RUSH TRANSCRIPT Thanks very ░░░░░░░░ Here s how the ░░░░░░░░ day of trading in ░░░░░░░░ is shaping up We ░░░░░░░░ some big themes emerging ░░░░░░░░ a short period of ░░░░░░░░ Intraday records to the ░░░░░░░░ and S P before ░░░░░░░░ S P turned lower ░░░░░░░░ NASDAQ way down Down ░░░░░░░░ than 300 points now ░░░░░░░░ 2 hurt by the ░░░░░░░░ in bond yields that ░░░░░░░░ just mentioned Those rising ░░░░░░░░ rs helping the bank ░░░░░░░░ so Bank of America ░░░░░░░░ fargo Goldman and JPMorgan ░░░░░░░░ higher Wells is up ░░░░░░░░ in two days and ░░░░░░░░ recovery plays the energy ░░░░░░░░ up 6 5 in ░░░░░░░░ days occi halliburton up ░░░░░░░░ bond yields driving much ░░░░░░░░ the market action are ░░░░░░░░ stock market gains coming ░░░░░░░░ an end Yes as ░░░░░░░░ Trainer CEO of new ░░░░░░░░ and also with us ░░░░░░░░ talk about the bond ░░░░░░░░ is Jim Karen from ░░░░░░░░ Stanley investment management Good ░░░░░░░░ have you with us ░░░░░░░░ let me begin with ░░░░░░░░ it looks like a ░░░░░░░░ place Bonds are up ░░░░░░░░ that s the yields ░░░░░░░░ are up The prices ░░░░░░░░ going down Thanks for ░░░░░░░░ me There s a ░░░░░░░░ of things going on ░░░░░░░░ have to understand policy ░░░░░░░░ technicals have been a ░░░░░░░░ driver of the markets ░░░░░░░░ the fourth quarter and ░░░░░░░░ a lot of last ░░░░░░░░ So last year what ░░░░░░░░ saw was we had ░░░░░░░░ omicron variant that was ░░░░░░░░ we had supply technicals ░░░░░░░░ were really really positive ░░░░░░░░ the bond market in ░░░░░░░░ there was a low ░░░░░░░░ issuance and also we ░░░░░░░░ corporate pensions becoming fully ░░░░░░░░ and buying long duration ░░░░░░░░ and that kept yields ░░░░░░░░ low as we start ░░░░░░░░ year we see a ░░░░░░░░ of that starting to ░░░░░░░░ The first thing I ░░░░░░░░ say is that a ░░░░░░░░ of the pension fund ░░░░░░░░ is probably starting to ░░░░░░░░ the marketplace at this ░░░░░░░░ as we move away ░░░░░░░░ December 31st and into ░░░░░░░░ new year the market ░░░░░░░░ starting to price the ░░░░░░░░ of the omicron variant ░░░░░░░░ I know we re ░░░░░░░░ the end of it ░░░░░░░░ with the markets forward ░░░░░░░░ The other is that ░░░░░░░░ supply probably wunlone of ░░░░░░░░ most important things net ░░░░░░░░ of U S treasuries ░░░░░░░░ 2022 is going to ░░░░░░░░ over two and a ░░░░░░░░ times the amount of ░░░░░░░░ supply net treasury supply ░░░░░░░░ 2021 So the market ░░░░░░░░ going to have a ░░░░░░░░ to digest going forward ░░░░░░░░ at that time when ░░░░░░░░ is coming to an ░░░░░░░░ which we expect by ░░░░░░░░ end of March and ░░░░░░░░ a lot of that ░░░░░░░░ that s going to ░░░░░░░░ a very interesting dieynamic ░░░░░░░░ ve nailed it there ░░░░░░░░ me you ve got ░░░░░░░░ this supply coming on ░░░░░░░░ to sell that supply ░░░░░░░░ re going to have ░░░░░░░░ offer higher yields and ░░░░░░░░ big egs egsest buyer ░░░░░░░░ the market is stepping ░░░░░░░░ Correct that s one ░░░░░░░░ the things we