← The Compound and Friends
The Compound and Friends
Google Pops, Belief in the American Dream Drops, Regional Bank Stocks Rally Ahead of Rate Cuts
01:05:45
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- [00:00]
A
Ladies and gentlemen, welcome to the Compound and Friends. Tonight's show is brought to you by msci. More on MSCI in just a moment. Tonight's show is also brought to you by Rocket Money. With prices going up on just about everything lately, dealing with money can be stressful. Trying to manage subscriptions, track spending and cut costs can feel overwhelming. Luckily, Rocket Money can relieve some of that stress and help you feel confident in the financial decisions you make. Rocket Money is a personal finance app that helps find and cancel your unwanted subscriptions, monitors your spending, and helps lower your bills so you can grow your savings. Rocket Money shows you all your expenses in one place, including subscriptions you forgot about. If you see a subscription you no longer want, Rocket Money will help you cancel it. Their 5 million members have saved a total of $500 million in canceled subscriptions, with members saving up to $740 a year with when they use all of the app's premium features. Cancel your unwanted subscriptions and reach your financial goals faster with Rocket Money. Go to rocket money.com/compound today. That's rocket money.com/compound all right, we have a huge show. It's what are your thoughts with Michael Batnik and myself. There was some after hour news breaking on Google. This Alphabet literally launched on news that they will not have to sell or spin off the Chrome browser. If you recall last summer that ruling went against them and that was a worst case scenario. Worst case scenario appears to be off the table. We take a look at the rally that we've seen in junk stocks this summer. We take a look at some of the superlatives from the overall market rally and we look into why we are seeing record levels of pessimism people are expressing to surveys about their own financial situations. Also, some ideas for investing as rates fall and some recent rallies in stocks that we haven't talked about in a long time. So I think you're gonna love the show. I'm so glad that you're here. I'll send you over now. Welcome to the Compound and friends. All opinions expressed by Josh Brown, Michael Batnik and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. All right, Good afternoon Gangsters. Gangsterrettes. Good to see everybody in the chat want to introduce the show properly. My name is Downtown Josh Brown here with my Co host as always, Michael Batnik. Say hello to the folks.
- [03:12]
B
Hello. Hello, folks.
- [03:14]
A
For those of you who are tuning in for the first time, and I know we had an influx of new followers, new subscribers. Let me set this up on. What are your thoughts? Michael and I go through the biggest stories happening in the markets, in the economy this week, and we don't really talk as often as you guys might think. All day long, every day. So I want to hear Michael's thoughts. I assume he wants to hear mine. We have a live audience here on YouTube in the. In the live chat for the taping. Want to say hello to some folks? Let's see who we got here. I got Jay one time in the chat. Ladies and gentlemen, Jay Luther is back. Jason Chen is back. He said, why Google jump after hours? Jason, Very simple. We're gonna get into it in a few minutes. We're gonna have all the information that you need. Who else? 4am Pizza. Are you ready to get pounded? I woke up ready. My friend Drew Hickman is here. Brian Grill is back. Cliff is here. Magnus, Roger, all the regulars are back. And some new faces, too. Good to see you guys. Tonight's show is brought to you by msci. Michael, new sponsor alert.
- [04:29]
B
Yeah. You look surprised.
- [04:31]
A
I am. Very exciting. Love, msci. Why don't you take us through this?
- [04:35]
B
All right. Many of us have a little home country bias. We tend to invest close to home. Actually, we're talking about that later in the show. But you may have noticed right now some of the strongest growth stories are unfolding far from Wall Street. Markets outside the US have been gaining ground. In fact, a look at MSCI indexes show that certain international markets, from developed Europe to fast growing emerging economies, have been outperforming the US this year. That's right. Outperforming non US equities outpace US equities by one of the widest margins in years. It's a reminder that opportunity isn't always in your own backyard. Wealth managers can see these trends emerge through MSCI's ex US indexes. Is it time to rethink our U. S. Focused diversification strategy?
- [05:14]
A
Visit msci.com index indexes. All right, shout out to the good folks at msci. I want to just start with this idea of a junk rally because I sort of think it's coming to an end already. But Adam Parker, our friend Adam Parker at Trivariat did a really good piece of research over the weekend. And the gist of it was. I'm paraphrasing him, but like if you're frustrated that, that you're trailing the market since, since April, but all year you're not alone because very few institutions own the types of stocks that, that are in the lead performance wise. It's this really weird period of time where since the liberation day low. Yes, we've had rallies in the S and P. Yes, we've had rallies in the NASDAQ and in the mega caps. But this rally that's taking place in low quality stocks is one for the ages. It is, according to Adam, the biggest junk stock rally ever after outside of the recovery from a crisis. And I want to just walk you guys through what Adam had to say. And Michael, I'd love to hear what your thoughts are along the way. Basically, Trevariot tags stocks at the end of each month and puts them into one of four quality buckets. High, mid, low and then junk. And the factors that are determining which bucket they are classifying stocks into fact. Things like the level like the price, the volatility of roe, the distance to default, the free cash flow generation, the amount of short interest turnover of the share base. These are the types of signals that would tell you whether or not a stock is high quality or junk. He makes the point that outperformance from active management has been pretty impossible this year because of the very lowest quality stocks in both the growth bucket and the value bucket. Running away with the football. So negative cash flow companies. We've talked about the evtol companies like Joby as of for instance. He's talking about low operating margin, highly indebted companies like the meme stocks, heavily shorted stocks. There are no. Michael, you'd agree with this. There are no active managers, at least that we know of, that advertise their style as we buy the biggest pieces.
- [07:43]
B
Of shit and hold them forever.
- [07:45]
A
Yeah, and we overweight money losing companies systematically. Nobody would ever run an ad saying that that's the way they, that's the way they allocate, which is why institutions are so underrepresented in this area of the market. So Adam makes a couple of points here. The first is don't get too upset because over the extremely long term, quality does beat junk. Let's put up the first chart. So believe it or not, that big heavy black line in the lead, and this goes back 25 years to 1999, is high quality value followed by high quality growth, junk quality value. It's very confusing. But if I say junk quality growth is, is literally the worst of all of the buckets that you could find yourself in and just not this past couple of months. Here's a table showing these are some of the historic junk rallies. And the first thing that should jump out at you in those top years, they all seem to coincide with major bottoms for the stock market or major turning points at least. So you see Covid in there, you see March of 2009, there's a bunch around Covid. And then the question becomes, is this the kind of thing that you should try to chase or should you just let it happen without you and stick to if you're a quality investor, are you better off just sticking to that? Michael, what are your thoughts?
- [09:27]
B
Are you. No, but. No, dude, do not chase junk rallies. Come on.
