Congress Trades During Tariff Announcement, Oil Market Reaction to Israel vs Iran, OpenAI vs MSFT

Summary

Podcast Summary: The Compound and Friends Episode: Congress Trades During Tariff Announcement, Oil Market Reaction to Israel vs Iran, OpenAI vs MSFT
Release Date: June 17, 2025
Hosts: Downtown Josh Brown and Michael Batnik

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1. Introduction

In this episode of The Compound and Friends, hosts Downtown Josh Brown and Michael Batnik delve into a range of pressing topics affecting the business and investing landscape. They kick off with recent geopolitical tensions in the Middle East, exploring their impact on global markets, particularly the oil sector. The conversation then shifts to the controversial topic of congressional stock trading amidst tariff announcements. The hosts also analyze current market sentiment, scrutinize the roles of major tech players like Nvidia, OpenAI, and Microsoft, and discuss broader economic indicators influencing investor behavior.

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2. Middle East Conflict and Oil Market Reaction

[00:00 – 10:32]

The episode begins with Josh Brown addressing the ongoing conflict in the Middle East, specifically focusing on the recent clashes between Israel and Iran. He expresses skepticism about the market's muted response to these events, contrasting it with past reactions where such geopolitical tensions would significantly impact oil prices and energy stocks.

Josh Brown [06:28]: "That is an automatic for me, generally."

However, Michael Batnik counters by pointing out that the energy sector's weight in the S&P 500 has diminished due to increased domestic oil and gas production in the United States, reducing the market's sensitivity to foreign oil disruptions.

Michael Batnik [08:23]: "The production, import, export dynamics of our country today versus the past look radically different."

Josh visualizes this by presenting a chart of three-year WTI crude prices, highlighting the negligible spike despite the severe geopolitical events.

Josh Brown [10:33]: "It's like nothing happened at all."

They conclude that strategic military restraint, possibly in coordination with the U.S., has prevented a substantial market reaction, maintaining stability in oil prices despite regional tensions.

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3. Congressional Stock Trading

[20:44 – 24:35]

Transitioning to the topic of congressional stock trading, Michael Batnik references a Wall Street Journal article detailing over 700 stock trades by House lawmakers and their families during a critical period surrounding tariff announcements.

Michael Batnik [20:44]: "These people, literally controlling policy, are allowed to trade on inside information. Who thinks this is a good idea?"

Contrary to expectations, Josh Brown adopts a provocative stance by expressing support for congressional trading, likening it to historical practices in ancient Rome.

Josh Brown [21:42]: "I think it's terrific. Let them earn it out."

He narrates a historical anecdote about Crassus, the richest man in Rome, to underline the entrenched nature of such practices.

Josh Brown [22:06]: "This is what's happening. It will never change."

The discussion highlights ethical concerns and the perceived double standards between policymakers and regular financial professionals constrained by stricter trading regulations.

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4. Market Sentiment Analysis

[16:03 – 20:37]

The hosts examine the current market sentiment using data from Bank of America's global fund manager survey. They note a significant shift from heightened fear of a global trade war and recession to a more optimistic outlook, with a majority now favoring international stocks over U.S. equities for future performance.

Josh Brown [17:05]: "The proportion of surveyed investors expecting weaker global growth fell to a net 46%."

Michael Batnik expresses confusion over conflicting sentiment indicators across different platforms, emphasizing the fragmented nature of investor moods.

Michael Batnik [18:50]: "I was talking about this with Ben today. Schwab has a proprietary indicator called stacks where they are measuring the mood of the investor."

Josh underscores the importance of interpreting such data carefully, given its variability and the diverse demographics it represents.

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5. Nvidia and Its Dominant Market Role

[21:44 – 30:37]

Nvidia emerges as a focal point in the discussion, with both hosts acknowledging its pivotal role in the current market landscape. Josh Brown argues that Nvidia is the most influential stock, contributing approximately 26% of the S&P 500's total return year-to-date.

Josh Brown [29:18]: "It’s Nvidia. All right."

Michael Batnik concurs, highlighting Nvidia's steady performance and its integral contribution to the S&P 500.

Michael Batnik [30:37]: "Nvidia will contribute 17% of the total earnings growth being expected for the S&P 500 in calendar 2025."

They examine Nvidia's price performance, noting its resilience and the strategic importance of its technology in AI and semiconductor sectors.

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6. OpenAI vs. Microsoft and the AI Landscape

[40:29 – 47:24]

A significant portion of the episode is dedicated to the evolving relationship between OpenAI and Microsoft. Josh Brown outlines the tensions arising from OpenAI's shift from a non-profit model to a for-profit entity, necessitated by substantial investments from SoftBank.

Josh Brown [43:32]: "OpenAI is trying to make this conversion from a not-for-profit with a profit-driven arm to a full-on for-profit standalone company."

He explains that disagreements have surfaced over acquisitions, with OpenAI reluctant to share proprietary data from a $3 billion acquisition with Microsoft, its major shareholder.

Josh Brown [44:09]: "OpenAI does not want to share the data that's going to come with this acquisition with Microsoft."

Michael raises concerns about the potential implications for Microsoft, questioning the sustainability and strategic alignment of their partnership.

Michael Batnik [45:24]: "It is a really fascinating situation and the implications for all of the other tech giants that are trying to compete in AI are massive."

They speculate on OpenAI's future, including the possibility of an unprecedented Initial Public Offering (IPO) and its influence on the AI sector's competitive dynamics.

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7. Broader Stock Market Discussions: Amazon and Oracle

[35:24 – 54:21]

Amazon:
Josh Brown posits that Amazon is poised for substantial growth, driven by its AI investments through AWS (Amazon Web Services). He forecasts a potential surge in Amazon's stock price, citing its strategic positioning and the increasing importance of AI infrastructure.

Josh Brown [47:32]: "I think the earnings here like ultimately by the end of this AI build out could be $10 worth of earnings. This stock ain't staying at 200."

Michael Batnik supports this view, highlighting Amazon's robust earnings growth and strategic investments in AI technologies.

Oracle:
The discussion shifts to Oracle, which has received positive coverage for its dominance in cloud databases and applications. Despite significant capital expenditures, Oracle's stock performance remains strong, reflecting investor confidence.

Michael Batnik [53:36]: "They have more than made up for it. This thing is just on fire."

Josh elaborates on Oracle's leadership under CEO Safra Catz and its strategic initiatives that continue to drive shareholder value.

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8. Banking Rates and Savings Behavior

[36:21 – 39:57]

Michael Batnik presents a revealing chart from Torsten Slaght illustrating the stagnation of interest rates on checking and savings accounts relative to the Federal Funds Rate. The data underscores a shift in consumer behavior, where banks are no longer incentivizing savings through competitive interest rates.

Michael Batnik [36:33]: "The implication of this is that we're now at a point in society where we don't rely on our banks for anything other than safety and continuity."

Josh Brown interprets this trend as consumers treating bank accounts purely as repositories for safety, rather than vehicles for wealth generation, prompting banks to push clients towards wealth management services.

Josh Brown [38:20]: "People now are looking at the bank account as only safety and functionality and not as a way to generate income or wealth or anything."

They discuss the broader implications for consumer financial behavior and the banking industry's strategic responses to these changes.

