Jim Chanos Joins On The Tape at iConnections Global Alts 2023

Guy Adami (0:01)

The crowd is here clearly to see Danny Moses and Jim Chanos. Definitely not me and Dan, but thanks for joining us everyone. And Dan and I do a show each day at one o'clock, we call it MRKT Call. So this is a special edition of MRKT Call with Danny Moses and Jim Chanos. So thank you, and we'll get right into it Jim.

The macro backdrop, I mean, given everything we've seen, given where rates were, where rates are now, I just had a panel with Mike Novogratz, it was Mike and I, and we talked about, this is one of the more confusing backdrops we've seen. And I say that because if you're bullish, there's something for you.

If you're bearish, there's clearly something for you. And the market's sort of trying to figure it all out right in front of our eyes. What are your thoughts just sort of on the macro level?

Jim Chanos (0:44)

I might take a little issue with the markets trying to sort it all out or the markets confused. I think the market is pretty excited. I mean, I said last night Nirvana, and if you think about it, market is priced in based on forward-looking stuff.

The reality that Goldilocks is pretty much a certainty, right? I mean, earnings are supposed to be up 12% this year in the S&P.

Forward look on inflation is between 2% and 3%. And the market is assuming the Fed's gonna be easing at some point within the next year. That's all pretty, I think that's all pretty bullish. Now whether it's right or not correct remains to be seen.

Guy Adami (1:28)

Marco Kalanovic, JP Morgan, he's actually said that at current levels, Jim, the market is pricing in this sort of soft landing Goldilocks scenario. It sounds like if I'm listening to you, you'd think it's a bit of a pipe dream here.

Jim Chanos (1:41)

Well, I mean, I think it's gonna be, it might be difficult for all three of those things to happen and none of them might happen, but the market is certainly pricing in right now that all three are the most likely scenario. So the risk reward I think is getting even more interesting in my world because people are getting increasingly, increasingly excited about prospects that they were pretty dour on six months ago.

Guy Adami (2:08)

Danny, you get painted with a bit of a narrow brush, unfairly I think, the guy that's always negative bearish, which is just patently false. But I think you also, Jim does as well, extraordinarily rigorous work and you've seen what's going on and we had conversations about this all the time and it's been a real honor getting to know you and calling you my friend. But same question to you.

Again, market trying to figure things out, there's enough for both sides of the aisle to have a very, I think, cogent and it's pretty strong argument.

Danny Moses (2:37)

Yeah, I mean, as hectic as 2022 was, I felt like it was the first time in a very long time that stock picking mattered, bottom up work actually mattered.

We rolled the calendar in 2023 and I certainly didn't think that we would have this rally that we did because I believe that we're gonna hand off from this Fed obsession to fundamentals and what it actually means. And I think back to 2005, six and seven, when we were breaking down the housing market, it already had cracks in 2004, 2005, 2006 The Fed was raising rates and it's no, I mean, it's not a coincidence that the Fed basically went to 5% in 2006, but it wasn't until October of 2007 that the market actually peaked. So I think this market has all been about immediate gratification, FOMO, missing things. And when you take a step back, yes, we've had a nice rally, but it feels like it's under pretense to a degree to me. It doesn't mean you can't own certain things, but I think we're in for a very rough ride just on index levels, but then again, opportunities will come out. But I do think there are some fat pitches on the short side and some individual names and probably we'll be on the long side soon.

Guy Adami (3:41)

We'll talk about that. Dan, you tend to be a bit more pragmatist, at least when it comes to me and you. I mean, I try to sort of, I don't know, parse through things. I'm always what can go wrong, will go wrong. I was born on that Wall Street, you know, prepare for the worst, hope for the best.

You tend to have a little more even keel and a lot of the things that you've talked about come into fruition. Again, inflation trending the right way, commodity prices going lower, unemployment rate sticky, but moving maybe in the right direction, but not in a meaningful way.