Buy the Election, Sell the Inauguration

Summary

Podcast Summary: The Compound and Friends – Episode: "Buy the Election, Sell the Inauguration"

Release Date: November 15, 2024

Hosts: Downtown Josh Brown, Michael Batnick
Guest: Adam Parker, Founder and CEO of Trivariate Research

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1. Election Market Predictions and Polymarket Insights

The episode kicks off with a discussion on the accuracy and impact of prediction markets like Polymarket during election seasons. Josh Brown and Michael Batnick reminisce about tracking election outcomes using different indicators, such as currency markets and Polymarket probabilities.

• Josh Brown [00:00]: "Polymarkers, Mexico dollar cross... Mexico was looking at pesos to tell me who was going to win the election."

• Adam Parker [03:01]: "You could go from 23 to 99 for the popular vote."

Adam Parker highlights how Polymarket allows users to "gamble on everything," emphasizing its growing influence in future elections. The hosts analyze past election data, noting significant inflection points like debates and unexpected events that swayed market predictions.

Michael Batnick anticipates that "in the midterms Poly market is going to be way more cited than people like Nate Silver" [01:14], underscoring the increasing reliance on such platforms for election forecasting.

2. Stock Market Valuation Debate

A significant portion of the conversation centers around whether the current stock market is overvalued. They reference David Einhorn's assertion that it's "the most expensive stock market that we have seen since the founding of Greenlight" [11:11], which Josh Brown disputes by citing traditional valuation metrics.

• Josh Brown [11:27]: "I totally disagree with that. On standard metrics like the median stock, free cash flow yield... I don't see it that way."

The discussion delves into historical valuation standards and how modern metrics may differ, questioning whether traditional approaches to assessing market value remain relevant.

3. Value vs. Growth Investing in the Modern Era

The hosts explore the shifting dynamics between value and growth investing. They argue that the traditional value investing approach, which relies heavily on fundamental deep research, may no longer be as effective.

• Josh Brown [12:03]: "I just measure stuff, right?... It's very true. Tried and tested that valuations related to margin."

Adam Parker adds that "the deep value, so the cheapest 20% of the market is in the fourth percentile. So almost never been cheaper and for good reason. Investors don't want it." [14:41]

This segment highlights the challenges value investors face today, as the market increasingly favors growth stocks with high margins and consistent earnings.

4. Institutional Investor Sentiment and Market Trends

Adam Parker shares insights from his research, indicating that institutional investors may be using outdated investment playbooks, neglecting the evolving market landscape.

• Adam Parker [22:25]: "It could also still be expensive and valuations do matter."

Josh Brown discusses "the mega large cap companies that trade below 10 times forward earnings," noting their scarcity and questionable value.

The conversation underscores the importance of understanding modern investment metrics and adapting strategies accordingly to navigate a market dominated by high-growth, high-margin companies.

5. Money Market Funds and Cash Flows

The hosts touch upon the unprecedented growth in money market funds, which have surpassed $7 trillion for the first time.

• Adam Parker [48:20]: "US money market funds for the first time ever crossing $7 trillion."

Josh Brown expresses concerns about the backing of these funds and the potential risks associated with such massive inflows.

• Josh Brown [49:16]: "I see that today too... what backs that and where is it? If people freak out, like, it's... it could make you nervous."

The discussion reflects apprehensions about the stability and underlying assets of money market funds amidst their rapid growth.

6. Consumer Sentiment and Its Impact on Markets

Michael Batnick critiques the reliability of consumer sentiment polls, arguing they often reflect mood swings influenced by media rather than actual economic indicators.

• Michael Batnick [52:07]: "This is what you're getting. You're not getting people's assessment of how things are going financially. You're getting their mood swing based on what they saw on Fox News or MSNBC."

Josh Brown shares personal anecdotes illustrating how sentiment can be misleading and fail to predict market movements accurately.

7. Potential Market Risks: Fed Policies and Immigration

The episode delves into potential risks that could affect the market, focusing on Federal Reserve policies and immigration plans.

• Michael Batnick [57:34]: Discusses Trump's immigration plans and their potential economic toll, quoting the New York Times on the possible influx of "13.3 million people living in the United States in some version of illegal status."

Josh Brown downplays the immediate impact on large-cap equities but acknowledges the downstream effects on small businesses and wage inflation.

• Josh Brown [59:53]: "It's more that downstream. If wage inflation goes up for small businesses, then they're more impaired to spend, their confidence goes down."

They also discuss the likelihood of Fed rate cuts and how unexpected policy shifts could introduce new uncertainties into the market.

8. Technological Advances in Healthcare and Productivity

A forward-looking segment explores how AI and technological innovations can significantly enhance labor productivity and corporate margins.

• Josh Brown [59:53]: "Companies like McKesson or Sancora... they should get better at predictive analytics... that's a good stock."

Michael Batnick emphasizes the transformative potential of AI in various industries, hinting at substantial future market gains.

• Michael Batnick [63:07]: "They're going to have their earnings season at some point this year where companies are actually going to talk about the victories from implementing all the AI in 2023."

The conversation underscores optimism about technology driving future economic growth and corporate profitability.

9. Closing Remarks and Personal Insights

As the episode winds down, the hosts share personal interests and recommend engaging content:

• Josh Brown [67:18]: Recommends the book "Factfulness" by Hans Rosling, highlighting its positive outlook on global progress.

• Michael Batnick [66:35]: Praises the TV show "The Penguin" for its quality storytelling and production.

They conclude by promoting their respective platforms and inviting listeners to connect, emphasizing the collaborative and informative nature of their podcast.

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Notable Quotes:

• Josh Brown [11:27]: “I totally disagree with that. On standard metrics like the median stock, free cash flow yield... I don't see it that way.”

• Adam Parker [14:41]: “The deep value, so the cheapest 20% of the market is in the fourth percentile. So almost never been cheaper and for good reason. Investors don't want it.”

• Michael Batnick [52:07]: “This is what you're getting. You're not getting people's assessment of how things are going financially. You're getting their mood swing based on what they saw on Fox News or MSNBC.”

• Josh Brown [59:53]: “It's more that downstream. If wage inflation goes up for small businesses, then they're more impaired to spend, their confidence goes down.”

• Josh Brown [67:18]: “Factfulness” by Hans Rosling.”

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Conclusion:

In this episode of The Compound and Friends, the hosts and guest Adam Parker provide a multifaceted analysis of the current economic and investment landscape. They critically examine the reliability of prediction markets, debate stock market valuations, explore the evolving dynamics between value and growth investing, and discuss potential market risks and opportunities driven by technological advancements. Personal anecdotes and expert insights create a rich, engaging narrative that offers valuable perspectives for both seasoned investors and newcomers alike.

Transcript

[Josh Brown]

We talked about it when we were together on election night, Josh and I, that like the Polymarket was right everywhere. And the poll, I don't know who's going to believe a poll every day.

[Michael Batnick]

So I'm a bigger boomer than you because I had the New York Times needle on my side.

[Josh Brown]

You're younger than me. Is that what you're doing?

[Michael Batnick]

No.

[Josh Brown]

You're flexing your youthfulness already.

[Michael Batnick]

No, I was the boomer that night. I was looking at the needle. You were looking at currency markets and.

[Josh Brown]

Polymarkers, Mexico dollar cross.

[Michael Batnick]

You were looking at.

[Josh Brown]

I was.

[Michael Batnick]

He was looking at pesos to tell me who was going to win the election.

[Adam Parker]

That's the market.

[Michael Batnick]

And he got it.

[Adam Parker]

Well, Polymarket is going to be a much bigger company in the future.

[Josh Brown]

The question is interesting because there's a lot of economic data that we all react to that is survey based. So if polling and surveying is now worth zero less and you can maybe we'll just. Poly Market like, well, it's worth more CEO confidence, Michigan consumer like maybe you'll just be able to gamble on everything. Right.

[Adam Parker]

Don't tell me what you think should be your portfolio.

[Josh Brown]

Right?

[Adam Parker]

Right.

[Josh Brown]

Yeah. You can gamble right now on whether I think like I saw this in the poly market earlier today on does it take 100 days for a war to end? Does it take 14% to Ukraine ends before Trump? There's a lot of increased interest in Poly Market.

[Michael Batnick]

I think in the midterms Poly market is going to be way more cited than people like Nate Silver.

[Josh Brown]

What we did is and this is super nerdy, but we looked at the since the day that Biden announced he was out and then the Trump first assassination attempt. We looked at the daily change in the poly market probabilities for the candidates and compared it to the daily returns for the S and P and the sectors a little bit. But I just trying to be analytical when I do stuff. I don't like to get political just because in the immortal words of Michael Jordan, Republicans buy sneakers also. So we're going to also produce content and buy clients don't care which I.

[Adam Parker]

Get stocked paying you for it.

[Josh Brown]

Analysis. Yeah, stock analysis. So I don't give my political opinions but so I thought that'd be an interesting way to look at it. But he didn't have a huge sample size in the number of days. But he had a couple huge inflections. Obviously the Harris debate where the perception was she won and then obviously the assassination where he peaked.

[Michael Batnick]

You know that's the first day That I believed that he would win.

[Josh Brown]

Yeah.

[Michael Batnick]

The response to him being okay after that and that, just that iconic photo of him with his little fist in the air. I said, he's probably going to win this thing.

[Josh Brown]

Yeah. Then I went Zuckerberg coming out and giving him credit. Like, there's a lot of, you know, that was an inflection.

[Michael Batnick]

But then I went back and forth a lot. Then I thought probably a month before that it would be her, maybe. And then right up until the day before, I said, if it's a coin toss, I think she wins the coin toss. And I was wrong. I didn't, like, feel that strongly about it.

[Adam Parker]

But it's crazy because obviously it wasn't a coin toss and Polymarket or the bettors were right the whole time.

[Josh Brown]

You could buy a Trump, you know, victory in the absolute vote for 23 cents the day before. So for the popular vote. For the popular vote.

[Michael Batnick]

Wait, how does that pay? How does that work?

[Josh Brown]

How does that pay? So you got 4x in 24 hours. Yeah.

[Michael Batnick]

So it was worth a dollar right after.

[Josh Brown]

Yeah. 99. Yeah. You could go from 23 to 99.

[Michael Batnick]

Because that was the strike price of the contract.