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9. Conclusion

In wrapping up, Josh Brown emphasizes the unpredictable yet promising landscape shaped by AI advancements and strategic maneuvers of tech giants like Nvidia, OpenAI, and Microsoft. Michael Batnik concurs, highlighting the need for vigilance as these developments unfold. The hosts sign off with a nod to their merchandise and upcoming episodes, leaving listeners with a comprehensive overview of the current market dynamics and their potential trajectories.

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Notable Quotes:

• Josh Brown [06:28]: "That is an automatic for me, generally. [...] That is an automatic for me, generally."
• Michael Batnik [08:23]: "The production, import, export dynamics of our country today versus the past look radically different."
• Josh Brown [21:42]: "I think it's terrific. Let them earn it out."
• Michael Batnik [30:37]: "Nvidia will contribute 17% of the total earnings growth being expected for the S&P 500 in calendar 2025."
• Josh Brown [43:32]: "OpenAI is trying to make this conversion from a not-for-profit with a profit-driven arm to a full-on for-profit standalone company."
• Michael Batnik [36:33]: "The implication of this is that we're now at a point in society where we don't rely on our banks for anything other than safety and continuity."
• Josh Brown [38:20]: "People now are looking at the bank account as only safety and functionality and not as a way to generate income or wealth or anything."

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This comprehensive discussion offers listeners valuable insights into how geopolitical events, corporate strategies, and shifting economic indicators interplay to shape the investment landscape. Whether you're a seasoned investor or just starting, understanding these dynamics is crucial for informed decision-making.

Transcript

[Josh Brown]

Ladies and gentlemen, welcome to the compound and friends. This show is sponsored by our friends at Grayscale. Don't know where to begin in crypto. Start with Grayscale. More on Grayscale in just a moment. Tonight's show is an all new edition of what are your thoughts? It's myself, it's Michael Batnik. We're going to start out with the recent events in the Middle east and the market impact as a result of this weekend's conflagration. We'll look at oil prices, energy, stock prices and everything you need to know about how the markets are digesting the most recent round of attacks, bombings, etc. Then we're going to go into Congressional stock trading. Look, if you're like most Americans, you absolutely love and support this. I think we can all agree there's absolutely nothing wrong with the people who sit in Congress and legislate and debate laws and make laws and make policy also benefiting from that very activity that taxpayers are paying them to do with their brokerage accounts. Like what? What could possibly be more American than that? I don't know. So we, we, we fully support it and we've got some new data on how politicians were trading the events of Liberation Day. We're going to look at market wide sentiment. We're going to do a whole thing on Nvidia, OpenAI, Microsoft. You're going to have a lot of fun. So without any further ado, I'll send you right into the show. Guys, make it happen.

[Michael Batnik]

Welcome to the compound and friends.

[Josh Brown]

All opinions expressed by Josh Brown, Michael.

[Michael Batnik]

Badnick and their castmates are solely their own opinions and do not reflect the.

[Josh Brown]

Opinion of Ritholtz Wealth Management. This podcast is for informational purposes only.

[Michael Batnik]

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.

[Josh Brown]

All right gangsters, it's time for an all new edition of what are your thoughts? I am your host, Mr. Downtown. Josh Brown. With me as always, my co host, Michael. Michael Batnik. Michael, say hello to the people.

[Michael Batnik]

What's up people? Josh, how are you? It's good to see you.

[Josh Brown]

I'm doing okay, dude. I'm honestly having one of the best weeks of my life. I have to be very honest with you. I, I, I'm just, I'm just happy.

[Michael Batnik]

I love it if you're happy. I'm happy.

[Josh Brown]

I really thank you. I really think, I really think this Florida thing has legs for me. I think this is where I, where I Belong. All I do when I'm down here is like, eat healthy because my wife only eats healthy. Like, I'm eating more vegetables on a daily basis than probably ever in New York. Walking, like, walking all day long. And yeah, you look slender, dude. Lifting weights, walking in the pool and working. And like, that's it. Like that. There's no commuting, there's no schlepping. The weather is incredible. Everyone I meet is like, I used to work in finance. I'm like, I'm like a celebrity here. Like, everyone's like into like financial shit. Like, it's just, it's amazing. I really don't want to leave.

[Michael Batnik]

It was nice.

[Josh Brown]

I know. I have a flight in an hour and two hours and I'm seriously considering missing it. Okay, today's show is brought to you by. Brought to everyone by our friends at Grayscale. Curious about investing in crypto and not sure where to start. Start with grayscale.

[Michael Batnik]

Grayscale is the world's largest crypto native asset manager and has been in crypto since 2013. That's a long time when you consider how early we still are in crypto adoption. Grayscale also offers the widest selection of crypto investment products in the US over 30 different funds for investors to choose from. That's plenty of choice for both first time crypto investors or crypto experts.

[Josh Brown]

You may not be considering crypto for your portfolio today, but whenever you're ready, grayscale can be your guide. When you think crypto invest.

[Michael Batnik]

Grayscale investing involves risk, including loss of principle. For more information, visit grayscale.com all right, grayscale.com.

[Josh Brown]

Thank you so much guys. Hey, if there's any such thing as a guaranteed buy signal for stocks, it's probably when the guys who sell options trading newsletters start going on TV talking about the straight of Hormuz. I'm just going to tell you straight up, like anytime it gets to that point where like the traders are like talking about any kind of geopolitics but when they go to this. Did you know that the Strait of Hormuz is responsible for 30% of all of the oil the world uses each day. Like it's, it's this thing where you ever meet somebody who just read a book and then every conversation is like about that book. Remember when Chris read or I should say listen to the audiobook of Robert Moses and then three years, God, it was like four years of, oh, that's just like this time when Robert Moses.

[Michael Batnik]

Dude, those were the Dark ages. Those are some of the worst years of my life.

[Josh Brown]

So this is like. And he didn't even read it. He listened to it shout out to Chris, but. Oh, my God, don't tell me about a book you listen to. All right, so wait a minute. So this is one of those things, like, in the last couple of days, these guys. And I know these guys, these are guys that, like, I used to work on the Chicago Board of Trade or whatever, and I was like, a pit guy, and then I transitioned to, like, trading my prop account, and now I sell a newsletter. Okay. No disrespect. That's cool. Why the. Are you talking about the straight of Hormuz with a straight face on tv? What. What. What are you, geopolitical expert now? Well, if you think about how economically sensitive they're. Straight of hor. I said not the straight of Hormuz. Now what are we going to do? The minute that starts, just. It doesn't even matter what you buy. Just pick five stocks, buy them. Four of them will be higher within 48 hours.

[Michael Batnik]

All right?

[Josh Brown]

That is an automatic for me, generally.

[Michael Batnik]

A good rule, but not when the Vix is at 20. This straight of Hormuz, there's no.

[Josh Brown]

Are you mad?

[Michael Batnik]

There's nothing going on in the markets. There's no volatility based off this event.

[Josh Brown]

It's just. It's just. Can we. So I want. So I have, like, I have CNBC on in my place, and I'm like, not, like, watching. It's just on. Because it's always on. And. But every host of every show brings up the Strait of Hormuz. Is that, like, in the. Is that in the rule books? So the minute Israel defends itself against any kind of action, you know, any kind of action by Iran, it's like, well, we have to mention the straight of Hormuz during every hour just to remind people that that's the biggest risk. Is it? Is it the biggest risk? I don't know.

