[music]

Bloomberg Audio Studios, podcasts,

radio, news.

>> I think there's a chance you might have

to re-record an [laughter] intro or at

least the intro might be out of date by

the time the episode comes out.

>> That's how you know.

>> That's how you know it's bad. That and

when people start waving around standard

deviations,

>> standard deviations

>> and also when people start saying it's a

healthy correction in the market,

although I haven't seen that much of

that.

>> It's pretty gnarly. Also, when we don't

just say the date that we're recording,

but [laughter] we say the minute we're

recording this at 7:04 a.m. on February

6th, 2026. All the signs are back.

[music]

>> Joe, I want a t-shirt that says ruthless

utility maximizer.

>> Black gold.

>> Let's talk about losers.

>> Who cares?

>> I've decided I'm going to base my entire

personality going forward on campaigning

for a strategic pork reserve in the US.

>> Skulls Unlimited.

>> Ooh, what's the ticker for that? No, I

think that like in a couple years the AI

will do a really good job of making the

OddLots podcast.

>> How do I get more popular and

successful?

>> One day that person will have the

mandate of heaven. We do have

>> the perfect guest. [clears throat]

>> Welcome to Lots More, where we catch up

with friends about what's going on right

now

>> because even when Odd Lots is over,

there's always lots more.

>> And we really do have a perfect guest.

But it is weird, isn't it? Because it's,

you know, it's a little different.

>> It's been a while.

>> Very strange. It's a surreal It's a

surreal type of market environment,

especially over the last week.

>> Right. So, if you've been living under a

rock, markets have been tanking. There

have been a bunch of different things

going on, but first of all, gold and

silver and the metals complex started

plunging.

>> Then you had like basically a slaughter

in software stocks. What else? There was

one. Oh,

>> and crypto.

>> Crypto. Crypto is a big one. So, Bitcoin

is like down to 66,000 something like

that.

>> And I think it hit 60,000.

>> Oh, wow. And that's the thing. I can't

keep up anymore.

>> It doesn't matter.

>> And also, there's concern about private

credit because private credit has so

much exposure to software and they

basically lent all the money at the top

of the valuation cycle, which I wrote

about in the newsletter yesterday. But

anyway, there's a lot to talk about in

markets. Who do we call when markets are

moving? That's right.

>> Sup, Charlie.

>> You guys are amazing.

>> So, this is Charlie McGeligette. Of

course, he is the crossasset macro

strategist over at Namora. I'm going to

start with the the simple question.

Maybe it's not an easy question, but

what was the approximate catalyst for

all of this because you have a bunch of

different things going on, including, by

the way, the nomination of Worsh at the

Fed. So absolutely part of the feedback

loop

>> and but these things are never singular

input you know in a world of thousands

of macro factor variables in this case

and you know I'm an ambulance chaser

that's kind of what my gig is a grave

robber a carpet bagger [snorts]

you know all those things I try to

reverse engineer car accidents yeah

>> and kind of the qualitative starting

point of that is to locate

consensus

positions that tend to then crowd

>> in positioning when trend trades develop

that's usually accompanied or

requirement or requirement being low

volatility to accumulate those kind of

smooth trends. So point being I think

there were a number of market narratives

that got a little lazy.

You know, for instance,

Q4 of last year, as we recall, I think

there was, you know, somewhere 3 to four

months ago, there was still a fair bit

of concern with regards to this idea of

like labor cracking, you know, and there

was still a lot of feedback with regards

to Liberation Day

>> and the policy volatility dynamics, you

know, before things really got hot with

policy volatility most recently. Um, and

that was leading to some, you know, some

skepticism and as it relates to kind of

the equities world, what did you do? You

just stuck in the stuff that kept

working. And that was that same dynamic

we spoke about a number of times last

year. You know, that crowding into

secular growth, mega cap tech, AI, they

just keep growing earnings,

profitability, all of those metrics, and

they took up this massive part of the

market. That's part of this positioning

that set you know at some point in Q4

run hot starts happening. you start

seeing data upside surprising again,

right? He starts openly and more

recently transitioning into January

talking openly advocating his weak

dollar policy.