[Adam Parker]

All of it is. It's binary. It's yes or no. So I think there was a lot more action on the who would win the election than there was in the population.

[Josh Brown]

Exactly.

[Michael Batnick]

Oh, wait. So, all right, so all these bets are priced as a dollar.

[Adam Parker]

Yes. So they match.

[Michael Batnick]

And then they could be. They could be above or below a.

[Josh Brown]

Dollar, I believe, like predicted markets totally different than Poly.

[Adam Parker]

No, no, no, no, no. It can't be above a dollar.

[Michael Batnick]

I'm asking.

[Adam Parker]

No, it's either. If something is like 100% going to happen, then it'll trade at 98 cents, for example. Like, there's always a margin.

[Michael Batnick]

Nothing will ever be. Nothing will ever be at a premium to the payout.

[Adam Parker]

The payout is a dollar, so they matter.

[Josh Brown]

Do you think there are situations, though, where the combination of the two are greater than 1?

[Michael Batnick]

So combination of one meaning, like, there.

[Josh Brown]

Was a moment where, like, Harris plus.

[Michael Batnick]

Trump, 54 plus 59, 32.

[Josh Brown]

But I haven't made it. I haven't placed. I haven't done one yet myself, so I probably should stop talking about something I haven't, you know. Okay, interesting stuff. Election. We're, you know, we got the election.

[Michael Batnick]

I think two things. I think that Poly Market is going to end up like Robinhood, like crypto. It's going to just be a thing. Or like sports betting apps. It's just me. A thing people do.

[Josh Brown]

Sure.

[Michael Batnick]

It's going to become more mainstream, especially among young men who like to gamble.

[Adam Parker]

But also not just that. Think about your clients. We used to always talk about who's going to win the election. What does this mean for the dollar, for the peso, for this, for that?

[Michael Batnick]

Just by the election?

[Adam Parker]

Just by the election, yeah.

[Josh Brown]

So like it's gets bigger and more liquid. You can use it as a hedging device. I mean, there's a lot of different things you could do.

[Adam Parker]

So it's like the CME going to start doing this.

[Michael Batnick]

I mean, see, that's the thing. See, this is when technological revolution, crypto.

[Josh Brown]

A lot of it's done in crypto.

[Michael Batnick]

When there's like a revolution, there's always this. There's always this air pocket where new entrants are unencumbered by existing regulations or think they are, and they get big really fast before the incumbents have a chance to like, negotiate with their regulators. The CFTC would probably have a heart attack if the CME like just started launching contracts like this.

[Josh Brown]

I did a risk dinner with seven or eight guys who were like chief, Chief risk officers earlier this week. And like the one clear thing was just like, crypto wins. Like, I think people couldn't see a path for that not being great in the next 612 months. And these are people who I would say are, you know, were generally been very skeptical five years ago and are now sort of warming to the idea that just the size of the asset they won.

[Michael Batnick]

They're warming to the idea because it's at 90,000.

[Josh Brown]

Right? Right. No, but they're saying more like it's become an institutional product. Right. Like if you're somebody with, you know, you're in some big, you know, JP Morgan, Morgan Stanley or Goldman Private wealth network, their advisors and I'll say, well, if you have 20 million, you could put 1 or 2 in crypto. Like, they're starting to make it a legitimate.

[Michael Batnick]

I was on the air with.

[Josh Brown]

That was different than.

[Michael Batnick]

But not everybody got the memo. I was on the air with somebody today. Crypto came up and he's a gentleman of a certain age and he's like, but it's too volatile to be a currency. I'm like, nobody says cryptocurrency anymore. You're reading the script from 2014. We're saying crypto, period. It's not crypto currency. It's digital assets crypto or Bitcoin. And we don't care if it's currency. The use case is making a billion dollars. You need a better use case than that. That's what it is right now.

[Josh Brown]

Yeah. By the way, it's just wonderful to see the color coordination of the bookshelf here.

[Michael Batnick]

Yeah. That's my madness.

[Adam Parker]

Let's do it, John.

[Josh Brown]

Let's get it started. I love it. I love it. Does everyone comment on that? Does everyone?

[Adam Parker]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor.

[Michael Batnick]

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[Josh Brown]

Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnik and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[Michael Batnick]

Oh man. Episode 166. Oh boy, do we have an episode for you today. Ladies and gentlemen, welcome to the compound and friends, shout out all the first time listeners. We love you. Welcome. This is your new favorite show. You don't know it yet, but I'm telling you that right now. To our day ones. Thank you so much for sticking with us. Thank you for all the likes, the feedback. You guys are the best guys. We have a fan favorite guest with us today. One of my favorite people on Wall Street. One of the smartest people on Wall street and he knows it. Not humble at all about the. About his intellect. Adam Parker is the founder and CEO of Trivariate Research, a U.S. equity focused boutique research platform. Adam was the chief U.S. equity strategist at Morgan Stanley from 2010 to 2017 and he is a frequent contributor to CNBC. Adam Parker, welcome.

[Josh Brown]

Thanks for having me.

[Michael Batnick]

Great to see you with me today. As always, my co host, Mr. Michael Batmick. Michael, say hello.

[Adam Parker]

Hello.

[Josh Brown]

Hello.

[Michael Batnick]

Nicole's here. John Duncan, Rob. Whole gangs in town. We are so excited to. We're so excited to have you all listening? And let me tell you, this is like one of those weeks, historic weeks. You get a rate cut year, the S and P hit 6000, you have some really big stocks go absolutely crazy. Tesla, DJT, all the blue chips. You have crypto hit 90%.

[Josh Brown]

Morgan Stanley, KKR. There's been a lot of real companies that are up there.

[Michael Batnick]

Now on top of that, all cabinet appointments. This is like everything is happening right now. Nvidia earnings next week. We're just in one of those insane news moments. It's really exciting and I'm so happy to have you with us this week. Can I play something for you?

[Josh Brown]

Yeah.

[Michael Batnick]

Okay.

[D]

In terms of just the overall macro picture, it sounds like you believe that despite some reemergence of inflation, growth won't be a problem. So you're not concerned about stagflation? No, I think the economy is pretty good and I think they're going to run it pretty hot. And yeah, I see the stock market is good, right? And asset prices are high. Christmas should be good. Employees, employment is good. Wages are up. I don't know, unit labor costs are up three and a half percent. And I think there's 2% of productivity on top of that, which means that wages must be at 5 or 6%. So, you know, obviously not each person is in a great spot, but collectively this should be pretty, pretty strong economy. But in your latest letter, you wrote.

[Josh Brown]

That by most measures the.

[D]

It is the most expensive stock market that we have seen since the founding of Greenlight. But it sounds like you're not outright bearish. So what does that mean for your gross exposure? Yeah, we're not outright bearish. And it is the most expensive market of all time, as far as I can see. At least since I've been managing. There's plenty of businesses that are pretty ordinary. You know, they grow GDP or GDP plus one or two and they're trading at, you know, 45 times earnings and stuff like this. And then there's other businesses that have a little bit more excitement than that and they're trading at 45 times revenues and things like that. This is a really, really, really pricey environment.

[Michael Batnick]

And that, of course, is country legend Chris Stapleton. That's David Einhorn with Leslie Picker at CNBC's Delivering Alpha yesterday. The most expensive market he's ever seen in his life. Was that the quote?

[Josh Brown]

Yeah, I totally disagree with that.

[Michael Batnick]

I mean, I think he probably disagrees with that. The most expensive market I've ever seen. David Einhorn.

[Josh Brown]

Really? That's not True on standard metrics like the median stock, free cash flow yield.

[Michael Batnick]

Should we get him on the phone or no?

[Josh Brown]

I think if your intro included me having a humility challenge, I think we're gonna. Okay, we're gonna get redlined if we get the two of us on the same phone.

[Michael Batnick]

I didn't want to play like 20 minutes audio.

[Josh Brown]

We don't make fun of wildly successful geniuses. But I'm saying I think when I look at the median stock, I don't see it that way.

[Michael Batnick]

We're David Einhorn fans, so I listen to everything.

[Josh Brown]

Guy's a genius and a billionaire. I'm just saying the median stock is not at an all time high on price on free cash flow yield. And I think when you adjust for margins, a lot of companies have higher margins than they used to. And it's very true. Tried and tested that valuations related to margin. So maybe if he's saying, I think everything's wildly over earning, that's true, but it's not true optically on today's valuation metrics. That I can say.

[Michael Batnick]

And he's not bearish. So he finished that by saying, but we still think the market can go higher from here. So that's not what a lot. A lot of value people. Value is the only input that they use to think about markets. And so I think there's a huge.

[Josh Brown]

Arrogance to being a value investor. Okay. It's really different than it was 25 years ago. I think when I started, I thought the growth guys were the arrogant guys. They had to envision some total available market and whether the drug or the technology works.

[Michael Batnick]

And the value felt Janice, Janice attitude.

[Josh Brown]

Yeah, I felt more humble, like value, like, okay, I know how much default rate could be in the price. I know demand supply for metal. I can kind of bet now that. And it was sort of like you could use backward looking data and be like a reasonable judgment value investor in the 90s or whatever. And I think now it's like totally in reverse. Like the growth investor. Just like, I know the themes that are growing. We can list them off. I want to own semis, whatever. We can list them off. And then I can buy the high quality companies that are in those and I just wait. If they roll over, I just buy more. I mean, that's all that's worked the last 15 years. Whereas value, I got to be like Eric or you know, arrogant. Maybe it's like much harder. I've got to like envision recovery.

[Michael Batnick]

Do you agree with that?

[Josh Brown]

It's different than it Used to be.

[Michael Batnick]

Is value the most is value right now in the modern era, the most arrogant prism through which to view whether or not stocks are a buy.

[Adam Parker]

Maybe stubborn is a better word.

[Michael Batnick]

Stubborn versus arrogant.

[Adam Parker]

So gmo just funny mention this, Adam. GMO just wrote a piece that I haven't had the chance to read yet, but they say it opens with devalue stocks, our GMO asset allocation's highest conviction investment idea.

[Josh Brown]

And they look at this from 1999-2000-2001-2000, 2003, 2004. I mean I was in Grantham's office 20 years ago saying Neiman version sugar pee. That stuff doesn't work because in a.

[Michael Batnick]

Bed'S margin, GMO's highest conviction bad 10 years ago was emerging market timber.

