Market Outlook: Despite recent modest rate cuts by the Fed, bond yields remain attractive, drawing significant investor interest, with $98 billion flowing into bond funds in September.
Investment Strategy: FM Investments introduced compounder ETFs designed to mitigate the impact of regular income distributions on compounding, offering a solution to the fixed income distribution problem.
Bank Earnings: Major financial institutions reported strong earnings, highlighting the resilience of the consumer sector and the broad-based economic recovery, with banks like JP Morgan and Goldman Sachs showing robust performance.
Stock Market Insights: Adam Parker's analysis suggests that stocks with strong momentum tend to underperform post-earnings, while lagging stocks may present buying opportunities, as evidenced by recent bank earnings reactions.
Sector Performance: The financial sector is expected to grow by 13.2% this quarter, ranking fourth within the S&P 500, driven by strong trading and investment banking revenues.
Company Highlights: Wells Fargo's removal from regulatory restrictions marks a significant turnaround, while BlackRock's massive $13.5 trillion AUM underscores its market dominance, despite digital assets comprising only 1% of its portfolio.
Economic Concerns: Jamie Dimon of JP Morgan expressed caution regarding geopolitical uncertainties, asset prices, and inflation risks, maintaining a risk management focus rather than a bullish outlook.
Market Dynamics: The podcast discussed the potential for further revelations in the private credit market, emphasizing the importance of vigilance and risk assessment in the current economic climate.
Transcript
All [Music] right. Do you have a Jackson Dart shirt already? >> Got to support Jackie, baby. Of course. Do you know I tried to we tried to find Justin a Jackson dart jersey and they said they're not being shipped until October 30th. Like they weren't ready for this kid's level of popularity. Like nobody had any idea. Oh [ __ ] we better have a million Jackson Dart jerseys ready. So >> just get a just get a fake one from China before they start. >> They have the blue one. Oh, I shouldn't say there were no jerseys. They have the blue ones, but he just got the Brian Burns in blue. He doesn't want to have two blue Giants jerseys, so he wants the white one. There aren't any. Like, literally. So, it's uh listen, we say the market's efficient. It's not always so efficient. Hey, uh ladies and gentlemen, welcome to an all new edition of What are your thoughts here on the Compound Network? Uh we are so excited to be here live tonight. The chat is going crazy. You all say hello to my co-host, Mr. Michael Batnik. Michael Batnik, you say hi to the folks. All right. Hey, what's up folks? >> Um, let's let's see what's going on in the chat right now. I am told table for seven says, "Ready to go to pound town. I'm becoming a gold bug." Okay, maybe we'll talk about that. Uh, some shout outs to Nicole in the chat. Guys, I want to tell you about something. Um, Nicole has officially gotten the compound's Instagram account as of today to over 50,000 50,000 followers, which uh I think is coming from a,000 or 10,000 when she joined. So, she's 5xed the channel in just a couple of years. I think we have a a shot of Nicole here being Nicole. Nicole being Nicole. uh she is literally our resident social media genius and uh has absolutely helped us transform this channel into more like it's more of a movement I would say at this point. So shout out to Nicole. We're going to drop a link where you can follow us on Instagram in the live chat on YouTube right now. Um and for those of you listening, it's uh the Compound News is the uh the official Compound handle. So Oh, there she is. Thanks, Nick. All right. Uh, also wanted to mention we have only or there might be less by now. Only 10 tickets or less left for the New York live show uh with Michael, myself, and Jim Kramer. So, that's happening on Friday, October 24th. Doors open at 6:00 p.m. There will be food, drinks, there will be Kramer, there will be signed copies of his new book and a live podcast recording. Um, Nicole, do we have that link? Let's drop that. Now, if you guys are watching this video later and there were none left, don't say I don't say I didn't try. Don't say I didn't try. I really hope that uh I hope that whomever wants that ticket sees this alert. And she's saying now saying less than 10. All right, we're on fire. Uh sponsors tonight. Um FM Investments. Michael, take us through FM Investments. >> All right, listen up, folks. Even after the Fed's recent modest cut to overnight rates, compelling bond yields are still attracting a lot of investors. That's right, 90 billion, 98 billion in September. Wild. Um, most bond funds come with a catch, which is the catch is those regular income distributions that bond funds have to pay out. Distributions sound nice obviously in theory, but they actually weaken the magic of compounding. Why? Because every ETF distributions weaken the magic of compounding. >> Taxes. Oh [ __ ] >> Taxes. That's it. Um, every distribution pulls assets out of >> Shut up for a second. Let me finish this >> temporarily. It says forbade. >> So, the FM compounder ETFs are designed to solve the fixed income distribution problem. Compounder ETFs can help investors avoid distributions, stay invested, and compound their capital gains. What are the compounder ETF tickers? I'm glad you asked, Josh. It's CPAG, that's CPAG, the FM compounder US aggregate bond ETF, and CPHY, the FM compounder high yield ETF. CPAG and CPHY help investors harness the magic of compounding. Learn more about the FM compounder ETFs at fminvest.com. >> Shout out fminvest.com. That is a real problem and it's nice to see somebody finally address it. All right, we have some uh >> you just shouted out their website. Unbelievable. >> Well, listen. Yeah, shout out to the website. >> Shout out to the site. Um, we got some peeps in the live chat tonight. I want to say hello. In Jensen, we trust Cam Rackom. Matthew Steic is here. Oliver is here. Joe Alamorro, we see you. Jay Luther, what's up, man? Ring KPS, Fred Cote, Conor McLaclin, what's up? Georgie. All right, thank you guys for being here for the live. Let's get down to business. Um, first things first, the banks reported to some of the banks, some of the largest financial uh, companies in the world report on earnings this morning and the the reports were awesome. Now, I don't think that's surprising to most people. Financials have been among the top three or four sectors of the year pretty much all year and um, the big banks are among the best of the financial uh, sector stocks. So, no one was really like totally knocked out that these reports were so good. But I think it just underscores um the broadness of the rally because the banks don't just deal with technology companies. The banks have customers in every segment of the economy. What do you think of that? What do you think of that take? Like banks has a gauge of the economy beyond tech. I know they're involved with tech as well. Yeah, we So JC was on the show earlier in the year and if you'd listen to me for a second, I'll let you know that yes, banks are important to the economy, to the stock market. It's discouraging when you see the banks being left behind. You want to see real confirmation that there is activity in the real economy outside of just this circular notion of Open AI and Salesforce now, which was a dud, and and uh what Oracle and all of these deals need. You need the real economy, damn it. Yeah. >> So, I want to I just before we get into the reports today and the market's reaction, I wanted to highlight Adam Parker's work. Adam did this really interesting thing showing that um showing what you want to pay attention to in terms of stocks before earnings. So, chart on please. Adam said stocks in the bottom half of industry group relative momentum. All right. of stocks in the bottom half tend to beat expectations on the earnings release and those in the highest 5% of two week stock performance see a statistically significant underperformance on the day that they report earnings. This is important. On average, big moves into earnings releases should be sold and big laggers should be bought. So, let's see what happened today with Croup and with Wells Fargo. Next, two charts, please. Both of these acting pretty damn heavy. Not necessarily if you were just purely technicals. I don't know that I want to be long this going to earnings. Boom. Big candle. Next one. Same thing with City. Also pretty cruddy price action and you had a very nice day today. So kudos to Adam. I thought that was interesting stuff. I only agree with half of that. >> Which part? Um, I like I guess it's the on average part that I don't love because think about >> I know, I know, I know, I know, but think about anecdotally like how many counterexamples of this that are so easy to find at your fingertips, >> dude. Of course, he's just he's all So, put put it put his chart back on. Put the bar chart on back on. So, this is showing you pretty clearly that the stocks with the strongest momentum, now listen, this is very short-term stuff. We're talking the next day. the stocks that are ripping into earnings like they tend to the expectations are too high in the short term and stocks >> percentage gain. >> Yeah, I don't know if this percentage gain uh it's a it's a t stat. Don't don't worry about what tat means. It's it's very top >> because the point is what this is not this so what this is not saying chart off what this is not saying is that stocks rallying to earnings have bad earnings results. >> No, it's just describing profit taking selling the news. Correct. Correct. That's it. >> I I >> You're such a hater. What's What's wrong with you? It's a great chart. It's a great chart. It's a great chart. >> It's I think it's good food for thought, but I want to see what is that the next day. >> Like I kind of like I kind of want to see give me the total return the two weeks before the earnings and the one week after. And I guarantee you that that that stat gets obliterated. like how many people are buying the stock the day before earnings and selling it the day after. That's a very small component of the market. >> His clients are hedge funds. I'm I'm merely making the point. >> That's all right. So, let's get to the >> I I do understand the point. I just question the uh the practicality of paying attention to it. Is that >> there's a lot of things that we talk about that people should not pay attention to. Let's be honest. >> That's definitely true. All right. um earnings. Uh so, so we have a bunch of great stuff here from the gang. Um Cali, Chart Kid, Matt, Sean, I don't know who's is whose, but these are some things that we want to share. This is the financial sector earnings week. Not every one of them reports, but almost every big company that reports this week is a financial. 65% of the companies reporting this week are from the XLF. >> I love this >> sector. Okay. U me too. And I love that it's first, by the way. I think that's huge. Okay. >> Um, the entire financial sector is expected to have growth of 13.2% for the quarter. That is the fourth highest within the S&P 500, fourth of 11. Um, not all of these stocks, even though they all had good earnings, not all of them went up after. Again, Adam's right. That phenomenon is real. A lot of these are stocks that have run up 20 20% in into these reports. So I I get it. Okay. Um trading and investment banking revenues beat and look strong across the board. Deal making is okay. I think deals were the big story at Goldman Sachs in or uh overall investment banking revenue I should say. Um worries about credit quality are are I don't know. They're not new. I feel like it's every quarter. People are like dying to find some sign of it. Dude, there's nothing there. There's nothing there. >> There's nothing there. JP Morgan, uh, the provision for credit losses was $59 million driven by the impact of a charge off related to a single client, which we'll get to later. Net charge offs were $62 million and the net reserve release was $3 million. Um, they asked about the credit card business early or or they didn't even before they were even asked about it um on the JP Morgan call, they just went right to it. CCB uh uh CCB there's nothing happening there. There's like literally nothing to report. There's no uptick. There's no like scary activity in the worst borrowers. Like none none of it. So that's that's the good news. Um Jamie Diamond's economic comments were, you know, the usual. He is never going to give you what you want if what you want is everything's great. That's not that's not Jaimeesque. He sees himself as a risk manager, not as a cheerleader. Um, >> well, hold on, let me read this quote. So, this is this is this is the this is slide one in their earnings release. While there have been some signs of a softening, particularly in job growth, the US e economy generally remained resilient. However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs, and trade uncertainty, elevated asset prices, and the risk of sticky inflation. As always, we hope for the best, but these complex forces reinforce why we prepared the firm for a wide range of scenarios. He says this every quarter. It it is who he is, and he shouldn't say anything different. He's the head of the biggest bank in the country, in the world, >> you know, right? Somebody was joking around. I forget who it was. Like, what would get you bearish? >> He'll never spike the football. >> Is is Jamie Diamond taking a victory lap? Like, he never All right, we're good. >> He never will. >> He made it. >> Okay. Um, City, anything crazy to say on City? Not really. Right. >> So, you know what? I'll be honest. City and Wells, I just I can't listen to them all. I do Black Rockck, I do Goldman, and I do JP Morgan. >> I Yeah, I did I only did Black Rockck and uh JP Morgan today. Um, and Goldman I read about. Um, City beat on revenue for all divisions and didn't really have any negative comments in the economy. I saw they put somebody on TV today and uh he echoed a lot of what um Jamie Diamond had to say about overall credit quality and lending and etc etc. >> They basically all say the same thing. >> It's business as usual though is I think the the takeaway. Um Wells Fargo got out of uh bank jail. So for a for a long time because it was the worstrun bank in America. Worst one run large bank in America. um literally lying, cheating, and stealing. They had a cap on how much uh money they could return to shareholders. They were shut out from doing any kind of M&A. They were like in a penalty box deserved. Um they faked 40,000 fake accounts at the retail bank branch level. Everyone running the firm has been fired as a result. New management. They have this guy Charlie Sharf now for the last couple of years as the new CEO. He is a Jamie Diamond protege. People seem really happy with the turnaround at Wells Fargo and now they had this asset cap lifted. Um so the third quarter was the first full quarter without that without that cap. So they're going to be treated like every other uh uh systematically important financial institution um or CIFFy and uh they should be able to do bigger buybacks, dividends, etc. Now, um this was a good reaction though, Mike, on uh on Wells. >> Yeah. Well, because nobody expects anything from them. >> Yeah. Um the team notes that's the best earnings performance uh best post earnings performance since 2015. Stock hasn't done this in response to an earnings report in in a decade, which I find notable. Um all right. JP Morgan, Goldman both went down or under under or underperformed the KBW bank index. Let's put that chart. >> Gold was down. Gold was down two. Goldman and JP Morgan both down 2% on the day. >> What do we This is market caps. Look at JP Morgan acting like a acting like a mag 7 almost a trillion. >> 846 billion. Goldman is 238 billion. Black Rockck 178 billion. Are you surprised by the order? Um, that's a good question. >> Between Goldman and Black Rockck, if if you if I blindfolded you, which would you have guessed is bigger by market cap right now? >> I I probably would have guessed Black Rockck. >> That's what I think I would have guessed that, too. We would have