>> Europe is playing along Trump, right?

You know, so you you start having these

things where people were really

accumulating around effectively a lot of

short dollar trades.

>> And when I'm sitting there and I'm

seeing like how do these narratives go

wrong? How does this crowding go wrong?

And I'm seeing, you know, gold and

silver being attributed to this

debasement narrative or this

ddollarization narrative. There's

credibility in those arguments, but I'm

also a skeptic with regards to the flows

and the actual like singular catalyst of

those. But I start seeing those

positionings really overshoot. We're not

talking like linear projections like

bending off the curve type of, you know,

price performance of late. I see EM

equities crowding. I see cyclical

equities because everybody owns secular

growth and nobody had enough economic

sensitivity. So I start seeing these

kind of positioning overshoots, you

know, that's all the work that we do

internally. And it just said if the

dollar starts agitating and it stops

going lower and you start losing these

short-term trend windows and then you

get, you know, maybe a little bit of

wow, we didn't get the max doubbish

hasset trade, right? Oh, we start seeing

upside surprise data. When everybody is

short dollar and thinking rest of world

growth and actually US is maybe leading

to the upside again or reacelerating

dollar starts performing,

people start monetizing and you start

taking money out of these trades and

that turns into a bigger derisking.

Obviously, we want to get into like got

to get into everything including like

the software selloff and its connection

to silver etc. You know, it occurs to me

speaking of the software thing and I'm

glad you brought up a liberation day.

One of the memes of 2025

>> was just this idea that well look we

don't really know what tariffs are going

to do. We're not really sure what effect

they're going to have on the economy.

But one thing we could be pretty sure of

is that it's only going to affect the

sort of physical goods economy and not

the digital economy. And so tariffs in a

way sort of seem to embolden the

software maybe crypto digital trade

because it's like this stuff is

borderless. It doesn't it's not going to

get held up in customs. So let's lean

into this and then so it's interesting

to hear you know then you get this big

reversal. Can we measure it when you

talk about like how leveraged and how

consensus these trades were whether

we're talking about software or

whatever. Can we measure how crowded

those trades were, how levered these

trades were?

>> Absolutely. I mean, I I'll I'll look

across, you know, we we we have internal

money that we run within QIS businesses

where there's billions of dollars

behind, you know, very sophisticated,

not like naive toy models from trend to

risk par, you know, vault control,

target volatility. So, I look at where

those gross exposures are and like

period point blank grosses were too big,

right? If you look at a snapshot of a

model risk parity portfolio, four

assets, long only using leverage to

allocate your volatility, right? Long

only in equities, bonds, credit,

commodities, different waitings based on

different economic scenarios like very

kind of generic risk parity.

>> We're seeing on a let's say a 5-year

look back 99 spot 7 percentile gross

exposure. It just so happens, right, you

know, Goldman Sachs prime brokerage data

with regards to equity hedge fund

grosses as of last Friday, 100

percentile on a 5-year look back. So

like these are these are synonymous. Now

now gross exposure is not purely a

function of trailing realized

volatility, right? Different strategies

deploy different leverage. different

strategies, you know, will try to

amplify a market neutral versus a net

lean or a directional lean, but by and

large, the grosses were too damn big.

It's like the guy that used to run for

mayor. And when you see grosses being

that big and you see prices bending off

the curve and you see the the thesis

behind it, and this is where I I'm

pumped to tie in like the Bitcoin read,

right?

>> Yeah. if debasement was actually what

people are saying it was right this idea

that in darization you know moving away

from fiat you know US policy volatility

US fiscal deficit which by the way okay

like same with Europe same with Japan

now you know with their little trust

moment you know Europe is taking the

austerity break off that's a global

phenomenon with fiat currency so like

okay I can get with that to a certain

extent but like why didn't Bitcoin

participate if that's what people kind

of claim is, you know, Bitcoin's a shape

shifter as is gold. But, you know, my

story and my skepticism with regards to

that debasement or that deolarization

was the way that Bitcoin absolutely did

not participate when it was gold and

silver. And I and look, you know, I sit

in an options business. I see just

outrageous call SKs and demand for

upside and people, you know, keep

putting on keep reloading into these,

you know, the call spreads and upside

trades in SLV and GLD. The options

volumes are massive. We became a

speculative macro touourrist retail type

of a trade on top of all this.

