Aug. 22, 2022

Meme stock win, Cineworld, Wall St. warns on rally, FOMC minutes, Jackson Hole and shrinking rivers!

It's the summer but there's no shortage of business news and wow do we cover a lot of ground!

From the success of the student making over $120m on Bed Bath and Beyond shares through to problems at Cineworld and the second coming of WeWork's Adam Neumann.

Here's how it breaks down:

- Student raises funds to win big on Meme share
- Why can't great movies save the cinema?
- Financial services, why are they teaching us to suck eggs?
- When is a market rally not a rally?
- University fees, are they value for money?
- WeWork didn't, will Flow?
- China economy
- Shrinking rivers
- Shocking the markets
- Jackson hole and inflation

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Unknown Speaker  0:00  
Hey, everybody, and welcome to the Monday edition of rolling on it myself, Mark and I co host Pete,

Unknown Speaker  0:07  
we're just going to be covering off the as usual, the financial news, what's happening, what may happen this week. And also, Hey, what happened in the last week and then we'll kick off Peter, with a good news story.

Unknown Speaker  0:21  
I mean, it's a good news story, some interesting kickers on the side

Unknown Speaker  0:25  
of a student, yes, a mathematic student who is in the US. It made 110 100 and $20 million out of purchasing Bed Bath and Beyond stock. So Pete, what do you think to that? I mean, to me, that's astonishing. Did it all over four weeks, right? It did it over four weeks. So Bed Bath and Beyond is one of the meme stocks as they've been called, along with what we've had, we've had AMC, we've had GameStop, we've had a number of others. And he'd been in Bed Bath and Beyond before now the shop, I hesitate to add. He may have been Yes. As a student, he may have been a guest and they sell IKEA priced stuff. He's probably shoplifting, but I don't know. Anyway. So he built a position. And all you see obviously in the stories of the headlines, he's come away 110 120 million, but he's built a position he's not your average student is he's he's he's had was it 21 million, he raised two. So here's the story, he raised 27 million. It was very nonspecific, where he'd raised from to build this position. But you know, I put it to you that you may well be physically a student and logically a student. But I don't know many people, let alone students that could raise $27 million. I what I did like about, I'm not gonna be honest with you, I really liked how humble he was, because he said, I expected it to go from $5 to $7.50. And in fact, it went, I think it went to like 20, or dollars, just huge, huge rise. But I liked his humility. I just think it's a bit of a non story. If you start off with $27 million in the first place, to be really honest, I also think that, you know, it's a pure punt, right? We're in the summer markets here.

Unknown Speaker  2:17  
Retailers typically don't do that well, in the summer, unless they're selling fishing and hunting type of gear. Bath and Beyond. Don't do that. So I'm not really sure what was behind his hunch that I think he was just building a sort of a longer term position, maybe looking for some sort of rally and it was gifted. He said, Well, he apparently he is a gifted statistician, alright. But what he did was, he built a big enough position to be able to go to the board of the company, and recommend to them a way that they could refinance their debt, which they did. They took his advice, and subsequently, the share price catapulted because they refinanced. That was a sort of story I read now whether Yeah, how much of that is true or not? But of course, once you get over 5%, you are you're in a position where you can talk to people, so to speak. So whether whether that's what you actually did, or whether that's the sort of the apocryphal stories putting out there, but for me, I mean, if you're watching huge kudos to you, right. Absolutely incredible. Could you give me a call, let me know, where you got your $27 million stake money from? Because I think that's, that's part of the key to that. And he must have assembled that position in quite small chunks to not pump the price himself. Yes, indeed. It's a story begging of multiple investigations. Below. It is. It's a bit like Stelios, who owns EasyJet in the UK, he allegedly the apocryphal story about him is oh, I started EasyJet when I was a student and I had nothing. The bit that he misses out from his story, his life story is that number one, on his 18th birthday, Stelios was actually given four oil tankers in the under the name stoma, and the first jet was bought for him as a gift by his uncle. Yeah, it was a Greek shipping great shipping business. Yes. So see wasn't surprisingly how many self made men are Bed Bath and Beyond thing is interesting this week because Sydney wild again, wasn't seeing well it was AMC, but was almost going bankrupt about a year ago on the back of the pandemic.