been wrong. Although, they're close enough that like a month of market performance could change that. Uh, next. >> Hold on. Hold on just for a second. Um, we spoke about this uh with Scott Nations. Man, I know Robin Hood is killing it and their future is bright, but 120 billion just in the context of Black Rockck being 100, what do we say? 180. Ah, one of those is wrong. >> Oh, why is Robin Hood almost the same valuation as Black Rockck? >> One of those is wrong. Very wrong. Come on. I mean, >> I pitched I uh I pitched Black Rockck on CNBC today. Pull up a >> lot today. pull up a technical chart though. This is this is a legit legit legit breakout. Like a highly legit breakout. >> So it closed at an alltime high today. Black Rockck took in um $25 billion in quarterly net inflows. $25 billion. How much is on Robin's platform? Is it that much? >> Does Robin have 300 billion? What's the number? >> Whatever. It's close. >> It's in the billions is the point. And and Black Rockck's had 13 and a half trillion. >> Black Rockck took in and I know it's they're different businesses, but Black Rockck took in $200 billion in quarterly net inflows. >> Oh, I had some notes from JP. Can we just go back to JP Morgan? >> Yeah. >> All right. So, the consumer is fine was my big takeaway. They said it 50 different ways. Um, and you know, they would love to tell you if that's not the case. They'd love to be the first bank to say, "Yeah, no, there's a real problem here." because they're going to handle the everyone else. Yeah. >> Tell you so Jeremy Jeremy the C the CFO said I mean Jamie may have his own personal opinions here but I think at a high level the story that we're trying to tell is one that's anchored on the current facts. The current facts on the consumer side are that the consumer is resilient. Spending is strong and delinquency rates are actually coming in below expectations. Those are facts that we really can't escape. >> People keep as if Right. As if it's a bad thing to say. It's crazy. um which I'm going to ask you a question about. Um the net interest income outlook for 2026 which is the bulk of their uh the bulk of the revenue um it's a bank after all. They said the consensus estimate on Wall Street of hundred billion for 2026 quote does look a bit low. So this bank could conceivably exceed $und00 billion in net interest u just given the size of its deposit base which is really really really remarkable. Um then they then two different analysts wanted to talk about first brands which I know we're going to we're going to dive into in a minute. Um, but I just wanted to point out to people, so JP Morgan has minimal uh uh exposure to first brands, although not zero. Um, but they do have exposure to this thing called, which uh I we talked about this last week, how that's being talked about as the next um disaster. Uh it's another auto related business, but I they kept saying NBFI, NBFI, NBFI, and I had to Google it because I forgot. It's been a really long time since we heard analysts on a call asking about this. Uh but non-bank financial institutions, NBFI is going to be the buzzword of the fourth quarter. Um in in the financial world, I believe I it's my that's my top pick for like top buzzword that people start writing articles with that in the headline. Um, I think it's going to be like uh just because just because there is a huge contingent of people who want things to go wrong, especially for hedge fund managers and private equity people >> and especially the Financial Times. >> Oh yeah, the FT the FT would the FT would love to see this all blow up. I just I think this is the new buzzword that people are going to walk around saying because they think it makes them sound significant uh uh sophisticated. >> Jamie kind of said he thinks the news gets worse uh or there are more revelations. >> No, no, no, he did not say that. >> But he doesn't think it's like >> Hold on. He did not say the news gets worse. He did not say the news gets worse. No, he did not. >> Dude, he he did not. First of all, this is from Jeremy. So Jeremy said, "We've also acknowledged that a lot of the private credit actors are, you know, large, very sophisticated, very good at credit underwriting. I don't think you're supposed to jump to the conclusion that the that there are necessarily lower standards or a huge systemic problem. To the extent that we lend to some of these folks who are client of ours as well as competitors of ours, that lending follows our normal practices, it's often highly secured and everything we do is one way or the other or another risky. I'm not sure that our lending to the NBFI community is an area of risk that we see as more elevated than other areas of risk. And the quote that you're mentioning about Jamie, Jaime said something like I probably shouldn't >> No, no, no. He didn't say that. He said, "I probably shouldn't say this, and I'm I'm guessing because he doesn't want to scare people, but there's never one cockroach in the kitchen." That's what he said. >> Okay. Yeah. So, that's the same thing as I'm saying. >> No more to come. How is Wait, how did your voice just go up six octaves? >> Yes, more to come. There's never one cockroach. How are these two turns? How are these two turns of phrases not synonymous? >> Okay, because there's never one cockroach in the kitchen is saying >> what's the application of that there's another cockroach more to come. >> No, but it's not the same. >> Stop. >> It is not the same. >> Please stop for my benefit. There is more more to come is saying that you know there's never one cockroach is like wouldn't it be surprised if something else happens there's a difference >> sure Michael let's do all right let's do Goldman >> um so Goldman it was the same questions on on the call and David DJ Si you know he might he might drop my playlist >> because it's never interesting >> no >> I think I'm done with Goldman >> on on purpose do you think >> um I don't know he's just there's There's respectfully there's just not that level of charisma and he doesn't say anything interesting. Maybe nor should he but >> I think that's like by I really think that's by design. I don't think he wants any more attention personally. >> Like I mean he came through credit to him. He did did come through. There was two years ago it's pretty dark. Um so they were ask the same questions about you know private assets, private credit risks, etc. Um and nothing, you know, listen nothing to pull out. But the big story for Goldman and to the point that we opened the show with is that uh the economy is firing. There is deals, there is activity. Um so throw this chart up. Uh look at investment banking fees. >> Second quarter was 2.1 billion. Third quarter 2.6 billion. Up from 1.9 billion in the third quarter of 2024 year-over-year. I mean there it's humming. It's definitely >> that is that's a that's a meaty bar right there. >> Things are happening. Yeah. Um, Goldman bought industry ventures, which is interesting. Uh, $8 billion venture company place in the >> So, it's a venture capital fund or it's more than that. >> They they do a lot of different things. They were the pioneers of venture secondaries and they've been they've had a very successful story career, $8 billion in in aumum and on the platform. Um, I think the cash comp was like 600 with another 300 on their earnout, something like that. So, >> so it's almost a bill it's almost a billion dollars for for the business. >> Do you think that that was a comp you think that was a situation where the company put itself up for sale and Goldman won an auction? >> I doubt >> or do you think this was strategic and Goldman went to them and said there's a good fit here for some like for for some reason beyond just like >> Yeah. You know, >> so not knowing anything speculating tourist here I would I would say that this company is very well respected. I would guess that they're not hiring a bank to shop them. I would guess that Goldman approached them. >> Well, you know, there's never just one cockroach. So, I wouldn't be surprised to see more more deals uh more deals for these for these companies now that um they sort of can do whatever they want, almost whatever they want. Uh I think I think from a regulatory standpoint, from an antitrust perspective, if they want to do something, they could probably do it. So, I I think we'll see more. Uh, let's do let's just on Black Rockck. I know you have some some data on this one. I This is what stood out. This what stood out for me. 13 and a half trillion in AUM is so big. >> Yeah. >> We say we we say the words tr we say the words trillion a lot on the show cuz we're always talking about like Apple and Nvidia, but like honestly, >> okay, I'm so >> an investment firm with with 13.5 trillion under management. This is one company managing 13 and a half trillion. Not just managing but like responsible for that is so big. >> Okay. I'm really glad you mentioned that because show this chart from Bloomberg Intelligence John please. So IBIT took in a hundred billion dollars in about 400 something years. >> My god. >> Okay. So, IBIT and their other ETFs total did $61 million in crypto ETF revenue. So, I call it a $250 million annual run rate, give or take. A quarter of a billion dollars. And guess what? The percentage of that revenue was 1%. >> Oh my god. >> Wait, can we put that chart back up? This is showing how many days it took for IBIT to get to 100 billion. And they have four other ETFs that are 100 billion. V, which >> No, no, no. That's not No, no, no. That's not what this is showing. This is showing how quickly it took other companies, other ETFs to get to hundred billion dollars. So, V. No, >> that's what I said. These are all Black Rockck products. >> Oh, no, they're not. >> V and VA are Vanguard. >> Yeah. >> FA is State Street >> and EMG is >> No, no, no. Those are Black Rockck and IMG. Those are Black Rockck. >> Oh, okay. So, but I'm saying that's the length of time by days is how long it took, >> right? So, IBIT did it in in just over a year and VO, which is like their S is like the Vanguard SPY basically. >> Yep. Correct. >> Took 2,000 days. That's what the point I'm trying to make. Okay. Um, what does that what does that say for is that say more about Bitcoin or does that say more about just uh the development of the ETF business in general? >> Yeah, both. Both both. In fairness, um, obviously ETFs are a lot more mature than they were when VO was launched, you know, back in the day. So, but my my big point is this. Show the table of business results. So, look at September. Look at the fourth column. September, okay? September 30th AUM as a percent of total. Okay. >> Digital assets 1%. >> Oh yeah. >> And 1% of fees. >> It's like a blip. And it's a hundred billion dollar product. And it's a blip. Uh look at go back. >> Sorry. I have another question. I have a question on that though. >> So what So only 1% of Black Rockck's aumum is in digital assets. Let's say I >> and base fees and base fees. >> But how big is BlackRock in Bitcoin overall? Are they 10%. >> Like how much of Bitcoin does does >> I bit is 100 billion. How much Bitcoin is there? >> And Bitcoin's what is it? Three trillion. I don't even know what it is. >> I don't know the answer. >> They're a meaningful They're like a meaningful amount and rapidly becoming more meaningful. >> Yeah. All right. Chart back on. Um the other portion that's interesting is private markets $300 billion dollars plus and it's 13% of their revenue and and that will that number will grow higher undoubtedly. >> Yeah. Yeah. For sure. >> Anyway, the point is it's super profitable >> even even though there's 12 or more >> digital asset ETFs like all none of them are cutting fees like all of them are making money. Bitwise is >> oh Bitwise cutting fees already. Okay, >> I think they are but the point is this trillions of dollars to your point earlier it's so much money that showing that the hundred billion dollar ETF is 1% of their AUMUum 1% of revenue really puts it into context. It's so much money. So like getting back to what I said earlier Black Rockck is either way undervalued or Robin Hood is way overvalued. Maybe a little bit of both. >> All right. uh story today in the Wall Street Journal midm morning reacting to these earnings reports that we're talking about. Um can we get a screen grab of this John? Wall Street is firing on all cylinders fueled by deals and trading. The subhead is results are beating expectations across the big banks. So um not to repeat a lot of what we just said. Um but here are some things from here. Goldman is now on pace for its best year ever. Ever. Did you hear that? in its main investment banking and markets division. JP Morgan is on track to make over 50 billion in annual profit for the second year in a row. Black Rockck 13.5 trillion. Um these are the most important companies in on Wall Street and all of them are just absolutely crushing it. This year we've already had the biggest ever leverage buyout. That's Electronic Arts. Um, advised by Goldman Sachs, $20 billion in financing from JP Morgan, Bank of America is expected to bring in the biggest ever disclosed deal uh deal fee for a single bank, 130 million. So, did you hear what I said? Bank of America is getting 130 million for that deal. JP Morgan is financing with 20 billion and either the buyer or the seller was uh the the seller was advised by Goldman. It's like it's unbelievable how much money is being made. Um, which explains why these stocks have done so well. So, and and they go on and on. There's equity trading, there's equity underwriting, there's debt uh debt debt capital markets activity, just it's all explosive. Um, and it's and it's all on a year-over-year basis. Uh, just a a huge change. So, the question I wanted to ask you is one thing that's really interesting, we're kind of like in these Goldilocks days for Wall Street, um, with all these records being broken, but it seems like everybody wants to spend the entire time imagining ways for it to all come crashing down rather than just like enjoying it. Like, all right, we're in it right now. Why do we have to focus relentlessly on how it's going to end? Do you get that feeling that that's all anyone wants to talk about? >> All right, the question is, who's anyone? Because I think what you're referring to are the headlines. And I was talking to Ben today about this. Journalists don't. And this is not their fault. Good news is boring as [ __ ] Nobody cares. And >> this is good news. But this is an exciting article. >> Headline, dude. Come on. >> On all cylinders. >> Not interesting. They want more. They want more uh first brand stories. That's interesting. How could people have been so irresponsible? People with so much money. How could they have been so reckless? That's what people click on. Nobody cares that Goldman's going to have a record year. Like investors care. Well, they should. It's the second biggest sector in the economy or in the stock market. But this idea that people want to see the banks blow up or whatever. Big Short 2.0. Yeah, that's what the headlines want you to see. Of course they do. They want you to that's that's their business. >> But how do you explain the amount of regular people who are doing Google searches for stock market bubble? Everyone's saying bubble now. Everyone. Is it because things are just so good that people just can't take it and they just have to ask like when is this going to come to an end? >> I mean, that's a different story. The stock market, the banks do well, those are different stories. >> Uh, not really. I think they're pretty rel I I just >> I don't hear anyone, regular people or the media being like, "Yeah, it's a bull market. Things are good. It's a bull market, but it's weird." Like like I don't understand this obsession with how's it going to end. >> Well, I love that and so should you. How's it going to end? >> Dude, we need we need a wall of worry. We can't have everybody's like, you know, everybody in the boat, no risk, whatever. S&P 15,000, get in, [ __ ] we're getting rich. Like, I'm happy that there's and but >> Yeah. Uh well, there's a lot. I want to show you something funny. Um put this first tweet up. This is a good tweet. >> Yeah. Nathaniel Whitmore. Um, do you know him? I don't know. I don't know him. >> An