Well, it is uh round two with dave. This is uh man i got ta tell you. I am always excited to chat with you dave lauer uh, not only because you're intelligent, but i i like that you laugh at my jokes. I got ta.

Tell you last time we talked, i compliment you for uh. Looking like you lift, and i i don't know if you can tell, but i i i've uh, probably you're, looking good yeah yeah, i'm trying to catch up, i'm trying to catch up. I get it like. You probably have as much trouble gaining weight as i do.

Oh, it's, tough! It's tough! It is it's! It's just hard to eat that much food. You know yeah! I know i got ta eat a lot just to maintain. That's where i'm at that's uh. I get that down to my core well uh.

First off, if you don't know dave he's a very intelligent guy. Uh he's got a background in mar uh market micro structure. Uh he's worked with citadel in the past no longer there. So that's a saving grace.

I'm kidding uh, but he's a very smart guy. He's got a lot to offer so hopefully enjoy this conversation but uh how you doing man what's up what's new, what are you uh? What have you been up to doing good? It's always uh an interesting day here in markets right every day is something new. It seems um, but you know i've been i've been working hard, mostly on the terminal which is uh our product, that we're hoping to release um in a couple of months and uh. Just sort of been navigating the space of uh data, really i've been kind of living in data.

The last couple of weeks negotiating with some vendors and you know trying to bring in the highest quality best data at pretty exorbitant prices. But but i'm pretty excited with what we're building and you know, that's been a main focus and you know really just trying to stay on top of all the the new developments and markets and trying to think about what next year is going to look like. Because i think it's going to be an amazing year uh for market structure, which is not something i would have said for most years in the past. So that's that's pretty exciting to me and very few other people but exciting nonetheless.

So this kind of leads us into a good way to to pivot this conversation well, but but first, let's hear about the terminal right so how's this terminal compare to uh current market structure. What's it going to do to improve current market structure and as always, i'm going to link this down below if you'd like to check it out yeah, you know so we're trying to build a product for retail investors that gives them access to the same data and Tools, uh, that that i was used to that i've been used to on the institutional side, and so you know our our thesis is sort of with better data and tools and a platform built for collaborative research. Um. You know the the community and retail investors can do amazing things, and so you know that's what we're trying to come out with early next year and then there's another whole side of it.

That's just focusing on education and advocacy and that part of the site will always be free and i'm going to really focus my time on that. So i'm very excited about it and i think that there are a lot of good opportunities for retail's voice to be heard in the market structure, debates that are going to be coming next year. I think they're going to be more like wars. You know it's going to be sort of a knock down, drag out fight, and i think it's time that you know retail is represented um by itself by by the community and by by people who really represent retail interests rather than the internalizers and the the discount Brokers who have always claimed to represent retail, and so i think that kind of sea change could really have a dramatic impact.

So that's what i'm most excited about in a world of uh of of hedges and mortals, we were graced with uh captain redbeard. I i appreciate the rundown of that, so why are you excited about 2022 right? That's probably a good place to start what about 2022 in particular? Gets you excited for market structure, micro market structure right? What kind of change do you see coming uh in the future? Yeah you know, i, i think that next year is going to be the first and really the only opportunity that retail has had to make its presence felt from like a regulatory perspective, right and and and so uh to me, it's a it's a really. It's really unique timing because you have someone at the sec and gary gensler um, who wants to take on the problems that we talk about so much head on and - and i know, uh people can be frustrated and they can see the last. Let's say six months or year really as a time of inaction, uh and - and i know how frustrating that is - i've been doing this for a while, and these things take time.

But i got ta say that you know, hopefully when it does hit when when um, you know my what i hear my expectations are: that there's a big proposal, that's coming down the pipe um and that will attack head-on payment for order flow exchange, rebates, off-exchange trading, Um and the fact that you have someone willing to take on some very powerful, politically powerful interests is, is unique and then not only do you have that on one hand, but you have retail ready to get behind him and ready to support that, whereas in the Past, even if someone were willing to take on these practices, you would have had citadel in virtue and td, ameritrade and schwab, and now robin hood saying hey, we represent retail and this will not be good for them, and i think that that conversation has changed dramatically. Um, and so that's that's why i'm excited. I think that there is going to be this opportunity for us to make our voices heard in a very constructive way and in a way that is supporting. You know the sec and what they're going to try and do and supporting them against very politically powerful interests, and you know there's no way to know how it's going to come out.

I can guess i can guess that the sec is going to make this proposal. Hopefully, we can marshal resources to support it and show that you know there is a very there's, a grassroots groundswell of support for these kinds of changes, and maybe that's enough to get it over the line. But you know, what's going to happen is even if the sec approves the changes. I bet you know dollars to donuts they'll get sued by citadel, like we've seen it before.

