Dark Matter

Summary

Podcast Title: The Compound and Friends
Host/Author: The Compound
Episode: Dark Matter
Release Date: January 10, 2025
Guests: Julie Hyman, Doug Bonaparte
Description: Join Downtown Josh Brown, Michael Batnick, and a rotation of their friends every Friday for expert insight and hot takes on the latest in business and investing.

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1. Introduction and Opening Banter

Timestamp: 00:02 – 04:06

The episode begins with Josh Brown and Michael Batnik discussing the unusual circumstances of the day, noting the stock market's closure. They humorously reflect on their habitual behavior of refreshing ticker pages despite the market being closed. Michael mentions enjoying a rare day free from shows to work on his newsletter, which sets a relaxed tone for the episode.

Notable Quote:
Josh Brown [00:12]: “Is this how normal people live?”

2. Introducing Guest Julie Hyman

Timestamp: 04:29 – 08:15

Josh Brown welcomes Julie Hyman, a host for Yahoo Finance Live and a seasoned financial journalist with over 20 years of experience. Julie's extensive background includes covering major financial events such as the Great Financial Crisis and the rise of meme stocks. Her introduction highlights her expertise and sets the stage for her contributions to the discussion.

Notable Quote:
Josh Brown [05:04]: “Allow me to introduce you to Julie Hyman.”

3. Bond Yields and Term Premium

Timestamp: 09:09 – 16:21

Julie authored a piece on rising 10-year bond yields, which the hosts delve into. Michael explains the complexity behind bond yields' impact on stock markets, noting the uncertainty surrounding the term premium—the portion of the yield not explained by inflation expectations. They discuss how a surge past the 5% mark could influence investor behavior, potentially triggering bond selloffs and affecting stock valuations.

Notable Quote:
Michael Batnik [10:06]: “There is debate over what level in the 10-year yield would be especially problematic for stocks.”

4. Stock Market Analysis and MAG7 Concentration

Timestamp: 19:00 – 27:12

The conversation shifts to the stock market's current state, emphasizing the ongoing bull market's third year. Doug Bonaparte presents charts illustrating different bull market paths, highlighting the concentration of returns within the MAG7 (the top seven contributing stocks). The hosts debate the sustainability of such concentration and its implications for diversification in investment portfolios.

Notable Quote:
Doug Bonaparte [20:15]: “There's nothing here whatsoever other than a lot of spaghetti on a chart.”

5. Election and Political Impact on Markets

Timestamp: 28:00 – 32:00

The hosts speculate on the 2028 presidential election, pondering potential candidates like Gavin Newsom, Donald Trump Jr., and Elon Musk. They discuss the historical impact of presidential actions on market volatility, referencing Donald Trump's first term's muted volatility despite his active communications. The conversation anticipates increased volatility with the new administration and the potential market reactions to policy changes.

Notable Quote:
Josh Brown [29:08]: “But it was the pandemic, of course, started when Trump was still in office.”

6. Employment Trends and AI’s Impact

Timestamp: 32:00 – 40:39

Julie and Michael address the evolving job market, noting a rise in long-term unemployment and the gradual impact of AI on job roles. They discuss how AI might lead to attrition rather than mass layoffs, allowing employees to transition naturally out of roles. The conversation also touches on the challenges faced by those in sectors like real estate and the broader implications for economic stability.

Notable Quote:
Julie Hyman [36:28]: “If you're in college and you're like, oh, what am I going to go? Don't go into the job that's not hiring for the last six years.”

7. Private Equity and Retirement Funds

Timestamp: 49:45 – 58:13

The discussion shifts to the private equity industry's push to access retirement savings, such as 401(k) plans. Doug Bonaparte expresses concerns about the complexity and suitability of private equity investments for average investors. The hosts debate the potential benefits and pitfalls, including higher fees and the need for increased financial literacy among investors to navigate these sophisticated investment vehicles.

Notable Quote:
Doug Bonaparte [50:34]: “It's hard enough to get people contributing and investing in their 401(k)s in the first place.”

8. Consumer Spending and Influencer Marketing

Timestamp: 58:13 – 64:05

Julie explores the surge in consumer spending fueled by platforms like Instagram, TikTok, and Buy Now Pay Later (BNPL) services. They discuss how affiliate marketing and seamless online shopping experiences drive excessive spending and debt accumulation, particularly among younger consumers. The hosts express concerns about the long-term financial habits being cultivated through these modern consumer behaviors.

Notable Quote:
Julie Hyman [62:18]: “The use of Buy Now, Pay Later as a credit option allows shoppers to split into multiple payments.”

9. Quantum Computing Stocks and Market Volatility

Timestamp: 65:00 – 73:28

The episode covers the volatile nature of quantum computing stocks following announcements from major players like Alphabet. Despite optimistic forecasts, stocks in companies like Quantum Computing Inc., Rigetti, and IonQ experienced significant drops, illustrating the speculative frenzy and the disconnect between technological advancements and market performance expectations.

Notable Quote:
Michael Batnik [66:00]: “They said getting very useful quantum computers to market could take 10, 15 to 20 years.”

10. Adrian Peterson’s Financial Troubles

Timestamp: 71:08 – 75:43

Josh highlights a high-profile case of NFL star Adrian Peterson facing financial ruin due to poor financial management and high-interest debts. The discussion underscores the importance of financial literacy, sustainable lifestyle choices, and the risks of mismanaged wealth, especially among young, high-earning individuals.

Notable Quote:
Julie Hyman [72:38]: “The importance of financial literacy, clearly. The vulnerability of exploitation by advisors and people you surround yourself with.”

11. Closing Remarks and Looking Forward

Timestamp: 75:43 – End

The hosts wrap up by sharing personal highlights and upcoming topics. Julie looks forward to advancements in AI and her work on her book "Money Together," which aims to help couples manage finances effectively. Michael expresses excitement about covering Elon Musk's ventures, while Josh humorously addresses Kevin O'Leary's unlikely bid to purchase TikTok. The episode concludes with light-hearted banter and acknowledgments to their guests and team members.

Notable Quote:
Julie Hyman [78:39]: “We're getting cool stuff, but nothing that they go, whoa, we want the next big.”

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Key Takeaways

• Bond Yields: Rising 10-year bond yields and the elusive term premium pose uncertainties for stock markets, especially if yields surpass the 5% threshold.

• Stock Market Concentration: The MAG7 stocks dominate market returns, raising concerns about diversification and long-term sustainability.

• Political Influence: Upcoming elections and potential policy shifts are expected to introduce increased market volatility.

• Employment Shifts: The job market is experiencing longer-term unemployment and gradual shifts due to AI integration, affecting sectors like real estate.

• Private Equity Access: Private equity's push into retirement funds raises questions about suitability, fees, and the need for investor education.

• Consumer Behavior: Influencer-driven spending and BNPL services are altering financial behaviors, potentially leading to increased debt among younger generations.

• Quantum Computing Speculation: Quantum computing remains a speculative investment area with high volatility and uncertain market implications.

• Financial Literacy: High-profile financial failures among athletes highlight the critical need for financial education and sustainable wealth management practices.

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This episode of "The Compound and Friends" provides a comprehensive analysis of current financial trends, market dynamics, and socio-economic factors influencing investing strategies. With insightful discussions and expert opinions, listeners gain a nuanced understanding of the complex interplay between bonds, stocks, politics, technology, and personal finance.

Transcript

[Josh Brown]

Did you watch any of the funeral?

[Michael Batnik]

I mean, it was on.

[Josh Brown]

It was a weird day today to be in the office, but the stock market's closed. Is this how normal people live?

[Michael Batnik]

I wondered that today. I was like, oh, I could have meetings. And indeed a lot of people in my office were having meetings today.

[Josh Brown]

Do you know how many times I refreshed the ticker page? Did you? I can't help it. It's a force of habit, like, what's going on with my life.

[Michael Batnik]

It actually felt luxurious to me because Thursday is my writing day. I write our Morning Brief newsletter on Thursdays for Friday. And usually I have to do that, like in between other things. I've even been known to finish it, like during the show, during commercial breaks.

[Josh Brown]

So you had no shows to make today so you could just write what topic du jour. Well, we're going to get to it. We're going to get to it.

[Michael Batnik]

Should I tease it? Should I do a tease? Well, we call them the biz.

[Josh Brown]

Yeah, do a tease.

[Michael Batnik]

Bond yields, Yields.

[Josh Brown]

Bond yields. Are they good?

[Michael Batnik]

It depends.

[Josh Brown]

We'll find out.

[Michael Batnik]

It depends.

[Julie Hyman]

Where do they fit into your diet?

[Josh Brown]

Will bond yields fit into your diet? Stick around. So I watched a little bit of it. They had. Joe Biden gave a speech which I thought was pretty good. And it sort of was like a subtweet about Donald Trump. Because the whole thing was about Jimmy Carter's character and why character matters. Because I think that's the thing, like, if you ask somebody what they think of Jimmy Carter, that's like probably the main thing people point to is how modest he is and.

[Doug Bonaparte]

Never met him.

[Josh Brown]

Never met him. Sort of. He's sort of like the anti Trump. He still lives in this like ranger ranch style house.

[Michael Batnik]

Lived a life of service. Right.

[Josh Brown]

So you want to laugh? He had to sell his. His business to become the president.

[Julie Hyman]

It was a quaint.

[Josh Brown]

It was a peanut farm.

[Julie Hyman]

Yeah, right.

[Michael Batnik]

Yeah.

[Josh Brown]

Okay. I think that precedent.

[Doug Bonaparte]

Think about the conflicts.

[Josh Brown]

Yeah, yeah. Can you imagine the conflicts? I think that precedent is over forever.

[Julie Hyman]

Today. Today he would be forced to putting the peanut farm in a blind trust.

[Josh Brown]

He would have to sell peanuts from the White House.

[Michael Batnik]

I don't know.

[Josh Brown]

Yeah, well, I don't think any president will ever really have to do that again. Which opens up the window to more types of presidents who want to keep their business. How could you tell them they can't do that?

[Julie Hyman]

There's an argument to be made that like, hey, you've spent 30, 40 years of your life building a business, some enterprise and you gotta divest yourself of it like it was Mitt Romney that was going hard into that point.

[Josh Brown]

I think you limit the well of potential people that you might want to run the country.

[Julie Hyman]

Yes.

[Josh Brown]

If you're gonna make them all sell their businesses.

[Doug Bonaparte]

Can we talk about the election of 2028?

[Josh Brown]

Yeah.

[Julie Hyman]

Who do you got?

[Josh Brown]

Who are you voting for? Gavin Newsom or Donald Trump Jr. What do you think Elon Musk you gonna vote for? He can't vote.

[Michael Batnik]

Are we changing the law so that he can run?

[Julie Hyman]

Yeah, probably. Well, you got chunk of market, so we can do whatever we want.

[Josh Brown]

Now. If he's from Greenland, by then it'll be the 51st state.

[Doug Bonaparte]

You know who the most famous person from Greenland is?

[Julie Hyman]

Tell me.

[Doug Bonaparte]

I don't know. It's gotta be someone.

[Julie Hyman]

Look it up right now.

[Michael Batnik]

I don't. I don't know.

[Doug Bonaparte]

Guys, we ready?

[Michael Batnik]

It does have to be someone.

[Doug Bonaparte]

I'm out of banter.

[Josh Brown]

Some of the worst banter you've honestly ever done. Listen, I'm looking forward to the election of 2028, I'll tell you that.

[Doug Bonaparte]

I'm out.

[Josh Brown]

And do you know who's the most famous person in Greenland?

[Doug Bonaparte]

Listen, Home run, huh?

[Michael Batnik]

Did you find him?

[Julie Hyman]

Yeah.

[Josh Brown]

No one I recognize.

[Doug Bonaparte]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Today's show is brought to you by Vaneck. Listen up. There is a huge wave of demand currently and on the horizon from hyperscalers for data center power. And many of them have already looked to nuclear as a solution in the short to intermediate term. Why? Because it is both clean and efficient. It has one of the lowest emission profiles among energy sources, and it can produce power 24. 7, unlike renewable sources that produce electricity intermittently. To learn more about getting your exposure to these companies, visit vaneck.com NLR that's vaneck.com NLR.

[Michael Batnik]

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.