entire generation watched The Big Short, thought Michael Bur was cool, and spent the next decade calling everything a bubble. I wanted to I didn't like this cuz I'm not on on Twitter, but I would have liked this 500 times if I could. This is, I think, one of the best explanations for all of the hate and bitterness about the stock market. I think a lot of it boils down to all these ambitious young men who saw that film in their teens or 20s or god forbid read the book a little bit earlier than that and just they thought like this is what you're supposed to do. You're supposed to be the smartest >> fraud. You're supposed to you're supposed to be the smartest person in the world, outsmart everyone, spot the bubble before everyone else. Bet against it and like that's like what you're supposed to do in the market. That's like literally what a 100 million people think think they're supposed to be doing. And I'm exaggerating the numbers, but like there's a whole there is this whole generation. They think that [ __ ] is cool being like this uh freakishly like brilliant contrarian who makes everybody else look like a [ __ ] >> Now, I think a lot of these people that you're describing are people that wanted to be professional investors, like real serious investors. I think most average people don't aspire to be Michael Bur. Um, but and I think I and I think a lot of people grew out of that [ __ ] Like our friend Dan Mcer is killing it in the hedge fund business and he's not one of these freaks that is betting on the world and then everything is a fraud. Like I think that there are certainly there is a corner of the universe absolutely that was brainwormed by this. Um, but not everyone. >> I like brainwormed but like I think in a I think they want to be the hero. I don't think they're like villainous. I feel I almost like they want to be the guy that saves everyone. >> Well, you know what? >> Because they're like, "That's about to blow up." >> Yeah. And I'm going to save you. So, Michael Steinhard famously said, "Nothing makes a money manager feel better than making their clients money when everybody else is losing theirs." You are hero goated forever and ever. There's no there's no higher mountain for a money manager than that. And so, bull markets make that sort of investing really difficult. Obviously, >> uh this was a good clapback from uh High Yield Harry. This is one of the top five funniest people in the world in finance. Uh he's pseudonmous. I don't know him in person. He said, "Disagree. I was inspired by these guys." Um these were the these are the mortgage brokers in the Big Short, >> right? who would like beyond like beyond ridiculous like caricatures of I know mortgage brokers and directionally the the movie sort of had it right but like they were like to the nth degree. I thought that was I thought that was good. Anyway, it's kind of sad that there aren't a lot of people who are just like, "Yeah, this is pretty great." Like my friends who work on Wall Street are doing well. They're making money. Um they're they're, you know, buying bigger cars. They're buying bigger homes. Okay, maybe a little bit of envy, but overall it's a good thing that the capital markets are working. That like nobody has that opinion. >> I don't know. I don't know. I think people in the real world might have that opinion. Like people on Wall Street in the real world might have that opinion. I think that I think that all forms of of of media consumption, social or otherwise, just warp everything. >> I really do. >> I do, too. All right, let's move on. >> Um, okay. So, I saw this poster. I think Robin actually shared this with me. Uh, throw this Luther thing at. All right, so The Economist um, famously late and the poster child of a lot of magazine indicators, which I don't believe in, but sometimes. >> I was going to say this might be the bottom for Lulu, >> but sometimes. So, I I immediately wanted to buy the stock. So, I thought I'd play a game with you, Josh, where we're going, okay, value or value trap? >> And we're going to start with Lulu. So, and I told Sean we're gonna revisit this in a year. Okay. So, Lulu is in a 67% draw down. So, this is obviously surface level analysis, right? We're not going deep on each of these names. So, chart on please. We'll start with Lulu. So, on top you see the price. Lulu is down 67% from its high. Um, in the middle we've got the free cash flow and on the bottom we've got the PE ratio. And I got to be honest, I so the the the free cash flow is obviously turning. Like, duh. It's, you know, stocks don't fall 67% for no reason. I thought it would have been way worse. >> I think what Yeah. Um I think it's a buy if my only two choices are buy or sell, but I don't invest this way personally. I'm not a value guy and in fashion it's even twice as hard. So it like in other words, one thing to be a value investor and look at like Hershey and be like, "All right, this company's been around for 380 years. I'll take the bet that whatever's going wrong, they'll fix it and there will still be an underlying demand for chocolate." I don't know that anyone can say that about any fashion brand. That being and some go away forever. That being said, there are some really great examples, and I'm sure they're a minority of the time, of brand resurrections and what we witnessed. Um, >> Crocs, >> just think a couple of months ago, all it took was Sydney Sweeney and uh and Abberrombie and what was it? What is it? I don't even American Eagle. They're all to me. >> No, you're right. So, so retail companies turn around, but it is hard as [ __ ] So I as much as I really want to fade the economist and just hold my nose and buy, >> I I think you're right. Like I Aloe is just destroying them. So maybe they get it together. Maybe they don't. All right. So it sounds like we're both pretty >> Sydney Sweeney wearing uh Lululemon yoga pants. Why is this so difficult? You can't write a big enough check. Close 10 stores and give her the money. And next next question was the question, how do I turn around Lululemon? Uh, all right. Salesforce >> Salesforce. So, interestingly, the stock is down 35%. Free cash flow is near an all-time high. Uh, forward PE is about as low as it's been for the last couple of years, and nobody wants any part of the stock. In fact, it failed to rally on the news today that there's a partnership with Open AI. I mean, nobody wants to own the stock right now. >> I think that there's an open question about the need for buying seats per employee head on a go forward basis. I think every SAS company will be facing this reality in the AI age. Companies are writing their own software at this point with the aid of AI to enable them to do a lot of the things that you needed to rely on Salesforce for. That's a B. Yes, we're in a lowhiring lowfiring equilibrium. That's going to break in one direction or the other. And I think most people would bet it's going to break negatively and you will eventually see layoffs. doesn't have to be catastrophic, but companies like Salesforce that rely on enterprise sales, those are per head deals. And if you have a lower headcount working in corporate America, it stands to reason it's going to be very hard to sell uh very hard to grow an enterprise SAS business that quite frankly already has everybody as a customer. Who are they where they enough of this? Value, value, trap. I have two more names. What do you think? >> Trap. It's going lower. >> Trap. Don't I don't want it. >> Okay. Um Nike, we've spoken about the stock a million times. Um down 62%. Holy [ __ ] >> Close your eyes and buy it. Just buy it. I'm I'm gonna buy this. I'm gonna violate my own rules. >> Just close your All right. Here's what you do. Here's what you do. Here's what you do. Buy 500 shares now. >> Have 500 shares in reserve for when it when it uh has a false breakdown and breaks below uh 55. and it'll last for 10 seconds. You need to use a uh buy stop limit in that moment. But I am telling you, when it breaks below 55, you put in a buy stop limit for 60 and just ride it back higher. And uh I don't know. I I could see this being this could go to 95 in two weeks if they get the right the right headline, the right news flow. The the reality is it's just not that bad. >> It's bad. >> The counterpoint is the counterpoint is it's it's 35 times earnings. >> Counter counterpoint. Nobody gives a [ __ ] >> I agree. Um >> you want to hear you want to hear what how many times earnings Palanteer sells for? >> Yeah. >> Come on. What are we talking What are we doing here? >> Little but point taken. All right. Um Chipotle. I actually think I want to buy the stock. So Chipotle is in a 38% draw down. Its free cash flow is near an all-time high. Uh the stock is always expensive, so forget about that. But nobody wants it. I think a lot of this is the CEO leaving. And there was problems, no doubt. The food got ridiculously expensive. But I'd be a buyer of the stock. >> You know what I think about whenever I walk into a Chipotle, usually to pick up food from my 16-year-old? I feel like the kid in the emperor's new clothes. Why am I the only person willing to say out loud the food is terrible? >> No, it's not. >> It's literally terrible. Why? >> No, it's not. >> Why am I the only person who will admit it? And so now it's expensive and terrible. I've seen you eat Chipotle. >> I know I do. I eat Well, look. Am I Do I look very selective? >> Come on, dude. Chipotle is a great lunch food. What are you talking about? >> No, it's not. It's convenient and it's nearby everywhere and it's and it's fast >> and it tastes good and it's >> slop. And I have to be honest with you, >> all Mexican food is slop. >> Nope. And it's getting worse. And it's getting worse. Would you like to apologize to the Mexican community? Um, this is just >> I love slop. >> No, it's not good food. It's not good. I want it to be cuz Mike, it I have to go there for nugget every three days. That's all these kids eat. That's all they eat. Gen Z and and millennials, they'll eat Chipotle seven days a week. I just don't like Chipotle. >> I just don't understand why people won't say it used to be better than it is now. I've been to let's say Chipotle's in five different states in the last two years. Okay. It's never good anywhere I go, but it used to be. >> I I enjoy it. Uh, we have one more. Okay, last one. >> What do you get? Salad. >> Two more. >> You got a bowl. A a bowl. >> Don't worry about what I get. I get what I get. Um, >> not good. >> All right. Airbnb. I I like this one, too. All right. This is a great This is a great story. So, Airbnb, the the problem here is it just came it came public in in a in a mania and the valuation was ridiculous, but it never stopped growing its free cash flow and the stock has gone sideways for three years. I think this is a buy. >> Uh, I don't want to dislike all of these. What did I say I like? So far, Lulu and Nike. >> Nike. No, you don't like Lulu. You said no Lulu. You said if Sydney Sweeny's in Lulu. You don't like Nike. >> Yeah. No, I think it's it's turn it's turnable. Yeah. So, I only like Nike out of these. >> Okay. So, you don't like >> Well, >> okay. >> I never liked it. I never I never understood it >> cuz you personally don't like it cuz you don't like Chipotle. I have a bias. >> This is This is Josh as a snob episode. All right. Let's last last one. Last one. All right. >> I don't like the stock. I think it's too much competition and lodging. >> Okay. Um, fair enough. All right, Adobe. This is like a value manage. The value people won't stop talking about this one. So, free cash flow alltime high. Stock is in a 50% draw down. So, stock's been cut in half because nobody believes the earnings. Nobody believes earnings are going to be there. >> What's the valuation? >> 21 times. >> Um, it's a buy. >> I mean, knowing nothing, it looks like a buy. >> No, I'm I'm just look I'm looking at the chart. I don't care about the I was joking. Uh, it's it's a buy. >> There's a lot of support here. >> It's a buy with a very obvious place to put to put a stop. Like an >> I think your stop is your buy. Where your stop is, you buy it. Don't Don't put a stop in. >> Mike, >> Mike, the April low, the April low was tested three times. This is now the This is the third test of the April low, which is 330 >> right there. I I understand. I think that I think it'll I think it's going to it's going to break below and it'll be a false breakdown and then you plow into it when it reverses. >> I agree. >> This is I love this setup. I love it. I love it. I love it. >> This will be this will be 450 in a year. So the the the reason why the stock's not doing well is um obviously like the business isn't growing, but everyone thinks Sora and Chat GPT and all these services are going to obviate the need for professionals with Adobe licenses doing design work. I would go the other way. >> I'd go the other way. Most of the people doing their own childish childish AI slop design work are doing these like cartoon images of themselves. That like that's not going to pass for design. The world >> my math watered. My mouth just watered. I I'm think about Chipotle. I might get a bowl for dinner. >> Like voluntarily, not because it's convenient. >> I do love me some Chipotle. >> Do you, bro? All right. Uh All right. This is a good game. I like it. Was that the last one? >> That's it. We're done. >> All right. So, I like I like Adobe. I I don't know if I have the guts to do it myself, but I uh I I think it's I think it's trying to bottom right here. Okay. Jerome Powell spoke today. Did the market really react or not really. I couldn't tell. >> I didn't see like big signs of a big reaction >> while he was talking. I don't even know what time he spoke. Either the market reacted intro to to the Trump tweet. >> All right. Um, Cali points out the new thing that he said was that balance sheet runoff could end in the coming months. So, what that means is that the tightening might be too much might be too much tightening. Balance sheet runoff is bonds mature and then the Fed does not go out and buy new bonds to replace them, which is right like that's like the end of the the runoff. So >> remember the bull market was only the bull market was only being supported by Fed liquidity >> by by the Fed like replacing bonds that were maturing and and buying. >> So I thought I I don't know. I thought that was an interesting comment. I I don't Calli points out yields didn't move much on this. Maybe a few basis points down. Okay. Um job market employment prospects continue to worsen although conditions haven't changed much since the September meeting. Good nugget. Uh, let me see what else. Um, Cali points out inflation increased year-over-year for a third straight month in August. So, that's looking at CPI PCE. Um, here's here was her T. By the way, Callie's our uh chief strategist at Red Hole Wealth. That's why we're citing her. Um, >> read what you wrote to to Reuters. >> Jay Powell dropped a major piece of news when he mentioned that the Fed could stop coloring the size of its balance sheet in the coming months. The Fed has been reducing its runoff for months now, but the idea of a stable balance sheet could help lower yields in the middle to long part of the curve, meaning that's where the Fed would be buying bonds, thus lowering yields. Yes, that's a hidden source of relief, especially to homeowners, that the rate cuts alone may not be able to deliver. Okay, I think that's really interesting. Um, otherwise, Powell didn't say anything too surprising. He repeated the no risk-free path comment which I'm guessing will be a buzzy monetary policy phrase for the rest of the year. Both sides of the Fed's mandate are still under threat even though Powell and Co have chosen to focus on unemployment. Inflation worries still linger. Um all right. I think uh I think at this point in time the Fed is a chess piece for uh the stock market is off the board. What do you think? Um, I I agree with you. I don't think that what whatever the Fed does at the next couple of meetings, I don't think is going to have a big impact on the stock. >> Cut or or cut or not cut, I don't think it matters that. It might matter in the moment, but I just don't think it matters for where the market ends the year. I think they're off. >> I am curious