The Week We All Found Out

Summary

The Compound and Friends – Episode: "The Week We All Found Out"
Release Date: August 8, 2025
Hosts: Downtown Josh Brown, Michael Batnick, Sam Rowe
Guest: Luke Kawa
Description: Join Downtown Josh Brown, Michael Batnick, and a rotation of their friends every Tuesday and Friday for expert insight and hot takes on the latest in business and investing.

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Overview

In this episode of "The Compound and Friends," the hosts—Downtown Josh Brown, Michael Batnick, and Sam Rowe—welcome returning guest Luke Kawa. The conversation spans a range of topics including personal challenges, investment strategies, the impact of AI on the economy, data integrity concerns within governmental agencies, and celebrating achievements within the financial media community.

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1. Sam Rowe’s Apartment Flooding Experience [03:04 - 07:06]

Sam Rowe opens up about a recent personal ordeal where his downtown Brooklyn apartment was flooded for the second time. He details the challenges of dealing with water damage, including the remediation process involving industrial dehumidifiers and replacing drywall to prevent mold growth. The experience underscores the frustrations tenants face with landlord responsibilities and the resilience required to manage repeated disruptions.

Notable Quotes:

• Sam Rowe: “So the rent, it's either frozen or you get credited for the time you're not able to access the apartment. And then they reimburse you for the hotel, and then anything that's damaged gets replaced.” [05:33]
• Josh Brown: “Do we have your landlord here? Duncan, would you like to apologize?” [05:24]

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2. Navigating Alternative Assets in 401(k) Plans [20:00 - 25:00]

The discussion shifts to recent policy changes allowing private equity, real estate, cryptocurrency, and other alternative assets within 401(k) plans. The hosts debate the potential benefits for educated investors versus the risks posed by higher fees and the suitability for average participants. They explore whether this shift represents a democratization of sophisticated investment strategies or exposes retail investors to undue risks.

Notable Quotes:

• Sam Rowe: “I think even the existence of people like us talking about investing and having listeners who are sort of in control of their 401k plans already makes our work more complicated.” [21:28]
• Michael Batnick: “This has been a week for you. What happened?” [20:50]

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3. AI's Role in Economic Growth and Potential Bubbles [29:00 - 51:00]

Luke Kawa leads an in-depth analysis of AI capital expenditures (capex) and their disproportionate impact on U.S. economic growth compared to traditional consumer spending. The hosts express concerns about whether the current surge in AI investments resembles historical infrastructure bubbles, such as the railroads and telecom sectors. They discuss the sustainability of AI-driven growth, the possibility of obsolescence in rapid technological advancements, and the broader implications for the stock market and the economy.

Notable Quotes:

• Luke Kawa: “Consumers want to spend a lot, so you have to produce more. The second is a big boom in commodity prices that tends to be more localized.” [32:06]
• Sam Rowe: “It's possible for an industry that completely takes over the economy, the stock market, the growth narrative...” [54:48]
• Michael Batnick: “Apple's total operating expenses from the report for the last nine months was $46 billion. So where does $100 billion come from?” [19:07]

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4. Data Integrity and the Firing of the BLS Commissioner [59:00 - 64:00]

The conversation addresses the recent dismissal of the Bureau of Labor Statistics (BLS) Commissioner, highlighting concerns about the politicization of economic data. The hosts discuss the potential ramifications for financial markets, emphasizing the importance of trustworthy data for instruments like Treasury Inflation-Protected Securities (TIPS). They debate the implications of reduced response rates and funding for data collection, questioning the feasibility of maintaining data integrity amidst political pressures.

Notable Quotes:

• Michael Batnick (Reading from JP Morgan): “Having a flawed instrument panel can be just as dangerous as having an obediently partisan pilot.” [60:11]
• Luke Kawa: “Do you think you could collect accurately data on how many jobs are changing in a month in an economy of a couple hundred million jobs? I don't think I can.” [62:29]

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5. Celebrating Joe Weisenthal and Tracy Alloway from Odd Lots [64:00 - 73:00]

The hosts celebrate the Odd Lots podcast by Joe Weisenthal and Tracy Alloway for being featured in the New York Times. They share personal anecdotes about their interactions with Joe and Tracy, highlighting their mentorship and influence in the financial journalism space. The segment underscores the value of thoughtful reporting and the impact of quality media on the investing community.

Notable Quotes:

• Michael Batnick: “Tracy is someone who will take the time on every piece not just to give you a fish, but to teach you how.” [65:31]
• Josh Brown: “Joe is the true everyman covering economics.” [69:20]

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6. Announcements and Future Proof Festival [73:00 - Close]

The episode concludes with upbeat announcements about the upcoming Future Proof Festival, featuring performances by Bush and Blues Traveler. The hosts share light-hearted banter about the festival lineup, personal plans, and express excitement for upcoming events. This segment adds a personal and communal touch, celebrating the intersection of finance and culture.

Notable Quotes:

• Sam Rowe: “I'm doing some late summer house cleaning. I'm throwing crap out like crazy. I'm turning into a full minimalist.” [71:33]
• Luke Kawa: “Looking forward to that more. I think it's gonna be an incredible adventure.” [72:34]

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Key Insights and Conclusions

1. Personal Resilience: Sam Rowe's experiences with apartment flooding highlight the importance of tenant rights and effective landlord responses in mitigating personal crises.

2. Investment Democratization vs. Risk: The inclusion of alternative assets in 401(k) plans presents both opportunities for diversification and potential risks due to higher fees and the complexity of these investments for the average investor.

3. AI as a Double-Edged Sword: While AI investments are driving significant economic growth and stock market performance, there is an underlying concern about sustainability and the formation of a potential investment bubble reminiscent of past infrastructure booms.

4. Data Integrity is Crucial: The politicization of economic data collection, as evidenced by the firing of the BLS Commissioner, poses a threat to market stability and investor confidence. Reliable data is essential for informed decision-making in financial markets.

5. Mentorship and Influence: Recognizing key figures in financial journalism like Joe Weisenthal and Tracy Alloway underscores the role of quality reporting and mentorship in shaping informed investors and professionals.

6. Community and Culture Integration: Events like the Future Proof Festival exemplify the blend of finance and cultural engagement, fostering a sense of community among professionals in the industry.

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Notable Quotes with Timestamps:

• Sam Rowe: “Do we have your landlord here? Duncan, would you like to apologize? Is there anything that you want to say to Sam?” [05:24]

• Sam Rowe: “It's possible for an industry that completely takes over the economy, the stock market, the growth narrative...” [54:48]

• Michael Batnick (Reading from JP Morgan): “Having a flawed instrument panel can be just as dangerous as having an obediently partisan pilot.” [60:11]

• Luke Kawa: “Consumers want to spend a lot, so you have to produce more. The second is a big boom in commodity prices that tends to be more localized.” [32:06]

• Michael Batnick: “Apple's total operating expenses from the report for the last nine months was $46 billion. So where does $100 billion come from?” [19:07]

• Josh Brown: “You can't buy a standalone biotech stock in a 401k because the guardrails that exist are like, you're buying funds, fund administrator, plan administrators, they're putting in these menus of like very diversified funds.” [28:31]

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Follow the Hosts and Guests:

• Sam Rowe: Twitter Handle
• Luke Kawa: Follow on Sherwood News
• The Compound and Friends Podcast: Subscribe

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Thank you for tuning into "The Compound and Friends." Stay informed and engaged with the latest in business and investing every Tuesday and Friday.

Transcript

[Josh Brown]

Whoa, whoa, whoa. Stop the clock.

[Sam Rowe]

He's been here. Look.

[Michael Batnick]

Duncan, welcome back.

[Josh Brown]

We've been here. Oh, Duncan's back. Oh, my God.

[Sam Rowe]

Awesome. Sam, welcome back. Thank you.

[Michael Batnick]

Thank you.

[Sam Rowe]

How you doing, man? We'll get you right down here at the end, across from Josh, right?

[Josh Brown]

Hi, Luke.

[Luke Kawa]

Nice to have you.

[Michael Batnick]

Come on in. Sam, you got to be close to number one. Repeat guest.

[Josh Brown]

Ukraine.

[Sam Rowe]

Yeah, maybe so five. This is seven, brother.

[Michael Batnick]

What do you got? Seven.

[Sam Rowe]

This is seven.

[Michael Batnick]

All right, so you're 100% number one.

[Josh Brown]

No way. Really?

[Sam Rowe]

Yeah. Why do you guys.

[Josh Brown]

That is awesome.

[Michael Batnick]

Why do we keep inviting you?

[Sam Rowe]

A lot of people canceling or something?

[Josh Brown]

We love you.

[Sam Rowe]

Do you guys get a lot of nose?

[Josh Brown]

No, we don't get nose anymore.

[Sam Rowe]

It's not a.

[Luke Kawa]

Dude.

[Michael Batnick]

We were just talking about Mr. Buffett, so. Actually, you know what?

[Josh Brown]

This is awesome. Thank you.

[Sam Rowe]

Yeah, you bet.

[Michael Batnick]

There's gotta be a better answer than Warren Buffett as the number one person you'd want to have dinner with. That's kind of a lame answer. Number one for what number one person you want to have dinner with?

[Josh Brown]

Nicole asks. You could have dinner with anyone, living or dead.

[Michael Batnick]

It's so cliche, right?

[Josh Brown]

I said Warren Buffett, but living.

[Sam Rowe]

Oh, my God.

[Josh Brown]

All right, here's a good question. Nicole posted a video of me walking around last week on YouTube. And I guess most of the videos, I'm seated and people in the comments were like, holy shit, Josh is tall.

[Luke Kawa]

People didn't know that? I thought that was one of the very known things about you.

[Josh Brown]

Apparently, I give short.

[Sam Rowe]

Really?

[Josh Brown]

I'm telling you. Did you see it?

[Michael Batnick]

You're very beta.

[Josh Brown]

Did you see how many messages were like, wait a minute. Josh is gigantic.

[Sam Rowe]

There's so many group pictures of you.

[Josh Brown]

I guess these are people that don't see the photos and they just watch the video.

[Michael Batnick]

I thought they were gonna comment on the labubu, which is predictably ridiculous.

[Josh Brown]

You said I give short energy. What does that mean? When did I say that? Last week. When I'm like, why is everyone in the.

[Luke Kawa]

So I talked to Dan on this, and he also thought you were gonna.

[Michael Batnick]

Be short when he was hired.