- [09:31]
A
But what if I need performance? What if I need to outperform?
- [09:35]
B
Well, active managers, not chasing the junk. But you. Yeah, you said a lot. I just want to address one thing.
- [09:40]
A
Yeah.
- [09:40]
B
I'm in my comp tables at Y charts and I'm looking at you mentioned like, oh, the junk rally makes it hard for managers to outperform. But actually I haven't looked on this exercise in a while. I'm looking at the S P500 members with their year to day return. And I'm sorting from high to low. And I'm looking. And this the top of this list, Josh looks nothing like years past in a good way. So we've got Palantir leading the charge. Then Newmont. We've got Seagate. Next, ge, Vernova, Western Digital, CVS Health, GE Aerospace, Energy Energy Helmet, Royal Caribbean, Amphenol Tapestry. I'm scrolling, I'm scrolling on what I, what I don't see here.
- [10:22]
A
There might be a few junk names in there, but not a lot.
- [10:25]
B
But here's what I don't see. But these, but these junk names are not in the S and P. Not almost by definition, but a lot of these ones aren't. What I don't see. I'm scrolling, I'm scrolling, I'm scrolling. Not even in the top. I would have to. Not even the top 75 or any of the Mag 7 names. So this is the year out of the last five years where if you were ever going to outperform, Nvidia's up 29%, but that's like way down the list.
- [10:50]
A
I think I'm conflating time timetables. It's really about the rally off the April lows. Yeah, that's. I think that's like the real standout where it's like, wait, I understand all these stocks just doubled these are the worst stocks in the market. And it happened anyway.
- [11:05]
B
All right, so two more thoughts. Number one, just because we just experienced a very strong junk rally does not invalidate the total rally because what you also saw alongside that was exact what you wanted to see with a healthy bull market. Financials technology, the leaders. Deleted. We're going to get to the next topic but I had chart kid create since the bottom to the top the most shorted stocks. So this is from Goldman. This is Goldman's most shorted index. And if you go back to 2010, the only other time you saw a piece of shit rally like this and listen, the most shorted stocks, no offense, these are not good companies. Okay?
- [11:43]
A
No, these are by definition there's, these are all problematic.
- [11:46]
B
They're all dogs. The most doesn't mean they can't have sick rallies as you just as we just witnessed. But you have to outside of 2021, we've never seen anything like this before. So yeah, it's been a junky junk rally alongside a broadening healthy rally.
- [11:59]
A
Yeah, it's, it's been wild. So let's go to the next chart. So just like I'm. You can see the whole time frame here but just pay attention from the April lows and what you see is junk quality growth just launching. I mean far outpacing everything in the market which again over the long term this is the worst bucket. I gotta say this names that's why it's so jarring. Usually this works in reverse for investors. So let's go next. This is the cumulative performance positive versus negative free cash flow stocks through I guess through the end of July. The black is positive free cash flow. It crushes negative free cash flow.
- [12:49]
B
Yeah. Over, don't, don't earn businesses that are losing money. Very controversial.
- [12:54]
A
But again here's the short term. Adam says next chart. But again consistent with margins and quality buying companies that burn cash has been better than buying those that generate cash off the market lows. And you can see it as as clear as day here. Negative free cash flow is far and far and away over the last year in the lead. Mostly because of what happened in the last few months. Last thing from Adam, he thinks it's over or almost over. So this is how he concludes. Our judgment is that the junk rally we have been in is close to ending. Either the market retreats on a tariff induced growth scare and junk relatively lags or the high quality businesses catch a bid and relatively catch up as their fundamentals remain intact. We think either way it's hard to see a sustained continuation of the junk rally beyond something akin to a short term rally fueled by a September interest rate cut. I sort of think he's right just because I'm seeing so many high quality companies get racing right back to their. To their old highs and starting to take the steering wheel. I think the junk rally was fun for the summer, but I think people get serious again in the fall. What are your thoughts?
- [14:11]
B
Yeah, I really want to know what's. What names are we talking about here.
- [14:15]
A
In his junk basket?
- [14:16]
B
Yeah.
- [14:17]
A
Well, I'm going to, I'm going to go out on a limb and I'm going to guess it's a lot of like sound hounds and like speculative AI maybe like gene editing, probably the EVTOLs that I mentioned, some robotic stuff. It's again, it's not. Oh, they're talking about open in the chat. Yeah, of course Open is going to be in the. In the junk bucket.
- [14:41]
B
I didn't realize Joby just had a monster retracement.
- [14:44]
A
Yeah. Yeah. So Adam thinks it's coming to an end. I wouldn't be shocked by that.
- [14:49]
B
Not me either.
- [14:50]
A
So. All right, you're up.
- [14:53]
B
Okay. So I want to talk. Oh, let's do Google real quick. So this happened about 30 minutes ago from CNBC. A federal judge ruled Tuesday that Google can keep its Chrome browser but will be barred from exclusive contracts and must share search data. Shares are popped 6% in extended trading. U.S. district Judge Amit Mehta ruled against the most severe consequences that were proposed by the US Department of Justice, including selling off its Chrome browser. Okay. The stock is up 6%. I'm very surprised that that was so much of an overhang on the stock. I really didn't think anybody took that seriously. Apparently did. But I want to make a point and I was at this next week. We don't have time to get to it today or in two weeks actually. We're going to be future proof. So I sold Google near The lows at 160 maybe. Whatever. When I. Whenever that was, I remember. It's funny, I almost never have CNBC on during the day. I had it on. I believe you were on the show, but I can't remember exactly. And we were. I said this to you a couple months ago that I didn't really buy the chat. GBT overhang. I thought that Gemini was doing really good things and I thought that Google's user base was so entrenched that I just didn't buy the story, which is why I bought Google in The severe drawdown. And then I held it for I don't know, maybe two weeks and we had the news. I forget who was on the show with you guys, but they had a piece of data that quantitatively showed how much users they were bleeding compared to J GBT. The stock was down 7%. I was down a little bit, maybe even or down a couple percent. I said, you know what, eh, I don't need to wrestle with this. I don't need to get mad to the stock. I just got in two weeks ago. Let me just bail. That was at 160 about 40% ago. Put the chart on please. So I was right and then I got scared. It happens. Holy one of on this bit. This thing has been on. Look at the past. I didn't realize this. This is news to me. Look at the past three years. John, next chart please. That. Did you realize Josh, that Meta was kicking the shit out of Google to this extent?
- [16:52]
A
Yes. And that's. Google is. Is and was at that time that you sold it the lowest multiple of the MAG7 stocks. Way lower than Meta, Microsoft, Apple and cheap. You know, a lot of people said, well it's cheap for a reason. They have this existential crisis that people are skipping Google search and going right for the answer on ChatGPT.
