Biggest Headlines That Shook Markets In April And What’s Next

we're going to be switching things up a little bit I'll give you a breakdown of the news items over the last week and a half that have moved markets the most we're going to analyze what happened recap what happened and recap some of my guest highlights over the past week but I won't be doing it alone I'll be doing it with my team so most importantly today I want to introduce you the audience to my wonderful team Cornelius Christian Aaron Cole uh these guys have helped me grow the channel without whom I haven't been able to grow the way I have so thank you both for being a part of the team gentlemen why don't you introduce yourselves first and then we'll get into the round table discussion where we analyze events together Cornelius hey David thanks for having me on I'm really happy to be here uh my name is Cornelius Christian everybody I'm a professor at Brock University where I teach economics and have been doing so since 2017 and recently I've joined the David ly report as a producer and I'm really happy to be on here thanks Aaron thanks for having me on David I appreciate that once again everybody my name is Aaron Cole I'm a video producer here at the David ly report uh where I've also had the opportunity to work extensively in the world of crypto where I worked in coin market caps data and research department so looking forward to bringing the and bringing the news and covering the news with you guys here so thanks for having me on David So Cornelius and Aaron are producers on my show but uh they're also really really smart guys just during work I've had the chance to just chat with them um shoot the barrel so to speak and just talk about news now realize they have a lot of good insights to share with not just me but also to you the audience which is why I think this will be a very interesting segment I want to start by talking about the latest headlines that um over the past week have been uh instrumental in moving markets first uh Republic First Bank failed on April 26th so just uh two paragraphs from the Reuters article here us Regulators on the 26th of April seized Republic First Bank Corp and agreed to sell it to Fulton Bank underscoring the challenges B ing Regional Banks a year after the collapse of three peers Philadelphia based Republic first which had abandoned funding talks with a group of investors was seized by the Pennsylvania Department of banking and securities now I had the chance to speak with a former FDIC Insider Thomas honik who was the uh former Vice chairman of the FDIC and also the former president of the Kansas City fed and he told me that although bank failures may happen still as an ongoing thing it's likely the government will back stop these failures and bail out some of the banks thus mitigating a broader systemic shock in the financial system and preventing a broader financial crisis you may want to check out the interview here should we the government or the people let the banks fail and not intervene well theoretically yes there should they should let them fail but the Practical matter is that the United States through the great financial crisis to today uh have made it a practice of bailing out institutions and setting the standard so to change that um I think would be very difficult because the industry has come to rely on and so has the depositor and the other liability holders of these commercial Banks the second item that moved markets q1 GDP Advance estimates came out real GDP grew at 1.6% which was much lower than the consensus expectations this underpins a worry that the economy May be slowing down faster than some may anticipate could we actually go into a recession or even just stagnation which is what some economists have talked about I've talked about this issue with several guests including Professor Steve hanky professor of Applied economics Johns Hopkins University you may want to check out this interview that came out recently this week we also spoke about the Federal Reserve speaking of the fed the FED to nobody surprise kept interest rates unchanged this week uh what did uh surprise some people was that derome Powell and announced a tapering of the taper which is to say that he's going to or plans to slow down quantitative tightening this may also have broader implications on the change in the money supply we talked about this issue at length with Professor hanky how does this affect inflation how does this affect ultimately economic growth and the markets this covered extensively in my interview with Professor Hani so check that out inflation was hotter than expected although the data came out last month and that underpins the fed's worry that inflation is not yet under control many of the guests I've spoken to this week in the past week have said that they expect interest rates to maintain higher for longer now what does this mean for markets well probably not great because the St stock markets earlier this year priced in at least five to six rate Cuts uh most people have told me that these expectations have been adjusted somewhat already the bond market is still expecting one cut Peter bfar CIO of Bleakley Financial Group broke this down for me quite well check out this interview we talked about his expectations for fed cuts um his expectations for where interest rates are ah headed he actually thinks at the long end of the curve the 10 years heading higher and that he believes the FED has every reason to keep rates longer for or higher for longer rather and so that was a very interesting talk uh finally Market moves oil continues to slide so it's down to about $78 as we speak today on May thei I spoke with Bob Ryan who is the um commodity and energy Chief strategist at BC research and we spoke about oil extensively we talked about the geopolitical risks underpinning oil we talked about uh his outlook for oil which is bullish for the remainder of the year due to supply and demand fundamentals check out a clip here two weeks ago there was a lot of concern about the war between uh Israel and Iran escalating to a regional War if not in the worst case a global war it doesn't seem that way for now what's your read on the situation how it would potentially affect oil anything that threatens The Straits of hormos anything that threatens um you know Saudi production or UAE production or a rocky production um you know because it has to it has to go out of the gulf and through the straight of for to get to the market um the market really uh stands up and takes note of that um in some instances like if you shut down the Straits for um a month the straight of hores uh you know you you could get to scenarios where you see $200 oil prices and you would almost surely get U direct us involvement in there to shut that down and make sure the Straits are reopened and they more than likely would have the support of China at that point because China gets you know somewhere north of 40% of its oil out of that uh part of the world Bitcoin continues to slide this is a wild card because a lot of people were telling me that post having Bitcoin would either stabilize or fall while the people in the falling Camp called it and now it's down about uh 20% from its highs just a month ago now not everybody is bearish on Bitcoin in fact most people I've talked to who are in the crypto industry are long-term bullish on bitcoin Jack MERS CEO of strike which is a very well-known payment system based on uh the lightning Network a layer 2 blockchain system that makes payments on blockchain uh Bitcoin in particular baster uh Jack MERS believes that Bitcoin is going to a million dollars in this cycle that is an extraordinary number he highlights his reasoning quite extensively and thoroughly in our last interview together last week check that out stocks well I talk about stocks with pretty much everybody on my show at some point um one analyst in particular I want to call out is Milton Burke who is a president of uh MB advisors Milton has spent several decades working with some of the top hedge funds in the world before starting MB advisor he actually said that in his words the great bull rally of stocks is over it was over as of March 20124 this year and we are most likely entering a great bare Market most likely nothing's for certain but he said most likely