Andrew Brill shares the most compelling moments from our interview guests this week — in the latest edition of Wealthion’s Market Recap.
In a conversation with Anthony Scaramucci, Joe McCann, Founder and CEO/CIO of Asymmetric, discusses the potential for an upcoming 50 bps rate cut, the economy, and his outlook for Solana and crypto. Peter Boockvar, CIO at Bleakley Financial Group, breaks down the economy’s uneven landscape and its effects on various income groups. Jonathan Wellum, CEO of Rocklinc Investment Partners, discusses stock market challenges and Warren Buffett’s next moves. Finally, Chris Casey, Managing Director at Windrock Wealth Management, contrasts the effects of a Trump vs. Harris presidency on crypto regulation, real estate investing, and fiscal spending.
Investment Concerns? Get a free portfolio review with Wealthion’s endorsed financial advisors at https://www.wealthion.com
Andrew Brill 0:00 Hello and welcome to wealthions, weekly market recap. I'm your host. Andrew brill, this week we received information leading us to believe we will get an interest rate cut in the near term, and the markets responded. Let's hear what our experts had to say. Joe McCann, the founder of asymmetric joint Anthony Scaramucci on speak up this week. Joe discussed with Anthony inflation in the current state of the rate cut discussion, and together, they debated how much of a rate cut the Fed would entertain in September. He also explained the economy in bimodal distribution, what exactly that is. And Joe, being a big crypto enthusiast, talked about the state of crypto and where he thinks the value of Solana is going. Anthony Scaramucci 0:47 And so let's start right at the top, where all roads lead back to the Federal Reserve. Joseph. So what the hell is going on now? The numbers are out. Inflation looks tamer. It's under 3% what do you think happens? Joe McCann 1:02 look, I mean, if you've, if you've read any of our market updates that we put out every month, they're free. Subscribe. dot asymmetric, dot financial. You can read it. You can just check the receipts. We've been pretty much dead on with macro since we launched the fund in June of 2022 our view has been for quite some time that, you know, the tightening policy was done earlier this week, earlier this year, I should say. And we actually have a view that the Fed should have cut in July. And we see that price recently in the futures markets that they're looking at 50 bits. JP, Morgan, who tends to, as you know, Anthony, they don't speak out of tune, out of turn. They are also clamoring for 50 bits. Our view is that inflation has come down significantly, and there's greater risk to the employment picture, which is the Fed's dual mandate. And so our view really is, you know, at Jackson Hole, which I'll be at next week with you, speaking at the blockchain symposium, looking forward to that like, our view is that they're going to, you know, Jerome Powell is going to come out and more or less telegraph cuts in September, but also potentially Qt, right? If you look at what's happened to reverse repo, we're down around $300 billion that liquidity is coming out of reverse repo going back into banks. And you've also got cash at all time highs and money market funds, they're probably going to have to end up doing something as it relates to Qt as well. So our view, potentially, they end up talking something about the balance sheet and either tapering Qt or ending it all together. But I think it's pretty clear at this point, with what you've got for the economic data that's come out that cuts are coming. They've been coming from, our view, since April, we've been calling for this, so we think that's still the case today. Anthony Scaramucci 2:44 Give me the numbers, 25, 25 25 we get three cuts this year? 50, 25. 25 or is it one cut? What do you think, Joe, Joe McCann 2:55 yeah. Look, I think September. I think if they cut 25 in September, they're gonna crash equities. We think they're behind the curve here, like, we really do think they should have done 25 in July. And so our view is really 50 in September. And look, a lot of people, we think they'll do 50 again. And the reason is, people tend to look at this and go, that would be crazy. It's like, we'll do they hiked 75 and 75 back to back, right? So there's no reason that they couldn't actually do a maintenance cut twice in a row and then start, you know, doing the kind of quarter the 25 VIPs cuts consistently going forward until they reach sort of a normalized rate. We think that's close to 3% so there's, there's a lot of room for them to cut. And let's be clear, real rates, if you look at median inflation right now, it's about 1.7% top end of the corridors, 5.5 you're talking real rates over 3% even if you take current headline inflation, it's still over 2% historically, real rates are around one to sub 1% they've got room to cut, and they've got the reasons to do it. Do they do 50 and 50? Potentially, we think that's a real good shot 20 fives all day long. Easy. Anthony Scaramucci 4:03 Forget about the Fed for a second. I want the Joe McCann view of the economy, right? I look at the data, I see a mixed bag. A lot of things about the economy I like. I do see some softening. Of course, if I'm the man on the street, I'm not in love with the inflation and I'm not in love with the creeping costs that are eating up my disposable income. So, so tell me what Joe McCann thinks of the economy. Joe McCann 4:29 I mean, look, we recently