← The Compound and Friends
The Compound and Friends
Wilfred Frost Comes By, Margin Debt Tops $1 Trillion, Nvidia Earnings Preview
01:33:39
Loading summary
Transcript382 lines
- [00:00]
A
Ladies and gentlemen, welcome to the Compound and Friends. Tonight's show is brought to you by public. That's public.com and the public trading app. I use it all the time. Super easy. Go to public.com wat we had some fun this week. My buddy Wilfred Frost came back from England and co hosted Squawk Box for cnbc. Most of you guys probably remember Wilfred when he had the show with Sarah Eisen. They were doing the closing bell for, I don't know, four or five years together. And I was a regular on the show and Wilfred and I became friends. So it was really cool to catch up. And we talked about the difference between investing in the UK versus investing in the US Is it cultural? Is it political? Is it structural? Why are multiple so depressed across the pond versus here and what can be done about it? And I really learned a lot from wealth, so I think you guys will enjoy that. And then it's an all new edition of what are your thoughts? Michael Batnik checked in from vacation in Rhode island and we did a pretty in depth preview for Nvidia, which is reporting earnings this week. Probably the most important stock with one of its most important reports ever. So we dive into that. We look at the everything rally. Got a lot of rotation happening in the market making Michael very bullish. We talked about CEOs raising guidance while Wall street analysts continue to be lukewarm on the outlook. Thought that was an interesting disconnect. And there's a make the case, there's a mystery chart. We looked at the explosive growth in margin debt. Lol. It's not as bad as you think and so much more. So stick around. Please enjoy the welcome to the Compound and Friends. All opinions expressed by Josh Brown, Michael.
- [01:57]
B
Badnik and their castmates are solely their.
- [02:00]
A
Own opinions and do not reflect the.
- [02:01]
B
Opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.
- [02:08]
A
Clients of Ritholtz Wealth Management may maintain.
- [02:11]
B
Positions in the securities discussed in this podcast.
- [02:16]
A
Ladies and gentlemen, welcome to Live from the Compound. My guest today needs no introduction and I'm actually, I don't want to say embarrassed, but I'm sheepishly about to do an introduction. And the reason why is you are a professional at this and I've only. I only do this in my spare time, but I'm gonna. I'm gonna give my best shot. Wilfred Frost is a British business journalist and television presenter known for anchoring Sky News Breakfast. He spent five years as a fund manager at Newton Investment management, which I did not know about before launching your broadcast career in 2011. You guys know Wilfred primarily as the host of CNBC's Worldwide Exchange, which aired from three in the morning till five. In the morning.
- [02:59]
B
Five till six.
- [03:00]
A
Five till six. All right. But you were the co host, the Closing Bell with Sarah Eisen. I was a weekly regular. We had the Time of Our Lives. I think that ran from 2018. Trying to remember when it ended.
- [03:13]
B
I did. I did 18 to 22 on that. Four years. Yeah.
- [03:16]
A
Okay. All right. Wilfred is here to discuss the current state of markets as well as his new weekly show, the Master Investor Podcast, where he interviews legendary investors and business leaders to offer listeners exclusive investing insights and ambition fueled inspiration. Did you write that?
- [03:34]
B
No, I didn't. You guys wrote that. I'm going to take that off.
- [03:36]
A
Pretty bad ass. Yeah, that title. And I looked at your guest list. I haven't listened to all the episodes. It's pretty apt. You have Ray Dalio. I love the Liz Ann Sonders episode from last week, especially because you gave me a shout out during that. You're getting some incredible guests and obviously that's a testament to the work that you did while you were here covering business and meeting all these folks.
- [03:59]
B
Yeah. And we had David Solomon as well. We had Dan Niles.
- [04:02]
A
Oh, tone it down. We got it.
- [04:05]
B
And lots more to come. I mean, the thing that I'm so excited about the podcast is pretty much everyone has said yes that I've asked.
- [04:14]
A
Okay.
- [04:14]
B
Obviously I haven't scheduled them all yet. It's a weekly drop. And I think that's. I'd like to think two things. One is, as you said, you know, a testament to the groundwork one puts in and building those contacts over time. But I think that there's an interesting offering. So the tagline that I came up with, you guys have just improved with giving Josh the script there.
- [04:37]
A
Unbelievable.
- [04:37]
B
Unbelievable is, you know, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge. And I think in the UK there's been something lost about that in the last decade or two. I don't think it applied when I grew up and in my six and a half years in America when I moved back, I kind of was a bit disappointed and surprised, but the amount to which we seem to want to criticize success rather than celebrate and learn from it. So that's kind of the heart of what I'm doing there.
- [05:06]
A
Well, it really seems like you're in a position to bring those animal spirits back in the uk. I feel that if you can build an audience of people who have found huge success investing and these are not people that they got lucky or their brother in law tipped them off to a coin or they accidentally bought Nvidia and forgot to sell it. But like people that over decades have established credibility, have made money for a lot of other people, not just themselves, have invested for on behalf of hospitals and pension funds. Those are the type of people that I think do offer the type of example where your viewers who are maybe only semi interested in investing might become inspired. So I love that for you.
- [05:53]
B
Absolutely right. And I think, you know, it is important because when you have inflation at 11% in the UK a couple of years ago, people are losing money if they're just sitting in cash, let alone, I think for the next decade we're probably going to have over 3%. The latest print in the UK was 3.8%. People have to be smart with this or else they're actually losing. It's not just people don't want to take risks, perhaps in the uk, but actually if you're just standing still, you're losing. So I think that's a point. And our listeners after eight weeks are roughly half UK us. It's definitely not just for the UK audience, but I think it gives a slightly different perspective, me doing it in this format compared to what I used to do for CNBC. It's long form, 45 minutes or so, 30 to 45 minutes an episode. And it's not too tied to the short term news cycle. It's life lessons from these people as well as politicians. We had Jack Lew so far we've.
- [06:43]
A
Got Liz Truss, former Treasury Secretary Jack Lew.
- [06:45]
B
We've got Liz Truss coming up. We've got Nick Clegg coming up. Two former British politicians who have different perspectives on the economy and business. So I think it's life lessons as well as investing tips ultimately. Either way, if you listen, I think.
- [07:00]
A
We'Ll give you an edge as you're speaking. I'm just looking at the FTSE 100. I think a lot of listeners or viewers of this will be surprised to learn that it's actually doing quite well.
- [07:10]
B
They'd be like the what? Yeah, what are we talking about?
- [07:12]
A
So these are year to date, these are the largest, most consequential companies in England and you guys have a stock market now.
- [07:19]
B
It's depressing that you have to describe what the FTSE 100 is, but you probably do.
- [07:24]
A
I sort of do. Yeah.
- [07:25]
B
But it's very rare.
- [07:26]
A
Yeah.
- [07:27]
B
In my entire time in the markets, which was since I graduated in 2008, that we're outperforming the US because the US has been the only game in town. I mean, I think you still are the only game in town, to be clear. But in a relative sense it's not been a bad year in terms of stock market performance. And it's a similar kind of theme you're seeing here. You're seeing a bit of the value or quality pick up relative to the growth. We don't have much growth, but there's a price for everything.
- [07:53]
A
Well, right. So what you lack is the type of like globally dominant technology giants that have been one of the driving forces of earnings growth and market cap growth. So Nvidia, I believe, is larger than the entire FTSE.
- [08:07]
B
Oh, easily. I mean, at 4.4 trillion, I think you've got five companies bigger than. Separately bigger than the FTSE 100 compiled.
- [08:15]
A
And then I was looking at some of the components of the FTSE in preparation for this and I see like, I see companies like Rolls Royce which people associate with the cars, but I think BMW makes the cars now they don't even do that. They're making mini nuclear reactors and jet engines. And it's tech.
- [08:33]
B
Oh, historically we were fantastic engineers. We developed Concorde, which flew quicker across the Atlantic in 1970s than people can do today. So it's a great shame. But this comes back to it. It is in our DNA. Britain as a mindset towards success in capitalism, I've always thought is somewhere between continental Europe and the us And I growing up always believed, and maybe this is because my father had such an affinity with America and the household I grew up in, but that we were much closer to the US than we were to continental Europe. I still believe that. If you look at our history, if you look at our DNA, you look at some of those success stories, but there's just been some kind of something that's held it back and I think it's there. I will always be a massive long term bull on the United Kingdom, but we definitely have slowed down of late, I think.
- [09:27]
A
First things first, stopping the listings from leaving should be like priority one. And the way you do that is with less onerous regulation. But you look at this company called Ferguson Trades here in the United States. It was a US company acquired by the British company. I think it spent 50 years as a British company and then they left and relisted here because they looked at the multiple that they were getting on their earnings and they looked at their US based competitors and they said this is ridiculous. We should at least be getting a similar multiple to what our competitors get. Hasn't worked. Still very cheap stock, but I think we want to stop that for you. And then I also think the rebirth of the IPO is something that the public gets excited for.
- [10:13]
B
Yeah, so it's interesting. I think the listing problem is almost the kind of public face of the issue, but I don't think it's the core issue because it is just a fact that, you know, capital multiple in the S And P is what, 22 times versus 12, 13 times in the UK. So it's very hard to argue against relisting if you're a business that that is kind of comparable to what's in the other country. Particularly if you're about to IPO and some of the fintech successes in the UK are choosing to IPO over here. It's a problem it'd be great to correct. But the key thing is where these companies are headquartered and based. And can we make sure that if you are the next ARM holdings, for example, which is our 1 big tech success story of the last day, listed here, listed here after being bought by a Japanese firm and private for five or six years, can they develop and stay physically based in the uk? Because that is more important to me. I think that you want to make sure we remain and I think this is a question mark at the moment attractive to the best global talent in the world and most importantly to our domestic talent. And if you can show those people this is a place where your ideas will be rewarded and you can have a great career, then we're still fine long term. And the listing thing is, is a problem, we need to address it because it raises the working capital costs of the company there. If you're going to have to raise capital and it costs you more. These are all factors. But I think worse would be as if you see ARM, it chose to list in the US but if it says we're closing 50% of our research facility in Cambridge and we're moving it to the Cambridge here. Do you know what I mean? That would be a really big.
