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Trends with Friends
Election Day Special: Market Impacts, Crypto Insights, and the $9 Trillion AI Investment
01:00:59
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- [00:00]
A
Foreign.
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B
Gentlemen, gentlemen, welcome to election day Trends with Friends. It's a sausage fest. As the sausage eaters, the sausageers love the markets. We've got candlesticks. We've got Zach Pandal, rhymes with panhandle. And candle from grayscale joining us. 40, 50, 60 billion. Is it right now? Under management.
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A
Approaching those numbers.
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C
He's buying.
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B
Approaching those numbers. Phil wearing his stock twitch pajamas. Retro. Welcome, Phil.
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C
And by the way, this is like circa 2011, 2012, something like that.
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B
I'm wearing my Trends with no Friends sweatshirt. Hides the boobies. And we've got two immigrants on the show. Michael Parak. It's an important, I think two immigrants. There's jc. Are you first generation? Second generation.
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D
I'm first generation, proud to say, but first generation. Like to tell me that I was an immigrant.
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B
Question, question. When you came here, did you eat a cat and a dog? Was that part of it they're eating?
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E
There was. It was an hors d' oeuvre tray at the airport.
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D
You want to know. You want to know something sick? I don't know if I'm a great father or a terrible father for this, but I was.
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B
I think you're good. I've seen the pictures. I think you're a great father. I think you're a great father.
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D
I was playing it, and then my kids would start going, roof, roof, roof, roof. Like, my, my wife is like, can you stop playing that weird music?
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B
Hang on, I got to adjust the mic. The. I cannot believe what I've seen in the last 72 hours. I again, I don't know how I'm going to be labeled. I'm always quickly labeled a fascist in an elite. I find that amusing. Since I went to Arizona State University, I always saw an elite was these. The, the Winkenthal brothers, the Winklevoss brothers.
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E
Who were on the rowing team at Winklevy.
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B
They have some interesting political views with Bitcoin. But anyways, let's. Let's hop into it. Trends with Friends. It's election day. I have no idea what's going to happen. There's a lot of people with very strong opinions joining us.
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E
There's only one thing that's going to happen. Women have no. There are better halves and they're kind of ticked off if they show up.
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B
I think we're all going to chime in if they show up. But based on some numbers that I see on Twitter, and again, very narrow slice of life and stock twits, which Phil will show you, the men are acting like they've turned out and the men are going heavy, heavy, heavy Trump. At least the slice of life that is stock twits. They'll pull it up six.
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C
Look at this. So we have polls now on stock twits.
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B
Yeah.
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C
And we just put a poll up for the election and we're heading towards. And it's not even fully deployed from what Max tells me. And so there's almost by now I pulled this, I screenshotted this this morning. There was 54,000 votes already. Huge bias towards Donald Trump, huge bias on stock twits towards males. So whether there is any underlying meaning to that correlation. I think there is, but it's just really interesting how we're getting a huge amount of investors who are able to vote in our polls. It's just incredible. We just rolled this thing out to. It's really, really cool.
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D
By the way, can we give a shout out to Fibonacci? Notice how it's 68. Right. So it's basically the same betting odds right now as Poly Market. Is what you're seeing on stock twits. You think it's the same?
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E
I think it's.
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B
I think it's. I think obviously it's the same slice of life, Jason. Right. I think it's. Dude. I think it's much easier to vote on stock twits. I think what I'm surprised about is that 60, it's such an interesting number because how fast up the boards, you know, Stock Twitch is a large community, but the fact that 60,000 unique people, and from our data, a lot of those people aren't general contributors, they're New time contributors, meaning they're lurkers. So even the lurkers. Again, what's so interesting about the stock twits data here is it's probably male, 90, 95%. It probably skews younger. So crypto kind of natives, 30 to 25 to 55. And they're upset.
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D
Right.
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B
Like I get yelled at on Stock Twitch, which I find humorous because nobody, you know, I get judged so quickly on a couple things. And so I think the intensity of this election is something that I've never seen before. And maybe it's my age or maybe it's because I have a daughter and a wife and a son now who has a girlfriend who lives in the UK and is Jewish. Tensions are high. And I think, listen, I think the turnout, it's going to come down to the turnout of women. The younger men are voting and they're voting decisively from traders and from the Twitter Universe. I don't know what that Twitter slice of life is because it's very dominated by Elon. So we'll pass it around the horn AI whisperer. Michael Prak joining us, obviously, Phil Pearlman holding shit together. J.C. peretz, looking great. Love that color blue. And Zach. Zach, welcome to the pit of despair we call this. He's the most clean cut next to Michael Parek. We're going to talk about crypto. Phil, take it away.
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C
Okay, let's go right into crypto and the election. And so we have Zach here. Zach, great pleasure to have you. And let's go right into it. So right, right out of the gate, is there a difference? What happens if Harris wins? What happens if, if Trump wins? Is there a difference? Is it matter your take?
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A
I do think that there is a difference. You know, crypto is a bipartisan thing at a constituent level, at an ownership level. Everybody owns crypto, Democrats and Republicans. And there isn't a left right really in the, in the crypto industry. But at the level of federal politics in the United States, it is a left right issue to some de today. And the former president, former President Trump has enthusiastically embraced crypto lots of different ways. You know, I think he's become more vocal about that this year, but was already involved in a variety of crypto projects before this year. So if, if we see Trump a Trump win, I think bitcoin's price and altcoins or the lower market cap stuff beyond bitcoin, I think everything rallies for a period of time. If we get a Trump win, if we get a Harris win, I think bitcoin will stumble over the short term, meaning like the next week or two. But I personally would see that as a buy the dip opportunity. I mean, the great thing about bitcoin is that it doesn't really care who's in the, in the White House, it continues to produce blocks. It's completely autonomous from the behavior of the US Government. That's why people like it. And I think bitcoin would rally after a short dip. So I think this week there's definitely election related volatility around Trump and Harris and that'll drive a price over the coming days. But either way, I think it's a reasonably good outcome, you know, regardless of who's in, in the White House. And we can talk about Congress and other topics as well. But that's how I'd be reading the Trump Harris race.