wrote about this in our last update. You know, I think part of the issue with the economy as it relates to the Fed, is they tend to look at things on the average, and on the average, things seem okay, but that's a normal distribution of outcomes. And in reality, and certainly in practice right now, if you look at the data to support this, it's actually what's called a bimodal distribution, right? And so on the left mode of the distribution, you know, bimodal is basically two humps, right? So. On the left mode of the distribution, you know, let's just take a look at dining out. Okay, so on the right mode of the distribution, these are people that they're doing well, folks have got, you know, cash and money market funds. They're generating great interest income from that on a real, real basis. Dining out, all time, highs, McDonald's, struggling. Why? Because you have a bimodal distribution of how the actual economy is functioning right now, and the folks that are, I would say, more budget conscious consumers at restaurants, as an example, are struggling to meet the prices that McDonald's has, even with McDonald's dropping prices. Yet on the on the flip side, you've got folks that are eating out at all time highs. And so the our view of the economy really is that the the the average, is not actually the appropriate way to frame what's happening the economy. It's a bimodal distribution, so that left mode is the part where people are really struggling, and the right mode people are doing great. And I think that that's to your point where, you know, some folks feel like things are just fine, and you can always cherry pick data to fit your narrative, but it's really the case. There's these bimodal distributions throughout the economy. And in fact, we saw this even in 2023 of last year, when you had the regional bank crisis. So there was a bimodal distribution there, right? The Federal Reserve kept saying, Oh, the bank's balance sheets, their deposits are great. Et cetera, et cetera. Well, yeah, on the average, because you've got JP Morgan and Bank of America with these enormous deposits. But then the regional banks, they weren't as strong. And I think that that's what you ended up seeing in the outcome of those regional banks. Is another form of the bimodal distribution of how the economy is actually functioning. Anthony Scaramucci 6:36 Let's talk about the state of crypto for a second. And again, two schools of thought there some people are very happy. This time last year, Bitcoin was at 30,000 now it's roughly 60. So there's a school of thought is very happy. There's another school of thought saying, Whoa. We've had great news in crypto. Hit the all time high of 73 we've had a having we've got 11 Bitcoin ETS. Now have an ETF or several ETFs or Aetherium. But why is Bitcoin stagnant? So what's your school thought? Are you happy? Or are you? Where are you? Joe McCann 7:12 I mean, my LPs are happy. I can assure you of that. So look, I tend to say symmetric is a macro shop dressed up in crypto clothing, right? We use global macro to really inform our view more broadly, and we use crypto as the ultimate expression of that. And so, you know, why isn't Bitcoin at New all times highs now, after the having, because there's more sellers than there are buyers up near the highest. Like, it's pretty simple, right? But our view is, you know, is, I don't want to say it's simple, but it has a lot to do with global liquidity and the global liquidity cycle. And so our view is, q1 would kind of be a ripper for for Bitcoin and crypto, because of the ETF news and ETF flows, as well as no new year annual flows that come into the markets. Q2 historically is the roughest quarter. It's actually the only quarter of the year. Historically, this negative for Bitcoin turn to be, turned out to be the same case this this past. Q2 q3 our view has been that, you know, over the summer, that's when global liquidity injections in collateral ratios start to tick up, such that you're going to have more liquidity entering the market. And q4 of course, we've got an election, but we do see that uncertainty largely being contained irrespective of the outcome. And so if you look at where we are in the global liquidity cycle right now, we're nowhere near a peak. And in fact, even as of we see here on Wednesday, August 14, last night, the PBOC injected an enormous amount of money into China, that country is struggling economically, and they are also going to be launching a stimulus package in September. So if you couple, say, coordinated central bank rate cuts, you've got Bank of Canada cutting, you've got ECB cutting, you've got 90 bits price for ECB for the rest of the year. And you see what's being priced for the Fed, coupled with what's happening in China as it relates to liquidity injections as well as the stimulus package, it's hard for us to see a scenario where this liquidity doesn't flow further out the risk curve. And so our view has really been as the global liquidity uptick happens over the summer, which is candidly happening right now, that will ultimately inflate risk assets and crypto will will benefit from that Anthony Scaramucci 9:24 I ran into you in San Francisco. I don't know if you remember this. Joe McCann 9:29 Oh, I remember Anthony Scaramucci 9:30 But the good news about the encounter is we were drinking tequila together, see that? So that was something I remember quite vividly. And of course, we were there. I was meeting with the Sui guy. We