Here’s what we cover during this week’s Partner Meeting segments:

  • VC deal flow has slowed, but there’s still a lot of action including an increase of insider rounds
  • Apple’s in-app purchase policy and what it means for mobile blockchain adoption
  • Dissecting November’s economic data
  • China’s zero Covid policy protests
  • Startup Tip of the Week: Community Building

Show Links:

Transcript (this is an automated transcript):

MPD: All right. Mike's gonna give us some coverage on the venture market here. Mike was, what's the 

Chris Zhang: update? Yeah, the 

Mike Rogers: update is that I think high level, I think we talked about this even on, on this podcast, was a lot of people thought coming out of the summer, I think expectations were that September, October, November would be an active market.

In venture world, people regaining. Confidence and putting more capital to work. And we just really haven't seen that the market's actually gone the other way. And, I can share a quick chart right here. This is what it looks like. Probably the opposite of what anyone would wanna see in terms of how charts should look.

Q4 looks like it's gonna be dism. Q3 was tough too. And I don't really see any sign of that slowing down right now. I think again, hopes are really that people will start to pick up deal flow again going into the first quarter, second quarter of next year. And it looks as the Fed signals, that they're gonna slow interest rates that might give people confidence, start putting money back to work in long duration assets like tech.

But for now, deal volume has basically grinded to a. Valuations are still coming down. And again, I think generally speaking, the problem here is bid ask between what VCs want to pay and what entrepreneurs are willing to accept is still too far apart. And because of that, we see a lot of inside rounds, we see a lot of notes, and we see a lot of, quote unquote kicking the can down the road on actually valuing assets.

MPD: Yeah, there's a quality dimension to this, right? Like the best companies right now are gonna be more likely to raise an inside. Or be able to from their existing investors. Investors came into this market with a lot of cash warehoused in the funds. And it's a game of when companies can't hold their breath anymore.

Cuz we all know this isn't private equity where the companies have profitable cash flows. A lot of the companies are by design unprofitable. And we've got a cycle where it's very clear. That a lot of companies are delaying their raise and the volume down 


Mike Rogers: venture capital is a natural game of J curves, right?

And today we're seeing the great J curve of how much cash do you have and can you get back to evaluation that's reasonable or close to your last round before you run out of money? And companies are not, and those companies are selling or are getting acquired for low multiple exits if they can.

Some of them are shutting down and I. Q1, Q2 is gonna be really telling just how far that will stretch because a lot of these companies that might have raised end of 2021 had a year or 18 months of cash. That was the plan, right? That year is up about now. So those companies that are gonna have to go back out to market in the next few quarters, and I think it'll be really telling where company's price and what investor appetite is for these.

MPD: Yeah, I think the volume's gonna pick up and pricing's gonna get sorted out cause oxygen's gonna run out. But the, just for, folks not living in the driver's seat the way you and I are here in this industry, yeah. It's down, it's slower, but we're, there's still a lot of stuff going on.

We're hearing pitches we're picking spots and making investments. Yeah. So it's happening. It's just slower than it was. Certainly during the pandemic and a little bit slower than I think it was right before 

Mike Rogers: it. It's slower too. And I think that your point is well known there. There's two things that I think we're seeing here.

One, we're just reverting back to the mean, back to pre pandemic levels. So all that covid growth and bump and extra capital is in the system is really being flushed out. So what the Fed wanted to do is happening. The other thing that's happening right now in venture land is ECS are going earlier.

So if you were a series A or series B fund now, and you've got a ton of money to deploy, you're just pushing it earlier into precede and seed. Because if you're making a bad at sea and you're giving a company three years of runway run rate you're like, great, we'll put money in here. And in two or three years if this thing's working and the market's loosened back up, we can reprice at a place that works for us.

It's just a good kind of easy place to put capital without having to face the true narrative of valuations 

MPD: today. What's your gut on when you think valuations are down? What's the data? 20, 30% since 

Mike Rogers: the top, a, I think, seed and pree have stayed more or less the same within a little bit of wiggle room.

