DiMartino Booth: Fed Quietly Reclassified $300B In Loans With No Comment – Is This Systemic?
Summary
Fed Policy and Market Impact: The podcast discusses the recent Fed minutes, highlighting a hawkish stance with some members opposing rate cuts due to ongoing inflation concerns, despite market expectations for a rate cut.
Reclassification of Loans: A significant theme is the Fed's quiet reclassification of over $250 billion in loans, moving them from traditional categories to non-depository financial institutions (NDFIs), raising concerns about transparency and systemic risk.
Gold as a Momentum Play: Gold is identified as a momentum asset, with increased interest from traditionally skeptical sell-side banks, indicating potential risk as it becomes a popular investment choice.
Private Credit and NDFIs: The rise in NDFI loans, up 20% year-over-year, is linked to the growth of private credit and leveraged ETFs, highlighting potential vulnerabilities in financial markets.
Labor Market Concerns: The podcast highlights the high youth unemployment rate in the U.S., drawing parallels to 1988, but attributing current issues to a lack of demand rather than an oversupply of labor.
AI and Employment: The impact of AI on employment is discussed, noting that while AI adoption could boost productivity, it currently contributes to job insecurity, particularly for recent graduates.
Systemic Risks and Economic Outlook: The discussion raises concerns about systemic risks in the financial system due to opaque lending practices and the potential for a recession, exacerbated by the Fed's reclassification of loans.
Investment Strategy Advice: Investors are advised to consider the human impact behind economic data and to be cautious of momentum-driven investments, while also recognizing opportunities for young job seekers in a challenging market.
Transcript
Hey everyone, welcome back to another special in-person episode of the Julia Lar Ro Show where we are joined by Danielle D. Martino Booth, CEO and chief strategist at Qi Research. And I have to say I always love our inperson episodes. I look forward to them. I actually come up to New York just to talk to you in person anytime I get a chance. And it's not FOMC day. It's Fed minutes. Got the Fed minutes. Yeah, it's Fed minutes day. Boy, those were some hard-hitting minutes. Um and we were kind of expecting to be um it was obviously there was a show of force against Steven Myron the intruder um you know when Pal was at the podium and um and obviously in the statement and in the dot plot where one of the dots was wandering off the reservation. Um, but they were even harder hitting than I thought they would be. Um, because there were a few members of the committee who didn't feel that it was appropriate to raise interest rates at all in September. You want to communicate a really hawkish message by saying, you know, not only did not only did Waller and Bowman go along with not cutting by 50 basis points as they would have given their brothers, uh, there were also some who didn't want to go along at all with a rate cut and they all came together. They didn't want to do rate cut period. No. Okay. So, and the minutes were, you know, we're still extremely concerned about inflation and the pass through effect. And I'm like, I get it. But this was like, okay, so we've we've stuck a knife in Myron's back. Now, we're going to pour salt in the wound. And that's really what this was. Okay. You were a Fed insider. Explain the dynamic. Like, what do you think is going on then? Well, look, look, it's um these individuals, you know, to become a a a president of a district bank, to become a governor on the Federal Reserve board, it it's it's the culmination of an entire career in economics. It's considered to be a great honor. And you know, and I'm no huge fan of PhDs in economics. And you know, why does the Fed need 800 of them? But for people who are who get that far in their careers and to have somebody say, "I'm, you know, I'm just going to put my day job on pause. I'm I'm only going to be gone for four months. I'm not going to I'm not going to actually become a fullblown governor because I've got something else better to go off and do at the end of January." It's It has to have rubbed a lot of people the wrong way. And clearly it did. Showing that in the minutes. Okay. Uhhuh. Do you think we saw the risk management cut in September? Do you think like they really even wanted to cut then? Oh no. Um um there so to be fair there were mentioned in the minutes by some of the benchmark revisions specifically you know that negative 911,000 in the year ended March uh 2025. There are clearly doves who are concerned about this employment mandate and rightly so. Christopher Waller came out uh right before Blackout started for that September the 17th meeting and was was very forthright in saying, you know, ADP provides us with data in the middle of the month. So, in the middle of their own um because they're getting it on a day-to-day basis. So they're able to it's it's you would think it was easy enough to do dot dot dot except for the government agencies which can't seem to to to get the data in a more real time or even reliable fashion. My point is the Waller speech told us we are looking at alternative measures of the labor market and specific to ADP it said since the last employment report things got weaker and that would have been theoretically revealed in the September payrolls data which we didn't get on October the 3rd but we did have ADP come out with a massive downward revision um in just very weak numbers. So you know that there are members on the committee who are are focused on the pay report. The Carile group came out with their own proprietary measure of what they estimated uh non-farm payrolls would be. That was a whopping 17,000 for what they thought they would have been had they been reported in September. And as things are progressing, let's just say that this shutdown lasts for another week or so. Let's just say it's a twoe shutdown. The Bureau of Labor Statistics is not going to have enough time to do the groundwork quickly enough to produce the October non-farm report. So my point is the market has priced in a Fed rate cut based on data that are available just on what they can glean on what they can see and that's going to put the Fed in a difficult position for those really hawkish members of the committee who were saying you know maybe we only need one more rate cut in in 2025. But I I I don't think given the shutdown that the Fed's going to change the market's mind or even try and change the market's mind before the October the 29th meeting because I think it would just be too upsetting to a market that is at least a bond market that's on edge and the bond market's what leads everything else in theory, but you know, but We're like in the middle of of Ghostbusters. It's like dogs and cats are living together. We've crossed the streams. You know, the NASDAQ's flying and so is gold. Gold. Yeah. That's so unusual. It is unusual. So, it's it's really hard to say. I mean, gold is a meme stock for heaven's sakes. People are piling into it. sellside banks are are saying this portion of your portfolio should be allocated% right put a price target on gold for heaven's sakes I mean these are entities that have historically shunned the asset class in its entirety like not even not even nodding to gold and yet there they are now fully embracing it um because it's become a momentum play and that it to me at least that is a sign of risk for gold itself. Um we forget right after co hit and the markets initially were very disrupted and and fell and margin calls were going on that people were being forced to sell their gold just because it was liquid and there were gains there. Gold keeps setting new all-time highs but price appreciation isn't the only way to profit from owning gold. Monetary metals is redefining the future of precious metals investing. Instead of paying to store gold, imagine getting paid to own it. With Monetary Metals, you can earn up to 4% on your gold paid in physical gold. That's right. Your ounces grow each month, not just your paper balance. A yield on gold paid in gold means you're stacking more ounces every single month. And you still benefit if gold's prices rise. You're earning more gold every month and enjoying potential price appreciation at the same time. Go to monetary-medals.com/julia to learn more and see how you can start earning 4% on your gold paid in gold. We've had a lot of guests on this channel, not not like right now, like well