Something, Somewhere, Is Going to Break w/ Jeffrey Snider

26:35Isn't that what they're already talking about? They're already talking about, you know, hearings on Capitol Hill. Let's grill all these bankers and see what more Congress should do about them, as if that's really the problem. And they're always looking backwards. They're never looking forward. I mean, nobody right now is really stopping to analyze what is it that's really going on with the banking system. It's not just about the redistribution and lack of circulation of money between money market funds and regional banks. What is causing all this apprehension to begin with? And I think it only starts with commercial real estate in the same way that it was, you know, the 2008 crisis wasn't really about subprime mortgages.

27:10That's just where it began. And once it started to infect all of these major functions in the banking system, it led to the situation that we're confronting now, where money didn't circulate freely throughout the global euro dollar system, which led to all sorts of problems. So the issue isn't rate hikes, it isn't about treasuries that are underwater. It's about assets that are not being valued properly for given economic and monetary fundamentals that's causing people to pull back, which is only natural from an individual perspective. What would you do when confronted with so much negative information asymmetry?

27:43You do what you would naturally. You just, okay, I'm going to take some chips off the table and just wait to see how everything works. But that's the pro-cyclicality, which leads to, as I take money off the table, it causes markets to become illiquid. Illiquid markets means that everybody gets even more uncertain. We take more chips off the table and we get into the self-reinforcing vicious cycle where before you know it, interest rates are at zero. I've spent a long time working on this and I think it's all down to demographics that caused all of this. And then the replacement of as GDP growth globally slowed.

28:23Debt growth became the driver. And then debt growth slowed. And now you've got the situation where all the major economies are 100 % plus of GDP in debt, roughly. And interest rates have to remain low for this whole thing to function. And there's just not enough money for all of what is necessary just to meet the interest payments, essentially, for both the private sector and the public sector. And that's why we've got this huge problem that we're in. I figured it out that, you know, let's assume that trend rate of growth in the US is 2%. It's actually 1.75%. But for easy numbers, 2%. And interest rates are at 2%, which is where they've averaged over the last, you know, since the financial crisis.

29:04The US government's 100 % of GDP in debt. That means 100 % of GDP growth each year just pays the interest on the government debt. but the private sector is another 120 % of GDP in debt and they're seeing interest rates of 2 % plus. So it's dragging down the economy at all stages, which is why it keeps ending up, the debt payments end up on the balance sheet. And I think this is all, and I think I've proven that it's all to do with demographics that's created this shortage everywhere because we had too much debt in the system and now not enough money to service the debt, which is why you keep pointing out that time after time after time, this stuff blows up.

29:44You know, I think that demographics are a big part of it, but also productivity, because we got away with it in the 80s and 90s with massive amounts of productivity because of the adoption of the internet and computers and everything else, which actually did create legitimate prosperity for a long time. But then once the productivity started to decline, really getting into the 21st century, then you're right. Then it was all about finance. It was all about let's just create more money to see if we can just keep it all afloat, if we can keep juggling all the balls in the air without the productivity growth, then we're facing a very different economic baseline than before.

30:20And I think that's part of the monetary story, the euro dollar story of the pre-crisis era, is that as productivity started to generate real economic growth, it led into this belief that there was no risk, that we can just do any insanely stupid thing that we want. And by we, I mean banking system. That's where subprime mortgages came from. The idea that the global economy would go on forever in this massively favorable state where productivity, regardless of demographics, we're going to create new technologies. We're going to adopt them across a wide scale of the global economy. And just the good times would go on forever.

30:57And nobody ever prepared for when that inevitably declines. Because as you know, Raul, history is always cyclical. It never goes on forever. The good times never go on forever. And there was going to be a point where, you know, demographics would catch up without productivity. And then you have all the finance that's that's added on top. And that's really I think that's that's one of the most unproductive parts of the entire 21st century is the degree to which finance and money overtook real economic factors to be, as you just said, the drivers of economic growth. And of course, it can't drive economic growth.