he's been on the show last year and he called the top in July perfectly so listen to Milton take a listen to this clip we're quite bearish but uh generally we find we think there's a quite strong probability that what you're going to what we're going to be seeing is not simply a correction within a bull market but most probably or not most probably but a greater the random probability let's put it that way that the great bull market that began in March 2009 uh ended in March 2024 and we'll have a um sort of a great uh a beer market ahead of us however we know that every Beer Market early in Beer Market there always contend rallies and we're probably going to get short agressively short after the first rally now when I say this I know for example there the great the B the bare Market in 1973 74 for example uh saw a series of of 3% rally 3 to 4% rallies about four of them um as the market was declining at early in the decline but that that's a standard Beer Market lasted about two years or so in a crash type Market you generally see a stronger rally in 1929 you saw a uh a nearly 6% rally lasting four days before the crash took place in 1987 you you saw roughly 7% rally taking something like 12 days before the before the 87 crash took place so whether in a be Market uh mean will be down say 50% in the next two years or whether we're in a crash down 30% in the next three months we're going to wait for the first rally and see what the technical condition of the market is or what the um uh the action inter internal action of the market is and then we'll decide whether we go aggressively short but we're going to wait for that finally gold gold has broken new alltime highs this year it's been probably uh the number one surprise asset for most people who uh were kind of not paying attention to Gold last year because it was a sleeping asset but as we know this year it broke out and and and and and boy did ever break out $2,400 was the top it's now down to 2314 as we speak I've spoken to many people about gold I've spoken to many gold miners as well uh everyone still seems optimistic this is the one asset in which I've talked to pretty much everyone about in which there's consensus bullishness everyone thinks it's going to go much higher no one agrees no one knows for sure how high it's going to go by the end of the year but Rick rule had a very good assessment watched that interview um he thinks it's going to go higher he thinks that in the next couple years it could go to $99,000 um he's not saying it will but he wouldn't be surprised if it does I also spoke about Gold's shorter term forecast with George Milling Stanley Chief gold strategist of State Street research and his proection his projection for gold later this year is also up due to a host of reasons including continued interest from Central Bank buying As We Know central banks were uh heavily buying gold all throughout 2023 and into this year so check that interview out as well finally uh the last piece of news that really shook a lot of people was The Proposal in capital gains increases in both the US and Canada where we are based so in the US the Biden Administration has proposed an increase in the capital gains tax rate to 44.6% for those individuals and entities who earn over $400,000 in annual income in the CA in Canada the judeau Administration has proposed uh a similar increase but up to 66% now neither of these have passed yet they still have to vote on it so on and so forth but people are talking about it we're going to break this down so I'll pass it over to you Aon we're going to talk about uh what you found in relation to the capital can's tax rate increased in Canada first you've done a lot of research you found a lot of good clips and Analysis from other people let's hear what you got yeah so most definitely I think uh there's definitely been a lot of discussion about everything going on with capital gain St because well first of off before we get before we get into that where do you personally stand on this should we get it yes or no you know I'm I'm not gonna go full Barry ikenberg here but uh I'm I'm I'm a firm believer I'm a firm believer that uh yeah you know it's uh I'm not going to go the route of saying taxes taxation is theft I do think that we should pay taxes how much is the question and that always that's always where the discussion lies I do think that these uh these these new increased measures are a little bit drastic just because um regardless of whether you're raising Capital to pay for government debt by raising capital in these ways uh it's still not going to put a dent into anything if spending doesn't get uh put into check so uh me personally where I stand is that uh these these uh increases in taxes uh in taxes aren't really going to do much except uh encourage brain drain so uh we're constantly seeing a a rising movement of people U becoming more Global you could say where you have people living more more internationally uh like for example there was a recent study put out that since since uh 2016 there's about 11% of all of Canada's population that are now living abroad and it's to escape similar measures like this where they feel like they're being taxed to death same thing for a lot of Americans who are now moving abroad moving to Puerto Rico for example if they still want to um you know have some advantages of still being a US citizen and there's also some people expatriating over this uh we also see the rise in people moving to places like Dubai things like that so I I think all that these uh capital gain taxes and these increased tax measures are going to do is just continually encourage um you know wealthy individuals or even people who aspire to be wealthy and who are Building Wealth to take their Capital elsewhere because they only they might see that as the only viable option for them to continuously uh to continue to prosper all right uh let's let's figure out uh well let's uh get your presentation uh going you found some interesting things yeah yeah not a problem so I'm just going to go ahead and uh get this up so I found I think one of the most uh interesting uh developments that I that I found was actually from a CPA uh this one's based on the the Canadian angle uh but it was actually a CPA that that ended up finding uh just breaking down the myths uh behind behind the whole capital gains tax uh in general so I'm going to go ahead and play this clip real quick it'll basically you know just give us a quick synopsis of exactly what's going on with this increased measure from let's say I think it was around 50% to now 66% we'll start off with an explanation of how capital gains taxs currently Works in Canada U since that seems to be where a lot of the confusion about this change was really stemming from uh currently in Canada much like many other countries capital gains receive a favorable tax treatment over your typical income uh with the idea being that they want to incentivize people to invest in businesses rather than say just earning interest income but unlike the United States where there's a unique capital gains tax rate applied Canada does things a bit differently where you use your marginal income tax rate the same as your earned income but instead only tax a portion of your capital gain uh with the inclusion rate currently being 50% so if you bought a stock for $2,000 and eventually sold it for $3,000 your capital gain would be that $1,000 difference and you would only apply your marginal income tax to 50% of that or $500 meaning that effectively capital gains are taxed at 50% of your Mar marginal income tax rate with the 2024 budget however the federal government is proposing that we change the inclusion rate for capital gains tax from 50% or half of capital gains to 2/3 in three different circumstances uh for annual capital gains earned above $250,000 for individuals for all capital gains earned by corporations and for all capital gains earned by trusts so to be clear Canada is not increasing its capital gains tax to 66.7% it's increasing how much of your capital gains is taxed the inclusion rate from 50% to 2/3 or 66.7% in fact after this change the highest marginal tax rate you could possibly pay on your capital gains will still effectively be just 35.7% again at the highest possible level and again it's only in certain circumstances