Unknown Speaker  4:23  
We're really struggling and then We've obviously had Die Another Day. We've had Top Gun Maverick to both fantastic films if you've not seen them, go and watch them in bigger more some quickly, because it looks like seeing well we're gonna file for bankruptcy again. Well, what chapter that's the thing is that I'm never sure that it's like chapter 10 or chapter 11 is protective. And then the other chapters are, I don't know so before they got bought out before they, yeah, they got bought bought outs before they got there and inevitably got racked up with huge amounts of debt. Now, we've seen this story before guys and girls, guess what's happening now? They can't afford to pay their debt. Actually put

Unknown Speaker  5:00  
If any of it, they're not getting enough revenue to cover their debt. Now, if I P company, I'm still relatively happy because I managed to get a lot of debt in the business, I put that debt into other deals elsewhere, I probably packaged up that debt and sold it to some other people as well. So I'm not a private equity player, I loaded it up, sell it off, take your fine one of the 244,000 Sunni world employees. They employ 244,000 People Poland, Germany, UK, US, Israel, everywhere. Why if it's a global bankruptcy, that's pretty major. But I mean, I haven't been to the cinema since COVID. I have to say just sort of never went back

Unknown Speaker  5:40  
for no particular reason. But I wonder if that business model is now permanently broken. I mean, like any, any model in the digital age, it's almost like cinema was a precursor to the digital age, right? Content, you need content. If you don't have good regular content, then people aren't going to come in, you know, undoubtedly, I mean, I was one of the people who was like, you know, when Tom Cruise wouldn't allow, you know, Top Gun Maverick, to be released on streaming. I thought, Well, come on, man. We're all sitting at home. This pandemic, to be honest with you. It's a bit depressing. Yeah, but you nice to see that film. But once you've seen it, the cinema you go, Oh, I can see why you did that. You can see

Unknown Speaker  6:23  
all the rights to it as well. So he must know. Yeah. And it's a pure like non CGI film, everything, everything is real. Everything is real. But you know, you get killer content like that. And you get it with a high frequency. People will go to the cinema. Absolutely. But when you get that one, so you got di another day, then you got that. And then you got one of the Marvel movies, Thor and something really escapes me but my kids Gen Z, they love it. They love every franchise. And I think they did quite well as well. But there's been nothing since. And is it because a lot of money is now in prime studios or Netflix studios or Disney plus studios or an apple studios. And it's not in their interest.

Unknown Speaker  7:04  
Again, I think the the pandemic changes everything right, some of these movies take a year, two years to make if it's depending on how much of a blockbuster it is.

Unknown Speaker  7:13  
And if it you know, might not take a year to shoot it. But you've got the post production you've got all of that stuff goes along it. So you we've kind of missed that window to have a lot of stuff produced. The Void has been filled. And this is my opinion. So much pap, it's unbelievable. I mean, I, you know, I get Netflix and Amazon have to produce stuff. But there's a thing on Amazon recently. It's called like 13 lives or something. What is the point in making that movie? When we all know they got out? There's no point there's no suspense to it? Because you know, oh, yeah, there's kids trapped in a cave in Thailand. They're all gonna get out big deal. That should have not been a movie. To my mind. That should have been like a maybe like a 10 minute short or there is a brilliant National Geographic documentary. So watch that. Yes, yes. I have watched that. My son had Moore's Law though and loved the movie, because he's Gen Zed, right? So they absorb a lot of stuff in their bubble. But he didn't know. I mean, he knew at a high level because obviously as a football fan, and these kids turned up at my new didn't they? Yeah, they did. Yeah. But he didn't know how he got them out. He said, Do you know what they did? I said, yeah, they won't spoil it for anybody. He was like, Oh, my God. So if you have if you don't know the story, I guess it's Yeah, to me. I just thought it was a movie. Ron Howard, he makes good films. He does make good films. He does. I'm so getting happy days. I didn't think it wasn't to be honest with you Happy Days was it's like many things, right? It was a time and a place. And that's the thing and also brings me on to the next thing, which is financial advice. There's a time and a place for it. But I don't know if you've noticed over the last certainly several years. The more financial advice I read in the particularly the mainstream media, it's absolute garbage. It's

