Is the Market Running Out of Money?

What if the cleanest read on market risk isn’t a sentiment index but the dollar itself? We connect the dots from DXY’s slide and rebound to the invisible gears of Eurodollar credit, showing how collateral breathes through trade invoices, repos, and leverage, and how that breath has begun to shorten. From port softness and a reported 17% drop in trucking volumes to tighter haircuts and slower factoring, we map the quiet contraction that can force risk assets to pay a toll in the form of sharp pullbacks.

We dig into why professionals rarely short meme‑charged leaders like Palantir even when valuations look unhinged, and how the “malicious” habit of strong markets is to snap back toward the one‑year moving average before pushing higher. Along the way, we revisit the Supreme Court’s tariff signals, the politics of New York’s vote, and the way those headlines filter into liquidity creation via trade flows. On jobs, we unpack an ADP beat that hides softness in information and professional services while healthcare and utilities carry the print, and we talk frankly about how AI threatens a quarter of tasks, particularly in admin and legal support.

Finally, we ask a contrarian question: is Apple right to avoid an AI capex arms race? Preserving balance sheet flexibility might be the smarter bet if we’re edging toward a collateral recession where financing gets stingier and optionality becomes a moat. Expect volatility, not apocalypse; respect the cadence of liquidity; and plan for violent, normal pullbacks within long trends. If this perspective challenges how you track markets, follow, share with a friend, and leave a quick review. What’s your top stress indicator right now?

Chapters

• 0:00 Wind, Verse, And Opening Jitters
• 3:30 Mind The Gap And Chart Signals
• 7:40 Supreme Court, Tariffs, And New York Politics
• 12:20 Dollar Index As Liquidity Barometer
• 18:30 Eurodollar, Collateral, And Invisible Money
• 25:20 Freight, Invoicing, And A Collateral Slowdown
• 30:30 Bearish Calls, Pullbacks, And Market Discipline
• 36:20 Bitcoin, Options, And Meme Stock Logic
• 42:00 Palantir, Pullbacks, And Risk Management
• 46:30 Is Apple Right To Sit Out AI?
• 50:10 Jobs Data, AI Automation, And Wage Signals
• 55:00 Are We Entering A Collateral Recession?
• 1:00:00 Odd Headlines, Gratitude, And Sign Off

Transcript

SPEAKER_01: 0:01

I'm coughing. Oh my goodness, that must mean only one thing is not end recording. We are recording. We're on my blasted notes. Ladies, ladies and gentlemen, it is I, Hugh Hendry. I'm sitting outside again. And it's windy. I hope I don't mess up the sound. Anyway, without other ado. Remember, remember the 5th of November. Not vom not not vomiting? Hmm. Not bonfires. But even that crafty chap, Guy Fox. Was he a Catholic or was he against the Protestants? I can't remember. Not a stiff upper ember or member. I'm here. I'm your acid capitalist in the tropics. With the sparks. The sparks are divine. Markets! Markets may flare. It's been two days. Since I last spoke. Two days? I don't know. Since I last spoke to you. Since I last tried to communicate with you, my brothers and my sisters. Markets flared. They flared. They flare up. They flare down. Here the rum flows. I don't like rum, but every poem seems to need rum when you're in the land of the pirate. Madness aligns or does it. Ladies and gentlemen, I am no conspirator. I am simply your provocateur. Seeking to light up that inky mind of yours and mine with some economic fire. Boom. I think I should always begin with a with a poem. Because again, was I procrasticating? I was, I was delaying action. But that sounds as if you're delaying it for a reason. There was no good reason. And I always feel like when you are delaying because you're you're pensive. But it sounds like prevaricating. Pensive. I am a pensive mind. I'm hesitant. Little old me. Oh my god. I began like a hare running out of the box, chased by the greyhounds on the like the front cover of a blur album and everything very South London. I always feel self-confious. Diffident. Not to be confused, but defiant. No, diffident. Until I get going, I'm lacking a little bit of confidence. Not ready to assert myself. I'm fearful. I'm temporizing. I'm cautious because I want it. Oh my god, I'm taking a time check. Okay, it is it is 26 minutes to nine o'clock in the evening. Let's keep this going. I'm cautious because I want it to be so good for you and for me. Right, Henry. Shut up. I am looking. Do you know what I'm looking at? Actually, I'm looking at FinViz. There's another free F R free in same box. F-R-E-E. Speak slowly, Mr. Henry. I'm looking at the Dow Jones, the SP, the NASDAQ. I'm looking at those charts. And yeah, yesterday, we weren't talking yesterday, and markets were down, but you would think it'd been a Z-score day. It was not. They were back up today. And if anything, it just looks as if we had taken out the enthusiastic grasping to buy stocks early on as the weekend gave over into this splendid week. Prices gapped. There was an interruption in prices. And they did quite trade at every level. And I think I I noted that I am of a generation, or otherwise, I those with the supposition that gaps, mind the gap. They say that on the London Underground. Mind the gap. Because the gaps get filled. Kind of. That's what it looks like. The Nikai is one of those wondrous charts, actually. I like to look at these Japanese candlesticks. It's a representation of the markets, the high, the low, the close. Oh my god, what is it? High, the highest point of the day, the lowest point. Oh, the opening and the close. There, there are four points which define these patterns. And the practice of looking at these patterns, daily patterns, intra-day patterns, goes back, I believe, as far back as I think the 17th century, and Japanese rice traders. So here we are looking at the Nikkei 225. And it's it's not a doji. A doji is inside the day before. I think is what is that? Oh my god, I can't recall its name, but the close was higher than the opening, and both were substantially greater than the intraday low. And and so there was a sell-off intraday, which flushed out sellers and was met by buying, I guess, every you say his law, supply creates its own demand. That is true, but it typically has or it can have price consequences. The price consequence the day before in Tokyo was modest. The things you say when you begin a podcast. A bearish engulfing pattern. What's that all about? I don't think it's a huge amount. I think I think I I definitely do not know, but possibly. We did, remember, remember, the 5th of November. And we did receive did we receive or they started? The Supreme Court started taking notes and hearing about these tariffs and the legality. And there was some nervous chatter that the nature of the questions from the supreme members of the highest court may lead one to suspect that they are suspicious of the legality of the president's use of his power. And that if they were to rule against, then what happens to the 30 yards, the thirty billion dollars per month of tariff or tax revenue that has become an important fiscal consideration in taming this out of control spending by Washington. Maybe that's what was going on today. But the really, really big thing was happening up the coastline from me in New York. Where they did it. They did it on a record turnout. The good citizens of New York went bonkers. The first thing I read this morning was from the new from what is it called? Zorb Zorban. Thank you to those so often forgotten by the politics of our big city. Those who made this mo this movement, they made it their own. I speak of the Yemeni Bodega. The Yemeni? I cannot speak. Yemeni. Yemeni. Not Yosemite, but Yemeni, the brothers, the Arab African brothers, the Yemeni Bodega owners, the Mexican Abulas. I had to look up Abulas. I think that means grandmothers. The Sengales, oh my god, the Sengese taxi drivers and the Uzbekistan nurses.