got into a discussion about salon. I don't remember this, but we were at the bar and my old friend Sam Bankman Fried, who's now spending 25 years in jail. And yes, people get mad at me when I bring him up, but I don't care, because he was a very smart guy. He said that the fastest blockchain is going to win, and the fast. This blockchain will end up being the most valuable blockchain. He thought, Solana, was that blockchain? Do you think is that blockchain? And if you do, do you think he's right in his theory and suggestion? Joe McCann 10:13 Yeah, look, I think we can separate the criminal from the the intelligence of Sam, if we can, if we can be intellectually honest. And I agree. And this has been my view since 2019, and part of the reason is, you know, when I started to study Solana as a technology, I had just seen this movie before. And, you know, if you look at like, say, BlackBerry, it was technically the first kind of smartphone, right? And it dominated. You know, Research In Motion had 80, 90% of smartphone market seemed to be a home run of a company from here on out. The problem was the approach that they took was taking, you know, a desktop style computer and jamming it into a phone, as opposed to thinking about a phone from a first principles perspective, which is what Apple did. It's a flat piece of glass, right? The way that you interact with this particular device, with the internet is fundamentally different than when you're sitting at a desktop computer. That is effectively Ethereum versus Solana and so Ethereum hats off to them. They kind of created smart contract programming, a new leap in computer science, a new type of of compute, but it was a fork of Bitcoin, and so they took Bitcoin, they copy and pasted it, made some changes, and unfortunately, that technical design is what we call a single threaded design, right? So everything has to happen in a very serial fashion. That's not how moderate compute works today, right? So as we sit here on this call today, you've got, you know, you've probably got another browser tab open, maybe you've got Excel open, maybe you've got your email client open. You can run multiple applications on your machine, because you can run things in parallel using parallel processing. That is Solana. Solana is a is a blockchain that enables parallel processing, which is consistent with the pattern of compute for the past, you know, number of decades. And so to me, it stood out as like this is so obvious. Not only is it utilizing the patterns of modern compute, which is parallel processing, but also it is dirt cheap, right? And so a lot of folks in crypto have brought a lot of the kind of, I would say, traditional financial business models. And said, Well, you know, if you're going to run an Ethereum node, you need to pen this much money in electricity, and then you have to generate this much in income, and then there's your discounted cash flow, etc, etc. And I'm like, this is a network. And, in fact, TCPIP, SMTP, these things that the internet is built on, HTTP, et cetera. These are just protocols. No one makes money off the protocols. No one's valuing HTTP, because it's all the applications that are built on top of it, right? And so Solana, it being so cheap and fast, will enable use cases that are literally impossible on Ethereum in its current state, I should say, right? They maybe they break through some new leap in computer science again and figure out the scaling issue, but fundamentally, the technical architecture of Ethereum is disabling them from doing things like the applications that exist on Solana and so yeah, it's still my view that Solana is the fastest horse. And then if you look at it from a trading perspective, look, I might tell trading perspective, look, I'm a technologist and a trader, right? So I look at the trading perspective, and I go, what's the relative value trade here? Long, soul, short, eth, it's up 35% year to date, right? Like, and this is in a year when Ethereum had spot ETFs approved, right? And so I look at the relative value of Solana versus Ethereum. I look at the fundamental challenges associated with Ethereum versus Solana, and it's really hard for me to make a case that I should be actually overweight Ethereum versus Solana. Anthony Scaramucci 13:49 you know, I think you're going to be right about that too, Joe, you got a good gut instinct about this stuff. So are you and I just lucky, Joe, or are we smart? Tell me what you think. Joe McCann 13:59 I mean, that's what I say at asymmetric is that we just keep getting lucky over and over and over and over again, right? I say that in jest. But look, this is not some overnight success, right? Like I've been in tech and finance for 24 years. This is what I do. I live, breathe and eat this stuff. I'm a software developer as well as a trader, and so, yeah, is luck involved? Absolutely, no doubt about it. But I do think that a lot of what we synthesize at asymmetric that informs our views is not just kind of rehashing the same narratives or buying into the same approaches that I think other folks in the space have taken. And to be frank, people were stomping on our throats when Solana was trading $8 and I was shoving all in because I still had the same level of conviction as the kind of the fundamentals of that particular blockchain we're just getting beat up by. You know, obviously it's a tightening cycle from the Fed. But also, you know, post FTX, all these kind of calamitous events that were