go below six before it goes to seven. but i think you'll see day rates go much higher >> robbie? >> kla we're in an ai arms race i want to buy the pick and shovel sellers >> good session going. i'll see what the rest of the day holds. see you on "closing bell." "the exchange" is now. ♪ ♪ >> thank you, scott. welcome to "the exchange." i'm kelly evans. here's what's ahead this hour. bullet troof there's one trade our market says can with stand the fed and whatever they might throw at us. and we'll talk about whether another black swan event could be just around the corner. plus, china's economy is so weak, officials are reportedly planning for stimulus measures but investors say the economy may prove more resilient than expected and with banks on the sidelines,

other lenders are busy stepping in to fill a capitol void in commercial real estate ♪ ♪ there are two areas in particular where there is great opportunity right now. that's ahead before all that, let's have a quick look at the markets. dow is up 384 points, rebounding from yesterday's unh led decline and 1.1% dwayne here 4409 for the s&p, with a 36-point pop today the nasdaq, up 87 points or 2/3 of 1%. ironically, it's the laggard look at the treasury complex, as well we saw a big reaction initially to that fed meeting yesterday. but look at this 3.84 was the yield on the ten-year yesterday afternoon all the way back to 3.72 and home builders are on the

move lenar was the big gainer and raised its full-year guidance for home deliveries. dr horton moving higher, as well the travel trade is sitting out today's rally, all down about 3% there has been weakness in this group lately, as everyone continues to emphasize services versus goods in consumer spending in this economy back to the fed. we got a pause but also signals that a couple more rate hikes could be ahead jeff dunlop, here is what he said after yesterday's presser >> i feel like the fed is getting mr. magoo again. the last meeting it was a hike but called a "dovish hike." now we have a hawkish pause. i wonder what the mix will be in the july meeting it seems like the unanimity of opinion that we need more rate

hikes has been made clear. >> one of my next guests says inflation will remain sticky enough to warrant a couple more hike things year and he sees a slowdown arriving later than previously thought michael and keith, great to see you both mike, are you the one feeling a little more bullish lately >> sure. i think it's hard to deny that the incoming data has been resilient in the u.s. economy, so we're tracking growth of around 2% in the first quarter, solid upward revisions to construction spending, which may be coming out of those large fiscal packages passed previously but the big difference has been the sharp rebound in labor supply last year, there were shortages in labor supply, maybe around $2 million is what we were estimating that's now down to about 400,000. immigration has surged participation with working age

women has come back. it makes it easier to add jobs it adds to growth and disposable income so yeah, the combination of all of this, and a little better risk back crop, led us to push out down turn, and we made it a lot more mild. so we think the economy will move into 2024 without experiencing a downturn. >> if i'm not mistaken, your firm was definitely the first, maybe the only to definitively say you thought we were going to be in a recession in the back half of '23, right >> i don't know if we were first, but i felt like there was a big gap between labor supply and labor demand and to bring inflation down, you had to lean geagainst that that was the fed's messaging at the time but you have to respond to what the data is telling you, and the signal is there's more resiliency here. in the meantime, that resiliency

argues that the fed probably has more work to do. >> also noted that the fiscal policy bills for investment and manufacturing, we have seen a massive boom, i've never seen anything like it keith, for you, how are you investing? you've been bullish through and through. >> bullish off the october lows. i said big tech will return to the head of the class long before people are prepared to accept that reality. that's still the case today. those companies are changing our world, and the amount of money chasing them is growing, not shrinking. if you think about an ocean, rising tides raise all boats that's the situation we have here today >> apple is at an all-time high today. oracle, did that catch you by surprise >> oracle did, honestly. that was one i did not think was going to be amongst the front runners. but good on the stock. i don't happen to own it i wish i did but i'm content to stick with

apple. >> mike, let's talk about 2024, the dynamics you know, even while acknowledging some of the things that have gone better than expected, it feels like everyone is celebrating on a day that jobless claims are still where they are i just wonder if we are going to look back and be like, maybe that was the time that the slowdown was starting to hit it has to mean something they're up quite substantially from lows. >> it does look, there are plenty of signs that the economy is slowing. housing, equipment spending, different types of business spending loan growth is slowing down, so the shocks into regional banks and worsened profitability outlook there. so there are signs and the second derivative is the economy is moderating, just much more slowly than we thought. so it's not like we are going to be rebounding to 2% or better growth outlook it's just that on balance, if

