This is all economics 101. They know

exactly what they're doing and they're

showing you. They've already started to,

you know, buy the long into the curve

whether it's through that yen

intervention or the doubling of

buybacks. They're They're getting people

comfortable with it. They've already

started buying stocks whether it's Intel

or MP to get people comfortable. And

both of these things are at all-time

highs. We've never seen this before.

Talk about never seen it before.

They're getting the world comfortable

with what's coming.

>> Let's just start with you right now. Is

the bond market the volatility trigger

across the board for every asset class

on Earth?

>> Um

Look, I have a a opinion here which is

out of the

uh the ordinary uh which is that

this whole Warsh, Jackson Hole,

Druckenmiller predating that is Kabuki

theater.

Um it is a

>> Yeah.

>> Good. You're not alone.

>> That's good to hear. We're yeah. Uh

I feel like everybody else seems to

disagree. Um there there's a pricing

Well, there's a pricing of a 66% odds of

uh you know, a rate

uh

a rate hike coming. I think that's

ridiculous. Um I

>> ridiculous.

>> Yeah. Yeah. [laughter] So, we agree. But

but point here is um

uh nothing has changed here. You know,

look uh Warsh and Besent are flying back

and forth on Air Force One uh talking

daily. And you know, they they work for

Druckenmiller. Druckenmiller's out in

the Wall Street Journal op-ed op-ed

op-ed kind of taking on Besent in the in

the public, you know. What do you

think's going on, guys? Come on. Wake

up. This is uh this is a narrative

machine. And why would you have two

sides diametrically opposed in their

views of what's happening?

Um because you need brakes and gas. You

want to manage the market. You want to

manage expectations. You want to move

things uh the way you want. You want to

also preserve, you know, in Warsh the

legitimacy of of kind of central bank

policy and independence of the Fed. You

want to support the dollar. You want to

do be able to do all of these things,

right? So, you need a good cop, bad cop.

This is a stable gas brakes type

machinery of narrative. Okay? This is

what we're what we're dealing with here.

Let's take the narrative away for a for

a second and let's look at what they're

actually doing.

Okay? The scent is out there yen

intervention, doubling the the buyback

in

you know, in in the treasury buybacks.

These are real things. This is what

they're doing. We know what he's doing,

okay?

What has Warsh actually done?

First of all, he voted with the doves in

the first you know,

Fed meeting. Two, he's completely

removed any form of guidance.

So, he has no accountability to

guidance.

Three, he's changed the inflation

measure and very conveniently chose the

measure that is the least sensitive to

inflationary pressures in the short

term.

This is what he's done so far. These are

the facts, okay? Like everything else

>> Well, and to Jim's to to Jim's point,

right? He's got these task forces that

are going to ostensibly give us the new

new at the end of the year and then why

would we do anything in front of that?

So, okay, maybe something happens next

year based on the new framework, but

there is no new framework. So, in the

meantime, what do you do? You got to do

the dance so [snorts] that you can buy

some time.

>> Ilya, I hear we have a deal in 2 weeks

in the Strait of Hormuz.

>> Axios will let us know post haste.

>> It's the same damn thing.

>> [clears throat]

>> It's controlling the narrative and

controlling markets, okay? And and so,

if the market's now taking this one

hook, line, and sinker, good luck. I

think it's going to end up the same way

that anybody's expectations on oil

turned out. It is a manipulation of

markets and an attempt to control things

into the midterm.

My opinion, why do you introduce this

war straw man or whatever you want to

call it? The the the bad the good cop

bad cop routine. Well, right now they

haven't been able through both

you know, the yen intervention and the

doubling of the buyback to get markets

going in the right direction. They

haven't been able to resolve the yield

issue.

So, what do you do? What they've done

for the last 2 years, take it when you

can't take it up, you take it down to

take it up.

You know, and last year in 25, we had a

liberation day, 150% tariffs.

And then we had 10% tariffs on some zero

and others, 6 months 9 months, we'll

talk about it later. Then they then they

get repealed.

What happened last year or this year? I

apologize.

End of a civilization will be here

tomorrow like nuclear bomb kind of

depression photos via social media. Next

day, we got a deal in 2 weeks.

Both situations V bottom. Take it down,

expand ball, get Pete short zen, trend

following CTAs short.

