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In this Weekly Market Recap, Eric Chemi is joined by Guy Adami, Co-Founder of RiskReversal ( @RiskReversalMedia ) They’ll unpack the potential of a 2024 recession, analyze global market dependencies, and provide critical insights into real estate investment trends. An unmissable episode for anyone braving the 2024 economic waves, offering bold predictions and strategies to navigate the uncertain financial landscape.


Guy Adami 0:00
The later we gotten this year, the more people on my side of the equation said, Listen, I think I’m going to be right. But I can’t wait any more. And when you have a benchmark, you have to sort of, you have to sort of hit. And you have to go back to your investors or your employees and say, why wasn’t I in app or in video and all these things? That’s a very difficult conversation to have. So the calendar suggests there’s going to be a chase. And to a large extent, that’s what we’ve seen over the last couple of weeks. But also say this, if you look at a lot of the indicators that I look at, forget about the leading economic indicators that’s on the economy side of thing, market indicators. We’re seeing a the fear greed index at levels on the greedy side we haven’t seen in quite some time.

Eric Chemi 0:47
Welcome to Wealthion. I’m Eric Chemi. There is so much confusion right now in the markets. We’re looking at all time highs on some of these major indices, but a lot of uncertainty about the economy. Where should we go from here? Should we be buying at all time highs? Do you start shorting at such elevated prices and and fight the momentum, a lot of confusion, my guest today Guy Adami, I hope you can help me sort this out. I see you everywhere, right? You’re on YouTube, you’re on television, podcast, you’re on social media, people that follow the markets, they follow finance. They’ve seen you they know your wisdom. But I want to I want to drill a little deeper down on some of this today. So thanks for joining me on the show today.

Guy Adami 1:25
Well, ice as you know, and I coined you that I don’t know if you still go buy ice ice champion, one of my favorite nicknames, but it’s a pleasure to be with you. You know, I think the world of you and your family. So thanks for having me.

Eric Chemi 1:35
Thank you for coming on. And I’m glad you tucked out the traffic from Jersey to New York to come do this. But it was because of you. I never realized that I C E we’re in both of my names first and last name. So when I was getting ready for this, I was telling my sister in law, and she didn’t realize that either I was explaining go they would call me ice ice. And this is why she said I never realized that those were the letters in your name. And both names so so

Guy Adami 2:05
better late than never, as they say

Eric Chemi 2:08
the only 10 years later, but we’re starting to learn something. So you know, when you see all time highs in a world that is uncertain, right? You have enough conversations people think we’re going to crash 40% hard landing, there’s a recession happening or it’s currently happening or going to happen. But yet the stock market everyone says not the economy. Here we are so high. I struggle, right I struggle because T bills at 5% seem pretty safe. But after tax and I get much and boom market moves like 10% in a month you miss out there. So what are you telling people who are struggling with such extreme moves in such uncertain times?

Guy Adami 2:45
Yeah, again, thanks for having me. And just so I’m so everybody’s clear you I’ve been struggling as well. It has been an extraordinarily difficult environment this year specifically, you know, I’ll tell you 2022 made a little bit of sense to me. And I was bearish most of the year and I was bullish twice in 2022. Now, the first time was in June of that year, and basically all predicated on a volatility index, the VIX spiking up to about 34. So, levels that we hadn’t seen in quite some time. And my sort of theory with that one was, the VIX is suggesting word, an oversold condition, probably a time for a bounce and the market did bounce. I think about 17%. The same thing happened in October of 2022. The VIX spiked to 34 and a half or so and we basically laid out the same type of trading strategy. What’s confused me is everything effectively, since you know what we’ve seen here in 2023, has been nothing short of extraordinary in the face of, as you mentioned, some uncertainties that we haven’t seen in quite some time. The first thing I look at is bond volatility. I know you just mentioned the bond market. But think about what we’ve seen. Forget about this year, what we’ve seen over the last couple of months, we’ve seen 10 year yields go north of 5% Briefly, only to fall back below 4%, seemingly in about a month and a half or two months unprecedented move. So bond volatility still off the charts. Yet equity volatility has been for whatever reason under control. So the landscape, to me suggests that it’s just a matter of time, before the volatility we’re seeing in the bond market. And quite frankly, the currency markets as well manifests itself into the equity market. And we can talk about some of the headwinds, but, you know, my thesis for 2024 is it’s going to be extraordinarily difficult for the market to come anywhere close to the performance that we’ve seen this year, given the backdrop of everything that’s going on.