[Adam Parker]

No, but listen, so you're right. I think that the iPhone changed everything. These companies fundamentally look different. The cloud computing, the margin profile looked different. And what GMO got wrong, and no disrespect at all, they're obviously legendary investors. That it was all about margins of the most revealing mean reverting series in finance turned out to not be true because they didn't understand what Apple, the moat, the Google, like they didn't understand it. So what they're saying is that the deep value, so the cheapest 20% of the market is in the fourth percentile. So almost never been cheaper and for good reason. Investors don't want it.

[Josh Brown]

If I print off for you, we do this all the time. The mega large cap companies that trade below 10 times forward earnings and I show you them, there isn't a single one. Oh, did you know that it's like kind of General Motors, a little bit cheaper. You're not going to be like, whoa.

[Michael Batnick]

It'S like, totally, yeah, we're all the way and it's just sitting there.

[Josh Brown]

What's different? And here's what I think is different. I just measure stuff, right? Like I don't, I don't. These guys are doing much more fundamental deep research. But it used to be a reasonable thing to say, hey, you know what, I can buy this stock because it's sort of discounting a normal recession now. The stocks where the multiples contract the most are still the worst during the recession because the market learned last cycle their earnings get most impaired. Like the numbers come down the most. So the actual optical valuation isn't a positive sign that it's in the price, it's a negative sign that it's about to get annihilated on the earnings. So like that's What I mean like that's the arrogance. Yeah. It's like you're saying that the market's wrong. That's the arrogance. Right. And I feel like on average now the market's right, that there could be some great stuff in there. These guys are great stock pickers. Of course, Einhorn is a great. I'm just saying the basket of them are going to underperform. So it's harder to find the turnaround and gamble what's coming. You know what I mean?

[Michael Batnick]

One of the points that he made was that we're in a market that's now obsessed with only one thing, which is earnings growth. The thing is we're paying 20 and 30 times earnings for companies that are maybe growing 2% faster than GDP. So the thing that investors like the most is not just the fastest growing earnings, although we love that. It's the consistency. We have companies that are so consistent finding ways to grow earnings every year like Microsoft and Apple and Meta. This is what the market price grows above all things. And that's why we pay 20 and.

[Josh Brown]

30 times it's gross margins. If I look at, we took a look at all the stocks in the growth universe that have beaten by 20% or more rolling over time and we said what did that 20% or more beat come from? Was it the multiple expanding alone which would be oh, it's expensive. Was it earnings revisions, earnings growth? The answer is it's gross margins. The ones that outperformed by 20% or more had the most gross margin expansion. Why? Is that a proxy for future growth?

[Michael Batnick]

No, but why do investors gravitate towards.

[Josh Brown]

Because the business model of companies that have high gross margins is more repeatable, it's more stable. There must be something about their pricing power or their product. So I think when you look at the price of orderings on next 12 months earnings, it looks expensive. But if a lot of businesses are higher margin, they're not as expensive on 2, 3 year out earnings and those are more believable.

[Michael Batnick]

What percentage of your customer base understands that?

[Josh Brown]

I don't know. I mean we focused as you know on institutional investors and I'd say pretty high percentage. I mean it just depends. Some guys are really just like bottom up biotech geniuses and not really thinking about that. That's a different word they're thinking about is the drug safer, effective. But I think most generalist PMs who are trying to beat the S and P with a diversified portfolio are pretty aware that to get to the long term average of 17 times forward earnings, you would have a collapse in the market. The only way we can get there is if you have a collapse in profit margin for the biggest company.

[Adam Parker]

So listen, a lot of these people are using an outdated playbook. Remember like Porter's Five Forces was like the bible and it said that if you have these high margins that will attract competition and it will drive margins lower. It's the opposite. The high margin businesses are monopolies.

[Josh Brown]

They have moats, they have the high.

[Adam Parker]

Margins because nobody could come in and take them.

[Josh Brown]

Like Taiwan Semi is a perfect example. Like if you decide you want to beat and start and beat Taiwan Semi, you have a like good luck. Right, right.

[Adam Parker]

But YouTube too. You just go after YouTube.

[Michael Batnick]

But it's bigger than that. And people have talked about this. We long ago, I think the US fought this landmark case against Microsoft 25 years ago and it drug on. Is that dragged? Dragged on. It dragged on.

[Josh Brown]

It's probably in one of these books.

[Michael Batnick]

I don't think it's drug on. It dragged on for like seven years. And by the time it was resolved it was a moot point. The lawsuit was about anti competitive behavior when Microsoft bundled Internet Explorer, the browser with its Windows operating system. And the argument that the United States made was that this is reducing competition and it's ruining the thing is Internet technology moved so fast. By the time that was resolved, Google had come along and nobody gave a shit about the Windows, the Windows Internet Explorer bundle. It was a moot point and browsers were free and everyone had one and it didn't matter. But I think what happened as a result of that ridiculous waste of time and money is that we kind of abandoned the idea of antitrust and we allowed a 15 year period where these companies not only built vertical monopolies, they started building horizontal.

[Josh Brown]

Yeah, you could buy any, buy anything where the technology.

[Michael Batnick]

So here's a really good example today, Hims and hers, which is a publicly traded company, Telehealth company direct to consumer. So if you have an embarrassing problem like female pattern baldness or erectile dysfunction, you use hims, you can call, you can use the Internet and they will give you a prescription which then gets delivered in a nondescript thing to your house. Okay, great, great idea. And there are five of those. There's roe, there's okay, that stock got annihilated today because Amazon said, oh yeah, we have a telehealth service. It's a low cost, you know, the price upfront, it's a clinical visit and we bundle that with our drug delivery. So the prescription is built right into the visit and it's available to prime users.

[Josh Brown]

It's all Walmart. Everyone's a primer. Amazon, they're gonna win. Right? Right. So but like that direct to consumer businesses generally are. These are Warby Parker. Same thing. Like it's hard to.

[Michael Batnick]

So for that to make money. Here's a company that is a bookseller turned. Turned grocery store.

[Josh Brown]

My dad bought stock like the Kindle. Okay. Right.

[Michael Batnick]

But now they're in healthcare and they're not just in HealthC. They're filling squares and they're putting people in front of doctors. Nobody doing research at GMO could have foreseen that 20 years ago.

[Josh Brown]

I think fundamental analysts should spend a big chunk of their time on gross margins for a company. And do they have a differentiated view from gross margins and consensus? And there's a lot of things that go into that pricing mix. Input costs, labor, commodities, logistics. There's a lot of things that can make them go up or down. But one of the things I've learned in the last 25 years is like you don't want to short stocks where the gross margins are going up. That's like.

[Michael Batnick]

But I think there's a legitimacy to tam. I know it gets embarrassingly misused, but I also think network effects. I don't know how you quantify the network effects of something like prime or Netflix or. These are. So Netflix is going to show the Tyson. Is it Jake Paul or Logan Paul? Jake Paul vs Tyson is Friday night. I'm not suggesting it's going to be like good boxing. I'm just suggesting it might be the most watched boxing match in the history of the world because it's Netflix. So it's free and it's global synchronized all over the world at the same time. And Netflix can translate it into other languages immediately and it'll be like a formula one race. So how do you compare that to a cable TV operator in 1989 with straight face?

[Josh Brown]

Look, eight of the biggest ten U.S. equities in the 80s were energy. Right. They're high cap bet. So if I'm going to compare margin profile from today and say it's expensive versus the 80s, it's the ultimate apple versus orange comparison. So I think you got to focus on margins. And then the other thing obviously is the shareholder return, the management decision making. Are they good stewards of capital? And so fundamentally else I think can differentiate that's where they should be spending their time.

[Adam Parker]

But two things can be true that the old playbook throw it up you're using outdated models, but also valuations do matter.

[Josh Brown]

It could also still be expensive and valuations do matter.

[Adam Parker]

And are these stocks too expensive?

[Josh Brown]

So I did a note a couple weeks ago inspired by Costco, which I.

[Adam Parker]

Think all that trading at 45, 40 times.

[Josh Brown]

40 times.

[Michael Batnick]

40 times.

[Josh Brown]

It got over 50 times forward. And that's what inspired us to write the note. And I kind of set up as look, we all like Costco. It's a great business. It had that Netflix moment of they're going to stop Brown and Batnik from using the same idea. Kind of monetize the door better. They get over 50% of their operating margin from that annual fee. And it's a great business. The employees like working there, but at 50 times forward. So we said let's look at every company in the market ever over the last 25 plus years that had been below 50 times earnings for the last few years and had ascended up to 50.

[Michael Batnick]

What happened after?

[Josh Brown]

Because per Greenlight's view, it's not like its growth rate really changed that much. It's a pretty solid grower. But the margins went up a little bit. And that's associated. Basically the answer is six to nine months later you start seeing pretty steady margin, sorry, multiple contraction and underperformance. Only about 24% of the stocks can maintain that 50 multiple.

[Adam Parker]

Two years later there's a limit.

[Josh Brown]

So you start fishing from a pretty disadvantaged sea. So what we start doing now at Tribarius, anytime we see a stock that got eclipsed at 50 time, we say, hey, you're in the kind of choppy.

[Michael Batnick]

Water now that it may not be a sell signal, but it's not the time to put new money.

[Josh Brown]

On average it was like six to nine months later. It really started like a 10 month through 30 month decline. Okay, so it's not like moment it gets there, you panic, but it certainly gets into your red zone or however you want.

[Adam Parker]

I wonder if Einhorn would say the expensive stocks are way too expensive.

[Josh Brown]

That's totally probably what he means. Stuff like that, where it went from 2 to 3% margin round numbers, it got massive multiple expansion. It's a great business. But to walk in today and say for the first time ever, like geez, this Costco seems like a great investment.

[Michael Batnick]

This is what I would say and.

[Josh Brown]

I agree with him on that for sure.

[Michael Batnick]

Valuation matters, but only when a company.

[Josh Brown]

Up, well, yeah, down revisions plus high multiple, you get the double whammy. Right, right, right.

[Michael Batnick]

Until a company has a misstep or an executional failure or like Boeing or like some kind of crisis crowdstrike recently, that's when valuation matters. And until then it really doesn't because asset managers are chasing the names that are already working.

[Josh Brown]

Yeah. The other thing kind of per this sort of the market evolves and it changes is it used to be classic quant signal was I buy the cheapest quintile on price to cash.