- [17:17]
B
That narrative was obviously wrong.
- [17:19]
A
I don't know if it's going to be wrong long term.
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B
Well, no, no, it was wrong. Maybe not forever, but for now it was wrong.
- [17:25]
A
The news that you were rattled by was they asked Jony, I've at a conference a question about this exact ruling, like how big of a deal it would be. And he made this offhanded remark about how like Google searches are not even like something to the effect of like Google search. Google searches are like falling off iPhone usage. I forget the exact way that he phrased it. A lot of people got nervous about it. I took a profit in this thing close to 200. Obviously at this point I wish I hadn't, but I felt vindicated when it fell and Jimmy Leventhal was sticking to his guns. He's from Google, he wrote out the downturn. I assume he's still in it. But this was the thing that people were most afraid of. They had this anti competitive or allegedly anti competitive deal with Apple where Google paid Apple $50 billion in order to be the default search engine and default browser in the iOS devices.
- [18:28]
B
I thought it was 20, but either way it's a lot of money.
- [18:32]
A
No, it was like 50 dude. I think it was 50 over multiple years. But like companies like DuckDuckGo were arguing like, this is complete bullshit. Like, it's not a fair, it's not a fair playing field if Google is always the default. People thought that the judge was gonna push for a remedy because Google lost, wherein Google was forced to, to sell the Chrome browser. And that's not what happened here. So the worst case scenario is off the table and that's enough for, for a big rally here in the stock. I'm not convinced that there's not going to be cannibalization. I do Google searches still. I get the Gemini summary.
- [19:13]
B
It's good.
- [19:14]
A
Perfect for me. I don't click shit. I know that's costing them somehow. I just, I don't think, I don't think it's big enough where we're like actually seeing the result of that. But like, give it a few quarters. I still think that's the biggest risk for Google is a behavior change. For, for 20 years, people never even thought twice. Anything they were wondering about the answer to, they just went straight to Google.
- [19:41]
B
People still use Yahoo. Like behaviors are entrenched. That's tough.
- [19:44]
A
I don't know. I don't know those people. I believe that you're right because they still come across AOL email addresses. But we're, what we're talking about is like billions of people, not a handful of people, John.
- [19:54]
B
So that last chart up just this is. Blew my face. Google divided by Meta. I didn't realize the extent to which Meta had kicked their ass. Isn't this wild?
- [20:03]
A
Yeah. And by the way, Meta thinks that their AI efforts are going to be a competitive threat to Alphabet, like they all do.
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B
Yeah.
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A
So I'm not convinced. I'm not convinced we've seen the worst of, of this story. But the, the judge, the judge thing, like the remedy thing, this is a clear upside catalyst, obviously, which is why the stock is up so much in the afternoon.
- [20:29]
B
Stock up so much. Okay. All right. So the topic that I had before the Google breaking news, which is now 8%, is that I don't know if you know this, but I've confirmed we're in a bull market. Holy cow. Yeah, no, it's, it's true. So, all right, this chart, I've never seen anything like this before and it might take you a minute to process it and it might take me a minute to explain it. Turn on, please. So what we're looking at, this is from Ned Davis research and it is so good. So we are looking on the Y axis at the percent of Stocks above various moving averages. Okay. Within different areas of the market. So large cap growth is orange. Next is makeup growth, etc. And on the x axis is the moving average days. So focus your eye on the top left quadrant. Okay, Josh, So what this is showing you is that Basically all of 95% of small cap value stocks are above their 10 day moving average.
- [21:29]
A
I believe that.
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B
Okay. And then the dashed line all the way at the end, that's the, that's the 200 day, the dashed line all the way at the end to the right. You see that? The vertical dashed line, that's a 200 day. So small cap growth has the lowest percentage of stocks above their 200 day moving average. It looks like it's about 55. Large cap growth, it looks like it's 78%, give or take. Anyway, this is a beautiful chart. And everything's above the moving averages. It is a broad rally.
- [21:57]
A
Yeah, it's interesting. Wait, what's, what's the, what's the gray?
- [22:02]
B
That's small cap growth.
- [22:03]
A
Small growth. So even after that whole spiel we went through about junk stocks leading the market, like it's, it's, it's still, I guess these stocks had such a far distance to travel to get back to their 200 day that they're still the lowest percent of, you know, of all the groupings to have like a lot of stocks in their category up there.
- [22:27]
B
Yeah.
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A
So it's, it's crazy. I guess that's a function of how, how far below all time highs those stocks started out.
- [22:34]
B
Yeah, they got railroaded. All right, so we spoke earlier in the show, just a second ago when I was naming all of the top performing stocks. These are like not the names that people that I would think are leading the market this year. So duality research, they should be on your, their radar if you're not. If they're not, check out this beauty of a chart. They're showing the average number of daily advancers by calendar year. And 250, that horizontal line, that's break even. Right. There's 500 stocks in the index. 264 stocks on average are advancing on a daily basis in 2025. That's the highest level since 2021. This is a broad rally and the things that are rallying. Josh, before I move on, have any comment here?
- [23:19]
A
No, but it's notable that this is a better quality rally than last year or the year before on this metric.
- [23:26]
B
Yes. So I've been saying that in bull markets. Chart off for a second in bull markets, especially ones that have lasted as long as this and as sharp from the bottom, of course you're going to see nonsense right like that just especially in 2025 that you will never not see nonsense ever again. With Reddit and, and the message boards that will never not exist. The way that people galvanize together to four stocks higher, they will never not happen. But you're also. Don't let it distract you from the quality nature of this rally. Next chart. Is this bullish, Josh? This is the equal weighted version of consumer discretionary names divided by consumer staple names. Decade, multi decade high.
- [24:04]
A
Yeah, just the. My only comment would be look at the end of 2021 how fast that went away into like the high of the year for 2022 for, for the whole stock market was January 1st. And they just relentlessly took it away. So it's a, it's a great representation of what's happening now. I don't think we should hang our hats on it. As though there's any permanence to it. 100% they can rip it away so fat. They could rip it away so fast.
- [24:34]
B
100%. I am saying today we are clearly, clearly cleanable market. And you're 100% right. As quickly as we got here it could be ripped away. This other chart also from Duality Research shows the same thing.
- [24:47]
A
What the is a risk sniffer. That sounds perverted.
- [24:50]
B
It's the what it's so it's showing the same thing that I just did in the light green line which is discretionary divided by stables. But they're also showing you that credit spreads are showing you the same thing. So this is high yield spreads inverted. It's basically just showing that bonds that credit markets are confirming the strength. That's all that show.