- [11:51]
A
It's such an important point because when I'm invested in a stock and I look at who's the CEO and I try to understand the family tree, like where did this person come from? So one of my bigger investments is in Uber and Dara of course comes.
- [12:04]
B
From like I remember you talking about.
- [12:06]
A
That, that family tree With Expedia and Barry Diller. Like, you look at all these companies now, SaaS, software companies where the founder came out of Google. You look at like in the semiconductor industry, there's this whole chain of people how they got to where they are now. You kind of need that and it takes generations. But the sooner you restart that process, because you're not just giving birth to companies that then list their ipo. Think about all of the executives and engineers at these tech firms. At a certain point, they want to leave and do their own startup. And you want there to be an ecosystem so that they can actually staff that startup locally, not just go out to Palo Alto.
- [12:49]
B
Yeah. And what we've been poor at in the tech industry in particular, I think in the last five to 10 years is allowing the early, like unicorn type success stories to scale in the uk, right? So actually we've got some of the brightest minds. Our education, I think is still very, very good.
- [13:07]
A
We don't need no education.
- [13:08]
B
Well, that's true, but people are coming up. BRITISH SONG but the people are coming up with some of these ideas and you're developing these companies, but then can they get the access to capital and talent to really scale? And they're being picked off by American pe and again, they're still sort of headquartered there, but they need to be able to grow further.
- [13:27]
A
I'm curious what your thoughts are about who the audience is for business, financial, media and business in the uk. The great thing about your podcast is people all over the world are gonna listen to it and I'm sure they already are.
- [13:41]
B
Well, it's a really interesting question. So, you know, I was up rewind the clock a bit when I moved out here December 2015. I had been two years at CNBC London, came out here. I was blown away by the scale of interest in what is a sort of niche area of journalism, business, news. And I think in America, CNBC and its rivals, which it leaves in the dust. I love CNBC, you know, fighting for maybe 25% potential audience of the population who are just people who are interested in success, wanna be successful themselves, but they don't necessarily.
- [14:17]
A
So it's tens of millions of households.
- [14:19]
B
Tens of millions of households that would.
- [14:20]
A
Tune in if you can get them to pay attention.
- [14:23]
B
And these are people who didn't have to work in finance, but they may have made their money in any area, but they wanna be interested in the stock market and success stories and ambition and celebrating all of those things. I think in the UK, the sort of CNBC and Bloomberg are fighting for 1%. It's literally just the people that work in finance who might have it on in the office, but probably not at home. And so there's a big, big gap between the two. I actually think in the UK there's much more than that. One or two percent of the population out there that are in shit.
- [14:57]
A
Oh, definitely.
- [14:57]
B
But it's probably not 25, and I think it's 10 to 15. And I think, by the way, that market is also served as if it is only 1 or 2%. So I think here there's fierce competition for a podcast like this as present company very much included in that sense. And so I think it's a big, big chunk of people, and we'll find out in the weeks ahead. By the way, the early numbers make me think. No, that I just think there's a lot of people that want to celebrate success and not just always had this tone of envy and criticism, which, you know. Do you know your episode with Tom Lee recently, You guys were talking about this, about people that got jealous of crypto successes. You know, by the way, I'm the person that hasn't bought every single one.
- [15:43]
A
You're the last buyer.
- [15:43]
B
I'm the last buyer.
- [15:44]
A
Okay.
- [15:45]
B
But I'm not jealous of any of the success stories. I've got some friends that have made a fortune from it, paid off their mortgages, I think, Fantastic. Good for you. I wish I'd joined you, but I'm not envious that you've done that. And I think way more people have that kind of mindset than have almost sort of publicized in the uk.
- [16:01]
A
So I want to ask you if you think this is true. I've been to Europe. I've spoken with people that work in the financial services industry. I've spoken with a lot of financial advisors. I once went to an event, British company put on this event on the continent, and I guess they assembled financial advisors from every European country in Berlin for three days on asset allocation. And basically fund managers pitching.
- [16:26]
B
Berlin's fun, right?
- [16:27]
A
Berlin was fun. What I heard from people, and I know you see Britain as being more similar to the United States than the rest of Europe. But what I heard, including from British financial advisors, is that as a financial advisor, it's sort of really hard to get fired because most of them work at banks. And These banks are 400 years old, and the families who are wealthy now are the same families who were wealthy 400 years ago. It's people that had land, effectively. And so as a result, the Advisors get switched around, but the family never leaves the bank. And so they sort of see themselves as not as entrepreneurial as advisors in America. They sort of see themselves more as well. The relationship is really between this family in Amsterdam and this bank that they've been at for 200 years. And I'm the part that can get kicked out. So what I have to do is not take too much risk. Whereas here in America, we have to take risk on behalf of our clients. They expect us to do so. They don't like it when it goes poorly, but we do reap the benefit of having made people a lot of money when it goes well. And I just didn't really hear that mindset in talking to British and European financial advisors. Am I like, overgeneralizing or do you think there's some element of that?
- [17:51]
B
I've never heard that specifically, but everything you're saying kind of tallies. I can totally believe that. And I'd say it slightly differently, which is, you know. So I started my career in finance at Newton Investment Management and it was your classic, slightly stale. Loved everyone I worked with there. But slightly stale, long only asset manager now. I love the way my investment knowledge has kind of played out because it was great learning tool. I did all the classic DCFs, very, you know, it was picking stocks. Are we going to switch our position from Vodafone to British Telecom? And we'll spend a year debating it. And by the time we shift, one's move 5%, the other's move 5%, and then they stay flat for a decade anyway. But it was all very good grounding. And then I switched to the Asia desk, which was a little bit more dynamic, but it still wasn't particularly dynamic. And then I came out here for cnbc where people like Tom Lee, people like you are being quicker on the money. You're more focused on things like momentum and sentiment. And the first year, I'm thinking, sorry, guys, this is a cheaper stock, so it's better than the other one or whatever. And so I think there's definitely that difference. The traditional asset management industry is the same as it is here, but you don't have as big of a new retail trader sentiment and you don't have that influencing what the market does as much and thus allowing you guys to build success by looking at that and giving it a weight in how you put up your decisions.
- [19:23]
A
Is there a cultural difference, though, in the willingness to take risk that can be overcome?
- [19:27]
B
Definitely, definitely. And the willingness to take risk, I think is again, somewhere between the average in continental Europe and in the US how do you overcome that? It's hard. And I'm not going to sit there on the podcast and tell people to take risks, but I'm going to give them as much of an education and the tools if they so desire that hopefully they'll be in a better place to do it. But I mean, yeah, it's an interesting.
- [19:53]
A
Part of it may be structural. Sometime in the 1990s, we basically decided as a society here in the US that we were going to put the onus of retirement directly on the household. So we went away from these like sort of defined benefit pension schemes to fund retirement and we said instead, ladies and gentlemen, this is the 401k. You choose your own funds, you make your own decisions about how much exposure to risk versus how little. And it's on you. The company is not gonna pay you until you're 85 years old. There's no pension anymore.
- [20:33]
B
Well, we did that too, maybe five or so years later. And yet we're stuck in between both. So we have much fewer defined contribution beneficiaries of those types of pensions now. And yet the defined benefit pension isn't as embraced as it is here. So that's a great snapshot for the difference. When I moved here versus the UK people here are so actively engaged on their own 401k almost.
- [20:59]
A
Because they have to be.
- [21:00]
B
Yeah. Whereas in the UK a people don't probably save enough into it in the first place, but they won't have a slightest clue about what's in it. It'll be managed by some arm of the corporate that they work for, not even necessarily in the asset management, which will be outsourced again to some kind of pension fund manager. But it'll be pretty heavily in bonds as well. So it's a whole mindset that needs to change.
- [21:22]
A
Yeah. I wanted to ask you. So my take on the way finance is covered here on the part of big media, because I want to talk to you about what you think about. You mentioned being bullish on traditional media, bullish on the news. So the way I've always thought of it is CNBC covers the markets like sports.
- [21:42]
B
Yeah.
- [21:42]
A
I've always looked at it like it's ESPN for money, which is what I love about it. And I think that's what the viewers love. Bloomberg is a little bit more B2B and I almost feel like they are covering markets through the lens of data and analysis because that's their main business. And then Fox Business really seems to Cover it almost as like a different version of politics, which is fine. There's room for everybody in the uk, you just don't have that many outlets that are specifically focused on markets. But you are bullish on the concept of traditional news. Maybe not specifically cable itself, but just like sort of having these news outlets that are large dominant and that do a really good job of covering whatever it is, politics, et cetera.
- [22:32]
B
I'm really bullish on live tv, particularly relative to how it's priced. If there was a price for all of this, obviously you can look at some of the stocks which trade off that ITV in the UK is on a sort of 8 times PE. It'll be really interesting to see what PE the new Comcast spinoff Versant starts off at.
- [22:52]
A
So first it will be msnbc, cnbc, CNBC and the Golf Channel.
- [22:56]
B
And I bet it'll start on a very low pe and everything has to have a price. I'd be a buyer of that potentially. But. But my point and my day job in the UK is mainstream news. Sky News is mainstream and the podcast is on the side. I think that expectations are so low. One Sky News you can't trade because it's owned by sky, which is owned by Comcast. But I think if it was trading right now, it'd be on a very low pe. And I think that's wrong because all of the sort of new media that has evolved, let's say over the last decade has had so much money poured into it. So there's the high quality drama and docs that can be on Netflix or Disney plus or HBO or wherever. There's the kind of news ish type rivals of these types of podcasts, which are all fantastic. But it's hard to see how those new media threats could have more investment in the next decade relative to old media than they've had.
