What Are Bank Earnings Telling Us?

26:56Waller speaks here, and you see two-year yields rise there? I mean, is that a healthy way for an economy to function? I mean, I don't think so. I've written about this before. I think the Fed communication is way, way, way too much. It's just gotten to the point where each governor and each member is speaking all the time. The non-voters are speaking. They're saying different things. Maybe in a world of a crisis where you need forward guidance and you're trying to pin yields in the back end down because you can't cut anymore or something. But I don't know. I feel like it's just this cacophonous noise that is not useful.

27:32I personally don't think it's useful. I think they're over-communicating like crazy and there's just no point to it. You know, those of us who have a few gray hairs remember the days of Alan Greenspan, where the only communication you got from the Fed was the thickness of his briefcase. Yeah. And CNBC used to set up telephoto lenses to catch him carrying his briefcase down to go and testify at what was then called the Humphrey Hawkins testimony on the Hill. How far we have come. Yeah. And he used to joke about, like, if you understand what I'm saying, then you're not understanding properly what I'm saying.

28:05So, you know, they were trying to be like intentionally vague to give themselves latitude. And now, I don't know, to me, it feels like central planning or just like, I don't know. I don't know really what the motivation is at this point for so many speeches and so much communication. To me, it just feels like wildly unnecessary. I mean, you do have to wonder, even for people who are not Fed skeptics and Fed critics, about the nature of an economy that has taken on. I mean, if you just go and look at the size of the Fed balance sheet and compare it to the overall GDP of the U.S., it's just a massive proportion.

28:41Yeah. And I mean, if you think about all the fiscal stuff that happened as well, it does feel like market forces just got kind of like blown out of the water there for a couple of years. And now the market's trying to find its equilibrium again. So like 2021, we had the bubble and everything because there was just so much money being firehosed all over the place. And now they're trying to take back the money. And yeah, to me, it feels like there's a lot of issues with market pricing and, you know, interest rates not necessarily finding their natural level and things like that. But, you know, all you can do is play the game and as it sits before you and play the hand that you've been dealt.

29:22So I try not to get too bogged down in these like sort of more philosophical things just because it tends to be like turn into complaining about markets or BS or this and that. But in the end, our job is just to like try and make money. Yeah. I mean, at the end of the day, it's like complaining about the weather. It is what it is. And you've just got to adjust to the current situation. By the way. Yeah, exactly. Some live TV back in the envelope, head math. W-A-L-C-L. This is total assets, less eliminations from consolidations on the St. Louis Fed Fred database. $8.1 trillion right now. Now the balance sheet, U.S., a GDP about$26 trillion.

30:01So back of the envelope, it's about 30%. Yeah, I mean, the numbers are getting so big now that, I mean, human beings can't even understand what they mean. So, I mean, the next time there's a recession or something scary happens, what, they're going to be$20 trillion. Like, it is kind of mind-numbing at this point, the size of the numbers, especially when you dig into how big a trillion actually is. Yeah, and it's one of the reasons why I think it's important to look at these. as ratios because people get 30 percent 30 percent of us gdp currently held on the balance sheet of the federal reserve yeah i mean it's a it's a really sort of striking embracing moment when you think about that and understand uh the magnitude of that change yeah i think essentially what's happened is that mmt kind of became almost orthodox right for a bit and so the combination of fiscal and monetary extreme, like extreme policy kind of became like, oh, it doesn't matter.

30:57The politicians don't care about deficits. No one ever asked, like remember back in the day, people would say, how are we going to pay for it? Now, that's not even a question. You just announced the stimulus and who cares? Who cares how we pay for it? So I guess the answer to how we pay for it is it's monetized by the Fed. Yeah, 10 to the 12, a one followed by 12 zeros, a million million. before you know it it starts to add up to some real money doesn't yeah it's almost real money at this point uh listen i wanted to tell everyone who's watching right now this has been the first half of the show that we've been doing a live on youtube we're about to transition to go behind on the real vision website for the second half of the show to talk a little bit more and in more detail about some of these points that we've been discussing here so if you don't want to miss it You can sign up by using the link in the description or scan the QR code on the screen.

