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- [00:13]
A
Microphone check, 1, 2, 1, 2. They faded the music early. I was about to drop a freestyle. All right, you're lost, Duncan. I was about to bless the mic. All right, ladies and gentlemen, welcome to an all new edition of what are your thoughts? My name is Josh. With me, as always, is Michael. And this show is about the stock market, the bond market, interest rates, the economy, technology, innovation, everything that matters to investors right now. And, Michael, before we even shout out anyone in the chat or any of the sponsors, I want to hear if you agree with me. There are, like, a lot long stretches of time where I, like, sort of know what's going on in the market and I have a decent handle on it. But then there are these periods of time where I just, like, have it on smash. Like, I have the market in the palm of my hand. I'm literally, like, telegraphing, now this is gonna happen. Now this is gonna happen. We're in one of those moments right now. I have never felt more alive and connected with the tape as I do today, and I just wanted to know if you agree with that. Are you. Are you, like, getting that sense that you are. It's exciting. Am I getting the sense that this is one of my market moments? That, like, I just. I own this right now? Like, I'm so. I'm so dialed in right now. You're not feeling. You're not getting that. That's not coming off of me. That's not emanating out of me.
- [01:43]
B
You're doing great work. You know, I'm a big fan.
- [01:45]
A
No, it will. No, it. But not always right at this moment.
- [01:48]
B
Okay.
- [01:49]
A
Like, this is my tape.
- [01:50]
B
This is fine. I guess it is. This is the most exciting tape that we've had in a long time. It's been bold.
- [01:58]
A
That's a good take, but finish the thought. And Josh has caught it by the tail like a tiger. I have. I really have. We're going to talk about. All right, guys, Today's a. This is a really important show. Don't click away. Don't click away. Wait, hold on.
- [02:12]
B
I thought we did. We did phenomenal work last week. We set the table.
- [02:16]
A
We did. Oh, my God.
- [02:18]
B
Now we're bringing you dessert.
- [02:20]
A
Honestly, I'm like, I. I'm like. I'm, like, pulsating. Like, I. I just. There's just something about my. My. My grasp, my command of this particular moment. It won't last. I understand. It's ephemeral. Nobody gets to hold on to the market forever. But right now, I don't know anyone else. I don't know of anyone else that that has it the way that I have it. I'm feeling really proud.
- [02:45]
B
I wish I had your confidence. Let's. Let's get to the show.
- [02:49]
A
All right, guys, the live chat has been going crazy week after week, and we just want to acknowledge we love you so much for showing up all the pounders. Charisma Spigot is here. Derek Sips. I'm going to shout out some people I. I haven't gotten to before. So to all my regular pounders, bear with us. My top data is in the house. The Benjamin biz. I switched YouTube accounts. Can you all see me? Yeah, we got you, bro. Let me do one more. Okay, just one more. Let me see. What do we got? Neil Griffin, 880. Hello, all. What's up, Neil? All right, guys. Tonight's show is sponsored by Betterment, one of our favorite sponsors in the whole world. Betterment Advisor Solutions. Specifically, what growth strategy are leading rias using that most firms don't? Michael?
- [03:37]
B
Segmentation.
- [03:38]
A
You're right. Some clients needs are sophisticated and require deep ongoing planning. Some clients needs are simple, like those in the wealth accumulation stage. The smartest firms know planning shouldn't look the same for every client. The experience should always be exceptional.
- [03:55]
B
That's right, Josh. Now it can be with Betterment Advisor Solutions. It's a platform built for segmenting your book and streamlining those smaller and simpler accounts. The onboarding experience is automated and paperless. The portfolio management, the streamlined, the tax efficient, the client experience. It's consistent and modern. And the impact isn't just felt by your clients. It's felt across your entire practice. Imagine a back office that's humming. A team that's thriving in a service model ready to scale. Betterment advises Solutions. Your biggest regret will not will be not doing it sooner. Learn more@betterment.com advisors.
- [04:26]
A
This episode is sponsored by Clearbridge Investments. Earnings growth in the rest of the equity market is forecast to catch up with the Magnificent Seven in in 2026. Position your investment portfolio for an expected broadening in performance with fundamentally driven Clearbridge active equity strategies. Clearbridge, a Franklin Templeton company. Go to clearbridge.com to learn more.
- [04:51]
B
Let's sniff some risk. What do you say?
- [04:53]
A
I mean, it's not hard to sniff it. It's literally every. It's around. It's hiding around every corner.
- [05:00]
B
Stinky. All right.
- [05:02]
A
I believe that I have identified this year's dominant investing theme and I am calling it Halo, which is a backronym for heavy assets low Obsolescence, just at first blush, does that pass your sniff test? Does that seem to be an accurate reflection of the stocks that are going up versus the stocks that aren't in. In, in 26.
- [05:28]
B
Oh, I'm sniffing it. It's. It passes mustard of the Dijon variety and it passes muster. Back to you.
- [05:34]
A
Yeah. All right, so what we're talking about here, guys, the stocks that are not disruptible, at least not currently by AI I think I actually have discovered the first new factor of the post AI era, although I am not personally equipped to figure out how to quantify it.
- [05:53]
B
Maybe that's a Kai Wu.
- [05:55]
A
Kai woo. Kai Wu should be all over this. But so here's what's interesting. You keep hearing people talk about rotation and you keep hearing people talk about broadening, but those are anachronistic terms that do not fully capture and reflect what's actually happening here. Because halo stocks are not necessarily value and they're not necessarily growth. They could be either or they could be both. It's not about that, that, that dichotomy. This, this time around. It's not a value to growth. Growth about. We're not talking about that. They're not even natively. They're not even native to any particular sector. Although we do have a lot of halo stocks in energy, materials and consumer staples. Halo stocks obey a very simple litmus test. And you can do this as a rhetorical exercise out loud. Ask yourself the following. Whenever somebody puts a ticker in front of you, if you somewhat know the fundamentals, can an LLM replicate what this company makes or sells or can it not? And you're going to have to be a little bit creative because things are being disrupted out of nowhere. But generally Speaking, we spent 15 years celebrating these Asset light businesses. Software being a really obvious example, information services, consulting, a lot of the white collar services part of the economy. Asset light. Asset light, that's what everybody wanted. High margin businesses. And they didn't really have like big, big heavy things on their balance sheets.
- [07:42]
B
Can I just for one second.
- [07:43]
A
Yeah.
- [07:44]
B
These Asset light businesses, not to be like super doomy, but these are companies that when the equity goes to zero, the bonds go to zero.
- [07:54]
A
Yes. And hopefully it doesn't come to that, but that's the test. So if the answer is yes, that's not a stock that's going to work right now. Unfortunately, if the answer is no, then my friends, you have a halo stock on your hands. So I'm hearing people say rotation, they're saying broadening. They're missing it. I want to quote from Mike Wilson who is a strategist at Morgan Stanley on the broadening and he says the broadening accelerates despite choppiness across large cap indices. Last week our broadening thesis continued to play out with the S and P equal weight index breaking out to all time highs on Friday. Again, this is something that you and I have been talking about for months now. In particular, we were encouraged by significant outperformance from early cycle reflation trades, transports, housing, regional banks, small caps. We continue to like these areas of the market with which align with our run it hot framework. So he's thinking about like the Fed dropping rates and the economy reaccelerating and he might be right, but so I'm not contradicting him. I think the point that I'm making is it's not about people just all of a sudden deciding they want to broaden out. And a lot of these areas that are rallying, that rally is not being accompanied by improving fundamentals necessarily. What's actually happening is people are looking at their holdings and they're saying is anthropic about to this company's life up or not and where you can say or not more dollars are going to be allocated and I could give you a million examples of individual stocks and believe me, I'm looking at the charts in the doc, I will. But I think that that is really what's happening here. And I don't think the strategists on Wall street, they're sort of describing it with some of these old terms from another era, but they're not quite capturing the story as well as as I'm trying to. What thoughts, Michael?