- [23:54]
A
Oh, that's interesting.
- [23:55]
B
And I think live television outside of sports has been really hollowed out and there's always a need for it. Now I totally agree with your framing of cnbc, which is it covers it like sports. So it makes there always be a need for that niche audience, which is quite a sizable niche.
- [24:11]
A
Stay tuned in.
- [24:11]
B
Just stay tuned in. Yeah, and in mainstream news you don't have that reason as often, but there will always be a requirement for live television news and the competition is lower than it used to be because it's been hollowed out. And you see that here, this cost cutting of the big cable news channels here.
- [24:28]
A
So if something live TV really resonates it no longer has as much competition.
- [24:33]
B
Exactly.
- [24:33]
A
And then all of a sudden you've got pricing power on the advertisements that are gonna run during it. Because it becomes bigger as a result of not being as competitive.
- [24:42]
B
Exactly right. And I think that on top of that, we're about to relaunch the Breakfast Show. My new co anchor and I, Sophie Ridge in. They haven't announced the date yet, but it's in the next couple of months. I think the day gets announced next week. It'll be in the sort of late part of the year. And I think that we can just give it a bit more energy and freshness as well, which makes a big difference. You know, I think if you throw some. I think, you know, our aim will be to bring a warmth and a relatability to the Breakfast Show. Intelligent conversation, but in a very inviting way with a sort of unscripted jeopardy to it. So this is the thing that live television, unexpected moments as the podcast don't.
- [25:29]
A
Yeah.
- [25:29]
B
You know, the viewer knows that it's live. Whether that's the two presenters chatting and something going wrong or right or funny.
- [25:36]
A
Right.
- [25:36]
B
A reporter joining with a report from the field or in the studio or a live interview. Particularly when you're holding someone to account, a business leader or politician, there is a jeopardy about it being live and not knowing what's going to happen. That 10 minute conversation could contain less in it and it still be more attractive to the viewer than a recorded 10 minute version of it because it's live. And you know, I have mainly, I think that because of my own experience in tv, but also from watching back, you know, the tens of thousands of interviews. My late father did, you know, that aspect of it being live, the unpredictability about it. I think the viewer knows that and they're more drawn in. All else equals.
- [26:13]
A
So I'm glad you brought that up because I wanted to talk about the legacy of what your father accomplished as arguably one of the most important television journalists, or maybe just journalist period of the 20th century. For people who are unaware. What could we tell them about David Frost? And sort of the life's work that you are now doing to remind people of how important journalism is. Yeah.
- [26:41]
B
So dad started on TV age 22 in 1962 and continued for over 50 years till the day he died in 2013. Yeah. So 51 years on screen. And did it, you know, across actually not just two continents. Cause he was pretty big in Australia and the Middle east as well. Like across the world, but particularly UK and US and across so many different genres as well. You know, he wasn't just a business journalist or a politics journalist or an entertainment or sports like he anyone you could think of in the last 50 years, he interviewed. I think you were off that week, Buzz. Listen to the episode Michael and the team were discussing when Hulk Hogan died about people who are globally famous like Hulk Hogan was. And they listed the other people that they thought were in that category in the last 50 years. I think every single one of the ones they listed dad had interviewed at times, multiple times, like the Beatles, Ali, Elton John. It's extraordinary the spread that dad did that with. And you know, after he died in 2013, I picked up the reins of his company and I bought back and done various deals to digitize, catalog and buy the rights of interviews that he's done. I now control about 80% of the 10,000 plus interviews he's done. And I've done a series of things. There was a podcast series called the Frost Tapes and now a TV series called David Frost Versus which came out earlier this year on msnbc. It's not on a streamer yet in the US but it will be soon. And it was to really try and go back into those moments in history where dad had a particular front row seat to them unfolding. And, you know, it's been a good one.
- [28:15]
A
So I wanna ask you about the most famous example. I don't think I was not born yet. You certainly weren't. But the Frost Nixon interview, which of course there's a famous movie about that episode, but I think your dad is widely credited with the person who basically broke the story wide open when talking with President Nixon and getting Nixon to a point where he just couldn't take it anymore. And maybe you could tell us a little bit more. You know, we have a young audience on YouTube, but this is probably fascinating to them.
- [28:49]
B
Yeah, I think this is the most famous interview he did because he sort of became a part of history with it. And so obviously Nixon was forced to resign in 1974 largely because of the Watergate scandal. To be clear, dad didn't break that story, which broke a year or so before. That was amazing journalists like Woodward and Bernstein.
- [29:10]
A
Washington Post.
- [29:11]
B
Washington Post, guys. Exactly. But dad was very much involved in the US broadcast media at the time and covering it as it broke, but he didn't break the story. Nixon was forced to resign in 74. And then famously, his vice president, Gerald Ford became president, immediately pardoned him. So he never stood trial for his crimes.
- [29:29]
A
Right.
- [29:30]
B
And dad took on the media establishment, the networks here, NBC, ABC and cbs, to get the broadcast interview with Nixon, he outbid them.
- [29:41]
A
Cause someone was going to get him to talk.
- [29:44]
B
Someone was gonna get him to talk. And it took three years. By the time the interviews happened, it was 1977, though he did the deal in 75.
- [29:50]
A
I may have been born then.
- [29:51]
B
Yeah, I was gonna say when you were saying that, I was like, really?
- [29:54]
A
I may have been. Okay.
- [29:55]
B
And then he outbid the networks. He paid Nixon $600,000 to get the exclusive interviews, which, inflation adjusted, is 2.1 million. And he's just a presenter, dad. He's not a business at this point. And then because he outbid the networks, they were so pissed off, they didn't want to buy it off him. So dad then had to build together 140 local TV stations to distribute it. He kind of built a cable channel before it became the case.
- [30:23]
A
That's wild.
- [30:25]
B
And then had to, because otherwise he.
- [30:28]
A
Would have put up all that money for nothing. It would have been an underwhelming thing.
- [30:32]
B
But that process was incredibly expensive too. So the two year process cost him about $1.5 million in total, which, inflation adjusted then you're closing in on $10 million dab was on the hook for. And then he sat down for what ended up being 28 hours across four weeks of recording sessions with Nixon. And he had to get Nixon to admit wrongdoing and to apologize.
- [30:59]
A
28 hours. Sounds like you can get somebody to admit to just about anything.
- [31:02]
B
Well, I mean, thank God he paid so much money to secure that time. And he wore him down over time, by the way, those 28 hours I've watched from start to finish, and I don't recommend it. It's pretty dry.
- [31:14]
A
Do we have something?
- [31:15]
B
But this bit, I think is breathtaking.
- [31:17]
A
Okay, so let's show people what we're talking about in the Houston plan.
- [31:23]
C
It's stated very clearly.
- [31:25]
A
Use of this technique is clearly illegal.
- [31:28]
B
It amounts to burglary. Why did you approve a plan that.
- [31:33]
A
Included an element like that that was clearly illegal? Yes, well, burglary is the word.
- [31:39]
C
But another way to put it is that you get the information that you need. There are some actions that have to.
- [31:47]
A
Be covert.
- [31:50]
C
By covert. Let me put it this way.
- [31:53]
A
Or in this case, illegal.
- [31:55]
C
Well, let me say that it is.
- [31:58]
A
Legal in my view. So what, in a sense you're saying is that there are certain situations, and the Houston plan, or that part of it, it was one of them where.
- [32:10]
B
The President can decide that it's in.
- [32:13]
A
The best interest of the nation or something, and do something illegal.
- [32:19]
C
Well, when the president does it, that.
- [32:21]
A
Means that it is not illegal by definition.
- [32:24]
C
Exactly.
- [32:26]
A
That's the money. So that's the money shot. That's the moment that people were.
- [32:33]
B
That's. So now we've got Bob Woodward there reflecting on it. But that is the moment after. By the way, the first half of those 28 hours didn't go that well for dad. And so the pressure was building, and that was the moment where it turned, where he knew he had a line that would resonate. In fact, there they were talking about the Houston plan, not Watergate. And as it goes on, he gets him to admit wrongdoing and apologize to the American people about Watergate.
- [33:01]
A
But the poker face there was no. Your dad did not do, like a gotcha. Like, there it is. He just. He kept going very calmly.
- [33:09]
B
So that very moment, I remember him talking about years later, and I remember him saying, essentially, the gravy train had arrived and you wanted it to keep coming and more to come. So you don't wanna say aha or you don't wanna be like, can you.
- [33:23]
A
Imagine the serotonin fireworks going on in his brain?
- [33:27]
B
And inside he's thinking, I thought I was gonna have to sell my house right now. This is the first moment I think I'm gonna be able to keep my house. But you have to keep it together. And honestly, you know, there's different styles to interviewing and different things at work. Dad, under unbelievable pressure, stuck to his guns, stuck to his DNA, and he got there with Nixon. And the pressure on him going into it. You literally can't make it up. He mortgaged his life to do that interview, and he stuck to his style of interview, and it worked.
- [33:57]
A
Who was in the movie? I should have.
- [33:58]
B
Michael Sheen played Dad and Frank Langella played Nixon.
- [34:02]
A
Oh, Langella is.
- [34:03]
B
Oh, he's fantastic.
- [34:04]
A
He's one of the greatest actors ever.
- [34:05]
B
Oh. And do you know what? The two of them inhabited those roles for three years because it was a play in London to great success for about a year. Then it moved to Broadway for about a year, and then it was a film. And then you had all the opening nights and stuff. And we used to. I was at university around that period of time. So it was like late teens, twenties. It was great fun. It came in late in Dad's life. So it gave him a wonderful boost because, you know, kind of made him a sort of pseudo movie star right in the twilight of his life. And obviously, my brothers and I Were like signed up to all the opening nights and premieres and awards nights. And whenever we'd see Michael at any of them, we'd always joke being like, dad, how are you doing? You know, which he didn't really find that funny, but he had to go along with it.