[Josh Brown]

Where is he? Bring him. Bring him to me at once. Dan thought I would be short also. All right. There's something about maybe the way I sit that gives short. That gives, like, an impression. Is that him? You get me Dan.

[Michael Batnick]

Get me. Dan's wired.

[Josh Brown]

Where is he? Come here. Get on Duncan's mic. Nicole said that you thought I was short before you met me in person. Oh, I Did. All right. But we're trying to figure out why everyone in the YouTube comments was surprised that I'm tall.

[Luke Kawa]

I don't know.

[Michael Batnick]

I know why.

[Josh Brown]

Why?

[Michael Batnick]

Because your energy is very like aggressive. Like you're a short guy trying to be not short.

[Josh Brown]

Is that. Was that your impression?

[Luke Kawa]

No. No.

[Josh Brown]

Why did you think I was short? You just. It just looked like I was.

[Michael Batnick]

Yeah, I just.

[Josh Brown]

I'd never seen you setting up and I was just, you know, surprised. All right, there's no good answer.

[Sam Rowe]

There's absolutely no good answer.

[Josh Brown]

You're dismissed.

[Luke Kawa]

You know what?

[Sam Rowe]

Here's the way to think of it for the record.

[Josh Brown]

Six two. 186 two. Yeah.

[Sam Rowe]

Are you sure it's not like six one and three quarters kilogram? Is this like a one?

[Josh Brown]

I'm 62 and my 16 year old son is 61. I think he's me. Taller than me. Yeah.

[Michael Batnick]

Oh, boy.

[Josh Brown]

I think he's me. Taller than me.

[Luke Kawa]

How tall is your wife?

[Josh Brown]

Not tall. Five. Three. Five. Five In Louboutins. Yeah. So I don't know. Did you. You like. You surprised by that? That I'm giving short to the, to the audience? You're not surprised?

[Sam Rowe]

I think. I think people are probably getting used to finding out that I'm going to sit up. People in real life are shorter than you expect. Like Tom Cruise and Al Pacino.

[Michael Batnick]

4 foot 6.

[Josh Brown]

Yeah, me and Tom Cruise. Everyone always says.

[Michael Batnick]

All right, so Sam, this has been a week for you. What happened?

[Sam Rowe]

Yeah, it's been an interesting one.

[Josh Brown]

Can we get into it a little bit?

[Sam Rowe]

Yeah, sure.

[Josh Brown]

Okay. So you have been displaced from your apartment?

[Sam Rowe]

Yeah, I just moved back in two days ago.

[Michael Batnick]

But not your first rodeo?

[Sam Rowe]

Not my first rodeo. So my apartment got flooded.

[Michael Batnick]

It's your second rodeo.

[Josh Brown]

Oh, just for the listener, share the street address.

[Sam Rowe]

I'm in an apartment building in downtown Brooklyn in that development area, and I was actually out of town and I got a phone call from my landlord saying that the person upstairs left their kitchen sink running.

[Michael Batnick]

But who was this? Blackstone.

[Josh Brown]

Right.

[Sam Rowe]

Blackrock or Blackstone. Yeah.

[Josh Brown]

So what, it came through the ceiling or through the wall?

[Sam Rowe]

It came through the ceilings and the wall. So, you know, by the time people realize there's a water problem, it's usually already in the wall. That seems to be like the rule.

[Josh Brown]

Yeah, but then they have to remediate. It's not enough to just dry it because now you can have mold.

[Sam Rowe]

So this was my. So since this was my second time, I was able to witness the entire process when it happened. The first time. And, yeah, like, by the time the water is still, like, being mopped up, there's, like, a SWAT team comes in with, like, the dehumidifiers and the fans and a guy sawing out all of, like, the wet drywall.

[Josh Brown]

They have to pull the drywall out and redo it.

[Sam Rowe]

Yeah, because of mold and all that stuff.

[Josh Brown]

All right.

[Sam Rowe]

And, yeah, they just leave industrial dehumidifiers on for, like, four days until the place is like a desert.

[Josh Brown]

So that's two strikes on this landlord. All right, for any attorneys in our audience, we might. We might have need of your services if this happens again. I don't think we're going to put up with it.

[Michael Batnick]

But how does this work? Because you have to pay for a hotel.

[Sam Rowe]

All that gets reimbursed. So the. The rent, it's either frozen or you get credited for the time you're not able to access the apartment. And then they. They come, they reimburse you for the hotel, and then anything that's damaged gets replaced.

[Josh Brown]

Okay. And now we have your landlord here. Duncan, would you like to apologize? Is there anything that you want to say to Sam?

[Michael Batnick]

Sits close to home.

[Josh Brown]

I have.

[Luke Kawa]

The.

[Michael Batnick]

Happened in Brooklyn.

[Sam Rowe]

Yeah, I remember. You were talking about this where my place got flooded two years ago.

[Luke Kawa]

Years ago, neighbor went to Europe during the winter and left their heat off, and so their water pipes busted.

[Josh Brown]

Holy shit.

[Sam Rowe]

Well, I mean, that's. That's kind of the funny thing about this. It's. It's not an uncommon story to hear about water damage, flooding kitchen sinks, and all this stuff. But, you know, in that context, I thought my experience two years ago was pretty good. Like, sometimes this stuff draws on for. For months, like if the landlord doesn't care or if, like, if it's.

[Josh Brown]

That was you. That was you. So what? Well, how long were you out of your apartment for? It was months.

[Luke Kawa]

We never went back.

[Josh Brown]

You never went back?

[Luke Kawa]

It was.

[Michael Batnick]

Yeah, it was months.

[Luke Kawa]

And there was no.

[Michael Batnick]

No date in sight.

[Sam Rowe]

Right. And then, like, you know. You know, the. Everything from, like, covering, mold, inspection and.

[Josh Brown]

You have anything you care about get damaged or TV or anything?

[Sam Rowe]

No, I mean, this is actually in my lifetime. This is my fourth flood.

[Michael Batnick]

You must be uninsurable.

[Sam Rowe]

Yeah, I mean, I don't leave. I don't leave stuff on the ground. I don't.

[Josh Brown]

You're like the wet bandits. Now, what did being flooded teach you about B2B sales?

[Luke Kawa]

Nothing for that one.

[Sam Rowe]

You know, the funny thing is, I.

[Josh Brown]

Mean, so Jack Raines was here this morning. It's funny I should ask them.

[Sam Rowe]

Oh, yeah, he's in town. Yeah, he's in.

[Josh Brown]

He's in town. He's making the rounds.

[Sam Rowe]

So the B2B story is this stuff. Like, this is unavoidable. I mean, you guys are homeowners. You have disasters all the time.

[Michael Batnick]

That shit happens.

[Sam Rowe]

Yes.

[Josh Brown]

Every week. Something.

[Sam Rowe]

Something like, really the unusual thing would be, is if you never have, like, an issue in your house now, if it's happening like, every two weeks, and that's a whole other story. But, you know, once every two years, I have. I've had no other incidents in this building. And the landlord's, you know, overall great. Like, the way that they handle the situation is great. Like, you know, Duncan wasn't able to move back in. I'm back in, in eight days.

[Michael Batnick]

You roll with the punches.

[Sam Rowe]

Yeah, I mean, I think that's what makes me a great stock market.

[Luke Kawa]

You make content out of the punches. It's perfect. It's even better.

[Sam Rowe]

Yeah, I mean, you know, that's the other thing too, I think, you know, I've been scaling down in terms of crap that I keep in my house.

[Josh Brown]

Okay.

[Sam Rowe]

And. Because I don't know what it is, but, like, it can, you know, some stuff can be kind of like a psychological weight and a distraction or whatever.

[Josh Brown]

Oh, I agree with that.

[Sam Rowe]

I don't know what it is, but, like, I'm most productive when it comes to work when I'm not at home. So, like, if I'm at like a conference or something and go back into my hotel room for two hours, like, I could do like six hours worth of product.

[Josh Brown]

You're not surrounded by all your. Your toys and games.

[Sam Rowe]

Exactly.

[Josh Brown]

All right.

[Michael Batnick]

I'm working on that. So in my 401k, I just put on a trade. Will Sam's apartment flood next year? Thank you, Kalshee, for that.

[Josh Brown]

Yeah.

[Sam Rowe]

Nice. Yeah.

[Josh Brown]

Are you. Are you on the prediction markets right now?

[Sam Rowe]

Not yet, but I'll make sure that happens. Because, you know, why get insurance when you can just, you know, put money on self insure.

[Josh Brown]

I love that we've rebranded this as prediction markets and not gambling.

[Michael Batnick]

No, it's prediction markets.

[Josh Brown]

Yeah, sure it is. I love. I love it.

[Luke Kawa]

I bet that I don't gamble.

[Sam Rowe]

I predict isn't like the history of.

[Josh Brown]

I'm a degenerate predictor.

[Michael Batnick]

I can't. I cannot stop predicting.

[Sam Rowe]

Like in the. In Game of Thrones or whatever, the shorthand for the insurance guy was the gambler.

[Josh Brown]

Oh, really?

[Sam Rowe]

Yeah.

[Josh Brown]

Good to know. All right, we ready to Rock. You guys ready?

[Sam Rowe]

Yeah.

[Josh Brown]

Let's go here. All right, Duncan, you ready? Okay.

[Sam Rowe]

Coming in with three claps.

[Josh Brown]

All right, let's do it, Sean.

[Sam Rowe]

Episode 203 Whoa, whoa, whoa.

[Michael Batnick]

Stop the clock. Here's a word from our sponsor. Today's show is brought to you by our sponsors at Ben Advisor Solutions. If you happen to be thinking there's gotta be a better way to grow my raa, you're not alone. I With Betterment Advisor Solutions, we do the heavy lifting so you can focus on what matters most. Your clients. From improved service that makes asset transition smoother to fast paper free onboarding that delights clients on day one, we've built a digital first platform designed to streamline your operations and make life easier. Now, if you're thinking, wow, they take the paper out of paperwork, then you'd be right. Grow your RIA your way with Betterment Advisor solutions. Learn more at betterment.com advisors Investing involves risk Performance not guaranteed. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute.

[Josh Brown]

Yes, let's. Capturing value in fixed income is not easy. Bond markets are massive, murky and let's be real, lots of firms throw a couple of flashy funds your way and call it a day. But not Vanguard.