Unknown Speaker  9:04  
it's teaching grandma to suck eggs, as we would say, yeah, it's all the things that you could get from a book, or sitting down with a financial advisor for an hour or two. It's just Mom and Pop recommendations. Part of the reason we run this podcast, right? Yes, there are things that you should do. You should buy tracker funds, you should look very closely at mutual funds because a lot of money is going in fees. If things are getting tight, you go down to generic own brand products. I mean, these are just very simple things but they're being packaged by the media but not a package by the media. What sort of depresses me more package by so called well meaning financial institutions were built a big Wealth Management arms to say yeah, this is amazing insight. Well, it might be amazing insight, but it's things everybody should know and why are you feeling now that

Unknown Speaker  10:00  
You know, it's your job to

Unknown Speaker  10:02  
like marketing, it feels like I've watched some of those Barclays ads that come up on YouTube. And honestly, say it patronising. Yeah. And quite frankly, it just shouldn't be allowed that sort of content. Yeah. And the irony is, you often get that sort of content saying,

Unknown Speaker  10:20  
I save money by switching this, or I do save money by doing that. And then it's then immediately followed by one of my my constant hates, and I've mentioned them before, which is the people saying, Oh, I can buy something now and split it on three payments, something I can't afford. So you've got this completely bizarre mixed message going out of cut back. This is how you live sensibly. And when if you can't be bothered to live sensibly, or if there's something you really want, don't worry about it, because you can split it into three payments. There's no consistency here. And terrifyingly, and I look at the UK university system here. They're now saying the deans of the universities were saying yesterday, they think the fees for university in the UK should go up to 13,000 pounds per year. But yet, they're still not going to teach them anything other than than the basic courses that they're currently teaching. That is, to my mind, an outrageous thing to do to the youth of our country, you're not even giving them life skills, you're giving them some qualification that may or may not get them a job. And they're going to come out a minimum unless their parents can cough up a minimum of 39,000 pounds in debt, which to put it into perspective, if there's a couple will give you ate about 80,000 pounds, which is 33% of the cost of the average house in the UK. So where's that? Where's the sense there? It there's no sense to me, there's there's a, you know, in life, there's basically, you know, action reaction. And what you need to look at, is when there were no fees, when the government used to pay fees, versus when the fees were 3000 pounds, which is when my cousin when versus when the fees were 9000 pounds? Was the quality of education any better? Did people get better results? And did they go on to live better lives and get more wealth and use the country? The answer's no, the answer is no. And because a lot of that money has gone into libraries, buildings, student accommodation, which has been racked up with these

Unknown Speaker  12:33  
loans, perpetual loans, because a property developer comes in and says, you know, this isn't theirs, but you got to pay me this amount of money for ad infinitum, like the private equity structure, and lectures and lectures, fees, right? Well, let's not forget the big one, which is the Dean's of the universities and the Penn trouser ring 300,000 A year yes, stupid, stupid money at universities that in my opinion, some of the ones that I read about that are paying the big money. They're not even universities. And I'm not being funny, right? A university should teach you something, not just education, we should teach you some life skills. Northampton University sponsor, Northampton Town Football Club. I don't know if they do this ship, they certainly have been. What is a financial

Unknown Speaker  13:18  
instrument like that being done? Why are you doing that? Why are you using that sum of money, which must represent 456 Kids fees, maybe 10 Kids fees every year to sponsor a football team that doesn't even get on TV that's only advertising base. And only visual bass is going to be the same area that you're located in as a university, while often hubris is the answer to that question. But I've got an even more fundamental problem there and no offence to anybody has been there. Northampton is not University. No, no, no, I completely agree. I mean, I would suggest that Northampton is more of a college that gives you a degree it Yeah, I mean, and great. If it's if it's vocational that then absolutely. But and this is part of the problem with universities and the whole funding thing that was unleashed by Tony Blair, which is everyone should get a degree and everyone should go to university. Yeah, well, they fundamentally shouldn't. unleashed by Tony Blair, who son, of course, is making a lot of money out of advocating, advocating, sorry, the exact opposite. And saying, You don't need to go to university Why don't you just stick with you know, it's often a well trod path. The kids don't do the opposite of what the adults see. You know, so so fair play to him. What else has caught your eye this week? A few things have caught my eye is going to reference the Financial Times weekend a very, very good publication. I guess the first thing that we've seen swing though, left wing for you, left wing to you, is the rally. We had a bit of rally when we have been Oh, yeah. Coming up in a few weeks. Nice, fun and nice rally.

