What if It’s Still Early? With Denise Chisholm

Summary

Podcast Summary: The Compound and Friends

Episode: What if It’s Still Early? (with Denise Chisholm)

Date: May 29, 2026
Host(s): Downtown Josh Brown, Michael Batnick
Guest: Denise Chisholm (Director of Quantitative Market Strategy, Fidelity Investments)

---

Episode Overview

This episode dives deep into the current state of the U.S. stock market, the impact and interpretation of the ongoing AI-driven CapEx (capital expenditure) wave, the perceived risk of bubbles, market breadth, the role of investor psychology and macroeconomic factors, and what history can teach us about bubbles, recoveries, and cycles. Denise Chisholm returns as guest, bringing data-driven insights and historical context to challenge some prevailing market fears.

---

Key Discussion Points & Insights

1. Current Market Sentiment and the CapEx Wave

• Main question: Is the current economic surge a bubble, or is it an underappreciated, durable growth phase driven by AI CapEx?
• Denise stresses the difference between idiosyncratic (a few companies) vs. systemic (market-wide) CapEx spending, noting that the aggregate is still well below past bubbles even with today’s headline numbers, especially when comparing CapEx to free cash flow.
  • “At the bubble time in 2000...they were spending three and a half to four times their free cash flow. We are still under one.” (11:00, Chisholm)

2. Why Do So Many Fear Another Bubble?

• The hosts and Denise discuss "availability bias": Many investors reflexively expect the current CapEx cycle to end badly, merely because the last big one did (the dot-com crash).
  • “We only remember the last one and it turned out badly.” (12:27, Host)
  • Denise explains that most CapEx waves historically are tied to healthy growth, not crashes, and stresses that a CapEx-driven cycle is more desirable than one built on buybacks or financial engineering.

3. Investor Skepticism & Psychology

• The panel notes persistent skepticism, even as fundamentals strengthen. Investors appear to seek reasons to dislike the rally—from complaints about buybacks in the past decade, to complaints today about “excessive” investment.
  • “There is a component to the market where they will just dislike a rally and you can come up with the reason after. It almost doesn’t matter.” (14:06, Host)
• Denise contextualizes this with historical data: Most of the time, markets are a hedge against bad times, not a straightforward reflection of “good times.”
  • “The equity market doesn’t always reflect good times. In fact, [it] acts more often as a hedge against bad times.” (14:52, Chisholm)

4. Valuation Compression and Market Fears

• Discussion of how earnings have soared but, unusually, price-to-earnings multiples have contracted. This means market gains are grounded more in real growth than in simple valuation expansion—seen as a healthy sign, not a manic one.
  • Denise: “This persistent fear...the more fear in the equity market, the higher the odds of a stock market advance.” (19:15, Chisholm)
• “There is a lot of fear. And it’s really hard to have both of those thoughts in your head at the same time.” (20:33, Brown)

5. Breadth and Diffusion of Growth

• A major theme is the broadening of earnings and margin expansion beyond the “Magnificent 7” megacap tech stocks.
  • Small and mid-cap, “the 493” (S&P 500 ex-top 7), are finally seeing early stages of robust earnings recovery after a three-year decline.
  • “We’re just really getting started.” (41:59, Chisholm)

6. Semiconductors, Memory Stocks, and Mania Watch

• They address the frenzied rise of semiconductor stocks (with the SOX index far above long-term averages), but Denise notes that price gains mostly match earnings growth—a notable historical anomaly.
  • “It’s exactly in line with its earnings growth. If I bought it every time it was up 100%...more often than not, it goes on to outperform again...” (28:12, Chisholm)
• The pace of gains and change in industry structure is acknowledged, but panel sees fundamental support—unlike the revenue-less fiber optic boom in 2000.

7. AI CapEx Transparency and Market Suspicion

• The lack of public financial disclosure from players like OpenAI and Anthropic could help explain disbelief or suspicion around the sustainability of the AI CapEx boom.
  • “...the fact that they don’t have tickers...it’s harder to tie [CapEx] to revenue that we can actually see...” (36:58, Host)

8. Profit Margins and Labor Costs

• Rising margins are attributed less to AI (for now) and more to restrained labor costs and improving productivity.
  • “The biggest correlation to margins is unit labor costs...low unit labor costs usually mean higher corporate profit margins.” (38:04, Chisholm)

9. Small Cap and Sector Earnings Dynamics

• The recovery in small caps is linked to the early stages of a manufacturing recovery, rather than monetary policy.
  • “It’s all linked to that median earnings growth is finally emerging from...a recession that lasted the better part of three years.” (45:23, Chisholm)

10. The Fed, Inflation, and Market Impact

• Sweet spot for equities is inflation running between 3–4%; core CPI ex-shelter is already low, and Fed hikes have typically been short and minor when durable goods orders (CapEx) are booming.
  • “The sweet spot for the equity market is between 3 and 4 [percent inflation].” (47:04, Chisholm)
• Oil price spikes are discussed—not a Fed hike trigger, since oil "acts more like a tax" and is rarely passed through fully to core inflation.
  • “Oil-driven shocks have historically made the Fed less likely to tighten, not more.” (49:55, Brown quoting Chisholm)

11. Potential IPO Boom, Liquidity, and Rebalancing

• There’s anxiety over enormous upcoming IPOs (SpaceX, OpenAI, Anthropic) potentially matching 1999–2000 issuance levels. But when adjusted for today’s larger market cap, it’s proportionally much less. Short-term volatility and allocation challenges may arise, but long-term earnings remain the key market driver.
  • “In the long term...earnings is going to be the driver and that will ultimately be [what matters].” (59:38, Chisholm)

12. Speculation, “Junk Rally,” and Bubble Watch

• Speculative areas (meme stocks, high-beta tech) show pockets of mania, but historically, “junk rallies” often kick off new bull market cycles and are not broad enough (yet) to endanger the overall market.
  • “The median earnings recovery...That’s exactly what you should see, a junk rally in the beginning that you generally speaking don’t want to chase.” (62:46, Chisholm)

---

Notable Quotes & Memorable Moments

• On CapEx Skepticism:
  “Most CapEx cycles actually generate growth rather than create a bubble that deters it.” (12:42, Chisholm)
• On Investor Behavior:
  “The equity market doesn’t always reflect good times…If you drop a quant on it, you’d almost say it’s more often a hedge against bad times.” (14:52, Denise Chisholm)
• On Momentum and Valuation:
  “The more the equity market goes up…momentum usually begets momentum.” (19:15, Chisholm)
• On Breadth:
  "Equal weighted earnings growth has actually been contractionary...only now getting back to a situation where equal weighted earnings growth can grow and be durable." (41:47, Chisholm)
• FOMO vs. Fundamentals:
  "All of a sudden the stock market stopped punishing people for CapEx and started rewarding...companies that were making these investments." (14:06, Host)
• On AI CapEx and Transparency:
  "I’m not sure transparency would solve the suspicion..." (37:00, Chisholm)
• On the Fed and Growth:
  "Rates or the Fed follow the cycle rather than potentially create it. If rates are a reflection of growth, the market’s got no problem with it." (52:15, Chisholm)
• On IPO Liquidity:
  "Over the long term...earnings is going to be the driver..." (59:38, Chisholm)
• On Where We Are in the Cycle:
  “We could be relatively early in the earnings growth cycle for the 493.” (63:13, Host summarizing Chisholm)
• On The Importance of Skepticism:
  “The more skepticism there is, the more you can climb the wall.” (64:20, Chisholm)

---

Timestamps for Key Segments

• CapEx Cycle & Bubble Concerns: 08:00–15:00
• Investor Psychology & Market Skepticism: 15:00–18:00
• Valuation Compression & Earnings Growth: 18:59–25:00
• Tech & Semiconductor Mania: 25:45–35:30
• AI CapEx Transparency: 36:58–37:22
• Profit Margins & Labor Costs: 37:50–40:07
• Broad Market Breadth and Small Cap Revival: 41:10–46:10
• Inflation, Fed Policy & Macro: 46:14–55:55
• IPO Supply & Market Impact: 55:55–60:30
• Speculation & “Junk Rally” Context: 60:39–62:46
• Big Picture Takeaways & Summary: 62:46–64:33

---

Big Takeaways

1. Despite big price moves, the foundation of growth is strong and broadening.
2. Market skepticism and multiple compression are historically healthy—fear, not euphoria, remains the dominant mood.
3. AI-driven CapEx is unlike previous bubbles—cash flow-funded, supported by fundamentals, and increasingly diffused.
4. Speculative mania, while present, is still a sideshow—not the main event.
5. Upcoming mega-IPOs may cause short-term ripples but don’t threaten the bull market’s core unless fundamentals deteriorate.
6. It's “still early” for the non-megacap (S&P 493) recovery.
7. Rate hikes and inflation close to or slightly above target are not necessarily bad for equities—context matters.

---

Find More from Denise Chisholm

• LinkedIn: Denise posts weekly charts and a newsletter.
• Fidelity Market Insights Podcast and Quarterly Webcasts (for Fidelity clients)

---

For anyone who missed the episode, this summary offers the key arguments, historical context, and data-backed reasoning that guide today’s bullish-yet-grounded outlook on the markets.

Transcript

[Josh Brown]

I saw a reel from Neil DeGrasse Tyson on these being the closest thing we have to aliens. They have, like, nine hearts, a couple of brains.

[Michael Batnik]

I did not know.

[Josh Brown]

Cut off their arm, it grows back.

[Michael Batnik]

Well, that part I knew. I remember that. Yeah.

