You're about to watch a fascinating interview with a hedge fund Trader who gives us some incredible insights into their opinion of not just Warren Buffett but also Kathy Wood What's going on with the banking crisis, recession, and much more. Keep in mind all of my videos are brought to you by my own programs on helping you build your wealth whether it's zero to millionaire, real estate investing, do-it-yourself Property Management getting into your first rental property stocks, psychology, money, or learning about LLCs insurances and otherwise so you could make more money either with your side, hustle, your entrepreneur hustle, or as an employee. Check out all those programs linked down below. that is the primary sponsor and it is what keeps us going on this channel to bring this value to you.

So check that out. link down below that does it for sponsors in this Now let's get into the interview. Hey everyone, welcome back to another episode of the Meet Kevin show. Today we are with a Bob Kendall of the Kendall report a welcome aboard! Thank you so much for being here.

Tell us about yourself, what what do you do, who are you and and let us know and how can people follow you. Great I'll try not to get too involved I have a lot of different hats I wear So I'm a software developer I'm a former Trader on on Pacific Stock Exchange Also the Chicago Board of Trade I also have been the head financial analyst for a major firm I worked Merrill Lynch at research for a while, managed money at uh, lots of big big places, consulted about 36 banks of the largest banks actually I can remember three of them aren't in business anymore. bear Stearns credit Suites and uh and um I forgot the other one right now. So anyway, but yeah, so done a lot of those kind of things with uh with been in the markets I started in Chicago Board trade in 1979 lost all my money Should I tell that story? Absolutely yeah it was a year Volker was nominated yeah I got stuck limit down in four days and when I woke up they didn't have it, there was all the money was gone.

so um, it was a good experience though because it made me focus on two things: the emotions of the event as well as the I Guess understanding how to develop risk strategies and things of that sort and that was big so you know Capital Preservation was everything and it always is. But yeah, so one of the software platforms that I have I developed something called Advanced and protect. So if you Google advance and protect, you'll see a bunch of investment advisors out there. they're most likely even current clients old clients.

But I taught the whole industry how to how to basically protect their assets. On the downside by going to cash What a concept, right? Yeah, right and uh and then also participating uh when the markets are going up so trending. So a lot of the stuff I do or Trend analysis those type of Wow. So I'm a technician I could go on and on.

It's incredible I Remember I was in my 40s one guy said you're not old enough to have that resume so sorry I did all these things So wow, that's very impressive. And now so one of the things that you mentioned is you have a big opinion about what's going on with the banking crisis because obviously for the last month that's been a big deal. When's the next Bank going to fall? Jamie Diamond says the hurricane is on the horizon from JP Morgan the next banks are coming and the next failures are coming. What's that you? um I don't see it.

uh, very isolated. there are a few banks that have problems and uh, a lot has been made of all the cash flow going, the money, funds, and all this stuff. It's not really going to, uh, matter to the banks at all. I even saw somebody sent me a a text earlier this morning telling me how the Federal Reserve has those losses on their books and they do.

but they have something unique. they can print money, they have a direct direct connection with the legislature so they can change rules and I heard actually um regards say something that really woke me up now just on a clip that I watched yesterday and she said one of the things that we're going to be talking about is restructuring debt and I thought wow, never thought about that. So like in a commercial real estate world, right? they're just going to restructure data. That's why they're all defaulting.

That's yeah, But no one cares because these guys just trade off like Okay Kevin you owe me money, it's due next week, but don't worry about it. Pay me two years from now. We'll see what it looks like and I'll give you a break on interest and so in other words, default so you can negotiate to restructure. Exactly.

Yeah, but but think about restructuring the entire debt of the world to all the central banks because that you know, she's with the uh ECB now. But you know what happens if they restructured all the debt? Let's just change. So tell me about that. Do you mean I don't like treasury's outstanding? Yeah, just everything.

So why would they be talking about restructuring debt? Who's that? Are they talking about restructuring? I Have no idea, it was just a comment, right? Interesting. and she's been kind of reviewing a lot of things with CB DC and all the other stuff that's out there. and now does that make you nervous as an investor in? Market I don't I don't know how to interpret it. Okay, the debt restructure yeah I mean number one.

we don't know what it is was a comment. we're going to talk about restructuring debt and I thought wow, that's that's a very interesting thing to do, huh? Yeah, absolutely. because you know it makes sense in commercial real. estate.

And I think one of the things we're seeing is a lot of people are very concerned about commercial real estate. Understandably, so. office vacancy is 50 60 in many cities and they're very difficult to convert to housing, especially the 1960s office. It's impossible.

Yeah, they're not enough window spaces egress everything. so there are legitimate reasons to be concerned about commercial real estate. But when we hear about for example, the Wework default that just happened or some of the other defaults that are happening. are these concerning signals for regular investors or is that just a normal process of the business would say from a macro economic, it's not going to matter.

The people: if there's empty Office Buildings I was telling somebody that we're you know here in L.A Accounting You count the buildings in La Go one two three empty, one two three. You know out of every ten, right you've got. and then you've got three of them are empty. right? You get to ten.

Three of those are empty. Wow. Not physically obviously, but cumulatively so you know I don't think it's going to affect the average Joe It's not going to keep anybody from going into Walmart buying anything they don't know what's happening, huh? Because that's the big Catalyst that people are saying is the cause of the next recession. Now it's going to be the banking crisis tightening credit standards and Commercial Real Estate we're all screwed.

It's gonna be worse than 2008. They say what say you? yeah and I've talked about this on my channel quite extensively. It's just it's just not physically going to happen ever. you don't see it happening.

No. I mean because you know if you look at at what's happened, even if you went back to uh to GFC right and go to go to the whole restructuring that was a restructuring of debt 2008, then 2008. Yeah yeah. so and so during that time you know you just saw everything get, uh, the banking system was restructured.

It was to start over. kind of do an extra sketch. uh, if they would have taken uh, you know there's a couple of situations that would have happened. They would have taken down the whole system if they didn't do what they were doing.

credit cards were an hour away from shutting off. Yeah, yeah. I mean everything. You know if the money starts coming out of the the machine, it's Panic time right? that's for sure if the ATM stopped working.

Yeah, exactly. And so and you saw that like in um uh, what was it that was in the increase? It was another country right there where they only could get x amount of dollars 300 hours a day or whatever it was I mean it's brutal quotas or rations rather in terms of how much cash? Yeah. So once you start that game, you're you're in trouble. Then it's really panicking.