over a year ago, who have been talking about gold and having an allocation to gold. Now you're you point out that now everybody's talking about it. And it's not that you're like anti- gold, is it? Not at all. The concern is like all the sudden it's it's um for some publications you're see that's that's the only story they have out today or they're just they're making their newsletter all about gold or Yes. And um it's the cover of a magazine or something which always should give any contrarians pause when something feels like it's just a pure momentum play. And right now again the NASDAQ is pure momentum and gold is pure momentum. Um there's there's an issue there. When you have conversations you have a active Bloomberg channel active Bloomberg chat. What are people talking about these days that you can share or just anything that especially around markets? So, what we're really really talking about is the reclassification of loans. I mean, this is the hottest subject of discussion. Every Friday afternoon, 30 minutes after the stock market closes, the Federal Reserve publishes its weekly H.8 eight report which gives you all the details of commercial banks balance sheets, what their loan books look like, where there's been growth in lending, what the deposits look like. You know, I used to follow it because of my mentor Lacy Hunt. He would always follow other deposits and liabilities and when that was kind of declining, you know, that was a red flag and and we are actually seeing deposits declining right now. But over the last 18 months or so, we've all been following NDFIS. I mean, NDFIS is where it's been hot, hot, hot, nondepository financial institution loans. And you know, it sounds arcane, but there's a reason that buy now pay later is so hot. There's a reason that triple levered ETFs are able to even exist. There's a re there and the biggest reason of all is private credit. So all of these conduits into the markets, all of these conduits into the real economy have to be financed. Well, they're financed in the non-depository financial institution lending market. So your safe banks over here and it makes a loan to your non-bank over here. Now the non-banks lending standards are a lot weaker than the bank's lending standards. But this is an armslength transaction, right? I'm loaning to KKR. I'm loaning to Drexion. I I'm loaning to CLA. Just to give you three areas where NDFI loans land. Okay. So year to date, NDFI loans are up 20 some odd percent year-over-year. It's a lot. And but that means that lending to private credit's been gang busters, which we know, right? Um it means that that Drexion just rolled out, I think, nine new triple levered ETFs based on individual stocks, which we see. We see that CLA is growing its its borrower base with buy now pay later because now borrowers can put services on buy now pay later. So you can pay for that vacation for a really long time or that Mai for a really long time or your groceries for a really long time. But if they're growing then their financing has to be growing. Now, go back two weeks and all of us geeks waiting at 4:30 Eastern for the Fed's H8 to come out went say, "What?" The Fed reclassified more than $250 billion worth of loans that had been in this stodgy category of con commercial and industrial and consumer loans. They said, "You know what? NDFIS are no longer 1.4 trillion outstanding. They're 1.7." Oh, that was just within just within a week of within a week. That was That was the big subprime Okay. auto company that that had loans out. And that means that the regulators didn't actually know that some of the lending that was going on was not actually classified in these stodgy loan categories, but rather they had to pick up that and put it in the go-go area. And in my world over the weekend, because this comes out late on a Friday, by the time Saturday rolled around, my Bloomberg chat room was hopping on a Saturday afternoon because not only did the Fed reclassify this these loans, it did so with no comment. Quietly on a Friday then. And then we have first brands which is a quiet little auto supplier, air filters, windshield wipers, or is it really a financial? So Jim Chenos did a fabulous interview with the Financial Times and he talked about NDFIS and he talked about first brands and his comment was it wasn't until we were way down the pipeline because again NDFIS here's something for you offbalance sheet financing remember that offbalance sheet financing special purpose vehicles, SPVS. Uh Janet Yellen was asked in front of Congress and she was like, "I I'll get back to you. I don't really know what an SPV is." And yet there was the world blowing up in her backyard, countrywide finance, all of these subprime lenders that were being financed with offbalance sheet vehicles, loans that were warehoused. So a lot of what's been going on in First Brands inricolor has been offbalance sheet lending. So what Jim Chenos said to the Financial Times was, you know, it wasn't until Enron and then Tao that we realized how extensive offbalance sheet financing had become such that. We thought it was a company that was in the energy space or we thought Tao was a big conglomerate but real business. What we didn't appreciate was that they were actually financials. And what we're discovering with UBS saying, "Oh, it's got 500 million of exposure." I mean, you cannot keep up with the number of this morning, I think it was Jeff with 175 million of exposure to these First Brand accounts receivable factoring. Now we're finding out that First Brands was not some quiet private auto supply company, but rather like Enron, a financial, a financial using lots of go- go financing. And so now we talk in my chat room, it's like, is the Fed going to upset the markets further by reclassifying loans that were clearly made to first brand that should have been off balance sheet, classified as offbalance sheet or not? Black Rockck announced and a big pension in Texas announced today that they were withdrawing money from the fund that Jeff was um that that Jeffre was was using to to fund First Brands. So they're like, "No, we're pulling our money out." And you're like, "Gosh, who what what started?" Oh, that's right. Bear Sterns. That's what started when people started pulling their money out. And these are pennies compared to trillions and trillions of dollars under management at Black Rockck. Um, but it's so symbolic because like Jim Cheno said, we thought Enron was this type of company, but it was really just a glorified financial moving money around. We thought First Brands was an auto supplier and we're learning with every single headline that crosses there. There's another bank that's got 300 million in exposure to First Brands. We're learning that it was actually a financial. And Jim's comment was the time we learned that stayed stodgy companies were not in fact what they appeared to be, we were too far gone. And so that's why we talk about non-depository financial institutions because we're discovering after private credit having been a black box that not only is it a $ 1.4 trillion outstanding market, it's actually now 1.8 trillion. The reclassification alone made it such that commercial and industrial lending for the year year-over-year was negative. So lending into the real environment by lenders is negative year-over-year. That means you're deep in recession. Lending to the offbalance sheet conduits, that's up big time. And yet the losses that the banks are taking as these loans blow back to them are real. Just like it was the case for Fifth Third or for JP Morgan, each taking $200 million in losses tied toricolor. So this is kind of a I mean for total dorks in the market this is a big deal. I mean I love that you guys are so into that. This is the first I've heard of it too. So I'm can I this is very like basic question is kind of like the interpretation or the so the so what is that it's like there's something going on that's bigger in the economy like recession or something that we you and I talked about recession but what is for the everyday person who's watching listening like what is well you know so if if let's say these reclassified loans that are presumably tied toricolor um have all blown up well And this guy on Twitter who's anonymous but brilliant put a put a posting out today and he said, "Well, let's just do some very simple back of the envelope math." That means that the subprime delinquency rates about double what it is and that we're not seeing the distress in the marketplace if it's being glossed over by the fact that the