[Josh Brown]

All right, ladies and gentlemen, welcome. Welcome to episode 173. All right. You are now rocking with the best investing podcast you've ever heard in your entire life. I staked my whole reputation on that. Doug, what do you think?

[Julie Hyman]

Yeah, you should do that.

[Josh Brown]

Listen to a lot of you. Listen to a lot of investing podcasts though.

[Julie Hyman]

Just this one.

[Josh Brown]

Just this one. See?

[Julie Hyman]

Told you.

[Josh Brown]

And Michaels.

[Julie Hyman]

And Michaels.

[Josh Brown]

Guys, we are, we are doubly blessed. Today we have two of my favorite people. One is a repeat guest, longtime friend of the show and one is her first appearance ever.

[Michael Batnik]

Amazing.

[Josh Brown]

Hopefully not the last. Allow me to introduce you to Julie Hyman. Julie is a host for Yahoo Finance Live. Julie has been a financial journalist for more than 20 years, covering events including the great financial crisis that was the collapse of drug maker Valiant, I remember. And the rise of the meme stocks. Before joining Yahoo Finance in 2018, Julie worked at Bloomberg Television as a senior markets correspondent, Anchorage and retail reporter. That's where I met you. Yes. Yes. Those are the days. In many ways, those were the days.

[Michael Batnik]

Were those the days?

[Josh Brown]

I sort of feel like they were.

[Michael Batnik]

In what way were those the days?

[Josh Brown]

I'm not sure.

[Michael Batnik]

I feel like Everybody's all about 90s nostalgia right now.

[Josh Brown]

Yeah, that's a thing this week that's going on.

[Michael Batnik]

But like when, when did we. What year was it? I post financial crisis.

[Josh Brown]

I'm going to guess that I met you in like 20. 2011. 2010. 2011. I was doing a lot of Bloomberg back then. Most people don't know that about me. I was doing that show that Matt was doing at like 11 o'clock at night. What was that? What was that show on Bloomberg?

[Michael Batnik]

I mean there were so many different. You mean Miller? Miller, yeah, yeah.

[Josh Brown]

What was he doing? It was weird. It was great.

[Michael Batnik]

If it was, if it was Miller, it was weird.

[Josh Brown]

He's so weird. I love that guy.

[Michael Batnik]

He's amazing.

[Josh Brown]

So I was doing a lot of Bloomberg radio. I even co hosted the radio and I did a bunch of Bloomberg tv. So I'm guessing I would have met you around that time. 2011ish.

[Michael Batnik]

2011 was a good time.

[Josh Brown]

Yeah, it was a wild time with us also today, Doug Bonaparte. Doug is the president and founder of Bonafide wealth, an independent RIA focused on serving high achieving millennials. Along with his wife Heather, he is also the co author of Money Together, their forthcoming book on love and money.

[Doug Bonaparte]

When is it forthcoming?

[Josh Brown]

When is it coming out? I feel like we have a publication.

[Julie Hyman]

Date as of like two days ago. It's October 28th.

[Josh Brown]

Are you on pre sale? Are you available for pre sale right now?

[Julie Hyman]

I technically think you can pre order this right now.

[Josh Brown]

Okay.

[Julie Hyman]

I wasn't prepared to say that to.

[Josh Brown]

Anyone, but yeah, okay, give us like this and give us like the elevator pitch. Why should people buy the book?

[Julie Hyman]

Because in Our lives. You're a team with your partner and money is never not going to be a thing that you have to deal with. It's not a game you can win. It's going to evolve, it's going to change. It's cliche to mention the statistic of how many relationships don't work out because of money.

[Josh Brown]

Yeah, let's fix it.

[Julie Hyman]

Let's.

[Doug Bonaparte]

My first wife.

[Julie Hyman]

Yeah, let's fix that. Let's make this possible to communicate around the things that make a strong and unstoppable financial team.

[Josh Brown]

What's the writing process like with. With any. Not just your wife, but any partner.

[Julie Hyman]

You switch off chapters, don't get divorced is the number one thing.

[Josh Brown]

No, no, no. What's the process though? Like who. Who does what?

[Julie Hyman]

We did this in Heather's voice. She's the better writer. So There are over 75 interviews of couples, over 35 interviews with professionals and experts in their respective fields. So while I'm out there getting interviews and sitting in those interviews and coming up with collaborating with the ideas that we have, we're going to use her voice, we're going to use her writing style because she's a prolific writer and everyone's going to see that.

[Doug Bonaparte]

Did you guys turn the mics on yourselves?

[Julie Hyman]

Yes. We weave our story throughout the entire book. But I have to tell you, the people we've interviewed. I cried twice reading this book. There are some really exceptional stories that are relatable to any reader. I'm so, so privileged to talk to those individuals.

[Josh Brown]

I love this. Very exciting. Most investing in money books are geared toward. I mean, I know you know this are geared specifically toward an individual reader. This sounds like something that, like, let's buy two copies and then talk about it.

[Julie Hyman]

You are going to read this book and grab your spouse and say, read this part. This is like, this is us. Like Evrodsky did that with Fair Play. You're gonna do that here with money.

[Josh Brown]

All right. We're very excited for you, Doug. And of course we will include a link to where people can see the book for pre order. So can we talk about rising 10 year yields? Julie, you wrote about this.

[Michael Batnik]

I did, yeah.

[Josh Brown]

We're front running your piece a little bit.

[Michael Batnik]

You are? Well, but by the time this comes, it'll be fine. Yeah, it'll come out Friday morning. So I mean, and I'm certainly not the only person to notice this, right? Like we've seen stocks pull back since mid December at the same time that yields on the 10 year have gone up by like 50 basis points. Right. So the question is, why is it a problem? Because yields went up other times, especially last year, and it didn't seem to be a problem for stocks. And at the time everybody was saying to us in interviews, well it matters why yields are going up. Right. And if yields are going up because people are optimistic about the economy, then it's not as much a problem. But yields kept going up even when the Fed was cutting, which seemed to be puzzling everybody also. And now yields are going up and inflation seems to be coming back and that is not making people as happy as it was, you know, when that wasn't the case.

[Josh Brown]

Can I quote you?

[Michael Batnik]

Sure. I don't know if I've ever been quoted in myself.

[Josh Brown]

I'm going to quote you quoting others. There is debate over what level in the 10 year yield would be especially problematic for stocks. With consensus coalescing around 5% and markets have already gotten a taste of that. The less closely watched 20 year treasury hit 5% this week. Yields notwithstanding, most Wall street strategists, Yuri Timur and then talk to Urian, friend of the show as well, and Michael Arone from State street, think that earnings, not fiscal policy, not the Fed, will determine where stocks go. Okay, sure, but 5% is gonna get people to sell and I don't know a hundred percent why that's the case. I just know that it's true. You gotta take on that.

[Julie Hyman]

I wanna see if it blasts through it. I think that's what gets people really spooked here.

[Josh Brown]

So not stopping at five.

[Julie Hyman]

Yeah, the momentum into it. Like if we hit it and we flail around there and we come down a little bit, we'll be like, oh that's like April or oh that's like October of 23. Maybe earnings will come through and we'll see rosier passage. But if it blows through, you think.

[Doug Bonaparte]

You'Re gonna have clients ask you, hey, does it make sense to take a little.

[Julie Hyman]

I think clients are going to be wondering how long duration they should have been or need to be moving forward on their fixed income portfolios.

[Doug Bonaparte]

Well, cash is over.

[Josh Brown]

Yeah, well, so that's the reason people sell. People don't sell stocks at a 5%, 10 year for no reason because they think it's some unwritten rule that it's because it's a competing asset class and it's guaranteed. So if you think you're going to do worse than 5% in the stock market this year, then that's a really easy trade off to make. Even though bonds are also total return. But that's the reason why that could be a threat to the bull market kind of thing. What else did Yurian say when you talked to him?

[Michael Batnik]

So he talked about inflation too and being a little bit concerned about inflation. But overall he is bullish. I mean he also talked about the term premium on Treasuries versus stocks and sort of the competition that you're talking about. To some extent he still likes Bitcoin.

[Josh Brown]

Because he's like that in a 5% yield environment.

[Michael Batnik]

I mean he likes it regardless of anything else, which is mostly the case when people like it. But he also is fairly optimistic about earnings growth regardless of what happens, excluding that. And that's kind of been consensus ish of people that we've been talking to lately is that they are pretty optimistic about earnings. And it's always interesting to me when somebody says, well don't pay attention to the Fed, don't pay attention to fiscal policy because those things obviously could have some impact on some earnings. I think the view is just that it won't be widespread enough to more.

[Josh Brown]

Of an impact on sentiment than on earnings, at least in the short term. Yeah, I think one of the big stories this week is about you mentioned the term premium. And I wanted to just bring this up because if we think that the reason why the 10 year yield matters is the why, why it's rising. So this is one of the puzzles on the street. And Bloomberg wrote about this today, I'll quote Bloomberg. It's the buzzword on Wall street and in the hallways of the Federal Reserve and Treasury Department. It's blamed for triggering bond selloffs, shifts in debt auctions and interest rate policy. Few agree on exactly what it reflects or how to measure it. It doesn't matter. The term premium is a powerful new force in the market. And the gist of this is it's the portion of the yield that's unexplained by inflation expectations. There's something else going on there and maybe that's financial risk generally, or maybe that's risk specific to US Debt or, or maybe that's concerns about President Elect Trump's new policies. But like that term, Premier Bloomberg calls it the dark matter of Wall Street. And the reason why is they asked a bunch of people to measure it or explain it and they got a wild array of different measurements and different explanations. We have a chart. Let me show you this. This is Bloomberg's chart. This is the term premium itself and it got up to almost half a percent, which in in bond yield Terms is sort of a big deal. Backed off a little bit, but it's not zero and it's not below zero anymore. So we had negative term premium for a while. Now we have positive term premium and this is what people are talking about on the street.

[Julie Hyman]

So we have the largest unexplainable premium.

[Josh Brown]

Well, we'll find out the reason later, that's how. Well, stay tuned.

[Michael Batnik]

If I could, if I could chime in with one more reason, maybe, but I don't necessarily agree with this reason, but it's something that someone said to me recently. John Hilsenrath, who you guys probably remember as like the Fed whisperer.

[Doug Bonaparte]

He was Fed.

[Josh Brown]

Where the hell did this guy go?

[Michael Batnik]

He started his own consulting. He's consulting now? Yeah, he's consulting now. Okay. And so he was on with us the other day and while we were on we were talking about Fed minutes and then after he went off he said, I want, you know, next time we gotta talk more about yields. He thinks maybe there's a little more bond vigilanteism creeping back in the market. I don't know that I buy that yet. I mean I talked to Rick Reeder last year and he said markets pay attention to the shark closest to the boat. And you know, the deficits are not the shark closest to the boat right now.

[Doug Bonaparte]

What is the shark?

[Josh Brown]

Inflation.

[Michael Batnik]

Yeah, I don't know what he would even think the shark is like at this moment, cuz he's bullish. But I mean that's the Fed.

[Josh Brown]

The Fed's shark is not whether or not people are going to boycott US Bonds because of our national debt. The Fed shark is still inflation.

[Doug Bonaparte]

If there was concerns over our deficit and debt, and maybe that's showing up in the strength of gold and bitcoin, but it would show up in dollar weakness and that's not happening. Clearly the dollar has been in a secular bull market for a long time.

[Josh Brown]

Exactly.

[Michael Batnik]

So I don't know that this is happening yet, but it is. I mean certainly people were talking about it a lot around the election and there was another interesting note out from Jason Drayo over at ubs, who I think we're talking to tomorrow, who talked about MAGA versus Doge, in other words, the different impulses in the administration, cutting versus spending and like what is that going to do to deficit? So I think, I don't know that it's being felt in the markets like that tangibly right now. But we're still, we're going to be talking about this for the next four years.

[Josh Brown]

I think it's just an expression of people saying this is not as low risk as you think it is to be in, in, in the bond market or to be in cash. I don't think that anyone thinks that we're going to get this like surge of bond vigilantism and people are going to dump their treasuries. I don't, I don't know that, that whatever I just showed you would represent enough fear to say that.

[Michael Batnik]

Yeah, I think to Michael's point it's like.

[Josh Brown]

Yeah, but I also think this is good.

[Doug Bonaparte]

It's a, it's generally a good thing. Like how long did we bemoan the fact that investors or savers were being punished? And now nobody's saying they're being rewarded but they are.