[Michael Batnik]

Let me ask you a question. Am I in the minority? Here's what's on my TV all day, every day.

[Josh Brown]

Let me say. Nothing. Yeah. That's weird.

[Michael Batnik]

Is it? I think it might be weird. There's never anything on.

[Josh Brown]

I mean, you just raw dog the day all day.

[Michael Batnik]

I never have TV on. Like, once in a while.

[Josh Brown]

You don't want to. You don't want to ticker, like, just if there's breaking news or anything.

[Michael Batnik]

I. I don't know. I think I'm probably in the minority. I never have the TV On.

[Josh Brown]

Oh, one thing though. I turned off all my breaking news alerts on all my apps. Like nothing, nothing is breaking in my life anymore. Maybe that's why I need that. There's, there'd be something on the screen.

[Michael Batnik]

Here's. But here's what I have on my, on my other screen all day, every day. Never leaves the screen is, is the stock tickers. So if there's anything going on, I'll turn the TV on if I have to.

[Josh Brown]

Okay. I think it's just background. I think it's just background for me to just.

[Michael Batnik]

Yeah, I think it's normal to have the TV on. I think it's normal to have it on.

[Josh Brown]

Yeah, yeah, it's very, it's very, it's very strange that you can get a whole day that way.

[Michael Batnik]

I might try it.

[Josh Brown]

Impress strange but impressive. What's your take on the way the oil market, I was going to say.

[Michael Batnik]

Reacted so happy you would ask.

[Josh Brown]

You know, it failed to react.

[Michael Batnik]

As a former, as a former energy analyst. No, literally, I know nothing. I know nothing. So I was talking. Here's what I know nothing. But I was talking about this with Ben today, just how it's interesting how little reaction there was in the market, even in the crude market. And there was obviously, was it Sunday night, crude futures were up 8%. Not nothing. Two days later gave it all back. And the production, import, export dynamics of our country today versus the past look radically different. So yeah, it used to be a lot more, it used to be a lot more impactful. The energy companies were not 3% of the S&P 500. They were 12 and 13% back when we were very dependent on foreign imports of, of oil. And from the, in the market view, it is not a giant story compared to what it used to be.

[Josh Brown]

That's, that's, that's the point. I was going to say, I actually was going to say 20 years ago, if this were 2005 and Iran had fired hundreds of missiles into Israel and then Israel retaliated to the extent that it did and they now effectively control the skies above Tehran, which is a really interesting story that I know nothing about you. I'm just going to tell you, you would have seen a massive reaction in the S&P 500 and you would have seen names like Exxon, Chevron and all of the other follow on energy stocks up 10, 12, 15%. Like there'd be no doubt about it. And I don't know if that speaks to the massive increases in domestic oil and gas production here in The United States to your point, or if the public, the markets at large have just contented themselves with this idea that oil price volatility is just a perennial like this happens. Something happens every year that either disrupts or potentially disrupts the supply of crude around the world. And it never seems to be the thing that wrecks S and P earnings and therefore these market wide reactions are just going to be short lived. Let's do a chart.

[Michael Batnik]

Yeah, go ahead.

[Josh Brown]

So three year WTI crude price, nothing like literally not that little squiggle at the very end, that little spike. I mean again, compared to 20 years ago, even 10 years ago, it's almost as though nothing happened at all. Yeah. Now of course Iranian oil is not particularly important to anyone other than China. There are sanctions, there are reasons why that's, but it's still part of the global supply. And if you're buying oil from Iran, you're, you need to buy it from somebody else if, if for whatever reason that gets disrupted. One of the things that the non market news sources are talking about is that Israel is very deliberately not going after export terminals, not bombing the types of assets that would ordinarily cause the type of price spike that we're talking about.

[Michael Batnik]

And that might be a big part of the story.

[Josh Brown]

Yeah, it might be in cooperation with the United States, might be a conversation between Trump and Netanyahu. Look, you can, you can mostly do what you want but don't, don't cause massive inflation as a result of whatever you're doing. So that's probably part of it. Next chart is I own this etf. This is just my shorthand for domestic US based producer exploration and production companies, oil and gas companies. ConocoPhillips is like a third of this ETF by the way, COP but IEO is effectively flat over three years. It's done effectively nothing. This is my oil price, this is my oil spike hedge. This is like a permanent part of my portfolio where if something really drastically spikes the price of oil to the point where the whole market sells off, this is like the way that I'm hedging that risk and it acts like a hedge. It's up five and a half percent in total return over three years. That's effectively, it's effectively down.

[Michael Batnik]

Do you take the hedge off when it works?

[Josh Brown]

Never, never take the hedge off and actually add to it as the rest of my portfolio grows that, so that it's still an oil, oil shock hedge commensurate with what the size of my overall portfolio is. The problem is I'm always a net buyer if I'm trying to keep it somewhat constant as a hedge. Because look at these stocks versus like anything I own that's software as a service or AI related. It's like a joke.

[Michael Batnik]

Yeah.

[Josh Brown]

So. But you don't know. You don't know if you're going to need it till you need it. Here's the XLE. I own Chevron, which is the second largest component of this. But I don't own this ETF. The XLE is the S&P 500 energy sector. Spider. We don't use the term spider anymore.

[Michael Batnik]

I said spider.

[Josh Brown]

You do you.

[Michael Batnik]

Okay. Spider.

[Josh Brown]

No, it's just the ETF Spider. So I thought you said.

[Michael Batnik]

I thought you said you did on.

[Josh Brown]

I thought you said you. No, no, no, no. You said. You said you were long.

[Michael Batnik]

I didn't say I was long. You son of a bitch.

[Josh Brown]

Yeah, dance the drink over to me.

[Michael Batnik]

All right, shots.

[Josh Brown]

XLE up 8% in total return over three years. Horrendous.

[Michael Batnik]

Wow. Impressive.

[Josh Brown]

You'd be outperforming this with a checking account. I don't know what I do you actually need World War 3 for these stocks to go up. So energy is the most. Is the cheapest sector in the S&P 500 now. Significantly cheaper than utilities which are supposed to be the cheapest sector. There's just nothing happening here. And I don't know what it takes for this to be a leading sector. Doesn't look like it's going to happen this year. We've got multiple wars going on that concern oil and gas supplies globally and nobody gives a shit. Nobody's worried about scarcity. And I think the market wide story is also interesting. Put this chart up. Nasdaq, S&P Dow. Are you surprised at how quickly we completely erased the threat of World War Three? Looks like it took about 12 hours.

[Michael Batnik]

I am. Given how, given the nature of the V ship recovery that we just experienced, you would think that the bears could take a little bit back. And I, you know, you can make the argument that, that the, the momentum has stalled over the past week or so. Right. Like we are maybe forming a short term top here, but the fact that they can't even punch through, they can't even make like a lower high. It's kind of. It is interesting. It's also. It's a fluid situation. Josh. Market's not done. We'll see what happens over the next couple of days.