So, you can turn it the other way. If

you can't generate the the buying under

behind you as percent as a hedge fund

manager, you create the flows to benefit

you and then you squeeze the flows.

If you want to crash the market, you

this is how you do it. And so, they have

a midterm coming up. They need to get

the market going. The way they take it

up is to a little nice take down, get

people scared, get the yield

expectations high, and then surprise,

we're not going to raise rates.

Surprise, like we're actually going to

stimulate.

>> Right? That's actually a really a really

interesting kind of

shuffle here because

let's say you get a softish services ISM

this week like you just got

manufacturing and then you get a softish

jobs report again. Market's going to go,

"Wait a second. Warsh keeps telling us

to look at the data.

What's the data say?

The data's been weakening all through

August.

The PCE numbers are saying inflation is

moving the Fed's way after the core. The

three-month annualized, six-month

annualized are going down, not up. And

so, you look at this and you go, "Okay,

well, what's the stock market going to

do if Warsh says, 'Well, I told you all

to look at the data.

I didn't say listen to me. I said look

at the data. What's the data say? No

hike.' And then the stock market's going

to go, "Oh my god, this is the best and

greatest day in all of life."

>> I think that I think you're right on. I

actually don't think it's going to

happen yet. I do think we could actually

see we'll see what the numbers say, but

a a nonfarm payrolls that that is

stronger than expected because God knows

Trump wants a strong nonfarm payrolls.

Um, and that actually then reiterates

the view that Warsh is going to

um, uh, you know, uh,

they're going to he's going to raise

rates. Then you get a little extension

of this decline a little ball squeeze

which is further. Yeah, pull the they

need to pull the rubber band further.

This is not enough.

Uh, you need people to start dumping and

getting scared and getting really

bearish. Nobody's there yet except for

kind of us. We were ahead of time, you

know, ahead of this game. Um, but I'm

telling you once they start to see a 2%

type daily decline, when you get a real

tail tail or 1 and 1/2% and ball starts

to actually expand, look over your

shoulder cuz Basant's coming with a

hatchet

uh, to kind of take out your your

shorts. So, um,

they've done it again multiple times.

They've tried to keep stimulating here

when they can't. The move is take it

down and take it up until you get the

ball expansion, until you get a real

kind of bear sentiment coming here,

they're not going to turn it, and my

guess is

they're okay with the bearish news for

now. Anything they can get to expand

vol, but but expect that this is very

much a manipulated outcome so that they

can turn it here, and they're probably

going to turn it right into the Fed

meeting,

and really get you going in a positive

direction.

>> You know, I can't help but notice over

the course of the past few days the

Cboe's core 1 M index has really started

to get moving to the upside here. It's

no longer, you know, in the 4 5 6% range

that it was at some points earlier in

the summer.

Is this a market that's finally starting

to signal signs to you, Jim, that

things are going to be unglued here for

a little bit? Like maybe rough first

half of September, and then we get that

Fed meeting at the turn of the month on

September 16th.

>> They want to take it down and take it up

as soon as possible. So, I my my bias, I

think it

I would not hold a short position. I

want to be clear past September 28th,

and my best guess is that before the Fed

meeting they turn this. If they can get

it down and get vol up, that would be

perfect for them. Now, if they can't,

but but you know, this is a dynamic

game.

They they will, you know, they will do

whatever they have to do to to kind of

but but by the end of the quarter,

they're going to squeeze this thing. And

by the way,

last Remember, March, what did they do

specifically? They used the flows to

their benefit. That JP Morgan hedge

equity went straight through it, massive

short gamma end of quarter,

caught all the CTA's short, caught all

the vol targeting short, lifted it on a

dime on the 30th, on the 29th end of

quarter. We had this rip, right in the

right at the end of quarter. That is not

a coincidence. That was very very

like smart. Like if if you put me in

that seat, that's what I'm doing.

That's another window you have to be

careful for. So, if they can if they can

squeeze it, if they get enough of all

expansion, turn it earlier, I'm sure

they're going to want to do that.

That'll be right in that Fed meeting set

up X.

But if they can't, you know, look for

that other window right at the right

before the end of the quarter to turn

it. But I would not hold a short. I

would be you know, very long of markets

into this decline

here in September. Would not hold it

past September 28th, no matter what and

and could be as soon as 2 and 1/2 weeks

we get a bottom and a turn here.