[Josh Brown]

Each one of their tentacles can see, feel, touch, smell, taste.

[Podcast Host]

I don't eat. I don't eat octopus. Okay, you don't, But I eat calamari. I eat squid.

[Michael Batnik]

Okay.

[Podcast Host]

I don't know why I draw the distinction. It's not the octopus. I saw a documentary about how intelligent octopi are.

[Michael Batnik]

Yep. And good use of plural there.

[Podcast Host]

So the problem is we go to, like. We go to Keema. We go to, like, all these, like, Mediterranean restaurants, and everybody gets the grilled octopus. You know, I used to like it

[Michael Batnik]

a lot, but now you feel bad.

[Podcast Host]

That's why I'm wasting away, Denise. Here's where I'm at.

[Michael Batnik]

Tell me.

[Podcast Host]

I don't know if this is my age or my personality. I'm now at a stage where I eat out at a restaurant, and I have no patience for the bringing of the check routine. Like, you have to flag somebody down. They come over. I'd like the check. They will be right back. They go and get it. Then they come. They leave it there. Then you have to sit with it for five minutes.

[Michael Batnik]

Yep.

[Podcast Host]

Then you put it.

[Michael Batnik]

Please come back. Please come back.

[Podcast Host]

Then you put your credit card in and you're looking around for somebody. I'll give it to a busboy. I don't give a shit.

[Josh Brown]

This is why you own toast.

[Podcast Host]

Hold on. And then. And then they'll come take it. And then. That's a mystery. Where do they go? Because the thing that they dial it into is always by the kitchen. Yep, fine.

[Michael Batnik]

I see it.

[Podcast Host]

Then they come back. Then I have to look at it and pretend that I'm looking at it. And then. And then signing the tip. So when the toasting came along. Yeah, Okay. I loved it.

[Michael Batnik]

Yeah.

[Podcast Host]

And I'm. I own shares of Toast to Stock. But, like, can I have a check? Yes. Here it is right here.

[Michael Batnik]

I have the control.

[Podcast Host]

I just want to press a button. Literally, the last forkful. I want to drop the fork and walk out of the restaurant. Now, I don't know if that's.

[Michael Batnik]

Did you ever achieve that? Yeah.

[Josh Brown]

This is Josh's softer side. This is how he connects with the audience.

[Podcast Host]

No, it's really bad. The point I was trying to make is I used to have a lot more. It's not tolerance, patience. I just want to. When I Finish something. I want to be on to the next thing. And the lingering is.

[Michael Batnik]

What was it? An SNL skit with the doctor and the old man that you have eog.

[Podcast Host]

What is eog?

[Michael Batnik]

Early onset grumpiness. Did you ever.

[Josh Brown]

Yeah, that's diagnosed.

[Michael Batnik]

Yeah, you have eog. Can I get rid of that?

[Josh Brown]

Why would I not concur?

[Podcast Host]

But isn't it better for the. Isn't it better for the server? For the restaurant owner?

[Josh Brown]

All right, so as a former waiter. I was a waiter for years. Full time.

[Podcast Host]

Why does it take so long?

[Josh Brown]

Because you, sir, are not the only customer.

[Podcast Host]

But why do we have to do this dance?

[Josh Brown]

What dance?

[Podcast Host]

I just want to. It's 20, 26. I just want to put. Put my fork down, put the napkin

[Josh Brown]

on the table and walk out all kidding side. Usually like it's 50. 50 if they bring you a toast.

[Podcast Host]

What if I just give them my credit card on the way in?

[Josh Brown]

Just stay home.

[Podcast Host]

Yeah, right.

[Josh Brown]

Problem.

[Podcast Host]

So I hadn't thought of that. I hadn't thought of that.

[Josh Brown]

Are you in New York frequently? Do you come here often?

[Michael Batnik]

Not. Not that frequently, no. No.

[Podcast Host]

Well, everyone here is just like me, so. No, I'm not really normally like this.

[Josh Brown]

Yeah, we know you can't do individual stocks. We can. So we'll do the talking.

[Michael Batnik]

You do the talking. Yeah.

[Josh Brown]

So I know you can't confirm it. Deny. But it's public now. It's public. This just happened before we came on here. Anthropic. Series H. Where we go, where is this Series h? They're raising $65 billion. At $965 billion plus money. The round is being led by Altimeter Capital, Dragonair, Green Oaks and Sequoia. And listen to us participating. Basically Everybody. Capital Group, CO2D1 Capital Partners, GIC, Iconic. Yeah. And Taylor too. And XN AMP, BBC, Bally Gifford, Blackstone, Brookfield, D.E. shaw, DSC, Global Fidelity Management and Research Company, General Catalyst Insight Partners, Jane Street Light Sheet Partners. I'm like halfway done, I'll stop reading. But.

[Michael Batnik]

Right.

[Josh Brown]

Holy shit.

[Podcast Host]

With that amount of money you need everybody.

[Josh Brown]

Basically 65.

[Podcast Host]

It's like. It's like the last Avengers, right? Like everybody's got to show up for this. You're trying to. You're trying to do $2 trillion, maybe $3 trillion IPOs. Inside of a six month window. You need all the Avengers. So I don't know.

[Josh Brown]

Are we potting?

[Michael Batnik]

Yeah.

[Podcast Host]

All right, we're ready.

[Josh Brown]

Are you nervous about the IPOs? We're going to talk about it.

[Podcast Host]

Not the ones that Fidelity's invested in.

[Josh Brown]

There we go.

[Podcast Host]

Have it on good authority.

[Josh Brown]

Nicole, look at this.

[Podcast Host]

John. John's on. I'm so disoriented.

[Josh Brown]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Quick trivia question. Which asset class saw a 100% increase in flows this Q1 versus last Q1? The answer. Drum roll, please. Municipal bonds with taxable equivalent yields looking extremely favorable. Investors are finding this boring asset class pretty exciting. And when it comes to munis, Franklin Templeton has the expertise and experience you need. They've been managing tax free income strategies for over 40 years. Today they offer a comprehensive muni bond lineup, including more state specific strategies and more active Muni ETFs than any other manager. See their full range of muni mutual funds, ETFs and [e-mail] munis before investing, carefully consider a fund's investment objectives, risks, charges and expenses. You can find this and other information in each prospectus or summary prospectus if available at franklintempleton.com, please read it carefully. All investing involves risk, including possible loss of principal. Franklin Distributors, llc. Member finra, sipc.

[Michael Batnik]

Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnik and their castmates are solely their own opinions and do not reflect the opinion of Redholtz 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.

[Podcast Host]

Oh, my God. Ladies and gentlemen, welcome to the very finest investing podcast in the world. I am your host, Downtown Josh Brown. If this is your first time joining us, man, are you in for a treat or. I apologize, I'm not sure. To my left, my co host, Clark, co creator of the show all around good guy, Mr. Michael Bannock.

[Josh Brown]

Hello. Hello.

[Podcast Host]

That's it? That's all we got. Thank you. Thank you. All right.

[Josh Brown]

You're far too kind.

[Podcast Host]

Our special guest, returning champion. She crushed it on the show. The first time we had. We were in Boston. Is that right?

[Michael Batnik]

That's right.

[Podcast Host]

All right.

[Michael Batnik]

Yeah.

[Podcast Host]

Denise Chisholm is Director of Quantitative Market Strategy within the Quantitative Research and Investments Division at Fidelity Investment Investments. Denise focuses on historical analysis and its application and diversified portfolio strategies using factors. Oh, they like the factors, Denise. Good sectors.

[Michael Batnik]

Yeah, that's better. I like sectors, too.

[Podcast Host]

And themes. Denise joined Fidelity in 1999. Her research informs the views of roughly 150 managers overseeing more than 450 mutual funds and ETFs. Thank you so much.

[Michael Batnik]

Yeah, thanks for having me. Thanks for having me back.

[Podcast Host]

Question one, where will the S&P 500 finish 2026?

[Michael Batnik]

No idea. Don't give spot estimates.

[Josh Brown]

Fair enough.

[Michael Batnik]

Higher or lower is.

[Podcast Host]

I think that's a good bet.

[Michael Batnik]

Yeah.

[Podcast Host]

Goldman Sachs joined the s and P8000 chorus this week. I want to read their rationale. Do so and get your response. All of this checks out with me, so. All right. Earnings growth powered by the AI boom will drive further gains in stocks. Okay. I think we're all experiencing that right now. We would all agree Goldman is going to 8,000 from 7,600 quote. Continued earnings growth should drive continued equity market upside. The increased return forecast reflects increased estimates for S and P earnings following an exceptionally strong first quarter reporting season. I also would point out their earnings per share forecast would equate to 24% year over year growth this year and they're bumping up 27 to 13% growth. The argument is there's a lot of beneficiaries of artificial intelligence infrastructure investment in the S and P. Maybe that was underappreciated in January and we've all woken up to this may last thing. The combination of decelerating earnings growth and continued uncertainty around both AI and the macroeconomic outlook should prevent a major increase in valuations. So they're saying, not a bubble. The governor is. There's still this uncertainty about AI. So the infrastructure powers the earnings, but the multiple stays in check. Because people are a little bit nervous about what is it all gonna mean.

[Michael Batnik]

Yeah.

[Podcast Host]

Does that sound.

[Michael Batnik]

That sounds reasonable.

[Podcast Host]

Certainly in line with what you expect.