- [09:57]
B
I think you did a great job capturing the current zeitgeist as you often do at turning points last week during the bloodbath, because it was a bloody week, 337 stocks in the S P 500 were up on the week. How nuts is that? Yeah, the index was basically unchanged despite the carnage underneath, particularly in these anti halo names. And investors are taking note. Gungeon tweeted something like more money went into sector funds X tech last week than the entirety of 2025. In 2025 the only thing people wanted to buy were tech names. And just last week it was a vacuum in the other direction.
- [10:47]
A
Yeah. Can anthropic disrupt Delta Airlines?
- [10:52]
B
No, I know it's rhetorical.
- [10:54]
A
Delta is a heavy asset. Low obsolescence risk. Nobody's going to come out with a new plane next week and there is nothing an LLM can do that will materially change whether or not people are going to fly. Delta is halo. There are so many, there are so many obvious examples of this. Now Delta also has a great fundamental outlook for this year because travel is doing really well. So let's take a stock where it's not quite that Pepsi, at best, Pepsi can grow 3 or 4% a year. Why would the stock price go up 15% in two weeks? That is a rerating. Because Pepsi is halo. Claude cannot give you a Diet Pepsi or a bag of Fritos. Right. Like to me it's so clear. This is not about a broadening. This is these people buying these stocks are refugees from the 500 or so asset light SAS related stocks that they've been riding for 15 years. That it's, it's literally like somebody flipped a switch. And everyone now understands they have a lot of portfolio disruption risk and they're looking. Where else can I go where I don't have to worry about LLMs in my sleep?
- [12:18]
B
Let me give you, let me give you the top 10. There's 149 stocks in the S&P 500 that are within 5% of a 52 week high or right there. Okay, 150. It's a lot. These are the top 10 names by market cap and they all make the list of what you're talking about. Walmart, jnj, bank of America, Chevron, Caterpillar, Cisco, ge, Coca Cola, Merck and Goldman.
- [12:49]
A
Halo, Halo, halo, Halo, Right. With the exception of Goldman. But you could argue like Goldman sort of playing both sides. Some of what they do has disruption risk, but then they're also the company doing all the investment banking deals to raise money for the disruptors.
- [13:05]
B
But all these businesses are not disruptible. Philip Morris, McDonald's, GE, Vernova, Citigroup, Verizon. There are no threat. They're not under assault.
- [13:17]
A
That's right. And most of them, most of them are telling the sell side stories of efficiencies thanks to return on investment via AI. So not only are they not disruptible by anything that Claude is doing, but put that aside, in many cases there are beneficiaries, not victims of all this disruption. These are the companies that are paying Salesforce and Workday and ServiceNow and Monday.com and all of these SaaS companies, these are the payers. And if the payers have some leverage because of innovation, Wall Street's going to look at that as being worthy of taking multiples up, not down. Goldman Sachs said that software stocks are like newspaper stocks in 2002. This is brutal. To me this might be way too.
- [14:15]
B
Far but I want to crazy.
- [14:17]
A
I want to share. Share what they said Goldman Sachs warning the great software stock route of 26 may be just beginning. I don't think it's just beginning, but I don't think it's over. One should look no further than how the rise of the Internet in the early 2000s hammered the newspaper industry to get a taste of what may be to come. Quote One lesson from historical examples of industries facing disruption risk is that share price stability requires stability in the earnings outlook. Newspapers faced risk from technological disruption as the Internet grew in the early 2000s. The share prices of the group declined by an average 95% between 02 and 09, said Ben Snyder, Goldman Sachs strategist. Quote the multi year decline of newspaper stocks ended only as earnings estimates bottomed and the litigation disruption of tobacco followed a similar pattern. In this case, the uncertainty around the eventual impact of AI means near term earnings results will be important signals of business resilience but in many cases insufficient to disprove the long term downside risk. We talked about this. There is no proof point. Even if earnings deliver, we're still not giving these stocks the same multiples that they got because right around the next corner could be something disruptive we're not even thinking of. Give me these charts guys. These are Goldman's charts. On the left, newspaper stocks declining by 95% in seven years. I wasn't even aware of how brutal that period was. I guess I didn't own these things. I was getting blown up in other stocks. On the right, this is newspaper share prices troughing just ahead of consensus earnings estimates troughing. So that's interesting. They eventually newspaper earnings eventually did bottom when there were like five of them left. But that's a super dire outlook. What are your, what are your thoughts? Is Ben Snyder going too far here?
- [16:24]
B
Yeah, I would say two things could be true. The it's an overreaction in the software stocks and it's an overreaction that makes sense because we have no idea what the future holds. It is so in flux. And guess what? Investors are always going to overreact and I think they're right to overreact because we've spoke about Adobe a lot. It doesn't matter what they're reporting today. They can report record revenue, record earnings. It doesn't matter because investors are looking down over the horizon and we're all guessing. Think about how fast the narratives are shifting when with this think about how, how screwed Google was until it wasn't. So we could easily look back and say this is a joke. They're comparing enterprise software companies. That Pitchbook made the analogy. This is, it's open heart surgery to replace these companies at, at big companies. Right. Corporate America is not going to start vibe coding their own solutions. So to replace Salesforce is very difficult. It's not going to happen overnight. So this type of, this type of analogy to me strikes me as. Come on.
- [17:24]
A
Well, I think, I think there were a lot of defenses of the newspaper stocks too. They used to talk about the subscriber bases. They used to talk about the specificity of the advertising product for a specific like for a geographic region and how hard that would be for Google to replicate. They couldn't. But Michael, in O2 they couldn't envision Facebook.
- [17:49]
B
Mm.
- [17:49]
A
Because it, because Mark Zuckerberg was in 10th grade. And that's the point. And that's why it's so hard for these stocks to bottom.
- [17:56]
B
Dude. I understand first of all to your point. So let's, let's look at the performance. It's. It's fugly.
- [18:02]
A
Well, I want to get it, I want to get into two of the defenses. Hold this for one second, guys. Goldman is not Goldman. The Goldman view, and I don't even know if the whole Goldman believes this. This is one of their people is not being shared by every, every firm on the street. J.P. morgan defended software. This is Dubrovko Lagos who said the market is pricing in worst case AI disruption scenarios that are unlikely to materialize over the next three to six months. That's right. You'll have to wait nine months at least. Given the positioning flush overly bearish outlook on AI disruption, we believe the balance of risks is increasingly skewed toward a rebound. I think you're getting that right now. Especially in higher quality software segments. He probably means cybersecurity. Morgan Stanley, Katie Huberty quote. We believe the dislocation in US Software evaluations is sentiment driven, not fundamental. Yeah. Well.
- [19:01]
B
Yeah.
- [19:02]
A
Works the same way though, right? Not fundamental yet. Sentiment first, then maybe fundamental. We'll find out.