you think there's going to be a slowdown, i think it's right to think any down turn will be more mild than average, and is in part why financial markets are reacting the way they are. >> you say your forecast is now as much a growth recession as it is a mild recession. what is a growth recession i'm not sure i -- >> there's all these terms running around a growth recession we would define is growth that's positive but below trend. so you never quite get negative growth, but it's slow enough over time that you would take some inflationary pressures out of the economy an actual recession involves declines in gdp, or job losses if you will. in our forecast, we do have two negative quarters in the first half of next year. if you look at it on a q4 basis, take a step back, growth this year is -- we think it will be 1.1% next year, it will be flat, then recovers after that.

if you take a longer perspective, it's more about a growth slowdown and not actually about maybe a hard landing in there, we think you can get one or two quarters of declines in gdp, as the consumer settles into a different style of spending >> we look around the world and what happens in europe or new zealand, all these places that are getting negative prints, but the stock market in europe is not acting like it's in a downturn keith, last word to you. market broadly, would you stick with big tech here you're not taking profits, pairing positions, nothing like that >> no. i'm hunting for more opportunity. this jgenie is not going back in the bottle i think we're coming out of a recession, even though it wasn't formally called that i'm on the hunt, looking for names that will perform and i want that stuff that customers are running to, not away from. >> does that include tesla >> yes, it does, as a matter of

fact i can't get enough of that stock. i hope i'm smart enough to buy more >> does valuation matter, keith? >> it does but not like it used to that's the part so many are having trouble with. the valuation metrics we grew up with don't reflect the accuracy and the impact of big data to me, if anything -- >> you sound like irving fisher or 1999. don't you worry about a rerun of those playbooks? >> of course i worry about it. but we have a very different world today than we did back then we have a tremendous amount of liquidity chasing comparatively fewer and fewer quality stocks if you look at stock market history back in 1871, 1903, 1929, the big money concentrates on the successful companies. that is the way capitalism works. this time won't be an exception. >> gentlemen, thank you. appreciate it.

let's move to china. recovery continues to disappoint, with another slew of data adding to signs of a slowdown now "the wall street journal" is reporting beijing is preparing for a "new spending drive and other stimulus to revive china's flagging economy." should you throw in the towel on investing in china or just get started? welcome to both of my guests here stef, we have to talk china. it's confusing and it's important to the overall macro where do you think people should be looking for opportunities >> i think there are a lot of opportunities out there. mainly on the services part of the economy, and also just the consumer in general. so we know the recovery in china has been sluggish, but we have seen a lot of monetary policy inputs over the last couple of weeks. i think you're going to see

more they already cut those the central bankers cutthe serve-day reverse repo rate the new lending bank program in may is up to $190 billion and they lowered the rate on lending fa s facilities last night. i think you'll start to see more of these, because the economy is taking a long time to recover. but as i mentioned, i think services is where you want to be the last reading we got with pmi services, 53.8 gross gaming revenue in macaw, up 173% year over year the first five months of the year, as a gross gaming revenues in macaw totaled $8 billion, versus $5 billion all of last year and retail sales, i know that they disappointed, but i would take a 12.7% retail number any day. way better than anybody else

so focus more on the consumer and on services, because i think that's where the opportunity is. >> that said, it looks like you're playing through some of the u.s. players with china exposure, opposed to the chinese listed companies themselves. >> yeah. i just find the transparency for china pure plays is limiting and you can wake up one day and all of a sudden the government will remove the ceo for no reason so you can do all the fundamental analysis that you like, but it doesn't pay off, at least in my experience so that's why las vegas sands has 40% of their total exposure in china in the revenues, and estee lauder has 30% ex-pocher in china estee lauder has been a dog. i think you can buy this one at a good price >> one of the most surprising qu quarters was telling with china.

