Everybody's Wrong

Summary

Podcast Summary: "Everybody's Wrong" – The Compound and Friends

Release Date: July 18, 2025
Guests: J.C. Parets (Founder and Chief Technician of Trend Labs)

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1. Introduction and Milestone Celebration (05:31 - 07:30)

In this landmark 200th episode of "The Compound and Friends," hosts Josh Brown and Michael Batnick welcome their special guest, J.C. Parets, founder and chief technician of Trend Labs. Celebrating from Bryant Park in New York City, the hosts acknowledge the dedicated crew behind the scenes and set the stage for an insightful discussion.

J.C. Parets [07:30]: "You're such a dick. It's so perfect."

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2. Understanding Trend Labs and the "Everybody's Wrong" Newsletter (07:33 - 10:22)

J.C. Parets delves into the origins and mission of Trend Labs, emphasizing the "Everybody's Wrong" newsletter. The newsletter aims to identify where market consensus falters, allowing investors to capitalize on overlooked opportunities.

J.C. Parets [09:30]: "Trend Labs is specifically what I'm doing, what I'm doing with my portfolio, what matters to me."

Michael Batnick highlights the unique contrarian approach of the newsletter, contrasting it with typical trend-following strategies.

Michael Batnik [10:42]: "A lot of technicians are trend followers and you are too, to some extent. But you also have this contrarian streak to you."

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3. Bond Yields and Market Implications (12:00 - 17:00)

The conversation shifts to the significance of 30-year Treasury yields, currently at 5%, and their potential impact on the stock market. Michael Batnik raises concerns about a possible spike in yields leading to increased market volatility.

Michael Batnik [13:16]: "I feel like we're off to a horrible start."

J.C. Parets explains that it's not merely the direction of interest rates but the rate of acceleration that could destabilize markets.

J.C. Parets [14:07]: "It's more about the rate of acceleration and less about the exact direction."

They explore how rapid changes in the bond market can ripple into equities, citing historical patterns where swift movements led to significant market shifts.

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4. Short Interest Analysis and Identifying Squeeze Opportunities (24:00 - 35:00)

J.C. Parets introduces a chart from Trend Labs showcasing hedge funds and asset managers' short positions, highlighting areas where the market consensus might be incorrect. The discussion emphasizes how high short interest combined with new stock highs can indicate potential short squeezes.

J.C. Parets [26:13]: "Everybody's wrong is, is not only identifying those who are wrong, but extracting dollars for our own selfish endeavors from those folks."

Notable examples like GameStop and Iron Iran illustrate recent short squeeze events, demonstrating the real-world application of Trend Labs' strategies.

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5. Global Market Performance: A Wave of All-Time Highs (35:00 - 58:00)

The hosts and J.C. Parets review a series of charts showing global stock markets reaching new all-time highs, from Europe’s DAX and FTSE 100 to emerging markets like India and Brazil. This synchronized global bullish trend underscores the episode's theme that “Everybody's Wrong” regarding market pessimism.

J.C. Parets [56:36]: "This is Japan priced in yen, making all time highs. But if you price Japan in the dollar, you're going to see all time highs as well."

The conversation touches on the rarity of such global upward momentum, likening it to previous years like 2017, which were marked by low volatility and strong international growth.

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6. Sector Spotlight: Biotech’s Struggle and Potential (59:00 - 66:00)

A critical analysis of the biotech sector reveals contrasting performance within ETFs like XBI. Despite high short interest and overall bearish sentiment, select biotech stocks show resilience and potential for breakout.

Michael Batnik [65:17]: "If rates come down, people think biotech is not going to rally? It always does that people buy small cap biotech stocks when interest rates are coming down."

J.C. Parets emphasizes the importance of individual stock analysis within the biotech space, noting that while many are undervalued, only a few may deliver significant returns.

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7. Cryptocurrency Insights: Bitcoin Dominance and Market Sentiment (66:00 - 75:00)

The discussion shifts to cryptocurrencies, highlighting that the total crypto market cap has never been higher, yet remains insignificant compared to traditional markets.

J.C. Parets [47:58]: "It's completely irrelevant. A rounding error at best."

J.C. Parets points out the growing institutional interest, particularly noting that commercial hedgers are now net long on Bitcoin, contrasting with prevalent speculative shorts.

J.C. Parets [51:52]: "The smartest money in the world, commercial hedgers are the most net long bitcoin ever."

The conversation also touches on Bitcoin dominance dropping, which J.C. interprets as bullish for both crypto diversity and broader market risk appetite.

J.C. Parets [49:25]: "I think it's bullish for stocks. I think it's bullish for crypto."

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8. Sector Importance and Contrarian Perspectives (75:00 - 80:00)

Back in the equities realm, the hosts debate the most important sectors, with J.C. Parets advocating for financials as the backbone of bull markets, while Michael and Josh emphasize technology due to its dominant market capitalization and growth.

J.C. Parets [39:03]: "I think it's on a case by case basis. In that group, it's hard to buy a basket, particularly the XBI because there's so many different things going on."

The discussion underscores the necessity of financials for financing market growth and the vital role of technology in driving earnings and valuations.

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9. Contrarian Trades and Future Outlook (80:00 - 78:32)

Wrapping up, Michael pitches a contrarian trade on the biotech ETF (XBI), suggesting that prevailing negative sentiment and high short interest present an opportunity for significant upside as market conditions evolve.

J.C. Parets [63:18]: "If you are shorting the stock and buying Bitcoin to take advantage of the arbitrage, my point is, dude, you're betting that that orange line is not going to follow the black line."

The hosts reflect on past market behaviors, reinforcing the newsletter's philosophy that consensus opinions are often incorrect, and true opportunities lie in recognizing and acting against widespread market pessimism.

10. Personal Highlights and Closing Remarks (75:00 - 78:32)

As the episode concludes, the hosts share personal updates, celebrating J.C. Parets’s new lake house in the Poconos and Michael Batnick’s plans to attend a Broadway show with his child. They express gratitude to their listeners and crew, reaffirming their commitment to the podcast’s ongoing journey.

Michael Batnik [77:56]: "We'll see you on the 400th episode. We appreciate you."

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Notable Quotes with Timestamps

• Michael Batnik [10:42]: "A lot of technicians are trend followers and you are too, to some extent. But you also have this contrarian streak to you."
• J.C. Parets [14:07]: "It's more about the rate of acceleration and less about the exact direction."
• J.C. Parets [26:13]: "Everybody's wrong is, is not only identifying those who are wrong, but extracting dollars for our own selfish endeavors from those folks."
• J.C. Parets [49:25]: "I think it's bullish for stocks. I think it's bullish for crypto."
• J.C. Parets [63:18]: "If you are shorting the stock and buying Bitcoin to take advantage of the arbitrage, my point is, dude, you're betting that that orange line is not going to follow the black line."

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Conclusion

In "Everybody's Wrong," The Compound and Friends deliver a compelling exploration of current market dynamics through the expert lens of J.C. Parets. Emphasizing contrarian analysis and the identification of mispriced assets, the episode provides valuable insights for investors seeking to navigate uncertain financial landscapes. From bond yields and short interest to global market synchrony and the evolving role of cryptocurrencies, the hosts dissect multifaceted topics with both expertise and engaging camaraderie.

Listeners gain a deeper understanding of how consensus views can often lead to missed opportunities and how strategic contrarian moves, as advocated by Trend Labs, can potentially unlock significant market gains.

Transcript

[Josh Brown]

Every Tuesday, Josh and I do. What are your thoughts? And we do a mystery chart.

[Michael Batnik]

You just sent me the wrong. You sent me the wrong doc and every.

[Josh Brown]

Yeah, I did. And every. Every week. I guess it.

[Michael Batnik]

Dude, I'm Michael's very good. Michael's very good at this.

[Josh Brown]

I look at charts. One sec.

[J.C. Parets]

Josh, my man.

[Josh Brown]

So how are you? How's your summer?

[J.C. Parets]

Dude, did you get my text message? Straza texting me like, yo, Josh is always pumping my stocks.

[Michael Batnik]

Oh, am I?

[J.C. Parets]

What if you didn't get text message?

[Michael Batnik]

No. When did you send it to me?

[J.C. Parets]

Dude, are you kidding me?

[Michael Batnik]

I'm terrible. You know, I'm really bad at that.

[J.C. Parets]

Look at your text. This is.

[Michael Batnik]

But from what day, though?

[J.C. Parets]

This is Straza slacking me that he sees a head.

[Michael Batnik]

Oh, yeah.

[Josh Brown]

Which stock was it?

[J.C. Parets]

I don't know, but he was talking about it and Straza was balls deep and rocket and like. But it shows up, like, in his. Like a. Like a newsfeed. Josh Brown pumps. Whatever.

[Michael Batnik]

He doesn't pump anything. No, I discuss stocks.

[J.C. Parets]

It says.

[Michael Batnik]

I don't.

[J.C. Parets]

Look, the news was IBKR Vol. Pop. Josh Brown mention was the exact headline.

[Josh Brown]

What was it? What was the stock?

[J.C. Parets]

Ibkr. IBKR Vol Pop. Josh Brown mentions. And then Straza says, I love Josh. He pumps my favorite stocks.

[Michael Batnik]

Oh, my God.

[J.C. Parets]

No, I mean, you're just talking on tv, but he's happy when he owns the stocks that you're talking about on TV is all. I guess.

[Michael Batnik]

All right.

[J.C. Parets]

I just think that's funny. Like anybody else thinks that's funny.

[Michael Batnik]

I do.

[J.C. Parets]

I think that's hilarious.

[Michael Batnik]

But tell him not to use that.

[Josh Brown]

He didn't say.

[J.C. Parets]

Oh, he did say pump.

[Josh Brown]

Manipulates. Stomps.

[J.C. Parets]

No, no, no. He did say pump.

[Michael Batnik]

Right?

[J.C. Parets]

No pump. But that's how the kids talk these days. Moon pump.

[Michael Batnik]

I know, but I don't talk that way.

[J.C. Parets]

Yolo gmgm. You know, like, this is how the kids talk. Like, he doesn't mean you're actually pumping.

[Michael Batnik]

Very confident in my.

[J.C. Parets]

It's just a nomenclature.

[Josh Brown]

What do we think?

[Michael Batnik]

Why you did it? I like Michael doing it. Wait, I'm locked out of this dock. Hold on. I'm locked out of this dock. I need somebody to.

[Josh Brown]

Dude, I have a extra laptop.

[Michael Batnik]

Can you. Can somebody just invite me to my personal Gmail? And don't say it out loud.

[Josh Brown]

I feel like we're off to a horrible start.

[J.C. Parets]

No other way. Are you sure?

[Michael Batnik]

No, it says the left or right.

[Josh Brown]

You know what? You should isolate. We should reset. You should isolate. What? I just said fake news. Like, when the dow is down 800 points, I feel like we're off to.

[J.C. Parets]

A harvest two hundy. Wasn't I one Hyundai?

[Josh Brown]

Probably.

[Michael Batnik]

You probably were one Hundi.

[Josh Brown]

You've been on like 18 times.

[Michael Batnik]

I know. It's dead.

[J.C. Parets]

Charger.

[Josh Brown]

Do we have another Charger?

[Michael Batnik]

Oh, my God. How many factor authorizations?

[J.C. Parets]

Dude, not enough.

[Josh Brown]

Dude.

[Michael Batnik]

Does it ever end?

[Josh Brown]

Take my computer.

[Michael Batnik]

Very confident in my assertion. Does it ever literally end?

[J.C. Parets]

You know, if this was on on the blocking chain, this solve these problems. You understand? Nobody cares.

[Michael Batnik]

I got it.

[J.C. Parets]

Why you move this? I liked it where it was.

[Josh Brown]

I got it.

[Michael Batnik]

Yes. I'm in. You guys, I'm in.

[J.C. Parets]

We don't need like, 2%.

[Michael Batnik]

No, 23%.

[Josh Brown]

Hey, why isn't this working?

