The Stock Market Booms While No One Can Get a Job | WAYT?

Summary

• Market Outlook: The podcast discusses the relentless pace of breaking news in the market, highlighting the volatility and rapid changes investors are currently experiencing.
• Investment Strategies: The hosts emphasize the advantage individual investors have over algorithms, particularly in reacting to one-time events like Netflix's tax issue in Brazil, suggesting that human analysis can sometimes outperform automated trading.
• Company Insights: Netflix's earnings report is dissected, noting the company's strategic shifts, such as moving into live content and advertising, and the potential impact of these changes on its business model.
• Sector Analysis: The discussion touches on the streaming wars, predicting a future battle between Netflix and YouTube, and speculates on potential mergers, such as Netflix acquiring Spotify, to strengthen competitive positions.
• Economic Trends: The conversation highlights the challenges in the job market, particularly for white-collar and entry-level positions, exacerbated by AI and automation, which are reshaping employment landscapes.
• Investment Opportunities: The podcast suggests potential investment in companies like Zoom, which, despite slow growth, holds a strong market position and could benefit from strategic shifts and disciplined financial management.
• Financial Products: There's a discussion on the rise of private credit and the potential risks associated with its rapid growth, drawing parallels to historical financial bubbles and emphasizing the need for careful analysis.
• Key Takeaways: Overall, the podcast provides a comprehensive look at current market dynamics, company strategies, and economic trends, offering insights into potential investment opportunities and risks in today's financial landscape.

Transcript

[Music] It's all gangsters here today. I could tell already. I could tell already. I'm just looking at the names in the chats uh in the in the live chat. It's gangsters only as it should be, right? >> Amen. Amen, sister. >> Thank you for that endorsement. Uh, hey everybody. It's an all new edition of What Are Your Thoughts? If you're wondering where I am, I am in uh I'm in Las Vegas. I'm at the Encore. It's pretty sweet. And uh I I was here the same time last year for the same event. And uh it's kind of becoming a thing. So I I uh I'm excited to be I'm not a huge Vegas person because I don't gamble. >> No, but I I because I don't play. But uh we'll see some friends tonight. We'll see JC. We'll see Joe Fami. >> What are you guys for dinner? >> Uh I will not say don't say don't say >> until tomorrow. >> Yeah. >> All right. Um what was I going to tell you? Oh uh the chat is all the way live. Cliff is here. Chris Hayes Code is going absolutely nuts. East Bay Elitist. Um Chase is here. Georgie John Tagnachi asks when is Nicole going to have her own podcast? I don't know what would it be about though. >> That's what I was just thinking. I don't know. She's She has many interests. >> John, she has a she has a Tik Tok. She crushes it on the talk. So, if you're looking for more Nicole flavored content, that's where you want to be. Um, anyway, all the gangsters are here. Shane, I see you. Matt, Oliver, thanks for coming, guys. Great to check in with everybody. There's a lot happening this week. I can't really remember uh a time like this where there's just breaking news every 5 seconds for the last 2 or 3 weeks. >> I mean, it's been a time. It's It was boring. >> It feels relentless, though, right? >> Yeah. But the end of the summer was boring. Nothing happened. Nothing happened. >> Well, we are so back. >> Good. >> We're so All right, guys. We have a lot to do tonight. I want to shout out the sponsor. Um we uh we love all our sponsors. We truly love Betterment Advisor Solutions. Um, Rholtz Wealth is a customer of Betterment Advisor Solutions. Today's show is brought to you by our sponsors at Betterment Advisor Solutions. If you happen to be thinking, there's got to be a better way to grow my RAIA, you're not alone with Betterment Advisor Solutions. We do the heavy lifting so you can focus on what matters most to your clients. From improved service that makes asset transition smoother to fast, paper free on boarding that delights clients on day one. >> We've built a digital first platform designed to streamline your operations and make life easier. Now, if you're thinking, "Wow, they take the paper out of paperwork." You'd be right. >> That's right, Josh. Grow your RA your RA, excuse me, your way with Betterment Advisor Solutions. Learn more at betterment.com/advisors. Investing involves risking >> involves risk. Performance. >> Performance not guaranteed. >> All right. Uh, shout out to Betterman. So, uh, let's just get right to Netflix. They reported, I don't know, um, an hour ago, right? And uh the conference call started 15 minutes ago which we're obviously not listening to. Uh this is the f before we even get into the numbers. This is the first thing that I want to say. I feel like this is an example of where individual investors have an edge over the algorithms that dominate so much the trading volume because this knee-jerk reaction to a one-time tax related issue in Brazil is so stupid. I almost can't believe that I have to read the words and explain to people what's going on. And I feel like the first sellers on that headline number were undoubtedly algorithms. I don't think a human being looked at that and swung around that much stock. But the name is off about between 4 and 5 1/2% so far in the after hours and I think the majority of the selling that happened like immediately of course is computers selling to other computers. Um do you have a you have a strong opinion one way or the other on that? >> I am inclined to agree. I would also point out that we never do know why a stock moves the way it did. I mean, sometimes you do. Sometimes you do. This could merely be the stock's up 40% in the last year and it was going to sell off anyway, unless it was a blockbuster report, which it wasn't. So, I not a blockbuster report. >> I mostly