Eric Chemi 4:45
And when you talk about that thesis, what are the data points you’re looking at? Is this based on experiences is a historical Hey, I saw this in the 80s or 90s. Is there something that you’re looking at, because I feel like too many people have a thesis but But they can’t really drill down on what detailed numbers are looking at.

Guy Adami 5:04
So I’ll drill down a bit for you. So something called leading economic indicators, le eyes if people want to go to the Google machine and check it out, they’ve been now go contracting for the last 19 months. So leading economic indicators are absolutely telling a story. The second story is credit contraction, bank credit contraction is at levels we haven’t seen in quite some time. So the banks are not out there lending money to people, the unemployment rate is sort of the wild card here. I’ve thought for a while somewhat correctly, incorrectly, last reading, but I think it’s going to prove to be the case that unemployment rate is not going to go up in a linear way, it’s going to sort of stair step its way to somewhere between 4.6 and 5%. And I want to say it’s going to happen, probably in the first half, if not the first quarter of next year. So then you start to connect those dots and economy where 73%, effectively the economy is driven by people having jobs and buying things, and buying things on credit. If the unemployment rate is starting to move higher, if credit is contracting, those are sort of the pillars, those are the foundations of the economy. So if those things start to falter, by definition, the economy should start to falter. On top of which, you know, we’re looking at it in an environment where the market is expecting somewhere close to 13% earnings growth. The math doesn’t work with I think consensus GDP somewhere south of 2%. So there’s just a lot of factors at work here, that in my opinion, to answer your question, in a granular way, it’s going to be very tough for the market to overlook them and to sort of get through those hurdles.

Eric Chemi 6:48
And you’re right, there’s so many hurdles, right, because this is the same conversation we’ve had at home, because somebody in my household was thinking very bearish thoughts and got us out of a lot of equities. In May, it turned out to be the wrong move. But the fundamentals are there, like you said, there’s a lot of weak issues. And now we get stuck on the emotion of we got out, we thought all these things you’re thinking markets moved away from us.

Guy Adami 7:14
And people are scared, right? That’s exactly right. And you sit by each day. So once it’s it’s interesting that you say that. So once you’ve sold something, whatever that something is to say obviously now, it’s equities, the clock starts to tick, because I’m telling you, whether it’s Apple or Caterpillar or Nvidia, once you make a sale every single day, multiple times a day, you go back and look at it, you know what you sold it, you know where it’s trading? And you’re saying yourself, Oh, my God, what have I done? And now you’re just hoping that okay, maybe to get back to the level that I sold it at. And I can get back in so the mind starts to work against you without question, I’ll tell you. And you know this, and I think a lot of people should understand, regardless of what you hear at your cocktail party on Saturday night, regardless of some of the nonsense that you hear from friends and colleagues, nobody buys the lows, and nobody sells the highs. So if you sell something, by definition, there’s a good chance it’s going to continue to go higher. You mentioned it was May, you looked at a lot of things that I’m looking at, I’ll just add one more sort of arrow to that quiver, if we make it to February, and we will make it there in terms of the calendar. But if we make it to February with the continued inversion of the twos versus 10 year spread, that will then be the longest inversion, since the data has been collected, the length of that inversion suggests and you go back and look at history, the longer the inversion, the worse the downturn is going to be. So the fact that we haven’t seen it yet, doesn’t mean we won’t see it. It’s just to me, it’s there’s an inevitability to all of this. And a lot of people will say, well, the Fed is going to stick the landing, inflation is going down. Inflation is just going up less quickly. So you look at the cumulative effect of inflation over the last couple of years. It’s been devastating for people. And by the way, the Fed indicating their their pivot or whatever they did a week or so ago. Right now the market is pricing in five if not six, interest rate cuts in 2024. Ask yourself this question. What do you think’s going to happen to inflation inputs, when the Fed starts cutting rates, inflation is going to rear its ugly head again. So I’m hard pressed to figure out and believe me, I spent a lot of time looking at this, how 2024 is going to be even remotely close to what we’ve seen this year.

Eric Chemi 9:43
And what do you do about those emotions? Right, because I think that’s really all time has really got me because the facts that you said they’re the same facts.