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C
So you intuited my second, my second question, you son of a gun. And that is that in the long run, Bitcoin is a decentralized, not owned by any government form of value currency, whatever we want to call it. And so it is, theoretically, it is independent of whatever. So you're, you, and you, you implied that just now that over a longer period of time, as long as we're printing dollars, it doesn't really matter what, what, what, what, who gets elected. This thing is going to go up and to the right over a very long period of time.
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A
Yeah, absolutely. You know, the thing that would. So bitcoin is the coolest thing I've ever come across in my professional life and that, that's why I do this full time. It's a computer network that is totally autonomous from anything, totally independent, totally free from any outside interference, and totally secure as well. So it doesn't care what happens in the election. The bear outcome for Bitcoin is if either one of the candidates were to get up there and say, I'm for a balanced budget and lowering the deficit. I'm for low and stable inflation and an independent central bank. I'm for free movement of capital and free movement of goods around the world and American military hegemony. If we were to hear those sort of messages from either candidate, there would be a bear scenario for Bitcoin. The reason that people are so enthusiastic with bitcoin is you have an election with both. Neither candidate cares about these things. You know, we're going to get big budget deficits and a rising debt stock no matter what. And the debt to GDP ratio is already 100% in the US and that's just going to keep climbing regardless of the election outcome. So unless that broader macro picture changes, Bitcoin is going to be an asset that people gravitate to both in the US and all around the world.
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E
Michael and as we discussed last week, crypto also has utility value as plumbing, as we talked about. Right now, we're talking about Bitcoin and all of these coins from a trading investment point of view. But there is another aspect to crypto and blockchain that has been there for over a decade. And now with AI and so on, we may have really useful mainstream applications in a few years. You know, the canary in the coal mine was stripe a couple of weeks ago with their acquisition of bridge and stablecoin. You know, and that's plumbing. That's not sexy, but it's extraordinarily utilitarian in terms of bringing efficiency to global payment systems, etc. And those things are very interesting to keep and keep track of. Away from the hype in hoopla. I agree with the element of the politicization of this Gary Gensler, all of that. It's unfortunate that the tech industry has become a little bit single issue on this piece for political reasons. And that is strictly trading one's book. But the broader picture, if you look at the other side, Kamala Harris, et cetera, and I'm not pitching for one party versus the other, but there is very real evidence that other party is also going to be very relatively centered around the utilitarian aspects of this. You saw Ben Horowitz of Andreessen Horowitz switch his vote. He also contributed to the Harris side of the equation. So this partisanship around crypto, I think hopefully is a passing phenomenon regardless of what happens at the end of the day. And to the broader point, the other aspect is crypto is also a very key element in the globalization or the re globalization of the world.
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B
Correct. Digital re globalization.
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E
And one party here, the Trump side is extraordinarily isolationist. And that's a very key point where the Republican Party, the party formerly known as Republicans, and this is not a political thing. Okay. But this is the party. Ronald Reagan, et cetera, defend Taiwan, defend countries around the world, defend globalization. And now it's like 200, 2000% tariffs. Okay? And it's very clear. 2000% tariffs is basically Smoot Hawley. I mean it's 1930s. Google it. It basically contracts the global economy by 30, 40%. Those are very. And even Elon Musk says, oh, if we win, get, get ready for a little bit of turbulence, okay? And I'm saying just keep in mind, you know, don't think single issue. This is, this is. We are approaching the 250th birthday of this country as a first generation immigrant. Yeah, it's iconic. And yeah, if the probabilities after today, the 47th President of the United States is a woman, it's time the first president, the first woman president. That's independent of the stuff. But this transition is important in the context of our next 250 years and setting the stage of that. And I think we need to get above singular issues and think about the broader picture. And that's very, very important as adults.
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B
Worst worst take I've seen of all worst takes is the Winkle. The Winklepoops yesterday. I mean, these guys are rich. They are the definition of elite. Again, I'm sure they would take issue with that, but I don't know. When I grew up, I thought an elite went to Harvard and, you know, was on the rowing team and could talk to the President and could sue Mark Zuckerberg and these whiners. The definition of single issue voters, right? These guys have created more pain at Genesis and all their scammy lending operations. And that guy is on Twitter yesterday saying that he's, he's for Trump because $500 million, this guy's, all of a sudden a Data expert, says $500 million in legal fees have been, you know, we'll go to zero. As if if Trump was president, the 500 million in legal fees regarding January 6th didn't happen, or billions of dollars in legal fees. So the single issue thing is really irks me. And again, no one's more bullish on crypto than Mark Cuban, and he's a Democrat. So again, Mark Cuban, very eloquent, very early supporter of crypto and entrepreneurship. And in my opinion, when he says he has the ear of the Democrats, that's a billionaire that probably does have the ear of the Democrats versus Elon and Trump. So if you talk about two human beings that could communicate versus Elon and Trump, I still will take Cuban. I mean, think what you want to Mark Cuban as a billionaire or an elite. Cuban and Kamala chatting versus Trump and Musk's chatting. That's a different conversation. So again, like, the single issue thing is ridiculous. Cuban is a really smart guy, raised what I can tell from a great family. So it's just the nonsense that's being spewed by the crypto community. Does that bother you at all, Zach, when you see that stuff or you just don't care?