jason, how would you describe your investment approach to china? >> we're looking at the macro and the mike rowe. -- micro >> so tell me where your -- what are you doing in terms of china, are you bullish, bearish what is your take with what is going on with the economy here >> so we're contrarian value investor for us, china is a particularly interesting opportunity right now. it is disappointing expectations there is sort of scary political optics risk, and what better time to buy than when there is a lot of risk, and the risk premium is how we overcompensate for the optics we're not surprised by the fact that the numbers are softer than expectations, but it's still a fairly good number in terms of growth right now, all eyes are on what

beijing is going to do so soft numbers are good news. that forces beijing's hand it's got to roll out the much anticipated fiscal stimulus, the big packets that are rolled out. and right now, what you don't have is not the capacity issue everyone has a capacity issue. we have this enormous savings rate, a lot of money in the banking system but what's lacking is confidence that can get turned around with more fiscal stimulus, with a big announcement suggesting that beijing does care about gdp growth after all >> would you have people invest in china through an etm? what would be your strategy? >> i generally don't recommend to buy individual stocks, especially in a market like china where the fundamental is less transparent the geopolitics, you know, that

can help you read the tea leaves >> all right jason, stephanie, thank you both appreciate it. as china remains a thorn in most investor's side. coming up, opening at 42 from the ipo price of 22 and that's not the only recent listing doing well and a new warning about the chance of a big drop in the s&p 500 in the next month. we'll talk to two people who know about big drops and how to profit from them one just wrote a book about it the other has lived it scott patterson joins me live later on as we go to break, here's a look at the markets. dow is up 1%, while the nasdaq is up half that amount

we're back after this. (sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989!

anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

welcome back to "the exchange." here is a test of masks. what do you think chair powell is thinking about this today cava group opening at $42 a

share versus its $22 offering price. and the last 18 months marked the slowest ipo market since the financial crisis is today the end of the dry spell? welcome to both my guests. dan, cava, we need some b-to-be software companies >> issuers want to see companies that look like themselves, but certainly ipo bankers are ringing off the phone today, because the one thing cava says is that institution alibiers, the mutual funds, hedge funds, et cetera, are interested in a new issue. in this case, you mentioned chairman powell. a new issue dealing with high labor and supply costs >> and leslie, what are people saying about this debut, about the pricing, about the pipeline as a result? >> i'm talking to a lot of investors who are angry about not getting allocation to this

deal you can see why that would be. but it's all about scarcity with this one scarcity in the fact that it's coming in time where we haven't really seen a consumer name brand in about 18 months time. so there's scarcity just in issuance, period but there's also scarcity in the book, because you had three mutual funds you took up about 30% of the allocation here. you had some crossover investors, meaning those invested preipo, bulking up at the offering price so that left little for the rest of the market to get into this and that's why you are seeing the 30 times over subscribe numbers and the after market activities >> i promise not to go on this rant every time we talk about an ipo. but dan, the only people who are going to do well are the ones that got in at $22 what do you say the odds are that this company is above $22 a year from now? >> it is unlikely. the most obvious comp here is

sweet green, right sweet green also had on enormous bounce at the ipo and come way back down. you know, i don't know if we had a conversation when they went public, but if we did, it was pretty similar >> i guess what i'm saying is the ipo model works well for people who get allocations at the ipo price and sell them on the open great, no brainer. i want those shares, too but if my only choice is to buy it at $42 or not, that's a much easier call. i don't think this is the next chi chipotle >> that's research that shows that companies that double on the first day of trading don't go higher for a certain period of time, like six months to a year so there is this short-term risk with these deals that have so much momentum out of the gate. not true in all cases, but it's something to be mindful of if you are buying shares today. >> the market is meant to entice

other companies in you want to see the pop so that people want to go public and they go public to give liquidity to employees what are the prospects that we can start to insta cart? are they coming to market? >> the two we keep waiting for, stripe is not going to do it this year. they're going to hold off. you know, the expectation, there is an expectation that we are going to see not a huge number, but a decent number of ipos post labor day. what we have seen today with cava makes that more likely. if you were on the fence trying to decide well, our numbers are good but does anyone have interest in buying, the cava experience shows that there is potential here >> last word, leslie >> it's important to extrapolate the companies that could no public

sector specific is really important. yes, the broader market is up, but there are some industries that are behind where they were in 2021, when these companies were having deliberations about going public they said you told me in this 2021 that i could get this valuation. maybe if i can afford it, i'll wait until valuations in the public market in my area have recouped before going public, because i want to get the biggest bang for my buck >> kelly, it's worth noting, there's a connection between cava and paneira >> interesting he's always one to watch funny how many industries, if you know the right people to watch, it can lead you to the right places i had cava yesterday it was delicious thank you both coming up, shares of sofi have been on a run, nearly

doubling in the past month today, oppenheimier downgrading the stock. we'll be joined by analysts. and commercial real estate could be heading for more pain than the great recession that's the warning from the co-ceo of one of the biggest non-bank lenders who also sees massive opportunity because of it. as we go to break, here is a look at the map. united health leading the index higher only four names are in the red with nike one of the biggest losers again "the exchange" is back after this conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

there are some things that go better... together. burger and fries... soup and salad. thank you! like your workplace benefits and retirement savings. with voya, considering all your financial choices together... can help you make smarter decisions. for a more confident financial future. hey, a tandem bicycle. you can't do that by yourself. voya. well planned. well invested. well protected.