agree with you. My my take on the Netflix earnings, and I've been listening to them for a long time, they've gotten probably deliberately, and this is not a bad thing, more boring over time. So they no longer they no longer report their subscriber numbers. >> They net ads. >> Yeah. And why would they >> no more net ads >> and and they no longer report their RPO their average revenue per user or average revenue met this I think they call it ARM whatever doesn't matter. Um and so in addition to that and they've been doing this I think for a couple of quarters now the the the questions are pre-screened. So it's like an internal Q&A and it's fine. It's a mature business. Healthy as [ __ ] Nothing wrong. They're still killing the game. They they they won and it was a it was a boring uh boring report. >> My hot take on Netflix is don't listen to a thing they say because they change their mind all the time. They say things like we're not interested in live. Now it's all about live. Live is driving all like live is driving all the excitement around the stock. They said for uh 12 years, 10 years, we're not going to do ads and now it's all about like all about the how profitable the ad business is relative to um relative to the premium tier. So like whatever they the the way to think about Netflix and I was I was actually listening to uh Matt Belly this morning talking about this uh and Lucas Shaw. They do these like trial things in a very small way. They gauged the reaction from their users and it either disappears forever, they never do it again. Like they tried this thing interactive uh shows and like people were just not into it. Um and you never saw it again, you know, so now they're going to get into podcasting. >> Yeah. Yeah. How about the refresh with the with the home screen? Like they did they don't just do wide rollouts, right? To your point. >> Right. Right. And that's like that's business. Like that's what you're supposed to be doing. I don't think that a Netflix needs to do these like um these grand pronouncements of from now on we're all about podcasts. But the reality is podcasts are cheaper than traditional TV show. Believe you could trust me on this. Cheaper to produce than traditional television. But this is where the culture is. People enjoy listening to the insights or the hilarity or the dirty talk of their favorite people. They they will they will leave it on for 4 hours in the background. They want to hear um Bill Simmons. They they want to hear Call Daddy. >> They want to see them >> and they want to sometimes they want to see them, not always. >> I I I I thought it was hard to believe in the early days when people were asking us to put our podcast on YouTube. I was like, but why? >> Who in the hell's going to watch that? And um obviously YouTube crushed and Netflix is better late than never and if it stops working they will pull it back but it's it is going to work. It's not going to not work because it does work. I for example Patrick Onessy friend of ours it's a relatively it's not a boring show by any stretch to the imagination but it's one dude interviewing usually another dude. And why would you want to watch that? Guess what? I I don't watch it on my TV but it's on Spotify. It is the video. And so if I see the person, if I only look at them for two minutes at the entire show, just to get a sense of who am I looking at, what is their body language, are they smug, are they sincere, are they smiling, it adds another dimension that is critical to developing our opinions about who we want to listen to. That's a good point. The other thing is we had a lot of people who listen to us on Spotify and they were always at a disadvantage because we put a lot of charts up when we do the compound and friends or their show for that matter. And now if we're talking about a chart, somebody can grab the phone, press that button, go from audio to video, and for two seconds they can glance at the chart and then go back to, you know, whatever they were doing, making lasagna or beating their wife. So, it's like you you have the option of like when you want video, when you want audio, toggle back and forth in between, and you can have your hands free and your eyes free when it's just two dudes talking to each other. You don't have to watch it. And >> is that like a Sopranos reference that you just threw in there? >> I don't know. But no, I'm just saying like people have other things that they're up to while they listen to us. I can't even imagine the depths of depravity of the typical podcast listener. What what I would say what that's weird is Spotify obviously owns the ringer and has been pushing that video and now you'll be able to get that video still on Spotify but also on Netflix and they're removing the full episodes ringer episodes for these specific shows from YouTube. So >> I didn't know that part. >> So here here are my hottest takes. We're finally here. Everything has been leading up to this. This is the heavyweight championship of the world on the line. 2026 is going to be about Netflix versus YouTube. And that is the battle. And YouTube started it. YouTube spent so much time and energy and political capital to get YouTube TV and get regular YouTube app on every OEM TV manufacturer. It's an app on every TV you can buy. I don't care if you buy a TV at Costco like a like a Kirkland or if you buy the highest end TV. It's not just YouTube TV. there's regular YouTube as a standalone app and that has been a huge push and as a result um the amount of viewing of YouTube content that takes place in people's living rooms now is alarming for Netflix. They they can't do they can't just let YouTube run away with the with the podcasting. So So some of this looks like they're on offense, but some of it really feels like they're defending their turf. Netflix's turf is the television set in your living room and the TV set in your uh bedroom and YouTube is encroaching. They're there. >> Oh yeah, they're there. They're there. They're they're actually most of the viewing of YouTube podcast is done on a television, >> right? So this is like an So I think in 26 we used