31:50And we're going to continue to jump into more analysis right now. Thanks for joining us, everyone who is watching on YouTube. And please continue to join us on the Real Vision website. We're going to take another quick break and be right back with more of the day's top analysis on the Real Vision daily briefing.

32:12Okay, Brent, lots to talk about. Let's talk about some of the research that you've been doing here. We're going to walk through some of that. Give us big picture context on the deep dive that you've been doing on these markets. So what do you want to talk about first, the FX or the dollar? Is that what you want to talk about first or where do you want to go? Yeah, let's do FX and the dollar. Sure. So people have been much more sympathetic to the weak dollar trade lately. And it's been kind of working, kind of not. Like people were trying to do China reopening and buy Australian dollars and things like that, which haven't really worked.

32:46But overall, when you have a period of U.S. slowing down and the rest of the world is not disastrous, which is where we are right now, generally that's like a sell dollars regime. And so that has been working. And that's kind of really the main vibe right now is kind of like this. it's not a hysteria or anything, but just kind of like this slow kind of feeling that the dollar is going to decline, maybe like nothing major, maybe 5%, 7 % more from here. And to me, that makes sense. Like, unless we see something very dramatic in terms of like the economic data just starts picking up out of nowhere, which is possible, then I think we're kind of in a textbook dollar down environment here with China reopening, Europe's fine-ish, and U.S.

33:32slowing. To me, that's like a textbook dollar down environment. So people were making money this week until today the dollar ripped because of Waller. So that two-year yield chart, it looks kind of like a chart of the dollar where a little bit more of a decline throughout the week in the dollar and then bang, you know, kind of a little mini correction today. I don't know if we have that dollar chart, but if we don't, we could pull back up the Waller chart and take a look at that one more time. Yeah, I don't know if I sent you guys the dollar chart, but it's similar, except if you, instead of kind of being flat after CPI, it was more of a downtrend in the dollar and then like a severe chunk higher today.

34:21So let's go through the logic of that, particularly in relation to Mr. Waller's comments, why you saw, why you expect, why you believe that occurred. So generally, like the very basic framework in FX is generally countries with higher yields attract money. So that's why dollar yen, for example, went from like 105 to 150 last year, because US was hiking and Japan was pegging yields. And so that yield differential got so big that it's really attractive to own dollars and not yen. So Japanese investors, for example, will then flood into the dollar. And then if yields are coming off, generally it's just like it's less attractive to be in that currency.

35:02So that's why, for example, Aussie, the Australian dollar has been very weak relative to what you would expect because the Reserve Bank there is just like crazy loose, like real rates in Australia are negative 3 % or something. So generally that's like the very basic framework that FX runs on. And then there's a lot of exceptions and different things. But yeah, that's kind of in the framework for a while. And then if you look at the other side of the coin would be if there's a crisis, then people just buy dollars. So that's like a whole different framework, but we're not in that right now. Well, that's exactly what you were talking about earlier with the hypothesis of the smile.

35:41the so-called dollar smile where you see a sort of risk on both sides of the equation increasing dollar strength yep yeah absolutely so when um when the u.s is kicking ass dollar goes up and when the world is scared the dollar goes up because dollar is still the safe haven so and then when it's kind of like in the middle like goldilocks or or stumbling stumbling through kind of thing that's when generally that's like the textbook dollar sell um environment now the only thing is that U.S. yields are still pretty high. So it's expensive to be short dollars for a prolonged period. So then you'll get corrections like today where people just get annoyed and buy all their positions back.

36:23And especially on a Friday, you see that quite often. Explain that proposition about the high cost to be short dollars. So generally, if you are short a currency, you have to pay the interest differential versus the currency that you're long. So if you're short dollars and long yen, and the difference is 4%, then that's what you have to pay that interest rate differential. And like, obviously, it doesn't matter on any given day that that 4 % divided by 250 trading days is nothing. But if you're sitting there short dollars for short dollar yen for three months, then, you know, it starts to bleed.

36:56It's like, it's kind of like being long an option where, you know, it you see your P &L, it's never like a huge amount of money, but it's just drip, drip, drip drip um and so generally if like everything else was equal people would rather be long currencies that are higher yielding because it's just you know it gives you a little margin of safety that that not a huge one but it gives you something to work with so currencies like brazil where rates are much higher are attractive just for that reason um because you can just sit on it and try to use some leverage and and that's the called the carry trade as you know yeah very well said.