31:31It can't drive economic growth on any long run or sustained fashion. which just leads us into this. It seems like this it's this this trap we can't escape from because we've got everything backwards. We're looking at the wrong things and trying to do the wrong trying to solve the real problems with the wrong types of solutions. Yeah, I think, you know, my thesis is productivity does come back with AI and a bunch of these new technologies. But that's not fast. I mean, it takes a while for this stuff to really integrate into the system. So maybe after 2030, we start escaping this trap. But this trap ain't over yet.

32:05There's not enough growth. There's too much debt. And I just can't see how you can generate structural inflation or any of the things people talk about. So are you of the opinion, and we're in a very small group if you are, that 10-year bond yields come back down to 1.5 % or lower? Yeah, I'm thinking lower. I mean, you know, the way I look at it is, look, look at this, as you just pointed. I mean, look, we went through the first global monetary crisis in 2008. What happened? Structural yields went down. Economists like to refer to it as R star, which is the natural rate of interest, which is nothing more than reflection of the economic environment, which we just talked about.

32:47A low R star, by the way, from the very beginning, that's representative of depression. So a depressionary circumstances in the real economy, you would expect. You just saw the New York Fed came out and said R square has gone lower. Yes, I know. And it's like, why doesn't the light bulb go off for these people? That's not inflation, that's deflation. In fact, Newt Wixell from the beginning said that's depression. When you see low interest rates that stay low, that's depression. And we went through 2020, which, I mean, did anybody really believe we would escape the whole pandemic and disruption without causing more economic damage than we were already going into it with?

33:25So what happened essentially is the government - into a recession anyway in 2020, right? Exactly. I mean, that's what the markets were saying. And then it got to be this enormous thing. And then we come out with the other side and everybody's convinced it's this inflationary, prosperous, red hot economy. It's like that never made sense to begin with. It was essentially a temporary kick the can down the road moment. And now we're down the road. We're dealing with an economy, as you just said, that was in really bad shape before we got to 2020. And then 2020 happened, which made it even worse. And so the fear is that we're going to have to revert to a mean here that is a lot less than we thought it was before, which means in the context of interest rates, which are the least important part of this, I mean, the real economic fundamentals and fallout is going to be just severe.

34:09But interest rates in that situation, I wouldn't be surprised if we have record low long-term rates in the United States. I mean, flirting with zero may be going negative, depending on how things play out from here on. So I think that's the direction we've been heading in all along. And 2020 didn't stop it. It accelerated it. Yeah. And when I think this thing through, for example, the banking issue, right, we get rid of this deposit flight stuff. Fine. You know, that's when the Fed cuts and, you know, there's less pressure on money to leave the system. OK. But then these guys are stuck with this commercial real estate, which is worthless.

34:52and that is going to be a huge drag because they're going to stop lending so it means that growth in a lot of these regional markets is slow because nobody can get access to to borrowings this commercial real estate's weighing down on these portfolios that needs to be worked out like europe i think this is the same as the european crisis was a banking level it ended up on the balance sheet of the ecb in the end and the ecb said just give us any old shit as collateral and we'll give you money. They will do that. But that stuff is slow to come out the other side of this. Add in AI, jobs growth is going to be slow after we've had the rise in unemployment.

35:28So I think there's a much higher probability than people expect that, as you say, the long-end rates are much lower than anybody imagined. Yeah. And you also have to consider that, especially commercial real estate, how pro-cyclical that is and how economically sensitive that is compared to something like residential real estate a generation ago. I mean, commercial real estate, prices have already started to roll over, but valuations haven't, which means that everybody is sitting here on pins and needle, everybody in the banking system on pins and needle thinking, boy, I hope prices rebound sometime soon because I don't want to have to start marking down these assets on my balance sheet because as soon as I do, that leads to everybody knowing that I'm in trouble and therefore deposit flight isn't about interest rates.