affecting the. Rice. So I do think that luck is absolutely involved, but you need to have an informed view and a prepared mind to be able to capitalize on those opportunities, so that you're not paralyzed when you're seeing Solana down 94% from his all time high. Andrew Brill 15:14 Peter Boockvar of Bleakley financial referenced our uneven and mixed economy and how the inflationary impact is affecting the lower and middle income families. He also explained how there is a recession happening in different segments. In his most recent book report, Peter talks about the softening of the travel industry and mortgage refinances being on the rise. You know, with last Monday, the market going bonkers in the wrong direction, and then this week, I guess for the rest of the week, it started to pick up. What's your take right now on the economy? Peter Boockvar 15:52 Well, on the economy, I think there. It's very much an uneven, mixed economy with some pros and some cons. I do think, though, and something that I've thought for the last couple of years, that this higher rate environment, which is less high, but still higher than the 15 years pre 2022 is still having sort of a death by 1000 cuts impact on the global economy, in addition to the cumulative rise in inflation over the last couple of years, which is draining the savings of lower to middle income consumers. So I think there are a lot of sort of arrows pointing in many different directions in the economy. I think bringing it all together, just based on all the earnings that I've gone through over the past month, and we'll see some more over the next couple weeks in terms of retail, that it just feels like an economy growing one to one and a half percent. And I know the estimates for q2 are around the two ish percent level Atlanta Fed, even though it's still very early in the quarter only halfway done is closer to three, but just doesn't feel like that. And I think a lot of the government spending is distorting the overall picture in terms of its outsized influence on on the GDP calculation. Andrew Brill 17:19 A lot to unpack. There now a heavy impact in the lower to middle income families, and that's where a lot of the unemployment comes in. Now the unemployment figure that we got Friday was better than expected, but they're still suffering. The middle to income families, or middle lower to middle income families are still suffering. There's a lot of articles out there about people not being able to afford just the staples and stuff like that. Peter Boockvar 17:47 Yeah, that's where the greatest inflationary impact is being felt. But that's always the case. Is necessities and needs relative to wants is a higher percentage of of their income, and just shows you the the pernicious and damaging impact that inflation has. And you know, you draw a trend line through inflation over the past 20 years, and just to visualize the extent at which we got above trend, you know, it's rather dangerous, and the Fed is actually lucky that rents were included in the CPI and PCE calculation, because if it was home prices, CPI would have well exceeded 10% in the summer of 2022 and while wage growth has been very good over the last couple of years, and In many cases, that has actually kept pace with the level of inflation. For some it has not. And I think that's why you hear a lot about value, conscious, budget seeking consumers that are choiceful, and that also then gets into the importance of the stock market, because the higher income consumer is the one that's that's doing better. They're obviously much more immunized from inflation and benefiting from a 5% interest income on their savings and a stock market that's had a big run here, at least, where at least, I should say, the tech driven S, p5 100 and NASDAQ have had a good run. Everything else has been sort of left for dead. So if the stock market, for whatever reason, rules over, because people are worried about economic growth, the decline in the market can actually exacerbate any decline in economic growth. Andrew Brill 19:35 So you think a recession is we're on our way to that right now. Peter Boockvar 19:40 Well, if you break down the US economy, they're already or the global economy, parts of it are already in a recession, right? And we talked about the lower to middle income consumer, they're already in a recession. Manufacturing is already in a recession. The pace of existing home sales is already in a recession. And then, of course, that they're also the only areas of growth in the economy that I'm seeing. Is higher income spending, government anything benefiting from government spending, particularly health care, which is a huge beneficiary of government spending, and other industrial manufacturing, type facility builds and all the capex that's going into AI. You take Europe, they're bright spots, like Spanish economy. It's benefiting from tourism, for example, and even Italy, but then you have Germany that's in a recession, and you look at Asia, China's growth slowing, but then you have robust growth in India. So a lot of pushes and pulls here. Andrew Brill 20:33 You talk about those other countries. I had read that travel is up, and you had written about that travel is is still somewhat robust, and is that because the dollar is a little bit stronger? Peter Boockvar 20:46 Well, yeah, travel has been, I should add that travel has been a healthy area of the economy, the global economy, but there are now some signs that that travel