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A
Well, one of the beautiful things about crypto is that it is totally permissionless, open to anyone. And the technology doesn't care who is coming in, who is going out, or what they have to say. And that's why I like it so much, is that it's really an open, decentralized system. So we have to appreciate, I think, the full spectrum of opinions that people share about all topics in crypto. And I just go back to the earlier point about, you know, bitcoin is one thing, it's a kind of hard money asset. And it's very much about the dollar and about macro policy. But crypto is also about financial technology, about payments, infrastructure, et cetera. And all that stuff is totally irrelevant for, you know, what's happening today with, with everyone voting. You know, we need a financial system in the future set of financial technologies that can intermediate value between humans, AI agents and connected network devices. And crypto and blockchain are exactly that technology. So from my view this stuff is inevitable. But you know, like your, you know, like your many friends on stocktwits, you know, we, we, we like trade markets. We, we're excited about the short term stuff as well. And I, you know, I think the election will be a big deal for the very short term for our industry, but not for the, you know, the quarters and years ahead.
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C
Hey, got a question from our chat. Fabrizio asks, is Ethereum dead? And he spells it D E D. I don't know if that, is that a crypto thing that they spell differently over there.
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D
You got to put the skull with the bones.
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C
It's a skull of the bones.
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E
Convenience, convenience.
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C
Skull with the bones. Is it Ethereum dead? I mean, I know that chart, the BTC to Ethereum chart is just like going like that. But yeah, what do you think?
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A
Shout out for the typo? There definitely is a, you know, an appreciation for intentional typos like, like this in crypto Internet culture. No, Ethereum is definitely not dead. And how I think about is maybe a little bit different than how other people think about it. In my view, Ethereum does not compete primarily with the other, you know, smart contract blockchains. Some of your user groups will be familiar with Solana or Avalanche or other things along these lines. In my view, Ethereum competes with centralized alternatives. It is the only chain that can do big boy finance, meaning like tokenization of government bonds and settlement between major financial institutions. You know, why are major financial institutions building tokenized treasuries on Ethereum? Because it is the only chain that is credibly decentralized, sufficiently secure and sufficiently neutral that it can serve as that platform. So Ethereum is definitely not dead. Ethereum is a maybe the world's most important open source software project of all time. So it's very much not dead. And people get very wrapped up. Short term price changes. You know, Bitcoin ETFs took in $24 billion this year and that's why it has outperformed so well. And Ethereum ETFs have not taken in money. And the reason is that people don't know what Ethereum is. The average investor doesn't know what a smart contract is, they don't know what tokenization is, they don't know what a stablecoin is. And so we at Grayscale are out traveling the country having those conversations and I think people will be very surprised by the traction that these products ultimately receive and what it means for Ethereum as an investable asset. So no, definitely not. Definitely not dead.
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D
What about, what about the public markets? Does anybody care about public markets anymore these days? You know, are we still looking for trends? Us friends getting together? Do we still look for trends or no?
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C
Let's take a look at that. Let's take a look at Israel because you have a great chart on that. JC Israel is like has all the problem. It's got 99 problems, but its stock market is not one of them. J.C. go.
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D
Yeah, I mean listen, Tel Aviv Stock Exchange continues to make new all time highs, completing a multi year base. Looks great. Just hit new 52 week highs relative to the German DAX. Just hit new 52 week highs relative to THE EURO STOCK 600 which is, you know, a broader look at Europe. The strength in Tel Aviv is off the charts. And you know what I find really interesting is that Tel Aviv, Israel is doing so well despite the amount of underperformance from technology. Large cap technology in America has been underperforming for most of the year. Small cap technology in America has been underperforming for 18 months. Right. So technology has really been struggling. But in Israel you're seeing that strength despite all that technology exposure. A point to software specifically, where Israel, you guys, correct me if I'm wrong, tends to shine within the technology space and if we've seen any rotation in technology, it's been more into software. So I guess that makes sense in that respect is how I see it.
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B
Go ahead, Michael.
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E
Go ahead, Michael. And Israel also continues to be obviously a fountain of technology startups and innovation. This Saturday I wrote about an AI video company called Descartes, which is a young company out of Israel, a really innovative video approach to AI, even surpassing potentially what OpenAI is doing with Sora and others, et cetera. So I just highlight that one little data point in a broader context. At Israel, you know, is historically been, you know, at least 20, 30% of the innovations in technology over the last 20 years. I remember at Goldman we took Checkpoint Software public way back two decades ago and it's still one of the, you know, fifty hundred billion dollars cap cybersecurity companies out there. So good times and bad times, Israel continues to execute fundamentally on the bottom up and they're very focused on AI. So in these beginning days. So I just wanted to underline that.
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B
And if you can hear me, I mean, shout out to Palantir. Really like, it's like Palantir for president, right? Like I think Alex Karp, I keep saying this is Gonna, I don't haven't dug into the. I don't use the product. I don't think I use the product. But the fact is the guy has told a perfect story. It's a meme stock on top of a business with on top of momentum. And I've never seen a guy tell such a clean story at the right place at the right time. You know, we had the, the original meme coins, GameStop, AMC and it was all scammy.
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D
This chart doesn't include today's data. Today's data is breaking us out of this base. It's a gap and go. This thing's off to the races. I mean this thing's a beast no matter where.
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C
100 billion market cap.
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B
He tells an American story that it's hard to argue with. Right? Again, he's a storyteller. Right. If you have a public company, you have two products, you have your stock and you have the product. Right? And the product is not worth the stock meaning it's trading at, I don't know, 50 times sales. But the story is on bucking point. Right. And so when you combine great fundamentals with a hell of a great story and I think Benioff is told is one of the best storytellers. Reed Hastings been a great storyteller. Jeff Bezos was a great storyteller. Alex Karp, I'm telling you man, again, I don't know. I own the index, so I guess I own the stock again. But it's way ahead of its skis. But it's really the stock of the year and it really is a story about America, at least the way he's telling it. Right. He's doing the job of telling the story that the president should be telling the story of. It's like we're supposed to be out here defending our borders. So I don't know what stops this but like the announcement and the earnings.
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E
Were, you know, loved.
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B
Anybody Mike, you know about this with A.I.