37:33Listen, while we were talking there, I was able to screenshot a copy of the US dollar index chart. Let's take a look at that. This is DXY. Nice multitasking.

37:45So that you can see that right there, Brent. Any comments you'd like to add? Yeah, no, I mean, that's kind of been like we were in a raging dollar bull environment for a long time with the European energy crisis and all that. And so a big part of like the dollar sell-off recently has just been kind of mean reversion and getting away from like, okay, Europe's not like shutting down for the winter, things are going to be all right over there. Oil also kind of calmed down and nat gas and, you know, UK electricity, all that stuff calmed down. So a big part of the dollar selling really like for the last couple of months was a lot of mean reversion.

38:20And so now you kind of have to guess or predict what's the data going to do. And if it's kind of in the middle, if the U.S. data is in the middle like it has been, then that's an okay time to still stay short dollars. Let's get back to your chart pack. Walk us through what else you've got here that you want to go through. Sure. Just one thing I think is it's kind of like a non sequitur compared to what we're talking about, but there's a housing chart in there. And I think it's useful just to sometimes look at the index instead of the year over year. So that's U.S. housing prices. So I think if you asked the average person on the street, they would probably think that U.S.

39:00housing is not doing very well and it's kind of maybe crapping out. But the reality is that volumes have decreased a lot, but prices have not. And it's the same thing in Canada. Some countries have seen bigger declines, but I think it's just useful to know that, I mean, U.S. housing is basically the same price as it was a year ago. So it went up a bit. Sorry, it went up a lot and down a tiny bit. And so I just feel like sometimes that that is a useful perspective instead of looking at year over year. And I think that's part of why like this whole scenario in the US is very difficult because there's so many moving pieces and we're coming from such a weird starting point where everyone had so much money and work from home happened.

39:42And then you got like tech people are getting laid off, but unskilled workers, there's still a massive shortage. And then on the inflation side, like goods prices have gone down a lot, but services prices are still sticky. So a lot of the things in a normal economy, you're mostly looking at demand. But a lot of things that have mattered this time have been more supply side, right? So that's created this weird bifurcation where you hear all these tech layoffs and you think, whoa, boy, like the labor market's bad. But then construction at this point in the cycle is usually, you know, shedding jobs like crazy, but it hasn't been at all because all it's doing is like there was a massive shortage and now there's less of a shortage.

40:20I mean, if you walk around my town, every single restaurant is still looking for people. Let me ask you a question. That chart that we just brought up, I couldn't quite see the title of that. Was that S &P CoreLogic, Case Shiller, Metro Area Hall? Yeah, I think that's what it is, if I remember correctly. It's definitely Case Shiller. There's two of them, and I can't remember which one I picked, but they're similar. Yeah, it's U.S. Home Price Index. I think it's index 200 back in 88 or something. Something like that. Let's bring that chart up one more time because I wanted to point something out that is interesting.

40:51What we're talking about here is that little roll over to the downside that we've seen in the upper right-hand corner of that chart. But I want to focus on the obvious here for a second. You see that hump directly in the center of your screen. That's the so-called 2007 housing bubble. And look at what's happened to that chart since. I mean, obviously, you know, a material increase, and you can see the sort of the extreme left-hand side of that chart. You can start to see the second derivative begin to increase as that number starts to roll up, looking more like an exponential curve. But boy, what we've seen happen since that crash, that's monetary policy.

41:28Yeah, absolutely. And if you look at other countries like Canada, actually never even dipped in 2008. It's crazy. It just flatlined for like two years and then kept on going up. And there were like articles in magazines about the housing bubble in Canada in 2013. And, you know, it's just literally a straight line up. It's dipped now like the US. But yeah, I think the amount of asset price inflation that we've seen is, I mean, if you stepped back to 1998 or something, it would just be totally incomprehensible. Like not one person would believe that this could have happened in the amount that asset prices have gone up.

42:06And really, that's the product of QE, right? I think the empirical evidence now shows us that QE doesn't create consumer price inflation. It creates asset price inflation. And then if you throw fiscal on the fire, then you get CPI going to the moon. Well, you said something there that's just so powerful. The idea that what's happening with QE is not driving CPI inflation. It's driving asset price inflation. Such an important point. I think something that we didn't really think much about before all of this happened. Are we just kind of like the frog in boiling water here? We don't feel it happening because it's happened so slowly?