Restate with that question. Yeah, so do you think that uh, we've got the banking crisis. We've got these recessionary fears about commercial real estate. Uh, you're saying maybe the banking crisis isn't that big of a deal, But are you're still seeing a recession though, right? I mean everybody's predicting recessions? Zero recession.

So one of the things I I won't I won't mention any names. but I Watched a video on the way over here and it's just to know exactly what wasn't going to happen. I won't mention the name. that wasn't going to happen.

Okay, all right, because whatever. Anyway, So, but uh, one of the things I've been everybody's talking about M2 collapsing. Okay, money supply. Falls Nobody is talking about the velocity.

It is going vertical. Really? Okay, so take a look at those charts. the velocity is screaming and it's uh, that's the turnover of money. Yeah, and we've been talking about velocity just collapsing for years.

Yeah, we have been. exactly yeah. That's been the dialogue I'm actually surprised it's already inflected. When did it inflect now? I Feel behind? Yeah, Well, recently.

Yeah, just recently. Yeah. During Sbv during the banking crisis. Oh, this is very recent.

Yeah, yeah, that's a big deal. and and uh, so some people are calling a little bounce and yeah, you know, some kind of reaction. But it's so on the banking crisis. Let me try to unpack something because the reason why I'm not saying there aren't issues in the banking, uh, industry.

There's always issues everybody's talking about on um, you know, deposits that aren't insured, right? They've never been insured, Something's changed. Yeah, that's true, they've never been. So all of a sudden that's the dialogue for the Bears to try to get you to go. Oh no, they're not insured.

Yeah. I mean what bank has ever been insured? It's always been based on trust. Yeah, you know. I Started on on a trading floor where I was yelling and screaming at my friends trying to make money and everything.

if you and I were trading and we agreed to a trade, well next morning you forgot to turn your card in because it's old paper days and come in and go. Hey Kevin I Bought so-and-so from you and like I don't I didn't buy anything from you I didn't sell anything and then it's called a DK and but now guess what? I don't trust you anymore. Yeah, I'm like dude I watched a guy one day in a trading pit for a half hour try to do a market order at the market to buy something because nobody trusted him. Nobody trusted him.

Oh he was done. So you just get that black. But the same thing here with the you know with anything it's trust. You know us.

Tower It's trust right? Interesting. Yeah So and that's a big thing now too is people are talking about this dedolarization thanks to Saudi Arabia now partnering with Iran and maybe denominating some oil and natural gas trades and Renminbi instead of dollars? What's your take on that I mean is dollar Gonna Die Tomorrow Dollar's not going to die tomorrow. There are some downside risk in the dollar, but it's not going. but think about it.

How long did it take him to put the year all together? Oh my gosh. Well yeah, I mean that was a very long period of time. They were talking about that ever since I can remember in the early 90s. Yeah, it didn't come together in 1999.

I Told everybody said well they were they were going to have it there, but it wasn't going to be floated until the next year, right? Sure. and I think it's still 1203. You basically have doubled the the currency on the planet. The Euro has to go down everybody.

I don't know. It's like no, it has to go down. If you look at when the Euro came out, it just went down. Ah, interesting, it went down like 12 15 like boom because because you had doubled the amount of currency available.

okay, there's more of it. It's not going to go up until they eliminate one of the two components. That just made sense to me. And so um, and so relating to the dollar, Then yeah.

so to the uh, the dollar? Um, I Think what we're saying is bifurcation of people making transactions. It's kind of already always happened, right? but it's never been acknowledged once again. Now all of a sudden, it's a thing because and and there have been some substantial deals I mean with uh, Macron going over to China and saying some of the things he said the other day was like, okay, what's this about You know, okay, I need to diversify away from the dollar. It sounds like that was maybe a line that came out of uh, some somebody else's script.

Yeah, yeah. Xi Jinping script Exactly. Yeah, So yeah. I I Don't think the dower is going to like, just go away.

That's not going to happen because once again, it's trust. Yeah, So do you actually want to be in the Yuan Do you want to do that? Yeah, you know, maybe not. But if whether you're you know some of these countries secondary countries I saw actually Larry Summers Made it an interesting comment on a on a Bloomberg uh interview a few days ago and he said when when the China offers money to some of these small countries, they offer like we'll build infrastructure, how about an airport? Okay, yeah, we'll take an airport and some money and yeah, we'll get infrastructure. He said they call the U.S They get a lecture on how good the U.S is and how you want to use our dollar.

They don't get any anything in return except for a lunch. A lecture, which you think about it, you know it's the old uh, you're going to give me something I'm going to probably pay more attention to you. Yeah, exactly Yeah, Absolutely. so.

uh, this this idea of uh D dollarization is that? Do you think maybe just now being blown up a little bit in the mainstream media to maybe bag on the current Administration or something combination of all that, but the I think the um, the realities are, it's not going to happen. Yeah, uh. it's not. not that it couldn't.

You couldn't see a shift in a bifurcation of the planet where there's two worlds there kind of already is. Yeah, if you look at it and it's been like that for a long time, they just decided I think the current uh Administration has isolated themselves so bad. and especially over the Russia's uh, sanctions and all that they've just. you know, they forced this thing that looked like it is.

sure. And of course, and you know, um, I was thinking about Kim.com If you followed him at all, he's just going crazy on this, the Dollar's done and all this stuff you know, and uh, and he's a very smart guy in that. but I don't think that's that's going to happen. No, is that it seems like maybe because I'm American Oh well, that might have something to do with it.

I See a lot of people who are super anti-dollar or often really into gold and they're they're selling gold. Do you think there's just a bias in that? then? potentially. Or because I think going back to what you said about trust of the paper money, the dollar has the most trust. It might.

All paper money might suck, but it's the best of the worst so to speak, right? Yeah, you know. So um yeah. I Like I said. I I Don't see it going away I Don't see that.

Um, really playing out real good. So no banking crisis, no dog crisis. So let me qualify the banking prices because there are issues in the banking yeah, industry. Yes, Are there one.

They're going to be thousands of banks Fail? No. Why? Because and if you go back to 2008, everybody had the same trade on. okay, everybody had the same crud. They had assets on the books that were worthless.