to hear what companies have to say, especially consumerf facing companies, about the impact of tariffs on spending and margins. >> All right, let's do this first brands thing. What do we I know we covered it last week. What do we want to say about this? >> Here's what I want to say. All right. First of all, throw this throw this graphic up. So, for people who are not aware of who First Brands is, they are a conglomeration of all these auto parts. The one the only one that I know frankly is is Michelin. Um, so >> you and I, just for the for the listener who can't see us, Michael and I are not the kind of guys that know how to fix anything on a car. We don't lift the hood up for any reason. Um, we don't change tires. We just We don't do any car stuff. We don't So, these brands mean nothing to me. >> You I honestly have never heard of any of that. What What have you heard of on this >> Michelin? >> They don't own Michelin. This is important. They license Michelin just the windshield wipers. >> Okay. >> Yeah. They don't own They don't own the Michelin brand. >> And I only know Michelin because of the restaurant ratings. Go on. >> All right. So, um, we spoke earlier about NFBIS. Okay. NFBIS. And one of the things that Jamie mentioned was fraud. He used the word fraud. >> That this is this is even though there there is not one cockroach, um, this was fraud. So, Bloomberg did a story. So, this guy Patrick James built a company, 26,000 employees, six continents, revenue of $5 billion. But a lot of it was just buying up companies. So debt and and very little organic growth. So in 2023 to 24, its revenue only rose 1.3%. The cost of servicing its debt went up 38%. Not great. Is >> that bad? Is that bad? >> Not great, obviously. So Jeff had a hedge fund, Point Bonita Capital, that had a quarter of one of its portfolios, $715 million in first brands, which is very bizarre. Um, I'll get this aside. Chart of Look at this chart of Jeffre smoked. Not great. Not great. Why would a hedge fund have a quarter of its money in I think the the the debt of a company? All you could do is get paid back. Why would you make a concentrated bet on debt? It's very bizarre. But so the the article goes on to say that in 2011 a unit of Fortress Investment Group sued some of the companies and claimed that they had obscured the the CEO's controlling interest and the fact that all the companies share the same employees and management do not have separate bookings and records and are grossly under capitalized. Um this guy denied the accusations, but he paid to settle the case. Um and another one that was alleged fraud two years earlier. Public records showed that he took out mortgages for homes in Cleveland, set up a foundation to give churches and schools in the area money, but he left almost no trace of any of this on the internet. So, there's all sorts of red flags all over the place. >> What the hell? >> This guy took massive steps to obscure all all traces. So, you couldn't find anything about this guy on the internet. So, one of the one of the analysts said it seems like he went above and beyond to hide himself and his assets. All of this should be a huge red flag for investors. So, I don't know who missed this, how they missed it, whatever. But the point is there was allegedly fraud going on and Larry said on talking about private credit. Um, the market has grown increasingly anxious given some of the recent dynamics both related to perhaps growth uh blah blah blah. Um, so Larry said, "All right, thanks Alex. I hope you're doing okay. So listen, I'd start by saying just that the heritage of Black Rockck and HPS and definitely the combined firms steeped in rigorous. Okay. Um so we've taken a we've we're talking a lot with teams about the news, but I say that teams are generally seeing strong credit quality from borrowers. They're generally seeing a positive environment from credit investing. Even in syndicated loan markets, default rates have been declining. We of course read the same headlines that you do around private credit bankruptcies, but those exposures are actually in syndicated bank loans and CLLO markets. They're not with large private credit managers and direct lending books. And in those very public cases, the ones that we're reading about, you're reading about, potential frauds also been reported. Um, so anyway, listen, Black Rockck is obviously they're all in on this. So what do you expect them to say? But this is there another cockroach perhaps. Would it be surprising if this blows over as an isolated incident? Not for me. >> All right. I actually think it's good that this is happening because I do think that it reprices the market and it reprices the I should say it reprices risk in the market. I think it heightens everyone's uh awareness of this possibility. And I think you I think you you can't just have a one-way credit market for 10 years where nothing ever goes wrong because that we there's this concept uh called known as the Minsky moment after a famous economist where when things are too stable that in and of itself produces its own form of instability. People have to feel like other people are watching what they're doing and people have to be alert to risks. So, I actually think unless this is the Bear Sterns hedge fund in '07 and it's the true canary in the coal mine, which I mean I won't be the one that will know that in advance. Um, unless it's that and I look like an [ __ ] 6 months from today, I I don't think that you want you have to assume that it's that. A lot of people want it to be that. Back to what we were saying about bull markets. The you all the usual suspects who want there to be another Lehman Brothers First Brands is their new Leman Brothers. They have to have it. They need it's almost sexual. >> They want the rich and powerful to be exposed as see what these guys why are these guys rich. >> It's grotesque. They're licking their lips. They need this to be the the the private credit version of Lehman. They want it so bad. So, and maybe they'll maybe they'll finally get it. Maybe this finally the meteor hit Earth. My god. >> I don't know, man. I don't think that Blackstone and Aries and Blue I don't think all these guys are idiots. Is there too much money there? Are returns going to be lower? >> Someone's going to clip that. >> Okay, fine. Are returns going to be lower than they were in the past? Probably. There's a lot of money coming in. But is it going to be a a absolute destruction of ruin and people going to jail? I I don't think so. You know what's funny about bilateral lending? Like in game theory, you would assume that to be the safest form of lending. In other words, syndicated loans, we all understand how they go wrong. >> That's dangerous. Yeah. >> It's a thousand people who barely give a [ __ ] all putting money into the pot. a bilateral loan where I call you and say, "Okay, I'm going to give you $80 million, but these are the covenants, and if you violate, we're going to court, and I will press you until you either pay me back or I seize your assets or some combination." Wouldn't you just like on the surface be like, "All right, these probably aren't all first brands. This probably most of this activity is not dumb. Some of it means >> if you if if you're making that assumption, you're dumb, >> right? It's like, oh, I just I I gave this I gave this guy an entire loan and I had no expectation of getting paid back. Like, how who's doing that right now? Is anyone doing that? Probably not any like Probably not Aries. If somebody's doing it, it's not them. Okay. Um >> I actually am going to call an audible here. We're going to dive into this uh we're going to dive into this hedge fund. uh excuse me into this uh global fund manager survey um during during uh the compounded friends later this week. We'll do it with our guest because we're at uh we're at 558 and I don't want to >> I don't want to skip over it. >> I'm very glad you all because honestly I don't think it's that interesting but we could we can pull out some stuff. >> All right. So maybe we'll pretend we were never going to do it at all. All right. You want to make the case? >> Uh I do. So I want to make the case that I think it's easy to get distracted. I keep saying this. It's easy to get distracted by the nonsense, the speculative stocks and become very cynical. Iron, OK, all of these names would be like it's a freaking bubble and and and maybe that part of the market is and it probably is. Um and see the hyperscalers and think like there's nowhere to make money and that's just not the case. You might be shocked to know that a third of the market is in a 20% draw down from its 52- week high right now. A third of the S&P there's a lot of areas that are that have opportunity. A third of the S&P 500. One third is 20% above below its 52- week high. Throw this chart up from Matt. Matt charted the median stock the 52- week draw down from the from from the for the median stock on Friday. That was >> interesting. >> So this flies in the face of the this flies right in the face of the bubble narrative. there's opport median stock is in a 13% draw down from the high >> right like a bubble >> so um show the Russell 2000 let's let's skip here the Russell 2000 has been sideways since the peak in uh in 2021 it is only now breaking out and the longer the base the higher in space that's Louisiana via JC JC loves to quote that one I think this one's going a lot higher But the one that I want to shout out, it's a stock that I don't own. I've owned it in the past. Um I was listening to Delta. Delta stock is in it's it's 11% off its highs. >> Um and the stock is the company is crushing it. Free cash flow at an all-time high. And the story with Delta is very interesting. Chart off please. Um did you know that 60% of the industry profits are now generated by Delta? It is eating everybody's lunch. It is the only premium brand in the sky. Hard stop. Well, I'm very sorry to inform you that we booked American Airlines for our trip to DC in a couple weeks. Uh Delta is always the best the best customer experience overall, I would say. >> By far. Um >> and with an airline, like that's the the bar is low, but they they do it. I like I'm happy when I when I fly Delta. >> Corporate travel corporate travel is higher than pre-COVID highs, which shocked the [ __ ] out of me. They're just winning. They're doing everything right. They're firing on all cylinders and I think the stock is grossly underpriced and airlines historically have sucked. Love multiple shitty companies, but this is different. I think it's going a lot higher and I should own it and I don't. >> I like it. I think you'll have a crack at it. These are just high beta sloppy charts. Like I think you buy a name like Delta when they wreck the overall stock market and it just >> I think that's right. I think that's right. This is not gonna this is not gonna double while you watch it and say I wish I owned it. It's just not gonna happen. I mean just look at the ju you know what I mean? Like it's just >> it's an airline. It's it's it's not gonna double in a year. >> You'll be fine. You'll be you'll be fine. But I like it and I I agree I agree with you if you are invested in anything travel related. This is as good a name as any other. Um so I I do like it. Uh mystery chart time. I feel good about your chances today. >> Feel great. >> Okay. These are two different um investable asset assets. They're related to each other. And I think the main point that I'm bringing out is what's gone on over the last uh two weeks. >> Okay. So, are these semiconductors? >> They are not. They're not stock. They're not companies. I specifically went out of my way to say that they are investable assets. investable assets. Okay. So, I see a lot of s Oh. Oh. Uh oh. Okay. Um, >> do do it for me. Do it. Come on. You got this. >> One more hint. >> Is it Is it Bitcoin and ETH? >> Look at you. Look at you. Super impressive. Um, I'll tell you what I find interesting here. Couple of things. Bloomberg has this really great article about what went on last weekend. Um kind of had like a flash crash. Um >> Oh, there was a flash crash. Absolutely. >> So, I just want to read this really quickly. Uh for a few manic hours on Friday, the world of digital assets replayed Wall Street's oldest reflex at machine speed during market stress. A stampede for the exits. The spark was familiar but unexpected. Donald Trump's 100% tariffs. Um the pain was most acute in crypto with an index tracking altcoins um dropping 40% in minutes. >> Dude, that's nuts. >> It was It was gnarly. >> While the crash was brief and prices have partially recovered, critics point to underlining issues in the crypto market structure makes it prone to violent sell-offs. quote, "During this crash, depth evaporated and liquidation engines got overwhelmed. Um, this is like a crypto expert. Uh, auto deleveraging control mechanisms at exchanges poured gasoline on the fire and it felt like a market and more less like a market and more like a trap snapping shut." Bullish. >> It wasn't It wasn't really Bitcoin per se. It was soul I think fell like 25 soul and ETH fell 20 plus percent but it was really the altcoins. A lot of these ones went down 80 90% and just to to to their point just an absolute air pocket. No liquidity whatsoever. It's pretty ugly. Coin Glass estimated that a total $19 billion worth of positions were wiped out across trading venues. The actual total is likely much higher since Binance only reports one liquidation order per second. the I mean it's listen a lot of people it's not it's not good enough that they're taking the risk of being in these things. They also need leverage on them or they have options and futures trades on them. It's like it's it's still it's the biggest casino on earth. >> It's so insane. I was I was saying to Ben today somebody tweeted long-term capital management blew up. They were trading fixed income arbitrage. Okay. >> Treasuries treasuries. So these are basic points and they were using 25 times leverage. So what are you doing using 50 times leverage on >> it's just this it's just this generational nihilism where it's like I will never make it in life just doing my stupid nineto-ive job like I have to have to do this. >> It's not good. And I'm not a monster. I I I know there's a whole lot of people that like no crying in the casino. And I I agree. No crying in the casino. But I do I do feel bad when people get wiped out. I you know I'm not I don't not happy when I see people losing money even if even if they should know better. And hopefully the silver lining is some people learn some lesson from this but it's it's ugly. It's not great. >> Lol. Nobody learns. We have one more chart. This is from Chart Kidm. Bitcoin has seen shallower pullbacks versus ETH. That's about what you'd expect, but he illustrated it for us. This chart on the left, the blue is the Bitcoin pullback and the red line across is the average. The chart on the right, you could see these Ethereum pullbacks are like every time every time is a crash. >> That's heavy. Um, interesting though because back in the day, not back in the day, prior to like two years ago, Bitcoin would have done 30% too in 24 hours. >> That's right. Bitcoin is like matured. People don't people aren't as quick on the trigger with that thing. Yeah. As they used to be. So, that I thought that was notable. All right. Great job guessing the mystery chart, guys. Thank you so much for tuning into the live show. We appreciate all our pounders in the audience. You guys are literally the best. We miss you when we're not here. We love you very much. Um please tune in tomorrow. All new Animal Spirits with Michael and Ben dropping in the morning. Video out. Uh as well, um I'm going to start on Ask the Compound later in the day tomorrow. Ben has me on as his special guest with Duncan and uh we're going to have some fun. and I got a peek at the questions that we're answering. I love doing Ask the Compound. So, that's happening. And then at the end of the week, it's an all new Compound and Friends with a new guest uh friend of mine. Super excited to uh to have this person on the show and uh you guys will love it. So, thanks so much for everything. We'll talk to you soon. Good night. [Music]
Wall Street is Firing On All Cylinders | WAYT?