Bitcoin kept going lower and I started

seeing one if people are grabbing people

clearly have this preference for real

assets you know physical assets right

now in this world of debasement of fiat

of fiscal deficit spend perpetual

issuance all those things Bitcoin is

trading like software it's trading like

SAS which is going through an

existential crisis right now for really

justified reasons especially with

regards to valuation right and the funny

thing is when we were talking about, you

know, how AI was actually going to I was

making the point kind of Q4, start of Q4

last year, there's two major tailwinds

for equities that become potential

headwinds in 2026. They're very well

socialized, but they still ring true.

Ironically, we kind of got a back door

on it. One was that the capex spending

with regard to AI, you know, was burning

your cash and you were moving through

the cash so fast, right? and the cash

that made these companies so preferred.

So, you know, screening is quality and

profitability and all these great

things. They're liquid. They're big. You

can move in and out of them. They only

go higher, you know,

>> and they did a bunch of buybacks.

>> Well, that's the trick, right? So, like

you aggregate kind of like the MAG seven

or like, you know, maybe the 12 biggest

kind of like AI contingent types of

players. You're talking like 20 to 30%

of the overall S&P 500 buyback. So,

that's a huge point for me because I've

made this before. Buybacks are like

seven to eightx the largest source of

demand for equities over the past 15

years.

>> Wow.

>> And it's a vault suppressor.

>> Yep.

>> Right. I mean, you are a

>> you're a passive bid under the market on

a Vue up order or more importantly, when

there is a draw down, that's when they

get most active. So, it's like long

gamma. It's like synthetic long gamma

market. So, one, you're burning through

your cash and you're no longer doing

that. two, you're burning through your

cash and you're no longer buying back

stock as this v shock absorber and

passive bid into the market from kind of

sort of a quarter to a third of the

overall S&P's buyback that you're then

too having to take on this new debt. You

take on new loans, you know, to a

certain extent, you're trying to lever

the balance sheet, but you know, more

importantly, what does that mean for

credit? Credit has been this perpetual

kind of va bleed.

>> Yeah.

>> Because spreads are so tight, credit,

>> people have been issuing to fund

buybacks as well.

>> Yeah, 100%. I mean, ironically, that's a

probably a separate podcast. But

remember, we used to kick and scream

like, "Ah, QE, this is crazy. Like this

malinvestment, like they're bringing

debt for buybacks and they're not doing,

you know, R&D and they're not spending

capex, they're not building plans."

Well, here you go. You know, Duck said

something like this, you know, many

years ago in an interview. He's like,

actually, when you start to see, you

know, the cash turn into capex spend,

there's usually kind of a point of

agitation. It's not always in the right

direction for equities, let's say,

right? And in this case, I think we're

starting, obviously, we're starting to

get that, but the credit point is

critical because the pace of the capex

kind of prisoner dilemma that we're

still seeing right now with like

yesterday's earnings releases. The

magnitude of that supply in the

investment grade market is simply going

to widen spreads. Tech is a big part of

that. Now, this is the punchline.

bringing it back to software, bringing

it back to Bitcoin

as we were all kind of watching this

potential for, you know, the credit

markets to become a headwind. Not in a

shock, not in a freeze, you know, not

anything close to a systemic dynamic,

just too much supply with spreads too

tight. You're not being compensated for

it. So, like there was kind of this

general shortened credit because guess

what? The whole world is watching one in

like baby footsteps. Can Oracle get

their funding done? That was the one day

we had a sigh of relief this week by the

way. They got 25 billion of investment

grade done plus converts

>> with like 129 billion of demand. The

market huge exhale. But guess what? Open

AI is still in the background somewhere.