is showing some some signs of softening. Airbnb talked about that Expedia talked about that Marriott Hilton. It's only on the edges, and it's still a good area of growth, but it's a variety of things. You mean. Look at the cruise line business. They're benefiting tremendously from number one baby boomers that are benefiting from high stock prices and nice interest income on their savings and the desire to travel in a low cost way, and then on the upside, you have young people that are able to travel in a low cost way. International travel sort of post covid is still generating a lot of interest. So it's, like I said, softening around the edges, but still a pretty good, healthy part of the global economy. And just look at, you know, TSA numbers in the US. You know, the travel numbers are still pretty good, but we have to watch for potential signs of weakness. I mean, even Disney talked about, you know, inflation is negatively impacted the trips to their parks business. So these are things that we have to pay attention to. Andrew Brill 21:59 But refi are up. So mortgage rates haven't come down, really, but refinances have gone up. Is that because people bought at such a higher rate that they're now starting to refinance as it comes down slightly. Peter Boockvar 22:10 that's a small sliver. I mean, 90% of the mortgages out there have a mortgage rate below 6% right? We're still well above that. So yeah, the person who was unlucky that got a seven and a quarter mortgage, and maybe they're going to refinance it six and three quarters. But the refis are also going up because people are tapping their their home equity loans. They're doing cash outs, cash out refi. So that's one of the main factors, and why refis have ticked up. Andrew Brill 22:36 Jonathan Wellum, of our registered investment advisor, partner rock link, joined wealthy on this week and feels there is pressure on the stock market with stretched valuations in some areas. He also talked about salaries and inflation being misaligned, causing pressure on consumers. He also pondered what Warren Buffett will do with the piles of cash he has now amassed. James Connor 23:00 And so as I mentioned, the S&P is up 12% on the year, give or take. So it's been under quite a bit of pressure from its highs that we saw earlier this summer. But as this unwinding process goes on, they're going to have to be selling down whatever assets they own. A lot of speculation. They own a lot of these high beta names like Nvidia and Apple and Microsoft, etc. But do you think we're going to see continued pressure in the S&P and the Nasdaq in the coming weeks, as this trade gets unwound? Jonathan Wellum 23:30 Yeah. I mean, even if the trade, you know, stays where it is right now, we don't have an addition to it and compounding of the problem, I think people do need to be focused on valuations. If anything, it's it's told us that there are certain stocks that have been the beneficiaries of large, large capital flows, whether it's because of indexing and ETFs and carry trades that you know, The Magnificent Seven. And you know, there's more than just the Magnificent Seven. There's been a handful of companies that have been the beneficiaries of this capital, and they have pushed the market averages up. That's why we always like to talk to our clients and say, look, look at some of the smaller cap area. Look at the Russell 2000 it gives you a much better indication of what's going on below the surface, if you will. Or if you extract the Magnificent Seven out of the S&p 500, you'll find out that those indexes haven't moved very much. And in some cases, there's a lot of stocks that are down. So I think again, it just warns us that valuations are stretched in certain areas. And if you're going into those areas now, be very, very cautious. And we can see the kind of volatility that can quickly erupt and all of a sudden, you know, we've got clients, phonies, and saying, you know what's going on the market. They're seeing all of this, but as we tell them, like we don't have a lot of direct exposure to those Magnificent Seven, and we've got a lot of companies below the surface that are trading at pretty decent valuations, and they're not going to give you the wild ride and and so I think again, it just forces everybody go back to fundamentals. Fundamentals. Will eventually win the day, and if you just trading on speculation or short term moves, be very careful here. I think the trading that we saw with Warren Buffett is a good indication that maybe we should watch some of these fundamentals. He's certainly watching them. James Connor 25:16 So let's talk about the consumer now, given that the consumer represents 70% of GDP, so whatever they do has a massive impact on the economy. We've had weak numbers out of many companies, including Amazon, Nike, McDonald, Starbucks, Airbnb, massive drop last week. But they're all suggesting that the consumer is pulling back. They're not spending money, especially when it comes to anything discretionary. What are your thoughts on this and and how much pressure Do you think the consumer is feeling? Jonathan Wellum 25:45 I think the consumers got a lot of pressure. We talked, I mean, just talking to our own clients here in Canada, but looking at, you know, so the real people we talk to, real people, you talk about the pressure that's that they're experiencing, and then you look at the numbers on the companies, and it all reinforces one thing, that you can't double interest