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E
I mean, so Palantir I've been following for a very long time and an owner as well for a long time before it got in, in the index. It's, you're totally right. It's ahead of its keys from a valuation perspective. It's been that way. But history has shown us, you know, when you have a company of one relative unicorn, not in traditional billion dollar company unicorn, but in unicorn. Tesla was another one. Right. For 10 years and even now trades two to three, four times the valuation ranges of comparable auto companies. If you look at it from an auto point of view. And Palantir is obviously they earn their chops in the defense side. You're totally right, Howard, that Alex just did a brilliant job on social media, et cetera, Elon and then Cathie Wood who helped Elon and I think. So the meme stock aspect of it aside, they have been ahead of the curve even before generative AI in terms of machine learning, deep learning for solve government's problem of analytics on huge amounts of government. Obviously this quarter they showed that their commercial non defense government business is growing faster than their defense piece, which expands the story dramatically. And also this is a function of the venture industry typically having stayed away from defense related things. And now there's a rush. Anduril is another one that marries hardware and software. The one thing I'll tell you because of the JC's point about it's up to 15%, it's crossed 100 billion, 118 billion cap. At that level it's about equal to a Boeing. And remember Boeing was the key defense talk of America for a long time. Obviously they're going through a lot of difficulties and it's a mixture of commercial business and defense business and they're trying to get out of their space business. And then you have Obviously Elon with SpaceX and Starlink over there. So we have, if you look at the cluster of major public private companies around the world in SpaceX and Starlink, we have 100 $200 billion companies right there. We have Anduril, which is also in the billions. We have Palantir. And in the next five to 10 years, especially as AI totally changes the defense business both in software and hardware, we've seen what's happening with drones in Ukraine and DJI is in China. China is already just now cut off. Skydio, most people may not know this. Skydio, you can Google them. They're our leading drone company and they have been boycotted by China not to get the batteries because we've been cutting off China for the AI chips from Nvidia. So the geopolitical thing compresses the pie for everybody. And so the kinds of things you're talking about, Howard, for Palantir, and especially as we get into robots and so on, most of the manufacturing supply chains are in China. And so for us, whether it's for defense purposes or commercial pieces, this is an important piece. I just did a post on enterprise sales growth for AI and Palantir is a very interesting piece of that section of companies and I just wanted to.
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B
Underline that I think it's a mass. Like I said, it's a. You got to have a CEO that gets a story, right? Like a read. So let's look at Bitcoin and then look at Ethereum quickly. And then we'll go back to JC in the monthly Bitcoin way underachieve. Even though it's one of the most incredible brands. Way underachieve. Why? Because it's been hijacked by millions of storytellers, of which 98% of them suck and might be grifter criminals, because they don't understand the tech. Okay? And so at the one hand, you have a bullish guy like whatever his name is, the elite kid, the brothers, the Winklepoops, okay? They tell a terrible story for bitcoin because it's diluted with their own grips of Genesis and lending, et cetera. It takes away from the story of bitcoin if there was a. And so you have to find, understand the tech and stick with the right people that understand the story. And I think because bitcoin's been hijacked by so many storytellers, it's a very tough thing to trade and it's something to hold. Okay? Ethereum right now has been hijacked by terrible storytelling like Zach says. Fred Wilson, who was the first person to tell me to own it at 40 bucks on stage at Stocktoberfest, I don't think he cares whether it's 4000 or 2400. But as Zach says, it's the largest open source project. And when the banks do come for this and the lawyers, they're going to go to Ethereum, not Solana. So again, you know, the storytelling in crypto is a mess. The storytelling at Palantir is beautiful and you can see the difference in how they trend. You know, it gets harder for Palantir because the stakes get higher. They got to continue now to perform and deliver, and now the performance has to catch up with the storytelling. So that's what happens with single stocks, right? Like, his storytelling's been so good that the company is going to have pressure to perform. All right, let's zoom out a little bit. Jc, give us a walk through the monthlies or. Phil, did we miss something?
- [28:35]
C
I just want to finish up on Palletto real quick. I just want to make a couple of really quick comments. One, just to provide context, they reported yesterday they raised guidance. And number two, I love it when JC and Michael agree because Michael understands fundamental stories and history from the ground up. And JC is a top down chartist price behaviorist, who is looking at how prices playing out over time. Very simply, but very elegantly as well. And when these guys butt heads, then it's like, okay, I don't know. But when these guys are in alignment with each other, it's really, really interesting. One last comment about that, about momentum and the psychology of this. You look at a report like that came out last night and you see that they're raising guidance and that they have a huge amount of earnings momentum and revenue growth year over year momentum. In other words, they're raising their guidance above where the analyst estimates are, the consensus analyst estimates are. People have this tendency to believe that that will regress. In other words, that that can't go on forever. But a lot of times when you see that it's only the beginning of that and it's even more, there's even more demand in the system than you could actually believe. Okay, I'm done with that.
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B
I agree with that. But let's just remember people like Bitcoin is hijacked by a thousand storyteller. Palantir has a master storyteller. So they're very different assets, both trending, both unique. And that's the beautiful thing about the markets. One's kind of inanimate and just code and block, and the other one's a moving living organism of people with one storyteller right now. Really fascinating the way the markets work in. Casey, let's walk through because there's a lot of like pre election jitters and the big caps, from Tesla to Microsoft to Apple. And so I know last week you kind of came out and Phil and I were surprised, but this is how markets change. You kind of went like, okay, maybe we gotta, you know, ease off the gas here because we've been bullish for months and months.
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D
If that's how you interpret it, that's not right at all. Okay, so there were some possible divergences, potential divergences that are still in place, that need to be monitored, but it doesn't mean that we're not buying stocks. Okay, I'm sorry if I wasn't clear about that.
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B
No, no, no. There are this show. I just, I don't have a chance to read anything. So walk us through it.
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D
Yeah, for sure. Listen, you know, for me, whether it's a natural disaster, whether it's an election, you know, whether it's something in the news, at the end of the day, are we buying stocks, are we selling stocks or are we doing nothing, right, that's people pay me for that as an investor, that's what I'm thinking about. Is money the most important thing in the world?