lending is going on in the shadows, unregulated and invisible. And on top of that, we already know that banks are modifying loans in their consumer loan book. Whereas prior to the great financial crisis, that was really mostly isolated to commercial real estate loans, the extend and pretend, the modifying of of loans. But now we're seeing it across bank loan books. Thank you, Bill Morland at Bankreak Data, um, for combing through those crawl sheets and saying if banks weren't extending and pretending with personal loans, with credit cards, with auto loans, then what they're reporting is, call it 5% delinquency rates on autos would be a lot higher. Now add non-depository financial institution lending that's also showing signs of distress, but we can't see it until it blows up. And we know that even though First Brands is only a10 to6 billion 10 Yeah. 10 to$16 billion liability bankruptcy only. We know it can't be alone. These practices have been adopted. It's like a symptom. Yeah. Okay. Of something that could be endemic. And the most salient question that was asked in my chat room today is is this systemic? And we don't know, but we do know that the Federal Reserve does more than make monetary policy when on a Friday afternoon it reclassifies nearly $300 billion worth of loans. Mhm. And puts them into a big black box. And if they don't know what's going on with the banks they regulate, God help us. Okay. So, going back to the Fed, the Fed monetary policy maker. Yeah. Yeah, bank regulator. Gosh, we have a meeting. It's already October. Like, we have a meeting coming up at the end of the month. We do. I'll be right back here. I know. And I think I'll be right back here with you. We'll go and put on the books, Matt. We'll we'll schedule the October 29th. Um, make sure the studio is available. Do you rate cut October? It's we need a 50 basis point one. Likely, but we won't get one. It The government shut down. They're flying blind then or they have to go off. You just took the words right out of my mouth. And the army of PhDs will only go so far until they see the the official data. They have they are so data dependent. They won't make the move without their official data dependent. Official data. And it's they're they're not going to say Gee, look at that challenger report. Or they're not going to look at true inflation. Or they're not going to look at true inflation, which was what, 2.22% today, real time. And by the way, really high, higher than it would be otherwise because of utilities. Thank you, AI. Okay, so they obviously like certain official data. Having been a Fed insider, have you ever had to when you were there, um have you ever had to like bring like data that wasn't official or go make them look at something? So, speaking of challenger hiring data, um when I got to the Fed, they weren't even using challenger firing data because it wasn't it wasn't a a historically long enough in the tooth data set to seasonally adjust. And I'm like, but this is, you know, at the time, this is the best data we have on announced layoffs, which precede initial jobless claims, which precede non-farm payrolls. So, why wouldn't we want to know what's coming down the pipeline? So, let me tell you how popular I was the day that I introduced the the challenger. Yes. Hiring series, which goes back, I think, to 200, I want to say maybe 2012. Um, which was right when I was there. And I'm like, this is great. Companies are announcing what they're hiring during the holiday seasons. We're going to be able to see the strength of the consumer based on seasonal hiring patterns. This is fabulous. We can see what retail sales are going to be because if all, you know, all the major Walmarts and Amazons of the world, if they're hiring big time, then they expect a big old holiday season. if they're not. Of course, we just had the weakest September in hiring data in how long, implying actual job losses. But when I raised this subject, they actually the PhDs there were were were concerned that President Fischer was going to embarrass the Dallas Fed by making mention in a Federal Open Market Committee because Danielle had put it in her markets briefing prior to him going to Washington of a brand new data set because they can't be open-minded to something that's not No, you're putting it very very delicately and diplomatically. That was very well done, Julia. Okay. No, no, do it the non-domatic way. No, no. I mean, they were they were actually appalled. They were horrified. That kind of seems like ridiculous that they can't just look at something new or different. Look, Liz Anne Saunders tweeted out this morning um you know that small business hiring according to I think it was maybe Moody's is is down in X number of states and led by leisure and hospitality. It's indicative that we're in a recession. um you couldn't introduce that either even though it's on the ground good data in an on the ground good data era what I don't understand why not or are they afraid like they they'd be embarrassed because they would prove that they've been wrong for so long or if you cannot make historical references back through the ages of the business cycles and if you have a chart that doesn't have gray bars on it gray bars denote recessions then your chart is is seen as as being just north of useless. H that's got to change at some point. Um, so to speak out of the other side of my mouth, look, the Fed put was born October the 20th, 1987 when Alan Greenspan released a statement saying that the Fed was there to backs stop the banking and financial systems. Okay. Yeah. At which point, and this is documented and it's in my book, he then started to allow the New York markets desk to leak to Wall Street bond trading desks prior to Fed moves to inject liquidity into the system so that you could frontr run the Fed, birth of the Fed put. So that's when politics entered policym, right? And with the Fed under a full frontal assault right now, the opportunity presents itself for there to be rethinks, Julia, for the Fed to indemnify how it makes policy so that it's not putting itself at existential risk because it's making policy based on metrics and models that precede the dinosaur. So, um, there is an opportunity if the Fed comes out at the other end of the president trying to take it over for, you know, as great CEOs would say, to, you know, take the opportunity of a crisis to make change. I like that. Hm. I want to talk to you about the labor market because we were just talking about like we were talking about before you started recording, we're talking about young people and like job seekers like those who are also just graduating. The only thing that you know the class of 2024 can brag on at this point is that it's worse for the class of 2025. That's got to be so problematic then. So if you look at the youth unemployment rate which is these are discussions we typically have about Italy and France and emerging markets economies where there are so few opportunities that you have prolonged periods of high levels of youth unemployment which is is very destructive on a societal level. But here we sit today with the youth unemployment rate in the United States at the highest level since 1988. Now what does that mean? In 1988, the supply of labor into the job market was the highest in postwar history. It was the year that the baby boomers entering the job market peaked. So the high unemployment rate for job entrance then was because the supply overwhelmed the demand. there were just too many people. And then the youth unemployment rate quickly came down as these individuals were absorbed. But now we see the youth unemployment rate has risen right back up to where it was in 1988 today. But it's not there because there are so many of them. We haven't had a baby boom. Yeah. It's not a baby boom. You're right. It's there because there's a lack of demand. Right. It's the law of supply and demand. In 1988, it was a supply issue. to 19 in 2025. It's a demand issue and I I I think policy makers, politicians, um the president, they have to appreciate that that politics and policy is colliding headon with AI. And though AI will after we get over this period likely prove to be highly productive. You know adoption of AI in Singapore which is kind of a controlled economy is a multiple of what it is in the United States. They've been told adopt and do it well and they have but again I think it's around 27% in the United States compared to Singapore which is through the roof almost 100 companies are adopting AI blindly. They're not hiring people because of