36:10Now it's about, you know, insolvency, right? And so as the economy rolls over and gets worse, we head toward into head into recession, maybe even worse recession, that does what to commercial real estate prices, they're going to continue to fall, which means the probability of having to mark these portfolios, these commercial real estate assets down only goes up. And so even if we might be able to stop the deposit flight is interest rates, the Fed's interest trade particular stop and pause here and then maybe go lower, the deposit flight gets taken over by other considerations that are already maybe inevitable.

36:45In fact, I think we're already seeing the beginning stages of that anyway, where again, commercial real estate prices are falling, but valuations are still really high. And then it infects other things because as valuations start to go or start to be marked down toward prices, that means that there's going to be disruptions to marketplaces, which means lack of liquidity, which means more risk aversion. And more risk aversion means more lack of liquidity in these markets. And you get into these self-reinforcing spirals and the Federal Reserve and central banks are always looking backward. They don't see these things coming.

37:20So there's no help from them either. And pretty soon before you look around, markets are illiquid. Banks are struggling for funding. Some of them, some more of them are failing. It's really not hard to envision interest rates going really low and staying there. Yeah, and I also think the balance sheet comes into play much faster than people expect for the same reasons. I mean, this is a big, ugly mess that's out there because it's not just, you know, real estate values can go up and down and that's fine. The system will absorb it. But when 50 % of all commercial office space is empty and nobody's ever going back to it.

37:59I mean, here's you and me. Neither of us are in the office. I've got an office in the Cayman Islands. Nobody's in the office. We've got a real vision office in New York. Nobody's in the office. We can't get out of the fucking lease. The moment we can, we're out, as is everybody. There isn't the economic growth plus all these structural changes to how we work from 2020. I mean, it's like a perfect storm of disaster for commercial real estate. And yet, you know, I think that's why they're so intent on selling this narrative that's all about rate hikes that, you know, as soon as the Fed stops hiking rates, the banking crisis will be over when it's so much more than that, so much worse than that.

38:33And I think if you were, Raul, if you were managing a money market fund and you were seeing all of this money come into you because you offer a better competitive rate, what are you going to do with all those funds? You're going to look around at all the opportunities and repo markets and everything else, maybe even some unsecured lending. I'm not going to lend anybody who has commercial real estate in their portfolio because that would be absolutely insane to do so. I'm sure as hell not going to take commercial real estate as collateral in some of these arrangements. So when you start breaking it down on its fundamental levels, the lack of redistribution of money across the entire global system really does start to make sense.

39:11Because, I mean, money market funds, as they're demonstrating right now with the debt ceiling, they're overly cautious to begin with. So rather than do anything with the funds, I'm just going to park it in the Fed's reverse repo because that's just the path of least resistance. That's where it makes the most sense. I don't have I don't want to be exposed to anything right now. So what do you think about the debt ceiling issues and how that plays out here? Well, I think that ceiling gets resolved. Is there actually any question that it won't? I mean, they've got to play chicken. They've got to play to their constituencies, both sides.

39:43And they're going to do this until the last possible minute. And so eventually the debt ceiling gets worked out. What that means, I don't know. I mean, it doesn't really matter. But it's already at this late stage that the debt ceiling has already caused some problems, especially in the T-bill markets, which is, I mean, we can at least afford more disruptions and unpredictability at this particular time in economic and monetary history. So whether the debt ceiling gets worked out or not, I mean, we've already suffered through the parts of it already that has created more problems than we can really handle.

40:18When we get to the other side of it, when the Treasury starts to issue debt again, I actually think that's a good thing. That actually might help because the system is very desperately short of especially Treasury bills. So maybe some issuance of Treasury bill actually helps out. I know most people think it's the opposite. When the TGA balance goes up, that drains bank reserves. But as we already talked about, bank reserves are not something I really pay much attention to. T-bills are more useful as a form of currency than bank reserves are. So that might actually help. But not if we're already into this situation where we have a banking problem on top of an economic situation, recession.