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A
No.
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D
Are there more important things out there? Yes. But what we're talking about here is specifically about money. And the thing is about humans is that humans have a hard time. And this is where Phil Perlman isms come in. You know that here's the thing about behavioral economics. People are crazy. People are crazy, to quote the great philosopher Dr. Phil Perlman. So because we know that as investors, we want to be able to take advantage of those human flaws and extract money from those who are mentally too weak to overcome whatever biases they may have. Today, literally today, it's election day. So people's political emotions and the way that they're behaving is not logical. It makes no sense. The way that people are behaving if they were just looking at markets, they're allowing their political beliefs to influence their decision making because they're humans. In many cases they don't even realize it. But for those of us who study these things and study humans, it's very obvious. Yesterday the CBOE put call ratio hit new 52 week highs. 52 week highs. Yesterday with the S&P 500 at all time highs. People are just scared. I, I can't think of why on earth they would be as scared as they are, but they are, right? Stock market's at all time highs. The world's never been a better place, and they're buying insurance hand over fist because they think the world's about to fall apart.
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E
So what, 200 tariffs, 50%.
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B
It could be hedging, but it's. It's a good point. It's a good point.
- [33:11]
C
Yeah.
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D
The point is, is that people are all in on insurance. And if we've learned anything about humans, when they're all in on insurance, is that the time that you want? Insur, not so much. So I like fading this. I think people are scared for the wrong reasons. They're scared because they're letting their political beliefs get in the way of logical, rational decision making. Which again, perfectly normal for humans. But let's just recognize that and see it. So at this point, and things could change. The betting markets have Trump winning by a landslide. You've got the DJT up 25% in two days. Bitcoin's up 3%. Dogecoin's up 10%. Regional banks absolutely ripping. So you go, you go Trump trade by Trump trade. Every single one is going up. Here's what I want to ask Lindsay about How cool is it that for the first time in American history, Americans or anybody in the world has the ability to trade individual stocks as the election results are coming in. So it's no longer oh, let's see how they open tomorrow. You can actually see on Robinhood what these stocks are trading at. So in the past we've had futures great. And then even some crypto in recent elections. Now you have individual stocks. So Lindsay, I'll throw it to you as an early investor in Robinhood. I mean that's pretty cool that we get to see what individual stocks are doing tonight.
- [34:33]
B
No, it's not just the individual stocks. I give. Listen, I'm not in the exact meetings I haven't been in. Talk to Baiju and Vlad. Well, Baiju is no longer there, but Vlad in forever. I know some of the board members. So I get to talk to Justin, who is just a genius guy. Justin Saslot Ribbit. But I wouldn't have thought that buying a futures business when they were coming off the Gamestop debacle would be a good idea. And this is why again, being an operator and being a voice here on Trends with Friends and a pontificator on many subjects. But lover of the markets wasn't something that was on my bingo card for Robinhood to do. And sure enough, they launched one of the coolest. I do not bet. And Somehow I had 200 contracts again, 100 bucks. I laid down 200 contracts as a fade on Kamala when she was at 33% on. On the ability to be able to express yourself and learn the markets 24 7. And like I said, it's kind of like duolingo for investing. The fact that we can duolingo our way to crypto, to meme coins, to betting on the markets. There's good and bad, of course, but the fact that I could learn what's bad about it, well, people will misbehave. It's not bad for me because I know who are going to misbehave.
- [36:05]
D
Whether they're able to trade very good.
- [36:07]
B
For Robin Hood as long as they do their risk management.
- [36:09]
D
Right. What do you think about the individual stock? Like, I get what you're saying. I agree all that, it's awesome. But what about the individual stocks? Like how cool is that?
- [36:17]
B
It's.
- [36:17]
C
This is never you can trade djt tonight at 10 o' clock you can trade regional Iowa comes in surprising people.
- [36:25]
B
Or whatever this is.
- [36:26]
E
But at what price? Remember, you know, I was at Goldman Sachs 20 years. Okay. I know about alternative markets and and when, when you can trade stocks at night, there is a, there is a higher vig spread there. So as an investor or a trader, be careful. Understand what you're paying for it. That's a show for the convenience of night. You know, all I'm arguing is I love markets. I, you know, the wider and deeper. It's awesome. And I love the fact that you can trade DJT tonight if you want.
- [37:00]
D
To and if you're not going to trade it and you just want to watch.
- [37:03]
B
I think it's entertainment. I do think entertainment.
- [37:06]
E
It's marketing. I mean, you know, Howard, you're talking about futures on Robinhood, which is awesome. But futures have been around for decades and. But not accessible 99% of the time. I know, but for institutions they were accessible. They essentially make our modern world work. Pig bellies, pork chops, all of this stuff. That's all futures. Agriculture, how we eat, how we get McDonald's specials at a dollar. That's all futures.
- [37:32]
D
That's prominent.
- [37:33]
E
This is now being made accessible to 8 billion people through their smartphones, which is a good thing. But with that over time should come concurrent education. That's what we're talking about. Smartness. And even in institutions, education takes years and decades. And individual investors should also need to make a note to themselves, put a sticky on their monitor, teach myself a little bit more about what I'm doing when I'm putting $1,000 in or $10,000 in.
- [38:02]
D
And while I agree with everything Michael is saying, literally to a T everything I'm saying, remember Michael, that the more educated they are, the bigger they blow themselves up. We also know that.
- [38:11]
B
So having Jean street worst election trade in history was Sam at stl.
- [38:18]
E
Exactly. No, we are all human. We make mistakes. Okay? Personal accounts. I mean we've all blown millions in our personal accounts on stupidity over 30 years. As we've learned the business, that's part of the cost of admission. Okay. And I'm just arguing with today's technology AI, you can pay less of a cost every. Anyone, whether you're 20 year old or a 70 year old. Can you throw access in these markets.
