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H.R. 8801, DC ROADS Act

CBO -

As ordered reported by the House Committee on Oversight and Government Reform on May 20, 2026

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Mediocre 3Y Auction Tails Despite Solid Buyside Demand

Zero Hedge -

Mediocre 3Y Auction Tails Despite Solid Buyside Demand

With markets thrown in turmoil following Trump's threat to restart war against Iran in retaliation for downing a US Apache helicopter, it wasn't clear how today's $58 billion 3 year auction would go. In the end, it wasn't great, or terrible: a little tail, but besides that all metrics were relatively solid.  

The auction priced at a high yield of 4.192%, up from 3.965% in May and the highest yield since Feb '25. It tailed the When Issued 4.189% by 0.3bps, the 2nd consecutive tail.

The bid to cover was 2.645, up from 2.540 last month, and above the recent average of 2.614. 

The internals were also solid, with Indirects awarded 63.7%, up from 62.96%, though just below the 6-auction average of 63.87%. Directs were awarded 21.01%, modestly higher than 20.14% last month leaving dealers holding 15.28%, a slight decline from 16.90% last month.

Overall, this was an average auction, with forgettable metrics, which was to be expected in light of the broader market selling that provided a buffer to any lack of buyer demand. It also signaled that despite expectations that tomorrow's CPI will be the first 4%+ print in 4 years, the bond market isn't too worried... yet. 

Tyler Durden Tue, 06/09/2026 - 13:28

New Clues In Apple's iOS 27 Hints At Upcoming Foldable iPhone Launch

Zero Hedge -

New Clues In Apple's iOS 27 Hints At Upcoming Foldable iPhone Launch

Software researcher M1Astra shared with Bloomberg new clues embedded deep within Apple's iOS 27 developer beta that suggest the long-awaited foldable iPhone remains on track for a September debut, alongside the iPhone 18 Pro lineup.

"Apple's iOS 27 and related software updates offer the clearest public signs yet of the company's upcoming foldable iPhone, revealing references to folding hardware and new features designed for larger, more flexible displays," Bloomberg reporter Mark Gurman wrote on X, refering to M1Astra's findings that show within iOS 27 developer beta, there are code strings related to determining whether a device is folded or unfolded.

Files inside the first iOS 27 developer beta include references to "foldState," "mechanicalAngleDegrees," and "angleDegrees," suggesting the iOS can detect whether a device is folded, unfolded, or partially opened around a hinge. Other repair-related code mentions a secondary display, a second cover glass, and additional light sensors.

The clues come as Bloomberg previously reported that the foldable iPhone remains on track for a September launch alongside the iPhone 18 Pro lineup, with pricing expected to start around $2,000. This would be the most important iPhone design shift in the nearly 20-year-old iPhone lineup.

However, Apple is late to the game. The first available foldable smartphone with a flexible display was the Royole FlexPai, announced in October 2018 and shipped in December 2018. By early 2019, Samsung had released the Galaxy Fold, and other brands were launching their foldable models.

On Monday, Apple unveiled Siri AI and the next generation of Apple Intelligence during its Worldwide Developers Conference.

Our coverage:

Goldman analyst Michael Ng has provided clients with the key takeaways from WWDC:

We attended AAPL's WWDC keynote and investor event at Apple Park in Cupertino, CA on June 8th, where the company announced key features for iOS 27, Apple Intelligence, and Siri AI. AAPL was down 1% on the day, in line with AAPL's average day-of WWDC performance, with announcements around Apple Intelligence & Siri AI largely in line with expectations. We viewed the announcements as positive with visibility into Siri AI timing, confidence in the completeness of features, and early signs of monetization through iCloud+ subscriptions and product refresh.

First, Siri AI will be available in beta this fall in English. The keynote and follow-up presentations that we attended were notable in that Siri AI demonstrations all appeared to be utilizing real features (e.g., the presentation we attended included a live demo), suggesting to us that Siri AI features are largely complete and likely will hit key timelines. Second, rate limits should drive monetization opportunities. Some features, including image generation, have daily usage limits because they rely on powerful server models. Users will be able to get increased access through most iCloud+ subscription plans, which should drive direct monetization for Apple Intelligence. Third, the most advanced AI features announced today will require 12GB memory, driving a refresh opportunity. Features including expressive voices and more advanced dictation will require 12GB memory which is included in iPhone Air, iPhone 17 Pro, iPhone 17 Pro Max, iPad (M4), and select Mac (M3). We think that will help drive a multi-year product refresh cycle, particularly as AI features continue to improve and demand compounds.

Over time, we view that continued iteration of integrated AI feature releases should (a) support longer-term demand for product offerings via installed base growth and (b) support longer-term Services growth via monetization of new first-party and third-party apps as well as greater iCloud storage demand with greater personal data & content created with AI features.

1. Siri AI & iOS 27 Fall 2026 launch details: iOS 27 will be available in the fall for iPhone 11 and later, with Apple Intelligence available for iPhones 15 Pro/Pro Max and later. Siri AI will be available in beta later this year for users with devices set to English, with support for additional languages expanding over time. Apple noted that Siri AI availability for iOS 27 & iPadOS27 will be delayed in the EU due to the Digital Markets App (DMA). Additionally, Siri AI & other new Apple Intelligence features should be delayed in China as Apple works through regulatory requirements. Separately, AAPL's most powerful on-device AI model and its features (e.g., expressive Siri AI voice, advanced dictation) will be only be available for devices with at least 12 GB of unified memory including the iPhone 17 Pro/Pro Max, iPhone Air, iPads M4 & later, and Macs M3 or later.

2. Siri AI features in line with expectations: First, Siri AI will have greater personal context awareness as it draws from on-screen and historical personal data across first-party apps (e.g., Photos, Messages, Mail, Music), third party apps, the web, and Visual Intelligence (via device camera) to inform its answers & action execution for queries & requests. Second, Siri AI will allow users to personalize Siri's voice for pace, as well as expressivity (for devices with at least 12 GB of unified memory). Third, Siri AI will have a dedicated app from which users can recall and continue prior conversations. Fourth, Apple demonstrated Siri AI's ability to engage across a user's complete device ecosystem (e.g., Visual Intelligence identifying nutrition facts for food captured on-camera, splitting bills via receipts, creating an event from a flyer to the Calendar app, identifying the location of a photo posted on social media).

3. New Apple Intelligence features for iOS27 announced, also as expected per our WWDC preview: First, Safari will use Apple Intelligence to (a) create tab groups by topic, (b) monitor and set alerts for changes on internet pages a user wants to track, and (c) create custom extensions via description. Second, Apple Intelligence will introduce suggested actions across apps (e.g., add details from Messages to Reminders, updating meeting details on calendar invite by event description). Third, Apple Intelligence will introduce new photo editing features including (a) the Extend tool (to expand images) and (b) the Reframe tool (to shift the perspective of the camera.

4. Platform improvements to personalize design and improve performance. First, iOS 27 will allow users to adjust the strength of the Liquid Glass display (ultra clear to fully tinted). Second, through improved CPU scheduling, iOS 27 should improve performance across Apple products (e.g,. Apps launching more quickly, faster AirDrop, more seamless transitions from cellular to WiFi networks). Third, users will be able to include Android users within iCloud Shared albums.

Apple shares on Monday wiped out any gains and closed down 1%, in line with the stock's average WWDC-day performance over the years. Shares are lower in cash on Tuesday.

Professional subscribers can read the full Apple WWDC note here at our new Marketdesk.ai portal.

Tyler Durden Tue, 06/09/2026 - 13:20

China's Oil Imports Plummet To Eight-Year Low

Zero Hedge -

China's Oil Imports Plummet To Eight-Year Low

Confirming our recent reporting on China's oil demand collapse, crude oil imports to China in May fell to their lowest since October 2017 because of the price spike resulting from the Persian Gulf tanker traffic disruption, plunging refinery margins (due to price ceilings imposed by Beijing), of a slowing economy and the rapid slowdown in the economy. 

The May total stood at 33 million barrels, or 7.8 million barrels daily, Bloomberg reported, citing Chinese customs data. This is roughly a 30% drop vs the average daily import rate of 11.6 million barrels last year. As previously noted, refinery run rates are down as well, as are fuel exports, with Beijing careful to make sure there is enough diesel and gasoline for the domestic market. All this is happening as the latest batch of Chinese data was "shockingly bad", promptly fears of a China hard landing.

As OilPrice notes, the news will likely push oil prices lower as China’s reduced appetite for imported crude is widely seen by traders as a cap on international prices. Demand for oil in China, however, has not fallen particularly. The only reason the country’s refiners can afford to slash imports is the substantial inventory cushion available, estimated at over 1 billion barrels, which we said three months ago is the biggest wildcard in the Iran war oil price shock. However, this cushion is not infinite and, as suggested recently by analysts, China will at some point start to ramp up imports.

China’s subdued oil buying from abroad “represents one of the largest offsets to the shock, second only to Saudi rerouting flows and larger than coordinated SPR releases from the U.S., Europe, and Japan,” Societe Generale commodity analysts said earlier this week. However, strategic and commercial oil inventories need replenishing at some point, and when that point is reached and the war is still not over, we are likely to see higher oil prices again. In its lenghty weekly note, JPM commodity analysts agreed.

ING commodity analysts made a similar point last week. “Sizeable inventories in the lead-up to the war have provided a buffer for the market,” Warren Patterson and Ewa Manthey wrote on Friday. “This buffer is shrinking with every passing day. With the seasonally stronger summer still ahead of us, we could see demand grow by more than 3m b/d quarter-on-quarter in the third quarter. The pace of inventory declines will only intensify through the July-September period.”

Tyler Durden Tue, 06/09/2026 - 12:40

Professors Behind California's Wealth Tax Threaten Possible Legal Action Against Critic

Zero Hedge -

Professors Behind California's Wealth Tax Threaten Possible Legal Action Against Critic

Authored by Jonathan Turley via JonathanTurley.org,

There is an interesting controversy brewing in California after four California university professors threatened a political candidate, Richard Lucas, for criticizing them for their roles in the "Billionaire Tax" and sent him a "cease and desist" letter.

David Gamage from the University of Missouri, Brian Galle and Emmanuel Saez from UC Berkeley, and Darien Shanske from UC Davis claimed that the public criticism violated anti-doxxing laws by sharing contact information. They are clearly wrong. One of the aggrieved professors, Brian Galle, teaches at Berkeley Law School called Lucas "a clown," but insisted that sharing public information is unlawful.

Attorney Catha Worthman sent the letter, but has reportedly refused to respond to inquiries after attorneys for the Alliance Defending Freedom (ADF) pushed back on her legal claims and those of her clients.

I have long been a critic of such wealth taxes, specifically California's Billionaire Tax, as economically moronic and legally questionable. The proposal has already cost the state trillions in lost wealth as wealthy taxpayers have fled, taking their businesses and jobs with them.

As I discuss in Rage and the Republic, these wealth taxes have a terrible track record and, on the federal level, face serious constitutional challenges. In California, the drafters included a retroactive clause that can also be challenged.

One of the four professors - who Lucas referred to as "the looter dream team" - destroyed the claims of many supporters that this is just a one-time tax. Some of us have written that this is simply the first salvo. Once they succeed in targeting billionaires, the same measure will likely be used for those in lower tax brackets.

In a recent debate, Berkeley professor Emmanuel Saez admitted that he could not seriously claim this would be a one-time tax, as many in the public have asserted. He said they would have to wait to see if it passes, but it is likely to be repeated, and noted that there may also be a federal wealth tax on the way.

He said:

"I don't think it's going to be a one-time tax...because you can't surprise billionaires more than once.

Even then, you know, maybe some of them were expecting something like this.

So it's going to be a debate about this time, you know, a permanent wealth tax at a low rate that's going to last for a number of years."

Saez has publicly taunted the wealthy who are fleeing the state:

He noted the move on the left to create a federal wealth tax which has been pushed by Bernie Sanders and Ro Khanna.

The legislation, "Make Billionaires Pay Their Fair Share Act," echoes the growing "eat-the-rich" mantra on the left - seeking to replicate a disastrous push in California that has led to an exodus from that state and an estimated loss of $2 trillion in taxable assets.

It is also flagrantly unconstitutional.

Under the plan, Congress would target 938 billionaires to tap them for $4.4 trillion. That money would then be redistributed as a $3,000 direct payment to every man, woman, and child in a household making $150,000 or less - $12,000 for a family of four.

Now back to the legal threat. I believe that the threatened legal action is wildly off base. Putting aside the fact that this is protected speech, the two anti-doxing statutes, Penal Code §653.2(a) and Civil Code §1708.89, contain clear scienter or intent requirements.

They must show that Lucas demonstrated an "intent to place another person in reasonable fear for their safety, or the safety of the other person's immediate family." Penal Code §653.2(a); Civil Code §1708.89. There is no evidence of such intent. If simply posting such identifying information is a violation, a significant range of protected speech would be proscribed.

There are ample reasons to criticize this tax and the claims made by its champions. There is a type of self-sustaining pattern on the left in support of such measures. Universities have largely purged conservatives and libertarians from departments, leaving most faculties with professors who run exclusively from the left to the far left.

These professors then added intellectual support for radical proposals like wealth taxes. The media then reports that experts have reviewed and approved the measures. It becomes an entirely closed loop from political groups to academics to media creating a uniform narrative.

The ADF wrote a strong letter pointing out the flaws in the claims of these professors under anti-doxxing laws from the lack of intent to the protection of free speech. These professors became public advocates for this ill-conceived plan and, as a result, have drawn criticism for that advocacy.

Lucas was one of those critics:

Nevertheless, the professors sent two cease and desist letters to Lucas, requesting that he remove their names and contact information from his website "California Wealth Exodus." Lucas has remained adamant that he will not remove their contact information.

The site for figures like Galle link to his academic page, as I have done above. We routinely link to such sites for people to look at the background of figures discussed in columns. In the case of Lucas, it is also meant to allow citizens to express their views to those pushing this proposal.

In my view, the threat of legal action is fundamentally flawed and would not prevail in the courts. These professors will need to respond to their critics rather than work to silence them.

Tyler Durden Tue, 06/09/2026 - 12:20

Jefferies: "Turns Out, We Weren't Bullish Enough On Copper"

Zero Hedge -

Jefferies: "Turns Out, We Weren't Bullish Enough On Copper"

"Turns out, we weren't bullish enough on copper," Jefferies analyst Christopher LaFemina wrote in a note to clients, marking a notable shift from one of Wall Street's most seasoned metal voices. LaFemina joined Jefferies in 2011 after more than a decade covering metals and mining at Lehman Brothers and Barclays, lending weight to his view that the explosive growth in AI data center buildouts, power grid and infrastructure upgrades (a theme he calls "powering up America"), and tight supply are creating structurally higher prices for copper.

LaFemina raised his 2030 target and now expects copper to average $8 per pound, or $17,636 a ton. COMEX copper last traded around $6.34 a pound, while LME copper was near $13,583 a ton.

On a longer timeframe, the LME copper chart suggests the $10,000 level was the breakout zone, further supporting LaFemina's 2030 target given the current supply-tightening backdrop.

"Turns out, we weren't bullish enough on copper," LaFemina said, adding, "We now have the highest copper price forecast on the Street as we see strong US industrial demand and still tight supply."

He noted that the data center and power infrastructure buildout should drive a meaningful acceleration in metals demand, with copper and aluminum prices able to rise much higher before weighing on the broader economy.

Goldman recently estimated that AI capital expenditures by hyperscalers will soar to $800 billion this year. The report can be found here.

In recent weeks, Goldman raised its year-end copper price target, and HSBC warned (report found here) that commodities face a "super-squeeze."

HSBC analysts told clients last week that "metal prices are generally in an upswing, driven by supply disruptions for some commodities due to the Middle East conflict and strong structural demand."

Separately, Goldman analysts led by Aurelia Waltham explained that one of the core issues with the copper market right now is supply:

  • Year-to-date data does suggest that supply recovery from previous disruption events has trailed our expectations. Accordingly, we lower our 2026 global mine supply forecast by 350kt, equivalent to ~1.5% of global mine supply, including ~200kt less from Grasberg (Indonesia) and Kamoa-Kakula (DRC) combined, with neither returning to full capacity until 2028.

At the same time, Waltham said stronger-than-expected U.S. copper imports in the first half of 2026 are tightening the ex-U.S. market:

  • Furthermore, US copper imports in H1 2026 have exceeded our previous forecast, tightening the ex-US balance. As a result, we now expect US inventory to build by 900kt in 2026 (vs. 550kt previously), even as our base case remains that no copper tariff will be announced this year.

The combination of soft mine supply, U.S. stockpiling, tariff uncertainty, and long-term demand tied to AI buildout and grid-upgrade themes prompted Waltham to upgrade her end-of-year 2026 and 2027 copper price forecasts:

  • We raise our end-2026/average 2027 LME copper forecasts to $13,735/$13,800 from $12,465/$12,150 previously (vs. forwards at $13,630/$13,610).

She outlined three price scenarios for copper:

1. Strait of Hormuz Remains Closed for Longer: While we would expect limited impact on the global copper balance as the demand hit from lower economic growth is largely offset by lower copper supply due to sulfur shortages, a substantial pullback in global risk appetite could push the LME price down to its fundamental support level at ~$12,600 in H2 2026, before resuming an upward trend.

2. US Copper Tariff Announced for January 2027: If a US copper tariff is announced prospectively in June 2026, to start in January 2027, we would expect US copper imports to accelerate in H2 2026 (vs. our base case of a slowdown in imports), tightening the ex-US balance and raising prices to over $14,000 in H2 2026. However, we would expect prices to retreat in 2027 as imports stop once the tariff is imposed.