re ░░░░░░░░ to have to contend ░░░░░░░░ into 2022 We don ░░░░░░░░ know what the treasury ░░░░░░░░ s going to really ░░░░░░░░ like when the biggest ░░░░░░░░ starts to step away ░░░░░░░░ ironly ironically this is ░░░░░░░░ to come at a ░░░░░░░░ when inflation is declining ░░░░░░░░ it s not all ░░░░░░░░ news there could be ░░░░░░░░ support for the treasury ░░░░░░░░ but the bottom line ░░░░░░░░ is with the Fed ░░░░░░░░ way and GDP growth ░░░░░░░░ to be good that ░░░░░░░░ probably going to at ░░░░░░░░ margin push bond yields ░░░░░░░░ The stock market side ░░░░░░░░ this equation you say ░░░░░░░░ easy money is leaving ░░░░░░░░ market that is certainly ░░░░░░░░ that Jim would agree ░░░░░░░░ you re not going ░░░░░░░░ have qe2 3 h ░░░░░░░░ 5 or whatever it ░░░░░░░░ supporting the market in ░░░░░░░░ way it has been ░░░░░░░░ one of the things ░░░░░░░░ said in your note ░░░░░░░░ stood out is this ░░░░░░░░ earnings are more overstated ░░░░░░░░ at any time in ░░░░░░░░ last decade which means ░░░░░░░░ is more hisrisk in ░░░░░░░░ t most investors see ░░░░░░░░ do they get overstated ░░░░░░░░ understated A lot of ░░░░░░░░ in the accounting rulebooks ░░░░░░░░ we ve been studying ░░░░░░░░ for years they re ░░░░░░░░ all time highs You ░░░░░░░░ we saw the flip ░░░░░░░░ of this during Covid ░░░░░░░░ earnings were understated When ░░░░░░░░ write everything down and ░░░░░░░░ their books off so ░░░░░░░░ things look good again ░░░░░░░░ they have in the ░░░░░░░░ year or so the ░░░░░░░░ growth comps look as ░░░░░░░░ as possible so as ░░░░░░░░ drive the stock up ░░░░░░░░ much possible we ve ░░░░░░░░ corporate America taking advantage ░░░░░░░░ that trend squeezing as ░░░░░░░░ cookies out of the ░░░░░░░░ cookie jar as they ░░░░░░░░ to make the earnings ░░░░░░░░ as good as possible ░░░░░░░░ make the stocks look ░░░░░░░░ good as possible and ░░░░░░░░ s a risk that ░░░░░░░░ lot of investors aren ░░░░░░░░ aware of Wlenhen they ░░░░░░░░ out of dough they ░░░░░░░░ t keep squeezing the ░░░░░░░░ out of the jar ░░░░░░░░ say that the most ░░░░░░░░ stocks no surprise here ░░░░░░░░ suppose are the ones ░░░░░░░░ have been very fashionable ░░░░░░░░ high priced meme stocks ░░░░░░░░ so forth and that ░░░░░░░░ may be a year ░░░░░░░░ some of the laggard ░░░░░░░░ the less highly valued ░░░░░░░░ come to the floor ░░░░░░░░ Yes I think this ░░░░░░░░ still tails with what ░░░░░░░░ is saying We re ░░░░░░░░ interest rates go up ░░░░░░░░ more attractive relative to ░░░░░░░░ but you don t ░░░░░░░░ this tail wind we ░░░░░░░░ had for 20 years ░░░░░░░░ interest rates going down ░░░░░░░░ stocks more attractive we ░░░░░░░░ t have the tailwind ░░░░░░░░ as much stimulus There ░░░░░░░░ a little less capacity ░░░░░░░░ there to buy stocks ░░░░░░░░ when you don t ░░░░░░░░ of have a lot ░░░░░░░░ easy money to throw ░░░░░░░░ at everything what do ░░░░░░░░ do you become more ░░░░░░░░ if you re becoming ░░░░░░░░ disearning