[Michael Batnick]

At Vanguard, Institutional equality isn't a tagline, it's a commitment to your clients. We're talking top grade products across the board of over 80 bond funds actively managed by a 200 person global squad of sector specialists, analysts and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com/fixed income.

[Josh Brown]

Institutional quality in this context is meant to convey a level of professional rigor and expertise combined with low costs. To learn more, visit vanguard.com all investing is subject to risk. Investments in bonds are subject to interest rate, credit and inflation risk. 2025 the Vanguard Group Inc. All rights reserved. Vanguard Marketing Corporation Distributor welcome to the compound and friends. All opinions expressed by Josh Brown, Michael.

[Michael Batnick]

Batnik and their castmates are solely their.

[Josh Brown]

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. 203 is a big one. Sam Rowe is back for you. Think it's the seventh time.

[Sam Rowe]

It's either six or seven.

[Josh Brown]

Oh my goodness.

[Michael Batnick]

Let's call it 6.9.

[Sam Rowe]

6.9.

[Josh Brown]

All right. We're gonna read you an introduction anyway, though. Okay, guys? Sam Rowe is the founder and author of Ticker, that's spelled T K E R, an award winning newsletter covering news, data and insights informing long term themes for investors and the economy. We love when you come on the show. Thank you so much for being here.

[Sam Rowe]

Thanks for having me.

[Josh Brown]

Appreciate it. We'll get a dehumidifier on you right in that corner, draw you out. All right, first time guest today, you guys. If you've been on financial social media at any point over the last 15 years, you know this dude. This dude is razor sharp. Covers the gamut. Markets, economy, predictions, you name it. Luke Kawa is the markets editor at Sherwood News, a media and research army of Robinhood focused on markets, business, tech, and the culture of money. Luke, thank you so much for being here.

[Luke Kawa]

Pleasure to be here.

[Michael Batnick]

Awesome.

[Josh Brown]

The crowd's going nuts. I don't know if you could, if you could hear that. They can't be. They can't be restrained. So you and I met once before in person.

[Luke Kawa]

Yes.

[Sam Rowe]

Okay.

[Luke Kawa]

We met. Gillian Tetz, backyard big financial, Bloomberg writer at the time. I was a Bloomberg writer at the time. And you had just, like, wrote something nice about something I wrote. So I was like, very happy that that was a big, big deal for me at. It would actually still be a big deal for me now if you did that.

[Josh Brown]

Wow. Yeah. No, I love your stuff. I've been reading your stuff forever. And when I was active on. On finance. Finance, Twitter, you were definitely one of, like, the key people that everybody follows. So really nice to get this chance to talk in person now. Your accent's interesting. I'm picking up Mississippi. All right.

[Luke Kawa]

Neil Dutt has already outed me on this show, so, yeah, let's not. Let's not beat around the.

[Josh Brown]

What, what, what province are you from?

[Luke Kawa]

I am from Ontario. Thank you for knowing provinces.

[Josh Brown]

Very good. Very good. I do. All right, guys, I want to. I want to play something. Okay. Ukraine. Getting it settled, Getting it ended. Should have never started. Would have never started. If I were president, it would have never started. I want to thank Tim Cook. He's a great, great man. A visionary, a businessman. Just about every quality he can have other than athleticism, I don't know, but I'm looking at him. I. I'm not 100% sure, but you're a good athlete. I'll bet you're pretty good. I think he's good at everything, but I want to thank you very much, Tim. Thank you, sir. Congratulations. Thank you all very much. Thank you, Mr. President. So Tim Cook went to the White House last night and brought Donald Trump. Let me, let me read this.

[Michael Batnick]

An iPhone.

[Josh Brown]

All right here. First, they announced another hundred billion dollars in U.S. investment. They're going to make some of the glass for Apple devices in Kentucky. I think that's a corning plant. Okay, very cool. With trembling hands, this is USA Today. Cook opened an Apple box he said was made in California, took out a circular plaque with an apple shaped cutout in the middle made of glass apparently made in Kentucky, and attributed the design to a former U.S. marine Corps corporal who now works at Apple. The plaque was set in a 24 karat gold base Cook said was made in Utah. Is Tim Cook like a, like a genius? Like, what else would you need to do? He got Marines involved, he got two red states involved. There's a gold. 24 karat gold. That's it. That's the secret. Why is it so difficult for everybody else? Why do we even have tariffs? Why doesn't everyone just bring him gold? I don't know. Is that, is that like a, for me as an Apple shareholder, I'm looking at that like, all right, good, problem solved.

[Sam Rowe]

Yeah, I think that's exactly it, right? You put on your shareholder hat and sort of separate the bizarreness of it all. People are going to fight all day long on Twitter about like, well, this is like, you know, giving gifts to an autocrat and all these things. And like, okay, you know, there's a, you can have that discussion. But like, just as a straight investor who needs to see that the companies that they perform, that they invest in, they need to operate and execute and, you know, what better way to execute in the world when you get the person who's basically running the world on.

[Josh Brown]

Your side, the gold, the 24 karat gold base of this, whatever the thing is, is not the point. He's not a six year old. It's the $100 billion investment in making glass for the phones in Kentucky. It's a step in the right direction. Right.

[Luke Kawa]

Well, I just, I look at it from not the perspective of a shareholder, but the perspective of a Verizon customer who now knows when I go to get my new iPhone in October, that like, I'm not facing nearly as much of a hit as I would have. But I think, like, this is just the proportional evolution of what the crypto folks have already done with Trump for some time.

[Josh Brown]

Right?

[Luke Kawa]

Like there's, there is a playbook for, for doing this, for pulling this off, and for minimizing damage. The one who seems to have done it most successfully without kind of just purely through a public pressure campaign, without really having to, you know, pay the tithe, as it were, is Jensen Long. Like, just the. What he was able to do in terms of getting the H1 hundreds back to. Back to China, also helping, you know, AMD in the process there. But like exclusions. Yes. Like, so that, that kind of pressure campaign to me almost strikes me as more revealing. But ultimately what this tells us and kind of what every deal has told us is that the inclination is not to blow everything up. Right? You just have to do something. And the Golden Apple is a hell of a lot of something.

[Sam Rowe]

Also, I don't know about how consistent the track record of these big commitments are.

[Josh Brown]

Oh, they never actually do anything.

[Sam Rowe]

They never actually happen.

[Josh Brown]

No, it doesn't matter.

[Sam Rowe]

Every couple of years you hear about some massive deal to invest for six or eight years or some time period where you know that president's not going to be around to even bother you. And then some article comes out and says, oh, it turns out Foxconn didn't actually build that plant in Indiana.

[Josh Brown]

Or look at, he's screaming about intel right now. Intel was supposed to make these huge investments and I guess they're slow. Like, I don't know.

[Luke Kawa]

But even the, like, even the semi 232 tariffs that were announced, like, think of how loose that is. All you have to do is say you're bringing manufacturing back at some point, have plans to do so. People can have plans for four years that never happened. And now we're already running down the clock on that. So when TSMC is the biggest beneficiary in the market of a measure that's supposed to return domestic manufacturing investment to America, I think that's pretty telling as to how porous this is and how toothless a lot of this is. And toothless is great because that sector is on a fine trajectory as long as it's just not punished.

[Michael Batnick]

So I was going to. I was just looking at this. Apple's total operating expenses from the report for the last nine months was $46 billion. So where does $100 billion come from? Does that. Nobody cares, right?

[Josh Brown]

It's not. I don't think that goes into opex.

[Michael Batnick]

I'm just saying they're total operating expenses. Total.

[Sam Rowe]

I think this doesn't, I think a lot of this doesn't even come out of Apple's own pocket. Pockets too. Like there's always, like, deals with suppliers.

[Michael Batnick]

Yeah. Mexico's gonna pay for it.

[Sam Rowe]

Yeah, like some. Yes. There's usually something going on with, you know, whoever it is that they're. They're dealing with, whether it's a supplier or a customer that they're.

[Josh Brown]

What does it say that the thing that they're able to make in America after like six months of fighting with or Trump fighting with them is like glass? Not that it's not impressive, but like, they're not making. They're not making the M3, like advanced Apple chips.

[Sam Rowe]

I mean, it's possibly the case that the US Was always making the best class.

[Josh Brown]

No, they were. It's corning. We've been making the best class for 100 years.

[Sam Rowe]

So basically it's business as usual, but instead of filing an ak, you're doing it from the White House.

[Josh Brown]

Yeah. Well, listen, that's how the game is played. There was another executive order today. Or they're signing it today. Or they already signed it. Everyone kind of knew this was coming. I think it's a big deal for Wall Street.

[Michael Batnick]

It's a huge deal.

[Josh Brown]

Yeah. Trump will sign an executive order Thursday that aims to allow private equity, real estate, cryptocurrency and other alternative assets in 401ks a major victory for industries looking to tap some of the roughly $12.5 trillion held in those retirement accounts. So basically taking the risk away from plan administrators from saying we will now allow these types of funds. I wrote about this on Monday. Do you guys think this is like game changing or it's just another thing that might come and go and nothing really much will come of it. What do you think?

[Sam Rowe]

I mean, you know, I feel like it's almost a continuation of the slippery slope of going from defined benefit plans to defined contribution plans. Right. Where, you know, just the fact that we can make our own equity allocations in our 401k plans is a form of shifting that risk to the individual.

[Josh Brown]

Yeah. For better or for worse.

[Sam Rowe]

Yeah. For better or force for an individual. Yeah. So maybe it is the case that there's people who are very well educated and understand the risks or will get educated. And it's like this is now a great opportunity to invest in some of these alternative asset classes at a low cost. That said, it's not going to be.

[Josh Brown]

That low a cost.

[Sam Rowe]

It won't be that low a cost.

[Michael Batnick]

Yeah.

[Sam Rowe]

Someone will surely clean up on it. But I think even the existence of people like us talking about investing and having listeners who are sort of in control of their 401k plans already. The reason why we exist. People are making terrible decisions already when it comes to their retirement savings.

[Josh Brown]

Yes, correct. Not everyone, but some people.

[Sam Rowe]

Not everyone, but yeah, it probably just, it makes our work more complicated and yeah, maybe people end up losing a ton of money on some of these. Maybe they make a lot of money, you know, who knows?

[Josh Brown]

How much private equity do you want for your retirement account?

[Luke Kawa]

I, I, I will have zero just.

[Josh Brown]

Like whenever you have none.