SPEAKER_00: 10:14

And more than honorable mention to the Trinidadian cooks and the Ethiopian aunties. Yes, it's not me saying yes. Zorban, the mayor, he said yes, the aunties.

SPEAKER_01: 10:32

May I remind you, this is the citadel of finance, or maybe I should say past tense. The people. The tyranny of the many. We complain about deficits, but at the at the polling booth, it's like spend me the money.

SPEAKER_00: 10:56

Spend me the money. And remarkable. Remarkable. There's no mention. There's no mention of the American worker. Quite astonishing.

SPEAKER_01: 11:09

Yemeni, Mexican, Sengalese, Uzbekistan, Trinidadian, Trinadian, and Ethiopian. And I was on the the Twitter. Not a lot. I'm trying to get I'm trying to. It's not healthy the time I spent on the the Twitter. But there's a a new, I think a new service. Code Motivational Quotes of the Day at Q U O D A Y. An honourable mention. And and they had me in there. They had a dreadful, I mean, I think I'm quotable. They had the worst quote from me ever. One that goes along the lines of you can take the boy out of Glasgow, but you can't take the Glasgow out of the boy. And I I tapped them up and like, thank you. I mean, you know, I I'm appreciative of any interest. But I think I I think we could do better. And I gave them what did I give them. I don't know if I I I am going to attempt. I am going to attempt to press a video. I wonder if you will be able to hear it. Let's go. No, it would seem I would recommend you panic. What? I would recommend you panic. I'm sorry, what? I would recommend you panic. I'm sorry, what? I would recommend you panic. Oh my god, who is that guy? Like, mmm. The asset capital is on on BBC News tonight. A long, long time ago. Am I recommending you panic today? Don't think I am, but I'll come back to that. The core day, however, they have they have a quote from Alan Watts. Alan Watts has a remarkable, a remarkable voice, a remarkable life, a philosopher, kind of meditation, and a scholar, I mean, an enchanting voice, and very, very clever. No longer with us, sadly. Um, but the the quote of the day was to go out of your mind once a day is tremendously important. Because by by going out of your mind, new majors come to your senses. I like it, I love it. The same, however, I don't think, can be said of the New York decision with their mayor. Who who am I to say? I don't live there. I can't see. I'm looking through my notes because I'm trying to see. There was so much vitriol written, I'm sure. I because I I take little pictures of things that I read so that I can share it with you. Oh, yeah. Uh so the Financial Times, the Commie Times, the newspaper, the newspaper. Let me do it justice. The newspaper for the Yemeni, Yemeni bodega owners, for the Mexican abulas, for the Sengese taxi drivers, and the Uzbeki nurses, for the Trinidadian lime cooks and the Ethiopian aunties, we have the pink financial newspaper, the Financial Times, and its take on the the Merrill races last night. Analysts, analysts said Republicans acros across across the board losses showed voters were largely dissatisfied with the president's performance ten months into his second term. Boom, boom, boom. I don't I I beg to differ. And I don't think there was any any great surprise. Like democratic, like you know, areas that voted, and they went comp they really went completely bonkers. Is the country ready to go completely bonkers? I don't know, I don't think so. And and Trump would be well advised to be presidential, just say, yeah, let's just give it time. Let's let's see how it how it rolls. But that was the first thing I read this morning. It did make me laugh. One of the charts I'm looking at, oh my goodness, I I actually you're listening to the podcast, but I record this thing and I put on a shirt, and I'm sitting outside, and in my fan. It's too noisy, so I switched it off. I'm feeling hot. Anyway, the dollar was written off by the Financial Times and written off by the superior intellectual middle brow, and was down, I think, at one point down about 10, 11, 12% on the year. And it is staging something of a comeback. It is the dollar, the Dixie, the DXY, which is largely the euro dollar, is just about just above 100. And so down about 10% on the year. And if we were to go back to the year 2023 when it peaked at 115, it's down about 15%. And I I've certainly had I've seen chatterings, I've seen speculative rents, some, not all, not Trader Mike. Trader Mike is just too busy. Trader Mike in the last three years has made back to back to back six six to six zero percent gains. He is not playing in the dollar index. I mentioned the dollar perhaps because it's talismatic, and I think is maybe the best indicator of liquidity. Wow, I suddenly I think I've opened a door, and I think I know the next five or six sentences. The talismatic dollar. I like to look at it because I feel it's one of the clearest indicators of collateral. And behind every good man there lies collateral, not a lady. Of course, there's a lady, but you know, the the the phantom of liquidity seen everywhere, lots of hocus pocus financial services. There's many a YouTube channel, there's many a guru out there becoming rich, selling bogus liquidity indicators. Bogus, that's