[Michael Batnik]

I'm going to power through. I was about to hit the clap button.

[J.C. Parets]

You unplug this one.

[Michael Batnik]

All right, hold on.

[Josh Brown]

I'mma clap.

[J.C. Parets]

I'm going clap my first time. Yeah.

[Josh Brown]

I can get used to this.

[Michael Batnik]

You got it.

[Josh Brown]

Today.

[Michael Batnik]

Okay. Attaboy. All right.

[J.C. Parets]

Is this like your first time with the bombs? Yeah.

[Michael Batnik]

Let's go.

[J.C. Parets]

You're allowing this?

[Michael Batnik]

What are we waiting for? It's almost Labor Day. What?

[Josh Brown]

Where's your computer?

[Michael Batnik]

I'm going to a Broadway show tonight. I can't have a laptop. You can't check bags at Off Broadway shows.

[J.C. Parets]

He would know.

[Michael Batnik]

He's a Broadway check.

[Josh Brown]

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[Michael Batnik]

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[Josh Brown]

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[Michael Batnik]

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[Josh Brown]

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[Michael Batnik]

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[Josh Brown]

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[Michael Batnik]

Welcome to the Compound and friends.

[J.C. Parets]

All opinions expressed by Josh Brown, Michael Batnik and their castmates are solely their.

[Michael Batnik]

Own opinions and do not reflect the.

[J.C. Parets]

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

[Michael Batnik]

And should not be relied upon for any investment decisions.

[J.C. Parets]

Clients of Ritholtz Wealth Management may maintain.

[Michael Batnik]

Positions in the securities discussed in this podcast. Ladies and gentlemen, episode 200. Do some shit over there. Michael's controlling the sound. All right, guys. Oh, my God. We've done this. We've now done this 200 times. What do we think about this?

[J.C. Parets]

Not bad, not bad, not bad.

[Michael Batnik]

All right, before we begin the show, want to acknowledge the people who make this possible each week. The people who literally work on this all week long. I just sometimes get to drop into the seat and host the show. Michael, too. We prep a lot, but these are the people who really bring the show to you. Ladies and gentlemen, number one, Duncan Hill. Duncan around. John Grayson. Daniel para, Nicole Samarukova. Okay. And behind the scenes, Keith. Rob. By the way, Travis is in the house. Our newest producer from San Diego. Look at the tan. Look at the tan on this gentleman.

[J.C. Parets]

Yo. Not bad.

[Michael Batnik]

All right. And of course, Sean Chart kid, Matt. So many, so many others who make the show possible. Sean did point to John Grayson. Got John second. All right. All right, guys. Welcome to episode number 200 of the compound and Friends. We are live in New York City, Bryant park, to be exact. We have a fan favorite guest. Couldn't be anyone but him, ladies and gentlemen. J.C. peretz is the founder and chief technician of Trend Labs, a technical analysis focused research platform. Trend Labs drops a daily note called Everybody's Wrong.

[Josh Brown]

You're such a dick. It's so perfect.

[Michael Batnik]

That delivers charts and actionable ideas straight from JC So subscribe to Everybody's Wrong, which I myself have done recently. Can we just talk about what is Trend Labs and what your role is there? Because the people are dying to know.

[J.C. Parets]

Yeah, no question. I mean, listen, you know, we built All Star Charts. You were there. You know, people are like, well, why'd you start a blog?

[Michael Batnik]

I think we helped and we did our part.

[J.C. Parets]

Dude, are you kidding me? Everybody was like, jesse, why do you have a blog? I'm like, I don't. I don't know how to do that. Right? Like, Josh had a blog. Reform broker Perlman, Josh Jofami, Greg Barry, Michael, Barry Riddles. Well, Josh and I were Barry fanboys first, right? And we would read Barry's blog every day. And then eventually they met in the bromance and the firm and the whole thing, Right? But for a while, Josh and I were just fanboys. So, like, we learned how to blog through Barry. And then Josh kind of like, you know, Josh would write the rules of. This is how you block and this is how you source that.

[Michael Batnik]

I was a major asshole back then.

[J.C. Parets]

No, but you, like, made the rules, and if it wasn't for you, it would have just been even more of a shit show, right? So, like, think about it like that. And then so, you know, all Surcharge was a blog. It turned into a hedge fund, it turned into a research platform. You know, we got acquired in, you know, four years ago, and, you know, that was great. And then so we started Stock Market Media, which is really a platform to be able to help content producers, particularly in the financial industry, be able to monetize the work that they're doing, whether it be written work or video work. Because as someone who, you know, did that for so long and made every mistake and, like, learned the hard way how important it is to have the proper infrastructure. You guys that have a very successful RRA know just how important it is to have the infrastructure to be able to scale and. And you made.

[Michael Batnik]

You can't. Put to your point, you can't keep putting out research if you're not being paid. Like, you could do that for six months on pure adrenaline. But at a certain point, there has to be a business model, otherwise why are you giving people information, Right? So, all right, that's. That's really important. So what's Trend Lab?

[J.C. Parets]

So then, you know, Trend Labs is really just selfish to me. So while All Star Charge was a research platform, still is, right? Very successful, that caters to hedge funds, financial advisors, individual investors, and writes research to help all these different investors with what they're doing. Trend Labs is specifically what I'm doing, what I'm doing with my portfolio, what matters to me. You know, the newsletter. Everybody's Wrong is very. I mean, it's very, very.

[Michael Batnik]

I mean, My assertion, you are.

[J.C. Parets]

Listen, at the end of the day, we're very specifically looking for where everybody's wrong. Because at all times there's some extreme out there where positioning is completely on one side and has to go to the other. And dealing with hedge funds and financial institutions as long as I have, I know for a fact that that's how they have to invest because they need the liquidity to get in, they need the liquidity to get out. So that's just how I think, because that's how markets work. So we're looking for those extremes.

[Michael Batnik]

A lot of, a lot of technicians are trend followers and you are too, to some extent. But you also have this contrarian streak to you, which is why I love the title of your letter, Everybody's Wrong. It's perfect for you. By the way, if I said to Michael, guess who the person we know is that just started a daily drop called Everybody's Wrong, he would know exactly two seconds.

[J.C. Parets]

But can I just give a shout out to Brett Shaffer out there? That was his idea. So I don't want to take all the credit. It is a great name. But shout out Brett Shaffer, it's pretty great.

[Michael Batnik]

But you have this contrarian streak to you where you are looking to lean the other way when everyone's at a particular extreme. And most recently, I think the last time you were on, we were laughing about the dollar and obviously this year is one of the worst years. I think the worst year for the dollar and maybe ever. 50 years, right?

[Josh Brown]

Yeah.

[Michael Batnik]

Okay, so I like that about you and I think that's where you stand out versus other technicians. So we, we appreciate that. Hit the thing. See, we're like, well, I read his mind. All right, we're going to start with that. We're going to start with something that's not technical but I think important to the market. It may not be important to anyone's particular trading strategy, but it's something that's getting more attention. The Wall Street Journal pulled out all the stops today. They had three cover story articles on why Trump shouldn't fire Powell. One of them was, what's the big deal? He's building this hundred million dollar building for the Fed. You know, who cares? Another one was, this is gonna be really bad for the bond market. And then another one was like an op ed from just. When you read the Wall Street Journal's editorial board, when you read what they're saying, you should know that that is in practice the mouthpiece of the business wing of the Republican Party. So not the gun wing, not the anti abortion wing, not the neocon wing, that's specifically Chamber of Commerce types and all the conservative think tanks in Manhattan. That's who's speaking when they write that way. And whether it's related or not. Put this picture up. Do we have this? Don't fire Jerome Powell, comma, Mr. President. The only way they could have been more on the nose is if they had also written like, please. Right, okay. When you see this kind of a full court press from the Journal, it tells you that people are really nervous that this might actually happen. And I wanna put up this chart of the 30 year treasury yield, which is back at 5%. We saw it break above 5% in early May, probably at the height of the tariff induced inflation concerns. And now we're right back here and I can envision a scenario where this breaks loose and a lot of the gains in the stock market from the summer go away really quickly. I'd love to hear what your take is because I know while you don't care that much about the Fed, you do care about intermarket analysis.

[J.C. Parets]

Can you throw up the last chart? Actually?

[Michael Batnik]

Oh, that's great, actually. And then we'll just finish the show.

[J.C. Parets]

And then we could go straight to happy hour. No, because Josh is like, can we talk about the Fed? Like, don't you have enough like nerdy economist friends?

[Michael Batnik]

Yeah, I don't want to do like the gossipy side. I want to do the market impact side.

[J.C. Parets]

Don't fry. You have friends that are economists. Like, you're like, you have, you have those friends.

[Michael Batnik]

Yeah, dude, I'm friends with everybody. That's why I'm downtown. Josh Brown.

[J.C. Parets]

Just saying.

[Michael Batnik]

What do you got?

[J.C. Parets]

You would have nerdy economist friends.

[Michael Batnik]

Yeah.

[J.C. Parets]

All right.

[Michael Batnik]

Broadway friends. Economist friends.

[J.C. Parets]

You know, so well rounded, you know that he was an art history major in college. Josh Brown. Fun fact.

[Michael Batnik]

Didn't go well. All right, what do you got?

[J.C. Parets]

So for me, it's less about the direction of interest rates and less about the exact direction. It's more about the rate of acceleration.

[Michael Batnik]

Okay. This is weighty.

[J.C. Parets]

So this hasn't done shit for a few years. And how has the stock market done over that?

[Josh Brown]

Just fine.

[Michael Batnik]

Really well, Pretty damn well.

[J.C. Parets]

So it's more about the rate of change and less about the direction. If interest rates are going up, but they're going up in like a nice orderly manner, you know, is it going to have a major impact on the equities market, are you going to have these major volatility swings, you know, that's not what I would bet on. But if you're getting major moves like you saw the worst quarter in the history of the dollar in Q1, well, the stock market had a heart attack and volatility spiked. And well, that's what happens when the currency market and the fixed income market are having big moves very, very quickly. So it's less about the direction and more about direction.

[Michael Batnik]

But what about the level? Forget the direction. Put back the 30 years and this thing's a mess.

[Josh Brown]

Is there a Vix for the bond market? Yeah, there is. Right? The move in, is it doing anything?

[J.C. Parets]

It's about to break down.

[Josh Brown]

Exactly.

[J.C. Parets]

So the move index is about to break down.

[Michael Batnik]

So rate of change I get. Because when things look like they're moving fast, it seems chaotic and that makes people nervous, especially in. Yeah, but it's not.

[J.C. Parets]

But it's not so much that it's seems chaotic, it's that the bond market is so big that if there's chaos in such a massive market that is $130 trillion bond market or a quad trillion dollar forex market, it's going to make its way into the stock market is chaos.

[Michael Batnik]

It doesn't look like it is chaos.

[J.C. Parets]

Thank you.

[Michael Batnik]

Yes, but what about the level, psychological levels? I don't think that 5% means anything per se, other than it means something to people.

[Josh Brown]

Dude, it means nothing.

[J.C. Parets]

Josh, how many people do you know? Look at the 30 year yield, not including your nerdy economy.

[Michael Batnik]

Oh, here's my question then. Is a spike in the 30 year yield more concerning than a spike in the 10 year yield?

[J.C. Parets]

No, it's more of a curve thing. But I mean the 10 years.

[Josh Brown]

Hang on. But yeah, everything is based off the 10 year. The 30 year is not breaking out. The stock market is hitting an all time high literally right this second. This is a news story. It's not a market story. Because if it was, the the bond market wouldn't be doing what it's doing.

[Michael Batnik]

Would it be a market story at 6%?

[Josh Brown]

I don't know.

[Michael Batnik]

I bet you it would.

[Josh Brown]

I agree, but tell me what the market's doing right now. The market doesn't care because he's not firing Powell. Everybody knows.

[J.C. Parets]

Why don't we actually just turn to the market? Right, so if you want to throw up the inflation adjusted securities.