[Luke Kawa]

Whenever, none. Whenever somebody wants to sell me something. And the reason why is that the people they're normally selling it to have run out of room to hold it. Yeah, I, I generally find that, I.

[Josh Brown]

Think that's the whole thing. Why are they going down market otherwise?

[Luke Kawa]

I, I think that's a big, big part of this that it's like that. It is a form of exit liquidity and it's a pretty immense potential form of exit liquidity. In a previous life when I was working on the other side of the street, we loved private markets for this exact reason too. You can't ignore the fees. The fees are what matters. And over the long term the fees are a compounding drag on returns.

[Michael Batnick]

I think I get all of this, but I think there's too much like, oh, this is going to be terrible for the end investor.

[Josh Brown]

I don't know that anyone's saying it's going to be terrible.

[Michael Batnick]

No, I mean, what do you mean? We just started. The context of this conversation is this is bad. This is bad. People are lose money. Like that is the tone from everybody on Wall street that's not working for these giant companies. That is the tone. Every blogger.

[Josh Brown]

I think it's more like you're going to underperform, dude.

[Michael Batnick]

Every, every columnist. This is a terrible idea. This is expensive. It's exit liquidity. This is going to end badly. I'm not that like a doomsday on this. Do I think it's like a great idea? I don't know. Maybe. I probably, I probably wouldn't say it's a great idea, but let me just say this. Most people are auto enrolling in target date funds. These instruments, these private equity private credit vehicles will, I'm assuming find their way into target date funds in a reasonably allocated way. I think there will be some guardrails. I think that it will be the giants, it will be the Blackstones of the world. It's not going to be a complete free for all in wild west in your 401s and I think for the most part it'll be a reasonable allocation number one. And then number two, the other side of why is this even happening? These companies are staying private for way longer. OpenAI will come public at a trillion dollar valuation perhaps. Is everybody going to invest early in open AI? No, that's not the point. But the point is these, the private markets are growing, private credit is huge and is displacing a lot of the loans that banks used to make. And it is an evolving landscape and it's growing and it's changing. So I understand all of the expensive exit liquidity. I don't think it's going to be that bad.

[Josh Brown]

Do you think that you're going to see. So I know Vanguard is got an alliance with Blackstone 2020. You're going to see products but I don't think they're going to be as expensive as people think they will be.

[Michael Batnick]

So Vanguard got into the game with Harbor Vest five years ago and I think actually the introduction of a lot more spotlight on these things, fees will come down.

[Josh Brown]

That's what I think.

[Michael Batnick]

I think a lot of bullshit will get cleaned up. And yes, people will have bad experiences obviously like with every other form of risk taking. But on balance I'm not like, my God, this is the worst thing ever.

[Josh Brown]

I don't think it's the worst.

[Michael Batnick]

No, but I'm saying that's a very in vogue thing to say and I get why, but I don't think it's that bad.

[Sam Rowe]

Do you think, do you think, you know, this is the kind of thing that will lead to, you know, an actual sense of urgency where finally they require financial education in high school or middle school or.

[Josh Brown]

No, no, that will not. I would just. My point would be, we went through this already a generation ago. They wanted to democratize hedge funds and nobody won. Like the retail investor did not get access to great hedge funds. We know that was not the outcome. And the way we know is all of these quote unquote liquid alternatives that were launched 15 years ago, none of them have good track records. None of them have raised a ton of money. There is a market for hedge fund like strategies. The best and the brightest managers of those strategies are not courting people with $5,000. Yeah. So it's, it's like almost like tautology, this idea of democratizing a sophisticated asset class. But by definition somebody that's got a great product is not like how fast can I get this in the, in the hands of regular people? They only want very successful hedge funds, want to work with the top, top, top investors. They don't want to have to educate investors in the middle class.

[Michael Batnick]

Yeah, you're. But there is a difference between hedge funds and private credit and private equity. It's not the exact same thing. There is capacity with these headphones. It's a little bit different. But point taking, I. But listen, whenever anything needs to be democratized, of course your antennas go up. How could it not?

[Sam Rowe]

Yeah, I mean, you know, how different is this from, you know, the last backboom? Right. Like at the beginning. It sounds really interesting and it attracts a ton of money.

[Josh Brown]

Democratizing the IPO process.

[Sam Rowe]

Yeah, exactly. And then when everyone realizes is a disaster, then, you know, it disappears. So maybe this is a conversation that.

[Josh Brown]

Doesn'T last very long because cryptocurrency in a 401k, that could be. That could be a disaster. That could be a disaster like for a million. I don't know. What do you think is the. How did the crypto guys sneak in on this thing that. Steve, you know what the big difference.

[Michael Batnick]

At least the private stuff, at least you can't sell it.

[Sam Rowe]

They bring a gold plated bitcoin to the White House.

[Michael Batnick]

The average person will lose money in crypto in a form. Okay.

[Luke Kawa]

If we as a society are taking a very permissive stance towards what I would loosely call speculation, then like, this is a pretty logical endpoint of it, right? Crypto as a, you know, asset to qualify. And in some, in some respects, I agree. Like, is crypto any more speculative than a very small biotech company when it comes to, when it comes to serving as a source of funds, perhaps, or recourse when you're applying for a mortgage?

[Josh Brown]

No, it's not.

[Luke Kawa]

So in a lot of senses. The only place that I worry is like the classic joke about crypto is like, crypto is just, you know, learning all the lessons we learned about the fiat system and they're doing it on speed drive. Like, I would like the banking system, the traditional banking system to not have to relearn lessons that we already know because crypto is getting, you know, sufficiently adopted and in, you know, places where there's either more leverage or consumer exposure.

[Josh Brown]

You can't buy a standalone biotech stock in a 401k because the guardrails that exist are like, you're buying funds, fund administrator, plan administrators, they're putting in these menus of like very diversified funds. They're not really doing sector bets per se as like the menu. But now you're going to introduce like, okay, here's a bitcoin sleeve. You can either opt for it or not. I would imagine, like most young people that have a 401k at work and all of a sudden they could put 10% into Bitcoin, they're going to do it.

[Sam Rowe]

Yeah. I mean, I think one of the bigger risks is this idea, this implication that because it's available in your 401k, it's safe. It's safe.

[Josh Brown]

Yeah, I agree with that. I agree with that. That's like the. That's like the unspoken thing. It's like, well, they wouldn't let me blow myself up with something in a 401k.

[Sam Rowe]

Right, right. It's the same with, like, all the big asset managers that are bringing crypto onto their platform. It's like, that's when I'm going to invest in.

[Michael Batnick]

It's a philosophical debate. Like, we view the 401k as sacred. Like, do not mess around. You can do whatever you want in your brokerage account, on chain, whatever, but not in your 401k. The other person say, well, why not? This is their money. Why can't they do what they want?

[Josh Brown]

Right. Let's talk about. Let's talk about the stock market. We have a whole bunch of charts. Who wants to take over and steer us through what's going on?

[Michael Batnick]

Luke, this is your stuff. Why this? This was the week that everybody posted the same thing. And I think it's not a mystery why. It's because we had the AI earnings reports and you had the shitty job support. But. And so this was the week that every content creator did the same thing. And, Luke, you're one of those people, but you did it very well.

[Luke Kawa]

Absolute.

[Michael Batnick]

You did it very well.

[Josh Brown]

So the messaging is like the consensus now is that AI is powering the entirety of economic and stock market earnings growth and everything else is kind of falling by the wayside. Do you agree with that conclusion or no?

[Luke Kawa]

I think it requires a lot of caveats around it and caveats that I decline not to focus as much when I'm trying to tell the best possible story. But so a lot of story. I think you can summarize last week as the week where a lot of people said AI is eating the US economy and the stock market, and it completely deserves to.

[Josh Brown]

Yeah.

[Luke Kawa]

So that is where we have now set the bar. How did we get there? It's a combination not just of the jobs report, but I also think the GDP report, which then showed, when you add up Q1, Q2, first half of the year, you have ancillary AI spending as broadly Defined as overpowering consumption in terms of the contribution to growth. Now like that's where one big caveat is needed and that's where I would point to a company like Texas Instruments. Not AI, not really AI, really the more the industrial automotive. But it's going to show up in terms of a lot of the chip ordering equipment. That was done in Q1 when a lot of people are fearing tariffs. So that's when actually the big spike in a lot of this was.

[Josh Brown]

And oh, that's interesting. So people just equate anything semiconductor related with AI now?

[Luke Kawa]

Yes, so that, that is part of the reason why it shows up so bigly in the GDP data. But the timing, Mike said, like it was just delicious and perfect. But I think the, like the next part of the story is, okay, that's where we set the bar. We set the bar at. It's. You have, you had Asia, you had Alphabet. Absolutely killing. And then what happens when we've set the bar at AI is the economy. It deserves to be the economy. Amazon comes out. Nobody was expecting Amazon to grow faster than Alphabet or Microsoft on the top line in its cloud business. No one was. And then all of a sudden after its earnings report, it's like, well, what have you done for me lately? You're number one, but you're losing market share these other companies. So it's a bit of a double edged sword in that I think the theme got a very, very big, very big narrative boost. And it's a little bit of a bar that's harder to clear from here.

[Josh Brown]

Okay, show me these charts. What are we looking at, guys?

[Michael Batnick]

John, chart us.

[Josh Brown]

So chart us up. What is this?

[Luke Kawa]

This is kind of my, this has been one of my favorite charts lately. The, the blue on the right hand side is the annual change in consumer spending. The green line on the left hand axis is the change in S&P 500 capex year on year. One thing you'll notice in this chart, and it kind of has a, a logical underpinning is you get capex booms for three reasons. One, it's the lagged effect of a big increase in consumer spending. Consumers want to spend a lot.

[Josh Brown]

We got that.

[Luke Kawa]

Okay, so consumers want to spend a lot, so you have to produce more. Second is a big boom in commodity prices that tends to be more localized. That's I would say really no longer an issue at the S&P 500 level because of how small materials and energy are just as a share of the overall index. So we can like, you can basically throw that out it's not happening. But even if it were not a.

[Josh Brown]

Great explanation for what electricity a commodity though.

[Luke Kawa]

Fair, fair. Fair enough. Yeah. The, on the, on the data center side that's, that's definitely filter filtering through on the S&P 500 capex. And the third reason is tax policy changes. So you do see like into 201718 there you do see a big jump in capex. And you know that I would tend to associate with, with changes in tax policy. But what do you have here is a multi year nearly streak of S&P 500 capex accelerating as consumer spending decelerates. Like this is.