Okay, they got treasuries. They're not worthless, right? Okay, and by the way, by what's happening in the 10-year and all the the rates, yeah, those most of the problems worth more. Yeah, exactly. it's already.

and in fact, if the right things would have been done with this. uh BB So I think there was a conflict of interest because uh Becker was on the San Francisco Fed board. All they had to do And this is what I said when you and I met, let that one fail. Well no, they all they had to do is do open up the discount window.

Oh right they said Oh Mr SBB you've got a liquidity problem. no problem how much money you need which they did I filled the Gap Yeah, they could have filled the Gap and guess what by filling that Gap it probably would have seen the same reaction in treasuries and some portion 20, 30, 40 or more. The issue would have went away immediately immediately. Right? and by the by Monday morning after SBB it had already, They didn't even have a problem if they just left the doors open.

Wow! And and the state Regulators in Florida in California California Yeah, shut it down. They shut it down Monday morning LTC or the FED has no ability which to close the bank only the state regulates. Oh really interesting. Okay, so the state had to pull the trigger so somebody panicked.

They pulled the rip cord and it was over. You know? And there were others there were. but I felt like there must must have been some kind of conflict that was laying there like oh, he's on the board and now his bank's in trouble I work for a firm that uh, our the chairman of the Chicago Board of Trade was also our chairman. We were the largest uh commodity Traders on the planet at the time.

Okay so what happened we got. We had calculation a capitalization issues with with our firm. Our chairman is the chairman of Chicago Board of Trade First thing, he's resigning from the Cbot everything starts to implode. Nobody wants to be our friends anymore.

Uh, capitalization. Uh 14 days to go on a liquidation. So there were other firms. uh man man.

uh Futures uh Refco. if you look at the history of the Futures markets there's been, we were the first one to go and then there were similar type events. So wow, things do repeat themselves and you know Industries change a lot. But uh, just back to uh, this whole thing and what I What I said on that stream that we were on was you know all they had to do is open up the discount window literally.

As I was saying it, the FED announced they were opening up the discount window doing a special I don't know if you recall that. Oh yeah, funding facility I Was really frustrated for an hour I was trying to tell everybody this is all they got to do. Yeah, yeah, they are, you know And of course we got the rally and the treasuries and bubble. Oh yeah, it's so yeah.

so um but yeah I think so the banking. Back to looking at what it was like in 08. compared to now, there are no systemic issues. Everybody has treasuries.

They're not worthless assets as opposed to Cdos from away. Exactly which we're getting worthless because of a real estate cycle for those watching. In other words, those assets were going to zero Were today. Everybody's got treasuries.

you know. And on the subject where we're you know, uh. just talking about probably. what.

The markets. The Bond markets. Everybody's Bond markets pricing and stuff. It's not pricing in anything.

What it's doing is there's less Demand on the back end of the market so it's going to be lower. Interesting. Just think about real estate. You're a real estate guy.

Yeah, there's not. You know, try to do a re. No one's going to do a refi right now, right? Repives are gone. Okay, you gotta, You got a two percent.

Why am I going to go to a six? Yeah, yeah, of course you know. So so all of the demand on the back end of the curve is gone. and what you're going to see is the curve is going to start. It's already in a u-shape If you look at it, it's already the 30 is starting to tick up.

Aha. so everything's gonna do a U and then it's just going to rise. A little bit. interesting.

So so how would you explain that to someone watching? So who's not super familiar with bonds? maybe? Yeah. so we were talking about the sea change thing right? Yeah. so um I picked up something comment that that Paul said and it just wow. It was like he just drunk.

Yeah, so he said he said that we're doing something right now with uh with the interest rate structure that is going to last for decades and it's going to change how how things operate going forward. So I heard that it's a one little it was in a press conference. eh, it was at a press conference. Okay and so when I heard that I thought this is and and I've uh I've talked to a number of other friends of mine.

They're very knowledgeable and this is what I believe is happening. Rates are never going down for a very long time. Oh wow, they're going to stay between uh down would be where they are now. three and a half.

maybe a print of three but they're going to range three to six on maybe As and mortgages are going to be somewhere between. So uh, why is that? because the FED wants out of the game of QE they're not going to play the game they've got themselves so far in. all you got to do is look at Japan that's a whole nother uh hour we could spend talking about that, but they don't want that. they don't be in that game.

So what they want to do is the mark. This is what I grew up in. Uh, last, if you've been around the markets for 20 years, you think that the FED runs everything and they adjust the rates and everybody that they're the Puppeteer right? If you go back previous to that, the Market's always the FED if you go back into the 60s, 70s and Beyond the FED just adjusted rates to the market and they want to be back into that game. Yeah, they don't want to, they want rather than creating the market.

So yeah, so what is interest rate right? It's a some kind of assessment of risk for me giving you money I need to get paid back. So right? Think about this. Depositors will actually get money. They you can actually put money in.

You know, in a money fund. That's what everybody's doing. Money markets right now. Four and a half percent.

Of course. you're going to do that right. and that's healthy. Actually, it's not a negative because now people are.

You know they're talking about inflation with us. You know some of it's getting offset just by doing that and then. But if if you start to look at some of the I guess ramifications of this higher interest rates, it's not there. So I I Bought a house here in California in 1990.

So yeah, 19 it would have been 1986. Okay, my my mortgage was 13 and a quarter. Oh wow, didn't even Flinch Just that's what the market was. Yeah, housing prices.

If you go back and look at housing market, it was fine. Yeah, 13. Yeah, you know there were people prior to that paying 15 and 16 and there was a market. It's crazy.

It was like buying it's credit card markets and people were buying houses. and you know I wouldn't say money was necessarily easy. You had to qualify. Yeah, yeah, but it wasn't like you know it was in the crazy days and you know, over six oh six where dead people? Yeah yeah, can you can you sign a piece of paper exactly? or the ninja loans? But you know I just feel like uh yeah, it's they're gonna restructure this thing and it's going to look a lot different.

Okay, so I want to unpackage that a little bit. So so you're thinking we're not looking at a recession. we're looking at just higher that what they're what they keep saying, the higher for longer, they mean it. Yeah, so that's what I've been saying.

So so is the So. the bond market isn't necessarily wrong. it's just not not maybe understanding that we're actually going to have this higher for longer. Christ And it's a Bond market.

