E142: "Rich Men North of Richmond" hits #1, upward mobility, real estate capital crunch, Trump RICO

his typical positions are 50 basis points, 80 basis points, 100 basis points. So he's not a big risk taker. So what he probably has on is what's called a short straddle... So this is a big much ado about nothing. It's good headlines in a moment where there's not much to talk about.

I think the consensus view of the street is that inflation is largely in the rear view mirror... I think there are at least two really big risk factors to that. One is that inflation could still rebound... there is typically a big lag in the impact on the real economy of rate hikes and I think you could still see these rate hikes take effect over the next several months and you could see a real dip in the economy, potentially a recession... right now the markets are pricing in a soft landing or no landing.

this is not like the Fed's, you know, impact with this tool is not like driving a car where you hit the accelerator, you hit the brake, and you get an immediate reaction. This is more like driving a train where, like, it takes a little while to get up to speed... And if you slam on the brakes, this thing can come off the rails. And that's the scary part for me.

The problem is not on the demand side. The problem is in the capital stack... First of all, the rates are much higher. You're looking at paying 8% or 9% instead of the 3% to 4% that you had penciled in your model a couple of years ago... There is not, I think, a sector of real estate developer who is not in distress right now if they need financing in the next year or two.

I heard there's just no bid. I mean, these guys I know that work in commercial real estate debt said they're putting out these syndicated loan proposals to the typical funders and there's no bid.

The thing to remember about all these businesses, Stripe, Adyen, PayPal, is that they're middlemen businesses, which by definition means that they don't have pricing power... So your margins over time tend to be compressed and over time your share of profits tend to be compressed and you have to give up a lot... So the real takeaway is that this is a very tough, tough business that is a race to the bottom.

this could be the buying opportunity for a lot of these equities if you believe in them long-term. I saw Dan Loeb is placing a bunch of bets. He bought some Uber, he bought Nvidia.

if it's going to cost you 8% to buy a new house and it used to be 3% a couple of years ago... you can't afford to sell your current house and buy a new one because your current house is financed at 3%... So we're already seeing a huge reduction in the number of transactions in residential real estate... I think that as this washes through the system, you could see a big correction in the values of residential real estate, which is most people's main asset.

my only thought around housing was that very much just supporting what Sacks just said. We're in an incredibly untenable situation, mostly because as rates go up, mortgage applications go down and so what you're seeing is just the number of people trying to transact is very small and so the inventory is very small

if you look at Adyen, what does it mean about Stripe? And I think the answer is that Stripe at that $50 billion round, $55 billion round is worth 25 billion. So there's a 50% markdown right there.

I think you're right. I think that we have a almost perfect comp there.

We have told every American that they should put all of their net worth and more into their house. And as a result, we've had to continue to drive up the price of housing in the US., drive up, create a housing bubble by pouring a ton of capital in to keep that asset safe and protected because it is where most Americans have put their nest egg.

let's just point out the opportunity cost to you. You could buy treasuries that pay you 5.5%... Your actual cost on that capital that you're using to finance the building yourself to buy the debt is costing you 5.5% a year of risk-free income for the $9 million.

We've given everyone access to an education by giving free student loans out. And those student loans have caused an asset bubble in the price of education.

you have to question the wisdom of the executives at Disney who, you know, could have left this material alone. They didn't have to go here, but they did decide to go here. They did decide to do a remake and they changed all these things. Why even bother, you know, all you're going to do is ruin the public's perception of the original.

if the Fed is susceptible to political pressure, I think this is the kind of thing that pressures them to move forward, the point at which they start cutting and to start to let go the release valve just because there's just too much pressure in the system if you let this stuff build.

this is the media business losing its business model and Google and Facebook taking all their revenue and Craigslist and Facebook, you know, Marketplace taking all their revenue.

The 10-year rate is, what is it now, at like 4.5 percent, something like that? And that rate may not come down. A lot of economists are worrying about this. Some are worried about this because the federal government has such huge financing needs... just because short rates come down, there's no guarantee that the long rates are going to come down. And so, there may not be this relief that real estate developers are looking for next year. And again, there's this wall of debt that has to be refinanced.

I got a building that's worth about $15 million. It's an office building, okay? There's a $9 million loan on it that is coming up to be refinanced at the end of the year... They agreed to give me $2.4 million out of the nine secured by the building. That's it. They wouldn't roll over the nine.

I believe that you're gonna see Chris Christie and Vivek surge... It's gonna be a three-horse race with DeSantis. And I think Trump's gonna be out of the race in the next six to 12 months. That's just my prediction.

what Democrats are doing with this partisan lawfare is that they are polarizing the outcomes. They're either going to send Donald Trump to the big house or to the White House. That's what I said back in August last year when they rated Mar-a-Lago.