[Michael Batnick]

So this is, this is it.

[Luke Kawa]

This is the inherent tension in the market. It's how long if. If at the end all we care about is the end user. Like the hyperscalers customers by and large are everyone. Right? Like it's enterprise. Every, every. Every large institution.

[Josh Brown]

Enterprises are people, my friend.

[Sam Rowe]

No they're not people work at.

[Josh Brown]

No they're not working. People are customers.

[Michael Batnick]

There is a, there's a K shaped economy which we spoke I guess right. The K shaped recovery people with assets, people without that theme has continued and it's now inside the stock market in a big way. And I think like you can see this continuation of the S&P493. No margin expansion, although maybe that's coming with AI. But I think that this is the biggest question like can we, can the stock market survive a consumer slowdown on the shoulders of the hyperscalers? And I think the answer is yes.

[Luke Kawa]

It has been so the, the so far the evidence is completely in your favor. We're running at last six months consumer. Nominal consumer. Consumer spending past six months up 1.4%. That's the slowest pace since August 2020 on a six month change. And stock market seems to be doing pretty darn well through this.

[Sam Rowe]

Real consumer spending is actually down I think. Right.

[Michael Batnick]

But you know it's weird like there's such consumers are slowing down. They are picking and choosing as they always do, but to a greater degree. Disney just had their record breaking third quarter for the theme parks. How many years ago would you have thought that would have vanished? Like all right, like they went to Disney, people got it out of their systems. They still had a record at the theme parks. So people are maybe not spending on Chipotle bowls. Now I know it's a different thing at Disney World versus a Chipotle bowl but you hear from a million companies and they're all saying something a little bit different depending on where they are and where they fit in the value chain.

[Josh Brown]

Yeah, the anecdotes are not helpful. They're spending at Disney but not spending at Nike. What are you doing?

[Sam Rowe]

Or they're spending at Disney but they're not spending at Six Flags.

[Luke Kawa]

So Josh's MGM Las Vegas Strip down 4 down 4% year on year. So you know, that's, that's a big one. Right.

[Michael Batnick]

But somebody, somebody made an interesting point about Vegas. I forget who tweeted this. So forgive me for stealing this. Like, Vegas is not the thing. People can gamble anywhere now. This is a, like, this is an artifact. We should not look to Vegas as a leading indicator.

[Sam Rowe]

I mean this is an issue with any kind of sort of historical context.

[Josh Brown]

Vegas is having its worst summer though.

[Sam Rowe]

Yeah, yeah, yeah, yeah. They literally have double digit declines.

[Michael Batnick]

And that's with the backstreet.

[Josh Brown]

But we're, but you're saying that's not the, that's not the economy. That's new outlets for that gambling drive.

[Michael Batnick]

That is a take that I lifted from somebody else. I thought it was astute.

[Sam Rowe]

Yeah, I think, I think that's about right.

[Josh Brown]

Well, they would probably, Vegas would probably say that.

[Michael Batnick]

Can I give you another astute observation? Where is this.

[Sam Rowe]

Oh, wait. Just one real quick thing though. With, with. I think it's really important what you said. The key word here is growth, right? Like responsible for economic growth. The economic growth story. Responsible for the stock market growth story. It is still the case that the consumer is massive. Like it's still 70% of the economy. Whereas like the spending on AI capex is mid single digits.

[Michael Batnick]

16 trillion of consumer spending versus 1.5 for capex.

[Sam Rowe]

Right. So if we're talking about like the economy, it's still the consumer. But if we're talking about what's defining the growth story right now.

[Josh Brown]

Yeah, it's AI and the stock market. The earnings growth is coming from the AI Capex build. Even today the Dow is down triple digits. The best performing sector is utilities and like the third or fourth best is tech.

[Michael Batnick]

That's it.

[Josh Brown]

That's it. It's all one thing. There's nothing else working.

[Michael Batnick]

So the stock market might be able to shoulder this, but can the economy? And you would probably not.

[Luke Kawa]

My answer is consumer always wins. Right? Consumer always wins. And the consumer either wins by being so bad that it drags everything else down. I do not think you get the same rates of AI spending growth in an environment where the consumer is outright retrenching for a prolonged period of time.

[Josh Brown]

You're right.

[Luke Kawa]

There's no way or the consumer wins because hey, we're getting some productivity increases down the road or now from this, the wealth effect is lifting consumer or supporting consumer spending sufficiently in the near term. You can make the case that, you know, as long as that coast that there's room for effectively there to be a decent floor under AI spending. But like the consumer will always win in my mind. And that's why like so many people pay so much attention to myopically consumer labor market, because that is going to be in the end a huge beta driver.

[Michael Batnick]

So I want to caveat what I said earlier. If, if there is sluggish spending, I think the stock market can survive. If it falls off a cliff, then of course, I mean not of course, I don't think it could. All right. Brendan Duke tweeted, I've seen a lot of takes about how AI related investment is preventing the economy from falling off a cliff. He said, I think this is wrong. In a still strong economy, my guess is that less AI investment would mean lower interest rates and for example, more housing investment. I thought that was a good, I.

[Josh Brown]

Thought that was because the stock market would stop going up and the Fed would feel better about cutting rates.

[Michael Batnick]

Absent the hyperscaler spending, you would have a slower stock market and perhaps slower growth rates and then therefore a stronger impetus to cut rates which would maybe spur the housing market. I thought that was interesting.

[Sam Rowe]

But to what degree?

[Josh Brown]

Except that the Fed is not supposed to be paying attention to the stock market.

[Sam Rowe]

Right. But they broadly pay attention to financial conditions, whatever that means. But I mean, I'm sure that the wealth effect of a sluggish stock market is going to affect the person's desire to or ability to buy a house.

[Josh Brown]

Right, I, I would agree. Let's do chart 2. AI spending is eating the US economy. So walk us through what we're looking at here.

[Luke Kawa]

Yeah, no, that's, it's. So it's spending in green on information processing equipment and software. So again, broadly defined, there's going to be a lot of semi and computer equipment in there that is not necessarily purely AI, but you know, you have to aggregate or disaggregate somewhere. That's the decision made here. And this is. I was on the phone with Neil while he was making this tweet and this chart. He was just like, I really want to show how much AI is juicing the economy.

[Josh Brown]

Neil Kavuta, Neil Dutta, Neil Diamond. So this is personal consumption expenditures in blue. And then it looks like a nosedive. I don't Know, it could bounce from here.

[Luke Kawa]

But like, yeah, I'm not, I'm not going to do any TA on the economic data.

[Michael Batnick]

No broke support.

[Josh Brown]

But, but hey, like the support.

[Luke Kawa]

But again, this is the story of something that, that green line in. Once you aggregate, it's 6% of the economy and it's adding more to growth than something that's 70% of the economy. This is very rare. If you like, go back and even just want to sum up, like residential investment and consumer spending, we're running a lot closer to the lows of what we averaged through 2022 in real terms than even what we got during the new normal, which was this Paris, perilously slow time of like, we're never growing fast enough, we're never generating enough inflation, yada, yada, yada. So like it's a, it's a bit of an about phase just in the, in the composition of economic growth. And I think it leads to the question that is the, the Q3 question. So is a slowdown in consumer spending, is that uncertainty about tariffs or. And we're now prepared to bounce now that we have certainty of what may not be the best situation, but hey, at least, you know. Or is it the impact of slowing income growth and a bite from higher prices that will continue and perhaps accelerate in the.

[Josh Brown]

It's. Prices have not come down. Right? They have. They're not rising as fast as they were a few years ago, but they.

[Michael Batnick]

Prices are down 8,000%.

[Josh Brown]

Yeah, prices, right. Prices will not come down stubbornly staying high. Summer is still accelerating and people aren't getting the wage growth that offsets it anymore. And their biggest investment for 55% of the country, all of their net worth is tied up in a house that is still difficult to sell.

[Sam Rowe]

And you have job creation screeching to halt.

[Josh Brown]

Right. And now we're averaging 35,000 new jobs a month for the last three months. And that's new because last year was still gangbusters. So you have a less confident worker base. You've got homes that can't be sold. Prices are still high. And most of this tax reform that we just saw was just an extension of what already existed. It's not really a stimulus. It would have been a negative stimulus had they not extended the. So like, yeah, the consumer is running on, I mean, not running on empty, but like running on fumes for sure. A lot of those drivers are just not there.

[Michael Batnick]

Yeah, Money on Empty is a great song, Josh. Now is a good time. This just dropped. We announced the future proof Musicians.

[Josh Brown]

It's out.

[Michael Batnick]

It's official.

[Josh Brown]

All right, let's do it. Okay, let's hold it. Let's hold it. All right. What's this? Two cyclical pillars. Put this chart up. Chart, right.

[Luke Kawa]

This is what I was just talking about. Stole this from Connor Sen at Peachtree Creek Investments. And this is just the average quarterly contribution to GDP growth from residential investment and consumption during different periods. So 2025 year to date. Those two things that you know. Hey, Ed Lemur wrote the famous paper housing is the business cycle right before the housing market crashed. So very good timing on that one. Consumer spending, we all know, huge chunk of the economy adding a half percentage point to growth on average. We're very close to 2022 when it was about 22 basis points added to growth on average and again doing so, so much better and steadier during a completely slow growth era. I really do think this underscores just how precarious the real spending and the frozen housing market is for the US Economy because I think for these things to have to change, you have to either think that job and income growth will pick up or long term interest rates will go down a lot.

[Michael Batnick]

But interest rates are going to come down. So what if we get this beautiful handoff of the consumer slowing down their spending and then all of a sudden we get a housing boom. It's not inconceivable.

[Luke Kawa]

Not at all. Not at all. The thing working against that is we've already cut rates a few times and bond yields went up. Why did they go up? I would argue a combination. I don't.

[Michael Batnick]

Well, there was one rate cut, right. A year ago.

[Luke Kawa]

We got a few actually. We're down 75 base, base points off the peak.

[Michael Batnick]

So where mortgage rates now like 6.5 ish.63. If it comes down under 6, I think you're gonna see an explosion.

[Luke Kawa]

I just feel like though, in the bond market there is a Trump premium in the front end because there is the idea that whoever the incoming Fed chair is is going to be more predisposed to Fed cuts. That's something that predates the kind of recent bad jobs report that's caused a lot more pricing to get pulled.