[Julie Hyman]

Yeah.

[Doug Bonaparte]

Because it's a much better environment.

[Julie Hyman]

You can get some good yield and perhaps, you know, if you still believe rates are going to come down, there's your appreciation while you wait. I mean that's kind of where I've been hoping to get. We're there. Yeah. But we've been kind of robbed of it as rates are not going. We're not getting the appreciation on the bonds you bought, you know, more cheaply. Remember bond back up now.

[Doug Bonaparte]

Remember bond proxies in like 2013, 14, it was preferred stocks, it was junk bonds, it was AT&T dividends. Like now we don't need proxies, we have actual bonds. I think it's a great thing.

[Josh Brown]

I think what's really happening that is no longer punishing savers, they're punishing realtors.

[Julie Hyman]

I mean that's one way to put it.

[Josh Brown]

I mean that's literally who's paying the price for this for the last two years. We just, we just had four rate cuts last year and the 10 year went up 100 basis points. And nowhere is that felt more acutely than somebody trying to get people to take out a mortgage and buy a house.

[Julie Hyman]

And just last month you were, you were told you're not getting half as many rate cuts. You know, look at this year as you were.

[Doug Bonaparte]

So this chart shows the 10 year yield before and after the first Fed cut.

[Julie Hyman]

Yeah, yeah.

[Josh Brown]

Crazy.

[Doug Bonaparte]

Normally obviously when the Fed is cutting, the long end goes down too. And this is the exact opposite. Just a very unusual.

[Michael Batnik]

Did you guys see the latest mortgage rates with 72 6.93 the Fannie and Freddie.

[Julie Hyman]

That was my joke yesterday.

[Doug Bonaparte]

Nice.

[Michael Batnik]

It's like the highest since July.

[Julie Hyman]

Now that rates have come down, I'm excited. I can refinance my 6.5% mortgage at 7%.

[Doug Bonaparte]

Congratulations to you.

[Josh Brown]

So I spoke to, I spoke to somebody who's been a realtor for 25 years. This week he said he sold one house this year. Like one house, not good. And where he is located, there is no new construction. It's just turning over houses and houses aren't turning. And then I spoke to a mortgage broker I'm friendly with and this is fire and brimstone. He's just like, I don't understand what's going on. Like, we just got four rate hikes. Why won't Wall street let us have the rate hikes? Why are they putting the rates back up? And I don't really have a great answer for them because we did get two and a half percent inflation. So for whatever reason, it's, it's not, it's not working the way they thought. The real estate market is as frozen as I think it's been that we can remember.

[Julie Hyman]

How long can we keep pointing to lack of supply as the largest explanation or the larger it is, though it.

[Josh Brown]

Exists, it's as long as it exists.

[Julie Hyman]

And that's for the foreseeable future. I don't understand how we're going to build and construct.

[Josh Brown]

We were set, we were saying, Michael, you and I, two days ago, like, or yesterday. If all this AI spending stuff wasn't going on and the market was like conforming more to the housing cycle, which is what it normally does, we would be like 0% GDP. Stock market, I think the S and.

[Doug Bonaparte]

P would be at 4,000.

[Josh Brown]

Yeah, I think the stock market be at least 15, 20% lower. So it's not, I think it's not great. Let's go into. But we are still in a bull market. Let's go into some of these charts. We're, we're in the third year now of a bull market. And I don't know what are the ramifications here.

[Doug Bonaparte]

So it just gets a little bit dicier year three does than years one and two, I guess just by definition we've got this chart from Todd Sohn showing all of the different paths. And there's not a million of them, but nevertheless the dispersion is pretty notable. Like there's nothing here whatsoever other than a lot of spaghetti on a chart.

[Josh Brown]

What's the red line?

[Doug Bonaparte]

That's the average.

[Josh Brown]

The median. That's the median. That's what year three of a bull market looks like. It doesn't look that great.

[Doug Bonaparte]

Listen, I would take this, I'd sign up for this. If we can get back to back 20% years in a sideways year. Who says no?

[Julie Hyman]

Not many, I think. Take a breather.

[Josh Brown]

I think most people would sign on for 2020. What do we have? 24, 27 flat.

[Doug Bonaparte]

I mean, listen, I think that stock's going up 20% year after year. Sets yourself up for something dangerous. Like to me, this would be very healthy and welcomed.

[Julie Hyman]

I returned to normalcy.

[Josh Brown]

Let's go to the next one.

[Doug Bonaparte]

So 2024 was interesting in the sense that it was a complete continuation of 2023, also from Todd. So what we're looking at is the top 10 contribution or contributing stocks as a percentage of the overall total. So the record year was 2007. The second record was 2023, where we had around 69% of the returns came from only 10 stocks. And then you saw a repeat of that in 2024. And on the flip side, stocks that sucked wind in 2023 also sucked ass in 2024, which is an unusual.

[Josh Brown]

Julie, that's a, That's a technical term.

[Doug Bonaparte]

Yeah, sucked. Went to sucked ass. That's how we do it.

[Josh Brown]

When you talk to people, is this one of the things that people bring up the most?

[Michael Batnik]

They say sucked, winter sucked.

[Josh Brown]

No, no, no. Like the concentration or.

[Michael Batnik]

No, of course. They talk about concentration all the time. And they keep saying the broadening is coming just like they keep saying small caps are going to start to do better.

[Josh Brown]

Do you know why?

[Michael Batnik]

And neither thing has happened because that's what they're selling.

[Josh Brown]

They're selling a strategy that differs from the index. They have to believe that.

[Michael Batnik]

Well, and what's so funny to me about this argument is like, oh, things need to broaden. Why do they need to broaden?

[Josh Brown]

So that they can sell value.

[Michael Batnik]

Right. But I'm saying in terms of, oh, to keep the rally going, things have to broaden. No, they don't.

[Josh Brown]

Well, they haven't. Or they broaden temporarily and then narrow.

[Michael Batnik]

And the rally keeps going as long as. And I also keep seeing these charts like, oh, the MAG7 growth is going to. Their earnings growth is going to decelerate a little bit and everything else is going to accelerate a little bit. But there's still a big gulf between the two. As long as the MAG7 growth is still happening, why can't they continue to lead the market?

[Josh Brown]

Ken, this coming year is another year where the Mag 7 is going to outearn the rest of the market. I think by a lesser degree. Yes, but still, but still.

[Julie Hyman]

I mean, look for your classic 60, 40 investors or 80, 20 investors where you have that 12% allocation to mid caps or 7 to small caps. Right. It's kind of starting to have interesting conversations with clients or you know, what do we have these mid caps and small caps?

[Josh Brown]

What do these even do? I don't know.

[Julie Hyman]

And we have to say you're going to be glad that they're there. When you're unhappy with momentum and large growth and you pull out your Ibbotson chart and you go back two decades to where that is and you have to believe in stats and believe in, you know, long periods of time and constantly remind your clients. It's just now becoming that conversation when you're looking at your, you know, your risk adjusted portfolios.

[Doug Bonaparte]

I feel like we've reached like a critical point of. It feels like people think that the past is going to continue indefinitely.

[Julie Hyman]

Well, we almost had it, right? You saw the broadening happen. It started to that rally in the end.

[Josh Brown]

September, October. Yeah.

[Julie Hyman]

It was there. I was stoked. I was like, this is finally the bull market of bull markets now. Like everything's firing on all cylinders.

[Josh Brown]

Y.

[Julie Hyman]

We retreated from that.

[Doug Bonaparte]

Small caps gave up their entire post election pop. Like gone all time high.

[Julie Hyman]

We had all time highs, all of it.

[Josh Brown]

Some of these things just work better tactically than long term. Like there's room to say you could have a period of time where small caps lead large caps. Should you think that that could be a 10 year period of time? I don't think anyone should think that. Really, I just don't. Do you think anyone believes that?

[Doug Bonaparte]

Yeah.

[Josh Brown]

You think there are people that believe.

[Doug Bonaparte]

So now all of a sudden you think diversification is stupid?

[Josh Brown]

No, I don't. I think they work better tactically than they work strategically because of how literally recency buys talking.

[Doug Bonaparte]

I know, come on.

[Josh Brown]

But recently that's how I feel. It's hard. All right. Somebody's like, what, what, what's. Why do I own international stocks? Well, that's very simple. It's to make small and mid caps look good. So there's a purpose for everything in a portfolio. I would just say it's really hard for people to picture right now a situation where you have an over 10 year period.

[Doug Bonaparte]

Not for me, it's not of the CAPE ratio is 37. It's 37. It's high. If you look at like forward, forward earnings estimates, especially for the Max 7, it's high. It's very easy for me to picture a world where this doesn't persist. I'm not saying it's going to stop today. Or tomorrow. But if you think I'd like beyond the next like 12 to 24 months, I could easily see a scenario where the rest of the world doesn't look as bad as, as it has been in the last 10 years.

[Julie Hyman]

When your client needs a 6 or 7% average return to solve their retirement planning scenarios. And they're getting 13 to 17% on their 80, 20 or 60, 40, take your pick. And that includes them holding mid caps and small caps. Are they going to feel good knowing that? Yeah. The story of you're going to be happy that they're here for the times when you know the AI story of the grocery is not there, I think is worth it. I really do. They're outperforming what they need to get to retirement at 55.

[Doug Bonaparte]

Hold on, think about it. 2022, if you were saying this, hey, you know what? Everything, let's just own the Max 7. Amazon fell 50%. So did Google. And video was down 70% and so was matter down 75. Netflix down 75.

[Julie Hyman]

Crushed.

[Doug Bonaparte]

Yeah, like how quickly we forget.

[Josh Brown]

So, so some of the outperformance is because things went down less. Because I don't remember small caps having a great year in 2022.

[Doug Bonaparte]

They were not down nearly as much as the mega cap tech stock.

[Josh Brown]

Do you think that, do you think that, do you think that clients or investors even look at what did the Russell 2000 do at the end of a year like this last year? Or they just care about how their.

[Julie Hyman]

Portfolio did first they look at, you know, the Mag 7 and what it did for them. They're not focused on what didn't work. They're focused on what did work. I know. Hey, why don't we have more like literally calls. Why don't we have more Nasdaq a few calls for why mid caps at all? Sure. That's there. Yeah, I think that's, that's. And then the second point, so the.

[Josh Brown]

So the Nasdaq's compounding at like 20% a year or something. And when you build a financial plan for clients, like you don't ever build a plan that requires 20%. So what that means is after three years of that, after five, seven years, more than once, you're going back to that family and you're saying, good news, we are way ahead of where we originally projected we'd be. Thank Tim Cook and Sundar and Zuckerberg. But we have to make a decision. Are we going to roll the dice into next year or are we going to change the plan or what are we going to do?

[Michael Batnik]

Because what do most people say?

[Josh Brown]

I don't, I couldn't guess firsthand. My guess is that people a little bit up their spending plan and a little bit dial down the risk and it's something in between rather than one or the other. I don't know. You, you would know better than I.

[Julie Hyman]

Do with a client getting that much closer to retirement, let's say. And they were chilling. 70, 30. Right. They love the idea of like, hey, 60, 40, you know, 10%, shaving it back. Let's go back a little bit. And everyone feels good about that.

[Josh Brown]

But also I'm going to, but also I'm going to buy. I'm going to buy a second home or 10 years ahead of when I thought I could.

[Julie Hyman]

I think they'll start talking about those intermediate term goals with a little bit more desire for them. But I think when you start having more detailed conversations around it, they'll come to the conclusion this is either a really bad idea.

[Josh Brown]

You think roughly the same kind of thing. Yeah, I think people are more likely to dial back the risk than they are.

[Doug Bonaparte]

I think stocks have given investors a gift over the last, I don't know, 10 plus years. And now that bond yields are getting 5% plus, like the ability to dial it down and still be okay is a beautiful thing.

[Michael Batnik]

Yeah.

[Julie Hyman]

I will say this though. Younger investors, my youngest investors are, you know, you're 30 something. So they're, they're like, can we, they're the ones who are saying, can we add more growth in NASDAQ leverage? Yeah.

[Michael Batnik]

Well, shouldn't they?

[Julie Hyman]

After having, after, after having already done it.

[Josh Brown]

Yeah, yeah.

[Julie Hyman]

And I'm like, that 10% NASDAQ sleeve on top of your 35% in the S&P 500 might be good enough as far as risk on goes, plus the Fartcorn sleeve. So, you know.