somebody would ask her something and she would just walk right past them, (laughs). she didn't know they were talking to her. i just could not hear. i was hesitant to get the hearing aids because of my short hair. but nobody even sees them. our nearly invisible hearing aids are just one reason we've been the brand leader for over 75 years. when i finally could hear for the first time, i could hear everything. unlock our best deal of the year during our 75th anniversary sale. call 1-800-miracle today. welcome back to "the exchange." dow is up 1% today, rebounding from yesterday's unh decline and

obviously continuing to perform after the fed meeting. nasdaq up half a percent a much better tone that we usually see in that initial 36 hours after the fed meeting. kroger shares are down on a revenue miss they beat on earnings, but management saying that budget conscious households are buying fewer items, amid the s.n.a.p. benefits downturn. shoppers are upping their spend, kroger shares are down 3%, the worst drop since october manchester united popping on a report it's negotiating with the former prime minister. he made his first bid back in february this soccer team could sell for more than $6 billion the shares are popping 6% today after billion halted earlier on a couple of times. they're up just about 30% this yee week and ev stocks are surging today on optimism over the chinese ev makers after they received

approval to roll out driver assist technology in beijing tesla is trading lower it ended its 13-day win streak yesterday. retail investors perceive tesla more as an ai proxy than ev. tesla said they'll reduce the number of extra shifts and temp workers. now to bertha coombs for an update a tropical cyclone has made landfall in india, and is bringing extremely heavy rainfall, waves up to ten feet and winds near 80 miles per hour more than 180,000 people have been evacuated from india and pakistan ahead of its arrival. forecasters say it could be the worst storm in 25 years. former president donald trump was arraigned in his city on federal criminal charges, and the mayor of miami is jumping

into the race for the republican presidential nomination. frances suarez announced he is joining the crowded field on social media today nearly a dozen other republicans have announced their candidacies. trump and florida governor ron desantis are leading the pack in polling. two nasa astronauts conducted a space walk outside of the international space station today. they continue to roll out solar panels on the iss. this was their second walk in less than a week i'm always on pins and needles when i watch them do that. it's scary to me >> it's very cool. i wouldn't do it i'm glad they will bertha, thank you. coming up, the best of times in commercial real estate for one firm, whose ceo says now is the best time in his 20 plus year career to be a buyer as other players exit the market.

so th'sexat nt. this is dr. arnold t. petsworth, he's the owner of petsworth vetworld. business was steady, but then an influx of new four-legged friends changed everything. dr. petsworth welcomed these new patients. the only problem? more appointments meant he needed more space. that's when dr. petsworth turned to his american express business card, which offers flexible spending limits that adapt with his business. he used his card to furnish a new exam room, and everyone was happy. built for dr. petsworth business. built for your business. amex business.

welcome back to "the exchange." a credit crunch particularly in commercial real estate is widely

expected and worried about in the aftermath of the banking stress earlier this year roger ferguson told me earlier as part of the financial adviser summit that there are opportunities in credit right now if you know where to look. >> i think there will certainly be some good opportunities in credit now, obviously the issue around cred sit choosing the names carefully with, you know, a sense of do i understand the underlying business? but as you point out, in terms of preference, you know, credit is where one will be in lower equity >> my next guest agrees, seeing he expect the company could see equity like concerns joining me now is the co-ceo of akor capital non-bank commercial real estate, in some ways it's the best and worst of times >> it's a very large market.