Series A is down 20, 30% and then as you look for into the growth market, it becomes more and more opaque because there's really not a ton of data there 


MPD: grab a hold of. Yeah. That barks like at a grinding halt. Yeah. It's a lot more rounds and nothing's reported. Yeah. Where do you think we bottom 'em out?

If you had to guess, when do you think this kind of companies come up for air? The throughput starts happening again. We're going full velocity again. Yeah. What do you think that is? 

Mike Rogers: My hope is that by Q2 or so, it looks pretty clear that the Fed's interest rate policy is slowing down, rising, probably slowing down.

I don't think we're gonna go the other way, but at least it's stationary and people can have some conviction over what the cost of capital. That should open up the ability for people to invest more money in these places, have a better idea of what possible returns are, and thus probably push multiples a little bit higher, again, which will let companies be more adequately priced for a next round versus where they were before.

Because right now, if you gave a company two years of runway and you priced them at 50 times revenue a year and a half ago, They would've had to five x the business, right? Or six x the business, depending on, on, on what the terms were, just to get back to that valuation. If the multiple comes down to, 10 x.

So it's completely unrealistic for anyone realistically to grow into that valuation, especially with headwinds in the market that we've seen in terms of, slowing consumer spending, slowing business spending, layoffs, et cetera. SaaS companies, right? A lot of them charge on a perceived. So all their tech companies are shrinking headcounts.

So what's gonna happen to their revenue? You're gonna have a big network effect of downward trend in revenue because a lot of these businesses sell to other startups and other tech businesses. So it's gonna be really hard for companies to reach their revenue goals. But if we see multiple start to creep back up a little bit, it will even out their ability to raise capital because they might get back to somewhere near the previous round valuation.

And then you might get more investor 

MPD: interest in doing. Interesting times, yeah. Like you started off with it, I thought in September it was guns blazing and it's been third gear. It hasn't, didn't happen. We haven't been in neutral. It's just been slower. 

Mike Rogers: Yeah. I think the thing that I would leave, like any founder listening with is Tim Cook doesn't wake up in the morning and say, oh man, how am I gonna do this?

Apple's down 40% from the highs. If you raised your last round at a price that was quite high, And you're waking up this morning being like, wow, we might have to take a down round 20 or 30% below. That's just the reality of growing a business, right? It's never gonna be all straight up markets.

So as pricing changes, especially as drastic as it did from the top of the covid markets, and now planners, I think should just have a realization that. Hey, if we need more money, that's fine, and our multiple might not be the same, and that might mean that our mark to market price is lower. But if you're really building something for the next 5, 10, 15 years and your goal is a big outcome, this is just part of the journey.

And if you can go and face that realistically, I think you'll have a better chance of raising money and a better chance of really like just surviving and growing a big business. And that might mean the down round. And guess what? That's not the end of 

Chris Zhang: the world. Thank you. Cool. Thank you. 

MPD: All right, now we're to Brett to learn about what's going on in the blockchain world.

What's up, Brett? All 

Brett Palatiello: right. So I wanted to talk a little bit about Apple's in-app purchases policies and how they're adapting to blockchain. So this week reportedly Apple blocked Coinbase Base's wallet on iOS. Because they made the decision that all gas fees need to be made through their in-app purchase system.

So what does that mean? So typically Apple takes 30% of all purchases made within the applications on iOS. So this is interesting, right? Because it's first they wouldn't allow NFTs on the platform. But now they've gone a little bit deeper and they're willing to allow NFTs on the platform, but everything, all payments in any form need to go through that in-app purchase system.

Now, this doesn't make any sense for those of us who understand how blockchains work. It's the gas fees are basically just taxes to be able to keep the network secure. And so these are just fundamentally supporting the ecosystem. But nevertheless, it's a good sign because I think it sheds light on, what they could be missing.

Because one of the big frustrations with crypto and web three is the lack of a push towards mobile, which honestly, you know, most of us interact with probably more often than we are on our laptops. So it's a very interesting move. And we've seen, like Solana, for example, They're gonna be launching their saga phone in 2023.