[Michael Batnick]

How's that working out?

[Josh Brown]

The best performing now are more like the sixth and seventh most expensive. Right. The only danger zone for us is in the top decile EBITDA forecasted sales there. I'd say when you get really extreme, in fact, I would argue, I guess I particularly don't like the deep value point because the cheapest decile and the most expensive decile are bad.

[Adam Parker]

Stay away.

[Josh Brown]

They're bad. The reason they're so cheap is the market's telling you something wrong.

[Michael Batnick]

Details.

[Josh Brown]

Yeah, they're cheap for a reason. And the reason is they stink. Right. And the ones that are super expensive, they just start to get riskier on your point, like they're probably embedding really high forecasted growth. That's a risk. Or you know, you could, you, you have a bigger risk of your double whammy of like lower numbers and a lower multiple. So I don't mind a six decile expensive stock that's doing okay. Like the market's told you that since what, 2011? Pretty steadily. That's, that's the go zone.

[Adam Parker]

Not to put words in their mouth because I didn't read the post yet, but they would, I think they would say it's like there's always been trash and the trash today is cheaper than the trash has ever been.

[Josh Brown]

Right. And my point back to them would be yeah, it's also worse.

[Michael Batnick]

Oh, it's trashier.

[Adam Parker]

Yeah.

[Michael Batnick]

I don't know. Is that true? Like do they have more debt or do they have lower mar.

[Adam Parker]

Or maybe the market's smarter.

[Josh Brown]

I think more risk to their viability, more obsolescence, more disruption risk probably.

[Michael Batnick]

Yeah, I would agree with that.

[Josh Brown]

And so I think it's like, you know, it's easy for me to say the newspaper industry is fairly cheap versus its history.

[Adam Parker]

Yeah.

[Josh Brown]

Call centers don't feel like, wow, they seem like cheap. Right. But. Or you know what I mean, like I'm exaggerating for a fact. But you know, some of those businesses have real pyramids.

[Michael Batnick]

In the late 90s, I was, we were selling, we were selling steel stocks to people. They were the last ones left. There were five left.

[Josh Brown]

Right.

[Michael Batnick]

They all since went bankrupt. Bethlehem steel had a $7 stock price and everyone you spoke to had heard of it. So, like, what if I told you you could buy Beth Steel at four times earnings? Okay, four on the way to two on the way to one on the way to nothing.

[Josh Brown]

I think some of the stocks have rallied this year. Like, I'm still not sure they're not going bankrupt. I mean, ATT had a nice big move. General Motors has been a good stock peloton. And are you sure?

[Michael Batnick]

Like, well, Spirit just went bankrupt.

[Josh Brown]

Right.

[Adam Parker]

Should I buy it here?

[Josh Brown]

GM went bankrupt 15 years. I mean, like AT&T. Like, I think they go bankrupt in my lifetime. I mean, I hope I live. They have so much debt. Like, at some point when you grow zero and you have that much debt, it can be a problem. So they can oscillate, but I don't know. So I'm just saying sometimes the optical valuation, I think is more a problem than it is an attractive thing.

[Michael Batnick]

I want to give you some props for what you said the last time you were on the show. Oh, no, good.

[Adam Parker]

It's good.

[Michael Batnick]

No, it's good. Our research associate, Sean Russo combed through your comments and you absolutely nailed it.

[Adam Parker]

They combed the desert.

[Michael Batnick]

Michael, you want to run through these?

[Adam Parker]

Okay, Adam, this is you.

[Josh Brown]

I feel like karmically this is a bad idea. No, for real. Everything I'm about to say is going.

[Adam Parker]

To go to show you're. Yeah, this is not going to work out. That's what I mean.

[Josh Brown]

This is the biggest short idea I've ever had.

[Adam Parker]

Shorting me right now was, was January 2024. So you're right on the money. You said a bottoming economic activity gauge and loosening financial conditions are typically positive for risk taking. Check. Dovishness means higher price to forward earnings ratios, particularly for growth stocks. Nailed it. If the economy slows but doesn't hit a recession and interest rates slowly continue their path toward a normal yield curve, we could see materially higher equities in 12 to 18 months. Nailed it. And finally, the bottom line. We think the risk reward for US equities is skewed to the positive for 2024. And that was not really consensus.

[Josh Brown]

Well, I'll tell you what I'm worried about right now. And Josh, I'm sure, sees this too.

[Michael Batnick]

Very proud of you, by the way. All useful. I mean, that's 10 months ago. That's exactly the environment we ended up in.

[Josh Brown]

If you do what we do, you're going to be bullish. Bearish. Right? Wrong. You live in all four quadrants. And I think you got to take the compliment, dude. I'm trying to fend off the short idea that I know I now am. But one thing I will say is, and you and I over indexed toward talking to word salad people who don't invest any money and kind of have, you know, revisionist history on what they said. But I will say there were a lot of these cross asset types who were pretty negative on equities two years ago. And one of the things I'm worried about is they're universally bullish now. Like, you know, when you go on TV now, it's like, wow, just now.

[Michael Batnick]

Or they've gotten there, I would say.

[Josh Brown]

From like a couple weeks before the election. And now it's like this theater the other night. Like, I couldn't get somebody to say something bearish. I'm like, all right, let's say we get in the 5,300 at the end of the year. What happened? Let's say bond. All people could say is, the dollar keeps strengthening. Well, it has been strengthening. I'll give you an example. There's a lot of things I don't know, and one of them is what the Japanese carry trade actually was. I searched every earnings call transcript from every US company back to 2011. Everyone. The words Japanese carry trade had never been used in consecutive.

[Michael Batnick]

We laughed at that shit in real time on their show.

[Josh Brown]

I didn't know what it was. I'm like, asking all my friends, what the hell is this? Well, it's jet banks, okay? So I looked just before I came on the show. I was just looking. We're kind of close back up to where the dollar yen was. It's like, really close to, like, July. And so at the dinner I had with investors, I'm like, does anybody worry about thinking it was like, nah, that can't happen again. I'm like, okay, you guys are supposed to, like, manage risk for, like, hedge funds.

[Michael Batnick]

It can happen again. But we could all ignore it. Yeah, like, we, like, everyone ignored it.

[Josh Brown]

Because it recovered so fast they didn't even know what to do.

[Adam Parker]

But, like, so I hear you that everyone.

[Josh Brown]

I don't know what it is. I'm just saying.

[Adam Parker]

But why wouldn't everyone be bullish? Maybe that's in and of itself is bearish, but why would you expect any different?

[Michael Batnick]

That's six weeks left. You have positive favorable activity on tax policy and deregulation ahead. You still have interest rates coming down, although maybe they shouldn't, which we're going to get to in a minute.

[Josh Brown]

So I hear you. What you're basically saying was what's the bear case? So we could go, I think we know the bull case all over the place. And I think there's a. I think the bull case has a higher probability than the bear at the current moment. So. But what worries me is just, okay, what's been a tried and tested formula the last three or four years when Morgan Stanley, Goldman Sachs and JP Morgan to the year at how it looks, which is like this week or next week, and they're universally bearish. The market rips. Okay.

[Michael Batnick]

They might not be this year.

[Josh Brown]

They come out bullish this year.

[Michael Batnick]

That's such a great point.

[Josh Brown]

I mean, what's left? Okay. And I'm a little bit worried that these guys. I made. I made the sausage when I worked. Like I see how it works. Right. Like it's the most painful process. Right. There's like a three week thing. There's 20 chef in the kitchen conclave. It's so brutal.

[Adam Parker]

But everyone's on one side of the boat.

[Josh Brown]

Right. And I'm just worried now that like it's hard to come in.

[Michael Batnick]

And the bear cases, there's no wall of worry.

[Adam Parker]

Well, here it is. That's exactly right. So Cali, our chief strategist, made this chart from the conference board and it asks, do you think stock prices will be higher? I think it's one year later. And the percentage of Americans that think.

[Josh Brown]

That is that we should poly market this thing, man. What's going on?

[Adam Parker]

It's basically an all time high.

[Michael Batnick]

Right?

[Adam Parker]

It's at an all time high.

[Josh Brown]

Right.

[Adam Parker]

So to your point. Yeah, the bull case is obvious. We all know what the bull case is.

[Michael Batnick]

Hold on. 50% of Americans think stock prices will move higher. And two years ago it was like 25%.

[Adam Parker]

So yeah, I think.

[Josh Brown]

Right. Because they're trailing price momentum affects their mood. Right.

[Adam Parker]

The point is that there's no wall of water right now. And that in of itself is dangerous.

[Josh Brown]

I think the biggest risks that people see that are like the macro types are strengthening dollar maybe a hot jobs report. December 6th being the next data point.

[Adam Parker]

Well, inflationary policies and then get them.

[Josh Brown]

To pump the brakes on the Fed. The Fed pumps the brakes. I mean that's.

[Michael Batnick]

We got c. All right, so we got CP week. Came in inline. October was 0.2% month over month, two and a half percent year over year. The estimate was 2.6. So it was actually a little bit cooler. The lowest year over year CPI reading in three and a half years. Core came in slightly above expectations. No big deal. Shelter was still up. That's still annoying. And then PPI was today. And here, let me share this with you. This is bank of America. Core PCE likely to print at 0.3% month over month. Again, given today's PPI report and yesterday's CPI data, we expect core PCE is what the Fed cares about. We expect core PCE inflation to increase by 0.3% month over month. The year over year rate should rise to 2.8 from 2.7%, due in part to base effects that might be a problem. Rising pce. Rising core pce.

[Josh Brown]

This is not what I'm telling people to position for.

[Michael Batnick]

Do you have two more of these?

[Josh Brown]

You're asking? Let's brainstorm what the bear case could be. Besides the obvious, which is you want to do the opposite. If everyone's okay, which I think we all. You have to admit, it resonates a little with all of us. Right? Right. Okay. So right now, the investors I talk to, who are very kind of in this, I would say, hyper political mode for the short term, there's a very benign interpretation to what policy is gonna look like. Everyone I know is like, well, Trump may mention a lot of tariffs, but in reality, there'll be deals and it won't create a lot of volatility and companies won't have to adjust how their government relations are with Mexico or China because there's gonna be some deal that's gonna be fine.

[Michael Batnick]

Don't listen to everything he says. Is the consensus.