what I say to you, they're all bogus. But the dollar's not a bad indicator of liquidity. And no surprise that it's fallen fifteen percent. So if you were a reverse indicator, the the uh the dollar is the reserve currency, it is dollars, it is dollars that move or power asset prices globally and powers them higher. When there are more dollars chasing assets, then asset prices rise. And what did I say? We the the the late 22 peak coincides with you know the the pro the profound sell-off that we saw. I'm saying profound sell-off, and as always, I'm of the type that I'm always questioning myself. I'm bringing up the the spy, I'm looking at the SP 500, so in five years and end of 22. Yeah, yeah. So to remind ourselves for yeah, for that that 2021 markets really tanked, really tanked. We fell from like 500 to to 350, 30 percent. So dollars were being set on fire, liquidity was contracting. You know, if the if the market capitalization of of stocks is two times GDP, so s almost sixty six zero trillion dollars, and the market the market falls thirty percent, then the market capitalization has fallen by eighteen trillion dollars. Eighteen thousand billion US dollars have vanished. That's that's the liquidity that I talk about. And so dollars have become scarcer, more valued, more needed to survive. People bid for the dollar, not the asset, not the stock market, not the private equity, not pro not real estate, but cash dollars. So the the bottom of the market, the stock market, kind of first of October 2022, coincides with peak dollar. And the SP or I'm looking, I'm using the the spider, the ETF, of course, has moved higher from 350 to what 680. And so we've added again probably 18. We've added 27 trillion dollars. So dollars are now plentiful or have been plentiful, and the dollar index had has fallen, fallen from 115, and what did I say? The low had been oh my god, I'm looking at Bitcoin. We'll come back to Bitcoin. I promise you, remind me if I forget. Um yeah, we we'd moved 115 to 9 to 95 on the Dixie as dollars became plentiful. Now, how did dollars become plentiful? It's worth mentioning again because it's very much in vogue. And and this tiny little rise from 95 to 100 again in the dollar index is so if the market's gonna sell off, stock market's gonna sell off, you're gonna be destroying dollars again, and at some point there'll be a clamor, a desire on the part of financial speculative institutions, there'll be a need for them to have more dollars, so they'll bid for dollars and they'll sell other currencies, and the dollar will rise once more. Now, if you're gonna see a 25-30% decline in the stock market, so similar to the year 2021. Um that dollar index is gonna go way higher. But let's discuss how that happens. Liquidity, this damn word liquidity, is like the wind. I I mean I've literally told Chat GPT that it is it is banned from EM dashes. Do you know what an EM dash is? EM dash are those things that newspapers use, and I think they come off the old-fashioned American typewriter. It's a it's a double dash without a space, an elongated dash. An artificial intelligence and reports crafted from such or crafted or assisted. It's become almost like the DNA of AI, the the selfish gene. And it's the the the our purpose on earth is to propagate, to receive our DNA and to pass it on to another generation. The great sin would be our failure to pass on our DNA. And in a similar manner, it would seem that the machines, the progeny of the machine, I'm making this up, of course, is the EM dash. And try as I may, I cannot eliminate the damn EM dash. Anyway, em dashes and the the glib use. They've been speaking for 20 minutes, the glib use of liquidity are my bugbears of modern life. And I was telling you, I was telling you about one of my great substack or Patreon, patrons, patrons, you know, like a support someone who supports my creative endeavors. I ask you all to please buy a hat or a membership to the summer camp or become a substacker. Um I turned the transcript the other day into a super essay, and we expanded further on the trader mic's option trading. Today I think he made you know today. The Solano was up and he's in the two times, and he he bought a lot of options yesterday. Did he say he made$100,000 today? I don't know. One do you know one of his legs and legs, but one of his delta long positions in Bitcoin? And he's not sure about Bitcoin like any of us today. Right now. He's typically very willing to open himself up to downside risk in Bitcoin, but less so just now. And maybe that has something to do with liquidity. But yeah, he's running like in just one of his positions, I think he has four or five. Bullishly predicated, directionally bullishly predicated trades in Bitcoin. One is it, eight million bucks. I mean, Mike swings work. Bitcoin Bitcoin, Bitcoin. Oh yeah, that and I was the idiot. I'm sure I wrote something. Let me look in my download folder. Downloads. And let me I I should really prepare the i idiot. The idiot, I think, is referring to that famous Damn, there's nothing there. Okay, I'm gonna have to. I'm gonna have to get into the Chat GPT. But you know, it's a it is a is it Dostoyevsky, the idiot. Tell me more, Mr.

unknown: 27:59

Mr.