so if you don't have any trusts you don't have any corporations and you're not expecting to annually see capital gains above $250,000 meaning that's how much you're profiting you're not going to see a direct tax increase from this now in circumstances where it does apply there is a meaning ful jump in taxes here of roughly 33.4% yeah so right now the the clip we just watched was actually from the plane bagel's uh YouTube channel so uh shout out to to him he uh he's also a CPA as well too so he does have a lot of clients where this this inclusion rate and this capital gains tax increase it is going to affect them and he broke it down in uh detail in this video but I just want to gather your guys thoughts about like you know what what you kind of think about uh the entire situation here like uh what are your thoughts about how this capital gains increases in both Canada and United States could potentially affect uh investors when I think you've uh prepared an entire uh slide deck for us with your analysis let's not make fun of him he worked hard for this uh with your analysis on uh how how this could affect the economy by the way Cornelius was very uh humble I don't think you did you even introduced the fact that you got your PhD in econ from Oxford yeah no I I didn't I did go to I I have so I have to plug that in for you you're very humble huh this guy this guy this guy is an Oxford PhD at Econ and uh and uh and he has something for us so yeah please uh tell us what you found all right so I have a slide presentation for you guys and you know my personal view just to be completely candid on the capital gains tax is at at the very least you know Canada should not be having a capital gains tax Canada already has productivity problems relative to the United States which is a huge which is you know are you saying we shouldn't wait sorry you said we shouldn't have a capital gains tax you mean increase no we should we shouldn't we shouldn't have a huge capital gains tax we should try to be competitive with the United States and uh you know even a 35% top marginal uh or top capital gains tax which is what the accountant alluded to I think is really pushing it because uh we have a lot of as as Aaron already alluded to brain drain but we also have a lot of capital drain and a lot of asset flowing from Canada to the United States because why would you stay in Canada when you can go to the United States and pay less tax just overall right and also the fact is I mean the United States has a lot more opportunities as well so uh let's talk about this really quickly so I have a quick presentation here motivation you know um with the Canadian Capital tax increase or proposed increase I should say uh Mavericks which is a a private Equity Fund uh this guy r warns that Trudeau's Capital uh taxes could cause Capital flight which means that Capital flows out of Canada into other jurisdictions which are more tax friendly maybe the United States maybe Ireland maybe other places who knows um the other motivation I think that's kind of interesting for this is you know a lot of people say oh this is only going to affect the very very rich this is only going to affect like the point top Point one% top 0 one% but um there's a lot of talk now about how Millennials will probably be the wealthiest generation in history because of the great wealth transfer from Boomer parents to their Millennial children um to the extent that Capital taxes go up or that inheritances are taxed after this or whatever happens this is definitely going to put a dent in that entire narrative in that great wealth transfer narrative so uh two questions I had were do capital gains taxes have a significant impact on Capital flight and number two what are the effects of capital taxes on markets on stock markets equities in particular so what does economic theory see economics tells us that if you're a small country that is not a major Global player basically anyone aside from China and the United States if you're any other country then you should not have a capital gains tax why because if in that particular case where capital is perfectly mobile the capital is going to flow to the United States it's going to flow to China or another place it's going to flow to a regime a small country which has a zero capital gains tax it's going to have go to a country which has zero taxation or very uh beneficial tax rules um and big countries like the United States they do have more freedom to raise taxes China has more freedom to raise taxes why because the United States is the United States if you're a company that's not located in the United States you might as well forget about it because you're not you're not going to be you're not going to you're not going to be located among companies and other firms and clients that can benefit your business the United States is the world's biggest economy the US dollar is the world's Reserve currency if you're not there then you're kind of losing out so this is the US capital gains tax I found this chart uh this chart basically uh shows the it shows three things really three or four things I should say it shows the maximum tax on long-term capital gains which is the red line it shows the effective capital gains tax rate which is really what matters in yellow and then it shows realized capital gains in the green so you can see um what was surprising to me actually was that Ronald Reagan who is often portrayed as this champion of free markets and freedom he raised Capital taxes he raised capital gains taxes in his uh I think 1986 budget so um he raised it Clinton uh cut it and then when Clinton cut it you see an increase in realized capital gains of course it kind of makes sense right uh US capital flows don't seem to have being affected tremendously at in line with the theory I mean there does seem to be a slight increase after uh after Clinton uh cut the capital gains tax and then foreign direct investment in the United States uh doesn't seem to really have had much of an impact either a lot of foreign direct investment goes into the United States in general so here's what the research says about whether capital gains taxes cause Capital flight does it actually cause Capital to flow out of a country so what you have here is Ireland basically Ireland in the year 2008 decided that they were going to raise their capital gains tax I think from um around 20 to 25% or something around there and what this chart basically looks at is the difference in the capital gains tax between Ireland and the United States the Blue Line shows the outflows out of Ireland or or yeah the outflows basically out of Ireland and you can see that when the capital gains tax went up that's the line Capital outflows also went up so it does seem to suggest that there is an effect of capital gains tax on Capital flight so capital gains taxes what else can we say about them they definitely reduce investment there was a study which looked at the small business jobs act which gave a capital gains exemption for startups and it showed that that exemption actually increased small business funding by $9.6 billion per year uh capital gains uh now in terms of contribution it does affect the top .01% of Americans who make around 80% of their money from Investments and businesses and therefore are going to get a lot more of their income from capital gains than let's say the middle class or or lower class uh Americans now let's turn to the effect on markets there is an effect on markets uh from an expected capital gains tax change so if for example capital gains if markets expect that c a capital gains tax will be implemented in the future you get something called a locking effect what that means is that if you increase the capital gains tax then people are just less likely to sell their stocks it's not really surprising right if if if the benefit from selling your stocks it goes down you're not going to sell your stocks uh now PRI what does that mean in terms of actual trading prior to a rise in capital gains tax there is a rise in trading volume it seems that people try to get out of markets quickly before the expected increase in capital gains tax and to a cut in capital gains taxes Equity prices rise people go into the market right they don't try to pull out of the market um capital gains taxes what other