[Josh Brown]

Gold fell. The U.S. dollar rose. Vix fell 8% yesterday. Vix fell 8 percent yesterday. Nasdaq higher than where it was before this started. S and P rallying down.

[Michael Batnik]

I don't even know what the market is reacting to at this point. Like what is what the market is rallying on. What honestly? A deteriorating economy.

[Josh Brown]

Yeah. I'll tell you what it's not reacting to geopolitics Just it's not, it's not.

[Michael Batnik]

It's not responding to a slower economy. Like we got retail sales this morning. Not great. It's not responding to that. It's not responding to a deteriorating labor market. I don't know what it's responding to other than AI. I just.

[Josh Brown]

So the Fed meeting is tomorrow. That would normally be like one of the things over the course of the summer that the market reacts to.

[Michael Batnik]

They're not cutting.

[Josh Brown]

They're not cutting. The market doesn't think they're cutting. Somebody was saying today. Steve Lman was saying today on. On halftime Report. The Fed's posture now is they're watching inflation, they're watching unemployment and whichever one gets worse first is the one they'll worry about. So that's the posture of the Fed. This summer is on a chaise lounge.

[Michael Batnik]

Tim Arroyos just wrote a similar article. Obviously he is the unofficial math piece for the Fed in terms of the media and he said the same thing. They're not doing anything trilling.

[Josh Brown]

Okay. So stocks have fully discounted the opening stages of World War iii. Which I guess is bullish. Bank of America global fund manager survey is now. The sentiment is now back to pre Liberation Day. Let me read this to you. As the Wall Street Journal investors mood has rebounded back to the more bullish levels seen just before Liberation Day Tariff salvo. Remember what that was like back then? February, March.

[Michael Batnik]

Not great.

[Josh Brown]

No. Right before everything was like all systems go.

[Michael Batnik]

Yeah.

[Josh Brown]

The bank's global fund manager survey found that fears of a global trade war and tariff induced recession were receding. The proportion of surveyed investors expecting weaker global growth fell to a net 46%. You know where it was in April?

[Michael Batnik]

Wild.

[Josh Brown]

82%.

[Michael Batnik]

Yeah. Unbelievable.

[Josh Brown]

Myself and climb in that 82 investors are now holding less cash today than they were in April and are underweight the dollar the highest level since 2005. A majority of respondents say international stocks will be the top performing asset over the next five years. Less than 25% say that U.S. stocks will keep dominating returns. So the contrarian trade amongst global fund managers is mag7s and P500. That's interesting. The consensus is international stocks will be better over the next five years.

[Michael Batnik]

What do you think I've never been more confused by sentiment and how to read and register what the investor is doing? Because there is no the investor. The investor at Schwab is different than the investor at Robinhood is different than the global fund manager survey. I was talking about this with Ben today. Schwab has a proprietary indicator called stacks where they are measuring the mood of the quantitatively, the mood of the investor, and they are looking at flows, actual dollars. What are people doing? And the investor at Schwab, for the last four months, information technology has been the largest net sell sector. So go explain that one. I just don't know how to explain the investor these days because. Which investor are you talking about?

[Josh Brown]

So that's the retail investor at Schwab, or is that the advisor?

[Michael Batnik]

It's the retail investor at Schwab. Nvidia was the single largest net sale that they made in the month of April or was it May? In the month of May.

[Josh Brown]

The only way to explain.

[Michael Batnik]

But it had been. But it had been. It wasn't just that they loaded up at the bottom and then let go.

[Josh Brown]

I was gonna say the only way to explain that is it's just people selling what they have gains in so they could reallocate and buy something else.

[Michael Batnik]

It's more than that. It's. It's four months in a row. So they were selling into the puke, whereas other investors were running into the building. Sentiment survey stuff is more noisy than ever.

[Josh Brown]

Yeah, I. You know what? I think that's. I think that's actually the best take. If you read us. If you read a data point about like, quote unquote, what the investor is doing, and it's coming from any one particular platform.

[Michael Batnik]

Yes.

[Josh Brown]

It doesn't always equate to like, what they're doing across the board.

[Michael Batnik]

You could credibly make any argument for what the investor is doing. It's like in civil war. Well, what type of American are you? Like, that's how I feel like. What type of investor. What type of survey did he respond to?

[Josh Brown]

Right. When did you respond? What date did you respond? What was the market doing on the day you responded? What? What's the average demographic?

[Michael Batnik]

It's so noisy. Unless you're talking about extremes that all line up like they did in the sell off. They really did. Everybody was bearish.

[Josh Brown]

Median age. What's the median. Not what's the median age? Individual investor at Schwab. What's the median age? Individual investor who would respond to a survey.

[Michael Batnik]

Yeah.

[Josh Brown]

68.

[Michael Batnik]

So for the Schwab thing, it was proprietary. Insights into behavior, not sentiment. Stuff so that I value. Don't tell me how you feel. Literally. Show me what you're doing. Because if you're bearish and buying, I don't care.

[Josh Brown]

Yeah. You know who's been super active lately? Congressional stock traders.

[Michael Batnik]

I don't like this. That's a great segue, Josh. So the Wall Street Journal wrote a. An article. Throw this up. This is disgusting. For people that are listening, it's the trades reported by House lawmakers of their families and a spike in April. Go figure. Here's The Journal. From April 2, when Trump launched the sweeping tariffs, to April 8, the day before they paused. Many of them, more than a dozen House lawmakers and their family members made more than 700 stock trades, according to a Wall Street Journal analysis of disclosure filings. Let me ask you this. I have somebody that I know who works at a bank, somebody I know that works at a hedge fund, and one of them is only about allowed to buy ETFs. They have to hold it for a minimum of a year. And I think. I think the same thing at the bank as well. How come the restrictions on banks, on bank employees are so tight, but these people, literally controlling policy, are allowed to trade on inside information? Who thinks this is a good idea?

[Josh Brown]

I love. I've come full circle on this issue. I think it's terrific.

[Michael Batnik]

All right, let's hear it.

[Josh Brown]

Let me ask you a question. Do you know what the salary is that they pay these people?

[Michael Batnik]

So pay them more.

[Josh Brown]

Nah, let them. Let them earn it out. I like it. I think it's great. I really think it's great. Listen, this has been going on since time immemorial.

[Michael Batnik]

End it.

[Josh Brown]

The Roman Senate was doing that. Do you know the richest.

[Michael Batnik]

I don't. I have no time for market, for history right now. You give a history lesson.

[Josh Brown]

I'll give you. I'll give you a quick one. This is important. The richest man in Rome, Crassus. No, no, no. It's important. He had his own fire department. And people would run and give him tips, like, yo, there's a fire just broke out in, like, the slave quarter and. Or whatever, like a fire just broke out at this merchant's store. His fire department would, like, race over there to the scene, and he would arrive with them, and he would say to the guy that owns the building, all right, this is how much it's gonna cost you to. For. For me to put out the fire. The guy would be like, I'm not paying you that. All right, no problem. You'll pay it to me in five minutes. Five minutes goes by. The guy be like, all right, fine, I'll pay you. He goes, oh, I'm sorry, the price just went up. This is what it is.

[Michael Batnik]

Okay, okay, okay.

[Josh Brown]

You think these people are.