Unknown Speaker  14:54  
But people don't think it is a rally people think it's a lot of hedge funds and investment banks on winding short

Unknown Speaker  15:00  
positions getting out.

Unknown Speaker  15:02  
Which obviously looks a bit like a rally, because you have to sell and people will buy stuff when you sell it.

Unknown Speaker  15:08  
And there is a lot of pressure forming around Jay Powell. It's the Jackson Hole meeting this Thursday, Friday. He's doing a speech on Friday. We had the FOMC minutes last week. Yeah. FOMC minutes.

Unknown Speaker  15:23  
I mean, I don't know why people read them to be honest. It basically do they? Well, people allegedly do. I wonder if the media, but maybe if you're in the media, that's your job, right? And people are commenting on that. And they're dissecting sentences, which literally say, we'll have to do what it takes. What is it? What does that mean? We'll have to do what does that mean? What does what it means inflation goes higher, we'll ramp up interest rates. And if it tails off, we can ratchet them back. But this guy's in a rock and a hard place. He's already being hammered for being too late to the party. So it's gonna be interesting to see what he wants to do now, everywhere in the world is a disaster. i Let's be completely honest. And it's being fueled by in Europe, particularly Ukraine. But you've got this climate thing going on. I didn't realise until the weekend, the drought in Europe, there's also a drought in China. And yes, the Yangtze River is drying up, the Colorado River is drying. The Rhine is drying up. So we saw last week and we commented on you can't ship stuff across Europe anymore, because the Rhine has got too shallow, same problem in China. Now this is the stuff they haven't been making enough of anyway, because of all the lock downs due to COVID. They now can't get it down the rivers to the container to the container ports. Yeah, the mask have been saying about that. But look at the icing on the cake for us. belligerent broken Britain, is we've got an eight day strike on the biggest container the biggest container port in the country. Yeah. Which is of course going to bump up inflation even more cause more problems. But this all sounds negative mark, and we don't want to be negative because the Messiah has come again. Ah, what a great man, what a great man

Unknown Speaker  17:02  
on the value of my stock and we work hopefully I'm pronouncing that right Norman or Newman, I guess depends on whether you're a German native or not founder of we work who did you know, raise a lot of money made a lot of people very liberal billions, your your work is being in another chance. And this is his business called flow. I like a like people like him because he actually has a vision, which isn't just to make more money right here. He has a vision that is that the way we live, and the way we work and the way we do things, those two things alongside and the residential market itself. It's all a bit flawed. And I want to fix it now whether his solution is right or not. For me, he gets credibility points for attempting to do something about it. And it's basically shared ownership. Right? Yeah. shared ownership and floating his vision, which works particularly well in Germany. And maybe that's the Linda, it may well work in Germany, but I don't know. I think there's something a bit bizarre, right? It's institutional investors, or it's in this case, I think, Andreessen Horowitz, Andreessen. So look at these guys, and I think here's a guy that lost every single ounce of credibility, lost the lot. People didn't want anything to do with them.

Unknown Speaker  18:19  
There's a documentary series about we work mockumentary type series where we were, he was annihilated. And yet, within two years, here he is back again. And he's managed to get 400 million from the same people. Now I'm assuming the reason they've given him the money is because they were the people that exited successfully. When Softbank, I think it was ended up with the Yeah, they basically share the lion's share of that he's a guy who can raise money, right? That's fantastic. He's a guy who can raise money because that passion and that evangelism comes across. Yeah.

Unknown Speaker  18:53  
So yeah, I, you know, we know we're in for an interesting few years. Right, we the other big thing that caught my interest is the, you know, we talk about what's coming up with the Fed, you know, and everyone looks to us, you know, the old adage still applies, you know, if the US sneezes the world catches a cold, but China and are doing the opposite to the US. China's economy, we know is in a little bit of a pickle. Yeah. But can you trust all the numbers that come out of there? Probably not. But even the numbers that you see are not telling a great story, particularly around all the money that's in tied up in residential property, terrify the ability of people not to be able to pay back some of the feuds, food shortages, we can see. And obviously this big thing around the zero COVID policy and now obviously, we've got the Yanxi stuff as well, but their economy is overheating, like everybody else's, but they're doing the opposite. They're cutting interest rates. They are actively going out r&d, actively going out to people saying if you've got one house by another, if you've got two houses by it, not in

