Podcast Summary: The Compound and Friends – "Tom Lee to the Rescue" (March 7, 2025)

Host: The Compound
Guests: Tom Lee (CIO and Portfolio Manager at Fundstrat Capital), Josh Brown, Michael Batnick
Release Date: March 7, 2025

1. Event Reflections and AI Panel Insights (00:00 – 04:25)

The episode kicks off with Josh Brown reflecting on attending an exclusive event at the Rainbow Room, highlighting the influential presence of Stephanie Ling and her network on Wall Street. Brown shares his admiration for Stephanie's ability to convene top financial advisors and industry leaders, including Karen Fennerman, Dan Greenhouse, Dan Ives, and the ever-influential Tom Lee.

Notable Quote:

Josh Brown (00:00): "Stephanie Ling is the most powerful person on Wall Street."

Michael Batnick provides insights from an AI panel discussion attended earlier in the day, emphasizing the burgeoning applications of artificial intelligence in voice technology and dating. Alex Kanchwitz, Dan Ives, and Bill Baruch are mentioned as key contributors to the conversation.

Notable Quote:

Michael Batnick (02:03): "Voice is the big thing... dating is the second big application."

2. Impersonations and AI Security Challenges (04:25 – 07:21)

The conversation shifts to the alarming rise of AI-driven impersonations on social media platforms. Brown and Batnick discuss the challenges of combating fake accounts that mimic their identities, underscoring the limitations of current policing mechanisms due to jurisdictional hurdles and platform policies.

Notable Quote:

Michael Batnick (04:25): "It's impossible to police."

Brown recounts personal experiences with impersonations, highlighting the ineffectiveness of reporting mechanisms and the persistent threat posed by AI-generated fraudsters.

Notable Quote:

Josh Brown (06:20): "It's whackable because every day it's all coming from Africa and Asia..."

3. Introduction of Tom Lee and Tariff Impact Discussion (11:45 – 17:14)

After the initial segment, Tom Lee joins the conversation as the guest of the episode. Hosting a deep dive into the recent tariff announcements, the trio discusses the immediate and long-term impacts of these tariffs on the stock market and the broader economy.

Notable Quote:

Josh Brown (12:00): "This might be the most important show we do all year."

Lee, with his extensive background from JP Morgan to Fundstrat, provides a strategic overview of the situation, comparing the current tariff-induced market reaction to historical events like Brexit.

Notable Quote:

Tom Lee (14:24): "I think this is actually a lot like Brexit..."

4. Market Reactions and Comparisons to Brexit (17:14 – 24:00)

The discussion delves into the similarities between the current tariff wars and Brexit, analyzing how the market has historically responded to such geopolitical shifts. Brown and Batnick express skepticism about the long-term benefits of the tariffs, questioning the real "victory" achieved versus the economic costs incurred.

Notable Quote:

Josh Brown (15:31): "Tariffs on stocks are going lower and that's exactly how it's playing out."

Lee points out that while the immediate market reaction has been negative, historical precedents like Brexit suggest potential long-term stabilization and opportunities once adjustments are made.

Notable Quote:

Tom Lee (15:35): "There'll be a little disturbance, but we're okay with that."

5. Impact on Technology Stocks and Sector Analysis (24:00 – 34:25)

The hosts assess the disproportionate impact of tariffs on technology stocks, with giants like Netflix, Apple, and Nvidia taking significant hits. Batnick suggests that global companies are more vulnerable to retaliatory measures, leading to sector-specific downturns.

Notable Quote:

Michael Batnick (19:21): "Tech companies are global companies and they're gonna be the retaliatory victims."

The conversation expands to include sentiment indicators such as the VIX and trading volumes, highlighting extreme pessimism among investors and unusually high withdrawal rates from retirement accounts.

Notable Quote:

Tom Lee (29:09): "They have to be betting not just that it's two months of tariffs, but that this is a new regime."