Guy Adami 9:52
It’s all factual. I mean, everything exactly. You know, everything I just mentioned, it’s factually true. The problem of course, is the mark If, for whatever reason is looking past all that, so to answer your question, and it’s a good question, how do you get over the emotional part of this thing? So this is what I tell people all the time as human beings, we’re emotional animals, right? The great things, you’re having a baby, or, you know, things are great, you’re feeling good, you’re on that sine curve. Things go poorly, maybe your son does poorly in school or something happens, somebody loses a job, and then that sine curve goes. So we sort of ride this roller coaster, the sine curve of emotions, as people, that’s what we do. Unfortunately, you do the same thing in the investing world, right? When things are going great, you’re up here, when things are going poorly, you’re down here, if you sold something, and it goes, you know, basic continues to go higher. That despair, you feel that FOMO you feel is real. How do you eliminate that? Well, to be a good, I believe this in my heart to be a good investor to be a good trader, somehow, you have to take the emotion out of the equation, and one of the best ways to do it, is to have a plan going into things because if you have a plan and stick to that plan, almost by definition, you’ve avoided the emotional part of trading or investing, which I think makes it very difficult for all of us.

Eric Chemi 11:18
Here’s an example of a plan that didn’t work. So let’s say let’s say you get out and a lot of people were talking about, we’re gonna go below 4000 of the s&p.

Guy Adami 11:25
And you know, briefly, if you look at briefly we did in October, I mean, you know, within reason, so that that move in October, you started, you’re saying yourself, I was early in May, the fall was sort of backing up, it was good, it was reinforcing the belief systems you had in the spring, and then all of a sudden, you saw things snap back in a meaningful way. And, you know, I’m hard pressed to understand exactly what the trigger for that was. But obviously, it’s happened. So there you go. But go ahead.

Eric Chemi 11:56
What do you what do you say to people, they have a plan, but the plan just doesn’t shake out, right? It’s okay, waiting for sub 4000 to begin to buy back. And now we’re looking to 5000. And and people could never have never fathom that, like you said, how can we have all these problems? The market is just ignoring it. And yet there’s this impending doom like you said, these twos 10s curve is just waiting for this impending doom. When the plans break down. What from your experience as a trader going back many years? Yeah. What do you do at that point? If it’s just hey, I guess I just miss read this, or am I too early? Right? Because I think that’s where people can never know, you can be too early for 10 years, and you just keep missing gains the whole time?

Guy Adami 12:35
Well, as you know, and I know, you know this intuitively, but in our business, if you’re early, you’re wrong. It’s just another word for being wrong. So in a lot of ways, yes. I mean, forget about me being early, I’ve been wrong in so many different ways this year on across of swath of individual names, but most of all, this this resiliency in the broader market, but I think you, you have to obviously be critical, you have to be a critical thinker, and you have to constantly trying to poke holes in your thesis. And I do that and I look at things and I say, What am I looking at? How can I be wrong, and one of the ways you can be wrong is, you know, over time, to your point, that FOMO, that sort of chase for performance starts to kick in. So the later we got in this year, the more people on my side of the equation said, Listen, I think I’m going to be right, but I can’t wait anymore. And when you have a benchmark, you have to sort of, you have to sort of hit and you have to go back to your investors or your employees and say, why wasn’t I in Apple, and Vidya and all these things? That’s a very difficult conversation to have. So the calendar suggests there’s going to be a chase. And to a large extent, that’s what we’ve seen over the last couple of weeks. But I’ll also say this, if you look at a lot of the indicators that I look at, forget about the leading economic indicators that’s on the economy side of thing, market indicators, we’re seeing a the fear greed index at levels. And on the greedy side, we haven’t seen in quite some time, number one, Relative Strength Index, which is something everybody sort of talks about and looks at, you know, we’re at levels we probably haven’t seen in a couple of different years. And in terms of valuations for so many of the stocks that have driven the bus, you know, you’re talking about valuations that are, even by their own standards expensive. So I understand a lot of these stocks are worthy of a premium valuation, but the question you have to ask yourself is, what is that premium? And when do they get over their skis? So there are a lot of things to be concerned about. And earlier this week, we saw a pretty big reversal in the market on Wednesday. And you say, Well, what was that on the back of? Well, it’s on the back a number of different things, but I can speak intelligently about many things, but I can’t in terms of the zero to expiry options, but volatility is a great thing. It works for you until it works against you and I think so many people on the investing side of thing on it Trading side of things have gotten themselves on one side of this volatility boat, that it’s just almost again to use the word inevitability that that’s going to snap back. And I think you saw glimmer of that on Wednesday of this week. And I think that’s sort of a snapshot as to what can happen in 2024.