[Michael Batnik]

Yeah. Well, I think that there's a lot of data that supports what they said. And then in addition to that, which is to say that it is becoming more diffuse, it is becoming more broad in terms of the recovery. And you can measure it a bunch of different ways. And I think the interesting part about capex cycles is that you can measure them historically. I mean, post the financial crisis a lot of investors complained about the fact that corporate America wasn't spending. Right. And that the earnings was fake. Ish. In the sense that it was driven by buybacks and dividends and it wasn't real earning. So you can measure it historically. Now we're starting to complain, I would say, or to be concerned about capex. But capex is usually the better path. Right. So if you say capex relative to sales is on an upward trajectory and let's call that a CapEx recovery, and you could call the opposite, something that's not you would rather, as an investor from a stock market perspective, from an earnings perspective, from a GDP perspective, and from a job perspective, rather have a CapEx recovery. That CapEx recovery on the high end is definitely driven by CapEx seen in technology stocks, but it's getting more diffuse. So all of the sectors now of the 11 GIC sectors, we have the data going back in history, you can measure it capex relative to sales, they're all accelerating and not to such a degree that we saw in any kind of bubble. I mean, at the bubble time, when you measure it, especially relative to free cash flow. At the peak of the bubble in 2000, corporate America in aggregate was spending three and a half to four times their free cash flow. At the time, we are still under one in terms of free cash flow,

[Podcast Host]

even with outside of the hyperscalers, even

[Michael Batnik]

in addition to them, like so in the aggregate. So yes, outside them, we're not really anywhere in that bubble territory.

[Josh Brown]

So when people say they're spending all their free cash flow, you say so what?

[Michael Batnik]

So I say that's six or seven companies over the last six or seven years. But it's not systemic. So there's idiosyncratic. Right? And then there's systemic. And again, when you idiosyncratically focus on a couple of companies, you, you could fall prey to the fact that, you know, we'll see. Will the capex estimates come to fru? Will the free cash flow not be there or will revenues actually grow in addition to what you think? Or maybe they'll figure out other ways to generate free cash flow, which we've seen in the past, but you're not seeing that for the aggregate of the technology index. So they've grown free cash flow above CapEx for the better part of 20 years. So the recent hookup is still, we're still, from an aggregate sector perspective, underspending in terms of capex relative to free cash flow.

[Podcast Host]

Why do you think people have so much trouble accepting a capex wave and not automatically going to. Well, it surely must be a bubble because the numbers are going up from last year. Therefore it's some sort of a mania. Like why can't people just accept. Not every wave of capex spending automatically turns into a pumpkin.

[Michael Batnik]

Well, don't you think maybe it's just because that's what we lived through? Meaning that there hasn't been a CAPEX cycle availability bias.

[Podcast Host]

We only remember the last one and it turned out badly.

[Michael Batnik]

Correct.

[Podcast Host]

Okay, correct. Have there been examples of capex bubbles that didn't result In a stock market crash.

[Michael Batnik]

Capex.

[Podcast Host]

Capex waves. Sorry, that didn't become bubbles and result in a crash.

[Michael Batnik]

Oh for sure. I'd say like again back to that sort of data. If you say a Capex recovery is when you're spending Capex relative to your sales base and the opposite, most Capex cycles actually generate growth rather than create a bubble that deters it. So I mean if you think about it just in the basic, like the virtuous cycle of the US economy, when corporate America sees growth and spends for growth, they create growth by spending, creating jobs. So it's, in some ways it reflects the durability of the cycle.

[Podcast Host]

Can we go back to something that you said? This I think is a really key point. Michael and I have been around long enough that we were probably maybe not doing this show but doing blogs or whatever during this period of time where a lot of the earnings per share growth was coming as a consequence of float shrink, where companies were being rewarded by shareholders for not spending on R and D, capex M and A and just like running their businesses, buying back stocks and those would be the top performers in the market or among the top performers. And that was like good enough. But you had a lot of critics railing that it's a, it's a bubble because it's all being driven by buybacks and once the buybacks stop, it'll all come crashing down. And actually what ended up happening was not that the buyback stopped because there became an urgency for investment.

[Michael Batnik]

Yep.

[Podcast Host]

And then all of a sudden the stock market stopped punishing people for Capex and started rewarding and getting more bullish and buying the stocks of companies that were making these investments. And now it's a lot of the same critics and now they've changed their tune, the buybacks are over, but they still hate the market. And now the reason they hate the market is cause they're not doing buybacks. They're so busy investing, what are they making all these investments for? So there's a component to the market where they will just dislike a rally and you can come up with the reason after it almost doesn't matter. Do you feel that there's some of that in the air?

[Michael Batnik]

Oh, absolutely.

[Podcast Host]

Do you want to name any names or anyone that you want to call out?

[Michael Batnik]

No, I will call anybody out. Yeah.

[Podcast Host]

But you think that's a real thing?

[Michael Batnik]

Well, I think the most interesting part is I think that most investors, and I think for people who study history, this is the exception. But most investors want the equity to market to reflect good times and good diffuse times, meaning that not just a few companies are spending, but many companies are spending. There is good growth, there is good job growth. But when you study history, the equity market doesn't always reflect good times. In fact, if you had to say, if you dropped a quant onto it, and I'm kind of a quant, and you said, is the equity market reflective of good times or is it a hedge against bad times? You'd almost say that it's more often the hedge against bad times. I mean, think of all the things that have gone wrong over the last five years, and the equity market is 70% higher. So this is the trick, I think, of investing, that when you study history, like, you understand all the risks, all the headline like, all the problems that can go wrong, and your downside risk is, well, what if they don't go wrong in the way that you think that they will? Then you give up on average returns of 8% a year, which is one of the few asset classes that can actually keep pace with inflation. So I think that's the tug of the. The riddle with equity investing.

[Podcast Host]

I think there are investors also who politically are just on the other side of the administration, and that's perfectly fine. They'll have their time in the sun someday, too. We assume it goes back and forth.

[Michael Batnik]

Oh, it always goes back and forth.

[Podcast Host]

But there are people that, when they don't like the direction the country seems to be headed in, they don't like who's in the White House, or they disagree with the way, like, certain things are happening in the culture. It's like a cognitive dissonance that they almost can't bear. They can't process. Why is the stock market higher? Isn't A, so bad and B so bad, and C so bad? This, surely this is wrong because I don't feel good right now about what I'm seeing.

[Michael Batnik]

But the problem is, I don't think

[Podcast Host]

anyone's, like, fully immune to that. Hence the need for quantitative.

[Michael Batnik]

I think that that's what's helpful, right? If you say, like, consumer confidence is at all time lows, like, is that a problem? And you go, well, wait a minute. You'd actually rather be buying equities when consumer confidence is low relative to high.

[Podcast Host]

I stopped paying attention to that a long time ago.

[Michael Batnik]

Right. I mean, same thing with uncertainty. Like, we got this with tariffs originally. You know, last year when people were like. And I had a lot of diversified portfolio managers come to me and say, denise, this is a very uncertain environment and an Uncertain environment. Corporate America's not gonna spend. If they don't spend, jobs aren't gonna grow. And you say, okay, well we can measure all of those things and we can see if that's true. And the interest when you quartile out uncertainty, the more uncertain the environment, the higher the odds of the stock market advancing and the higher the odds that corporate America hires and the higher the odds that there's capital spending.

[Podcast Host]

Meaning nobody thinks that way intuitively.

[Michael Batnik]

But by the. But it's like the Barron's head, like the covers, it's. By the time it is so visible, it is more likely than not already discounted. Corporate America is already not spent. Corporate America is already not hired. The stock market has already worried about all the things that you're very visibly worrying about. And I mean to put a fine point on it, I don't remember if we talked about it last time, but remember, I mean the low in the market between like 1976 and 1985 was 1978 before either of the recessions happened. So if you said like, hey Denise, I know what's gonna happen. We're gonna have two back to back recessions and rates are gonna go to

[Podcast Host]

15%, nobody buys it.

[Michael Batnik]

But then if you said like I'm gonna sell in 78, I'm gonna get this right, I'm gonna nail the risks, I'm gonna get the risks right and I'm gonna buy back. At the end of 82 when jobs finally started to recover, you lost 40% cumulative nominal returns.

[Josh Brown]

So we saw a lot of worries in the first quarter of the year where the market didn't really seem to react to the news immediately. And there was a lot of people thinking like, does how is this happening? The closure of the straight of Hormuz was supposed to be a black swan type of event where oil goes up to 150,000 a barrel s and P closes limit down like that. You know, it's a black swan type of outcome. And the market seemed to be sort of yawning past it. And you had this weird dynamic where earnings estimates were rising and prices were coming down a little bit. And so you saw the valuation compress in a big way.

[Michael Batnik]

Yes.

[Josh Brown]

So you went through history and you looked at this. Daniel, chart 1 please, of the valuation compression over a six month period. What were you saying during this period of the multiple coming down with this weird dynamic of earnings skyrocketing?

[Michael Batnik]

Yeah. So it's an interesting dynamic. This is rare that you have this kind of multiple compression, but if you Go like reverse to when we started the year. I had a lot of people asking me just even from a institutional perspective, like, how can you be bullish on the market when the market is up so much over the last three years and stocks are expensive? And the problem is, again, quantitatively, neither of those things bend your odds for underperformance of equities. Right. So the more the equity market goes up, you guys know, like momentum usually begets momentum. Which is not to say that it's 100% of the time, but it is to say that if you bet on that, if you want to take the other side of stocks going up, you have to accept the fact that it's a lower likelihood, not a higher likelihood. And you know, something that the stocks don't know. Second, same thing for, you know, valuations. Like, there's no quartile difference in terms of the odds of an equity market advance coming into the year. For me, what has been different since 2022 is the equity market is just persistently fearful. You can measure it in valuation spreads on a rolling measure of the vix. Right. I mean, during the tariff tantrum, you know, you saw the Vix spike to 50. I think during this tantrum we saw it spiked to 30. You sort of roll it out through time. When you look at the fear in the equity market that has been persistent relative to the fear in the credit market, that's where you start to get this linear relationship that you potentially want to take the other side and the market has more likelihood to climb the wall of worry.