The ato, the founder of Solana, has a background in this area, so it'll be interesting to see if there's any inspiration from Solana's experimentation with their phone. That'll be adopted by iOS. I don't imagine that saga will be a competitor to to iOS. It's built on Android, but nevertheless, I think it might create a good playbook for how mobile phones will end up adopting this technology because at this rate, you can't charge 30% of the gas fee.

It doesn't make any logical sense. But yeah, it makes sense that Apple wants to extract as much value as it can from its app store. But they could also be basically pushing out a tremendous source of revenue by charging 30% on gas costs, which are just used to support the protocols.

MPD: So why is it a bad idea for them to charge 30% on the gas? They're apple's trying to. A v on all the revenue coming through their platform. I get it. Why is gas the wrong thing to 

Chris Zhang: be charging? 


So you 

Brett Palatiello: should you should be charging the product itself not necessarily the back end that's being used to support it.

That's part of the issue. But it does make logical sense that they would wanna extract as much value as possible. How, how they end up doing that. I'm. But it is, and especially if they integrate with protocols like Solana, for example, where the fees are basically nothing.

It doesn't make sense to push out an entire industry just because you want 30% of, a 

MPD: quarter of a penny. But are they pushing out the industry or is this the beginning of a negotiation to get the fee? 

Brett Palatiello: Yeah, that's the optimistic scenario. Yeah. So the pessimistic scenario is that they're just gonna push their market power on the industry and that they're not gonna let anybody on without taking a cut of on all these areas.

The optimistic scenario is that okay, they've acknowledged NFTs are a thing. They're allowing NFTs on the platform. So the next step is to hopefully, allow them to get more comfortable with allowing different areas of the space go rent free and then onboard, defi, NFTs all these different things that are in the space.

So yes, that's the optimistic take on this. 

MPD: And this is technically vi possible though, right? Like I'm thinking, I'm sure the industry doesn't want to do. But if they needed to say, Hey, your gas fee is X, we're gonna charge an Apple fee of 30% on top of it and then just pass it through to Apple.

That could be done technically, right? 

Chris Zhang: Technically, yeah. 

Brett Palatiello: That could technically be done. 

MPD: Yeah. So this is the beginning of a negotiating cycle to figure out. How the money gets cut up and who has the most power and all of these ugly things that are constantly getting reassorted. 

Brett Palatiello: Yeah.

Again, that optimistic scenario is that, they do acknowledge that onboarding, let's say NFTs would actually result in more revenue than purely just extracting 30% from the gas fees, which are. Are very small relative to the 30% you can get on an nft, which could be, a thousand dollars, you get 30% of that, and then you let the 30% of a, again, like a third of a penny go by.

So yeah. I think this is the beginning. I personally think this is the beginning of a broader negotiation, as you said. 

MPD: Interesting times. It's never a dull moment. 

Brett Palatiello: No. I spared you from some more SPF stuff this week that's probably what's dominating the headlines. 

MPD: But yeah, that's, I feel like that's gonna be the headlines for a lot of time to come quite some time, 

Brett Palatiello: but yeah.


MPD: My man. Thanks, Brett. 

Chris Zhang: Yeah, thank you. 

MPD: All right, now we're over to Fong to get a business tip for the week. Fong, what do you have? 

Phuong Ireland: All right, thanks Mark. So today we're gonna be talking about community building. Which is really important regardless of what industry that you're in. So having a large engaged community can really lower your customer acquisition costs because your community acts as ambassadors for your brand, and that creates awareness and builds loyalty.

A big community can also provide customer insight and that can help you in improving your product and improving your brand experience. And then lastly, having a huge community also creates a moat around your business and helps protect you from competition. But building a community requires really thoughtful planning, and you have to be authentic, and it requires a lot of hard work, a lot of hard work, especially at the beginning when you're starting from zero.

