[David] Thanks, Matt. Appreciate it much. Be sure to get signed up for nbslive.net. When you do, go to the website, nbslive.net. Use the signup code LOL for Look Out Lending to get an extended trial period without having to put in a credit card number. But it’s so affordable and it’s so good, I recommend you just sign up. Use it. Really good. Thanks, Matt. Appreciate it much. All right, let’s get our panelists in on this. Starting off with someone whose commentary I thoroughly enjoy and I miss hearing all the time. Let’s get off with you, Mr. Corbett. What’s your thoughts?
[Bill] Okay, couple of things. So as Matt pointed out first that the interesting activity from the Fed last week took place during the press conference, not the announcement. And, first, we talked last week about how the Fed could move rates higher without actually raising rates, and obviously that’s some of what we saw. I was expecting it more on the short end of the curve than the longer end. But that’s what we saw. So the way I sum up the activity Right? Is Warsh in the press conference said, basically we’re gonna let the market do the work and not the Fed.” The market’s response was, “Okay, hold my beer.” “And watch.” Yeah. The other thing that I thought was very relevant, and, Claudia Sahm, kind of this was her headline over the weekend of Warsh’s inflation target is 2% of what and when, right? He talked about, first he was very specific that use of the PCE as their benchmark, he would only commit to that through January of ’27. So that kind of adds speculation to the is he committed to 2% but coming up with a different benchmark. And then is he really committed to the 2% target in the long term? The combination of those is what led to the long-end selling off, right? And there’s, a lot of the, the grizzled old veterans right now are starting to bring back the term, from the ’80s of the bond vigilantes, that when traders in long-term bonds, they’re willing to let the Fed lead right up until they start to lose confidence, and then they’re like, “Okay, watch. We’re the ones really in charge.” And I think that’s some of what’s going on. What’s going… Yeah. and I think also from the business side, So as I was watching a lot of the market activity and as a lifelong competitive sailor and doing a lot of distance offshore racing, like the, winning expression, if you will, is the winning happens at night, right? When people relax, they get complacent, they’re like I don’t really have to do,” fill in the blank they lose out to the people that are constantly on their A game, if you will. And, the other thing is the, greatest risk with the greatest opportunities always happen at transition points. Yeah. Absolutely. And in the market’s perspective a very flat, stable market makes a lot of people look really good. When you start getting some of this volatility, and we’ve talked about it before, right? We saw it over the weekend. Trump makes an announcement on Sunday night and the market moves. If your entire business model is based on acting and reacting during, US East Coast business hours, that can be problematic. I think a lot of what the market is saying if you want shorter… If you want lower long-term rates- … you have to raise short-term rates. And again, I think what the market is saying to the Fed- just say that again, Bill. Say that one more time. You- Yeah. If you want long-term rates lower, that means you have to have a credibility and a low target on inflation, right? ‘Cause what’s the difference between a short-term rate and a long-term rate is the expectation of inflation over time. So if you want longer term rates to be lower, then you might have to jack up short-term rates. And I think that was the fundamental message to the bond, from the bond market to the Fed last week
[David] Did they get the message? Time will tell. Yeah. Yeah, I agree with you. That’s what the message was sent, but I’m not sure. I’m a little more skeptical on whether or not they received the message. I think that’s a good point. Mr. Kittle, would love to get your commentary on this. Do you have any thoughts?
[Kittle] On advice of counsel, and based on my Fifth Amendment rights to the Constitution, I respectfully decline to answer. Thank you, Dr. Kittle Fauci. That was good. Yeah. So here’s what I’d say about it. I’m sorry, I thought it was last week still. I’m just still in shock with that- That is- … debacle yeah, that whole testimony was But if you just look at this from emotional gut, anybody could have made the call that they weren’t gonna change rates. It was his first meeting. He didn’t have enough forward data. He, unless all hell had broken loose with inflation and the war had gone horrible or whatever, they were not gonna increase rates the first time out. They just weren’t. And he said it. Bill just confirmed it again. Let the market take care of it, and I love what Bill said, “Hold my beer,” and that’s what happened. Yeah. So you gotta give him time, let him settle in. And if things continue, look, we got another pause in the war, which I don’t think is a good thing. I think it needs to finish. Yeah. And we can’t keep going back and forth and back and forth. On this, I am disappointed in the decisions that are being made there. You stepped into it, finish it. I know we don’t wanna kill anybody but we’re gonna have to, or they’re gonna kill us. Yeah. And they’ve been killing us for 47 years. So finish the war, oil comes down, meet the inflation target- … and then long-term rates will settle in. Clearly that’s what’s driving the markets right now.