effects do they have they seem to reduce merges and Acquisitions activity kind of makes sense you're less likely to sell your company to a bigger company or to merge or whatever if there's going to be capital gains implications and they also seem to raise the likelihood that companies seek debt-based financing as opposed to equity-based financing so that's basically the present that's what I have for you and yeah let's discuss it uh I'm going to play devil's advocate here because um because I just will okay um uh C look there I'm reading a bunch of Articles from the other side of the debate and most have advocated for a reduction in the income inequality aspect or problem that the US and other oecd countries are facing it and indeed wealth inequality or the rising wealth Gap is is probably one of the biggest problems our society is facing right now for a variety of reasons um some would argue and although the evidence of this may be contentious but some would argue that a wealth Gap or countries with an existing large wealth Gap usually are seeing lower productivity anyway and so what you want to do is mitigate this by equalizing wealth across the board transferring wealth across the board in a way that boosts everyone's standard of living I'm not trying to sound like a commi I'm just trying to cite the research from the other side um and and the argument here is that a transfer of wealth from the very wealthy who will not see a decline in living standards because of these capital gains tax increases and who will not actually see um a decline in their funds performance if they are indeed managing funds in those jurisdictions which are affected uh those that that marginal percentage increase will actually go to those in need and thus fund the future of the country and provide a relief for those who need it most that's the argument Aon I'm gonna ask you to to aine on this uh yeah not a problem I'd love I'd love to join in on this so uh honestly just just to kind of like going that uh to that Devil's ad Advocate argument I think uh the main thing that that the main issue rather than uh taxing wealthy people is more so I I think it it comes down to wages right now we're seeing a lot of the things that a lot of people uh you know need to to spend their money on such as like housing real estate um you know regular expenses such as uh groceries things like that um that's where a lot of you know you know regular middle class uh individuals are spending their income right and if wages aren't growing to a point um that they're not allowed to you know get access to these things or get access to the same amount of things that they're once able to because inflation is running so high I think that's where the real issue lies and a lot of inflation comes down to government spending and how large our governments have become the bigger the machine uh becomes the bigger the bureaucracy uh is the more expensive it is and taxing uh you know the wealthy doesn't automat doesn't automatically guarantee that that income is going to go to less uh less fortunate individuals because uh at the end of the day the government has to allocate those funds to whatever they say it's going to help help with and we often know that that's not the case the government is usually the most wasteful spender right like they they spend money like your like your drunk a drunk uncle or something like that like you know what I mean like they don't have they they don't a lot of them like even for example Trudeau like he his famous quote the budget will balance itself this is the mindset of a lot of bureaucrats right and if you give them access to more Capital that's what they're going to do they're just going to spend right so I don't think uh you know this capital gains this increase in capital gains tax or necessarily raising tax is going to really do anything for any um lower income individuals and things like that I think the main issue comes down to how can uh we how can we encourage wage growth in a way uh and hold you know maybe business owners or even or even uh large conglomerates or corporations accountable for that rather than you know trying to get the money on the back end because all they're going to to do is hire hire a couple accountants find ways to you know um shift the money globally and that's also a thing what funny enough Barry did me mention that Barry iing green where he he talked about something which is a growing concern for investors where there's going to be a lot of uh of a lot of uh cooperation amongst um different countries across the world to basically have a tax follow you no matter where you go so have like a global uh tax rate and that's not going to solve any at the end of the day because it's it's just it's almost like uh it's almost like you're you're being forced to pay for something that you you you're no resources and sources that you're no longer going to be um using or participating in so it doesn't make sense it's not fair it's kind of draconian kind of scary when you really think about it but at the end of the day I think uh where the real issue lies is wage growth and if there's a way to I you know I'm I'm not the PHD here but if there's a way for us to theorize or even you know some of the smartest individuals in our society to figure out how we can um you know challenge corporations to um you know combat wage growth and invest into productivity for their for their Workforce so that they can produce more things so that these type of things can happen I think that's the true solution and obviously curb government spending great great thoughts I think we've kind of diverted from talking about capital gains taxes to to wealth uh transfer and income taxes in general but I mean that's a good discussion I have a I have a question for uh Cornelius now uh why is it okay I'm I'm just playing devil's advocate here why is it that the countries with the highest Genie coefficient which is to say the most wealth inequality in the world tend to be the poorest yeah that's a great question that's actually an interesting question to me because I did study development economics when I was doing my PhD and my interests of course changed after that but really the reason for that is because a lot of the inequality is generated by corruption and by bad institutions when you have a dictator let's say in a country which has oil resources and that dictator manages to use the force of the state to accumulate all of those resources for himself his family and his cronies then it stands to reason that your gen index would be particularly high so I guess uh going back to the question around inequality really the question is why is the inequality generated is it generated by the market in which case you could argue that it's good because the market knows how to allocate Capital the market knows how to allocate resources or is the inequality generated by government and by government grift and by government force and in the latter case it's probably not a good thing and I mean you can you can also extend that I think even into the United States I mean yes the United States you could say has a lot of inequality but I'm curious how much of that is due to government uh you know government excess like shall we say I'm not again I'm with Aaron here I'm not saying that we should abolish the state at all but you know going back to capital gains tax right going back to that I the market I think knows best how to allocate capital and why is that important for wealth inequality because wealth inequality and going you know Erin actually mentioned this wages are what matter how are wages you know what determines the level of wages that a worker has it's their level of productivity in a market in a free market right the level of productivity determines wages so I tell my students I have I had a student uh who got his degree in computer science he was going to work in Toronto and I think they were paying him like $80,000 Canadian right so that's maybe like for your us viewers it's like 60 $55,000 us and then he's like okay so like if I were to work in California or New York or really anywhere in the United States I would be getting paid like at least $990,000 us right which is like1 $10,000 Canadian why is there that discrepancy between the United States and Canada it's quite simple