40:53Then even an influx of helpful treasury bills won't be enough to stem the crisis. And also, this reminds me a lot of 2011 when we last went through this. Remember, Europe was already creaking at the seams at that point. There were signs that their banking system and their sovereign debt market was going. And here we are in a similar situation with the U.S. regional banking system. What happened in 2011 was yields collapsed. Absolutely. And, you know, we saw it's almost exactly the same thing because we had the monetary crisis develop late 2010 into early 2011. you saw the yields go way down, especially in European markets, but also U.S.

41:35Treasuries too. And then, oh, by the way, we had this debt ceiling, which made it that much worse. We had the debt downgrade too, which just added more stress to the system that it couldn't handle it. And then as soon as the debt ceiling got resolved, we went right back to the banking crisis because it never really left. It was always there throughout. And it wasn't really about European sovereign debt, as you just said, it's really about how banks were using them and valuing them as collateral throughout the rest of the system that just couldn't withstand the revaluation of even sovereign bonds.

42:10So if we're thinking about the same thing in terms of commercial real estate and other types of financial collateral out there too, which might be even a bigger problem for some of these banks, it's the same type of setup where it's not really about the debt ceiling. We have the monetary banking crisis to begin with. The debt ceiling adds more pressure to it, regardless of what happens with the debt ceiling, we still have to deal with the monetary and banking crisis after it's all over. Are you picking up anything in the collateral markets or is it relatively okay? Right now, crises, they never go in a straight line.

42:44There's always ebbs and flows. There are always incremental stages. And so we got the first real indication that things were going bad last fall, September and October. There's a whole bunch of stuff. The stuff in the UK with the guilt market, that was the first warning sign that things weren't going well. The markets went crazy after that. The next stage, I mean, in between then and March, when we started to get bank failures, it seemed to be relatively calm, which is not, you know, that's the typical crisis period, typical crisis pattern where something happens and then everybody thinks, oh, the world's going to end.

43:18This is going to lead to disaster. And then nothing else happens. That's just how it goes. And then something else happens, which was March and everything. Oh my God, here it comes. This is the worst thing. It's going to lead to the end of the world. And then it slowly gets better. At least it seems to get better. And that's kind of where we are today. We suffered the next stage of the crisis. The system reacted to it. It created a short run equilibrium, even in collateral markets, where right now, that's why you see rates backing up. We see the yield curves are less extreme. The indications in forward rate markets are less extreme than they were a couple of weeks ago because we're in the ebbs and flows of the crisis.

43:54But the crisis is still there. We just can't see it as much. It's not as urgent today as it was several weeks ago or a couple of months ago. So as we move forward and we start talking about more fallout from the crisis that's going to continue, we start talking about the economic consequences that are going to make that crisis even worse. We expect to see the next incremental stage in it, which would be who knows what. I mean, more bank failures, likely. I mean, wasn't it just Friday that Janet Yellen was having her talks on Wall Street talking about, not a part of the official readout, but I think it was some media outlet said that they talked about more future mergers among the banking sector.

44:33I mean, even the government knows this thing isn't over. It's just we're in that intermediate phase and we're just waiting for the next thing to hit. Yeah, exactly right. Why is the bond market, why are yields holding up? Because the euro dollar markets were inverting. The yield curve was inverting. Economic growth is slowing. All the forward projections are slowing. It's written everywhere. Why are yields so sticky? That's been the one surprise to me that they've been slower to come down than I would have thought. Well, there's always that natural tension, right? I mean, yield curve inversions are at such extremes.

45:12Maybe there's a natural limit there because you got to remember this, this is a big, broad market. And some people in the market are investments. They're thinking about, well, do I want a 10-year that only yields 3.5 % when I can get a two-year at 4 % or I can get a short-term rate at 5 % and I get the reverse repo at 5-something? There's always that investment alternative. That's what makes rates sticky. In fact, to me, it's astounding that rates have gone as low as they have, that inversions have gotten as big as they have, because as I just pointed out, all the longer run economic fundamentals scream for lower rates, but yet we don't know exactly when that happens.