[Michael Batnik]

He doesn't have to fire Powell. Powell's gone.

[Josh Brown]

Everyone knows.

[Michael Batnik]

10 months.

[Josh Brown]

Everyone knows he's not firing Powell. Which is why the market doesn't care. It's a news story, not a market.

[J.C. Parets]

I don't know who's firing who to be fired. Yeah. So if you throw up the. So this is the inflation protected treasuries versus nominal yielding treasuries. So instead of like us pretending we know anything about inflation, we could just see what the bond market's thinking. And I trust, yeah, I trust the bond market more than the three of us combined. Right? You got that John? I'm looking man, you got 61 charts. It should be right above. It should be between the crude oil. It should be a crude oil right above the dollar. So the point is. Come on John.

[Josh Brown]

I'm getting there. Here we go.

[J.C. Parets]

No, so the point is, is that the bond market is now starting to like, I mean it is inching higher. Right. And when you see what happened in the gold market, making new all time highs. Gold tends to be a leading indicator in commodity super cycles.

[Michael Batnik]

Is this your chart?

[J.C. Parets]

This is the chart. Right. Copper should be next, oil after that. So we'll get back to that in a second. So here we're looking at the inflation protected treasuries. The tips, right. Just the tip versus the nominal yielding Treasuries. This is the seven to ten years. So we're, you know, these are equivalent durations etf.

[Michael Batnik]

A lot of advisors use this for their ladders and their fixed income allocation.

[J.C. Parets]

It's a 10 year. But the bond side, right?

[Michael Batnik]

Yep.

[J.C. Parets]

And now we're making new multi month highs in the ratio between the inflation protected treasuries versus the nominal yielding treasuries. In other words, what the bond market is pricing in for inflation. And it's not breaking this massive top that, you know, if you read like two chapters of a technical analysis book you'll be like, oh, head and shoulders top. Everything's going to crash. Actually it's usually a continuation pattern and this is turning into one. So if you go to the oil chart. So when I think inflation, correct me if I'm wrong, the first thing I'm thinking is oil. You had a pretty nasty failed breakdown in the oil futures and quickly recovered, you know, now you pulled back. I don't know what's going to happen in the future. But if you're interested in what inflation looks like, I would look at the bond market and then I would look at this chart right here.

[Josh Brown]

Dudes, open your computer and tell John what charts you're pulling up. A billion charts.

[Michael Batnik]

So every, so every one of these is telling the same story which is that inflation was becoming more and more tame and now that's reversed. Some of it is tariff some. I mean that's what they all seem to be saying that it's not saying like we're going back to 9% inflation but like what is the stock market.

[Josh Brown]

Saying about not go.

[Michael Batnik]

We're not going to two. It's not the direction.

[J.C. Parets]

Right now I'm more interested in what the bond market. It's not that inflation's here and there's this epic inflation, but if you show that inflation chart for the bond market like it's worth monitoring and crude oil with that setup is worth monitoring. And think about it like this. In these commodity supercycles that historically don't just last a few years, they last for a decade or two. So if you're, if you're saying that commodity bull market is over, then you're betting that this is the shortest one of all time.

[Michael Batnik]

So. But back to the original premise of the question. The 30 year is not as important as the 10 year in terms of the way people price assets and allocate. What a breakdown in the 30 year bond and a rally in the rate could be indicative of is people worrying about the long term health of the economy and the debt situation. That's why people pay attention to that. I don't think they would use it as a stock market signal. It's more a signal of like maybe longer term risks.

[Josh Brown]

There's enough talk about this cuz it's not breaking out, it's at the higher end of the range.

[J.C. Parets]

My thoughts are more on the market implications of such a thing and this is how I look at it. By thinking about gold making all time highs. Where's copper? Copper ultimately broke out biggest week, biggest day ever in copper last year. And you can start at the top. Go back to the top. Copper futures, copper future. Biggest day in the history of the copper futures. This was last week. So why did that happen?

[Josh Brown]

Was there a new. I know you don't care about the news, but was there news?

[Michael Batnik]

There was news.

[J.C. Parets]

It was tariffs. The buyers were more aggressively buying than the sellers were selling than in any other day in the history of the copper market. But the point is gold first, copper second. What's number three?

[Josh Brown]

The yen?

[Michael Batnik]

Oil.

[J.C. Parets]

It's oil.

[Michael Batnik]

Yeah.

[J.C. Parets]

So we'll see. I gotta see it. But that's, that's what would be logical.

[Michael Batnik]

All right, I want, here's how we're gonna do the show. I have some horrible charts but they're points that I want to ask you about. Okay, then we're gonna run through yours like a marathon.

[J.C. Parets]

Done.

[Michael Batnik]

And then I have Some more bullshit on the other end of that. Okay. I just want to say for, for all the things that have happened this year, the one thing that's like, remains constant after these storms pass is that large caps are going to large cap. Like, it's. It's almost unbelievable to me. And I want to show you Perlman.

[J.C. Parets]

I mean, we're buying small caps, bro.

[Michael Batnik]

I want to show you the. I want to show you the FTSE 100. This is. This is Great Britain's stock market. Okay. These are English stocks. Just Break broke 9,000 for the first time ever.

[J.C. Parets]

Can I just stop for a second and just tell you how happy I am that your first chart is like the United Kingdom.

[Michael Batnik]

The Footsie 100.

[J.C. Parets]

Like, it brings a tear to my eye. Like, you know how happy that makes me.

[Michael Batnik]

Like, if you. Assuming you're not being facetious, why.

[J.C. Parets]

Well, we've known each other for a long time and this is the first time that you've ever done that, actually.

[Michael Batnik]

Okay. Started with England. Okay.

[J.C. Parets]

Every conversation that you and I have had for 20 years. When have you ever said, hey, J.C. that in British stock market?

[Michael Batnik]

All right, here's my next horrible chart. Here's ifa. This is the ETF for, for developed stocks. Ex U S effectively. But it's like, it's Europe, far Far east and Asia, like a lot of Europe and Japan, little Aussie, basically. This is at a new record high or just breaking out. I mean, just breaking out right now. And we could have like really long conversations about dollar hedged or blah. But like the, the message here I just find to be really interesting.

[J.C. Parets]

Well, think about what's in there. The German DAX is at all time highs. Euro stocks is at all time highs. The Japanese Nikkei, finally since 1989. Remember I told you it was going to be resistance. A year and a half of resistance. Cac a little underperforming a little bit.

[Michael Batnik]

I have in my bottom pain. This is rate of change. And I did a period of six months just to kind of show this is at the upper end of the range of rate of change for this particular ETF since inception. Like, it's very rare that this thing has had as good gains as it's had in the last six months. Just going back through the history of the thing, like, for this is, I don't know, 25 years worth of data. It's very rare that you get these markets rallying to the extent that they are. I thought that'd be interesting to look at.

[J.C. Parets]

Well, think about what's in There. So you don't have a lot of tech. You've got a lot more financials, industrials, these Europeans, Germany, France, ton of industrials. Right. So it's a very different discretionary. You're getting more of a New York Stock Exchange composite kind of look at the market.

[Michael Batnik]

Yeah, I like that they're rallying and it's coinciding with the S and P new high. We've seen that before. Last time I can really remember it being this pronounced was 2017. You remember global synchronized growth was like the theme of the year that year. And every market around the world was ripping. That was a great year for investors.

[J.C. Parets]

2017 was the least volatile year in the history of the stock market.

[Michael Batnik]

Yeah.

[J.C. Parets]

This was immediately after Trump was averaging.

[Michael Batnik]

Like we were told or nine or something. It was crazy.

[J.C. Parets]

It was like how many days in a row without a 1% movement?

[Josh Brown]

The max draw was like 3%.

[J.C. Parets]

Joke.

[Josh Brown]

I want to, I want to get your take on the market and I want to start with this, like just overall, before we rip it to a billion charts from which there's no escaping your voice. I want to get your take on the market and start with this.

[J.C. Parets]

So no escaping.

[Josh Brown]

John, you have an. I'm giving you flowers as I could say. You have a chart at Trend Labs that shows asset managers and hedge funds net positioning. Did you bring that with us?

[J.C. Parets]

I did.

[Josh Brown]

Okay, so Dietrich tweeted, nice chart from JC that shows hedge funds and asset managers have missed this rally. There are pockets of optimism. Obviously we're at all time highs. But this likely says this rally has plenty left in the tank. What do you say?

[J.C. Parets]

Well, I mean, like we joke here like, oh, everybody's wrong, but that's specifically what we're looking for, where everybody's wrong. And it's really the lack of positioning in the market overall. Like short term, can we get corrections in the market? Yeah. But bigger picture, there's like an underlying put in the market because we're coming off such extreme pessimistic levels. Depending on how you calculate it, this spring we, we were at levels that we maybe have never seen more pessimistic than at the COVID lows at the great financial crisis lows, the dot com bubble lows. And maybe, maybe that's a little extreme. Maybe that wasn't the case. But the fact that it's even in the conversation is enough. Like people were angry. The Economist magazine, one after the other, angrier angry, like, you know, the bald eagle, like with bandages and like crutches coming out of A hospital. Like, if you're not buying.

[Michael Batnik]

In fairness, though, but in fairness, the only reason we didn't end up down 30%, we were down 20 is because they changed their minds. And maybe it's because they looked at the market and they said, this is going to get a whole lot worse. This is not worth doing.

[J.C. Parets]

Well, I don't know who they is, but what I can tell you, White.

[Michael Batnik]

House said, forget everything we just told you, we're now going to negotiate.

[J.C. Parets]

Oh, because I'm going to start trusting what's coming out of the White House now.

[Michael Batnik]

I don't trust in either direction. I'm just, I'm pointing out there is a world in which that pessimism is like, well founded. If that tariff shit would have.

[J.C. Parets]

Well, to be fair, there are plenty of people that still live in that world, fortunately for the rest of us, and they just are waiting for the world to come to an end. And the exact opposite is happening. So we're thankful for those sorts of individuals. And that's what the newsletter is all about. Everybody's wrong is, is not only identifying those who are wrong, but extracting dollars for our own selfish endeavors from those folks.

[Michael Batnik]

Are you going to call, you're going to call people out? Like specifically who is wrong? You know that.

[J.C. Parets]

No. Sell side analysts, economists, you're going to.

[Michael Batnik]

Go, you're not going to use names.

[J.C. Parets]

I mean, if they write the article on the COVID of the Economist, somebody could go, look, I'm not making, I'm not calling anybody out. It's more of just a consensus. I was sitting right here at this chair at the beginning of 2023 when every sell side analyst on Wall street said the market was going to go down. It was Wall street sell side consensus was that in 2020, the stock market strategist, strategists, the stock market was going to fall. Not only did it not fall, the s and P500 was up 20% two years in a row and the NASDAQ doubled.

[Michael Batnik]

Yeah.

[Josh Brown]

So what about today?

[J.C. Parets]

And this is when the sell side community is telling you that the stock market's going to fall for the first time this millennium.

[Michael Batnik]

By the way, let's ask the obvious question.

[J.C. Parets]

It doesn't have to be.

[Michael Batnik]

Let me ask the obvious question then. The consensus is now bullish into year end. All the analysts revamped their $6,907,000 targets for the S and P. Are they all wrong?

[J.C. Parets]

Well, I'll tell you this, listen, if I worked for a bank, I'd definitely pick 6900 as the target. Just because I'm a child like that.

[Michael Batnik]

Yeah, Michael would too.

[J.C. Parets]

I mean, how can you not.

[Michael Batnik]

69, 69, 69, 69 would be his year end target, but every year.

[J.C. Parets]

And then so, and then so the fact that they're bullish, that's not a. That's not information.

[Michael Batnik]

And they're not all bullish. They're.

[J.C. Parets]

That's when they're bearish.

[Michael Batnik]

So, okay, so that's interesting. It's a better contrarian signal when Wall street is bearish just because of how rare that is. Yeah, I agree. I would agree with that. It's actually common for them to all be 8% above where the market is.