[Josh Brown]

It's going to be Waller. It's going to be Waller. And he's already on the tape saying it's time to cut.

[Luke Kawa]

I hope so. So there's that there's a Trump premium in the front end. There's a Trump discount in the long right. Like it is more difficult to own U.S. bonds in a world where the administration has talked about taxing capital flows more, where there is more inflation risk because of some of the measures that are being pursued on tariffs. So 70 to 75% of the time the 2 year yield follows the 10 year yield. We haven't been doing that for a bit and we have some policy reasons why. Generally I would expect that to be right. Mortgage rates to come down on Fed cuts. But we've run this experiment pretty much over the past eight months and it has really happened.

[Josh Brown]

You think we could have 50 basis points worth of interest rate cuts between now and the end of the year and the mortgage rate doesn't fall?

[Michael Batnick]

That'd be surprising.

[Josh Brown]

Is that possible? That's not great.

[Luke Kawa]

I think that's possible. Again, I'd go with the 70% heuristic, but I have to acknowledge what we've just lived through and the possibility that repeating itself.

[Sam Rowe]

And there's, and there's still, you know, inflation out there too. So like what if we are cutting rates, you know.

[Josh Brown]

Well, I don't think the interest rate causes the inflation that exists. So I, I have this, I have this huge disagreement on, on that with several people that they think like the Fed can wave a wand and create either inflation or disinflation with fed funds rate and it just, it's not the thing. So right now if you ask like why is there still inflation in the system? I don't think it's because rates are too low. Like I don't think anyone would say that. I think it's just a situation where we don't have layoffs. We have baby boomers retiring or being retired, but we don't really have like mass layoffs. That's the only way that you would actually get disinflation. And we just don't have it. And part of that is no immigrants in the labor force. Part of that's policy decision and part of that is just the demography of the country and the types of things that people want to do for a living. So it's like if you really want disinflation, be careful what you wish for. You need much, much lower employment. I don't think the Fed can really do that. So it's, I don't know if I.

[Luke Kawa]

Have one regret, if I have one regret from the, from the pre pandemic cycle, it's the myopic focus on oh, core PCE is 1.8. That means the Fed needs to ease policy. Cause we really need to get that up to 2%. Like they can't do that the idea that there can be fine tuning the idea that like there isn't an acceptable range. Like for me it's, I think it's Greenspan who said it. But like inflation is a problem when people think it's a problem when people are talking about it, when people notice it. I think there's a pretty decent range in which people don't notice it. And you know that's oftentimes the best you can do, right?

[Josh Brown]

And it's not a thermostat, it's not the Fed can't dial it in. What they want their like inflation targeting. Like they, they actually don't have the power to do it cuz they have nothing to do with the housing market other than the rate of mortgages. They can't make more houses. So if you think like shelter is this like sustained cause of inflation, what do you really want the Fed to do about it? You want them to crash the housing market? They can't fine tune what the inflation rate is. They also can't print more people. So if like labor is the cause of inflation, what do you want them to do about it?

[Sam Rowe]

Right.

[Josh Brown]

To go back in time 20 years and create more births. It's like almost a ridiculous concept. I understand they can hurt it or help it a little bit but like in the end they're not as powerful as we thought. They tried to create inflation for 12 years, it couldn't do it. It rates at 0% still couldn't get inflation. So I just, I find that whole conversation where we're like ascribing magical powers to 12 people who decide the overnight rate. Could the Fed cause a crash? Yeah, totally. But they can't fine tune the rate of inflation that they want to say. Show me this. AI didn't hear no bell chart. This looks unsustainable.

[Luke Kawa]

What I do think this shows is two things. So this is the year over year change in the forward CapEx estimates for hyperscaler. So you know where CapEx will be in one year's time, change over time. So that's Amazon, Oracle, meta Alphabet, Microsoft, what I think this shows two things. One, that there is some implied economic sensitivity to capex estimates. The only time this rolled over was when effectively the post rose Gordon.

[Josh Brown]

Yes.

[Luke Kawa]

So the market assumes that AI spending is economically sensitive. That's like let's, let's take that as a given. That's something I would stipulate from this chart. The second is it bounced right back up and probably has a little further to go perhaps in the near Term but you're right back up to the same rate of growth of more and more spending. Now that in itself is not what.

[Josh Brown]

Happened here when it dipped.

[Luke Kawa]

What happened when it dipped? Well we got a policy reversal or.

[Michael Batnick]

A temporary Nvidia fell 40% that's what happened.

[Josh Brown]

So we're just looking at the share prices of the five biggest spend prices.

[Luke Kawa]

The estimated Capex what they'll spend in.

[Josh Brown]

Capex over the analysts lowered their estimates on Capex spending that fast and then raised it right back up. Yes, hysterical.

[Luke Kawa]

Yes this is but I do think this is a dial that both tells you hey capex is going to be economically sensitive and also we're law. Law of large numbers. Not to Andy Jassy it up but law of large numbers is not applying yet in this instance that you're still getting pretty immense increases will in the.

[Josh Brown]

Growth rates though like you can't, like you can't triple and then triple again and then triple again. Like at a certain point you won't be able to see that level of Capex growth percentage wise. I don't know where that is.

[Luke Kawa]

No exactly. I don't know where that is. And it seems to be longer than anyone had expected. I also think a pretty slept on story is just the OBB 8 one thing it did do is some of the changes to effectively how free cash flow will be treated incredibly beneficial for these companies. So if you think about how the.

[Josh Brown]

Expense, the expensing of the build out.

[Luke Kawa]

Full expensing some changes around you know plant that's put in place this year full expensing of that as well and some changes to the treatment of foreign taxes that effectively unlocks hey if, if you needed to tap debt markets for XYZ well you, you don't really have to as much the need isn't as great. I don't think there's any lack of desire to finance projects related to AI out there but it's just another window that will allow this to go on for.

[Michael Batnick]

All right, we've been 40 minutes on this topic. Is there anything else important that we.

[Josh Brown]

Want to hit on any of these other charts before we move along? I mean there's a lot, there's a lot in here.

[Michael Batnick]

It's all the same.

[Luke Kawa]

Nah, they're spending a lot of money.

[Sam Rowe]

Yeah.

[Michael Batnick]

Line go up.

[Sam Rowe]

Yeah, yeah. Is driving growth.

[Josh Brown]

Okay now I do want to hit the.

[Michael Batnick]

Let's pivot from AI to AI.

[Josh Brown]

Yeah no I do. Wait, what else did I definitely. What else did I definitely want to get to? Let's see golden apples. Oh, one more chart for me if you will on this topic. Paul Kadraski full on said this is a bubble. And he made, he made a couple of really interesting points that I hadn't read or heard elsewhere. But let's put this infrastructure capex as a percentage of US GDP by era. All right, this is the railroads of the 1880s. Telecom, it says 2020, but I'm not sure if he meant 2000. All right, this is data from Jens Nordvig who's also been on the show. And then AI data centers. So this is infrastructure CapEx as a percent. So he has AI data centers as 1.2% of US GDP right now. And for the people listening, not watching, the railroads at the peak of their bubble got to 6%. But Kadraski makes this point. He'll read this. Compare this to prior capex frenzies like railroads or telecom. Peak railroad spending came in the 19th century. Peak telecom spending was around 5G fiber frenzy. It's not clear for it to peak yet or not, but we're up there. These are raw capex numbers unadjusted for multiplier effects. In other words, just the purchasing and building of that stuff. And one of the things he points out is like if you lay railroad tracks, it's pretty durable. You end up with something that's still usable 30 years later at the rate at which these chips are like useful. And then oh no, there's a new generation, there's a new generation. I don't know what the long term effect is of a lot of this equipment that we're spending money on. Like what? Like what becomes of a situation where a lot of this stuff becomes obsolete. So that's one element of this particular capex. You can call it a bubble or not versus some of the prior ones. When we laid all that dark fiber 25 years ago, it was still usable. It just took a while before there was an actual use for all that. All that video. I don't know, any thoughts on that?

[Sam Rowe]

You know, maybe this is really great for the earnings of these companies because all this shit has to just continue.

[Josh Brown]

It's got to keep making more shit.

[Sam Rowe]

You have to keep making more and it keeps getting upgraded. It's a nightmare for people who have to pay for it. But maybe that's what keeps the economy going.

[Josh Brown]

All right, all right, we're good on that. But wait, what else do you have? What are these railroad charts? Are we doing these? Should we throw these in?

[Sam Rowe]

Yeah, I think we're. Again, it's all kind of the same story. So a different sort of angle on this. Instead of talking about how massive all this stuff is, what I take away from this is it's possible for there to be an industry that completely takes over the economy, the stock market, the growth narrative or whatever. And maybe a couple years from now we're not talking about AI infrastructure and that goes away. But I don't think that necessarily means that it's the end of the stock market economy or whatever, like something else is going to eventually emerge. So that's just sort of the short version of this. And the chart after this was, you know, sort of another, or I guess after this one is another angle on.

[Josh Brown]

This, you know, this whole idea of stock market dominance.

[Michael Batnick]

No, next one, look up.

[Josh Brown]

Oh, this one?

[Sam Rowe]

Yeah. Stock market dominance. That's another one too. But this one I think is interesting in that, you know, this was a study that was cited by a Goldman Sachs research note a couple weeks ago. And basically the story here is actually I have the Exact stat here. 60% of workers today are employed in jobs that did not exist in 1940%. So over 85% of the employment growth over the last 85 years is from technology driven creation, new positions. So the story being that in the process of emerging technology, destroying all these jobs and creating this nightmare for the workforce, it also figures out a way to create all these new opportunities for people. So again, this is just for the people who feel like there's some sort of doom story coming with AI and maybe there is a doom story, but the historical record is whenever there's something that destroys jobs, something else comes through on the other side.

[Josh Brown]

I don't know, I think we're seeing it already. You look at the last couple of jobs reports, I just don't think it's, I just don't think it's coincidence.

[Sam Rowe]

Yeah, yeah. No, I think, I think short term it's absolutely going to be a nightmare.

[Josh Brown]

Yeah, we'll create new jobs. I don't know when though.

[Sam Rowe]

Yeah, yeah, I don't know when. I mean, and it has to happen because you know, if, if there are no people who are employed to buy stuff, then none of this stuff matters.

[Josh Brown]

Do you worry about this?