- [19:09]
B
So.
- [19:09]
A
All right, let's go.
- [19:11]
B
I, I bought the puke on Thursday. I sold it today. Igv. M not looking to like be a hero called a perfect good though. Yeah. Not bad.
- [19:21]
A
All right. Look at you. And now you could. Now you could sleep at night. You don't have to go overnight with that.
- [19:26]
B
I'm out. So I don't, you know, I don't expect like a V shaped Recovery. I think that would be unusual because the looming threat, it's not going away. All of these companies can't prove they can't neutralize the threat. There's nothing that they can say or do that is going to make people that are selling forget that anthropic is looming.
- [19:49]
A
Well, I mean, that's. So that's like the main point that I'm trying to make is even if you say, even if you say these stocks are at a historic discount, like the cheapest that they've been for the last 10 years or whatever. Right. Because you could also say yes. And the reason is that there is the. So I think that this is going too far. I just don't think it's over. And I worry that though they will rebound and then roll right back over again because this fear is not going to go away. And that's why I'm talking about the halo side of the market. That's just far removed from, from these concerns.
- [20:31]
B
So, so here's, here's what I think can quell the selling. Not today. But the thing that can fix this is time. So I don't know if it's another 2/4 or another 6/4, but if Adobe continues to print record numbers for another five consecutive quarters, guess what? The stock will have been a screaming buy. Because at some point people are say, all right, I guess, I guess they're integrating AI. I guess the threat that we perceived was overblown. But I don't know when that happens.
- [21:01]
A
Yeah, no, no one does so. And I won't be the one that knows in advance. But I, I do think rollovers after bounces are more likely than V. Same. And if it's a V Gray, I'll look like, I'll look like an asshole. But that'll be great because you're talking about a lot of damage out there in this group and not, not fully deserved by all of them. I can't believe the extent to which they beat up cybersecurity. That makes no sense to me. I don't care if, if it's AI driven software or enterprise SaaS, you're going to need cybersecurity in either case. If you're in business, you can't just, it's not, oh, I coded up my own cybersecurity. I mean, it's the dumbest thing I've ever seen. So to me that makes no sense. But I also understand people are not waiting. They probably think, all right, this is probably not a great sale. But I still think I'm going to have a better opportunity later to buy back and maybe. And maybe they'll get punished for that. Maybe some of the people that are blowing out of these names now are going to look dumb in two weeks. I don't know. We're going to find out.
- [22:11]
B
John, can we skip a few charts? We could circle back, but the IGV shares outstanding one. So positioning in IGV has now been completely flushed and is. This is from Goldman and is significantly reduced since last summer with the ETF shares outstanding reaching near five year lows earlier this week. In short, there's almost nobody left to sell. So this is the thing that it's like, come on. There was such an extreme flush. Like nobody's. Everybody's out.
- [22:45]
A
Retail started buying.
- [22:47]
B
Good.
- [22:48]
A
Yeah, retail came running in and bought the dip, dude.
- [22:51]
B
Retail. This is no longer the dumb money. They've bought a lot of successful dips over the years. So I am not thumbing my nose up at that point.
- [22:58]
A
I agree. And I hate that whole narrative that retails the dumb money. They caught every V shaped recovery we've seen in every asset class like over the last few years. So I agree with you.
- [23:11]
B
One more thing on this and then we can recycle some of the charts that you have in here. So I felt today when we saw Schwab and Raymond James dump 10%. John, next chart please. Just out of nowhere we're like, wait, what is, what is happening? Schwab was at a 52E high. A matter of fact this morning, Schwab was at an all time high. I look up, it's down 10%. And I immediately bought the stock when I found, when I found out what it was going on. So the Stock was down 10% because our friend Jason Wank and his company Altruist, which Josh is an investor in, we believe in the company, we work with them, okay? They're doing great work. They're a great custodial solution relative to Schwab. They are tiny and like tiny tiny. And they announce their AI. It's, it's a, it's a AI solution. All right? So it's doing tax things and notes things and it's a whole thing and it's great. It's called Hazel. And that alone whacked 10% off the biggest custodian in the galaxy. And this is what some software investors must feel like when they see the companies because like we know what's happening here, right? This is our business. So I insta bought. Now listen, I sold it. I. I made I made two bucks. Thank you very much. Alos for the. For the free gift. Because I don't know how investors are going to treat this tomorrow, but just. We know for a fact, this crazy. This is such a nonsensical overreaction. 10% out of Raymond James and Schwab because of this. So don't you think this is like, what. Software knowers must see some of their names getting killed.
- [24:44]
A
So that's. So that's a really great point and I'm glad you brought that up. What is the. What is that thing? It's like a special type of amnesia.
- [24:54]
B
Gelman something. Galman Amnesia is when you see something. That's exactly what I thought of. It's when you see something in the newspaper that you're an expert on, okay? And you read it and you say what? That is the dumbest thing I've ever heard in my entire life. This person has no idea what they're talking about. And then you flip a page and you smile and you erase your memory and you believe what you read on the next page.
- [25:16]
A
Right? As if. As if the reporter covering the thing you don't know about is going to be any more of an expert than the reporter who just wrote the article that you laughed at.
- [25:26]
B
Exactly.
- [25:27]
A
So it's actually, it's Gel G E L L Dash man M A N N Amnesia effect, which Gelman was the name, but guess who coined that term.
- [25:36]
B
This is Robert Gel Man.
- [25:39]
A
No, Michael Crichton. He coined the term in a 2002 speech titled why Speculate? And he named it after a Nobel Prize winning physicist named Murray Gel Mann. And. And so he gets the credit. Coining a phrase is not the person who invented it per se, although in this case it sounds like it is. Coining it is the person who makes it a thing. And Gal man amnesia. So we know that Schwab should not have lost 10% of its market cap because somebody launched an AI tax tool. We understand that, you and I, because we know this industry backwards and forwards, but the rest of the market doesn't. So then somebody looking at this happening in another category. Software stocks that knows what they're talking about. To your point, they must be saying the same thing, like, are people out of their minds? And that. I think that that is the number one argument against blowing these stocks out right now. You know, so. So if you're overweight and you're super heavy in these names and you have too many of them or whatever, and we get a really nice bounce. Okay, different story. Maybe As a little bit of the fog of war is lifted, you can make some sales, but like you sell a Stock that's down 10 days in a row on no news, like what are, what are we doing here?
- [27:00]
B
But it's the market that we're in, the halo market. And it's also just zoom out the market structure that exists where it's just all alos like no fundamental. No human being is seeing the news from Altruist, which I don't. Which was not like a secret and is selling Schwab 10% down and Raymond.
- [27:20]
A
James and I would imagine a bunch of other names. All right, I want to go back to some of these charts. Okay, can we do. There's a new theme in town, so shout to chart kid matt, aka chart goat. Matt. This is energy up 20% in total return so far in 2026. We've been all over this on our show. We keep talking about Chevron and Exxon and Baker Hughes, et cetera. I don't know when these stocks are going to take a breather, but they, I mean even on a. I think energy might have been red today or some of the names in Energy might, but they barely go down. The buyers are sticking it out. And here you could see materials up 16.4% again, total return. And then you can see consumer staples up 12.3. Halo, Halo and Halo. Those three sectors in addition to industrials have. And health care have like most of the halo stocks in them. The. The. They have the heavy assets on their books that they own cannot be replicated. They're not information businesses. Let's do equal weight versus cap weight. It's just another way of thinking about the same story. You have lots of stocks all of a sudden catching a bid and many of them are of the halo persuasion. Next chart is small caps and mid caps hitting new highs. No mag7 in these names. Yes, they have software, but they have so many other things right. There's retail, there's staples, there's industrials in both of these indices. And it's just a very different story for the rest of the market. Staples are overbought. Sean and I did a column for CNBC Pro yesterday. We told people do not buy Coke and Pepsi at 85. RSI and Coke reported this morning the stock pulled back. That appears to have been good advice.
