Prof G Markets: Episode Summary
Title: Is Breaking Up Intel The Right Move? + The New Gold Rush
Release Date: February 24, 2025
Host/Authors: Vox Media Podcast Network featuring Ed Mylett and Josh Brown

1. Market Vitals and Initial Headlines

Overview:
Ed Mylett and Josh Brown open the episode by reviewing key market indicators and significant headlines impacting the capital markets.

Key Points:

• S&P 500: Reached a record high.
• U.S. Dollar: Experienced a decline.
• Bitcoin: Remained flat.
• 10-Year Treasury Yields: Fell.

Notable Quotes:

• Ed Mylett (02:30): "The S&P 500 hit a record high. The dollar declined, Bitcoin was flat, and the yield on 10-year treasuries fell."

2. Housing Market Slowdown

Overview:
The discussion delves into the disappointing data on U.S. housing starts in January, highlighting a 9.8% decline in new residential construction.

Key Points:

• Causes of Decline:
  • Harsh winter weather impacting construction schedules.
  • High mortgage rates deterring homebuyers.
  • Tariffs and inventory shortages adding to construction challenges.
• Regional Insights:
  While the national numbers show a downturn, the Western region saw a 24.9% increase in homebuilding, indicating regional disparities.
• Investor Sentiment:
  The homebuilding sector, represented by the XHB ETF, lags behind the broader market, presenting potential opportunities for investors if conditions improve.

Notable Quotes:

• Ed Mylett (05:12): "The median home price today is $420,000, and the median age of a homebuyer is 56. The way we solve this is we build more homes."
• Josh Brown (07:24): "The headline sounds worse than the reality. The cost of labor to build new homes is high and rising, and it's not necessarily in step with the disinflation we've seen elsewhere."

3. Intel's Potential Breakup: TSMC and Broadcom's Moves

Overview:
A significant portion of the episode focuses on the unfolding scenario where TSMC and Broadcom are exploring the acquisition of Intel's US factories and chip design & marketing business, respectively.

Key Points:

• Historical Context:
  Intel, once a dominant force in the semiconductor industry, has seen its market value decline by nearly 80% since its peak in 2000.
• Strategic Missteps:
  • Intel's pivot into the foundry business in 2018 under new leadership was ill-timed and poorly executed, especially with the rise of Nvidia and the AI boom.
  • The company failed to anticipate the shift towards parallel processing required for next-generation technologies like AI and autonomous driving.
• Valuation Concerns:
  • Recent talks suggest Intel's valuation may be overstated at $44 billion, quadrupling its previous $10 billion valuation by Fidelity.
  • Josh Brown attributes this surge to Elon Musk's influence and potential strategic alliances rather than actual financial performance.
• Regulatory Hurdles:
  • The proposed acquisitions would require approval from the U.S. government, with political optics playing a crucial role in the decision-making process.

Notable Quotes:

• Ed Mylett (37:46): "If Taiwan Semi really wants it, and Broadcom really wants it, prepare to spend a lot of time at Mar-a-Lago."
• Josh Brown (28:43): "It's the wrong people running the company. Intel misses where the market's heading due to cumulative poor decision-making."

4. The New Gold Rush: Surge in Gold Prices

Overview:
The episode transitions to discuss the unprecedented rise in gold prices, which have surged over 10% year-to-date, approaching $3,000 per troy ounce amid geopolitical tensions.

Key Points:

• Drivers of the Surge:
  • Geopolitical uncertainty, including tariff threats from ex-President Trump and fears of resurgent inflation.
  • Central banks diversifying reserves away from the U.S. dollar, increasing demand for gold.
• Investment Perspective:
  Despite the surge, Josh Brown emphasizes that gold traditionally underperforms stocks over the long term, citing 86 years of data where stocks have returned 11.8% annually versus gold's 6.6%.
• Gold Futures vs. Spot Price:
  • The disparity between futures and spot prices is highlighted, with current movements suggesting a temporary dislocation in the market.
  • Historical parallels are drawn to past market dislocations caused by significant gold movements during crises.
• Investor Strategy:
  Both hosts express skepticism about gold as a long-term investment, advocating for investments in dividend-paying stocks and companies that generate cash flows.

Notable Quotes:

• Josh Brown (41:20): "Gold is up 16% this month, the best in 13 years, but over the last hundred years, stocks have done far better."
• Ed Mylett (44:41): "Ray Dalio suggests investing in gold due to geopolitical risks, but I question its practical utility in solving real-world problems."

5. Looking Ahead: Upcoming Market Events

Overview:
In the closing segments, Ed Mylett and Josh Brown preview upcoming market events and make predictions.

Key Points:

• Upcoming Reports:
  • Personal Consumption Expenditures (PCE) index for January.
  • Earnings reports from major companies like Salesforce, Dell, Berkshire Hathaway, and Nvidia.
• Predictions:
  • Nvidia's Earnings: Josh Brown is optimistic, predicting Nvidia will report strong earnings driven by advancements in AI, automation, and robotics, potentially hitting new all-time highs.

Notable Quotes:

• Josh Brown (57:32): "Nvidia will report strong earnings, solidifying its position at the forefront of AI and automation technologies."

Conclusion

In this episode of Prof G Markets, Ed Mylett and Josh Brown provide a comprehensive analysis of critical market movements, including the troubling decline in U.S. housing starts, the potential breakup of Intel amid strategic missteps and regulatory challenges, and the soaring prices of gold driven by geopolitical fears. They offer insightful commentary on investment strategies, emphasizing the importance of understanding underlying market dynamics and questioning popular investment trends like the gold rush. As always, their seasoned perspectives aim to equip listeners with the knowledge to navigate the complexities of the capital markets.

Notable References:

• Guests:
  • Josh Brown: Co-founder and CEO of Ritholtz Wealth Management.
• Companies Mentioned:
  • Intel, TSMC, Broadcom, Nvidia, MicroStrategy, GameStop.

Additional Resources:

• For more insights and detailed discussions, listeners are encouraged to subscribe to Prof G Markets on their preferred podcast platform.