>> Elliot, we got some earnings that just

came out here. Dell closed at 424 up now

to 461.

That's 704 in EPS versus 492 expected.

Revs also beat at 4. 46.971 billion

versus 44.5 billion anticipated.

A little bit of a save the day there for

me. We were getting close to the short

put spread side of the short iron condor

that I was in which right now we're

staying inside the expected move this

far. That was down all the way to about

4 365 or up to we'll call it 482 and

1/2. Currently in at 462 for the 3 days

to go. Palo Alto Networks

>> Palo Alto also out, yeah.

>> PANW here on the screen. That closed at

362. Up at 379.90 right now. That's also

a double beat here. $1.02 versus 98

cents expected. 3.41 billion versus 3.35

going into today. The expected move for

the 3 days was down to about 325 or up

to 400 and we're still in the midst of

that range here. So, two inside moves

despite two beats. Last two names that

popped up on my screen.

>> inside the range, but down.

And this is

>> And that and that's been a thing for

Palo Alto is they've been reporting big

numbers and then getting hosed for it.

>> Well, Palo Alto here closes at 362. It's

up to 380.

I got my short iron condor here that's

working. So, I'm going to scalp some

scalp some out of there and then Crdio,

CRDO. This is also a beat, but not

enjoying it. Double beat here. I wasn't

particularly trading Crdio. There's also

DB which MDB on the screen. That

is a double beat and these shares are

down. 430 was the close. 435 the

expected move had us down to 360 or so

or all the way up to about 510 and we're

currently trading at 380. So Ilia, Jim,

a lot of volatility in some of these

names after hours, but

you know, we're still kind of in the

expected move right now.

>> Yeah, but what's the net outcome?

It's not about those earnings in my

opinion, right? There's a much bigger

set of story as you highlight at the

very beginning. It's about rates, it's

about the narrative, it's about what

they're trying to achieve at the index

level. The market, I want to reiterate,

there's a reason we have a hedge fund

manager as the head of the Treasury,

there's a reason we have a hedge fund

manager at the head of the Federal

Reserve. This is not a coincidence,

there's a reason they come from the same

family of uh hedge funds and the

Druckenmiller kind of line. Uh this is a

coordinated action. The more you start

seeing it for what it is, the better off

you are. There is a big coming kind of

uh you know, again, not to sound

conspiratorial, I'm not usually that

guy, but they have and they are being

forced, candidly, to to operate in a way

to

given given what's happening in the long

end of the curve, which is going to

necessitate a very big structural plan.

That is what matters here. Day-to-day,

stock-to-stock, those are kind of a side

story um amidst a kind of the bigger

picture.

>> Jim, you had the view a few weeks ago

that if what we thought was playing out

around Bessent's and Co. was coming

true, then you had a view of yields up,

gold and stocks down into the interim

period. It feels like we've checked all

three of those boxes so far. Which

breaks my heart because I'm still

sitting long gold.

Um do you

>> said I said after this pullback, right?

You want to be a buyer of stocks, a

buyer of gold, and they're actually, if

anything, going to try and do the exact

opposite on bonds where they they take

the yield up, spike it to take it down.

And so we'll we'll see, but I'm pretty

sure eventually all three of those are

going to go the opposite way.

>> Okay, so then I have to ask the question

then. I've got to ask the question then

because if oil today is one of these

facilitators of what's happening in

rates earlier?

>> Yes.

>> Did Becht tap Hegseth on the shoulder

and say like, oh,

give us some more pressure in the Middle

East. Give oil a reason to go up a

little bit more and put some pressure on

the bond market.

>> Labor Day weekend. Just be prepared.

Sorry to interrupt. I know that was

pretty

>> I know, but am I crazy am I crazy in

thinking that those two things go

together?

>> is crazy anymore.

>> [laughter]

>> I don't think anything is crazy anymore.

>> Believe your eyes.

>> I think I think the things

I think if we went back and said,

"Hey,

uh, the president has a bunch of crypto

deals at the same time that he's

deciding crypto regulation."

I think

like take us back even 4 years, we would

go, "This is an outrage."

Are we surprised? No.

We're not surprised.

>> We're not surprised.