to talk about the stream streaming wars and then the narrative early this year. The reason why Netflix has been such a home run stock, the narrative is Netflix won, the streaming wars are over. Um, they were the first to profitability. They demonstrated substantially more profitability than their competitors. We used to think their competitors were Disney Plus. >> Well, it was so they beat they beat Peacock, they beat Disney, they beat Max. Like that that war is over. >> Hulu is now a channel on Disney. >> Yeah, that war is over, >> right? That war is over. And now HBO is going to be owned by Paramount within 6 months. And the real war, the real war for 2026, and this is why this leads to my last hot take. I think Netflix is going to buy Spotify. >> I like that a lot, but they're I think they're going to merge. >> Um, historically they have not been, but times change. I think the combination of Spotify's strangle hold on the music business and um how how great they are even versus Apple as well as the podcast business. Many of the top podcasts they actually own own the the rights and the ability to distribute. Um I think that's too tantalizing for Netflix not to seriously consider doing it. >> Spotify's $140 billion just just the equity. It's a lot. >> It's a merger. It's a merger. It's a merger. >> I I love I love the take. Um I I love the take. I think that um the the war will never they could both win the war. There doesn't need to be a loser. They're both the winners. >> Yeah. No, I I agree. There's Miller there's Miller Light and there's Bud Light. I'm not I'm not saying like one goes away. I'm saying if you thought Netflix's competition was Hulu, you have no idea what's coming next year. >> YouTube Google's the final boss, >> right? So Netflix is subscale to compete with a an Alphabet. They can compete with YouTube, but like head-to-head against Alphabet, they need more firepower. They need more content, more views, more subscribers, more cash flow, more everything. I'm telling you, I think this is like a greater than, let's say, greater than 10% chance, whereas it would have been unthinkable a year or two ago. I think it's greater and and growing. >> Let's do the numbers. Let's do the numbers. Uh Netflix reported revenue of 11.5 billion up 17.2% year-over-year. And that is actually their guidance for the year. 17%. That's like the Netflix number uh for the for the full year. Earnings uh $6.97 up 29% uh 29.1% year-over-year was the expectation. What they actually reported was $5.87, which was only up 9% year-over-year. And that's what the algorithms responded to and that's why the stock went red immediately. But there is a massive caveat in that quote unquote miss. And I just want to share that with you. There's a longunning dispute between Netflix and the Brazilian I'm not even making this up tax authorities that was not in the guidance. However, Netflix has disclosed this previously in their risk risk disclosures. This is like 3 years worth of fighting and it ended up being like a Bloomberg actually Bloomberg actually has a a two sentence explainer on what what ended up happening. Netflix had to pay $619 million to settle a multi-year tax dispute with Brazilian authorities going back to 2022. The company had identified the potential risk in previous filings, not in its earnings guidance, and said it would have beaten forecasts if not for the expense. Future payments will be smaller, and Netflix has also already said they do not see this being a lingering issue or anything um that's going to go past this quarter. So, if you sold the stock down 6% on that news, uh paper hands, I don't really know what to say. I I am a shareholder. I'm not selling. >> PE people didn't sell. to your point, we're gonna we'll find out tomorrow because if this thing if this thing falls 5% tomorrow, then it wasn't just a Brazilian thing because everybody is looking past it. Like everybody everybody understands what you just said that this is a one-time thing. This is it's not immaterial, but it won't matter going forward. Now, John, throw up charts, the the the stock charts one year and three year. >> It could just be profit taking. I mean, this thing's up 62% over the last year, over the last five years >> versus the triple Q's, triple the performance of the NASDAQ. over the last uh 3 years, it's up 363%. Now, the shares were depressed, but even still, if anybody wants to take profits, you know, I'm not going to I'm not going to I'm not going to blame him. >> I sort of agree with that take except for the fact >> that it's up a lot, but it's it got so murdered >> in 2022. Yes. that that starting point. I know you're not cherry-picking, but to start from there feels cherrypickish >> because the stock was cut in half. >> Mhm. >> And then it went up 300 something%. >> I bought that dip. I know because I bought it in real time. >> So did I. >> Can we put this on Netflix share of TV time >> and then I sold it way too early cuz I'm a stupid bald idiot. >> Uh it's just showing Well, all right. What two things in here worth noting? Number one, record record share of TV time at 8.6%. This is in the US, but is also a record in the UK. It's second biggest market. Uh interesting that they put all other streaming into one bucket when we know that it is in fact trailing YouTube. >> Yes. Um and then linear and linear just shrinks. >> Yeah. >> Linear at the start at the start of this which is Q4 2022. linear linear is like uh cable subscribers, right? Or or just like broadcast TV and that was 57 and a half% of all TV time and that is now 42 and we know that's going to 32 and then 25. It's uh it's not a the only question is how fast. >> So, so Netflix Netflix is one of those I guess compounder stocks people talk about. I mean the business is going up and to the right for a long time. Who knows what the stock price is going to do? That's maybe a separate conversation, but uh they are confident that that they will double their ads in 2025, albeit off of a small base, but that is tremendous runway. They continue to just kill it on the content. K-pop Demon Hunters, their biggest watched movie ever, like