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All [Music] right. Do you have a Jackson Dart shirt already? >> Got to support Jackie, baby. Of course. Do you know I tried to we tried to find Justin a Jackson dart jersey and they said they're not being shipped until October 30th. Like they weren't ready for this kid's level of popularity. Like nobody had any idea. Oh [ __ ] we better have a million Jackson Dart jerseys ready. So >> just get a just get a fake one from China before they start. >> They have the blue one. Oh, I shouldn't say there were no jerseys. They have the blue ones, but he just got the Brian Burns in blue. He doesn't want to have two blue Giants jerseys, so he wants the white one. There aren't any. Like, literally. So, it's uh listen, we say the market's efficient. It's not always so efficient. Hey, uh ladies and gentlemen, welcome to an all new edition of What are your thoughts here on the Compound Network? Uh we are so excited to be here live tonight. The chat is going crazy. You all say hello to my co-host, Mr. Michael Batnik. Michael Batnik, you say hi to the folks. All right. Hey, what's up folks? >> Um, let's let's see what's going on in the chat right now. I am told table for seven says, "Ready to go to pound town. I'm becoming a gold bug." Okay, maybe we'll talk about that. Uh, some shout outs to Nicole in the chat. Guys, I want to tell you about something. Um, Nicole has officially gotten the compound's Instagram account as of today to over 50,000 50,000 followers, which uh I think is coming from a,000 or 10,000 when she joined. So, she's 5xed the channel in just a couple of years. I think we have a a shot of Nicole here being Nicole. Nicole being Nicole. uh she is literally our resident social media genius and uh has absolutely helped us transform this channel into more like it's more of a movement I would say at this point. So shout out to Nicole. We're going to drop a link where you can follow us on Instagram in the live chat on YouTube right now. Um and for those of you listening, it's uh the Compound News is the uh the official Compound handle. So Oh, there she is. Thanks, Nick. All right. Uh, also wanted to mention we have only or there might be less by now. Only 10 tickets or less left for the New York live show uh with Michael, myself, and Jim Kramer. So, that's happening on Friday, October 24th. Doors open at 6:00 p.m. There will be food, drinks, there will be Kramer, there will be signed copies of his new book and a live podcast recording. Um, Nicole, do we have that link? Let's drop that. Now, if you guys are watching this video later and there were none left, don't say I don't say I didn't try. Don't say I didn't try. I really hope that uh I hope that whomever wants that ticket sees this alert. And she's saying now saying less than 10. All right, we're on fire. Uh sponsors tonight. Um FM Investments. Michael, take us through FM Investments. >> All right, listen up, folks. Even after the Fed's recent modest cut to overnight rates, compelling bond yields are still attracting a lot of investors. That's right, 90 billion, 98 billion in September. Wild. Um, most bond funds come with a catch, which is the catch is those regular income distributions that bond funds have to pay out. Distributions sound nice obviously in theory, but they actually weaken the magic of compounding. Why? Because every ETF distributions weaken the magic of compounding. >> Taxes. Oh [ __ ] >> Taxes. That's it. Um, every distribution pulls assets out of >> Shut up for a second. Let me finish this >> temporarily. It says forbade. >> So, the FM compounder ETFs are designed to solve the fixed income distribution problem. Compounder ETFs can help investors avoid distributions, stay invested, and compound their capital gains. What are the compounder ETF tickers? I'm glad you asked, Josh. It's CPAG, that's CPAG, the FM compounder US aggregate bond ETF, and CPHY, the FM compounder high yield ETF. CPAG and CPHY help investors harness the magic of compounding. Learn more about the FM compounder ETFs at fminvest.com. >> Shout out fminvest.com. That is a real problem and it's nice to see somebody finally address it. All right, we have some uh >> you just shouted out their website. Unbelievable. >> Well, listen. Yeah, shout out to the website. >> Shout out to the site. Um, we got some peeps in the live chat tonight. I want to say hello. In Jensen, we trust Cam Rackom. Matthew Steic is here. Oliver is here. Joe Alamorro, we see you. Jay Luther, what's up, man? Ring KPS, Fred Cote, Conor McLaclin, what's up? Georgie. All right, thank you guys for being here for the live. Let's get down to business. Um, first things first, the banks reported to some of the banks, some of the largest financial uh, companies in the world report on earnings this morning and the the reports were awesome. Now, I don't think that's surprising to most people. Financials have been among the top three or four sectors of the year pretty much all year and um, the big banks are among the best of the financial uh, sector stocks. So, no one was really like totally knocked out that these reports were so good. But I think it just underscores um the broadness of the rally because the banks don't just deal with technology companies. The banks have customers in every segment of the economy. What do you think of that? What do you think of that take? Like banks has a gauge of the economy beyond tech. I know they're involved with tech as well. Yeah, we So JC was on the show earlier in the year and if you'd listen to me for a second, I'll let you know that yes, banks are important to the economy, to the stock market. It's discouraging when you see the banks being left behind. You want to see real confirmation that there is activity in the real economy outside of just this circular notion of Open AI and Salesforce now, which was a dud, and and uh what Oracle and all of these deals need. You need the real economy, damn it. Yeah. >> So, I want to I just before we get into the reports today and the market's reaction, I wanted to highlight Adam Parker's work. Adam did this really interesting thing showing that um showing what you want to pay attention to in terms of stocks before earnings. So, chart on please. Adam said stocks in the bottom half of industry group relative momentum. All right. of stocks in the bottom half tend to beat expectations on the earnings release and those in the highest 5% of two week stock performance see a statistically significant underperformance on the day that they report earnings. This is important. On average, big moves into earnings releases should be sold and big laggers should be bought. So, let's see what happened today with Croup and with Wells Fargo. Next, two charts, please. Both of these acting pretty damn heavy. Not necessarily if you were just purely technicals. I don't know that I want to be long this going to earnings. Boom. Big candle. Next one. Same thing with City. Also pretty cruddy price action and you had a very nice day today. So kudos to Adam. I thought that was interesting stuff. I only agree with half of that. >> Which part? Um, I like I guess it's the on average part that I don't love because think about >> I know, I know, I know, I know, but think about anecdotally like how many counterexamples of this that are so easy to find at your fingertips, >> dude. Of course, he's just he's all So, put put it put his chart back on. Put the bar chart on back on. So, this is showing you pretty clearly that the stocks with the strongest momentum, now listen, this is very short-term stuff. We're talking the next day. the stocks that are ripping into earnings like they tend to the expectations are too high in the short term and stocks >> percentage gain. >> Yeah, I don't know if this percentage gain uh it's a it's a t stat. Don't don't worry about what tat means. It's it's very top >> because the point is what this is not this so what this is not saying chart off what this is not saying is that stocks rallying to earnings have bad earnings results. >> No, it's just describing profit taking selling the news. Correct. Correct. That's it. >> I I >> You're such a hater. What's What's wrong with you? It's a great chart. It's a great chart. It's a great chart. >> It's I think it's good food for thought, but I want to see what is that the next day. >> Like I kind of like I kind of want to see give me the total return the two weeks before the earnings and the one week after. And I guarantee you that that that stat gets obliterated. like how many people are buying the stock the day before earnings and selling it the day after. That's a very small component of the market. >> His clients are hedge funds. I'm I'm merely making the point. >> That's all right. So, let's get to the >> I I do understand the point. I just question the uh the practicality of paying attention to it. Is that >> there's a lot of things that we talk about that people should not pay attention to. Let's be honest. >> That's definitely true. All right. um earnings. Uh so, so we have a bunch of great stuff here from the gang. Um Cali, Chart Kid, Matt, Sean, I don't know who's is whose, but these are some things that we want to share. This is the financial sector earnings week. Not every one of them reports, but almost every big company that reports this week is a financial. 65% of the companies reporting this week are from the XLF. >> I love this >> sector. Okay. U me too. And I love that it's first, by the way. I think that's huge. Okay. >> Um, the entire financial sector is expected to have growth of 13.2% for the quarter. That is the fourth highest within the S&P 500, fourth of 11. Um, not all of these stocks, even though they all had good earnings, not all of them went up after. Again, Adam's right. That phenomenon is real. A lot of these are stocks that have run up 20 20% in into these reports. So I I get it. Okay. Um trading and investment banking revenues beat and look strong across the board. Deal making is okay. I think deals were the big story at Goldman Sachs in or uh overall investment banking revenue I should say. Um worries about credit quality are are I don't know. They're not new. I feel like it's every quarter. People are like dying to find some sign of it. Dude, there's nothing there. There's nothing there. >> There's nothing there. JP Morgan, uh, the provision for credit losses was $59 million driven by the impact of a charge off related to a single client, which we'll get to later. Net charge offs were $62 million and the net reserve release was $3 million. Um, they asked about the credit card business early or or they didn't even before they were even asked about it um on the JP Morgan call, they just went right to it. CCB uh uh CCB there's nothing happening there. There's like literally nothing to report. There's no uptick. There's no like scary activity in the worst borrowers. Like none none of it. So that's that's the good news. Um Jamie Diamond's economic comments were, you know, the usual. He is never going to give you what you want if what you want is everything's great. That's not that's not Jaimeesque. He sees himself as a risk manager, not as a cheerleader. Um, >> well, hold on, let me read this quote. So, this is this is this is the this is slide one in their earnings release. While there have been some signs of a softening, particularly in job growth, the US e economy generally remained resilient. However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs, and trade uncertainty, elevated asset prices, and the risk of sticky inflation. As always, we hope for the best, but these complex forces reinforce why we prepared the firm for a wide range of scenarios. He says this every quarter. It it is who he is, and he shouldn't say anything different. He's the head of the biggest bank in the country, in the world, >> you know, right? Somebody was joking around. I forget who it was. Like, what would get you bearish? >> He'll never spike the football. >> Is is Jamie Diamond taking a victory lap? Like, he never All right, we're good. >> He never will. >> He made it. >> Okay. Um, City, anything crazy to say on City? Not really. Right. >> So, you know what? I'll be honest. City and Wells, I just I can't listen to them all. I do Black Rockck, I do Goldman, and I do JP Morgan. >> I Yeah, I did I only did Black Rockck and uh JP Morgan today. Um, and Goldman I read about. Um, City beat on revenue for all divisions and didn't really have any negative comments in the economy. I saw they put somebody on TV today and uh he echoed a lot of what um Jamie Diamond had to say about overall credit quality and lending and etc etc. >> They basically all say the same thing. >> It's business as usual though is I think the the takeaway. Um Wells Fargo got out of uh bank jail. So for a for a long time because it was the worstrun bank in America. Worst one run large bank in America. um literally lying, cheating, and stealing. They had a cap on how much uh money they could return to shareholders. They were shut out from doing any kind of M&A. They were like in a penalty box deserved. Um they faked 40,000 fake accounts at the retail bank branch level. Everyone running the firm has been fired as a result. New management. They have this guy Charlie Sharf now for the last couple of years as the new CEO. He is a Jamie Diamond protege. People seem really happy with the turnaround at Wells Fargo and now they had this asset cap lifted. Um so the third quarter was the first full quarter without that without that cap. So they're going to be treated like every other uh uh systematically important financial institution um or CIFFy and uh they should be able to do bigger buybacks, dividends, etc. Now, um this was a good reaction though, Mike, on uh on Wells. >> Yeah. Well, because nobody expects anything from them. >> Yeah. Um the team notes that's the best earnings performance uh best post earnings performance since 2015. Stock hasn't done this in response to an earnings report in in a decade, which I find notable. Um all right. JP Morgan, Goldman both went down or under under or underperformed the KBW bank index. Let's put that chart. >> Gold was down. Gold was down two. Goldman and JP Morgan both down 2% on the day. >> What do we This is market caps. Look at JP Morgan acting like a acting like a mag 7 almost a trillion. >> 846 billion. Goldman is 238 billion. Black Rockck 178 billion. Are you surprised by the order? Um, that's a good question. >> Between Goldman and Black Rockck, if if you if I blindfolded you, which would you have guessed is bigger by market cap right now? >> I I probably would have guessed Black Rockck. >> That's what I think I would have guessed that, too. We would have been wrong. Although, they're close enough that like a month of market performance could change that. Uh, next. >> Hold on. Hold on just for a second. Um, we spoke about this uh with Scott Nations. Man, I know Robin Hood is killing it and their future is bright, but 120 billion just in the context of Black Rockck being 100, what do we say? 180. Ah, one of those is wrong. >> Oh, why is Robin Hood almost the same valuation as Black Rockck? >> One of those is wrong. Very wrong. Come on. I mean, >> I pitched I uh I pitched Black Rockck on CNBC today. Pull up a >> lot today. pull up a technical chart though. This is this is a legit legit legit breakout. Like a highly legit breakout. >> So it closed at an alltime high today. Black Rockck took in um $25 billion in quarterly net inflows. $25 billion. How much is on Robin's platform? Is it that much? >> Does Robin have 300 billion? What's the number? >> Whatever. It's close. >> It's in the billions is the point. And and Black Rockck's had 13 and a half trillion. >> Black Rockck took in and I know it's they're different businesses, but Black Rockck took in $200 billion in quarterly net inflows. >> Oh, I had some notes from JP. Can we just go back to