it's because of productivity the L there's a lack of productivity and I'm not saying Canadians are less are not as hardworking As Americans I'm saying that we do not have the technology and the resources and the capital capital to be productive right like the software is in you know you you guys know this you work for Canadian companies the software that's available for Canadian companies as as opposed to uh uh American companies is much inferior so if you tax capital gains and my point is that it prevents uh in some ways companies from investing their capital in building productivity and then allowing workers to have higher wages allowing workers to compete you know that's that's really where I see the Crux of the problem I'll add my thoughts and I'll move on to another topic um so my actual thoughts I don't think they should do this um I think it's a bad idea for a lot of reasons but one thing we haven't talked about is included in the 44.6% in the US um in on the US side Biden's proposal is a 25% annual minimum tax on unrealized capital gains which I think is just I'm gonna say is really really stupid okay that well arguably if you raise the capital gains tax on realized gains that could arguably or you know that could be debated as to whether or not going to have an actual impact on Fund performance or fund Behavior or capital Capital flight you know you've not your research not withstanding the capital gains tax was already high to begin with one could argue that a minimal marginal increase may not have a significant impact but taxing unrealized capital gains would first of all bar new entrance from entering into the capital markets and two really just incentivize people to move the money offshore uh this would be the death of the American Capital markets in my opinion if they go through aead with it I don't think they will I don't think that I I it astounds me how Biden is proposing this in election year it really just astounds me but you know maybe they've given up I don't know let's see I don't think it'll go through I think this will be a non-issue in a couple months let's see if I'm right let's move on to another topic um I want to talk about uh Trump being on the FED now this was an article that was circulating On The Wall Street Journal I talked to Professor hanky about this at length so please watch that interview so what happened was a um a document a secret document was circulating supposedly drafted by Trump's close allly but it was so secretive that not even Trump's closest AIDS were made aware of this and I I asked Professor hanky who is well acquainted with some of clo some of Trump's closest AIDS including Steve Moore and uh Steve Moore didn't even know about this document Professor hankki was called by according to this interview he called uh he was contacted by the financial times who asked him do you know anything about this document and he said no so what this document was is it outlines a secret plan to have Trump be more involved involved with the Federal Reserve uh going as far as to say that Trump may be sitting on the Board of Governors in an acting basis Trump would then directly provide consultation to the Federal Reserve on interest rate and fomc decisions essentially having a direct impact on Central Bank policies and of course um uh Trump's closest AIDS denied this this they haven't seen this document it's debatable whether or not this document actually exists but let's just talk about the theory behind this and whether or not we think there should be more oversight so there's two issues to be discussed one uh Central Bank Independence which is the Crux of this issue obviously if we have an elected official directly intervening in fomc decisions it's no longer a central bank that's independent that's number one but Professor hanky argued that that aside there should be more oversight there should be more um auditing of the FED whether or not we should have somebody from the government intervening in the central bank that's a separate issue he argues no but there should be other ways to audit it I'm going to get your thoughts I'll start with Cornelius yeah I would agree with Professor hanky because you know the FED is in a unique position I know you want to audit the FED right you don't believe that I want to audit the FED make sure they have their gold but uh no really the FED is in a unique position in the sense that it basically the Congress uh affirms the or confirms I should say the FED president the fomc board and then after that there really is no way to eject a a crazy or loose board member like in Canada for by contrast for example the Minister of Finance is in charge of the Bank of Canada as and does have a say the deputy Finance Minister as well has a say in the Bank of Canada meetings um now that doesn't mean that they can say oh to Tiff mackam who's the Bank of Canada Governor you have to lower rates this time or or you know it doesn't mean that but it does mean that there is some kind of democratic accountability there now in in the extreme there was case there were cases I should say in Canadian history like the coin Affair of the 1950s where James coin who was the Bank of Canada Governor back then he went around Canada basically blasting the government and telling everybody oh the government should spend within its limits the government is not doing that you know the de and Baker government at that time in Canada and the def and Baker government fired him and this this actually instigated a political Scandal he was ejected from the Bank of Canada uh but I I don't see that as particularly a bad thing if you have a loose canon as a bank of can a bank of Federal Reserve I should say a Federal Reserve uh Governor or fomc board I I think that they can be Democratic mechanisms for removing them what what do you think Erin I I personally honestly me personally abolish a Fed abolish the but I agree with that too set you up with duck Casey you guys have a great drink together don't worry I can I can be the JZ duck Casey but um but yeah aside from that you know aside from uh you know my thoughts on real quick really quick no but seriously as aside from abolishing that but you know in a in a perfect world uh I do think uh some oversight does make sense uh and having uh oversight there uh but I I think it would be more interesting if it if it was someone who was elected to be that some to be that person who has oversight rather than someone who's appointed uh because then you can get into situations where um you know political lines get drawn just such as like the um US Supreme Court for example or any uh ministers that are appointed it it basically comes down to like whenever situations come up or or anything has to get done uh it's basically drawn on party lines and what that basically leads to is no collaboration and no uh action being taken so I do think it would be interesting a proposal to kind of have some oversight there but um I just think it depends on how it how it happens and you know if there is like a true Democratic way of of holding them accountable rather than um you know having people gen like generally appointed to that type of role here it says the uh I'm reading the Wall Street Journal article the group of trump allies argues that he should be consulted on interest rate decisions in the draft document recommend subjecting fed regulations to White House review and more forcefully using the treasury Department as a check on the Central Bank the group also contends that Trump if he returns to the White House would have the authority to OU Jerome Powell as Fed chair before his four-year term ends in 2026 the people familiar with the matter said no power would likely remain On The fed's Board of Governors I'm not sure why the last sentence was mentioned I I didn't was there beef between pow and Trump that I missed somebody fil me out on this wasn't there that time that Powell uh was supposed to redu or at least Trump wanted Powell to reduce interest rates at one point and he was like no I could be wrong here I could be misremembering okay well I'm not really sure myself so if you're watching this comment below why you think Trump may want to ask Jerome pow he's not saying he will but in this article it says that the document uh suggest that this could be a possibility or at least an option