Christopher Zook, founder and Chief Investment Officer of CAZ Investments, which oversees around $5 billion in assets under management, joins Julia La Roche on episode 72 for a wide-ranging macroeconomic discussion.
In this episode, Zook shares that a recession is coming, and it’s “going to be deeper and probably longer than people think.” He adds that we’ll have a “manufactured recession,” where inflation is running so hot that the Federal Reserve has to raise rates fast to slow down inflation, forcing the economy into a recession. Moreover, he points out that markets believe the Fed will start cutting rates by the end of the year, something Zook does not expect to happen.
In these types of environments, Zook is looking for opportunities in dislocated assets or persistent assets that perform well, even if his hypothesis is found to be true.
Zook has over 30 years of experience investing in traditional and alternative asset classes. He was recently honored with the Texas Alternative Investments Association’s (TAIA) Lifetime Achievement Award in recognition of his contribution and sustained support of the industry in Texas. He regularly contributes to major media outlets, including CNBC, Fox Business, and Bloomberg. Before starting CAZ Investments in 2001, Zook served in senior leadership positions with Oppenheimer, Prudential Securities, Lehman Brothers, and Paine Webber.
0:00 Intro
2:12 Welcoming Christopher Zook to the show
2:50 Beginnings in investing
3:43 Trading commodities to pay for college
4:40 Reading about traders
5:55 Managing risk extremely carefully
7:20 Starting own firm
8:20 Managing money at age 22
8:50 Set goal to start firm in 10 years
9:50 Tony Robbins
10:40 The bigger the way, the bigger the try
14:00 Zook’s “why”
16:20 CAZ Investments structure and focus
18:36 Thematic approach
20:30 Betting against subprime housing
25:00 Macro outlook
25:12 Meme stock bubble
26:23 It takes longer than people think to reconcile dislocations
27:07 We haven’t seen true dislocation yet
27:40 Recession is coming and it will be deeper and longer than people think
28:08 A manufactured recession
29:00 I’ll be shocked if the Fed cuts rates this year
30:06 More of a 2-3 year recession
31:00 Disconnect between the Fed and the market
33:20 Be greedy when others are fearful
33:54 Stagflation
34:34 Worst economic regime for financial assets
38:13 Opportunities
40:20 Themes right now
41:09 Cord-cutting
41:40 Opportunity in sports teams, media rights
43:55 Themes that exist in real estate today
45:40 Stress from higher rates will force refinancing
46:45 Why we haven’t seen panic selling yet
47:45 Every sector of real estate will be stressed
50:40 U.S. Dollar outlook
53:39 U.S. debt levels are terrifying
56:29 Growth of private assets
57:04 Opportunity in GP stakes
#172 John Cochrane On The Fiscal Theory Of The Price Level, Causes Of Inflation, And The Need To Stop Throwing Money Down Trillion-dollar Rat Holes
#171 Dave Friedberg, CEO Of Ohala And Co-Host of The All-In Podcast, On The New Breakthrough Can Boost Crop Yields By 50-100% And Could Change Farming Forever
#170 Bob Elliott: The Biggest Risk For Equity Investors Is The Economy Remains Too Strong
#169 Carol Roth: The Stagflationary Economy Is Making A Resurgence
#168 The ‘Acid Capitalist’ Hugh Hendry On The Fed’s No-Win Situation, The Fragility Of Valuations, Gold As ‘The Alchemy Of Chaos,’ Buying Bitcoin, And The Dangerous Sign The Japanese Yen Is
#167 Michael Pento: If Rates Don't Come Down Across The Yield Curve Relatively Quickly, The Economy's In For Big Trouble
#166 Nancy Davis: 'Whatever They Say, The Opposite Happens' — Fed Meeting Reaction, Why Inflation Is Here To Stay, And The Opportunity For Investors
#165 Jim Bianco On Stickier Inflation, A 10-20% Chance Of A Rate Hike, And Why The 10-Year Treasury Yield Could Surge To 5-5.5%
#164 Chris Whalen On Higher Interest Rates, Illiquidity, And The Death Of Leverage
#163 Professor Scott Galloway: We're Turning Into Something That's Not Very American
#162 Keith Fitz-Gerald, Investor Who Nailed 2023 Market Rally, Says The Fed Doesn’t Matter — Investing In Optimism Does
#161 Michael Howell On Global Liquidity, A Re-entry Point For Risk Assets, Monetary Inflation, Gold, The US Dollar
#160 Bill Fleckenstein: The Fed Is Trapped And Unable To Fight Inflation
#159 Lyn Alden On Fiscal Dominance Macro Backdrop, Why The Rise In Gold Is Indicative Of Fiscal Problems, And Why Bitcoin Could Hit Six-Figures In This Cycle
#158 Larry McDonald: We’re Entering A Sustained Inflation Regime, Why Trillions Of Dollars Are Currently Misallocated, And The Opportunity Right Now In Hard Assets
#157 Dr. Gary Shilling On The Hidden Flaws In The Economy
#156 Tom McClellan On Why The Recession Is Still Coming And Why The Second Half Of 2024 Could Be Unpleasant For Stocks
#155 Meredith Whitney On The 'Bifurcated' Economy And Consumer, Why It Will 'Pay To Be Patient' For Young Homebuyers, And The Coming 'Silver Tsunami'
#154 Dr. Art Laffer: We Are In The Middle Of A Massive Redistribution Revolution And It's Destroying Growth
#153 Amy Nixon On Inflation Running Hot And Pivoting On The Deflationary Recession Call
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