So here's some tips on how to start building the first, firstly, set the purpose. So you have to have a clear purpose for building your community. You have to understand it. Your team has to understand it, and your community has to understand. And in order to set this purpose, just try to think about who you're trying to build the community for and what the members will get out of it.

It's important that you build your community around that need, not around your product. So for example, suppose your product is an e-commerce app. The purpose for building a community could be to connect merchants and allow them to share advice around growing their brands, but not about the app itself.

Then start small. Build in person relationships and then move it online to scale. It's funny cuz I find a lot of my advice, regardless of what the topic is about starting small. So in this case, start by talking to one person who you think is your ideal community member. Really try to understand who they are, what they're looking for, and how a community like yours could help.

And based on what you learn from this one person, curate a small group of core people, say 10 who you think could be your first members. It's really important that you're thoughtful about who you include in this first group because that's gonna set the tone for how you build the rest of the community.

Then, Build trust with them and make your core group feel invested in the idea. Ask them if they'd like to get together with other people who are interested in the same topic. So from the previous example, you can plan an event with 10 e-commerce store owners. Get them together in person if you can maybe with a dinner or a happy hour and start the conversation going.

Start building trust between the members. That's gonna be important. Then once you have this group, you can move them online and start facilitating interaction. So once you've established personal relationships with a core group, pick a platform that works for you, depending on your community. So it could be Slack, Facebook groups, Instagram, discord, and move the group.

Post prompts and questions so that members can start responding and get the conversation going. Your most important job here is to facilitate the interaction. Make every member feel special. Give them attention. Make them feel like they belong. This is gonna be important as you scale, but especially with this early group, make them feel special because they are special.

They have the privilege of. At the start of something from the ground up, make them, make sure they feel heard by always responding to messages and comments. And then grow. But be okay with growing steadily and sometimes at a slow pace because it really can take a minute. There's a lot of manual work at the beginning and there's gonna be some awkward silences as you're trying to build a new community.

But keep supporting engagement, keep facilitating the conversation and keep the energy level high. And then once you get the ball rolling, you can really jumpstart growth with tools like influencer marketing, brand partnerships, and effective content strategy incentives and reward and incentives and rewards.

Those are gonna be topics for future episodes. So stay tuned. What's, 

MPD: yeah what's the how do you think about who should be building a community as a channel? Because like when you think about marketing, a lot of people default to search engine marketing, paid marketing, maybe doing some SEO to get up in the organic feed, but community engagement is it's a less controllable, less precise strategy, you don't always know what yield you're gonna get on time or dollars spent. So who should be using this? When does this matter? 

Phuong Ireland: I honestly think that if you have customers, then you need to be building a community, which could is app. I couldn't, I thought about it a lot this morning. I couldn't think of any examples of a business that wouldn't benefit from From a community, right?

Even logistics companies like the, it could be, trade group of trade professionals like it really can be anyone that could potentially be a customer. All the, they're all people and people have needs and they have, with respect to the product that you're selling and why they need it.

And so I think it's really important for all c. 

MPD: Okay. There's gotta be people out there who are gonna hear this, who are founder founders who maybe don't have community or marketing dna who are thinking maybe we should do a community, but why the hell would anyone actually want to join our community?

Chris Zhang: Maybe it is something like, a construction product or I don't know, 

where people 

MPD: maybe don't as commonly rally around a. 

Chris Zhang: How do you think about 

MPD: what the value is for the memories? How should people be thinking about that so they can maybe broaden. They're thinking about where a community can be relevant.

Phuong Ireland: Yeah, I think that's why having a purpose is important, right? So you're not rallying around a product. You're rallying around a purpose. Why someone would want to tap into a community based on. The type of profession that they're in the type of, interests that they have. So I really think that, regardless of your industry or the product that you're building, there is an audience that has a need for that type of thing.

And really setting a purpose around that is not around the product is a way to create a community around something that's not really obvious. 

MPD: That's great. That's a big insight, focusing on the pain point, not what you're selling. Exactly. We had Lisa, one of the founders over at Little Spoon on the podcast a long time ago, and she did a whole lot of really insightful strategies, give a lot of the wisdom around community building.