rates. In fact, more than double interest rates. You can't have 25, 30, 40, 50% inflation on all core food items. You can't put the gas prices up. Insurance costs. I mean, it's just shocking how much insurance costs have gone up for virtually everything, your homes, for your autos and so forth, and wages have not kept pace for most people, and so they're feeling the pinch. The money that the government's handed out during covid is long gone, and if you look at the credit card companies and the indebtedness, people are now adding to their credit balances. So there's no question that the average consumer is under pressure, and that's going to be felt in businesses that are discretionary. The Airbnb ones very interesting, because that's really a highly discretionary area where it's very quick, you know, you just don't go anywhere. You're not going to rent, rent a home. But again, we've Amazon. Amazon is probably one of the lowest cost places you can go and do some shopping. But they're also seeing those trends, and that's, you know, they're a massive barometer, if you will, of the of the broader consumer. And when they're saying things are a little tight for consumers, and they're seeing people, you know, seeing those, those shifts in the spending patterns, you gotta listen, though, that's probably the much better broader than what any of the government data that you're receiving. James Connor 27:18 as we mentioned earlier, you're a big follower of Warren Buffett in his style of investing, and he's been raising cash in the last few weeks. He sold down positions in Bank of America and also apple. He's now sitting on a record amount of capital, $277 billion which is kind of mind blowing. But what are your takeaways from this? And I know you can't really speak for him. But what do you think he's seeing? What's he concerned about? Jonathan Wellum 27:43 Yeah, you have to, you know, you really watch Buffett's actions. I mean, his words are important, and he is a tremendous teacher and instructor of investing over the years. If you're, you know, you read the books written by him, or if you attend his annual meetings, he's very, very thoughtful, and he's very expressive of his investment philosophy. Most importantly, they'll watch what he does, and these often he'll be saying one thing, and he might be doing something a little bit different, especially in the short run, while he's positioning himself, because he didn't become one of the wealthiest men in the world and create a company that's worth almost a trillion dollars by investing without being incredibly shrewd. And so, yeah. So when Warren Buffett is building up that kind of level of cash on its balance sheet, it tells us, I think the broader market, be careful, that Buffett is clearly lining up for opportunities, and opportunities for him means a down market, or pressure in the market, a lot of volatility, where he can swoop in and buy up, buy up, buy up companies or positions in companies. And so I think the selling down of Apple, I mean, Apple in particular, it was a massive position. He still owns around 89, $90 billion in Apple, so it's still one of his largest positions. But he sold down a lot, which means he's going to be paying tax buffet, even though he talks about tax fairness and all of that, he does not like that pay taxes if he doesn't have to. He's all about shareholder value, and so for him to make some of those decisions and to pay the tax, I think it tells us that he he thinks it's better to have cash. The optionality of cash to be able to make a quick investment decision is going to be important for him, I suspect also mean he's 90 he'll be 94 on the 30th of August. He was born the same month and years my father. So I can keep track of him a little bit easier, but he'll be 94 and I think that knowing Buffett being as competitive as he is in terms of creating wealth, my guess is that he really wants to do one, one massive transaction, another big one, before he leaves this world. And I think he sees the opportunity with the markets being expensive and a lot of vulnerabilities out there, why not have some cash? It's getting 5% line it up, and if something, if it goes his way. I think he'll be, he'll be the first one to pull the trigger, and it could be a major transaction for the fellow. So I think it tells a broader market, be careful, be attentive, keep a little cash around. Look for value, be be very, very, don't be buying and chasing, chasing stocks in this environment. James Connor 30:17 And just to clarify, we don't know why he sold it. Maybe he sold it just to get his weighting down, and not because of something as he sees to be negative. Jonathan Wellum 30:27 Absolutely. And it's still a large position. I mean, it's still probably about 10% of the value of his, of his business. So, you know, I'm just doing back with the envelope numbers in my mind. But so it's still a substantial position. And he, you know, he's, he probably made five, six times his money. He went back in 2016 so it's been an incredible investment for him apple, and he still speaks very highly of it. And he had, you know, he had talked about reducing some of it, but still maintaining a large position over time. So none of this is out of keeping with, you know, Buffett's approach and his discipline. But I think the the other reality is that he hasn't been making a lot of investments for now, for about a year and a half or so. So he has been building up cash and and, you know, he