[Michael Batnik]

Listen, listen. Also in the Coliseum back in Rome, circa whenever, they had gladiators fighting sharks with laser beams. I don't give a shit. This is ridiculous.

[Josh Brown]

Just telling you. It's never going to. It's never going to change people in a position of power, it'll change. When?

[Michael Batnik]

I don't know.

[Josh Brown]

It will never change. Ok, so in a position of power, will exploit that power.

[Michael Batnik]

Stock twits tweeted in January, Nancy Pelosi with a hat tip to Quiver Quant. Nancy Pelosi bought. Bought up 10 call options. That's now up 133%. Sister trade. Why the is Nancy. Forgive me for the F buttons, but why is Nancy Pelosi allowed to buy call options?

[Josh Brown]

Wait, what is tem. She's buying tickers I've never heard of.

[Michael Batnik]

What's that? You're breaking up. I don't know what time is.

[Josh Brown]

No, come on. You have no idea what that stock is.

[Michael Batnik]

It's a. It's.

[Josh Brown]

Can we.

[Michael Batnik]

It's not a stock. Listen, it's a lot of stock. I'll follow all of them.

[Josh Brown]

Please, I need to know. Tempest AI.

[Michael Batnik]

Okay, so, see, like, why. Why. Why are we accepting this? Why is she buying call options? And maybe it's her advisor, Winkwick, doing. I don't give a shit. Why is this allowed?

[Josh Brown]

It's great.

[Michael Batnik]

I love. No, it's. No, it's.

[Josh Brown]

Oh, it's so. It's. Is there anything more American than that? Come on, listen, listen. All I'm saying is, don't we want a society where everyone strives to be a multi, multi, multimillionaire?

[Michael Batnik]

I know you're stuck. This is not good for us. It's a clown show. And this is nothing to do with the current administration. It's always been this way. It's just. Enough already.

[Josh Brown]

Tempest AI is an American health technology company founded in 2015 by Eric Lefkovsky in Chicago, Illinois. All right.

[Michael Batnik]

Necessary. All right, let's move on. What's Johnson doing in Europe seeing the Coliseum?

[Josh Brown]

Here's how I want to frame this. Is Nvidia still the most important stock in the market?

[Michael Batnik]

Yeah, right now, I think so.

[Josh Brown]

You agree?

[Michael Batnik]

Yeah.

[Josh Brown]

It goes through these periods of time where people just forget about it. The Stock is up 50% from its April low or something. Some like the stock has just like recovered literally everything that it lost.

[Michael Batnik]

Bought the law.

[Josh Brown]

What's that?

[Michael Batnik]

Bought the law.

[Josh Brown]

All right, so Jensen, Jensen Huang made a, a made a run through Europe. He is a rock star in Europe and my take is he is being seen very differently versus previous waves of US technology. All right, so the Europeans like have always treated people like Mark Zuckerberg with a ton of suspicion. They've sued him, they've tried to get Facebook ejected from their countries, they've created new laws just to screw with different things that meta owns like WhatsApp, etc. Jensen is not getting that treatment. He's sitting with Macron, the president of France, at technology conferences. He's being very well received in UK Prime Minister Keir Starmer. He's got like, he's got like rock star energy in London and Paris everywhere he goes. And he's really bright. He's pitching this thing called sovereign AI, which I think is going to be like a new investing trend. As we see some of these defense tech companies like and, or start to come public and we start to see more and more of what Palantir is selling all over the world.

[Michael Batnik]

What sovereign AI?

[Josh Brown]

Sovereign AI is this idea that every country should not only own its own data, but utilize it to bring about a safer security situation, a more equitable society. Just like, look, these countries are collecting enormous data sets bigger than most individual companies. If companies are making this investment into utilizing their data to bring about higher profits, better outcomes for stakeholders, better work life balance for employees, like, why would individual companies be doing that and countries not. Also, if you believe this is the AI agent and everyone's going to be empowered with all these tools, shouldn't the government, like, shouldn't the government utilize what exists out there to do a better job at being the government of a country? And then lastly, like, as a way to preserve the culture, each country should have its own culture and, and the AI should reflect that, that country's culture. The whole world shouldn't just be operating on these homogenized data sets. So that's the pitch that Jensen Huang has been making as he attends all these events. All summer he was at this thing called the Viva Tech conference in Paris. Here's what he said. We believe that in order to compete, in order to build a more meaningful ecosystem, Europe needs to come together and build capacity that is joint. Then he talked about here. Wang spoke a lot during the week about sovereign AI, the concept of building data centers within a country's borders. That services its population rather than relying on servers located overseas. European policymakers said that this was a very important topic. I don't know, it's a whole thing. I just think it's interesting to watch the rest of the world wake up to the need to not sit this one out the way that they did during the Internet 1.0, the Internet 2.0. Like they never, these companies, these countries never made big investments. They were super skeptical of the cloud, e commerce, Internet advertising. They kind of let the United States run away with it. And it doesn't look like they're going to continue to do that. Thoughts?

[Michael Batnik]

I was listening to Bill Simmons this morning bemoan the face of the league argument, which is funny because, and I'm a huge Bill Simmons fan. But he, that's sort of his thing. Like he's a big face of the league guy and now he doesn't like it. Whatever. My point is I, I think Nvidia is the face of, of the market right now and I think it probably has been for two years. Do you, do you agree with that? Like who would you think is the face in the market? It's not, it's not Apple anymore. No, it's not Meta. It's either Microsoft or Nvidia. And it's got to be Nvidia.

[Josh Brown]

No, it's not Microsoft. It's, it's Nvidia. Nvidia. All right. The S&P 500 is up 2.17% year to date. Nvidia is 0.58 percentage points of that. So in other words, Nvidia is 26% of the total return of the S and P. Okay, put this chart up 1 year Nvidia Price performance. Look at this rebound off the lows. It got down to under 100 bucks and now it's 144.

[Michael Batnik]

But it, but it is interesting that we're talking about Nvidia with glowing price as its. It's earned. The stock's gone nowhere for the past year and it's just gotten cheaper because the revenue and the earnings have just gone straight up.

[Josh Brown]

It's gone nowhere. Some would say it's digested.

[Michael Batnik]

It's actually beautiful.

[Josh Brown]

Huge, huge multiple that's now become a smaller multiple.

[Michael Batnik]

Listen, if you are, if you are a long term shareholder, you would much prefer to see sideways than straight up and up forever.

[Josh Brown]

I agree, I agree with, I agree with that. Because if it does a vertical move, you just know it's like only a matter of time. You're on borrow that. Yeah.

[Michael Batnik]

You're on borrowed time back.

[Josh Brown]

Nvidia will contribute 17% of the total earnings growth being expected for the S&P 500 in calendar 2025.

[Michael Batnik]

Is that a record? I'd be curious to say. It's got to be.

[Josh Brown]

No, it has to be not. Of the total earnings is important.

[Michael Batnik]

Of the earnings growth.

[Josh Brown]

Of the earnings growth. Less drastic, but still drastic. Right. Like in other words, do you think The S&P 500 will make its number this year? I don't know. But if Nvidia doesn't, then it won't. How many companies in history have you been able to say that about, like on the, on the growth side? One more. Here's the chips. This is the SMH, the VanEck Semiconductor ETF. Total return.