And their community, although they sell baby food that's really healthy, is centered around, providing healthy food to children. It's not about buying their product. That's something people might choose to do, but it's a mission driven mindset. 

Phuong Ireland: The thing is that your product might change, right?

As you're learning more about your customer, like your product, you're gonna tweak your product and it might go through a journey where it doesn't look anything like it did at the beginning. Then if you're building your community around that, then your community may not, may or may not be relevant, but if you're building it around a purpose that's always gonna be 

MPD: relevant.

Chris Zhang: Very cool. Thank you. Thank you. All right. 

MPD: Now we're gonna hop over to Chris and do update on the broader market. Chris, your new camera that follows you is giving me car sickness. This is. 

Chris Zhang: Nauseated. That's the point. This new AI driven 4K camera that I use specifically for the segment, potentially too fancy.

Okay. What do we got in the market today, ? I'm gonna jump back today a little bit and focus on two broader topics that I think are most relevant. Especially given that we haven't talked, we haven't had this recording for a bit. So I think it's good to jump back and look at the broader picture.

Sometimes I feel like it's also the data that gets released every week gets a little too distracting. So it's important to pick what's important. So this week in particular, we've got the NFP data, which is Nonpharm payroll, that it's the job data in fact that just came out this morning. I think this is a good jumping point to talk about inflation and versus unemployment.

So let's do that. And basically the gist of it is NFP came out very strong. US economy added 263 K jobs in November. Unemployment rate remains that 3.7% hourly wage rose sharply by 0.6%, month on months to an average around $33. An hour which by the way is the biggest events in over a year. On a year, on year basis.

We just climb around 5.1% versus 4.9%. And looking at the data, we're back to the good news at that news again, market sold off because it's perceived as not so good data for the Fed who has been battling inflation, as we all know, for the better part of the year. So now all eyes are gonna be on cpi, which comes out in about two weeks less, slightly less than that.

My point of view is look, first of all, this data, obviously jobs very strong, but it's, the headline numbers still lower that inflation that we've had, which means household spending, powers going down, and there are also other indications elsewhere, other data showing that potentially inflation will go down.

For instance, US man manufacturing. Which is usually a leading indicator of inflation that's been pretty weak in recent month. Another chart, another data point that I found during the week that I thought was very illuminating, which is actually the one done by by Vanguard. They're showing that they're using effectively the hardship with straws from folks 401ks as a proxy for household's need for cash.

And that has risen to the highest level historically. So what you're really seeing is, yes, on average people are getting paid a little bit more, but inflation is still relatively high spending powers going down and people, for whatever reason, maybe is hangover from covid again, are still spending maybe even beyond their means.

So all that means that I think inflation is on track. To come down, maybe not at the pace that the Fed is liked. So that's, not necessarily a great jumping off point into 2023 when it comes stock market, which by the way has been rallying in the past month. Now we're back above thousands and pieces back above 4,000.

So it's likely that, markets are very exuberant because the re what we've talked about previously, the risk events are anticipating, or at least in the near future, And people need a recovery given the massive sell of your experience. But going to 2023, I think inflation will stay high, but it will come down, but it will stay elevated at a level that's potentially still the Fed is not comfortable with.

So the rate path that we're on is that it's going to go get higher and stay there for a little while. But overall the economy is strong, right? So I don't personally, I don't expect us to come crashing down like some people have expected. It's going to be a slow, slower grind, but maybe potentially a a more mild version of what people expect and at least at the beginning of the year.

So that's one point I wanna make. A second event I thought was super relevant, which is China. In fact, that's how we started the year. Sorry. That's how we started the week. Waking up Monday morning, first thing we saw this massive news headline on China protest, which is something that, part of the biggest protest that we we've seen in in, in a few decades.

There's this article. I think I, I circulate it internally. It's from research, which is an independent third party research firm. And I really agree with some of the points that was made in research. Basically, obviously now, CJ Pink doesn't have great options, right? He's being backed into a bit of a corner here.