Yeah, Foreign price. Discovery It's just price Discovery Because you were a market maker. Yeah, because people keep saying oh, the Bond market knows all the inversion of the yield curve signals a guaranteed recession and that what's a utility? Okay, you can look at your curves and they're not very accurate. Oh, interesting.

Which one would you look at to see the inaccuracy? I Don't know one right? That's right. But they've happened a lot. And this particular one, if you think about it, the the yields have been all jacked up because they had them at zero. They were never supposed to be at zero.

They were always supposed to be where they are Now by the way. Okay, okay, all the FED is doing is normalizing the yields to to what how they should be priced in a normal account. So this could be a normalization. That's what I'm calling it.

Interesting. Yeah, so it's not. You know I don't see that. um, uh, like I said I Don't see that the bond market is pricing anything other than demand if you look at true Demand on especially on the back end you know, 10 years and even into five.

and the the spread they look at I don't care anything about two tens, they're re so I spent from 19. Uh, let's see 1992 through 98. I Had a consulting firm and we consulted about 36 of the biggest banks. I Mentioned earlier that some of them aren't around anymore.

and uh, basically, if you look at the pricing where banks are, it's it's the five. The five thirties are the big spread and the five tens. Okay, okay, not the twos. The twos.

Forget about it. They're not lending money into Lorettes. Sure, they're lending money at fives to tens and sometimes on the 30s. So if you like a typical yield, that uh, bank.

if I work with banks in on their risk management side in their Gap analysis. and if a bank Banks don't take, they're not supposed to take a risk. Okay, they lend money. they do.

Services They they take margins right? Okay, so you know if you if you look at a yield on a duration yield in their book, if they got the seven years, that is so bullish on bonds, it's crazy. So they normally operate between three and a half and five and a half. Okay, okay and everybody did get pretty short here. but the FED kind of said okay.

so you can. you can do, you know, uh, you know, hold forever strategy right? Sure, Sure, it's maturity. Hide it over there. Yeah, you know, do that and don't even bother with.

um, you know we won't. We don't care what the prices are right, and that works. but the second you sell one of those or do anything in that bucket, yeah, it now becomes Mark to market, right? right? So you move them over to yeah that's available for sale. So okay, so your thinking is um, and the bond duration? Where are we sitting now I I Don't know that exactly? Okay, that's okay.

Yeah, that would be interesting. Yeah, but I think it's still pretty short because of the way it's been and you think we've got bullish Foreign. So for for a normal investor right now, uh, if you're not seeing a banking crisis, you're not seeing a big fear out of the dollar crisis. Um, maybe a remaining question or fear would be inflation.

I mean are we gonna have three waves of inflation again like we did in the 70s? or I think we're probably seeing everything pretty stable. I mean my title for my video for uh Friday morning was uh, negative? uh PP or on Thursday negative PPI Everybody thought it was crazy. you got a negative number? Yeah, we did. Yeah, big time, you know and and you can see what the August did trading that day.

They had a lot of fun. Yeah, yeah, they you know Friday was different, sure. but yeah, that was kind of a backfilling. but um, yeah, as far as inflation I think that's another hire forever I think there's a lot of oh, it'll stay sticky.

you think? yeah I don't know if they get to you know there was a 2-7 print the other day, so it's kind of hard to say you can't get the two five and they printed two seven? Yeah. but I think that was a one-off report that we saw I Think we'll see things kind of come back in that three and a half. Three and a half that four and a half is just going to stay there. Rates are going to be four to five.

All this stuff is going to normalize because it's got to be priced like it is interesting. Maybe they fix inflation. Maybe they don't. Maybe inflation just stays because there's so many uh, things because of restructuring after Covid and everything.

how things operate. there's a higher cost of everything. So I mean that sounds, uh, that sounds somewhat bearish. though.

If if inflation stays sticky and rates stay higher, we don't go back to the era of, say, easy money policy. Wouldn't that be a potential drag on equities? Who might be expecting that pivot? so to speak. 1983 Through almost 1990, Inflation was greater than five and a half. Six percent.

That was one of the biggest bull markets we ever had. That was when Proctor was predicting 3 600, right? So if you look at the markets and so yields only matter as when they really truly are not participating in the economy in a structure. Okay, so let me explain what I mean by that is the way we're structured right now. The economy can just scream it can just keep going and going.

There's not, it's not getting. I know everybody's talking about the credit crunch. Yeah, yeah, all that. I You know I think people, people are just going to keep doing business so you just look and go.

Okay, the rate's five percent now. I'm just going to keep doing no exactly right. What else are you going to do? You're going to stop living. Okay, I'm going to stop living.

If you have the money, you're going to do those transactions. And it does seem like people have more money now than the question for you. What do you see in real estate right now I know it's I mean the beginning of the year popped up a little bit. Yeah, you know I mean we had, uh, we had a fall from May to December but January Feb March have been great on so far.

Prices have been going up and partly because there's people are just buying what there is. there isn't much people aren't really selling. Yeah no. I mean maybe we'll get Blackstone or some of these larger institutions or REITs liquidating.

but so far it doesn't seem like people. the cre gets to them enough. they might want to sell some residential. That's actually a thought that I've had and I'd be curious to know your thought on that because my thinking is if if commercial real estate plummets now all of a sudden the cap rates Skyrocket on on Commercial Real Estate why would anybody buy residential as an investment? Those investors move to commercial.

You get prices then of residential down commercial up you get an equalization. So commercial tanking should drive real estate residential down. I'm arguing the commercial taking. if I had a lot of money I'd be buying these properties I don't know what I'm going to do with them, but they you'll be buying commercial Yeah as the prices are going down.

Yeah, okay into the fear or now. but would you wait if you did that in 089 Oh God yeah. which I did. Yeah okay uh.

it was the best trade you're ever gonna make. So you you know if you're going to buy low, sell High you. It looks like they're setting up the low. It doesn't mean it's going to bounce tomorrow.

Sure, but you know where do you think the low is I have no idea. it's not my not my market Sure. Uh, my brother's a multi-family and he was telling me that it's worse right now in multi-family than it was in. Oh wait, wait, what? Tell me more about this meaning that uh, the only deals are happening in deals that happen.

Somebody's got you know for uh, what is it? the 403 exchange? oh 1031. yeah, it used to be called so you said your brother's in multi-family real estate. Okay so and he was just saying there's no loans going on. The only deals were Happening Here somebody that sold out of something and they got them.