[Josh Brown]

That's the consensus, and that's in the price. Or at least directionally in the price. So if you get something breaks in a negative way in the first six months of next year, the interpretation could change. Right. If all of a sudden the corporate's like, you know What? I'm moving 2,500 employees from Monterey back to Memphis because I just can't trust. Or Trump does something with Canada because he wants to poke the policy. Again. I'm trying to be politically neutral, but you could see some weird. They're our biggest trading partner in dollars with loom. Something could happen and people are willing to. I'd say innocent till proven guilty. As a general Adam, to your point. Right.

[Michael Batnick]

It wouldn't even have to impact earnings. The sentiment shift alone, where people like, oh, wait, actually, maybe he is crazy with multiples here.

[Josh Brown]

Yeah, that's right. And if you just say, okay, yeah, it's a risk. Right. Because if you were running a big company and you saw, like, weird absenteeism in the US and, like, none in one of your forums you might have on the margin, moved employee. You're trying to get your margins up now. You're just a little bit concerned about having stable relationships with Mexico or China or, you know. So I'm in that camp of saying, yeah, I think they probably both want to have this thing work out and be smooth enough. It's fine. And they might work a deal out, but everyone thinks it's going to be benign. That's one risk. The second would just be the economy.

[Michael Batnick]

But he's not.

[Josh Brown]

Causes them to pump the brakes on accommodation. Like the Fed stops, they pause. I mean, that could be bad. That's possible.

[Michael Batnick]

He's not renegotiating NAFTA this time. That was the. In 2018, in addition to all the China stuff, it was about redoing the trade policies of the Clinton era with Canada and Mexico. I don't hear him say shit about Mexico this time. That's just not part of his repertoire.

[Josh Brown]

I think what people think, I'm just like. I'm just trying to reflect what I think. Institutional investors I talk to think is there'll be some sort of, like, golf round in Palm beach with Xi and Trump, some chocolate cake that Trump will say is the best chocolate cake. And then there'll be some sort of agreement, like, look, I'm gonna say some crazy stuff about tariffs to flex. You're gonna absorb it. It's fine. You're gonna buy a trillion of Treasuries across the curve, beautiful Treasuries. And then I'm not. Beautiful, wonderful Treasuries. The best Treasuries. And then I'm not gonna charge tariffs on almost anything. Give me, like, two random products. You don't care about that. I can take or 50% tariff on.

[Michael Batnick]

That, I could say.

[Josh Brown]

And then I'll say we're tariffing you because I'm the man. And then we're good. Right?

[Michael Batnick]

Look at how cynical we are.

[Josh Brown]

But I'm saying. But that's what the consensus is, Jules. Fester, I don't even know enough. I'm just telling you that's what people think is going to happen. And so we're not going to have bond vigilante stuff. We're not going to have the most volatile outcome. So I think the risks to the market could just be that there's currently optimism and a benign interpretation about regulation, about rates, about, you know, the smoothness and history would dictate that we're going to have, you know, one or two balls in that road. I mean, you know, the only thing.

[Michael Batnick]

He cares, the only thing he cares about more than his golf score is the stock market.

[Josh Brown]

Right.

[Michael Batnick]

That's the score in.

[Josh Brown]

And that's why I think one of the five still has a higher probability than the bear. I agree, but I'm just saying we all know we're not going straight up every year for the next four years.

[Michael Batnick]

Let me show you this chart. Let me show you this chart from. I don't know where this came from. The likelihood of Fed cuts. I think Charkid Matt did this on top of the BLS. So 82% chance of a cut in December up from 59% chance of a cut in December prior to the last CPI release. So we know the Fed goes off PCE and they might have already decided what they're going to do anyway. Is there a chance that they surprise the market and don't cut in December?

[Josh Brown]

You know that WIRP function which me and everyone else look at pretty regularly, the world interest rate probabilities, it just moves so much. Of all the things on planet earth that need to be poly marketed, that's probably the number one up there because you go from eight to four over a month or two. And I think people believe we're not halfway done cutting this cycle. How about that?

[Michael Batnick]

Okay.

[Josh Brown]

Okay. And so if we pause, I think the market will go lower on that news.

[Michael Batnick]

I do too, definitely. Yeah, I don't because I think that introduces new uncertainty.

[Josh Brown]

Like wait, where are we? The cycle, Are we done? Right. Right. People think we're three into eight or three. We've done three 25 units, 325 units into 825 units. If that's where people's heads are and we're not quite halfway done, they can remain. Oh, it's early to fight the Fed. But if people think we're more than halfway done, all of a sudden it causes a bit of a multiple.

[Michael Batnick]

What gets sold off the hardest if they don't cut in December?

[Josh Brown]

Regional banks.

[Michael Batnick]

Yeah, they're going to kill those stocks.

[Adam Parker]

Small value because they're like dreaming.

[Josh Brown]

I think they're almost already discounting too much because they don't even do M and A transactions. And some of them. Yeah, so it's a little bit. They're already.

[Adam Parker]

You said this earlier. But another potential risk is the strong dollar doesn't hurt stocks right now.

[Josh Brown]

It should be directionally negative for large cap companies. It was used to be. It should be the words that I look for in the transcripts are constant currency. So when everything's perfect, IBM, everyone will report, these are my earnings. As soon as currency starts hurting them, they say, well, here's my earnings. But a constant currency. They were good, right? So you know when it's negative, and if you think about it, like, when's the last earnings call you read? And you're like, oh, they're reporting a constant currency. You haven't seen it because it's not hurting in the head.

[Michael Batnick]

Who sells a multinational stock on a currency earnings mission? Nobody. Right. Like, nobody's serious.

[Josh Brown]

It's smarter than to do it, you know, for sure to report it that way when it hurts them. Right. But yeah, directionally, in terms of like, the earnings revisions for those companies, Pharma, Staples, Select Tech, where they have disproportionate cost versus revenue in Europe in particular. That's the issue.

[Michael Batnick]

No, I'm saying from the investment standpoint, say, oh, why did you sell Microsoft? Currency, Currency.

[Josh Brown]

Nobody's like trying to. Equity focused, guy. No, but it could cause flows out and it could make earnings revisions relatively hard. More challenging for the big versus the small. It could fuel that small.

[Michael Batnick]

All right, let's go into your research. John, put this table up. This is 97 years of monthly returns for the S&P 500. What are you telling us here?

[Josh Brown]

Well, this was the same thing. We're all saying the market's going up. This looks at all the years where the market was up a lot in January 1st to. Oh, this was the exhibit before that. So we looked at all the years the market was up a lot. January 1st to October 31st. And then we kind of said what typically happens in those years in November and December melt up when the market's up 20%. It usually does. Well, this exhibit before that just shows the November and December returns.

[Michael Batnick]

Let me quote you.

[Josh Brown]

Yeah. Usually the market goes up. It's like a really high percentage of the time.

[Michael Batnick]

So we have the. John, put that next chart up. So we actually have this one, too.

[Josh Brown]

Thanks. Good work. In the truck. Thank you. Yeah. These ones, it was up 20 or more in that left column. Then you see the November and December return. So you usually get another 5% plus, which.

[Adam Parker]

Not a lot of negative.

[Josh Brown]

Yeah, with not a ton of negative. Right.

[Michael Batnick]

All right, so this is very easily explainable. This is just people doing what's best for their careers.

[Josh Brown]

1943 was the last time you were down over those two months when you were up 20 in the first 10.

[Michael Batnick]

I'll never forget it. I'll never forget it. All right. 16 times in the last 96 years. If the S&P is up 20% plus through October of any given year, the market averages five and a half percent. Only three out of 16 times was the market down over the last two months when it was this strong.

[Josh Brown]

Right. 1936, 1938 and 1946.

[Adam Parker]

And there was stuff going on back then.

[Michael Batnick]

And there was some shit going on. Okay, you very provocatively titled a recent research report.

[Josh Brown]

Oh, no.

[Michael Batnick]

Sell the inauguration question mark.

[Josh Brown]

Yeah.

[Michael Batnick]

So is this like the new shtick? Like buy the election, sell the inauguration? Well, it just felt like sense to me.

[Josh Brown]

Yeah, it just felt like. And I guess that we're dancing around a little bit between us is like we have that icky feeling that a lot's getting discounted quickly relative to reality. There's a lot of optimism. But we also feel like this fomo, it works every time. I still can dream. And so I wrote that on Sunday. Is it going to be a sell the inauguration. I had this dinner Tuesday night during the appetizer. I was like, maybe it's January 1st. And then during dessert, I was like, maybe it's the Monday after Thanksgiving, you know, Like, I was like, you know. Cause as I heard, like everybody.

[Michael Batnick]

That's what you heard from everyone.

[Josh Brown]

Everyone was so bullish. I was like, whoa. You know what I mean? Cause, you know, I think we all remember that first couple trading days of 23. You know, people forget now, but Nvidia and Meta were awful stocks in 22, they were down 50, 60%. And the correct move, if you were God, was cover December 30th and long max on J. So I think a lot of people are worried. There just could be like a bit of a nasty rotation early next year, and they're just sort of hoping that it lasts. And then I start thinking, well, if I. If I'm aspirationally average pm, and I think that now maybe it happens two or three weeks before. And I just, you know, I'm just trying to. It's all game theory at this point. But I am a little worried.

[Michael Batnick]

So you might revise this idea when you see the Goldman Sachs and the Morgan Stanley, they're all bullish.

[Josh Brown]

I don't see how I can justify being bullish for the first half of next year. Or at least I will be. If there's a 20 variable problem, I'll weight that sentiment variable more heavily. Yeah, because that wisdom of the crowds has been like, wrong. The worst thing, the best thing. What's the best Thing you're a contrarian bull. And you're right, that's like nirvana.

[Michael Batnick]

So that's like the right. That's the Belsky moment.

[Josh Brown]

That's the best.

[Michael Batnick]

You're the only bull.

[Josh Brown]

That's the best contrarian bull. And you're right. The worst is, you know, obviously you're out of consensus Baron, you're wrong.

[Michael Batnick]

So you could survive. You could survive. Consensus bear. Wrong. Fine, no problem. Everybody else was a bear too.

[Josh Brown]

Right.

[Michael Batnick]

That you could survive.

[Josh Brown]

If you're a contrarian bear and you're wrong, it's super duper duper bad.