45:49And the short-term rate alternatives are an attraction for funds and for credit. So if short-term rates are up in the fives, there may be a limit as long as short-term rates are in the fives for how far or how low temporarily longer term rates can go. But as soon as short term rates start to tick lower or they look likely they're going to, that's when I think you see the long term rates really start to go down, because that'll be the point when even those that are in the market for investments start to say, well, yeah, that that 10 year at three and a half percent starts to look a whole lot better if short term rates are going to come down.

46:22Maybe I'll take a 10-year 2.5%. Now, Eurodollar markets are pricing in what, a cut by July, isn't it? Well, there's always probabilities. And I think the market right now is saying that we don't know about July. We don't know about June. June's kind of up in the air. July, you go back a couple of weeks, the market was saying that there was a maybe 50-50 chance of a rate cut by July. That's kind of gone away now because of ebbs and flows. Well, the market it is saying is that September. By the time we get to September, rates are going to be lower, the short end as well as the long end. So that's really something happens this summer when we get to September, which only makes sense because you look at every crisis period or near every crisis period, it's always September.

47:09The middle of September, like the middle of March, that's a seasonal point which we always go through these things. So if you're thinking ahead, there's probably a really good chance that something happens in September, if not beforehand. My view on this is after the fastest rate of change of interest rates in history, the probability is that maybe the euro dollar market is underestimating the speed and size of cuts when they happen. You know, if you've got a banking crisis and inflation is going to negative and unemployment is rising, I think there's a much higher probability that the first cut is 100 basis points.

47:50I think it's much higher probability than most people are expecting. I think you're, I mean, the problem is a lot of people believe the Fed. The Fed, Jay Powell has said, all these policymakers, not just the Fed, the ECB too, everybody said, we are going to keep interest, wherever the terminal rate point is, take us out of the word. We mean it this time. We're not just going to cut interest rates. And so there is a material risk that the Fed is just going to stick its head in the sand and keep short-term rates as high as they are until it becomes absolutely, they can no longer hold it to that policy to begin with.

48:26And so I think the reason why the markets are conflicted is because the Fed has shown unusual resolve in this situation where they have, this time they mean it. It's not just going to be like 2019 where we just, maybe there's a recession and they just start cutting rates in the middle of 2019 just out of abundance of caution. they have said we're going to stick with rate hikes and the market has said we still don't believe you but yet you can see why the market's a bit conflicted here because the fed can remain irrational for a very long time the fed can ignore even seriousness in the banking i mean the fed has basically said that stuff in march silicon valley bank that's all nothing we're it does we're still worried about inflation and so i think that's what the markets are really looking at is we think the economic fundamentals demand lower rates, but we recognize the Fed can ignore those fundamentals for a very, very long time.

49:22So, OK, we've talked a lot about the U.S. Where else are we going to see more shoes to fall within this? You know, we're talking about the global euro dollar market. Where else do you think we're likely to see issues arise? Because there's never just one area, right? Never. No, it's always one. It's really just variations on the same theme at different places and to different degrees. Right now, we're seeing in Asia. Asia, you know, the market's kind of, okay, there's less urgency for U.S. regional banks. There's less urgency in European banks. But look at China. Look at Asia. Look at the trade disaster going on there, the economic and financial fundamentals, especially the real estate sector in China.

50:02Enormous amount of risks. Now, China reopening didn't work. A complete disappointment, if not worse, which makes Asia a much bigger, riskier bet than it was before, which is why I think you see the dollar, China's yuan is starting to get weaker, the yen, the Korean yuan, other currency, the Indian rupee. So Asia is now in focus as one of those places where if everything is starting to go wrong, it really needed to go right in China and Asia, and it's starting to go wrong too. So maybe we need to focus a little bit more on the Asian economies and the Asian financial fallout from, let's face it, China never got better either.