AI blindly and they're not necessarily deploying AI efficiently. And we hear this, we hear this from big consultancies that put out these reports, Bane Capital, and you know, companies are say that they've thrown money away on trying to adopt AI and that their employees haven't been able to. Well, you can't just throw something at somebody and say, "Become more efficient at what you do or get fired." Um but by the same token, policy makers and politicians need to understand this moment in technological history when policy and politics are making it that much more difficult to plan for the future to hire. What are tariffs going to be? Where are politics going to be? How divided is this country going to stay? Are foreign companies going to be invited in to make investments or not? We go back and forth. Mhm. So the uncertainty plaguing occupants of the seauite right now on top of the requirement that they send from on high down to the minions to adopt AI save us money. It's they're compounding effects that are harming these young kids. The first five years of your career pretty much determine where you're going. They determine what graduate school you're going to get into if that's the path you should choose to take. Yeah. And these 21 year olds, 22 year olds are being cut off at the pass. God help us if they get angry. I really like this generation of young people. I live in a college town and I get to interact with them. My daughter's applying to be a Tarheel as well. Yeah. Um, go heels. As a parent of young people, like I imagine it's really worrisome, but do you hear similar things from other parents too, like who are going through the same I mean, parents are at a loss. Um, you know, they're like, "Well, I I told my kid to study computer science. I didn't realize he was going to be made redundant. I told my kid to study finance. I didn't realize she was going to be offshored and made redundant. Um, I mean, there's there's a fear factor here. You you can't just be an accountant when you graduate because you can be replaced. But if you're a forensics auditor, if you're Russell Crowe being a beautiful mind and connecting dots that a machine can't connect, that's something intuitive. attorneys, you know, a lot of a lot of what they do can be AIed. You can offshore a parillegal big data just put that law library on a chip and send it to India. But litigators really good litigators can't replace that with a machine, right? But a lot of that too, you develop like you point out the first five years of your career, you have to almost look at it as like cart. It's almost like Yeah. Yeah, you're that's where you go and you learn all those skills on the job. Mhm. And that's what's really worrisome. You're right. Because your 20s, this is one of the most important decades and that's where you're working. You're get in early enough to pay your dues. You're young enough and you're willing to do it, too. You're like, I'll get in early. I'll stay late. I'll raise my hand for that. I'll go above and beyond. Yeah. Yeah. I mean, when I when I first started on Wall Street, just a few blocks away from where we are at, 277 Park, I mean, you were supposed to be there before the sun rose, and you were supposed to be there after the sun set and that was actually okay. Yeah. It was expected. And you had the energy to do that. Y and you had the role models to say, "Look at that guy leaving at 1:00 on a Friday afternoon to catch the Jity to his place in the Hamptons." You're like, "Oh, wait, but he paid his dues." Mhm. So, if I pay mine, then I get his life in 20 years or 30 years or whatever it may be. You know, now companies have attrition and buyouts. And who takes these offers? The most experienced, the best, and the brightest within the organizations. All all these buyouts are like, "Well, we'll pay you x number for every year you've worked with a company. I'll do that math all day long. Bye." And you're left with shells and kind of people in the middle. But role models um policy makers and politicians have to stop and think through this. Yeah. This is going to be a real real risk on the horizon if something's not done. Yeah. And also makes you wonder too like the companies like the responsibility that they have as well. It does. Yeah. And you know, we we've got the president talking about selling off a big chunk of the student loan portfolio to the private world and getting out of the world of making student loans. I have I have clients who are who have kids in elementary school who are like, "We're not planning on sending our kids to college. They'll learn everything they need to know before they even graduate high school in this world." Mhm. And you may as well just light up light. a lot of colleges that are going to struggle because think about how many colleges and kids are doing the return on invest are already struggling now. The kids are doing the ROI. Yeah, the math. Yeah, they're doing the math. I definitely know more people than I had realized who either dropped out of college, didn't go to college, and they're working the same companies that I'm working at or have worked at. Yeah. Mhm. H because this is the world we live in right now is just grit. It's just grit. Yeah. That's how you're going to get by. You're going to take any job you're offered. Anything. And that's really hard to process when you've worked your ass off in college for the last four years and you think you've earned a a place at the bottom of the rung at the bottom rung of the ladder. In that bottom rung, you're like, "Ai just burned it." Yeah. Danielle, I always love having you in studio. It's so fun. I'm going to see you in just a couple weeks now. Yeah. Um, before I let you go, what do you want this audience to think about between now and the next time you and I sit down? So, I'm going to go back to what I've been saying. We strategists, we see reports come out that say that car repossessions are going to be the highest they've been since 2009. Please put faces on these statistics. You have to. There are people who were able to borrow way too much in 2021 and in 2022. And now reality is coming back to bite quite a few of them. you know, they shouldn't have taken out a $50,000 car loan, but they were allowed to. But but just dig deep in your soul and recognize that it's not just data. There are people behind this data. And if if you're struggling as an entrepreneur, as a as a small business owner, and you don't have the funds, but there's some college sophomore banging on your door and saying, "I'll work for free." Let them bring them on in. Let them work for free. At least let them put something on their resume in this time of any any one line on your resume has got golden value whether they're paid or not. So understand that there are kids out there struggling and they'll take the job. Yeah. How much of it do you think has just been masked by the fact that we've have markets at all-time highs? It's like I mean again and you know it's again the K the K has fallen backwards. I have the letter and I didn't make it up but um my viewers said that Adam Tagart from um thoughtful money calls it the I economy. So the little lowercase I folks at the top and then everyone else down here. So shout out Adam for that one for letter I. Lowercase I. Yeah. And the eye economy. There you go. It is the icon economy. Um, but there's nothing. It's not to be proud of because it also describes every banana republic in the world. Shouldn't be who we are. Yeah. Benjamin Franklin's rolling over in his grave right now. Danielle Daniel D. Martino Booth, CEO and chief strategist at Qi Research, author of the book Fed Up. We up to um also plug uh you write the Daily Feather. I'm a paid subscriber. Folks watching and listening, go subscribe to that. Um they can they learn about NFDIS by reading your substack or is that a very wonky institutional? I was going to say cuz that was the first I had heard of it and I was like read the feather this morning. I don't remember. Okay. It It's a little difficult to get through in 900 words or less. Yeah. I was like that we'll have to do a deeper dive in clients definitely benefit from. Yeah, exactly. But um we love folks like yourself who like maybe we'll have a Halloween sale and we we can have a big discount and off that institutional product. We can bring some new ones in. Anyway, I just want to say thank you so much for being so generous with your time, all of your knowledge, helping us all learn, think about these things. We really appreciate you and we look forward to seeing you again soon. Thank you.