[Josh Brown]

Yeah, yeah. You wanna diversify. Julie, you have this, you have this great graphic with presidential volatility. So the, the Trump regime to start. When is that? 20th.

[Michael Batnik]

Monday. Yeah.

[Josh Brown]

What's today?

[Michael Batnik]

Today is the 9th.

[Josh Brown]

So it's a week from Monday.

[Michael Batnik]

A week from Monday, Yeah, sorry, A week from Monday.

[Josh Brown]

Okay. So you say despite all of the tweets and crazy things, the volatility of Trump 1.0 was pretty muted.

[Michael Batnik]

Yeah.

[Josh Brown]

Let's put this graphic up, John.

[Michael Batnik]

So I looked at the vix, but then I thought, okay, well, maybe like individual stocks were more moved by his tweets. Right. When he would tweet about something specific, a specific sector. So I looked at The VIX eq, which is single stock volatility also. But both of them. And I looked at it starting the day after the election rather than waiting for Inauguration Day, because that's when. That's when the reaction started in stocks. And so the Vix averaged about 17.7 in that period of Election Day to Election day in Trump. 1.0.

[Josh Brown]

Yeah.

[Michael Batnik]

And it averaged 19.7 under Biden. And you might say. But it was the pandemic. Well, the pandemic, of course, started when Trump was still in office. And so you saw that spike in volatility.

[Josh Brown]

He had the volume spike in his presidency.

[Michael Batnik]

Exactly.

[Josh Brown]

Biden didn't.

[Michael Batnik]

So even with that volume spike, the average volatility was still lower in the.

[Doug Bonaparte]

First Trump term than 2017 was the calmest year ever.

[Josh Brown]

Yeah, it was crazy. It was eerie.

[Michael Batnik]

But not like there's such a disconnect. Right. Because the news cycle was not calm. Right. He was not calm. He was not quiet. And so it's just, I guess, a good reminder not to be reactive to his commentary on fiscal. The press conferences where he talks about Greenland and Panama Canal and whatever else. You know, the other side of that is that if you put the S&P 500 on here, it actually did better under Biden than under Trump.

[Josh Brown]

We're gonna react. We're not gonna react to Greenland and Panama, but we're gonna react to tariffs. I think the deportation stuff happens before the tariff stuff, and I think it's gonna be fairly disruptive in cities. And I think you're gonna start hearing from chamber of commerce types, people that ordinarily would be Republican making a lot of noise in op ed pages like, do not rip my employees out of the country.

[Doug Bonaparte]

But I don't think that's gonna impact the market at all.

[Josh Brown]

So. All right, I'll take the other side. I don't know how to quantify it, but I think that's gonna be the first time Trump stuff actually hits the market. So everyone understands what's going on this week has literally nothing to do with Panama. It's about getting this guy Hegseth pushed through and ending all of the disputes around some of the people that he's nominated to cabinet positions. If he has people chasing their tail talking about the Gulf of Mexico, then that means the operatives in government have the COVID to just kind of, like, push these things through and make it so people stop talking about them. Everyone, like, who's been in Washington for the first Trump administration understands that's how it works. The markets are ignoring it because the markets are smart. I don't think the markets are going to ignore the roundups. If and when those happen, I think that'll probably be the first time that people say, oh wait a minute, he wasn't just giving speeches at rallies. Like he's actually gonna do this.

[Julie Hyman]

Yeah, he's, he's the wild card guy. Right. And yeah, we've grown accustomed to him. To him saying wild card things that don't actually materialize. And to your point about like I don't know what data point to point to other than what my guts but like things kind of seem like there's gonna be a lot more action than.

[Josh Brown]

Than speak well, it's every president, the first year they get in, they start doing things like so he's going to do things and some of them will be good, some of them will be not so good. But I do think we're going to get a little bit more volatility in Q1 than we've seen so far since the election.

[Julie Hyman]

So many opportunities for that increased fall like right now.

[Josh Brown]

Yeah. So if you're under invested, maybe.

[Doug Bonaparte]

How are you playing it?

[Josh Brown]

Yeah. Doug, what's the go to move investing.

[Julie Hyman]

In the Northwest Passage? Right. So if we take Canada and Greenland and you know, ice is received, the canal is blocked.

[Josh Brown]

Where do you go?

[Julie Hyman]

Oh, ship.

[Josh Brown]

Oh man.

[Doug Bonaparte]

Doug, you talk to a lot of people, not just clients, but you're a very. You're a social butterfly of sorts.

[Josh Brown]

How are. Anecdotally, Michael called you a butterfly.

[Julie Hyman]

Not the first time.

[Doug Bonaparte]

What's going on with employment? People. People. Good.

[Julie Hyman]

Generally speaking. Yeah. I from, you know, a wide array of sectors and industries that our clients make up. It's been few and far between. There's been a handful of. Of job loss throughout 2024. I can't really count on too many people who didn't recover from that. I had some folks take some exit packages and now they're doing that beautiful double dip of they still got their package and they're able to be picked up. Picked back up at.

[Josh Brown]

At.

[Julie Hyman]

But at the big companies like Meta, you know, like cool, I'll leave you know a huge telecom and go do brand strategy for. For Meta. So I saw that look, you know it's taking a month longer.

[Josh Brown]

What to get rehired.

[Julie Hyman]

To get rehired than it was just a year ago. It was like six months. Now it's seven. I would.

[Josh Brown]

It was five minutes three years ago.

[Julie Hyman]

Yeah. You can get a job if you wanted it. Now it is getting longer. I think that's pretty normal if you ask me for the point you made of how, just how fast it was. Yeah, but I think also there's been a lot of a reality check with what people get paid. Right. So if you go to the software engineering side of things, right. We no longer see the. Here's your 180 grand to be the entry level software. You're going to get 135 for that and we're going to, we'll bring you back in for it.

[Josh Brown]

Wall Street Journal did a piece this week. Unemployed office workers are having a harder time finding new jobs. More than 1.6 million unemployed workers have been job hunting for at least six months. Put this chart up.

[Doug Bonaparte]

That's a lot.

[Josh Brown]

So you can see this is material. This is not bumping along the bottom anymore. I don't have a chart that goes back longer than this. My gut instinct is that this doesn't stop here. Julie, what do you think?

[Michael Batnik]

I mean it's, Listen, like I see.

[Josh Brown]

This is US workers unemployed at least 27 weeks.

[Michael Batnik]

I mean, listen, my social butterfly ness is within the media industry which.

[Josh Brown]

Well, that's a whole other.

[Michael Batnik]

Don't forget about it.

[Josh Brown]

You might as well be a coal miner.

[Michael Batnik]

Yeah, basically. Yeah, yeah. Don't rub it in. But you know, does it go, I don't know, or does it just go back to so called normal levels? Right.

[Josh Brown]

Like right now, that's where it is.

[Michael Batnik]

Yeah.

[Josh Brown]

The experience of the last three years is not normal. This might be what normal levels are.

[Michael Batnik]

Right, right. That's what I mean, like either hovers around here or maybe goes up a little bit. But I mean, my gut says I don't know, that it gets enormously worse.

[Josh Brown]

Yeah. Here's the Journal. As of November, more than 7 million Americans were unemployed. More than 1.6 million of those jobless workers have been job hunting for half a year. The number of people searching for that long is up more than 50% since the end of 2022. But again, the end of 2022 is not normal.

[Michael Batnik]

Well, but there's maybe one more wildcard we should mention which is AI. Right. Like, yeah, over the past year there were all these executives who are saying, oh, it's not going to take your job.

[Josh Brown]

It'll help you, you know, what's actually.

[Michael Batnik]

Going to do your job better.

[Josh Brown]

I think it will. You know what they're going to do with AI though? They're not going to do. I don't think they're going to do mass layoffs. I think it'll Be the attrition.

[Michael Batnik]

Right.

[Josh Brown]

They'll just let people gradually retire and not replace them. And that takes a really long time for people to really process that. That's what's happening. But I could picture that scenario and.

[Julie Hyman]

If you're observing that happening over a long period of time, it provides the opportunity to reskill. Or if you're in college and you're like, oh, what am I going to go? Don't go into the job that's not hiring for the last six years in that particular position because you know, AI took it over. So you major in something else or find a different skill that is applicable.

[Josh Brown]

That's a better version than we're cutting 10% of our workforce permanently thanks to AI. I don't know that anyone wants to announce that even if it's true.

[Michael Batnik]

Well, Klarna, you know the buy not pay later.

[Josh Brown]

Yes.

[Michael Batnik]

You know, we interviewed this, the CEO last month and he said we are not recruiting anyone anymore. Like, we're just not recruiting full stop ever.

[Josh Brown]

Stop ever.

[Michael Batnik]

I mean, for now, certainly for now, they, they're happy with the headcount they have, which they cut after their valuation went down. But then they, they did replace a bunch of people with AI.

[Josh Brown]

Yeah.

[Michael Batnik]

And those jobs are not.

[Josh Brown]

I think he's the most vocal that I've heard specifically coming out and saying, we've already seen the change.

[Michael Batnik]

I think it's probably happening other places. It's just not being talked about as much.

[Josh Brown]

Yeah.

[Doug Bonaparte]

Are you seeing it at all in your, in your world?

[Michael Batnik]

I'm not seeing replacement yet. Right. You know what I'm saying? And I gotta say, like, I don't know, how do you guys feel when you're going to read an article and they have the AI summary at the top? Or like, I don't like it either.

[Doug Bonaparte]

Clicked it.

[Josh Brown]

No, no, no, no. I don't like the articles that are AI generated by AI. I'm not gonna say anyone's name, but there are certain publishers, like, you click it once, click it twice, see it the third time, you're like, oh, software wrote this.

[Michael Batnik]

Right.

[Josh Brown]

Which means there's no color, there's no context. It's like a, it's like this cookie cutter thing that they just change the numbers.

[Michael Batnik]

Right.

[Josh Brown]

And maybe that's valuable to people. I don't find any value in it. When I read something, I kind of like the author to weigh in with an opinion and you know there's not going to be any real opinion in there.

[Michael Batnik]

Right.

[Josh Brown]

So. But I get it. It's a really Fast way to churn out content, if that's the game that you're in. The mood is going to shift, though, here, if this keeps going. In a survey of consumers by the conference board In December, 37% said jobs were plentiful. For context, in 2022, 57% said jobs were plentiful. So this is not necessarily people that can't find a job. This is people hearing from family members and friends that they're struggling, which again, maybe is normalized. It's just something that we haven't really heard for a couple of years. So that's kind of. That's kind of where we are. We have a jobs report tomorrow. Doug, you got something on this?

[Julie Hyman]

Yeah, I think it's more.

[Josh Brown]

What's the number gonna be?

[Julie Hyman]

I hope. I hope it. Whatever it is, I hope it extends.

[Josh Brown]

You know, you just want everyone to have fun.

[Julie Hyman]

I want everyone to make money and have fun.

[Josh Brown]

Yeah.

[Julie Hyman]

I want good times. Why would I want anything other than that? But I would tell you this. You know, when it comes to people who are currently employed, one thing I've gotten the habit over the last several quarters. Quarters is telling clients and people like, if you're happy where you are right now, this is the perfect time to go out and see what else is out there. Call your recruiter, talk to your former bosses and colleagues. I don't think there's ever a bad time to be seeing what your talent is worth, how much pay you could get. Because when things do shift, that's when everybody's doing that, and it's exponentially more difficult.

[Josh Brown]

There's less opportunity.

[Julie Hyman]

Yeah. Now is where there's the opportunity. So for anyone listening to this, who's happy, don't sit on your hands. You more than likely will end up staying right where you are. But you'll feel that much better knowing what was out there and what your worth is. And best case scenario, you find something killer.

[Josh Brown]

Yeah. Duncan. John, you could ignore everything that you. That he just said you got.

[Julie Hyman]

You guys should stay here, though, okay?

[Josh Brown]

Cutting government workers is a wild card here, too. This is a huge part of. This is a huge part of the job growth over the. Especially at the state level. What do you. If this Doge stuff is gonna become a reality, it's gonna be. We're gonna be having a different conversation.

[Michael Batnik]

Where are all those people gonna go? Yeah, what are they gonna do? Greenland for job, right?

[Josh Brown]

I don't know.