42:44Yeah, I guess it's, I think there's some cliche, like you don't realize you're part of history when you're sitting there during the history as it happens or whatever. It's like, oh, was that Archduke Ferdinand? Yeah, one of those things. So, you know, this is historic. Think about it. Like German yields were negative like two years ago. That's insane. Like the idea of negative rates is completely bonkers. It wasn't even in any textbook. And now we look back and it's only like two years ago. It's wild. All the engineering and fine-tuning and central planning and all that that's gone on is crazy.

43:23And to me, it probably has a lot of negative unintended consequences, like wealth inequality and favoring large corporations and many, many, many, many things. Hey, you know what's not an exponential chart to the upside? Average hourly earnings all employees. No, that's more of like a linear, yeah. Yeah, a slight increase in the second derivative. of it yeah nowhere near what we've seen with this rate of increase increasing on asset prices no and i think it's interesting now because we have a decent amount of evidence but like in 08 09 you know 100 economists wrote this signed letter saying the qe was going to trigger a massive hyperinflation and all that and so now now that we know kind of like we have some more evidence i'm surprised that they don't try to do faster qt and get the balance sheet down because like it's not serving any purpose after the emergency is over, right?

44:15Like in an emergency, okay, you can justify it. But once the emergency is over, they just, they stick with it for so long that it, to me, it just feels weirdly unnecessary. Like you can, you can withdraw it as fast as you enacted it if you want, but they don't, they choose not to because of like, I guess, risk minimization or like fear or just an asymmetry to always want to try to boost things and make things go up. Brent, let me ask you this. We've got a ton of questions waiting for folks to ask. Are there any other charts that you want to cover before we switch over and start doing questions from Real Vision viewers?

44:51No, no, I think I'm good. Okay, great. First question comes to us from the Real Vision website. It comes to us from Ralph Humphrey. How does trading volume look to Brent? um i haven't looked today um so honestly i don't i don't really know um i would say like i can say in fx because that's my thing is that things have kind of after silvergate blew up a lot of hedge funds took a lot of pain on the rate side and so we saw a big decline in volume in everything kind of macro-ish um in terms of equity volume i'm not sure but i would say that generally like appetite, risk appetite went down a lot after Silvergate, mostly because rates moved so much that it was like a shock.

45:35It was a bar shock. And the volumes haven't come back in my products yet. Here's another question from the Real Vision website comes from Jay and Jay. If the macro outlook looks shaky for stocks, the dollar looks weak. Is it long precious metals, TLT, and maybe energy stocks? One thing we haven't talked about yet is gold price of gold trading over$2 ,000 an ounce on futures on COMEX right now. Give us a little bit of context on that. Yeah, I think that's a good portfolio, what was just described there. Because if you think about what gold has gone through, like with all these rate hikes and everything, it's pretty mind-blowing how well it's performed through a very aggressive rate hike cycle from the Fed.

46:14So to me, then you kind of have a decent amount of basis covered there. And you're not necessarily looking for like an outright economic collapse like or wicked recession like 2001. There's a lot more scenarios where that that portfolio that was just described will make money versus short stocks. I just feel like, you know, you need very specific regimes to make money. It's just it's hard work being short stocks in general, whereas like long bonds and long gold, there's just more ways to win, in my opinion. So yeah, I prefer those to being short equities. Also, equities in the economy, sometimes they're linked and sometimes they're not.

46:55In fact, sometimes they're inversely correlated. You see this perception of significant recession risk and you see the Fed start to pour on the spigot with liquidity. You see those two move in opposite directions. Yeah. Okay, next question. Maximus Torres from the Real Vision website. Is Brent watching natural gas? I'm sorry, but no, I don't. I watch crude. Generally, NatGas isn't really correlated with my stuff. So sorry, but no, I got to say, I don't know anything about natural gas. A perfectly fair answer. Nobody can follow everything. But let me ask you this to follow up on your point about crude.