3. Announcement of No Copper Tariff: A definitive decision against the tariff would reduce the size of our ex-US deficit forecast in 2026 and push the ex-US market back into surplus in 2027 as imports fall to a negligible level. In this scenario, we would expect the price to fall to an average of $12,800/t in 2027.

View scenarios here:

Beyond Jefferies, HSBC, and Goldman, JPMorgan analysts have also told clients that the copper upcycle is being driven by a tightening supply backdrop, accelerating power-grid investment, AI data center demand, and broader industrial electrification. Taken together, some of Wall Street's top metals desks are increasingly converging on the view that copper is entering a structurally tighter supply regime that will support a sustained break above $14,000 a ton on the LME.

Tyler Durden Tue, 06/09/2026 - 12:00

Gold & Silver: From Pullback To Perfect Setup

Zero Hedge -

Gold & Silver: From Pullback To Perfect Setup

Authored by Matthew Piepenburg via VonGreyerz.gold,

With gold and silver having fallen by greater than 20% from their January highs of 2026, some have argued the gold trade is over. In fact, and as explained below, it is only just beginning.

Trading vs. Investing

Such misunderstandings are nothing new, as the difference between precious metal trading and precious metal investing is nothing new.

Nor is there anything new about top-down misinformation and misdirection given to Main Street when it comes to understanding gold and silver.

Traders, both skilled and unskilled, tend to track near-term signals for immediate rates of return (long or short) while longer-term investors typically watch history, debt cycles and currency debasement with patient detachment and a steady eye toward wealth preservation.

Such patience has served the longer-term, wealth-preservation-focused investors with greater returns (and calm) through periods of headline flux and geopolitical gyrations.

Since 2000, gold has outperformed the S&P, and when compared against the major global paper currencies (down 94% since 2000), gold (up 1580% since 2000) has demonstrably outperformed fiat “money.”

Longer-term investors see this larger picture and trend.

They don’t book losses in pullbacks because they understand the greater direction of the precious metal ball in a debt-saturated and hence currency-debasement playing field.

Comfort in Historical Fundamentals

In short, the fundamentals of history, economics and hence currency debasement confirm a clear pattern by desperately broke(n) nations to inflate their way out of debt at the expense of their currencies.

This makes the longer, anti-fiat direction for gold and silver almost too obvious, even in times of inevitable price retracements in the metals.

Historical cycles and longer-term calm, however, are easily forgotten or ignored in times of crisis. Investors somehow think “this time is different,” or, even worse, they don’t think about history at all.

Patterns: From Crisis to Gold Highs

But for those looking for signals, as well as sanity confirmation, it’s worth remembering that in every prior geopolitical and/or oil crisis (the OPEC embargo of 73, the Iranian Revolution of 79, the Gulf War of 91, the 9-11 disaster of 2001 or, more recently, the Ukraine/Russia crisis of 2022) there are clear patterns eerily similar to the current crisis surrounding the Iranian “conflict.”

Specifically, we are living within a template by which a geopolitical crisis sends the oil price up, which is followed by a rise in “inflation expectations,” which in turn means central banks like the Fed can’t cut rates, and soon thereafter the market, rather than central bankers, sets the rates.

This explains why yields on the US 10Y Treasury Bond (the true cost of Uncle Sam’s hideous bar tab) have risen by 75 basis points despite no active rate hikes by a Fed which couldn’t afford rate hikes even if they wanted them.

In this same template, as yields rise, investors typically follow the street’s traditional (yet now grossly mistaken) view that a yielding bond (from a broke issuer) is still better than a yield-less bar of gold.

What typically follows is a herd-like move to bonds whose “positive” nominal yields are measured in increasingly debased currencies and negative real returns when measured against actual rather than mis-reported inflation.

The ironies do abound…

But what fifty years of crisis patterns have also told us—at least for those paying attention—is that gold tends to drop early in every crisis only to then recover at newer all-time-highs as the crisis plays out.

During the 1973 OPEC embargo, for example, gold would dip and then participate in an historical, 4-digit upside in the seven years that followed.

After a temporary retracement during the 1979 Iranian Revolution, gold rose by 90% in one year, and saw double-digit upside within weeks of the 1991 Gulf War.

We saw similar dip-to-high surges in gold following the 9-11 tragedy. And as for the 2022 fiasco in Ukraine, gold broke 2000 not long after the crisis grew from threat to now ongoing reality.

Patterns in Moving Averages

But for those who still feel that history is no guide to future rhyming patterns, let us give equal respect to some of the key technical signals for the metals.

In fact, these signals—most notably from the 200-day moving averages in gold and silver—are themselves just historical signals of a different flavor.

More importantly, they are indicators which signal a rare opportunity in a time of crisis.

Looking at both gold and silver, for example, each metal has fallen below its 200-day moving average.

This is a powerfully bullish rather than bearish signpost.

Silver Signals

The last time silver fell below this average was in April of 2025, just before the metal, then trading at $27, ripped north at historical multiples and new highs.

Prior to 2025, we saw similar bullish signals beneath silver’s 200-day line in 2020 (when silver was at $11) and in 2022 (when silver was at $17).

Gold Signals

Equally bullish technical signals are ringing from gold’s recent dip beneath its 200-day moving average.

The last times we saw gold below this line it was trading in the $1500-$1600 range (2022) or the $1800 range (autumn of 2023). Thereafter, gold went 100% north 12 months out.

From Pullback to Historical Set-Up

Taken together, these fundamental as well as technical signals combine within a current as well as historical context which makes the current pullback in the metals a near perfect set-up rather than break-up for gold and silver.

In fact, current conditions for the precious metals in 2026 are even more favorable than the prior patterns of the 1970’s discussed above.

In 1973, for example, U.S. public debt was in the $500B, not $39T, range. Today, interest expense alone on American IOUs is twice the size of total US public debt in 1973.

Think about that for a second. At debt this high and unsustainable, the debasement trade is no longer a meme; it’s a fat pitch.

The Structural Bid Few Understand

In the 1970’s, moreover, central banks around the world were selling gold. As of this writing, and despite recent forced gold sales out of Turkey and Saudi Arabia, central banks (from Poland to Asia) are net-buyers of gold.

In fact, since the USA weaponized the world reserve currency in 2022, central bank gold purchasing has increased by 5X.

These signals from the world’s central banks are screaming signposts of a structural bid in the metals which most retail investors (who were spooked out of the trade at lows after buying at tops) are tragically missing.

Even the commercial banks have understood the patterns for gold after an oil crisis, and their price targets for the metal remain nearly twice current price levels.

Thus, whether drawing from historical patterns or from moving-day-average signals, the question going forward is simple: Do you trust King Dollar or a “pet rock”? Crowns of gold or crowns of paper?

Time will tell, and time is clearly on the side of precious metals.

Tyler Durden Tue, 06/09/2026 - 10:50

US Existing Home Sales Unexpectedly Jumped In May, Inventories Surge

Zero Hedge -

US Existing Home Sales Unexpectedly Jumped In May, Inventories Surge

With the Spring selling season in tatters, existing home sales were expected to rebound in May very modestly (+1.1% MoM) off recent record lows, but instead they outperformed, rising at 3.2% MoM (and April's 0.2% MoM rise was revised higher to a +0.7% MoM rise). That lifted existing home sales up 3.22% YoY - the strongest since September 2025...

Source: Bloomberg

That beat lifted existing home sales SAAR to its highest level of the year (but not exactly signaling a trend)...

Source: Bloomberg

“More Americans are on the move, with home sales rising to the highest level since December,” Lawrence Yun, NAR’s chief economist, said in a statement.

“This is great news for the housing market and the economy.”

Sellers are giving up some ground on price and “meeting buyers where they are,” Realtor.com said.

In May, the median sales price of an existing home climbed 1.3% from a year ago to $429,300, NAR data show.

Meantime, inventory rose slightly from a year ago to 1.55 million, the highest since July and representing 4.5 months of supply at the current sales pace.

Sales rose in the South, Northeast and Midwest from a month earlier, while they were unchanged in the West. In the Midwest, transactions reached 1 million, the highest pace since April 2023.

First-time buyers accounted for 35% of sales, compared with 33% a month earlier and 30% a year ago.

Finally, it appears home sales are catching up to the prior decline in mortgage rates (but we note that rates have been rising since)...

Source: Bloomberg

“Improving affordability is helping drive this momentum,” Yun said.

Tyler Durden Tue, 06/09/2026 - 10:11

US Existing Home Sales Unexpectedly Jumped In May, Inventories Surge

Zero Hedge -

US Existing Home Sales Unexpectedly Jumped In May, Inventories Surge

With the Spring selling season in tatters, existing home sales were expected to rebound in May very modestly (+1.1% MoM) off recent record lows, but instead they outperformed, rising at 3.2% MoM (and April's 0.2% MoM rise was revised higher to a +0.7% MoM rise). That lifted existing home sales up 3.22% YoY - the strongest since September 2025...

Source: Bloomberg

That beat lifted existing home sales SAAR to its highest level of the year (but not exactly signaling a trend)...

Source: Bloomberg

“More Americans are on the move, with home sales rising to the highest level since December,” Lawrence Yun, NAR’s chief economist, said in a statement.

“This is great news for the housing market and the economy.”

Sellers are giving up some ground on price and “meeting buyers where they are,” Realtor.com said.

In May, the median sales price of an existing home climbed 1.3% from a year ago to $429,300, NAR data show.

Meantime, inventory rose slightly from a year ago to 1.55 million, the highest since July and representing 4.5 months of supply at the current sales pace.

Sales rose in the South, Northeast and Midwest from a month earlier, while they were unchanged in the West. In the Midwest, transactions reached 1 million, the highest pace since April 2023.

First-time buyers accounted for 35% of sales, compared with 33% a month earlier and 30% a year ago.

Finally, it appears home sales are catching up to the prior decline in mortgage rates (but we note that rates have been rising since)...

Source: Bloomberg

“Improving affordability is helping drive this momentum,” Yun said.

Tyler Durden Tue, 06/09/2026 - 10:11

Trump-Netanyahu "Differences": A Good Cop-Bad Cop Routine

Zero Hedge -

Trump-Netanyahu "Differences": A Good Cop-Bad Cop Routine

By Michael Every of Rabobank

As You Were... But As Who Was? 

Yesterday nearly saw a full restart of the Israel-Iran war, apparently pulled back from the brink by intervention from President Trump. After yet another Middle East rollercoaster for markets it’s now ‘as you were’, with oil --so everything else-- little changed. The larger issue behind that pricing, however, is the key question - ‘As who was?’

Iran set up its proxy network, centered on terror group Hezbollah in Lebanon, to protect itself: if Israel attacked it, Hezbollah would attack Israel. However, Tehran now has to attack Israel, with counterattacks on it in response, to defend its ‘shield’. That’s a huge Iranian strategic setback. As such, Tehran is trying to tie Israel vs. Hezbollah to itself vs. the US to divide the US from Israel, which now have different needs: a deal vs. finishing the job militarily or via regime change. That dynamic has huge implications for when and how this war ends, so for energy, so for markets.

While Israel and Iran say they will stop their attacks, Israeli PM Netanyahu last night gave a public address where he stated: “Iran and Hezbollah are weaker than ever, and we are stronger than ever – but our battle against them is still not finished. In the last 24 hours, Iran and Hezbollah tried to impose a new equation upon us… an equation I find intolerable and unacceptable. They thought they would fire at Israel from Lebanese territory and from Iran – and we would not act. That did not happen, and it will not happen. Not on my watch!... At the moment, we are holding our fire, because after we struck the terror regime in Tehran, it ceased attacking us. In the event that Iran makes the mistake of resuming attacks on us – we will respond with overwhelming force.”

Moreover, Israel will hit Hezbollah in Beirut if it fires at Israel from south Lebanon, which Iran says is a red line that will trigger more attacks on the Jewish state, restarting this war.

If Iran tells Hezbollah to ceasefire, markets can relax;

If not, and Israel hits Hezbollah, Iran has to decide if it wants to fire at Israel - and restart the war;

If Trump forces Israel to hold back vs. Hezbollah, Iran will have linked the two fronts and divided the US and Israel – which likely sees more war.

After all, Israel’s 1948 War of Independence, its 1967 Six-Day War, its 1981 attack on Iraq’s nuclear programme, and its 2007 strike against Syria’s nuclear programme all took place against US wishes. To expect otherwise this time is unwise. Indeed, Trump-Netanyahu differences could be a good cop-bad cop routine to allow the US to push for a deal while Israel does the fighting.

In the background, Yemen’s Houthis claim they will restart a maritime blockade of Israel in the Red Sea, which was applied far more broadly the last time they put it in place. Obviously, that can threaten cargo and energy flows at this juncture, as a US Navy F-18 struck and disabled an oil tanker in the Gulf of Oman and the EU hit Iran’s Navy… with sanctions.

In short, this crisis is far from over, even as Trump says “total victory” will be declared in the next two weeks as Iranian negotiators are “willing to give us everything,” and VP Vance added that the deal being discussed was “a home run” for the US. Yet the inside baseball question remains which negotiators the US is talking to given local reports that contact has been lost with Supreme Leader Khamenei Jr. and another that IRGV leader Vahidi was killed in a recent Israeli strike.

Elsewhere in geopolitics, Berlin says the Franco-German fighter jet project is dead, a major blow to future pan-European defence plans; Switzerland is weighing a Franco-Italian alternative to US air defences given a 5-year wait for the latter; and a French fighter jet shot down a suspected Russian drone in Latvian airspace.

That’s as Germany claimed it’s ready to take the reins from the US in talks with Putin despite Russia rejecting Ukrainian and European peace initiatives, saying instead that the battlefield will decide the war – but as Moscow pauses its CCTV systems after Israel hacked Iran’s to target its Supreme Leader. Back in the UK, a secret camera was found in the ceiling panel of the room in a sensitive government building where the decision was made to approve the new Chinese embassy.

Showing how lines on the map can move as the driver of lines on the screen, the US is considering buying the Chagos Islands to take control of the strategic UK airbase on Diego Garcia; Mauritius, whom the UK is controversially trying to hand the islands to, is today demanding they get them ASAP to avoid that outcome.

China’s Xi Jinping, on a state visit, pledged “unwavering” support for North Korea, making some things crystal clear, as Bloomberg publishes its estimates for the economic damage from a war over Taiwan: $10 trillion, apparently. Which justifies or incentivizes doing what as insurance?

In LatAm, Peru is set for lengthy vote count as its presidential race is still too close to call, and Colombia will see a presidential runoff ahead following the leftist Cepeda’s first round election loss.

In geoeconomics, the US added Alibaba, BYD and other Chinese tech champions to its military company blacklist. That’s as Anthropic's Mythos can reportedly now exploit new software flaws in mere hours and OpenAI gets ready for its IPO, Trump is mirroring Bernie Sanders in arguing the state should get stakes in AI giants - and presumably not just in military and security areas but across the economic spectrum. To say we are moving the political-economy Overton Window is an understatement: at this stage are there any actual windows left? Indeed, could the walls and the roof fall in on conventional analysis using conventional wisdom?

The European press talks of how ‘China is killing Europe’s chemicals industry. Brussels wants to intervene’ and France’s Macron is reportedly to court China to get them to address trade imbalances – offering and threatening what exactly?

Indonesia is also weighing export rule exemptions for commodity traders to try to calm local markets after the recent de facto state control of that key area of the economy.

At the same time, Trump's $100,000 H-1B visa fee was declared an unlawful “tax” by a US judge, as were his tariffs of course, which will now be appealed (was the lower via fee also a tax? If not, why not?).

As you were then… but as who was? And what will we be soon – besides confused?

Tyler Durden Tue, 06/09/2026 - 09:45

Trump-Netanyahu "Differences": A Good Cop-Bad Cop Routine

Zero Hedge -

Trump-Netanyahu "Differences": A Good Cop-Bad Cop Routine

By Michael Every of Rabobank

As You Were... But As Who Was? 

Yesterday nearly saw a full restart of the Israel-Iran war, apparently pulled back from the brink by intervention from President Trump. After yet another Middle East rollercoaster for markets it’s now ‘as you were’, with oil --so everything else-- little changed. The larger issue behind that pricing, however, is the key question - ‘As who was?’

Iran set up its proxy network, centered on terror group Hezbollah in Lebanon, to protect itself: if Israel attacked it, Hezbollah would attack Israel. However, Tehran now has to attack Israel, with counterattacks on it in response, to defend its ‘shield’. That’s a huge Iranian strategic setback. As such, Tehran is trying to tie Israel vs. Hezbollah to itself vs. the US to divide the US from Israel, which now have different needs: a deal vs. finishing the job militarily or via regime change. That dynamic has huge implications for when and how this war ends, so for energy, so for markets.

While Israel and Iran say they will stop their attacks, Israeli PM Netanyahu last night gave a public address where he stated: “Iran and Hezbollah are weaker than ever, and we are stronger than ever – but our battle against them is still not finished. In the last 24 hours, Iran and Hezbollah tried to impose a new equation upon us… an equation I find intolerable and unacceptable. They thought they would fire at Israel from Lebanese territory and from Iran – and we would not act. That did not happen, and it will not happen. Not on my watch!... At the moment, we are holding our fire, because after we struck the terror regime in Tehran, it ceased attacking us. In the event that Iran makes the mistake of resuming attacks on us – we will respond with overwhelming force.”

Moreover, Israel will hit Hezbollah in Beirut if it fires at Israel from south Lebanon, which Iran says is a red line that will trigger more attacks on the Jewish state, restarting this war.