We're like kind of sort of in the next

two months they got to come up with like

anywhere from 100 to 200 billion bucks.

And that is still a major point of

skepticism.

>> It's not a funny punchline, is it?

>> No, it's not. it doesn't make you feel

really good. But here's the thing as

Anthropic has done their thing and I

mean bang you guys are in in it right

now with regards to claude and the

implications of vibe coding and you know

a whole reset with regards to certain

industries and taking out even if it's

just the basic level of like legal

compliance documentation and we've seen

it start to hit bottom lines with

regards to earnings mentions and things

like that that is happening so fast that

software is going through this

existential crisis and here's the deal

those dudes are stuffed on restricted

shares. They're stuffed on RSUs in the

concentric circles of

VC boys and tech boys and SAS bros and

Bitcoin bros has a lot of overlap.

>> It's all the be boys and bros.

>> It's not a ven diagram. It's just a

circle.

>> It's kind [laughter] of like straight up

overlap. And you know, in this sense,

you can't sell. you're kind of being

haircut 10% it feels like every week

right now with regards to do I have a

job what are the prospects where is this

industry going

>> and what do you have to sell you know

and I think that that's why it is

trading tick for tick year to date with

SAS software and it's quite remarkable

and that to me as I step back to this

large conversation

it's not really about the basement

right this is a digital phenomenon this

is a liquidity crunch with regards to

this the idiosyncratics of that sector

really coming under attack.

>> And by the way, now it's also become a

backdoor credit story where it's not

simply the spread widening from the

hyperscalers. It's people worrying now

about private credit, private equity,

the BDC guys which are, you know,

sitting on a lot of this stuff with, you

know, really tricky valuations and not a

lot of like buffer room on, you know,

with gross covenants and things like

that. So, you know, it's become a huge

macro story. They kind of did the

endound with regards to where we thought

it was going to come. But we can handle

a couple things at once. You know, you

all of a sudden you get a little bit of

a surprise with regards to the Fed

chair. Dollar stabilizes. You already

had people in all these short dollar

trades. People start taking money out

of, you know, gold upside, silver

upside. They start taking off some EM

upside. And at that point, like last

Thursday, I'm looking at grosses. I'm

looking at our CTA trend net exposures

in commodities and metals 98 percentile.

I'm looking at our net short dollar

exposure 0 percentile. Look at our net

equities exposure 97th percentile. I'm

saying these are the qualitative things

I need to see where profit taking and

monetization turns into a riskmanagement

exercise.

>> [music]

>> So speaking of selling what you can and

not necessarily what you want, one of

the reasons that yesterday, February

5th, I guess, was so painful is because

we started to see the places, the few

places where people were able to hide

start to go down. So consumer staples

for instance, it wasn't a big drop, but

still they'd been surging earlier in the

year

>> as people sort of switched out of

software and into consumer goods, but

now it's not quite clear where they're

going to go. So correlation seems to be

picking up, right? Like in a market

crash, correlation goes to one, but at

the same time, I can't figure out what's

going on with implied correlation

because if I look that up, it's still

pretty low. So this is you know

absolutely topical and it's something

that you know we continue to get

questions on over the last few years you

know that generic like why is V so low

right you know and low V or high V is

incredibly subjective it's about the you

know the V surface it's about skew it's

about where the starting point was where

you've moved from how quickly all you

know it's it's art plus science the part

of the problem with V in general

certainly being sticky and I think it

comes down to where the money has flowed

with regards to the hedge fund space is

that you know maybe 101 15 years ago the

long short universe you know running net

exposure

was I don't want to say you know

necessarily dollar for dollar like axed

or necessarily larger than you know the

multistrats at the time but like they

ran net and they would lever up

positions or they would hedge their

longs and there were you know generally

speaking there was buyers volatility

with those guys to a certain extent you

If you look back kind of on the sort of

let's say five at 10 years of dollar

flows into the hedge fund space with

regards to all new flows multistrats are

conservatively 80 cents of every dollar

in

>> and then if you actually include

outflows from other strategies you're

legitimately through $1 of. So the point

I'm making here and multistrats are

unbelievable

with regards to their low volatility

with regards to the consistency of their

returns with regards to the the

disciplined risk management the tight

stops model yeah

>> the non-correlated returns which is the

whole story why people keep allocating

into them

>> they've proven to be such an absolutely

undeniable force hence all this dollar

flow but think about it like this. We

don't see the core ones anymore. And

this is like

>> core ones.