[Michael Batnik]

Fishermen? I don't know.

[Josh Brown]

No, I don't know either. But it's a huge part of what we need to remain intact. So if these plans to cut government spending are serious, at a certain point someone's gonna have to get fired. Otherwise it's just talk.

[Michael Batnik]

Right.

[Josh Brown]

Cause that's where the money goes.

[Julie Hyman]

If the Doge thing happens, the amount of short term pain involved, volatility will be breathtaking, I think. And you cross your fingers that it leads to that long term payoff, like, you know, quote something, something Argentina, you know.

[Josh Brown]

Okay, here's another wild card. Your employer tells you we need you here five days a week. Does that change the calculus on the job that you're in or whether or not you want to keep it? JP Morgan is discussing a plan to require all of the banks to 300,000 employees to return to the office five days a week. There are a lot of firms doing this, but they're mostly Wall street firms. Yeah, mostly banks. I think because they pay the most, for the most part, they're. They have more power to be able to exert on their labor force.

[Doug Bonaparte]

What if they're trying to shrink their labor force?

[Josh Brown]

Well, that was what I wanted to ask you. Or maybe they want people to quit and it's cheaper than letting them go.

[Doug Bonaparte]

Exactly that.

[Julie Hyman]

That's 100% it. I'm glad we're talking about it because I don't think it's. It gets talked about nearly enough. So you have, number one, like the managing the hybrid remote work for very large companies. Like a JP Morgan with 300 is extra. First of all, it's difficult to begin with at 300,000 people. This is probably downright impossible for a five person firm. Yeah, of course you can make that happen too. This is clearly in my mind more of a financial forward decision that it's clearly not a people forward, it's decision. Right. Yeah, you get this opportunity like it's giving McKinsey and consulting, you know, vibes here. So you find the employees who are maybe phoning it in, kind of sitting back at home and they're going to quit.

[Josh Brown]

And those are the people that this is a deal breaker for. The people that are the least engaged.

[Julie Hyman]

Correct. Where it sucks though. Let's go the other side. So I get that that's where the money financial function outweighs, you know, the headline. But where this really does suck, and this is the minority of people, is the family of hardworking, you know, professionals who radically changed their lives during COVID moved two hours away. They've demonstrated their ability to work hard while being at home raising families and kids. And they've reshaped their entire life and they're being.

[Josh Brown]

And now you're going to yank it away from them.

[Julie Hyman]

Yeah, that, let's be honest, that is horrible. But it is, you know, dwarfed by basically everything else we.

[Josh Brown]

Do you think companies should say, this is our policy for people with children under 10 and this is our policy for everyone else?

[Doug Bonaparte]

Oh, yeah, that'll be popular.

[Michael Batnik]

I mean, that's tricky. I mean, I do think sometimes when they come out and say this, there is a little bit of wiggle room. Even though on the surface it doesn't sound like they're wiggle room. I mean, when they first came back with three days a week, it wasn't really three days a week for some of these firms. So I don't know this latest one, how much wiggle room there really is. But yeah, it's really tricky. If you would say, you know, what if I don't have small kids, but I have elderly parents, is that even legal?

[Josh Brown]

No, it's totally illegal. Could kind of make that small businesses are making this an unwritten policy. Like, oh, he's got, he's got two kids, he's helping his wife. Shut up. That's happening.

[Julie Hyman]

I know for a fact exceptions will be made.

[Josh Brown]

Exceptions will be made. JP Morgan can't do that even if they wanted to, which they definitely don't. You can't tell one employee that their expectations are different from someone else's based on their home situation.

[Michael Batnik]

But it happens. But it, but it does happen.

[Josh Brown]

I know you can't write it down.

[Michael Batnik]

Yeah, right. That's what I'm saying. Yeah.

[Julie Hyman]

Where legality meets fit. In terms of what we can talk about here, like, you're 22, fresh out of college. Get your butt into the office, surround yourself with people, learn from them. Because guess who's there? The 68 year old who doesn't want to go home and be with, you know, his family's all grown up and is escaping their spouse being in the corner office. They might actually have a lot to teach you if they're even willing to talk to you. But the middle there, the family, like the exception, what do we do there? That's a real issue.

[Josh Brown]

I'll give you a bigger one. There are certain roles at companies where being in person is way more important than, than not. And can you make a different policy for different types of employees at the same corporation? It's real. I know that's happening too. Yeah, like, oh, these are the software guys. I don't care where they are. You're in sales I want to see.

[Julie Hyman]

We see case law in labor law, you know, around this, over the next 10 years. So, hey, for all the labor attorneys out there, it's time to shine. You know, here's. Here's where your billable hours might be.

[Josh Brown]

When you think less of somebody who's 23 years old and they want to sit in an apartment, like, by choice. I kind of do.

[Doug Bonaparte]

How do you advance your career if you're by yourself?

[Julie Hyman]

Really?

[Josh Brown]

What do you think you're going to learn sitting in your. First of all, what's wrong with you? Why would you rather sit in an apartment than be with your co workers? Second of all, how do you think you're going to get better at this?

[Julie Hyman]

Really depends on the job. Because we could go through the list of things where, like, you could be traveling the world, doing your job, interacting.

[Josh Brown]

With people, but that's your job, traveling the world.

[Julie Hyman]

No, I'm saying you're doing that for fun, because you can do your job.

[Doug Bonaparte]

Yeah, but how does. How does your senior, your superior, recognize your talent if you're behind a screen all day? How would they even know the quality of your work?

[Michael Batnik]

It depends on what your work is.

[Doug Bonaparte]

And not just the work, but just. It's more than just the quality of your work. It's your personality now.

[Josh Brown]

Yeah.

[Julie Hyman]

I think you're throwing the baby out with the bathwater to think you can't create managerial systems that can accurately reflect how we do.

[Josh Brown]

More of our employees are remote than here.

[Julie Hyman]

No, no, I mean the proverbial you. Right.

[Josh Brown]

Like.

[Julie Hyman]

Like an organ. J.P. morgan at 300,000 people. That was my point. Yeah, of course. That you got to put down the blanket policy here. But I think in a world where push came to shove, if they really wanted to, with the money and power that they have. Don't lie to me and look in my face and say they couldn't figure it out. It's really hard. It's not worth the money. At least that's what they think. But there's probably a lot of people who'd say, here's a model. And it shows how over the long term, shareholder value goes up by treating your people in a certain way.

[Josh Brown]

Yeah.

[Julie Hyman]

And then they can all argue over whether that's true or not. And they'll probably still say, nope, too hard. Don't want to invest it for whatever reason. Like, come in the office, and that's how you get a result.

[Josh Brown]

When was the last time you passed J.P. morgan's new headquarters building on Park Avenue?

[Michael Batnik]

It's been a Long time.

[Josh Brown]

Oh, you haven't seen it recently?

[Michael Batnik]

No.

[Josh Brown]

John, can you get a picture. Can you get a picture of this? It's nearing completion.

[Julie Hyman]

That whole area is insane.

[Josh Brown]

This will be, I think, the tallest office building in New York. It's. It's called the super tall. That's the class of building it in. It is the entire square block, I think 47th to 48th Street, Madison to Park.

[Michael Batnik]

So they gotta justify that and have everybody in the office.

[Josh Brown]

Fun fact, it was a models before no one. Vanderbilt was a Modell's.

[Julie Hyman]

That was one Vanderbilt.

[Josh Brown]

Yeah, yeah. Anyway, if we could find, I don't know, can you find the facade of this thing?

[Julie Hyman]

There it is.

[Josh Brown]

Tell me, tell me what you see and I won't, I won't point it out until you. You find it.

[Michael Batnik]

Oh, now I feel like I'm gonna fail this test.

[Josh Brown]

When you look at the facade of this building, what do you say?

[Michael Batnik]

The Fortress of Solitude? I don't know.

[Julie Hyman]

I see a bar chart right now.

[Josh Brown]

Okay, guys, in case the subtlety is lost on you. Those are diamonds. They wrap the building.

[Julie Hyman]

They're rhombuses.

[Josh Brown]

No, no, they're literal diamonds. Up all the way up to the top and all the way down. I think on two sides of this thing.

[Julie Hyman]

Those are quadrilaterals.

[Josh Brown]

They are not quadrilaterals, sir. I submit to you, they are. Come on.

[Julie Hyman]

That's better.

[Michael Batnik]

Okay.

[Josh Brown]

Are these not diamonds?

[Julie Hyman]

He pulled up a bad resolution.

[Josh Brown]

Am I hallucinating? Okay, Jamie Dimon is the boss of all bosses for that. I mean, that's not, that's not subtle.

[Julie Hyman]

There's his legacy, right?

[Michael Batnik]

So he needs everybody to come into the office every single day.

[Josh Brown]

So if you just built that, if you just built that, you kind of want people to be.

[Julie Hyman]

He could have given every employee a diamond instead of building the diamonds.

[Michael Batnik]

I don't know. I don't know why, but I feel like maybe I'm just stereotyping. I feel like if you're a new employee at JP Morgan Morgan versus a new employee at Meta and you're a pro, like if you're a programmer, maybe you're not as motivated to go in. Yeah, but if you're like an invest a first year investment banker, you're gonna wanna be there, right?

[Josh Brown]

Well, they have no Choice. That's a 90 hour wait.

[Michael Batnik]

But I guess what I'm saying is when you guys. Well, what do you think of a 23 year old who wants to just sit? It does depend on the job, right?

[Josh Brown]

Yeah.

[Julie Hyman]

So I have an. It just Did a client meeting. IT systems administrator for a large consulting firm left, hired by JP Morgan. And he's going from five days a week at all day week at home to.

[Doug Bonaparte]

What's his first and last name?

[Julie Hyman]

Won't be revealing that. Four to five days a week in office.

[Josh Brown]

How many days?

[Julie Hyman]

He shows that and he's fine with that. And he said a lot of people he's worked with throughout his career are at jpm, so he's gonna get to go in and see some friends.

[Josh Brown]

Yeah.

[Julie Hyman]

How about that?

[Josh Brown]

I think that's important for your mind.

[Julie Hyman]

Yeah. His kids are also grown up.

[Michael Batnik]

I mean, I like being in the office. I'm in the office every day. I mean, I have to be.

[Josh Brown]

Are you? Every day?

[Michael Batnik]

Every day.

[Josh Brown]

Okay. Cliff, how many days does Doug make you go somewhere? Zero. Okay. Do you want to go somewhere, though? He's happy. All right.

[Julie Hyman]

We got an office.

[Josh Brown]

Your remote employee is happy. I have more remote employees than in person employees. I believe in remote life.

[Julie Hyman]

I used to tease them, when are you going to come in the city and do all the fun stuff? And he was like, it's chill out here. I like you do what you want to do, man.

[Josh Brown]

Yeah.

[Doug Bonaparte]

John, Chart six is a segue to the next conversation. So we're looking at a chart from Torson Slock showing the total employment in US commercial banks standing at 1.4 million versus Apollo, Blackstone, KKR and Carlisle, which is one sliver.

[Josh Brown]

I can't do the math of 16,000.

[Doug Bonaparte]

16,300 compared to 1.4 million.

[Josh Brown]

That's pretty. That's pretty crazy because these are gigantic market cap companies now.

[Doug Bonaparte]

Gigantic. And a bit of an apples and oranges comparison, but there is definitely a convergence between the function of the giant banks and how they're interacting with the economy and the way that these giant institutions. So where that leads us to are they're coming for your retirement plan. And I think. I think in theory this is a decent idea. I've heard much worse. Matching long duration capital with long duration assets. In practice or. Yeah, in practice and implementation. I'm a little bit worried.

[Michael Batnik]

I think I would agree with that. I mean, I think like you guys talk to individual investors all the time. Like they want a piece of this stuff, don't they?

[Doug Bonaparte]

Yeah.

[Josh Brown]

Well, if they look at the past returns, definitely. And if we're saying one of the benefits to these investments, there's this illiquidity premium, you earn a higher return because you're giving up liquidity. The 401k is the definition of Illiquidity. You can't pull the money out anyway, or you can. You pay a huge penalty, so nobody does. You could borrow against it, but, like, that's pretty much it. So when you think about it from that standpoint, if there is a way to do private equity, as a retail investor, arguably the smartest place to do it is in your least liquid pool of capital, which is your 401k. So I don't hate it.