- [29:18]
B
It's got to be like an all time high for rsi. No, Coke doesn't get overbought like this ever.
- [29:22]
A
Coke's like, you can't find Coke in an 85 RSI really anywhere in history. It's, it just, it's this absurd structural thing where people are like can't disrupt Coke and it's, that's not a great setup if you're a new long. Let me show you some other Halo names. These are like obvious ones. ExxonMobil chart 151 new all time high today. Unbelievable. This thing is up 30% since the year started or something like that. Just nonstop rally Walmart. Like obviously the trucks, the logistics, the distribution, the customer, the customer loyalty, the geographic presence. They compete with Amazon, but you're not coding up a Walmart. Okay, McDonald's, same thing. Can't replicate the sensation of taking down a 20 piece McNugget on a Friday night after a sixer. Right? There's only one way, only one place to get it and you can't get it at home on your computer. Here's Valero. Obviously like you're not going to refine gas with a, with a large language model. Here's Martin Marietta materials. They literally make asphalt and concrete. This is not disruptible at the present moment. Oh, you showed me the IGV shares positioning. Hold on. I thought I had a different chart. Maybe I threw it in somewhere later. Just a retail pile into igv. Like all of a sudden they came running in to buy the dip. And I think I have that somewhere in here.
- [31:15]
B
I haven't seen it. Does it. All right, before we move to the next topic, I just want to read you just getting back to the Schwab thing. Let me read you the lead in a Bloomberg article today, Josh, and let me see your reaction. Tax planning and wealth management stocks sank Tuesday after financial software provider Altruist launched an artificial intelligence tool for creating tax strategies, sparking concerns that traditional players could be at risk. Like literally. And zero disrespect. We love. Jason. What.
- [31:51]
A
I I. All right, so the, the backdrop though is did you see what S and P Global did today?
- [31:58]
B
Smushed. And it's this stock is getting murdered.
- [32:02]
A
Murdered. Like literally ax murdered. The Stock went down 43 points today just because, just cause it pre market was down like 20%. So it's a panicky environment. People don't want to be in the next stock that potentially could be down 20%. And that's why, that's why they're, they're reacting this way.
- [32:27]
B
Green chart, John. Slime Green chart. So this is the nature of the market. It's just get rid of it. We're looking at a chart of daily equity turnover and it just, it just topped a trillion dollars. This is the average daily US Equity market. So yeah, people are just not waiting around. Sell it, get it out, whack it off.
- [32:47]
A
Ian is asking why did did S, SP S and P Global do what it did today?
- [32:53]
B
They've reported earnings this morning.
- [32:55]
A
They reported earnings, but. And I, I don't even know if the earnings were good. I don't even know if it would matter. I honestly. Look, I've never, I've never seen anything like this.
- [33:04]
B
I haven't listened to the call. I'm actually.
- [33:05]
A
All right. They were supposed to, I mean they were supposed to report $4.34. They did. $4.30.
- [33:11]
B
That's not it.
- [33:13]
A
That's not it.
- [33:14]
B
All right.
- [33:14]
A
Right.
- [33:15]
B
All right. So I am of the view that this broadening out, this halo rotation is very bullish. Okay, that is my opinion. But it is also reasonable to talk about the other side. Well, market has lost leadership. Is it about the top? So I've got a bunch of charts to get through. Let's look at the top 50 stocks from Adam Parker. We're looking at the median gross margin by mega cap stock X Financials X real Estate. And yeah, guess what? A lot of the mega type mega cap tech growth. Wow, that's a mouthful. Is getting sold because their margins are getting smushed. The market is not dumb. In fact, I would argue it's smart. Next chart please. You love to see this. The s and P500. The price is going up, the multiple is coming down. I'd say that's pretty healthy. Would you agree?
- [34:06]
A
The price is going up but. Well, is it healthy or is it concerning? Because why is the multiple coming down and people are.
- [34:14]
B
I like it. I like fear duality research. Check out this no sniffer of a chart. Just last week the s and P500 recorded the most 50 new 52 week highs since 2024. On a day that was likely the worst since Liberation day for many investors. How's that?
- [34:31]
A
Yeah, I mean it's unreal. It's just this like bifurcation and people are just, they're, they're not, they're not worried about most of the stocks. They're worried about some stocks and they happen to be worried about some of the biggest stocks or were the biggest stocks.
- [34:49]
B
It's hard to make the case that the market is peaking when you have so many stocks going up. I know that sounds like circular, but look at this next one from, from duality. If you look back at how the s and P500 peaked a year ago. Both breadth measures were already rolling over. We're talking about the New York Stock Exchange advanced decline line as well as the number of stocks above their 200 day. That's in the green and the purple. And the great backdrop is the S and P. So those breath names were already rolling over. Right now like literally we're seeing the exact opposite.
- [35:20]
A
I read the Adam Parker piece and what he's saying is that the market is now pricing in lower margins. And the reason that matters is because the leadership stocks of the market had been the companies that were expanding margins. And now the markets are afraid that the biggest margin expanders are going to go through this multiple re rate lower because, and you know we talk about mag7 like Amazon says we're going to spend 200 billion in capex. Like, like everyone's capex numbers are going up, which sounds great and it is, you sell semiconductors. But it's unlikely that margins will survive. And I just want to, I want to just share this one data point that I thought was okay. The largest 10 companies are spending 35% of all the capital spending dollars of the top 2,000 US companies and that is clearly poised to massively rise given the guidance from the largest companies. And Adam says this has to be a problem. We pointed out a couple of weeks ago a legitimate bear case for US equities is a lack of Goldilocks on hyperscaler capital spending, meaning too little. And people get concerned that companies are worried about the return on investment. Too much capex and it results in an inevitable data center overbuild.
- [36:49]
B
So that's a good take. But what, but what if, that's. What if, what if a company announces that they're going to spend not $200 billion in 2026, what if next quarter Amazon says all right, we're going to pull it back to 160. You think the market freaks out? Maybe the market rallies on that and says thank God.
- [37:09]
A
You know what, it's a great question. But again back to the gross margin story. He's saying gross margins of the mega caps are contributing to this overall gross margin degradation. And he points out median gross margins among the top 50 stocks have just fallen from 55.7% in December to 50.6% at the end of January. And that is the lowest level for gross margins since 2012. So these used to be asset light companies with just insane gross margins. And now given all the investments that they're making, and I'm not saying they're Bad investments and all the spending and by the way, taking on a lot of debt too, etc. The gross margin story is degrading, starting with the biggest companies. Not. And he's just pointing that out as a market headwind.