If Iran tells Hezbollah to ceasefire, markets can relax;

If not, and Israel hits Hezbollah, Iran has to decide if it wants to fire at Israel - and restart the war;

If Trump forces Israel to hold back vs. Hezbollah, Iran will have linked the two fronts and divided the US and Israel – which likely sees more war.

After all, Israel’s 1948 War of Independence, its 1967 Six-Day War, its 1981 attack on Iraq’s nuclear programme, and its 2007 strike against Syria’s nuclear programme all took place against US wishes. To expect otherwise this time is unwise. Indeed, Trump-Netanyahu differences could be a good cop-bad cop routine to allow the US to push for a deal while Israel does the fighting.

In the background, Yemen’s Houthis claim they will restart a maritime blockade of Israel in the Red Sea, which was applied far more broadly the last time they put it in place. Obviously, that can threaten cargo and energy flows at this juncture, as a US Navy F-18 struck and disabled an oil tanker in the Gulf of Oman and the EU hit Iran’s Navy… with sanctions.

In short, this crisis is far from over, even as Trump says “total victory” will be declared in the next two weeks as Iranian negotiators are “willing to give us everything,” and VP Vance added that the deal being discussed was “a home run” for the US. Yet the inside baseball question remains which negotiators the US is talking to given local reports that contact has been lost with Supreme Leader Khamenei Jr. and another that IRGV leader Vahidi was killed in a recent Israeli strike.

Elsewhere in geopolitics, Berlin says the Franco-German fighter jet project is dead, a major blow to future pan-European defence plans; Switzerland is weighing a Franco-Italian alternative to US air defences given a 5-year wait for the latter; and a French fighter jet shot down a suspected Russian drone in Latvian airspace.

That’s as Germany claimed it’s ready to take the reins from the US in talks with Putin despite Russia rejecting Ukrainian and European peace initiatives, saying instead that the battlefield will decide the war – but as Moscow pauses its CCTV systems after Israel hacked Iran’s to target its Supreme Leader. Back in the UK, a secret camera was found in the ceiling panel of the room in a sensitive government building where the decision was made to approve the new Chinese embassy.

Showing how lines on the map can move as the driver of lines on the screen, the US is considering buying the Chagos Islands to take control of the strategic UK airbase on Diego Garcia; Mauritius, whom the UK is controversially trying to hand the islands to, is today demanding they get them ASAP to avoid that outcome.

China’s Xi Jinping, on a state visit, pledged “unwavering” support for North Korea, making some things crystal clear, as Bloomberg publishes its estimates for the economic damage from a war over Taiwan: $10 trillion, apparently. Which justifies or incentivizes doing what as insurance?

In LatAm, Peru is set for lengthy vote count as its presidential race is still too close to call, and Colombia will see a presidential runoff ahead following the leftist Cepeda’s first round election loss.

In geoeconomics, the US added Alibaba, BYD and other Chinese tech champions to its military company blacklist. That’s as Anthropic's Mythos can reportedly now exploit new software flaws in mere hours and OpenAI gets ready for its IPO, Trump is mirroring Bernie Sanders in arguing the state should get stakes in AI giants - and presumably not just in military and security areas but across the economic spectrum. To say we are moving the political-economy Overton Window is an understatement: at this stage are there any actual windows left? Indeed, could the walls and the roof fall in on conventional analysis using conventional wisdom?

The European press talks of how ‘China is killing Europe’s chemicals industry. Brussels wants to intervene’ and France’s Macron is reportedly to court China to get them to address trade imbalances – offering and threatening what exactly?

Indonesia is also weighing export rule exemptions for commodity traders to try to calm local markets after the recent de facto state control of that key area of the economy.

At the same time, Trump's $100,000 H-1B visa fee was declared an unlawful “tax” by a US judge, as were his tariffs of course, which will now be appealed (was the lower via fee also a tax? If not, why not?).

As you were then… but as who was? And what will we be soon – besides confused?

Tyler Durden Tue, 06/09/2026 - 09:45

Apollo And Blackstone Raise $35 Billion For Anthropic In One Of The Biggest Ever Private Credit SPV Deals

Zero Hedge -

Apollo And Blackstone Raise $35 Billion For Anthropic In One Of The Biggest Ever Private Credit SPV Deals

Back in January, when we profiled Meta's landmark $27.3 billion SPV deal named "Beignet" for the Hyperion data center located in Louisiana, in which Blue Owl provided the private credit, we said to "expect hundreds of billions of these in 2026."

Fast forward five months when we now read that Apollo and Blackstone have finalized a $35BN private credit deal that will help finance Anthropic’s growth plans, even as traditional "banks are choking" on the amount of AI debt they have to issue. 

The two private credit giants - which in a parallel universe are struggling with soaring redemption requests and gating retail investors in their private credit BDCs as documented here extensively in recent months - led the financing, one of the largest private credit deals completed, which will fund Anthropic’s purchase of Alphabet-developed chips.

The deal, dubbed project “Big Sky”, comes amid concerns that the AI frenzy has overheated the broader market. Shares in chipmakers rebounded on Monday after tumbling last week, led by Broadcom’s fall in market value. It also adds to a deluge of chip-backed loans that sparked debate over how quickly graphics processing units would depreciate as AI technology evolves.

In this type of financing structure, a special-purpose vehicle raises capital through a mix of debt and equity to purchase the chips, which are then leased to a customer, in this case Anthropic. The debt is primarily backed by the resulting lease payments, along with the unknown long-term value of the chips. In this case, the $35 billion debt facility was structured across three tranches. The senior layers — the $6 billion notes dubbed A1 and $24 billion of A2 notes — are backed by Broadcom, allowing the debt to secure lower borrowing costs aligned with Broadcom’s strong credit profile. The notes received private ratings in the mid-investment grade tier.

The transaction wrapped up days after Alphabet completed one of the largest equity offerings in history, as it looks to raise $85bn to fund Google’s AI build-out, and as SpaceX prepares for a flotation that could raise a record $86bn. Anthropic also announced it had confidentially filed for an IPO shortly after its blockbuster $65bn private financing round.

As discussed previously, the AI borrowing spree has reached beyond traditional US capital markets, where AI is expected to raise $400 billion in debt, rising to over $1 trillion through 2028 to meet roughly $1.8 trillion in capex needs over the next two years, according to Morgan Stanley...

... with Amazon raising C$14bn (US$10bn) on Monday in the largest ever Canadian dollar bond sale. 

Similar to Meta's Beignet deal, Anthropic’s deal with Apollo and Blackstone relies on a complex structure that private investment groups routinely use to finance start-ups with backing from blue-chip companies. A special purpose vehicle formed by Apollo’s Atlas SP Partners raised the debt and equity, with lease agreements for the chips ultimately supporting the value of the transaction.

Per the FT, Apollo and Blackstone structured the loan across three tranches, with interest payments on the two senior segments backstopped by Broadcom. The chipmaker is making the so-called tensor processing units, or TPUs, with Google. Its agreement to provide support if Anthropic misses an interest payment helped vastly reduce the costs on the debt.

The two senior portions of the debt were split between banks and investors. Some $6bn of so-called A1 notes were sold to banks with an interest rate 1% over Treasuries. A further $24bn of A2 notes were sold on to investors in asset-backed credit markets, priced with a yield of 5.75 per cent. Buyers of the A2 tranche included institutional investors like Apollo’s Athene insurance arm, which favors high-quality debt to back its long-term liabilities. 

The $4.5bn of junior debt, which is not supported by Broadcom and therefore exposes lenders more acutely to Anthropic, carried an interest rate of 8.5%. Investors were also offered an original issue discount of 98 cents to 99 cents on the dollar depending on cheque sizes. In other words, without the implicit guarantee from an investment grade guarantor - like Broadcom in this case - the cost of capital is roughly double. 

In addition to the debt, Apollo’s Atlas SP Partners’ structured-finance unit provided $800 million in equity, meaning it’s effectively the owner of the SPV.

A key feature of the deal is Broadcom providing a “residual value support” agreement. That means that if Anthropic fails to make the lease payments for a certain period of time, the SPV will sell the chips to pay back the debt investors. If the value of the chips doesn’t make the debt investors whole, then Broadcom will make up the shortfall for 100% of the value owed to the A1 and A2 investors.  

This type of residual value feature has been used in another mega debt deal, though it financed the construction of a data center rather than chips. As noted above, Meta provided a similar protection for the value of its Hyperion facility in Louisiana - a transaction that Morgan Stanley arranged. That allowed the so-called Beignet bonds to trade in line with Meta’s corporate debt.

For those whose head is spinning with the circularity involved, this is how we described the deal last week when it was first floated: 

Broadcom is backstopping a massive $36 billion private credit SPV with Apollo and Blackstone which will help Anthropic buy Google chips... made by Broadcom. Oh, and yes: Google owns 14% of Anthropic...

But wait, there's more... because if that wasn't enough, Morgan Stanley, which advised Broadcom and arranged the transaction, is also lending money to investors participating in the deal!

And just because this is a "chip-backed" off-balance sheet SPV where nobody really knows who holds the debt, the monstrous circularity of all the deal aspects will be ignored until the AI credit bubble cracks. 

As for the punchline: demonstrating the insane frenzy of anything involving AI, investors involved in the deal did not even know what they were investing in! According to the FT, investors pitched on the deal were not given early access to Anthropic’s financials ahead of its IPO.

Not everyone involved in the deal is a total idiot: some investors passed on the deal over the delayed-draw format of the debt, which drives down yields because the money can be withdrawn in multiple tranches over a period of time.

Yet despite the smashing success of the deal, one glaring question remains. Recall, last week SpaceX penned a massive deal with Google (to urgently burnish the IPO candidate's financials just days ahead of its IPO), according to which Google will pay Elon Musk $920 million a month for access to about 110,000 Nvidia GPUs (unlike its hyperscaler peers, SpaceX has plenty of spare compute to rent out). And yet, despite seemingly telegraphing it is dramatically "compute constrained" as the SpaceX deal implies, it still has plenty of chip available that it can sell $35B of their chips to their biggest competitor, Anthropic.

This wasn't the only such deal: just days prior, Anthropic (which will use proceeds from this private credit SPV to purchase Google chips made by Broadcom), agreed to pay $1.5 billion a month for access to 325,000 Nvidia GPU also held by SpaceX. No wonder these sham agreements were structured so they can be terminated by either party after December 2026. 

For those shaking their heads at these glaring examples of circular bubble euphoria, fear not: you will have plenty of opportunities to enjoy more such deals (going back to our point up top): Broadcom chief executive Hock Tan said the company hoped to connect “investor partners with the strongest balance sheets to deliver at scale sufficient compute capacity at the lowest cost”, pointing to the deal with Apollo and Blackstone as the first of many transactions to come.

Tyler Durden Tue, 06/09/2026 - 09:15

Apollo And Blackstone Raise $35 Billion For Anthropic In One Of The Biggest Ever Private Credit SPV Deals

Zero Hedge -

Apollo And Blackstone Raise $35 Billion For Anthropic In One Of The Biggest Ever Private Credit SPV Deals

Back in January, when we profiled Meta's landmark $27.3 billion SPV deal named "Beignet" for the Hyperion data center located in Louisiana, in which Blue Owl provided the private credit, we said to "expect hundreds of billions of these in 2026."

Fast forward five months when we now read that Apollo and Blackstone have finalized a $35BN private credit deal that will help finance Anthropic’s growth plans, even as traditional "banks are choking" on the amount of AI debt they have to issue. 

The two private credit giants - which in a parallel universe are struggling with soaring redemption requests and gating retail investors in their private credit BDCs as documented here extensively in recent months - led the financing, one of the largest private credit deals completed, which will fund Anthropic’s purchase of Alphabet-developed chips.

The deal, dubbed project “Big Sky”, comes amid concerns that the AI frenzy has overheated the broader market. Shares in chipmakers rebounded on Monday after tumbling last week, led by Broadcom’s fall in market value. It also adds to a deluge of chip-backed loans that sparked debate over how quickly graphics processing units would depreciate as AI technology evolves.

In this type of financing structure, a special-purpose vehicle raises capital through a mix of debt and equity to purchase the chips, which are then leased to a customer, in this case Anthropic. The debt is primarily backed by the resulting lease payments, along with the unknown long-term value of the chips. In this case, the $35 billion debt facility was structured across three tranches. The senior layers — the $6 billion notes dubbed A1 and $24 billion of A2 notes — are backed by Broadcom, allowing the debt to secure lower borrowing costs aligned with Broadcom’s strong credit profile. The notes received private ratings in the mid-investment grade tier.

The transaction wrapped up days after Alphabet completed one of the largest equity offerings in history, as it looks to raise $85bn to fund Google’s AI build-out, and as SpaceX prepares for a flotation that could raise a record $86bn. Anthropic also announced it had confidentially filed for an IPO shortly after its blockbuster $65bn private financing round.

As discussed previously, the AI borrowing spree has reached beyond traditional US capital markets, where AI is expected to raise $400 billion in debt, rising to over $1 trillion through 2028 to meet roughly $1.8 trillion in capex needs over the next two years, according to Morgan Stanley...

... with Amazon raising C$14bn (US$10bn) on Monday in the largest ever Canadian dollar bond sale. 

Similar to Meta's Beignet deal, Anthropic’s deal with Apollo and Blackstone relies on a complex structure that private investment groups routinely use to finance start-ups with backing from blue-chip companies. A special purpose vehicle formed by Apollo’s Atlas SP Partners raised the debt and equity, with lease agreements for the chips ultimately supporting the value of the transaction.

Per the FT, Apollo and Blackstone structured the loan across three tranches, with interest payments on the two senior segments backstopped by Broadcom. The chipmaker is making the so-called tensor processing units, or TPUs, with Google. Its agreement to provide support if Anthropic misses an interest payment helped vastly reduce the costs on the debt.

The two senior portions of the debt were split between banks and investors. Some $6bn of so-called A1 notes were sold to banks with an interest rate 1% over Treasuries. A further $24bn of A2 notes were sold on to investors in asset-backed credit markets, priced with a yield of 5.75 per cent. Buyers of the A2 tranche included institutional investors like Apollo’s Athene insurance arm, which favors high-quality debt to back its long-term liabilities. 

The $4.5bn of junior debt, which is not supported by Broadcom and therefore exposes lenders more acutely to Anthropic, carried an interest rate of 8.5%. Investors were also offered an original issue discount of 98 cents to 99 cents on the dollar depending on cheque sizes. In other words, without the implicit guarantee from an investment grade guarantor - like Broadcom in this case - the cost of capital is roughly double. 

In addition to the debt, Apollo’s Atlas SP Partners’ structured-finance unit provided $800 million in equity, meaning it’s effectively the owner of the SPV.

A key feature of the deal is Broadcom providing a “residual value support” agreement. That means that if Anthropic fails to make the lease payments for a certain period of time, the SPV will sell the chips to pay back the debt investors. If the value of the chips doesn’t make the debt investors whole, then Broadcom will make up the shortfall for 100% of the value owed to the A1 and A2 investors.  

This type of residual value feature has been used in another mega debt deal, though it financed the construction of a data center rather than chips. As noted above, Meta provided a similar protection for the value of its Hyperion facility in Louisiana - a transaction that Morgan Stanley arranged. That allowed the so-called Beignet bonds to trade in line with Meta’s corporate debt.

For those whose head is spinning with the circularity involved, this is how we described the deal last week when it was first floated: 

Broadcom is backstopping a massive $36 billion private credit SPV with Apollo and Blackstone which will help Anthropic buy Google chips... made by Broadcom. Oh, and yes: Google owns 14% of Anthropic...

But wait, there's more... because if that wasn't enough, Morgan Stanley, which advised Broadcom and arranged the transaction, is also lending money to investors participating in the deal!

And just because this is a "chip-backed" off-balance sheet SPV where nobody really knows who holds the debt, the monstrous circularity of all the deal aspects will be ignored until the AI credit bubble cracks. 

As for the punchline: demonstrating the insane frenzy of anything involving AI, investors involved in the deal did not even know what they were investing in! According to the FT, investors pitched on the deal were not given early access to Anthropic’s financials ahead of its IPO.

Not everyone involved in the deal is a total idiot: some investors passed on the deal over the delayed-draw format of the debt, which drives down yields because the money can be withdrawn in multiple tranches over a period of time.

Yet despite the smashing success of the deal, one glaring question remains. Recall, last week SpaceX penned a massive deal with Google (to urgently burnish the IPO candidate's financials just days ahead of its IPO), according to which Google will pay Elon Musk $920 million a month for access to about 110,000 Nvidia GPUs (unlike its hyperscaler peers, SpaceX has plenty of spare compute to rent out). And yet, despite seemingly telegraphing it is dramatically "compute constrained" as the SpaceX deal implies, it still has plenty of chip available that it can sell $35B of their chips to their biggest competitor, Anthropic.

This wasn't the only such deal: just days prior, Anthropic (which will use proceeds from this private credit SPV to purchase Google chips made by Broadcom), agreed to pay $1.5 billion a month for access to 325,000 Nvidia GPU also held by SpaceX. No wonder these sham agreements were structured so they can be terminated by either party after December 2026. 

For those shaking their heads at these glaring examples of circular bubble euphoria, fear not: you will have plenty of opportunities to enjoy more such deals (going back to our point up top): Broadcom chief executive Hock Tan said the company hoped to connect “investor partners with the strongest balance sheets to deliver at scale sufficient compute capacity at the lowest cost”, pointing to the deal with Apollo and Blackstone as the first of many transactions to come.