>> So, so there's a boy who cried wolf,

right? Two weeks, two weeks, two weeks.

So, what point do you open your eyes and

say, "Wait a second. This is just

nonsense."

>> Well, it has to be nonsense. Look at the

price of gasoline today.

>> I'm not saying he tapped Hegseth on the

shoulder and said, "Hey, we could use a

missile over the Strait of Hormuz." I'm

saying it's not far-fetched at this

point.

But also, it doesn't matter because

really the thing is the reaction

function in markets, right? Crude oil

wouldn't rally and was kind of wrapped

around the middle of the wartime range

until it was time to care about

inflation again. And that's just an echo

of warsh. That's the market going, "Wait

a second. We have to think about rates

now. They seem to be hawkish." Which,

again,

I have a very hard time

believing

that

not because they're influenced by the

president and necessarily, but that

anybody on that FOMC is going to go,

"You know what?

We are trying to turn the page on this

thing that we had with Powell and Lisa

Cook and back and and forth. And what

we're going to do is raise rates into

the midterms because obviously we don't

have enough Michigas to deal with

already."

Just wait a meeting or two if that's

what you really want to do.

But the market is not saying

And that's a misread, I think.

>> Yeah, Jim, I see the market pricing in

like oh, the Fed warsh was hawkish

today. No, he was saying stop

pricing things in anticipation of what

you think I want you to do. And so the

market says, "Okay, well, if you don't

want us to follow your lead anymore and

you're not going to give us guidance,

here's what we're telling you. You got

to raise rates. You have to raise rates

for us." Which sets up this really

fascinating showdown because right now

the market's priced in for 68% according

to the Fed watch tool.

Jim, I've gone back and looked to all of

the available data in the Fed funds

history. When you work out the

percentage pricing, the Fed has

literally never disappointed the market

as long as there's been a 55% chance of

something in one direction or the other.

So if the market's priced at 65% and the

Fed actually does not hike, that'll be

the first time in history that we've

seen that big of a discrepancy between

market pricing and an actual outcome.

>> So what do you think the probability of

that happening is?

>> [laughter]

>> No, of course not.

>> Had a lot of firsts. Turn it. That would

That would Yeah, exactly. But you know,

we've never seen a a 20% rally in 2

months

coming from anything less than a 20%

decline in markets

until this year.

>> I I think a lot of people forget that

Bessent that who's not Bessent? It was

Warsh and Druckenmiller co-wrote that

op-ed in December 2018 imploring the Fed

not to hike rates anymore.

>> Exactly. And now he, you know,

at Jackson Hole Warsh writes a a speech

that literally mirrors the the op-ed

coming from

if you if you take an AI model and you

overlay them it's the AI model will tell

you they they are literally talking

about the exact exact same facts, exact

same points, almost matching it seems

like it couldn't be a coincidence.

>> And Morris was the economic advisor at

Duquesne before this current gig.

>> Right.

>> Yeah.

I mean literally he's coming into the

role from Duquesne.

>> It is such kabuki theater. The fact that

this is even a debate in my mind blows

my mind up.

Um

so so I'm glad we got it you know a

couple guys agreeing here

but [clears throat] you got to start

seeing it for what it is.

And we got to start talking about it

like like it like it is. People are

afraid to talk in these terms because it

comes across as conspiracy. If you can't

see what's happening, right? I can't

help you at this point.

>> Well, I mean it's not necessarily

conspiracy. It's just this is what their

view on policy is. This is what they

think we need to be doing.

Okay.

>> Market manipulation because the markets

are too big to fail candidly. This is

again why we have hedge fund managers in

place.

You know, at the end of the day you have

a hundred fifty trillion dollars of

public equities and three hundred

trillion dollars of public and private

equities that are priced off the public

equities.

When it goes up 20% in two months like

it just did, what happens? That's a

fifty trillion dollars of new

collateral. That puts the ten trillion

dollars of fiscal spending we did for

ten years it's like a drop in the

bucket.

Markets are everything. It is driving

all the capex, all the earnings growth.

It is it is if it is if the market What

do you think happens when you take a

three hundred eighty billion dollars

stock like Anthropic and then you get

priced at a two trillion, what happens

to that one point six trillion dollars?

Goes direct to capex. Shows up as

earnings and the appreciation and then

that those dollars go into capex.