[Julie Hyman]

So characteristics and time horizon, especially for younger investors, lines up to that. But, you know, I think who, who, who is this really for, I think is the bigger question. You know, I'll take the classic like, advisor line here. It's hard enough to get people contributing and investing in their 401ks in the first place. Like, we live in a. Like the 401 is now the de facto retirement savings vehicle for Joe Schmo and everybody else. So if we're struggling to get them into the fund, and I mean, the qualified default investment option is only 20 years old. Right. That was two. Thank God. It was, you know, a lot of lawsuits over just sitting in cash. But now we want, like, PE in there. We just want people to stay invested. Like, can we get the foundational component first before we're saying, oh, by the.

[Doug Bonaparte]

Way, it doesn't matter what, we're in the lineup, they're coming.

[Julie Hyman]

Yeah, exactly.

[Doug Bonaparte]

So this is from the ft. The private equity industry is preparing to lobby the incoming Donald Trump administration to give it access to broad pools of capital it has not historically been allowed to tap, including retirement savings. In a movement that could unlock trillions of dollars for their firms. The $13 trillion industry is hoping the new White House will revive a deregatory push. So they probably will. It's coming.

[Julie Hyman]

Oh, it's an amazing distribution channel for, for these shops. And they'll make a lot of money by getting their products.

[Josh Brown]

Does the financial media know how to talk about private equity yet?

[Michael Batnik]

Well, that's a good question. They're talking to us more than they ever have before. I'll say.

[Doug Bonaparte]

Middle market lending.

[Michael Batnik]

Yeah, I mean, they are. You know, that's. That's been a real change since the beginning of my career. I mean, they didn't used to want to talk to the press at all.

[Josh Brown]

Well, you're. Because Yahoo Finance is geared toward investors that they've never talked to before. Correct. So you guys are actually a great outlet for them to start getting normal people accustomed to the particular jargon within PE and private credit that none of them have ever heard before.

[Michael Batnik]

Well, and here's where I do my disclaimer. Yahoo Finance is owned by a private equity entity. Of course, Apollo, of course. So Torsten Salk, of course, your colleague, chart favorite, and one of his frequent charts that I love is the one that shows how many public companies there are now compared to 10 years or 20 years ago or whatever it is. And it's shrunk, right, that there just aren't as many publicly traded companies anymore.

[Doug Bonaparte]

So the caveat is there were too many publicly traded companies in the 90s. A lot of them were pieces of shit. But the other correlation to that is that Torsten Slack also has a stat showing that 87% of all companies in the United States with $100 million in revenue are privately held.

[Michael Batnik]

Right.

[Doug Bonaparte]

And so why shouldn't investors be able to access it? And I think they should and they will. The question is, what are the fees? Which I think, I think, I think they're going to come down dramatically, by the way. I think this is unbalanced, a good thing. This will push fees lower because competition and more distribution. But the diligence part, like what is the individual investor even supposed to be looking at?

[Josh Brown]

Also performing.

[Julie Hyman]

What are they getting?

[Doug Bonaparte]

What are they getting?

[Julie Hyman]

What is it?

[Doug Bonaparte]

All of it.

[Josh Brown]

No, but like, even like investors are going to have to learn about like IRRs and different ways of looking at the return. They're going to have to learn about all these different fee structures that are inherent to PE. That is not relevant when they look at a 40 act mutual fund. So that's gonna be the job of the financial media, to communicate. Yes, this is different from other investments you've made. And here's how it's different.

[Michael Batnik]

Yeah, I mean the answer to your original question. No, I don't think we know yet how entirely to talk about it. I mean, we haven't even. We were mostly talking about private equity here, but private credit is on the table too. And to me that is, it could.

[Josh Brown]

Be as big or bigger.

[Michael Batnik]

Yeah. And that's more opaque and more complicated I think, to explain to people. So that, that also, I mean, you know, even just talking about the corporate bond market people is tough enough without throwing private credit in the mix. So that's also going to be a challenge.

[Josh Brown]

If you talk to any PE CEO right now and ask what's your priority for 2025. Right. So 20 years ago in 2005 they would have said China. Okay. I think 10 years ago in 2015 they probably would have been talking about LBOs in the stock market. Right. Like like valuations were, were cheap and small. Now it's just wealth, wealth, wealth, wealth, wealth, wealth. That's it. That's the whole ball game. It's, you got 7 trillion in RIAs, probably another 10 trillion at the wirehouses, God knows how much at family offices. That's it. This is it. We want to talk to wealth management.

[Doug Bonaparte]

I don't think so. Let me just push back against this a little bit. I don't know how I'm pushing back against, but just, I'll just throw this out there. So when people invest in their 401k and they're to target, they fund or they're in stocks and they're in bonds, do they really know, like what, do people really know what bonds are? Like, here's my Treasuries, my corporates, my, my agency back. Like, no, people don't know. And I think that over time private credit will be viewed as, it's what, it's, it's debt. It's, it's not a bond that trades on the exchange or anything like that. It's not frequently traded, but it's a loan to a company.

[Julie Hyman]

So we what, throw it in under the ALTS umbrella, right?

[Josh Brown]

No, it's fixed. No. So they don't do that now, but.

[Doug Bonaparte]

I think it will be indistinguishable from fixed income in a few years.

[Julie Hyman]

That's what you're saying, which is where we're going.

[Doug Bonaparte]

Yeah.

[Julie Hyman]

So what's the allocation in your, you know, what if.

[Josh Brown]

All right, so, so what if I say, what if I say I'm setting up a 401k for investor who's 30, 30 years. I'm helping a 30 year old investor with their 401k allocation. Now, of course, it's not how it really works. What actually Happens is your HR person says, here's your password. You log in, there's 600 funds to choose from. You have no idea what any of these terms mean at all. Sure, you end up with a portfolio that's 40% Korean and well, hold on, hold on.

[Julie Hyman]

Don't, don't discount the portals that now will be like, hey, we'll invest for you and you fill out a questionnaire.

[Michael Batnik]

And I think you just choose the.

[Julie Hyman]

Default or the target date fund. But what an opportunity. If we're going to really like dive into the distribution strategy of PE firms like you want to get in the allocation models that are promoted by the plan administrator.

[Doug Bonaparte]

It's inevitable.

[Julie Hyman]

That's the. But that's to me like it in those if you can auto into it. Oh my God. Like that's just in, that's just free inflows for days.

[Josh Brown]

So somebody who's 30 years old, is it feasible that we can see them be in a situation where it's a 70, 30 portfolio and of the 30 portion that's fixed income, 20 of that is high grade corporates and treasuries and 10 of that is some sort of a private credit fund?

[Doug Bonaparte]

The AGG with E. Yeah, I'm highly confident that's coming.

[Josh Brown]

The fund company that figures out how to bundle those things so that it's just one ticker, in my opinion, wins. I think that's where BlackRock is going.

[Julie Hyman]

BlackRock's going to do it.

[Josh Brown]

Yeah, yeah.

[Julie Hyman]

But does this then, if it's going to happen there, does this then proliferate it showing up into allocated funds and into your single fund solutions held in brokerage accounts.

[Doug Bonaparte]

They're making a massive push. Listen to any of the earnest calls and they keep saying that we think credit is credit. It doesn't matter if it's private or if it's public, the wrapper matters. But it's going to be indistinguishable from one versus the other.

[Josh Brown]

And the feature, it pays a yield. Like that's what we're doing, we're paying a yield.

[Doug Bonaparte]

So now in terms of education, I was talking to one of these companies today and they're like, listen, it's pretty simple. It's so for plus 601 ton of debt, I'm like, yeah, but slow down, nobody knows what you're talking about. So even if I said I like you, I like the team, I know what you guys are doing. What am I looking at in terms of diligence? I mean, you're going to show me the sub documents or the covenants that like, I don't know what I'm looking at. Okay, great. This company's doing $130 million in EBITDA. We're making them alone.

[Josh Brown]

Great.

[Doug Bonaparte]

Okay, I guess that works. Sure, why not?

[Julie Hyman]

But this was your point about, you know about bonds. You know when you said, oh, do they even know what a bond is? Right?

[Josh Brown]

No, no. But brand name is going to matter here. So if you're an intermediary, if you're involved with the plan sponsor and you're picking the menu of funds, brands are going to matter a lot. And saying Apollo or KKR is going to be important so that you don't have to talk about due diligence.

[Julie Hyman]

Do you, do you also get to say like you do with bonds, which they would know. Hey, we put bonds in our portfolio to dampen volatility. It's our less risky asset. Are you going to get to say that as well? Volatility?

[Josh Brown]

Yeah, there's no volatility.

[Julie Hyman]

Negative.

[Josh Brown]

Nothing, nothing ever moves. You're going to have to, you're going to have to couch this in the language that you use when you talk about high yield bonds.

[Julie Hyman]

Yeah.

[Josh Brown]

Because that's what it is.

[Doug Bonaparte]

My point is it's thanos like it's coming.

[Josh Brown]

Yeah, I, I would, I would guess that's probably directionally right. I don't know if it's this year.

[Doug Bonaparte]

All right, Doug, you'll have some takes on this. There was an article in the Barrons, I think two weeks ago talking about how Americans are binge shopping and where dictators to spending and it's so much easier now than ever to spend with it. Whether it's Instagram or TikTok, whatever. Let me set this up with some data. Americans are expected to spend as much as $5.28 trillion at stores in 2024. We've got a chart showing the consumer spending as a percentage of US gdp. And this is like really where it stops and starts for me in terms of like the whole economic story that we're talking about. Like a lot of times we're talking about things that are NOISY, like the 10 year term premium. Like this is it, this is it.

[Josh Brown]

Line go up, line go up.

[Julie Hyman]

People spend, spend, spend. Right. We've, you know, in the notes here, it's so frictionless. It is so beyond easy to purchase.

[Josh Brown]

Stuff, scroll your phone and buy things.

[Julie Hyman]

Oh my God, I get trapped into like an. Oh, this shirt is. This Simpson shirt's so dope on Instagram.

[Josh Brown]

How much do you return after you. How many things that you order on your phone do you end up returning?

[Julie Hyman]

Amazon's the only place where I feel comfortable. All the stuff that you order off my phone or Instagram, I wouldn't even know how to return to like where these, like sometimes they come from the uk. I don't even know where they're coming from half the time. And that's, you know, that's not going back unless you're paying like 40 bucks for shipping. And you gotta love it when you leave something in your cart and you get like five emails saying or text saying, hey, you left something behind.

[Josh Brown]

Doorbell rings.

[Michael Batnik]

Yeah, that makes me annoyed and I just don't want to buy it then.

[Julie Hyman]

Yeah, same here.

[Michael Batnik]

I think I like, I, I Don't like the hard sell. So I've gotten, I get annoyed and.

[Josh Brown]

Then I don't put this next table up. John, if you, if you would. So, Doug, to your point.

[Julie Hyman]

There you go.

[Josh Brown]

Percentage of respondents citing the platform is fueling their shopping addiction. This is 12 to 43 year olds. 78% blame Amazon, 15% blame Instagram. This surprised me. 46% YouTube.

[Julie Hyman]

I didn't know that was a thing.

[Josh Brown]

TikTok is almost neck and neck with YouTube at 44%. And then there's pretty much every TikTok.

[Doug Bonaparte]

It's all affiliate marketing, which they, which they think is going to hit 16 billion by 2028. It's a lot of money, affiliate marketing.

[Josh Brown]

So it's in, it's in. It's a, it's an influencer who has a deal with a cosmetics company. She sits on the camera, does a full face of makeup and there's a link that you can buy whatever products you just used.

[Julie Hyman]

Oh, it's real.

[Michael Batnik]

Yes.

[Julie Hyman]

I watched Heather put on a story like things, you know, she's sending to camp with our, our daughter. And you can click these things and I think like, she's like, hey, we made $90. Like it, it works. It's not our job, but like it, it actually happens there. But the part of all of this I think that is, is the extra bit of toxicity or what makes it radioactive is probably the Buy now, pay later, you know, programs that get wrapped.

[Josh Brown]

Up into this specifically better than having a balance on a credit card.