Tyler Durden Tue, 06/09/2026 - 09:15

Futures Rise As Tech Rebound Extends While Oil Drops

Zero Hedge -

Futures Rise As Tech Rebound Extends While Oil Drops

US equity futures are higher as Monday’s US stock gains extend into today’s trading with both tech and small caps outperforming as the AI theme resumes its global surge and US/Iran deal optimism is back (on the back of the now daily optimistic comments from Trump) broadening the rally.  As of 8:00am ET, tech enthusiasm is on display with Nasdaq 100 futures up 0.8% as chipmakers including Marvell Technology Inc. and Micron Technology Inc. posted strong premarket gains, while S&P500 futures gain 0.4%. In premarket trading, Mag7 names are mostly higher; cyclicals ex-energy are leading defensives ex-HC. A similar theme played out in APAC, with the tech-laden Kospi soaring 8.2%. Europe's Stoxx 600 is rising alongside weaker energy prices with gains driven by financials and consumer names. Oil dipped after Trump said a framework of deal "within the next 2 days," though it is unclear what has changed from previous claims over the last 2 months. Commodities are reacting to headline risk with Brent down 2.1% as Israel and Iran halt attacks and Chinese oil imports declined, and WTI below $90/bbl. The downside in energy prices has provided a mild support for global fixed income markets, with US yields 1-2bps lower across the curve ahead of the US 3-year note auction. The Bloomberg Dollar Spot index is down 0.2%. Downside in USD/JPY from a report that the BOJ could hike in June and October proved fleeting. Precious metals are steady. Bitcoin sheds 1.3%. The macro data focus will be on weekly ADP, the NFIB Small Biz Survey where the Hiring sub-index may give add’l evidence for the labor market acceleration. Keep an eye on the 3Y bond auction today

In premarket trading, Mag 7 stocks are mostly higher (Nvidia +0.4%, Amazon +0.6%, Meta +1.1%, Alphabet +0.6%, Tesla +0.6%, Apple -0.4%, Microsoft -0.3%). 

  • Chipmakers, opticals and storage firms rise, on track to extend gains, as the group rebounds in the wake of Friday’s sharp selloff.
  • Lithium stocks rise as Citi remains bullish on the metal, seeing a recovery in prices after the recent selloff.
  • Applied Digital (APLD) is up 11% after the neocloud company said it signed a 15-year take-or-pay lease with a US-based artificial intelligence hyperscaler, for 210 megawatts of critical IT load at its Delta Forge 2 campus.
  • CECO Environmental Corp. (CECO) gains 13% as the manufacturer of water treatment equipment updated its full year outlook after closing Thermon Group Holdings acquisition.
  • GDS Holdings ADRS (GDS) rise along with other Chinese cloud providers as people familiar with the matter said that China is preparing to spend around $295 billion over the next five years to build data centers across the country.
  • Mission Produce (AVO) falls 2% after the avocado supplier reported adjusted earnings per share for the second quarter that missed the average analyst estimate.
  • Nuvalent (NUVL) is up 39% after GSK agreed to acquire the company for $10.6 billion. The transaction will accelerate GSK’s entry into the lung cancer space and could help offset the looming patent expiry of its HIV drug dolutegravir, Barclays analyst James Gordon wrote in a note.
  • Perrigo (PRGO) slips 1% after the company’s CEO Patrick Lockwood-Taylor resigned from both roles and from the board, following a determination that certain personal conduct was inconsistent with the company’s code of conduct and core values.
  • SailPoint (SAIL) falls 13% after the software company’s quarterly results and outlook isn’t enough to extend recent strength in the stock, which is up nearly 70% off an April low as of last close.
  • Vail Resorts (MTN) is down 4% after the ski resort operator cut its net income guidance for the full year, attributing the reduction to “historically challenging” weather conditions in the western US.

In other corporate news, executives overseeing Oatly’s Chinese operations are said to be considering buying out the business. Apple’s iOS 27 and related software updates offer signs the of the company’s upcoming foldable iPhone. GSK agreed to buy clinical-stage biopharmaceutical company Nuvalent in a deal valued at $10.6 billion to expand in oncology treatments.

After a brief pause in the rally that propelled equities to record highs, traders are returning on expectations that corporate profits will give stocks further room to run. OpenAI’s confidential filing for an initial public offering and the oversubscription of SpaceX’s share sale served as reminders of the vast demand for AI - before attention turns to Wednesday’s CPI print.  Overnight sentiment was also boosted from lower energy costs, with Brent sliding 1.5% to below $93 a barrel. Israel and Iran agreed to end their tit-for-tat attacks, while President Donald Trump renewed his claims that a US peace deal with Tehran was nearly done. 

From SpaceX’s IPO being oversubscribed ahead of books closing late Wednesday, to OpenAI filing confidentially for an IPO and said to be planning a tender sale of its shares to provide liquidity to employees, “there’s a real race for capital that’s going on,” notes CPR Asset Management’s Julien Daire, perhaps to get ahead of the moment of realization that much of this SPV chip-backed rollout is funded by American retirees putting their money in "safe" annuities.

Meanwhile in China, the country plans to spend around $295 billion to fund a nationwide AI buildout of data centers, signaling its ambition to propel the domestic AI sector and rely on local suppliers for at least 80% of technology such as AI chips. 

And speaking of China, the AI supercycle showed up in macro data overnight as well, with Beijing's export sales of semiconductors soaring 111% year-on-year in May, the fastest expansion since 2013. Elsewhere, the massive PJM power grid region is expected to see a 26-fold increase in energy storage over the next decade on the back of data-center driven load growth and lagging supply strain reliability and affordability. 

There are red flags: bond-yield levels don’t look encouraging for stocks, but it will likely take greater rate volatility to trigger another leg lower, according to Bloomberg Senior Strategist Michael Msika. Risks are mounting into a tricky June, but portfolio rotation seems to be the preferred approach, rather than cutting exposure altogether. The bond market is running ahead of the Fed policy rate, with a clear message for Kevin Warsh that rates need to be higher, and prompted Citi to lower its short-term price target for gold.  

While AI “has driven a strong rally so far, it also carries a high risk of pullbacks, which are bound to occur given the dynamic nature of the sector’s development,” said Guillermo Hernandez Sampere, head of trading at MPPM.

Warnings that a push higher in stocks could prove choppy still abound. Citigroup Inc. strategists said traders are aggressively building short-selling positions in US equities, while bullish wagers on the tech sector remained stretched. Friday’s near 5% selloff in the Nasdaq 100 has only partially reset exposure among investors, the Citi team led by David Chew noted. 

The next few weeks hold major risk events, with inflation data due Wednesday and the first Federal Reserve interest-rate decision under Chairman Kevin Warsh on June 17. 

“If inflationary risks continue to rise, a more aggressive repricing of the Fed could easily challenge current valuations and derail equity markets,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin.

In politics, the race for California governor is on track for a two-person runoff in November between veteran Democratic politician Xavier Becerra and Republican Steve Hilton, a British-born television personality endorsed by President Trump. The Pentagon has accused some of China’s biggest companies of supporting the Chinese military, including Alibaba, Baidu and BYD.

In Europe, the Stoxx 600 is rising alongside weaker energy prices with gains driven by financials and consumer names.  Health care stocks were dragged lower by GSK, which shed as much as 3.9% after announcing it would acquire US firm Nuvalent for $10.6 billion. The energy subindex was the biggest laggard as Brent crude dropped below $93 a barrel. Here are the biggest movers Tuesday:

  • Demant advances as much as 5%, to the highest since August 2025, after a BofA double-upgrade to buy removes the only negative analyst rating on the hearing aids manufacturer
  • Givaudan rises as much as 5.9%, the most in almost two months and taking the stock to the highest since late February, as Deutsche Bank upgrades the Swiss fragrance and flavor maker to buy and JPMorgan adds a positive catalyst watch
  • WPP leads European advertising firms higher after Berenberg said the sector is poised for a rerating because investors have overestimated the threat posed by artificial intelligence. Analysts initiated coverage of WPP, Publicis Groupe and Havas with buy ratings
  • Seraphim Space Investment Trust shares rise as much as 26%, their biggest jump in almost three years, after the fund said the fair value of Iceye, its largest holding, had doubled after a funding round
  • Breedon Group shares gain as much as 6.6%, the largest intra-day rise in two months, after the building materials supplier announced the $120 million acquisition of a limestone quarry near Missouri
  • Fever-Tree shares rise as much 8.2% to the highest in a month after the company said it was on track to meet expectations and extended its buyback program
  • El.En. shares climb as much as 6.3% to the highest since November 2021, after Stifel initiated the laser equipment firm with a buy rating, predicting profits to more than double over the next five years
  • GSK shares slip as much as 3.9% as Barclays analysts noted the British drugmaker will gain access to two experimental medicines in late-stage trials through its planned purchase of Nuvalent, but that upside is capped
  • K+S shares fall as much as 5.6% to their lowest since January as the German agricultural chemicals firm launches an offering of convertible bonds worth around €300 million to finance the previously-announced purchase of Qemetica’s salt business
  • Trigano shares drop as much as 7.5%, the most in over nine months, after analysts at Oddo BHF cut their price target on the maker of recreational vehicles and removed it from their list of top picks within the European mid-cap space
  • Rusta falls as much as 7.7% after the Swedish discount retailer reported its latest earnings. DNB Carnegie says the print shows a weaker-than-expected end to 2025/2026, with added headwinds from “very tough” comparables

Asian stocks rose, as bargain hunters dipped back in to buy technology stocks after a sharp selloff. The MSCI Asia Pacific Index climbed as much as 2.8%, on track to snap a three-day losing streak. The information technology sector led gains among sub-indexes, with SK Hynix and Samsung Electronics contributing the most to the advance. South Korea and Indonesia led the region’s rebound, just a day after ranking among the worst performers. The rally follows a steep pullback triggered by concerns over overheating in artificial intelligence stocks. While broader concerns about the sector’s momentum remain, the recent drop has made valuations more appealing and steady earnings are helping to support sentiment. Easing tensions in the Middle East added to the positive tone, after Iran and Israel agreed to scale back strikes following a flare-up that had threatened to derail peace efforts and drew calls for de-escalation from President Donald Trump.

In FX, the dollar headed for its biggest two-day retreat in a month. Indonesia’s central bank raised its benchmark rate ahead of its next scheduled meeting to reverse a market selloff and support the rupiah. 

In rates, treasuries rose modestly as traders dialed back bets on US interest-rate hikes, led by short-dated notes as oil continued its decline after Israel and Iran agreed to stop attacks, following a flare-up in violence. US yields are richer by up to 2.5bp across front end of the curve with long end richer by around 1bp, steepening 2s10s and 5s30s spreads by 1bp and 1.5bp vs. Monday close. US 10-year yields trade around 4.545%, down 1.5bp on the day with bunds lagging by 1.5bp in the sector, gilts slightly outperforming. Bull steepening move comes ahead of this week’s first Treasury auction of $58 billion 3-year notes at 1pm New York. Treasury auction cycle resumes at 1pm New York with $58 billion 3-year notes, before $39 billion 10-year and $22 billion 30-year reopenings Wednesday and Thursday. The WI 3-year trading around 4.205% is 24bp cheaper than the May stop-out, which tailed the WI by 0.6bp.

In commodities, Brent has continued to slip, down 2.1% as Israel and Iran halt attacks and Chinese oil imports declined. Bitcoin sheds 1.3%. Precious metals are steady. Gold held steady near $4,340 an ounce. The appeal of the precious metal has steadily faded from a peak above $5,400 in January after the war in the Middle East upended expectations for US monetary policy, shifting bets from rate cuts to possible hikes.

Today's US economic data calendar includes ADP weekly employment change (8:15am), April trade balance (8:30am), May existing home sales, April wholesale inventories (10am)

Market Snapshot

Top Overnight News

  • President Trump asked Prime Minister Benjamin Netanyahu of Israel to pull back from escalating his country’s strikes against Iran during a call on Monday morning, telling the Israeli leader that the United States and Iran were within days of a breakthrough clearing the way for talks on a long-term nuclear deal. NYT
  • Trump Says Peace Talks on Track After Israel-Iran Clash Ends: BBG
  • USTR Greer said to be heading to Silicon Valley to promote onshoring this week: Semafor 
  • China’s exports surged last month on demand for AI-related goods as the world’s second-largest economy shook off the impact of energy shortages from the Middle East. Exports expanded 19.4 per cent in May on a year earlier in dollar terms, exceeding expectations. FT
  • A sharp fall in China’s oil imports is keeping global prices in check despite a supply crunch lasting more than 100 days due to disruptions in the Strait of Hormuz. China’s int’l oil purchases fell to the lowest level in more than 8 years in May. Nikkei
  • The BoJ will consider maintaining the current pace of bond purchases beyond next fiscal year, sources said, pausing a taper process that would ‌mark a turning point in its quantitative tightening (QT) plan. But the decision could be a close call as the nine-member board is seen as split between those who want to focus on soothing investor nerves and others who see the need to steadily slow purchases to reduce the BOJ's large balance sheet. RTRS
  • Japanese policymakers said on Tuesday they stood ready to act decisively against excessive yen falls while remaining vigilant to rising bond yields that could hurt the economy, highlighting ‌the dilemma they faced in countering unfavorable market moves. RTRS
  • German industrial production grew for the first time since war broke out in Iran, fueling hope that Europe’s largest economy is weathering the jump in energy costs. Output increased 0.4% in April from the previous month, driven mainly by construction. BBG
  • China is preparing to spend around 2 trillion yuan ($295 billion) over the next five years on building data centers across the country, fueling Beijing’s ambition to propel the domestic AI sector and surpass the US in a potentially game-changing technology.  BBG
  • The $31 trillion Treasury market has an unequivocal message for Kevin Warsh’s Fed: Interest rates aren’t high enough. Yields on two-year notes hovered near their highest level in more than a year. BBG
  • An index of US small business optimism fell last month to the lowest level since October 2024, erasing almost all of the gains seen since Trump was elected for a second term. BBG

A more detailed look at global markets courtesy of newsquawk

APAC stocks traded somewhat mixed, albeit with a mostly positive bias as indices rebounded from yesterday's losses, with sentiment helped by Israel and Iran halting their strikes, while participants also reflected on the better-than-expected Chinese trade data. ASX 200 declined as the prior day's losses caught up with the index on return from a long weekend. Nikkei 225 fluctuated and briefly wiped out all its opening gains before rebounding to print fresh intraday highs. Hang Seng and Shanghai Comp were mixed with the mainland kept afloat following the stronger-than-expected Chinese trade data, although gains were capped after the US Pentagon posted a list of Chinese military companies, which included Alibaba, Baidu, BYD, Tencent, NIO and Cosco among others.

Top Asian News

  • Chinese Balance of Trade (USD)(May) 105.4B vs. Exp. 91.5B (Prev. 84.8B).
  • Chinese Exports YY (May) 19.4% vs. Exp. 14.3% (Prev. 14.1%).
  • Chinese Imports YY (May) 27.4% vs. Exp. 25% (Prev. 25.3%).
  • Taiwan Balance of Trade (May) 17.91B vs. Exp. 15.2B (Prev. 14.35B).
  • Taiwan Exports YoY (May) Y/Y 51.7% vs. Exp. 37.9% (Prev. 39%).
  • Taiwan Imports YoY (May) Y/Y 54.90% vs. Exp. 37.4% (Prev. 29.2%).
  • Australian Westpac Consumer Confidence Index (Jun) 80.6 (Prev. 83).
  • Australian Westpac Consumer Confidence Change MM (Jun) -2.9% (Prev. 3.5%).
  • Australian NAB Business Confidence (May) -14 (Prev. -24).
  • Australian NAB Business Conditions (May) 3 (Prev. 3).

European bourses (STOXX 600 +0.5%) start Tuesday's trade on a positive footing with geopolitical updates quiet. FTSE MIB (+1.6%) is the clear outperformer helped by gains in Banks, while FTSE 100 (-0.3%) is the only index in the red as miners and healthcare giants fall. European sectors hold a positive bias. Insurance (+1.3%) tops the pile, with Retail (+1.0%) and Banks (+1.2%) rounding out the top 3. To the downside are Basic Resources (-0.3%), Health Care (-0.5%) and Energy (-0.4%).

Top European News

  • CBI warned around 200k more Britons are on track to become unemployed, with unemployment forecast to rise to 5.5% this year, while it cut UK GDP growth forecasts to 1.1% in 2026 and 0.9% in 2027 from prior expectations of 1.3% and 1.5%, respectively.
  • No breakthrough in discussions on finalising the Defence Investment Plan on Monday but it could still come this week, POLITICO reported citing sources.

FX

  • G10s are nearly entirely firmer against a modestly softer Buck, which remains towards recent post-NFP highs. Kiwi and sterling outperform, NOK is the laggard with Brent Aug’26 -1.5%.
  • USD a touch lower and well within post-payrolls ranges. The general risk environment has improved since Friday’s strong Payrolls, and Monday’s bid in crude. Overnight saw Kospi rise near 8%, optimism which has travelled through to European hours with bourses/US futures firm. The next inflection point, aside from geopolitics, will likely be US CPI and PPI on Wednesday and Thursday, respectively. Today sees the release of NFIB small business optimism data, weekly ADP jobs, and Trade metrics. Technicals, to the upside is the 100 mark, where DXY typically loses steam, and downside is 99.80 which provided support on Monday.
  • GBP is one of the best G10 performers. A strong BRC retail sales showed consumer spending had steadied from a weak April figure with food and non-food sales accelerating sharply in May. Pantheon Macro estimates the BRC survey in isolation is consistent with a 0.6% month-to-month rise in official retail sales volumes in May. Cable took a hit on Friday’s Payrolls and continues to trade below levels seen before the data (c. 50pips), carry remains in focus into the slew of Central Bank meetings this, and next week. BoE pricing steady, still only pricing one full hike this year (c. 45bps by year-end), consistent with recent levels.
  • Antipodeans outperforming with Kiwi benefitting to a greater extent after strong Chinese trade data beat expectations across the board thanks to robust tech-related Imports and Exports. Australian NAB business confidence was out overnight, remaining negative though faring better than April’s figure. AUD/NZD dipped from a 1.2136 peak, to mark a session trough of 1.2083, AUD/USD +0.1%, NZD/USD +0.3%.