JP Morgan? >> Yeah. >> All right. So, the consumer is fine was my big takeaway. They said it 50 different ways. Um, and you know, they would love to tell you if that's not the case. They'd love to be the first bank to say, "Yeah, no, there's a real problem here." because they're going to handle the everyone else. Yeah. >> Tell you so Jeremy Jeremy the C the CFO said I mean Jamie may have his own personal opinions here but I think at a high level the story that we're trying to tell is one that's anchored on the current facts. The current facts on the consumer side are that the consumer is resilient. Spending is strong and delinquency rates are actually coming in below expectations. Those are facts that we really can't escape. >> People keep as if Right. As if it's a bad thing to say. It's crazy. um which I'm going to ask you a question about. Um the net interest income outlook for 2026 which is the bulk of their uh the bulk of the revenue um it's a bank after all. They said the consensus estimate on Wall Street of hundred billion for 2026 quote does look a bit low. So this bank could conceivably exceed $und00 billion in net interest u just given the size of its deposit base which is really really really remarkable. Um then they then two different analysts wanted to talk about first brands which I know we're going to we're going to dive into in a minute. Um, but I just wanted to point out to people, so JP Morgan has minimal uh uh exposure to first brands, although not zero. Um, but they do have exposure to this thing called, which uh I we talked about this last week, how that's being talked about as the next um disaster. Uh it's another auto related business, but I they kept saying NBFI, NBFI, NBFI, and I had to Google it because I forgot. It's been a really long time since we heard analysts on a call asking about this. Uh but non-bank financial institutions, NBFI is going to be the buzzword of the fourth quarter. Um in in the financial world, I believe I it's my that's my top pick for like top buzzword that people start writing articles with that in the headline. Um, I think it's going to be like uh just because just because there is a huge contingent of people who want things to go wrong, especially for hedge fund managers and private equity people >> and especially the Financial Times. >> Oh yeah, the FT the FT would the FT would love to see this all blow up. I just I think this is the new buzzword that people are going to walk around saying because they think it makes them sound significant uh uh sophisticated. >> Jamie kind of said he thinks the news gets worse uh or there are more revelations. >> No, no, no, he did not say that. >> But he doesn't think it's like >> Hold on. He did not say the news gets worse. He did not say the news gets worse. No, he did not. >> Dude, he he did not. First of all, this is from Jeremy. So Jeremy said, "We've also acknowledged that a lot of the private credit actors are, you know, large, very sophisticated, very good at credit underwriting. I don't think you're supposed to jump to the conclusion that the that there are necessarily lower standards or a huge systemic problem. To the extent that we lend to some of these folks who are client of ours as well as competitors of ours, that lending follows our normal practices, it's often highly secured and everything we do is one way or the other or another risky. I'm not sure that our lending to the NBFI community is an area of risk that we see as more elevated than other areas of risk. And the quote that you're mentioning about Jamie, Jaime said something like I probably shouldn't >> No, no, no. He didn't say that. He said, "I probably shouldn't say this, and I'm I'm guessing because he doesn't want to scare people, but there's never one cockroach in the kitchen." That's what he said. >> Okay. Yeah. So, that's the same thing as I'm saying. >> No more to come. How is Wait, how did your voice just go up six octaves? >> Yes, more to come. There's never one cockroach. How are these two turns? How are these two turns of phrases not synonymous? >> Okay, because there's never one cockroach in the kitchen is saying >> what's the application of that there's another cockroach more to come. >> No, but it's not the same. >> Stop. >> It is not the same. >> Please stop for my benefit. There is more more to come is saying that you know there's never one cockroach is like wouldn't it be surprised if something else happens there's a difference >> sure Michael let's do all right let's do Goldman >> um so Goldman it was the same questions on on the call and David DJ Si you know he might he might drop my playlist >> because it's never interesting >> no >> I think I'm done with Goldman >> on on purpose do you think >> um I don't know he's just there's There's respectfully there's just not that level of charisma and he doesn't say anything interesting. Maybe nor should he but >> I think that's like by I really think that's by design. I don't think he wants any more attention personally. >> Like I mean he came through credit to him. He did did come through. There was two years ago it's pretty dark. Um so they were ask the same questions about you know private assets, private credit risks, etc. Um and nothing, you know, listen nothing to pull out. But the big story for Goldman and to the point that we opened the show with is that uh the economy is firing. There is deals, there is activity. Um so throw this chart up. Uh look at investment banking fees. >> Second quarter was 2.1 billion. Third quarter 2.6 billion. Up from 1.9 billion in the third quarter of 2024 year-over-year. I mean there it's humming. It's definitely >> that is that's a that's a meaty bar right there. >> Things are happening. Yeah. Um, Goldman bought industry ventures, which is interesting. Uh, $8 billion venture company place in the >> So, it's a venture capital fund or it's more than that. >> They they do a lot of different things. They were the pioneers of venture secondaries and they've been they've had a very successful story career, $8 billion in in aumum and on the platform. Um, I think the cash comp was like 600 with another 300 on their earnout, something like that. So, >> so it's almost a bill it's almost a billion dollars for for the business. >> Do you think that that was a comp you think that was a situation where the company put itself up for sale and Goldman won an auction? >> I doubt >> or do you think this was strategic and Goldman went to them and said there's a good fit here for some like for for some reason beyond just like >> Yeah. You know, >> so not knowing anything speculating tourist here I would I would say that this company is very well respected. I would guess that they're not hiring a bank to shop them. I would guess that Goldman approached them. >> Well, you know, there's never just one cockroach. So, I wouldn't be surprised to see more more deals uh more deals for these for these companies now that um they sort of can do whatever they want, almost whatever they want. Uh I think I think from a regulatory standpoint, from an antitrust perspective, if they want to do something, they could probably do it. So, I I think we'll see more. Uh, let's do let's just on Black Rockck. I know you have some some data on this one. I This is what stood out. This what stood out for me. 13 and a half trillion in AUM is so big. >> Yeah. >> We say we we say the words tr we say the words trillion a lot on the show cuz we're always talking about like Apple and Nvidia, but like honestly, >> okay, I'm so >> an investment firm with with 13.5 trillion under management. This is one company managing 13 and a half trillion. Not just managing but like responsible for that is so big. >> Okay. I'm really glad you mentioned that because show this chart from Bloomberg Intelligence John please. So IBIT took in a hundred billion dollars in about 400 something years. >> My god. >> Okay. So, IBIT and their other ETFs total did $61 million in crypto ETF revenue. So, I call it a $250 million annual run rate, give or take. A quarter of a billion dollars. And guess what? The percentage of that revenue was 1%. >> Oh my god. >> Wait, can we put that chart back up? This is showing how many days it took for IBIT to get to 100 billion. And they have four other ETFs that are 100 billion. V, which >> No, no, no. That's not No, no, no. That's not what this is showing. This is showing how quickly it took other companies, other ETFs to get to hundred billion dollars. So, V. No, >> that's what I said. These are all Black Rockck products. >> Oh, no, they're not. >> V and VA are Vanguard. >> Yeah. >> FA is State Street >> and EMG is >> No, no, no. Those are Black Rockck and IMG. Those are Black Rockck. >> Oh, okay. So, but I'm saying that's the length of time by days is how long it took, >> right? So, IBIT did it in in just over a year and VO, which is like their S is like the Vanguard SPY basically. >> Yep. Correct. >> Took 2,000 days. That's what the point I'm trying to make. Okay. Um, what does that what does that say for is that say more about Bitcoin or does that say more about just uh the development of the ETF business in general? >> Yeah, both. Both both. In fairness, um, obviously ETFs are a lot more mature than they were when VO was launched, you know, back in the day. So, but my my big point is this. Show the table of business results. So, look at September. Look at the fourth column. September, okay? September 30th AUM as a percent of total. Okay. >> Digital assets 1%. >> Oh yeah. >> And 1% of fees. >> It's like a blip. And it's a hundred billion dollar product. And it's a blip. Uh look at go back. >> Sorry. I have another question. I have a question on that though. >> So what So only 1% of Black Rockck's aumum is in digital assets. Let's say I >> and base fees and base fees. >> But how big is BlackRock in Bitcoin overall? Are they 10%. >> Like how much of Bitcoin does does >> I bit is 100 billion. How much Bitcoin is there? >> And Bitcoin's what is it? Three trillion. I don't even know what it is. >> I don't know the answer. >> They're a meaningful They're like a meaningful amount and rapidly becoming more meaningful. >> Yeah. All right. Chart back on. Um the other portion that's interesting is private markets $300 billion dollars plus and it's 13% of their revenue and and that will that number will grow higher undoubtedly. >> Yeah. Yeah. For sure. >> Anyway, the point is it's super profitable >> even even though there's 12 or more >> digital asset ETFs like all none of them are cutting fees like all of them are making money. Bitwise is >> oh Bitwise cutting fees already. Okay, >> I think they are but the point is this trillions of dollars to your point earlier it's so much money that showing that the hundred billion dollar ETF is 1% of their AUMUum 1% of revenue really puts it into context. It's so much money. So like getting back to what I said earlier Black Rockck is either way undervalued or Robin Hood is way overvalued. Maybe a little bit of both. >> All right. uh story today in the Wall Street Journal midm morning reacting to these earnings reports that we're talking about. Um can we get a screen grab of this John? Wall Street is firing on all cylinders fueled by deals and trading. The subhead is results are beating expectations across the big banks. So um not to repeat a lot of what we just said. Um but here are some things from here. Goldman is now on pace for its best year ever. Ever. Did you hear that? in its main investment banking and markets division. JP Morgan is on track to make over 50 billion in annual profit for the second year in a row. Black Rockck 13.5 trillion. Um these are the most important companies in on Wall Street and all of them are just absolutely crushing it. This year we've already had the biggest ever leverage buyout. That's Electronic Arts. Um, advised by Goldman Sachs, $20 billion in financing from JP Morgan, Bank of America is expected to bring in the biggest ever disclosed deal uh deal fee for a single bank, 130 million. So, did you hear what I said? Bank of America is getting 130 million for that deal. JP Morgan is financing with 20 billion and either the buyer or the seller was uh the the seller was advised by Goldman. It's like it's unbelievable how much money is being made. Um, which explains why these stocks have done so well. So, and and they go on and on. There's equity trading, there's equity underwriting, there's debt uh debt debt capital markets activity, just it's all explosive. Um, and it's and it's all on a year-over-year basis. Uh, just a a huge change. So, the question I wanted to ask you is one thing that's really interesting, we're kind of like in these Goldilocks days for Wall Street, um, with all these records being broken, but it seems like everybody wants to spend the entire time imagining ways for it to all come crashing down rather than just like enjoying it. Like, all right, we're in it right now. Why do we have to focus relentlessly on how it's going to end? Do you get that feeling that that's all anyone wants to talk about? >> All right, the question is, who's anyone? Because I think what you're referring to are the headlines. And I was talking to Ben today about this. Journalists don't. And this is not their fault. Good news is boring as [ __ ] Nobody cares. And >> this is good news. But this is an exciting article. >> Headline, dude. Come on. >> On all cylinders. >> Not interesting. They want more. They want more uh first brand stories. That's interesting. How could people have been so irresponsible? People with so much money. How could they have been so reckless? That's what people click on. Nobody cares that Goldman's going to have a record year. Like investors care. Well, they should. It's the second biggest sector in the economy or in the stock market. But this idea that people want to see the banks blow up or whatever. Big Short 2.0. Yeah, that's what the headlines want you to see. Of course they do. They want you to that's that's their business. >> But how do you explain the amount of regular people who are doing Google searches for stock market bubble? Everyone's saying bubble now. Everyone. Is it because things are just so good that people just can't take it and they just have to ask like when is this going to come to an end? >> I mean, that's a different story. The stock market, the banks do well, those are different stories. >> Uh, not really. I think they're pretty rel I I just >> I don't hear anyone, regular people or the media being like, "Yeah, it's a bull market. Things are good. It's a bull market, but it's weird." Like like I don't understand this obsession with how's it going to end. >> Well, I love that and so should you. How's it going to end? >> Dude, we need we need a wall of worry. We can't have everybody's like, you know, everybody in the boat, no risk, whatever. S&P 15,000, get in, [ __ ] we're getting rich. Like, I'm happy that there's and but >> Yeah. Uh well, there's a lot. I want to show you something funny. Um put this first tweet up. This is a good tweet. >> Yeah. Nathaniel Whitmore. Um, do you know him? I don't know. I don't know him. >> An entire generation watched The Big Short, thought Michael Bur was cool, and spent the next decade calling everything a bubble. I wanted to I didn't like this cuz I'm not on on Twitter, but I would have liked this 500 times if I could. This is, I think, one of the best explanations for all of the hate and bitterness about the stock market. I think a lot of it boils down to all these ambitious young men who saw that film in their teens or 20s or god forbid read the book a little bit earlier than that and just they thought like this is what you're supposed to do. You're supposed to be the smartest >> fraud. You're supposed to you're supposed to be the smartest person in the world, outsmart everyone, spot the bubble before everyone else. Bet against it and like that's like what you're