YouSaid · the spoken record

Peter Tchir

lines on the record: 68
first: 2022-11-07
most recent: 2022-11-07
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“At one point, sorry, I didn't want to interrupt you, but at one point, I think there were studies showing that crypto mining would have been if it was a country, the 10th largest user of energy, for example, right? So these things, it was, I think people underestimate how big it was in terms of that overall growth that we saw in disruptive tech and the economy. There were 22,500 autonomous car companies that seemed like a year and a half ago. Now there's a smaller number. So all these things were all buying the same sort of highly specialized, really interesting chips, and they were driving those stock prices higher. They were pushing everyone towards that. And if you view a chip as a commodity, which is probably a little bit of a stretch, but when I look at commodities, it's always the marginal 10% supply and demand that really drives prices. So whether you look at oil or wheat, we can all talk about everything, but it's actually a relatively small change in either supply or demand has a very large impact on price, particularly over.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And I think it had a much bigger impact on the economy. And to me, when you're always trying to think, where could the people in charge be making mistakes? I think underestimating how important crypto and things were to the economy is one of those cases because you have a bunch.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Things. You could put your toaster, could connect to Wi Fi for whatever reason your toaster needed to connect to Wi Fi. And now I think people are going back. What products can we make that are a bit more simple and don't require some of these things? And I think that's where it's going to be difficult for the chip industry. And the other thing I really think blockchain Bitcoin and all of this disruptive tech was such a huge part of the growth engine. And it's now just really gone. The excitement over Bitcoin is gone. And, you know, I hear a lot, well, Bitcoin's dropped 50% before, blah, blah, blah. Yes, but it was never a $2 trillion down to 500 billion, right? The size of this drop in terms of dollars is real. The amount of hiring, if you go back a year and a half ago, all you have to do is check headlines and some Wall Street professional was leaving to start a crypto firm. There were all sorts of great hiring, good jobs. They were raising money hand over fist. I think that's another key element that's just gone.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And that's a big drag on the economy. And then the other thing is we always talk about reaction functions, right? So if I hit you in the face, you're probably going to hit me in the face or something, right? And I think right now we've been really stuck on supply chains and worrying about when will China come back? How are, you know, where were companies building new factories? But I think it goes well beyond that. Companies are trying to readjust what their supply chains look like, how many components they use, how specialized those components are used. Because a lot of companies were effectively held hostage. The number of companies you talk to that have a $150,000 tractor that could be delivered, except it's missing one chip or a seat cover. Someone else, I think Whirlpool CEO said it in one of their calls, is 99% complete is not complete. And so people, I think, are really, re-engineering their products to, I think everyone got a bit casual, right? It's just in time worked really well. You could specialize and make really neat.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“I think it has much more to do otherwise. So even with the Fed, A, I think they should have been doing things last year rather than this year. But they always talk about things being transitory, right? Supply chains, all these other issues. And yet at some point they gave up that and are now fighting this as though it's a traditional inflation thing. I think there were some things that were transitory in terms of supply chains. These things are coming back around. And two big things have changed. One is globally we're deglobalizing to a large degree, right? It's China clearly has less and less of an interest in being the global provider of everything to us. They are shifting how they look. They're working more and more with the other autocratic nations. I think we're in a real battle for commodity resources. And China is working with the autocratic nations to secure those commodity resources. And China will ultimately sell them goods. And we're being cut out a little bit. So this deglobalization, I think, is real.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“We know someone within your circle who's either at risk or is talking about getting laid off, it changes, I think, your behavior. And so everyone tightens up a little bit and everyone spends just that little bit less. And then it becomes this vicious circle. Like you say, my savings was your income. And so you're not getting that income. So now you have to do something. And eventually it's going to come back to me because someone you try and save money with was my customer.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And I think that really starts bottom up is it's going to filter down to the companies that are hit. They're going to start the layoffs. And then that's going to roll back up because those people were out buying snowmobiles or whatever they were buying, right? And I think that's where it starts rolling back up. And they were going out to Home Depot and buying things to fix their houses. And all of a sudden they're at risk of getting laid off. And I think it's even more than just getting laid off. It's as soon as the perception comes that your job isn't safe, you change your spending habits. If you go back, flash back a year ago, almost everyone was sitting there and their house felt great, right? Your house assets great. Your job seemed secure, and you want the new barbecue or whatever you're going to buy, you feel comfortable doing that. Maybe it's a bit of a stretch. Maybe you buy the, I don't know, thousand dollar grill instead of the $500 grill or whatever number you're going to. Now all of a sudden your house is clearly not as valuable as was a year ago. Your job seems a little bit more shaky. You probably”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“They're waiting to buy things on discounts. So that's what hit there. And I think that to me is just really the first sign advertising clearly was weak across the board, right? Companies are saying we can't sell our goods, so we're going to cut back on advertising. And as those companies shrink, right, now you're going to get these layoffs or not hiring at these great companies, that feeds into the economy. And that to me, I think, is how these cycles build.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yes, and I think Microsoft, I would add in there right there at a very weak quarter that got pounded. And I think to me, when I go and talk to a lot of companies, I think the first thing they're trying to pull back on is not cutting employees, but they're saying, okay, what services do we have? And whether it's accounting services, I think consulting services is another area where people are like, wow, we've allowed so many consultants into our doors because we had all this money. Let's maybe cut back on where we're going on consulting. That will take time. And then it's just, wow, what are we paying for cloud services, for example? I don't know anything about the particular details, but maybe we bought X amount of cloud services and we really only need this amount of cloud services. How do we cut back on that? So I think that affected big tech a lot, right? We don't need, if we're not hiring new people, we don't need a new version of Excel. We don't need all these things. And Amazon in particular, I think, was hit by the retail consumer where the shift has been away from goods and people are very price conscious on goods now.