- [34:45]
A
It's so funny how these like. It's so funny how like we're still debating what the President, Ken and Ken can't do if they quote, unquote, believe it's in the best interest of the country. Not for us to get into a whole political discussion, but.
- [34:57]
B
But it's eerie though.
- [34:58]
A
It's eerie. The echoes. And I don't think it's an accident that George Clooney brought back the play Goodnight and Good Luck.
- [35:06]
B
I love that movie.
- [35:06]
A
I haven't seen the play, so it's the film. But they made it a play this summer and Clooney starred in it. And I don't think that it's random, obviously. I think there's. We still live with this issue to this day.
- [35:19]
B
Yeah, well, someone should bring back Frost Nicks into Broadway.
- [35:22]
A
I would go, what else do we wanna do? I do wanna ask you about. I do wanna ask you about the new show on Sky News just for our American viewers and listeners. This is a really big show. Like this is the one.
- [35:36]
B
This is.
- [35:36]
A
You're like Kathie Lee Gifford, the equivalent.
- [35:39]
B
Something like that.
- [35:40]
A
Yeah, yeah.
- [35:40]
B
Okay, listen. It's a dream come true. I grew up, you know, obviously with my father doing breakfast television in the uk and I can't quite believe that that's where I'm at now myself. And I think there's a huge opportunity. I think that. I think Sky News has all of the ingredients to be the biggest network in the uk And I think that Sophie and I, who's my new co anchor, can harness that. And I think there's lots of attractive things about it. More free flowing, less scripted, warmer, intelligent, but inviting. And I think we can bring the biggest guests in the world, from British politics to America.
- [36:24]
A
I pack my bag, you just give.
- [36:26]
B
You're on, man, you're on. But I think the biggest thing is unleashing and harnessing the talent internal at Sky News, which I think is a sleeping giant.
- [36:35]
A
Well, listen, I want to tell you, I love when I see you back stateside. We had a lot of fun on closing bell, you and I, and especially when I was in person. And it's. Anytime I see you back on cnbc, I'm just, I'm so excited about it.
- [36:49]
B
So I really appreciate the kind words. I really appreciate joining the podcast as well because I love listening and I love the way you guys have harnessed great content and minds in such a kind of conversational way. It's. I take lessons from it and it's been a pleasure joining you.
- [37:03]
A
Well, good luck with the podcast and thanks for stopping by and let's do this again.
- [37:08]
B
Would love to. Cheers, Josh.
- [37:09]
A
Thank you so much, guys. This has been Wilford Frost, ladies and gentlemen. Make sure that you are following his new podcast, what's it called, The Master.
- [37:16]
B
Investor podcast with Wilfred Frost. Available wherever you get your podcast.
- [37:19]
A
All right, thanks for watching. We'll talk to you soon.
- [37:21]
B
Thanks, Josh.
- [37:42]
A
What the hell? What just happened? What just happened to this kid? Oh, all right. Hey, everybody. Welcome to an all new edition of what are your thoughts? My name is downtown Josh Brown, here with my co host, Mr. Michael Batnik. As always, Michael, say hello.
- [37:56]
C
Hello. Hello.
- [37:57]
A
All right, Michael is coming to us from, from Newport, Rhode island this week. I feel like the whole world is in Newport, Rhode island right now. Get that sense my whole Instagram feed.
- [38:08]
C
Okay, I'm here first time.
- [38:10]
A
So this, I think this exact week last year, I was in Newport visiting with our advisors in the area.
- [38:18]
C
Did you, did you go into the breakers?
- [38:22]
A
I don't remember. Let me say.
- [38:24]
C
No, you didn't. You would remember. Dude, that's Vanderbilt's bathtub.
- [38:27]
A
No, I didn't do that.
- [38:28]
C
Oh, the mansion, dude, you don't forget this. It was one of the greatest, one of the greatest days of my life.
- [38:33]
A
We did the mansion tour, but we walked around outside. We didn't go inside to anything.
- [38:38]
C
So the first tycoon is actually the only bio of the big four industrial guys that I didn't read. And now that I'm on my audiobook kick, forget about it. I'm gonna slay this book in two seconds.
- [38:51]
A
Yeah, those homes are in those homes. Homes are completely complete and total insanity. There was no Hamptons in at turn of the century, so Newport was where they went in the summer. That was like the billionaires from New York. That was the where they went. All right, let's say some quick hellos. The chat is lit right now. I don't think he's with us tonight, but I wanted to mention Jack Rosenfeld has successfully recovered from heart surgery. He's one of our. He's one of our regular pounders and just wanted to give a shout out to Jack. You all can do the same thing in the chat. I'm sure he'll see it later. Magnus is here. Brian Grill, Benjamin Cliff, all the regulars are here tonight. We'd love to see you guys. Thank you for joining us for the live. It means a lot. We love the energy that you guys bring. Heather, I see you. Rob Fitzpatrick. What's happening? Matthew Stevik.
- [39:44]
B
They're.
- [39:44]
A
They're all here. And. And we love that we have a sponsor tonight. Public. The investing platform for those who take it seriously. You can build a multi asset portfolio of stocks, bonds, options, crypto and more.
- [39:59]
C
You can do everything. You can fund your account in five minutes or less. They've got AI. AI. AI. Excuse me. AI Aoi and AI out the ass. Okay, it is all happening. Go to public in the re. Dude, I do. It is all there.
- [40:16]
A
How about this? For a limited time, you can earn a 1% match on all IRA deposits, IRA transfers and 401k rollovers. That's pretty sweet. Fund your account in 5 minutes or less. Find out more at public.com w a y T as in what are your thoughts? Paid for by Public Investing. Full disclosures in podcast description okay, I have one more item of housekeeping. Nicole will kill me if I forget. There's an impersonator on TikTok pretending to be the compound. Just to reiterate, we will never DM you ever. Especially not from the compound account. Like that's it. Just it's from a compliance perspective, it's never us. So do not enter into any chat rooms or financial transactions or share any personal details with anyone DMing you pretending to represent us on TikTok or any other platform. I also want to remind you guys, August is portfolio review month at Ritholtz Wealth Management. We have certified financial planners standing by to take a look at your situation. Review your current portfolio and shed some light on how your allocation may or may not fit your long term goals. Go to ritholts wealth.com to get in touch. Hundreds of people have done it this month and this is your opportunity to talk to us. So we. We'd love to hear from you guys if. If you're looking for some help. All right, Mike, does it feel like the media is overdoing or underdoing Nvidia earnings week or just right?
- [41:48]
C
I have to be honest, I can't answer that question because I haven't been paying much attention. But can I give you my take? It matters. There's a big one.
- [41:56]
A
I think it matters a lot.
- [41:58]
C
Yeah.
- [41:59]
A
And what's interesting is the options market. The last time I looked, it only seems to be like a 6% implied move up or down, which I think is less than usual. But the last few reports, I don't remember the stock doing much. I don't know how long ago was the earnings party. And then the stock was flat. You remember, was that last summer?
- [42:22]
C
Oh man. Charcoal made a chart of this. But John, go to the second chart, the options pricing chart. So to your point, yeah, it doesn't feel huge. Doesn't feel huge. But this is the actual in blue, the actual one day price change post earnings and you saw that there's been a few below. That's actually.
- [42:38]
A
Oh, you know what's. Wait, you know what you're seeing in this chart?
- [42:42]
C
What.
- [42:44]
A
Like the, the days of them reporting a great number and the stock rallying huge ended in 20, 21st quarter. How many quarters ago?
- [42:57]
C
That's right, Josh. One, two, three, four quarters ago or five quarters ago? Excuse me.
- [43:02]
A
It just, it doesn't, it does not seem as though this is like the kind of rock and roll response to earnings that it used to be. And I guess that's just like the nature of the thing. Everybody knows the earnings are going to be good.
- [43:15]
C
Well Also when you're $3 trillion, it's hard to add $300 billion in market cap overnight. It just is the amount.
- [43:23]
A
Where is it even coming? Where is it even coming from?
- [43:26]
C
Let's stop the first chart. This is so chart goat did serious work for tonight's show. And what we're looking at, if you happen to be listening, is Nvidia's price since the launch of ChatGPT versus or compared to its growth in forward earnings estimates. And the price is up 964% and earnings growth. I don't know why it's not earnings, but earnings growth on a forward basis is up 1,100%.
- [43:56]
A
Okay, so the company's earnings have actually out. The growth in the company's forward earnings estimates, 12 month forward estimates has been rising faster than its share price.
- [44:09]
C
Yeah, that's right.
- [44:10]
A
Nobody would guess that. We know that empirically because its multiple is shrinking as we go along. It's not as expensive on forward earnings as it used to be. And it's sort of getting cheaper each time because it's not like they report 50% earnings growth, which is I think the expectation tonight. And the Stock goes up 15%. So that's what's happening.
- [44:34]
C
If you're saying that Nvidia is a bubble because of the market cap just in a vacuum. Oh, it's $4 trillion. It's a bubble. Or how can Nvidia be bigger than the healthcare sector? Whatever it is, you have to, you have to give some context and chart, kid. Did it look at the price versus the valuation. So Matt said, next one please. Matt said Nvidia went from. Nope, Next one went from five to 178. Thank you. Nvidia went from five to 178 and over the same time frame its forward PE ratio shrunk from 38 to 33. I feel like that's the only stat somebody needs to know to understand that the stock market slash semis are not in a bubble. So look at this. It went from 5 to 178 and it's trading below the average of the on a forward PE basis. It really is just a one of one remarkable growth story that we might never see again.
- [45:23]
A
Leave this slide up. That's not even the most insane thing. The most insane thing is that when it was selling at 70 times earnings at the end of 2022, that's when it was the most screaming of a screaming buy.
- [45:37]
C
Huh? You're right.
- [45:38]
A
And the reason that's the case is because 2022 was such a technology shit show. Yeah, that and Nvidia was partially reliant upon the crypto market for GPU sales.