Fixed Income

  • Global fixed benchmarks are mildly firmer this morning, benefiting from lower energy prices as recent geopolitical tensions ease for the time being. In brief, Israel and Iran have agreed to halt their strikes, though recent reports have suggested that Southern Lebanon remains under fire. Trump has continued to talk up the mood, stating that a total victory will be declared in two weeks. For reference, this marks the 37th time he has suggested that a deal is imminent, CNN reported.
  • USTs (+2 ticks) are slightly firmer and trade within a 108-27+ to 109-03 range. As above, action is facilitated by lower energy prices, but with trade tentative amidst the uncertain environment. Also clouding the picture is the hawkish economic picture, with the recent NFP report pointing towards a solid labour market. US CPI and PPI (Wed/Thu) will play key roles for policymakers heading into next week’s policy decision. As for today, traders will digest US ADP Weekly Change, Exports/Imports, Atlanta Fed GDP, and Wholesale Inventories (Apr).
  • Bunds (+10 ticks) and Gilts (+15 ticks) also trade modestly higher, but with price action rangebound. In Germany, Industrial Production increased from the prior, but still remains at low levels; trade data displayed a mixed picture.
  • Over in the UK, BRC Retail Sales in May topped expectations (3.4% vs exp. 0.6%), indicating that consumers have remained resilient despite the Iran conflict; though, some of that spending may be related to the good weather experienced in the region. As for politics, UK PM candidate Burnham is reportedly poised to delay any Labour leadership bid until after the battle to retain the Greater Manchester mayoralty. Gilts trade in a 87.53 to 87.69 range.
  • Germany sells EUR 1.756bln vs exp. EUR 2.0bln 1.80% 2053, 2.50% 2035 and 2.30% 2033 Green Bund.
  • The Netherlands sells EUR 2.5bln vs exp. 2.5bln 2.50% 2035 DSL: Average yield 3.102% (prev. 2.810%).

Commodities

  • Crude futures are softer, continuing from Monday's afternoon sell-off, as Israel and Iran seemingly hold onto their promises to halt attacks on each other. Despite this, there have been reports of strikes in Lebanon but benchmarks were unreactive. Late in Monday's session, Axios reported that in a call with Israeli PM Netanyahu, US President Trump warned that if the Israeli leader went back to war with Iran, he might be fighting alone. Further on the US-Iran deal, CNN reported, citing a top Iranian official, said a deal being imminently reached is doubtful due to persistence of major roadblocks regarding Iran's nuclear programme and uranium enrichment. However, these reports have failed to damper the risk tone. WTI Jul trades at the lower end of a USD 88.80-91.55/bbl range while Brent Aug hovers around the USD 92.00/bbl mark (USD 92.00-94.42/bbl).
  • Precious metals have steadied since Friday's selloff, with spot gold hovering above the USD 4300/oz handle (USD 4313-4352/oz). Spot silver has regained the 200-SMA, trading at the upper end of its USD 67.46-68.86/oz range.
  • 3M LME Copper gains, along with the broader base metal space, amid the positive risk tone. The red metal trades at the top end of its USD 13.55k-13.77k/t range.
  • Vale said it has not seen any significant destruction in global metals demand from the Iran conflict, with strong demand for critical minerals and tighter raw material flows helping support commodity prices and margins.

Trade/Tariffs

  • US asked China to resume rare earth exports to Japan, with Washington concerned regarding impacts on global high-tech supply chains, according to Nikkei.
  • China Foreign Ministry, on the US adding Chinese firms to Pentagon list, said China always opposes US overgeneralising the concept of national security.

Central Banks

  • BoJ is reportedly prepared to raise rates by 25bps at its June meeting, Nikkei reported. The hike is to prepare for the risk of an upward revision of inflation. Also, to begin discussions around the discontinuation of its quarterly reduction in government bond purchases from April 2027 onwards.

Geopolitics: Iran

  • US President Trump said they are negotiating regarding Iran and a victory will happen very soon, while he stated they will declare total victory in two weeks and oil prices will come down post-Iran. Trump separately commented that he could have an idea on an Iran deal in one or two days, and stated the blockade continues to hold, as well as stated that they are very close to having a good, strong, powerful deal. On the Iran-Israel front, he said that Israel and Iran agreed to leave each other alone for another week.
  • US VP Vance said a potential Iran deal will be a home run for the American people and that the US will need to verify over the long-term that Iran is living up to the agreement, while he also stated that the US's interest lies in a deal with Iran, whether Israel likes it or not. Vance also commented that the primary goal is to prevent Iran from acquiring a nuclear weapon, and stated that a military option is not ruled out if diplomacy with Iran fails.
  • Iran's UN envoy hopes for US-Iran talks conclusion by the end of June, and stated the US and Iran are exchanging views via Pakistan.
  • Iranian official said no agreement can be reached unless its frozen funds are released and sanctions are lifted, while the official added that Washington made changes to the draft MoU and that this was unacceptable, according to Al Jazeera. It was separately reported that a top Iranian official casted doubt on a deal being imminently reached between the US and Iran, while the official said major roadblocks persist on issues like Iran’s nuclear program and uranium enrichment.
  • Iranian Parliament member said that if Israel attacks Lebanon or Iranian soil, then both Israel and US military bases will be legitimate targets.
  • A military source familiar with the Houthis suggest that they are "preparing major military surprises, and that the weapons that will be used in the naval or aerial conflict will be of high quality", Kan's Kais reported.
  • Two new airstrikes have reportedly been undertaken by Israel, targeting Southern Lebanon, Tehran Times reported.
  • Tasnim news agency reported air raids by Israel on two settlements in the city of Tyre in southern Lebanon.IRNA reported continuation of attacks by Israeli regime on southern Lebanon.

Geopolitics: Ukraine

  • Russia's Deputy Foreign Minister said Russia and Belarus are constantly ready to use all available means, including nuclear, to ensure security, according to an interview with Izvestia newspaper.
  • Drone strike reportedly hit Sevastopol in Russian-annexed Crimea.

US Event Calendar

  • 6:00 am: May NFIB Small Business Optimism, est. 96, prior 95.9
  • 8:30 am: Apr Trade Balance, est. -56.1b, prior -60.3b
  • 10:00 am: May Existing Home Sales, est. 4.07m, prior 4.02m
  • 10:00 am: Apr F Wholesale Inventories MoM, est. 0.55%, prior 0.5%

DB's Jim Reid concludes the overnight wrap

Morning from Istanbul. Please don’t tell my wife, but this extraordinary city was the backdrop to the greatest night of my life some five years before I met her. Even now, the memory is vivid of that special night of passion. The heat. The noise. The sweat. A pounding heart and hours of emotional turbulence. By late evening it felt inevitable that it simply wasn’t going to happen, and that I’d leave exhausted, disappointed and slightly broken. Then, just after midnight, against all logic and expectation, came a sudden, frantic and utterly euphoric release. Yes after being 3-0 down at half-time, the "Miracle of Istanbul" arrived and Liverpool fought back and ultimately won the penalty shoot out and, with it, the Champions League back in 2005. A night I will never forget but with the way Liverpool played this past season I'm not sure when that will be next repeated.

Talking of repeats, it seems the cycle of "near a deal, not near a deal, escalation, de escalation, maybe back near a deal" continues. However for now we’re back in the “a deal is still possible” camp and in addition the AI trade has continued to bounce back this morning.  
On that, the KOSPI (+7.35%) is sharply higher after its 9th worst day in 45 plus years of history yesterday (-8.29%). The Nikkei (+2.19%) is also benefiting from a recovery in technology stocks after a decline of over -3.5% yesterday. Chinese stocks are up just over half a percent and other markets are broadly flat. S&P 500 (+0.26%) and NASDAQ 100 (+0.54%) futures are also continuing to recover after a decent session yesterday.

As I'm typing this this morning, President Trump has been speaking to reporters and has said that they are "very close to having a good strong powerful deal" and that they "could have an idea on Iran in one or two days now". Of course we've been here a few times before but the weekend stresses are fading back a little for now.  

Indeed markets swung around yesterday as we faced an array of geopolitical headlines. Initially, it looked like another rough session, with Brent Crude up over +5% in the European morning amidst the strikes between Israel and Iran we discussed this time yesterday. However, the mood soon began to turn more positive, with President Trump calling on both sides to dial things down which to be fair he tried to do late in the weekend. Then late in the European morning session, Trump posted that “Both sides, Israel and Iran, are looking to do an immediate CEASEFIRE! Final negotiations on “Peace” are proceeding, subject to ignorance or stupidity getting in its way. The Blockade will remain in place, and in full force and effect, until a “Final Deal” is reached. Things should move quickly.”

That post from Trump led to an initial decline in oil prices, but the bigger move lower then came after Iran’s Fars said that the military operation against Israel had ended. Admittedly, they warned that further Israeli attacks would lead to “much harsher and more crushing actions than before”, but the end to the attacks was taken positively. Moreover, Israeli PM Netanyahu later said that Israel would hold fire in Iran for now. So it felt as though for the time being at least, the weekend flare-up in hostilities had been stopped, and there was still a path for peace talks to continue.

Given the end to the Israel-Iran strikes, Brent crude ultimately came down from an intraday peak above $98/bbl in the European morning, to $94.25/bbl by the close. Or in other words, it was only up +1.25% from its Friday close. That gap has narrowed further this morning with a -0.80% fall as I type. 

Even with the pull back, concerns around inflation remained high yesterday, which cemented investor conviction that central banks would still be hiking rates in the coming months. Indeed for the Fed, markets raised the chance of a hike as soon as September to 53%, up from 44% on Friday. It's ticked down to 50% this morning.  

Given that backdrop, it was a tough session for sovereign bonds on both sides of the Atlantic. So Treasury yields rose across the curve, with the 2yr yield (+1.6bps) up to 4.16%, its highest since February 2025, while 10yr (+3.3bps to 4.56%) and 30yr yields (+4.0bps to 5.03%) saw larger increases. Notably, there were some big milestones for real yields, with the 10yr real yield (+3.7bps) closing at a one-year high of 2.20%. However, we didn’t have any Fed speakers as we’re now in the blackout period before next week’s meeting, so we don’t have much sense of how they’re thinking about the strong jobs report and whether it warrants a hawkish reaction.

Over in Europe it was a similar story, with yields on 10yr bunds (+2.2bps), OATs (+3.3bps) and BTPs (+3.4bps) all moving higher again. In fact, for 10yr OATs it took them up to a post-2009 high of 3.84%. And then in Germany, the 10yr real yield was at a 5-month high of 0.82%, despite some underwhelming data on factory orders, which showed a monthly decline of -3.8% in April (vs. -2.0% expected).

One relatively positive area yesterday was US equities, with the major indices stabilising after Friday’s slump. The recovery was particularly visible in segments that slumped the most on Friday, with the NASDAQ up +0.86%, whilst the Philly semiconductor index rose +5.61%, recovering about half of its -10.26% fall last Friday. However, the broader equity mood was more cautious, and the S&P 500 (+0.30%) recovered only a small fraction of Friday’s -2.64% decline. Indeed, almost two-thirds of S&P constituents were lower on the day, with tech and energy the only sectors to post clear gains. And the Mag-7 (-0.06%) struggled to follow the recovery in chipmakers, with Apple (-1.89%) leading on the downside amid a lukewarm reaction to the latest generation of its AI platform.

The equity weakness was clearer in Europe. In part, that was because they’d closed before the worst of the US losses on Friday, so there wasn’t the same bounce back potential. But they were also more exposed to the oil price increase, so the STOXX 600 (-0.15%) fell for a second consecutive session. There were similar moves across Europe, including for the DAX (-0.58%) and the CAC 40 (-0.23%), but Italy’s FTSE MIB (+0.63%) was the main outperformer.

Looking at the overnight data, in China both exports and imports grew at an accelerated rate in May, exceeding forecasts as surging demand for AI hardware mitigated the impact of disruptions caused by the war in Iran. Exports surged by +19.4% y/y in May, surpassing expectations of a +15% increase. This significant rise was partly fuelled by a weak performance last year, during the US-China trade war. Imports soared over +27% y/y in May, resulting in a trade surplus of $105.4 billion, the largest since January. Additionally, South Korea’s economy expanded by +1.8% in the January-March quarter compared to the previous three months, an increase from the 1.7% growth estimated in April. On an annual basis, Asia’s fourth-largest economy grew by 3.8%, revised upward from the earlier estimate of 3.6%.

Looking at the day ahead, data releases include German industrial production for April, the US trade balance for April, and US existing home sales for May. Otherwise from central banks, we’ll hear from the ECB’s Moulin

Tyler Durden Tue, 06/09/2026 - 08:38

MiB: Joe McLean, MAI Capital

The Big Picture -

 

 

On this special bonus episode — as Jalen Brunson and the New York Knicks take on Victory Wembanyama and the San Antonio Spurs in the NBA Finals — I speak with Joe McLean, managing partner of sports & entertainment at MAI Capital Management.

Known in NBA circles as being the “money whisperer”, Joe discusses how he pivoted from a playing career to managing money for high-profile celebrities and professional athletes.

A transcript of our conversation is available below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

 

 

 

 

Masters in Business
Barry Ritholtz interviews Joe McLean, Managing Partner, MAI Capital Management  ·  Bloomberg Radio

 

00:00:16  Barry Ritholtz: This week on the podcast — what a fascinating conversation. Joe McLean, managing partner at MAI Capital, began his career as a professional and college basketball player before effectively becoming the money whisperer to pro athletes. He works with pretty much all major athletes across every sport: basketball, football, hockey, baseball, golf, NASCAR, you name it. Obviously, the average person listening to this doesn’t have a hundred-million-dollar contract, but a lot of the ideas, a lot of the rules, a lot of the ways of thinking about money with college athletes and professional athletes are surprisingly applicable to the average investor. The idea of saving a substantial percentage of your income in your first bucket — and once that’s covered, moving to a second bit of saving that you’re going to be able to live off in the future, that’s your growth and investing bucket — before you fund the entrepreneurial types of investment. I thought this conversation was fascinating, and I think you will too. With no further ado, my interview with MAI Capital’s Joe McLean. I’ve been looking forward to this for a while. I’ve got to start with your undergraduate years — four years at Arizona, Division One ball. What was the original career plan?

00:01:59  Joe McLean: A hundred percent to play professional basketball. From the time I was eight years old — Michael Jordan, Larry Bird posters on the wall. I remember when the ball was put in my hand. That’s all I wanted to do. I was super blessed. I grew up in Pittsburgh, Pennsylvania, and then my dad — T. Boone Pickens, in ’84, ’85 — he worked for Gulf Oil, and we either had to move to Houston or the San Francisco Bay Area. We chose the Bay Area, and it became Chevron. And I met a point guard named Jason Kidd, who was my high school point guard. So I was kind of blessed to be put in that position — the whole world would come watch him play. And I got seen by all the right people. My mom was the one who decided which college I was going to go to, because during the recruiting visit, Lute Olson and his wife, Bobbi, showed up, and my mom really connected with her. And she said, “That’s who you’re going to go play for. I want you to be in that environment.”

00:02:54  Barry Ritholtz: So we’ll get to Lute in a minute. Did you have height in high school? When did you shoot up?

00:03:00  Joe McLean: I did. I was always 6’3″, 6’4″, and then grew another two inches in college. But — full disclosure — I peaked around 19. I remember, I’m fast-forwarding here, but I was in an NBA pre-draft camp, and I was six-foot-six, I think it was. Ron Artest was right around the same height as me. And then we were standing in our underwear, and he extended his arms — I was in proportion, and he was not in proportion. I think he had a six-eleven wingspan. I was like, “I don’t know if I’m going to make it.”

00:03:32  Barry Ritholtz: So Lute Olson — Hall of Fame coach, multiple trips to the Final Four. You played all four years under him, averaging 10 points a game. Small forward — what was your position?

00:03:44  Joe McLean: Shooting guard, and I guarded the small forward and big-four positions. I had to learn very quickly how to hold onto a guard’s jersey, because everybody was getting much quicker, much faster than me.

00:03:55  Barry Ritholtz: And so you graduate college and you start playing pro in Europe. Where’d you play? What country?

00:04:02  Joe McLean: So you’d basically try out for an NBA team, then get cut, and then you had two decisions to make. One: go to the minor leagues, which is now the NBA G League. It was the CBA at the time. So you go to Bismarck, North Dakota. I lived there for a year, living in a Bismarck hotel and traveling by bus. And then I decided to go to Europe for the years after that. I played in 11 countries, because there are only two Americans per team, no binding contracts — you lose a couple games, they’ll rip up your contract and send you home. And so it’s a great way to see the world.

00:04:31  Barry Ritholtz: What countries did you play in?

00:04:32  Joe McLean: I played in Spain, Portugal, China, Australia, Cyprus. I moved to Ireland for a year to try to get dual citizenship, because then I wouldn’t be counted as one of those Americans. It’s the equivalent of probably Division Three basketball. I was sponsored by a pub, lived in a town called Ballina, which was 8,000 people, 84 pubs. We were sponsored by Longnecks. I made $300 a week, and I have family for life there. It was a great experience.

00:05:00  Barry Ritholtz: That sounds like a blast. So what was the moment when you realized, “Hey, maybe a pro career isn’t my future”? What was that come-to-Jesus moment?