SPEAKER_01: 27:59

Chat GPT, don't let me down. I did this the other day, actually, but I I used the voice prompt and then I um I promptly stopped recording, unknown to me. The idiot by Fyodor Dostoy Dostoyevsky. And it it is a Russian novel that was conceived and written one hundred years before I was born. A young man whose innocence, his honesty, and his compassion. Oh my god, I feel I feel a connection. Maybe not young man, but I'm I'm the youngest. Mind you meet. But and it's true, innocence, more lost than it's I'm I never lost my innocence. I'm seeking to lose my innocence. Please help me lose my innocence. My honesty, I don't you can't be too honest. You know, I think my ex-wife would say to me, you would do yourself a big favor if you could keep a few secrets. Hostage. Example to the to the jury, like mentioning the coconut oil is a sexual lubricant. We don't need to know that. Why are we talking about it now? And compassion, I hope I'm compassionate. I'm tough, but I mean, tough know is tough. But I'm not I'm definitely passionate. Compassion? I want to say I I have compassion. And and put it all together, and and definitely people people call me an idiot all the time. And I don't even exist in the cynical high society of St. Petersburg. So it's a book exploring the moral purity in a corrupt world. I mean, I feel like I'm a kid in a corrupt world. The tension between idolism and realism, don't know what that means. Love and obsession. Love and obsession. Love is an obsession. Obsession is a love, surely. The clash between faith and modern modernity. I'm definitely into that. Modernity. Why does the idiot matter? Because Mishkin. Mishkin is God. Oh my god, was I comparing myself to God? I'm too good for this world. I'm too good for you all. Can pure goodness survive in a flawed society? Wow. I mention all of that. There's no I don't know why I mentioned all of that, but I can take that further. I can vibe with that. So Mishkin and his M Y, M Y if you're French. S-H K-I-N. But there was a former, I believe he was a former Fed governor. And back in the day, it would have been 2007. I was what was I? I was I was I was honest and compassionate and innocent, and I had amassed a monstrously preposterous short position in the Icelandic cod krona. And I was long both the euro and the dollar, the Dixie. And I think I had amassed one of the most pro preposterously large uh positions ever seen. What is the talk amongst yourselves? What is the GDP of Iceland? And let me hint to you is not a lot. Yeah. It's 33 yards. 33 yards. I mean, what is that? One percent of Amazon? And I think I was at one point two hundred million dollars long, and and therefore the equivalent short, the the corona. And and I hope you know the background and the reason it um it it became a the financialization, it was the Russian money actually, but coming in uh so a tiny little satellite country. Uh why would you ever hold cash in the Icelandic krona? It's preposterous. But here we were in 2004, five, six, seven. We were in the years following the NASDAQ crash when Alan Greenspan had taken interest rates in America on the dollar down to one percent unprecedented. And a carry trade of what it was created by Iceland paying you five, six, seven percent. Hmm, okay, and and so it attracted capital inflow, and that money resided as deposits with the banks. There weren't that many money market funds, it was deposits, and a deposit for a bank is a liability, and the bank will take the the the inflow and it feels compelled to create an asset, which is a loan. And there's just so much money coming in that again unsupply overwhelms the census. And God, I didn't think I'd be talking about this, and and so the banks were funding everything, uh, lots of idiotic things, and it it wasn't gonna last. And as the drama and the cry and the the suspense and the realization that the world was on a precipe, Iceland was raising interest rates because the atr the the principle, the only attraction of Iceland was this high carry. But then the Fed was raising interest rates. Remember, oil in 2007 got to almost$150,$150 more than twice its level today, and and so interest rates really had to be high, punishingly high in Iceland, 15%. And so it was like it was just easy, it was gonna fall over. And they kind of knew that, but the the central bank of Iceland contracted, consulted with this egghead, this renowned economist who had had the premature of having sat on the Federal Reserve Interest Rate Setting Committee and an academic taboot. And he got paid$100,000. They didn't really advertise that, they didn't really promote that in the front page of the Financial Times, but they took his name and they said, Crisis problem, Iceland's amazing. And 907. Wow, 30 minutes I've been speaking to no end. That cost me a lot of money that day. Michigan, I call, I think of him, and forgive me, I'm sure he's a charming and a wonderful individual, but nah. Shame on him was was what I thought. I definitely thought of him as being an idiot when the ultimate crisis befell Iceland. The idiot, not Dostoevsky, but my my my uh my my wonderful substacker or Patreon wrote to me saying that he had I think he's German. And he's very knowledgeable, he has a great base level of understanding of the financial system. Is he one of the mysterious five? I mean, who knows? But he was saying that he he had watched, and well done him. He'd watched one of these uh French television channels, Arte, I'm sure you don't pronounce the E, but A-R-T-E. And it actually had a program dedicated to the Euro dollar, the Euro dollar offshore dollar money printing, gig, business, empire, and according to ARTE, the French channel, and you the presumption must be it's RT, no, but they were making claims which I would absolutely uphold, which is that you know, so we're talking money, forgive me, this is laborious, we're talking money, or the creation of money, and what is money, and we're I'm trying to frame it in the context of liquidity. The popular conception of money is that it's created, and I alluded to it in the instance of Iceland, that money rushes into deposits, and the banks seek corresponding, which is that which is a liability of the bank, the private bank, private sector bank, and therefore the ledger must balance, and so it has a a need to find assets, and there are only really two assets for a bank, and we can lend to the government, so it would buy a bond, or it would lend to you and I and corporations and mortgages and the like, and that's this kind of money printing, and so in America, M0 is high-powered money. What is high-powered money? High-powered money is a form of banking collateral. Collateral, there's a word. I'm gonna expand upon that, but it's very much at the women controlled by the Federal Reserve. Um, and it's the and it's matched by it. The reserves are like the kryptonide of the financial system, which allow banks and their fractional reserve reserves, fractional reserves, they turn those reserves and into much larger pools of money, which we call M2. And so the high-powered money or M0 in America today is like four and a half trillion dollars, and broad money is$22 trillion. So it's being magnified by private sector banks lending, and as they lend that creates deposits and then reserves and is circular and it expands. But what the idiot was pointing out from the the French TV show was more money, and I definitely I've said this before, so wow, to be the corroboration comes at you from very distant and and and not so obvious places. More money