DiMartino Booth: Fed Quietly Reclassified $300B In Loans With No Comment – Is This Systemic?
Summary
Transcript
Hey everyone, welcome back to another special in-person episode of the Julia Lar Ro Show where we are joined by Danielle D. Martino Booth, CEO and chief strategist at Qi Research. And I have to say I always love our inperson episodes. I look forward to them. I actually come up to New York just to talk to you in person anytime I get a chance. And it's not FOMC day. It's Fed minutes. Got the Fed minutes. Yeah, it's Fed minutes day. Boy, those were some hard-hitting minutes. Um and we were kind of expecting to be um it was obviously there was a show of force against Steven Myron the intruder um you know when Pal was at the podium and um and obviously in the statement and in the dot plot where one of the dots was wandering off the reservation. Um, but they were even harder hitting than I thought they would be. Um, because there were a few members of the committee who didn't feel that it was appropriate to raise interest rates at all in September. You want to communicate a really hawkish message by saying, you know, not only did not only did Waller and Bowman go along with not cutting by 50 basis points as they would have given their brothers, uh, there were also some who didn't want to go along at all with a rate cut and they all came together. They didn't want to do rate cut period. No. Okay. So, and the minutes were, you know, we're still extremely concerned about inflation and the pass through effect. And I'm like, I get it. But this was like, okay, so we've we've stuck a knife in Myron's back. Now, we're going to pour salt in the wound. And that's really what this was. Okay. You were a Fed insider. Explain the dynamic. Like, what do you think is going on then? Well, look, look, it's um these individuals, you know, to become a a a president of a district bank, to become a governor on the Federal Reserve board, it it's it's the culmination of an entire career in economics. It's considered to be a great honor. And you know, and I'm no huge fan of PhDs in economics. And you know, why does the Fed need 800 of them? But for people who are who get that far in their careers and to have somebody say, "I'm, you know, I'm just going to put my day job on pause. I'm I'm only going to be gone for four months. I'm not going to I'm not going to actually become a fullblown governor because I've got something else better to go off and do at the end of January." It's It has to have rubbed a lot of people the wrong way. And clearly it did. Showing that in the minutes. Okay. Uhhuh. Do you think we saw the risk management cut in September? Do you think like they really even wanted to cut then? Oh no. Um um there so to be fair there were mentioned in the minutes by some of the benchmark revisions specifically you know that negative 911,000 in the year ended March uh 2025. There are clearly doves who are concerned about this employment mandate and rightly so. Christopher Waller came out uh right before Blackout started for that September the 17th meeting and was was very forthright in saying, you know, ADP provides us with data in the middle of the month. So, in the middle of their own um because they're getting it on a day-to-day basis. So they're able to it's it's you would think it was easy enough to do dot dot dot except for the government agencies which can't seem to to to get the data in a more real time or even reliable fashion. My point is the Waller speech told us we are looking at alternative measures of the labor market and specific to ADP it said since the last employment report things got weaker and that would have been theoretically revealed in the September payrolls data which we didn't get on October the 3rd but we did have ADP come out with a massive downward revision um in just very weak numbers. So you know that there are members on the committee who are are focused on the pay report. The Carile group came out with their own proprietary measure of what they estimated uh non-farm payrolls would be. That was a whopping 17,000 for what they thought they would have been had they been reported in September. And as things are progressing, let's just say that this shutdown lasts for another week or so. Let's just say it's a twoe shutdown. The Bureau of Labor Statistics is not going to have enough time to do the groundwork quickly enough to produce the October non-farm report. So my point is the market has priced in a Fed rate cut based on data that are available just on what they can glean on what they can see and that's going to put the Fed in a difficult position for those really hawkish members of the committee who were saying you know maybe we only need one more rate cut in in 2025. But I I I don't think given the shutdown that the Fed's going to change the market's mind or even try and change the market's mind before the October the 29th meeting because I think it would just be too upsetting to a market that is at least a bond market that's on edge and the bond market's what leads everything else in theory, but you know, but We're like in the middle of of Ghostbusters. It's like dogs and cats are living together. We've crossed the streams. You know, the NASDAQ's flying and so is gold. Gold. Yeah. That's so unusual. It is unusual. So, it's it's really hard to say. I mean, gold is a meme stock for heaven's sakes. People are piling into it. sellside banks are are saying this portion of your portfolio should be allocated% right put a price target on gold for heaven's sakes I mean these are entities that have historically shunned the asset class in its entirety like not even not even nodding to gold and yet there they are now fully embracing it um because it's become a momentum play and that it to me at least that is a sign of risk for gold itself. Um we forget right after co hit and the markets initially were very disrupted and and fell and margin calls were going on that people were being forced to sell their gold just because it was liquid and there were gains there. Gold keeps setting new all-time highs but price appreciation isn't the only way to profit from owning gold. Monetary metals is redefining the future of precious metals investing. Instead of paying to store gold, imagine getting paid to own it. With Monetary Metals, you can earn up to 4% on your gold paid in physical gold. That's right. Your ounces grow each month, not just your paper balance. A yield on gold paid in gold means you're stacking more ounces every single month. And you still benefit if gold's prices rise. You're earning more gold every month and enjoying potential price appreciation at the same time. Go to monetary-medals.com/julia to learn more and see how you can start earning 4% on your gold paid in gold. We've had a lot of guests on this channel, not not like right now, like well over a year ago, who have been talking about gold and having an allocation to gold. Now you're you point out that now everybody's talking about it. And it's not that you're like anti- gold, is it? Not at all. The concern is like all the sudden it's it's um for some publications you're see that's that's the only story they have out today or they're just they're making their newsletter all about gold or Yes. And um it's the cover of a magazine or something which always should give any contrarians pause when something feels like it's just a pure momentum play. And right now again the NASDAQ is pure momentum and gold is pure momentum. Um there's there's an issue there. When you have conversations you have a active Bloomberg channel active Bloomberg chat. What are people talking about these days that you can share or just anything that especially around markets? So, what we're really really talking about is the reclassification of loans. I mean, this is the hottest subject of discussion. Every Friday afternoon, 30 minutes after the stock market closes, the Federal Reserve publishes its weekly H.8 eight report which gives you all the details of commercial banks balance sheets, what their loan books look like, where there's been growth in lending, what the deposits look like. You know, I used to