we have about $4.5 trillion of commercial real estate debt that is outstanding you have about $2.5 trillion of that debt coming due in the next five years this is the u.s. as a whole. so you have a supply and demand, call it imbalance taking place right now. there's not that much liquidity as we had in prior cycles. and the demand is exceeding that supply so on the demand side, you have $2.5 trillion of debt coming due, $1.5 trillion next year call it $500 billion of private equity you are looking to invest in commercial real estate. on the supply side, it's clear the banks are entrenching and facing increased regulatory scrutiny and the regional banks are facing a whole other degree of concerns, not just regulatory, but also balance sheets and

liqu liquidity. >> we've seen one bank after another saying we don't want the credit exposure. you are now seeing some of the best opportunities you have seen in some time, while alsoing having a little bit of concern we share about the economy what are you able to look at right now and say we don't mind -- is it just the best office space, is it -- i know office is just a small piece, but what is your strategy for office in particular >> sure. i would just say a lot of the press is overblowing the issue you can't paint all of cre with one brush. there are sectors like self-storage, multifamily, hospitality, that are performing from a profitability perspective better than in the past. and we are very active in the multifamily sector and the industrial sectors by and large. we look to invest in the top assets and borrowers

and within that structure, we're able to make returns that are better than what they have been in the past. >> upwards of 10% kind of thing? >> it depends. the predominance is for senior loans. so 65% loan-to-cost senior loans that are 8.5% to 11% return without leverage about a year ago, those numbers were 3%, 4%. so the issue the market faces is there isn't enough capital available at the appropriate price, which leads to the opportunity for the non-banking sector >> i'm relieved there are players like you we can lessen what would have been a credit crunch but would you be -- are you active in the office sector at all, or one that you have to take a step back and say the risks aren't worth it? >> very good question. we are lenders, we're not taking

equity risks so we could just drop the leverage and get better covenants. so we have doing a couple of office loans we're doing one in west palm beach, we're making really good returns for investors. so the office sector, by and large, is performing very well the class b sector, not so well. the issue with office is that there aren't discernible trends right now. we're still waiting to see how this plays out from psychological and consumption perspective. >> so if people called everyone back to the office tomorrow, that would change the story. when we're celebrating the fact that vacancies got -- or occupancy got back above 50%, it feels like maybe this is a permanent change >> i like to focus on what we know, and control the controllables, and see what we

can do about the non-controllables. in terms of behaviors, there is a lot to learn, but there are some office buildings 80%, 90% fully occupied so we will be attracted to those buildings. it's the ones where functional on less ens that we stay away from >> where do you think we are in 12 months time is there a market shift from bank's involvement in commercial real estate to nonbanks like yourself, or is there a derailment coming? >> let's separate liquidity from credit the credit derailment could happen to the extent we have a perpetuating, high interest environment. and secondly, weakness in the consumer and corporate earnings. so two things that we are looking at prospectively in the meantime, this liquidity question needs to be solved in a couple of ways we need rate stability

if we get that, we'll see security buyers come back in, freeing up some of the capital to reinvest again. so in a loan, you have the base index, which is really drifven y the fed funds rate, and second is the risk premium. so to the extent we get rate stability, the risk premium will condense and secondly, it's anyone's guess what the fed will do, but it feels like they'll hold rates here for a while meaning that we'll get a little bit of both. one other point is the real question comes down to what is going to happen with all these trillions of loans come due? will the regulators extend these loans and will they be able to extend them? >> fascinating to think about the significance of the fed holding here, that it could bail

out the commercial real estate spaces thank you for joining us, connecting these dots. >> thanks for having me, kelly still ahead, oppenheimier downgrading sofi to perform today on concern share prices went up too far too fast sofi is up 14% this yeek we have the analyst behind the call, that's next. a car that goes as far as it does fast. as sleek as it is... spacious. as smart... as it is beautiful. introducing the lucid air. experience the best. ♪

(sirens) [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse! next level moments, we're 30 seconds out. need the next level network. [north corridor, hurry!] -coming through! -or 3, let's go.

the network more businesses choose. transplant received. at&t business. welcome back to "the exchange." sofi getting a lot of analyst's attention lately a month ago, they were called mathematically and intellectual off. earlier this week, a 45% rally on student loan payments resuming that could be ruled on any day now by the supreme court and sofi is up 94% since the original call, bringing us to today's call by oppenheimier they're downgrading the bank on valuation concerns, but dominic still likes the stock. great to have you here what is the valuation at the moment >> absolutely.

thank you so much for having me, as well. when we look at the sofi story, we want to break down sofi into two parts. you really want to break down the brank on its own and the technology segment when you add those up at a higher valuation of three times tangible book value multiple, and $1.20 or so for the bank, you get to roughly a $9.50 stock. we think that's at the high end where the stock will trade on 2024 estimates >> now the question becomes, from here, after this initial flurry of excitement about -- just so people are following, the student loan resumption could be a catalyst for people to refie what is the next leg of the story?

