30 years come down to 664 weeks ago was at 8%. So you’ve already had a one and a half percent cut in a fixed 30 year mortgage. If I were buying a house right now, I would use an adjustable rate mortgage or an interest only mortgage in order to bring that monthly cost down. Because the differential between renting and buying is historically wide today, it is much much cheaper from the perspective of what percentage of your disposable income goes towards shelter. It’s much cheaper to rent than it is to own. So I would still make the purchase. If I could I’d use an adjustable rate mortgage, I would use an interest only mortgage and then when the time comes around to refinance, I would do that because you’re basically levering your ability to buy a house and increase the equity that you’ll ultimately have in that home once rates fall back to a much more reasonable level. And the other thing that’s going on right now, Anthony, is that the supply of housing is so constrained because mortgage rates have been so high, you have no homes for sale. And I don’t mean that literally but you know, relative to history, the supply of available existing single family homes is extremely small. And so you’ve got a post pandemic lockdown, people can’t downsize because it cost them the same amount of money to do it. And first time homebuyers been priced out of the market?
Anthony Scaramucci 23:25
Alright, well, we’re in agreement, it is tough. I’m not saying it isn’t. But things that are worth something are always tough. If you think things are easy and never are rotten, I can tell you that an overnight success takes a minimum of 20 years. Sometimes you just have to grind things out. But try to be an owner, not a renter. I want to go to some audience questions. We had a fabulous voicemail pipe in. But let’s go to the emails first. Okay, please address the difference between consumer sentiment and economic growth and the recent increase in real incomes. This is from Andrew from Colorado. Ron, I’ll let you start. What do you say there?
Ron Insana 24:08
So again, you know, going back to what we’re discussing earlier, I think, you know, the consumer sentiment data are very strange to me relative to economic reality. And I understand that people have suffered through now, a price shock that’s lasted about two years, but the pace of inflation has certainly slowed considerably. Real wages are up across the board. And we’ve seen whether it’s new union contracts are whether it’s at the lower end of the income spectrum than the bottom 10% are actually gaining more ground than they have at any other time since about the 1960s or 70s. So I think there is this yawning gap between perception and reality and some of it look, you and I both live in the media world. Some of it is colored by what people say on TV, and again, what party you affiliate with, and who you think would ultimately do a better job on the economy. And so I think that’s been a real has had a real impact on people’s personal options of what is happening. When you look empirically at the data, the unemployment rate is 3.7%, the prevailing inflation rate has gone from 9.1%, down to 3.1%. And falling still, gasoline prices are cheaper today than they were a year ago, food prices are beginning to fall relative to the rest of the world, the US is growing faster with less inflation than any other country among the developed nations of this world. So we’re in good shape. I had Anthony a chance to talk to Tony Blair, a couple months ago, interview, and he said, We are in an extremely enviable position when compared to the rest of the world, strongest economy, strongest military. And yet, we tend to forget that. And we think only in absolute terms, not in relative terms, that we are really outperforming the rest of the world by leaps and bounds right now.
Anthony Scaramucci 25:49
Well, yeah, I think it’s fast. I think that we’re in post traumatic stress from COVID. So we almost have a post traumatic consumer disorder right now, where, hey, we lock people up, we put mass on their children, we said, You got to stay in your house, we forced them to take the vaccine. And they’re panicked, they got scared results of which savings rates was way high during that period of time. And then we got hit with inflation because the overcorrection from all the stimulus, because I just think it has people very, very scared. So even though things are going well, they’re afraid that the sky is gonna fall rocks gonna hit him in the head. So I get that. Let’s go to the next question.
Ron Insana 26:31
I don’t think that’s going to happen. By the way, I actually think that the longer term outlook is pretty good.
Anthony Scaramucci 26:35
I don’t I don’t either. But here’s the beauty of it. And you know, this, and I know this, it has happened to you and I nine times since we came into the business, we’ve experienced nine bear market. So even if it does happen, okay, the point of Wealthion. And the point of speak up with Anthony Scaramucci, and your whole career has been dedicated to thinking long term and managing through the cyclical downturns. Because one thing you and I both know, markets run in cycles, but the trend, and the trajectory has been up into the right for America for 125 years. So
Ron Insana 27:12
yeah, sky may falter. I want to know where the Dow was on the day I was born. 6261 It was 37,000.
Anthony Scaramucci 27:21
Now, you’re causing a lot of pain here. Okay. I mean, you’re really dating down when I was 34,000? Is 36,000. Right now. 37,000? Yeah. 37,000 see that? No, I’m kidding. I don’t know. I don’t know what it was when I was born. But in Santa and I are contemporaries. Let me just leave it at that. How can the greatest debtor nation of all time, continue to leverage its world reserve currency status, to exert geopolitical control? Worldwide? This is from Steve from New Mexico. You want to take that one.