[J.C. Parets]

Look at financial advisors, right? We look at financial advisors, we look at newsletter writers, we look at individual invest investors. They're bullish. For in bull markets, right, you need bull. You need bulls to buy stocks to have a bull market. It's when they're extreme pessimism that we want to flip the book.

[Josh Brown]

So right now we're at Nvidia 4 trillion. Josh finally gave people permission to trim a little bit. How quickly we forget. You remember what the drawdown was all the way back in March? In April, it was at a 37% drawdown. 37%. The biggest stock in the world 2008 was 37%.

[J.C. Parets]

Hold on, hold on. Settle down, zoom out and do the math on what Nvidia did going into that 38% correction.

[Michael Batnik]

No, we're making the point that people think that they're like, we're owed pain in the market. What do you call a 35% drawdown in three weeks? Stock in the market.

[Josh Brown]

Three weeks.

[Michael Batnik]

Three weeks. That's pain.

[J.C. Parets]

Haven't we had like multiple bull market bear markets in the last like half decade or something now you want another one?

[Michael Batnik]

We had one two months ago and we had one in 2022 and 2020.

[Josh Brown]

We have three in five years. We're good.

[Michael Batnik]

All right, chart, chart us up.

[Josh Brown]

Let's go, let's go, let's roll.

[Michael Batnik]

John, this is where you really get a chance.

[Josh Brown]

Let's go bowling.

[J.C. Parets]

Dude, I haven't been bowling in a minute. Okay, question. Short interest data. Who publishes it?

[Josh Brown]

Nasdaq.

[Michael Batnik]

Oh, I think the exchanges.

[J.C. Parets]

Wrong, wrong.

[Michael Batnik]

Okay.

[J.C. Parets]

When does it get published?

[Josh Brown]

All star charts. Am I right?

[J.C. Parets]

Nope. When does it get published?

[Michael Batnik]

That's a good question. Wait, let's see if this Rob, who publishes short interest data.

[J.C. Parets]

So Rob Passarella x Bloomberg, just Wall street legend now. You got 6 billion in asset managers here. No idea when the FINRA publishes it.

[Josh Brown]

Oh, interesting.

[J.C. Parets]

How often?

[Josh Brown]

Quarterly.

[Michael Batnik]

Quarterly.

[J.C. Parets]

Every two weeks. Where does it get published?

[Josh Brown]

See, everybody is wrong.

[J.C. Parets]

Where does it get published?

[Michael Batnik]

Twitter.

[J.C. Parets]

I wrestle.

[Josh Brown]

Oh, no, the beige book.

[J.C. Parets]

My argument. What color is that book? So my.

[Michael Batnik]

What color is the beige book? For a bonus point? Seriously?

[J.C. Parets]

Listen, my, my argument here and that everybody's wrong is that you two are some of the two of the smartest market participants. Wall street guys, financial advisors, whatever. Not short sellers, all of the thing. Fine. But you guys know your shit is my point. And even the guys that don't that know their shit don't know where to get this data when it comes out, where to find it. And then, by the way, if all those answers were a yes, this is what you get. What is this exactly?

[Josh Brown]

How do you, how do you. So how do you extract the data?

[Michael Batnik]

Well, you have to, you have to be able to.

[J.C. Parets]

You need machines, you need humans, you need. I mean, it's like a thing.

[Michael Batnik]

So in the defense of everyone that doesn't know this information, this gets distributed via Dow Jones. It's everywhere. It's In Barron's, MarketWatch, CNBC.com, wait.

[Josh Brown]

What is literally the point of this?

[J.C. Parets]

And by the way, it's never not wrong, by the way.

[Josh Brown]

I thought we were doing charts here.

[J.C. Parets]

Hold on. Let's go. Keep going. Hold on. Ready? This one you might know.

[Michael Batnik]

Commitment to traders.

[Josh Brown]

This is, this is.

[J.C. Parets]

Okay, there you go. This is a government report.

[Josh Brown]

Oh, same way.

[Michael Batnik]

So this, when does it come out? This is more frequent than monthly.

[Josh Brown]

Is this the 69th Tuesday of the year?

[Michael Batnik]

Always on the Friday after the 69th. Tuesday.

[J.C. Parets]

Second Tuesday. So Tuesday after the second Monday. Only month, every Friday.

[Michael Batnik]

Oh, I thought every Friday.

[J.C. Parets]

Okay, but if you go to the CFTC and you look for this, there's going to be 297 links. How do you even know which one to click on? And when you do, this is what you get.

[Michael Batnik]

Thank God I don't trade commodities.

[J.C. Parets]

Good luck. Good luck. So anyways, we take this information. The reason for this is because we take this information. Here's what we do.

[Michael Batnik]

Go ahead, you machine. Learn it.

[J.C. Parets]

Dude, AI is sick, bro.

[Michael Batnik]

All right?

[J.C. Parets]

I don't want to go down that rabbit hole, but there's, there's a lot going on there. So anyway, so then we take this. Data comes out every, every two weeks. This is the short interest data. And we're looking at the increases and decreases in the short interest. And we're adjusting by the size of the company. And you buy them right no, we don't want to be. No, we don't want to be contrarian for the sake of being contrarian.

[Josh Brown]

They go on your screen of watch these.

[J.C. Parets]

Listen, if they're increasing their short positions as the stock is making new highs, I want to know and what do.

[Josh Brown]

You want to do with that?

[J.C. Parets]

Well then we look at the charts, right, and we apply our principles. This is a great starting point.

[Michael Batnik]

We go back one.

[J.C. Parets]

Yeah, go ahead.

[Michael Batnik]

So like let's give people that are listening an example. So you're saying like GameStop category specialty retail market cap 10 billion change in short interest. This is month over month or this.

[J.C. Parets]

Is report over report.

[Michael Batnik]

So it's a two weekly.

[Josh Brown]

So it's being sorted by the right. I can't read that.

[Michael Batnik]

What is 7%?

[J.C. Parets]

So it's sorted by the right.

[Josh Brown]

So what does it say?

[J.C. Parets]

So this is an increase in the short position as a percentage of overall market cap. Right? Because if you're just looking at the biggest changes in short positions, you're going to get the biggest companies. So you got to adjust by market cap. Right. Those are things you learn the hard way. So we're looking at basically the biggest changes. Report over report everyone.

[Michael Batnik]

Shorting GameStop again would be my takeaway.

[J.C. Parets]

From this and Big Bear. Now remember, this data is delayed because I don't know why they're not using the blocking chain and we have to wait like 10 days for them to report it. Like I don't know why we have to pretend we're cavemen. Like we have the data that just report the damn thing. But anyway, so keep in mind it's a little bit delayed but still really good information. So here you can keep going.

[Josh Brown]

Whoa, hold up. Iron Iran just had a massive short squeeze. Holy shit.

[J.C. Parets]

Yes. I mean we're going to get into that but it's all of those types of stocks. So then we, when we sort by 10 day rate of change, right. So now we're looking at the names that have super high short interest, super vulnerable for a squeeze. And now we're sorting by the ones that are literally getting squeezed.

[Michael Batnik]

Rate of change makes the rate of change tells you the squeeze is on.

[Josh Brown]

Yeah, pro, Pro kidney. That that was from a dollar to $7 in like four days.

[J.C. Parets]

Yeah.

[Josh Brown]

Oh my. You know that because I just pulled it up.

[Michael Batnik]

Oh, okay. I'll just say you followed broken me.

[J.C. Parets]

But you see the, you see the thought process. I'm mostly not just going to dive into individual securities but to like walk through the thought process of taking these reports.

[Michael Batnik]

So open Door seems to be the short squeeze everyone's talking about this week.

[Josh Brown]

Shout to Eric Jackson. What a run. Unbelievable.

[Michael Batnik]

Yeah, okay. All right.

[J.C. Parets]

So that's also I want to highlight rcat. So this is the type of market environment. I'm going to put my fundamental hat on.

[Michael Batnik]

Red cat. And Is that the guy from Barstool Garbage?

[J.C. Parets]

No, no, listen. This is the type of market environment where if the name of the company has an animal in it, you buy it. Like a short, like a pony, a I or a data dog. Yeah, like if there's an animal in the, like in the name. Like this is the market where it's going up. You got to double the position if there's an animal.

[Michael Batnik]

So I want to highlight by my publicly traded winery. It's called Grape Ape. It's going way go right.

[Josh Brown]

Dude, you're right. So you, you, you, you energy fuels.

[Michael Batnik]

It just sounds like a company.

[Josh Brown]

Look at this.

[J.C. Parets]

I know.

[Michael Batnik]

Oh, shit.

[Josh Brown]

Went from six to nine. Nice. And like literally twice.

[J.C. Parets]

All right, hold on. Let's get into the charts. I just want to walk you through the mentality, you know, thinking logically through about exposing those who have overstayed their welcome. The short sellers that are getting greedy. When now the risk versus reward profile is skewed in the other direction. And we take the other.

[Josh Brown]

These people subscribing to your report. Like the people that are short selling.

[J.C. Parets]

I don't know. I'm good. I don't care. Go, go. Keep going. So now we're sorting by days to cover. So go back to the last one. So this is important because now we're taking the average daily volume and then we're taking all of the shares that are short. And we're calculating how many days at the average daily volume will it take all the shorts to cover.

[Josh Brown]

Dude, you should rename this. You call it the Divergence. Equity squeeze. You should call this the divergence. Now you can't leave.

[J.C. Parets]

Ooh, now you can't leave.

[Michael Batnik]

Right?

[J.C. Parets]

Dude, that's the second Bronx Tale reference. Like today. It's a lot of Bronx Tale references today. All right, let's get into some charts. But I wanted to show you sort of the thought process behind these things. Looking at the short interest and what we do with these reports. Not to mention, I want polling my smartest friends to see how many know when this stuff comes out. And the answer?

[Josh Brown]

We don't know.

[J.C. Parets]

Still. Still a squadoosh. And there's nothing against you guys. Nobody knows.

[Michael Batnik]

No idea.

[J.C. Parets]

No idea.

[Michael Batnik]

Yeah.

[J.C. Parets]

Okay. S and P, 500 new all time highs, not. Not things we see in downtrends. Right, right, right. Okay, keep going. So this is the chart that Michael was talking about where we're taking that data that's coming from the commitment of traders report. And we're taking what the asset managers, these are the large speculators. What they're doing, you know what they're not doing, they're not participating in this historic rally is what they're not doing. Because they're worried about like nonsense like tariffs or who the president is or global debt or whatever.

[Michael Batnik]

And like, will Jerome Powell be fired?

[Josh Brown]

Wars.

[J.C. Parets]

Oh, there's. Oh, there's a war in the Middle East. Big shocker. I can't believe it. There's a war.

[Michael Batnik]

So, yeah, who, who, who would have thought?

[J.C. Parets]

I can't believe it. Oh, shit. The Strait of Hormuz. There's issues there. I can't believe it.

[Michael Batnik]

Well, I said anytime you hear the word straight of Hormuz on financial television, just find something and buy it immediately.

[J.C. Parets]

Dude, I love how it doesn't even matter what all the AI experts and like chip logistics experts are now like, straight up Hormuz.

[Michael Batnik]

Yes. Overnight. It's. It's. We're so fortunate. We're so fortunate.

[J.C. Parets]

How lucky to be able to follow such geniuses. Okay, so nevertheless, the hedge funds, the asset managers, they're not in, which is fantastic. That's the type of thing you tend to see in the early stages of strong uptrends is people not participating, people.

[Michael Batnik]

Not buying interest ever resolve to the downside where the asset managers and hedge funds being lightly allocated to stocks end up being vindicated. Or does this always. Is there? Is the resolution? Almost always. Oh, shit, we're missing the bull market. And they buy.