47:31Are you looking at WTI? Are you looking at Brent? And what is the correlation with your models? Yeah. So crude's really interesting because obviously everyone was super bullish after the war started and then blip by bit everyone kind of slowly capitulated if you look at like the cftc positioning data and stuff it got back all the way back down to where it was before the war um and so did price right it got back into the 60s and then on this opec thing i think that's like was really spicy timing by them because positioning had been cleaned up and you got the big gap from like 75 to 80 on Sunday.

48:06And a lot of times those gaps just get filled right away. So the fact that it's holding and then positioning is kind of lighter to me is bullish crude now. I think it's like the first time I've been comfortable being bullish crude in a long time because it was just such a popular trade for so long. And so the relationship to FX is generally like some of the big exporters, especially Canada, tends Canada's GDP is driven to like, say, 10, 15 % by the price of oil. So you see a pretty much almost like a mechanical relationship at times between oil and Canadian growth and the Canadian dollar, you know, with some noise around it.

48:44But it definitely has to be watched if you're trading Canada. So dollar cad, by the way, understatement of the hour, spicy timing from OPEC. Spicy timing. Yeah, yeah, spicy timing for the middle finger to the United States. Yeah. Yeah. Geopolitically quite spicy as well. Indeed. Here's a great question from Brian Randall. When is commercial real estate going to start affecting banks? What would the leading indicators be? Boy, that's a great question. Yeah, that is such a big topic right now. And I think the problem with it is that it could just be this super slow bleed. A lot of it, you know, it really doesn't happen until leases get renewed.

49:22and then you realize like I have no tenants. So I think it's important, but it's just such a slow moving thing. And it's so well known that like risks that are slow moving and well known are very, very difficult to trade off of. So to me, like I'm not really factoring it in too much because I think it's real and it's important, but it's almost like a structural thing. And generally I try to focus more on cyclical things because they tend to move markets more at the margin. Whereas like this sort of like hovering, slow bleed, bad thing is just going to be like, it'll be a persistent drag and it'll hurt some banks and, you know, there'll be some gates closing on funds and stuff.

50:04But to me, I don't think it's going to be something that's really all that tradable or that's all that relevant to any investment process that doesn't include CRE as an asset. it. Yeah, extremely well said. I have to always hold myself back from going down this rabbit hole because it's out of context for a show about markets. But one of the most fascinating things that I see happening right now are all of the sort of sociological cultural changes that are happening in the wake of the pandemic. It's almost like a World War II moment. There's a before and there's an after. You know, just the world has changed so dramatically in terms of the way we lead our lives.

50:39That's going to have macroeconomic implications. There are going to be implications for markets and for asset prices. I just don't think anybody's figured out exactly what that is. We've got an office sitting down in Chelsea that's mostly empty. Yeah, same with us. Yeah, it's amazing. If you think about the idea of bank traders, market makers sitting at home, taking risk and making markets for clients, that would be like an absolutely impossible concept in 2018. And now it's a thing. It's just mind blowing. Listen, I'll tell a quick anecdote. I found myself last night at about 11 o 'clock on Smith Street in Brooklyn.

51:17This is like one of the cool, hip places where people under 30, under 40 live, hang out, congregate. Lots of great restaurants, lots of great cafes, lots of great clubs and bars. I couldn't find any place to go in and have dinner at 11 p.m. on a Thursday night. It was dead. It was like they rolled up the sidewalks. Funny. That's strange. Yeah, I always assumed like, you know, 11 o 'clock on a Thursday night. like all the cool kids are out partying. I'm the nerd who's home working. It turns out that's not the case. People just not going out the way they used to. Funny. I thought you were going to say the opposite because when I was in London, that's really the last time I went out at night, like in that way.

51:54And man, London was like absolutely on fire. There was massive lineups everywhere. It's so interesting. I do wonder, and this is like another thing that's kind of the flip side of the office equation. It's like people don't go out as much because they're on their phones, right? If you're a single guy or gal in your 20s, you don't have to go out to a bar and have to deal with asking someone for their phone number. You just do this all day. Yeah. And I remember that there is a risk of these anecdotes. I remember in 2008, people were like, oh, Balthazar is still packed, dude. And it's like, it was until it wasn't.