>> Core ones meaning like when things

shock, everything trades up together or

down together, right?

>> And that was kind of the old state of

the world. But now what we tend to see,

and this is exactly what we saw earlier

this week when you had, you know, and of

course financial market returns are not

on a normal distribution, but for you

know,

>> I hate people that point that out.

>> It's like it's like like something in a

pharmaceutical ad.

>> Yeah. like you have to include it cuz

otherwise someone annoying

>> don't take this drug if you're allergic

to this drug. Yeah. So the point here

being that you know you would see kind

of like a risk on risk off type of core

one phenomenon you know in past era.

Part of what is happening now in my

mind, you know, with these, you know,

little bit of fragmented, you know,

bullet points, you know, triangulating

here is the fact that the dollars and

the leverage controlled by the market

neutral multistrat equity space are so

overwhelming in the sense that when you

get when you are forced to derisk or

degross,

you know, the tilts go wrong

>> that you have the offsetting short on

the other end, right? It's not just you

stop out of your net longs or your

crowded longs, right? It's that you're

also, you know, theoretically an equal

dollar amount on the short side being

covered. And what ended up happening on

like the two big down days this week, it

was like 250 stocks were up, 250 stocks

were down. So, you're getting this like

reverse dispersion.

>> Yeah.

>> Right. very much the opposite of what

last year was which is this crazy

concentration of like top decile bottom

decile just spread 99th percentile on

like a 10-year basis which feeds into

why people are loaded into momentum

right the higher stuff keeps going

higher it's human nature this is like

fine French this is factor alpha you

know commoditized alpha so these things

I think due to this kind of where the

dollar flows have been the market

neutrality the fact that there's always

this offset against it you're not

getting core shocks and when you don't

get core shocks necessarily at least

initially because V did not really react

until just like two days ago and

yesterday volav

you need correlation as an input to

higher vault to like sustain and you're

just not getting that you still have low

core now the trick is to your point D is

very interesting you mentioned the

defensives right

>> the reversal that we saw when people

said look I'm I'm too much exposure in

secular growth mega cap tech AI I which

gives you a lot of momentum exposure a

lot you know you know unintended kind of

exposures that when people said I need

more economic sensitivity I'm taking up

my cyclicality right the three best

performing sectors kind of year to date

for most of the year have been like

energy materials industrials right right

stuff that people have kind of been

underweighted for the longest time

>> in the absence of a hot economic cycle

you know but also too when you started

seeing defensives join in that rotation

like it was this massive value

overgrowth trade and that's the three

four 5Z score types of moves that you're

talking about where people didn't have

that stuff on and your longs go against

you and your shorts go against you and

and that is also amplifying you know

these kind of moves because look it's

not just the market neutrals like

they're not boogeyman here they're

unbelievable they barely lose money ever

on a monthly basis they just have very

disciplined tight stops to to get out of

these leans and tilts

>> hard and fast unemotionally and but

guess what it's you know retail it's all

the story stocks all these themes that's

why I pointed out for the last two years

of the boom in leverage ETFs like 82% of

the assets in leverage ETFs which act

like synthetic negative gamma right the

higher you go the more you have to buy

at the end of the day the lower you go

the more you have to sell you know

massive pool of aum now because of like

retail you know tilted speculative

leverage behavior are tied into that

concentric circle of AI mega cap tech

semis you know disruptor crypto so we're

super overweighted super overindexed to

that stuff which amplifies when you have

the tight market neutral stopouts, you

know, with all that leverage with all

that AUM, you know, to get their factors

right because at the end of the day,

those guys are not trying to make factor

bets. There's scenarios where you maybe

run even a little net if there's like a

big, you know, economic reaceleration

trade or something like that. But

generally speaking, the idea is like we

don't want beta to the S&P. That's the

point. That's why people pay us. Stop

comparing us to S&P returns. So all

these things are part of this like

backdrop plus the narrative overshoots.