is created by the Eurodollar system, and that money does not reside or is not captured in high-powered M0 or M2, and because those are domestic measures, and and and the dollar today is largely created outside the jurisdiction of the Federal Reserve and outside the sovereignty of the United States. It's an invisible liquidity. It's the liquidity that comes, like I said, we we tend to think of mutual funds or hedge funds as like a billion-dollar mutual fund, and it would spend a billion dollars on equities. It does not. It pledges the billion dollars as collateral and it gets leverage and it buys many more equities. There's no bank account movement, there's no ledger movement that is captured by the Federal Reserve. Federal Reserve does not know. That's what the point of ARTE in France was making. Wow, the Federal Reserve does not know the magnitude of dollar creation. Think about that. Now, within that long, was it complex or waffly statement of mine? I I I hesitated there because there was a gust of wind and it it lifted the protective cover from the sunbed, and I now see it floating less than elegantly in my beautiful swimming pool. I mentioned collateral, and there's been there's a lot of talk about collateral, and there's a lot of talk about the plumbing of the of the onshore American financial establishment, and it has implications for onshore money creation, and and very neat that so collateral we mentioned the collateral of your billion dollar mutual fund that's an equity mutual fund. But a collateral is being formed here, there, and everywhere. The you have an American importer and a Chinese exporter. There is an invoice, a dollar invoice to be paid to the Chinese exporter. The invoice in the last few years onshore, private equity companies and the like, they're like, wow, facting, that's an asset. We can sell that. And we can sell that as an asset, a lot, an asset then creates liabilities like deposits in the banks. The facturization of the invoice is like a bank deposit, but a non-recorded bank deposit. But it creates dollar creation. And remember, we're talking about the last few years where the the spider, the ETF of the SP, what did we say had gone from 350 at the end of 2021, going into 2022? From 352 to 670, 680, stock prices have gone up because there's been a lot of dollar creation. And and the Dixie, the DXY has, to repeat myself, has fallen 20 points. Um and think about what was going on. I mean, the Chinese trade surplus has just positively exploded. You know, there was the what was I saying in the last podcast that Besints got Bescent and the subtitle machine, if it's listening, is B, is it B-E-S-S E-N-T or is it A N T. I'm no good at subtitles. We're saying 42% of the inflation of COVID was egregious overproduction of US government spending. But it un it unlocked once we re we reopened the international supply system, which was very rapid, a tsunami of imports-exports, facturization, phantom or otherwise, but collateral being created, and collateral that has its own fractional reserve system, whereby a hundred dollars of facturization might give rise to, I don't know, a hundred might give rise to a thousand dollars of of new money. And and and of and of very latest chapter, so it's a chapter that began late 2021 four years ago. So in the last year, of course, there'd been really an acceleration in invoicing American imports, Chinese and otherwise exports into the United States. Gasping to take a glass of uh drink of water, an acceleration on the basis of beating the damn tariff. Beating the damn tariff. So trying to land and get exports, dollar side, American site, um, created a surge in in invoicing, which just one element of dollar creation and liquidity. We now have the tariffs. I I I think I've seen I mean the US. The import bill from the Chinese has fallen has fallen considerably. Considerably, and these are big numbers. I think I'm 40 minutes into this thing. I'm hoping that if I keep timing myself, I may there will not be well, maybe there's lucidity, but you know, brevity. Brevity, please. Less invoicing. Less invoicing means uh month on month, quarter on quarter, year over year. Liquidity and and the acceleration. There's no acceleration, contraction, perhaps. Um I saw something. Where are my notes? This was all just like made up off the top of my head. Where are my notes? There was an article that I saw today that came from an interview on CNBC tracking the freight market. Apparently, freight, you know, the transport intermediate or finished goods, US trucking volumes. Interstate flat. Out of state, so kind of coming in from the ports on the west coast and then being put into the to be distributed across the landmass of the United States. Uh no, this is a CMBC headline uh from Craig Fuller. Freight waves, these are CEO. According to him, trucking volumes drop 17% year over year. I mean, think of that as a 17% correct correction, contraction, it may be in liquidity. And and we've seen some some hairy we well, we've seen credit failures. In the in the high yield world. And then we're beginning to see things going on in terms of regional banks that have been weak. Um, so there's the the murky hidden world of dollar creation, which has been on a pump higher and has taken equity prices higher and higher, is straining a little bit. So we're watching that. The dollar index itself still a shitty chart. Shitty, I don't know how to call it. I I would not commit my life and my reputation to the the Dixie, the dollar index. Marcus felt very weak yesterday, and there was a lot of people rushing to call the top. And I don't know. I I did, it it made me laugh. Laugh. I don't know if I laughed. I'm not the giggling type. I may have been supercilious. A great word, and my eyebrows may have twitched. When I read about the CEOs of the big Wall Street investment banks, and they were at a conference somewhere, and and they were all saying, and the the headline was stock bills get wake up call from Wall Street CEOs, the CEO of Goldman Sachs and Morgan Stanley predicting a 10 to 20% equity drawdown in the next 12 to 24 months. Goldman CEO and DJ David Solomon use the irrational exuberance. Now, apart from the irrational exuberance. Was I not saying to you that for the market to continue melting up, it would be normal, and I would say more than normal, it would be a prerequisite almost that we should witness 15 to 20% violent pullbacks back to the one-year moving average. And again, I I was in the DAM, the chat GPT, and I do have a a Hugh Hendry GPT, and I was gonna say to my superphones. Who are my superphones? But um, I feel like I'd I'd want to share my I I could how would I do that? I want to share my GPT. So this has all of my it's a pretty groovy GPT. It has all of my investment letters, and it has my mysterious memoir that I've written, but for um for frustrating reasons, the uh disturbance in the universe with the ghostwriter. I don't want to say anything more about the ghostwriter. I'm just I just want to yeah, I haven't really put it out, but I and I was telling you about the Twitter quote of the day people. So I was like, oh, you know, I went to my GPT. I was like, I'm a quotable guy. Give me some quotes, and let me see if I can find it, but well, let me share what it came up with. Number one on the list was you're all fucking idiots, which you described as the purest opener in modern financial literature, punk biblical, instantly recognizable as HH. My response to that was really you are you're not a fucking idiot, you're fucking lazy, Mr. GPT.