supposed to do in the market. That's like literally what a 100 million people think think they're supposed to be doing. And I'm exaggerating the numbers, but like there's a whole there is this whole generation. They think that [ __ ] is cool being like this uh freakishly like brilliant contrarian who makes everybody else look like a [ __ ] >> Now, I think a lot of these people that you're describing are people that wanted to be professional investors, like real serious investors. I think most average people don't aspire to be Michael Bur. Um, but and I think I and I think a lot of people grew out of that [ __ ] Like our friend Dan Mcer is killing it in the hedge fund business and he's not one of these freaks that is betting on the world and then everything is a fraud. Like I think that there are certainly there is a corner of the universe absolutely that was brainwormed by this. Um, but not everyone. >> I like brainwormed but like I think in a I think they want to be the hero. I don't think they're like villainous. I feel I almost like they want to be the guy that saves everyone. >> Well, you know what? >> Because they're like, "That's about to blow up." >> Yeah. And I'm going to save you. So, Michael Steinhard famously said, "Nothing makes a money manager feel better than making their clients money when everybody else is losing theirs." You are hero goated forever and ever. There's no there's no higher mountain for a money manager than that. And so, bull markets make that sort of investing really difficult. Obviously, >> uh this was a good clapback from uh High Yield Harry. This is one of the top five funniest people in the world in finance. Uh he's pseudonmous. I don't know him in person. He said, "Disagree. I was inspired by these guys." Um these were the these are the mortgage brokers in the Big Short, >> right? who would like beyond like beyond ridiculous like caricatures of I know mortgage brokers and directionally the the movie sort of had it right but like they were like to the nth degree. I thought that was I thought that was good. Anyway, it's kind of sad that there aren't a lot of people who are just like, "Yeah, this is pretty great." Like my friends who work on Wall Street are doing well. They're making money. Um they're they're, you know, buying bigger cars. They're buying bigger homes. Okay, maybe a little bit of envy, but overall it's a good thing that the capital markets are working. That like nobody has that opinion. >> I don't know. I don't know. I think people in the real world might have that opinion. Like people on Wall Street in the real world might have that opinion. I think that I think that all forms of of of media consumption, social or otherwise, just warp everything. >> I really do. >> I do, too. All right, let's move on. >> Um, okay. So, I saw this poster. I think Robin actually shared this with me. Uh, throw this Luther thing at. All right, so The Economist um, famously late and the poster child of a lot of magazine indicators, which I don't believe in, but sometimes. >> I was going to say this might be the bottom for Lulu, >> but sometimes. So, I I immediately wanted to buy the stock. So, I thought I'd play a game with you, Josh, where we're going, okay, value or value trap? >> And we're going to start with Lulu. So, and I told Sean we're gonna revisit this in a year. Okay. So, Lulu is in a 67% draw down. So, this is obviously surface level analysis, right? We're not going deep on each of these names. So, chart on please. We'll start with Lulu. So, on top you see the price. Lulu is down 67% from its high. Um, in the middle we've got the free cash flow and on the bottom we've got the PE ratio. And I got to be honest, I so the the the free cash flow is obviously turning. Like, duh. It's, you know, stocks don't fall 67% for no reason. I thought it would have been way worse. >> I think what Yeah. Um I think it's a buy if my only two choices are buy or sell, but I don't invest this way personally. I'm not a value guy and in fashion it's even twice as hard. So it like in other words, one thing to be a value investor and look at like Hershey and be like, "All right, this company's been around for 380 years. I'll take the bet that whatever's going wrong, they'll fix it and there will still be an underlying demand for chocolate." I don't know that anyone can say that about any fashion brand. That being and some go away forever. That being said, there are some really great examples, and I'm sure they're a minority of the time, of brand resurrections and what we witnessed. Um, >> Crocs, >> just think a couple of months ago, all it took was Sydney Sweeney and uh and Abberrombie and what was it? What is it? I don't even American Eagle. They're all to me. >> No, you're right. So, so retail companies turn around, but it is hard as [ __ ] So I as much as I really want to fade the economist and just hold my nose and buy, >> I I think you're right. Like I Aloe is just destroying them. So maybe they get it together. Maybe they don't. All right. So it sounds like we're both pretty >> Sydney Sweeney wearing uh Lululemon yoga pants. Why is this so difficult? You can't write a big enough check. Close 10 stores and give her the money. And next next question was the question, how do I turn around Lululemon? Uh, all right. Salesforce >> Salesforce. So, interestingly, the stock is down 35%. Free cash flow is near an all-time high. Uh, forward PE is about as low as it's been for the last couple of years, and nobody wants any part of the stock. In fact, it failed to rally on the news today that there's a partnership with Open AI. I mean, nobody wants to own the stock right now. >> I think that there's an open question about the need for buying seats per employee head on a go forward basis. I think every SAS company will be facing this reality in the AI age. Companies are writing their own software at this point with the aid of AI to enable them to do a lot of the things that you needed to rely on Salesforce for. That's a B. Yes, we're in a lowhiring lowfiring equilibrium. That's going to break in one direction or the other. And I think most people would bet it's going to break negatively and you will eventually see layoffs. doesn't have to be catastrophic, but companies like Salesforce that rely on enterprise sales, those are per head deals. And if you have a lower headcount working in corporate America, it stands to reason it's going to be very hard to sell uh very hard to grow an enterprise SAS business that quite frankly already has everybody as a customer. Who are they where they enough of this? Value, value, trap. I have two more names. What do you think? >> Trap. It's going lower. >> Trap. Don't I don't want it. >> Okay. Um Nike, we've spoken about the stock a million times. Um down 62%. Holy [ __ ] >> Close your eyes and buy it. Just buy it. I'm I'm gonna buy this. I'm gonna violate my own rules. >> Just close your All right. Here's what you do. Here's what you do. Here's what you do. Buy 500 shares now. >> Have 500 shares in reserve for when it when it uh has a false breakdown and breaks below uh 55. and it'll last for 10 seconds. You need to use a uh buy stop limit in that moment. But I am telling you, when it breaks below 55, you put in a buy stop limit for 60 and just ride it back higher. And uh I don't know. I I could see this being this could go to 95 in two weeks if they get the right the right headline, the right news flow. The the reality is it's just not that bad. >> It's bad. >> The counterpoint is the counterpoint is it's it's 35 times earnings. >> Counter counterpoint. Nobody gives a [ __ ] >> I agree. Um >> you want to hear you want to hear what how many times earnings Palanteer sells for? >> Yeah. >> Come on. What are we talking What are we doing here? >> Little but point taken. All right. Um Chipotle. I actually think I want to buy the stock. So Chipotle is in a 38% draw down. Its free cash flow is near an all-time high. Uh the stock is always expensive, so forget about that. But nobody wants it. I think a lot of this is the CEO leaving. And there was problems, no doubt. The food got ridiculously expensive. But I'd be a buyer of the stock. >> You know what I think about whenever I walk into a Chipotle, usually to pick up food from my 16-year-old? I feel like the kid in the emperor's new clothes. Why am I the only person willing to say out loud the food is terrible? >> No, it's not. >> It's literally terrible. Why? >> No, it's not. >> Why am I the only person who will admit it? And so now it's expensive and terrible. I've seen you eat Chipotle. >> I know I do. I eat Well, look. Am I Do I look very selective? >> Come on, dude. Chipotle is a great lunch food. What are you talking about? >> No, it's not. It's convenient and it's nearby everywhere and it's and it's fast >> and it tastes good and it's >> slop. And I have to be honest with you, >> all Mexican food is slop. >> Nope. And it's getting worse. And it's getting worse. Would you like to apologize to the Mexican community? Um, this is just >> I love slop. >> No, it's not good food. It's not good. I want it to be cuz Mike, it I have to go there for nugget every three days. That's all these kids eat. That's all they eat. Gen Z and and millennials, they'll eat Chipotle seven days a week. I just don't like Chipotle. >> I just don't understand why people won't say it used to be better than it is now. I've been to let's say Chipotle's in five different states in the last two years. Okay. It's never good anywhere I go, but it used to be. >> I I enjoy it. Uh, we have one more. Okay, last one. >> What do you get? Salad. >> Two more. >> You got a bowl. A a bowl. >> Don't worry about what I get. I get what I get. Um, >> not good. >> All right. Airbnb. I I like this one, too. All right. This is a great This is a great story. So, Airbnb, the the problem here is it just came it came public in in a in a mania and the valuation was ridiculous, but it never stopped growing its free cash flow and the stock has gone sideways for three years. I think this is a buy. >> Uh, I don't want to dislike all of these. What did I say I like? So far, Lulu and Nike. >> Nike. No, you don't like Lulu. You said no Lulu. You said if Sydney Sweeny's in Lulu. You don't like Nike. >> Yeah. No, I think it's it's turn it's turnable. Yeah. So, I only like Nike out of these. >> Okay. So, you don't like >> Well, >> okay. >> I never liked it. I never I never understood it >> cuz you personally don't like it cuz you don't like Chipotle. I have a bias. >> This is This is Josh as a snob episode. All right. Let's last last one. Last one. All right. >> I don't like the stock. I think it's too much competition and lodging. >> Okay. Um, fair enough. All right, Adobe. This is like a value manage. The value people won't stop talking about this one. So, free cash flow alltime high. Stock is in a 50% draw down. So, stock's been cut in half because nobody believes the earnings. Nobody believes earnings are going to be there. >> What's the valuation? >> 21 times. >> Um, it's a buy. >> I mean, knowing nothing, it looks like a buy. >> No, I'm I'm just look I'm looking at the chart. I don't care about the I was joking. Uh, it's it's a buy. >> There's a lot of support here. >> It's a buy with a very obvious place to put to put a stop. Like an >> I think your stop is your buy. Where your stop is, you buy it. Don't Don't put a stop in. >> Mike, >> Mike, the April low, the April low was tested three times. This is now the This is the third test of the April low, which is 330 >> right there. I I understand. I think that I think it'll I think it's going to it's going to break below and it'll be a false breakdown and then you plow into it when it reverses. >> I agree. >> This is I love this setup. I love it. I love it. I love it. >> This will be this will be 450 in a year. So the the the reason why the stock's not doing well is um obviously like the business isn't growing, but everyone thinks Sora and Chat GPT and all these services are going to obviate the need for professionals with Adobe licenses doing design work. I would go the other way. >> I'd go the other way. Most of the people doing their own childish childish AI slop design work are doing these like cartoon images of themselves. That like that's not going to pass for design. The world >> my math watered. My mouth just watered. I I'm think about Chipotle. I might get a bowl for dinner. >> Like voluntarily, not because it's convenient. >> I do love me some Chipotle. >> Do you, bro? All right. Uh All right. This is a good game. I like it. Was that the last one? >> That's it. We're done. >> All right. So, I like I like Adobe. I I don't know if I have the guts to do it myself, but I uh I I think it's I think it's trying to bottom right here. Okay. Jerome Powell spoke today. Did the market really react or not really. I couldn't tell. >> I didn't see like big signs of a big reaction >> while he was talking. I don't even know what time he spoke. Either the market reacted intro to to the Trump tweet. >> All right. Um, Cali points out the new thing that he said was that balance sheet runoff could end in the coming months. So, what that means is that the tightening might be too much might be too much tightening. Balance sheet runoff is bonds mature and then the Fed does not go out and buy new bonds to replace them, which is right like that's like the end of the the runoff. So >> remember the bull market was only the bull market was only being supported by Fed liquidity >> by by the Fed like replacing bonds that were maturing and and buying. >> So I thought I I don't know. I thought that was an interesting comment. I I don't Calli points out yields didn't move much on this. Maybe a few basis points down. Okay. Um job market employment prospects continue to worsen although conditions haven't changed much since the September meeting. Good nugget. Uh, let me see what else. Um, Cali points out inflation increased year-over-year for a third straight month in August. So, that's looking at CPI PCE. Um, here's here was her T. By the way, Callie's our uh chief strategist at Red Hole Wealth. That's why we're citing her. Um, >> read what you wrote to to Reuters. >> Jay Powell dropped a major piece of news when he mentioned that the Fed could stop coloring the size of its balance sheet in the coming months. The Fed has been reducing its runoff for months now, but the idea of a stable balance sheet could help lower yields in the middle to long part of the curve, meaning that's where the Fed would be buying bonds, thus lowering yields. Yes, that's a hidden source of relief, especially to homeowners, that the rate cuts alone may not be able to deliver. Okay, I think that's really interesting. Um, otherwise, Powell didn't say anything too surprising. He repeated the no risk-free path comment which I'm guessing will be a buzzy monetary policy phrase for the rest of the year. Both sides of the Fed's mandate are still under threat even though Powell and Co have chosen to focus on unemployment. Inflation worries still linger. Um all right. I think uh I think at this point in time the Fed is a chess piece for uh the stock market is off the board. What do you think? Um, I I agree with you. I don't think that what whatever the Fed does at the next couple of meetings, I don't think is going to have a big impact on the stock. >> Cut or or cut or not cut, I don't think it matters that. It might matter in the moment, but I just don't think it matters for where the market ends the year. I think they're off. >> I am curious to hear what companies have to say, especially consumerf facing companies, about the impact of tariffs on spending and margins. >> All right, let's do this first brands thing. What do we I know we covered it last week. What do we want to say about this? >> Here's what I want to say. All right. First of all, throw this throw this graphic up. So, for people who are not