But I do think that this, the headline around the protests is maybe a little overblown. It's still very small scale and especially in a country that's 1.5 billion population with a lot of speech control and not so much freedom of speech. It's, most people don't probably even realize that there's a protest going on.

However, this is an indication that especially the younger generation is not content with the current policy and zero, especially zero covid policy. That is the early indication of potential unrest. So really, what are the options here? And the research article talks about, and I personally very agree, there are really just four options at this point for the Communist Party.

And number one is what I don't think will happen, which is to basically put the whole country in a protracted lockdown. This is mostly just to affirm the political party's control over the country. This is at this point, I think an option that's bit out of the picture. The second one is really to have a targeted attack against these demonstrators.

And then put the country in a temporary lockdown. But only mostly to say phase, but only to slowly give the, what the demonstrators want, which is to open up the country and decrease some of these quarantine, quarantine policy, quarantine measure measures. I think this is definitely very likely given what the country, the party has done historically.

Number three is potentially put the country into a brief lockdown, but signal to everybody that the government will, impose tighter restrictions in specific targeted areas, but broad in a sort of on a broader stroke and a broader country level. Things will go back to normal. This is something they've already done over the.

A lot of the news media came out saying the comp, the party came out and said that we're going to make sure people's needs are addressed, which is their way of backing down and softening their tone a little bit. The last option is really to decide that, hey, open up the country immediately and and let the sort of the demonstrators and protestors have what they want.

I think this is a very not so likely. So really we're coming back to sort of option two and three, which is again, targeting demonstrators. Make sure there's to qualities of unre. And also put the country in a brief lockdown only to open up later. So what this means is, this means, to me at least, is to actually take this as a net positive for risky assets, not only in China, but also globally.

I think this is, has accelerated the pace of opening up China and previously what we're expecting six to 12 months. Now it's the window potentially through to six. Which is great for so broader financial markets, which is why, and if you look at Chinese markets, it had probably the strongest month of recovery in a decade.

And this week alone many of the top firms have recovered anywhere between 10 to 15% of the value. The last thing I'll make, sorry I've been rambling for a while, but I'll pass on back to you to some questions. But last thing I will make is regarding China. The one thing I think the, at least Western media is not dressing.

That concerns me a lot. I have this fear that that there'd be potential consequences to those protestors. If you look at the protestors that at least that's being captured in video, a lot of 'em are very young, right? They're in their twenties and college students. And this is the generation that's largely seen a very benign government.

They have never seen what an autocratic regime can do, right? They've probably heard about it from their parents or grandparents, but most likely they haven. So they're the one thinking the government will not do anything. They're one out there protesting. But the government decided to target these demonstrators.

I think there could be many very serious consequences to the younger folks. So I hope everything will work out in that front and I'll shut up now. Yeah, 

MPD: that's crazy. What's the, I read these headlines, but I don't fully have my head around it. What's the thinking through Zero covid policy at this stage in the game?

Like when? When no one in the, literally the world knew how to deal with it. What the implications were? Yeah, how it spread. We just didn't have any information. I got it right. There was an argument for it then, but now they've got vaccines and they know who's impacted the. Why aren't they doing it just seems like the players, if you're worried about, you do some sort of systematic dissemination, releasing to certain groups at certain times where people are getting, you're doing great question way, 

Chris Zhang: what are they doing?


MPD: actually don't even understand the logic 

Chris Zhang: board at this point. Yeah, no, I, my, so have to backtrack a little bit. The beginning of Covid, when the world's still trying to figure out vaccines and the consequence of lockdown. China's made the executive decision to not use any Western vaccines they want.

They do not want their economy and their population's health to depend on any foreign country. And in fact, there is a lot of propaganda within the country that says, basically West these vaccine companies, Johnson equivalent are evil. They're trying to control our population health and inject this into our system, et cetera, et cetera.