- [38:43]
D
Can you throw up the sentiment composite chart? Sorry that we went off on a tangent, but I do want to, I do want to hammer home this point that investors are scared to death with the stock market at all time highs.
- [38:53]
B
No.
- [38:53]
D
And they should aggregate all of this. We look at the 5 day JC.
- [38:56]
E
On a fundamental basis. They're scared. I love the put call ratio chart. Because what they're saying is there's a 50% chance that if Trump wins, there's a 200% tariff on everything they buy at Costco and Walmart or the stock.
- [39:14]
D
Market seems to like that.
- [39:15]
E
No, what I'm trying to say is that they're buying insurance, right? Your point is they're buying insurance. If the stock market said all time high they're buying insurance. Elon Musk himself said, you know, look, you could see 10, 20, 30% volatility. Translate that, that's the Great Depression stock market. Go back and look at those charts. That's what he is saying on, on his ex Twitter today.
- [39:37]
D
And here's the other thing, right? So a big risk that may not have been factored in in prior elections was the possibility of there being no result.
- [39:47]
A
Right.
- [39:48]
D
I think part of the elevated volatility and, and put call ratios is people placing bets on a possible no results tonight. So I think that I, I don't think that that is a risk.
- [40:01]
B
Right.
- [40:02]
D
Because it is now a known possibility versus a prior surprise.
- [40:06]
B
So Ben calls it the unknown, the known onion.
- [40:09]
E
And that's what makes a market.
- [40:11]
D
I'm personally fading people's worries and I am, I am trying to extract profits from those who do not have the ability to take the politics out of, right out of their decision making. And I think there's a huge anomaly there in the markets that we've seen before. And I think we're seeing it play out in real time. I think there's opportunity here.
- [40:35]
E
That is the very definition of a market. The buyer and the seller at any given point in time, each thinks he or she is the smartest on either side of the trade. That's why the trade happens.
- [40:46]
C
One quick comment.
- [40:46]
E
You just want to figure out if you are the smart one.
- [40:49]
C
One quick comment. I just want to go back echo something that Zach said earlier. He and one comment that he made at the top of the hour was, listen, if bitcoin gets killed for whatever reason through the election, just go buy some. Yeah, basically what he said. And I just want to say the same thing about the stock market. You wake up tomorrow or you wake up Thursday and the stock market's getting crushed because of either candidate winning. I don't care who, you know, take some cash and buy some VGT or VOO or vti, one of these Vanguard funds and just forget you ever bought it and put it away. Because four years from now, eight years from now, there's going to be another election and then there's going to be another election after that. And 10 years from now, those prices will be higher.
- [41:46]
E
Can I ask a little bit of in the weeds question on Bitcoin because we have an expert here? Please. As I understand it, Bitcoin, obviously there's a monolithic set that people are invested in long term, there's a lot of trading going on. But at the same time, now that they're also, you can buy them through ETFs, there are variations of Bitcoin, Blackstone, et cetera. Everyone has their own thing. Then you've got things like Ethereum, which one of our viewers asked about a question, is it ded? And as these kinds of instruments have come up as well, they in many ways are extracting value because they're going on the blockchain, et cetera, from classic Bitcoin. And so there is a theory out there that in a year or two maybe, or who knows what determined time, people may wake up and say the Bitcoin classic essentially has a lot of the value from all these other alternative users sucked out into these alternative bitcoins. And you as an investor don't actually, you own an IOU through Blackstone, you don't own the Bitcoin. And so you may have a potential issue if people realize that the Bitcoin classic that they invested in has a lot of the value sucked out into these other Bitcoin type of instruments. It's a sophisticated question that I've heard from smart investors and I wanted to get your take on that.
- [43:06]
A
Well, I'm glad that you asked that question. I think it, you know, it really could not be simpler. And these, these products work exactly the same as other commodity ETFs. So, for example, you know, the joke is that the gld, the gold ETF is just rocks in a box. You know, you own a share of this trust and the thing owns gold in a building. The Bitcoin ETFs work exactly the same way. You own a share in a trust and the trust own Bitcoin. And the only difference is that is a physical commodity with gold and a digital commodity with Bitcoin. I don't think that people should think of the ETFs in any way. A different kind of Bitcoin. It's exactly the same. Bitcoin held in addresses in exactly the same way. And for the vast majority of investors, the Bitcoin ETFs and of course, you know, I think we have the best product in that market at grayscale. But the Bitcoin ETFs are going to be much Cheaper than trying to buy Bitcoin yourself and much safer from token security and from a tax and from a estate planning standpoint. So if you're investing any kind of real money, the ETFs are going to be a much safer point. Now you make. The point that I think I would agree with is that the ETF owners are now a part of the bitcoin community. The bitcoin blockchain is decentralized and it's a miners, node, operators, asset holders, all collectively making this bitcoin community and shaping where the project is going to go over time. So in that sense, the ETFs are now the ETF owners and the asset managers that provide them are part of the crypto, the bitcoin community in a new way. But it doesn't mean they own a different kind of bitcoin. And I do think that, I feel strongly that for the vast majority of people, the ETFs are the right way to go if they want to add bitcoin exposure to a portfolio.
- [44:56]
B
Jc, what do you think the divergence between coinbase. So there's three ways to do it. ETFs. You can open a Coinbase account. I have slowly done less and less in Coinbase because I'm so scared of getting these stupid texts all the time and clicking a link. If I've had a drink and I'm being wiped out. I just. Obviously the risk is, if I have to flee the country, I get the case.
- [45:17]
E
Cold storage, Howard.
- [45:18]
B
I get the idea of cold storage, but I'm not there yet. I'm still going to be the sucker who forgets to leave the country. So I'm like, I'm torn here because the true way to own bitcoin must be cold storage or own a wallet somewhere decentralized. But yet you've got ETFs, you've got MicroStrategy, which is probably performing the best, which is bananas. And then you have Coinbase, which is surprisingly the most leveraged to the whole industry and is lagging like so. In a world where you believe bitcoin is going to work, which I do, and you believe in meme, coins and everything else, I would think Coinbase would be, with the leverage that they have, be outperforming these things. But jc, do you see anything in that divergence or it's just.