[David] Bill was, who was it that said that the that Las Vegas is now betting on when the war is ending? Was that you, Bill?
[Marc] No, that was me. No, that was Marc. Marc, that’s right. I was just going to do you anyway, so it’s a good segue for you to come in and into this discussion. I agree with everything to one element or another, everything Bill said and everything David said. And I’m a firm… I am not a hawk necessarily, but I am a retired for my six years, nine months and 24 days military guy. And I believe the worst thing you do is enter a war without a determination and a will to win it, because you do more damage than you do good. And I, for one, am one that’s thinking the way to win this war is completely destroy their non-social infrastructure of the country. You don’t wanna wipe out all the power plants and stuff, but you wanna destroy all the military, or they got… A dog can’t bite unless it barks, and they can’t bark if they don’t have a military structure. So why do they even have ships or missile launchers that can attack things in the Gulf? Take care of that stuff and then move on, and I think it’ll be good. As far as looking at , the market, we need to give this guy in there some time, okay? And we need to give our market some time to adjust to him and adjust to what the Fed might or might not do. But I think the most realistic thing right now that’s happening is we have now more things in our economy affecting the market, I think, in a global effect than we’ve ever had before. When you look at all the conflict going on between different countries, our involvement in Iran, Korea sending troops to Russia to die for them, and, all this other stuff. Next thing China will be sending troops to Russia to die for them. It’s just kinda crazy what’s going on. So I think we got more effect in the market than we believe, ’cause people just, people are being cautious right now. And when people are being cautious, we don’t see the growth we normally have, and I think that’s what’s happening right now. And I, for one, am cautious. I’m very cautious about my investments in this stupid company. I don’t wanna wake up one day and be broke
[David] Yeah, we’ve been cautious for a long time though, Marc. Would you not say that, yeah, there’s been tiny glimpse here and there with some optimism and hope? I would like to, David, but I think that’s the… There’s been so much press pulling us both ways and so many different things happening that it’s just caused everybody to be more conscious. If you decide today that you’re gonna buy XYZ from a company, and you say I’m gonna stock up on this because I never know where the price is gonna be.” You go buy it, and next day, guess what? They just recognize some new production thing and the price is going down. You could’ve gotten it 30% cheaper. That’s the kinda caution I’m talking about, is so much is changing out there. I don’t know what possesses people to buy new cars today. I really don’t. Because a car that I used to buy for, not that many years ago, a big Yukon Denali, used to be 55 to $60,000, now one’s 110 or 115. Something’s gotta give in this country, and it’s not working. Inflation is, been a necessary evil, and now they turn around and tell me that to live healthy I gotta get, buy the farm house eggs ’cause they got a more yellow yolk and they’re better for me. And they’re eight to $9 a dozen. So what’s this world coming to? We explore a lot of things, but none of us know what builds onto these things and make all of these things happy. But if I thought, when I was a kid growing up and we could buy three dozens of eggs for $1, did I ever think a dollar a dozen of any kind of eggs would cost eight or $9? Not me. Inflation is the thing that has been driving the Feds forever, and this is a temporary situation. So Bill, when we see this conflict end, whenever that happens, I would think we would see the potential for things to get better. But that’s not the conventional thinking. I’d love to sit in on the conversation that you and Les Parker have on some of this, as you debate back and forth. I know you guys do point counterpoint a lot.
[Bill] Without sounding like a, warmonger World War I ended with an armistice. World War II ended with unconditional surrender. which of those two scenarios led to a better worldwide, forget the US, worldwide economy? Yeah. Great point … and rates react to, and it’s they react to inflation and inflation expectations. And that’s where it’s a Marc point. things are not going to stabilize until after the Middle East situation is resolved. And, the point before, boy I… There are a lot of things that I could have a little bit of fun betting on. That would not be one of them. That was
[David] I agree this conclusion, I think would, especially when we watch another ceasefire for a period of time, which just seems like everyone’s reloading their guns and getting ready to get back at it. Yeah.