- [25:08]
A
I like when the bond markets don't look the polar opposite of a stock market rally. It's got that going for us which is high beta. You risk sniffing. You risk sniffing. Son of a.
- [25:19]
B
That's all day baby. High beta divided by low. Vol also at multi year highs. And you know what's interesting, Josh? I know we're going to talk about this in the next topic. The wide chasm between the labor market slowdown, how people are feeling and how consumer stocks are behaving. XRT is working in a big way. Of course it's not every retailer, Target for example is getting destroyed compared to Walmart and Costco. Anyway. This is really not.
- [25:59]
A
Yeah, I don't, I don't know how the XRT is weighted. I Haven't looked at it in a while. I'm guessing Walmart is, is pretty big. It's equal weighted.
- [26:07]
B
Yeah.
- [26:08]
A
Oh really?
- [26:09]
B
Yeah.
- [26:11]
A
So for me, for me, I just, I always would prefer to look at consumer discretionary as a sector rather than specifically the retailers because it's so messy. Like we just, we don't, we don't necessarily have an economy where most things are purchased as a retail good anymore. Like services are so much more important and I just feel like discretionary folds in travel and leisure and I just, I like, I like it better than looking specifically at the retail.
- [26:41]
B
Okay, fine. So look at, look at RSPD which I just showed you at an all time high and if you divide it by the staples at an all time high. And the reason why we use RSPD as opposed to XLY, XLY is like 40% Amazon and Tesla. So that's, that's useless now. It's a signal.
- [26:54]
A
Yes.
- [26:55]
B
All right, regional banks and the bank index from JC. New 6 months highs, new year to date highs. Not bullish, not bearish. Excuse me.
- [27:05]
A
Yep. We're going to talk about regional banks later in the show. I was talking about them on TV today. I think it's a big story.
- [27:11]
B
All right, almost done. The rally is global in nature. This is from Callum Thomas. The black line is the MSCI acqui x u s and the red line is the percent of countries above their 200 day moving average and it's about as high as it ever gets. And interestingly, Josh, and maybe the sentiment survey is just completely trash and has no meaning. Could be there's still more bears and bulls, at least according to the AI sentiment survey.
- [27:42]
A
Whether you could throw this out.
- [27:46]
B
But the reason why, I think it's interesting in this case, even though there's areas of euphoria, we mentioned the junk rally, there's still a lot of skepticism in the rally. There's still a lot of people that sold it, are pissed off and missed it that are, that are bearish. So maybe this is still a wall of worry yet.
- [28:04]
A
It is and I'm going to agree with you on that because I don't, I don't hear anybody that's like giddy and euphoric. There's a little bit of euphoria about AI, but I think it's more in the private markets, just the willingness to fund things and write huge checks and pay huge valuations. In the stock market we have these one day IPO pops and then these stocks get absolutely slaughtered for the next two weeks. That's not euphoric behavior. Euphoric behavior is like a company comes public, triples on the open day, and then triples again two weeks later. And we really don't have that. And so I just. I don't see the euphoria. I see way more skepticism, way more pessimism. And I'm just talking anecdotally. I don't. I don't have the data to back it up other than what you're showing me here. But that actually squares with what it feels like to actually talk to people.
- [28:58]
B
I agree with you agreeing with me, and I like it. It means that there are still disbelievers, which is what you want.
- [29:03]
A
Lengthens this. It lengthens the cycle. If people stay pessimistic as the market advances, those are future buyers. This cycle lengthens the cycle.
- [29:13]
B
I was about to say something inappropriate. I'm not going to. However, we are coming to a seasonally weak period of the year. Take it for what it's worth, but September. September sucks. Shot on, please. September is the only month, or the second. I guess February doesn't really count. It's flat. September is the only month with a legit negative return since 1950. And if you look at presidential years, the first year of a presidential cycle, it's even worse.
- [29:39]
A
Wait. Time to buy.
- [29:40]
B
Yeah, maybe.
- [29:41]
A
If you're. If you're. If you're an asset accumulator, you should look at that chart and you should say, how could I raise my. My accumulations in the. In the late summer, early fall? Now, I don't think it'll really make a big difference in the long run, but you definitely shouldn't look at that and say, oh, now would be a great time to get out. Unless you're, like, literally getting out forever, which I don't think is our audience on YouTube. I think the pounders are in accumulation mode, and you should get excited. By a month, that, on average is. Is. Is negative. This is the big story at the Wall Street Journal, and I wanted to. I wanted to get into it because I think it's at the heart of some of the pessimism in the stock market, and I think it's at the heart of the pessimism on social media. Just generally speaking, we really do have, like, a little bit of a pessimism crisis on our hands, and I'd love to hear what you think. The Wall Street Journal did a survey at the University of Chicago in the middle of July. 1527 adults respondents completed the survey online, except for 42 who were interviewed by phone. Let's put up this graphic. This is the title. Americans lose faith that hard work leads to economic gains. And I don't remember what the story is with these two guys, but here's. Here's the salient point from the piece. The share of people who say they have a good chance of improving their standard of living fell to 25%. That is a record low. In surveys dating back to 1987, more than three quarters of people said they lack confidence that life for the next generation will be better than their own. 70% of people said they believe the American dream, that if you work hard, you will get ahead. No longer holds true or never did. That's the highest level of pessimism in 15 years of surveys. The minor differences, like Republicans were less pessimistic than Democrats. That's because Republicans hold the White House. That's how it always is. An index that combines six poll questions found that 55% of Republicans and 90% percent of Democrats held a negative view of prospects for themselves and their children. 90% of Democrats. Really? Really. Okay, and let's put this chart up. The question asked is, people like me have a good chance of improving our standard of living. Look at the disagree. 70, over 70% agree is just over 25%. And you can see this going back to 1990. It's pretty bad.
- [32:29]
B
So the disagree part is down, but it's not dramatic. The agree part, that's the holy shit what just happened.
- [32:38]
A
Right? People will not agree with that statement to a huge degree. All right, next one, next one. This is same article, actual versus predicted consumer sentiment. This is crazy.
- [32:52]
B
What happened in 2020. It's like something happened. I can't put my finger.
- [32:55]
A
Yeah, I wonder what that could have been. It's so for me, this is like 80% inflation. What do you think?