- [46:03]
D
Yeah, I mean, there's no question when you look at microstrategies making new all time highs. Since incorporating the Bitcoin strategy, Michael Saylor has outperformed every single Stock in the entire S&P 500, that includes Nvidia. I mean this thing has just been an absolute beast. The way we always looked at it for right or for wrong, this is how we thought about it, is that Microstrategies is a bet on Bitcoin. Coinbase is a bet on crypto. And when you look at Ethereum making new three year lows relative to Bitcoin as we speak and you wonder why Coinbase is underperforming. That probably has something to do with it. The Bitcoin dominance at 60% probably has something to do with it. You know, I mean that's how I look at it. Or writer for wrong. It's proven to be right so far. That can certainly change.
- [46:52]
B
Yeah, I added a little Coinbase today. Full disclosure on the 180 will change.
- [46:58]
D
Right.
- [46:59]
B
To play the divergence today just a little bit, just to trade. So we'll see. It technically looks terrible.
- [47:05]
A
I think it's a great point. Bitcoin versus versus crypto in that comparison. And the only thing I would say is I do think market structure is changing really rapidly around the ETFs options coming and a lot of use of the ETFs pairing them with futures for the basis trade by hedge funds. I just think that something that is so overvalued like microstrategy has a sort of for me has a sell by date given the improvement in market structure around just holding Bitcoin itself. So we'll see how that story plays out. Of course, looking back backwards levered Bitcoin has been a great thing to have in a portfolio. I personally think that other people are going to find other instruments to express those types of leveraged views once the derivatives market gets fully articulated.
- [47:52]
D
Yeah, I mean the short interest is still pretty substantial in microstrategies. 14 and a half percent is the short. The short ratio is only two days. So it's not the end of the world. But there's something there. The premium that it trades to relative to the Bitcoin that it owns is off the charts, which is, thank the heavens every single day that I look at price and I don't worry about that other nonsense because it's turned out to be a distraction. Microstrategies exhibit A for sure.
- [48:19]
C
And people out there who are looking at that and saying, hey, there's a trade there, there's an arbitrage there. You have to be really careful with arbitrage is there's a limp, you know, classic Behavioral Economics 101. There's limits to arbitrage and things can get more, you know, if you're looking at two assets that you're thinking are out of balance with each other, they can get way more out of balance with each other. The market can stay irrational longer than you can stay solvent and so forth. Okay, I want to move ahead because I got two more things we want to cover. I'm running out of time. Michael, I just want to hit you with this really quickly. Nine SoftBank is talking about nine. I mean this is so insane of a story that we have to cover it and we have an expert on it, so it's awesome. Nine softback softbank is talking about $9 trillion investment in compute. This is an AI story. So just first of all just tell us what's compute. Just really, really simple dumb understanding. So like something somebody, somebody like me can understand like a data center compute, what's the difference? What's the similarity? What's the meaning of compute?
- [49:32]
E
Just for I'll do that, I did a detailed post on this, what's compute, what's Masa doing, etc. But here's the summary. Compute is simply a catch all word for everything from AI data centers to the power that you need to run the data centers, all the $30,000, hundreds of thousands of chips from Nvidia that go into that data center, all the cooling that goes into to cool the chips which can add another 10 or 20% of the cost. So when Meta or Google or OpenAI Microsoft say we're just putting up 100,000 GPU cluster and I have a post on this, you know, and that when you say here, 100,000 GPU data center cluster, that's $10 billion when MASA. So before we get to Masa, Jensen about a year and a half ago basically said look, the data center business for the last 20 years is about half a trillion dollars around the world. I took some of the first data centers public in the 90s so this is something that I'm very closely bottom up focused on. So what he said about a year and a half ago that is that all of these data centers are going to be have to be redone with AI chips mostly from Nvidia and all the cooling and the networking and the wiring, that's billions of dollars. And he said that is going to cost about a trillion dollars over the next decade. He was really saying by the end of this decade, 2030, that number about six months later he upgraded to 2 trillion. Coincidentally Goldman did a big report saying that oh, cloud computing is going to be about a $2 trillion number. Sam Altman from OpenAI about a year ago was talking about $7 trillion to build up all the data centers, hundreds of them, not just OpenAI but the whole industry around the world and all the power and all the cooling. So if you have 10 billion for a data center, you're going to need about 5 to 10 billion for the power. So that's how the numbers add up. And so when Sam said 7 trillion, Mahsa was at a conference in Saudi Arabia on AI, basically the place where he got $45 billion for his first Vision Fund from MBS. And he wanted to do exactly what Howard said, like Alex Karp or Elon, put up a really headline grabbing number because he's a good marketer. And so he put out a $9 trillion number because he wanted to be higher than 7. And the way he explained it is that look, 9 trillion is about 5% of the global GDP cumulatively over 10 years. So roughly, let's call it every, every year the Global GPD is $110 billion, $110 trillion over 10 years, that's a quadrillion. So 9 trillion is about 5%. And so he basically said look, if we get all the efficiencies of AI in 10 years we are going to save more than 5%. And that is relatively consistent with some numbers from economists like Ed Goldman who said that over 10 years the global GDP could go up by 7% or about 7,8 trillion. So that's how these trillions are floating around. So compute, It's a number.
- [52:46]
C
So 9 trillion in investment, a lot of it goes to Nvidia, many other companies. Is that realistic? Like what do you like, is he, is he just, you know, so, so.