- [38:07]
B
I would say that's a market headwind. A bear case for the mega cap stocks that are doing all the spending. Their bear case is the bull case for the 65% of the companies that are, that are beneficial of all of this. So let's skip the next chart, John, and go to the breadth dashboard. So this is, we're looking at the stocks above their moving averages, various from 10 to 200 days by sector. We're looking at the ones that are making new highs by four week, all the way out to 52 week, the ones that are making new lows. And we're looking at rsi. So this is a chart kit special. And the first thing that I want to look at is making new lows. All right? There's no staples, there's no energy, there's no materials.
- [38:43]
A
Look at this.
- [38:44]
B
What's making new lows and the short term. And there's no, there's really no 52e lo to speak of. I mean even within tech, which is, you know, the epicenter, it's 5.7%, communication services, 8.7%. They're making new eight week lows, new 12 week lows. And yeah, they're falling below their moving averages. But look at every, look at the halos, the industrials, the staples, the energy. Like look at the percentage of other moving average. They're all working.
- [39:09]
A
Amazing. They're all, they're all working and barely any losers in those sectors. And if they are losers in those sectors, they're not noteworthy companies for the most part.
- [39:19]
B
Okay.
- [39:20]
A
Do you know UPS just hit my list of best stocks in the market. Ups, Remember what a basket case that stock was the last time we talked about it, which is probably sometime the middle of last year because UPS is halo. It's physical delivery of goods. There's, it's, there's no workaround. If you need to move things from point A to point B, you're using either UPS or one of their competitors. But people aren't up at night worried about somebody like stealing their, their thunder. And that's just, it's just a totally different market this year and it's, it's actually pretty exciting.
- [40:00]
B
Okay, so is the market about the top? I've got two more for you. This is from Blue Kardick. Pull this from Daily Chart book. All right. The Vix closed above 21 after staying below it for 49 straight days. Historically, this setup has been bullish. In the prior 28 cases, the S&P 500 was negative only twice 12 months out. Okay, only two times out of 20, the most recent 28 cases. We don't see those conditions today. This is a healthy market pullback. I would agree with the data.
- [40:38]
A
What market pullback though?
- [40:39]
B
Right?
- [40:40]
A
Like what?
- [40:41]
B
Well, there was a, there was a stock pullback. Not, you know, the stocks have pulled back. Stocks have pulled back. Here's another one. Right, here's another one from Turning Point Market Research. He's looking at the S&P 500 after more than 18% of its members registered a 52 week high. And it was at the highest level in over a year. And look at all those green arrows. There was one time it didn't work out. So yeah, there's no guarantee. But this type of broadening is bullish af. It just is. Doesn't mean it's going to work 100% of the time. But like that's what it is until it's not.
- [41:16]
A
I think it, where it becomes problematic is obviously like whatever's working will always go too far. And then if all of these like quote unquote broadeners don't deliver on earnings or guidance, then it's like, well, what do we have to hang our hats on now?
- [41:32]
B
Yeah, of course.
- [41:33]
A
That's right, of course. No, but historically though. Historically though, you had these 20% growers, mega cap software stocks with massive margins and unbelievably reliable cash flow streams from license revenue and like the market could like fall back on those and they're gone. They're, they're. You don't have that layer in the market of like sure fire stocks because.
- [42:00]
B
They no longer that are taking the money out of those names and they're putting into other names.
- [42:05]
A
I just hope those other names don't disappoint.
- [42:07]
B
So do I tell you. Last one. I thought this was a really good chart. All right. Returns in 2025 versus so far in 2026. And what I notice here is the winners in 2025, it's really like almost all to nothing. They're either getting killed or they're ripping. There's really no in between, I guess. Warner Bros. But that doesn't count. That's a special sitch. So on the, on the one hand, the stocks that are under pressure that were major winners, App Love and Palantir, Robin Hood. And the winners that won last year. That are continuing. Micron, Seagate, Western Dig, Lamb Research, Corning.
- [42:47]
A
I wish I loved anything as much as you love saying Western Dig. I really. I wish I did. I wish I did. I can't wait. Put that back up. What else is on there? Teradine. What's fix? How come I don't know that stock Fix.
- [43:03]
B
Is that.
- [43:03]
A
That's on fix? No way.
- [43:06]
B
It can't be Fix stock. I don't know either.
- [43:09]
A
Lamb Research is on here.
- [43:11]
B
Comfort Systems. I don't know what that is. Comfort H Vac. Oh, that's Halo.
- [43:17]
A
Oh, that's so Halo. Are you kidding me? That is like the definition of Halo.
- [43:22]
B
All right, let's do Robinhood. So Robinhood, Scott, Robinhood is my favorite report to look at. Just visually, they do a phenomenal job. And Robinhood. Robinhood's got a good thing going. I mean, the stock is on the pressure.
- [43:37]
A
Not tonight, but doesn't matter.
- [43:38]
B
It's a great business. It really is. They're. They're killing it.
- [43:41]
A
Yep.
- [43:42]
B
Let's go to some charts.
- [43:43]
A
All right, the first thing I want to say is just the reaction. And this could obviously change. This stock has fallen from 150 to where it closed tonight at 85 and in the post market is now down to 79. Yeah, this is a full 50% haircut. If it opens at this price tomorrow, it's.
- [44:04]
B
It's crypto. It's trading off crypto, period.
- [44:07]
A
So somebody was saying, like, their revenue, their crypto revenue percentage has fallen so much, it's like less than 10% at this point now. I don't think that's true.
- [44:16]
B
That's not true. I haven't.
- [44:17]
A
Can't be true. Right?
- [44:18]
B
We have it here. Let's go to some charts. All right. Total platform assets, three to $24 billion. Is that. I mean, unbelievable. Is that 68. What does that say over here?
- [44:29]
A
Put it this way. No one else in this industry has a growth rate that looks like this. Nobody.
- [44:33]
B
All right, so here are some things that are not awesome. Next chart. The total net revenue was up 1% quarter over quarter. So, you know, stalled out there. Operating expenses are growing. And I don't think the street like this. Operating expenses. The outlook was 2.6 to $2.75 billion. Represents 18% year over year growth. That's, you know, that's high Street. Did not like that.
- [44:59]
A
Yeah.
- [45:00]
B
All right, next chart.
- [45:01]
A
Translation, what's in that? What? What's in that? Like, stop. Compensation. I get what's in their operating expenses.
- [45:06]
B
That's I'm. I'm guessing it's built out of prediction markets and investing in the business. I, I didn't, I didn't have time, time to read into it yet.
- [45:16]
A
I guess SGNA would like, the advertising would be there. They're spending a ton of money on ads that I know.
- [45:23]
B
Check this out. Transaction based revenue. So the options are just, I mean, unbelievable options. Up 41% year over year. It's where the most of their, their, most of their revenue, like by far 3% quarter over quarter. But look at, look at the crypto.
- [45:40]
A
So it's still options is the options is the neon yellow is neon.
- [45:45]
B
Yeah. So crypto is the light gray. So Interestingly, it's down 38% year over year. It's down 18% quarter over quarter. But it's still a significant piece of the revenue.
- [45:58]
A
Yeah.
- [45:58]
B
221 of 776.
- [46:00]
A
I don't know, I don't know who I was listening to. They were like, people don't understand, like crypto is not as important as it used to be. I'm like, it's not.
- [46:07]
B
Yes, it is.
- [46:08]
A
I feel like it definitely is. Right?
- [46:09]
B
Look at the stock and look at Bitcoin. Same thing. All right, this is wild. Net interest revenues is up 39% to $411 million. And the thing that jumps out obviously to me anyway is margin interest. $196 million for the quarter. People are trading their asses off and using leverage to do it.