follow it because of my mentor Lacy Hunt. He would always follow other deposits and liabilities and when that was kind of declining, you know, that was a red flag and and we are actually seeing deposits declining right now. But over the last 18 months or so, we've all been following NDFIS. I mean, NDFIS is where it's been hot, hot, hot, nondepository financial institution loans. And you know, it sounds arcane, but there's a reason that buy now pay later is so hot. There's a reason that triple levered ETFs are able to even exist. There's a re there and the biggest reason of all is private credit. So all of these conduits into the markets, all of these conduits into the real economy have to be financed. Well, they're financed in the non-depository financial institution lending market. So your safe banks over here and it makes a loan to your non-bank over here. Now the non-banks lending standards are a lot weaker than the bank's lending standards. But this is an armslength transaction, right? I'm loaning to KKR. I'm loaning to Drexion. I I'm loaning to CLA. Just to give you three areas where NDFI loans land. Okay. So year to date, NDFI loans are up 20 some odd percent year-over-year. It's a lot. And but that means that lending to private credit's been gang busters, which we know, right? Um it means that that Drexion just rolled out, I think, nine new triple levered ETFs based on individual stocks, which we see. We see that CLA is growing its its borrower base with buy now pay later because now borrowers can put services on buy now pay later. So you can pay for that vacation for a really long time or that Mai for a really long time or your groceries for a really long time. But if they're growing then their financing has to be growing. Now, go back two weeks and all of us geeks waiting at 4:30 Eastern for the Fed's H8 to come out went say, "What?" The Fed reclassified more than $250 billion worth of loans that had been in this stodgy category of con commercial and industrial and consumer loans. They said, "You know what? NDFIS are no longer 1.4 trillion outstanding. They're 1.7." Oh, that was just within just within a week of within a week. That was That was the big subprime Okay. auto company that that had loans out. And that means that the regulators didn't actually know that some of the lending that was going on was not actually classified in these stodgy loan categories, but rather they had to pick up that and put it in the go-go area. And in my world over the weekend, because this comes out late on a Friday, by the time Saturday rolled around, my Bloomberg chat room was hopping on a Saturday afternoon because not only did the Fed reclassify this these loans, it did so with no comment. Quietly on a Friday then. And then we have first brands which is a quiet little auto supplier, air filters, windshield wipers, or is it really a financial? So Jim Chenos did a fabulous interview with the Financial Times and he talked about NDFIS and he talked about first brands and his comment was it wasn't until we were way down the pipeline because again NDFIS here's something for you offbalance sheet financing remember that offbalance sheet financing special purpose vehicles, SPVS. Uh Janet Yellen was asked in front of Congress and she was like, "I I'll get back to you. I don't really know what an SPV is." And yet there was the world blowing up in her backyard, countrywide finance, all of these subprime lenders that were being financed with offbalance sheet vehicles, loans that were warehoused. So a lot of what's been going on in First Brands inricolor has been offbalance sheet lending. So what Jim Chenos said to the Financial Times was, you know, it wasn't until Enron and then Tao that we realized how extensive offbalance sheet financing had become such that. We thought it was a company that was in the energy space or we thought Tao was a big conglomerate but real business. What we didn't appreciate was that they were actually financials. And what we're discovering with UBS saying, "Oh, it's got 500 million of exposure." I mean, you cannot keep up with the number of this morning, I think it was Jeff with 175 million of exposure to these First Brand accounts receivable factoring. Now we're finding out that First Brands was not some quiet private auto supply company, but rather like Enron, a financial, a financial using lots of go- go financing. And so now we talk in my chat room, it's like, is the Fed going to upset the markets further by reclassifying loans that were clearly made to first brand that should have been off balance sheet, classified as offbalance sheet or not? Black Rockck announced and a big pension in Texas announced today that they were withdrawing money from the fund that Jeff was um that that Jeffre was was using to to fund First Brands. So they're like, "No, we're pulling our money out." And you're like, "Gosh, who what what started?" Oh, that's right. Bear Sterns. That's what started when people started pulling their money out. And these are pennies compared to trillions and trillions of dollars under management at Black Rockck. Um, but it's so symbolic because like Jim Cheno said, we thought Enron was this type of company, but it was really just a glorified financial moving money around. We thought First Brands was an auto supplier and we're learning with every single headline that crosses there. There's another bank that's got 300 million in exposure to First Brands. We're learning that it was actually a financial. And Jim's comment was the time we learned that stayed stodgy companies were not in fact what they appeared to be, we were too far gone. And so that's why we talk about non-depository financial institutions because we're discovering after private credit having been a black box that not only is it a $ 1.4 trillion outstanding market, it's actually now 1.8 trillion. The reclassification alone made it such that commercial and industrial lending for the year year-over-year was negative. So lending into the real environment by lenders is negative year-over-year. That means you're deep in recession. Lending to the offbalance sheet conduits, that's up big time. And yet the losses that the banks are taking as these loans blow back to them are real. Just like it was the case for Fifth Third or for JP Morgan, each taking $200 million in losses tied toricolor. So this is kind of a I mean for total dorks in the market this is a big deal. I mean I love that you guys are so into that. This is the first I've heard of it too. So I'm can I this is very like basic question is kind of like the interpretation or the so the so what is that it's like there's something going on that's bigger in the economy like recession or something that we you and I talked about recession but what is for the everyday person who's watching listening like what is well you know so if if let's say these reclassified loans that are presumably tied toricolor um have all blown up well And this guy on Twitter who's anonymous but brilliant put a put a posting out today and he said, "Well, let's just do some very simple back of the envelope math." That means that the subprime delinquency rates about double what it is and that we're not seeing the distress in the marketplace if it's being glossed over by the fact that the lending is going on in the shadows, unregulated and invisible. And on top of that, we already know that banks are modifying loans in their consumer loan book. Whereas prior to the great financial crisis, that was really mostly isolated to commercial real estate loans, the extend and pretend, the modifying of of loans. But now we're seeing it across bank loan books. Thank you, Bill Morland at Bankreak Data, um, for combing through those crawl sheets and saying if banks weren't extending and pretending with personal loans, with credit cards, with auto loans, then what they're reporting is, call it 5% delinquency rates on autos would be a lot higher. Now add non-depository financial institution lending that's also showing signs of distress, but we can't see it until it blows up. And we know that even though First Brands is only a10 to6 billion 10 Yeah. 10 to$16 billion