[J.C. Parets]

Let me tell you something, Josh. There's a really smart gentleman by the name of Barry Ritholtz, and he just came out with a great book about how not to invest. And one of the things he says answers your question, as a matter of fact, that you should not be betting with those guys. Right. You should not be doing that. Great book. Can we give a round of applause to Barry Ritholtz? JC gets a couple of shout outs. He misquoted me on one of them.

[Michael Batnik]

It's a 9,000 page book, so I'm not surprised. There's at least one shout out to you in there. All right, next, let's continue.

[J.C. Parets]

So no, I'm not betting that they're going to be right is the answer. And neither is Barry, apparently. So there's two. There's a big question and I want to hear your thoughts. What's the most important sector in the market?

[Michael Batnik]

Technology.

[Josh Brown]

You for today or in general in life? Financials.

[Michael Batnik]

No, it's always tech. No, it's not. It's. Okay, fine. Somebody want to dap me up?

[J.C. Parets]

No, I know.

[Josh Brown]

I knew you were going to say financials, but. But they are important. They're. How about this?

[Michael Batnik]

They're confirming right now. Nobody gives a shit. It's great that they're up. It's. We're happy. We celebrate financials every day. The only stock sector that matters right now, 38% of the market is technology.

[J.C. Parets]

Can I take you back to a one St. Patrick's Day, 2008. You and me drinking coffee on the corner of Vanderbilt and 46th Street. Watching Giant Irish dudes in bagpipe playing the bagpipes. People walking out of Bear Stearns holding boxes.

[Michael Batnik]

Yeah.

[J.C. Parets]

Cnbc, Fox trucks with satellite dishes everywhere. Drunk people everywhere. Because across the street from Grand Central and they were coming in to booze.

[Michael Batnik]

They had Erin Burnett set up with a folding table like it was a block party. And they. She did the show directly from in front of bears.

[Josh Brown]

Rest in peace, Naples 45.

[Michael Batnik]

Yeah, those are the days.

[J.C. Parets]

Remember the free pizza there, dude? Free pizza every day. How many times were me and Josh.

[Michael Batnik]

We could do Vanderbilt, we could do Vanderbilt reminiscences.

[Josh Brown]

Let's keep going.

[J.C. Parets]

I mean there were like $12. You were financially. But.

[Michael Batnik]

But why, but why do you think that we don't seem importance?

[J.C. Parets]

First of all, we do not have bull markets without financials. And we're thinking as just ignorant Americans around the world. They don't have huge tech companies. They got big banks that handle all the business. Right. So in other countries, the banks are even more important than the United States. And I would argue that the. In the United States, financials are the most important sector. Now playing devil's advocate, technology is the biggest sector. When you look at every bull important. Hold on. Right, that's my point. So when you think back over the last hundred years, you study every bull market, you'll notice that technology is a leader in pretty much all of them. Right. So you can argue that technology is the most important sector. Well, it don't matter because they're both making new alternatives.

[Josh Brown]

You need confirmation or you want it?

[Michael Batnik]

I think it's great that financials. I think you. First of all, you can't have a bull market without financials participating because somebody has to finance it all. And all the trading is happening within the financial company so of course it's almost a tautology when somebody says what's the most important? I read that as what's the most relevant. And of course it's technology. It's all of the earnings growth. The sector is bigger than all the other sectors combined.

[Josh Brown]

Yeah, this is a dumb question. It's obvious. Technology. Let's keep going.

[J.C. Parets]

I don't think it's obvious. I'm with you guys.

[Josh Brown]

I was answering how you knew.

[J.C. Parets]

I knew you were trolling.

[Josh Brown]

I knew you wanted to be.

[J.C. Parets]

Financials. But it doesn't matter because they're both making new highs. All right, next. Right.

[Josh Brown]

Well, industrials are the most economically sensitive sector.

[J.C. Parets]

Technology.

[Michael Batnik]

As long as you guys could both admit that you're wrong and I'm right, I would admit.

[J.C. Parets]

Who writes the blog? Everybody's wrong. Right. I'm going to make that decision around here. Communications, also very important. Technology became such a big sector that these guys had to take stocks out of the sector and invent new ones to put them.

[Josh Brown]

Why did they do that?

[Michael Batnik]

Because it was too much.

[J.C. Parets]

They had to.

[Michael Batnik]

You can't, you can't imagine if you had Meta and Alphabet in the same sector as Microsoft, Apple, Nvidia, it'd be 80% stock market at this point.

[J.C. Parets]

It's called mooning.

[Josh Brown]

Yeah.

[J.C. Parets]

So communications, all time highs. A lot of Netflix, a lot of Facebook, a lot of Google. Right. And then the next one. You know, the truth is when you go back and you do the math, which some of us like to do, and you take all the sectors and find the one with the highest correlation with the S&P 500, it ain't tech, it ain't financials. It's actually industrial.

[Michael Batnik]

I believe that because if you go back far enough, these were the tech stocks of the first 50 years of the 20th century.

[J.C. Parets]

Well, you know what else? Well, the s and P500 didn't come to the back half of the 50 years. But you're not wrong. You're right. But that continued. But it's bigger than that. I think it's that it's very diversified. Think about what's in the industrial.

[Michael Batnik]

Railroads, defense, waste management. Yeah, right.

[J.C. Parets]

Let me ask you a question.

[Josh Brown]

Why do you think a lot of people construction. Why do you think a lot of people.

[J.C. Parets]

Machinery, engineering.

[Josh Brown]

Let me ask you a question. Why do you think a lot of people get nervous when you have everything working? When you have industrials, financials, technology, the overall index, it feels too good. Why? So why do. Why is it that we think that what's about to go Wrong.

[Michael Batnik]

You know, it's a very Catholic. It's like a very Catholic mentality that, like, we're getting too much heaven. Surely short, like, it's almost like too much.

[J.C. Parets]

How much Catholic school did you go to?

[Michael Batnik]

My mother's Catholic. I could. I could talk very deep. My mother's Irish Catholic. It's a different kind of Catholic than, than. Than, you know. But like I'm telling you right now, there is this idea that people have where it's black, it's black, it's gotta go red, it's heads, it's gotta go tail.

[Josh Brown]

But do you have a Catholic thing?

[Michael Batnik]

I think there's a Catholic thing about sin and pleasure.

[Josh Brown]

Well, I'm very Jewish and I'm asking a Cuban. Do you. Why do you think.

[Michael Batnik]

Why do you think the difference. So I'm. I'm half and half. The Jews think nothing should ever go right. The Catholics at least allow for the possibility that could go well, but not too well.

[J.C. Parets]

Yeah, but you know what? It's different because trained by the Jesuits and the Jesuits get down the Jesuits party. So it's a different type of Catholic, you know, it's a different Catholic.

[Michael Batnik]

But I'm saying there is like, in the back of people's minds, the way we're wired, it's like. It's humans, too. Good.

[J.C. Parets]

No, I think it's humans. It's not Jews. It's not Catholics or Jesuits. It doesn't matter. It's the humans. Part of the reason why we call the newsletter Everybody's Wrong is because we know for a fact that asset prices trend. We know. We have the data. We have the math. Everybody has it. We know it's a fact. It is a pillar of the market. We. There's a lot of things about the market that we don't know. Mostly about the future. But we do know that asset prices trend. Okay, here's the other thing that we know. We know that volatility mean reverts.

[Michael Batnik]

Yes.

[J.C. Parets]

From high, volatility comes down. From low, volatility goes up. That we also know. But here is how the humans act. The humans are always trying to mean revert on the asset prices and they're trying to trend follow on the volatility. When volatility is high, they think it's going to be high forever. When volatility is low, they think it's going to be low forever. Stock market makes new highs. They want to sell it. Stock market makes new lows. How much lower can it go? A hell of a lot.

[Michael Batnik]

That's a Great point. Clip that for TikTok. I couldn't agree more. I just. I feel like people. People's feelings when they're making a ton of money, some people, there's almost like a guilt and a shame. Like, this is too good. It's gotta go bad. And people feel. Not just about the stock market, anything that's too good. It's almost like, oh, man, I'm gonna have to pay for this, like, somehow. And that's why people forget that asset markets trend and bull markets gone way longer than you think possible because they think they don't deserve it. And that's the. There's a very, like. There's a very Catholic thing to that kind of feeling. And I know it. Cause I see it in my real life with real people.

[Josh Brown]

Next chart.

[Michael Batnik]

In things that have nothing to do with the stock market. So that's my comment.

[Josh Brown]

All right, what do we got here?

[J.C. Parets]

I'll finish with this. Catholic, Jewish, it doesn't matter. At the end of the day, it's humans. And what we know for a fact as well is that humans are gonna make poor choices and act irrationally when their stress levels are elevated. Particularly when stress levels are elevated in this day and age. That happens when there's money involved and politics. But jc, when you combine both, especially in this, there's a lot. But there's a lot of opportunity there.

[Josh Brown]

But people think it's irrational to buy new highs. It's the opposite.

[J.C. Parets]

I don't know what's irrational about the fact that we know that asset prices trend and we know that buying new highs is historically a great strategy.

[Michael Batnik]

Once again, this is the gambler's fallacy, people. What goes up must come down, right? And in a lot of things in this world, that is how it works. Just not in this thing.

[J.C. Parets]

Yeah, good.

[Michael Batnik]

Yeah.

[J.C. Parets]

So these are the returns since the election going into the end of the first half. So these are just the first half returns plus the back end of the year.

[Josh Brown]

What's afk?

[J.C. Parets]

What?

[Josh Brown]

What's afk?

[J.C. Parets]

Africa.

[Josh Brown]

Oh, okay.

[J.C. Parets]

They're buying African stocks. Is that evidence of risk aversion?

[Josh Brown]

That's not a bear market. No, I've never seen that ticker before.

[J.C. Parets]

Well, step down.

[Michael Batnik]

That's the ETF for Africa.

[J.C. Parets]

Yeah.

[Michael Batnik]

Probably very heavy. Nigeria and South Africa, I'm guessing.

[J.C. Parets]

Yeah, that's right.

[Michael Batnik]

In that.

[J.C. Parets]

Yeah. A little Egypt in there.

[Josh Brown]

Very worldly observation.

[J.C. Parets]

Oddly enough, they delisted the Egypt ETF to my unsatisfactory.

[Josh Brown]

We talk about this every time you're here. Let's Go next show over Egypt.

[J.C. Parets]

So needless to say, tremendous return since the election. This is the Trump Squeeze 2.0. When 2016, I lived in California. People were jumping out of buildings. When he became the President of the United States, everyone's selling their stocks around me. I'm like, you guys are craz crazy. 2017 was one of the greatest years in the history of the market, one of the least volatile years in the history of the market. We've seen this story before. It's deja vu all over again, right? So I think the Trump squeeze still has legs, right? I still think.

[Michael Batnik]

But people. The stock market ripped higher when Trump won this time. I know what happened in 2016. Also. I think people knew Trump was gonna win for a month before this election. And they were buying stocks, they were buying crypto. I think people learned their lesson from that.

[J.C. Parets]

Here's the difference. Here's the difference. This, this. The. The troughs in sentiment, where sentiment was extreme, was near the election in 2016. It didn't come to the spring this year. So the extremes and pessimism were a little bit delayed this go around, but very similar.

[Michael Batnik]

Well, he didn't start talking about tariffs till late February, maybe this time around. So I think. I think that was the thing that freaked people out. This is. This is remarkable. What's not working this year in the. On the equity side.

[J.C. Parets]

Around the world, short sellers are getting crushed.

[Michael Batnik]

Well, obviously. But like any regions not keeping up.

[Josh Brown]

Or health care, I know it's not.

[Michael Batnik]

A region, but Latin America on here.

[J.C. Parets]

New Zealand is underperforming. You know, that's. That's one thing that stands out to me.

[Michael Batnik]

Something to keep an eye on.

[J.C. Parets]

Okay, let's go through this. Ready? All right. I wanted to talk about cryptocurrencies, because how can we not? You're looking at the total crypto market cap around the world at the highest levels ever. So crypto has never, ever, ever in history been worth more than it is right here.