if Trump were um were were uh given the uh authority to do so I'm not even sure if the legalities of Central Banking would have to be amended to make this happen so if you're a legal expert comment below on what you think and more generally comment on what you think of the capital gains tax rate um proposals where do you stand on this debate right in your comments below we have one last subject to cover which is the issue of the Tik Tok ban uh I'm going to I'm going to let eron take the lead in this discussion you are the social media expert of the group what's the latest development here what what happened so yeah so it seems that uh the that that Biden has officially signed uh into law uh that Tik Tok is going to have to be sold uh I believe that the the Tik tok's parent company uh bite dance they have about 270 days uh in order to sell Tik Tok and if they fail to do so uh that would lead to significant consequences so they say and and ultimately what those consequences would likely be is that Tik Tok would be banned from any app stores or Google Play Store uh from any device on in the United States so uh it would also prevent internet hosting Services uh from supporting it so you know doesn't matter if you're on AT&T Verizon anything like that like it's going to be blocked and uh that's going to be pretty interesting so it seems that it is happening but I'm I'm more so interested in to see uh if Tik Tok is going is going to sell it I don't think like me personally I don't think Tik Tok is going to actually sell their their their their brand and even if they do that's interesting because the CEO the CEO has already said that most of their data centers in the US um are operated by us companies to begin with right so it wouldn't be a huge change for them but I'm yeah I'm curious to get your thoughts yeah the reason why I the reason why I don't think that they'll actually sell it is because uh think about it like this Tik Tok has a proprietary algorithm that uh they don't want access they don't want other us companies or any person who might buy it to get access to it because um as you may know whe whether you believe Tik Tok is a good thing or a bad thing we all know it's it's algorithm is powerful it could be powerful in the wrong ways by promoting tons of brain rot content on there uh as we're very familiar but there's also tons of great content on there and and that's the Fine Thing the algorithm is is uh very powerful proprietary thing I want to get to this debate uh as to whether or not it should be banned but let me just interject my own opinion I've been hearing this a lot yeah you know the Tik Tok um algorithm has been used by the Chinese government to brainwash Americans because it's feeding Americans um Dumber quote unquote Dumber content and the Chinese people the Chinese kids in uh in mainland China are seeing like you know videos about math or chess and whatnot okay this is the just no let me just address this first of all there's no evidence that the algorithm has been manipulated to do this second you scroll and you determine what you want to see through your own scrolling pattern so on my own feet yeah I see a lot of I actually see a lot of like science and math stuff and like econ stuff is it because I'm Chinese and I'm a nerd no I like no maybe the last part yeah but I I promise you the Chinese government is not messaging me privately and say hey we're going to feed you all this stuff because we want you to be smart and then the other Americans we want them to be dumb I that I don't think that's happening guys you determine the own the the content that you want to watch based on your own scrolling patterns I promise you start scrolling on more chess stuff over the next month or so the algo is going to feed you more chess content if you keep scrolling on teenage dancers I mean that's probably all you're going to get and by the way what's with calling content creators dumb I mean you're the one making the content right so if you're saying well the Americans are dumb because they're watching the content well Americans are creating the content in the first place the Chinese government is not going to content creator say You must make stupid Dance videos to make the population Dumber like that's not happening content creators are making content people like their content whether you believe or you are in the camp that you think it's dumb or or intelligent whatever that's your opinion but don't watch it if you don't want I promise you if you don't watch it the algo is not going to feature that content so I don't believe there's a broader manipulation at play from the Chinese government simply because that's not how the algorithm works so I've said my two cents Cornelius you volunteer to take the other side of this debate yeah I'm going to play The Devil's Advocate although to be honest with you you know personally I'm against the van but I I'll play Devil's advoc right okay like aarin you know that the Tik Tock app cannibalizes your entire phone data It even records your keystrokes that you put in for other apps and so really my question is I mean do you really believe that the Chinese government is not having access to that kind of data I mean you're a company like B Dan you operate in mainland China I'm sure that there's been a tap on the shoulder at some point from you know some CCP Chinese government Ministry saying hey can you share your data with us I mean the United States you know to be fair to be quite Frank the United States does this with Facebook they do this they used to do this with Twitter right before Elon Musk bought it they they do this with Instagram they do this with pretty much every app or every social media company that's an American company the US government has tapped their CEOs or CFOs seet people on the shoulder and said hey share your data with us or we're going to make things difficult for you right so how do you respond to that uh I I it's funny enough I I think you said it right there I was just about to come back with the point about Facebook uh anytime I I I think a lot of people just don't realize that once you sign up for a social media platform and you start using it you you are signing off your you're signing off on your privacy essentially it's just that a lot of people don't actually read the terms H and service agreement they just hit I agree and move on right and these are things that all companies are doing even if they're not necessarily actively shipping your data to the Chinese government or um to the US government in the case of like Instagram Facebook things of that nature uh I think it's just out of out of privacy concerns I think if you're concerned about privacy I think you should just avoid these platforms altogether because they're going to share these this this data regard even if it's not given to an agency they do have this data and whether it's in a it's on a Oracle server in in San Francisco or if it's in a server on Beijing or sorry just just one question though like do you don't you think that Tik Tok can it gathers more data and it's more forceful in the type of data it gathers than uh apps like Instagram uh me personally I say no uh I think the only difference is is they just do what Facebook did but better I think that's the reason why there's a lot of uh push to ban Tik Tok it's because they like there's people who are interested in getting their proprietary software which basically built upon what they did but just did it better right and I think that that's the main reason where the concern and there's just the angle of China is our is our uh is our enemy or you know we're a nem they're a nemesis so they're pushing that angle that we cannot support this but in reality I think it's more of the fact of no we want to use this type of Technology but you can't so I think when it comes down to privacy and how things are done because that was the whole issue with the whole Facebook um uh with the whole Facebook pixel thing like I'm not sure if you're familiar with like Facebook pixels but just to give you guys a brief overview uh so Facebook pixels are essentially a way on how Facebook used to track uh users off of off of the platform whenever an ad went live so let's say you were scrolling on Facebook and you ever notice how sometimes when you're scrolling you might