[Julie Hyman]

I think it's worse. I think it teaches the ha. I think it makes a bad habit here. I worry about the younger generations because it reinforces bad spending behavior and I think it reinforces debt accumulation. So because it's easier because they think they can spread it out, I think you're likely to forget it. It makes you believe that I can have this today instead of actually coming up with the capital to buy it. The use of Buy Now, Pay later as a credit option allows shoppers to split into multiple payments. It rose 9.6% year over year and contributed to $18.2 billion in online spending during the holiday period. It's an all time high for the holiday seasons. This is according to Adobe. And Cyber Monday was the biggest day on record for Buy Now.

[Doug Bonaparte]

Do you want your stocks to go up or not?

[Julie Hyman]

Of course I do.

[Josh Brown]

I think that a firm would say the alternative to this is not people paying in cash, it's people using a MasterCard and then having that balance follow them around for the rest of their lives.

[Michael Batnik]

Well, and not only that, these guys will also say that their default rates are low. The people don't forget it. They actually do pay, and they are low. That's the argument that I get it.

[Josh Brown]

But we've only seen these proliferate so far. In a good economy, we don't have bad economies.

[Julie Hyman]

We don't do that anymore.

[Josh Brown]

You see the spending, we don't know. Like, we don't know what this looks like in the bigger recession.

[Julie Hyman]

The bigger macro issue around all of this is that we're conflating consumption with happiness. And if you fall into that trap, you're. And you're just going to end up trying to fill a bottomless hole that that will never be filled and end with disappointment.

[Josh Brown]

Speaking of bottomless hole, the more you.

[Michael Batnik]

Know, I don't want to hear the end of that.

[Doug Bonaparte]

That was like a Jerry Springer at the end of the Jerry Springer episode.

[Julie Hyman]

Final thought.

[Doug Bonaparte]

Final thought.

[Josh Brown]

A couple other things happened this week worth worth noting. We've had this kind of mini bubble, kind of sideshow bubble in quantum computing ever since. So Alphabet came out and made an announcement about achieving quantum computing dominance or whatever, and everyone got excited. And there were three or four, I call them micro cap stocks that all of a sudden exploded and became meme stocks because they were involved in quantum computing. It's a kind of a mini bubble because they're still tiny. But these were the stocks that active traders, slash gamblers were talking about. Jensen Huang was asked about Nvidia strategy for quantum computing. And he said number go down. He said getting very useful quantum computers to market could take 10, 15 to 30 years. And then John put that chart up. This is what happened. No qubit. Quantum computing Inc. Fell 50%. This is on the day. One day. Rigetti. I shouldn't be laughing. Rigetti Computing fell 49%. I. What is it? IonQ fell 46. Ionic and QBTS, which is D wave. Quantum fell 48.

[Doug Bonaparte]

That's my favorite plot.

[Josh Brown]

You like. You like the D Wave?

[Julie Hyman]

Okay, Jensen, the Godfather and then the.

[Josh Brown]

D Wave CEO was like, jensen Huang is dead wrong about quantum computers. Well, I trust D Wave more than Jensen. Anyway. It's crazy to have a stock get cut in half because some other CEO in an unrelated industry makes an offhanded remark like that. So as much as we're in a casino, we're in a casino with very swift enforcement.

[Doug Bonaparte]

There are rules.

[Josh Brown]

There are actual rules to this thing where it's not like these stocks were able to just like, pretend that didn't happen or the owners of these stocks are able to pretend that didn't happen. Have you had any quantum people on the show yet or any analysts talking.

[Michael Batnik]

About this stuff A little bit? We had some people talking about it a little bit. When the Alphabet thing happened. The picture of the steampunk looking device, that was actually a quantum computer.

[Julie Hyman]

It's like a chandelier.

[Michael Batnik]

I know, it's kind of cool.

[Josh Brown]

I said it's a golden octopus, but chandelier works. Yeah.

[Doug Bonaparte]

What device are you guys talking about?

[Michael Batnik]

The quantum computer that Google me.

[Josh Brown]

I showed it to you.

[Michael Batnik]

And they also had the quantum computing chip separately. The Willow is their quantum chip. Right. So we did have some people talking about it and they said at the time. But they're not Jensen Huang. But they said at the time, this is not happening right now. This is like a years down the road thing.

[Josh Brown]

But he said 30 years.

[Michael Batnik]

He said 20 was the most realistic. He said it's not 15, but it's probably not 30. It's probably 20.

[Josh Brown]

Okay. We'll all be dead by then. It's useless. But, like, nobody needs it then. I want it now, Daddy.

[Michael Batnik]

Well, you can't have it now, but you can have robots and you can have, you know, all the other stuff.

[Doug Bonaparte]

What is quantum computing?

[Julie Hyman]

I heard a lot of chatter specifically from, believe it or not, the bitcoin community when it came to the announcement of quantum. Because can it, can it.

[Josh Brown]

That's their kryptonite.

[Julie Hyman]

Yeah, yeah.

[Doug Bonaparte]

Guess what? Somebody said if there's quantum computing, they're going to hack the Fed. Why would they care about bitcoin?

[Julie Hyman]

Took the words out of my mouth. I do not think that's at the top of the priority status.

[Doug Bonaparte]

We could solve every puzzle in the world. Let's get bitcoin.

[Julie Hyman]

Let's crack the bitcoin blockchain.

[Josh Brown]

Well, they will. Well, they, they'll crack people's email.

[Julie Hyman]

Yeah. It's not the thing you're. You're primarily worried about here, but you learned by following the bitcoin narrative, you actually learned a lot about this quantitative computer.

[Doug Bonaparte]

Oh, yeah, let's hear it.

[Julie Hyman]

No, we just talked about it. That's their, their fear. And then people were debating as to why, you know, Mike, you know, these.

[Josh Brown]

Are computers that are more powerful because they're not stuck in this zero or one binary coding thing. It's middle out zeros and ones. It's middle out compression. Zeros and ones can become ones and zeros. Is, is and can't.

[Michael Batnik]

They also run all of it at Once at once, correct. Yeah.

[Josh Brown]

Yeah. Look at you, Julie.

[Michael Batnik]

I know.

[Doug Bonaparte]

Something El taught me. Whenever you can't answer a question, you always say it's really technical. I don't think you would understand.

[Michael Batnik]

I like that.

[Josh Brown]

Shout out to Eddie Duncan. Did you hear this Adrien Peterson thing? Yeah, I was reading that. Were you upset by it? Were you a fan of ap? No, but I mean, it's sad to hear. It's. It's. John, play this, please. According to the USA Today, a Houston judge has ordered AP to surrender property to satisfy the debt. Constables have been ordered to seize assets from his home. A court appointed receiver has accused Peterson of playing a shell game in order to avoid payment. Oh, who doesn't love China? I was gonna let this whole thing go, but it's almost too. It's almost a hundred million. And then he barred. I think he borrowed like 5 million in like two years, the interest. So when you borrow money like that, you got to play like 20, 25% interest on Joe. So it went from 5 million to like 8 million. In three years it might be 50% interest. All right, Shannon Sharp, ladies and gentlemen. All right, so this is a big story in sports circles because this is one of the highest paid NFL stars of recent times. Probably made 100 million bucks, is broke and negative net worth at this point. A lot of bad business dealings. Had a financial advisor who he is now accusing of getting him into a loan where the interest is now worth more than the amount he borrowed. It kind of sucks cuz he's a whole of a future Pro bowl for sure. Like for sure. One of only six running backs who's ever, I think, broken 2,000 yards. He's just got like this list of superlatives. Had a 15 year career and nothing to show for it financially, which is pretty upsetting. I bring this up because. And Doug, I want to hear what you think. There's this idea that it's glamorous to be a financial advisor to pro athletes, but the more you think about it, it's not that it's bad to do that. It's great to do that to help people. Those are really hard cases. Very hard because they make all their money in their twenties for the most part. And that money has to last a really long time. And the amount of uncertainty around injuries and things that you just can't imagine could happen at any point. The typical wealth management client is making most of their money in their 40s and 50s and does not have that much time that they need to account for in terms of what they save and you don't really have this sudden injury risk to the degree that a football player might. So it's not. These are not glamorous cases to work on. This is obviously a worst case scenario. What were your thoughts when you saw this?

[Julie Hyman]

Three main lessons. But I wanted to say it's not dissimilar from some of the YouTube stars or influencers who do particularly well when they're young and they're, you know.

[Josh Brown]

Yeah. How influential these people gonna be when they're 45 years old.

[Julie Hyman]

They are not. I see it with DJs and entertainers just the same, they are tough cases with athletes. However, the money scripts that they have, and I'm generalizing here, whether they grew up not well off or it was just kind of tough, you have that kind of creating a compound fracture.

[Josh Brown]

What's your money script?

[Julie Hyman]

Money scripts are the observations and environments that you grew up in around money and how that plays out into your behaviors around spending and money throughout your life. So it's kind of like your money.

[Josh Brown]

DN are people trapped in their money scripts from their childhood.

[Julie Hyman]

They can break them, but it's really hard. Depending on how severe the trauma is and what that experience is. And a lot of times, and we've interviewed a lot of people like this, they either fall victim to it and repeat the same thing that they have experienced either through their parents or whatever that was, or they go completely the other way and become like, I grew.

[Josh Brown]

Up poor and I'm determined I'm not gonna make the same mistakes my parents made. You hear that story a lot.

[Julie Hyman]

Or I grew up, you know, hungry and I'm going to now overstock my fridge with, you know, too much food, go completely the other way and overcompensate for it. But three big lessons. One, the importance of financial literacy, clearly. Two, vulnerability of exploitation by advisors and people you surround yourself with. You want to be extremely careful there.

[Josh Brown]

His advisor, which is one of the allegations.

[Julie Hyman]

Which is the allegations. And three, maintaining a sustainable lifestyle, which kind of dovetails into point number one, $100 million in a muni bond fund kicking out 3, 4% tax.

[Josh Brown]

First of all, you're, you're giving 10% to the agent.

[Julie Hyman]

Yeah.

[Josh Brown]

Okay, so turn that 150 is in taxes.

[Julie Hyman]

So let's turn the hundred into 50. Put a 4% tax free coupon on it and what do we get? Yeah, you know, two million dollar a year lifestyle tax free. I mean, easy for me to say that.

[Michael Batnik]

Well, but you're, but your point about like, these are kids. Kids. Right. And so if I'm a kid and I.

[Josh Brown]

Kids that don't necessarily have people looking out for them that know anything.

[Doug Bonaparte]

I have one more lesson. I have one more lesson. John, can you throw this up?

[Josh Brown]

I would encourage people to really look into the penny stocks where you paying.

[Julie Hyman]

A couple dollars or 50 cents or whatever. Whatever.

[Josh Brown]

Within five or six months, that money will flip so fast, you'll be like, what?

[Doug Bonaparte]

All right, that's enough opportunity. That's. That's Adrian Peterson. Yeah, he was trading penny stocks. Probably shouldn't be doing that either.

[Josh Brown]

Yeah, I mean, he's got like a colorful history of things he's been doing with his money and car collections. And it's just, it's a shame because you can never replace that amount of money.

[Julie Hyman]

Now, Julie, what's your point? That a kid who lives one year at a lifestyle of $2 million is going to want more than that because that's their baseline now? Or are they going to say to themselves, oh, my God, I'm doing everything I ever want to do on God's green earth. And, and I can do this every year for as long as I live, clipping $2 million coupons?

[Michael Batnik]

Well, I don't know that they would know what $2 million buys them in a year, but I could see them spending more even potentially if they want a certain.

[Julie Hyman]

I agree with that. That's the importance of the financial literacy component and the advisors around you. If someone had simply said, look, I want you to spend a year living on, I'm going to only give you $2 million here, go have at the beginning of every month, they'll give you 1/12 of $2 million.

[Doug Bonaparte]

I'm sure his spending would. Was out of control. Can you imagine what his monthly nut looked like?

[Josh Brown]

The other, the other thing. The other thing is that when you're a young star, whether it's movies or TV or sports, there's also an expectation like. And you have to have a certain outward Persona. You have to project success if you want to get endorsement contracts, if you want to be mentioned positively. So it's not like anyone should expect people in that position to not be superstars. It's just like, there's a limit, and who the hell knows what the limit is?

[Julie Hyman]

Ochocinko in that video goes on to say that AP flew out 300 guests to a birthday party that featured lions and all kinds.

[Josh Brown]

Now, you don't advise your clients to do that sort of thing.

[Doug Bonaparte]

For hyenas, we can do a small.