There was a lot of propaganda being. Little did they know, they locked them, shook themselves in the foot a little bit there because obviously later on we know, we knew what happened. They developed Saddleback vaccine, which has been proven over and over again, very ineffective against covid especially, all different variants.

And at this point, and more importantly, Saddleback is also proven a little dangerous for the elderly population. Anyone H 80 and above? . So as a result, for the age group, 80 and 80 above the vaccination rate in China is still around 50% to the state versus the, countries.

In the US that's in the 85, 90%. And on top of that, it's not very effective. So if, and by the way, there's about 20 million people in that segment in China. So if the country decides to open up, sorry, 40 million, I think I'll need to check my numbers. I think it's around 40. The country decide to open up, and that's the risk, that's the risk group right there, right?

So assuming half of them are really exposed because they're not vaccinated, we're looking at potential real unrest in, in a country. But now, c Jing kind of have to weight this against the younger population who don't care so much about covid and once all the, freedom and openness that they used to have.

Which is a much larger group of population, by the way. And it's the future of China in a way. What do you do? Which one do you choose? And it's a tough choice. Sure. Very interesting. Why can't 

MPD: they just start signing up to buy American vaccines now? Everything obviously is simpler in my head, but, I'm sure there's politics and politics, a lot of other 

Chris Zhang: things, dynamics going on, but Exactly.

People are, we everybody has access to information despite their control. People can still get on a VPN and get access to Western News Outlet. It's difficult to hide information at this point. So what they can, what they have to do is to try to fund their own policies and.

Propaganda is a set in place in the first place. And yeah, no it's politics. That's what it's, wow. 

MPD: Very fascinating. And then the first bit, you had talked about the interest rates. Yeah. It sounds like the Fed has accomplished a, is accomplishing a lot of what it wanted to accomplish.

The country, the economy's still strong, but there's some pathway here. What's your gut? Do they keep increasing rates beyond expectations now? Or do we, based on some of this new data, or do we think we're leveling out and the kind of economy is just catching up with the impact of the existing 

Chris Zhang: changes?

Yeah, no, that's the obviously the trillion dollar question here. Everyone's, it's been on every alligator's mind. My personal view is Look we're already at around 5%. If you look at the futures market, that's where we're headed. We're currently at 4%, so there's probably another a hundred basis wine hike to go into 2023.

Mark is pricing the peak around 5% at the moment, and I, my gut tells me that's near probably where we're gonna peak out. And probably five, five and a half, maybe six. But we're going to stay there for a while. So now market pricing. If you look at the future, there's the, there's a lot of cheddars around this inversion, right?

This curving version, on treasury curve twos, tens, how it's been the strongest gap in the biggest, the widest gap in 40 years, which is an indication for a recession next year. I. Two tens might make sense, but if you also look at the front end of the curve, which indicates a more, more sharper, drastic turn of policy into a more accommodated, cutting and maybe even QE open operations next year.

I think that's a little too early. I think even Chairman Powell came out and defunded that the Fed and in, in emphasize how difficult it is to. Reverse their stance and come straight back to a more accommodating stance. My gut tells me that we're gonna be in a high industry environment for a lot longer, potentially two years just to come back.

Inflation, bring everything back to normal instead of the sort of the six months, one year window that the market participants till this day still hope for. So higher interest rate, but we're near there but longer which could really bring down. Bring down gdp. We could be in a recession in a technical recession again.

But I do think, and of course, jobs market will suffer, but I don't see a scenario currently, at least we're back to 15, 20% unemployment rate and people are suffering. And I think that's still very unlikely. 

MPD: Thank you so much, Chris. And for everyone listening, just a quick reminder.

Chris is a SCC registered ra. and nothing he said should be considered or construed as financial advice, yada, yada, yada. It's a pleasure, mark.


Chris Zhang: right, everybody, that's a 

MPD: wrap. Hopefully. Enjoy today's pod. If you have any questions, let us know. You can give me any of those social media platforms, particularly Twitter at M p d, and stay tuned. We'll be in touch again next week.


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