of all time. Top five Halloween costume this year. Happy Guilmore 2 was huge. >> The Canelo Alvarez fight was big. They've got double header uh for NFL Christmas. The stock, I mean, the business is on fire. >> They have Do they have basketball now, too? >> No, I don't think so. >> Oh, they have they have the NFL game on. They have the state NFL >> the d the double header. So the the business is incredibly healthy and you can't I mean that's it. There's no there's no butts. >> Um K-pop Demon Hunters is going to go into the theaters for Halloween. They made up there was a longunning dispute between AMC and Netflix. Um AMC does not want to put things in theaters that are airing on Netflix day and date because they're like wasting a theater. But they actually are going to collaborate on this because it's such a huge cultural phenomenon. >> Oh, yeah. And also because AMC's market cap is uh $1 and a half billion dollars, so they should do whatever they can. >> All right. Uh Warner Brothers put itself up for sale today. This was uh not surprising. This had to happen eventually. They were pursuing this convoluted thing where they were going to spin off the non-growing business and separated from the growing business. The growing business, >> nobody wants that. >> Nobody wants >> Yeah, we'll take the piece of [ __ ] Give it to us. >> Well, you'd be surprised. Um, there are different types of investors that that more highly prize cash flows even if there's no growth and it's a melting ice cube. And then >> for like political reasons or something? No, for just like it's a higher it's a it's a lower um investment intensive business. You buy something that's got high cash flows even if you know it's going to disappear. >> So what's the crown jewel those cash flows? >> What's the crown jewel of the non-grow? Is it CNN? What is or is it Turner? What is >> CNN's a disaster? >> The last I heard CNN has 50,000 viewers in prime time. It's like it's like almost or something or 500. I forgot what the number is, but it's relative to like relative to the millions of viewers it used to have. It's um it almost not we we have more viewers than some of these shows on CNN. Um and the amount of money that it costs to keep that running. And the other problem with CNN is it's just a perennial [ __ ] headache for whoever owns it. If they piss off Trump, it's problematic for the whole corporation. This is this is why Apple got rid of John Stewart because John Stewart decided to do an in uh a whole episode trashing China. not great for Apple's corporate uh uh aims. Um, nobody wants to be in this business. So, there's two versions of what what can be done. You can sell one of these news operations to a private buyer like like Bezos bought the Washington Post. Bezos wants to use the news business to be influential. That was the idea. All right, that's one version. The other version is you can tame your news business or or Trumpify it. And that's what um Ellison did with uh CBS. So CBS News is one of the most storied uh news franchises in the history of America, but it had to pay a lawsuit in order for Sharie Redstone to be able to sell the company. Larry Ellison's very tight with Trump. Um it was like, pay me my fine and I'll let this deal go through. It happened. And then the next thing they do is bring in Barry Weiss, who is center right. Uh I wouldn't call her a Trumpist, but her positions and her vibe are way more uh right leaning than left-leaning. And she is not going to allow the type of like persecution of the Trump family that uh 60 Minutes and these other CBS News properties were doing. So that's the other version. The thing is, if you're David Zazlo, you don't give a [ __ ] about any of that. All you want is the ability to do big deals. And so, um, having something like CNN at Warner at Warner, it's just this politically toxic asset that you already know is a melting ice cube. Um, doesn't make that much money, isn't that influential. There's like an obvious thing to get rid of it, but finding a standalone buyer is not easy. So they have to sell the whole thing because the other assets are amazing. The problem with Warner Brothers is the debt level. It's 35 or 40 billion still. >> Yeah. It's coming down. >> All right. They've been paying down that debt. They've actually done a really good What is it? 34. >> Yeah. It's but it's down from 50 or something. >> Down from 50. That debt was incurred when they bought this business from AT&T or whatever a few years back. Um it it was unsustainable. Could not compete. They don't even have like movies in theaters this year really. Um, so they had like Superman was a really big hit that might revitalize their big franchise which is DC. They also have Harry Potter which potentially could be huge although it's been dormant for a long time. Um, they have a lot of assets. The the the studio uh is a is a great business. The streaming business is not great, but it's getting better. HBO has always been good. the rest of the [ __ ] they were throwing at the wall was not going well, but HBO still has a ton of value. Um, and then the library, it's a hundred years of some of the biggest smash hit TV shows and movies in the history of Hollywood. Like thousands and thousands of titles that can be monetized, new sequels, reboots, brand extensions, merchandise, theme park. It's like it's a great asset and I think ultimately uh Paramount will end up with it is is the way it seems. I don't really think there's going to be a million competitive bids coming out of the woodwork. Um I asked Sean to show us the largest global media deals. Let's put this chart up. So the enterprise value, guys, the enterprise value is the $45 billion in market cap plus the 34 billion in debt. So it's 77.5 billion. If you have to pay a 20% premium on the stock, not on the not you're not paying a premium on the debt, on the equity, you're talking about a deal like in the eight, let's say 80s billion rangeish. Um, here's where that would rank. AOL, Time Warner, maybe the worst media deal ever, 186 billion, and that was 25 years ago. So, you get an idea of the enormity of that. Time