Eric Chemi 15:19
You know, these market indicators, you mentioned the greed index, I was just looking at that right there that fear greed that looks like the speedometer, and we’re way, way, way into Greenland. And it always ends poorly, right? It always ends poorly, relative strength saying something similar. What are some other indicators? You’re looking, I just want people who are watching this can go do their own research. What other indicators do you recommend?

Guy Adami 15:41
Yeah, no, you know, it’s, I’m glad you mentioned that as well. The when you look under the surface, so one of the things that people are pointing to right now, on the positive side of the ledger, is this reacceleration. Or this, I guess, let’s put it another way, the market broadening out right there more stocks participating to the upside. And it’s not just the names we talked about all the time. The flip side of that coin is, and this is something that I watch very closely. And again, you asked me about my thesis and how I look at things. The IWM is the Russell small cap index. Now, I don’t know if you can pull up a chart in the show notes. But it is now at levels that we have stalled at a number of different times. And we’re nowhere near the all time high in the Russell that we made a couple years ago, I mentioned that. Because as you know, and I’m sure your listeners and viewers know as well, the small cap stocks are the most economically sensitive names out there. Now they’ve bounced recently, I think, in large part due to the fact that they’re predominantly predominantly in large part made up of small and regional banks, obviously, there have been a bounce in those stocks. But I look at this and say, Alright, how are these stocks are going to perform in 2024? Again, under the backdrop of rising unemployment, contracting bank credit, these stocks, and so many of these, and you know, this is well, I think 65% of the employment in this country is small and medium sized businesses. So if they start to feel the effect of inflation and contracting credit, and growing unemployment, what do you think’s going to happen to the underlying economy? So, to answer your question, one of the things that I’m laser focused on is the performance of the small caps, and on sort of a different level, but something equally important, how is credit performing and I look at credit through the lens of something called the hyg, the high yield index, which your viewers and listeners can look up as well, that is actually traded. Probably, you know, it makes sense that it’s done well over the last couple of weeks as the market is done well. But one of the other concerns I have is a credit event. Now my concern for a credit event was in this year, it continues to be for next year. But I think a credit event is something that people have to be on the lookout for as well.

Eric Chemi 18:03
So much to worry about. Right? Yeah.

Guy Adami 18:05
So what should we be optimistic about? I that’s gonna be your next question.

Eric Chemi 18:09
No, no, it’s funny. You’re you’re one step ahead of me. You’re early. I was gonna say, I was gonna say, how are you positioned? That yeah, right. If we, you know, hey, 23, I was in your boat. I did not expect it to rise this much. We’re still you and I are waiting for this impending doom to come. But how are you positioned? When you got to chase this benchmark? And you got investors? You’re looking over your shoulder? Like, why did I miss out?

Guy Adami 18:32
Yeah, well, a couple things. Fortunately, I don’t have investors or, you know, I don’t run a hedge fund where I’m, I have to answer to people, because that’s a very difficult conversation to have. So with me personally, it’s just, you know, I’m responsible for myself, so I can answer those questions in my head. The flip side of that coin is, as you know, in January fast money would be 17 years old. Now, on a nightly basis, I have to go on air and explain why I’ve been right about this wrong about this wrong about that. Those are very difficult things to do. So again, this being self aware and constantly sort of being a critical look at your some of the things you’ve said some of the ideas you have is paramount. To answer your question, though, I think you have to be right now. I think I’m saying to myself, alright, I’m preparing for some sort of market event in 20/24. And if that event takes place, here’s a laundry list of names that I think potentially could be interesting. And some of them are obvious names, but some of them might not be as obvious. So, you know, you look at some of these industrial names a caterpillar and a John Deere, which have gone parabolic over the last couple of weeks. And you say to yourself, how is that possible? When it’s clear that the global economy driven by China is slowing down? Is there going to be an opportunity to get those stocks at a much lower level? The homebuilders have been on a tremendous ride, coinciding by the way with 10 year yields going from 5% to below 4%. Is that justified under the environment that I think we’re gonna have in 2024? And then the small and regional banks, is there going to be some sort of bank event early in 2024 that are reminiscent of maybe what we saw earlier this year was Silicon Valley Bank and first republic. So those are some of the things that I’m looking at the other side of that coin is why are we seeing all this m&a in the energy space? What is Exxon see? What is Chevron see, what is Warren Buffett see, by now 27% of Occidental Petroleum, like, what’s going on there? Why have some of these stocks done well, like a marathon petroleum and MPC and a Phillips 66 at an all time high? Why are they outperforming what’s going on in some of these levered names? Are refiners going to reemerge in 2024? So those are the questions that I’m asking myself, but I also write down a list of names and levels where I think they might be interesting, sort of a wish list in terms of not only stock but in terms of levels as well,