[Michael Batnik]

Right now, the number is 3.8 trill.

[Josh Brown]

It's a lot of money.

[J.C. Parets]

It's not. It's an Nvidia. It's a rounding error is really what it is. Every single cryptocurrency in the world can go to zero tomorrow, and it will not matter to anyone who matters.

[Michael Batnik]

Yeah, I guess that's right. Nobody's systemically important, has, like, a lot of leverage on crypto to the point where they would, like, be threatened.

[J.C. Parets]

It's completely irrelevant.

[Michael Batnik]

Very different than, like, real estate. I would agree with that.

[J.C. Parets]

It is an Irrelevant asset. A rounding error at best. Part of the reason why I own so much.

[Michael Batnik]

In the aggregate.

[J.C. Parets]

Yeah. No, to an individual, they might have a big percentage, but when you talk about a quadrillion dollar forex market and hundreds of billions of dollars in bonds and 60 trillion in stocks, 4 trillion is nothing.

[Michael Batnik]

Well, the other thing is one stock on the way out, the 4 trillion doesn't vanish into thin air. It becomes dollars or something else. So it's. It's ripples in a pond.

[J.C. Parets]

It doesn't matter. But I think that that's part of the bull case, to be honest.

[Josh Brown]

You know, I don't say that pejoratively like you're bull. That makes you more bullish.

[J.C. Parets]

I mean, it doesn't make me bearish that it's so irrelevant, you know, like, how much smaller could it get?

[Michael Batnik]

I think that's really helpful for people to hear because if you don't think that way, you might be tempted to think like, this is as big as it could possibly.

[Josh Brown]

Hang on, guys. Hang on. Counterpoint. Nvidia is huge. 4 trillion is not nothing. Nvidia is bigger than Apple and Tesla combined. I saw that today. That nothing.

[Michael Batnik]

He's comparing it to the 4x market.

[Josh Brown]

Why? Why would you do that? Well, compared to the treasury market, it's tiny, but it's $4 trillion, which is nothing. Dude, how big should it be?

[J.C. Parets]

10.

[Josh Brown]

Okay. I hope it does. I'm bullish.

[J.C. Parets]

Yeah. 10. 10 trillion.

[Michael Batnik]

We don't have that one.

[Josh Brown]

Josh had zero percent chance. No, it can attend. Why not?

[J.C. Parets]

Yeah, 10. Okay, so right now it's at 3, 4. What's 10? So here's the big chart.

[Michael Batnik]

Oh, your laptop's off.

[J.C. Parets]

Yeah, here's the big chart. This is bitcoin dominance crashing.

[Josh Brown]

That's bullish for crypto.

[J.C. Parets]

I think it's bullish for. I think it's bullish for stocks. I think it's bullish for crypto. I think it's bullish for bitcoin risk on. I think.

[Josh Brown]

Of course it is.

[J.C. Parets]

I think altcoin season, like. Like Hot girl Summer. Like altcoin summer. Right.

[Michael Batnik]

Question. Is stable coins included in this? No, no, no. Okay. Solana is. ETH is. So a lot of people who. A lot of people are talking about the performance in those two.

[Josh Brown]

No, no, no. Not Solana.

[Michael Batnik]

Eth.

[Josh Brown]

BTC just broke a sick down chart going nuts. No, eth, btc.

[J.C. Parets]

No. He's absolutely right. Thank you. This is it.

[Michael Batnik]

There it is.

[J.C. Parets]

Thank you.

[Josh Brown]

You taught me well.

[J.C. Parets]

This is the one. While everybody's Freaking out. And they're crying about the, you know, epic reversal day. Now, every son is a key reversal day expert. In the bitcoin markets. You get a reversal on Monday, a little follow through on Tuesday, but all along that time, Ethereum is just grinding higher. And, you know, this is something new. When we see something that we haven't seen in a long time, that stands out.

[Josh Brown]

Yeah. If you zoom out, massive.

[J.C. Parets]

When was the last time that you saw Ether? Ethereum, Alfred? So let's do some math. Bitcoin is 2.3 trillion. Cryptos, let's call it 3, 8. Right. So Bitcoin is a little over 60% of the entire crypto markets. Ethereum is about 420 billion. 420 for those who partake. Then you got binance at like 100. Solana at like 90.

[Michael Batnik]

Binance is the BNB token.

[J.C. Parets]

Yup. And then ripple, like 200. Throw up the ripple. Look at this. Look at this chart, by the way. Come on, jb.

[Michael Batnik]

Yeah. Not for me.

[J.C. Parets]

Really?

[Michael Batnik]

Not for me.

[J.C. Parets]

You think this is a scam? One of those?

[Michael Batnik]

No, I just don't think anyone needs it. Oh.

[J.C. Parets]

Cause now we're buying things people need.

[Michael Batnik]

Well, no, from. From what I. Well, I like to understand, like, what. What it would be used for.

[J.C. Parets]

I don't know what.

[Michael Batnik]

I mean, I'm an idiot. Like that. I like to, like, have an understanding of, like, why. Why it would have value before I buy something.

[J.C. Parets]

I don't know anything about this, but what I do know is that there aren't any cryptos either.

[Michael Batnik]

I read five things, but, like, that. That's my bias. Like, oh, this is like a. It's a. Okay to have, but nobody really needs it.

[J.C. Parets]

But. But you're like a chip maker expert now too. Like, you don't know anything about chips.

[Michael Batnik]

I don't know anything about anything.

[J.C. Parets]

Right. That's my point.

[Josh Brown]

So what's the difference? Big Pringle guy.

[J.C. Parets]

I'm with you, bro. I don't know anything about chips or oil and gas drilling or.

[Michael Batnik]

Well, I understand. If it moves, trade it. Got it.

[J.C. Parets]

What do I know about. I know about charts. I know about wine and baseball and food.

[Michael Batnik]

And food.

[J.C. Parets]

Yeah. I'm pretty good at food. After that, I got nothing. Nothing. Right. All right. And then the smartest money in the world, commercial hedgers are the most net long bitcoin ever.

[Josh Brown]

What does this mean? What's a commercial bitcoin hedger?

[J.C. Parets]

These are the people in the business. So you're looking at the miners, you're looking at people who are companies that are transacting in bitcoin that actually have to hedge their positions? These are the corn farmers that are hedging their corn crops. Right. The speculators are the dumb money. These are the asset managers, the fund manager, you know, hedge fund managers. These are the people we want to take the opposite of up. So the small speculators, the large speculators, the money that is. That makes the worst decisions, particularly in extreme, is shorting bitcoin at the highest rate ever.

[Josh Brown]

Why are they doing that?

[J.C. Parets]

I have no idea. I asked myself the same question.

[Michael Batnik]

Told you why? The gambler's fallacy. What goes up must come down. That's the answer. There's no other. There's no. They don't know anything.

[Josh Brown]

Could they be short, I mean, just as hedging to offset other long positions?

[J.C. Parets]

No. The hedgers are the ones that do the hedging, and they are long.

[Michael Batnik]

Oh, oh, oh.

[Josh Brown]

Okay.

[J.C. Parets]

Not only are they not hedging, they're the ones buying. So are you gonna bet with the dumb money? You're gonna bet with the smart money?

[Josh Brown]

I'm with you, bro. Let's go.

[J.C. Parets]

All right, and then this is a trade that you hear a lot of people talking about, that they want to short micro strategy and then buy bitcoin, taking advantage of that arbitrage. Right.

[Michael Batnik]

Because Jim Chanos, this is his trade that he has on right now.

[J.C. Parets]

All right, good luck. So if do. If you are betting that that arbitrage is going to close out, then you are betting that the orange line is not going to do what the black line is.

[Josh Brown]

It is.

[J.C. Parets]

I think it is, too. But if you are.

[Michael Batnik]

Sorry, say that one more time.

[J.C. Parets]

So if you are shorting micro. So let's. For the audience that doesn't understand, go to the next slide real quick, and then we'll come back to this. So this is the strategy. It's such a strategy. They actually changed the name from MicroStrategy to Just Strategy. And they own $71 billion worth of.

[Michael Batnik]

Bitcoin and they're being valued at 140,127,127. You're getting about one Bitcoin for two. For two dollars worth of Bitcoin.

[J.C. Parets]

You're basically right.

[Michael Batnik]

Now, if you buy this, you're paying.

[J.C. Parets]

Close to a 2x multiple for the stock compared to their net asset value. If such arbitrary things mean something to you.

[Michael Batnik]

Well, the theory being he's going to do something with the bitcoin or with the leverage or he's going to be able to accumulate Bitcoin faster than, than.

[Josh Brown]

He could dilute the shareholders. That's it.

[Michael Batnik]

And he diluted. It's work.

[Josh Brown]

It's working.

[J.C. Parets]

Well, I'll tell you what, logically it makes sense. Like there's no reason for it to trade a 2x.

[Josh Brown]

Dude, he called a shot and he's doing it.

[J.C. Parets]

No, fine, but, but I get the logic. But if you go to the charts themselves, if you're betting, if you're shorting.

[Michael Batnik]

His answer is that the world is going to run out of bitcoin. So it makes sense to leverage up and buy it at a faster rate than anyone else. Yeah, fine, but my people who believe in that buy the stock.

[J.C. Parets]

Right, but my point is, if you are shorting the stock and buying Bitcoin to take advantage of the arbitrage, my point is, dude, you're betting that that orange line is not going to follow the black line.

[Michael Batnik]

Well, right, because think about it like if Saylor's wrong and demand for Bitcoin goes away, you'll lose money on both. Yeah, see, I'm not even sure there's a spread to be captured there in that scenario.

[Josh Brown]

Gentlemen.

[Michael Batnik]

So what are you rooting for then?

[Josh Brown]

We're at minute 55 and we've got into like six charts.

[Michael Batnik]

All right, all right.

[J.C. Parets]

I want to, I want to rip through a few charts here and then we could talk about it. All right, we're going to do this again. We haven't done this in 18 months. We did it in 18 months. How's the stock market done since then?

[Josh Brown]

Quite well.

[J.C. Parets]

Not bad. Not bad.

[Josh Brown]

Strong to quite strong.

[J.C. Parets]

So as, as hardcore Americans like, you know, I don't know the AFK ETF because I live in Long Island. Right.

[Michael Batnik]

Well, how much should I have allocated to the AFK etf?

[J.C. Parets]

Clearly you were under underexposed to the Africa mean reversion here. At the end of the day, there's a big world out there outside of Long island. Right? So let's go through it. Ready? Are you ready, John? All right, let's go. Ready? This is the Global 100 ETF. All time highs, German DAX. All time highs, German DAx. I would say after the United States, I would put it Germany number two. All time highs in Germany. Let's go, let's roll. Euro Stoxx 600. This is the S&P 1500 of Europe. This includes the small caps, mid caps, large caps, all time highs. And then we can just keep rolling. Euro stocks 50. This is the DOW of Europe. This is the top 50. Pushing up against new all Time highs. This is European banks pushing up against new all time highs.

[Michael Batnik]

So good.

[J.C. Parets]

I mean, you know, France, not the best but not bad. The CAC pushing up against new all time highs. And then things get better from there. JB bringing out London as the first chart. Didn't see it coming. Didn't see it coming. Love you London. Footsie 100 all time highs. 350. This is the broader look at the UK. This is the 350 over in London also making new all time highs. And then just keep going. Oslo, new all time highs. Stockholm 30 index Like France, not the best but still above the prior cycle highs looks great. And then we could just roll through all of these. Poland continues to make new all time highs. Amsterdam, new all time highs. Over in the Netherlands. Italy, 17 year highs.

[Michael Batnik]

Almost there.

[J.C. Parets]

Look the Milano Indici Borsa.

[Michael Batnik]

I can't believe it.

[J.C. Parets]

Portugal, highest level since 2011. We can keep going. Brussels, new all time highs. And the bell 20. Ireland. Shout out. Ireland, new all time highs for the Ireland stock exchange.