- [46:27]
A
Wait a minute.
- [46:28]
B
Believable.
- [46:28]
A
They made $196 million in 90 days on margin interest.
- [46:35]
B
I mean, this is a stock aside. This is a good business. They are printing money.
- [46:40]
A
They're loan sharking their users on, on margin.
- [46:44]
B
They're giving people what they want. I love this chart. I love this chart. I love this chart. This is showing. Okay, so on the one hand, yes, there is a not so small percentage of the, of the user base that is having a good time, that is speculating. But this chart is showing the average cumulative net deposits which has grown over time across their funded customer cohorts and recent cohorts. So the light yellow, okay, the 2021 cohort. You, you see that over time and how it's growing. But look more recently, look at the top line, the people that are putting money in today. These are legitimate deposits. Like people are, people are growing up, they're aging and I love it. I think this is a cool chart.
- [47:29]
A
It's fun. It's funny because this was the. One of the best performing stocks in the S P last year or maybe the best. And I guess I just didn't look at that and think that it was so heavily reliant on bitcoin. And you know, last year was like the first full year of Trump 2.0. And he's like the bitcoin president. And like in the end, like bitcoin didn't finish the year very well. It peaked in October, but like Robinhood held on. And then this year, I guess when bitcoin got into the 80,000 ish range, that was it. They just pulled the stool out from under the Stock.
- [48:09]
B
Guess what? Q1 numbers for crypto for the rabbit reports, I'm guessing are going to be an absolute disaster.
- [48:16]
A
Unless like, yeah, people aren't going to trade more though.
- [48:20]
B
Sentiment falls. Sentiment is D, E, D. All right, here's another good chart. They continue to gain market share over time. Look at the equities. It was 45 basis points of all trading in 2022. It's up to 1.1%, which is a remarkable number when you consider like how deep the market is. Options, market share, they've got 7.5% margin market share, crypto. I mean, the business is the business. They're, they're winning, they're, they're doing phenomenal work. The street doesn't like it for reasons that are obvious right now. But here's one other negative point in the report that I saw. Next chart. Monthly active users decreased by 1.9.
- [48:59]
C
What?
- [49:00]
B
Yeah, that was surprising.
- [49:01]
A
And this is Q4.
- [49:03]
B
Yeah. So that's not great. That's not great. And worse, or maybe just as bad, annualized revenue per employee was down 2% year over year. So they've got some things to figure out, some things to work through. But these are growing pains. Am I like not a short term call on the stock because the street doesn't like it right now. But the business, this is a very good business. They're doing a good job.
- [49:24]
A
So somebody who is bearish on Robinhood or pessimistic on their model would say people are losing too much money in bear markets relative to what other brokerage customers lose. And they're burning by, by enabling the type of trading that we talk about a lot. They could be burning the long term value of these customers because people blow up and go away in a way that they don't do on necessarily on legacy platforms like Fidelity. I think it's a, I think it's a reasonable point. I don't know if it's true. It might not Be true. But it's a reasonable concern.
- [50:04]
B
Of course it is. Of course it is. I'm not sweeping under the rug out of hand. I just think that, that, that is, I'm making this up 3% of their users. I have no idea. I don't think like all the users showed me them.
- [50:17]
A
But you just showed me the margin number. That can't be three. The users generating $200 million in margin fees. Not possible.
- [50:24]
B
But you're assuming that everybody who's using margin is blowing up.
- [50:27]
A
Yeah.
- [50:27]
B
And they're going to go and they're going to go away.
- [50:29]
A
You forget, I was a retail broker for 12, 11 years. A pretty good assumption. Taking care of business. Loco in the chat says prediction markets cannibalizing their own customers. So I had this thought. I wouldn't exactly phrase it as cannibalizing their own customers, but like, you know, they're making this big splashy launch into prediction markets. We can't possibly think that that's going to be a winning adoption for most of the people who go there. Now, I know the trades are small and probably don't ruin people's lives, so I'm not worried about that. But to some extent, if you show somebody a game like that, they don't necessarily have more money to play it. They just play less of a different game. And in fact, some of the crypto people are talking about how prediction markets have given traditional crypto players a new, more exciting game to play and that that could be behind the sell off in Bitcoin Eth Sol. Again, I can't prove or disprove it. I'm just telling you what people are saying. Is it possible that there is cannibalization because you just put too many shiny things in front of the same baby?
- [51:39]
B
Perhaps.
- [51:40]
A
Okay. I mean, you know, it's a thing that people, many people are saying this. I'm just reporting what I hear. You know, I'm talking to people all over town, so.
- [51:51]
B
Okay. Anything else?
- [51:52]
A
What did Mizuho say I'm gonna give you? I mean, not much. Dan Dolev, friend of the show Quick, quick, Perspective. Prediction markets were strong, but overall mixed quarter. And he points out average revenue per user. $191 versus the estimated 200. That's a big ARPU is ARPU is the big number for these stocks, like in the end. All right, let's keep going.
- [52:20]
B
Okay. We could blow through this. I just, I don't know. I thought this was interesting to take a look at. Remember, remember the DJ and Dao from 2021. These names. These names have. This is. You know what? You know what this is? This is that JP Morgan report that we love titled the Agony and the Ecstasy of Stock Picking. I never forgot the stat. It was seared into my brain. Why stock picking is so hard. 40% of all companies in the Russell 3000 had a catastrophic decline from which they never recovered. 4 out of 10. And they defined that as a 70% decline from which no material rebound has ever occurred. And that's what. Exactly what this chart is showing. Shop for 2021. So we're looking at GameStop, AMC Moderna, Teladoc, DocuSign, Zoom, Peloton Shop, Roku, and. And Block, formerly known as. Or Square God. So look at these names. These names. This is exactly what that report is highlighting.
- [53:22]
A
Dude, imagine somebody like Rip Van Winkled this portfolio in 21 and just like stop logging in and forgot it. You check back and it's like, wait, I held these stocks for six years. I'm down 80%. Correct. 80%.
- [53:35]
B
So the 2026 version of the. Our DJ Dow, which we spoke about. Next chart, please. We first spoke about this in December 2020.
- [53:44]
A
I still love that we created this. We haven't done a lot with it, but it's. Are any of these stocks delisted since we created this D gen Dow?
- [53:53]
B
I. I don't know.
- [53:55]
A
All right, for the, for the listener, what are some of the tickers in here? Michael.
- [54:00]
B
Archer. See Apple. Well, that, that one. Coinbase, carvana, what's. Oh, DJT, DraftKing. This.
- [54:07]
A
Real stocks in here. Roblox, Palantir, Nvidia. These are just stocks that the degens. It's not that the stocks necessarily are degen stocks like the, like the companies most. This is what. This is what the degens like to trade. And there's been new ones since. There's been new ones.
- [54:29]
B
Then rigatoni's down 69.
- [54:32]
A
I mean, what a disaster.
- [54:34]
B
So, all right, let's. Let's keep.
- [54:36]
A
All right, let's say something uplifting. Spotify. Nice. I don't even know if it held throughout the day, but the initial reaction to Spotify's earnings was very positive. And I sort of. I look at Netflix, which I have a tiny amount in still after having sold it. I sort of think like one. One day Netflix is going to do this on a quarterly bounce.
- [54:58]
B
It's still.