have said something on your phone and then you see it on your Facebook feed or Instagram feed you see the for it you're like oh man I was talking about a guitar now I see a guitar the reason why that was able to happen is because the Facebook pixel would essentially follow you across other platforms or other other things that you're using so whether it's your Safari browser or your Google Chrome browser it would follow you across these platforms but what ended up happening is is Apple recently put in a um a blocking feature where if you notice now if you have an Apple device it ask it always says uh would you like this app to track you uh uh and you hit allow or don't allow and obviously most people are going to be say I don't allow it right and that's what pretty much caused Facebook to kind of go through a little bit of a downfall a little bit of a you know a downturn in their advertising Effectiveness and efficiency and Tik Tok has just found better ways to do this in a similar fashion that Facebook was doing it so I just think it's more about like there's certain people who are interested in finding out how they able to maneuver in that type of environment because it all comes down to ad dollars at the end of this at the end of the day Tik Tok Tik Tok serves ads better it keeps the users more engaged that's also you know side note that's also another reason why uh T in Tik Tok in China they if you're under the age of I believe it's 13 or 14 they limit your Tik Tok usage to like 45 minutes to an hour versus like over here it's like there's like no limits right and what happens if I want to watch it for like 50 minutes I use my parents phone or what if you if you use your parents phone that's fine because your parents uh account is going to be over the age of 18 right and that's a thing so Tik Tok like in in China they just have specific laws about social media for underage children in general and I think that's where the disconnect comes from where in in the west and you know whether it's in America or Canada or United Kingdom Europe everything like that like we're a lot more liberal and and how how our children and our younger siblings use social media versus over there they're just more strict with it it's the same axis but they're I want to go off topic and I want to get cornelius's thoughts okay so you were talking about social media usage in China so there's a there's a um there's a legislation that was introduced I can't remember a year or two ago but basically children can't play video games for more than a couple hours a day and uh they actually just shut off your um account because you have to log into like the Chinese equivalent of steam or something and then they'll like monitor your account they'll shut it off but it's interesting because I was uh I was seeing on social media that in one or some Chinese prisons they forc the inmates to play W of Warcraft and farm gold so um W of Warcraft for those people watching is an online RPG where you play an avatar a character and it's a really fun game I'm a big fan of the game but um what they found was that that the prison wardens found that um it's actually quite profitable to get these players to farm in-game gold which is to say that they the players play the game they get the gold and then they sell it for Fiat dollars right so it generates it's basically slave labor except instead of doing manual labor you're playing video games and the money goes so it's like the Chinese government doesn't want the kids to play video games too long but as a form of punishment the prisoners have to play waterf it's just I think a lot of people really don't see understand that there's a whole world in in the gaming world where people people uh they Farm accounts because people they they love these games and they invest so much time but guess what imagine if you're in that scenario you're a kid you can't invest all that time into it but you want to be double prestige in this game or get to a certain level you will pay someone to do that for you so there's people even across the world like that's a real thing where they'll play games like World of Warcraft Call of Duty um uh DOTA DOTA for example and they play these games for other people so that they can rank up for them on their behalf and then they'll sell sell it so it is a profitable business that's already happening on smaller scales individually so hearing that they're using it as a punishment for uh prisoners kind of makes sense it's a it's a profitable business and I guess for the prisoners they don't really see it as a punishment because you know what would you rather do physical labor or mental labor by the way you guys brought up Facebook so I I the Scandal around Cambridge and analytica was not so much that Facebook collects user data we all know that the Scandal was around the fact that they were selling user data to third party apps and vendors right so this is where I stand in the debate and I may be controversial here but again like you said Aaron I agree with you 100% if you're signing up for social media service you're giving up some of your privacy in those terms I mean you you've agreed to upload your profile assuming it's a real profile pictures personal information data credit cards birthday address so on and so forth your user preferences what kinds of things you browse in the internet that's collected through cookies arguably we can debate whether or not the social media site should be allowed to do that but the AO argument here applies if you're not paying for the product you are the product and I actually don't have a problem with that but that's where I stand I have a I have one more thing to add though eron just to play Devil's Advocate this is not really a ban right this is basically you bite dance has given 24 uh I think it's 12 actually it's given a year to divest from its ownership stake in Tik Tok and you could say yeah of course they have their own proprietary technology but if an American company like wants to do business in China typically the Chinese government will kind of twist their arm into partnering with a Chinese company that then takes their intellectual property right I mean I I'm pretty sure that Tesla just partnered with was it BYU I can't remember really but I I'm pretty sure that involves some kind of transfer of intellectual property over to a Chinese partner and then maybe over to the Chinese government right so uh is this really a ban is what I'm trying to ask is is this really a ban well hold on let me just make a crude analogy here if the government comes to your house and says you have to surrender your house or we will ban you and send you to a gock are you banned are you censored I mean you could surrender your house well you're you're not send to be fair you're not no one's sending Tik Tok to the gulag they're just asking them to yeah it's a metaphorical goog you're ban they're banned from the US they're you can't access it's Financial goog Financial goog fair enough you guys are supposed to have a debate not agree with each other what's your ultimate stance so Aaron you're you're you're you're not uh can you um what did you say where did you say on this debate Aaron you are for no you are against the B no I'm I'm against the ban and I I I think I'm against the ban primarily because you don't think you sorry you don't think there's a secur threat no I I don't I won't say it's a national security threat just because like I think I think okay I'll clarify I don't think government officials or anyone should have it on their device because then it becomes a national security threat uh so I'll be specific with that because like I said you are acknowledging that you're giving up your privacy to degree so if you have a career where you handle sensitive information like that that is a risk so I'm not going to not acknowledge that however for the general public it is it really doesn't matter if you ask me what what privacy do you what is China going to do with your data like that's my question like what is China really going to do with your data are you really a threat to China you know what I mean but like a government agent yeah they might want they might want to uh have some information because maybe you might be working on a certain project that they might want to know about things like that