Eric Chemi 21:08
on an overall macro basis. Are you still 100% equities? Are you sitting in, you know, 50%? Cash or treasuries? How are you macro position? Is there some shorts years?

Guy Adami 21:17
No, I mean, you know, the short side of the equation, as you know, it’s very difficult to make money on the short side of things. It’s it’s a very hard game more. So now, obviously, in a world where passive investing has become sort of de rigueur, and money flows into stocks regardless, so you have that headwind against you as well, in terms of positioning, yeah, I’d like you in May, March, April, May, especially after the regional bank thing. I’m like, Oh, my God, there’s, there’s a shoe to drop here. So I ratcheted a lot of things back. And I’ve been reticent to get back in for all the reasons that you probably have in your head and all the reasons that I’ve outlined now, but, you know, I’m not going to fall victim to that feel of that fear of missing out and that sort of riding the wave of have this sort of, I don’t know, momentum that is sort of driving the market right now, I’m not going to get involved in that game, because at some point, it’s a game of musical chairs. And again, when you saw this earlier this week, on Wednesday, you see how quickly things can turn, especially when the system is sort of is one sided as it currently is.

Eric Chemi 22:30
Is there ever the fear that at some point, you’ll throw in the towel, at some point, you may just decide, You know what, it’s never coming back down, coming in. And that will be the day that that’s the top right, and all of a sudden drops 20% You’re like I was right, I should have stuck with my convictions. Do you have experience with that over to you know, in the past where you were something like that happened? What do they say the maximum amount of pain? Yeah, that investors in

Guy Adami 22:53
a market, the market can stay, the market can stay sort of crazy longer than you can stay liquid as the old saying, right. So the market can stay irrational longer than you can stay solvent is, I think the exact terminology. And you’re right. Everybody says to themselves, when you hear it on CNBC from time to time, I know the top will be in when I do X, you know, when I get into Apple, or when I sort of throw in the towel and say, you know, no moss, but again, the things that I’ve been concerned about, and it’s interesting earlier this week, President Xi met with President Biden earlier in the month, right, and they came out of that meeting seemingly, I want to say the temperature the temperature was taken down a bit. Then earlier this week, we heard and read stories about President Xi basically told President Biden that China will take over Taiwan by any means possible. That’s not me. Paraphrasing. That’s the language that you’re hearing. So one of the factors, one of the things that I’ve been terrified of the sort of the existential risks out there, the black swan event is exactly that. Think about how devastating that would be for multinationals and for the tech sector, specifically, if in fact, there were hostilities, or even some sort of whatever situation reared its ugly head between China and Taiwan. So that, to me is something that the market has clearly not priced in what by any way, shape or form. And that can take some of these larger companies like Apple and Nvidia and some of these names down in a very precipitous fashion. Doesn’t sound good. Well, no, but I’m not trying to be all doom and gloom here. I mean, these are, you know, all the things that we’re talking about are factually correct. I’m not making stuff up.

Eric Chemi 24:37
He said that you’re right. That was a conversation between government leaders that was said, so what do we expect is going to happen unless he’s just showboating or lying or bluffing? Right, something for

Guy Adami 24:47
that, you know, and I think we’re in a market environment now, where, in terms of what we’re seeing, the market pushes the market is going to push the like, you know what we’re gonna we’re not going to wait for that to happen. We’re going to Take it right up to, you know, the 11th hour before we pull the trigger, because everybody thinks they can time these things. Of course, the problem is, they seemingly come out of nowhere. And historically, you see events where where did that come from? And why did the market you know, why did we see that flash crash? And why did we see moves of that magnitude. And again, it comes out of nowhere, I’ll tell you that, you know, right now, I think the market is pricing in, as I mentioned earlier, 12 and a half 13 14%, EPS growth for 2024, I just don’t know how that comes to fruition, given some of the math surrounding it. And when you have a market, again, if you think about what the s&p is built on, it’s built on earnings. And it’s built on the multiple that people attach to those earnings. And that’s basically how you get to 4800 or 4900 or so, in the s&p. So if you start to do the back of the envelope math, I think the market has been expensive. And I think with each passing day that it goes higher, it just gets more expensive. Here’s a question.