52:28So the fact that London is busy, it's kind of interesting at the margin, but it doesn't necessarily tell you anything because of long and variable lags. Yeah. And the danger of anecdotes, I'm thinking maybe I should hop on the sixth train and go to Balthazar down on Spring Street. Yeah. Yeah. Okay. Question back to finance. This one comes to us from Alex Lester on the Real Vision website. Thoughts on the new BOJ leadership. What's the implication for JPY and USD bonds? Boy, this is a great macro question. Yeah. I mean, I think it's important, but the market's obsessing over it so much that it's been really hard to trade because each time you go into a BOJ meeting, the expectations just go run rampant because it's like the ultimate FOMO trade.

53:10Nobody wants to miss like the normalization of a central bank that has been easing for 20 years or whatever. So I think Ueda will eventually remove the cap on yields and it's going to be kind of slow. And so the issue really from the trading side is that if yields are going up and it's pressuring the cap, then it matters if they move the cap, right? But say yields aren't anywhere near the cap and they remove it, then nobody really cares. So the timing of it relative to what global yields and global interest rates are doing, I think is important. But I mean, it's a kicker to be long yen. I think it depends how far they go.

53:48I mean, like wages in Japan are very high by some measures and wage negotiations that in March were very strong. So I do think it's like a kicker for say being short dollar yen. But the problem is that you need the dollar side to cooperate or it's not going to work. So like, yeah, it's important. But in the end, dollar yen is still going to generally be a dollar. And then the yen thing will be like this sort of kicker that happens or that can help you. And I think it's meaningful. The first meeting from Ueda is in April and at the end, towards the end of the month. So that meeting will be extremely interesting.

54:27Here's a great question from Stephen Birchfield from the Real Vision website. Wage growth from March was up 6.4%, up from 6.0%. What do you think the Fed terminal rate will need to be? It's an interesting question because we were just talking about wage growth on the sort of the longer perspective. This is a much more tactical question. And secondly, we should say, obviously, federal funds target rate, 475 to 500 right now. Any thoughts on the terminal rate, where that stops? Yeah, I think we're close. I think just that Silvergate probably is not the last naked swimmer or the only cockroach or whatever you want to say.

55:01So to me, I think they're in the zone where it's kind of restrictive and each subsequent hike will probably trigger some more angst. And also, I mean, I think the economy is slowing. So to me, I think terminal would be probably 525 or 5, maybe 5.5. half. I think wage growth will probably be one of the last things to go back down, simply because there's been a shortage of workers. So it was kind of the last thing to go up and it'll be the last thing to go down. So I think there will be higher frequency things that you can look at, like claims, initial claims, or even like non-farm payrolls, and unemployment rate will probably all move before wages.

55:41So I'm not as big on watching wages in real time because I feel like they're kind of laggy. Yeah. By the way, that's right in line with what Fed President John Williams is saying at 525. Here's a question from Trillion X from YouTube. Trillion X is obviously watching the data closely. Brent, how do you explain that after disappointing retail sales, the odds of a rate hike in May has increased to 80 percent? Is it because the banking crisis has ended? Great question. This sort of seemingly paradoxical relationship. Yeah. So that's a A lot of people were asking that today. I think you have to look at everything that happened today.

56:16And retail sales was probably number three in terms of importance. So I think the banks being fine was number two. And then Waller being so hawkish was probably number one. And also, to be fair, going into retail sales, because of the credit card data, people were kind of expecting something weak. And then if you actually break it down below the headline, some of these, like the core, which is the, or sorry, the control group, which is the input into GDP was actually stronger than expected. So some of the details in retail sales were not as bad as pretty pessimistic expectations. So I think, but the real answer is that I think retail sales got trumped by the banks and then by Waller after that.

57:01Okay. Here's a great question that comes to us from an Anaimo trader, someone who's joined us on many of our Twitter spaces. Question, what are the serious mistakes you are seeing investors make in today's tricky investing climate? That's a great question. I may be out of a job soon. I think the most expensive mistake that people have made generally over the years is being too bearish equities and buying S &P puts that are impossible to monetize. So even in 2022, when stocks went down, it was hard to make money on S &P puts because vol wasn't really that crazy. So I think like a persistent negative bias, even though like, obviously, negativity can be correct at times, and I'm not a permable either.