[Josh Brown]

I'm so glad you said that. Because people point to the stock market and say, what an all time high? What do you mean there's fear in the market? Even last week or two weeks ago when the S&P fell 2%, it was nothing. The poke call ratio spikes immediately. There is a lot of fear. And it's really hard to have both of those thoughts in your head at the same time. I know, because you think like, oh, this is bubble, everybody's in. No. And that is why it keeps grinding higher.

[Michael Batnik]

Correct. I completely.

[Podcast Host]

What would be your signal though for that unwant, like what would have to happen for you to say there's not enough fear in the market. Multiple expansion again.

[Michael Batnik]

Yeah. So the 15% down sort of confirmed that whole.

[Podcast Host]

Think about how hard though it Is to have 29% earnings growth and outrun that with price.

[Michael Batnik]

Yeah.

[Podcast Host]

We would have to have like a 70% rally in the market.

[Michael Batnik]

Right.

[Podcast Host]

In order to get multiple.

[Josh Brown]

Well, thank God we didn't have that happen. That would have been scary.

[Michael Batnik]

Well, that's exactly. So when people say, like, what could be the problem? Something like that, where you see very little fear in the equity market or a bubble like that in terms of that price advance or something that looks more like that. And good economic times, top quartile GDP growth, which we're still grinding it out at like two, two and a half and we'll see where earnings growth ends up. But for the most part it's been between 10 and 15.

[Josh Brown]

So don't you think it's easy to make the case that investors as a whole are being sober right now, even though we're about to get to some of the crazy shit that's happening? Because there is obviously crazy shit happening. But I've said this to Josh a million times. In today's modern digital markets, in a bull market, there will always be maniacal behavior like that's just. That will never not happen again.

[Podcast Host]

And sideshows.

[Josh Brown]

Yeah, of course. But in the aggregate, the fact that we are not outpacing earnings growth, I think the market is being pretty sober.

[Michael Batnik]

Completely agree.

[Josh Brown]

All right.

[Michael Batnik]

Right.

[Josh Brown]

So rewind back to I guess earlier in the year. I don't know when we made this chart, but remember the forward P E of tech. Next chart please, Daniel. And the forward P E of The S&P 500 converged.

[Michael Batnik]

Yep. Yeah. Yeah.

[Josh Brown]

And we were like, yeah, is this good? Is this bad? This is weird. All right, well, that was the fat pitch. Yeah, we got it. Literally the 4p of tech and the whole market converged.

[Podcast Host]

You had a chance to buy all of these quote unquote high flyers at the same multiple as the overall market.

[Josh Brown]

So we made this last week. I forgot to put in the deck. But even better, we saved a few. Denise.

[Michael Batnik]

Yeah.

[Josh Brown]

Rolling 38 day performance since we made this chart or since those lines converge. Look at that fat pitch. Look at that home run.

[Michael Batnik]

I know.

[Podcast Host]

Was that plus.

[Michael Batnik]

Nice job.

[Josh Brown]

So it's a. It's a performance spread of tech versus the S and P over the time period.

[Michael Batnik]

I figured. Yeah, no, there's. And we have the data going back to the 60s. Right.

[Josh Brown]

So I have to go back to the 30s.

[Michael Batnik]

That's. I don't really have technology. I was like, wow, you'll have to share that with me. There is. There's a relationship. The cheaper technology stocks have been relative to the S&P 500.

[Podcast Host]

Tech in the 30s was brooms. Brooms were very big. So in many ways the multiple compression is justified because the companies Themselves are undergoing a transformation. They're going from capex Lite, predominantly software businesses with crazy high margins, a little bit of R and D, a little bit of capex but nothing crazy, to 120% cash flow going into long term infrastructure projects. Can't say they're capital light anymore maybe with the exception of, I mean even Apple would be a stretch. They're the only one not engaging in this capex frenzy. Their capex actually is down versus last year at least so far but these stocks should not be trading at 35 times earnings anymore. They are industrial, they're very modern industrials. What do you think about that?

[Josh Brown]

It's a great point.

[Michael Batnik]

Well I think it depends on their ultimate margin structure which we don't have the answer to yet. I think to your point in this

[Podcast Host]

transition period while they build they look more like heavy industrial companies with a

[Michael Batnik]

much higher margin structure and returns currently. That's what I mean. So what we know is to date that has not been true in the sense that they have spent more in terms of capex and yet they have retained this margin structure. Now we will see where it ends up Again like all estimates don't always come to fruition what they will spend maybe there will be bottlenecks, maybe in fact technology will do what technology always does which is make something very expensive and scarce and that will make it cheaper and abundant. Right. So maybe this capex ends up not being as egregious as we think and doesn't weigh on free cash flow as much. So there are all kinds of possibilities. I think that what was the debate in the bubble was that all of this spending was very clearly not associated with any margin or any earnings and to date the spending that we're seeing has been associated with.

[Podcast Host]

So we've made that point before and we've also made the sort of parallel point that the equity funded bubble of 2000 is very different than the cash flow funded bubble of today.

[Michael Batnik]

Yes.

[Podcast Host]

So the though that may not stay true I think half the backlog for AI capex is OpenAI anthropic and that money is very obviously has to come from IPOs or raised assets. So that's sort of equity equity issuance funded spending but like the capex itself is coming directly from the companies that are most capitalized to actually do the

[Josh Brown]

spending and also look at meta. So they've obviously spent a lot of money on AI and reels which is a three year old product is now doing $50 billion in annualized revenue. That's more than Netflix. And that is a direct result of the AI spend.

[Podcast Host]

Right. Reels has become the world's most addictive product. It's, it's literal heroin. If you, if you walk through an airport like and just look to the left, look to the right, walk through a terminal, you will see 8 out of 10 people are staring at their rectangle. 8 out of 10. If it's kids, it's 10 out of 10. And that's reels. So a little bit TikTok, but a lot of reels. And they've used AI to essentially rewire our brains. We can't stand on an elevator and not look down at the phone. Right. It's like it's captivated. So AI has enabled just an incredible step change in how addictive Meta is and how good they are at serving ads. More, more, most important, right?

[Michael Batnik]

Which is how they generate.

[Josh Brown]

So the biggest beneficiary of all the spend in the market today and the area where if somebody said, Michael, what do you mean the market is sober. Have you not looked at semiconductors?

[Michael Batnik]

Yeah.

[Josh Brown]

Okay, fine. Point taken. So chart three, Daniel, please. The Sox index is 69% above its 200 day moving average, which is unlike anything going back to. So I guess we only have data going back to 2002 here.

[Michael Batnik]

Okay.

[Josh Brown]

But we've never seen anything in the last 25 years like this. It is going straight up. We spoke. Josh and I were talking about Micron, how it just joined the trillion dollar Club. It's the 11th stock and I guess Anthropic is on its way. So on Tuesday, UBS raised its chart forward. Daniel, please. UBS raised its price target for Micron to $1,625 from $535, more than double its closing price on Friday of 751.

[Podcast Host]

Without commenting specifically on Micron, you would agree this recent development of these memory stocks and Korean stock market and all related some semiconductors that Denise is not specifically talking about. You would agree this is an area that's causing portfolio managers and market watchers

[Michael Batnik]

to be like, wait a minute, what's going on?

[Podcast Host]

I'm getting shades of Cisco, Lucent, JDS Uniface. Like I'm getting those feelings back from 25 years ago. You'd agree there's some element to that.

[Michael Batnik]

Yeah. So that's where I think the data is really interesting.

[Podcast Host]

Should we short Micron? I'm just teasing you.

[Michael Batnik]

I know you're teasing me. I won't answer. It doesn't matter anyway. So. No, I think that's A really interesting point in terms of like when you aggregate it together, forget Micron or any individual stock and just aggregate all the semiconductors together, you go, okay, well what's happened over the last six months, right, it's they're up 70%. What's happened over the last year, they're up 100% and now let's look at the data. Let's just pretend again back to sort of all the charts. Like let's pretend we don't know the answer and let's be open minded. Now you look at that and you could say, okay, well it's been up 100% before over the last year. And two things. One, it's exactly in line with its earnings growth and two, that's important and it gets more important in a second. And two, if I bought it every time it was up 100%, clearly the bubbles was one instance that was negative. But more often than not like 55% of the time, it goes on to outperform again the next year. The interesting part is let's forget semiconductors for a second. Let's take all of the industries going back to the 60s for anything in any GIC sector and say, well, what if I bought them when they were up 70 to 100%?

[Podcast Host]

Any sector that's up 75, any sector, any industry.

[Michael Batnik]

So one click down. So that'll be, it's only happened like 2% of the time, you know, historically, but every sector kind of has some participants 65% of the time. They go on to outperform.

[Josh Brown]

That's a lot, right?

[Michael Batnik]

Surprising too, which is sort of to the point of, wait a minute, is there something the market is not.

[Josh Brown]

Investors aren't stupid. Like there's a reason why this happens.

[Podcast Host]

They're not doing this randomly because what

[Michael Batnik]

the anomaly is has been earnings growth. So over the last two years, the price performance is less than the earnings growth have been for semiconductors as an industry over the last two years. That's the anomaly. They've never compounded earnings like this without being down 100% or, you know, not 100% and then up 100% but now this up trajectory up, let's call it more than 50%, has lasted more than two years. That's the difference in history.