could, he could see something on the horizon, a large transaction. You think of what he could buy with that money and be, should be amazing sized business, especially if you were prepared to put a little leverage on not a lot, but just a little leverage. I mean, he could pick up an asset that's four or $500 billion I mean, it's just his capacity to spend and to buy and to make investments is shocking. It's really something to watch. Andrew Brill 31:35 Another one of our partner investment advisors, Chris Casey from Winrock, joined us and compared and contrasted several investment areas that would be different under a Democratic or Republican regime come November. Some of those are real estate and cryptocurrencies. He did, however, feel the debt would continue to go up under either presidency. Let's get into real estate a little bit. And obviously interest rates play a little bit of a role in in real estate. And everybody's saying we're talking about mortgage rates under which president, President Elect, if you will. Would real estate be a bigger factor? Obviously, real estate prices are high right now, real estate mortgage rates are coming down, but they're still at a higher rate. Which under which president would real estate do better? Chris Casey 32:30 Well, I think there's no question to be under Trump. Now, real estate has always been probably the best, most tax efficient investment class out there. It's always been that way, right? It's a great place to make some money. Now, after Trump came first came to office, and we had his initial tax cut, which established opportunity zones, which allowed you to defer capital gains from numerous sources, which allowed you to increase the bases of those investments which allowed you to effectively have untaxed capital gains on real estate or businesses in opportunity zones that was highly beneficial to real estate. The other factor I think people should consider is that, I would argue, under a Harris presidency, I think we will continue to see this rotation of businesses and employers from so called blue states to red states. I think the inner cities and offices would continue to be negatively impacted, as they have over the last several years. So I think all I think it's a clear winner in real estate, Trump is the better candidate. And it's, it's no surprise. That's where he made his money, right? So that's where he's helping out Andrew Brill 33:47 The deficit, Chris, we obviously, both of these candidates are going to spend money. And you know, I remember, I think it was back to President Clinton, when the the actual deficit came down, and right now we're in a bad way. And you know, bonds are in a a precarious position position. You know, treasury bills have to be sold to cover the debt. How do we a where does that go under each candidate, and how do we get this under control? Chris Casey 34:29 Yeah, it's a bit of a I know it's commonly cited that Clinton had so called surplus budget surplus back during his tenure. But it's actually incorrect. It's really an accounting gimmick, because the debt, as long as the debt increases, by definition, you have a deficit. So we really haven't had a budget surplus since Andrew Jackson, right? That's a long spin. We've come close. We've had some pretty good fiscal responsibility under certain presidencies. I don't think we're gonna get any kind of fiscal responsibility with either candidate once they become president here, and that's not necessarily their fault. I mean, it is a large measure, but I think it's going to be very difficult, politically impossible, for them to really address the deficit, which requires a massive reduction in spending. And frankly, it shouldn't be that difficult, right? If you go back to spending levels of 2019 right? That's, that's not long ago at all. Right? You're pretty close to having not only a balanced budget, but a surplus, where you can start paying down debt. Uh, under Trump, I think it's more likely, maybe certain debt is restructured. I'm little shocked he didn't do it the first time. I'm not sure why the United States doesn't offer a 50 year bond or 100 year bond. If Argentina can get away with it, there's no reason the United States of America cannot get away with it. But again, with either candidate, I think spending will be out of control, and there's very little they can do about it. I think that will continue. Andrew Brill 35:58 Cryptocurrency, and I know here on wealthion, we talk about cryptocurrency a bunch, and I know that that's it's something that's in the crosshairs, and something the Democrats have said, you know, this is not a good idea, but something the Republicans say that this is a good idea. Maybe the Democrats are softening a little bit, but cryptocurrency seems, with a Trump win, to be something that could be, it could be, you know, something that's increased even more than it has, or, you know, the price has gone up a lot more, and people it'll become more mainstream perhaps. Chris Casey 36:37 I would agree with that. I think we'll have a friendly regulatory framework for crypto currencies that will be enacted. That's a big turnaround for Trump, right? I think it was as recently as 2019 he was on record as saying, like, bitcoins a scam or something to that effect. Really, I think he was just kind of, would you frequently hear from people that just don't understand it, right? They're just not informed. Well, I heard Vivek give an interview, and he talked to Trump quite a bit about