aware of who First Brands is, they are a conglomeration of all these auto parts. The one the only one that I know frankly is is Michelin. Um, so >> you and I, just for the for the listener who can't see us, Michael and I are not the kind of guys that know how to fix anything on a car. We don't lift the hood up for any reason. Um, we don't change tires. We just We don't do any car stuff. We don't So, these brands mean nothing to me. >> You I honestly have never heard of any of that. What What have you heard of on this >> Michelin? >> They don't own Michelin. This is important. They license Michelin just the windshield wipers. >> Okay. >> Yeah. They don't own They don't own the Michelin brand. >> And I only know Michelin because of the restaurant ratings. Go on. >> All right. So, um, we spoke earlier about NFBIS. Okay. NFBIS. And one of the things that Jamie mentioned was fraud. He used the word fraud. >> That this is this is even though there there is not one cockroach, um, this was fraud. So, Bloomberg did a story. So, this guy Patrick James built a company, 26,000 employees, six continents, revenue of $5 billion. But a lot of it was just buying up companies. So debt and and very little organic growth. So in 2023 to 24, its revenue only rose 1.3%. The cost of servicing its debt went up 38%. Not great. Is >> that bad? Is that bad? >> Not great, obviously. So Jeff had a hedge fund, Point Bonita Capital, that had a quarter of one of its portfolios, $715 million in first brands, which is very bizarre. Um, I'll get this aside. Chart of Look at this chart of Jeffre smoked. Not great. Not great. Why would a hedge fund have a quarter of its money in I think the the the debt of a company? All you could do is get paid back. Why would you make a concentrated bet on debt? It's very bizarre. But so the the article goes on to say that in 2011 a unit of Fortress Investment Group sued some of the companies and claimed that they had obscured the the CEO's controlling interest and the fact that all the companies share the same employees and management do not have separate bookings and records and are grossly under capitalized. Um this guy denied the accusations, but he paid to settle the case. Um and another one that was alleged fraud two years earlier. Public records showed that he took out mortgages for homes in Cleveland, set up a foundation to give churches and schools in the area money, but he left almost no trace of any of this on the internet. So, there's all sorts of red flags all over the place. >> What the hell? >> This guy took massive steps to obscure all all traces. So, you couldn't find anything about this guy on the internet. So, one of the one of the analysts said it seems like he went above and beyond to hide himself and his assets. All of this should be a huge red flag for investors. So, I don't know who missed this, how they missed it, whatever. But the point is there was allegedly fraud going on and Larry said on talking about private credit. Um, the market has grown increasingly anxious given some of the recent dynamics both related to perhaps growth uh blah blah blah. Um, so Larry said, "All right, thanks Alex. I hope you're doing okay. So listen, I'd start by saying just that the heritage of Black Rockck and HPS and definitely the combined firms steeped in rigorous. Okay. Um so we've taken a we've we're talking a lot with teams about the news, but I say that teams are generally seeing strong credit quality from borrowers. They're generally seeing a positive environment from credit investing. Even in syndicated loan markets, default rates have been declining. We of course read the same headlines that you do around private credit bankruptcies, but those exposures are actually in syndicated bank loans and CLLO markets. They're not with large private credit managers and direct lending books. And in those very public cases, the ones that we're reading about, you're reading about, potential frauds also been reported. Um, so anyway, listen, Black Rockck is obviously they're all in on this. So what do you expect them to say? But this is there another cockroach perhaps. Would it be surprising if this blows over as an isolated incident? Not for me. >> All right. I actually think it's good that this is happening because I do think that it reprices the market and it reprices the I should say it reprices risk in the market. I think it heightens everyone's uh awareness of this possibility. And I think you I think you you can't just have a one-way credit market for 10 years where nothing ever goes wrong because that we there's this concept uh called known as the Minsky moment after a famous economist where when things are too stable that in and of itself produces its own form of instability. People have to feel like other people are watching what they're doing and people have to be alert to risks. So, I actually think unless this is the Bear Sterns hedge fund in '07 and it's the true canary in the coal mine, which I mean I won't be the one that will know that in advance. Um, unless it's that and I look like an [ __ ] 6 months from today, I I don't think that you want you have to assume that it's that. A lot of people want it to be that. Back to what we were saying about bull markets. The you all the usual suspects who want there to be another Lehman Brothers First Brands is their new Leman Brothers. They have to have it. They need it's almost sexual. >> They want the rich and powerful to be exposed as see what these guys why are these guys rich. >> It's grotesque. They're licking their lips. They need this to be the the the private credit version of Lehman. They want it so bad. So, and maybe they'll maybe they'll finally get it. Maybe this finally the meteor hit Earth. My god. >> I don't know, man. I don't think that Blackstone and Aries and Blue I don't think all these guys are idiots. Is there too much money there? Are returns going to be lower? >> Someone's going to clip that. >> Okay, fine. Are returns going to be lower than they were in the past? Probably. There's a lot of money coming in. But is it going to be a a absolute destruction of ruin and people going to jail? I I don't think so. You know what's funny about bilateral lending? Like in game theory, you would assume that to be the safest form of lending. In other words, syndicated loans, we all understand how they go wrong. >> That's dangerous. Yeah. >> It's a thousand people who barely give a [ __ ] all putting money into the pot. a bilateral loan where I call you and say, "Okay, I'm going to give you $80 million, but these are the covenants, and if you violate, we're going to court, and I will press you until you either pay me back or I seize your assets or some combination." Wouldn't you just like on the surface be like, "All right, these probably aren't all first brands. This probably most of this activity is not dumb. Some of it means >> if you if if you're making that assumption, you're dumb, >> right? It's like, oh, I just I I gave this I gave this guy an entire loan and I had no expectation of getting paid back. Like, how who's doing that right now? Is anyone doing that? Probably not any like Probably not Aries. If somebody's doing it, it's not them. Okay. Um >> I actually am going to call an audible here. We're going to dive into this uh we're going to dive into this hedge fund. uh excuse me into this uh global fund manager survey um during during uh the compounded friends later this week. We'll do it with our guest because we're at uh we're at 558 and I don't want to >> I don't want to skip over it. >> I'm very glad you all because honestly I don't think it's that interesting but we could we can pull out some stuff. >> All right. So maybe we'll pretend we were never going to do it at all. All right. You want to make the case? >> Uh I do. So I want to make the case that I think it's easy to get distracted. I keep saying this. It's easy to get distracted by the nonsense, the speculative stocks and become very cynical. Iron, OK, all of these names would be like it's a freaking bubble and and and maybe that part of the market is and it probably is. Um and see the hyperscalers and think like there's nowhere to make money and that's just not the case. You might be shocked to know that a third of the market is in a 20% draw down from its 52- week high right now. A third of the S&P there's a lot of areas that are that have opportunity. A third of the S&P 500. One third is 20% above below its 52- week high. Throw this chart up from Matt. Matt charted the median stock the 52- week draw down from the from from the for the median stock on Friday. That was >> interesting. >> So this flies in the face of the this flies right in the face of the bubble narrative. there's opport median stock is in a 13% draw down from the high >> right like a bubble >> so um show the Russell 2000 let's let's skip here the Russell 2000 has been sideways since the peak in uh in 2021 it is only now breaking out and the longer the base the higher in space that's Louisiana via JC JC loves to quote that one I think this one's going a lot higher But the one that I want to shout out, it's a stock that I don't own. I've owned it in the past. Um I was listening to Delta. Delta stock is in it's it's 11% off its highs. >> Um and the stock is the company is crushing it. Free cash flow at an all-time high. And the story with Delta is very interesting. Chart off please. Um did you know that 60% of the industry profits are now generated by Delta? It is eating everybody's lunch. It is the only premium brand in the sky. Hard stop. Well, I'm very sorry to inform you that we booked American Airlines for our trip to DC in a couple weeks. Uh Delta is always the best the best customer experience overall, I would say. >> By far. Um >> and with an airline, like that's the the bar is low, but they they do it. I like I'm happy when I when I fly Delta. >> Corporate travel corporate travel is higher than pre-COVID highs, which shocked the [ __ ] out of me. They're just winning. They're doing everything right. They're firing on all cylinders and I think the stock is grossly underpriced and airlines historically have sucked. Love multiple shitty companies, but this is different. I think it's going a lot higher and I should own it and I don't. >> I like it. I think you'll have a crack at it. These are just high beta sloppy charts. Like I think you buy a name like Delta when they wreck the overall stock market and it just >> I think that's right. I think that's right. This is not gonna this is not gonna double while you watch it and say I wish I owned it. It's just not gonna happen. I mean just look at the ju you know what I mean? Like it's just >> it's an airline. It's it's it's not gonna double in a year. >> You'll be fine. You'll be you'll be fine. But I like it and I I agree I agree with you if you are invested in anything travel related. This is as good a name as any other. Um so I I do like it. Uh mystery chart time. I feel good about your chances today. >> Feel great. >> Okay. These are two different um investable asset assets. They're related to each other. And I think the main point that I'm bringing out is what's gone on over the last uh two weeks. >> Okay. So, are these semiconductors? >> They are not. They're not stock. They're not companies. I specifically went out of my way to say that they are investable assets. investable assets. Okay. So, I see a lot of s Oh. Oh. Uh oh. Okay. Um, >> do do it for me. Do it. Come on. You got this. >> One more hint. >> Is it Is it Bitcoin and ETH? >> Look at you. Look at you. Super impressive. Um, I'll tell you what I find interesting here. Couple of things. Bloomberg has this really great article about what went on last weekend. Um kind of had like a flash crash. Um >> Oh, there was a flash crash. Absolutely. >> So, I just want to read this really quickly. Uh for a few manic hours on Friday, the world of digital assets replayed Wall Street's oldest reflex at machine speed during market stress. A stampede for the exits. The spark was familiar but unexpected. Donald Trump's 100% tariffs. Um the pain was most acute in crypto with an index tracking altcoins um dropping 40% in minutes. >> Dude, that's nuts. >> It was It was gnarly. >> While the crash was brief and prices have partially recovered, critics point to underlining issues in the crypto market structure makes it prone to violent sell-offs. quote, "During this crash, depth evaporated and liquidation engines got overwhelmed. Um, this is like a crypto expert. Uh, auto deleveraging control mechanisms at exchanges poured gasoline on the fire and it felt like a market and more less like a market and more like a trap snapping shut." Bullish. >> It wasn't It wasn't really Bitcoin per se. It was soul I think fell like 25 soul and ETH fell 20 plus percent but it was really the altcoins. A lot of these ones went down 80 90% and just to to to their point just an absolute air pocket. No liquidity whatsoever. It's pretty ugly. Coin Glass estimated that a total $19 billion worth of positions were wiped out across trading venues. The actual total is likely much higher since Binance only reports one liquidation order per second. the I mean it's listen a lot of people it's not it's not good enough that they're taking the risk of being in these things. They also need leverage on them or they have options and futures trades on them. It's like it's it's still it's the biggest casino on earth. >> It's so insane. I was I was saying to Ben today somebody tweeted long-term capital management blew up. They were trading fixed income arbitrage. Okay. >> Treasuries treasuries. So these are basic points and they were using 25 times leverage. So what are you doing using 50 times leverage on >> it's just this it's just this generational nihilism where it's like I will never make it in life just doing my stupid nineto-ive job like I have to have to do this. >> It's not good. And I'm not a monster. I I I know there's a whole lot of people that like no crying in the casino. And I I agree. No crying in the casino. But I do I do feel bad when people get wiped out. I you know I'm not I don't not happy when I see people losing money even if even if they should know better. And hopefully the silver lining is some people learn some lesson from this but it's it's ugly. It's not great. >> Lol. Nobody learns. We have one more chart. This is from Chart Kidm. Bitcoin has seen shallower pullbacks versus ETH. That's about what you'd expect, but he illustrated it for us. This chart on the left, the blue is the Bitcoin pullback and the red line across is the average. The chart on the right, you could see these Ethereum pullbacks are like every time every time is a crash. >> That's heavy. Um, interesting though because back in the day, not back in the day, prior to like two years ago, Bitcoin would have done 30% too in 24 hours. >> That's right. Bitcoin is like matured. People don't people aren't as quick on the trigger with that thing. Yeah. As they used to be. So, that I thought that was notable. All right. Great job guessing the mystery chart, guys. Thank you so much for tuning into the live show. We appreciate all our pounders in the audience. You guys are literally the best. We miss you when we're not here. We love you very much. Um please tune in tomorrow. All new Animal Spirits with Michael and Ben dropping in the morning. Video out. Uh as well, um I'm going to start on Ask the Compound later in the day tomorrow. Ben has me on as his special guest with Duncan and uh we're going to have some fun. and I got a peek at the questions that we're answering. I love doing Ask the Compound. So, that's happening. And then at the end of the week, it's an all new Compound and Friends with a new guest uh friend of mine. Super excited to uh to have this person on the show and uh you guys will love it. So, thanks so much for everything. We'll talk to you soon. Good night. [Music]