Eric Chemi 26:01
So you know, a lot of people my age starting to have little kids, they’re thinking about that saving for college, right? Like, okay, I can put money in this 529 plan. And I’ll start, let’s call it, you know, here we are, Jan, first, I’ll start putting money in next year, because they can put a little bit more starting in January with the new rules, but people worried I don’t want to put money in at the top. But I need to start saving now. Because there’s a version as we’ve gotten in the past, if you put money in at the top, you could be 15 years later and still not have made a dime.

Guy Adami 26:30
Well, I mean, it’s, that’s, that’s a tough one, right? Because here’s the math, if if you buy something, and it goes down, let’s just say, to make it really easy, it goes down 50%. So if you buy something at 10, it goes to five, it has to go up 100%. Right, for you to be and it’s just the math, and you can do that with any numbers you want. So to answer your question, I understand that. There’s also the saying, the best time to plant a tree was 20 years ago, the next best time is today. So why do I bring that up? Because you got to start somewhere, right? So into the you know, just sort of the example that you gave me in terms of 529. That’s something where you have to say to yourself, Okay, I don’t really care what’s going on in the world on January 2 of 2024, knowing that I have three young kids, and knowing what the price of college is going to be, I don’t really care, I’m going to start understanding that my entry point might be within five 10% of a high, I don’t care, because I’m doing this over the course of the next 1415 or so years. And that has to be the mindset. But in addition to that mindset, you can’t be a person that then looks every single day at the underlying holdings of that 529 plan, because you’re gonna make yourself insane.

Eric Chemi 27:52
Yeah, and that’s why I think a lot of people are going insane right now, because they’re paralyzed at this, this disconnect between markets and reality that we’re facing here. Is this remind you of a time in your trading career? This is our specific year incident and geopolitical situation that you’re like, This is the best analog for what’s happening today? Or is this?

Guy Adami 28:13
You know, it’s a great, there are a lot of people and I want to be crystal clear. I’m not suggesting we’re on the precipice of anything I’m about to give you parallels to. But if you go and just look, a lot of people are making the parallels of the late 1920s, the market was on fire in the late 1920s, under the backdrop of very similar things that we’re seeing now inverted yield curve, all these, like economic indicators that I pointed out, but the market was seemingly going up every day until it wasn’t, you can make parallels I guess, in the late 1940s. The one that comes to mind for me and people will push back is the early 1970s, specifically 72 and 73. When inflation was rearing its ugly head, the Fed was trying to fight it. They basically said mission accomplished only to have inflation come raging back in 7374. That to me is why I’m surprised that this Federal Reserve is seemingly saying Mission accomplished, because they saw what happened 50 or so years ago, and I’m telling you that the inputs of inflation are going to start to I think, re accelerate into next year. And again, inflation isn’t going lower. It’s just going up less quickly, which is I’m not trying to be glib or it’s just that’s just the math.

Eric Chemi 29:36
No, I agree with you. I’m often confused when people talk about oh, inflation’s come around Cigna. Everything is 25% more expensive than it was two or three years ago, and it’ll be 30 or 35. Or expense. percent more expensive. It’s not getting cheaper. It continues to get more expensive, at whatever rate you want, but nothing’s ever getting cheaper. We’re never getting those price levels ever again. That’s gone.

Guy Adami 29:59
And that’s what That’s why for a lot of people, they get so frustrated when they’re watching TV. And they’re hearing that in footwear where we’ve killed inflation in flight, and they’re saying, What are you talking about? I know what my health care is. I know education. I know what just buying groceries are. What world do you living in? And I’ll say this, and this is not to be hyperbolic at all. I mean, the numbers bear this out. We talk about are we going into recession? I have no I’m not an economist. I say this all the time. I’m not smart enough. I’m not humorless enough to be an economist. But this is what I do know, for 45 50 million people in this country. And that represents somewhere between 12 and 18% of the population they wish, we’re in a recession, because for a lot of these people, it is late 1920s 1930s, in terms of what they’re dealing with in decisions they have to make, I think one in six people are relying on some sort of support, they don’t call them food stamps anymore. It’s called something else. A lot of people are dealing with things we haven’t had to deal with in quite some time. So they wish it was a recessionary environment, because for them, it’s worse and the disconnect, and you started this earlier by saying there’s always a disconnect between the market and the economy. I know, believe me, I know that as well as anybody. The problem I have here is that chasm, that disconnect is at levels we haven’t seen in quite some time, the stock market is saying one thing, and the real economy is saying something entirely different. It’s