- [33:01]
B
All right. I have a couple of reasons why this is happening. Number one, I think surveys are broken. And I think that it's not a crisis of pessimism. I think it's partly manufactured. Now, there are reasons for this. There are absolute reasons for this. But when I say surveys are broken, Ben and I did a rant on this last year where I can't remember who, who, who did the survey. And I'd love to see the questions that they were asking. But there was data, air quotes that were showing that people thought this economy was worse than the bottom during the gfc. Some of the things that people were answering were so far off the reservation that I said, that's it. I'm done. I'm done with service forever. It tells you nothing. It. It does tell you something. Tells you nothing and something. So. So don't take it literal, but take it seriously. All right? Covid broke everything. It broke the economy. It broke how a lot of people live. And it led to, obviously, a surge in inflation, of which the cumulative effects we are still dealing with every day. The prices have not gone down. And that is. That is the number one thing. Okay? That's the number one thing. Number two, all that we hear is that there's a crisis and that people are pissed off. We hear it every day from the news. We hear it from the politicians. All that they talk about, both sides are, the world's going to hell. You can't succeed anymore. The other party. That's all the messages. It's not about uplifting. It's just about blame. This country's going to hell. That's all that you hear. And then, number three, the stock market, and I would say especially the crypto market, being fueled by the Internet and social media, has really shown the spotlight on. If you are not in the asset accumulating class like our viewers are, it feels very much like you're getting left behind, which is true. So I think it's a combination of all of those things. We're never going back. It will never not look like this. Like, for the rest of time, it will never not look like this.
- [35:01]
A
I think Facebook and Twitter are a huge part of the problem.
- [35:03]
B
100%.
- [35:04]
A
Oh, my goodness. Just for fun, spend 15 minutes. If you have an old Facebook account, log back into it. I had to do that the other day to go into this ticket group to get tickets for something. So I went back into Facebook. I mean, it's probably, like, May or something that I'm talking about, but this is after years of not only not posting, just, like, forgetting that it even existed. It's like, baby picture, baby picture, baby picture, Israel, Palestine. Baby picture, baby picture, Israel, Palestine. It's just like that. Just the dumbest people, you know, are the loudest on Facebook, and then the second dumbest people, you know are in there disagreeing with them in their mentions. Okay? Twitter is. I mean, it's just migrants raping people. Like, that's the whole. That's the whole thing is like, racist posts about this race rapes more people than that race, and Europe is falling. And I'm like, what the Is this site?
- [36:10]
B
Social media?
- [36:11]
A
I used to be very active there. I don't even understand. People are so unhappy because of what the algorithm is motivated to show them that they assume their quality of life has to go down.
- [36:23]
B
So social media, they just assume it. It's so bad. And obviously the algorithm, it is designed to keep you on your phone. And nothing keeps people on their phone like out, like being outraged and being fed bad news, not good news that keeps you on your phone.
- [36:37]
A
It's so sick. I couldn't, I couldn't even do like five minutes.
- [36:40]
B
But I also.
- [36:41]
A
Sick.
- [36:42]
B
I also. And I'm not. There are obviously issues in this country, in this world, legitimately, why people are upset, but I kind of reject it. I just don't believe it. I think that there is such a disconnect between the online Internet and the way that people answer surveys versus the way that people are actually in their regular life. I don't believe that people are as upset as these surveys are suggesting. I just dismiss it out of hand.
- [37:07]
A
Oh, I think they are, but they don't have the facts.
- [37:09]
B
I don't believe it.
- [37:10]
A
I think they're upset for other. I think they're upset for other reasons. And they're answering a survey almost like they're venting. I don't think they know what unemployment rate is. I really don't think they have any idea. I don't think they know anything, quite frankly. I think they're pissed off because of what the algorithms are feeding them and what their bills look like, what their credit card bills look like and how much everything costs. And they can't, they just, they can't picture it getting better because quite frankly, right now they're right. It's not, it's not getting better. Prices are not ever going to come down. They might go up slower, but if prices like actually go down on a net basis year over year, we have a way bigger problem.
- [37:51]
B
I just, I just don't believe that people are as unhappy as these polls are suggesting.
- [37:54]
A
All right, let me share this with you. This is also Wall Street Journal. Middle class vibe has shifted from secure to squeezed. The middle class, generally considered to be households making roughly 53,000 to $161,000 a year, is playing an outsized role in that waning optimism. After months of tracking high income earners increasing confidence about the economy, households making between 50 and 100,000 made an abrupt about face in June. They now more closely resemble low income earners. Gloomier views. So in other words, let's put this chart up. Okay. I don't know why they insist on doing three shades of blue. It's sort of ridiculous, but this is meaningful. Look at the people with incomes above 100,000 or what I refer to as stock market Americans. It's up and to the right now. Look at this middle bucket, 50,000 to $100,000. This just collapsed over the summer. And I don't know, maybe it's the, the tariff stuff just started to hit.
- [39:02]
B
So noisy. Why are we day trading the consumer. Consumer sentiment.
- [39:06]
A
All right, and then, and then Obviously income people 50,000 and under never have just had a horrendous post pandemic experience because of high prices. But like, I just think it's, I think it's something to be watched by investors that, that middle class 50 to 100,000 sentiment is now collapsing because, yes, stock market Americans are doing great because they own Costco and Walmart and Apple and all these stocks are at or near highs. But the spending by this middle class cohort is the reason why those stocks have held up so well. And that spending is not guaranteed if that line gets worse than the downside. What do you think?
- [39:51]
B
I don't know, man. I just think it's really noisy. Like what happened in the last 60 days to make that collapse?
- [39:58]
A
Tariffs.
- [39:59]
B
In the last 60 days, people are.
- [40:01]
A
Feeling, well, tariffs happened 120 days ago. And 60 days ago the pricing resulting from those tariffs started to get worse.
- [40:09]
B
I don't, I don't like spending a lot of time on things that I think like negativity I think is manufactured, I really do not say.
- [40:17]
A
But it's also impactful if it persists.
- [40:20]
B
If people change, it's impactful for political reasons, which might be the most important of them all because people vote based on how they feel. But for the stock market, for what we spend time on the show talking about, I don't think it's particularly that important.
- [40:35]
A
I really think that interest rates have to go, have to come down in order to fix it and that it is fixable. I think, I just think the rate that people are paying for mortgages, the rate they're paying on their debt. Look, you can't fix the cost of everything, people's lives. We were talking to Jan Van Eck about electricity costs for the lower class. It's a huge line item in their household budgets. I don't know that you can really fix that. I don't think policy fixes that. It's just an unfortunate fact of life. Deliberately maintaining interest rates as though we're a 5% GDP economy, I think is absolutely absurd, especially when you look at the squeeze that people are feeling. So I understand we're trying to guard against, you know, rising unemployment versus the trade off and not having inflation. I really don't think inflation is the risk here. I think people are crying uncle and they're venting to these surveys because no one else will listen to them. And I don't think it just goes away on its own. And you can cut interest rates by 25 basis points. You're probably not changing the reality for most people, which we'll talk about later in the show. But like man, anything that we can do to ease the pressure on this group of people I think would help for some of that pessimism to dissipate. Right now it might be at, at its fever pitch and I think rates are playing a role in that.