[Michael Batnik]

So what do you see? What do you see? Semi.

[Josh Brown]

Well, dude, all the talk this spring has been about software.

[Michael Batnik]

What do you see?

[Josh Brown]

And this is gonna make it. This looks like it wants to take out the February high.

[Michael Batnik]

I mean, look at that. A cool runnings reference. That's a deep cut.

[Josh Brown]

It wasn't bad.

[Michael Batnik]

That V shape, that V rally is wild.

[Josh Brown]

The SMH is up 47% from its April 8 low. 100% of the S&P semiconductor ETF components. The individual companies are above their 50 days and 71% are above their 200 days. So 70% of the holdings in the semi index are in their own individual bull markets. And now I want to show you.

[Michael Batnik]

Well, can I, Can I better one. Do you look at. Listen to this. Micron. Have you seen that chart in a while? Micron was at 60 bucks at the lows. I don't know, a whole like whatever, 60 days ago. It's now at 120. It's doubled in like two months.

[Josh Brown]

Broadcom might be one of the best. That might be one of the best performing stocks I've ever seen. The run that Broadcom is on is just legendary even.

[Michael Batnik]

Yeah, Broadcom Avgo looks sick. Even AMD, right.

[Josh Brown]

AMD rallied 10%.

[Michael Batnik]

Let's check on Intel.

[Josh Brown]

No, let's not do that. Oh, so everyone's been talking about software though. So. So software stocks did not have the, the, the dip that the semis had and the chatter was. All right. The way to play AI used to be the semis, but that's over and now it's going to be in the software layer. That's where all the money's going to get made. Where let's like the work days, the servicenows, the, the sales forces like those.

[Michael Batnik]

Stocks held force market up but service now looks great.

[Josh Brown]

Put up the one year total return. This is the semis versus the software etf.

[Michael Batnik]

Igv narrative violator.

[Josh Brown]

Yep. So software is in way better shape, taking the chart back a year. But the semis are coming back in a much more. Look at how the software sector never even went negative this April on a, on a year over year basis versus like, versus how badly the semis got hit.

[Michael Batnik]

Yeah, interesting stocks.

[Josh Brown]

These stocks like crowdstrikes in there. Crowdstrike, by the way, about to break 500. Yeah, that, like, that's a, that's a big component in that index now. You got your Palo Alto networks in there. You got like, I'm not sure if Oracle's in there. Oracle is one of the best stocks of the year. So the software space has been better. But these semis are not asleep anymore. Like they're coming back.

[Michael Batnik]

Can I say something to you? I looked at this chart yesterday and I don't really want to buy it because there's so many other things that are working. But there's, there's no more sellers of Intel. Like, look at the chart. Pull it up right now. No, seriously, pull up the chart.

[Josh Brown]

I'm looking at it.

[Michael Batnik]

It has, it has been at 18, between 18 and 21 bucks since August of 2024. Anytime it gets to 18, like if you hadn't sold it at this point, I think this baby might be about to scream. I might, I actually might buy it.

[Josh Brown]

Look it. Absolutely.

[Michael Batnik]

You see what I'm saying?

[Josh Brown]

Absolutely. Could. The problem for me is I have to understand the story and it's not, it's not necessary for all investors. I'm saying for me, I have to understand. So let me give you an example. Amazon had this huge PR blitz today. And we're not going to spend a ton of time on Amazon because we're going to do that later. But like they have this laboratory in Texas called Annapurna, which is where they make their own chips. And the thing that they were doing this big PR blitz about was their new CPU chip that is directly impinging on Intel's business. Intel is a CPU chip company. And the silicon that Amazon is now producing itself, creating and producing itself. It's like one more example of Intel's former customers just making their own custom shit. And in that landscape, I need to understand why all of a sudden people aren't going to care about that.

[Michael Batnik]

Okay, I hear you and you're probably right. Here's what I understand. There is a big juicy gap all the way up at 29 bucks. And I might, like Bill Pullman said in Independence Day, I might want another shot at it.

[Josh Brown]

Okay. I'd also say, though, it's been cheap the whole way down.

[Michael Batnik]

And I don't even care about cheap. I'm just saying there's no more sellers. That's all they are gone.

[Josh Brown]

I mean, it's Nike, it's Pfizer, it's. It's like a group of these stocks that just, they're just. The narrative is so against it.

[Michael Batnik]

Exactly. And the stock isn't going down anymore.

[Josh Brown]

No, but they keep going. Some of them keep going, some of them don't. You don't know which is which? I don't know which is what you do.

[Michael Batnik]

I can just say that definitively until I stopped going down for a year.

[Josh Brown]

All right, here's where we could agree and then we'll move on. I don't want to short it. I don't want to. I don't, I don't want to short anything, but I definitely don't want to be short that.

[Michael Batnik]

Okay, what are we moving on to? Oh, okay.

[Josh Brown]

Rates.

[Michael Batnik]

So you and I got into a disagreement last year. You were of the opinion that banks were going to have to raise their rates to be competitive. And I said, no, people, it's just they know how we behave and we don't move our money.

[Josh Brown]

Great call.

[Michael Batnik]

Look at this chart from Torsten Slack. Truly wild. What we're looking at for the listeners is the interest rate on checking accounts versus the fed funds rate. And that entire time, I mean, I thought it would move a little bit, like did not lift off the ground.

[Josh Brown]

So you, like, if I were right, the savings account is the blue line.

[Michael Batnik]

Yeah.

[Josh Brown]

You would have, you would have seen the rate on a savings account get off zero. Get off zero and trend toward like let's say 1% even. And it just, it's not.

[Michael Batnik]

All right, so here's another face blower melter for you, Josh, also from Tor and Slot.

[Josh Brown]

Wait, wait, wait. Is the implication of this that we're now at a point in society where we don't rely on our banks for anything other than safety and continuity and we don't think of banks as a place to have our money, make money, because that, that's reasonable. Another way that you, I want you to think about this is all the major banks that are probably over indexed in that, in that review, they have wealth management operations and maybe instead of the banks having to raise the deposit rate, they have successfully convinced the clients. No, no, no, no. We're not going to do that. But the money that you want to have invested, move it over to our wealth management business, Wells Fargo. Bank of America owns Merrill. J.P. morgan, has two different brokerage firms, plus a whole private wealth thing.

[Michael Batnik]

I think that's, that's a component of it. But the reality is most people just don't have a lot of money in their checking account or their savings account. And even if it's not an insignificant amount, like, even if it's like 30 grand, like, it just stays. It just doesn't move.

[Josh Brown]

So if you had 100 grand at bank of America and you said, you call them up and said, why aren't I making any money? I really think that bank of America say you have 100 grand sitting in your bank account. What you should do is take 50 of that and move it over into your brokerage account.

[Michael Batnik]

For sure. For sure.

[Josh Brown]

And we'll put a consultant on the phone with you who will sell you a T Bill fund or something like. That's. That's what's. I think that's functionally what's going on with High Balance. Yeah.

[Michael Batnik]

Oh, no doubt those people are getting called. They're getting a call for sure. Here's another one. 21% of deposits. Now, again, these are probably tiny chunks, right? I'm guessing these are like small dollar amounts, but nevertheless, 21%. It's not an insignificant amount of money. 21% of deposits pay no interest. No interest.