Warner AT&T also a disaster um in 2016 109 billion. Um Disney's big deal um was was 83 billion. Uh Charter and Time Warner merged that was 79 billion. Two cable companies. Comcast bought AT&T's broadband business 76. So we're getting into that range where this could be like a top four or five. And uh I think there's really only one natural buyer um who would want to take the whole thing at once. Um if they do, I mean Paramount, if Paramount ends up with this whole thing and they could start selling off chunks of things that are worthless or or or a pain in the neck. I mean, that really could be a gigantic company. What do you think about that? >> I wonder what what would you can't kill the Warner Brothers name, obviously. What would it what would what would it be called? Like how would that work? >> Um no, the Warner Brothers studio will live forever. >> So >> what ends up what ends up happening is HBO and Paramount Plus are kind of like slammed together in some way and maybe if they're smart they keep >> it same way that Disney and Hulu smashed their apps together. I mean it worked. So, so Belly was saying that this is not a bidding war because Apple is out. Um, Netflix is just not they're not doing it. They they've been pretty clear. So, Bellan says >> Comcast is out there. Comcast owns Pe uh Peacock and they are shedding CNBC, MSNBC, and the Golf Channel. They're getting out of another company, Brian Roberts, right after the election. couldn't wait to announce we are spinning off all of our news properties into a standalone company that will be publicly traded on its own. They named a new CEO that you could tell um Roberts has no interest in the political aspects of owning a news business. >> So that's going >> here here's here's the bottom line I think from from Belly is that Zazoff wants to create a media circus. He wants the attention. He wants shareholders to believe that there is a bidding war out there. But Bellan said the Zaz strategy which is all but broadcast via bat signal is to fend off the Ellison overtures for all of Wonder Discovery amputate the gangress cable networks next spring and shop the studio and streaming assets separately to the many many interested parties whose jockey will result in a grand windfall. Maybe that would ultimately be best for the studio and streamer maybe. But it would certainly be best for Zazlovon is the best. He said a a delay would keep him flush with an eight figure annual pay. 8 figure it's obscene. a comp package so gluttonous that his longtime benefactor John Malone, whose boards are famous for shamelessly awarding outsized comp packages, recently walked it back slightly. And more importantly, a delay would keep the spoils of a Hollywood empire at Zaz's disposal, which is what many of his peers think is really going on here. Put off the inevitable, and he keeps the attention of celebrities and billionaires. He keeps appearing on TV while sitting courtside at big sporting events. He keeps being honored as a humanitarian. Uh, and he keeps getting written about by people like me. So, Bellan over at Puck is saying that listen, this is all this is all a charade. There is no bidding war. Like, it's it's he wants somebody other than Paramount to to fake interest and it's just probably not going to happen. >> David Faber said much the same thing when he broke the news on CNBC. It's like it's not like there's 20 biders, >> right? >> There's like a very small handful and this is so messy. Now, what you could see is an activist come in and you could see a private equity partnering with a Hollywood company and coming in and trying to pick off assets and and like you you could have like three different groups come in and try to buy different parts of this. But like did is that what's in the best interest of shareholders to spend a year on that kind of a bake off >> that would have happened >> and watch this thing get picked watch this thing get picked apart piece by piece? Like is that >> No, the stock is a shareholder in WBD. That's not a good outcome, >> dude. That would have happened when the stock was at $8 and it was staying there for a while. The stock is now at 20 bucks. It was up it's up 90% year-to date. It was up 10% today. Um so, hey, somebody thinks that there's a deal coming. Maybe there is. >> Sodak Jason in the chat says Zaz Love's the same genius who decided they didn't need the NBA. >> Yeah. Well, he he tried to keep it. >> He tried to keep it after saying, "I don't need it too late." That was >> that was talk about a bat signal. That that was like smack Adam Silver in the face and force him >> to go talk to Amazon and Netflix and and all these other play and all these other players. Um so that one did that one didn't work out. Um should we sell the compound to Paramount after they buy Warner Brothers? Should we be or or should we sell uh do a deal with Netflix? What should we do? What's our like what's our streaming war game plan here? >> I'm not here. I'm not hearing a game plan for that. >> I'm unequivocally team Netflix. Like, sorry. Sorry, Sundar. I'm not interested. >> Why isn't Rob Pasarella taking uh bisdev meetings with Netflix? What do we >> We got the wrong guy. He's not watching this, is he? We >> got the wrong Oh my god. Shout out to Rob. All right. Uh we have to come up with our streaming wars game plan at some point. Michael, we'll we'll go to Bagel Boss. We'll sit down. We'll we'll chop it up. >> No, let's get we'll get a pumpkin spice at the barn. We'll sit on the bench. All right, we're not going to do a whole huge thing on the quote unquote private credit bubble. Um, we're not going to go crazy here and I'm going to tell you guys why. We have a very special guest for the compound and friends um at the end of this week who is sitting right at the crossroads of media and private equity and private credit. Uh her name is Shenali Basak. She was, in my opinion, one of the best reporters covering um high finance um for Bloomberg and now she's at eye Capital and uh we really want to have this discussion with her. However, I didn't want to let the moment go because Barry Rholz, um my my partner, Michael's