Eric Chemi 31:28
it’s certainly certainly weird. Is there? Is there a war story, you know, that you go back to, in your own experience, a big mistake that you made where you think I saw something like this I really struggled with, with how to maneuver through it, manage it, and I would do something different now,

Guy Adami 31:45
while the war stories. So as I mentioned earlier, fast money started in and their career stories, but this I think is more relevant to the people listening and watching. So fast money started in January of 2007. Obviously, the world changed room, you know, in a dramatic fashion over the next few years. And I don’t say I don’t want to say we saw things coming. But you know, we were talking about things that we were seeing. And a lot of the feedback we got from people is nobody warned us. Nobody told us No. Where are you experts in Oh, eight, no nine. And that haunts me to this day. So the scars from that are still manifesting themselves today. So in terms of being cautious, I’m probably overly cautious, and maybe a bit hyperbolic, because I don’t want to make the same mistakes a lot of people made back then when saying, everything’s okay. There’s nothing to worry about here, when clearly, there were things to be worried about only in retrospect, you know, people saw those things. So I’m trying to be ahead of that curve. And maybe by trying to be ahead of that curve. I’m way too cautious or dire. But I’d tell you something, I can sleep well at night, knowing that I’ve been pointing out some of the things that we’ve talked about over the last half hour or so. And if people choose not to listen, I mean, that’s fine. And by the way, not listening for the last six months has been the exact right thing to do, obviously, through the lens of the market. But again, in my opinion, Eric, there’s sort of an inevitability to all the things that we’ve been talking about.

Eric Chemi 33:15
It’s just a matter of when I think we all thought it would be 23 says, okay, it’ll be 24. And I, I hope we’re not having this conversation a year from now saying, okay, it’ll happen in 25. And we’re still waiting again,

Guy Adami 33:28
well, then, and we’ll have and listen, I’m more than happy to come back wrong, right, whatever, you know, six months from now and take a sort of look back and the conversation we had today and the conversation, maybe we’ll have in June or July of next year. But I’ll say this, you know, the things that we’re talking about, they don’t turn on a dime, like all the things that we’re looking at, these are long cycle things. And again, I’ll go back to the yield curve inversion, which historically has been a great indicator of impending whatever. And as I said earlier, if we get to January, which is now a month and a half, two months away, and we’re still inverted to any degree, it’ll be the longest inversion, since we started looking at the data, right? And as I said earlier, the longer the inversion and go back and look, typically the more severe the downturn, and people will say, it’s different this time. I don’t I’m hard pressed to understand why it’s different this time.

Eric Chemi 34:24
That was my question for you is, is there anything that could be different? Or do you hear the case from the bowls? And you just shake your head and say, No, this, this just doesn’t make sense? What do you what do you think is that they’re picking up on that?

Guy Adami 34:39
Well, I think that’s a great question. I think what I think the bullish thesis is, you know, look at what we’ve weathered, you know, we’ve gotten through 500, whatever basis points of Fed rate hikes seemingly unscathed, we’re about to go to an environment where the Fed is going to start to cut his starkly low rates have been equal to doing well, in terms of stock market performance. It’s a very one dimensional way of looking at things. But with that said, if you own something at five, and it goes to 10, the reasons have went to 10. Nobody really cares, right? All you know, is something doubled. The reasons should matter. But the reasons don’t matter. So if you’ve done well in the market, all you look at it as through the lens, I’ve done really well. But now’s the time to start to take a critical look at okay, the markets done really well. Why is it happening? And what could be sort of the hurdles, the obstacles that we’re not talking about, we’re not taking into consideration. So the bookcases we continue sort of this passive investing money flows, China’s losses, our gains, the United States deserves a higher valuation, because we’re the best street on the block type of thing. Yeah, I mean, I guess I can sort of understand that. I just don’t think that’s what’s going to happen.