50:39I mean, the Chinese situation only became more unbearable after 2020, after the lockdowns, after the pandemic and everything else. And the Chinese have made it very clear that they're just going to kind of let this ride to see how it goes. They're going to try to limit the downside as much as they can. But as that downside emerges, maybe their ability to limit the downside becomes much more questionable and out. And so it just becomes another focus for these deflationary potential that is spreading throughout the rest of the world. Not just potential. I mean, you look at commodity prices, you look at producer prices and good prices in Asia, they're already falling.

51:17They're already into deflation. Just to me, when I see this set of cards, having seen how it plays out, I just can't see a world within which massive stimulus doesn't come over the next 18 months at every level from from interest rate cuts to central bank printing of money or whatever however you want to term it and fiscal because that is what these markets are telling us that we've got a tremendous period of weak growth ahead and that in a system so under collateralized versus the amount of loans out there the one thing you can't allow to fall is the price of collateral because then it's then it's game over um so that's re-liquifying or debasing the entire you know fiat currency base i just can't see a way around this and i just and i can't find anybody to give me a data-driven argument why inflation is sticky or why this is not just back to mean reversion And the down from 2020 and the up in 2021 just go back to trend in the end.

52:34Yeah, I was. That's I'm not going to give you the other side of that case because I agree with it 100 percent. I think that the most logical case that you could make as far as inflation or consumer prices is that we're going to go through this period where it's exceptionally volatile. We'll go through these alternating periods where consumer prices skyrocket because of all the short term fundamentals. And inevitably, the reversion to the mean leads to deflationary period, lack of economic growth, recession and worse, which will then cause governments around the world to intervene because that's what they're doing.

53:05That's the type. That's what they're that's the playbook that they follow, which imbalances supply and demand. And we go through another consumer price outbreak that everybody mistakes for recovery and the like. And then we just go back and forth in and out of these consumer price spikes interspersed with periods of deflation, which is obviously not the 1970s. It's not really inflation. it's just this confused period of being stuck in this low growth state and governments being unable to dislodge that background or that baseline and just temporarily trying to kick the can a little bit further down the road and just and actually making it worse as we go further and further without any legitimate sustainable economic advance yeah because they're just not pro-cyclical this stupid central bank surely they must know that you know if they were just a little further in advance of the cycle, which everybody else can see.

54:01I can't believe they're stupid. So there must be a reason that they're doing it this way, because you know where the rate should be now. And, you know, the lag is unnecessary. Well, the lag is political. That's I mean, I was just going to say part of it is definitely political. The reason why the Fed got so, you know, it turned into Paul Volcker, or at least, you know, trying to become the myth of Paul Volcker, You've got to believe that the Biden administration, as well as other politicians around the country, were calling Jay Powell and all their contacts at the Fed saying, we don't care if you do anything about inflation, just appear to be doing something.

54:39Because you can't just sit there on your hands. Everybody's really pissed off here. Consumer prices are obviously the biggest problems that voters are confronting. We just need you to do something. But the bigger problem is that with actual, you know, the Fed does always look backwards because the Fed does not know how to measure money supply. I mean, we don't know how to measure money supply. They sure as hell don't. They also don't know how to measure money demand, which was their big thing for a long period of time. They stopped being able to measure money supply. They can't measure money demand.

55:09So they don't know what interest rates are really supposed to be, which is why they put so much emphasis on the CPI or the unemployment rate, because they're trying to make a couple of huge assumptions. which is that if we jigger the interest rates around in a certain way and the CPI stays low and the unemployment rate stays low, then we're going to assume that we got interest rates where they need to be because we have a bunch of sophisticated models that tell us that. In the absence of being able to get any information directly from the monetary system, they're looking at macroeconomic variables, which as you just said, Raul, they're all backward looking.