partner, and one of the founders of the firm reminded everybody he had like everyone's talking about bubble all of a sudden, like the Google search term for bubble for whatever reason, like bubble's going crazy right now. Um he unearthed this thing he wrote in 2011 shortly after the great financial crisis when he actually did spot the bubble in real time. um how to spot a bubble in real time. And it's a 10 10 item checklist. And I just wanna I'm not gonna like read every word of this. >> I was about to say I know it's more than 10. I just have a feeling. And of course it's 14. >> Of course. But >> here's I'm going to give I'm going to give you 10 elements. Uh >> that's So is that the most on brand Barry thing ever? >> Here 10 10 things on my checklist. That's also 14 things. All right. But when you read these things out loud, I really think the private credit, we're not doing this with AI because there's not enough time on the clock. But with private credit, it checks everyone. This is my opinion. >> I don't think it does. >> Okay, you're going to tell me which ones it doesn't. One, standard deviations of valuation. Look at traditional metrics to rise two or three standard deviations away from the historical mean. No one would argue that deals in the private markets are not going off at higher valuations than historically. Nobody would. Significantly elevated returns. >> Private credit has had an incredible >> Wait, wait, wait, wait. Um, >> what are you about to throw a laptop out? >> No, no, no, no, no. Valuations I don't know that valuations in private credit are are elevated. >> It's It's not It's not >> It doesn't work that It doesn't work that way. It's it's um it's it's more like uh it's more like the the rates that you're accepting as an investor being much lower than what you would have. >> Not true. Not true. Not true. Not true at all. There's a 600 basis point spread and it's pretty it's pretty consistent. >> Private market private market assets are at par generally speaking with public market assets. That's what's changed. >> We're talking about private credit and yields. People there's not a chase for yield where they used to take 600 basis points. They're taking 300. That's not happening. >> No, they'll take the 600, but they're lending faster and easier than they used to. Okay. So, that's that's We're not doing private equity, so I agree with you. It's not quite as black and it's not quite as apples to apples, >> but it's close enough for me. >> Significantly elevated returns. Private credit. One of the reasons why this bubble, you don't have to call it a bubble, I will formed is because the returns have been damn good. We spent a lot of time with very low returns in traditional fixed income and private credit filled that bucket beautifully. The returns have been really good. And you can't have a bubble without great uh returns. >> But I I I feel like the the word bubble is not helping here because a bubble is not just a word that you just throw around when there's like enthusiasm. A bubble is a a an environment in which the fundamentals um have so far fallen behind the returns such that in no way, shape or form is there any way out without the absolute excess getting wiped out and you could say that there's >> an activity I think it's an activity bubble. >> Okay, but it's very different. It's very different. There's >> but also an activity bubble. I would also argue that we're if this is an activity bubble, I still still think we're in the early stages of this activity bubble. Like they're just coming to us. >> Number three, excess leverage. Every great financial bubble has at its root easy money. You're going to deny that one. >> I don't uh I don't have a strong opinion. I I don't know. I'm >> We had easy money all over the economy and a lot of it went into Okay. Four new financial products. I know you're not going to fight with me on that one. >> You think private credit is new? No, I think the amount I think the amount of products and the amount of quote unquote innovation in the space to get wealth management people in, family office people in I I really think it was a Cambrian explosion of new species that >> So, you're right. The the the explosion in new interval funds off the charts this year 100%. >> Okay. Expansion of credit. This is Barry said this is beyond mere speculative leverage with lots of money floating around. We eventually getting around to funding the public to help inflate the bubble from credit cards to helocks. The 20th century was when the public was invited to leverage up. So again, not apples to apples, but apples to what's close to an apple, a plum. It's close enough. We're doing that now. We're in that process right now. I would say it's expansion of availability. And this is the industry's big push. Um six trading volume spike. Okay, this doesn't trade. So, of course, it's tougher analogy, but when you talk about an activity bubble, I don't think anyone would disagree. The amount of launches and and and and product creation would suffice to replace trading volumes in in this sense. >> Wait, hold on. One thing that's important to mention is that the activity in the wealth channel, it's it's it's up and to the right. Um, at the same time, you have a lot of traditional institutional investors pulling back in their investments in private credit. Like, they're full. They're good. >> It's a good point. Perverse incentives. This is the this is the thing that will argue with uh Shenali where you have unaligned incentives between corporate employees and shareholders, you get per perverse results like 300 mortgage companies blowing themselves up. I do think that there's a lot of syndication and a lot of loans being sold and resold and packaged, not unlike previous debt bubbles that we've seen in history. And I also don't think that we even know >> how you're right. >> I just don't think we know. >> How's this for a perverse incentive? Charge on the leverage, not just the underlying. It's like, >> yeah, >> amplified charge a fee on the on the borrowed. >> Yeah. >> Tortured uh number eight, tortured rationalizations. Look