about what stocks ░░░░░░░░ want to buy you ░░░░░░░░ going to be discerning ░░░░░░░░ whether or not those ░░░░░░░░ make money so we ░░░░░░░░ there s going to ░░░░░░░░ a return to fundamentals ░░░░░░░░ companies that are actually ░░░░░░░░ cash flow trading at ░░░░░░░░ multiples or valuations are ░░░░░░░░ to become a lot ░░░░░░░░ popular than they have ░░░░░░░░ recently when we ve ░░░░░░░░ so many of these ░░░░░░░░ like these ipos last ░░░░░░░░ they weren t making ░░░░░░░░ money and everybody s ░░░░░░░░ throwing money at them ░░░░░░░░ all kinds of assets ░░░░░░░░ and nft as it ░░░░░░░░ never end As we ░░░░░░░░ that coming to an ░░░░░░░░ I think people are ░░░░░░░░ to become more rational ░░░░░░░░ wanted to get to ░░░░░░░░ couple of names you ░░░░░░░░ are attractive shell and ░░░░░░░░ Microsoft you think it ░░░░░░░░ be over a 400 ░░░░░░░░ Cash flow is super ░░░░░░░░ the royal dutch calls ░░░░░░░░ sort of our emblematic ░░░░░░░░ in terms of how ░░░░░░░░ capital has been chasing ░░░░░░░░ EV technologies to the ░░░░░░░░ we ve seen these ░░░░░░░░ valuations while overlooking some ░░░░░░░░ these more traditional businesses ░░░░░░░░ extremely cheaply Royal dutch ░░░░░░░░ is trading as if ░░░░░░░░ s profits will permanently ░░░░░░░░ by 70 petra is ░░░░░░░░ as if it s ░░░░░░░░ to be out of ░░░░░░░░ in 10 years When ░░░░░░░░ look at the ia ░░░░░░░░ in terms of how ░░░░░░░░ fossil fuel is going ░░░░░░░░ be consumed it s ░░░░░░░░ to go down about ░░░░░░░░ So these businesses are ░░░░░░░░ to be around Finally ░░░░░░░░ on rates a lot ░░░░░░░░ people are just kind ░░░░░░░░ psychologically watching the 1 ░░░░░░░░ level on the 10 ░░░░░░░░ what do you think ░░░░░░░░ the most important levels ░░░░░░░░ watch as this trade ░░░░░░░░ out I think we ░░░░░░░░ right at these levels ░░░░░░░░ s been a lot ░░░░░░░░ scars in the market ░░░░░░░░ who sold these levels ░░░░░░░░ year really didn t ░░░░░░░░ any money So it ░░░░░░░░ going to be very ░░░░░░░░ for many people psychologically ░░░░░░░░ step in and sell ░░░░░░░░ they have to realize ░░░░░░░░ a lot of the ░░░░░░░░ are starting to change ░░░░░░░░ end of qe The ░░░░░░░░ process more net issuance ░░░░░░░░ into the marketplace So ░░░░░░░░ re going to see ░░░░░░░░ buyers come in at ░░░░░░░░ point so if there ░░░░░░░░ a push higher in ░░░░░░░░ I think it can ░░░░░░░░ in the first quarter ░░░░░░░░ the year First half ░░░░░░░░ the year I think ░░░░░░░░ 2 in the 10 ░░░░░░░░ treasuries contains things so ░░░░░░░░ though we think the ░░░░░░░░ may rise higher at ░░░░░░░░ margin I don t ░░░░░░░░ this is a you ░░░░░░░░ this is a big ░░░░░░░░ bear market by any ░░░░░░░░ and I think we ░░░░░░░░ really going to chop ░░░░░░░░ for most of this ░░░░░░░░ Thank you both for ░░░░░░░░ time All right coming ░░░░░░░░ fake it till you ░░░░░░░░ it how much of ░░░░░░░░ role did Silicon Valley ░░░░░░░░ play in the thernos ░░░░░░░░ The lessons learned.