- [54:59]
A
Give me the Spotify chart one more time, guys. Like, look, this is a stock that's been basically in free fall for the last six months. It peaked last June, end of last June it was 800. It hit 400. So it bounced today to 476. Nobody's throwing confetti.
- [55:19]
B
What do you think the story is here? Like, do you think that it's like a YouTube story? Like why is, why is Spotify getting pummeled? Because the business is on fire.
- [55:28]
A
Yeah, but YouTube is, it's a three way fight now for podcast talent. And Netflix is spending money and pulling shows off of YouTube. They are showing some of the shows that Netflix has brought on. Continue to show video on Spotify. But it's just like it's a fight now. It used to. So podcasts were an audio medium. It was basically yet Apple and Spotify and then a bunch of also rants that have now disappeared. But all the podcasts are doing video now. And as a result it's not just Apple, podcasts and Spotify. It's a much deeper field of. And now shows are getting bought and almost like cable networks, you know, like, like, like if you think about Netflix is like building sort of an hbo a very high, very highly rated shows and just pulling them out of circulation one by one. And we've already seen Spotify go through these phases where they've spent a ton of money on content and on shows and we're not even sure that was even good for them.
- [56:39]
B
Yeah, but the business, you're not seeing it in the, in the numbers. Like the business is humming.
- [56:45]
A
The business is fine. I just think, I think Wall street understands that in the end people only have two ears and two eyes and they really can only pay attention to one maximum two things at once. So they might have Netflix on screen and in their hands is Twitter. Or they might have a football game on Amazon prime, you know, on the TV and then on the phone in their hand is their email. But like people can't have three things going at once. And you just reach a point where there are too many apps, too many shows, too many options, too much user generated content, too many social networks and it's just like nothing can break through anymore.
- [57:30]
B
You're absolutely right.
- [57:32]
A
Splintered this into micro audiences.
- [57:34]
B
You're absolutely right. And also, what would you say, what will you say if Spotify ever makes a new 52 week high?
- [57:42]
A
Oh, like what are the chances of that?
- [57:45]
B
No, I'm just saying like the story that you're narrating today is accurate.
- [57:50]
A
Yeah.
- [57:51]
B
Okay.
- [57:51]
A
Although I'm not saying it's permanent, but.
- [57:53]
B
Like the stock could start working again. I don't know what, what would cause.
- [57:56]
A
It to Spotify is one of the last things that I could personally cancel. It is so important in my life and I spend so much time listening to podcasts and music. Two of my favorite things in the world. Spotify is like one of the final things that I would cancel and I think a lot of people are like me and I think this stock does not get enough credit for that. And let me give you some of the superlatives from the from the quarter largest ever wrapped campaign. Over 300 million users engaged and they did a ton of stuff like wrapped like celebrating what you listened to this year around Christmas Q4 25 revenue grew 13% year over year. Premium revenue was 14% growth. Advertising revenue was up 4% people don't even think about this as an advertising business. Gross margin expanded to 33.1% up 83 basis points year over year. Full year 25 revenue up 13%. Gross profit up 20. Operating income up 50. And then the guidance they just gave us Q1 guidance. 759 million MAUs which would be up 8 million sequentially and 293 million premium subs. How many companies on earth have 293 million people paying them for anything? Probably 10 or less companies.
- [59:24]
B
Daniel said.
- [59:25]
A
Incredibly important platform.
- [59:26]
B
So this was Daniel X last conference call as a CEO. He said they've got three quarters of a billion listeners throw this chart on. I had Claude make this like they're, they're just. They're so dominant and they're getting no credit for it.
- [59:43]
A
Now nobody can buy this thing.
- [59:47]
B
It's 100 billion dollar market cap.
- [59:49]
A
It's a hundred billion dollar market cap. It's. It's a 60 times earnings. It would not be accretive to any buyer. No one's going to do it. And it's European which means you have to jump through all their circus. You know you have to jump through the whole three ring circus with the EU and Denmark or wherever this thing is from Sweden. It's like it's an impossible acquisition but it's interesting to watch people fight over Warner Brothers. And now you got this thing out there with 300 million paying premium subs but it's no one can buy it. Maybe that's part of the bull case.
- [60:25]
B
Monster business they were. They were asked about about AI of course and Claude, the new CEO co CEO said an engineer at Spotify in their morning commute from Slack on their cell phone can tell Claude to fix a bug or add a new feature to the iOS app. Once Claude finishes the work, the Engineer then gets a new version of the app pushed to them on Slack on their phone so that they can merge it to production all before they even arrive at the office. They're calling that hunk. Whatever. Some of the stuff that we're going.
- [60:54]
A
To see, the Jetsons. We get to work 24 hours a day now. It's amazing.
- [60:57]
B
Amazing.
- [60:58]
A
So cool. All right, last, last topic before we get to make the case in mystery chart. We have to talk about the travel stocks today. And yes, I get the yesterday and today give me Marriott. So we've. I've made the case for this on the show. Congrats to people that listen to me. This is one of the ones you don't have to curse me out about because it actually worked. This is what the consumer is doing. And don't tell me that this is all top 10% people. This is Marriott, okay? It's not all JW. There's some Courtyard Marriotts in there and God knows what else and they have nothing negative to say on the consumer. Or if they say it's K shaped. Well, more people are in the right part of the K than the wrong part of the K. Can I show you Hilton too before?
- [61:55]
B
Yes, same thing.
- [61:57]
A
Not I mean we. So I pitched this on this is the best stock in the market. A couple weeks ago we did this on tv. So this is like this is what the consumer is doing. And again Hilton is not the Amman like, like Hilton is everybody.
- [62:11]
B
All right, so earlier we said it's a market about to top right. You lost the leadership knees. Can the market work without the Mag 7. We didn't mention something so important. The economy is fine. These names that you're talking about the consumer that powers the economy. Hilton's not at an all time high because the consumer is not spending money. You have a Fed chairman that is going to probably come in here and lower rates. You've got accommodative monetary policy. Inflation is fine. Like the macro backdrop. You've got these companies spending giga billions of dollars. It's hard to see the market just falling out of bed.
- [62:46]
A
Now what's so great about Hilton and Marriott is that they. It's like Costco without all the inventory in the stores. They don't own any of these properties. I think Marriott owns one hotel and Hilton owns 10 or something like that. They people think they own the buildings. Nope, they are a point now. It's a loyalty points business. That's it. The whole thing. They're marketing and loyalty points and then they get paid to manage the hotels. So it's, it's a. So it's sort of halo because a Marriott hotel is a physical thing but it's sort of not halo because they're really a marketing business and the loyalty points is makes the whole thing. That's the whole reason why a hotel developer approaches Marriott and says we want to license Marriott, we want to have you manage the hotel so that you have this guaranteed influx of people staying there because they're part of Bonvoy and all these points programs and Hilton is the same way and people think that these are real estate or these are like building owners and it's the opposite. It's the brands and driving people to the properties. This one, I'm not sure about this. Give me Expedia. They're going to report this week. This chart you'll notice does not look at all like Marriott and Hilton just has been absolutely hammered year to date. I think this is part of the AI disruption story. Here are the expectations. Revenue up 7.1% year over year and earnings up 41% year over year. If they deliver that and the stock doesn't react to the upside, I don't know what to do. But I think people are worried about Expedia being easily disintermediated by a chatbot that finds you hotel rooms or a chatbot that books your flights for you. Like I. So that's that this is a really interesting travel name because they are not benefiting in the same way. The, the Halo hotel, this is Expedia is very much not Halo. I would just say that. So they're going to report I think on Thursday.