55:44So they're never proactive. They're always looking at the CPI telling us what something happened last year. They're looking at the unemployment rate when the unemployment rate is the least reliable cyclical indicator there is. And they're thinking, well, maybe we're doing something right because the CPI looks like it's moving in the right direction and the unemployment rate is remaining low. So let's stick with interest rates where they are until we actually have macroeconomic variables that tell us that they're wrong. So by the time they actually react, In fact, it's way too late. Final question for you.

56:17Are the euro dollar curves shifting around much and reassessing probabilities or are they pretty now consistent about the kind of pace of the cuts and the timing of the cuts? The timing has been the variable from the very beginning. The outcome hasn't. The markets have been absolutely certain. Once this thing happens, whatever this is, once it happens, rates are going down, they're going to go down by a lot. But what we don't know is when it happens and when the Fed recognizes that thing happening and starts to lower short-term rates, which then would unlock long-term rates to go lower too. So the markets have always said this is going to happen.

56:54And then everything that has happened over the last eight months, really going back to last year, has merely confirmed that suspicion. We've got the thing in the UK and Swiss National Bank and all this stuff last fall. Then a banking crisis. So as everything has developed over the last year, you were thinking that was, you know, we're going to end up with zero rates at some point in the future. Everything that's happened makes it more likely that's going to happen. So more confirmation that we're going to end up in that direction. It's just always been about when. When does this happen? There were parts, there were times last year, last June, when the Eurodollar futures inversion or term sulfur futures inversion thought that maybe things were going to get out of control in 2022.

57:332022 and maybe the last rate hike would have been December. Well, that didn't happen because the Fed was able to, you know, it didn't get to be a big enough factor in the Fed's calculation to force the reaction function to change. But now it's OK. Maybe it's the second half of this year, which the market is saying it's a really, you know, we're never certain about timing, but we're getting more certain about timing, at least in the terms of September and the later parts of this year. So the outcome has always been the same as far as the markets is concerned. We just don't know exactly when it all happens when it all really starts to get put together and what's your what's your best guess i still think it's this summer and i still think we stick to the seasonal pattern where the the middle of september that's when the shit always hits the fan yeah usually starts off in august you start seeing the signs accumulates in september finishes in october yep and then october is when the really the fallout starts to show up in the in the real economy as well as the financial markets.

58:30So, I mean, there's a reason why these patterns repeat and it's not just random fluctuations. And that's where the markets are zeroing in on that to begin with. And again, everything that's happened thus far would leave you to believe that that's more likely, not less likely. Absolutely. Jeff, as ever, fascinating conversation. And it's going to be a very interesting year. Yeah, absolutely. I wish it wasn't. I wish we could talk about boring stuff, But, you know, the way things are going, the way the system is aligned, it's just it doesn't leave us a lot of good things to talk about. No, no. But there's going to be opportunities for trading.

59:08So don't worry about that. All right, my friend. Great to see you. And thanks for that. You're welcome, Raul. Thanks for having me back. So there you go. Jeff sees trouble ahead. It's the same trouble I've been talking about in the global economy, that the markets are clearly pricing in a recession, but not only a recession, but some bad stuff that can happen. And that bad stuff, to me, leads to more liquidity coming out the back of it, which is what the euro-dollar markets are pricing in. How it's going to play out for markets over the summer could be tricky times ahead. We've got the debt ceiling.

59:44We've probably got the next phase of the banking crisis to start. What does that do to the Federal Reserve? How does J-PAL change his tune? All of this is to play for. I think Jeff's given us a peek into the future. I also think, pay attention to what Jeff is saying. This is not just a US issue. This is a global issue. The euro dollar market is all pervasive everywhere and anywhere. And somewhere, something else will break too. Anyway, good luck out there. What's up, revolutionaries? Thanks for tuning in to the Real Vision Daily Briefing. For more content like this, head over to realvision.com and get unfiltered access to the very best, brightest, and biggest names in finance.

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