and that could lead to it's an interesting point because it's an interesting point because China can't really do anything directly to me but the concern from the government here and in the US more particular is that the Chinese could use user data on an aggregate level to either formulate a a plan to attack the west or manipulate us through cyber threats or cyber attacks uh manipulate our elections manipulate um our thoughts using algorithm manipulation so on and so forth that is probably one of the it's not so much they have a direct threat on us it's more to the security of the nation state so I I have a theory on that I I do actually think that Tik Tock uh I'm not sure it proses a threat in that sense but I I've noticed that it allows a lot of content that questions uh US state department narratives shall we say right US state department narratives especially around foreign policy uh not only toward China but also toward the Middle East and the Russia Ukraine conflict and young people are seeing that content and now you see when you look at polls for example young people's opinions on the Middle East conflicts are changing on Russia Ukraine are changing and I think uh that you know this is actually one of the biggest things that worries the United States state department and and why probably Tik Tok is getting uh such a you know it's become such a Target right it's it's uh that's that's my theory anyway I don't know what you think Aaron uh yeah I I think i' I think I'd agree I think uh young people people definitely that's where they get their news from so it is the easiest medium where if you just want to control a narrative regardless of whatever the narrative may be you you might want to you know uh tighten up on certain things and that's why things like to I believe like what what's going on with Twitter and e x with Elon Musk is very Appo uh because like he he allows for for multiple opin like you see all types of opinions on there and I think that's the main thing that really needs to uh happen more in society rather than you know entering into Echo Chambers we need to see The Good the Bad the Ugly regardless of what you may believe in what side you stand on you need to see both sides of something because uh that's how you get open to different perspectives and that's why I think it's it's it's good to have other perspectives and hear other perspectives out doesn't mean it's right but you know like people just because people have the right to say what they want doesn't mean that they're right you know what I mean but I do believe you have the right to be wrong like that I have one final topic and we'll close it off here this races the issue of censorship overall I think the bigger problem with younger people getting their news and information from social media is that there's just a lot of misinformation disinformation spread on social media on all subjects okay I'm not everything you you see you have to just double check and verify for yourself and younger people when you're watching a 10-second 30 second clip on social media they're not going to have time to do that they're just going to be almost in it into thinking whatever is fed to them on a lightning fast basis and so what has to be done about this there's two arguments here first of all that's not the Chinese government's fault that's just content creators being irresponsible right I I I can see that because I'm a content creator I know how difficult it is to put out information fact checked everything make sure it's make sure it's clean make sure it's um accurate but most people don't well not most people but a lot of people don't do that that's not the Chinese government saying to these people look make fake news and propagate that to the American society I I promise you that's not happening people are just doing that because they're dumb and so what can be done to police this right I'm actually on Once Upon a Time I was all for complete freedom of speech first of all freedom of speech isn't freedom of being double checked and verified and and and um and fact checked it's freedom of speech from the government means meaning you what it really means is you can say whatever you want without being fear of sent to a gulock by the government it doesn't mean that platforms don't have the right to kick you off if you're just a terrible content creator violating their own cont content terms of services uh guidelines that is and so I actually believe that some moderation is necessary from these platforms not too much but some so that's my argument where do you stand agree or disagree I actually think that Elon musk's model right now on Twitter there's something called Community notes and that is if somebody makes an atro L bad claim then there are you know there are certain people on on community notes there's like you anybody can do this from my understanding anybody can comment under the tweet this is inaccurate information this is actually what the source says etc etc etc but then you get trolls actually you know saying this is inaccurate when indeed it may be accurate right so how do you yeah how do you balance that yeah I don't know I I actually think that what the real question is is is that Comm Community notes moderation tool better than having some arbitrary dictator uh saying that this is inaccurate like for example you know now uh snopes.com for example is known for factchecking news but it's known to be having it's known actually to have a very leftist bias right so if there's something that comes out about Trump or the Republican party or whatever it happens to be on the right side of the spectrum then snopes is much more likely to flag that as opposed to something that comes out about a leftist politician so um I really don't know which one is a better tool because every tool I think is going to have every tool that is used for fact checking is going to have some kind of problems right is it I actually think then AI could possibly be a solution if you design a system that is proven to be politically unbiased and all it does is fact check things for you um to to the highest degree of accuracy possible basically an impartial spectator that is not human that could work um yeah I I think it could help but the main issue comes down to like who's programming it right like uh we saw in the early days of chat GPT for example they had a very like leftist spin like you could you could ask it a certain question about like let's just just use Barack Obama for example it give you like a glaring like clean review and then you ask something about Trump and then uh it would insinuate that it's not going to be biased but then give you a bias answer so it's so it's just like all right like the AI is only as good as the parameters people make of I I have a response to that I okay so I've seen that too and I'm not a computer scientist but something tells me that all it stun is scrape you information on the internet and admittedly there's a lot more I would say um uh controversial articles or claims or uh things written about Trump that Maybe Obama and so maybe the algorithm is just scraping that it's not actually it doesn't actually it's not AGI it doesn't have a thought of its own um it doesn't it doesn't say well I'm gonna make a slant on Trump we don't have any evidence to say that it's been programmed that way all I can say is that it scraped Data before 2021 and produced whatever was given on the internet anyway that's all the time we have today great talk um let us know audience what you thought of this episode if we should uh do another one or and uh or what we should talk about next time so comment below your thoughts um on any of the topics we've uh we've talked about so far this the idea of this round table is to start a discussion amongst the community on this channel so spread the word like And subscribe and we'll see you next time

Channel: David Lin

Views: 16,651

Keywords: david lin, the david lin report, david lin youtube, david lin finance, david lin investing, david lin trading, david lin economics, economics, finance, business, macroeconomics, trading, investing, financial news, finance news, economics news, business news, economy, federal reserve, fed, inflation, trump, crypto, tiktok

Id: aGnlBBPbBaY

Length: 65min 26sec (3926 seconds)

Published: Mon May 06 2024