[Michael Batnick]

Well, they fired the two guys this year. They fired Mike Wilson, lost his job. He still works amongst Stanley, but he's not the. He's not the guy anymore. And Kalanovic.

[Josh Brown]

Oh, I was. Well, I thought Wilson still the US Equity strategist, right? Oh, you mean just from the investment.

[Michael Batnick]

They changed his role. It looks like a demotion.

[Josh Brown]

I don't think that's a demotion, but I don't.

[Michael Batnick]

Everyone else does.

[Josh Brown]

And Kolanovich, I'm a big Wilson fan. You know, the funny Ed Klotovich too. I'm surprised because Jimmy Dimon was kind of bearish on equities the whole time. So usually if you're in sync with your CEO, you get a little bit of.

[Michael Batnick]

This is the funniest part. Jamie Dimon is out there saying batten down the hatches for the last four years. The guy that works for him is saying the same thing. And that guy got fired.

[Josh Brown]

And meantime they're building a flesh colored middle finger sized building on park avenue that's about 100 stories.

[Michael Batnick]

It's a death star. Incredible.

[Josh Brown]

I mean, the thing is. No, I guess my view is that I actually was more surprised of the three firms that Kostin said equities were bad for 10 years and was like a 3% return for the next 10 years. Because I think if you're really doing the job and be provocative, you should be bearish once in a while. You have to have a framework that. And things should trip in and you should be bearish and you should be bullish and you should be right and wrong and you don't want to be a perma bull or a perma bear. I think if you have a framework and you're intellectually honest and you evolved and I think that's fine to be negative for six or 12 months, but to say for the next 10 years to your giant private wealth network of rich people, you don't like equities. That's a rough call tap for.

[Michael Batnick]

But you don't understand what the game is now. The game is to sell private market assets. Now do you understand that better?

[Josh Brown]

But I take the other side of that. I think there's 10 reasons why. The real bull case is we're on the precipice in the next six, four to six quarters of seeing companies get better predictive analytics, implement AI and margins are going higher.

[Michael Batnick]

And all these debt, you're missing it. The sales guys want to sell private credit and private equity, I get that.

[Josh Brown]

But you guys know, well from what you do, it's hard. Okay, I'll give you a story.

[Michael Batnick]

Looks like you don't want to say it.

[Josh Brown]

I'll give you a story. Okay. I used to go, I still, I go to Cities, I do six institutional meetings. I used to hit like the top 50 advisors in every city when I was at Morgan Stanley. Right. Ten years ago. And I'll never forget this, it was in Chicago, big Chicago Bears looking fan. And all these guys in the room are pretty successful guys, so they wouldn't be invited. So this guy's obviously got a great book of business.

[Michael Batnick]

He's a header. He's a header.

[Josh Brown]

And in those days, I think they still force you to rank your equity regions. And I always like, I like the US or whatever. And I remember the emerging market guys like, listen, we gotta rank em first this, that. And I'm like, look, I don't know. Okay, so we come up with a document. It's Em, then US, then whatever. I don't remember Europe, Japan, whatever. And so I'm in Chicago, the EM guy's out there, I'm by myself in Chicago and this guy's pulling out the papers and he's like, so you guys in New York, you guys like EM equities, huh? And I'm like, well, you know, I'm the US guy, but that's the house call, okay? And so he's just, he's got the document and he's like, so he looks like Ditka? Yeah, yeah. He's like, to Bears, you know, and he's like, so you want me to do what? You want me to sell, you know, Costco and Google and you want me to buy what? Indonesian telecom and South African. And he's like crushing me in front of the whole crowd. And so what did I realize? And I think about this guy pretty often when em beats the US by 30% a year for four years in a row, then maybe he'll buy some.

[Michael Batnick]

That's right.

[Josh Brown]

There is zero chance that that guy.

[Michael Batnick]

Will because his clients aren't saying why aren't I own em.

[Josh Brown]

Exactly.

[Michael Batnick]

That would take a three year rally to get that to happen.

[Josh Brown]

Massive.

[Michael Batnick]

I agree with you on that.

[Josh Brown]

And so it's like they gotta sell the product and there's guys who want alts but like people own US equities. It's big, it's liquid. They're trying to figure out to get in there. And I think do you agree with that?

[Michael Batnick]

Like what are you apologizing more for? Being long the US stock market in a bear market or being overweight international in a.

[Josh Brown]

If I get you into. If I get you in a brick and then it blows up down 20, I probably pull my money from you 100%. You know what I mean? Yeah, he's like story checks out.

[Adam Parker]

Another sign that things are going pretty well. We have six sectors through November 13th that are up more than 25% of the year. And it's never been better than that. You've chart on John, please. You've never had a year is a great November where more than six sectors were up 25% of the year. So we're firing on all cylinders. There's not a lot of wall wire to climb. Ben Johnson notes via. This is from State Street Global 2024 is a record breaking year for ETF lows $912 billion of net flows year to date. That's higher than the 909 billion record set in 2021. So yeah, everybody's in the pool.

[Michael Batnick]

Look at these numbers. Post election ETFs have attracted 58 billion animal spirits. Yeah, that's literally. Oh, the election's over. Press the buy button. Like a million people doing that all at once.

[Adam Parker]

But interestingly you also have US money market funds for the first time ever crossing $7 trillion.

[Josh Brown]

Yeah, I saw that today too. Yeah.

[Adam Parker]

You have any views on that?

[Josh Brown]

On the money market?

[Adam Parker]

I'm not surprised. In fact one of my predictions was that money market funds were going to remain sticky.

[Josh Brown]

So one of my five freak out moments in my life was when I found out UBS money market accounts were backed by auction rate securities in 2008 and it caused me to buy some physical gold.

[Michael Batnick]

How did you find that out? You looked or somebody. Or somebody.

[Josh Brown]

I read it and I was like well mean, I could get like a 92% quote of my cash like tomorrow from you, you know.

[Michael Batnick]

Yeah.

[Josh Brown]

And it was like whatever custodian. It was weird. Yeah. So I mean sometimes I just worry like what backs that and where is it? And if people. If there's, like, what backs the $7.

[Michael Batnick]

Trillion, there's a run.

[Josh Brown]

If people freak out, like, it's. It could make you nervous, I mean, I guess.

[Michael Batnick]

Well, it's backed primarily by tether and auto industry, commercial paper. What are you worried about?

[Josh Brown]

I guess it's a barbell, right? You kind of say, I have some profits, I'll lock some in. And what rate are you getting on that? No, I didn't see what they were.

[Adam Parker]

Four. Is it four? I guess. But are you surprised that given the strength of the market that money is still not coming out? It's going in. Money is still going in cash.

[Josh Brown]

No, I think the trailing price momentum is the biggest indicator of the flows. Right. I mean, you saw that with the copper.

[Michael Batnick]

But it never comes out. It only the amount going into it lessens. But the money is making more money. So if you own a money market.

[Josh Brown]

Fund, nominally, for sure.

[Michael Batnick]

I'm in one of Fidelity's best institutional class money market funds. As it spits out its monthly income to me, it buys more of the funds.

[Adam Parker]

Josh discovers compound interest.

[Michael Batnick]

No, I'm just saying. No, it's dividend reinvestment, but it's not dividends. That's why the money never leaves. Because it keeps buying more of it of itself. Do you see?

[Adam Parker]

I understand.

[Josh Brown]

I like the S and P has some. I mean, I don't believe anybody should have a tremendous amount of money in a money market account. I think unless you're actively trading and you're good at. I think when you deploy capital, you want to. I think the problem with letting. Like I discovered this many years ago is on the fiduciary responsibility I had was to the employees of Alliance Bernstein. I worked at Bernstein. It was on the 401k board. And it was right after 2008. And when I. But what the data showed was 95% of employees never change their allocation from the day they start working.

[Michael Batnick]

I believe that.

[Josh Brown]

And so if you're super embarrassing to get hired in 2008, you're like, oh, I want 100% cash. And then if you work there 20 years, you absolutely screw yourself with. So the debate we had was like, should we even allow an allocation above 10%? If they wanna max out, it's 10. But they gotta be in equities or bonds or something. Because otherwise. And these are professional investment professionals. A lot of men. And still 95%, don't you? I don't love the money market thing, but I could see as a rate, it's at 4. If you have 20 or 30 million bucks and you just made a ton in Nvidia, you might.

[Michael Batnick]

There's more than that. If it's investment professionals, they already have all the market upside and all the market risks.

[Josh Brown]

Right? So that's what I'm saying. They're barbelling. They're like hedging it with something more real life. Yeah, yeah.

[Michael Batnick]

This is the worst chart. This is the dumbest shit I've ever seen. If anybody says, what's the dumbest chart you've ever seen? I'll show them this, John, if you please.

[Josh Brown]

I'm sure we produce something that would.

[Michael Batnick]

No, this is not from Trivarian. Okay. This is consumer sentiment index by party affiliation. This is the five day moving average from October 1st through November 11th.

[Adam Parker]

What happened then? Just kidding.

[Michael Batnick]

I mean, this is genuine. When you do a sentiment poll of small business optimism or University of Michigan Polymarket.

[Josh Brown]

Polymarket.

[Michael Batnick]

All right, what I'm saying, this is what you're getting. You're not getting people's assessment of how things are going financially. You're getting their mood swing based on what they saw on Fox News or msnbc.

[Josh Brown]

I have like such a heartwarming thing on this. I was at the Duke NC State football game in Raleigh last Saturday. My daughter's a Duke student and it was, you know, it's a very military centric state. And with Veterans Day, they kind of rolled out some vets and the crowd was going crazy. They pulled out 100 yards long flag and had all these soldiers.

[Michael Batnick]

Everybody loves that.

[Josh Brown]

And here's like the amazing moment. They roll out these two guys who were World War II veterans. They were 98 and 100. And the crowd just chanted USA on both sides of the floor.

[Michael Batnick]

Yeah, we love that shit.

[Josh Brown]

It was amazing. I haven't, I mean that. So, you know, interview that crowd, Josh.

[Adam Parker]

But it matters though, the reason why.

[Josh Brown]

This totally, these survey polls are trailing sentiment.

[Adam Parker]

But this influences people's behavior. If they feel better, they'll spend more, they'll be more optimistic, they'll invest.

[Josh Brown]

It matters.

[Michael Batnick]

Let me tell you the, the ingredients.

[Josh Brown]

To this morning consult for advertising, I guess.