SPEAKER_00: 52:43

You've just taken the first quote from my book, the first literally the first page, and you're trying to serve that to me as that's it. You you get in, you get stuck in, and you find me more.

SPEAKER_01: 52:59

Second one was I like the second one. See, you tell me I'm a financial liberace, but the musical notes that I play are concocted from the price charts of stocks, bonds, and currencies. Yippy D, yippy dah. I like that one. That's peak me. Macro delirium. I like that one. I was like a shaman. No, I was a guard dog of capitalism. I like that one. Anyway, I was searching for, and it comes from my investment letter of December 2004. The malicious, this is me. I am Michigan, I am the idiot. The malicious nature of markets is that they have a tendency to pull stocks back periodically to their one year moving average. Such price price violence causes, I wrote, causes much unease. You bet it does, and it's designed to weaken one's intellectual determination. Boom, boom. Macro Zen master vibing, fear and discipline in one breath. And I think again, that's kind of what I was saying the other night that bull markets have these profound draw drawdowns. And we're all apostles. We think we've seen the AI future and we've seen the profits at the end of the rainbow. But somewhere, somewhere in that 20. I mean, if the index moves 25%, you know, your Solana is gonna be down 60, your salt, your two times leverage is gonna be eviscerated. And somewhere along that capricious journey, you're like, well, Jesus, well, the guy with the beard, the funny shoes, yeah, I don't know him. Don't know him, don't know him. Shut up, me right so we've done that. I'm gonna I'm going back to my notes. This is meant to be a program where we talk about economic data. Now, I I have to tell you, a Tritomite was like, he's really obsessed by this, and rightly so that AI and the the coming implosion in jobs. And he sent me a Goldman Sachs piece of research. It's a bar chart. Exhibit five. One fourth. One fourth. That was a funny word. One why don't they just say a quarter of current work tasks could be automated by the dreaded AI in the United States and Europe? A quarter. Most at risk, with a rate of almost 46%. One in two of all tasks I am mending to read this thing. Office and administration support, gone. Lego, 44% of those tasks gone. Architecture and engineering, 37% gone. I tell you, the damn architects drive me crazy. At the other end of the spectrum, only 4% of the tasks at risk in the installation, maintenance, and repair. I had 25 such individuals at my house today. There were eight white vans I parked in the exterior to have some flexibility. 1% of all tasks in the building and ground clearing and maintenance profession. Become a plumber, people. Become a plumber.

SPEAKER_00: 56:45

And did I again forgive me?