[Luke Kawa]

I've been now tested directly against AI by multiple bosses in very different careers. So far I've won both with flying colors. I don't know if I'll always keep winning it. But on like on the investing side.

[Josh Brown]

And you have at this for like the, for like society, like do you think that because we last week we did a show and we looked at the rate of college graduate hiring and it's way down. Like kids right out of school. You would think those are the people that are most likely to be replaced by AI would be like a recent college graduation. And it's exactly like what people feared. Like they're just not being hired at the same pace now. I don't know if that's cyclical or if that's the AI revolution or maybe a little bit of a mix of both. So I'm curious like what you think about that.

[Luke Kawa]

It's incredibly difficult for me to disentangle that with some of the trends that were in place I think well before AI was really getting up and running. We've had a low hiring, low firing job market for years now. Tough for me to disentangle. I await with interest though I don't look forward to whenever the next downturn is. You're always, companies are always making decisions on opex.

[Michael Batnick]

Common sense just say that like the new entrants, the, the. What's the first job called? Entry level. Yeah, there we go. The entry level positions. Maybe we don't need those anymore. I mean that's like the deathly nightmare.

[Sam Rowe]

Anecdotally it sounds like. Yeah, that's absolutely the case because you, there's at least an economic justification for, you know, entry level person because they can put together a draft of something that you don't like do work, that.

[Michael Batnick]

You'Re the least useful employer and now you don't need them. And what happens when you don't need young people? It's catastrophic. And I don't want to go there, but how could you not start.

[Sam Rowe]

It's, you know, you're, you're perpetuating your own demise when you do that. Yeah, I agree.

[Josh Brown]

But you think like it's too early to say if we're already seeing the effect of it.

[Luke Kawa]

I, I think there's. The companies who are adopting it the most aggressively are still basically saying, hey, we've done this and we've slowed hiring, we've frozen hiring. The use cases of companies that are out and out saying we've cut jobs and it's because of AI. Those numbers are still.

[Sam Rowe]

There are a couple who are still willing to.

[Josh Brown]

Klarna said it, but then they reversed themselves. You know who's not going to ever say that? Amazon will never say it because politically why the hell would you say it? It's a crazy thing to say, like good news, we no longer need to hire for the following positions ever again. Like, no one's gonna really. A few companies are saying it because they're pre public. Like, they're not. They're like pre ipo. They sort of have a window where they can be honest.

[Michael Batnick]

Elon would say it if it were true.

[Josh Brown]

Yeah. Well, all right, so we don't. But we don't think that's definitely. I don't. I'm starting to think it's like sort of very much.

[Michael Batnick]

I think it's obvious.

[Josh Brown]

All right, let's do this. Let's do this thing. From JP Morgan.

[Michael Batnick]

What did you guys think about the commissioner of the BLS getting fired?

[Sam Rowe]

I mean, I think it's been pretty well argued that it's not great. Somewhere between not great and terrible.

[Michael Batnick]

Why? If the person's not doing their job, you get rid of them.

[Sam Rowe]

Yeah. So I think since everyone kind of agrees on that side, I'll go on the third rail and sort of try to advance what some of the counterarguments are like, the decent counterarguments.

[Michael Batnick]

Dalio said that the lady should have been fired.

[Sam Rowe]

I don't know if the person had to be fired. I don't know what process had to happen to get to whatever the endpoint is. But there seems to be a lot of arguments to be made that there is a way to overhaul the process and the workflow and the way they analyze the data so that it becomes more. More tight and more efficient.

[Josh Brown]

Yes. Only Republicans can count jobs from now on. That's the way that they want to. In other words, if you are an appointee of a previous president and that president wasn't Donald Trump, you can't be an.

[Sam Rowe]

That's, that's. That's like the irony of the announcement, like him accusing the former commissioner of being, you know, tainted politically, but he's going to replace them and, like, it's not going to be a tainted position anymore.

[Josh Brown]

Hey, any projections on next month's jobs number?

[Sam Rowe]

It's going to be amazing. Revisions upward. Revisions.

[Josh Brown]

This is Michael Feroli from JP Morgan.

[Michael Batnick]

Yeah, what do you say?

[Josh Brown]

Potential politicization of the Fed has been much discussed over the past several months, but the risk of politicizing the data collection process should not be overlooked. To borrow from the soft landing analogy, having a flawed instrument panel can be just as dangerous as having an obediently partisan pilot. Here's the part in bold. As users of these data sets know, even small changes in the market share of private data providers can distort the signal on the national economy. The $2.1 trillion market for TIPS. That's treasury inflation protected Strips is built on a foundation of trust in the construction of the CPI data which is produced by the bls. As such, the integrity of this data is at least as important as the employment data. So now you had a whole raft of people come out and say well we never believed in this data. And the quality of the data has been deteriorating because a lot of it's survey based and people just don't respond to the survey. So the amount of people contributing to this data is down. And now you add on a layer of well, Biden appointed this person who's responsible for the official tally. Therefore it's bad data going in and it's a up politicized conclusion being drawn as a result of it. And I have to fire somebody. Ok, I feel like we could do that once. Are we going to now go through every single data point that the government collects and fire the person who's in charge of it? Because I don't think the market's going to love that. What do you guys think?

[Luke Kawa]

Well, if AI spending goes up, no, I won't make return to that AI data collection. If I'd pose like a couple of rhetorical ish questions. Do you think you could collect.

[Josh Brown]

Oh, the Socratic method I love. Let's do it.

[Luke Kawa]

Do you think you could collect like accurately collect data on how many jobs are changing in a month in an economy with you know, a couple hundred million jobs? I don't think I can. I think most people who would suggest.

[Josh Brown]

My partner Barry says no, exactly. This can't be done.

[Luke Kawa]

Exactly.

[Josh Brown]

Two.

[Luke Kawa]

Two. If you think you could, would you like more information to do so or more money to do so if given the opportunity? I think most people would answer yes to that. So do one of those two things. It's not just the response rate that's been going down. There's also been funding cuts in this regard and the response rate is down. You can mandate, mandate responses so you have less need to revise. A big reason for revision is responses.

[Michael Batnick]

Come in late but you can't mandate the quality. What do people like?

[Luke Kawa]

Absolutely.

[Josh Brown]

Well we already, the quality is already suspected. There's seasonal adjustments. There's like, like we have adp, so we have like private providers of payroll data. I. They don't diverge that much. The BLS stuff and the ADP stuff.

[Luke Kawa]

Do they on a year on year they don't diverge. But there's a, it's, it's almost a joke now in markets. If ADP beats, you know, NFP is missing. Like, it's just. It's just happened too many times in a row. So it's now just a fun joke to tell. But over time, directionally on the private. Directionally, they on the side, year over year, they track pretty darn closely. Like, it's. It's there. I. I don't know if this. I thought Covid would be like, the golden age of alt data. I hope this doesn't spur the need for another one. But, like, that's. That's still a tbd.

[Josh Brown]

I'm actually. I'm getting breaking news now. It looks like the new chief of the Bureau of Labor Statistics has been announced. So. Scott Baio. So I don't know if that affects any of you. All right, can we talk about Joe.

[Michael Batnick]

And Tracy before we get out?

[Josh Brown]

Yeah, let's. Let's. Let's do. Let's. Let's do that now. How proud of Joe and Tracy were you guys when you saw them this Sunday on the COVID of the New York Times Sunday Business section? I was so. I was, like, so excited for us and for, like, our little world to. I mean, to see them get that recognition.

[Michael Batnick]

Did Joe hire you?

[Sam Rowe]

Joe hired me at Business Insider in 2011.

[Josh Brown]

For those who are not sure what we're talking about, the Odd Lots podcast was featured in the New York Times. And the. The co hosts, Joe Weisenthal and Tracy Alloway, friends of ours and people that I think represent what we all do out here in investing in economic podcast land.

[Sam Rowe]

Yeah, I think what's great about this is I think we all listen to the podcast and it's really good.

[Josh Brown]

Yeah, it's great.

[Sam Rowe]

Every once in a while, you'll see, like, you know, some random piece about someone you've never heard of, and then you download it and it's just garbage. But, like, this is. This seems very appropriate and yeah, absolutely, I'm proud of this.

[Michael Batnick]

And you worked with. Were you at the FT with Tracy?

[Luke Kawa]

No, I worked at BI with Joe, and then I worked at Bloomberg with Joe and Tracy for a while. And like, God, it is amazing to see them get recognized for their amazing work. What this piece, and no piece will ever capture, is how many people they've brought along the way. It never will because it would take, you know, how many sections of the New York Times to do that? I don't know. Joe was someone you can learn from, example, from incredibly well. Tracy is someone who will take the time on every piece not just to give you a fish, but to Teach you how? In every case. She's made me such a better reporter. I've been so lucky to have these two as mentors as well.

[Sam Rowe]

They're absolutely amazing people. Like, I literally sat across from Joe for years, and I remember there would be times when, like, you know, an intern or a junior person would sort of, like, creep up behind them and then ask him if they could if he would take a look at a draft that he was working on.

[Josh Brown]

Yeah.

[Sam Rowe]

And every single time, he would turn around and be like, hey, how's it going? Oh, yeah, sure. I'll take a look at it right now. Send it to me right now. He had time for everybody, no matter how busy he was.

[Josh Brown]

Leadership clout. Leadership. That's how he became the. Like, Henry put him in charge of the newsroom.

[Sam Rowe]

Yeah.

[Josh Brown]

Because he had that quality about him. Like, he was there to make sure the finished product that they put out as a. As a newsroom was, like, up to speed.

[Michael Batnick]

Can I tell you my favorite. My favorite business? Inside a tweet of all time? I think. Do you know what to say?

[Sam Rowe]

I'm not sure there's a lot of them. I'm actually really worried. I'm nervous about this now. I'm nervous about this.

[Michael Batnick]

I think. I think Joe tweeted it, and it was a video of you watching the World Cup. You might have been eating food. And it was like an insane. It was an insane play. And you just very calmly said, that's a nice goal.

[Sam Rowe]

Yeah.

[Michael Batnick]

Do you remember that?

[Sam Rowe]

Yeah. Those were. Those were good times.

[Josh Brown]

That's not the best business.

[Michael Batnick]

No. For me, it is. Like, I just. That stands out. Those are simpler.

[Josh Brown]

This is the best Business Insider tweet ever. And I think it dates back to Clusterstock. That's literally what the website was called. This was unforgettable. Henry Blodgett tweets an article that he wrote. Article. Lol. A column, I suppose, or a blog post. Why do people hate Jews? And Twitter exploded. Like, just like these days, actually. You would be celebrated. Twitter.