[Michael Batnick]

Morning consult asks people about their current, about current economic conditions. Are they good or are they bad? That's literally how they ask it. And their expectations for the future. Will things get better or will things get worse? So heading into the election, Republican consumer sentiment was at 83. Any number under 100 indicates negativity. A week after the post Trump victory, it's at 107. And a half Democrat sentiment going into election day was 116. Now it's at 100. So the overall sentiment is now in positive territory for the first time since June 2021, largely because of the swing in Republican people that say that they are Republicans to the survey, that's data.

[Adam Parker]

But why do you think this is dumb? I know it's silly, but why do you think it's dumb?

[Michael Batnick]

Because people are dumb. They're not even answering the question. They're answering a question that's possibly related to the economy.

[Adam Parker]

Surveys are done.

[Josh Brown]

I've never back tested.

[Michael Batnick]

All surveys have done.

[Josh Brown]

I've never back tested, but I don't believe there's any like, predictive value in terms of subsequent one week or one month returns from changes in the. Anyway. Yeah.

[Michael Batnick]

No way. Oh. So this is my point.

[Josh Brown]

It's kind of garbage in, garbage out.

[Michael Batnick]

You could take these consumer sentiment, not investor polls, consumer sentiment, polls. Like, how do you like the economy? Well, if that son of a bitch Biden would just get out of the way, like that's how people are answering that question. You could just throw all that shit out and you don't need to.

[Josh Brown]

I think I've told you this before, but my favorite line ever on this, many years ago when I was at Bernstein, they had like a canned political debate in front of all the clients. And it was Bill Bennett, the book of virtues guy. And it was Al, I remember that guy, Al Franken. I think he was just becoming a senator from the comedian transition.

[Michael Batnick]

Yeah.

[Josh Brown]

And Franken gets up there and he's sort of waxing on poetically about how great the economy was during the Bill Clinton administration. And he's got his whole dog and pony show. And so he goes for like five minutes, comedy's great, everything's awesome. Clinton's great. And then Bill Bennett goes. He doesn't like. He kind of, you know, obviously they planned this, but he goes. So I wake up every day on the beach. I walk my dog at sunrise. We watch the sun rise together, him and his dog. I don't give my dog credit for it. And it was just such a perfect, like these cycles. Like the most important thing for the economy is the Fed. Right. It's not the President. Like, there's a lot of other things that matter and we try to blame or take credit for something.

[Adam Parker]

You think the Fed's more important than the companies, than the economy, the consumer?

[Josh Brown]

The two things that I think I've learned in the last 25 years that matter for stocks are changes to perception about rates and changes to perception about growth. And the Fed can influence that a lot. And it's not the reality of the growth or the reality of perception, it's the changes to the perception about it. And so you can look at FF12, 24 GP or fed fund futures 12 months from now and 24, and that kind of can be statistically significantly associated with the multiples. Right. So think about 2021, you got worried they were going to hike. Multiples for growth stocks got killed, like. So there's a period where that's all that matters. And you can do all your fundamental work in a biotech stock you want in 2021, but it's getting killed because the growth, you know, the perception about.

[Adam Parker]

Growth, you know, absent all the strategists turning bullish at the end of this year, for next year, what would you need to see to turn bearish?

[Michael Batnick]

Earnings falling?

[Josh Brown]

Yeah, I'd have to think the margins for the median company are going to go down or are going to, you know, and that would either come from. From. There's a very statistically significant strong relationship between changes in CPI and changes in margin. So if we start seeing CPI go up, a lot of small cap companies can't handle that. Their input costs go up, logistics go up, wages.

[Adam Parker]

This is what makes it so hard. Your job. And everybody's trying to figure this shit out, is that if margins start to come down, the stocks will get killed. And then it's like, all right, well, is this just like a dip and they're going to stabilize or maybe even accelerate or, or, uh. Oh, is it gonna get worse?

[Josh Brown]

That's why the easy thing to do is you buy the ones that are high quality, that high value, high margin, low volatility. You know, I think part of the job of the analyst isn't just figure out what the margins are. It's what introduces volatility into the P and L. The reason why levered companies go down a lot is because when you get bad things, the P and L, you know, their earnings.

[Michael Batnick]

Allow me to introduce. Allow me to introduce. That's a great segue. So here's what could go wrong. Immigration. And if they actually follow through on this idea of some more wage pressure.

[Josh Brown]

Yes.

[Michael Batnick]

So here's the New York Times. The piece is called Trump's Immigration plans could bring an Economic Toll. Newly appointed borders are. Tom Holman said the administration would start with the immigrants who have committed crimes. Okay. I think most people would agree. Good idea. Get them out of here. Okay. There are not nearly enough of those to amount to removals on a mass scale. However, we're gonna run out of criminal immigrants, so then they're gonna look at 11 million undocumented immigrants. That sounds like a lot of people, right? I'm assuming many of whom are in the labor force. Quote, if you are in this country illegally, in six months, pack your bags because you're going home. Mr. Vance said then the numbers could rise by another 2.7 million. These are people who are here on temporary humanitarian authoritarian protection, which could be revoked. So all in, it's 13.3 million people living in the United States in some version of illegal status. And if you ask me what's the thing that could really make people nervous about the earnings outlook is if they're serious about what I just read to you, which, who knows?

[Josh Brown]

I think there's not a direct impact from that for the biggest couple hundred U.S. equities. I mean, I mean, as far as I'm aware, there weren't a ton of illegal immigrants working at the biggest 50 or 100.

[Michael Batnick]

No, but this is how you get inflation back, Right.

[Josh Brown]

It's more that downstream. If wage inflation goes up for small businesses, then they're more impaired to spend, their confidence goes down, et cetera. So I think that argument would be more of a large versus small cap argument. It would probably, because I doubt Meta's earnings trajectory will be massively altered by that.

[Michael Batnick]

Here's an estimate. The Peterson Institute for International Economics estimates that the maximum case supporting 8.3 million immigrants would push prices 9.1% higher by 2028. Supporting only 1.3 million migrants would raise prices one and a half percent. I think most people could live with the less bad scenario. I don't think they would notice.

[Josh Brown]

I mean, prices are going up two and a half percent anyway. Yeah. So I don't. I think there's kernels of truth that are greatly exaggerated to that extreme scenario.

[Michael Batnick]

So it's not a thing that you think is going to be a market impact story.

[Josh Brown]

I think wage inflation will matter for some businesses, but I think the potential and dream for labor productivity is so high right now. I took this course this summer, AI for Healthcare at MIT was an online course, and I learned a ton. I'm like the new virginal analyst who thinks everything's awesome. But I started seeing and we've all kind of interacted in some form with the healthcare system. And I don't think I've ever left and been like, wow, this is like a Picasso. How they like, how they like this whole System worked. Right. And I just think there's so many businesses. McKesson or Sancora. McKesson's a 350 billion revenue company. It's a drug distributor. Pass through a 1% margin. If they can get better at predictive analytics, they should know where every the major drugs need to be in every county in the world. They should get better at. If their margins go to 1.8 from 1.1 on the 350 billion, you want to bet that's a good stock.

[Michael Batnick]

Adam, my dermatologist, they hand me a clipboard with a pen tied to the.

[Josh Brown]

Clipboard when somebody's physically writing something down.

[Michael Batnick]

Incredible.

[Josh Brown]

It's already terrible. They give these examples in this class, and this is so basic and dumb. So I just want you to hear my dumb example and then multiply it by like a million to what can happen. There was a hospital system in Boston that had 250 surgeons. Okay? Surgeons. For some reason, this resonated with me just from my own interactions, family interactions. They do surgeries on Tuesday that like the big surgeries and three days of recovery in the hospital, and they do, like, the minor ones on Thursdays. So the guy who runs the hospital is like, you know, the only thing I care about is having, like, ICU bed capacity, and, like, I basically don't have any on Wednesday. So if something bad happens, like, I'm kind of screwed. So a quant guy came in and was like, oh, If I move nine of the 250 surgeon schedules, we have the exact same available capacity Sunday through Saturday.

[Michael Batnick]

Right.

[Josh Brown]

Does that sound better to you?

[Michael Batnick]

Like, it sounds so stupid that doesn't even require AI.

[Josh Brown]

Right, right. I'm just saying, like, just basics. Okay? So now the AI stuff is like breast cancer imaging and, you know, avoiding, you know, you know, prophylactic, unnecessary double mastectomy. It's wild. There's gonna be a box, I think, in 10 or 15 years in every single new home in your room that's gonna be like a wearable multiplied by a million. And with electromagnetic waves, it's gonna be like, hey, Batnik, you've been sleeping poorly. Have you done this? Or you've been, you know, taking your. It's. It's going to be. So you want to short that healthcare technology complex and the ability to be more effective. And what's interesting is the sentiment right now. It's almost like, republican bad for healthcare, Democrat bad for healthcare. It's like tails and heads both lose. And I just feel like that's weird because Oracle's Showing you there's a little bit of this Cerner deal that's starting to happen two or three years later. There's some. You think intellectually tech and healthcare aren't going to get better. So I'm a little bit, I get that the grizzled healthcare guys, like, yeah, I've heard that and I've lost money on every one of those stocks, but like, kind of excited about the potential. All I think it's going to take for the market to rip higher is going to be a real company. Walmart would be amazing. But McKesson saying, hey, you know what? In the past I would have hired like two or three thousand people to do this and I got it done. Hiring zero. And then you're going to say, that's.

[Michael Batnick]

Such a great point. Like, we're going to have an earnings season at some point this year where companies are actually going to talk about the victories from implementing all the AI in 2023. They're going to be like, look how much better our results are now that we're doing X, Y and Z.

[Josh Brown]

Like Jensen, there was big doubts about the hyperscaler return on investment. People look at the Microsoft capex number and they're like, good God. And I get that the biggest 10 US equities are spending, I think the highest level of total capital spending dollars in the last 25 years. So people are worried about the investment. And so you get Nvidia down 10 bucks or whatever and then Jensen, the CEO of Nvidia, flies to New York in Boston and he says, calm down, go to my website, click on the healthcare button, chill. And then the stock goes up. So I think there's just a positive skew toward getting a good proof case on this. Earnings productivity and labor productivity much higher than Microsoft coming in and being like, our bad. We're shaving by 6p a quarter. It doesn't work. That will happen eventually. They'll plateau it and let others pick it up. But in the next six or eight quarters, like, can you imagine if Walmart is like, we grew our revenue 4%.