>> great question. that is baked into our estimates. we also have a big -- some personal loans baked into our estimates, given our overall thesis about consumer spending and demand slowing that's all baked into our estimates. but we think the sofi story will be one of execution. instead of having various macro issues affecting the trajectory of the stock, we think it will be all about executions and delivering on what they said, improving margins over time. we think that will drive the stock higher over time, but perhaps a pullback to lower levels near term >> sure. and those lower levels, be what they are, don't deter your bullishness on the stock >> it doesn't. the diversification of their business has really shown

through, given that, you know, they were really low on originations for student loans, which is where they originally started the business had they not made the changes they made to diversify their business, this could have been a potentially -- this stock would have in a significantly different place. it's because of their execution that, look, they have been beating expectations we raised our revenue outlook in this note and reiterated our jut perform when the stock was below $5 trying to fight the bears off with a big stick so we believe in the company's execution and in the business model. for us it's about valuation. >> good to have you here today thanks for your time >> thank you >> talking sofi. still ahead, black swan's dragon kings no matter what team you're on, the new book takes a deep dive into how a select group of traders makes big money on

catastrophic events. scott patterson and nicholas tella, here they are to discuss that in person dot awhicbrk.his quk ea n'gonyere. on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. new projects means new project managers. you need to hire. i need indeed. indeed you do.

when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. (fisher investments) it's easy to think that all money managers are pretty much the same, whose resumes on indeed match your job criteria. but at fisher investments we're clearly different. (other money manager) different how? you sell high commission investment products, right? (fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better when our clients do better. that might be why most of our clients come from other money managers. at fisher investments, we're clearly different.

welcome back goldman's derivatives team out with a new note today, warning the chance of a big drop in the s&p 500 in the next month is much higher than average my next guests have some familiarity with bigmarket drops and how people have been able to profit from them. actually able to profit from them joining me is scott patterson and nicholas tall len. scott's new book "chaos kings. welcome to both of you it's great to have you here. >> thank you. >> scott, we've got to mention the covid pandemic that was one in the book why don't you start with how many times in the past 15 years there have been big, profitable, if we can call them black swan events, like these. >> well, there's been two big ones obviously 2008, the global financial crisis, which is right

after "universe of the hedge fund" which was launched precipitously. they did very well and then obviously 2020 when covid came along and universe put out these phenomenal returns. that's when the idea came to me. >> bill actman did this, too what did he do, make 3.6 billion and then going long in march once hell came, so to speak. >> yeah. that's the first chapter of the book it's called "hell is coming. when bill came on cnbc and freaked out and freaked everybody out. at that point he had already put on this massive trade, i think 27 million, and out of that, yeah, he got 3.6, 3.5 billion. >> it's incredible one of the kind of wonky parts of the book people might enjoy,

na nassim, whether you can predict black swan events or simply always be prepared for them. >> let me say something more general about scott's work and why it's important it's not important because someone made some money at some point in the market. it's important because he's making us conscious of severe societal risks, but they are so abstract that we ignore them these big tail events. scott is a story teller, unlike me i'm author, i'm abstract he's a good story teller he inbe vented it through the visuals. that's what he does very well. being a journalist he can tell a story and make us conscious of these classic risks overall. forget finance, it's much more central than that. and the point -- the precautionary principle that comes out of this tail risk of

events is that we should as a society have a systematic approach he does a great job. it's not just a finance book, it's way beyond. >> i try to tell stories through characters like nassim and get into complicated stories through the characters i think of it as the sugar that goetz the medicine to go down. >> 100%. father's day is coming up. when people are thinking about, hey, what can we have -- dive into, this would certainly be one of them. one of the things that comes up, nassim, is globalization. >> yes. >> you foresaw this as being a contributor as a black swan event like pandemic. we are deglobalizing and plenty of people on international vacations. do you think the golden era of the globalization black swan world is behind us now or do you think these kinds of things might increase with frequency? >> no, i think we haven't seen yet the negative and the