liability bankruptcy only. We know it can't be alone. These practices have been adopted. It's like a symptom. Yeah. Okay. Of something that could be endemic. And the most salient question that was asked in my chat room today is is this systemic? And we don't know, but we do know that the Federal Reserve does more than make monetary policy when on a Friday afternoon it reclassifies nearly $300 billion worth of loans. Mhm. And puts them into a big black box. And if they don't know what's going on with the banks they regulate, God help us. Okay. So, going back to the Fed, the Fed monetary policy maker. Yeah. Yeah, bank regulator. Gosh, we have a meeting. It's already October. Like, we have a meeting coming up at the end of the month. We do. I'll be right back here. I know. And I think I'll be right back here with you. We'll go and put on the books, Matt. We'll we'll schedule the October 29th. Um, make sure the studio is available. Do you rate cut October? It's we need a 50 basis point one. Likely, but we won't get one. It The government shut down. They're flying blind then or they have to go off. You just took the words right out of my mouth. And the army of PhDs will only go so far until they see the the official data. They have they are so data dependent. They won't make the move without their official data dependent. Official data. And it's they're they're not going to say Gee, look at that challenger report. Or they're not going to look at true inflation. Or they're not going to look at true inflation, which was what, 2.22% today, real time. And by the way, really high, higher than it would be otherwise because of utilities. Thank you, AI. Okay, so they obviously like certain official data. Having been a Fed insider, have you ever had to when you were there, um have you ever had to like bring like data that wasn't official or go make them look at something? So, speaking of challenger hiring data, um when I got to the Fed, they weren't even using challenger firing data because it wasn't it wasn't a a historically long enough in the tooth data set to seasonally adjust. And I'm like, but this is, you know, at the time, this is the best data we have on announced layoffs, which precede initial jobless claims, which precede non-farm payrolls. So, why wouldn't we want to know what's coming down the pipeline? So, let me tell you how popular I was the day that I introduced the the challenger. Yes. Hiring series, which goes back, I think, to 200, I want to say maybe 2012. Um, which was right when I was there. And I'm like, this is great. Companies are announcing what they're hiring during the holiday seasons. We're going to be able to see the strength of the consumer based on seasonal hiring patterns. This is fabulous. We can see what retail sales are going to be because if all, you know, all the major Walmarts and Amazons of the world, if they're hiring big time, then they expect a big old holiday season. if they're not. Of course, we just had the weakest September in hiring data in how long, implying actual job losses. But when I raised this subject, they actually the PhDs there were were were concerned that President Fischer was going to embarrass the Dallas Fed by making mention in a Federal Open Market Committee because Danielle had put it in her markets briefing prior to him going to Washington of a brand new data set because they can't be open-minded to something that's not No, you're putting it very very delicately and diplomatically. That was very well done, Julia. Okay. No, no, do it the non-domatic way. No, no. I mean, they were they were actually appalled. They were horrified. That kind of seems like ridiculous that they can't just look at something new or different. Look, Liz Anne Saunders tweeted out this morning um you know that small business hiring according to I think it was maybe Moody's is is down in X number of states and led by leisure and hospitality. It's indicative that we're in a recession. um you couldn't introduce that either even though it's on the ground good data in an on the ground good data era what I don't understand why not or are they afraid like they they'd be embarrassed because they would prove that they've been wrong for so long or if you cannot make historical references back through the ages of the business cycles and if you have a chart that doesn't have gray bars on it gray bars denote recessions then your chart is is seen as as being just north of useless. H that's got to change at some point. Um, so to speak out of the other side of my mouth, look, the Fed put was born October the 20th, 1987 when Alan Greenspan released a statement saying that the Fed was there to backs stop the banking and financial systems. Okay. Yeah. At which point, and this is documented and it's in my book, he then started to allow the New York markets desk to leak to Wall Street bond trading desks prior to Fed moves to inject liquidity into the system so that you could frontr run the Fed, birth of the Fed put. So that's when politics entered policym, right? And with the Fed under a full frontal assault right now, the opportunity presents itself for there to be rethinks, Julia, for the Fed to indemnify how it makes policy so that it's not putting itself at existential risk because it's making policy based on metrics and models that precede the dinosaur. So, um, there is an opportunity if the Fed comes out at the other end of the president trying to take it over for, you know, as great CEOs would say, to, you know, take the opportunity of a crisis to make change. I like that. Hm. I want to talk to you about the labor market because we were just talking about like we were talking about before you started recording, we're talking about young people and like job seekers like those who are also just graduating. The only thing that you know the class of 2024 can brag on at this point is that it's worse for the class of 2025. That's got to be so problematic then. So if you look at the youth unemployment rate which is these are discussions we typically have about Italy and France and emerging markets economies where there are so few opportunities that you have prolonged periods of high levels of youth unemployment which is is very destructive on a societal level. But here we sit today with the youth unemployment rate in the United States at the highest level since 1988. Now what does that mean? In 1988, the supply of labor into the job market was the highest in postwar history. It was the year that the baby boomers entering the job market peaked. So the high unemployment rate for job entrance then was because the supply overwhelmed the demand. there were just too many people. And then the youth unemployment rate quickly came down as these individuals were absorbed. But now we see the youth unemployment rate has risen right back up to where it was in 1988 today. But it's not there because there are so many of them. We haven't had a baby boom. Yeah. It's not a baby boom. You're right. It's there because there's a lack of demand. Right. It's the law of supply and demand. In 1988, it was a supply issue. to 19 in 2025. It's a demand issue and I I I think policy makers, politicians, um the president, they have to appreciate that that politics and policy is colliding headon with AI. And though AI will after we get over this period likely prove to be highly productive. You know adoption of AI in Singapore which is kind of a controlled economy is a multiple of what it is in the United States. They've been told adopt and do it well and they have but again I think it's around 27% in the United States compared to Singapore which is through the roof almost 100 companies are adopting AI blindly. They're not hiring people because of AI blindly and they're not necessarily deploying AI efficiently. And we hear this, we hear this from big consultancies that put out these reports, Bane Capital, and you know, companies are say that they've thrown money away on trying to adopt AI and that their employees haven't been able to. Well, you can't just throw something at somebody and say, "Become more efficient at what you do or get fired." Um but by the same token, policy