E80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more

And frankly, I think the consumer in general, that's the next shoe to drop here. ... Credit card debt now has all of a sudden skyrocketed.

All I'm saying is it's not like excess credit is being built up in the system abnormally by consumers.

I really think we're going to run into a consumer credit bubble here. ... if we actually do hit a recession and we don't see real wage growth and the consumer credit bubble continues to grow, we're going to face a credit crisis and call it nine to, you know, nine months to a year

Meanwhile, we're waiting for CPI to downtick inflation hasn't really done that.

Larry Summers told him it would lead to inflation. Nobody, I know no one wants to listen to Larry Summers. He's like one of those guys you never want to admit is correct. But Larry Summers was correct.

And what the data says is that in the last 30 years, the minute you get over your ski tips at a billion dollars, very few people know what they're doing. Very few.

I agree at that point that these mega funds are very hard to repay because they require you to have multiple winners, not just winners, but mega winners. So, you know, we've always kept our funds in that five to $600 million range where you really only need one winner per fund to basically return the fund.

End of the great resignation. That whole concept of like fun employed and I'm going to flip NFTs and I'm not going to go to work, that's out the window. So for people who've been enjoying it, people are going to need jobs.

But the point is the Fed is in a really tough spot here because it feels like we're going into recession, which would normally mean you cut rates, but then you've got inflation demanding that we jack up rates far more.

like Open Door has 2.3 billion in cash and a 3.7 billion dollar market cap enterprise value 1.4.

And I'd say, especially with crypto, is with all the other crypto downturns, there were always, you know, the crypto accounts saying hodl or buy the dip or, you know, they had the laser eyes going. I don't see any of that right now.

Everybody's going to get to flip their NFTs and your board ape is going to become worth a million dollars. Your Bitcoin is going to be a million dollars each. ... This is not reality, folks.

I said, listen, the water is great right now. I am doing deals back at six to $12 million in the seed space with, you know, 200K in revenue and real founders and discipline. ... but the deals went from taking two, three days.

The thing to keep in mind is that all these late stage companies are mispriced. Doesn't matter whether you're the bottom decile or the top decile. ... You are massively mispriced. And there needs to be some correction between 30 and 70% on valuation.

If it happened in the public stocks, it deserves to happen in the private stocks too. Chamath's absolutely right about that. A lot of people aren't recognizing that fact.

So the stocks that got hammered were generally the COVID stocks. It was the Pelotons, the Netflix, Zoom. ... So basically, the COVID stocks have been hammered, but the B2B stocks actually had really good results.

And so, when interest rates got hiked, it was like, all that money is coming back out of the system. And it was like this whooshing sound, like the airlock got opened, and all the cash came back out. And as a result, the bubble is just all deflated.

the process of quantitative tightening, which is the Fed's mechanism of removing liquidity, is going to start now to the tune of about $90 billion a month, but to run off all the money that they printed will still take three years

this is the problem with the Fed and the administration and Congress basically flooding the zone with all this fake money is that it distorts all the signals in the economy.

roughly one third of public biotech stocks are trading below cash. ... But because the capital markets are gone now for them, or the assumption is, hey, there's not going to be any capital left

But I think the reality is there's a Fed put somewhere in between here, because if we see the credit markets really seize up, which we would if the equity markets continue to retrench, the Fed will be forced to step in with liquidity and we back to where we were before.

we've got several multiples still to go with respect to volume that needs to trade before you find what the true market bottom is.

I actually think we're probably close to a near bottom-ish here, 3,800-ish in the S&P 500 ... You're actually starting to see some of these early green shoots of a market bottom. What are those? It's when the most heavily shorted stocks start to rip up

Look, the market is a leading indicator, not a lagging indicator. And so, it adjusts first and then the real economy adjusts after that. And the risk right now is the stock market is telling us something about where the real economy is headed.

People can't afford the same mortgage they did before because rates are going up very fast. So, you know, sellers are going to have to drop prices.

In the 2008 financial crisis, the median home price to median income in the United States was 5x. Today, it's 7x. ... So people today own homes that are significantly more expensive relative to their income and earnings than was the case during the financial crisis that caused the massive housing bubble.

real estate is a very unique category because you have I buyers taking stuff off the market. You have regulation not letting people build more. So I would be very reticent to extrapolate what's happening in real estate.

I don't think we have like an issue in real estate, to be completely honest with you. ... I think that we may have a looming credit crisis.

Separately, jobless claims are now starting to tick up, which means that companies are beginning to affect layoffs because they feel this pressure. So now you're going to see an unemployment rate that starts to go up.

I think like recession now is this inevitable. To Chamath's point, you can't have 14% of global wealth wiped out practically overnight and not have that translate into a big recession.

That's where we have a problem with stagflation and where we are inevitably going to run into a recession.

In the contrast of everyone saying, hey, there's no capital available, there's no capital available. That's not true. There's more capital than has ever been available.

So those are commitments, it's not cash in the bank.

The crossover investors are washed out of the system, they're gone. I mean, Tiger's already deployed all of its capital, and I don't know when they're going to be back. ... Even if you had the same amount of money being raised and deployed, but it was happening over three years instead of one, that would be a two-thirds reduction in the availability of capital in the system.

Those two things could be what saves us, could save us during this recession. It's something distinctly unique about this recession, is job openings and low unemployment.

from where we're sitting, we're seeing a stock market crash, a panic and a recession and he doesn't even see it.