It would drive earnings again. It is a

circle and the

the liquidity is no longer driven by the

economy. It has been this way for quite

some time, but it is it is further than

it's ever been by far.

It is now markets are everything.

If the market in two quarters, quarter

over quarter, just goes down 20% just

goes back down where it was, that is a

$50 trillion drawing collateral. What do

you think that does to earnings? What do

you think that does to to liquidity?

The same exact thing we're seeing the

opposite way. The boom in earnings goes

the exact opposite way. And so

very few people kind of everybody thinks

the markets are some type of ticker that

reflects what's happening in the

economy. That's not how the system

works.

The market is the driver of the economy

more than the opposite. They both

matter, but I'm telling you

the markets are so big they drive all

the liquidity nowadays.

And by the way, even the economic

outcomes just from a consumption basis,

50% of all consumption comes from the

top 10% and that the you know, the

earnings of that top 10% are one-to-one

correlated with outcomes and markets as

well.

So

>> Zoltan Posner made

the point he was on a

podcast that it worries him as a

bull here and as a as as somebody that's

long

that basically the entire

thing

rests on the fate of two companies

that lose money,

Open AI and

Anthropic that lose money in the in in

the billions just as an order of doing

things. And so if ever there were a

capital constraint

and then you look at what's being

uh

the policy at the long end, if ever

there were a capital constraint

and those companies fumbled the ball,

that would be an almost instant

recession. And that would be that

feedback loop from what's happening

there. I mean,

Chris, you and I have been talking about

it

ad nauseam since we got those first

quarter GDP numbers where

business investment contributed more to

growth

than did the consumer.

Except business investment is 14% of GDP

and the consumer is 68.

So, what does that mean that business

investment added more to GDP

and it's five times smaller

than the consumer. How fast is that

going and how weak by turn is the

consumer?

>> Well, it's not great. You know, listen,

all this conversation here makes me

think about Oracle because if rates are

going up and we're going to see stocks

down, uh that probably is going to be

bad news for the companies that have had

the greatest financing concerns

throughout this whole shindig.

>> For two to four weeks, though.

>> [laughter]

>> Well, that's fine.

>> And then and then like they're going to

be right back at it and squeezing it

like you've never seen before until the

midterms. So, don't get caught. Like

this is the thing. The market is too big

to fail.

That's the reality.

And the only way out of this mess and

and and and we have debt which is

unsustainable and growing and pushing

the long end of the curve. How do you

deal with all this? There's only one way

out.

You print money and you buy stocks. You

got to just run it so hot that that you

got to inflate it all the way.

>> Bessen said that today. Can only grow

our way out of the debt.

>> [laughter]

>> Can't Can't Can't raise taxes.

>> And how do you grow your way out of this

debt? How do you grow your way out of

this debt?

>> You create a sovereign wealth fund. You

buy $5 trillion worth of equities. You

out pile

you know, money into these stocks to

drive more and more at CapEx and more

and more growth.

And then you hold the long end of the

curve down and you do QE at

infinity.

That's how this is economics 101. This

is how you create an inflationary loop.

But you do create growth in the 1960s

and 70s most people think growth was

slow cuz markets didn't do well. No, we

had 3.8% real

nominal was super hot. We had 3.8% real

GDP growth.

That's why

without the buying of stocks, stocks did

poorly.

Right? Because the discount rate goes to

the moon and multiples contract and

profit margins contract.

This is all economics 101. They know

exactly what they're doing and they're

showing you. They've already started to,

you know, buy the long end of the curve

whether it's through that yen

intervention or the doubling of

buybacks. They're they're getting people

comfortable with it. They've already

started buying stocks whether it's Intel

or MP to get people comfortable with it.

And both of these things are at all-time

highs. We've never seen this before.

Talk about never seen it before.

They're getting the world comfortable

with what's coming.

I'm telling you next year into a decline

we are going to see a launching of a

sovereign wealth fund in the trillions

of dollars

and QE infinity the long end of the

curve at the same time. That is the run

it hot that's coming for the next year

and a half 2 years into 2028.

And that's how it starts. It will go for

the next decade. This is the new normal.

Prepare yourself.

>> Uh like we're not stopping this train,

Elia, no matter what

>> What do you say you're done?