for abs absurd explanations for the new paradigm price to clicks ratio aggregating eyeballs Dow 36,000. >> Do you think that's this? I don't. >> This one's tough. I I would not say it's the only way you It's a rationalization. I think it's tortured. >> No, it's not. >> It's just people saying 6040 is debt. It's now 60 2020 20 and 20% is private private debt. And I'm like, well, why? It's these are non-traded junk bonds. Why is that the new 20? That's a tortured rationalization for me. >> Fine. So, but here's here here's the non-torrtured part of it is that these borrowers, which represents 90% of the economy, okay? They're not all junk. Represents 90% of the borrowers of the economy, they traditionally were being served by the by the not the giant banks, but the the mid-size banks. After the GFC regulations were put in place that made these loans much more expensive to make, they pulled back and and stepped in Blackstone. So that's not a torture rationalization. It's very straightforward. >> I agree with that. There's a reason this whole industry just 10xed. And the reason is we decided we don't want um we don't want deposit institutions like Bank of America and Chase. >> Yeah. taking deposited money that's supposed to be safeguarded for the consumer and gambling in markets that are not transparent, not liquid, etc., etc. So, somebody had to step in because businesses still need loans. Y >> perfectly legitimate. I'm with you on that. >> Un number nine, unintended consequences. All legislation has unexpected unwanted side effects. Okay, we just described that. Number 10, employment trends. a big increase in a given field. Real estate brokers, day traders may be a clue as to a developing bubble. You can't argue this with me. You can't >> go. Go ahead. >> Yeah. The smartest kids from my daughter's graduating class last year, uh, a year and a half ago coming out of her high school, literally the smartest kids, the ones that went to the best schools. When you talk to them or their parents, where are they going after college? What are they? Private equity. Private equity. Private equity. Private. They don't even know what the [ __ ] it is. They're just repeating what their big brothers and sisters are telling them because they see who's making money in this world. >> So, let me let me ask this just just to to interject here. Do you think that in 5 years we're going to look back and say there was a lot of sloppy behavior, which I think we probably will, but and also in five years the industry is going to be a lot bigger than it is today because I think both things are probably going to happen. >> Yeah. I don't think I'd argue with that because I do think people that are adopting um these private uh asset investments as part of their portfolio are not going to run away. I think they're going to stay stay put and I think most of these funds aren't going to blow up. >> A lot of them will be a lot of them will be fine. >> They can't leave. >> What I think is going to happen though that's >> a little a little nuance. I think a lot of financial adviserss are going to have to apologize for locking people's money up in the next downturn when people actually want it out or want to know how it's doing. >> I think there's going to be I think there's going to be a reckoning. >> So, there's been two there's been two stress tests, one in the GFC and one in 2020. And the defaults were not crazy. The actual navs now you could say the navs are fake. Okay, fine. But the navs did not crash nearly as much. And I think >> advisor 2020. Thrive. >> I think I think advisers and clients are going to love this in a downturn because guess what? It's not like people are going 100% in on this stuff. They'll have liquid assets. If they want to pull from they can. That's what the treasuries are for. >> I have a little bit I I have a little bit of a longer I have a little bit of a longer runway behind me than you do. And I'm just telling you, there were a lot of people who were pissed off because they were in mortgage funds and real estate funds and hedge funds that had illquid assets. And th this is how advisers lose clients in a downturn. It's not that the stock market falls. Everybody gets that. That's part of the deal. When your money is locked up and you can't buy the dip or you can't pull some out to make yourself feel better and put it in cash, you get really angry. And it's not like these things are throwing off 30% returns where it's like fine, I can live with the illquidity. >> I certainly agree that there will be adviserss who are completely irresponsible and reckless about the way they build portfolios, that aren't thinking about the downturn, that don't have enough reserves, that aren't setting their clients up for success. 100% that's going to happen without a doubt. I also think in aggregate that in the next downturn, people are going to want more illquid stuff because they're not going to want to feel the pain. They're gonna be like, "Oh, it was only down 7%." >> I don't think that's I don't think that's the general public. Yeah, you're very smart. Oh, really? >> You're very smart. Most people don't think that way, dude. Sorry. Giving people more credit than I'm this this is the behavioral argument. I think one of the reasons why private credit has resonated so much in in in the past couple of years is because of the pain of bonds in 2022. That's why that was a huge catalyst to spark the inflows. Oh my god, I'm getting 8% 9% and I don't have to see the marks every day. I I want more of that. So, I think the same thing happens in the next downturn. >> Okay, we're going to Well, we're going to find out. Uh, let's do these last Let's do these last ones. Credit spreads. Look for a very low spread between legitimately AAA bonds and higher yielding junk can be indicative of fixed income risk appetites running too hot >> and junk for sure. >> Okay. >> No, I'm not. No, not case close, dude. I'm telling you the spreads in these products are fairly consistent. They're around 600 basis points, give or take. Now, the speed at which they're being done and the way that the loans are being made with