- [45:54]
C
Oh, big time.
- [45:56]
A
So, so this, so this period of time that we're referencing end of 2022, there's no ChatGPT yet. ChatGPT is launched in November 30th and it probably takes a full 30 days before everyone figures out what this means for GPUs. So the most ironic part of that chart is that the ultimate buying opportunity in this stock was when it was selling for 7700 times earnings. Which should tell you a lot about the usefulness of backward looking P E ratios investing in growth stocks. Yeah, it's almost one of the most moronic things you could possibly be anchored to.
- [46:34]
B
Great.
- [46:34]
A
And that's an unbelievable illustration of that. We skipped over two charts. Should we go back and do them? I know, Matt, Matt, put some effort into these. So let's, let's get into them. What are we looking at here?
- [46:47]
C
All right, this is just revenue by segment.
- [46:51]
A
And so the whole thing is data center now.
- [46:54]
C
Yeah, but to your point that we just spoke about, this used to be gaming, remember? Like before crypto, this is a gaming stock. This is like Xbox and all that shit.
- [47:03]
A
Once upon a time in 2015, before people were bullish on. They weren't saying AI back then, they were saying machine learning and virtual reality and augmented Reality, that was the first time people started to get excited about Nvidia. But almost the entirety of the business was gaming, literally chips for Sony PlayStations and Xboxes. And the market cap was like 40, 50 billion, which made sense given the size of the company. So now it's 4 trillion. It's a 10,000x return, and they're in a completely different business.
- [47:40]
C
It reinvented itself twice. And we've spoken about this a lot over the years. These gigantic winners. The story changes all the time. Like, not just the story, not just the narrative, but the actual company. What the company does and can do changes all the time.
- [47:58]
A
We did a episode of the Compounded Friends with Adam Parker three weeks ago and we titled the episode why Valuation Doesn't Matter. And instantly, like, you see the chatter, oh, this is the top. No, it really doesn't. Because if Nvidia is going to be a completely different company and we don't know that, it will be in the past. This is hindsight bias. But just the possibility that that could happen is the reason why companies like Tesla get the benefit of the doubt. And the earnings multiple is so high, because nobody that owns a stock now is valuing it on the amount of cars they sold over the last 12 months. There's one other chart in there. Do we get that?
- [48:39]
C
No, this is the thing.
- [48:41]
A
This is the main thing. Right? Okay, so this is data center revenue. So this goes back to 2022. You can't even see the bars three years ago. It's a tiny inconsequent. Not inconsequential, but compared to now, inconsequential. It's like they're ticking along at 3 billion a quarter. 4 billion, 4 billion, 4 billion, 5 billion. It's now a $41 billion business on a quarterly basis. People in the chat are asking why we're showing 2026. And it's not because we have a time machine. This is, I think, fiscal year 2026, which is just the way the company titles its, the quarters. It's reported.
- [49:22]
C
Can I say one other thing? If, if Nvidia is a $4 trillion market cap in two years, in three years, if it goes down to 3 trillion, down to 2 trillion, that doesn't necessarily prove that it was a bubble because it is getting the benefit of the doubt of these valuations, because the growth, the remarkable growth and what it ultimately could become depending on how big AI gets. And so the outcome might not prove anything. I know that might sound more.
- [49:55]
A
But like we don't know based on the estimates. Now it's not a bubble. If those estimates fail to come in because people's expectations are too high, that's just the story changing and the fundamentals changing.
- [50:07]
C
Yeah. So if, if the growth rate slips dramatically and it's only turns out to have grown 5% instead of what's priced into the stock of 15 or 20% or whatever it is, all right, then people were too bullish.
- [50:21]
A
So here are some things for you guys to look for when the company reports tomorrow night after the close. If you listen, we're recording this Tuesday, so it'll report Wednesday post close. This is a stock that's already up 35% year to date, which is more than triple the S&P 500, up 40% over the last 12 months.
- [50:40]
C
Oh wait, but a stock that was down 35% very quickly in the first quarter, how insane is that?
- [50:45]
A
Recovered at all? And then some expected to report adjusted earnings of A$1 on revenue of 46.2 billion. And again, as we pointed out, almost all of that is data center, which is the hyperscaler build out for AI last quarter, excuse me, this quarter, last year for comparison, $0.68 revenue of 30 billion. So yeah, the stock over 12 months is up 40%. But so are the expectations going into this quarter. So if they do these numbers, that would be 49% earnings per share growth, 53% revenue growth respectively. So right in line with what the stock has done and maybe even faster, they're going to pay a 15% tax to the US government for anything they sell into China. And that is already factored in by analysts. That's an $8 billion China related hit to earnings this quarter. It's a pretty big number. There's a couple other things that I want to say about this. The big part of the story that you're going to hear the analysts ask about is the Grace Blackwell chip sales. Right now they're selling the GB200, which is like their top of the line, fastest, best, blah blah, blah. And then in September, so next month is the GB300 sales begin. And that's supposed to be not just incremental, but like an explosive improvement over the current Blackwell model. So you're going to hear people ask about the timing and whether or not they're going to hit their fiscal fourth quarter, their calendar fourth quarter. The other thing that's happening is really big orders for Grok, which is the Elon Musk empire. And so you'll maybe hear some questions about timing for that. I think I just want to leave you with a couple of quotes from Wall Street. This is all the analysts came out and said, reiterate, you want to be long this stock into the numbers. J.P. morgan, we expect July quarter results to be slightly better than our. Well then how are these your estimates or consensus estimates? They're talking about the GB200 shipment ramp and the start of GB300 ramp. Goldman Sachs quote. To be clear, we remain very bullish on Nvidia's prospects for driving outsized growth in 26 based on positive hyperscaler capex commentary. So that's like Microsoft, Amazon, etc. Everyone who reported three weeks ago, they all reiterated their Capex spend or actually raised guidance on that. Baird raising our revenue and earnings estimates on a significant acceleration in GB200 sell through shipments. What they're doing is they're tracking the racks that go out from the OEMs with the chips already embedded in them. And that's how the analysts are getting a read through to like the pace of chip sales. They're saying like this number of racks went out from the OEM. Figure out the number of GPUs that would be on each rack and that's what's giving them confidence to reiterate or raise their numbers. Two more Stifo. We aim to build a view into the foundation of the mosaic of Nvidia's end customers, which in totality includes CSPs. That's Cloud Service providers or hyperscalers. Neo clouds sovereigns and enterprises will continue to grow, supports a longer tail growth outlook, blah blah, blah. One of the things is that it's not just new data centers. It's swapping out old chips for new Nvidia chips into those data centers once they're already in existence. So it's like a replacement cycle on top of a build out. And the last one. This is Dan Ives at Wedbush. I'm going to read it as Dan. Okay, okay, let me get its character. The pieces of the AI puzzle are forming with massive strength from the hyperscalers seen this past earning season in use cases. Okay. Building across the board on the enterprise. Now, the biggest and most important piece in the AI puzzle is hearing from Jensen and Nvidia around demand transfer.
- [55:03]
C
The Godfather.
- [55:04]
A
The Godfather especially with a green light now on the China market. Okay, shout to our buddy Dan. Dan's goat. Green light on the China market. Anyway.
- [55:20]
C
All right, two things that's really good. Two things we heard from everybody, all of their major customers. We heard this is not going. I'd be surprised if it's a surprise, we've heard everything. Which brings me to my second point. Why are they like six weeks behind all their. Behind everybody else? Isn't that bizarre? It's like so anti climatic.
- [55:47]
A
Smart crowdstrike too. Crowd strike. Yeah, there's a. I don't, I don't really know how it happens, but I feel like once it does happen where you schedule your earnings in this particular week, you don't really move, move off of it. Because I was just.
- [56:03]
C
I have no idea how that happens. I don't, I don't know. Well, I'm sure there's something.
- [56:09]
A
For starters, when I started in business, most of earnings season was pre market. It wasn't until we had thousands of companies in the west coast like Microsoft that became really important that we started to have all these afternoon reports. But think about it. In order for a company in Cupertino or Palo Alto or Menlo park or San Francisco to report before the bell, they'd have to wake up at 3 o' clock in the morning. So that's how earnings season became an after hours phenomenon for half the stocks at this point. Because half the S and P is California based companies and they report after four, which is actually one o' clock their time. I don't know if you know how time zones work, but. So that's just, just a little tidbit for you. Buffett's the only one that does it right.
- [57:03]
C
Saturday, Saturday.
- [57:04]
A
And no conference call.
- [57:06]
C
Yeah, that's great.
- [57:07]
A
Figure it out. Everything he does like that I love so much. Even though I love earnings season.
- [57:13]
C
Okay.
- [57:13]
A
I really love it.
- [57:15]
C
All right, Josh, this is, this is a bull market of stocks. Everything is working for the most part. And a couple of weeks ago, maybe for the last couple of weeks I've been saying like, maybe to listeners, just like pump your internal breaks if you feel like you're getting left behind. Just like take a beat, don't give it to fomo. That's always good advice, but especially when stocks are going straight up. And I think I said sell something like two weeks ago.
- [57:40]
A
Yeah.
- [57:41]
C
And the market's gone sort of sideways. A little up to sideways. But this is.
- [57:45]
A
No one's gonna be mad at you for saying that. No one's gonna be mad at you for saying that. I. Dude, three weeks ago I said sell some Nvidia. No, it's probably going to 200 today.
- [57:56]
C
I am not embarrassed. Yeah, no, but my point is this, my point is this market doesn't wait for you. Bull markets don't wait for you, bull markets don't give you a chance to get in. There are so many stocks that are just hanging high and they're all working. Like everything is working. This is like just. If we could forget about everything fundamental. Forget about your opinion on what the labor market. Forget about your opinion on. On tariffs and cost pressures and the housing market. Just forget all that. Literally. If you are just looking at stocks indexes, you would conclude that we are in an absolutely global synchronous bull market and it's only getting started. Now that might prove to be wrong. Everyone could be wrong. That's certainly possible. But you have to give the stock market the benefit of the doubt. It's working and everything is breaking out. So I am bullish on the rotation trade. Let's go through a few charts. This is. Gosh dang it, who did I steal this?