[Michael Batnik]

Look at that.

[J.C. Parets]

Austria, 17 year highs over in the Vienna index. Shout out to Prague. New all time highs in Prague finally getting above those great financial crisis highs. Spain, the highest level since a great financial crisis.

[Michael Batnik]

This one will double top. I could see it, you know.

[J.C. Parets]

Shout out to Spain. All right, and then Greece, new decade plus highs. And then we could just continue to keep going. Tel Aviv. Shout out. Israel not only outperformed America last year, outperformed America once again this year. You hear nothing but terrible things about Israel stock market. All it does is make new all time highs. Johannesburg, shout out. Africa again. So many Africa shout outs today. New all time highs for the Johannesburg stock exchange. India pushing up against new all time highs. This is the nifty 50 then if you look at the bank Nifty, these are Indian banks. So you got the European banks, you got the financials in America and you got India doing the exact same thing. China hitting new multi year highs. The short interest in China off the charts. It keeps ripping and they keep shorting more and I love to see it. Japan finally exceeding those 1989 highs.

[Josh Brown]

So much memory.

[Michael Batnik]

This is crazy.

[Josh Brown]

So much memory.

[Michael Batnik]

This is crazy. Like this. This is the most epic of all the country charts I think.

[J.C. Parets]

Really?

[Michael Batnik]

Yeah. Cause it's a bear market. It's a bear market breakout like 38 years in the making. It's extraordinary.

[J.C. Parets]

I love Japan so much. Makes me so happy. Shout out to Japan.

[Michael Batnik]

So Those buyers from 1989, they're almost break even here.

[J.C. Parets]

They're break even now for sure. And then so when you look at it in various currencies, this is Japan priced in yen, making all time highs. But if you price Japan in the dollar, which is the next chart, what are you going to see? You're going to see all time highs as well. So it's not the yen, it's not the dollar, it's Japanese stocks. It's the stocks. Right, so we'll finish up here, Singapore, new all time highs. Australia, new all time highs. Brazil, and we'll finish up in Latin America. Brazil, Bovespa, new all time highs. This is all priced in local currency. Chile, new all time highs. Mexico, new all time highs. And then of course Peru, the Bolsa de valores de Lima. In conclusion, new all time highs.

[Michael Batnik]

So sell.

[J.C. Parets]

Listen, we did the same thing a year and a half ago.

[Michael Batnik]

Which way is the trial? I need Venus, Neptune and Jupiter to confirm what we're seeing here on Earth.

[J.C. Parets]

Listen, if they had a stock exchange, it would be on this.

[Michael Batnik]

It would probably be. All right, round of applause for JC and really for investors around the world. What could derail this? Maybe like a 10% rip in the dollar would definitely derail this.

[J.C. Parets]

Can you throw up the dollar chart? As a matter of fact, yes. Yes, that is exactly right.

[Michael Batnik]

If you're like, all right, this all looks amazing, but what happens if this is the if? Yeah.

[J.C. Parets]

Yep.

[Michael Batnik]

Okay. What if this is a false breakdown?

[J.C. Parets]

Yep.

[Michael Batnik]

Okay.

[J.C. Parets]

Yep. And then, you know, we were talking about at the beginning of the year how the big, you know, heads up as the dollar could be about to collapse. Boy did it. Part of the reason why I thought that was going to happen was where sentiment was. Commercial hedgers were super short the dollar. The dumb money, the speculators, the ones that are short, Bitcoin here, they were long the dollar coming into the year. They got smoked, right. And now it's the opposite. The hedges are actually net long. The dollar right now. And then the Economist magazine in the fourth quarter last year, Remember the water, Benjamin, shooting up in the air like a rocket ship. Remember that?

[Michael Batnik]

Now it's like George Washington on a stretcher. Like that's like the news.

[J.C. Parets]

Oh no, it's like a ghost face and it says the dollar crisis unfolding.

[Josh Brown]

Actually JC in perfect. If you were to have some charts that would invert it like Grant Hawk, which does a lot of stuff. The risk on, risk off ratio in sectors that trend. If you had to guess, there is one sector today that was red. The market just closed. There's one sector that was red today. It just made a new cycle low relative to the s and P500 which what's the sector stables. Close.

[Michael Batnik]

Healthcare, Healthcare, health care down, down a.

[Josh Brown]

Buck ten today percentage wise every other sector is green.

[Michael Batnik]

So that's a great segue. Let me show you another awful chart I made. I want to pitch you what I think is the biggest contrarian call right now. I'm not saying it's going to work, I'm just saying if I were a dyed in the wool contrarian this is the only thing I'd be buying and maybe it will work. Here is the ibb which is the large cap biotech index. It's a little bit concentrated into the top 10 names versus the S&P 510 years. So over the last 10 years you did 249.1% total return of the S&P. You did 1.7% not annually, period. 1.7% in biotech. This is literally the worst place you could have been as a sec, as like a, I guess part of healthcare but like as a big industry group. This is as bad as it gets. But it looks like this downtrend could be maybe, maybe, maybe this is xbi. So let's put up. So XBI is equal weight. So there's more tickers in this one. It's a little bit, got a little bit of a small cap bent. I don't know, I'm not saying it's an uptrend, I'm just saying is it breaking the downtrend of the last year? Sort of a little bit.

[J.C. Parets]

I gotta tell you, this is one of those scenarios where I think everybody's wrong. The short interest right now in the XBI is as high as it's been in years. Yeah, I mean you want to talk about short sellers overstaying their welcome. Not only are they incredibly short, the Biotechs, they're new 52 week highs and short interest in the Russell 2000. Now so when you think about what's in the Russell 2000, what's in it? You got a ton of biotechs. 250 biotech.

[Michael Batnik]

I'm going to ask you like when rates come down do people think biotech is not going to rally? Because I know it will. It always does that people buy small cap piece of shit biotech stocks when interest rates are coming down, period. I don't have a reason for why it makes sense for them to do that. I'm just saying they do it.

[J.C. Parets]

But interest rates have been going up or sideways, not going down.

[Michael Batnik]

All right. This is Ari Walt.

[J.C. Parets]

But then hold on. The other thing I was going to tell you is that it's top down. Short interest in the smalls and then what's in the smalls? Regional banks and biotechs. Short interest is off the charts in both.

[Michael Batnik]

Yeah.

[J.C. Parets]

So it's a short interest. The Russell 2000, the buzz and then to, to quote macro charts. Give macro charts a follow. Great follow. And he says that never in history have we had a major top in the market with this much short interest in the Russell 2000. You're seeing it in the ETF and the futures market.

[Michael Batnik]

So that's got to get unwound first.

[J.C. Parets]

In other words, nothing has to happen. But like you could place your bets historically. So I'm with you.

[Michael Batnik]

All right, let me show you. This is Ari, friend of ours, Ari Walt from Oppenheimer. He's basically saying this is the final piece to unlock the broader breadth that people want to see. And he's saying XBI above $89 would support broader 200 day participation. Like this is the last big piece of the market that just has had no benefit whatsoever. And then let me show you a second chart real quick revisiting biotech's lost decades trade. It's crazy but like to have zero progress for this whole area of the market for such a long period of time. And he's showing the 10 year US treasury yield versus up against the S&P biotech versus the S&P 500. That's a pretty neat correlation there.

[J.C. Parets]

That's what you were just saying, right?

[Michael Batnik]

Yeah, it's pretty incredible. These stocks are just. Huh.

[Josh Brown]

That is good stuff.

[Michael Batnik]

That's good.

[Josh Brown]

Yeah.

[J.C. Parets]

But to your point, everybody already agrees that they're dead and they suck and they think they're going lower.

[Michael Batnik]

I agree.

[J.C. Parets]

And this particularly the biotechs is part of the ARK short. The Cathie Wood short. I mean I don't know if you know this, but she's repping highest short interest ever in Ark on Ark.

[Michael Batnik]

Let me show you two charts that.

[J.C. Parets]

Don'T look like biotech is Arky.

[Michael Batnik]

You know which of the, which of these, if either would you buy? Here's Amdalam pharmaceuticals is the 5th largest holding in IBB. Believe it or not. Alny. Not a name a lot of people know. This is on my best stocks in the market list. This looks pretty good to me.

[Josh Brown]

Looks very good.

[Michael Batnik]

Okay, Gilead, everyone knows this name. Oh my God.

[Josh Brown]

Haven't heard of that.

[Michael Batnik]

This stock has done nothing for 15 years and then all of a sudden near the 52 week high list. Multi year high, I should say. These are the only two of the top 10 IBB names that looks like it has any semblance of life to them.

[Josh Brown]

Remember Regeneron?

[J.C. Parets]

What's up with these?

[Michael Batnik]

Regeneron looks worse than ever.

[J.C. Parets]

What's up with these arithmetic? Scale charts?

[Michael Batnik]

Yeah, it's high roll Tyrol. I don't have that. I don't have that much time. Anyway, I thought it was interesting that you would think in a bull market there'd be some big biotechs doing really well. Maybe there are some small ones that are bucking the trend, but overall nobody cares.

[J.C. Parets]

Well, I think that, I think you're right in what you just said is that, you know, the overall biotech, you know, the problem with biotechs is that they're all so little and you know, they're all, you know, there's very few big biotech stocks. They always get bought out by the big ones. Right. If you look at, if you sort by like biotechs between 10 and 30 billion in market cap, there's like five of them, right. There's like none. So they're all super little.

[Michael Batnik]

You have like the amgens of the world, they're just not working.

[J.C. Parets]

Well, I think that it's on a case by case basis. In that group. It's hard to buy a basket, particularly the XBI because there's so many different things going on. But I think it comes back to what Ari was saying. Want to give a shout out to Ari Wald? I don't read anybody's work. Like I don't, I don't have time to worry about what other people think. Ari's one of the people that I read very few. So shout out to Ari and I think that when he's talking about the market breadth, think about just how many biotechs there are. There's a zillion of them. Yeah, there's like 250 in the Russell 2000. There's so many. So when you talk about market breadth, like this is a big group because there's so many of them by the way, regional banks also, dude, if you.

[Michael Batnik]

Did a, if you did a biotech chart of the week, it would be hot.

[J.C. Parets]

A biotech chart of the week.

[Michael Batnik]

People really love that shit.

[J.C. Parets]

All right.

[Michael Batnik]

They really do.

[J.C. Parets]

Done.

[Michael Batnik]

Try to find one that's going up. Let's skip ahead. We're going to do Fav Mag 7 for the second half. The reason why this is relevant is these are the stocks that everyone owns or if they don't own them, they're following them and they might want to buy one. So these are like the mega cap tech names. I don't think they'll outperform per se. I got tons of stocks that I own that are doing way better than my Mag 7 stocks. But I'd just be curious to hear what you think is the best technical setup amongst those seven names for let's say now into year end. What are you looking at?

[J.C. Parets]

And so what are the seven?

[Michael Batnik]

Right. Tesla, Microsoft, Apple, Google, Amazon, Alphabet. Amazon, Nvidia.

[J.C. Parets]

Not Broadcom?

[Michael Batnik]

No, not in it. Taiwanese?

[J.C. Parets]

Taiwan? Semi.

[Michael Batnik]

No, no, no. Broadcom, Taiwanese, sort of. Not really.

[J.C. Parets]

Is it?

[Michael Batnik]

No, it's not, it's not, it's not in it. It could. It might as well be America. No, no, it might as well be at this point.

[J.C. Parets]

Really.

[Josh Brown]

Okay, do you want me to go? What you think?

[J.C. Parets]

Well, go ahead.

[Michael Batnik]

All right, wait, you know, you know which one JC will?

[Josh Brown]

No, I'm gonna give my answer. JC okay, okay, okay, okay. All right. So this is a bit contrarian and I've been talking a lot of smack about the company, not the stock, although the stock too. I think Apple, if it breaks here, this is Apple relative to spy. That is multi year support. If it breaks us, which is very well might not, game over. Obviously it's four trillion. It's three and a half trill or three trill, whatever it is, but I don't think it's gonna break. Oh shit, my bad. I don't think it's gonna break. I think it's gonna hold and Apple is gonna catch up. There is so much negativity in the stock.