We've seen it before they'll get sued by the retail brokers, they will sue their regulator uh and they will try and at least slow it down, because it's a cash cow for them and every month they can keep it going, is millions and millions of dollars more In all of their pockets, and so they'll do everything they can to slow it down and delay it install it, and i think that again, as long as sort of retail is here for the fight and here to in for the long haul uh, hopefully we'll we'll See these changes come through. You know it's interesting, as you said, political interest, because what comes to mind immediately for retail investors, like just myself in particular, is market makers, institutions right the big guys who can move dollars around in the market, but uh is there anything else that you you'd stand By in terms of the sec having to butt heads with right, uh dollars getting matched, you know this is what my assumption is. Is market makers institutions get backed by politicians, which is why i think it's fascinating, that you said political interest, what kind of uh? What kind of friction is is the sec up against? You know what what are the retail gon na be up against? You know right, no, it, and, and that's it exactly right. The sec is, is also going to be going head-on with congress, and we don't know.

What's going to happen in 2022, in the the midterms right uh, we we can speculate and we can say well if congress does flip uh sides. We have seen this become a partisan issue and that that's a shame right this. These issues around regulating markets and and sort of these, these statistical discussions about what's right and wrong, should be bipartisan um. But we have seen that not be the case and you know i'm i i am not trying to be political um and i i do try and avoid that these days, because it gets so heated.

But you know it's very clear that the legislative proposals to ban payment for order flow um are coming from the democratic side and the legislative proposals to uh to support payment for order flow are coming from the republican side, and so right now you know the sec Is controlled by the democrats and congress is controlled by the democrats, and so this is the window to do something, because it is not hard to imagine that after the midterms congress is no longer controlled by the democrats. That being said, it's so hard to get anything through the senate uh. I think that the the real force that the sec will face is more of an oversight course rather than a legislative. I i don't see the senate actually passing a law on payment for order flow one way or the other.

So in that way, it's sort of up it's all on gensler and what he feels like he can do and what the administration feels like it wants to do. Uh, but you know there: there are these political forces that um, that are it's all about funding right. It's all about campaign finance, unfortunately, and you know when we talk about politically powerful forces, we're talking about wealthy firms and individuals who influence the political process uh for their own gains uh, rather than for you know, trying to figure out what's best for markets and, what's Best for the country, and - and so you know, i think that that's a very difficult thing to go up against and we have seen time and again uh that regulators um, you know, cannot succeed when they go up against that those kinds of forces you have not Just those political forces, but you have the regulatory revolving door right, so you have staff at the regulator. That's looking for their next job at a high paying hedge fund um and at the fed right we've seen constantly seen.

People go through that door, uh, and so it makes it really difficult to to take on those kinds of forces. You know this is something that i i struggle with a little bit myself right, so i watch gary gensler we've talked about it before, and this is probably just a difference in experience right from my perspective and i'd, say many retail uh. I see him tweeting about things regarding spax special purpose acquisition companies right, which is important - it's absolutely important, but i don't think it's for focuses. So you get this like uh.

The sentiment within retail within i'd, say the majority of uh. You know investors of what what the is happening. You know what's this, what's this guy doing so, from your perspective, what is it about gary gensler and uh, and you know, sort of the sec breakdown right now, that's different from where it was before. Is it necessarily who's in office who's in the seats or is it retail? Is it? Is it the little guy making so much noise that kind of forced the hand combination of both that's kind of a multi-faceted question but um? That's that's like for myself and i'd.

Imagine many others, that's the struggle is like it's hard for me to fathom that that's actually gon na happen. You know you know i i got excited when i saw there was a new speech about to come out uh and i looked at it and yeah. It was all spacks and - and i agree you know - i i think spacks are something that are worthy of attention - anything that um. You know that, where investors can be ripped off very easily or lose money through complicated structures, i think needs to be addressed.

I've i've spent a lot of time thinking about specs, i sit on the board of a canadian stock exchange that has had a lot of specs go through and we've thought long and hard about these issues. Although i'd say that some of the things in canada uh are different than in the us and better um, but you know all of that aside yeah, i, i kind of had a very similar reaction. Come on man like yeah, yeah, yeah, yeah, you know, and and and and so what is different this time. I i one and most importantly, it is a a factor of who's in the seat and what parties in power there's no way around that right, whether you're republican or democrat, the republican administration with jay clayton as the chair, had very different priorities.

You know these issues. I've been, i was in a meeting with jay clayton when he was chair of the sec and - and i brought up these issues - that's insane. I mean you've talked to some crazy people. I get excited when uh.

When i talk to my mom, i don't know, go on, i mean they cut you off, you know, and no, no and and i've been bringing up these issues i mean i i've been bringing the bumper through other chairs as well and other commissioners and um. You know you need the political will not just of the chair who needs to be behind it, but he has to have the admit or he or she they. They have to have the administration behind them um, and that was not the case with jay clayton it with jay clayton. It was a deregulatory agenda, um and they were trying to.

It was a very corporatist, a very pro-corporatist agenda and - and that's i to me - corporatism - is a bipartisan issue. Both parties are corporatists and it's really sort of the rod at the core. So right, that's not to say that the dems aren't it, but it is to say that the gensler came in with a very different approach. He is a unique individual, so you have to start with that um.

But you know there is a question of. Would he take have taken this on um in the way that we expect him to without retail behind him? And i i can't answer that question um, but i would like to think that you know this movement. This community is playing a role, and, and - and i will i will say that, even if that you know, regardless of whether that's the case or not, in sort of um spurring this on, it will be the case that this will be successful, because the community will Will support it and and and will make its voice heard and will drown out. You know the interests that want to maintain the system and if we can drown them out, that would be a dramatic difference from years past, where maybe there was the will to take it on.

But there was just too much to take on with the internalizers and the market makers and the discount brokers, fascinating man, that's uh. I haven't really thought about the sec prior shares. You know that's something as as a new investor, maybe maybe a lot of retail investors. I can't speak for most, but for myself, i'm pretty young, i'm a 24 year old kid uh straight straight out of college, didn't know a whole lot about nothing and you really don't think about sort of the history of who sat in the chair before oh yeah.

It's sure, like an interesting perspective, i've been sort of in this since mary, jo white and obama, the obama years and um, you know. Even then, there were different priorities and the the general consensus was that markets were working well, but also you need to know that like back, then, if you looked at off exchange volume, it was more like they're in the low 30s, not 90 in a single day. For sure yeah, and so it wasn't, you know when we were looking at the problem then, and - and i remember because i i found a study and i really tried to promote it. That said, you know if we hit 40 off exchange volume, that's where it really starts to damage markets and damage the price discovery process, and we were in the mid-30s at the time, but it had just been going straight up and the point that we, you know Not just me, a bunch of us were trying to make at the time was.

This is a trend that we need to get ahead of because it's clearly going in one way, and you know now it has gone right, we're constantly seeing the mid 40s or higher of off exchange trading and in some names you know off the charts and so Uh you know i i would say that back then maybe it just wasn't considered to be as big of a deal uh, because people are always sort of focused on the present. But now in the present it is clearly a much bigger deal. So, let's dig into that a little bit right off exchange trading. We have a breakdown, two sort of different systems.

Here, ats, alternative trading systems. You've got otc over the counter. One's meant for institutions, one's kind of meant for retail right, different purposes, they serve their own needs uh, and you can actually make arguments in both directions right in certain situations in certain amounts they are good uh, but break down sort of the the micro market structure. If you can, because i know i've tried before you know, you can do this better than i can uh why it's bad, how it works and and what it would look like to sort of you know, get rid of payment for overflow, regulate payment for water flow Or or essentially, damage or regulate the way that these systems operate in a current market structure, yeah, so um, you know, first of all, i think it might help if, as a mental exercise, think of a world with a single blob, a single central limit order book Um all the orders in the market in one place, uh very much like the futures market is, you know the cme has.

I haven't looked it recently, but anywhere from you know, usually around 90 market share of the futures market. There's essentially not much else out there. So um, that's that's one type of market structure, everything on a single book and it can work very well in many ways um, but it can lead to. Let's call it complacency on the part of the exchange operator.

They're, essentially a monopoly, and so you you, you don't get the kind of innovation that you get in equity markets, which are highly fragmented right. We have 15 exchanges, 40 dark pools, um and and a handful of off exchange internalizers or otc internalizers. So right, um, you, you know if you think, on one end of the spectrum, there's the central limit order book and on the other end of the spectrum is the u.s system as it stands today, yeah, because you can't really get much more fragmented than than the Way, the u.s system is set up completely black and white here, huh yeah, no for real, two great examples, um and so the u.s system. You have what's taking place on exchange and you can't have anything trade off exchange.

You couldn't, if you didn't, have the exchange, because the exchange establishes the nbbo, and ever all trading that takes place in the market has to be within the national best bid and offer. So first of all we can accept one fact: exchanges are absolutely required for trading and off exchange is not a is not required in any way right right now there are reasons, so so, let's start from there and then let's talk about okay. Well, what reasons would we want to have off exchange trading? So let's talk about ats's or dark pools. Uh ats's, alternative trading systems are run by broker-dealers, who are regulated by finra, and an ats or dark pool is a non-displayed facility so on an exchange.

Exchanges have both displayed orders. You know you post your order to buy 100 shares at 100 bucks or you can post a hidden order like on iex. You could post a midpoint peg order, so it's pegged at the midpoint and nobody can see it, but you you have both types uh off exchange, while it's possible to have both types. You don't anymore, you only have non-displayed trading, so there is an order on a dark pool.

Now, why would you want to have a dark pool? Uh? Let's say i'm a large pension plan. Okay - and i just got all of the contributions for this quarter. For my retirees and i need to put those contributions, i got millions of dollars and i need to put them into specific stocks block trade yeah. Yes right, so i probably if i can find a natural counterparty i want to because my costs are going to be as low as possible.

If i can execute a big block - and you know clear - let's say 200 000 shares or more, which is the definition. You know, you know it depends. 100, 000 or 200 000 shares uh definition of a block, and so what what you would find is that um, you often don't find a counterparty who's looking to buy at the price and quantity uh that you're looking to sell at at the time. You're looking to do it right, so that's where you need intermediaries, but at least with the dark pool.

The pension plan can put their order there, and maybe they find someone um. But if they put that order on an exchange, everyone would see that someone wants to buy a million shares or something and the price would go crazy, so dark pools make sense for institutions to try and execute slowly or find that natural counterparty. Then you have the other side of the off exchange market, the otc side of things and that's where retail lives, so retail orders don't execute on dark pools. That's a very important point: uh yeah! Yes, sure there are some, it's very rare uh.

There are some dark pools that advertise there's some retail order flow, but really it's it's an immaterial percentage of trade, retail executes otc over the counter in market makers, uh, wholesalers or internalizers. Depending on you know what term you want to use and those that's vertu, citadel uh, two sigma and and a couple others, but really it's mostly vertu and citadel, and so why does that exist that exists, because bernie madoff figured out that he could pay kickbacks to Brokers and they liked that money, and he liked making money off the orders that he bought and hence payment for order flow, was essentially created. Um payment for order flow, which is this practice that, where retail brokers sell their order, flow to internalizers, um statistically, can be defended, because these market makers can say: look we price improve. We give executions that are better than the nba um, but first of all, it's immaterial what they price improve yeah most of the time, it's misleading.

Yes, most of the time it's a mill uh or slightly more than a mill, which is a one penny per hundred shares that you're trading um, and you know what they do is. Of course, they make a lot more money than that right and so out of the money that they make. Some goes to the investor, the tiniest part, some goes to the broker, a bigger part, and some goes to their pockets, which is the biggest part and by doing that by taking these, or the reason they can make. Money is because these orders from retail are much less price sensitive than the institutional orders and they're price takers they're willing to take whatever price is out there and they don't care what the price is about to do over the next 50 or 100 milliseconds.

So but the market maker does care and does know or can forecast very accurately, and so they can make a lot of money off of those orders. But the thing is so: could other market makers right so could other traders and speculators, and so if, instead of those orders going to two or three high-speed speculators, like virtue and citadel, if instead those orders went to an exchange where hundreds of market makers and traders Were competing over them, the outcomes would be objectively better for everyone, except for the internalizers right. It's the difference of a duopoly versus an actual market. I mean you're, making a market out of it's funny how it works out in this pun, but market makers.

I don't know exactly exactly no and and honestly like this is it's a simple argument that i'm making i'm arguing for open competition? That's right! Instead of payment for order flow into a duopoly. I think you should have open competition for order flow, and i think you should have hundreds of companies competing over that order flow, and i know i know that outcomes would be better. First of all, spreads would compress by 25 or more, according to a study that i saw that i that i, you know, find very compelling um and the execution quality would it would be much better and - and we can even see that today, so a company like Public, which is uh custom, routing their orders and instead of sending them to internalizers by default they route and they look for midpoint executions. They published a study and they showed that they're finding those midpoints.

Even in the current market structure, let alone the market structure that we could have and so quantitatively, i know that if we got rid of payment for order flow and we got rid of this off exchange trading without material price improvement, that outcomes would be better for Everyone, institutional and retail, so from my perspective, it kind of looks like you know, otc ats right, there's there's definitely a lesser of two evils here like to me. You know dark pools, alternative trading systems if they're used in the way that they're meant to like for a pension plan, you're just doing what it's what it's purpose for it doesn't seem that bad i mean i could be wrong here, but otc is just drastically different. Like that just seems like the system - that's really abused here comparatively and then and then to add to that a little bit uh if they're, really not improving price right. There's kind of this idea: that's floated around where there's different prices by large margins on dark pools or or in otc uh books right there's, really.

You can't make much of an argument here. You know like if there's really a fractional price improvement, it's pretty obvious. What the purpose of it is, you know it's to find pockets of these guys who gaslight i i'm gon na i'm gon na. Be that bold, i'm gon na say gas like? Can you hear me now? Oh money, good stuff, good stuff, all right, give me one sec to fix that and uh we'll be back to it, i'll just clip that part out we'll get back into the meat of it.

Yeah see this. This is the perfect example of me being just technologically uh incompetent. I don't know, i don't know anything about tech. I don't think you could see it, but i was trying to find the plug-in for my headphones and the batteries yeah.

It was like funneling the crap out of this right right, your head uh and i just couldn't find it, but nonetheless back to it. What were you saying? I'm sorry for uh that that discombobulation, don't worry. I was saying you know like. I have never used the term gaslighting before um until this exact you know argument and it's exactly what they're doing they guess.

You know the the internalizers, the high-speed speculators, the discount brokers, are gaslighting people into saying you know into thinking that they're crazy. When it's a it's such a very clear, like quantitative, simple argument and they're the ones making these great, that this crazy convoluted system could possibly have better outcomes than a far simpler one with open competition. That's all it is, if you believe in capitalism, you believe in competition, and you believe that competition leads to better outcomes. Uh and that's all we're we're arguing.

I think capitalistic economies typically do the best right and uh you you kind of have this. I mean within the market, which is basically representation of the entire economy. Uh duopoly, i don't know right exactly and that's the that's the gaslighting is them trying to say in what is the engine of capitalism that a that you get better outcomes through duopoly and corporate concentration than you do through open competition? That's it's absurd. It sounds pretty pretty freaking stupid when you say it like that, but that's what it is.

It is that's what they're saying and that's why it is it's gaslighting it's trying to make you think you're insane, because you're like wait a second. What i just said is so practical and rational and and philosophically aligned with just the very foundations of capitalism. How can you try to tell me that i'm the one who's being ridiculous? It's it's out there. You know that kind of ties us into the economy.

You know we kind of talked about how the market's obviously a representation of that uh. I watched i'm sure he watched this too right with jim cramer. He went on uh, i don't have to say any opinion about him, i'm not i'm. Just speaking for myself uh.

I watched his piece on the current state of the economy and i i felt like that's not maybe gaslighting, i think, maybe he's just not as intelligent as he leads on or something, but he spoke on the current state of where we're at right demand of jobs. Uh interest rates are super, low, people are spending money in cash and i look at the the market and i can't feel like that's just not true. I mean i look at the amount of margin that exists. I look at some of these uh smaller names and i think it's both retail institutions.

We've talked about this a little bit before, but retail institutions dumping massive amounts of leveraged money into the stock market. To me, it just feels like, like a bubble, is a word that gets thrown out a lot, but i feel like there's a lot of bubblish sort of things that you're watching right now, what's your take on on the economy, you know you can speak on a Million different things i i've researched a little bit, but i don't know i'm gon na tell you but uh. I just love to hear what you think man, i think you're smarter than me and i'd love to hear yeah. You know i i do pay attention um.

I i mentioned you before you know my background is economics, and - and so you know, i i i at least know some sort of what they what they teach you in university. Captain redbeard had it again, but you know, look i've. I've lived through some man, i've seen some i've seen the dot-com bubble, i've seen the great financial crisis um, and so you know i i've and i've studied them in depth from both a markets and an economics perspective. I i think that there are a lot of measures in the economy right now that are very frothy.

You know i are we in a bubble i mean probably, but but that doesn't help right, knowing you're, you know right, knowing that you're in a bubble doesn't really do much, because you have no idea when it's gon na pop, if it's gon na pop, i mean You know luckily uh, i i have a financial advisor and i've listened to them this whole time because i would have pulled out from the market years ago, and so don't take my you know what i give is not financial advice and i'm not. I i'm not a market timer, but um. I will say that when you look at certain measures of uh leverage, they're extremely high and worrisome uh, if you look, you know the leverage levels in the market that finn retracts are higher than they were in the dot-com bubble. If you look at certain um measures that uh the the bis tracks in terms of like derivative notional derivative exposure, uh, the us is much higher and growing more than other countries, and you know yeah.

A big part of that is because we are sort of the safe haven funds flow into the u.s. Despite extra, you know extremely low interest rates um and we're starting to see. Not only have we seen that from you know, a capital flows perspective, but we we're starting to see it. You know the the impacts of stimulus, uh and the recovery, the post-covered recovery, and so that's resulting in some inflation um.

You know i i still will say that i'm sort of on team transitory in terms of inflation um. I and that's, not bold stance, dave. I don't think i've seen anyone say that i know i you know i get that um, but i i i say that for a couple reasons and it's not to diminish the impact of inflation because it is impacting people's lives, absolutely um, but uh we're also seeing Wage growth we're not seeing as as much as we'd like to as fast as we'd like to, but we're seeing more than we have in the past um and that offsets a lot of not all of the inflation but the the other side of it is. We measure inflation from a year ago, um right and a year ago.

Things were bad right and uh. You know the the 2020 was a year. I think most of us want to forget and 2021 is really turned into another one uh, but you have to remember like how things are measured and what they're measured in relation to, and so, if we get some inflation, that's not necessarily a bad thing. That's that's! The economy growing, you can get inflation from two sources: you get inflation from the supply side or the demand side, and so, if this is more of a demand side, inflationary cycle that we're entering there's a part of it, that's good right.

That means the economy is growing, people are making money and spending it they're working. You know, employment levels are incredible right now, um, and so you know, i think a lot will remain to be seen about the next two quarters from an economics perspective and we'll see what the fed does um. But you know i, i could see a a bit of a market sell-off a bit of a correction being a very healthy thing right now and setting us up for this continued bull market expansion, which is already you know longer than anything, we've ever seen and really Spectacular from that perspective, in terms of the wealth creation, that's taking place, and so you know i i hope that uh, the fed is managing this right. Um i've got a lot of policy disagreements with the fed and the way that you know.

Uh monetary policy uh leads to inequality, but that's sort of a completely different conversation uh. It doesn't really have to do with the idea of you know: employment and inflation, which are the dual mandate of the fed and and how things are going to look over the next quarter or two i'd i'd be very surprised if our economy is not looking very Strong uh by mid next year, so, let's back up a little bit, because this is actually. This is really interesting. I haven't thought about it from the demand supply perspective, where there could be an imbalance there, that that reminds me of uh the comparison to the roaring 20s right.

So what jim said is what you're seeing right now is uh as a demand for goods and services. Like you haven't seen since the roaring 20s and that that's obviously from a demand perspective right, there was a lot of cash getting pushed out and there wasn't enough goods and supplies and uh services to to be produced. Do you see that as a problem or is a good thing right, because we know obviously it's not it's not the same right, we're not in the same sort of socioeconomic situation. We are or political.

Oh you know. Listen i mean it. There are so many parallels with the roaring 20s. It's really messed up and i've actually got a.

I love history. I read a ton of history and i've got a a book that is focused on the 20s that i have not read red beard. I'm telling you this guy, i do i i'm obsessed with history um, but 1918 was the spanish flu right like that and and then we came out right and we came. I didn't even think of that.

Oh man, we came out of the spanish flu and there was all this pent-up demand and it led to the roaring twenties, which was an unprecedented economic expansion that led to crazy bubbles which led to black friday, which led to the great depression you know. So when he's got goosebumps - oh my god perspective and from a cyclical perspective, um it, it is not surprising that we're about to enter a roaring 20s and - and in fact i you know - this was sort of one of my theses coming out of kovid uh last Year was that you know the timing was just too perfect, not to call it the roaring 20s again um, and i think the fed also has a lot of tools in its toolkit to avoid a great depression, which is unique. I mean that you know the tools in the fed toolkit were created as a result of the great depression and say what you will um about uh. You know the dot-com, the the things we've i've lived through and and some of which you've experienced the dot-com boom.

The great financial crisis neither resulted in a depression, nothing like what was seen in the 1930s in this country and around the world um, because at least we have the counter-cyclical tools to combat that kind of slowdown. And so you know this there's nothing to say that we couldn't be on the precipice of an excellent decade in equities, with continued massive money flows and wealth transfers taking place from the boomers to younger generation. You know there are a lot of forces that are set up to continue the expansion and continue the bull market, and there are a lot of things that would give you pause when you look at valuations and something called cape - and you know other ratios, that would Leave you a bit concerned, so you know, i can't say that i know what the answer is. I will say it's an incredibly fascinating thing to be witnessing um and i can't wait to see how it unfolds yeah.

I hope you know i and i hope it unfolds in this way, because, if it unfolds in any other way, it means it. It's a lot of pain and suffering, and and people have difficulty and - and i hope that as a country and as a world uh that we can avoid that kind of outcome. So what are these uh? What kind of tools do you think that the feds got in their pocket? That would prevent uh another depression if, let's just say, the cyclical nature, fractal theory kind of gets tossed around with stocks? A lot we'll just call this fractal theory for for for economics and then the last question that i have on this. We can move on to something else.

Is the debt ceiling right? How does that kind of play into where we're at right now, because that's obviously a figure that a lot of people pay attention to that was voted on today? Uh today is the 14th. This is probably gon na come out in a couple days, but uh it's it's very fascinating. Seeing that kind of coincide with debt levels as well. I don't know it may not even be related right, you're, the economics guy i majored in nutrition.

So i just like to hear your perspective. Nonetheless, so um, you know, i think that uh, you know what i'd like to see from the fed is i'd like to see them start to raise interest rates. There's no, no doubt about it. I think that for them to do um it's hard in other countries too, but i i think we desperately need to slow down the stimulus and we desperately need to see this economy sort of you know maintain itself without unprecedented emergency stimulus from the fed, and so I think if, over the next couple of years the fed is able to finish the taper and then start to raise rates and and get us to a normalized uh place.

And - and you know i i don't even know if it's possible right - i i don't know if we're too far down the rabbit hole or not. But if we're not and they're able to do that, you know, then they go into the next uh correction recession, whatever it is with one the ability to to lower rates again, which is where you want to be to the ability to start asset purchases again and Three: the ability to loan money uh, you know open the various windows that they've got uh and inject. You know large amounts of capital into the economy, and and if, if we can do that, you know if we may, if we pull back on things and the economy can keep growing. That means that gives them those tools to use when when there are more issues, um and and so it it'll probably be rocky it'll - probably be a rocky couple of years as they try and do it because again we're in uncharted waters right.

But if, but hopefully they can um, you know yeah the debt ceiling. I i think, that's like one of the dumbest issues that we have possibly come up with as a as a people, um and - and i can't believe it's an issue right but, like you know, congress authorizes spending and then debates whether to pay the bills that they Authorized it's it's so absurd right, like the you know, we're facing this debt because of both parties because of the you know, the tax cuts of 2017 and the coveted stimulus passed under both administrations. Right so, like you know this, this is not again. This should not be a partisan issue.

This should be a okay uh congress did these things and it was agreed upon. So we have to pay, because you know bills work right and then, if you want to change uh fiscal policy, well, you do that with congress and go ahead, get the people elected who will change the policy uh. But you know it seems like nobody. Um is willing to make the hard decisions in congress to reduce out you know the the money that's being spent or to spend in more efficient ways, and you know i think, like the the corruption and corporatism is again a bipartisan thing.

I don't think you get anything decent from either party man, yeah, that's uh! That's that's a humorous way to look at the debt ceiling. No, it's it's pretty out there uh, let's kind of wrap this up with uh with the sec uh, the sec is sort of. What's been talked about as of recently so there were, i don't like talking politics, but i'll just say some commissioners right who discussed you know gary gensler and some different topics that have kind of circulated around two stuck out to me were otc and uh cryptocurrency regulation. Right and uh, you know we've already kind of talked about otc, so i'd be more interested in your perspective on crypto i'll tell you from my perspective right.

I my channel will be a year old, actually in two days, that's kind of wild uh december. Congratulations! Yeah! Thank you for that uh! It's! I don't know how time flies that quick. But here we are, you know a little older i'll, tell you what's been quite a year right yeah! I mean it's 10 years in the last year. I'll tell you that right now, it's absolutely insane! You owe me both, but but crypto is something that's really taken root, i'd, say: infin twit, uh, youtube, twitter, reddit and some of it's good right there's a lot of good information that comes out, but i think sadly, that's kind of overweight by some some some snake Oil sellers, you know where get coins they get pushed and you get a lot of scams.

They get pushed and people lose that money and i think, that's a spot where i kind of an agreeance in terms of a lack of regulation. Uh, i'd like to hear your perspective on that. What do you kind of view, the cryptocurrency market, as because it's like it's a conundrum, it's supposed to be to some extent decentralized, it's supposed to be in the hands of the people, but we're kind of witnessing at the same time that in the hands of the People you can get scam, you know, so there's got to be some sort of middle ground here, it's very hard. It's a very hard issue.

I think actually - and i think people who make it out to be a simple issue. Um are being more political than anything else um. I think that there are great arguments to be made on either side now you know i am a huge fan of crypto. I i think that it is um an incredibly innovative space.

I think it's sort of an adventure right now and yeah. You know as someone again as someone who loves markets and loves history. It's it's again, a such a cool thing to be a part of such a nascent uh. You know initiative and a developing technology and market um, and i think it is you know it's sort of it's going to be one of two things: it's either a complete scam or it's the future of money and - and you know, like that's - a pretty crazy idea.

Yeah right, yeah, and - and so i i think that there's a good case to be made that it's the future of money and it will help to disintermediate. You know a lot of these big financial institutions, but it's certainly not there yet um and you have to have a level of sophistication when you're dealing with crypto that most people do not have their own. You know that, it's simply you you, you know, they're, not and, and even me, like i'm not going to be the kind of person. That's going to go, read a smart contract and understand decentralized programming.

That's you know. I have a history as a programmer. I've built some very impressive, complicated systems, but you know i've never built decentralized systems like this um and so uh. You know, but i would consider myself someone who's sophisticated from a technological perspective and able to sort of understand the higher level um nuances of crypto and make you know, decisions as to what to invest in and - and i love doing that - and i love learning about These technologies, but the the real question is, you know, are these things securities and should the sec regulate them as securities in order to bring the same kind of investor protections that we're used to in the securities market into crypto, and the other side of it is In doing so, will they dampen innovation to such an extent that the us no longer becomes the center for crypto innovation and if crypto is the future of money, you want to be the center of crypto innovation right uh.

But you know the us has a whole lot of other advantages in these kinds of conversations, and the regulation of the of the equity markets, for example, has not dampened the us's sort of you know: central role in global markets as a center of innovation. So you know, i find the arguments that oh, if the sec comes in innovation will disappear. I i find those to be relatively disingenuous, but i do think that something is needed. You need some level of investor protection and you need some level of um.

You know the ability to take action when there are frauds and when people are being defrauded, and so you know what that might look like. I don't know i think hester purse has had some really interesting proposals for sort of safe harbors, where you can protect innovation while providing some sort of basic regulatory protections, and i think, that's probably at least somewhere to start um. But you know i i don't want to see innovation dry up and again. I think that you know, even in crypto a correction which is what we're witnessing now.

Um is a good thing, because things were intense and frothy like nothing else. Um yeah, you know what was a big i'm a big fan of uh avalanche and you know the prices that avalanche got to over the last month have been intense. And now it's back down to still a very high level, much more reasonable level and well it was fun to see it go high. It did not feel like it was connected to reality.

So um you know yeah. I i think that crypto is an exciting space to be in and it's where there's a lot of opportunity, because it's so new um but yeah there's, there's there's a lot of danger. There are just too many people getting scammed and getting scammed with uh scams. That are, you know, just age old.

It's not like the fraud in crypto is novel. It's just it's all the same kind of securities fraud, we've always seen in other. You know even regulated markets, so you know i would just urge people if something is too good to be true. It is, and you know, be careful out there.