- [58:56]
A
Wow. Look at this. Equal. Look at the equal weight.
- [58:58]
C
This is from the chart Life. Okay. The Dow ripped out hard on Friday. Equal weight. New all time highs. Micro caps, new all time highs. Let's look at this new chart from Alfonso at all star charts. Micro caps, they've been dogs. High rates have smushed them. Multi year highs. And this is phenomenal. The fundamentals are supporting this. So Matt made This chart showing MAG7 on the left. Actual earnings growth versus consensus estimates. And the actual earnings growth is slowing from insane numbers obviously. Right. Like that. You can't continue to grow at 36% forever. But look what's happened to the actual earnings growth of the 493. And look what's happening to consensus estimates. They are going up in a big way. Here's this for a rotation and I'll stop talking. Look at this rotation. European banks.
- [59:50]
A
Yeah.
- [59:50]
C
Versus U.S. banks. Are you kidding me?
- [59:52]
A
Does anybody know ultimate risk on signal?
- [59:54]
C
Does anybody? So don't dig in your heels. You're not smarter than the market. It is all working. And maybe there's something that comes along tomorrow to knock us off our axis. Maybe it's Nvidia's earnings report. Certainly could be. But my goodness, this is a bull market. Don't fight it.
- [60:12]
A
I mean the micro cap thing is shocking to me. I understand the action in the last week because of Jackson Hole. It's like the last boot on the neck of small cap stocks. Is this ridiculous? What are we at? 4 and a half percent interest rate? Whatever it is, it makes no. Makes absolutely no sense to anyone. So I get that Powell signaling a dovish move in September should be the trigger. But they started rallying. Well in advance. What, that chart you just showed me?
- [60:43]
C
Yeah.
- [60:45]
A
Can we put up the. Can we put up the.
- [60:48]
C
And it's. It's everything you want to see. It's discretionary over Staples, it's home builders, it's financials, it's tech. It's everything you want to see.
- [60:55]
A
John, Give me this.s&p493, earnings growth accelerating. Nobody knows this is going on. Like nobody's even thinking about this, right? Look at this.
- [61:06]
C
I don't believe so.
- [61:07]
A
So these are consensus on the right side. These are consensus estimates for everything but the MAG7. And for Q3, 20, 25, the number is 4.7% expected earnings growth, then 4.5%, then it jumps to start off 26. Q1, 9.9%, then 10.9% the next quarter, then 14.3%. Now analysts always go into the new year overly optimistic and then they cut their expectations as the quarters go on. We know that, but what we also know is that companies are beating the shit out of these estimates. We just did 12% earnings growth this past quarter. Ex Nvidia. So let them. I guess let them cut their estimates. If we're really going to get anything even close to 1014, somewhere between 10 and 14% earnings growth for the S&P493, then the equal weight should be at record highs. Why wouldn't it?
- [62:09]
C
Why wouldn't it be so don't, please don't hear this. I know you can interpret any way you want as Michael's flipping. Bob, listen, this is not me. It's the market. The market is bullish.
- [62:19]
A
Sorry, let me correct. I got to correct somebody in the chat. Adam is saying, dudes, momo stocks have been tanking nonstop for a month.
- [62:27]
C
Which one?
- [62:27]
A
Not sure what Michael is talking about. No, that's what he's saying. The money is leaving a lot of these broken momentum names and it's going into the Russell 2000 and value and other areas of the market. So a stock doesn't. Doesn't get born and then die as a momentum stock. Just so everyone understands this.
- [62:48]
C
Who said that?
- [62:51]
A
Adam. Adam.
- [62:52]
C
So Adam is correct that there are a lot of names getting nuked. We spoke about this with. Who was on before Tom the week before Tom. Or maybe it was Tom. There is a great chart that I think Grant made.
- [63:02]
A
Todd Stone.
- [63:03]
C
Okay, maybe it was Todd Shannon showing that even though the market is at an all time high, the number of stocks that are making all time 52 week highs and 52 week lows is expanding. And a Lot of that is coming from the 52 week lows. So you're right, there are a lot of names getting nuked because AI is making winners and making losers. But if you step away just from the AI trade in the moment, names that you talk about, they're getting nuked. And yeah, there are names that are getting smoked. Equal weight, small caps. When I say everything is working, okay, yeah, there's things that are not working, but everything that you want to see working in a healthy bull market, it's all happening.
- [63:37]
A
But, but I want to go back to the nomenclature of what is a momo stock, like Reddit, running from 70 to 200 is a momentum stock. But then when it falls from 200 to 100, it's not a momentum stock anymore.
- [63:55]
C
Right.
- [63:55]
A
Like momentum has a definition. It's not a feel thing. It's like a former momentum stock.
- [64:01]
C
No, it's a formula. So, yeah, circle's getting smoked. Figma's getting smoked. Core weave is getting smoked. There are names, absolutely. Yeah. It's not, it's not hard to find losers. But if you look at the aggregate, and I'm not just talking about the mega caps, the equal weight, the microcaps, the Russell 2000, it's a bull market. Let's move on.
- [64:18]
A
Yeah, I think that's a good point. I, I think this ties right into it. Bloomberg has a piece about how like, corporate America is more upbeat on the outlook into year end than Wall street is. And this is pretty rare. Cause a lot of times Wall street is taking its cues from what corporate leaders are saying, especially when you're talking about like analysts covering sectors or some of the strategists that do these surveys. So, like this time, Wall street sort of isn't listening. Corporate leaders and CEOs are, at least in the things they're saying. And the way that they're giving guidance are super bullish right now. And there's a little bit of a disconnect. So let me just share this with you and then I want to hear what you think. Among S&P 500 index companies that adjusted their revenue views in the current quarter, 44% have raised, which is the highest proportion since 2021. The share of outlook downgrades is only 14%. That's the lowest in the data going back to 2015. Quote, this is a Jeffrey's Equity Research Guy quote. There's basically no reason that a management team would want to raise guidance on something that they're not 100% positive on, because they know the implications of that I would argue that is a lot of what's powering stocks higher. And then the last thing on this strategist at Goldman Sachs also flagged the disconnect between what companies are saying and the macro picture. The firm's in house barometer of economic activity among S and P companies. So they're tracking the real revenues of all companies, excluding energy rose 4.8% this quarter from the same time a year ago, exceeding the pace of economic growth. So companies are acting like it's 2019, like game on. And the street, it just can't get there mentally, I guess because they're just not as bullish. What do you think?
- [66:32]
C
You know who else flanked this? Me. I said with Ben a couple of weeks ago, I am done listening to the headlines and the economists and the strategists and the this and that. There is such. And I said this. There is. When you listen to the calls and I listen to a lot of these calls, there is such a disconnect between what they're saying and to the point that the Jeffrey's analysts make or whoever it was. They're not. They have no incentive to over promise if they set the bar too high. And they. That's not what they're trying to do. They're trying to tell you the truth. Like if anything they're looking to sandbag.
- [67:10]
A
So they would be crazy to bullshit. They would be crazy in this climate. They're not in the business you on. On guidance.
- [67:17]
C
That's not what they're doing. So again, yes, there are companies that are having a difficult time, as is always the case. But for all the ones that I listen to, the consumer is fine. Yes, the low end is struggling a bit or more than a bit in certain cases. But they're all saying the same thing. Growth, growth, Tariff concerns overblown. Like they're not seeing it.
- [67:41]
A
Look, 44% of the company's saying anything about guidance or raising. What else do you really need to hear?
- [67:49]
C
Now wait, hold on. This is the critical point. Critical, critical point. I am talking about large cap stocks. I'm talking about stocks that have no problem tapping capital markets. Okay, so there is a big disconnect between what these companies are saying and how they're doing and how maybe Main street is doing and maybe that like that's also a large part of the story because yeah, there is a lot of people that are. The labor market is slowing down. There is a lot of people that are like not doing great fact. But we're talking about the stock market and the companies powering the stock market are doing great.
- [68:23]
A
I'm with you on that. All right, let's, let's keep it moving.
- [68:26]
C
Okay, so we made the case, or I made the case last week for rate cut stocks, I believe. And here's one that we never talk about. And we spoke earlier in the show at the top of the show about Nvidia, and we talk often about the next earnings call and what stocks are going to do next week and maybe not enough time about. These are actually businesses. And it's pretty miraculous that the price follows the fundamentals or the fundamentals follow the price, whatever. Like price leads fundamentals, but they're tied together. So this is a great example. Let's look at Wayfair, a rate cut stock that we just never talk about. This is, this is Wayfair's operating income. Okay. And when people were staying at home and moving during pandemic, the stock, I'm sorry, the company. The company. The fundamentals of the company went crazy. And then came the rate hikes, and then came the frozen housing market. And the company, the company got smoked. The fundamentals of the business got smoked. And then this company, by the way, is founder led. This company made a lot of operational adjustments and efficiencies and they really turned their business around. And wouldn't you know it, the Stock is up 64% year to date. But more importantly, look how the price. Look how the price. It's a miracle. Look how the price follows the fundamentals, or vice versa. John Toggle back and forth. Boom, boom, boom, boom. There it is.
- [70:03]
A
It's almost perfect. If you overlaid them, it's pretty good. Like a professional, we would be able to see both things happening at once. But it's almost opportune. It's pretty good. Here's what's interesting about Wayfair. So Trump said something about tariffs, indeterminate amount of tariffs or something. And the furniture stocks got wrecked yesterday. So RH would be a good example. And Ethan Allen, all these furniture companies, I don't care how highfalutin their brands are, they all have the shit made in China. So Wayfair, very interestingly does not struggle with the tariff issue the way that all of these other furniture sellers do.