[Josh Brown]

I think the average investor, they see the price, right? So they see like the Wall Street Journal had this great chart. The Wall Street Journal had this great graphic showing the time between reaching $500 billion and a trillion dollar valuation. And Berkshire, I mean, you know, whatever it was a Long time ago. But Micron, it happened in how many trading days is that? Like. I don't know. I can't. It doesn't say.

[Podcast Host]

But yeah, 20.

[Josh Brown]

It's ridiculous, the speed at which it happens. So we made a chart showing that Micron, we're showing its path in the s and P500 over time. And a year ago, like not a year ago, it was the 127th largest stock in the S and P. It was a, it was a less than $100 billion market cap just a year ago, and it's now number 11.

[Podcast Host]

10 years ago, it was number three. 81.

[Josh Brown]

Speed. The speed is amazing. So Denise, you have a chart showing the relative forward PE of. Of semis.

[Michael Batnik]

Yep.

[Josh Brown]

And they tend to trade at a, I don't know, discount, but investors don't give them the premium multiple.

[Michael Batnik]

Right.

[Josh Brown]

So I had a friend of mine who, credit to him, he's been in Micron for a while, he's made a lot of money. And I was saying, like, hey, listen, I'm not like calling on top of Micron or anything like that, but like when something goes up 5% a day, set some sort of exit plan just while you're sober. And maybe he's drunk on the, on the gains, but like. Cause if and when this thing falls, it's just gonna be disoriented for your brain. Like, I'm not making a short term call, but just having this conversation with

[Podcast Host]

him, it'll fall 5% a day, fall 20% a week.

[Josh Brown]

Well, it just, it just fell 30% like after earnings. It just did. So anyway, the point, the point is this. He said, well, it sold out for a year. Is it still a cyclical business? And I would say yes. But you know a lot more about this than I do.

[Michael Batnik]

Well, I would say so. The, the trick with cyclical businesses, if they're cheap, right. That could be the peak in earnings. Right. So that's to your point. Like, if this is still a cyclical business, then valuation doesn't look from a probability perspective the way it currently looks for semiconductors. Meaning that I have this linear relationship. The cheaper the stocks are right now over the last 10 years, the more likely the stocks are to outperform. Right. So I think some of what we're seeing right now is a changing business. Right. We just talked about that. In terms of earnings, they've never compounded like this. Now, whether or not earnings is peak, that part I don't know. But what I can say is that the valuation compression that we just Saw again that two year stack in terms of the earnings growth. It's almost like a catch up trade. And some of this valuation multiple is saying, look, I understand that there's a lot of fear in the market about what this might mean. Some of that's in the stocks. Right. Which seems absurd to your point. Like back to the point of like,

[Josh Brown]

yeah, there's fear in the stock. It's only up, it's only up 8x.

[Michael Batnik]

Exactly. So again, it's sort of, you have to sort of put the case of yes, anything that goes up that much can also go down. But when you think about measuring fear quantitatively and measuring valuation support, there's, you know, 70% odds are not 100% odds. But when you see a pattern like that, I think you have to be a little bit more open minded that price might be understanding something that you don't.

[Josh Brown]

What's that 70% that you just mentioned?

[Michael Batnik]

So the odds of semiconductor outperformance over the next 12 months based on when your starting point is in that bottom quartile of valuation.

[Josh Brown]

But do you still think there's cyclical?

[Podcast Host]

Yeah, but the nature of the cycle itself is probably changed. So maybe the cycle used to be three years and now it's seven and we won't know until we get to eight and look back and say, oh, that was the peak of cycle. One of the things that distinguishes this from the 2000 bubble, Micron in particular. So I'm old enough to remember two years ago when they were comparing Nvidia to Cisco and we don't talk that, uh, Nvidia, Nvidia, like basically has become Taylor Swift and Micron is Olivia Rodrigo and like the, the young, younger girls don't care about Taylor Swift anymore. Okay, okay, so, so now we're not saying, we're not saying Nvidia, Cisco maybe we're saying Micro. So people are pointing back to like the, the telecom fiber optic boom and how like they laid all this fiber and then nobody needed it and all those companies went bankrupt. And then it wasn't until five years later that YouTube came along and all that fiber that they thought was worthless. And I, I was in these stocks like MF&X and like I owned all of these things. Um, I don't love that comparison or that analog because Micron's memory is not being installed in a data center. And then collecting cobwebs, like the stuff that they're selling is put into use immediately. Now you could argue whether or not that will continue, but that's Not a great comparison to Cisco and fiber optic cable in the year 2000.

[Michael Batnik]

Right.

[Podcast Host]

This is not Capex with the expectation that maybe somebody will need it. They're literally saying we're short compute based on today's demand. Forget about what we think demand is going to be in three years. Do you think that that point is made enough on the bull side? Do people understand it really? Or.

[Michael Batnik]

I mean, I think it goes back to the like idiosyncratic versus, you know, systemic in terms of like how you add it up. So yes. Are there individual stocks where you could sort of make this comparison? But the problem was in the, in the 90s into that bubble, it was everybody. Right. So the median technology stock, their earnings peaked in 1996.

[Josh Brown]

Whoa.

[Michael Batnik]

Right. That was the disconnect. Right. I mean, this, like, could we get there? Sure. But we're a very far cry from there. The median tech stock is profitable, obviously. The cap weighted tech stocks are profitable. Operating margins are still increasing. Could we look back at some point and say this is the peak. But again, back to that. Okay, let's pretend then this is the peak. What if, then it's 1996.

[Podcast Host]

Okay. Do you think if Anthropic and OpenAI were public companies reporting financials on a quarterly basis, holding conference calls and had ticker symbols that people could see the visibility of where the spending is going and where the revenue is coming from would be a better source of comfort to people? Because I think one of the issues right now is a lot of this capex is going into projects being paid for by Anthropic and OpenAI and they don't have tickers the circle and they don't talk to the public unless they want to promote something on, on tv. But they there. It's not a, it's not the same as seeing a public company spending and then being like, okay, I get it though, they're also generating revenue. We're getting rumors of revenue about these companies. They're like casually mentioning their revenue at the Milken conference. Like we don't have, we don't have the data at our fingertips. And maybe that's why all the Capex spending, it's harder to tie it to revenue that we can actually see. Do you think that's an issue for investors? Is that maybe why there's so much suspicion?

[Michael Batnik]

Yes, but I'm not sure transparency would solve the suspicion to your point. Like, I think there are skeptics out there. I think the skeptics will probably continue and in some ways, like I don't know, do we want comfort? Because so far it's been a decent investment setup. So do we need people to be more comfortable? I'm not, I'm not sure the answer.

[Josh Brown]

That's your question.

[Michael Batnik]

Do we need, do we need that as a driver?

[Podcast Host]

Well, the people who are long right now don't need that. They're fine.

[Josh Brown]

What are the areas of the market where there might be too much enthusiasm and this is hard to say what's priced in or not, but it might be, it might be the analysts. So this is from BC Alpha Research. They grabbed this data from FactSet. We're looking at net profit margin for every sector and they're expected, I mean they're at all time highs and they're expecting even more gains.

[Michael Batnik]

Yeah.

[Josh Brown]

What happens if this doesn't come to fruition? I think you keep saying like the diffusion and the breadth of companies benefiting from this. Do you think that this is more likely than not that margins are going to keep going up? Because this to me is the, this is it, this is the whole king.

[Michael Batnik]

Right? Yeah. So I would say let's look at the forward indicators in terms of what's correlated to margins and the biggest correlation to margins is unit labor costs. So labor especially when you sort of compound it for productivity, that's corporate America's biggest for the most part cost, which is not to say that there's not other input costs, but that's the main, I would say that the main corollary. And so when you look at unit labor costs over time, every sector. Yeah, so most sectors, the vast majority of sectors and then when you aggregate it up for the market overall, without a doubt. So I think you have this unique combination of unit labor costs are in the bottom quartile of history. Right. So that is very rare relative to like you know, 3% inflation. So it's partly because wage pressure has been, you know, continued I would say with you know, in conjunction with productivity advancements. So that has the correlation to profit margins. So the lower unit labor costs have been direct relationship. The higher corporate profit margins usually are.

[Josh Brown]

Do you have to put token spend back into the, you know, the labor costs?

[Michael Batnik]

Why?

[Josh Brown]

Because a lot of the money that

[Michael Batnik]

on a capex human side is being

[Josh Brown]

spent on the robots already or the machines.

[Michael Batnik]

Not yet. I would say from a proportion perspective, not yet. Maybe that will change but I don't think we're there yet.

[Podcast Host]

Oh, so like we're saving money by hiring people but we're just reinvesting that money into compute like that already we might be, yeah.

[Michael Batnik]

And so. But I don't think that that's where the productivity is coming from quite yet. But I do think that wage growth has been restrained. Productivity is on the uptrend and that usually makes corporate America more profitable. Again, back to just relationships. Right. And then you add in that fact too. So you go, okay, so then these are the expectations. You know, they continue, but yet we're seeing this, you know, persistent fear in the equity market and this multiple compression saying that some people are already pricing in the fact that it won't continue, meaning that there's already the fear that there are these risks. So you end up in the same situation where the forward drivers do suggest that it's more likely than not that profit margins are higher rather than lower and the market doesn't believe it.