Unknown Speaker  20:00  
line with the fantastic economic thinking of that genius in Turkey. It's almost 70 79% inflation. And what I'm gonna do is cut rates further. Yeah, and there's a point at which the whole thing comes down like a pack of cards. And I think the difference between Western society, although you may argue, Western society, not so much, so more, and some of those more closed societies, when it comes down like a pack of cars in a closed society, you get massive civil unrest, oh, completely. And of course, the Chinese are used to civil unrest, which is why they're trying to log it, which is why they turned him down, right, because they can see what's coming. So look, on that note, I think we'll leave it there, we've got to 20 minutes. I mean, for me, it's much the same as last week, really, we're coming towards the end of the holiday season, if you're still trading, the markets, trade it a bit lightly, just just, you know, keep your powder dry. I think we're in for a very, very big rock and roll scenario. In September, October, I've got no idea whether it's going to go down or up like that I'd be really honest in my head tells me, the world is in deep doo doo, it has to, I think, come down, you're absolutely spot on. People are going to feel like they have to act. Yeah, when they come back in September. So we'll wait for Labour Day, I reinforce what you've said, we didn't get massive number of signals last week, we still got some really good trades. But totally, I don't want to sit there all day and wait for four or five signals. So you know, take take a bit of time out that people are going to come back in the same way that the chairman of the Fed is going to have to do something, the bankers, the traders are going to have to do something and I think there's gonna be some big swings buys or sells. We don't care. We trade you can make money. But the reality is a lot of those guys are speaking to a few friends in the city recently. The reality is they've still got really big inflows of cash coming into those funds. And they have to deploy them somewhere. Yeah, they can't just say, well, we'll keep it all in cash, and we'll wait for it, they have to do something with it. Because the rules prevent them from keeping more than I think it's 7%. In most cases, in liquid, the rest of it has to go into the market. So with now everybody having to do a pension, have everybody having to make those commitments pretty much globally. I'm just wondering is, are we going to see the exact opposite to what every piece of empirical evidence tells me? Which is the market is overvalued? Are we going to see the opposite in some monster rally to Christmas? Well, if we are then Mr. Powell is gonna have an even bigger, he's gonna have an even bigger problem. And they that and there was one sorry, there was one thing it was, it wasn't Ben Bernanke, who was before him. One of the Fed Ex fed chairs from 30 or so years ago, basically is said, to fix the situation you're in you have to shock the markets. He is not shocked them, Alan Greenspan. Now. Alan Greenspan said that and he is not shocked the markets, he has not done something significant enough that it's not priced into thinking, and no thing is these these things get priced in really quickly, right. I mean, it's like, like that. I think the real kicker comes, when people start to re mortgage, that's when I think it really kicks in. And that of course, because everybody's had fixed mortgages for so long. That's a much much slower process. When we go back 30 years 95% of people were on variable rate mortgages. Now 95% are on fixed. So the, the, the effect of those interest rates is really staggered, depending on how people have fixed that. So hey, you know, I'm not going to say which way it's gonna go. I have a gut feeling the market should tank, but I've noticed even my hero, Michael Burry has recently started saying, Well, maybe maybe this is a good resting point for a significant period of time. So if he's becoming a little bit more bullish, then maybe it goes up personally, I don't care either way we trade it

Unknown Speaker  24:01  
doesn't really bother me. which way it goes. The only thing we know. You can't time the market. You can't time it. Yeah, if you've got a pension fund, don't try and time it just keep paying it in there. Leave it in there and see what happens. And on that note, we'll say thank you for joining us. This is the end of this week's rolling been honest. Next week is a public holiday in the UK. So we're going to be a day late will be a day late and probably more will have happened during that. So we've had the Jackson Hole meeting, which will be interesting, obviously, because you've got a number of global financial. Yeah, so we'll see what happens here. He's Jackson Hole, Wyoming, Wyoming. Fantastic. Never been to Wyoming but Jackson Hole parent is a really good ski resort. So one day we will need to go they're gonna have a bit of a problem during that next week, but I'm sure that they will. They will get cycling they'll give it a go. If he's good cycling count me in will be there to join Jackson Hole if you get an invite. And on that note, thank you for joining us. We'll see you next week. It's goodbye from me. It's goodbye from him.

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