[Josh Brown]

Wild. Yeah. Mike, I'm telling you, I think people now are looking at the bank account as only safety and functionality and not as a way to generate income or wealth or anything. And they're fine with it. Like they have other outlets to do.

[Michael Batnik]

All right, here, here's sort of a non sequitur. But I didn't know where to put this, and I just wanted to talk to you about it quickly. This is a. Another monster narrative violator. We're looking from bank of America Global Investment Strategy. The foreign inflow to US Stocks year to date is annualizing for the second largest year ever. Okay, excuse me. I was told that foreigners are no longer interested in our markets, our dollars, our markets, our. Our stocks, our bonds.

[Josh Brown]

It's early, bro.

[Michael Batnik]

Dude, stop.

[Josh Brown]

Where's all that capital flight? Where is it?

[Michael Batnik]

It's the second start. Largest ever.

[Josh Brown]

When is, when is all that capital flight start?

[Michael Batnik]

So just pump the brakes.

[Josh Brown]

I was told that foreign investors were angry at Donald Trump and tariffs and they were losing faith in the United States treasury simultaneously because of our high debt levels.

[Michael Batnik]

And they're Buying the renminbi.

[Josh Brown]

We're going to repatriate to renminbi.

[Michael Batnik]

Yeah, yeah. Not happening. Not happening.

[Josh Brown]

It's, I maintain it's early. All right, we'll do this one quickly. Another Journal story today talked about the growing rift between OpenAI and Microsoft. And I, I'm not sure how much to make of this. Here's why it's important for investors because we're not a tech, we don't, we don't do like a tech podcast. Microsoft owns 49% of OpenAI. OpenAI is going to be, if not the most important, it will be among the top three most important AI companies in the world for the foreseeable future. It'd be really hard for me to hear somebody make the case for why it won't be important a year from now, two years from now, three years from now. Like I think by the end of the decade, this will still be one of the most important players in arguably the biggest technology revolution since the Internet. OpenAI has incredible metrics any way you look at it. The partnership with Microsoft has obviously played a big role in that. But Microsoft has its own AI ambitions away from OpenAI. And one of the problems now here is that OpenAI is trying to make this conversion from a not for profit with a profit driven arm to a full on for profit standalone company. And that transition is necessary in order for them to raise the money that they're supposed to be raising from SoftBank. So there's like $20 billion of capital on the line. They have till the end of this year to fully convert to a for profit, to get their hands on that 20 billion. And every, every billion dollars counts in this race to build out, you know, these, these platforms. So basically this rift kind of exploded into public view over an acquisition that Open Air is making. They're buying this, I forget what it's called, Win something or other. They're buying this thing for $3 billion and it's got this proprietary data and OpenAI does not want to share the data that's going to come with this acquisition with Microsoft. Microsoft sees itself as the parent company, an exclusive partner of OpenAI on ChatGPT. And OpenAI sees Microsoft as a 49% shareholder who needs to back off and leave us alone. So it's a really interesting moment and I think the longer that tension persists, the better it will be for other competitors, like Amazon's Anthropic, for example, that are trying to gain a foothold here. That kind of distraction could be meaningful in the Stock market. One other thing I wanted to just show you. One other thing I wanted to just mention here that I think is important. People need to understand how big OpenAI is going to be. I don't know when it's going to go public. It could be the biggest IPO in history.

[Michael Batnik]

Why does it need to go public? Microsoft's not looking for liquidity.

[Josh Brown]

It has to go public because it has to raise money. They're talking about trillion dollar build outs. So for, for, for AI period like it, it has to, has to have the ability to raise its own money. Okay, these are the, this is what we're talking about here. Okay. OpenAI revenue growth as of June, annualized run rate of $10 billion. That's double the annualized run rate reported in December. 5.5 billion.

[Michael Batnik]

It better be doubling.

[Josh Brown]

Okay. I'm just saying. Its annualized run rate has doubled in six months. The company is projecting 12.7 billion in revenue for 2025. That would be an 82% year over year growth rate as far as user growth. ChatGPT has 500 million weekly active users. Do you have any idea how big that is? Okay. Between December of 2024 and March of 25, active users grew 33%. So rising from 375 million to 500 million. So this is a company that is sitting on the biggest user base, AI user base on the planet. It's not even currently set up as a for profit company. It is struggling to make that conversion, fighting against its largest shareholder, which is a, the second largest publicly traded company in the world, Microsoft. This is a really fascinating situation and the implications for all of the other tech giants that are trying to compete in AI, I think are massive. Like how this shakes out and what ends up happening. So I just, I wanted to put that on everyone's radar. Any thoughts?

[Michael Batnik]

It is. Did you say it's going to be the biggest IPO ever? It.

[Josh Brown]

Well, the only thing on the Runway that potentially could be bigger is maybe SpaceX.

[Michael Batnik]

What is the biggest IPO ever?

[Josh Brown]

I think at like at its time or.

[Michael Batnik]

Well, it used to be Facebook, right? Or was Facebook even. I don't even remember. Alibaba.

[Josh Brown]

I think Alibaba in its moment anyway. This will be the biggest period.

[Michael Batnik]

Yeah.

[Josh Brown]

If this came public, if this came public a year from now, which is conceivable, this will be, this will be bigger than anything that's ever come up.

[Michael Batnik]

So I think the Last valuation was $300 billion. It could come public. Bigger than Berkshire. I mean, I don't know.

[Josh Brown]

Yeah, no, it's. I mean, it's conceivable because if they have. Look, the thing that would hold it back from that is if we look at the expense side and we decide, okay, that's so much growth, that's great, but, like, you'll never make money.

[Michael Batnik]

Yeah.

[Josh Brown]

I don't think that's what's going to happen, though.

[Michael Batnik]

Is there any even whispers of when an IPO would be? Not anytime soon. Soon.

[Josh Brown]

It can't even. It can't even talk about it because they're currently not even set up as the type. The. The structure of a company that could be public. It's like that's how early they still are in there. It's a wild situation to have something like this 50% held by Microsoft and. And then the question is how much of the growth and the valuation expectations for OpenAI are baked into the Microsoft valuation.

[Michael Batnik]

Right. Yeah. A lot of moving parts.

[Josh Brown]

Like how much do Microsoft investors expect them to get? A, from the partnership and B, from the eventual share sales that might become possible.

[Michael Batnik]

Right.

[Josh Brown]

You know, and what percentage would Microsoft sell in a, in a public offering? Half their holdings. Is it. And could this thing get to a valuation that's so big that, like, there's just no buyers for it?

[Michael Batnik]

And what is 13 times 47?

[Josh Brown]

Yeah. All right.

[Michael Batnik]

Okay. You're gonna make the case, or am I doing mystery chart? What do you do first? I can't remember.

[Josh Brown]

I'm gonna make the case. Amazon's going to 250. It's 217 today. Ish. I think. Let me show you a chart. This is. I love this. I love these types of charts. So very straightforward, wide charts. I'm showing you volume and RSI in the bottom pane. I'm showing you the gap higher after their earnings in late April or early May. And what you can see is that after this huge upside gap, not huge, but big upside gap, a very low volume retest of. That's the. Is that the 200 day.