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Can take a look at any of these stocks, whether it's a Peloton, they've gone way up, they've gone down. So their employees are hurting, and they were spending a lot of money. And that's a subset of the economy, but also those companies themselves were able to spend on whatever they wanted, right? They were only being viewed as, are you growing? That's going to be another area you see that. So I think the leading indicator here is going to be big tech. And I think we started seeing that in this quarter's earnings.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“I go to 2001, 2002, and yes, you had.com, but you had Enron, you had WorldCom, massive investment grade corporations that were fraudulent. That caused problems. And to me, the 2008 crisis is all about housing and the AAA mortgages. And so what scares me right now is you're seeing yields go very, very high. So mortgage rates above 7%. Treasury yields have gone from 1.5% to 4.5%. In a very short period of time, and you can't help but watch what happened in the UK bond market, the Gilts, where you had this incredibly volatility and you saw effectively a world-class country experience a bond market that looked like some weird third world country. So I think that's weighing on people's minds. What's going on with FX? What's going on these other things? And then the final part, sorry, I'll probably be a bit long-winded, is no, no, I think there was immense wealth creation and destruction in the disruptive stocks. And not only are there employees hurting,”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And I suspect that's what we're seeing. So we're seeing that roll over a little bit. I think the other part of this issue to me is, and this is maybe going to sound slightly weird, but I always talk about credit bubbles, for example. And I have a very strong view that credit bubbles only happen with safe assets. And a lot of people say, well, that sounds strange. How can a bubble happen with safe assets? And the reality is it's safe assets that cause the problems because that's where people own too much. They don't think about losses. And if you go back to problems that have occurred in the US economy before, it was the S&L crisis. And it was simple mortgages, but the savings and loans companies did not hedge the interest rate risk very well. Then you can jump forward to Russia on long-term capital. That caused a financial crisis. And long-term capital bet on very small little things in massive sizes, all these little spreads. You also had Russia and everyone said, sovereigns don't default. They were defaulting. That caused that.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“It typically comes, consumers, a big part of it. They get over levered. And the one nice thing is we're not seeing an overlevered consumer, but we are actually seeing a consumer that's been conservative. So I think they spent a lot when they had the money and they needed goods. They don't need goods so much. And to me, the wild card is they've shifted a lot of that spending behavior to services. And how I viewed the post-COVID recovery is very reactionary and consumers have been smart. They said, hey, I need to buy stuff we haven't been able to buy stuff. So they bought two of everything or they bought the skis and the bicycle, whatever they needed. And that's been shifting. And we started seeing that last year when a lot of the big retailers noticed declines. Right now their spending pattern has shifted into travel, leisure, services. So we're seeing inflationary pressures there. The big question is, is that permanent? Or again, is this just a catch up from all the things that people missed in 2020 and early 2021?”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“We watch for that, that's where we're going to get surprised to the downside. I think that could be a mistake Powell is making.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“So, how many people are in the labor force? That declined. So normally that would actually decrease the unemployment rate. The fact that it went up despite that tells you there's something weird going on beyond the surface. So you have these two surveys that aren't really meshing. So I think that's important. And then my other view of this whole thing has been that it was so hard for companies to hire people that that's the last thing they're going to do in terms of belt tightening. Normally they cut employees relatively early in belt tightening. I think right now they're going to figure out all sorts of other ways to cut costs long before they cut an employee because it really was very difficult and remains difficult. If you're still trying to hire someone, it's not easy. And that, I think, weighs on everyone. And that's going to be one of the shifts that we see in this maybe recessionary cycle is employment tends to always lag. I think it's going to be really lagging this time.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I think the headline number that we all read is the establishment data. And so a lot of people I don't know pay into this close attention, but there's actually two surveys that come out at the non-farm payroll. There's the establishment where they get data from large corporations. And then there's the household where they really go door to door effectively to get information from people. And there's a huge discrepancy this month yet again where the big number we saw was 260 some odd thousand. The household was actually 330,000 job losses. So it was almost 600,000 difference. And I'm not sure which one's going to reflect. I think the establishment's generally better, but that also feeds into the unemployment rate. So the unemployment rate ticked up to 3.7%, which in theory is something the Fed's looking for. But it was a really bad uptick for me because it came from that 300,000 job losses. And the other thing we've all been watching closely is the labor participation rates.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Here's what we're going to do. Here's why, blah, blah, blah. And we've gone ahead and done it. I think there's a lot more leeway to respond to data now.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“I would disagree with him. I think it's probably weaker than he realizes. And I'm a big believer that we've already set a chain reaction in motion where all these higher yields are slowly working their way into the economy. For example, for a company to have inventory, it now costs them more. People are starting to get their car leases come due, right? And it costs more. So these things do take time to play into the real world. And I think we've got to give some of that. And anything I look at that is more contemporaneous or real time seems to be showing indications of weakness, whether it's rental markets, if you talk to Zillow or any of these more dot-com type things that keep real good real-time track, rents are coming down. So I think he's being a little bit too optimistic. And I think the market's also read a little bit too much into him. He wants a sound hawkish, but the reality is the next meeting is in the middle of December. We have six weeks. And I think we're truly data dependent. For the last six months, especially since Jackson Hole, we've been on a preset path.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT