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| 0:00 | · | The holiday season is here and as you |
| 0:02 | · | know that brings us to the Black Friday |
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| 0:17 | · | during this Black Friday period. So |
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| 0:20 | · | single best time of year to save money |
| 0:21 | · | on a subscription. |
| 0:25 | · | Equities had a disappointing day. Nvidia |
| 0:28 | · | reported good results and stocks |
| 0:29 | · | initially rallied 2% at the open. But at |
| 0:33 | · | 10:36 a.m. markets uh peaked and staged |
| 0:38 | · | a pretty sizable decline with a 3 and |
| 0:40 | · | 12% decline into the close |
| 0:44 | · | and that took us down 1.6 for the day. |
| 0:48 | · | Now again I think many people are |
| 0:50 | · | disappointed because Nvidia had great |
| 0:51 | · | numbers. So what caused this reversal? |
| 0:53 | · | Well, it's not always clear why stocks |
| 0:56 | · | fall, but we do think there are five |
| 0:57 | · | possible explanations for this. First, I |
| 1:02 | · | think one factor behind the meltdown was |
| 1:04 | · | that there were some tweets that that |
| 1:07 | · | created a little bit of outrage on |
| 1:09 | · | social media, and it was President Trump |
| 1:13 | · | responding to some Democratic |
| 1:16 | · | uh veterans suggesting that they can |
| 1:18 | · | ignore orders from Congress. |
| 1:22 | · | And uh and that first tweet was at 9:17 |
| 1:26 | · | a.m. The second one came at 10:21 a.m. |
| 1:28 | · | He said, "Sedicious behavior punishable |
| 1:31 | · | by death." Now, notice the time stamp. |
| 1:32 | · | That's 10:21. And the market turned down |
| 1:35 | · | just a few minutes later. |
| 1:39 | · | That tweet led to Democratic Congress |
| 1:41 | · | members and uh leaders protesting the |
| 1:45 | · | death threats against Democratic |
| 1:47 | · | members. |
| 1:49 | · | Now, the second thing that I think did |
| 1:51 | · | contribute to the decline is the release |
| 1:54 | · | of the uh Epstein files. So, President |
| 1:57 | · | Trump signed the Epstein Files |
| 1:58 | · | Transparency Act into law and now has |
| 2:02 | · | ordered uh these files to be released. |
| 2:05 | · | There's going to be a lot of people in |
| 2:06 | · | those files. In fact, um for instance, |
| 2:10 | · | here's someone pointing out that it |
| 2:11 | · | could even uh embarrass uh many donors, |
| 2:15 | · | billionaire donors. So, you can imagine |
| 2:18 | · | There might be investors who are just |
| 2:20 | · | nervous who's going to be on that list |
| 2:21 | · | and it's revealed does it do something |
| 2:24 | · | to markets. I think that contributed to |
| 2:26 | · | some of the nervousness today. |
| 2:28 | · | The third factor is crypto. Um Bitcoin |
| 2:33 | · | has been selling off recently uh and |
| 2:36 | · | generally has led the equities. But you |
| 2:38 | · | can see at the open Bitcoin peaked and |
| 2:40 | · | began to to weaken at 9:30 |
| 2:44 | · | and the S&P followed basically an hour |
| 2:46 | · | later. |
| 2:47 | · | This has been the case for some time. |
| 2:49 | · | It's something I've pointed out that |
| 2:50 | · | Bitcoin has been leading the S&P. For |
| 2:53 | · | instance, Bitcoin peaked on October |
| 2:54 | · | 10th. Um, that's right before we had |
| 2:58 | · | that liquidity shock, which ended up |
| 3:01 | · | being the biggest liquidity shock in the |
| 3:03 | · | history of crypto, wiping out more than |
| 3:05 | · | 2 million accounts and and Bitcoin's |
| 3:08 | · | been falling since. But as you can see |
| 3:10 | · | here, this has led to |
| 3:14 | · | um the S&P spider peaking on October |
| 3:18 | · | 29th. |
| 3:20 | · | And uh you know, it's something I I I |
| 3:24 | · | was interviewed on CNBC today and I |
| 3:25 | · | mentioned that since October 10th, there |
| 3:29 | · | was this feature called ADL that caused |
| 3:32 | · | a a significant amount of liquidations |
| 3:35 | · | and it was really due to a pricing |
| 3:36 | · | error. |
| 3:38 | · | But that pricing error has not gone uh |
| 3:41 | · | has created |
| 3:43 | · | significant holes in the balance sheet. |
| 3:45 | · | In other words, the reason crypto has |
| 3:47 | · | continued to have lingering weakness is |
| 3:50 | · | that market makers who play a critical |
| 3:53 | · | role in crypto have weakened balance |
| 3:55 | · | sheets from that liquidation event on |
| 3:57 | · | October 10th. Now market makers are |
| 4:00 | · | essential to crypto liquidity. They're |
| 4:02 | · | essentially acting like central banks |
| 4:04 | · | because they provide liquidity and |
| 4:06 | · | they're pulling back is the equivalent |
| 4:08 | · | of QT for crypto. So you can imagine |
| 4:10 | · | crypto is suffering from tightening |
| 4:12 | · | conditions along with a hawkish Fed. |
| 4:16 | · | Now in 2022 when a similar event |
| 4:18 | · | happened because of FTX, it took 6 to 8 |
| 4:21 | · | weeks to recapitalize those market |
| 4:22 | · | makers and for market function to |
| 4:24 | · | recover. So we're about 6 weeks into |
| 4:26 | · | this process. |
| 4:30 | · | The fourth factor is Oracle um and CDS |
| 4:34 | · | because there was quite a lot of chatter |
| 4:35 | · | about this. As you know, there's many |
| 4:38 | · | skeptics of AI, people even questioning |
| 4:40 | · | Nvidia's numbers, but what's catching |
| 4:43 | · | people's eyes is Oracle's credit default |
| 4:45 | · | swaps are rising. This could be |
| 4:48 | · | investors hedging against um |
| 4:51 | · | [Music] |