57:44But I think a persistent negative bias is probably the most expensive mistake that people make, because it's just stocks tend to trend higher, not all the time. But like, it's, it's so easy to get sucked into too. Like negativity always sounds smarter, for example, like you go on Twitter, you can always find really smart reasons to be bearish. And so I think negativity sells and it penetrates the psyche of a lot of people. And it kind of like always feels like it makes more sense, right? If you look around, like being negative sort of feels like the right play. But it to me, like some kind of rational optimism is the better metagame where like you don't just commit to always being bullish, but you also are very skeptical of the bearish hypothesis most of the time.

58:32Boy, that's such an important point. We've talked about a lot of things at the sort of the strategic level, but that's a great grand strategic takeaway. I've fallen victim to that myself. I think many people have. I mean, me too, of course. Yeah. It always sounds like the smarter argument, smarter, right, in double quotes, to be negative. And look, we saw this. I mean, I remember this in 2008, people getting caught up, I think, in their political biases, right? This idea of like, well, you know what the Fed is doing right now is just terrible. This isn't the way that markets are supposed to work.

59:00And people who went short got their faces ripped off. Sure. I mean, a lot of people were short from like 2010 to 2016, basically, like off and on. And most of the time, it kind of made sense at various points. So, yeah, I mean, it's a tough one. It's just it's hard to make money being short, too. Like, it's just such a different game. So, you know, you can always hang out in cash at 5%. there's nothing to be ashamed of there or be long TLT or whatever, like the initial portfolio question. But generally being short, you have to have really good timing and you have to know what you're doing and you have to risk manage and stop out if you're wrong.

59:37And that's something that sometimes people have trouble doing. Yeah. And for those folks who are secularly short from say 07 until the present, I hope they bought a nice place in Boca. I hope things are well for them, But obviously, the trade did not work out. All right, everybody. I waited a full 58 minutes to 458 to ask this question. So we didn't do too much crypto. But this is a great question. It comes to us from Laurent Lequeux. Any views on crypto, Brent? Yeah, I think it's interesting how well it's trading. It's kind of decoupled from the NASDAQ and from yields a little bit in the last couple of days.

1:00:14Although I would say still that sometimes crypto just doesn't get the macro memo right away. and it's like it doesn't react to the macro stuff right away. So like super micro, I'd be a little bit, I'd be worried about a correction. But, you know, overall, I think it's very slowly kind of finding its role as another hedge for loose monetary policy. So when the market sniffs out that the Fed's going to be looser, crypto benefits, it's the highest beta, most volatile way to bet on loose monetary policy. And I think it'll continue to be a good tool for that. And that's kind of what it's been doing now.

1:00:54However, I will say, though, if Waller is right and the economy is OK and yields go up much more from here, I think that's going to hurt crypto again. You know, we'll see another correction. So to me, it's like structurally the world is very loose, but then there's these cycles of tightness. And so when things start feeling tight, that's when crypto gets hit. But in the long run, you just keep buying dips. Yeah, and I promise I got the memo. I'm not going to turn Real Vision Daily Briefing into Real Vision Crypto Daily Briefing. We're going to cover macro and traditional financial. You guys got a whole product for that, yeah?

1:01:27Yeah, we do. If you want to come geek out with me, every weekday at noon, we're talking about exactly these topics in a lot of detail, and obviously talking about macro and TradFi on this show. Brent, this has been a fantastic conversation. I really enjoyed this one. I think it was a perfect one for the Long Friday format. Final thoughts, key takeaways that you'd like to leave us with. Well, I think now we're going to get into a bit of a boring period because all the data for April basically came out. So I would say the risk for like the next few weeks, next month is just that we keep on squeezing inequities just because it could be the path of least resistance until you get some actual bad news, which is probably coming in the summer or in the fall.

1:02:09Yeah. Anything else that you'd like to leave us with? No, that's it. Really enjoy the sunshine. Enjoy the sunshine. It's like 70. We were talking about this earlier. It's a beautiful day here in New York City. Really appreciate you joining us. Fantastic conversation. Awesome. Thanks for having me. That's it for today's show, everybody. Thanks again for watching. I hope you enjoyed this extended version of the Real Vision Daily Briefing. And thank you again for being a member. We really appreciate it. Have a great weekend, everybody. What's up, revolutionaries? Thanks for tuning in to the Real Vision Daily Briefing.

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