- [70:46]
C
Because they said they have 20,000 suppliers.
- [70:50]
A
Yeah, but they don't. But they don't own it. So what I think people miss about the Wayfair model, they're like more like Amazon enabling third party sellers of furniture under the Wayfarer banner. But they don't Themselves import the shit into the United States and pay a tariff that's on the supplier to figure that shit out. Wayfair is just passing along a piece of furniture from a seller to somebody that buys something on their website. And it's a really different model obviously than the other publicly traded furniture companies. And I didn't, I wasn't really like up to speed on the Wayfair phenomenon. We have a couch in our office from Wayfair. It's the easiest thing on earth. I, I think we bought it. It arrived like eight hours later. It was in a tiny box. I'm like, how does a couch fit in that box? I swear to God. I took a, I took a pen and ripped open the box along the seam and this couch like inflated itself and we just have a, have a couch from Wayfair. I said, oh, now I get it. This is the easiest furniture purchase I've ever made in my life. This stupid office couch. I got it within hours of ordering it. So I don't know how that happens.
- [72:01]
C
Well, the stock is working, the business is working. It's up 64% year to date. All right, moving, moving on to one.
- [72:07]
A
Can I say one thing? I, I do think that this is the next leg of the bull market is the rate sensitive names. Now that we're back into a cutting cycle, even if it's a short lived cutting cycle, these stocks have done nothing for so long. I really like the action in the, in the homebuilders and the stocks related to houses, mortgages. It's time I'm seeing like property and casualty insurers perking up. And I just want to say my best stocks in the market list has 190 names on it.
- [72:39]
C
Wow.
- [72:40]
A
The average over the last year has been like 70.
- [72:43]
C
Wow.
- [72:44]
A
So that's what's on that list now?
- [72:46]
C
Yeah.
- [72:46]
A
Is the rate sensitive stocks that just woke up out of nowhere.
- [72:49]
C
Yeah, okay. Yeah, that's working. All right. I listened to Home Depot's call. I own the stock. And this was very interesting. Speaking about, like, just listen to the calls. All right. So they were asked about what a potential rate cut would do for the business. And I thought this was noteworthy. Certainly some relief on mortgage rates in particular could help. I think referring to it, a bit of a frozen housing market with 40 plus year low turnover rates and even new starts are struggling a bit. So lower rates would certainly help. We don't have a crystal ball on what that number is. When we talk generally though, to our customers, each of our sets of consumers and pros. The number one reason for deferring the large project is general economic uncertainty. That is larger than prices of projects of labor availability. All the various things we've talked about in the past by a wide margin. Economic certainty, economic uncertainty. Excuse me, is number one quote off, please? I thought that was remarkable. And again, a big source of why there seems to be an enormous disconnect between how the market is behaving, between what economists and strategists and people are feeling. It's really something.
- [74:10]
A
It's not right. There's no gimmick. There's no gimmick that you could pull off to make people, millions of people, all at once. Say it. I'll do my roof, I'll do my kitchen. I'll do the bathroom. Like everyone has these projects that they're waiting to do. The only way these things end up happening is if people stay in their jobs and they feel confident that they're gonna be in their jobs for a while. And unfortunately, the conference board numbers, consumer confidence is just horrible. Present conditions, future conditions. Like none of these numbers look good. They all look like they're headed to the zero line.
- [74:49]
C
I really think this is, this is the, this is, maybe this is recency bias, but I can't remember another. Actually, that's not true. Covid. Covid was, was like this where you have the stock market making an all time high and you're just like, I just don't get it. Home Depot is saying the number one reason is general economic uncertainty. And you're seeing that everywhere. And yet the stock market is breaking out all over the place. Now when you really peel back the, the layers of the onion, we can make sense of it very easily, right? It's, it's AI, it's CapEx and Amazon and Google. They don't care about the, the unease of the general population. Like they're spending and rate cuts and inflation. Well, I don't say it's moderate or not, but like, so it makes sense. But. But it, it doesn't. It doesn't. It doesn't.
- [75:34]
A
Well, the 20% of Americans who I refer to as stock market Americans who own 85% of the stock market are not sitting around worrying about general unease. Not yet, because it hasn't touched them yet.
- [75:48]
C
Right?
- [75:48]
A
So we're talking about a different consumer and we are not talking about the people who are loading up their portfolio with stocks right now. All right, so entirely different person.
- [76:00]
C
For this next topic, for this next topic, I just want to say. Chart kid. Matt, I called him at 440. And I said, I said, you've got five minutes. Can you make me a chart of margin debt as a percentage of S and P market cap? And he said, yes, five minutes. And I said, go. I hung up on him.
- [76:18]
A
That's so funny.
- [76:19]
C
Keep going.
- [76:20]
A
Because I ordered a chart from these guys and I think it's in here also. Did we order the same chart?
- [76:25]
C
Mine's better because I'm a professional.
- [76:27]
A
All right, you'll explain to me why yours is better. This is a piece at the Wall Street Journal. Telus Demos. Margin borrowing may not be a great predictor of the S&P 500's next move, but it can still tell us something useful about how to invest. We'll be the judge of that. Relax. Basically, FINRA tracks the data. They don't know who's taking out the margin debt and they don't know what they're using it for. So this is aggregate. But we topped a trillion dollars for the first time ever as of June, according to the July margin data, which I guess just came out in August. Investors are borrowing money to buy stocks and Telus goes into detail about some of the reasons why. It might just be a mechanical thing. One of those reasons which we're going to get to in chart form, is just the fact that the stock market is bigger and so margin debt is sort of rising commensurately with the overall size of the market value. That's one thing. Another thing is short selling. You do short selling using margin debt and when prices rise, you have to post more collateral would be the way I would explain it, but it's post more dollars to your equity balance in the account so you can maintain your short position. So that's not people speculating on a higher market, but it's a scenario that would drive margin debt up. So there's a lot of other shit going on. But let me just quote a couple of things from here and then I'll have you do the charts. If margin borrowing by individual retail investors was surging faster than the overall total, it might signal exuberance among that crowd. But FINRA doesn't track who's doing the margin borrowing or what purpose are using it. Margin loan books grew well over 15% at Charles Schwab and Interactive Brokers in Q2, we get that from the earnings report on top of fees generated by trading volume. This helps fuel growth in net interest income, hence why these stocks went up so much. Robinhood's margin book grew 90% in the second quarter from a year earlier. Okay, so that's growing faster than the stock market. So market cap. One other thing I wanted to do here. This could be a double edged sword. If prices plunge, so can margin lending. Investors roll back borrowing to slash risk. And as collateral needs shrink rather than grow, margin debits can become credits and interest income falls. So talking about the impact on the brokers and their P and L. But.
- [79:09]
C
What about the turtles?
- [79:11]
A
Did I say totals or turtle?
- [79:13]
C
All right, let's just go with that.
- [79:14]
A
Anyway, it's a trillion dollars in margin debt and I know. Put this chart up from WSJ real quick. This is what it looks like. Total debit balances and customers securities margin accounts over a trillion for the first time ever. And I know the way to rationalize this is to say, yeah, but look how much the stock market is up, therefore it's just keeping pace with blah, blah, blah. So let's do my chart, which you can make fun of and then we'll do yours.
- [79:42]
C
I'm not making fun of this. This is just typical you. It's very amateur.
- [79:46]
A
It's very amateur. This is finra margin debt versus the overall market cap of the Russell 3000. And all I'm trying to do here is establish the fact that it's not like these things have completely divorced each other or that the rate of change is so wild that there's a massive gap between the Russell 3000 market cap and the total margin debt. I'm not trying to do anything magical here, but this is just the way I visualize what's actually happening. And when you do that, it's not a five alarm fire.
- [80:21]
C
Right? This is obvious. Like what? Why would it be anything?
- [80:24]
A
All right, you show me your chart.
- [80:27]
C
No, I'm patting you on the back.
- [80:29]
A
Oh, thank you so much. I appreciate that.
- [80:31]
C
Actually, now I'm patting you on the head. Show my chart.
- [80:33]
A
Thanks, dad.
- [80:34]
C
All right, show my chart. All right, this is the chart you adjust. So margin debt as a percentage of market cap. This is all you need to know. That's it. This is it.
- [80:44]
A
Okay, so let's tell people the numbers, please. So 2008 to now.
- [80:49]
C
Yeah, so 2008 got a little nutty, obviously. 3.3% margin debt as a percentage of total market cap. And if you look at it today, it's 1.8%. And look at the change in the previous mania in 2021. Again, things went a little nutty. And yeah, they're on the rise today, certainly on the rise from the lows, but it's you know, it's. It's really nothing with nothing. Sorry.
- [81:12]
A
The message of this, of your chart. Your chart's better than mine. The message of this chart is that we're not taking on enough margin debt.
- [81:19]
C
Yeah. What are you guys doing by relative? Why are you guys so bearish relative to history? Did you not get involved?
- [81:28]
A
So as a percentage of the S&P 500's market cap, you guys just are not fired up enough.
- [81:34]
C
Like, come on, people, get with it. More leverage. Actually, it's a great segue, Josh. To the next one.
- [81:41]
A
Well, to tell us Demos's credit, he did not. The. The headline was more alarmist than the piece.
- [81:50]
C
Great article.
- [81:51]
A
The article was great because I think he explained a lot of things. All right, this is our last one. There are now officially more ETFs than stocks. I feel like that's good, right?
- [82:01]
C
Yeah, why not?
- [82:02]
A
Is it good for you? Do you like it?
- [82:04]
C
There's only eight Nvidia leveraged ETFs. Like it's not enough.
- [82:08]
A
Did you think we would get here? I always knew we would get here.
- [82:11]
C
Yeah. Look at this chart. It was.