cryptocurrencies in general. And then last month, Trump was at Bitcoin, I believe is in Tennessee conference, and he said he wants America be he frequently does this with different interest groups, but America would be a, you know, superpowers relates to mining. We would be the place to go for cryptocurrencies. So I do think you're going to see a very beneficial regulatory framework come out, which could, which could increase the value of cryptocurrencies across the board. Andrew Brill 37:30 Former President Trump has said he wants a say in the Federal Reserve and interest rates. Do you agree with that? You think? Do you think that that's something that should happen, or is that a checks and balances thing where you know what that should be, a separate thing, just like the three branches of government are separate. Chris Casey 37:51 This is kind of a pet peeve of mine, because I know what you're talking about, which recently happened. And if you look at a headline, I just saw one this morning, it said something to effect of Trump wants control of the Federal Reserve. Economists say it's a bad idea, something along those lines, right, right? And here's a pet peeve of mine about journalism, and just digress for a minute. But first of all, journalism, everyone says it's bias, and obviously is. I mean, look at like Stephen Colbert, you know, last night, or whenever that happened, people laughing at his comment that CNN was, you know, reported the news that was his own audience. It wasn't like he did a live show in front of a Trump rally. That was his own audience laughing at his own statement, right? But the reality is that media has always been biased. If you look back in the 19th century, you could argue is even more so it was more biased. Look back to Horace Greeley. I'm finishing a book right now, a biography on Salman Chase, who was the former chief justice Supreme Court, Secretary of Treasury under Lincoln, Ohio governor, etc, spent his whole life in politics, right and when he was running for office in Ohio. This is not unique to him, but back then we're talking, you know, antebellum times. This is maybe 15 years before Civil War, 1845, it was not uncommon where the candidates, and this is part of their strategy for everybody, would find a family newspaper, they would inject it with funds, and they'd insert their own editor, like this was like a just a common practice, and it was just considered okay. So the media has always been biased. That's not really what bothers me. What bothers me is that the media is journalism is so bad nowadays, right? So, for instance, this particular situation, they're talking about Trump. So I just want to know, what did he actually say? It's difficult to even find the exact quote, and you may find one sentence, but I'd prefer to have it in a paragraph, right? So there's some context to it. And I believe the quote was something to the extent of he wanted input. He thought he had a different perspective, or better perspective, than maybe some members of the board for Reserve board. I don't find a problem with that. I mean, we have Nixon on tape in 1972 berating Arthur Miller on No. Was on the Federal Reserve Chair on cutting rates for that year going into the election. It's rumored that Nixon actually, not just rumored, it's pretty well confirmed, put the Federal Reserve Chairman against a wall right at that time period. So this has been going on, and frankly, I would interpret Trump's comment to mean he's going to talk to the Federal Reserve Chair. He'll talk to Powell like he'll long for lunch. And that happens with every president, right? They meet with him on a fairly regular basis. That's not unheard of. And if I could just digress for one more minute, I don't know who is the PR firm for the Federal Reserve, but I need to get in contact with them, because they're fantastic, right? So the Federal Reserve, there's this myth that, you know, they're fighting inflation. Well, the truth, they're the only one that causes inflation. There's the myth that they're, you know, stabilizing the economy. Well, in fact, they're the only ones that really cause recession. There's a myth that they're independent. I do think it's a myth, and it's because they have a dual mandate. It's actually a triple mandate. But that mandate doesn't require them to backstop, you know, every Treasury that's issued if a buyer is not there, right? There's no reason to do that, except for political reasons. And so I do think that they've always been political. It's always been the situation there. I mean, Ron Paul said it years ago. It's, it's a pretty unique animal to call it independent, when you have everyone appointed by the President, et cetera. So I don't really see a problem with that, that particular quote. In fact, I see nothing wrong with but as far as increased presidential let's call it authority or influence on Federal Reserve, which would take an act of Congress, I don't necessarily see a problem with that either, because then we know exactly who's to blame, right? Then we have culpability. Things go wrong. You can't just right now. You just be like, I don't know what's going on. The Federal Reserve is at fault, right? They didn't, they didn't cut rates. So they did cut rates, what have you. But if we had greater input from the executive branch, we would know that they're the ones responsible. Andrew Brill 41:58 Thank you for watching this week's recap. 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