To me

>> that was fantastic and it's very

intuitive. I mean there is already good

theoretical ideas for thinking that the

multistrats

were huge drivers of all this. And then

when you add in the fact that the

staples like the sort of underloved

areas or energy materials are the

winners very intuitive to your point on

software you know no one really knows

obviously the degree to which AI is

going to obliterate these business

obiate these businesses no one really

knows but like from the perspective you

mentioned the tight stops that each

manager has within these firms. Can you

give us like some sense of how much is

it like look I just want to keep my job

here and this is the ugly stuff that's

going on and so I'm just going to sell

now and ask questions later. Like how

much does that play into on a week like

this?

Well, we're we're talking about wide

swaths of strategies and active, you

know, systematic versus, you know, field

directional trading. And, you know,

>> you know, tight stops are, you know,

typically that, you know, down 2% kind

of down one and a half% maybe even in

some cases. But you know that's why it

is managed so microscopically and you're

extracting these you know basis points

of alpha in your longs and shorts and

then you know using leverage like a you

know a market neutral is probably 200

300% gross by and large like long short

was always kind of like 50 net 150 gross

something to to that extent but they're

just not as big of a player anymore but

you know that's the trick here like when

I start seeing I always love the

systematic stuff because it's so tied in

it looks a lot like the options market

And market structure by and large feeds

momentum now, right? You're not scaling

out of positions the more they trend.

You're loading into them. So like

whether it's target volatility or CTA or

you assign a an exposure target you know

a leverage target and if the volatility

is five and your V target is 10 you got

to lever that two times or 12 you know

like and that is ironically the lower V

goes the more you need to add leverage

onto that position right to match your

target and that's why that's the problem

we create crashes because all of modern

anybody who's like on a VAR model is

actually a momentum trader, right? You

have to delever when V goes higher by

and large. Now, of course, if you have a

high conviction bet and V goes higher,

that's actually going to be part of your

potential return profile. You know,

that's great. And God knows people have

learned to like, you know, sell Rich V

and buy, you know, buy dips. It's become

conditioned. These time horizons are

like hours at this point. But like

>> some people have made an entire career

out of doing it once.

>> Yeah, for sure. And I mean, you got to

have a titanium stomach. Like I've been

talking to a buddy all week at a multi,

you know, this absolute madman and

there's many others like him. You know,

he's been shorting silver the last two

weeks. I'm like, "How you been sleeping,

dude?"

>> You know, he's like a little better now,

but you know, there's

>> the silver moves are unbelievable.

Yesterday was like 16. I mean, these

I've seen two people I've spoken to say

that the silver move specifically may

have been the crazy one of the craziest

moves they've seen their entire career.

>> It's crowding plus the trend plus the

optionality plus the leverage ETF. You

know, the optionality is leverage in and

of itself. And it's high beta, you know,

as is to regular, you know, big brother

gold. So, these moves are, you know,

wild. But we know that in the era of the

speculative era, you know, people seek

the movement. That's the opportunity.

You are not going to retire 4% in cash.

You know, that's just the way this world

works right now. Now, you know, do you

necessarily need to be like shorting V

or things like that? That's not the way

to do this. But people yolo. It's that

financial nihilism that we've spoken

about, you know, many, many times. You

seek out the movement. You want the

stuff that's moving. And generally

speaking, and this is where it's so

interesting, like you try to press moves

by and large, certainly like the retail

cohort, the world is not built the vast

majority of the time for mean reversion

anymore. Value is mean reversion. Like

something is rich, something is cheap.