Eric Chemi 35:58
So before we go, then what’s your one main piece of advice for people who are watching, they’re in

Guy Adami 36:03
love with that? So here it is. Here’s my one. And hopefully, and you might have to think about this a couple times, folks, but here you go. Listen to everybody. But don’t listen to anybody. And what does that mean? Eric? I’ll tell you what it means. It means you take in every piece of information you possibly can you read whatever you can you listen to, to whatever podcast, you take all that information in. And then you make your own decisions, right, based on everything you’ve heard. So it’s got to be your decision. At the end of the day, you can say, I heard what guy said, I heard what Eric said, I vehemently disagree with them. I listened to them, but I’m not listening to them. Right. So take in everything. So many people are guilty of their investment thesis is whatever they heard last, right. That’s, that’s like going to a craps table, you might catch a hot craps table, but over time, the house is going to win. So listen to everybody, but do your own work and make your own decisions based on all that work. And based on all those inputs.

Eric Chemi 37:04
That’s good. So yeah, if you didn’t like what you heard for the last half hour, scrap it or at least understand I think,

Guy Adami 37:10
no, no, don’t scrap it. I mean, take it and listen to it, but and then say, Okay, I understand what Eric and I just talked about for the last 45 minutes. I just don’t agree with it. And these are the reasons I think they can be wrong. And my, you know, my investment thesis is going to be based on all the things they just talked about, but the reasons why those things are not going to come to fruition. So that’s what I mean by listening to everybody. But then at the end of the day, you got to make your own decisions.

Eric Chemi 37:34
you explained it better. I was too glib, but I think there’s a lot of people, especially with social media, you know, they get into the comments and say, Oh, I’m logging off. I don’t like what they’re saying. But I think it’s important, you got to hear those different perspectives, you got to understand what the market consensus is because the market consensus, half the people are buying because people are selling to them, right? So every every transaction is that you got to understand both sides, so that you can make your you can make your decision, you can’t just listen to people that you always agree with, because at some point, they’re going to be wrong at some point.

Guy Adami 38:04
Well, that’s true and everything in life, right. And I think, you know, before we get out of here, we get caught up in our echo chamber and listen, I might be guilty of it as well. You know, sometimes I go out searching for stories, they’re gonna sort of backup and galvanize what I think but I also then try really hard to listen to read about things that okay guy, these are the reasons you’re wrong. But it’s so easy to sort of live in that echo chamber, whether it’s politics, smart, whatever the hell you sports, you got to get out of your echo chamber and you can’t get caught up in your dogma, whatever that dogma is.

Eric Chemi 38:35
Guys, thank you so much. Really appreciate this. I know you gotta go busy day before you go real fast. Where can people find you where give me the social media.

Guy Adami 38:42
Check us out on YouTube at risk reversal media. We have a YouTube channel we have a daily show called market called one o’clock Eastern time. We also have a podcast that drops on Friday called on the tape and 10 Nathan does a podcast called OK Computer, which typically jobs on Wednesdays, but you can find everything at the risk reversal website. Risk. Thank you, Eric.

Eric Chemi 39:04
Appreciate it. Thank you so much. Thanks again to my guest, Guy Adani for joining me here on the show. And thanks to all of you for watching and listening, checking out this podcast. Of course, if you like it, please actually like it on the channels, share it subscribe, all of those things really help get that content out to as many people as possible. And of course, you’re hearing all this and you’re wondering what am I going to do about my finances my family’s investment future, you can go online to, you can fill out a very short form that we can connect you with investment advisors, investment professionals that we endorse specifically that that we know we vetted, they’re not just anybody off the street. These are people that we have relationships with, and that we think they could be a good fit for you. So there’s, there’s no obligation, there’s no commitment, there’s no cost. You can just have a consultation with them. You can just talk to them about what you’re thinking about. If you like them, great. If you don’t, that’s fine, too. It’s a free public service that we provide here at Wealthion. We’re trying to help as many people as possible with that. So you can see that at Wealthion dot com. Also on Anthony, you can submit your questions for the Anthony scare Moochie show speak up with Anthony Scaramucci. He’s taking live calls. He’s taking your questions online. That show airs every Friday at 11am. Eastern Friday at 11am. Eastern again, and Anthony’s, your opportunity to get your questions in on that once again. Thank you so much for watching and listening I’m Eric Chemi. We’ll see you next time.


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