SPEAKER_01: 56:51

Am I using the same notes from the other night? Maybe. So far this year, job cuts are just shy of a million job cuts, 946,000. The highest in five years, pandemic, there were just over 2 million job cuts announced. It's up 55% from last year. So it kind of feels kind of funky. And again, people getting a little bit shifty, a little bit nervous. And the fifth highest in the 36 years of Challenger. So kind of something's happening. Probably the main thing that's happening is um is more like companies just are not willing to commit to new hires. I think that's the biggest issue just now. So people don't know. And they they feel like if you're a corporation, but what I want to say is two-thirds of our economy is made up of you and I, wages, and the return to us of our efforts. And it gives rise to an economic term which is called the fallacy of composition. And so it seems like a really, really smart thing at the granular level, at the corporate level. I'm a bit worried about the economy. I'm going to let some people go. And that might be good for your profits. But if every company does that, then you're effectively firing the ultimate consumers of your collective goods and services. And so you are actually the architect of voluntary revenue contraction. And companies are leveraged, they've got a lot of fixed cost components, which they have to meet, regardless of revenues being down, flat, or higher. And so any movement in revenue is typically double, triple leveraged via profits. So fallacy of composition is what makes sense at the single company level or the single consumer level when you elevate it to the macro. It can be bad news. So all of these tasks that can be eliminated. And remember, we're talking about a damn system that cannot calculate compound annual growth rates, that struggles with documents where the number of words are greater than 6,000. I mean, it's a damn computer. Why is it struggling with 6,000 word documents? Why can it not calculate compound annual growth rates? But apparently it can eliminate about 50% of all legal administrative services. Go figure. But if you were to lay off all those people at the economic, at the at the macroeconomic level. The utility, the utility offered by all these redundant legal paralegals, maybe they'll become musicians and they write books and they sing songs and they entertain us. Anyway, the day before today was Tuesday, and you know, we're barren with regard to economic statistics, but the the big one, which is normally just ignored, but you know, in a in a day of uh nothing going on, the standout was the RCM. The TIPP, the economic optimism index for November. I've never heard of it. And it's notable, notable because I will not use the decimal points, but it was just shy of 44, and it was well below the expected, just above 48, and it was down from the prior reading of 48. And and it's a consumer confidence type index. So, you know, people getting people getting a little bit itchy. And then yesterday, Michael Bury, Bury, Bury, Bury, Bury. I didn't realize he was managing so much money. And he revealed in his hedge fund they'd taken a billion dollars short in Palantir. Which Alex Carp was describing as like batshit crazy. Why would you do that? Maybe you would do that because Palantir. Palantir, Palantir, Palantir. I mean, I love Alex, but his stock is really hard. It's really, really come on, Alex. It's really, really hard. I damn, I didn't take a snapshot of this, so again, I'm gonna have to speak to you and try and do this. But let's do Palantir P A L E. Was it A Palan? What is I think Palantir means something like profoundly Greek and preposterously. What is your price? I mean it's gone from five bucks to two hundred and thirty bucks, but uh the the key statistics on bar chart, bar chart should sponsor me. I'm giving them shout-outs all the time. I mean it's it was a half a trillion dollar company and revenue revenue with without giggling historically was just shy of three billion, half a trillion for three billion and and of course are growing rapidly. So let's say next year revenues are are are six trillion. You know, like half a trillion dollars for that. But but you should note that when they say Burry had a billion dollar short position, yeah. Liar, liar, pants on fire. We have no idea the net position he had he had on. They they they were quoting elements of an option strategy, but you don't know what the net position. Well done, Michael. He got a lot of headlines, and the I mean, well done. I he probably doesn't want the headline, but beware of headlines like that, they don't mean much. And I I have to say, I would be profoundly suspicious of how great a short position, if any, Michael Burry had actually adopted because there is a pro way of doing things. He is obviously the pros pro. And you don't short charts like Palantir. Palantir reg. We we live in a in a new world. This decade is different from previous decades. The proliferation of the meritocracy, the the accessibility of stock trading has given rise to meme stocks, stocks and and asset classes like gold and bitcoin. And don't go into Twitter or other echo chambers and try and argue with people. This is religion, and Palantir is a meme. You don't go from five bucks to 230 bucks in the space of what? Whoa, there you go. From remember what we we were saying, we were saying that huge drawdown, which I may have alluded to 21, and I probably meant to say 2022, that 30% contraction in the spider index. That the bidding up of the US dollar as liquidity shrunk as$18 trillion of equity valuation was eviscerated, extinguished, and then on the other side, the dollar creation, the collateral from dollar invoicing and and facturization et al. and many, many other things. The the the two trillion dollars a year of fiscal uh treasury deficits et al. Stock goes from five bucks to 230. That is meme, and you as a professional investor, you you do not short that. You do not short anything where you you could never, never envisage or or or create an argument that that would say Palantir, as wonderful as carp is, as wonderful as that company is going to become, would go to a half a trillion dollar market capitalization. And having done so, it makes redundant any expectation that you you have of calling what it does next. The only point I would make is is like where is my telephone? It is 188. God, now I'm into an hour. I'm gonna have to do I start speaking more rapidly. This this episode is brought to you, however, by my lack of imagination. I've I paid a little bit more to the podcast platform, Buzz Sprout, and and I believe I'm gonna get chapters, so you can just choose your chapters. But I was saying that the principal issue is price is about one eight eight moving average, one year is 127, 61 divided by 188. I can all hear you saying it's about 30, 33 percent above its one-year moving average, um, and it will pull back. Palantir, meme or no meme, I'm very confident in saying that Palantir will have a 40 to 50 percent drawdown and will probably make new highs. Boom. Is Apple right? Where'd that come from? I put that in huge, unromantic, very, very high font size, so I'd I would see it. Is Apple right? Again, this was kind of something that Trader Mike was just saying in passing. What is Apple not doing? It is not plowing hundreds of billions of dollars into opening data centers. It's just not there with AI.

SPEAKER_00: 1:07:49

It's like, yeah, you you you want you we we will we will partner with you. You spend the money, we got customers, we're over here. Let us know how it works.

SPEAKER_01: 1:07:59

No AI spend, let the others do it. Is Apple right?

SPEAKER_00: 1:08:05

I mean, I don't know, but I think that's an interesting question, and the stock's kind of been flat this year.