positive from globalization. very good thing, 1 billion, 2 billion. with it comes too much connectedness, too much reactbility of systems what happened? we have shortages. huge gluts, huge shortages these things wouldn't have happened 50 years ago, not even 25 years ago so we live in a world that we don't quite understand at the, you know, regulatory level, political level, but some people understand it. we need to make people aware of the side effects of these things. >> yes >> let's not now throw the baby out with the bath water. globalization is something that is helping us survive as a society. >> something nassim has been writing about for a long time is that with optimization of supply chains when everything is moving faster, quicker as possible, that's when things can break down >> fragility >> exactly the idea is to push people to

stop mapping the fragility understand you have winner take all effects at the level of everything, including errors small errors have huge -- >> i understand this is a broad societal book but what's fascinating is how do you translate that into profits, into investment gains? is your strategy, is this kind of an insurance policy where you have puts, you have -- against a big market drop? and then once in a while something crazy happens and you're glad you had that insurance policy >> in many domains people are quite understanding. people have insurance on their house. they won't buy a house if they can't get insurance. in some domains when it's someone else's money at play, people forget this for example, finance, pension funds are not managed by me, we the owners of the funds. you manage your own insurance for your house so it's not managed so you have a gap in there we have a conflict of interest

and people tend to try to forget about these events because they happen rarely and when they happen you hope to be retired. >> as we know, most people, scott, are required to have insurance for things like their home or their car because they don't want to have to pay for it, right? you want to say, i'm good. i don't need to worry about it after what we saw in the financial crisis and to some extent 2020, there was a proliferation of these strategies there was a black swan etf i take the concept, we can replicate this and offer it as a general service for people do you think that is going to take off or is this going to remain a niche approach? >> you know, it's interesting after the global financial crisis you saw the success the universe had there were copy cat funds. there are more hanging around but it's a very hard strategy to keep up because as nassim knows, he went through it you have to keep losing month after month, sometimes year after year, until the event

happened and the trick is to do that and not bleed to death. >> not lose all your clients. >> yes. >> in the last minute i have, nassim i know you don't want to answer it if you could just please for the sake of those watching. >> yes. >> we see the market flying this year we see some of the macro data weakening. do you think -- i'm going to ask you something you don't want me to ask you, do you think this could be climaxing in some kind of -- i know 1987 is what got you into the business. >> this is actually something that resembles 2008, 2007 in we had a financial crisis the reaction was to lower rates, which was a temporary policy to cure a structural problem. put novocaine on the wound no pain and now we're waking up because we had more of an event. we had valuations and real estate that are fake, you know real estate, 3% interest rates mortgage now north of 7%

so we're going to have to take some pain with the adjustment to the fact have rates at zero are not going to happen again. we discovered now that it's a very bad policy. it's not a cure. with interest rates higher, we don't have gravity a lot of tumors. tumors in the system like bitcoin are going to have -- >> the news flow today is coming around to your bearishness on bitcoin. there's much more detail in the book if you want to know about all of these different trades and strategies at a time like this scott, perfectly timed thank you both for joining me. i really appreciate it scott patterson, nassim. eamon javers in for tyler. hes tt igeing ready. i'll join him on the other side of this break. i'm so glad we did this. i'm so glad we did this.

i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones this is cynthia suarez, cfo of go-go foodco., an online food delivery service. business was steady, until... gogo-foodco. go check it out. whaatt?! overnight, users tripled. which meant hiring 20 new employees — and buying 20 new laptops. so she used her american express business card, which gives her more membership rewards points on her business purchases. somebody ordered some laptops? cynthia suarez. cfo. mvp. built for cynthia's business. built for your business. amex business. if you have this... and you get this... you could end up with this... unexpected out-of-pocket costs. so if you're on medicare, or soon to be, consider this.

an aarp medicare supplement insurance plan from unitedhealthcare. medicare alone doesn't pay for everything. and what it doesn't pay for, like deductibles and copays, could add up to thousands of dollars. medicare supplement plans help by paying some of what medicare doesn't... and making your out-of-pocket costs a lot more predictable. call unitedhealthcare now and ask for your free decision guide. medicare supplement plans also let you see any doctor. any specialist. anywhere in the u.s. who accepts medicare patients. take charge of your health care today. consider adding this. call unitedhealthcare today about an aarp medicare supplement plan. and welcome to "power