They got a trade. Sure. So there was like a property the other day. There was like 60 bids on it.

Oh my gosh on one property. Wait. but how is it worse than 08? Then it sounds good. There's no there's no financing.

The cap rates haven't changed. Uh, nothing's adjusted so you can't. You can't put it deal together. He goes.

There's no way to put a deal together and make it work. Yeah, yeah, exactly. It's all overpriced. In other words.

Yeah, so is he forecasting a fall? Most of most of the uh multi-family is me trading with you. It's Jacob and I Bought this property four years ago. You paid this and they just kind of trade amongst them. Create a fool.

Yeah, I mean I mean there's a lot of a lot of these things have I Mean these guys have rolled when the zero money was going up. Um, you know they've rolled. You know, 50 million to two? three, four hundred, five hundred? Oh yeah. Oh absolutely yeah.

Yeah, they're buying. You know, 12 unit properties and 36 unit. not the big. You're not buying 2 000 units.

Sure, you don't need to. Yeah, you know there's so much opportunity in real estate and I think we'll go through that again. Like here, there's all that is everywhere. right? Yeah, and um so yeah? I think I Guess to summarize what we're at here is: I Just think that we're going to see everything's this is the sea change.

Normalize. The sea change was when Volcker came in when I started right. So we went through these crazy rates trying to kill inflation, right? Okay, restoring that fed credibility. Yeah, we got to uh, the 21 discount with a four percent, uh uh penalty if you showed up the discount window too often.

But everybody was. so it was. literally 25. I mean today I think it's 25-bit penalty Yeah I have three plus I have to quote uh Dr Baker on this because he was he was running uh the Penn Square Bank thing I was telling you about.

Yeah well the guy that was running Penn Square Bank was bragging the baker he goes hey, I'm I'm doing all these loans uh and I'm getting 25 and Baker's laps and he goes I'm buying treasuries and getting paid 17. with no risk and I'm and I'm my my loans are are guaranteed by the US government and you're never going to see a penny on those 25. Sure, because they're going to refinance someone, they're not even going to refinance, it's just going to default And that's what happened. No way, Are you serious? Yeah, if you look at the Penn Square Bank they didn't get paid on all these aggressive ones they were doing.

It was just the massive defaults. Oh wow. There was also an oil thing in there too because that was if you go back there in that time crude oil is like under 10 bucks. Oh yeah, yeah.

and so what happened is a lot of the oil patch stuff in Denver and Oklahoma They were financing this stuff at these crazy rates I see so it just blew up of course. Yeah, so well. sure, price of oil goes down. They can't make their payments anyway, right? So okay so first sea change.

It was Volcker 79. Yeah, it was when he was appointed so early 80s first season and that's normalizing Fed credibility pretty much. Okay, Yeah, okay. and and again, actually really attacking in inflation.

Okay, you know because everybody said you know who who raises rates during you know, recession? Yeah, yeah. and he raised them aggressively because Burns before that was under the impression that we'd rather tolerate higher inflation than have people lose their jobs bulk or flip that you bring up Burns he's on my list as the worst fed Governor prior to yelling, but that's another thing. so tell her. but I didn't know yelling I used to say that back when in my early days in the markets.

but I'll have to show you my pictures of Halloween two years ago I dressed up as drone Powell my father in law was Janet Yellen No, that was funny and we gave away money with candy. That's awesome because inflation was transitory. That was our argument. Yeah, it was then.

anyway. Okay, first C change Volcker. the second sea change seat. uh.com.com bubble.

Okay, everything was restructured again. uh, over what was, uh, what was Greens fans were exuberant, something irrational, irrational exuberance. Okay, yeah, okay, and so that happened. and then of course, 0808 and real estate.

Now now we're here. The sea changes aren't necessarily crisis, they are the restructuring of of how rates are working. And the FED has a lot to do with that. Sure, of course, right? But what? Like I said earlier, what they're really trying to do is they're just trying to.

They want the mark Market to be the rate structure. What's a demand? What kind of risk is that? Civility? Yeah, yeah, I mean that's why. and I think what what you're seeing like even in the Uh in the tenure. that's why we printed down and you know, down to low threes, it's amazing I mean three three.

I was on my channel one night going I'm going I'm getting projections to go to three and a quarter. That's nuts. and they went to three and a quarter. Yeah, they did and I thought it was just completely.

You know I have to my work in my quantitative work I do what I do and that's that's what I was saying, you know? and now it's saying uh. three, probably 365 370. it'll stabilize in between where we are now. Interesting.

So it looks like we're just going to flatten out for a while. How long that lasts now? I Mean it. So inflation? What if it turns out to be transitory and inflation does end up going back to one and a half percent? Rates come down. possibly.

Yeah, but you don't, But the markets Market's going to determine that. you know, because think about that. If that happened. uh, that would be the case.

I can tell you where I live in Arizona they just went to um uh SEC the second that they cut oil production, there's one distributor Just Jack the rates like it's like there's some guy in headquarters going. Oh they just they just did this and they just jumped at 10 cents. We're up over four bucks. I know that would be so you would like to buy gas before.

Yeah, but in California Yeah, but so you're saying OPEC plus Cuts somebody instantly raises the prices when they when they go down. it's trickle trickle trickle. Yeah, yeah, sure, so they're They're just playing the margin. So um I yeah I Just like the way I see the world right now.

I've been doing this for 43 years. so I've been around a few days. yeah and I've seen I've went through all every one of those guys starting with, you know with Volker when I started in the business. So I've watched every fed.

yeah, you know I got to see helicopter Bin up front in my life. Yeah yeah, I mean you know he's yeah, you know? Yeah, it was, uh, those are crazy times and actually yelling I I kind of, uh, trolled her a little bit there. but Yellen is the only Fed chair that never had a crisis under her. That's a good point during the end of the Obama era there.

Yeah, she never had one. and my pitch back then was every one of these guys get a bad something happens. Ah, except her. it's your stuff for hers.

It never happened. So I I'm so more women fed Place Yeah, I don't know I think really what was happening then is it was the stabilization after everything. all the money after being added and there wasn't really. For whatever reason, it wasn't in any crisis.

I'm a little worried about her at the treasury. Well, it's very politicized there. it is very politicized, but even then if you look at the treasury bank account and it's pretty much tapped out because we got the debt ceiling, that's a whole nother thing. But and that's gonna that's gonna get raised of course.

Yeah, everybody knows that. it's just they're going to have some kind of drama around to negotiation. Well, you have to make it look like they put up a fight. Exactly.

No, it's true. Yeah, and so that's not. I don't see that as being an effect in anything that's going out there. I mean so it sounds to me like you're not terribly worried about.

uh, recession dollar crisis. China this the really inflation. What you're thinking more is just get used to the numbers. where we are in.

this economy can keep going. Well, I Would tell you that all of those things you mentioned any one of them could rear up and be an issue. Just they're not. Now they're They're talking points.

And you know the markets are with the August trading and they can. They can trigger them very easily. So you get a lot of activity in the markets and you know when they when they come in. The other thing, there's a dynamic that's happened in the markets.

I Haven't been around for a long time. When I started in 1979, the volume on the New York Stock Exchange was 40 million in a day. That's a nanosecond. Yeah on Monday morning.

Crazy. So it's just. but. The The point is is that markets have evolved.

Then after Covid, we've probably doubled or more the amount of people that are participating in the market. Wow. Wow. Yeah.

so um, and the other thing that's helped that happen and it wasn't uh, just Robin Hood But it's fractional shares, Sure. So my favorite line is investing used to be for someone, now it's for everyone. Ah, and and the reason? so that's if and I I have a little podcast I did in 2019 I Went to Charles Schwab convention for the institutional convention down in San Diego and I I was watching and they were announcing that they're going to do fractional shares and I said what we're going to see is we were doing about a billion shares roughly average per day. Yeah, and what we're going to see is we're going to see buy them Co-op Now we're doing 6 billion.

Wow. But if you look at 2020 after all that I mean I was literally there just weeks before the pandemic, right? Yeah. and but once that happened, everything went crazy. you know? But isn't that a good thing though? Because yeah, very good thing.

Yeah, yeah, a very good thing. And you know, and the fractional shares is given access to markets. Sure to people. and unfortunately, 21, uh, 2020 made it looked like it was easy.

Yeah, yeah, of course. and it's not so easy. And I remember proclaiming it in 21, uh 2021 that the easy money is over. folks? It's kind of.

It's back to work back to normal. Yeah, and that's these higher rates? Maybe higher inflation? You look at what happened to meme stock, you know? Yeah, all the Kathy Wood stuff you know, which is really bad, you know. So um, so you're not a fan of Kathy um do I say it? Uh, well, how about this? What do you think about these? Holdings I think she's one of the worst, uh, portfolio managers I've ever seen. Oh wow.

Okay, why why do I think that it just, uh, she's she's just by the dip, by the dip, by the dip she has in her documents I was really thrilled. Yeah. so I rebuilt Arc in our software platform. Okay I took all the stocks and she's so uh, she gets very heavily weighted and then she's committed to her ideas which is admirable.

I guess if you're an individual investor, but when you're managing other people money you, you know she dropped almost 80 percent off the peak, right? So you can't run money like that. She just kept buying more and more and doubling down and doubling down. doubling down quadruple whatever. So from like an advising point of view, yeah I mean if you're if you're running which I know I know you've got your fun running now.

Yeah, if you're running money, you want to make sure that you can manage the the volatility. Yeah, yeah, the volatility is everything and it. From you as a business person trying to grow your fund to the guy that's investing in it, right? So it's you have to. You have to manage that.

It's a really important. It's not just through diversification if you're just a real quick comment on ETFs in general. Yeah, if you look at every ETF they're heavily weighted and then by time you get to the bottom, there's just a couple, maybe one percent. Oh yeah, a few.

BPS if you invert most most of those I do something called ETF hacking. Okay, so I'll take all this stuff. Yeah, so it we go in. we we go into our software and basically for the most part The Waiting gets flipped upside down.

Wow. so you put the smallest positions as the largest. What happens is most people are going to invest on what they think is going to move the most. so they heavyweight that of course of course.

And if you're wrong the volatility goes crazy of course and but um so the but it's interesting because some of their their what they would you would think was my least likely pick is a really really good pick if you look at them. So I look at the bottom end of these funds. A lot of times. Really? Yeah, especially like like we did an XLE hike.

uh heck in 2001. Easiest trade on the planet, right by energy right? Nothing. Nothing smart about it. Uh other than it was an easy trade.

Okay and it actually goes back to 2020. uh in November 2020 I was telling everybody financials and and oil. Wow, that's where you want to be. That's where you're going to be energy.

That's the sector you want to be playing in and they were obviously you're coming out of. you're going to come out of the pandane. At some stage you're going to have the oil demand activity. but you know the two very easy trades that everybody told me I was wrong on.

So I was very right on. Yeah and but the ETF hack uh was up over 40 percent. Wow, you know in 21 which is not a bad bad year but you know it didn't Um I don't think it was. Everybody wasn't going to like concentrate but that's my other strategy I do like concentrated strategies.

Wait. So but on one hand you're saying take the smaller ones and diversify them against these. make them the bigger trades. Oh, you're just saying literally.

So almost flip it. So you're just saying so if I put our software on there and we ran this, yeah, chances are the waiting is just completely different. Well so, but that's just a different opinion then. But what you're saying is flip the uh the the you look at the ETFs and you take let's say something that's a one percent allocation versus something that's a 10 allocation and you would flip those potentially based on if there was if they were trending.

if they had a signal, that would all based on the TA Yeah, Ah, and then on the Quant stuff. Yeah, so like we run 10 10 million calculations every night in our database. Oh my gosh, every symbol has uh 600 variables that it looked at every day. So and we've been running this uh process since 1997.

and you just refine this software every day. Or how do you? How do you adjust It Runs It runs every night. It's got allocation process right? You know that's a it's very interesting because it it basically is rebalancing. We built something called uh Dynamic uh profit harvesting.

Uh where you like literally you take stuff off the the stuff that's growing the most. Sure when you have a new idea yeah you take from the the big guy the winner. Yeah and then you put it into the new idea. So so the concept is.

the one that's growing the most is probably getting to the end of a cycle or closer to it. The new one has got a new brand new cycle. It's got more probabilities, it's got more possibilities of growing, and so what happens? Uh, it literally causes an acceleration of growth of capital. Wow, So what what would you advise to? uh, sort of a regular investor watching now.

yeah, if if they've got you know cash and they're let's say if they're 50 cash right now, do they stay cash heavy? Now do they go into stocks? Real estate bonds? Yeah, that's uh. Being who I am being a Quant the first thing I would do is go to my software and see if I like that like this stuff. Yeah and but uh from I think what? I think individual investors have an opportunity to actually go in and do some analysis on the stocks that they like and then find a find some kind where they're using TA or whatever they're doing, find some kind of concept that they can back up. whether it's fundamental, understand what you're you're involved in.

That's simple rule, right? everyone? Everybody should know that, but everybody doesn't know that and you know, probably. Uh, don't watch too many podcasts and so many different ideas, huh? Yeah, Because that goes back to what we were talking about earlier about. You know, be careful what you read, you might believe it, right? Yeah, same thing for sure, you know. And and I have I do daily uh streams every day, right? Yeah, I'm in the opposite scope as I told you I'm on at 9 30 at night.

So I do pre-market set up for what's going to happen next the night before. Yeah and we have something called a market grid and it actually predicts where the range is going to be. nice. so we have like.

It's really interesting so I'll put out there like it's going to be S1 support One S uh R2 Yeah and they're crazy Act it and they're they're developed. It looks like when you look at it, maybe like a Bollinger band when you first look at it. Sure, but they're not a standard deviation based. Okay, and um, their their volatility based and they have some Fibonacci calculations that are going.

Uh, here's where the range is I actually built that indicator. uh for my institutional accounts when I was working with banks because we were working with Gap analysis. So if you were banking had long liability you needed to sell some of it off. You would look for the exact point where you you would try to.

You need to sell something. So we developed here's the best possible price for you to get sell for that day because these guys have to do something. It's not something they want to do so because they're hedging. Yeah, exactly.

So I've got new pipeline especially. We worked a lot on mortgage pipeline pipeline stuff and you've got mortgages. Just came in today. Do I want to hold these like they are or do what's what's what kind of risk? What kind of duration do we have? So then okay, if I need to sell something, we would developed a price range where these are your your Target price range for yourselves, is your target ranges for your buys? Wow.

And then we just started to evolve out to use it for other Markets started predicting rain for individual Securities and everything. so uh okay, um on the market broadly bullish or bearish? S p 525 Very bullish. Very bullish. Yeah.

so uh, give you example: uh I have um, the database that I'm talking about right now. um, is 63 of all the stocks. okay, are long so some people look, oh it. uh.

stocks that might be over the 200-day moving average. That's just the fact that they're over the 200-day moving average. doesn't mean they're trending just because they're above the 200-day moving average, right? So everything I do is uh Trend base and so I have right now about 10 000 symbols in database that are suggesting that they're going to go up I Guess 63 are up. Yeah! so I have a map on every symbol so I can tell you how long we normally hold, what the returns are, what the deviations, every stat you have.

Forward-looking So one of the things I talked about on my channel is what percent bullish are we? Yeah, so there's some magic numbers I Won't talk about that, but it's too detailed. but what a certain level? there's enough Traction in the market. it's not going to go down. I Told everybody just the other night I'm not going to be wrong.

9 600 times. Well okay, that's not going to happen. Probably 60 plus will work and someone can be spectacular trades. Some are going to be moderate trades, but the overall market.

So there's a forward-looking component. So we know that on our our intermediate models. the average holding periods like 220 days, 230 days. That's a year.

Yeah, better part of a year, right? So all of this stuff, especially if you're talking trading days. Yeah, yeah, they're trading days. Yeah, yeah. so so you're looking out a year.

So we started buying. First time we saw anything was in October around right? That's near the Buffaloes but we were last in 22. we were in cash for the most part. a heavy heavy cash all year long.

Wow. And then we come in the fourth quarter. We start getting buys and so we have short terms of buys which are 35 to 50 day hold and then we have the intermediate which are 200. We'll just say 200 plus.

Yeah! so when the 200 pluses start to come on now these are real, They're material And so right now our forward-looking there's still I Think it just off the top of my mind right now as we still have maybe a hundred and twenty to 150 forward-looking days. Positive: Wow. So I'm thinking we're not going to have any even things to talk about until Q3 maybe middle of Q3 and then you can go. Okay, let's see what's going on because that's where everybody keeps saying the recession is going to be and I and I understand that.

So and I can tell you that's where our models are are projecting a point. But what can happen is so with sixteen thousand symbols, we're going to get a rotation. so these things can. It can kind of refresh the stats.

so some things get sold off, they go down for a while, they get bought back in, and so it rotates. So I'm always looking at these stats. What are your favorite sectors now? What are what are they saying? Your favorite sectors right now? What are your models? Um, that's good I wish I had looked at that a little closer. That's all right.

but uh, but the yeah, um, bearish staples Commodities yeah yeah. I'd have to look at it yeah I Just um yeah. I don't I don't have an answer for you, but there is that. I Can tell you this that of all this the sectors that we follow, we built all of our all of our indexes are custom.

They're not anything off the shelf, it's all custom built. But right now I believe there are eight of the 11 sectors are bullish. Wow, Wow. There's certainly some favorites that look better than the others, but I did not.

So if you're ready for that, let's say you're you're 25 today and you've got some cash. Do you buy a house? Do you go all in on the S P 500 The NASDAQ uh, do you get a better job? What do you do all the about to buy a commercial that's an analog? Yeah. I shouldn't make that joke. Oh yeah, yeah.

Like I said, if you're going to buy low, Yeah, yeah yeah. listen. I think uh, the stocks that I've been talking about a lot is I think that the the Russell is going to come into play. Small caps.

Okay, what are your favorites? Uh, don't have any. Okay, just Russell in general. Yeah. 2 000 small caps.

You have to understand we're looking at stuff we have so many metrics to to build things with. So um, well. your ta, you don't like the earnings calls as much. Eh yeah.

I Know earnings are are bad. Uh, you have to understand I worked in two institutional research departments. You never want to listen to anything they say. Is it just all marketing? I Was trolling and yardini the other day.

Yeah, well. I worked. Ed Ed was our head? Um, in the 80s? he was our head Economist Sure and we just faded him. He was the best fade trade that there's ever.

really. because he's got the yard. almost as good as Kramer Stop. Oh my Gosh.