[Podcast Host]

Let's talk about the diffusion that you spoke of. I think this is one of the most unsung aspects of the bull market this year. Last year we talked about it a lot. The financials had a great year. There's a lot of money to be made in things other than tech last year. This year I feel like the focus has gone back to AI CapEx being the only game in town. But here's a chart 11. This is the S&P 493.

[Michael Batnik]

Yeah.

[Podcast Host]

The earnings revisions for the first quarter.

[Josh Brown]

And

[Podcast Host]

I feel like this is, I feel like this is trending in the direction that you'd want it for the overall market.

[Michael Batnik]

Right.

[Podcast Host]

So it's like more, more upside from more companies that are not mag seven.

[Michael Batnik]

That's correct. I think it's a unique setup in the sense that there's been a big divergence between cap weighted earnings growth and equal weighted earnings growth. And while cap weighted earnings growth has been fine and good for the last three years, equal weighted earnings growth has actually been contractionary. From a duration perspective, smaller companies have

[Podcast Host]

not had the same earnings boost.

[Michael Batnik]

Correct. And I would say not only the same earnings boost, we're actually seeing earnings decline.

[Podcast Host]

Yeah.

[Michael Batnik]

From not a magnitude perspective like we saw in other, other recessions, but from a duration perspective, it was as long as those recessions. So that's why like 2022 was kind of recessionary. From a corporate America profit perspective, it wasn't. It was a full employment recession. And this is a full employment recovery. But this is just now getting back to a situation where equal weighted earnings growth can grow and be durable. And from a pattern perspective, you see the symmetry between the duration of the decline and the duration of the support.

[Podcast Host]

How long was the duration of the decline for three years. Three years.

[Michael Batnik]

Three years.

[Podcast Host]

So where are we in this earnings Recovery for the 493?

[Michael Batnik]

Like we're. Four months.

[Podcast Host]

Yeah, four months.

[Michael Batnik]

Yeah, yeah. I mean I started writing about it in the beginning of the year that we're just really getting started.

[Josh Brown]

So the Mag 7. The Mag 7 are up 6.6% year to date.

[Michael Batnik]

Yep. Which is underperforming the market.

[Josh Brown]

Exmag X Mag is up 10 and a quarter percent. So I thought this is a. This is really welcome, welcome site. Daniel, chart 5, please. The top 10 stocks in the S&P 500 in terms of what's contributing to the overall gain. Google's number one. The fact that Micron is number two is so insane. It started the year at $100 billion and it's the number two contributor. It's added a hundred plus basis points to the overall index. It's remarkable. After that you've got Nvidia, Apple, AMD, Amazon, Intel, Broadcom, SanDisk, and Lam Research. So we're noticing a theme here. Okay, obviously. But they all add up to 2.3%. Guess what? The index is up 10%. Pretty damn good.

[Michael Batnik]

Yeah. Well, that's why it's interesting when you talk about people saying, oh, the market's dependent on the Mag 7. The Mag 7 underperformed for the better part of the last 18 months and

[Podcast Host]

they themselves are diverging from each other.

[Michael Batnik]

Correct.

[Podcast Host]

Which I love.

[Michael Batnik]

Correct. Which. Maybe we'll have to come up with another acronym or something.

[Podcast Host]

Well, we're going to have to add SpaceX to that MAG7. It's going to be MAG8.

[Michael Batnik]

Tough acronym. Okay.

[Podcast Host]

Right. But it's go. It's definitely going that direction. Do you want to do this one?

[Josh Brown]

Which one?

[Podcast Host]

Margins Outside Tech.

[Josh Brown]

All right, so. Oh yeah, this is also very welcome. Margins Outside tech.

[Podcast Host]

Is this AI, Basically is the question.

[Josh Brown]

Yeah. So what do you think?

[Podcast Host]

Why. Why are margins expanding at this rate outside of technology companies? Because they're the users of AI and they're expanding their margins or it's too early.

[Michael Batnik]

Yeah, I think it's too early. I mean, you're definitely seeing productivity advancements in, specifically in software, but I don't think it's diffuse relative to the rest of corporate America. And again, I would go back to the. If you asked me what's sort of the, the driver behind that, I would go back to the pattern of unit labor costs. Right. And that's sort of the driver, at least the corollary, the tightest corollary that I'VE ever seen with corporate profit margin.

[Josh Brown]

So I want to get your take on, on this and, and sticking with the rest of the market. So small cap earnings, I forget what the overall estimate is but it's like a, it's like 30% it's like a number that you're like wait, what? How so one of our guys, Chartkin, Matt compared the small cap earnings the Russell 2000 versus the S&P 500 the expected earnings over the next four quarters and the spread amongst the two is gigantic. Energy and materials I think we sort of know what the story is there at least on the energy side. But what's happening with financials? How are they expecting 66% earnings growth for small cap financials and just 7% for large cap and similar things with real estate and discretionary. The spread is gigantic.

[Michael Batnik]

Do you feel like it's the calculation in terms of the non earners and how you calculate that from people? Because at the end of the day like Russell 2000 what we went from we're close to at least 20% on

[Podcast Host]

$1 losing 5 cents and now they're going to earn 5 cents and how

[Michael Batnik]

do you huge difference are they out? I think that's the case I think

[Josh Brown]

with the 6002 direction this and starting

[Michael Batnik]

with directionally the same but I think

[Josh Brown]

from a magnitude perspective that we overstated it. But what do you think is driving this? Do you think it's because it's not the expectation of Fed cuts which we're going to talk about? No, because that is going the opposite direction. So what do you think?

[Michael Batnik]

Correct.

[Josh Brown]

What do you think it is? Because you're right like the equilibrium and small cap earnings have not broken out yet, correct?

[Michael Batnik]

No, I mean I think it's all the beginning of a recovery. Right. So and you're all seeing this together. It's the manufacturing recovery that they're linked to. So the same thing like when you look at ism, right? Ism New orders inflected higher for the first time in three years. Right. It's very rare that the manufacturing economy is in I would call it maybe recessions overstating it but a malaise for three years. Last time you saw that was like in the 80s, right. And you see a big corollary to smaller businesses and productive capacity in the US So it is just starting to emerge to what normal growth actually looks like and that's where I think you get from a non earner perspective to a flip to earner perspective. This is the beginning, right? This is exactly where it starts so it's all linked to that median earnings growth is finally emerging from what I would call a recession that's lasted the better part of three years.

[Podcast Host]

What do we do with inflation?

[Michael Batnik]

What do you mean? Buy it, sell it?

[Podcast Host]

It's not trending in the right direction. It's changing the story of what we thought the Trump appointed new Fed chair would be able to do, would want to do. They just pushed the first rate cut of 2026 into December. In terms of the probability based on trading that probably my guess, I don't think we get any kind of relief on the inflation numbers next month, the month after. I'm guessing they'll push that 26 cut completely off the table and maybe start talking more about a hike. What do we do with this as investors?

[Michael Batnik]

Yeah, so I have a lot of thoughts on inflation. So the interesting part is as an investor, right, do we get any relief? Do we need relief?

[Podcast Host]

Do we need it? Equity market investors, cpi, have to cool off to two and a half or can we just.

[Michael Batnik]

The, the sweet spot for the equity market is between 3 and 4, right? Inflation, yes. So I actually have a chart of that. I know it's ironic.

[Josh Brown]

Chart 15.

[Michael Batnik]

Yeah, yeah. So I mean, so that's one irony, right, which is what? You know, like equities act like an inflation hedge, right. The times when you don't want to own equities are when it's top quartile, inflation is top quartile and rising, that's four and a half percent. We can debate whether or not we're going to get to 4.5% from a core CPI perspective. I don't think we will and we'll talk about that next. But that's the area that you don't want to own equities, anything sort of like in this inflationary dynamic which we're a part of, I would call it the middle quartiles. It's not the driver. Right? Earnings growth is the driver. And again, if earnings growth is the driver, equities can be a valid inflation hedge. So there's an interesting pattern there as it relates to overall inflation. So this is, again, this is, I don't wanna say controversial, but so if you look at core CPI and you take out shelter, if you say, let's call shelter a supply shock this time around, because that's exactly what happened, right? Interest rates went up, everybody was locked in their mortgages, so nobody wanted to sell. So it's acting like a supply shock. If you look at core CPI X shelter, do you know What? It was last quarter or last month, 2.3%. Oh, right.

[Podcast Host]

The shelter component is what's making it look like it's way worse than it is. Yeah, well, people really do care about shelter though.

[Michael Batnik]

No, but I understand that they should care. It's not about what the consumer feels.

[Podcast Host]

Yeah.

[Michael Batnik]

This is about how the Fed should manage.

[Podcast Host]

Well, that's a good point.

[Michael Batnik]

Right. Those are different. Right. So the reason why you look at core CPI and we'll get into energy in a second, but the reason why you look at core CPI is because if you're the Federal Reserve, you don't want to double down on a supply shock. Meaning that if oil acts like a tax hike, the last thing you want to do is add rates to mitigate something that you can't control anyway.

[Podcast Host]

And that's right. Sorry about the gasoline prices. Here's higher interest rates.

[Michael Batnik]

Correct.

[Podcast Host]

So that's why it made no sense.

[Michael Batnik]

That's why they look core cpi. And the interesting part is so when people are worried about higher rates this time and you say, well, okay, we can observe that rates are going higher, but again, let's assume we don't know why. So when you look at oil specifically and you chart it out, we have a great chart of this. I don't know if you have it up or if you have it, but when you sort of quartile out the oil like advances that you see over time, 10, 10%, 20%, all the way up to 60%, you say, is there a pattern between what has happened to oil over six months and what the Federal Reserve will do over the next 12 months? There's a negative pattern. The bigger the shock in oil, the lower the probability that The Fed hike 25% is not zero. But even when oil is up 60, what you see is only a 25% chance that the Federal Reserve hikes. Why? Because most of the time since the 1980s, you don't see a pass through to core inflation. And by Most I mean 48%. Let me quote not never.