It's this counter kind of like a gamma

type of a flow, you know, long gamma

type flow. we feed moves now because of

the riskmanagement dynamics and

especially too just like market

structure how much trend there is built

into the market leveraged ETFs options

things like that you know particularly

the way that people tend to use them

which is kind of to to feed into

prevailing moves

>> so all of this kind of changes the

behavior and the expected outcomes where

you know momentum has been you know this

remarkable factor

for you know academic history studying

these things because of like greed and

fear and things like that and moves can

extend longer than you think. Just

because a trade is crowded doesn't mean

it's the wrong trade. But when you start

to layer in, as I said, the positioning

data, the overall leverage data, the

kind of the conversational qualitative,

how many people are buying into this,

but then you see, you know, some like

divots here and there and like the story

and it doesn't actually make sense. And

actually, this thing is starting to

stall and now I got people taking money

out this thing and I got trend this

loaded into it. This is going to unwind

hard. And I sent that note Thursday, you

know, started unwinding hard. Friday,

doors got blown off. And guess what? It

waterfalls. So other crowded trades go.

Cosby, everybody was like, you know,

no-brainer into that. Japanese bank

longs, right, which are short JGB proxy,

macro tourism. Like people start coming

out of these trades because they're

noncore, but they were high sharp,

>> right? So flows before pros, but now the

pros are chasing flows and that's

hurting the bros. [laughter]

>> That was good. That's really good.

>> That's incredible.

>> Thanks. Um, okay. So you just touched on

this, but what stops the bleed?

>> I think you're, you know, you're getting

certainly some relief here. I mean,

look, people will say, you know, at some

point on a smaller growth,

you don't really have to do anymore. You

don't have to reach for hedges, which

get dealersh gamma, right? Because

you're you don't, you know, have as much

exposure anymore. That's the first step.

People then have to monetize their

hedges. It's the way all of these

reversals happen. you take off your

hedges or you take off your directional

stuff, whether you're shorting futures

against the moves or you're buying

downside puts, you're buying VIX calls,

you start to unwind that and guess what?

Like now the dealers got to take off

their stuff and you got delta to buy.

And then some people say, "Oh,

everybody's taking their hedges off

around the street. Market's starting to

rally off these lows. I'm going to buy

some zero DTE calls." And you know, then

you create more delta to buy.

>> We're back to the races.

>> And and and V starts, you know, V starts

rolling over and guess what? Then the

systematic the v supply people come out

of the woodwork and they feel

comfortable to come back in lean into

this and that's de facto by the dip

right so th this is the cycle and the

world that we live in there's too many

assets this is a final point that that

may be tangential here but with regards

to how these dynamics end it's not

necessarily about like back in the days

like Warren Buffett steps in you know

provides some you know financing line or

you know Toma Bravo stepping in doing

some like deal

>> Satoshi Nakamoto is calling up Warren

Buffett Yeah, I don't know if that's

pulling up David

>> offering 10% of uh

>> it's more about you know these flows

kind of stopping the bleeding but you

know this is the other thing too like

the V flows are so important with

regards to the like the hedge unwinds

and creating the turn in the market the

inflection especially with the

conditioning buy the dip sell the vault

rip that like fixed income has been

trash for five years since the

tightening cycle since you know poor

inflation still running too hot right so

people said Look, this thing doesn't

work for me. It's not helping my

portfolio. My 6040 is awful, right? But

I can't just be long equities, but I

need some yield. I'm I'm boomer. I'm

old. I need some, you know, some

enhancement, but I want equities upside.

And we've talked about this so many

times, and it's true, you know, because

the assets keep growing. All these yield

enhancement vehicles, all these income

vehicles, they're selling equity

optionality. So, your long underlying

equities, you cap that upside to a

certain extent, but you're generating

yield by selling options. That's the new

fixed income. And those flows matter

because those flows that when the kind

of the coast is clear, they just come in

and it's just Vegas supply and it just

smashes all back down.

>> Thank you so much for for coming on at

short notice.

>> It's 7 in the morning.

>> 7 in the morning. Thank you very much.

>> Midday.

>> Yeah. Midday.

>> Yeah. Your day's over, right?

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Brooks.

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