- [82:14]
A
There's another Bloomberg story, but it's Morningstar data, so the. Here, I'll just quote the number. Thanks to a breakneck pace of new launches, there are now more than 4,300 exchange traded funds, A figure that for the first time eclipses the total number of stocks. Currently hovering around 4,200 ETFs account for a quarter of the total universe of investment vehicles, up from 9% a decade ago. Issuers have been busier than ever this year, having launched more than 640 ETFs, a record setting pace that comes to about four per day. The number of funds that came to market in the first half, 469. Nice. Was nearly 50% higher than the year earlier period and about 140% above the previous five year average. There's like a lot going on here. I would just point out one of those things is that it's cheaper than ever to get a product launched. So it's not like people are like doing this huge lift. The paperwork's faster, the law firms charge less, the exchanges are streamlined. It's way easier to launch product than it was 10 years ago, 20 years ago. So let's just establish that. The second thing is it costs less to keep a zombie ETF out there that barely has any assets. So that also reduces the risk of launching something that doesn't catch on. And then the last component to this is these Are not indexes anymore. We're not in Kansas anymore. These are active strategies. Some of them pretending to be factor. Some of them are 2 and 3x leveraged. Whatever. None of this is indexed. That's over. That game has already been won. So what we're seeing now are basically almost more like stocks than they are like funds, I would argue.
- [84:05]
C
Yeah.
- [84:06]
A
Right. From a risk profile perspective, from a concept perspective. The other thing is, every time there's a successful product launch, that issuer doesn't just say, okay, great, we did it. They say, what are three more funds we can launch and create a suite. Because that's where the real money is. An ecosystem of ETFs all keying off a similar theme. So Tom Lee's launching a bunch more like, just like Kathy did. So you have these, you have these runaway hits and then it's like, well, we need. We have to put out another single.
- [84:45]
C
Yeah.
- [84:45]
A
Or else the band is not gonna, you know.
- [84:47]
C
Yeah.
- [84:48]
A
Like it's, it's, it's human nature for one successful ETF to beget 10 more attempts.
- [84:54]
C
Mm. It's a lot of turtles.
- [84:58]
A
Is it problematic?
- [85:00]
C
No, I mean, there's. Well, well, well, hold on. There's a lot of junk.
- [85:04]
A
Is there risk to the investor?
- [85:06]
C
Yes. I was gonna say there's a lot of junk. There's a lot of shit being thrown against the wall and some of it is sticking. In fact, a lot of it is smearing. A lot of it.
- [85:15]
A
So disgusting. It's truly, truly revolting.
- [85:19]
C
Okay.
- [85:20]
A
Do you think that the risk is that a lot of people are gonna trip and fall over into some of these shitty products? Cause they don't know any better.
- [85:29]
C
Yeah. Yes. And you know what? Like, who's to say you know what the best way to do. I'm sorry, the best way to learn is to do so. I am optimistic that some people, unfortunately get burned with more money than they should. But I'm bullish on investors learning. There's never been a more educated investor class ever. People are not dumb people, they touch the stove, once, they burn their hand, they don't touch it again. And so a lot of these things that are being launched, if they don't work, they won't take money in.
- [86:01]
A
I think the exchanges should raise their prices. I don't think more is more. I think the exchanges should say, okay, this is just activity for the sake of activity. All this market making bullshit going on with funds that barely have any money in it. I think one of the exchanges should differentiate itself from the other Like NASDAQ or New York. One of them should say, we only do quality here. We're not focused on trading volumes. We're focused on what. What we think is, like, best for the market.
- [86:33]
C
Oh, yeah. As a shareholder of New York Stock Exchange, I don't want that. They're running a business. This is capitalism.
- [86:41]
A
It's just. I don't know. I mean.
- [86:43]
C
Oh, stop it. Don't be.
- [86:44]
A
This how I come from the 1900s.
- [86:47]
C
And.
- [86:47]
A
And where. Where I come from, like things, like, mattered, I get.
- [86:52]
C
Oh, shut up. This is not. Don't be an idealist. This. This is the world that we're.
- [86:55]
A
I understand. Like, nothing matters. All right, do. So why not 80,000 ETFs.
- [87:00]
C
I'm just saying 10x that shit. Yeah, why not?
- [87:02]
A
And it's just a lottery ticket. And maybe it's a piece of shit, maybe it's not. No one's really paying attention. I don't. I don't know. You know what? We have a. We have a great guest. We have a great guest on the compound. And friends later.
- [87:16]
C
Talk to it. Yeah.
- [87:16]
A
For me to get into a fight with. I don't have to fight with you over it.
- [87:19]
C
Yeah. Okay. I am. I'm going to make the case for. Dude, I'm bullish on the rotation trade. It's been a minute. Minute. Minute. I think we're here. And I love these.
- [87:29]
A
You love these head fakes.
- [87:30]
C
I do. I'm a sucker. I should have brought you every time.
- [87:34]
A
They get you every time.
- [87:36]
C
I forgot. I am a sucker. I forgot to bring the chart of the. Of the IWMSPy, but I'm telling you, man, it's turning up. All right.
- [87:42]
A
This is the one.
- [87:43]
C
This is the time. This is the time. So Bespoke tweeted last week. There have only been 15 other days since 1990. This was. Was this Friday, maybe, when the cap weighted index fell at least 0.4% while the equal. No, it's not funny what you're talking about. While the equal weighted index rallied 0.4%. I don't know if this Wednesday or Thursday, but either way, it was an outlier. And I think the rotation is on. Here's one area that I think is going to go. Maybe not a rotation trade per se, but. But Chinese Internet. This is the time. Look at this. You believe in triple tops? I know we don't.
- [88:12]
A
Oh, that's going, right?
- [88:14]
C
I don't own this, but I. Chinese.
- [88:16]
A
Stock market is up huge this year and nobody's talking about it.
- [88:20]
C
Nobody cares. Chinese Internet stocks are about to go crazy. I suspect.
- [88:23]
A
I don't believe in. I don't believe in triple tops.
- [88:25]
C
No, not a thing. This is going to go. Grant. Hawk Ridge has a chart showing that the Russell 2000 has been below its all time high for 950 days, which is one of the longest streaks of all time. Guess what? This baby's about to fly. So I am a believer that the rally is broadening out. For real, for real, for real. In fact, how about this? It is happening today. That's a fact. It doesn't, you know, it doesn't require faith or belief. It's happening today. But I believe that it is going to continue.
- [88:59]
A
If Nvidia misses and this is the top, they're gonna clip you up. This is gonna go viral. It's gonna go viral. I'm just.
- [89:07]
C
I'm just saying, I'm a big boy. I could take it.
- [89:09]
A
All right? Cause it's happened to me.
- [89:11]
C
I've never been wrong on video before.
- [89:14]
A
What are you making the case on, though? Because you're saying rotation into the rest of the market, but then you're saying, like, Chinese Internet, you're just seeing, like, everything.
- [89:23]
C
Chinese Internet was everything. Chinese Internet was a bit of an outlier. But the things that have not worked while the bull market has just soared.
- [89:32]
A
All right?
- [89:32]
C
The things that have been lowered.
- [89:33]
A
So the everything else.
- [89:35]
C
Everything. The 493. The 493.
- [89:37]
A
I love it. I love it. And I actually think you're going to be way right. Okay. This is gonna be a tough one for you, but you're very good at this, and I wanted to challenge you. And then we'll get out of here. Here's my mystery chart.
- [89:49]
C
Say no more. Josh. No, I'm just kidding.
- [89:52]
A
Yeah, right. Not this time, my friend. All right, couple hints. It's a stock, not an etf, not an index. Okay. It's a US Stock. It's a household name.
- [90:05]
C
Okay.
- [90:07]
A
It's probably the first company in US history to be literally put out of business by crypto.
- [90:17]
C
Okay. Western Union.
- [90:20]
A
Holy shit. Are you good?
- [90:22]
C
I mean, that was great. Clues. So. Thank you.
- [90:25]
A
Look at this. Are you seeing this?
- [90:27]
C
I am.
- [90:28]
A
This is a $25 stock five years ago. It's $8 now. Why today? Why am I bringing it up today?
- [90:36]
C
Why?
- [90:36]
A
Michael, I got the nod. No, I'm just kidding. Here's what I want to tell you. Massive insider buying. Massive. One of these guys, I think, Matthew Cagwan is the CEO on August 18th, which is when is that? Friday. Bought 17,500 shares in the open market at $8.36. That's a quarter million dollars. Two days later, three days later, on the 21st, Devin McGranahan, which I guess is a board director or an executive, bought 176,470 shares at $8.49. He now owns 900,000 shares. So he materially raised his position. The bottom line, and this is, this is NASDAQ data. Over the last three months, there have been three open market buys. But over the last 12 months, the whole way down, 23 open market buys by insiders. The number of shares bought over the last three months, 222,772, versus only 26,000 sold. Over the last 12 months, 910,000 shares bought versus only 200,000 sold.
- [92:01]
C
I like almost. I like it.
- [92:03]
A
There are almost no publicly traded companies where you'll see a ratio of buys to sells like that. So. And granted, this could literally be put out of business by the blockchain. Remember, Western Union guys, for those of you who aren't aware, is remittances from immigrants who are trying to send money back home. Historically, they paid egregious fees to Western Union and now they can do it with Bitcoin or stablecoins or whatever. And this might be the first company in history to actually be disrupted out of business by blockchain. Or it might double. What if there's a Western Union stablecoin?
- [92:45]
C
Dude, I like that stock. I like how it's. I like how it's. I like it. I might buy it for real.
- [92:50]
A
I like that. You guys, the mystery chart. Very proud of you. All right, we're going to let Michael get back to his vacation. I want to remind you guys, tomorrow is an all new edition of Animal Spirits, just like every other Wednesday morning. That's my favorite podcast. Make sure to listen. Ben's got an all new edition of Ask the Compound. And then on Friday, very special guest. Multiple, multiple appearances on the show. And we're super excited to have him back. So look for that on the Compound and Friends feed. Thank you guys so much for listening. Have an amazing summer. Tuesday night.
- [93:24]
B
Sam.