6. Market Indicators: VIX Contracts and Sentiment Analysis (34:25 – 50:56)

Batnick introduces the concept of VIX futures contracts, explaining their inversion as a potential signal of impending market stabilization. The hosts debate the interpretation of these indicators, weighing the likelihood of a market bottom versus ongoing volatility.

Notable Quote:

Michael Batnick (40:01): "When the one month is higher than the four, that inversion is what the bottom histogram chart shows."

Brown and Lee discuss the challenges of market timing, acknowledging the complexity of using sentiment surveys and VIX indicators to predict accurate market movements.

Notable Quote:

Josh Brown (43:05): "A cut in May? Oh, I would better this."

7. Granny Shots ETF: A Strategic Investment Approach (50:56 – 76:59)

The conversation transitions to Michael Batnick’s new ETF, "Granny Shots," which focuses on enduring stocks tied to long-term generational themes. Lee and Brown explore the strategy behind the ETF, emphasizing its multi-theme approach to ensure resilience against market fluctuations.

Notable Quote:

Josh Brown (70:21): "These are stocks that are enduring. The story behind them is bigger than the stock itself."

Batnick elaborates on the ETF's methodology, blending quantitative models with qualitative assessments to curate a diversified and robust portfolio. The hosts discuss the benefits of equal-weighted portfolios and the tax efficiencies achieved through minimal turnover.

Notable Quote:

Michael Batnick (73:40): "We have themes that span multiple decades, like cybersecurity, millennials, AI, Fed cycles."

8. Crypto and Bitcoin as a Strategic Reserve (76:59 – 83:47)

A significant portion of the discussion centers on the role of cryptocurrency, particularly Bitcoin, in the future financial landscape. Lee and Batnick debate the feasibility and implications of the U.S. adopting Bitcoin as part of its strategic reserves, drawing parallels with the Strategic Petroleum Reserve.

Notable Quote:

Tom Lee (80:42): "How are we getting to 5 million?"

Brown and Batnick explore scenarios where Bitcoin could stabilize or exacerbate economic conditions, considering factors like central bank involvement and market speculation.

Notable Quote:

Michael Batnick (82:35): "The US owns 200,000 Bitcoin. As long as it's not, those keys are safe."

9. Concluding Remarks and Future Outlook (83:47 – End)

As the episode wraps up, the hosts share personal updates and upcoming engagements, maintaining a collegial and forward-looking tone despite the turbulent economic discussions. Batnick emphasizes the importance of continuous investor education through webinars and weekly updates, ensuring that "Granny Shots" investors remain informed and confident in their investment choices.

Notable Quote:

Josh Brown (85:27): "It's a really good thing."

Final Thoughts: The episode concludes with optimistic yet cautious reflections on the market's resilience and the strategic initiatives underway to navigate the current economic challenges. The combination of expert insights, strategic investment discussions, and forward-thinking approaches provides listeners with a comprehensive understanding of the complex interplay between tariffs, market sentiment, and emerging financial instruments.

Key Takeaways:

• Tariff Impact: The recent tariff implementations have triggered significant market downturns, particularly affecting global technology stocks. Historical comparisons to Brexit suggest potential long-term opportunities despite short-term losses.

• AI and Security: The rise of AI-driven impersonations poses substantial security challenges for high-profile individuals, highlighting the need for more robust online identity protection measures.

• Market Sentiment Indicators: Inverted VIX futures contracts and extreme bearish sentiment indicators may signal upcoming market volatility, but interpreting these signals requires nuanced understanding.

• Granny Shots ETF: A strategic investment vehicle focusing on multi-theme, enduring stocks linked to generational trends, offering diversification and resilience against market fluctuations.

• Cryptocurrency Strategy: Debates around adopting Bitcoin as a strategic reserve reflect broader discussions on the future role of digital assets in national financial strategies.

• Investor Education: Continuous engagement and education through webinars and updates are crucial for maintaining investor confidence and navigating economic uncertainties.

For more insights and detailed analysis, listeners are encouraged to subscribe to Fundstrat Research and explore the "Granny Shots" ETF as part of a diversified investment portfolio.