00:05:11  Joe McLean: They were both on the court and off the court. The closest I ever got to the NBA was when they went on strike. The Sacramento Kings had the seventh pick in the draft. I lived in the Bay Area, and I knew they didn’t have any NBA players to work out their draft picks. So I called the scout and said, “Hey, I’ll bring my own lunch. You don’t have to pay me. I’ll just guard the guys you need to draft.” And I couldn’t believe it, but he said, “If you can be here next Tuesday, show up.” And so Tuesday turned into 22 straight days of workouts — I was literally working their draft picks out. They ended up taking Jason Williams. But I got to listen to everything they were looking for, and the process. And long story short, the 23rd day, nobody else was there but the coaches. And they said, “We’re working you out — today’s your day.” And I made it all the way through pre-draft, all the way through the final cut. I was getting on the bus to go to the very first NBA game, opening day, and I watched Oliver Miller walk past me in the locker room. And I was like, “Well, Oliver Miller’s not on our team.” And then I realized — no, he’s coming to take my spot. And so Rick Adelman looked at me, and his head went down, and I don’t even remember what he said. I just knew that it was over for me. That was as close as I was going to get — walking to the bus. And now I had to figure out what to do next.

00:06:32  Barry Ritholtz: So how do you get from working out with an NBA team to pivoting into finance? What was the factor that tipped you that way?

00:06:44  Joe McLean: I had no idea what to do. All my buddies at the time — this is 1999 — everyone I knew in the Bay Area was working for a dot-com company. Everything was dot-com at the time. So I did all my interviews, and I’d show up in a suit. I’d go to Oracle, I’d go to Pets.com — I think I did 50-plus interviews. And I’d show up in a suit, and everyone else was in flip-flops and t-shirts. And it’s like, this doesn’t feel right. I need structure. And so I started playing basketball for this club called the Olympic Club, and I met lawyers and accountants and financial-services people. And they pointed me in the direction to interview. I interviewed every financial-services company. A lot of the big ones — the Goldmans of the world — said, “Go get experience and come back.” And then I met an old former athlete who had had success at Franklin Templeton, and he said, “I’m going to give you a shot.” I’d had some experience investing in mutual funds with the money I made in Europe, but I didn’t really know what it was. And so I just said yes — because he looked like a coach to me. That was it. That was the only reason I got into financial services.

00:07:47  Barry Ritholtz: And how’d you do at Franklin Templeton? They’re a great shop — a trillion dollars. Jenny Johnson is the CEO.

00:07:54  Joe McLean: Honestly, the best company I’ve ever worked for. The transition for an athlete to do anything else is a very, very difficult thing, because the thing you have as an athlete is structure — you have a schedule, a sense of accountability, goals, a connection with a team. You have all of that. And the day you stop playing, you’re on an island. There is no schedule. There is no level of accountability. So what they gave me was — and I think you wrote about this in your first book — the first thing Jim Escobido told me, he was my manager at Franklin Templeton, he said, “You don’t know nothing about nothing. And the sooner you learn that, the sooner you’ll be curious and start having this level of intellectual curiosity.” I hold onto that every day. It’s one of the great gifts he gave me. And what I got to do at Franklin Templeton was spend six years in a car — I think I drove over 400,000 miles. As a wholesaler, all over the state of Pennsylvania, all over Arizona and Northern California — those were my regions — doing hundreds of rubber-chicken dinners. I wasn’t the advisor; I was working with the financial advisor. And I got to meet hundreds and hundreds of people going through different situations with their money. I learned from all these other people. It was an awesome experience.

00:09:14  Barry Ritholtz: So I want to roll back a moment. You described the structure of being an athlete, and you gave me six bullet points. They sound like they’d be useful for anything. Run through those bullet points again.

00:09:28  Joe McLean: So you have a sense of accountability. There’s a schedule, a structure. Every day you wake up knowing what the common goal is — both as an individual and the role you play. And there’s a level of expectation as to what you need to accomplish, not just in one day, but one month, six months down the line. You have the NCAA tournament, you have all these things going on that have longer-term goals, but you’ve got to have a day-to-day discipline to execute on that. When you transition, it’s all gone.

00:10:04  Barry Ritholtz: Well, that structure, that setup, sounds like it can be applied to any endeavor in life — any organization, especially where you’re working with other people.

00:10:15  Joe McLean: That’s right. And I see a little bit too much where younger people jump to become an entrepreneur. I get the premise — wanting to be an owner of everything you do, quickly. But there’s a level of foundation and humility that can be accomplished by going and seeking out another environment that provides those tools for you.

00:10:38  Barry Ritholtz: So you’re a former college player, a former almost-pro player. What did you learn shooting hoops that the CFP or CFA curriculum simply can’t teach?

00:10:54  Joe McLean: Perseverance. This is something I’m trying to teach my kids. I learned to fail and really enjoy it. For a while I was failing and not reflecting on why I failed. People use that term a lot — “failure’s a good thing.” It’s the best thing to have in my life. It’s not the failing part; it’s what you learn from failing that really is effective. And the idea that you’re willing to bet on yourself at all costs, no matter what. If you think about that as an athlete, the mindset is, “I’m willing to do whatever it takes. I’ll go broke to try to get this done.” I have been broke. “I’ll take as many risks as I possibly can take. I’ll fail, fail, fail.” Those are not necessarily great attributes as an investor, in terms of translating that mindset. So as an advisor, you have to appreciate where an athlete’s coming from, and actually make them aware of those traits — they’re great qualities to have success in your craft, but they may not be great qualities to have when you start thinking about financial advice and investing.

00:11:59  Barry Ritholtz: So let’s talk a little bit about athletes as clients. You somewhat famously won’t take on a new client if they don’t save at least 60% of their basketball earnings. I’m curious — how’d you come up with that rule? How many potential clients turn you down? How many clients do you have to turn down? Tell us a little bit about the genesis of that. It seems to make sense. What’s the average NBA career — seven years, something like that?

00:12:30  Joe McLean: A little bit less than that, probably.

00:12:31  Barry Ritholtz: All right, so it makes sense. Tell us where this rule came from.

00:12:36  Joe McLean: It came from learning from my early mistakes as an advisor. I was willing to take anybody as a client. That’s the one thing, if I looked back, I wouldn’t have done. But you’re building a business, you try to get revenue, and that happens — everybody does it. How I came up with the measurement was a young person saying, “I want to be a millionaire.” He had an NBA contract — it was a three-year deal. And I said, “All right, well, when do you want to be a millionaire? Because here’s the money you’re going to make, here’s the taxes you’re going to pay. You can actually make that choice as to when you want to log into your account and see a million dollars.” And he’s like, “Well, what do you mean?” I said, “Well, if you save 30%, it’s going to be May 1st of 2028 — that’s when you’re going to have a million dollars.” He goes, “Well, I don’t want to wait that long.” I said, “Okay. Well, what if you did 40%? What if you did 60%?” And so what I realized is that using fear is not a great motivator for young people to make decisions. Putting it around a milestone, or a level of respect that they want to attain, does. And so for me, that became the parameter: if you want to become a client, and we want a relationship built on mutual respect, then there are some things I’m going to require. And for me, it was 60 cents of every net dollar that they earn.

00:13:57  Barry Ritholtz: After tax, after agents, after all that stuff.

00:13:59  Joe McLean: Yeah. And then on the second deal, it goes to 70%. Third deal, it’s 80 to 85%. And what we realized is we had clients talking in the locker room about how much they’re saving. Eventually — it’s messy — but about how much they’re saving. And then we would show a scoreboard report: “Hey, so-and-so saved 92% last year; you saved 74.” And he’s like, “I don’t believe it.” And then they’re texting back and forth, and it begins this dialogue. And it was awesome. It sounds strenuous, and it’s easier said than done now, when you see the level of the contracts and how much money is going in and out of someone’s life on a daily basis.

00:14:35  Barry Ritholtz: This is the exact opposite of the 30 for 30, right — the Sports Illustrated story. Eighty percent of NFL players, 70% of NBA players, subsequently file bankruptcy. Crazy numbers. How significant is that in your mind? It sounds like that sort of fearful threat doesn’t really get the job done.

00:15:05  Joe McLean: It doesn’t. If I’m talking to a 19-, 20-year-old, and I say, “You know what, three years from now, if the next number-one draft pick walks into the locker room and they walk directly to your locker — because everybody knows that you handle your business on the court and you handle your business off the court, and you’re somebody who’s respected in both the business community and the community around the team you play in.” Because there are going to be pros in that locker room, and there are going to be knuckleheads. And if you don’t know who the knucklehead is, I promise, it’s probably you. So what we want to do is teach you the traits to become that person — where someone wants to walk directly to your locker and ask questions. That versus showing them statistics of going broke. Most young people are going to be like, “I’m one in a million. That’s not going to be me.” And the reason a lot of them do go broke still is — not many athletes retire with $10 million, $15 million, $20 million. But they have significant burn rates of three, four million dollars. And so do the math. In five years, it’s gone.

00:16:12  Barry Ritholtz: Divorces are expensive. Child support is expensive. There are a lot of friends with business plans — that could be an expensive can’t-miss. By the way, everybody in that locker room probably, statistically, is one in a million. How many people play in the NBA?

00:16:31  Joe McLean: Less than 400.

00:16:32  Barry Ritholtz: All right. Just 350 million people, almost by definition 350 people are one in a million. It’s kind of amazing. The other thing you have your athletes do is try to save two years of cash. That’s a quote of yours: “Athletes need two years of cash as a buffer.” How do you sell that idea to someone who just signed an eight-figure, multi-year deal?

00:16:59  Joe McLean: Well, you get a chance to show — especially in the early days — the rules evolve over time, once someone has shown their level of professionalism with their money. So early days, there’s that three-bucket strategy I’ve always put in place: that safety-and-security bucket you’re referencing. But that’s the first time someone’s learning what an NBA or NFL or MLB contract looks like. Like, “Here’s the deal I just signed — but what are all these red numbers that go through it? Who’s FICA?” and all these terms. And they see what a $10 million contract really is. It’s much less than —

00:17:35  Barry Ritholtz: Ten million.

00:17:36  Joe McLean: It’s much, much, much less. And then in the NBA there’s another tax — it’s like a jock tax — that they may or may not get back, based on basketball-related income, which is another 10% attached to these things.

00:17:45  Barry Ritholtz: What is the 10% jock tax?

00:17:47  Joe McLean: So there’s a tax — everybody in the NBA gets it; it’s up to 10% — and it’s related to the agreement the players have with the owners, that they have to get up to 49% of a number, of a revenue. And if the owners don’t get that number, then they get to dip into the cookie jar and take that basketball-related income and put it in their pocket. Most of the time, the players get 65% of that back. But in our budget, we budget as if you’re never going to get it back. So it’s a nice cherry on top at the end of the year. But when you think about paying taxes in every single state, and sometimes city, that they play in — whether it’s the New York Knicks or the Golden State Warriors, you’re paying a much higher level of tax. So going through that whole experience for the very first time is —

00:18:34  Barry Ritholtz: Well, the Toronto Raptors — even higher.

00:18:36  Joe McLean: Exactly. It’s startling. So it’s helping someone pre-experience what it’s going to look like and feel like to get paid for the next three years. Because we’ve seen the movie over and over. I’m just trying to show you the movie. Your story is going to be different from everybody else’s, but there’s going to be common ground. It’s just for you to pre-experience and understand it, and then to put your own goals and milestones on top of that.

00:19:00  Barry Ritholtz: Explain the three buckets. What are the three buckets you discuss?

00:19:03  Joe McLean: So there’s the safety-and-security bucket, and that typically is your cash to support at least 24 months. Because in the NFL, you may get paid just during the season; Major League Baseball, maybe six months; the NBA could be over a 12-month period. Everyone’s cash flow is different. So I want two years of seasonality to support your lifestyle inside the safety-and-security bucket. If you buy a home, it has to be necessary — a home where you want to live, not necessarily where you play. Quite often someone gets traded multiple times, they’ve bought homes in multiple cities, and now you’re trying to sell a house in Milwaukee when you’re playing in Dallas but you really live in Florida. So just put the house you want to live in long-term in the safety-and-security bucket. And typically we’ll buy that with no debt, because I don’t know when the next contract’s going to come once you’ve filled that bucket. The second bucket is the growth bucket. This is where you start to understand how money works for you. In theory, all I want young people to understand is: if you get 24 paychecks from the NBA over a 12-month period, our goal by the end of your contract is to find 24 other ways for you to get compensated. It could be in bonds, it could be dividends, it could be real estate over time. However, inside the growth bucket, for the first contract of their life, 85% of it has to be liquid. It has to be liquid. Because quite often, when I was researching young athletes, they were far too illiquid. They were investing in private deals. They didn’t know the value of it. It wasn’t supporting their lifestyle. And then all of a sudden they didn’t have the safety-and-security bucket, and they had to sell everything — and most of it wasn’t worth anything. So it’s no genius asset-allocation strategy from Yale that I came up with. That’s just life. And having someone prove to us over time that they know how to save and they’re responsible with money — so they can reserve the right for the third bucket, which is the dream-and-entrepreneurial bucket.

00:21:01  Barry Ritholtz: So what goes into that?

00:21:02  Joe McLean: That could be setting up a business. I throw venture capital and private equity over there — early-stage opportunities. It could be the second car — I don’t care what kind of car you get. I don’t care what kind of watch you buy — you just get one. If you want another great car, sell the other one and get the next one. But that extra bucket — it could be 5 to 10% of your life that sits over there. Now, when you put a safety-and-security bucket, a growth bucket, and a dream bucket in front of a young person, which one do you think they want to fill first?

00:21:41  Barry Ritholtz: Well, the dream bucket, of course.

00:21:42  Joe McLean: We all do, right?

00:21:43  Barry Ritholtz: That’s the fun one.

00:21:45  Joe McLean: So the discipline is, you’ve got to fill the first two before you reserve the right to be an entrepreneur or to fulfill that dream. Because part of what we talk about a lot is: live the dream that you’re playing right now. Don’t try to go out and establish all these other things and crafts. Focus on what you do well — because this, as you said, seven years or less, could be the greatest earning capacity in your entire life right now.

00:22:10  Barry Ritholtz: Really, really fascinating. Coming up, we continue our conversation with Joe McLean, discussing why he launched a boutique asset manager for athletes. I’m Barry Ritholtz, and you’re listening to Masters in Business on Bloomberg Radio.

00:22:41  Barry Ritholtz: My extra-special guest today is Joe McLean. He is known as the money whisperer to professional athletes. Let’s talk a little bit about how you got that title. You were a wholesaler for mutual funds at Franklin Templeton. What led you to launch a boutique asset-management shop catering to star and professional athletes?

00:23:04  Joe McLean: Well, I went on from wholesaling, and then I went to two other companies — Lord Abbett, and then AllianceBernstein. And AllianceBernstein at the time launched an Advisor Institute. There were 300 advisors at Bernstein who were bringing in a hundred-plus million in assets every year — a highly dedicated and focused team. So I went out and trained financial advisors on how to build a business and work with centers of influence. And I met another mentor in my life — a former minister who’d gotten a master’s in neuro-linguistic programming and understood how to communicate effectively with people. I spent two years on the road doing that, and then eventually became an advisor at Bernstein. A bunch of old teammates — I was less than a year into my financial-advisory career — came up to me when they were getting ready to retire. And they said, “I’ve been watching you. I think you’re in that money thing. Can you look at my stuff?”

00:24:05  Barry Ritholtz: That money thing.

00:24:06  Joe McLean: Yeah.

00:24:07  Barry Ritholtz: “You do that money thing,” right?

00:24:08  Joe McLean: That’s what they said. And these were 32-year-olds. Some had made over a hundred million dollars. I had not grown up with any wealth, but now I’m 15 years into the career and have learned from other families — and obviously the companies that taught me things, and being on the road — and I realized: no one has ever sat you down and walked through the level of planning that would be required for this level of wealth, to prepare you at age 32 to live off this money.

00:24:37  Barry Ritholtz: That’s astonishing.

00:24:38  Joe McLean: There was no class we ever took in college. And even if there was a class, you probably wouldn’t have paid that much attention to personal finance and investing. And sports and wealth was not something anybody was really interested in. I heard it from other firms who said, “I don’t want to get involved with athletes. It’s just babysitting.” Back then there were no sports-and-entertainment divisions at wealth-management firms. Nobody was involved. So I went to Bernstein and said, “This is it. This is where I want to be. I’m going to focus the whole rest of my life on this. I’m going to be a coach, but do it in finance.” And it was something they were open to, but not interested in — because it was way beyond investing. It was personal finance and cash flow and budgeting and creating a protected circle. Because there are so many things that could touch someone’s money. It could be the car guy, the shoe guy, the jeweler, the family — that all needed to be controlled, and put the scoreboard up financially as to what’s required to have success.

00:25:42  Barry Ritholtz: That sounds a lot like a traditional family office.

00:25:46  Joe McLean: I had no idea what a family office was at that time, but I was identifying that this was the need. So long story short, it couldn’t be done at a traditional wealth-management business. It had to be an RIA, at the time, for me. And so that was the move to start Intersect, which was heavily focused on personal finance and family office. And I was still learning the game, too. The contracts weren’t as big as they are today. But I remember being in the 2011 draft, and I think I was competing against two other financial advisors — maybe. Nobody was really interested in this industry.

00:26:25  Barry Ritholtz: That’s unbelievable to me. So at 11 people, you’re managing $1.7 billion for about 50 clients. How did that grow? And when did you start to hear from people thinking, “Hey, this might be a good tuck-in into a bigger shop”?