- [52:56]
E
So what I said in the post is that JC and I were talking about markets. The market right now on AI data center compute is 1 trillion to 9 trillion. That's the bid asked. Even if it's a trillion, it's massive numbers. When I was at Goldman, when the Internet was built, the telecom companies basically put a trillion dollars of fiber and backbone to make the Internet happen in the 2000s, which is the broadband connectivity that we all enjoy. And now the wireless broadband, they spent a billion, a trillion and actually we've spent over a trillion additional. So just an Internet broadband where we went from dial up modems to full wireless broadband, 5G modems, we've gone to at least $2 trillion of investment. So it's very, when you've got a big change in computation, we're going from deterministic software to probability software, like AI. Yeah. 2 trillion is a in the ballpark number. And can it grow to 4, 5, 6, 7, 8, 9 trillion? Yes. As we go up the stack. Thank you for putting up the stack because right now the 1 or 2 or 3 trillion is in the first three boxes. If you then build in all the uses of AI, like what we were talking about with Palantir where Alex Cobb said, hey, we are doing things with AI far beyond chatbots. That's in box six. And so that's where we're going to need billions of additional compute. So, yeah, it's in the trillions. Little bit of this is of hand waving by Masa and people like that to basically say, hey, guys. Mostly to governments to say, hey, get ready. Because this is going to require massive amounts of investment in power, in transmission lines and so on. So it is in the trillions and there is some method in the madness of this.
- [54:45]
B
Yeah, you guys got me to download Perplexity last week, which is fun. So I'm paying again. Like, Perplexity may not win, but it's pretty cool. And the compute. The compute is the compute. Like Mike said, they're gonna spend the money. Thank God they have the cash and they're not levered up to do it. Although knowing Masa, he levered himself up to do it. So. But the money's gonna get spent, the.
- [55:08]
E
Money'S gonna get spent. Not all in a straight line. It has to be raised constantly. So there's a lot of issues. But directionally, we're going to need a lot more compute, millions and billions of times more compute than we think today. So I hope that helps, Phil, in terms of understanding computer.
- [55:25]
B
I'm being called away to vote for the seventh time today and I'm standing in line for Larry David. So we're going to. Phil, you finish it up, boys. I'll see you.
- [55:33]
C
We're going to do a couple things. We're going to do a couple more things. If anybody's got a hop, we're going to do a couple more things before we leave. First off, Riley. What's up, my guy? How we doing? Hey, buddy, listen, we're going to get to you in just one minute with trends. With no friends, I would just like to make a comment to the losers out there. Okay, so we're taping this on Tuesday. We're live. People are watching this and some people, a segment of our viewers are going to wake up tomorrow and they're going to be losers. Okay, maybe. Maybe we don't find out till Thursday. Maybe we don't find out till next week. I don't know. I don't care. Maybe we find out by 9:30 tonight, who knows? But there's going to be half of the. Half the people in this country, approximately, are going to be losers. And the other half will be winners. But I want to talk to the losers. And so this has been an incredible, incredibly contentious election where people have put so much of their own identity into the. The candidates, one or the other. I'm not talking, I'm not talking about anything Partizan here, just saying. And when you put so much of yourself into something and you lose, it's very difficult. And so tomorrow morning you really, you know, or the morning after we know and you're a loser.
- [56:56]
B
We.
- [56:56]
C
You have two choices, right? You're going to wake up, you're going to get out of bed, you're going to go take a pee, and then you're going to look in the mirror. Maybe you're going to brush your teeth, you're going to look in the mirror and you have two choices, okay? One choice is to just get really fucking pissed off, right? And it's just to like deny everything and it's to distort reality and it's to rail against the system and it's to claim that something was fixed or the refs were against you or whatever it was. And then you have another choice. You have a second choice. That's kind of the easy choice. The second choice is you look in the mirror and you say, okay, we fucking lost. It's not the first time anybody's lost, right? The Yankees just lost. The Yankee fans have to face it. We just fucking lost. Now what am I going to do from here today forward? What am I going to do from this morning forward? What am I going to put my own energy into to make something great of my life, to do something positive, to do something wonderful. So I'm just talking to you. You don't know who you are yet. Could be talking to any of you. I could be talking to people over here. I could be talking to the people over here. But half of you are going to be losers. What are you going to do with it? You wake up that next morning and you look at the look in the mirror. Okay, Riley, take us away. Treads with no friends. Yes. So today we're going to be looking at front door. If we can go ahead and throw the chart up there.
- [58:38]
B
Beautiful.
- [58:39]
C
So front door is a $4 billion home repair and maintenance service provider with only 213 followers on stock twits Monday before the bell it reported earnings beat bottom line estimates and raised its full year guidance and the stock popped 7%. It's trading at 52 week highs. If we zoom out and take a look at that next chart, which is the monthly chart we can see it's kind of knocking on the door, no pun intended with those all time highs going back to 2021. So nobody cares about front door. I don't even think I saw a post on the front door stream following earnings report. It's an absolute monster there. Listen everybody, have a great day. Zach, you thank you. Thank you so much for joining us. Thanks for popping in.
- [59:25]
E
Michael, I just want to add one more. Your comments at the end were amazing. The losers. The one thing I'll just remind us all regardless because the sentiments are running so high at the end of this. Whatever happens at the end of today or the end of this week, we are still winners because as a first generation American, I just want to feel we are Americans and we have something amazing regardless of how we feel one way or the other. And we really need to be able to look through that and try and celebrate through that and see the other person. I came here when I was 17, Alabama, North Carolina. My wife is from Pennsylvania. So I have a lot of connections there, you know. So there are good people all over this place. And it was only in my 30s and 40s that I realized left wing and right wing. And I just want to get back to just remembering that politics aside that there are just good people everywhere. Small town, big town, rural flyover. It's just amazing place. I've traveled half the countries in the world, nothing like it here. So I just wanted to say that thanks to. Thanks to what? Inspired by what Phil said.
- [60:43]
C
Amen man. Amen brother.
- [60:44]
B
Thanks Michael.
- [60:45]
C
Hey Zach, thanks again bro.
- [60:47]
A
Thanks guys. This was great.
- [60:48]
C
Adio. See you boys.
- [60:49]
E
See you.