You know crypto's kind of interesting because i i kind of view it as this infinite potential sort of situation similar to like uh. Hopefully, facebook gets beat up by some other company on this, but, like the metaverse right, i think the metaverse is a cool concept and idea that i'd back a lot more if it wasn't facebook sort of pitching the idea. But yeah like the idea of this, like just as an example uh being able to have a ledger that's available to each individual person, so you can watch what's happening. I feel like that, would completely eliminate a lot of the problems in the current securities market.

So you can see every transaction, you can't replicate things. You can't have synthetic things that you can't have fraud, because you can't you can't fake it right. You have to fix the ledger of every single person who gets uh a transaction filled. You know uh, that's just like an idea like it just seems like the innovation, as you were talking about is kind of infinite and from my perspective you know i'm gon na be transparent.

I really don't have uh crypto in my holdings, i'm a stock guy, but it's fascinating to watch and that's kind of why i wanted to dig into this with you. Uh is because i think you have interesting interesting perspectives that you know i just don't think of. I'm kind of a smooth brain ape. I don't know what to tell you, but that's that's cool, i kind of rambled.

That's that's my thing, but yeah yeah no worries, i mean yeah. I think it's like it. It's if you love markets. Crypto is so much fun because it's it's very raw and and and new - and you know, there's a ton of volatility.

It's like trading, you want volatility, uh, that's where to find it and get the heartbeat yeah exactly um again. You just have to know that uh crypto when it drops it drops crazy and it drops fast. You know i've been through like multiple 80 corrections in crypto um, and you know it's enough to shake you out and shook me out enough times that you know i'd. Be a much wealthier man if it hadn't uh.

You know that aside, like, if that's what you're looking for it also means that's where you know you get the the multiples of money over short time periods too. So like that's where the volatility is - and you know as a trader, i like volatility yeah, obviously obviously so, there's somewhere around here. That just says i love volatility. No, that's got to be a t-shirt.

You should you should make that you really should i got ta i'll, find it yeah volatility is green. That's that's! That's where the cash is made all right. I've noticed this trend. It's interesting.

It's uh during you know the weekdays. A crypto will have ups and downs right just normal stuff, but over the last couple months i've watched fridays you'll see like the what i'd call the blue chip, cryptos right, bitcoin ethereum uh have massive, pushes three four five percent and then on sunday, they'll just dump And that's been something that's taken place every weekend for a couple months now, what's your take on that i've seen some theories kind of circulate around in terms of money flowing from institutions? You know they're using crypto to do xyz my perspective. Is people like to play the casino you know when the markets close they want to put money somewhere else, but i'd love to hear your take on it. Nonetheless yeah.

I just i think that you know again like off hours, there's just less liquidity, so it doesn't take as much to move prices but yeah. It's not something. I've really looked into. So you know that's fair! That's fair, yeah, yeah right right! That makes sense cool.

Well i'll finish it off with this, you know, uh, i think, there's a lot of the audience, obviously who's retail investor and they're interested in the ape stocks right retail stocks, and it's been a a couple of rough days. You know it's things have been moving down and we kind of talked about this offline a little bit. What do we, each kind of think is happening, but uh? I talk about all the time what i think's happening on a day-to-day basis. What do you kind of think is happening? The last couple of weeks in terms of a marker, a market micro structure.

You know for these names, amc, gamestop, blah blah blah go down the list. Yeah i mean look. I i think, the the the retail heavy names, the meme names - are they're again they're, very volatile and they're, not they're, not trading, on fundamentals, um, you know they're they're, trading, on sort of market, mechanics and fomo, and all of that so you know, i think they're. Just they're subjected to these crazy swings and um.

You know i i i don't know you know, i don't think any of us know like how it's going to turn out or or anything like right. Um - and you know, i've said it a bunch of times, but you know i want people to be careful and you know uh not be in it with more than they can stand to lose, and these last couple of weeks are a really good example of that And um you know, i i think it's very much. These are names that are very much controlled by retail, but sometimes there is institutional flow and sometimes those institutions are making leveraged bets, and so when markets sell off, these are names that are going to drop harder and when markets are going up there, you know these Are names that are going to go up higher, right, um and, and so you know, they're they're. It's like it's very it's hard to pin down, because there are some times where they're like you know, high beta, and there are some times where they're negative bait and they don't even appear correlated right back in the you know.

Earlier in the year, there were plenty of times where, like the market would be selling off, because those names were going up and because of the the the impact that was having on leverage - and you saw it again today too, which is why yeah yeah? That's right. Exactly so honestly, like i i mean i can't say that i have any idea any idea really. You know, i think that leverage and the the force of retail is sort of wrecking havoc with these names, and you know it's it's hard to forecast. What's going to take place on a short term basis, that's fair you're, uh, you're, a micro market structure guy, i'm a guy that likes to look at charts.

You know fair enough. Sometimes you got to throw the reel and hope that you you land for sure. You know yeah, that's cool uh. This is a comment that i saw a lot last time.

The clock: it's not moving. Can you explain the the clock? That's not changing time. No, it's it's just a background. It's my virtual background.

Yeah yeah.