00:26:42  Joe McLean: That happened all in less than seven years. In sports, I realized a couple of things. One, I didn’t want a client base that was only athletes. You had to pass the test of a 50-year-old business owner who was going to ask more sophisticated questions, who was going to challenge you to make sure you created a process, a plan, and a portfolio sophisticated enough to support his or her needs. So this became a mutual-admiration club of entrepreneurs, business owners, and athletes. A baseball player wants to talk to an NBA player and a golfer, and so on. It was a great community built in there. And that’s how all these other sports came about. I was a classic case of high growth trying to keep up with operations. So I was constantly taking my own capital and reinvesting, trying to stay up with the support. And that’s when I had someone come up to me — I was trying to find an investor just to help me out, because I couldn’t support it myself. And that’s when I was introduced to MAI, which, unbeknownst to me, was a very quietly built family office for athletes, dating back to Arnold Palmer — Mark McCormack were the first owners and clients of the business.

00:27:59  Barry Ritholtz: Client-owners. That’s pretty savvy.

00:28:01  Joe McLean: Yeah. Mark McCormack was, for sure, the OG in the sports-agency world. His focus was to take an athlete to an entrepreneur, to an owner of everything they did. And famously, he got Arnold Palmer — Palmer did handshake deals on just about everything he ever did. He had a handshake deal with Wilson, and Mark saw the value of what Palmer was doing for that company and was able to renegotiate it. Most people don’t. Wilson was actually a meatpacking company way back when. A banker came in and saw that it was undervalued, because they weren’t utilizing the entire cow. And they started taking the hides and making footballs and basketballs. And they extracted extraordinary value out of that. It eventually became a sporting-goods and equipment company. So they were very savvy when they did that deal with Arnold Palmer, and McCormack came in and unlocked all kinds of value for Palmer. And so when you look at athletes now, they talk about becoming an owner of everything they do — this is something they did. This is 1973, ’74.

00:29:11  Barry Ritholtz: I kind of remember Arnold Palmer designing golf courses and putting his name on them and getting fairly well compensated for that. Am I recalling that correctly?

00:29:20  Joe McLean: He did that and a lot more — the royalty rights, the drink. And that umbrella — that iconic logo he has. If you’re in the golf world, you know that’s Arnold Palmer. He was the one who famously told every athlete, “If you’re going to put your signature on something, make sure people can recognize who you are.” And I know Peyton Manning and others have taken on that banner. He was a trailblazer, very early days. And his level of wealth was extraordinary — it would rival the likes of Stephen Curry and Kevin Durant as you see today.

00:29:55  Barry Ritholtz: And the other thing about golfers — the successful ones have a much longer career life, and then they start playing in the seniors for another 20 years.

00:30:05  Joe McLean: Yeah. There’s nothing like golf — it has a completely different level of financial planning, because there are no guaranteed contracts. If you win a tournament, yes, you may get a year or two of your tour card, but if you don’t, and you’re missing cuts, then there’s no money. It’s one of the most difficult sports to survive. The successful ones, obviously, as you said, could have a 30-, 40-, 50-year career.

00:30:30  Barry Ritholtz: But it’s a winner-take-all.

00:30:33  Joe McLean: It is. It’s very difficult.

00:30:33  Barry Ritholtz: So MAI acquires Intersect. After the acquisition, you go from founder-CEO to managing partner, running the multifamily office inside this larger platform. You spent a long time building up culture and trust. How do you maintain that when you’re tucked into a larger shop and a very different brand?

00:30:59  Joe McLean: The good thing was — and it took a long time for me to figure it out before I made a decision — the firm was a service-oriented business. It wasn’t a business that was providing services; it was service-oriented. That was very different for me, because I didn’t come in with any high level of business prowess. I was a service provider. I still am. I think there’s nothing beneath me in terms of what’s required to serve a client and the people around them. And they had the same mindset. It was actually, at the time, a loss leader for the IMG business. IMG would charge their 20, 30%, and they would have MAI — which was McCormack Advisors International, the acronym — as a service center to do your taxes, your bills, and build your portfolios. So they had the same mindset I had. But there was another level, as you know, of acquisitions and really growing. We had gone from $12 billion to $80-plus billion in assets. So it is difficult to maintain the culture. But it’s a very independent, fiduciary-minded world that was aligned with me. I think the evolution of where the advisors and the clients are going now is this level of partnership — because that’s what I was experiencing in my boutique. It’s not a client-advisor or advisor-client relationship; it’s a partnership. Young people don’t want to be told what to do. They want to be given information to make better decisions — but don’t tell me what to do. So I’ve learned a lot in that culture. That’s where, now, the term “family office” is everywhere. That’s how you’ve got to build it going forward.

00:32:34  Barry Ritholtz: So I love the distinction between simply managing money — this “money thing” your friend asked you about — versus managing wealth and all the related services. Is that effectively the evolution you’ve gone through, from Intersect to MAI?

00:32:55  Joe McLean: A little bit. I would say MAI and the rest of the industry are coming around to how we’ve serviced athletes — and not just because they were athletes, but because they were young people. The industry is trying to turn toward how to service the next generation of wealth, and this transfer of wealth that’s happening from the baby boomers. If you look at the history of advice, it was really built on the backs of the baby boomers. I always look at 1981 — I think there were six or 700 mutual funds to choose from. And all of a sudden it was this hockey stick. It just exploded. And what happened? The baby boomers were turning 35, which tends to be the age where you finally have some money to spend and invest. And then you look at this explosion, and the value proposition to that marketplace was simply access — access to the capital markets. So I always tell young people: if you ever watched The Pursuit of Happyness, the great movie — Will Smith cold-calling — he was just giving you access. And then it became about alpha, generating — “How is my black-box research better than this person’s?” And then it became about spending and income strategies in retirement — that was the third one, all satisfying to baby boomers. Now the value proposition has flipped. It’s access, not to the publics, but to the privates. And it’s spending and income, not in your retirement, but in your entire life — managing that lifestyle. These are things we’ve done from the very beginning, because there never would have been a dollar to invest if I didn’t control the cash flow.

00:34:27  Barry Ritholtz: Really, really fascinating. You talk about dealing with younger people, especially athletes — we’ll get to college athletes in a little bit. How do you get a young person to understand that owner mentality, both from a risk perspective and a compounding perspective — especially today, when they’re always connected, there’s so much going on, so many speculative distractions? How do you get them to think like an owner, and not like a simple player, day by day?

00:35:04  Joe McLean: Day by day, really.

00:35:08  Barry Ritholtz: It’s a long game.

00:35:09  Joe McLean: There’s no level of putting a Monte Carlo analysis in front of someone and showing them 20, 30, 40 years out what the compounding effect could be. It looks nice, but there are behaviors and discipline that have to be created day by day, month by month, over time. But if you gamify it, it works. That’s the aspect of putting the scoreboard up — are you winning or losing each month? And the one thing — if you look at contracts today in sports and how big they are — as you know, with anything, with great abundance typically comes less discipline. You see a lot of people with great talent, but they don’t necessarily work that hard. But if you work hard and you have talent — tough to beat. It’s almost impossible to beat. And so that became my investment philosophy, even with young people or old people. When you think about the laws of physics versus the laws of finance — think about this abundance. The laws of physics say, I’m trying to cross the creek, there’s a log I’m going to walk on. If I take my eye off that log, there’s instant feedback — I’m going to fall in the water. The laws of finance say, if I have an abundance of money going out of my life, and I take my eye off my money, nothing happens. There’s no immediate feedback. American Express doesn’t call and say, “Hey, you just spent $55,000 this month — slow down.” No — they’re giving you more benefits. The laws of finance give you no immediate feedback. So the philosophy has to be creating a standard of what you’re going to focus on in the future. It could be a month from now — let’s just win this month, and then let’s win the next six months. And all of a sudden, now we’re winning for years. But until you become aware of that, most people don’t have success with it.

00:37:12  Barry Ritholtz: Fascinating stuff. Coming up, we continue our conversation with Joe McLean, managing partner at MAI Capital, discussing what it’s like to advise athletes and entertainers on their finances. I’m Barry Ritholtz, and you’re listening to Masters in Business on Bloomberg Radio.

00:37:43  Barry Ritholtz: My extra-special guest is Joe McLean, the managing partner at MAI Capital, where he has helped build not only the firm’s family-office group but its sports-and-entertainment division, serving hundreds of professional athletes and entertainers. So that sounds like a very fascinating group of people to work with. I want to start by thinking about what’s going on at the college level: name, image, and likeness. This has become a giant business. Suddenly you have 17- and 18-year-old phenoms with potentially seven-figure contracts. What’s it like having a conversation with a suddenly wealthy 18-year-old?

00:38:36  Joe McLean: And by the way, it’s in high school now, too — people are getting sponsorships in high school. So it’s a —

00:38:42  Barry Ritholtz: A 16-year-old. Even worse.

00:38:45  Joe McLean: You know what’s interesting — I was blessed with four years of Coach Lute Olson at the University of Arizona, and an extraordinary network of alumni and teammates I got to know, or who were also coached by him. So I see the benefit of staying for four years — not jumping around school to school. At the same time, I’m trying not to sound like I’m 52 years old and say, “Back in the good old days, this is what we did,” because we weren’t getting contracts offered to us for $1.4 million. I just looked at — there are research services out there for each of these sports — I looked at one for a player who averaged 5.6 points a game this year. But they’re projected to have success, and they’re going to get $1.8 million next year to go play as a sophomore in college. And that’s extraordinary. So how do you pass up going to another school for those types of things? It’s really getting them to sit down and think about some things that are important besides money: their college experience, who’s the coach you’re going to be playing for, does that match the style you think you could have success in? Then, outside of that, the financial advice that’s required — “Hey, you’re now a 1099 contractor. There are no taxes taken out of these deals.” So you can’t just spend a hundred percent of it — you owe money to the government. And that becomes the whole lesson of gross versus net, and setting up some success. The good news is they’re learning these life lessons before they become a pro. Because what we also remind them is that every NBA, NFL scout is watching how you’re reacting to this money. If you get a million dollars and you go buy a Ferrari — which happens — they’re going to put that on their board: this is someone who may not be responsible when we give them $10 million. So they’re getting a window into the human being, as to how they may react once they turn pro. These are all conversations we’re having much, much earlier. But I think it could be a good thing long-term. I know, as a college sports fan — everybody says, “I don’t like these portals,” and I agree with them. But as a young person with opportunities, they’re going to be smarter, they’re going to want to learn faster, and there will be more successful outcomes than less.

00:41:08  Barry Ritholtz: That’s really fascinating. The obvious things that are potential minefields — they seem to be getting good advice and avoiding them. And it sounds like a lot of the college athletes getting big paydays are making better decisions than poor ones. Is that your experience?

00:41:30  Joe McLean: I think so. And by the way, I think 90% of these NILs are probably a hundred thousand dollars or less. They’re much smaller deals — by the hundreds. It’s reminding them — if they don’t have a base around them, that professional locker room we talk about — first and foremost, the number-one priority is to be a great teammate. Because we’ve seen the scenarios where the quarterback makes $2 million and is disrespectful in the locker room, and now all of a sudden nobody’s blocking for you. That will happen.

00:42:06  Barry Ritholtz: We saw it in the Super Bowl this year.

00:42:07  Joe McLean: Exactly. So if you don’t think through those types of things and be aware of it — maybe you want to contribute to that community and create a donor-advised fund with some of this money, and give it away, and bring awareness to what your brand is. Because your brand really is not what your social followers are. It’s being a great teammate, a great human being, responsible. You can have all these extraordinary experiences, say, in the NCAA tournament, but if you’re a knucklehead off the court or off the field, there are going to be consequences.

00:42:42  Barry Ritholtz: So let’s now move into the pros. But we’re not talking about 52-year-olds in basketball — you’re 23, 24, 25, early in your career. I’m curious about a couple of things. The first: you have a day like last week, where the market’s melting down. A 25-year-old guy in the first year of his second contract calls up and says, “Hey, are we okay?” How do you manage clients who are perhaps a little freaked out by the news flow?

00:43:16  Joe McLean: Over time, for me, the benefit has been introducing them to other people besides myself — first and foremost, other professionals in the markets and other asset classes, who they can get on the phone with and understand what the facts of the case are versus the noise around it. And typically every scoreboard we have is projected out through their entire contract. So what are the things we can control versus the things we can’t control? I always go back to that. Yes, the market’s down — let’s say it’s down 10%. What are the things we can control right now? We can control our spending, our decision-making, and our attitude. So that may be an opportunity — let’s look at our spending; maybe we dial it back so we want to invest more over time. It’s opportunistic. These are all very rational things that, as you know, most humans become very irrational about. And the more I can get someone to talk about their emotions, the more they move to a rational state. So it’s just talking out loud — let’s talk through this. A lot of these athletes, over the last couple of years, really haven’t been through a major market.

00:44:23  Barry Ritholtz: Fifteen years of bull market.

00:44:25  Joe McLean: When it’s been really good. I remember, early days, this happened, and I had one player liquidate all their 529 plans because the market was down 15% — and that was, obviously, one of the mistakes, the consequences of that. But if you don’t go through it… I was a benefactor of losing all my hard-earned money in Europe in 2000. I was investing in mutual funds at $10 that went to a hundred dollars in these biotech funds, and then March of 2000, everything went to zero. So it was a lesson I learned early — not to have concentrated all in one asset class. So most of the clients are fairly diversified.

00:45:11  Barry Ritholtz: So let’s hold the 23-, 24-year-old aside and talk about a 25-, 26-year-old with a max contract — their second contract. You don’t think of a 26-year-old as a potential family-office client, but at that level of income, that level of wealth, it kind of makes sense. Is this the right model for those athletes, for those professionals?

00:45:41  Joe McLean: A hundred percent. So if you think about what you’re describing — a 25-, 26-year-old on a max contract is probably making over $40 million a year. Let’s talk through a couple of things that are happening. It’s a guaranteed contract if you’re in basketball or baseball, even hockey to that extent — but it’s not guaranteed for death.

00:46:04  Barry Ritholtz: But it is for injury.

00:46:05  Joe McLean: It is for injury, but not for death. So there’s life-insurance planning involved, where both the team is trying to get coverage on that person — for their first $30 million — and then you’re trying to get coverage. And if you have big endorsements, the Coca-Colas and Gatorades are all trying to get coverage on you as well, to protect theirs. So there’s a level of sophistication they’ve got to start thinking through from a risk-management standpoint. Again, back to the three buckets — they still remain for the rest of their life, so you’ve got to keep filling them. But now it gets complicated. What’s the goal here with this money? Is it just to save it and sit on it? Or now they’re getting access to really interesting opportunities — they want to maybe own a team someday. So this is the —

00:46:55  Barry Ritholtz: Third bucket.

00:46:55  Joe McLean: Right. This is the entrepreneurial one, where you’ve got to keep filling the first two and always know what it costs to be you. That’s always January 1st — did you know what it costs to be you? And how do we make it cost a little less to be you, if we can be smart with some of the savings in all areas? So what do we want it to cost to be you when this contract’s over? Again, back to that burn rate — how much you’re going to spend in retirement, because I’m assuming you’re never getting another deal. So is it $2 million a year? Is it a million and a half? What’s the number we think you could live comfortably on? And obviously, when you’re 35 years old, this money has to last much, much longer. So just going through that level of planning, and giving them information so they can make better choices. But that is when this entrepreneurial bucket really kicks in. They’ve established a brand as a great player — performance is the number-one factor of their success financially — however, now there’s an opportunity to develop something that could be sustainable for 30, 40 years as an entrepreneur. And that’s where we start identifying what philosophy they want to have in that sector.

00:48:02  Barry Ritholtz: So you mentioned death or injury. I’m curious about your take on the most — or the least — appreciated risks on a modern team roster. Is it injuries? Is it lifestyle creep? Is it that entourage that could be a bad influence? “Deal flow’s in the DMs” is a line I saw that cracked me up. What do you think is just bad mojo that potentially derails a client?

00:48:35  Joe McLean: Well, a couple of things. You mentioned risk and injury — you cannot avoid this. There is a way to protect yourself over time. At this point, at this level of wealth, at the size of these contracts, you have to have your own doctors, your own trainers. You have to get information that comes directly to you, not through the team to you.

00:48:55  Barry Ritholtz: So we’re talking nutritionists, trainers, physical therapists, massage therapists — straight down the line.

00:49:02  Joe McLean: And they all have to report to the client, not to the team. The team has these people, and they’re great people, but they work for the team. We’ve had situations where clients got injections, and it killed cartilage in their hip, and it eroded over time. And all of a sudden they’re in a situation where they may not get the next deal. So at a max contract, someone’s going to be spending somewhere between $400,000 and a million dollars a year into their body.

00:49:32  Barry Ritholtz: Wow, that’s unbelievable.

00:49:33  Joe McLean: Yeah. And if you think about the benefit of that — players are playing to 35, 40 and beyond.

00:49:40  Barry Ritholtz: I look at Tom Brady — no business playing into his forties, and playing fairly well. That has to be the result of all that self-investment.

00:49:50  Joe McLean: No doubt. There’s a track record there that others can turn to — LeBron James being one of them. They see the value in that investment, and they also see the risk of not investing in it. I’ve had these discussions on the first contract, when I look at — because I see the personal P&L on everybody when we’re paying all their bills — and I could see, “Are we really still going to McDonald’s? You’re crushing fast food constantly.”

00:50:19  Barry Ritholtz: But at 23, aren’t you kind of immortal? How do you get someone who’s been the biggest, fastest, strongest guy everywhere he went to realize, “Hey, this is a rusty bag of bolts if you don’t take care of it”? How do you get a 22-year-old to understand you’re not immortal?

00:50:38  Joe McLean: You show them that if you’re in the NBA, and you’re a draft pick today, and you get to your fourth contract — assuming a 5% growth rate of the salary cap — you’ll have grossed a billion dollars in contract value.