[Michael Batnick]

This escalated quickly.

[Josh Brown]

Yeah. Why do people hate Jews? To wait. He fixed it. So he went back in. You're laughing because you know what he did? He changed the title. He changed the headline. Why do some people hate Jews? And then that made it even worse. And then it was, what are the root causes of anti Semitism? Anyway, well done, Henry.

[Sam Rowe]

I don't want to add too much to that, but this is the inside sort of an anecdote from that period.

[Josh Brown]

Yeah.

[Sam Rowe]

So the Business Insider newsroom was in basically Something the size of an auditorium. Yeah, very tightly.

[Josh Brown]

I was there. I came to hang with you guys.

[Sam Rowe]

It's very noisy. There's a lot of typing. People are yelling. When that post went up, dead silence. And all you could hear. All you could hear were keystrokes and.

[Michael Batnick]

People opening their seltzer.

[Sam Rowe]

Everyone was g. Chatting. Everybody.

[Michael Batnick]

Yeah, it's the boss, and he's.

[Sam Rowe]

And he stands right in the middle of the newsroom.

[Luke Kawa]

We'll say in Henry, just in general. Henry Blodgett, defense, tall man standing in middle of newsroom at standing desk. Clearly A, running the company and B, contributing to the editorial product. Best management style I have ever seen. Undefeated.

[Sam Rowe]

Undefeated. Did you guys know.

[Michael Batnick]

Did Henry start reinvesting his dividends yet?

[Sam Rowe]

I think he's okay on that.

[Josh Brown]

Okay. But yeah, no, financially, he will recover from not reinvesting his dividends, but, yeah.

[Sam Rowe]

No, he was great. That was the first time I was in a. At a. At a company where the CEO was right in the middle of the newsroom with everybody else doing this exact same thing.

[Josh Brown]

All right, shout to all the. Shout to all the bi.

[Michael Batnick]

They are left the biggest coaching tree of any reporter.

[Josh Brown]

Can we put this up?

[Sam Rowe]

Photo op, Huge reach.

[Josh Brown]

This is Joe and Tracy at your wedding, Luke.

[Sam Rowe]

Yeah.

[Josh Brown]

When did you get married?

[Luke Kawa]

Got married in. She get this right? 20, 23.

[Josh Brown]

Is trace. Is Tracy pounding a Corona?

[Luke Kawa]

Yes.

[Josh Brown]

And not a Corona light. I love her. She literally is the best.

[Michael Batnick]

Joe looks like he's mid dance.

[Josh Brown]

Maybe.

[Michael Batnick]

Perhaps.

[Josh Brown]

I went to Joe's house in the Hamptons last summer for his birthday party. We there.

[Luke Kawa]

I was not there last year. I've been there the past couple before that.

[Josh Brown]

All right, so here's what's cool about. Here's what's cool about Joe. So I'm walking around the party. I don't really know anyone there, right? And I can't spend that long, so I'm there for like an hour. But I spoke to, like, a lot of people there. People come up to me, and it's always like, how did you meet? Like, how do you know Joe? He makes friends with everybody. Like, these are people that are like, oh, he used me as a source on a story seven years ago. Or I sent him a DM and wished him a happy birthday last year, and he remembered me and invited me this year. Like, Joe is the true everyman covering economics, which is mostly covered by extremely elite kind of academic people who don't touch the crowd, don't get really deep involved in the subject matter, kind of look at spreadsheets Joe, like, puts people on the show. Who do you have on the other day, a guy that makes Pizza Town right? Like that. I think that's why the show is so lovely.

[Michael Batnick]

And he had a baker.

[Josh Brown]

Yeah, they go.

[Michael Batnick]

They go Very, very narrow.

[Sam Rowe]

They're the best one of his. He actually. This is, I guess, the last thing I'll say. He had a birthday party once at Business Insider where he actually sent out, like, a tweet and a Facebook post and just had it open to everybody. He said, anyone who's going to show up, we're going to go to this Chinese restaurant and we're all going to have dinner here. And I think there must have been, like, 80 people showed up to the same.

[Josh Brown]

Think about how insane that is.

[Sam Rowe]

And splitting a check with strangers. Are you insane?

[Josh Brown]

Yeah. Yeah.

[Sam Rowe]

And somehow it worked out.

[Josh Brown]

All right, guys, this has been so much fun. Thank you guys so much for being here. We always end the show asking people what they are most looking forward to. So this could be. This could be anything.

[Michael Batnick]

What about first dinner with Warren Buffett? I can't wait. That's gonna be awesome.

[Josh Brown]

Living or dead or alive? Well, how'd she ask either way?

[Michael Batnick]

I don't know.

[Josh Brown]

Living or dead, I'm trying to be alive. All right, what are you looking forward to?

[Sam Rowe]

I'm doing some late summer house cleaning. I'm throwing crap out like crazy. I'm turning into a full minimalist.

[Josh Brown]

Okay, what can you throw out? Clothes.

[Sam Rowe]

There's. There's definitely. There's way too many random T shirts. There's too many random pairs of shoes. There's too many. There's all kinds of kitchenware that I only used once. I mean, I'll give this stuff away. I'll donate to Goodwill, give it to friends and stuff.

[Michael Batnick]

But, like, how many ladles do you need?

[Luke Kawa]

Right?

[Sam Rowe]

You only need one. Yeah.

[Josh Brown]

You.

[Sam Rowe]

Only one ladle, man.

[Josh Brown]

What are you looking forward to?

[Michael Batnick]

What are you throwing away?

[Luke Kawa]

I'll do a twofer.

[Josh Brown]

Okay.

[Luke Kawa]

First, Neil Dutta getting appointed to the Fed Board. That'd be nice. Looking forward to that. But on a more serious note, I very, very delayed honeymoon planned for. For 2026. Going out on safari. Still very in embryo, but I am a lion lover. Lion tattoo. Have a parallel screenplay for the Lion King planned at some time. I could not look forward to that more. I think it's gonna be an incredible adventure.

[Josh Brown]

Where do you. What country do you fly to?

[Luke Kawa]

It is that embryonic? That.

[Josh Brown]

Okay, you haven't figured that out? You have to get shots for that too.

[Luke Kawa]

Yeah.

[Josh Brown]

It's like. It's a lot. It's a big thing.

[Luke Kawa]

Yeah.

[Josh Brown]

All right. I've never done it. I've never done it.

[Michael Batnick]

And you never will.

[Josh Brown]

I don't think I ever. I don't think. I don't. If you met my wife, you and.

[Michael Batnick]

Shower, you're going at a safari.

[Josh Brown]

No, it's never going to happen. Maybe Six Flags Animal Freedom. I'm looking at going back to my bubble on Monday. I'm going back to Boca, and I need to kind of get away from it all.

[Sam Rowe]

So the pre Future Proof warm up. Oh, you didn't. You never told us the music. There you go.

[Josh Brown]

Can we announce this?

[Michael Batnick]

I've been requesting this for years.

[Josh Brown]

Yeah, this is a big one for you. I agree.

[Michael Batnick]

Bush.

[Josh Brown]

All right.

[Michael Batnick]

Bush is the headliner. Drumroll, please.

[Luke Kawa]

All right.

[Michael Batnick]

No, you can do the opener because this is your. So Bush is the headliner and you might. You guys might not know this. The opening.

[Josh Brown]

Wait, Josh, back up. Literally don't even know what you're talking about.

[Michael Batnick]

All right, stop. They do Future Proof. They heard us. So there's a musical act. Bush is the headliner and the opening act. Josh literally discovered them. They were like. Josh was walking in, Merrick invented and he saw them in somebody's garage and he said, you guys should be a.

[Josh Brown]

Rock band, not happen.

[Sam Rowe]

Oh, I know who this is.

[Michael Batnick]

Wait, Josh invented them. Go ahead, tell a story.

[Josh Brown]

Let's back up. For people that are listening have no idea what a Bush is. The banned Bush is going to be the headlining act at Future Proof festivals.

[Michael Batnick]

Why are you infantilizing the audience? They know what I was talking about.

[Luke Kawa]

Listen.

[Josh Brown]

Not everyone listens every week. Some people. I said it earlier.

[Michael Batnick]

We got Bush.

[Sam Rowe]

All right, wait, wait. Who's the headliner again?

[Josh Brown]

Oh, my God. The headliner is a band called Bush and the opening act is Blues Traveler. So what do you. What do you think about that?

[Sam Rowe]

I remember hearing your story about blues travel. That's amazing.

[Josh Brown]

Yeah, dude, that's. Sorry I pretended that I invented. It's not a real story. All right, guys, if you are working in finance or wealth management and you weren't sure whether or not you were attending Future Proof this coming September, now you know that you actually are coming, and we're gonna get Michael up on stage at one point, I think to accompany Gavin Rossdale on Glycerin.

[Michael Batnick]

Absolutely.

[Josh Brown]

Can we do that? Yeah. All right. Duncan, you psyched for that lineup?

[Luke Kawa]

I am. It's pretty good Blues Traveler person, myself.

[Josh Brown]

Yeah, I think both are gonna absolutely destroy. I think it's gonna be an amazing night.

[Sam Rowe]

Yeah.

[Josh Brown]

So that's the Tuesday night of future proof. All right, guys, this has been so much fun. I want to tell you, the audience, where they can follow you for more of your writing and insights. Sam, we did you the ticker. If you're not subscribed to the ticker, I don't know what you're doing.

[Michael Batnick]

Sam, what's your handle on Twitter? Elta1 that's right.

[Sam Rowe]

D E1T A. Yeah.

[Josh Brown]

Are you Walter Bloomberg? Wait. X.comsamrow Yep. Okay, Luke, where do we follow you? How do people. How do people get your insights?

[Luke Kawa]

Lj K AWA everywhere, pretty much. And Sherwood. Sherwood News. Rios, we got a lot of great folks, not just me. A lot of folks a lot better than me.

[Michael Batnick]

You guys are killing it.

[Luke Kawa]

A lot of breadth and, yeah, very impressed with what I've done.

[Josh Brown]

Yeah. Shout out to Sherwood and follow JKOWA everywhere on all social platforms and subscribe at Sherwood News. All right, guys, thank you so much for being here. Thanks to the audience. Please like and subscribe, and we'll see you next time.