- [42:04]
B
So. Okay, nice segue.
- [42:08]
A
Perhaps to now say something super bullish.
- [42:14]
B
Roger Lowenstein wrote an article yesterday how and why US Capitalism is unlike any other.
- [42:24]
A
And I didn't read this yet.
- [42:28]
B
This is important. He wrote. Early corporations were hardly models of transparency. But the quintessential openness American society saw later expression in the American invention of corporate disclosure. Congress abolished debtors prisons in 1833. Liberal bankruptcy laws also removed a shackle from would be borrowers. As the freedom to fail is also the freedom to succeed. Capital flowed more copiously than in any other country today. Our legal systems highly developed protections of the sanctity of contracts is a uniquely American asset. I never really thought of it that way, but I saw a video over the weekend of Bezos being interviewed, I can't remember by who, where he spoke about US exceptionalism in risk taking and particularly what makes us different than almost any other country. I shouldn't say almost any any other country is our willingness for these venture capitalists in particular and their investors to sure, let's throw $50 million at a seed company with a 5% chance of success like that, sort of.
- [43:39]
A
Or wearing failure as a badge of honor is another thing that's uniquely. I don't even want to say American. I want to say Californian.
- [43:46]
B
When the fire stick fail or the. Whatever. Yeah, whatever. The tablet that Bezos built, that was a huge flop. Yeah, he wore it as, not as a badge of honor, but I remember him writing about it and went like viral at the time because people were just like, this is how you do it.
- [44:02]
A
Yeah. So but one of the, one of the things back to what we were talking about before, like one of the things that's kind of a fly in the ointment here is that basically to the person who's not part of this game, the person who's not part of like venture capital, Wall street, they don't have assets. The way they look at it is every time rich people get a little bit uncomfortable, as my friend Garrett Baldwin put it in his new blog, there's some sort of like, rescue immediately, like FDIC limit. Don't worry about that. We got you. Like, we'll take care of you. Great financial crisis. No, no, no, no, don't be silly. We'll do cash infusions for all you guys. Silicon Valley bank, like, that whole episode was like just a recent example. But there have been so many over the years where rich people really, as a group don't get uncomfortable for too long before the treasury, the Fed, Congress, everybody's riding to the rescue. And that's what I think middle income people look at. And they're just like, so let me get this straight. I have the freedom to fail, but if I have billions of dollars on the line, no one's going to let me fail because I'm too important to somebody politically to actually ever take that kind of pain. And that's, that's how you get a situation where every crisis leads to the people who are already rich being even richer and the people who are locked out of the system just taking the consequences on their own. And that's what I think. That's what's at the heart of a lot of the problems that. Look, I have an active account on Blue Sky. Not everyone on Blue sky is a socialist. Not everyone on Blue sky hates capitalism. But like a lot of them do. And no matter what you say, like, post something about the economy, jobs, numbers, surprise to the upside, they'll be like, all right, but hurry up and get to cash. Because this whole thing, they were about to tank this thing to make people rich again. Like, they literally look at like market corrections as organized in order to help the people who already owned all the assets. You talk about the Fed cutting rates. They sort of see it as like, yeah, of course they're going to cut rates because someone's going to tell them they have to. And they don't see it as like, oh, they're going to cut rates to help regular people. So people hate the Fed. They hate. I mean, and it seems, I had thought it would get better given that we're in a 4% unemployment economy. It. Michael, honestly, it only seems to be getting worse. It only seems to be getting worse. And I, I don't know what changes it. But again, I think the rate cuts are like the, the route Toward maybe making the pressure on people be less so. We'll see. I mean, we'll see if it plays out that way.
- [46:53]
B
All right. I thought this was an interesting chart from Goldman. Over 40% of equity holdings by European funds are in the US versus just 15% in 2009. This is wild, huh?
- [47:07]
A
They're buying our stocks. Is that, is that the answer? That's what's going on, yeah. Percentage of total equity holdings. Yeah. I mean, what choice do they have? They don't have, they don't, they don't have their own version of our NASDAQ 100. They really, they really don't. They have a few. So I, I totally, I totally get it.
- [47:31]
B
All right. This is sort of, kind of related, maybe a not so, but I just thought this was mind blowing. Somebody tweeted, throw this up. No matter what happens today, 70 million working Americans will still be buying Nvidia every month, whether they realize it or not. And they calculated the amount of money coming into these names on a daily, weekly, monthly basis. And on a daily basis, $95 million is going into Nvidia, $83 million into Microsoft, $75 million into Apple. Just a mind bending, face blowing amount of money.
- [48:04]
A
Yeah, so this is something I explained to people I don't know 13 years ago now. I think this is one of the unsung heroes of what has now become the second best bull market ever. From the lows in the great financial crisis. Just the sheer number of people who don't even look, they just have portion of their paycheck diverted into large cap stocks and they almost never change it, they almost never pull money out of it, even in retirement. They're rolling these things into IRAs and continuing to accumulate as though nothing changed. And this was the thing that people, one of the big things that people didn't see coming. Like how is it possible that we would have low volatility, high returns, trillion dollar companies. This is one of the enabling factors. Think of the 401k is $9 trillion. What's it going to be in 5 years? What's going to be in 10 years? 20 trillion? Could it be more? So that is volatility mitigation on steroids. Nothing the Fed does with QE or whatever, nothing the Fed does can compare to the mollifying effect of every two weeks, 70 million people willingly allowing their part of their paycheck to buy these stocks. They buy them up, they buy them down, they buy them flat, they buy them in high volatility, they buy them in Low volatility. It's a volume dampener for the ages, which I think I spoke about pretty early. And now it's funny to see it kind of becoming conventional wisdom. Nick Magi sort of flipped bearish on his blog this week. I wanted to hear what you thought about it. He's got some anecdotal stuff about Chamath and the new Spark and he's looking at. Do we have this chart S&P 500 price to sales over time. I don't love these. This is one of those, this line looks like that line or this point in time looks like that point in time. But he does have a point. Nick says, as you can see, the price to sales ratio of The S&P 500 hit an all time high of 3.41 during the peak of the dot com bubble in December 99. It hit another relative high of 2.98 in December of 2021 and it's at 3.2 today. It is this point in time where people are paying up on a price to sales ratio. We might blow through this like it never happened. But I totally understand why he's looking at this. Like maybe people are a little bit too excited or maybe the market's a little bit overvalued. What do you think?
- [50:55]
B
Is there anything different about the composition of the market today versus the dot com bubble?
- [51:00]
A
Yes, but price to sales is. Price to sales. It's different companies. Okay, I'm just saying. I'm just saying it is.