[Marc] Let me ask you guys both a question. If I told you right now that I would bet that we’ll still be involved in some degree of a conflict by year end, what would your answer to that be? What would you think? Based on how it’s going, highly probable. Yeah. Yeah I would not be able to come up with a counterargument to that. You think about that. That’s something we control. We either need to make an effort to win it or get the hell out, one of the two. And we obviously start to make the effort to win it, and then we back off, and we do it, and we do… It seems like we’re trying to get them to the negotiation table by doing that, and that’s not working real well, I don’t think. So some people in Washington ought to wake up and realize that. But that just shows you the ambiguity of this whole thing. We don’t know. And how can the market know? How can the Fed know? There’s so many outside forces controlling our economy today. How can you bet on anything right at this moment? I think that’s the story right there in itself, in my opinion. Y’all might disagree, but I’m- Well- … I’m, that’s what I’m sticking with.
[Bill] Yeah I also do think that finding the end strategy, to be fair, is very complicated because you’ve got a wide variety of countries with very different interests and expectations and, that’s not to make it sound like it’s really simple, but I think that we do have to understand the complexity and how intertwined everything is and- the usual expression, “He who has the gold makes the rules,” he who has the oil, right? And the refining capacity and everything of even the allies in the Middle East, they still have an outsized influence on what the outcome is, and those are not easy conversations.
[David] No, and the thing that’s not being brought up in some of the things, news reports that I’m hearing is how Ukraine’s successful attacks on the refinery and the, depots in Russia is gonna play into all this. This is just another aspect of this whole conflict that is of that conflict that I have not seen play into this yet. Bill, your thoughts?
[Bill] I think the whole, Ukraine is showing the whole nature of war- It’s changing … is changing. And if you look at, the US military and the way the Army is constructed and the Navy whose arguably single most important mission for the last 50 years has been the Strait of Hormuz. The Army has become completely obsolete, and the Navy has failed at their number one mission how do I get some of my tax money back for them missing two major things. Now, the Ukrainian thing has been fascinating because that is absolute necessity is the mother of invention. Well- … survival, trumps necessity, right? They have done a phenomenal job in redefining how to fight a land war, and it’s been, it’s been impressive. The problem is they haven’t, and I, it … They haven’t figured out how to turn it into a totally winning strategy yet, but I think they’re getting closer and closer every day. I
[David] Think that there’s so many things fixing to change in Russia as a result of this conflict, and how Ukraine has brought the war to Russia is another factor in this. There’s just a lot of incivility out there, and I think which we’re gonna continue with these higher rates for an indefinite period of time. I don’t see them going away.
[Marc] Guys, I want to ask a question. How many years you think… I know the answer to this, and y’all probably do too, but I’m gonna ask the question to our listeners. How many years is Russia and Ukraine been at war? Oh. Man. Three? Huh? Four. Is it three, Marc? Four. Two thou- 2014, guys. That’s, yeah, that’s true. It’s been going on for 12 years, and what scares me about it, watching ourself right now in Iran is like watching Russia in Ukraine. In a crazy kind of way, R- Russia can’t win that war. Don’t seem to be winning that war, and now Ukraine’s blowing the hell out of the refineries. It’s a crazy kind of thing. I don’t wanna be in a war with Iran for 14 years. Yeah. I wanna end it. I don’t want anybody… i’m just, I’m just saying that as a person, not as a war monger or anything like that. And now I gotta watch out, ’cause my d-
[David] Where there’s gonna be some fatigue showing up here pretty soon. We’ll see what the midterms bring about as a result of this dragging on longer than what some thought and positioned us to, or led us to believe that it would be. So midterms are gonna be interesting. Really an interesting time, ’cause there’s so much is pivoting on this war. In fact, we’ll leave it at that on the discussion. Any thoughts on anything-
[Marc] Dave, one closing thing. You know they are taking wagers in Vegas on the midterms too. Oh, they are. I’d love to hear what that- what that’s looking. I they make wa- wagers on everything. They’re waging on how, if when Kittle’s gonna hit a hole in one in his golf game. I don’t know, who knows? But, Next week … next week. Yeah, that’ll be good. When you’re down here, visit me. Anyway, lots to talk about. What do we have? We watched this. We’re gonna be continuing to watch it, folks. So we enjoy your feedback. By the way, again, we just crossed over for the regulars, they didn’t hear me talk about this at the beginning of the program. We just crossed over 61 million impressions with over a million downloads. This podcast just continues to do well, and it’s because of these discussions we have. So thank you Les Parker. Thank you also for Matt teeing up information so that Bill, Dave, Marc, and I, Alice, when she’s here, can talk about it. So we appreciate your thoughts. I love the feedback we’re getting on these segments from those of you out there in listening land.