Ron Insana 27:58
So, you know, I think there’s been a lot of hand wringing over the status of the dollar as a reserve currency, the level of debt that the US has accumulated, which look I’m not thrilled with. But it’s so far still somewhat manageable. We borrow in our own currency, much unlike other countries, which gives us a fair amount of flexibility. The dollar is used in 65% of global trade, it touches 95% of all foreign exchange transactions, so dislodging the dollar. And I think that’s underpinning this question is going to be difficult in the US, again, from both a military and economic standpoint, is the strongest nation on the planet. So we do have to adjust and address the heavy indebtedness that we have, which has been a result in responsibility, and we can blame both parties for it. And it has to be addressed in some intelligent fashion somewhere down the road. I don’t see any viable alternative to the dollar. And so whether it’s the BRIC countries, you know, putting together some alternative currency basket, what and again, you and I may differ on crypto, I don’t think crypto replaces the dollar as a reserve unit, it may be a, you know, digital gold or what have you. I just these in a certain sense. While I worry about this, I much I worry more about China defaulting before we do. China’s debt to GDP ratio is 300%. When you understand how China’s debt is managed, they they’re responsible not just for the federal debt, but municipal debt throughout the country and the debt of state owned enterprises. And their economy in my estimation is failing. So we’re not and so while we do have considerable market power when it comes to the dollar, and you know, this Anthony every time there’s a global crisis, what happens every central bank on the planet calls the Fed and ask for dollars and dollar liquidity. So I really think that we do have that leverage. It exists and we use it whenever possible. And
Anthony Scaramucci 29:55
I think the last point that I’d like to make on that then we’ll go to voice Question is here, what Ron is saying, you can get scared by the total amount of the debt. But then you’re not looking at the assets of the United States. And don’t forget, the US government owns 28% of the land. I mean, you could Google it. I mean, I don’t know if that’s the exact number, but it’s pretty close. We’ve got our military, we’ve got these natural resources that are literally second to none. And we’re protected by these two amazing oceans. So so this is a fortress, we don’t necessarily have to pay back that debt, as much as we have to grow out of it. And, you know, the scary thing that sometimes said to people that shouldn’t overly scare them is we never paid back the debt from World War Two. That’s true, but we ended up growing to get okay. And so so I don’t want people to be in the Armageddon zone. The most confident and the most optimistic investors think long term. And those are the ones that make money. The pessimists get it right once in a while. And I want to point out to everybody that if you are a stock trader almanac enthusiast 83% of the time, the stock market goes up in an election year 83% of the time, and let me tell you concomitant to that figure, the Fed has just announced that there’ll be cutting rates into 2024. So there’s a reason and the fundamental reason why Ron and I are both bullish and optimistic about 24. Let’s go to the voicemail from Annie from New York. Hey,
Speaker 2 31:36
Anthony. This is Annie calling in from New York. And I wanted to get your take on JP Morgan, tripling its crypto team. All while Jamie Dimon is saying if I was the government, I’d close it down. Seems like a double standard to me. What are your thoughts?
Anthony Scaramucci 31:53
I would say any that Mr. Diamond, I think Ron probably agree. He’s one of the smartest people in financial services. And he’s had a legendary career. And he kept that bank growing it together through many crises, ups and downs, and he’s subjected to fairly stiff, and sometimes puteri regulation from Washington, and when he’s being questioned by people like Elizabeth Warren, and with all respect to Elizabeth Warren, a former professor from Harvard Law School, very smart person, but in my opinion, not the best agent for financial services regulation, primarily because she didn’t really understand how the whole system works. And so we have a 70 plus year old woman dictating terms of banking regulation, at a time when we probably need something a little bit more advanced than that. Mr. Diamond knows that. He’s up against it. And so when he says things to her, we should shut it down. It takes pressure off of him. Now he’s making a mistake doing that because it’s temporary pressure, he has to walk back those statements. He always goes to marijuana as the analogy. And so recently, he said, Well, I don’t smoke pot, but it’s legal in the country. And if you want to smoke it, and we need to bank it well in a banking it and so. So he’s in that mid zone position. And trust me, because I know that people in his digital area, they groan and moan every time he speaks up negatively about the crypto markets. Ron, you want to say anything?
Ron Insana 33:22
Yeah, look, I agree. And you know, you can say those things publicly and still build out a unit that’s going to make money from crypto just as you can build out a unit that’s gonna make money from banking, marijuana, whatever your personal predilection might be, as a CEO, you there’s, you have, I think, the freedom to say certain things, and Jamie has certainly earned it. But he also knows that if there’s money to be made within his organization, he’s not going to be left behind. So he’ll build out that team to make sure that the bank is covered, and that they have an operation that can mine, if you will, additional profits, as banks are, you know, intent inclined to do so. I’m not really, you know, it’s funny, he also said the world wasn’t prepared for a 7% interest rate. And we’ve gone down ever since he said that. And so look, I mean, even smart people get things wrong, and maybe, you know, loading the boat on one side.