- [51:07]
B
All right. And I'm just saying nonsense. What about. What about the fundamentals? What about the margins? What about the leverage? What about the moats? You can't.
- [51:16]
A
I, you can't have. Different is. Come on. Yeah, I know. I think that is the thing that's different. I don't think he would dispute that. I think what's different is the recurring revenue nature of the companies that are really large in the index versus in 99. These were not recurring revenue companies. These were companies that had to sell a million computers every month or they would miss earnings.
- [51:39]
B
And also, obviously I love Nick chamath launching another SPAC. Okay, how about 500 IPOs a day each going up 2000%? Like, come on.
- [51:50]
A
We're not, we're not quite there. He's not, he's not shorting the market. So Nick is basically saying like it's very rare for him to get cautious or a little bit barren.
- [52:02]
B
He went to 20% treasuries.
- [52:04]
A
Yeah.
- [52:05]
B
So listen, this is not a cheap market, obviously. Okay. I'M not here to say that this is a, that this is a bargain by any stretch of the imagination.
- [52:13]
A
It's notable because this is the, this is the, this is the just shut up and buy guy.
- [52:20]
B
Yeah. And guess what?
- [52:21]
A
That's it.
- [52:21]
B
If he gets a sell off, I know what he'll be doing.
- [52:24]
A
Yeah, he will just shut up.
- [52:25]
B
And he'll be looking.
- [52:26]
A
He will shut up and just keep buying.
- [52:29]
B
The thing about expensive markets is obviously they can persist. But if and when there is an event, and there will be an event, obviously, because there always is, something will happen that we could not have foreseen. Whether it's another SVB or more tariffs or whatever. Doesn't matter what it is. When you have stocks that are trading this high. All right, a stock, and let's just use the index as an example. A stock that's trading at 12 to 14 times earnings, if it misses by a penny, it can go down 3%. If a stock is trading at 150 times sales and it misses by a penny, it could fall 30%.
- [53:07]
A
Execution has to be perfect.
- [53:09]
B
Right? So we're not, there's not a lot of, not a lot of wiggle room here. Not a lot of margin for safety. We got to keep growing. And if we don't. Yeah, there'll be a sell off, obviously.
- [53:17]
A
Last chart from Nick. Total market cap of US stocks with a price to sales ratio above 20.
- [53:23]
B
I have a big time actually for this one, so.
- [53:27]
A
Nvidia, because you got to admit, you got to admit it's something, bro. I know you have an explanation for why it's not the same.
- [53:34]
B
Okay.
- [53:35]
A
All right, go ahead.
- [53:36]
B
So put that chart back on. This looks like 6 trillion and change.
- [53:41]
A
Correct.
- [53:42]
B
Okay. 4.5 of it is Palantir. Nvidia, get that chart off my screen.
- [53:47]
A
Great explanation.
- [53:49]
B
Thank you.
- [53:49]
A
And. But still. But still.
- [53:51]
B
No, no, no, no. But still. That's it.
- [53:54]
A
Jay Luther's in the chat. Jay Luther's in the chat saying Batnik is risk sniffing.
- [54:01]
B
Always sniffing. But.
- [54:05]
A
But you haven't, but you haven't caught. You haven't caught any risk yet with all that sniffing. Just not, not quite. Not in these charts at least.
- [54:12]
B
Clear as a whistle, Josh.
- [54:13]
A
All right, let's do make the case. I've been whining and crying about rate cuts for an hour. So if we get them, we've talked about some of the ways that we think will benefit. We talked about Rocket a couple weeks ago, ad nauseum. So we're not going to go there. The regional bank Charts are indeed looking really exciting. I asked Sean to post a few of these and I wrote up regional banks for CNBC Pro. We talked about it on TV today. Let's put a PNC inverse head and shoulders. Inverse head and shoulders, one of the most reliable reversal patterns that technicians follow. Nothing's foolproof, nothing's guaranteed. But you like to see these. And when you emerge from an inverse head and shoulders, you should be into a new leg of a bull market. You should be in a new bull market. I should say.
- [55:07]
B
Can I say one thing, please? So the neckline breakout was like 180. And you got the retest right at the right of the 200 day. I think JC would say this is like textbook.
- [55:17]
A
It not only is a textbook, you have a golden cross here. And, and, and look how well behaved this stock was when we tested both the 50 and the 200 at the same time.
- [55:27]
B
She's going higher.
- [55:28]
A
I think it's going. And, and not crazy. Overbought yet to 72 RSI. The other thing about inverse head and shoulders is you want to see them accompanied by rising volume. Guess what? So PNC looks phenomenal. I think this is one of the largest of the regional banks. Maybe not the biggest, but among the biggest. Here's fifth. Third. Same chart. Same chart. Not as far along, a little bit further from the December high from, from last year. But, you know, this is, this, this one's a little bit more tame. But I would tell you this is what you want to see happening. Very simple. Regional banks are more sensitive to increased mortgage and mortgage refinance activity than the major money center banks. They need it more. It's a bigger part of their business. They don't do more revenue in mortgages than the bigger banks. The revenue that they do is more meaningful to them. But it's not just revenue. It's activity. It's foot traffic back into the branches. They need phone calls, they need lower rates. Now, do they give something up in net interest margin? Yes, because when rates come down, you do see a compression of the spread between where they borrow money and where they lend it out at. But the increased activity that you get when rates fall more than makes up for that slight net interest margin compression. So this is a huge catalyst for these stocks getting some relief on overnight rates, which then feed all along the chain until they get to, you know, business loans and mortgages and all that good stuff.
- [57:12]
B
Hold on. So two things on that. Obviously, regional banks are more exposed to the community Main street than Wall street banks or the money center banks are. But also look at the, look at the, how steep the curve is. If rates come down, that might actually be good for them because they're borrowing at a lower overnight rate and they're still lending out longer. Like they're, they're going to be, they're going to do just great.
- [57:31]
A
It's very good for them. That's exactly right. Put this chart up, guys. First one. This is the number of homeowners who might benefit from refinancing by interest rate level. Great chart at the Journal. As you can see, the further you get to the left, which is 7.5% rates on the X axis, the less people would want to refinance there. And then the lower you get on the X axis, you get to 5.5%, all of a sudden you got 5, 6, 7 million people. So the way they figure this out is they say, here, let me read this. Homeowners with high mortgage rates are starting to get excited. Chart off. The average 30 year fixed rate mortgage dropped to a 10 month low of 6.56%. According to Freddie Mac. The rate has inched down for nine of the past 12 weeks, tracking expectations that the Fed will cut its own rates next month. More than 2 million homeowners could now save money. That's the average 30 year fixed rate on the screen. More than 2 million homeowners would save money if they refinanced today, which is up from 1.7 million at the end of July. And if rates get to 6%, 6 million people would reduce their rate by at least 0.75 percentage points. You sniffing? Yeah. That's not risky smelling, my friend. That's opportunity. Anyway, the Mortgage Bankers association has an index that tracks refinance applications. It was up 19% from a year ago during the week ended August 22nd. So this market is working. Rates are coming down in the mortgage market and people, 20% jump in refinance applications, or what you would refer to as refinance applications. This market is working as it should.