[Josh Brown]

Let me quote you to yourself.

[Podcast Host]

Quote me.

[Josh Brown]

You said many investors and Denise, you write on LinkedIn weekly.

[Michael Batnik]

Yes.

[Josh Brown]

Okay. Many investors see higher oil prices as the factor that's increasing the odds of a Fed hike. But when you examine the data, oil driven shocks have historically made the Fed less likely to tighten, not more functioning, more like a tax on the consumer. That's great news than a catalyst for broad based price increases. And by contrast, what clear pattern emerges?

[Michael Batnik]

Yeah, growth. Growth is the clear pattern. And the funny thing is like when you look at. I wrote a lot about the manufacturing recovery earlier on the year. Durable goods orders are actually in the top quartile of their range.

[Josh Brown]

Chart 14, Daniel.

[Michael Batnik]

Yeah. So that's chart 14. And then you do see this pattern, right, between core capital goods. Right. So the strongest core capital goods, that's the quartile we're in. You see that relationship, you know, that monotonic relationship between the higher the growth is in terms of durable goods orders, the more likely the Fed is to hike.

[Josh Brown]

And which quartile are we in? Right now?

[Michael Batnik]

We're in the top quartile of capital goods. Yeah.

[Josh Brown]

So you think they're going to do it?

[Michael Batnik]

I don't know. I mean, it increases your odds to 65%. I would say that again. You got to go with the base case is, okay, so something changed in terms of the probabilities. Let's be open minded to the probabilities. Then the question becomes, okay, let's say they're going to hike. Do I care as an equity market investor? And that's the unique data set, which is, you find out really quickly.

[Josh Brown]

Chart 15, Daniel.

[Michael Batnik]

Which is, it's not about, oh, we're

[Podcast Host]

going right to magnitude. So important. So I don't know if you know this. I am a television star and we spend so much time on TV talking in binary terms about hikes versus cuts, what's good, what's bad. There's very little discussion of magnitude. So let's get. I'll sign an autograph after this, but let's get into yourself.

[Michael Batnik]

I think it's interesting. So if there is growth, you usually see in these middle two quintiles or quartiles of the Federal Reserve hiking interest rates. So these two quintiles are 0 to 100. Right. So if you're hiking like 25 basis points and maybe 100 basis points over the course of four meetings over the course of a year, those are your market odds. Right. And there are higher odds of a market advance than baseline. Right. So baseline, 75%. And you would say if I knew everything about what the Fed is gonna do, whether they're cutting or hiking, what's my best probabilities? It's the Fed hiking by just a little.

[Podcast Host]

A small hike and a stock and a stock market that is not disturbed by it.

[Michael Batnik]

Correct. Because it's a reflection of the dryest. It's not a deterrent to it. Right, okay. And it's more like it's indicative of the fact that, you know, rates confirm the cycle. That rates or the Fed Follow the cycle rather than potentially create it. And if rates are a reflection of growth, the market's got no problem with it, cuz they're focused on growth.

[Josh Brown]

How often do new Fed chair people come in and hike? I know there's not been like a

[Michael Batnik]

million examples, but I actually don't know.

[Podcast Host]

Well, it ain't gonna be this. It ain't gonna be this guy. I could tell you right now. It reminds me of the O. Henry story, the Gift of the Magi, where his husband and wife. No, no, right.

[Josh Brown]

What is he talking about?

[Podcast Host]

Is a husband and wife, they each want to buy each other a gift and surprise each other.

[Michael Batnik]

Oh, I do know the story.

[Podcast Host]

Right?

[Michael Batnik]

Yeah.

[Podcast Host]

But they don't have money and there's a whole thing that goes on, it's not important. But in the end, he buys her this beautiful hairbrush. I don't know if it's like ivory or something. She cuts off all her hair for the money to get him a gift.

[Michael Batnik]

Yes.

[Podcast Host]

So there's some elements of that where it's like, all right, oil price spike, definitely uncomfortable for the consumer business. High gasoline, very real. And then the reaction to that is what we're worried about. The reaction to that is that is going to make its way into other prices in the economy, which I understand. But then the reaction is going to be, well, we're going to raise rates.

[Michael Batnik]

Right?

[Podcast Host]

Well, first of all, you ain't going to change the price of oil by raising rates.

[Michael Batnik]

Right.

[Podcast Host]

So what are you really doing? You're just exacerbating the high prices that you were worried about in the first place.

[Michael Batnik]

I think that's correct.

[Podcast Host]

Okay, so, but they, I mean, I'm not a PhD. Surely they understand this, right?

[Michael Batnik]

I do think that if I understand this, they must, I would say that it's clear in the data. Right. When you see in history the fact that the Federal Reserve is less likely to hike the bigger the spike in oil, I think that they see it exactly the same way, that oil is like a tax hike on the consumer. And the interesting part, again, since the 80s, I mean this doesn't include the 70s and like the big inflation spike, which is different because of unit labor costs. But if you say what are the odds that it does get passed through? I would say less than 50, 50. And I think that we saw this movie with tariffs. Right. In some ways corporate America doesn't get to decide what it can pass through. The US consumer decides what it's going to absorb. And that's, I think, what's very different so if real incomes aren't excessive or we're not getting rained down in terms of 15% GDP coming out of COVID or something like that, if you have to spend more money at the pump or from a tariff perspective, more money on washing machines, then your marginal propensity to consume goes down in other areas and their marginal ability to price goes down with it. So you saw again, I think over the last 12 months corporate America try and increase prices and then quantity demand fell and so what did they do? They cut prices to increase quantity demand.

[Podcast Host]

So I think where do we see that? Autos, airline tickets, Pepsi.

[Michael Batnik]

Yes.

[Podcast Host]

Saw that in some consumer goods.

[Michael Batnik]

Yes, right, yes.

[Josh Brown]

So forget about fed funds rates for a second and let's talk about the 10 year.

[Michael Batnik]

Yeah.

[Josh Brown]

And the longer end of the curve which people have been nervous about over the last couple of weeks. Do you think that's appropriately priced given how strong demand and growth are and therefore it's not necessarily something to be worried about?

[Michael Batnik]

Yeah, I would say it's not anomalous at all. Like when you. Yeah, when you look at it relative to growth, I mean again it goes back to the like would we like it lower from an accommodation perspective? Not clear in terms of the data. Lower rates are often a reflection of lower growth. So no. And when you sort of quartile it out and you say okay, where we are relative to where GDP is or where it would be, you would say there's really nothing to see here from a pattern perspective.

[Josh Brown]

And where was the 10 year in the 90s? It was like 5%.

[Michael Batnik]

Exactly, exactly.

[Josh Brown]

All right, so there are, there are, the IPOs are coming. SpaceX is looking like sometime in June. Who knows about The Frontier models OpenAI and Anthropic? But let's just assume that at some point. So we have a chart showing the actual money raised and we did not inflation injustice. Okay. But in 1998 and 99 and 2000, which was a legitimate IPO boom, obviously the numbers were smaller. Okay, not inflation adjusted.

[Podcast Host]

You could say mania, but it was

[Josh Brown]

a legit full blown mania.

[Podcast Host]

Yeah.

[Josh Brown]

And it's possible that at some point over the next year or whatever, we're going to have as much supply coming to the market from SpaceX, OpenAI and Anthropic. I mean this is the, this is a big one. Do you think there is enough liquidity, enough willing buyers? Can the market take on this much

[Podcast Host]

new effort for the people listening and not before you answer, for the people listening. So Michael's chart is like you look at 1998, 99 and 2000. You had 34 billion worth of IPOs, then 65. Then 65. That's 164 billion in three years of new equity issuance. Contrast that with this year. If we were to get SpaceX OpenAI anthropic, those three deals, we think would add up to something like 170 billion would have to be raised.

[Josh Brown]

These numbers look light and like, I

[Podcast Host]

mean, and these numbers are going up every minute. Yeah, so has the market versus, I don't know how many IPOs. We think in the 98, 2000 periods. Hundreds.

[Michael Batnik]

But don't we need to rebase it in terms of market cap?

[Josh Brown]

Yeah, of course, of course.

[Michael Batnik]

But if we rebased it in terms of market cap, wouldn't that look 25% of that?

[Josh Brown]

Yeah, probably.

[Michael Batnik]

Right.

[Josh Brown]

All right, but whatever. Let's just. It's a lot of money.

[Podcast Host]

Delete that portion of the show.

[Josh Brown]

No, no, no, no. But this is something that people are worried about.

[Michael Batnik]

Yeah, no, I understand. You guys know more than me about, like, IPOs. And clearly you can look back in history and say IPO booms are at least correlated with some potential busts in the sense that they usually correlate to euphoria in the stock market, which is usually around boom conditions in the economy, boom condition in earnings. It's very diffuse. So they all tend to happen together. You know, bullish sentiment, you know, exorbitant earnings. And by exorbitant, I mean like top quartile. Right. All of these top quartile indicators. We're not there in any other indicator.

[Podcast Host]

You talk, but you talk to portfolio managers. Is anyone talking about what they. The fact that they might have to sell things to participate in some of these. Like, it's a certain amount of money you have under management.

[Michael Batnik]

Yeah, yeah.