Anthony Scaramucci 34:12
Isn’t you know, I so it doesn’t take my respect away from him. You were gonna say something related to optimism, and long term optics. I want you to say it before we blow, blow it off.
Ron Insana 34:26
Yeah, look, I think when we were talking about the national debt, I mean, if if the Federal Reserve starts cutting interest rates and does so in a meaningful fashion, that debt service burden that the US currently is dealing with at $650 billion this year, maybe 850 billion next year, if the Fed left rates where they were, the debt service burden for the US government would be a trillion dollars, the largest single line item in the budget, if they start cutting rates, that all changes, and that that service burden starts to fall. So when people get very, very wound up about this, and again, I have concerns about it. I have concerns about the long term health of entitlement programs which need to be addressed and probably adjusted for, you know, longer lifespans over the long run. I think if rates start coming down in a meaningful fashion, that’s gonna take a lot of pressure off the federal government, hopefully, hopefully it won’t induce them to add on to the debt and, you know, continue to build larger and larger deficits, but it will take some pressure off if rates come down and reduce the burden that we have at the moment.
Anthony Scaramucci 35:24
Well, it’s very thoughtful stuff. We got one more email coming in. Can you give a few pointers on trading psychology that have worked for you? Thanks, and keep up the great work. I really appreciate that Dean. We’re doing our best here. I’ll start with this. Mr. Johnson is also a traitor. The worst thing that you can do sometimes is put your ego into a situation the absolute worst thing that you could do. I want to give Dean A big shout out though he’s tried calling in last week. And he’s a persistent sob ROM, which you know, I love because that’s my whole life is about. And I am familiar. Yes. But Dean, I appreciate it. Man. I’m calling in a few times that scrapped as Scaramucci is not answering the phone. He fires in the email. But here’s the thing I would set, I’m at my best when I take my ego out of the situation, my egos injected into the situation, I am absolutely terrible. If I get emotionally invested in something, a name, a security, a digital currency, what ends up happening as I make mistakes, I get overanxious at the top, and I get very, very frightened at the bottom. And so you have to be dispassionate, as a best an investor, I’m at my best when I’m able to do that. I think that’s the biggest lesson that I’ve learned in my career. Anything you want to add there?
Ron Insana 36:48
Yeah, I think, look, if you’re going to trade and not being a long term investor, if you’re really going to trade and be a trader, you need to develop or learn a discipline strategy that you don’t abandon. Again, as you said, when you get married to a position, I mean, some people really fall in love with their investments, or their trades, they fight the market, they think they’re right, whether you’re right or not, in the long run, you can get chewed up, if you stick to a position too long, and the markets going against you. So you need you needed a very exacting discipline, you need cell stops, you need the types of protective devices, if you will, that help keep you from making big mistakes. Most successful traders are right 51% of the time big and wrong 49% of the time small. And that’s kind of really where, you know, you look at all the great hedge fund managers. They try not to make huge mistakes, and they try and they’ll walk away if something’s not working. And they are, as you say, dispassionate. And I think that’s, that’s something that people really need to learn when it comes to trading versus investing, which is putting money away for the long haul.
Anthony Scaramucci 37:52
You see, it’s interesting because I have a friend of mine who’s a hedge fund manager, I’m an investor is a firm Steve Cohen, point 72. He’s applied some of that trading mentality to the trade deadline for the New York Mets. And if you caught that, right, he said I would not make it he blew everybody out he would have prospects and so we’ll have to see if that translates over into sports, Mister on Santa, but you’ve been absolutely terrific to join. Not sure. Right? Well, not all of us. So why don’t we know our friend David?
Ron Insana 38:22
I’m not a huge analytics fan. Yeah, well, yeah. David, having a problem
Anthony Scaramucci 38:27
with Carolina Panthers, Blue Jays about these guys. They adapt like they’ve had to adapt over the generations in the markets and so my money’s long term on them. Next week, we’re gonna be doing predictions for 2024 You had some here for Mr. Ron Insana, a CNBC, Senior Analyst. He’s also chief Market Strategist at dynasty. Where can we find you before we wrap on? What’s your Twitter handle your ex I’m
Ron Insana 38:52
on Twitter, I am on this idea that I’m on Twitter. I’m on threads. I’m on Facebook, I am on Instagram. there to be found a Twitter or x whatever the heck it’s called these days is at our insana. Everything else you’ll find under my normal name. Somebody took Ron Insana on Twitter when it first started so I had to go with my my first initial,
Anthony Scaramucci 39:11
like the real the real Ron Insana. Well, thank you.
Ron Insana 39:17
So tell tell that to my wife and kids.
Anthony Scaramucci 39:19
Well, I will tell that the next time I see them this is Speak Pp with Anthony Scaramucci. Please call in you can leave voicemails here we’ll pick it up, dial in at nine to the mooch 928-436-6624. Until next week. This is a wrap from speak up with Anthony Scaramucci. Thank you very much.