makers and politicians need to understand this moment in technological history when policy and politics are making it that much more difficult to plan for the future to hire. What are tariffs going to be? Where are politics going to be? How divided is this country going to stay? Are foreign companies going to be invited in to make investments or not? We go back and forth. Mhm. So the uncertainty plaguing occupants of the seauite right now on top of the requirement that they send from on high down to the minions to adopt AI save us money. It's they're compounding effects that are harming these young kids. The first five years of your career pretty much determine where you're going. They determine what graduate school you're going to get into if that's the path you should choose to take. Yeah. And these 21 year olds, 22 year olds are being cut off at the pass. God help us if they get angry. I really like this generation of young people. I live in a college town and I get to interact with them. My daughter's applying to be a Tarheel as well. Yeah. Um, go heels. As a parent of young people, like I imagine it's really worrisome, but do you hear similar things from other parents too, like who are going through the same I mean, parents are at a loss. Um, you know, they're like, "Well, I I told my kid to study computer science. I didn't realize he was going to be made redundant. I told my kid to study finance. I didn't realize she was going to be offshored and made redundant. Um, I mean, there's there's a fear factor here. You you can't just be an accountant when you graduate because you can be replaced. But if you're a forensics auditor, if you're Russell Crowe being a beautiful mind and connecting dots that a machine can't connect, that's something intuitive. attorneys, you know, a lot of a lot of what they do can be AIed. You can offshore a parillegal big data just put that law library on a chip and send it to India. But litigators really good litigators can't replace that with a machine, right? But a lot of that too, you develop like you point out the first five years of your career, you have to almost look at it as like cart. It's almost like Yeah. Yeah, you're that's where you go and you learn all those skills on the job. Mhm. And that's what's really worrisome. You're right. Because your 20s, this is one of the most important decades and that's where you're working. You're get in early enough to pay your dues. You're young enough and you're willing to do it, too. You're like, I'll get in early. I'll stay late. I'll raise my hand for that. I'll go above and beyond. Yeah. Yeah. I mean, when I when I first started on Wall Street, just a few blocks away from where we are at, 277 Park, I mean, you were supposed to be there before the sun rose, and you were supposed to be there after the sun set and that was actually okay. Yeah. It was expected. And you had the energy to do that. Y and you had the role models to say, "Look at that guy leaving at 1:00 on a Friday afternoon to catch the Jity to his place in the Hamptons." You're like, "Oh, wait, but he paid his dues." Mhm. So, if I pay mine, then I get his life in 20 years or 30 years or whatever it may be. You know, now companies have attrition and buyouts. And who takes these offers? The most experienced, the best, and the brightest within the organizations. All all these buyouts are like, "Well, we'll pay you x number for every year you've worked with a company. I'll do that math all day long. Bye." And you're left with shells and kind of people in the middle. But role models um policy makers and politicians have to stop and think through this. Yeah. This is going to be a real real risk on the horizon if something's not done. Yeah. And also makes you wonder too like the companies like the responsibility that they have as well. It does. Yeah. And you know, we we've got the president talking about selling off a big chunk of the student loan portfolio to the private world and getting out of the world of making student loans. I have I have clients who are who have kids in elementary school who are like, "We're not planning on sending our kids to college. They'll learn everything they need to know before they even graduate high school in this world." Mhm. And you may as well just light up light. a lot of colleges that are going to struggle because think about how many colleges and kids are doing the return on invest are already struggling now. The kids are doing the ROI. Yeah, the math. Yeah, they're doing the math. I definitely know more people than I had realized who either dropped out of college, didn't go to college, and they're working the same companies that I'm working at or have worked at. Yeah. Mhm. H because this is the world we live in right now is just grit. It's just grit. Yeah. That's how you're going to get by. You're going to take any job you're offered. Anything. And that's really hard to process when you've worked your ass off in college for the last four years and you think you've earned a a place at the bottom of the rung at the bottom rung of the ladder. In that bottom rung, you're like, "Ai just burned it." Yeah. Danielle, I always love having you in studio. It's so fun. I'm going to see you in just a couple weeks now. Yeah. Um, before I let you go, what do you want this audience to think about between now and the next time you and I sit down? So, I'm going to go back to what I've been saying. We strategists, we see reports come out that say that car repossessions are going to be the highest they've been since 2009. Please put faces on these statistics. You have to. There are people who were able to borrow way too much in 2021 and in 2022. And now reality is coming back to bite quite a few of them. you know, they shouldn't have taken out a $50,000 car loan, but they were allowed to. But but just dig deep in your soul and recognize that it's not just data. There are people behind this data. And if if you're struggling as an entrepreneur, as a as a small business owner, and you don't have the funds, but there's some college sophomore banging on your door and saying, "I'll work for free." Let them bring them on in. Let them work for free. At least let them put something on their resume in this time of any any one line on your resume has got golden value whether they're paid or not. So understand that there are kids out there struggling and they'll take the job. Yeah. How much of it do you think has just been masked by the fact that we've have markets at all-time highs? It's like I mean again and you know it's again the K the K has fallen backwards. I have the letter and I didn't make it up but um my viewers said that Adam Tagart from um thoughtful money calls it the I economy. So the little lowercase I folks at the top and then everyone else down here. So shout out Adam for that one for letter I. Lowercase I. Yeah. And the eye economy. There you go. It is the icon economy. Um, but there's nothing. It's not to be proud of because it also describes every banana republic in the world. Shouldn't be who we are. Yeah. Benjamin Franklin's rolling over in his grave right now. Danielle Daniel D. Martino Booth, CEO and chief strategist at Qi Research, author of the book Fed Up. We up to um also plug uh you write the Daily Feather. I'm a paid subscriber. Folks watching and listening, go subscribe to that. Um they can they learn about NFDIS by reading your substack or is that a very wonky institutional? I was going to say cuz that was the first I had heard of it and I was like read the feather this morning. I don't remember. Okay. It It's a little difficult to get through in 900 words or less. Yeah. I was like that we'll have to do a deeper dive in clients definitely benefit from. Yeah, exactly. But um we love folks like yourself who like maybe we'll have a Halloween sale and we we can have a big discount and off that institutional product. We can bring some new ones in. Anyway, I just want to say thank you so much for being so generous with your time, all of your knowledge, helping us all learn, think about these things. We really appreciate you and we look forward to seeing you again soon. Thank you.