[Podcast Host]

All right, so now you have a company that you already know. If you're being benchmarked to the S and P or a growth index or NASDAQ, you must own. You literally must either own SpaceX or it crashes and you look like a genius or something in the middle. But, like, you have to do something.

[Michael Batnik]

It's a rebalance challenge. I mean, I think that we've seen this over and over again with the Russell value and growth indices and the market handle 80s.

[Podcast Host]

We had a guest on our show a couple of days ago, his math. Let's assume it's the case. He's saying it's like 74 billion they'll raise. And then if the green shoe is exercised, which of course it Will be be like $86 billion.

[Michael Batnik]

Okay.

[Podcast Host]

That money has to come from somewhere. Especially if you think they're going to engineer a pop. Like it's going to open, it's going to open up like not down. You probably need like 2x that in order to get a pop in the stock somebody has to sell something. That money doesn't just come from like another planet. So like is that a concern in the near term for investors in other tech stocks? Because I'm assuming that's where the money will come from.

[Michael Batnik]

Yeah, I mean we'll see. In the near term anything can happen. Right. So in the long term, and by long term I mean again over the course of a year, which is generally my time horizon, it will be. What will matter the most will be earnings. Right. So you will get, I'm sure you'll get more volatility or at least idiosyncratic volatility. Maybe not at the highest level of the market for a time from an absorption perspective. But I think that that might be more short term than you think. Which is like I said, go back to the rebalance that we have. Again this is a little bit of a different issue but we've seen rebalances like that that are sizable before in Russell versus Growth in 2000 go into sort of the mid cap and all of that. Yes, there are absorption issues over the short term, but over the long term and again just a one year time horizon earnings is going to be the driver and that will ultimately be the.

[Podcast Host]

We'll get through this level of new equity issuance because the earnings will bring people back in as buyers.

[Michael Batnik]

Correct.

[Podcast Host]

This would be a good time for buybacks to kick back in. We're getting all this equity issues sticking

[Josh Brown]

with like the speculative stuff. Does the speculation worry you at all? Is it a total sideshow? So the meme ETF from Round Hill is at an all time high. It's a relatively new ish etf. Like they issued it, I don't know in the last 12 months. I think it came out in October 25th. Okay. It's at an all time high in terms of price. All October 25th.

[Podcast Host]

What does it own?

[Josh Brown]

So the. But my point is like the main names are working. Yeah.

[Michael Batnik]

It owns non profitable tech.

[Josh Brown]

Yeah. Red Wire, ast, Space Mobile. So all right. Space Applied Opto Electronics. I don't know what that is. Iron. So a lot of the quantum stuff Applied Digital Rocket Lab. The, the, the, the junk is working.

[Michael Batnik]

So yeah. I did an interesting piece on this for Risky Tech and because There's a lot of charts making the rounds. If you do like towards top quartile beta. Right. Or highest beta stocks within S and P technology they were hitting all time highs and like the inflection was very similar to what we saw in 2000. The interesting part about that is when you sort of rebase it for relative to the s and P500, they've actually lagged broader tech. And the funny part is and I had this chart, so if you look at, if you just look at high beta tech versus tech, it's been in a downtrend since the 90s. Like you generally don't want to own risk and it was, it sort of oscillated right back to the top of the range. So you'd say it worked in the way that it's worked other cycles and you would say there's nothing anomalous to see here relative to the rest of technology. You could certainly say that because it's rallied so much, it's fairly expensive and there are better portions to own in tech that are not high volatile. But you also wouldn't say that you would sell technology as a sector. Meaning that even if risky tech underperforms, you still see the less volatile tech actually outperform to the tune to 75%. So it doesn't look. When you start to normalize things in terms of risky tech relative to tech and you sort of look at it relative to other cycles, nothing looks particularly anomalous. And then if you layer on the fact that, you know, sort of. Let's just get, you know, let's think that the median earnings recovery that I was talking about is right. That's exactly what you should see, a junk rally in the beginning that you generally speaking don't want to chase.

[Podcast Host]

So I want to you first of all, you're amazing, you know that. I want to sum up for the people that are listening, watching but maybe didn't absorb every one of these very important things. The number one thing for me from this conversation is that we could be relatively early in the earnings growth cycle for the 493. Yeah, is that right?

[Michael Batnik]

That's correct.

[Podcast Host]

So we're all assuming like we're at the end of something because stocks have been going up for years. It feels like uninterrupted. I know it has been interrupted but this concept that all of a sudden margins are expanding for small caps, the equal weight is seeing faster earnings growth than the max 7. The 493 is a better earnings story for this year. I don't think the average investor is aware of that or understands the meaning of that. And you're talking about this symmetrical where we had three years of these companies earnings being under pressure. And so what if we had three years of earnings expansion, Margin expansion for everything. That's not a Mag 7. That might be the most underappreciated aspect of the market. The second. Do I have all that right?

[Michael Batnik]

Yes.

[Podcast Host]

Okay.

[Michael Batnik]

Absolutely.

[Podcast Host]

The second big takeaway is the multiple compression. And that's sort of a favorable setup. So long as it's not coming as a result of earnings falling.

[Josh Brown]

Correct.

[Podcast Host]

And the stock market falling faster. That's not what's going on.

[Michael Batnik]

Correct.

[Podcast Host]

What's going on is people almost don't believe the growth can last. So we're seeing. Okay, that's not a negative.

[Michael Batnik]

And the more skepticism there is, the more you can climb the wall.

[Podcast Host]

Yes. And then the third big point that I took from this is you don't really see the Fed as being a major issue in the second half of this year.

[Michael Batnik]

Yeah.

[Podcast Host]

Did I miss anything?

[Michael Batnik]

No, you summarize very well.

[Podcast Host]

Very good.

[Michael Batnik]

Yeah.

[Podcast Host]

Professional podcast host. He is, too.

[Michael Batnik]

I know.

[Podcast Host]

Certified.

[Michael Batnik]

That's why I'm here.

[Podcast Host]

Did you have fun?

[Michael Batnik]

I did. I always have fun.

[Podcast Host]

What's your favorite part about living in. What's your favorite thing about living in Boston? Is Boston nice in the summer?

[Michael Batnik]

No.

[Podcast Host]

Okay.

[Michael Batnik]

Not to me. So I would say the fall. Fall is my favorite.

[Podcast Host]

What do you. So besides, like, you go to Duncan and, like, Matt Damon standing there, like, what else do you like about. What's, like, the best Boston life thing? Because when we went up to see you.

[Michael Batnik]

Yeah.

[Podcast Host]

We loved it. Like, what's that neighborhood that we stay in?

[Josh Brown]

Oh, we stay. Where do we stay? Right by your offices.

[Podcast Host]

What is that called?

[Michael Batnik]

245? The ladder.

[Josh Brown]

Yeah.

[Michael Batnik]

Oh, you're seeing the seaport. Oh, that's a fancy area.

[Podcast Host]

It's all, like, new buildings.

[Michael Batnik]

It's totally new. It used to be parking lots.

[Podcast Host]

Okay, so the seafood. So say more.

[Michael Batnik]

I think. Yeah, no, the seafood. And I would say the seafood. Seafood purveyors. I'd say the restaurants. Like, I think Boston.

[Podcast Host]

You don't strike me as a lobster roll person.

[Michael Batnik]

No, I'm not a lobster rol. Okay. Are you. Why don't I strike you as a lobster roll person? What do lobster roll people.

[Josh Brown]

Yeah, we just met. I love the pistachio cannolis of the north.

[Michael Batnik]

Oh, yeah?

[Josh Brown]

Is it Mike's?

[Michael Batnik]

Oh, absolutely. Mike's pastry. Yeah. Yeah. The Italian food's great.

[Podcast Host]

What's the best. What's the best seafood dinner in Boston?

[Michael Batnik]

Oh, in Boston. No, I. I would have to say my husband's cooking. I have to say. Yeah, yeah, yeah. Good to him.

[Podcast Host]

Good answer.

[Michael Batnik]

Good. All right.

[Podcast Host]

We loved having you here.

[Michael Batnik]

Thank you so much. So much.

[Podcast Host]

I want to let people know that you are doing research for Fidelity. A lot of the stuff that you do makes it out into the public eye. Tell people where they can find more. Denise Chisholm.

[Michael Batnik]

Yeah, you can find it on LinkedIn. So I do share charts of the week and you can subscribe to the newsletter. That way it comes right into your email box as opposed to sort of filtering it through. I also write a monthly white paper. I also do my own. Not like you all do, but a podcast called Market Insights. They let me talk about. Okay, let me talk. But it's just me talking. It is a hostage situation, but it's good, though. But no video. So just me talking. So for those who don't consume my research from a. Not everybody likes to read. So for people who like to listen. And I also do a quarterly webcast for clients that is the quarterly sector and investment research.

[Podcast Host]

So Fidelity clients can get access to that. Okay, well, we think you're magnificent. You can come on our podcast anytime you want to do video with us. Thank you so much, guys. Follow denise Chisholm on LinkedIn and check with your Fidelity rep for why you're not getting her research. It's very good. All right. We had an awesome time on the show this week. We did. We did it. All right. All right, guys, thank you so much for listening. Thank you for watching. We'll see you soon.

[Josh Brown]

Did you know if your windows are bare, indoor temperatures can go up 20 degrees. Turn the temperature down with blinds.com and get up to 50% off custom window treatments like solar roller shades and more during the Memorial Day Mega sale. Whether you want to DIY it or have a pro handle everything, we've got you free samples, real design experts, and zero pressure. Just help when you need it. This is your last chance to shop up to 50% off site wide during the Memorial Day Mega Sale at blinds. Com. Rules and restrictions apply.