- [59:20]
B
Let me ask you a question, Josh. When you refinance, do you refi?
- [59:23]
A
I don't refinance. I refinance.
- [59:25]
B
Do you refi or do you refer.
- [59:28]
A
I refinance. I don't know.
- [59:30]
B
Do you refi?
- [59:31]
A
I don't abbreviate it, okay. It's a sacred act and I think it's crude to be talking about refinancing.
- [59:39]
B
Okay?
- [59:41]
A
It's not a Toyota. I refinance the house.
- [59:45]
B
Sure you do. Anyway, I love regional banks.
- [59:48]
A
You're lucky. I'M not saying refinance because that's where it's going next. Here's the kre. This is the regional bank ETF versus the xlf, which is like Citi, JP Morgan, blah, blah, blah. Look at this outperformance off the April low. 35% versus 23%. And by the way, all those XLF names look great. They're all at record highs. Here's the regional bank ETF with its moving averages. Golden Cross Stair Step higher. Not quite above last year's high, but certainly look like they want a challenge. Here's Truist tfc. This is a big one. What do you think? Triple Top or Goodbye?
- [60:35]
B
Goodbye.
- [60:36]
A
That's what I think. Here's. This is the one I talked about. Here's Huntington Bank. Look at this. Will the Beast. Triple Top or she's going?
- [60:48]
B
Nope.
- [60:48]
A
What do you think?
- [60:49]
B
See ya.
- [60:50]
A
Yeah, I got this chart on tv. Are you proud of me?
- [60:53]
B
I love it. Oh, really? This is a DTJB joint.
- [61:01]
A
Let me show you another. Here's the inverse head and shoulders in Huntington bank. Hba. Now this was a little pornographic. This one they would not put on tv. I didn't mean it to be that way. Oh, my God. I didn't. I didn't draw it to be. Don't all. Don't nobody screen grab this. I don't need this.
- [61:20]
B
Advertise wiener and balls. We all say it.
- [61:22]
A
I didn't mean to do it that way.
- [61:24]
B
Josh, come on.
- [61:25]
A
All right. Anyway, so that's my. Make the case. What do you think? Bullish?
- [61:33]
B
Yeah, I love it. Okay.
- [61:35]
A
Okay.
- [61:36]
B
All right. I've got a mystery chart. In fact, I've got several.
- [61:39]
A
Well, maybe I'll sniff it out. Let's see what happens.
- [61:41]
B
John, if you please. Okay. Would you buy this? Yes, I thought you might say that.
- [61:49]
A
Is this eth priced in bitcoin or some annoying shit?
- [61:53]
B
No, it's. I think I have one more chart.
- [61:56]
A
John, I bought it. What did I buy?
- [61:59]
B
This is you bought the Russell 2000 divided by the S&P 500.
- [62:04]
A
Okay, so no hints, just you. Full reveal.
- [62:07]
B
Oh, you asked.
- [62:09]
A
What else you got?
- [62:10]
B
You asked. All right, John, what are the charts that I break? All right, so this. This is surprising. I cherry picked a little bit. This is going back to last the second week of last July. Is that surprising?
- [62:21]
A
The second week of last July?
- [62:23]
B
I said I.
- [62:24]
A
Is there. Is there significance to that?
- [62:25]
B
Yes. I wanted. I wanted the numbers to line up. That's the significance.
- [62:28]
A
The point is, are these stocks?
- [62:30]
B
No, no, this is It. It's the same thing. The reveal is over. Josh, Isn't it surprising over a year of same performance.
- [62:39]
A
I would not have guessed that over the last year the Russell had kept pace with the S and P. Neither. I mean you cherry picked it, but so what?
- [62:48]
B
It's over. I think I have two more. All right. This was interesting from Yard. Denny. He's showing operating per share earnings on a forward basis. I mean the large cap. Lol. Why are stocks going higher? I wonder why. But look at the blue and the green. The mid cap of the small caps turning up. Not nothing. Yes, not nothing. John, do I have anything else? I thought maybe one more. Oh yeah. All right, so this is from Todd Sohn and the. There's a lot of noise here. The only one I want you to pay attention to is the bottom chart which is the one year rolling flows for small caps and we're two standard deviations below the average. I mean nobody wants these stocks.
- [63:31]
A
It's crazy, right?
- [63:32]
B
I like the setup.
- [63:33]
A
So this. I couldn't. I can't follow you into this. I get why you like the setup though. This is your type of. That is your type of setup. You like those things where like nobody will say anything good about them.
- [63:45]
B
I bought Western Union and I listened to the conference call. They know about stablecoins and I'd sit at the wheel.
- [63:51]
A
We're taking some shit in the chat.
- [63:53]
B
Shit in the chat.
- [63:54]
A
Brian Schatzer says. Ah yes, technical analysts. Astrology for middle aged white men. Tell me more about your cup and handle. So we're just studying what buyers and sellers are actually doing. I think that's less astrological than say guessing what an earnings multiple might be on a company's earnings. That to me seems way more bullshitty than actually studying the price itself, but okay, I'm with you, man. No, we don't all have to. We don't have to all agree on that. I'm supposed to tell everybody that the new trucker hats have arrived at the compound shop. Guys, do we have. Don't these look awesome?
- [64:32]
B
Love it. Can't wait to.
- [64:34]
A
Nicole said I have one of each sitting on my desk. I'm gonna pick one to bring to future proof next week. Which one do you think I'd look better in the blue?
- [64:44]
B
I'm rocking the white so you rock the white one.
- [64:47]
A
Okay. I mean these are. These are pretty sick, right? Love them. I think we're gonna sell these out. To be honest, if you, if you. If you guys want to see the hats for yourself, ironshop.com we've never done anything like these trucker hats before and they are absolute fire. So go ahead and check those out. Guys, I want to mention tomorrow Wednesday, all new animal spirits, Michael and Ben and then we'll do Ask the Compound later in the week, Duncan and Ben and then Mike and I will be back with two guests and an incredibly informative show, the Compound and Friends on Friday. So keep it locked. We love you. Thanks for liking and subscribing and we'll talk to you soon. Sa.