00:50:54  Barry Ritholtz: Get out of here. That’s unbelievable.

00:50:56  Joe McLean: A billion dollars. Yeah. So what are the things you can do now to be around in your fourth deal? It obviously extends beyond being a good player.

00:51:05  Barry Ritholtz: That’s four-year deals or longer?

00:51:08  Joe McLean: Between three and four-year deals. So if you’re 21, by the time you’re 31, 33, depending on your contract cycle, you could have grossed a billion dollars. That’s where the Cooper Flaggs of the world are trending toward — Jalen Rose, Jayson Tatum — that’s where they’re trending.

00:51:26  Barry Ritholtz: Wow. I was courtside for the Lakers game against the Knicks last year. And what is LeBron — 38? He was, last year. He’s amazing — just a force of nature. And that doesn’t happen by dumb luck. That looks like a lot of work.

00:51:48  Joe McLean: My legs were tired in the fourth quarter when I was 21 years old.

00:51:52  Barry Ritholtz: It’s extraordinary what he was doing. He was faster than everybody out there, other than maybe one of the point guards. And he’s a monster — when he’s in the paint, you are not stepping in front, you’re not taking that charge. You’d wake up next Tuesday.

00:52:06  Joe McLean: The old-school guards, back in the day, would play their way into shape the first 20 games — because, lord knows what they did all summer. Athletes’ summers now are just as physical and difficult as the seasons, in terms of preparation.

00:52:21  Barry Ritholtz: That’s fascinating. There’s a quote of yours I really like: “The number-one trait of a great advisor is being willing to get fired.” Give us an example of what leads someone to get fired, when you’re delivering the cold, hard truth.

00:52:40  Joe McLean: Let me give you one where I almost got fired first. This was one of the most important clients in the history of my career. And I thought I was doing the right things — and I still, today, think I was, but I was doing it the wrong way. This was a situation where there were a bunch of knuckleheads surrounding the client. They were going to really affect that person’s brand off the court or field. And it was really starting to irritate me. So I decided to take it into my own hands and address it personally with them, with the friends and with the family members. I got into everyone’s face, and I was ready to take them down. Because when I look at doing trust planning for a client, I know who they love — that’s who’s in the trust, literally — and who we’re going to take care of financially, and the ones that are outside the circle. Most of them were outside the circle, and they were really affecting this individual. So I was going to try to take them out — but do it verbally. And so I addressed it, and all of a sudden I got called to a meeting with the client. And they came at me and said, “Don’t you ever come at my friends. If this ever happens again, we’re never going to work together.” And for me, this was the first time we were having some conflict, and I was ready for it. I was excited to have this conversation — like, let’s get real about what’s happening. And even when you don’t know it’s happening, the person was shutting down more and more. They weren’t ready for conflict. So if you’re going to say a great advisor is willing to get fired, you also have to prepare your clients for conflict — healthy conflict. I realized I never prepared to have this conversation with someone where we’re going to be brutally honest with each other. So the two traits I found you have to have to have great professional conflict: you have to have mutual respect, and you have to have compromise, and you have to have these conversations in advance. So now I have them in advance: “Hey, there are going to be times when we disagree, and I’m never going to blow smoke. You’ve got tons of yes-people in your life. But I’m never going to disrespect you, so don’t disrespect me. And at some point I’m going to win, and sometimes you’re going to win, in terms of a level of compromise.” If I’d had that, I think this would have gone better. It did not — it went really bad. We were able to repair it over time. And I’ve had situations, unfortunately, where maybe I didn’t get the client early enough to create behaviors — gambling, mental health, all these aspects that are all over life and in the world. They’re all over sports, too. And there are just some people you can’t save. So those are some unfortunate situations where we did have to fire somebody.

00:55:37  Barry Ritholtz: So that raises a really interesting question. Everybody walks around with these devices, and these devices are everything from social media — which can be a minefield — to all the gambling apps. And even if you’re not touching DraftKings, between Kalshi and Polymarket, or Robinhood, you could speculate, gamble, just go down a rabbit hole. For someone with a lot of cash burning a hole in their pocket, this always-connected, always-on world could be really dangerous. What sort of advice are you giving clients who have these seven- and eight-figure contracts?

00:56:22  Joe McLean: Those are the ones where you use a little bit of fear, and start sharing some stories that have happened to others — potentially getting blackballed. Even investing in or betting on your own sport — just getting anywhere near attached to it — is something that could affect the growing wealth you could create over time. There’s a level where you can scare them with that. And for all of us — gambling and sports, and the amount of revenue — I don’t think it’s a great thing. It really isn’t.

00:56:55  Barry Ritholtz: No.

00:56:55  Joe McLean: It’s pretty awful. You have a whole generation of young, mostly males, that have become gambling problems, addicted to it.

00:57:00  Barry Ritholtz: Does fear really work in that — “Hey, you’re risking a billion dollars against fooling around with 10 or 20 thousand dollars”? Why? It doesn’t make any sense.

00:57:15  Joe McLean: The scarier ones are in Vegas. When you go to Vegas, or some of the other casinos, you learn for the very first time what a marker is. What Vegas created with markers is — there’s no exchange of money. You just sign your name. And inside that contract, it also says they can reserve the right to go into your bank account and take the funds if you don’t pay up. So as you can imagine, when there’s no exchange of funds and you just sign your name — that’s a rabbit hole you can go down. That’s disastrous.

00:57:48  Barry Ritholtz: There have been studies that people who spend cash versus credit cards — with a credit card you’re just swiping or tapping, it doesn’t feel like you’re spending money. When you’re counting out hundreds to buy a watch, or whatever, I can imagine the marker in Vegas has to be really dangerous.

00:58:05  Joe McLean: Yeah. Even to that point, we’ve had clients where we’ve decided to have them write every check — pay every single bill, so they feel it. So you send a checkbook — here it is. Now you have to sign it. You see exactly how much you’re paying for each of these transactions. It works.

00:58:21  Barry Ritholtz: I would imagine that’s effective. But that raises a really interesting question. The economics of being an elite athlete — you go back to the sixties and seventies, the top of the team roster really wasn’t making a lot of money. Now, across the whole industry, it’s big bucks, and the top is crazy big bucks. How has this changed the way you think about asset-allocation planning — looking at everything from safe assets, dividends, and bonds, to speculative venture capital and privates? How has the world of athletic finances changed over the course of your career?

00:59:04  Joe McLean: The first thing that’s changed the most is you have to be sophisticated from day one. If you think about when I was getting into the business, in 2009 and ’10, these contracts didn’t exist. I knew enough to get clients into mutual funds and get them to save. These contracts are very big, and they’re early, and they’re coming fast. So from a level of planning, and understanding how to build this — one of our lessons is, the next generation is watching. What are the decisions we can make now that set you up, not just for yourself but for the future? We’re not talking about going broke anymore. This is hundred-year money. So that level of estate planning exists for a 22- or 23-year-old now, which we never had before. I don’t think the asset allocation needs to change — it’s just that the entrepreneurial bucket will evolve over time. Getting someone with that founder mentality — I don’t know about you, but I love being a founder. Being a CEO is not as fun. I like having them say, “Be the CEO of your money.” Like, I want you to be the founder of your money. We don’t want the “shirtsleeves to shirtsleeves” metaphor that everybody talks about. Let’s think about that entrepreneurial bucket and where you think you could have great impact. Some of them may say, “I just want to be a coach. I just want to coach my high school team.” And I think that’s great.

01:00:31  Barry Ritholtz: Come out of the NBA to be a high school coach.

01:00:34  Joe McLean: Correct. And I think that would be an extraordinary gift back to the universe — as to your mindset and what you believe in and the give-back. It’s important to have something to fill your time. So having more meetings with people who are either executives or other coaches — whatever your aspect is — you have to start thinking, beginning with the end in mind. By the time you’re 25 years old, even though you may play until you’re 40, you can fall into that and make that transition — back to what we started with: the schedule, the predictability, the accountability. You have that professional locker room in life, established for that third bucket.

01:01:13  Barry Ritholtz: So I’m seeing more and more athletes getting involved across different sports. Michael Jordan now owns — or is an investor in — a NASCAR team, and we see other athletes buying British soccer teams. How do you think about cross-pollination from one sport to another?

01:01:37  Joe McLean: I think the common ground is just: be wary of your time. It’s very easy to look on social media and see someone owns three or four different teams — they own SailGP, they have a Formula One race team, they’re all limited partners in these things. It looks great. But just think about how you want to spend your time in retirement. Do you want to be spread out all over the world, having access to these things? Yes. But at the same time, you have an obligation to fulfill your time in these things. So part of it is: how do we simplify your life? I’m reading, now for the second time — and I’m still not good at it — a book called Essentialism. That’s the disciplined pursuit of less. I have a ton of user error in my life, where I help clients say no, but I say yes too much to doing other things. So we have to remind them: yes, you have a ton of access, but let’s be most careful of your time, and where you want to spend it. There are opportunities to own things, but to spread yourself out and be all over the world in these soccer teams — it sounds interesting, but I don’t think it’s effective.

01:02:58  Barry Ritholtz: So what do you think athlete investors are either not thinking about, or not talking about? What’s a blind spot that would be really useful for them to better understand, to have greater awareness of?

01:03:12  Joe McLean: Let me overgeneralize what’s happening in sports. We went from spending money on materialistic things to overinvesting in private things. It’s great that we’re talking about how much we’re saving, but it’s also, “I invested in this deal, and this deal, and this deal.” And as you know, no one really understands risk until they’re taking too much. At that point, you truly start evaluating what that means. So I don’t know if everybody understands yet, as an investor, that all these things we’re investing in privately — you don’t know how much it’s worth. That’s a significant blind spot for many — back to those mental traits we all have as athletes, that we’re willing to bet on ourselves, that there’s nothing we’re not willing to take a risk on. That’s not the trait you want as an investor. Again, it’s reminding them that we don’t need to take this type of risk. Some clients’ growth buckets were just in muni bonds for 10 years, until they produced enough income to support their lifestyle. But it’s a significant blind spot right now — nobody really knows what some of these things are worth. But it looks good on paper.

01:04:27  Barry Ritholtz: Yeah, to say the very least. I have to bring up your podcast, The Pro’s Pro. Your first guest was Eli Manning — is that right? What is this podcast thing? What motivated you to go that way?

01:04:41  Joe McLean: It’s this new thing. It’s just starting — it just came out now.

01:04:44  Barry Ritholtz: And what do you want to accomplish by sitting down with people like Eli Manning?

01:04:48  Joe McLean: For me, I was just hoping it’s a gift to the next generation that’s seeking information — and getting some quality information. We see now, in the NIL world, where a young person will come to me and say, “Hey, I play at Oregon, but I’m going to set up my LLC in Texas, because I have an aunt there, and I read this thing on Instagram where I could not pay any state income taxes.” There’s information out there, and it’s just not right. So this whole idea of wanting each of these clients to be the person someone walks to in their locker room and asks a bunch of questions of — the pro — I just want to interview a lot of these successful athletes that have been through it. Eli’s an example: he had to come into New York and lead a city, and understand the most important things to build trust quickly with his teammates and his coaches. There are all these built-in athletic things that are important. And then he came into an extraordinary amount of wealth, and he had to manage it. And for him, now it’s learning how to give money away most effectively. So the more I can extract information from people that have been there and done that, and share that with everybody — it’s a testament to what these individuals have done, but at the same time, we can all learn from them as well.

01:06:06  Barry Ritholtz: Creating a permanent record is so important, because the half-life of financial literacy is so short. I’ve had the same conversation every three years — “Didn’t we talk about this in 2023?” “Yeah, but I kind of forgot.” So, I only have you for a few more minutes — let’s jump to our favorite questions. I ask all of my guests, starting with: you referred to a few people, but let’s put them in one place. Who are your mentors, who helped shape your career?

01:06:41  Joe McLean: My mom, for sure. She did whatever it took to raise three boys, and then put me in the right situation to have an opportunity to be around Lute Olson. One of the great gifts Coach Olson gave us was that he made us do public speaking at school. We had to do it in sixth, seventh, and eighth grade. And then sophomore year, you start working your way into high school, and by senior year you had to speak at a high school graduation. He brought in people to teach you how to communicate effectively. I had no idea the power of that over time — once you get into the work world, and the level of confidence it gives you, while always having a high level of humility. That was a great gift, outside of all the basketball stuff, and always being prepared. Jim Escobido was the example at Franklin Templeton, who told me, “You don’t know nothing about nothing,” which was great. And then, as I began to understand the mindset, having someone like Ken Haman, who retaught me Maslow’s hierarchy of human needs — this level of safety and security that so many humans are stuck in. If we can give them a reason to say no to a lot of things, and the power of a plan, to get them to some level of connection, whether it’s human or professional — that was a great gift he gave me. But I’ve found, over time, that it’s less just mentors and more finding ambassadors for you. I see it with my kids — I have a daughter who didn’t necessarily have great confidence athletically, and then someone just took extra time to say, “You know, if you did this, this, and this, I think you could be exceptional.” And then they work with you. It’s just finding more ambassadors. That’s what I’m trying to do as an advisor — to be an ambassador on behalf of more clients. It’s super powerful. It’s not necessarily a mentor relationship, but I think the greatest gift you can give somebody else is your belief in them, even when they don’t believe in themselves. That’s the power of being an ambassador. I highly recommend it for as many people as possible.

01:08:52  Barry Ritholtz: Let’s talk about books. What are you reading right now? What are some of your favorites? You mentioned a book earlier.

01:08:58  Joe McLean: Greg McKeown — I think it’s Essentialism. That’s a great — that is the disciplined pursuit of less, and getting rid of some of the inefficiencies in everybody’s life. And you could end up doing more. My favorite book is always the one — for me, it’s whatever got you reading. I didn’t read in college. I did what I had to do to get good grades and stay eligible. And my first book ever read was John Grisham, The Firm. For me, it got me excited to want to turn the page. And now I read as often and as much as I possibly can. I just can’t get enough of it. But I always say, for those that aren’t reading: just go read anything that excites you. It could be a magazine, it could be a comic strip — but whatever gets you excited to start reading, start.

01:09:50  Barry Ritholtz: Let’s talk about streaming. What are you either watching or listening to? What keeps you occupied when you’re traveling around the country visiting various athletes?

01:10:00  Joe McLean: Binging constantly on everything — Netflix. I just watched Madison, which was great. So sad. I like a good cry. I cry more on airplanes than anywhere else.

01:10:14  Barry Ritholtz: If you watched Madison, I’m assuming you saw Landman, right?

01:10:18  Joe McLean: For sure. Yeah.

01:10:18  Barry Ritholtz: Anything Taylor Sheridan does — he’s extraordinary.

01:10:20  Joe McLean: I don’t know when he sleeps.

01:10:21  Barry Ritholtz: And he’s got another — there’s a new show coming out this month. I’m just astonished how productive he is. Give us another — what else are you watching?

01:10:36  Joe McLean: Oh my God, I can’t even remember the one I’m watching with my wife. We always have rules where we have to watch them together — we can’t binge outside. There’s one where they’re dating, and the age is like a 20-year difference. I can’t remember it. I became dumber every 20 minutes that I watched it. I rewatch West Wing, John Adams, and Band of Brothers probably twice a year. I’m in a loop.

01:11:03  Barry Ritholtz: It’s funny — I don’t remember what I was doing when West Wing was on, but it wasn’t watching TV, and it’s on my list of things to go back and watch. During the pandemic, we watched Mad Men, which I had never seen. It’s a really amazing show. Final two questions. What sort of advice would you give to a recent college grad interested in either a career as a professional athlete, or working with professional athletes in a financial capacity?

01:11:38  Joe McLean: It does help to come with a sports background — however, it’s nowhere near the most important trait. The more you can bring interesting experiences and knowledge to sports, the better. That was the example of Moneyball — a bunch of statistical nerds brought data to help drive more opportunities in sports and be more effective. So you can bring an outside perspective. However, whether it’s getting into sports or anywhere else, come in with this service mindset of “nothing is beneath you.” I had a situation one time where an honor student came in — as an early job with us — and said, “Hey, I’ve been paying bills and bookkeeping for clients for the last six months, and I was an honor student at such-and-such college. This is beneath me.” And I said, “Well, last week I was cleaning gutters at a client’s house, because it was the first time them being a homeowner, and we’re trying to teach them how to manage a home. Nothing’s beneath you.” So if you just come in built to serve, with that service mindset, you’re going to be successful at anything you do.

01:12:39  Barry Ritholtz: I love that answer. And our final question: what do you know about the world of investing and wealth management today that might have been useful 25 years ago, when you were first getting started?

01:12:52  Joe McLean: I would have listened to what Sir John Templeton, at Franklin Templeton, was giving us in some of these quotes. Like, “The four worst words in investing are: this time it’s different.” And, “Bull markets are born on pessimism, they grow on skepticism, they mature on optimism, and they die on euphoria.” I would have listened, because nothing’s changed. It’s taken me a long time to not have any FOMO when it comes to investing — but I’m there. I would have listened to a lot of his traits and quotes from back then, because obviously he had lived them before me. I just wish I would have listened in the early days.

01:13:28  Barry Ritholtz: Joe, really fascinating stuff. Thank you for being so generous with your time. We have been speaking with Joe McLean. He is managing partner at MAI Capital Management. If you enjoy this conversation, well, check out any of the previous 600 or so we’ve done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, Apple Podcasts, or wherever you get your favorite podcasts from. I would be remiss if I didn’t thank the crack team that helps put these conversations together each week. My audio engineer is Steve Gonzalez. Anna Luke is my producer. Sean Russo is my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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