[Michael Batnik]

Any sort of the same thing about Alphabet right now?

[Josh Brown]

No, no, no, no, no, no. Google's working. Google's working. It just closed at a multi month high. Yeah, there's so much negativity around Apple. If they do anything in AI, the stock's going to rip. And that's my answer.

[J.C. Parets]

And then why do we have to buy the American ones? Why can't we buy the Apple China question? With the Apple of China, the Tesla of China, the Amazon of China?

[Michael Batnik]

We can, but not for the. Not for these purposes. Not for the purposes of this exercise.

[J.C. Parets]

Got it. So we have to see the stocks.

[Michael Batnik]

That our listeners shall meet. These are the stocks that our listeners are involved with. They're either in them or they're out of them. Might get back in.

[J.C. Parets]

The one that I would buy right now that I think goes the highest over what period?

[Josh Brown]

Rest of the year, I don't know.

[Michael Batnik]

Year end arbitrarily. Second half of the year, probably Tesla. Tesla is down the most of the group, negative 20% on the year. Definitely the most controversial. Probably the one that's other than Nvidia, the most exciting one is going up. Okay. Do you like the setup here?

[J.C. Parets]

Yeah. I mean, listen, we've been in it. As soon as that guy from Minnesota, what's his face was like dancing on stage, like talking about like, you know, what's the guy? Waltz. Waltz. Tim. Timmy Tim Waltz. He was like, this is the guy. He walks around talking about how broke he is and how he doesn't own any stocks. And then he's on stage at a rally talking about like how it helps him get through his day to watch like Tesla stock fall. Like, if you're not buying.

[Michael Batnik]

Did he say that?

[J.C. Parets]

Yeah.

[Michael Batnik]

Pre or post election.

[J.C. Parets]

Tesla's up like 50% since then. No, it was a few months ago.

[Michael Batnik]

Oh, boy.

[J.C. Parets]

Oh, yeah. Huge winner. Oh, yeah, yeah, yeah. Best trade of the year. And I think that I'm not just making fun of the of him, but that was like, you know, the same week I got a phone call from a friend of mine telling me that they were getting off Twitter because they didn't like the CEO. I was like, we gotta be close.

[Michael Batnik]

There are people, probably a million people who wake up in the morning and pray for Tesla's stock to fall.

[Josh Brown]

Sounds like a fun life.

[Michael Batnik]

Yeah.

[J.C. Parets]

So if that's the case, how are we not buying Tesla?

[Michael Batnik]

Let me show you. Let me show you. Amazon Golden Cross. 240 Resistance. Heading back. Heading back to this level after about six months of consolidation. Here's Jeff DeGraff version. Better than mine.

[J.C. Parets]

Shout out Jeff DeGraph.

[Michael Batnik]

By the way, Jeff says this is the most notable of the of the mega cap stocks. And he's also pointing out the golden cross. But he's also pointing out relative performance to the whole Russell one.

[Josh Brown]

Dad, looks like it's going to break out.

[Michael Batnik]

What if I told you this and not quite, not nowhere near really being overbought in such a way that you'd be worried about it, even though it's been ripping the last couple of weeks. I think this is the one I want to get out to Jeff DeGraff.

[J.C. Parets]

Big shout out to Jeff DeGraff. Jeff DeGraff.

[Michael Batnik]

JC Can I do one more chart on this?

[J.C. Parets]

Yeah.

[Michael Batnik]

These are fundamentals. You won't care about this, Michael. My. This is Amazon price. Lowest PE ratio ever. 36. Not that that's cheap, but cheap for Amazon. And you could Say the growth rate is low. Okay, fine, I'll give you that. It's not as high as it used to be. Look at earnings per share hockey sticking. This is just trailing 12 months, nothing fancy. So basically you've got earnings starting to explode because of all the cost cutting. You've got the lowest PE multiple ever you've been able to buy Amazon at. And you've got a stock and a golden cross about the challenge. All time highs set six months ago. I sort of like that setup for the end of the year.

[J.C. Parets]

I just read Barry's book and he says the valuations don't matter.

[Michael Batnik]

Oh, well, in that case, forget that. Forget that.

[J.C. Parets]

Hold on. But I did want to get back to the Jeff DeGraff chart.

[Michael Batnik]

All right, Put that.

[J.C. Parets]

So many Barry shout outs, by the way.

[Michael Batnik]

Yeah.

[J.C. Parets]

So what if I told you he.

[Michael Batnik]

Doesn'T listen to the show that often? Perfect, we'll send it to him.

[J.C. Parets]

That book. So what if I told you that one of the biggest reasons why I like Tesla to continue higher is because I'm bullish? Amazon. Right, Go on. Because Amazon represents 22% of the consumer discretionary sector, which, by the way, in the conversation of the most important sectors we didn't discuss, but is in the conversation, obviously. So consumer discretionary. 22%. Amazon should probably be more. Amazon's in my house every day. And when it's not like the guy knocks on the door like, everything okay. Right.

[Michael Batnik]

You didn't order anything.

[Josh Brown]

Just.

[Michael Batnik]

This is a. This is a wellness check, dude.

[J.C. Parets]

My wife. My wife orders things on Amazon on the way to ordering things on Amazon.

[Michael Batnik]

So my wife orders things and as she presses by, she's telling me she has to return it.

[J.C. Parets]

Mine doesn't return anything.

[Michael Batnik]

Okay, all right.

[J.C. Parets]

Maybe they should share notes. So Tesla is like 18% of the consumer discretionary sector. So if this bull market's got legs, which I don't know if I didn't make that clear, I think it does. Right. Then are we going to have another major leg to this bull market and these shorts are going to. Their heads are going to be exploding even more over the next six months. Is that going to happen? With consumer discretionary stocks falling? Probably not. Right. So if you reverse engineer what the next leg of a bull market looks like, Amazon is certainly part of that as a consumer discretionary stock, the leader in the space. Is that going to move with Tesla falling? I don't think so.

[Michael Batnik]

I mean, it could. I mean, it could, but is that.

[J.C. Parets]

The bet that you want to make? I probably do not so. When I see sentiment and the Minnesota guy dancing on stage, and I see, you know, everybody hating Elon, for better or worse, I don't. I've never met the guy. I don't know anything about him, but people are very upset with whatever it is that he's doing or not doing. I don't even know. But I like it. The angrier the better, right? And I think that not only, correct me if I'm wrong, not only is he pissing off the liberals, he's pissing off the Republicans too. So that's even better, right? Getting both sides. So I think that that creates a further squeeze. And by the way, with Ark as the. Having the largest short exposure ever, the highest short interest ever in ark, Tesla is in that. It's not. It doesn't have super high short exposure, but Tesla is an arc stock.

[Josh Brown]

It's going vertical.

[J.C. Parets]

Poster child. So you got Palantir.

[Michael Batnik]

It's part of that. Part of that universe.

[J.C. Parets]

John, can you Show get the Charts.com? i know there's people that always ask for the charts. If you want the charts today, Spencer Israel set it up. Thank you, Spencer.

[Michael Batnik]

Shout out to Spencer.

[J.C. Parets]

Shout out to Pete Campbell. Get the charts dot com. I know a lot of people always ask, go ahead and get the charts.

[Michael Batnik]

All right. Hit my applause. All right. J.C. peratts, ladies and gentlemen. So we always end the show these days by asking people what they're most excited about in the future, what they're looking forward to. Could be anything personal, something you're doing with business trip you have planned. You tell us. What are you looking forward to?

[J.C. Parets]

Just bought a house up in the Poconos on a lake.

[Michael Batnik]

Okay. Oh, not Jersey Shore.

[J.C. Parets]

Not Jersey Shore.

[Michael Batnik]

Okay. Why?

[J.C. Parets]

Because I could use it the rest of the year.

[Michael Batnik]

Okay.

[J.C. Parets]

You know, so, you know, we might get a shore house eventually, but like to use it for three months. Like, I think it's probably a better life investment.

[Josh Brown]

We could do Airbnb.

[J.C. Parets]

I mean, we rented a house for six weeks earlier this summer. I mean, this tan, I don't have this tan all year round, you know, so, like, we could do that.

[Michael Batnik]

But to have a house, Poconos, you.

[J.C. Parets]

Could always go the fall, I'm an hour away. So the fall, the winter, the spring, you know, even the summer is nice. Even though I'd rather be at the beach in the summer.

[Michael Batnik]

Oh, we love it. What do you. What are you looking forward to?

[Josh Brown]

I am looking forward to hikes with Phil Pearlman. I'm looking forward to tonight. I love being with my friends. And I love you, JC And I love you, Phil, even more than I.

[Michael Batnik]

Like JC where are you guys going?

[J.C. Parets]

Phil's definitely more lovable.

[Michael Batnik]

So this is not going to air till tomorrow. Where are you going?

[Josh Brown]

We are going. Where are we going? Dams.

[J.C. Parets]

Well, we. Oh, yeah. We're not doxing ourselves. No, you're not doxing doxing yourselves. Math nerds all over the place will come looking for Michael Van.

[Josh Brown]

Dozens of them.

[J.C. Parets]

We're going to Dom's Bogan. Oh, so this is Korean. Korean barbecue joint. Shout out to Sam Rowe. Who's got me hooked on this. Shout out to Sam.

[Michael Batnik]

All right, I'm sorry I can't join you guys.

[Josh Brown]

So this is what life is all about, right? Being with friends. So that's what I'm looking forward to.

[Michael Batnik]

I agree. All right. We have a. We have a cake on the table for the 200th episode. We take. Want to take pictures? Okay. All right. We have a lot of special guests in the studio today.

[Josh Brown]

What's with the significance of the rocks? What is that? Well, Josh is like. You're a theme guy, so I had.

[Michael Batnik]

Nothing to do with the cake. The cake's beautiful, though. You know what it looks like? Doesn't it look like those paper plates? Yes, it does, right? Arizona. Yeah. Yeah, yeah, yeah. All right. Are we. They nailed it. Are we lighting this, or is this symbolic? Yeah, right. Oh, okay. No one. We're not gonna light it at all. Blow it out. Is that only for. It's her birthday. I don't have a. I don't have a light.

[Josh Brown]

We could skip that.

[Michael Batnik]

This was 25 years ago. I would, like.

[Josh Brown]

What are you looking forward to?

[Michael Batnik]

I'm taking my kid to a Broadway show. I don't know if I mentioned it, so I would be with you guys at dinner, obviously. These tickets report bought a long, long time ago. Rob. Heathers. Where is that in the pantheon of 80s movies, top half, it's Winona Ryder. So instantly that elevates it.

[Josh Brown]

Is that Columbus? Who did that?

[Michael Batnik]

Who made Heathers? It's super dark. It would not have been Columbus. They're murderers. They're in high school, and they're killing their classmates. So I don't know. I don't know who the. Anyway, and we're going to Santi. You know Michael White. Chef Michael White. Yeah. Santi is his new place. I've never been. Cool.

[Josh Brown]

How many names.

[Michael Batnik]

He's a little bit. All right. All right. Anyway, we're gonna. We're gonna wrap up so I can go eat dinner. Guys, I want to just thank everyone out there in Spotify land, Apple, podcasts. Come on, hit my applause button. YouTube, social media, Instagram. All right, response. I don't care where you watch the show, where you listen to the show, whatever works best for you. We love you. Thank you so much for watching. Thank you to our amazing guests all these years. J.C. peretz, thank you so much for being a regular here on the show. Thank you, guys, to the crew, to the fans. We love you so much. We appreciate you. And as I've said before, we will be here forever. We are never leaving. I hope that's dawning on people. We will be here forever. Thank you. We'll see you on the 400th episode. We appreciate you.

[J.C. Parets]

All right, 400.

[Michael Batnik]

All right. And that's a wrap.