SPEAKER_01: 1:08:21

Is Apple the new consumer? What is what do we call these things? Are they discretionary and non-discretionary? Staples. Mr. Levinson. Was it Levinson or was it his young progeny? Was it was it Ben Ben Bray? Um or maybe both sent me a Y chart a chart package, which was a ratio of the XLP, which is the consumer staples ETF, versus the spider, the SP. And this is, I mean, the XLP is one of those charts. As I say this, I'm I mean, I'm not proving it to myself, but yeah, I'm spitting it in. What was I saying about Martin Marietta materials? What was I saying about anthenol? What was I saying? The definition of a wonderful asset is you go, well, I go, I move it from daily, I go quarterly, and I say, you know what? Show me everything, max it out, baby. What have you got? And you find that the the stock price series goes from the bottom left-hand side of the of your screen to the top right hand side, and and XLP is one of them. Um this goes back to 1999, it was trading at call it 25. And 25 years later, it's trading at 75. Being a three-bagger. Another great one, which went sideways for 12. It went sideways for the best part of nearly 15 years. You is as late as 2012, you were still able to buy this thing for like under 30 bucks, and then you know, ceiling becomes the trampoline floor, and boom, you're up threefold. Anyway, so consumer staples are typically a rich rewarding area if you're passively accumulating stocks. But when you get these technology surges, the these boring stocks get left behind. And so it had a taught Torah time in it, and it troffed versus the SP in March 2000. The the high in NASDAQ. And and it had massive outperformance. Like it went from a ratio of 0.1 to a ratio of 0.25 in the course of 10 years, and then in the course of the last 15 years, it's gone from 0.25 back to 0.1. And Mr. Levinson was saying, I think he's alluding to the notion it double bottoms here, and it's more evidence of a peak in US equity prices. Ah, I don't know. I don't I don't think so. I will be shading that chart and discussing that chart in the Substack and the Patreon. Again, I I I hope more of you will join me there. I did, didn't I? I was meant I am meant to be talking about data and data releases, and I did mention this very obtuse. Oh my god, I was going to talk about obtuse indicators again and again, and I'm not going to. Today, of course, we had the big one was did we have ISM non-man manufacturing? I'm worried about hallucination from the chat GPT. I do know. I do know we had an ADP, we had a private sector jobs report. I know that it it beat, and I know we got a very robust, better than expected, ISM services expansion. So I know those things are good. I've been newly enjoying the work on Twitter. I'm going to give him a good shout out. Look up Endgame Macro. I think this kid, probably it could be my father, I don't know. Could be my father, it could be my son. But he he is writing well, but he was saying at the granula, maybe that's something I'm meant to be providing. The granular detail of these economics, that's just that's not something I do. But the the release was ADP non-farm employment for October, and it printed 42,000 jobs added. The consensus was 32,000, so it was a beat. And we have to remember that in September that was a negative. That would job losses of 29,000. But Mr. Endgame Macro, I'm sure you're getting a giggle for. I hope you're you're listening. Monsieur, well done. But I was going through your little threads, and excellent, really, really good. Most of the gains are coming from education, healthcare, utilities, utilities created 47,000. Is that is that data centers? I do not know. But everything that signals healthy, like discretionary private sector demand, information. I think information, well, that would be like data processing, administration, down 17,000 professional business services, again, things that could be automated with AI down 15,000. So that's not so good. And then he was saying, hey, look who's hiring large companies. They added 73,000. So they're kind of they're they're oil tankers, they're slower to turn. And he was saying, but medium-sized businesses that don't have the luxury of holding on, saying, Well, let's just see. Medium-sized businesses cut a combined 31,000. And and wage growth, kind of the same thing. People are not really getting paid more. Very small businesses between one less than 20 employees, two and a half percent annual pay rewards. Yeah, well, what's he called? Endgame mark. What is the end game? The end game is we look in the mirror and we say, regardless of how shitty today is, you say, you, you, my friend, I believe in you.

SPEAKER_00: 1:14:42

You got this.

SPEAKER_01: 1:14:45

Where did that come from? Oh, and I'm seeing more notes about collateral. Oh my god, I took lots of notes. The uh some good chat might may have been from Mr. Endgame Macro again. But our question, are we in the are we in the early stages of a collateral recession? If so, then you're gonna be hearing all these liquidity nut jobs talking about their liquidity indicator being deteriorating. When collateral dries up, leverage unwinds. And it's not panic selling, it's just it's that kind of silent tight. I heard that the the amount of crypto that you can buy on Argent is getting less and less. I heard that the the the the leverage that they'll offer you offer you if you if you cede your your Bitcoin to your bank. And like if you present a billion dollars in Bitcoin, you're like, hey, uh what will you give me? And like here's my equity, you know, what kind of loan will you give me? It's getting less and less. That could be a problem for stocks moving forward. There was also a hallmark of today, or was it yesterday? Or it was probably today, but caused by yesterday's drop in in share prices. Was some really good articles, so um, some very compelling arguments for why, like data centers, dark fiber, that there's a that it's railroads that we're building too much, that the the implied profit is overstated, that it's an arms race between the US and the Chinese, that it will require fiscal deficits until the end of mankind. All I can say, and remember, I am the idiot. I need more water order. All I can say to you is you will not read. I promise you. You will not read the the narrative that explains to you why the stock in the bull market will end. It will become known in the years that follow. It may be supposition in the months and the years preceding the high. It will be dismissed or ignored. It will even be dismissed and ignored years after the peak in equity prices. That's all I'm saying. Again, I'm reading you know, invoices, collateral, collateral recession, tariffs, port activity down ten to fifteen percent, ten to fifteen. I mean, it's either down ten or it's down fifteen. These are big numbers, but I wrote I I copied here down ten to fifteen percent year over year since late September. What else have I got for you? Oh my god, none of that. Oh, I did have the Palantir. Ooh, just had to go down and look at your notes. Yeah, market capitalization palantier, half a trillion dollars. Oh, it did make me giggle. The French government. I mean it gave it it gave permission to this fashion, fast fashion retailer, Shane Shine, S-H-E-I-N, gave it the right to operate, to run its own big department store in Paris. And they were just about to open, like, ah, you can't open. Why? Because they discovered that they offer childlike sex tall sex dolls on their third-party marketplace. I mean, I am not condoning childlike sex dolls, but do we care? Uh, I mean, again, did I tell I did tell you the the the Tokyo bar that poisoned me, there's the strip bar, they did have those two and they weren't childlike, they were very much um very sexy, but like, you know, over 20 years old um sex dolls. Um which I did I mean I I touched the skin off. And and the and they really did look human. Um apparently you can buy it. Imagine my cleaning lady coming uh to make up the uh the uh to make the bed and clean the floor in the master bedroom and and being introduced to um Lucy the uh the sixth doll. Don't think I can do that. I found another motivational quote of the day. The privilege of a lifetime is to become who you truly are. And I have to I have I'm I'm thanking you, ladies and gentlemen, because you're listening. Um and I'm speaking. I'm speaking too long. What's the time though? What's the time mister? Oh my god, we're over an hour. But you listen, I speak. It's a great privilege. You're allowing me to become truly who I want to be. Um I'm gonna leave you. I am here, Henry. I did forget to add the the wonderful music to Monday's show. Um I will add it tonight. I'm gonna close before it's 10 o'clock. From the tropics where we have no winter, to the normal northern hemisphere where you will see no light for six months. Take vitamin D pills. Um, this is Hugh Henry. This is Hugh Hendry, the asset capitalist. I am signing off. Uh, until Friday, my friends, be careful. Good night.