- [64:57]
B
Okay. All right, I'm gonna make the case for the only stock that I own individually in my personal account. It's a stock that I've made the case for before. Last time it was April 2025. So it's not like I did this yesterday and I'm making the case for IMAX again because A it's working. B I don't think you missed it. The stock is not extended and it's a 2 billion dollar market cap. It's still A, it's still a modest IMAX is Halo. IMAX is Halo. So I got an email today from Jennifer Horsley. Jennifer is the Senior VP of investor relations and she won't respond to my emails. I'm trying to get Rich Galon to see on the show. So if anybody knows Jennifer, please send to this video. All right, let's get right to it.
- [65:38]
A
You didn't ask me to do this, please.
- [65:39]
B
All right, so this is what the email said. Dear IMAX investment Community, IMAX momentum has carried into 2026 with strong January box office growth. The IMAX January box office of $80 million grew 16% year over year propelled by Avatar, Fire and Ash, where IMAX has delivered 13% of the total box office cumulative to date versus 11.3% on Avatar, way of Water as many have seen recent Oscar nomination Spotlight and my IMAX's strong partnership with leading filmmakers. Of note, five of the 10 best picture titles played in IMAX, including three standout releases where IMAX delivered 20% or higher of the opening weekend domestic box office, including Sinners, One Battle after another and F1 the movie. Let me show you some charts. Look at this brand awareness. I don't know how this is quantified, but they've got it. They're comparing themselves with ESPN and Marvel and HBO Max and Spotify. The brand is super strong and you think about who the audience is. This is a bit of a face blower, Josh. Look at this diverse audience base. It's not just for fanboys. Everybody half about half male, half female.
- [66:55]
A
Yeah.
- [66:56]
B
If you look at the age, dude, young people are going to the theater. Look at this 25 to 34 demographic chart off please. I don't know why this angel just walked into my office, but look at this cutie patootie.
- [67:07]
A
Oh my God. What's a. Are you going to take him to an IMAX movie this year?
- [67:11]
B
We're seeing Goat on Friday night. Okay, let's keep it moving. 2020, 2020 25. So this is from investor day and this is in December, was on track for the best year in IMAX history. 33% IMAX box office up. Yeah, the system, I mean it's all, it's all working. And then 2026, it's the same thing. Leveling up for another record year. Their guidance is to all time highs on the system installations, the box office and the stock is working and it has been working and it's a volatile stock. Right. It's a small, it's a small market cap. But there's a special story here that's happening and I think this is going to continue to work well.
- [67:50]
A
They're going to have possibly the biggest, one of the biggest events in the decade for cinema this summer when the Odyssey debuts. Is it a summer movie or a Christmas movie? I don't even know.
- [68:03]
B
It's, it's, I believe it's summer when they announced ticket sales a year in advance, which is never. Everybody was like, what are you doing? And guess what? They sold that in two. Was a two hour. I, I can't, I tried to get tickets. You can't get them.
- [68:18]
A
And some of these IMAX screens are nothing special. Like they're larger than the traditional format, but they were like retrofitted into a traditional multiplex. The real IMAX, the 70 millimeter, there's only like six of them on the continent of North America. Like there. I happen to have gone to one for one battle after another in Fort Lauderdale. They have one in a science museum, the 70 millimeter IMAX. And. But they're rare. There's one in Manhattan at Lincoln Square. It's not like 100 of them. Can you imagine if there was?
- [68:51]
B
And also so, so China's going nuts. They're doing a ton of business there. And Dune 3 is going to be another mega, mega, mega IMAX hit.
- [69:00]
A
And that's this summer too, right? Or this year.
- [69:02]
B
They're doing 20% of the total global box office in iMaxes. For a lot of these, these names. It's an event that people are coming out.
- [69:10]
A
Yeah, no, it's, it's a great stock. And I think if they weren't based in Toronto, if they, if they were like, if this was like a New York or an LA based company and had more visibility with US investors, I think the stock would be materially higher. I don't know what, I don't know what you do about that. It's just, that's just the reality.
- [69:28]
B
I'm waiting.
- [69:29]
A
Yeah. All right. Great pick. I love it. Let me do the mystery chart and then we'll get out of here. This is an industry group within the financial sector. So it's a sub industry group. It's an, it's.
- [69:46]
B
I gotcha.
- [69:46]
A
How do I put this? It's not an, it's not an industry group. It's a sub industry group. It's like even, even smaller. Carve out of an industry group. But there's a lot of stocks in it. There's at least 25 stocks in it.
- [69:57]
B
Insurance?
- [70:00]
A
No, capital markets. I'll give you two more. What is it? What's the next guess?
- [70:07]
B
Capital markets.
- [70:08]
A
Close but no cigar.
- [70:10]
B
Okay. I don't know. What is it?
- [70:12]
A
Okay, it is within capital markets. But I told you, it's a sub industry group. It's a broker dealer index etf. I says the US Broker dealers and securities exchanges etf. And this is, this is so Robinhood's in here. This is about to get really interesting, I think because now the question becomes, all right, we know a lot of these companies in here are reliant on crypto these days. We know a lot of these companies in here are reliant on not getting disrupted by AI. But now we see like what happened with Schwab and Raymond James today and like we like starting to get the first inklings that maybe the brokerage business can be disrupted by new AI tools and possibly new AI driven platforms for trading. And then there's the whole prediction market angle. Some of the companies in this index, I'm going to show you them in a second, benefit from increased volatility. So give me that, give me that chart. Because it's not just broker dealers, this broker dealers and exchanges. So Goldman Sachs Number one waiting, it's 10, 18%, Morgan Stanley's 14. Put those aside. Schwabis 3, CME Intercontinental, Moody's is in here. MSCI S&P Global. So these have all been annihilated. NASDAQ Interactive Brokers, LPL Financial, Raymond James, cboe, Robinhood, Coinbase, this would you agree with me, like there is some, there's fireworks in this group or potential fireworks in this group coming up in the, in the next couple of months.
- [71:51]
B
This is really interesting because we had a chart, I can't remember who made this chart. It might have been S and P actually, ironically enough that showed like dispersion within sectors and basically there's no point in picking individual energy names because they all move the same. Like they're all the same trade. Not this, that basket. The dispersion is a shotgun. There are serious winners and losers. It's a really interesting basket.
- [72:15]
A
Yeah, we're going to keep an eye on that. Maybe we'll, maybe we'll, we'll pick that up and do a segment on it in a, in a couple weeks. All right, guys, I know we ran late. Thanks for hanging with us. Want to say, say a special thank you to everybody in the live chat. Those of you listening to us on Spotify, on Apple, thank you so much. We appreciate it. Please leave a rating and review. Tomorrow is Wednesday which means an all new Animal Spirits with Michael and Ben first thing in the morning. When you arise, we'll have an ask the compound this week and we will have a compound and friends at the end of this week. Keep it locked. We'll see you soon. Thanks again.
- [73:02]
C
Ritholtz Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Ritholtz Wealth Management and its representatives are properly licensed or exempt from licensure. Nothing on this podcast should be construed as and may not be used in connection with an offer to sell or solicitation of an offer to buy or hold an interest in any security or investment product. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by Ritholtz Wealth Management unless a client service agreement is in place.