[Michael Batnik]

This is a FAMI special.

[Josh Brown]

Yeah. So look at this low volume retest that I have in the, in the, in the top oval of that 200 day, gets below it for 10 minutes, springs right up off of it, and is now poised for the next higher high and rsi. So relative strength during that little dip back to the 200 day held up perfectly.

[Michael Batnik]

Yeah.

[Josh Brown]

So we're not overbought. We're about a 65, 64, 65 RSI. You had the retest already and now I think you could be off to the races. Amazon from my perspective has the ability to be the best performing name in Mag 7, the mean analyst target. Right now 44 firms covering the stock is in the 2 forties. So I'm saying 250 the way I want you to think about this, Michael. It's the stock's 217. It's like a $21 stock going to 25. So I'm not saying like something crazy is about to happen, but the Trainium chips we talked about competing with Blackwell, it's not that they're competing at the cutting edge of tech, it's that they're competing at the power per dollar spent. It's a much more efficient chip, the neutralium chip, than what's out there in the market. I'm saying that aws, Amazon's cloud unit is the most important AI infrastructure company in the world. I'm also saying the market cap could be worth 3 trillion AWS as a standalone business. If you remove this from the grocery store, this could be like a $3 trillion company AWS, the entire market cap of Amazon right Now is only 2.3 trillion. AWS has more cloud share globally than Azure and Google Cloud, its two biggest competitors combined. AWS has 29% of the the global cloud market and growing. This is in my opinion the fat pitch amongst the Mag seven. And here let me show you one more chart. Okay, this is fascinating the where this is Amazon stock price versus forward earnings estimates for the current fiscal year in blue and forward estimates for next fiscal year in orange. And it just continually updates. Right, look at the stair step pattern in this earnings growth off the bottom in July of 2022. So for the last three years the current year estimates just move up and to the right, up and to the right in a stair step pattern. That's the blue and in the orange the next year's next fiscal year's earnings estimates which are now at $7.36. And you can see by the way.

[Michael Batnik]

That that dip is all CapEx 100%.

[Josh Brown]

100%. So I, I'm just going to tell you I think the earnings here like ultimately by the end of this AI build out could be $10 worth of earnings. This stock ain't staying at 200. It's just not. Well, it's just not.

[Michael Batnik]

Amazon is I believe my second largest holding. So I'm in with you 35 times.

[Josh Brown]

PE ratio, 29 forward whatever, 17% expected earnings growth next year.

[Michael Batnik]

That's what I'm talking about. I mean did you know that over the last five years, just or despite of, or in spite of, I don't know, all of this growth, Amazon is up 65%. The S&P is up 106%.

[Josh Brown]

Yeah.

[Michael Batnik]

So it's been left. It's been smoked.

[Josh Brown]

Look, they had a horrific post pandemic period. The, their earnings effectively collapsed. They did so much hiring and building and spending, but it wasn't a waste.

[Michael Batnik]

They messed up. Yep.

[Josh Brown]

They fixed it. Messed up. But a lot of that infrastructure spend is now converting to profit.

[Michael Batnik]

Well, it's got a. It's got a gush. It's got a gush.

[Josh Brown]

They were earning in 2020. In the pandemic year, they were earning 21 billion. In the last 12 months, they've earned 66 billion. Their earnings power has tripled over the last five years. Do you understand? Nobody. Because I think, I honestly think people are underestimating what's happening at Amazon.

[Michael Batnik]

You and I. You and I are not. You're, you're, you're long.

[Josh Brown]

All right.

[Michael Batnik]

And you're long and svelte.

[Josh Brown]

Yeah, let's, let's solve it.

[Michael Batnik]

Okay? This is, this is a company that. And it's also a stock. How about that? You mentioned it on the show. This is year to date and it has springboarded off of the lows from one. Holy mackerel. From 120 to 211. John, if you please zoom out a little bit.

[Josh Brown]

I said the name of the stock today.

[Michael Batnik]

You did. It's, it's, it's actually underperformed. Big league until. Yes. And then one, one more zoom out. So that was, this was the last clip. Look at, look at this. Look at this beast. So Oracle was. And good, good guest, Josh.

[Josh Brown]

Thank you.

[Michael Batnik]

So Oracle was written up in Barron's over the weekend.

[Josh Brown]

Good timing.

[Michael Batnik]

They said Oracle will be the number one cloud database company, Oracle will be the number one cloud applications company, and Oracle will be the number one builder and operator of cloud infrastructure. So that's exactly where you want to be.

[Josh Brown]

So they relate to the cloud, but they have more than made up for it.

[Michael Batnik]

The headline, the headline was capital spending for the fourth quarter was $9.1 billion, or nearly 60 of overall revenue. And this is how shareholders are treating the stock. They don't care. In fact, they love it.

[Josh Brown]

Do you know who the CEO of Oracle is?

[Michael Batnik]

I just mentioned his name. I don't know, it doesn't ring a bell.

[Josh Brown]

Safra Cats.

[Michael Batnik]

Who is that?

[Josh Brown]

It's a woman.

[Michael Batnik]

What do you mean? And I said, who is that?

[Josh Brown]

I'm saying, okay, nobody knows. Nobody who's casually follows tech knows who she is. Tech people know who she is. Larry Ellison looms so large over this company. Still obviously the largest shareholder. And he's like 80 years old, but yeah. Oh, this guy, he's like, if you. If you were writing a book about who are the people who have won the most in, like, in life, he's definitely like top 100 in history.

[Michael Batnik]

Big.

[Josh Brown]

This guy is just. I mean, he, he owns his own, like, Hawaiian islands. He's just. He does whatever. He does whatever he wants. Sons like, dad, I want to run an entertainment conglomerate. Oh, okay, no problem. I'll just buy you Paramount. What? Like, what else should we do today? You want to have lunch like this? This guy is Sizola. And look at the stock. He deserves it. If you're a shareholder in Oracle, you. You're not a mag 7, but so what? Like, you're. You're doing as well as shareholder in any other stock that you could think of. This thing is just on fire. All right, that's it from us today, guys. Thank you so much for tuning in. We appreciate those of you who attend the live premiere. Of course. I want to mention that tomorrow is Wednesday, which means an all new edition of my favorite podcast, Animal Spirits with Michael and Ben.

[Michael Batnik]

Tomorrow was a good one.

[Josh Brown]

Yep. By the way, guys, the merch store is open this summer and it's idonshop.com. look at this shit that we're. Dude, the towel is insane. Look at that towel. You want to. You want to rock one of those at Catalina, right?

[Michael Batnik]

I need, I need.

[Josh Brown]

All right, Nicole, get Michael and I towels, please. New Animal Spirits T shirt and the all new series 777. So. So that's so hot. That shirt available in two colorways. Check out. I don't shop.com to see. See all of our compound merchandise. Shout out to the whole team. And guys, talk to you soon. Thanks for watching. Thanks for listening. Whether you're just getting started as an investor or you're managing a multi million dollar portfolio, Ritholtz Wealth Management has the solution for you. It all starts with building the right financial plan. To speak with a certified financial Planner today, visit ritholtswealth.com don't forget to check us out at YouTube.com thecompoundrwm. Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.