[Adam Parker]

And we hired zero, it'll gap up 13%.

[Josh Brown]

Like, if you think their margins are going up 1 whole percent, this stock will trade at like 40 times more.

[Michael Batnick]

If you think it's good for Walmart, think what it means for Nvidia.

[Josh Brown]

It's already at 140 as we speak.

[Michael Batnick]

Did you have fun on the show today?

[Josh Brown]

I love being with you guys.

[Michael Batnick]

All right, thank you. We always have so much fun. Thank you so much for coming By. We always close the show with favorites. And I'd love to hear what you're into these days. What are you reading? What are you watching? What do you think the audience would benefit from knowing about it?

[Josh Brown]

I'm worried that because you've asked me that every time and I didn't prepare for that because I don't really watch tv.

[Michael Batnick]

Where'd you go for dinner with your hedge fund friends?

[Josh Brown]

I don't watch TV because during the pandemic, I watched a couple of shows, the Heist, one Money heist. And in the end they all turned to soap operas and I lost sleep. I was tired. I learned nothing. I was like mad that I deployed the time poorly. And so I've kind of given up. And so I'm like the worst person to ask about tv. I'm a big live sports nuts. Michael and I were talking about the NBA when I walked in. So I think, like, a good business model for me is going with my children to live sporting events. Like, they don't feel the pressure of having to talk to me the whole time because they're entertainment in front of us.

[Michael Batnick]

I'm a big, big, big NBA cup right now. Are you excited about the NBA Cup?

[Josh Brown]

I'm from Boston, so hopefully that doesn't annoy some of your listeners. I'm a huge Celtics fan my whole life. Larry Bird, Robert Parrish, Kevin McHale, the whole thing. And big Celtics fan. We are the current champs. I have a little bit of a Celtics looking tie on, so you guys don't need the contest. We lost. Certainly win the whole thing. We also win. And I thought. I was pretty proud of my response to one of my Knicks fan buddies who was teasing me about losing. I pulled out the old. Nobody who's won the par three tournament has ever won the Masters. Like, like, we do that. We do the NBA championship. We don't do the. The midseason.

[Adam Parker]

We saw. We saw after the game. We saw Iverson at the casino. He was hanging with his buddies at the.

[Michael Batnick]

Oh, how come we didn't want. How come we didn't.

[Josh Brown]

By the way? That's. That's the. That's the real AI.

[Adam Parker]

Yeah, exactly. The dealers. The dealer said, do not talk to him. He will curse at you.

[Josh Brown]

I thought 20 times now, like, why an AI company hasn't hired him as their spokesman. Like, that just seems the easiest marketing call of all time. You just have AI be your guy.

[Michael Batnick]

I don't hate that idea.

[Josh Brown]

Right?

[Michael Batnick]

Nobody did monetize that. I haven't seen him have that Seems so.

[Josh Brown]

Why is an open AI. Why is an open AI have. Alan, are you like, can we get a kickback on this?

[Michael Batnick]

I'm trying to think if that reference would be lost on half the audience.

[Josh Brown]

Right, right. Doesn't know who he is. Even though he was just like. He was just like such worth paying for guy.

[Adam Parker]

Right?

[Michael Batnick]

Yes, I saw. I sort of like it. What do you got for us?

[Adam Parker]

Did you finish the Penguin yet?

[Michael Batnick]

No. Do you want to spoil it?

[Adam Parker]

No, I won't. But just the Penguin is one of those shows that I think. I think people rightfully just wait until how a show ends.

[Josh Brown]

I don't even know what the show is.

[Adam Parker]

It doesn't matter.

[Josh Brown]

Okay.

[Adam Parker]

But the show is fantastic. Worth watching.

[Michael Batnick]

Colin Fowl, great in like head to toe, fat suit and makeup. He's unrecognized.

[Adam Parker]

You never know it's him.

[Josh Brown]

Right.

[Michael Batnick]

So he played this role as a minor role in the new Batman movie.

[Josh Brown]

Right.

[Michael Batnick]

And Warner Brothers made it an HBO show, like a spin off from the movie. And it's like one of the few bonafide hit shows of the year because we just don't have that many great TV shows.

[Josh Brown]

Here's a book you see, I should read. I read it a few months ago. I think about it a lot. It's called Factfulness.

[Adam Parker]

I love that book.

[Josh Brown]

You know that book? Yeah, yeah. It's out several years ago. The guy died. But it's very positive. So if you notice, I gave you the USA chant. I'm in a positive mode about humankind. I really am. And this factfulness thing, it basically asks questions about society. And you always think the way worse than it is, like how many people can eat? And you're like, is it 50? And you just always pick. They give you this 13 question quiz.

[Adam Parker]

Hans Rosling.

[Josh Brown]

Yeah, Hans Rosling, exactly.

[Michael Batnick]

You assume the answer is going to be worse than it turns out.

[Josh Brown]

They ask you 13 questions. You're a smart guy, you know what's going on. You're going to get like four of the 13. Right. Okay, now I'll exclude you and get five. Right. Okay. And because you always just think like, oh, it's like terrible things are worse.

[Michael Batnick]

Than they really are.

[Adam Parker]

I don't know who said this quote, but somebody said two things are always true. The world is always getting better and people always think the world is getting worse.

[Josh Brown]

Yeah. And that's kind of the summary of that Rosling's book. And so I've been thinking about it because I do think sometimes in the day to day of like, thinking about the stuff I underestimate, like, the demographic certainties of what are happening, you know, like, it's just.

[Michael Batnick]

Yeah.

[Josh Brown]

You know, so it's something to.

[Adam Parker]

Yeah. Good rock.

[Josh Brown]

Yeah.

[Michael Batnick]

You were dead right on Yellowstone. Seasons one through three are three of the best seasons of TV ever. Season four becomes really unwashed.

[Josh Brown]

Has any show ever been good in season four?

[Michael Batnick]

Like Sopranos?

[Josh Brown]

Okay. Yeah.

[Michael Batnick]

Four through seven are better than one season.

[Adam Parker]

What's the cowboy that they follow? Is it Jimmy? What's his name?

[Josh Brown]

That was back when I. That was back when I watched tv. I did watch the Wire, Sopranos. I did those shows got.

[Michael Batnick]

Those shows got better as they went on because there was no Internet, so they were like 9:00.

[Josh Brown]

You, like, had to. You like your wife yelled you to get in front of the TV when it was starting.

[Michael Batnick]

What's going on with this show? I could see the progression. Costner is losing interest with every passing season, so his scenes start to become fewer and far between. There was one scene where he was wearing the same clothes.

[Josh Brown]

He can't work remote. He wants to work remote.

[Michael Batnick]

Well, he lost his wife over this.

[Josh Brown]

Oh, yeah.

[Michael Batnick]

So, yeah, Costner's wife left him for the. For the personal.

[Adam Parker]

You won't believe how bad it gets, so.

[Michael Batnick]

But you could see him in it less and less and it's. The show gets worse.

[Josh Brown]

I guess the thing I'm most excited about in the world of what I pay attention to is we got a 12. We got a 12 team NCAA football tournament. That's new. You know, your canes should be. Should be in there.

[Michael Batnick]

Canes are one of the top ranked teams, unfortunately.

[Josh Brown]

And it's probably the last time I could say this for the rest of my life, but I went to Michigan where the defending national champions. So we're five and five as I speak, and it's looking bad for the next two games, so. But I guess we can still hang out to national championships, which I never get again in my life.

[Michael Batnick]

As somebody who has a ton of friends that went to Michigan, you have a very Michigan energy. And I mean that. I mean, that was a slash asshole there. My wife went there.

[Josh Brown]

My wife went there.

[Michael Batnick]

Duncan, you with me on that? This is a Michigan vibe.

[Josh Brown]

I mean, I went to Boston, I went to Michigan. For a lot of people, those are like the two worst things you could say. I get it.

[Michael Batnick]

But did you ever have this observation that people that went to Michigan are the most likely of any other college to wear Michigan clothes?

[Adam Parker]

Oh, yeah, for sure.

[Michael Batnick]

You would agree with that, right? Right.

[Josh Brown]

The maze in the blue. I mean, you know, it's also the largest living alumni, so maybe it's just math. Like you just run into more people.

[Michael Batnick]

Wait, is that true? How do you know that?

[Josh Brown]

I think you could. I think the Googler.

[Michael Batnick]

Really?

[Josh Brown]

Yeah, there's just. It's been a big school for a long time. People in their 60s and 70s, you know, 80s. There's a lot of.

[Michael Batnick]

So like when you see people wearing their college stuff, they're the most. It's the most likely to be Michigan people.

[Josh Brown]

I mean, probably not by like a.

[Michael Batnick]

Massive percentage, by the way. Listen, I mean it's the leaders and the best.

[Josh Brown]

It's in the fight zone, guys.

[Michael Batnick]

We want to thank Adam Parker of Trivariate Research for joining the show this week. Adam, you are spectacular as always. Love you tell people where they could follow you.

[Josh Brown]

So if you're interested in what we do, you can just email sales, trivia.

[Adam Parker]

Research.Com and you serve who, who are your clients?

[Josh Brown]

Our clients are Americans, Michael. People who care about U.S. stocks. And we are eventually going to do a newsletter for the masses. So I'll be back on at that time to tell folks about it 100%. But I love talking to you guys. Anytime I can help with anything, let me know.

[Michael Batnick]

So we're trivariate research.com and infoep LinkedIn.

[Josh Brown]

You can find us. We post content there. I try to go on once in a while with you on tv. I love being on tv. You're very good at it.

[Michael Batnick]

Let's do it. Let's do it again sometime. Hey, I want to finish by letting you guys know we are hiring if you're a video editor that can work locally with my all star team here in New York City. We want to hear from you. We have work for you. Reach [e-mail] Duncan will personally respond. We need help. The team is growing, the channel is thriving and we need talented people who want to be a part of it. So if that's you, hmu, you know what that means.

[Josh Brown]

Hit me up. Hit me up.

[Michael Batnick]

Hit me up.

[Josh Brown]

Nice.

[Michael Batnick]

All right. Hey guys, thanks so much for listening. Thanks for watching. We love you. We'll see you next time.

[Josh Brown]

I went by so fast.