[Julie Hyman]

Petting zoo in a backyard, yellow lion.

[Josh Brown]

Corps cost in 2025.

[Julie Hyman]

Inflation's real, Josh.

[Josh Brown]

Right. I just think these are really tough cases. And I don't fault. I don't. I don't. I don't look at this and say, haha. You know, like, I feel genuinely bad because I don't know what you do now. How. How do you get that back? It's. It's impossible.

[Michael Batnik]

A lot of cameos.

[Julie Hyman]

Beat me to it. Yeah, beat me to it.

[Josh Brown]

Quantum computing. All right, last thing. Kevin O'Leary is pretending he's about to buy TikTok stock. I'm willing to bet anybody $9 billion that in no way, shape or form is this actually being discussed anywhere other than from Kevin O'Leary's mouth on Fox News or on Twitter.

[Michael Batnik]

Can I do a shameless plug?

[Josh Brown]

I want you to guess what.

[Michael Batnik]

Kevin O'Leary is going to be on Yahoo. Finance tomorrow morning talking about this very thing.

[Josh Brown]

Well, here's the news. The Shark Tank star has teamed up with other entrepreneurs, including former LA Dodgers owner Frank McCourt, to lead a bid in purchasing the social media platform from Beijing. That. None of that's being discussed, which has been required by U.S. officials. However, O'Leary believes he needs help from President elect Donald Trump to finish the job. This is a quote. Trump will be who we have to work with to close the deal in the months ahead. He announced during a January 6 appearance on Fox News. So I wanted to let him know, as well as others in his cabinet, that we're doing this and we're gonna need their help. Do you think Kevin O'Leary is the front runner to own TikTok? Does that sound realistic?

[Michael Batnik]

I don't want to front run the interview tomorrow morning. What are you gonna ask? I'm not actually doing that. It's not me doing the interview. So.

[Josh Brown]

All right. Do you think.

[Julie Hyman]

So I asked ChatGPT what the probability of Kevin O'Leary buying TikTok.

[Josh Brown]

And you want to take the other side of.

[Julie Hyman]

Nope. It says it is effectively zero.

[Josh Brown]

It's effectively zero.

[Julie Hyman]

And then ChatGPT says it and then some sentences as to why.

[Josh Brown]

Right.

[Julie Hyman]

But I just like the fact that it literally flat out effectively zero.

[Josh Brown]

Wow. I don't think there's a bandwagon he wouldn't jump on. This is the latest.

[Doug Bonaparte]

He's gonna pay them a $2,000 a month royalty.

[Julie Hyman]

I was waiting for the Shark Tank royalty joke, and I am so happy you made it.

[Josh Brown]

No, but, like, don't you also, like, don't you feel like, in five years, it's like O'Leary quantum computing.

[Julie Hyman]

I think he becomes a quantum computer.

[Josh Brown]

It's like, super trumpy to just, like, throw your name on everything. So I don't. I don't think that's. I don't think that's something that's gonna happen.

[Julie Hyman]

Did he have, like, O'Leary pogs back in the 90s because. Yeah, probably.

[Josh Brown]

Probably. All right, guys, you have fun on the show today.

[Michael Batnik]

Yeah.

[Julie Hyman]

Yeah.

[Josh Brown]

All right. We loved hanging with you both. And we finish the show every week by asking our guests, what is the thing you're most looking forward to? Doug, let's start with you.

[Julie Hyman]

Oh, it's ladies first.

[Michael Batnik]

No, you go first.

[Julie Hyman]

Two things. Two things.

[Josh Brown]

Not on this show, Doug.

[Julie Hyman]

Okay, two things. One, AI playing a bigger role in our lives. You know, we're getting cool stuff, but nothing that they go, whoa, we want the next big. So give me HAL 9000. But without wanting to kill me or do evil things.

[Josh Brown]

Yeah.

[Julie Hyman]

Like, hey, schedule my vacation. Book the hotels, and, like, literally, it does it or presents the options to me.

[Josh Brown]

You think that's coming this year? I don't.

[Julie Hyman]

No, not this year. That's my big. But this year, what's coming is helping couples become unstoppable financial teams.

[Josh Brown]

Ah, look at this.

[Julie Hyman]

There it is.

[Michael Batnik]

Doug.

[Josh Brown]

Doug's plugging the book in. What are you looking forward to, segment?

[Julie Hyman]

Money Together.

[Josh Brown]

Would you expect anything less?

[Doug Bonaparte]

No, I love it.

[Josh Brown]

Julie, we want to hear from you. What are you most looking forward to?

[Michael Batnik]

Okay, I'll do the businessy one first, which is that I'm excited to continue to cover elon Musk in 2025.

[Josh Brown]

You haven't had enough.

[Michael Batnik]

I mean, do we really. Do we think we're getting a cyber cab? Do we think we're getting the cheaper car?

[Josh Brown]

You'll get a cyber cab by the end of the. So, yeah, there'd be, like, two of them on the road.

[Michael Batnik]

Yeah.

[Josh Brown]

Uber will go to $4.

[Michael Batnik]

I mean, whatever I think of him, like, it's a fun story to cover. And obviously, whatever happens with him and Trump will be interesting, as long as it doesn't harm too many people.

[Josh Brown]

I agree. That part's going to. That part's going to be fun.

[Michael Batnik]

That's the.

[Doug Bonaparte]

What do we set in the line for, like, with their breakup? Is it three months, six months?

[Michael Batnik]

I don't know. I think it could go long. Like, I feel like so many people were on the side of, oh, they're going to have a falling out that I'm. I would almost Take the other.

[Doug Bonaparte]

Well, Musk won't fall out with Trump, won't fall out with Musk. It'll be the opposite. Trump will be like, you're gone. You're annoying me.

[Michael Batnik]

Yeah, I don't know. I think if it hasn't happened so far, I don't know.

[Josh Brown]

He's not even in office yet, though.

[Michael Batnik]

Yeah, but I feel like the other, he had short patience for other people. I don't know.

[Josh Brown]

I'm going to give you the fault lines. Here they are.

[Michael Batnik]

Tell me.

[Josh Brown]

Elon Musk got very animated about H1B visas on Twitter or on X. And a lot of other Trump people did too. A lot of his new friends, these, the founder crowd, all the VCs and software guys that are now Trump guys, they're all pro H1B visa because they need talented, skilled people who are building. All right, so that makes perfect sense. And I actually think that's good for America too. Okay, fine. So I'm not against it, but I'm just saying they were aggressively and I thought that could have been a moment where Trump refuted all of that. And he didn't. He kind of was like, no, no, no. I agree with Elon Musk. That was interesting. Another fault line is going to be China, because the tariff stuff is going to start probably in 12 days. What did we say? Inaugurations in 10 days?

[Julie Hyman]

Next Monday.

[Josh Brown]

Okay. A week from Monday, 12 days from now. The China saber rattling stuff, and most of it is just going to be a prelude to Trump talking to China and it's just making noise. That is Elon's most important market. The Shanghai gigafactory is extraordinarily important to Tesla. And the Chinese consumer is up for grabs. There are many Chinese EV players looking to supplant Tesla. That's another potential fault line for a lot of companies, not just for Tesla. The third and more interesting one is whatever happens with Truth Social. Part of me feels like it's obvious that Twitter just buys it and Trump gets a really big check as a result of that. And maybe he's kind of counting on that happening and it certainly could happen. But from my perspective, those are the three fault lines. Where something interesting could happen, where the bromance falls apart.

[Michael Batnik]

Yeah, I mean, with the China one, to me, that would be the most likely one. But I could also envision a scenario where. Where Musk is the back channel guy.

[Josh Brown]

Yeah, totally.

[Michael Batnik]

Where he's the one who helps broker some sort of situation that helps both sides save face. But I don't know I actually think.

[Josh Brown]

That'S the best outcome is that there's some sort of trade talks and I don't care if we see them in plain sight or don't. I think a worst case scenario is a repeat of 2018 and nobody had any fun in 2018.

[Julie Hyman]

I think Trump has sold himself on the fact that he believes Elon Musk is the smartest man in the world and he's got him in his corner and he is the greatest tool. I don't mean that in a bad way, but he's the greatest tool to operate things that he could possibly have. And you're right, it might actually turn out. Or get really annoyed with him and kick him out of Mar a Lago.

[Josh Brown]

Either way, Julie. I agree. That's gonna be fun to watch. What's your non financial thing that you're most looking forward to?

[Michael Batnik]

And this one is fresh in my mind. Cause it was just announced there's a band called Wolfpeck. Yeah, do you guys know this band?

[Josh Brown]

No.

[Michael Batnik]

So they played 2019 at MSG and it was like this weird thing because it was this little band that I had heard of that didn't. I don't know if they had a label. And they played the Garden.

[Julie Hyman]

You like Disco Snails?

[Michael Batnik]

That's like one of the newer. That's one of the side projects. Ish.

[Julie Hyman]

My kids sing that song all summer.

[Josh Brown]

What is this band? Are they German?

[Michael Batnik]

No, they're from the University of Michigan. So it's a play on the Wolf Pack in University of Michigan. And so it's Wolf Pack, but then there's like the guy who was the guy, one of the guys who started the band who also puts out music as Wolfman. And then there's some songs that they put out just as Wolf, but it's sort of a collective.

[Josh Brown]

How did they play the Garden?

[Michael Batnik]

Very well, I thought.

[Josh Brown]

No, no, no. But like I've never heard of them. How do they.

[Michael Batnik]

Because they have enough of a following. And also there are different configurations of the Garden where you don't have to do like the whole 360 situation.

[Josh Brown]

How did you get put onto this band? Are you like. Are you like secretly like a cool indie rock chick? Sure you are though.

[Michael Batnik]

I mean, I like that. How did. I don't even remember how I first found out about them. My husband's in the music business. He's a promoter. He does more. He does more like jam band than Indy, but, you know.

[Josh Brown]

So have you been to a goose. Have you been to a goose show?

[Michael Batnik]

I have not been to a goose show yet. He's not a huge goose guy. He's sort of a. He's a fish guy.

[Josh Brown]

So all the guys my. All the guys my age that are not Dave Matthews or fish are going hard into goose. I'm trying. Like, I'm listening to it a little bit. I'm not going to a show. These guys go on shows with, like, eight dudes, you know what I'm talking about?

[Michael Batnik]

And they get a party bus, right?

[Josh Brown]

Yeah, I think this band played Radio City or something. Like, I think they're playing.

[Michael Batnik]

Goose has gotten pretty big.

[Julie Hyman]

Yeah, they're at PNC over this. They're at the PNC over the summer.

[Josh Brown]

Did you see it?

[Julie Hyman]

I did, and I wanted to.

[Josh Brown]

But you did want to go.

[Julie Hyman]

I did. I'm gonna vouch for Julia with Wolfbeck. It's some funky stuff, man.

[Michael Batnik]

It's really good. It's really good.

[Julie Hyman]

Yeah, it's fun.

[Michael Batnik]

It's good. Billy Strings. Are we on the Billy Strings show?

[Josh Brown]

I like Billy Strings. Yeah.

[Michael Batnik]

You know, there's a lot of good music out there.

[Josh Brown]

Billy Strings pops up in a lot of my Spotify playlists, and I'm like, oh, this is like.

[Michael Batnik]

That's the same universe now. The newer kind of jam stuff.

[Josh Brown]

Yeah, yeah. All right, I'm. I'm in. Well, I want to thank you guys both for being here this week. It's been an absolute pleasure. Hope to have you both back, and maybe we'll see what ends up happening with all these things we're watching for. In the meantime, thank you guys so much for listening. Special thanks to John Duncan. Duncan, welcome back, by the way. Special thanks to Cliff.

[Julie Hyman]

Yeah, Cliff's a man.

[Josh Brown]

You say something about Cliff, you know.

[Julie Hyman]

So just blessed to have Cliff in my life.

[Josh Brown]

Cliff works with you at Bonafide Wealth.

[Julie Hyman]

Yeah.

[Josh Brown]

All right. And I know he's indispensable to you.

[Julie Hyman]

Number one man. Absolutely.

[Josh Brown]

Cliff, we appreciate you. Thanks to Nicole Duncan, John, Graham. Who else? Rob. The gang keeps growing. Daniel, Sean, Char, Kid Matt. We appreciate all your help, guys. Thanks for listening. We'll see you soon. All right. Thank you, guys. That.