E90: Twitter subpoenas, market overview, Pelosi's Taiwan visit & more

The thing about that is though that I think what the PAL and what the Fed says today about rates is way less important than what the inflation data will actually show in a few months. If we still have 9% inflation three months from now, then I don't think the rate increases are done.

I'll say it again. I've said it now five pods in a row. We've never seen a moment in history, in American history, where when CPI has printed successively above 5%, that it got under 5% without Fed funds getting to that same number. So we should all hope that this is the exception that proves the rule, but there's an enormous amount of data that would tell you that we have to take rates to double what the equilibrium rate is thought to be right now.

So, CATL, which is Tesla's biggest battery supplier, basically, you know, delayed the announcement of a factory. It's not clear whether they're going to put it into the United States. They may actually pick a city in Mexico.

Jobs, and we've talked about this every month as we watch it, finally dipped under 11 million, as Sacks predicted. You know, we're going to shed three or four hundred thousand jobs, it seems, every month, which should take this, you know, 10, 11 million number over the next year down to maybe five or six, which would still be an unbelievable number, still put us at very robust, full employment, which has been a big question.

There is currently an indulgence in conflict, and I think that that indulgence will cause more harm than good, particularly for these financial markets that we're commenting on right now in the months ahead.

No, but so six months from now, when all the fruits and vegetables that have been embargoed and not sent to Taiwan and then the sand that allows them to make chips continues to now flow, do you think that they'll still be positive about the trip?

I think there is bipartisan support now to defend Taiwan. I actually think that is in the cards. I think there's a very high probability that we actually end up in a war with China.

I would agree with that. But explain why you think there's going to be a war, because I think a lot of people think there's way too much at stake here for there to be a war. So there is going to be some sort of negotiated settlement in the South China Sea.

And if that happens, then you could see massive civil unrest. He's been encouraging the population in Brazil to go to the streets and fight back. And there are a number of these flashpoints. And by the way, that's a massive food supplier, as well as a massive holding in EM credit portfolios around the world.

So if you play all of that out, you start to see an issue where by, you know, October, November of this year, we're back into the same complexity where energy is the tip of the spear around which everybody starts to debate all of the national security issues that we have to deal with, the Ukraine war, et cetera, et cetera.

There's obviously a massive problem with getting gas to Western Europe for this winter.

US consumer credit is a problem. We just had the largest number of new credit card accounts open since 2008 in Q2 from the New York Fed report yesterday.

There's an emerging problem with food insecurity in Africa, South Asia, around the world.

Yeah, you're right. So the commodity prices are reflecting expectations that the economy is slowing down and maybe in a recession.

You may have called the bottom here on the program a couple of months ago, and I started J trading three weeks ago based on our discussions here thinking we're bouncing along the bottom.

So there you have it. I really don't know what's going to happen from here, but I tend to think things still have to get a lot worse to flush everything through the system.

What it basically shows is that during protracted bear markets, you can still get substantial bear market rallies. And so during the 20002001.com crash, you had these plus 32%, plus 41%, plus 45% rallies, but even while the market as a whole was going down. And so they ended up being sort of sucker rallies. Now, I don't know if that is what's happening here, but it is a possibility.