I'm serious. Oh my. God Somebody said they were quoted Ed and I go. Well now.

I Go. He's actually improved. He's only mostly wrong, not always wrong. Oh my Gosh.

So wait. that's typical of economists. If economists could trade, they'd be the best manager in the world. They can't punch himself out of a wet paper bag.

Okay, yeah, yeah, when I hear that stuff, you know? yeah? I Yeah. Okay, so not a fan of earnings calls because it's all sales marketing. Yeah, because think about that. this is I always put this out on earnings, right? So what's really going on? Are these guys understating so they can get a pop in the stock? Sure, the companies are always trying to do that right.

It's it's. a marketing every research report you ever see. Having worked in two major institutional firms, their marketing reports, they are not have anything to do with what's likely to happen. Oh my Gosh.

Uh, so that was my opinion. Do you feel that way about sort of mainstream media as well? Absolutely. So what's your favorite? New York Times Wall Street Journal yeah I Don't read papers? Oh, not at all. No.

Bloomberg anything. I'll watch some things once in a while. but I I isolate Pretty good. Yeah, so staying away from sort of that mainstream instead just focusing on on your Algos in that end.

Yeah, that's it. Wow, so yeah I think you know just uh I think too much is trying to read I actually watched some Kathy on the way over. Oh really watching? Okay, and that's that's who I was trying to. true.

Here's what's not going to happen. but one of the things that everybody she has the same dialogue everybody has. we're coming in recession. the M2 is dropping blah blah blah.

these are these are common type things that are going on. and uh I I Have you have to understand I'm an old Trader A little bit of a contrarian, but if everybody's saying it ain't gonna work, that's not going to work. But she says a million dollar Bitcoin your take no idea, not into compared to boish on bitcoin right now. okay I don't know about a million dollars.

Okay so this was like if you could ask me Bob what do you think the Market's going to be in 27 right? Yeah, Who cares? Yeah, it would be my answer I can't trade it Yeah yeah. Am I going to put a trade on today thinking about 27 or so? No. So uh, the bullish Bitcoin right now yeah I have been Yeah? yeah. okay.

well I could I could show you I think we had a signal it I want to say 15 000 bin long 16 and then 15 16 range is where we picked this thing up. Um, you know and gut objectives I've been talking about 31 000 and we're printing here we are. No one thought that you know I don't know, no one thought but you know I think um yeah, everything I do is really just all up. I'm a very unique guy because I built a platform.

Think about this. I I've monitor 16 000 symbols. Yeah, all of the symbols are executing my exact models that I built back in the 90s. Yeah and I've been following them for three decades.

so where's my confidence come from from those? So how'd you put one of these together? Like how does one start making their own model and in your version? Like if you were to start over right now, what would you start with? Um yeah I don't know I was very lucky. um I built some. um I've been very lucky with some of the mentors I had I had an old client that was a professor at University of Michigan PhD in physics. we get the sentiment surveys from them.

yeah they do and but uh, Bill came up with the concept. so I I have a PhD Plus in moving averages I know more about moving averages than most people will ever want to know. Okay, and I've used three moving averages or almost? Uh, since 86 10, 21, 40. Uh, I implemented the 200, which I found to be useful.

but we do something unique as we run indicators on the internal change of the moving average. So this is the big dilemma and this was our dilemma. The derivative of the moving average. Yeah, we're looking at first second derivatives of the moving average.

Okay, so and trying to determine and we built a probability map. Okay, so here's the big thing that everybody's looking at. Here's a 10 period, whatever average and the Market's coming down to, it's going to hold. Yeah, I don't know.

We'll see right? I can tell you if it's gonna hold I Can tell you what the probabilities are if it's going through or if it's going to bounce because of the three together and because of the probability map. and and what what? the basically what? that percent change in the angle. So I talked about angle of attack. Yeah, angle of attack is an aviation term.

Sure. Okay, so but it's the same thing here. once the angle gets to a certain level. Yeah, the probabilities of going through start to drop.

So once you get above a certain angle, it that's when you you see the steepness and I have three different versions. There's one. what's a typical where we get to some kind of terminal value and then it comes back. There's another one where we can get extended patterns are likely to happen and then the last one is a parabolic curve which is vertical right.

So there's there's numbers in there that set that will tell you what's going, what's going on? Wow, so those are the the core understanding of of Trends So when does it go wrong? Um I don't know. I mean they're just trades so you know. um I mean not all trades work. No, no they don't But uh, they when you're okay.

So you were talking about building a model I Think it's very difficult because I we worked we bill and I for years and then I went on my own. The nice thing is I was probably using a program on Dos 2.3 all the time. Okay, and there weren't very many programs out. There was one called Computrack and Compatrack was the very first program out there and they allowed you to build your own indicators.

You could do custom stuff like you know, 2023 kind of stuff. Yeah, uh, to a point. And so we we had this dilemma about the moving averages. How are we going to figure out when it's going to hold and when it's not? We needed that answer.

Everybody needs that answer. So we came up. We we just focused on getting that answer. We're also Elliott wave folks.

So so um, my do I talk about is Wavetech. So Wavetech is combination using moving averages, angle of attack to determine probabilities of change and where they're likely to go. So um, that is uh, the club the Crux of everything I've done from my entire literally since 1984. and so does that mean you're uh I mean I understand you're trading.

but when when you believe that what Kathy Wood is saying let's say is not going to happen Does that make you anti-innovation or just anti-trade Innovation is fine I don't have a problem with that. it's just yeah. the the stocks they gotta the signals are wrong. No, they they have to do something right.

You can't just go down forever and keep talking about this as a good stock. I see so good stocks don't go down so you know I've never I've never seen uh, you know stocks that collapse you know? uh there there was somebody I was following and I I get blocked sometimes I can be a little troll. that's all. We love it.

Yeah Twitter is entertaining because it is and and uh there was a guy on there uh young guy and he had all Kathy's meme stocks and all the stuff on there and when they started to collapse when it got really ugly and I said you realize that most of these stocks are never coming back Wow, they're not ever I don't care. You can talk about their income, You can talk about everything. They're not going to come back. Wow and all you have.

You can actually get a view of that world by looking at like crazy penny stocks like Otcs. Yeah those things. they get that big curve and they collapse. They're done.