probably sloppy diligence that is definitely happening. Not everywhere. >> Saying the spreads are the spreads are appropriate given the amount of risk that people are taking. >> I'm saying in average the spreads are where they always are. You don't if you just look at that and I'm not saying you should. That's not where you see the bad behavior. It's in the documents, the loans, like the sloppy behavior. >> It's not the rates people are accepting for risk. It's it's in the uh speed of transaction. >> Holy [ __ ] we just got $7 billion in flows. put it to work. >> That's where you see the blowups. >> All right. All right. Uh 12. Credit standards. Number 12 on Barry's uh list of 10. >> Credit standards. Low and falling lending standards are always a forward indicator of credit trouble ahead. >> This can be part of a bubble psychology. >> Do we have to articulate anything else about that or ding ding ding? >> Two more. 13. Default rates. Very low. Wait. Very low default rates on corporate and high yield bonds can indicate the ease with which even poorly companies like first brands can refinance. >> Say it again. >> This suggests excess liquidity and creates false sense of security. >> 100%. Howard Marsh was on TV the other day saying the worst loans are made during the best of times. >> 100%. Okay. Last last 14 unusually low volatility and this is explicitly equity low equity volatility readings over an extended period indicates equity investor complacency. >> Um in the in the credit world no there were no losses so the complacency is like understandable. No, but the I think the complacency I hate to say complacency the the lack of volatility in the equity markets makes it such that people are more lacadasical with what they're doing with their money and check check. So yeah, there's definitely there's not nothing there's definitely some [ __ ] going on. >> Can I just can I just say uh Barry ate on that on that top 14 list. He ate >> Yeah, he did. >> There's just no way that was >> that was vintage red holtz. >> That's good stuff. >> Yeah, there there's elements for sure. You want to show me this chart because I don't know what it means. >> Uh, >> sure. We quality. >> So, so Bank of America, now this is the consumer, okay? Um, this is the these are not corporations, but for all this talk, and we we've been, you know, belaboring this point a lot on recent shows about how desperate the media is to feed us the blowup. We're just not seeing signs of stress in the consumer. I'm sorry. This is consumer net charge offs. Look at the gray dot, Josh. It was 98 basis points in the first. >> It's actually falling. >> It's falling. Then it was 90. Now it's 82. Bank of America serves Main Street. And I just I look at the data. I'm sorry. Anecdotes aside, I I'm sympathetic to all the the bad stories as well, but the data is the data. And there's just not a lot of stress out there. >> Okay. I can't I can't disagree. >> All right. Um, we're going low, but I think this is I think this this is a topic worth covering. So last week we spoke about a lot of potential value stocks. We'll look back on those in a year and see how how these stocks did. But this is a tweet that made the rounds and and uh it's great stuff. Steve Mandel, the founder of Lone Punk Capital, said, "I don't need an analyst to tell me when a 10p stock is cheap. I need an analyst to tell me when a 40p stock is cheap." >> That's so brilliant. That's such a brilliant uh insight. It's so true. >> It's so so good. So, I want to take a moment to talk about a stock that I've been wrong about, and the stock is Apple. So, Apple is about to hit $4 trillion in a market cap. The stock has had >> record high yesterday, >> new record high. The stock has had market performance over the last five years. So, the Q's are up 100%. Apple's up 100%. Obviously, some of its competitors, Google, Meta, Microsoft are up a lot more. Um, and if you look at like the PE ratio, which I do and a lot of others have, and you say, "How does this make sense? It's at 40 times, like this is madness, and it's at whatever 30 times forward, whatever it is." Um, okay. Look at the operating margin, and we've spoken about this, but like this is I guess the story of why the the mult the elevated multiple makes sense. >> I had this right from Jump Street. I had this right from Jump Street. Apple is being valued like a high margin consumer staple, which is exactly what it is. Your iPhone breaks, you get another iPhone. You might not buy the newest model. You're not you might not buy the Pro Max, but you are buying another Apple. Your iPhone breaks, you do not say, "Let me check out the Galaxy ecosystem. It's a consumer staple." You have your brand of paper towels that you buy. Um, that's that's got a way higher way higher switch potential because Bounty is fine, but the other one is probably fine, too. With this, it's high margin and it's a locked in consumer and Costco is 50 times earnings. How does that make sense? Alex, >> Walmart is for 40 times two. >> Oh my god, you almost choked on the >> very >> Is that a big enough uh jug of water for you? I worry that you might get dehydrated. You know what? I I'm a big big straw guy. I love the big straws. >> You should drink you should drink four or five of those and then go right to the hospital. Um so, uh Apple that's the way Apple's being valued. The way Costco cost Costco is being valued in such a way. It's not that they're growing fast enough to justify. It's that you know for a fact those earnings are going to be there. People prize certainty and the way a stock gets to 30 times. I'm not saying it deserves it. ain't got deserve got nothing to do with it. Um what it's about is people prize consistency of earnings over growth of earnings in some cases. And so in the case of Costco, people have a a membership. They're not going to go somewhere else to shop. We know the earnings are going to show up and that's worth a premium to the market. Apple is no different. We we know they're not going to grow 30% a year, but we know that the earnings are going to show up. We know the the buybacks are going to happen. We know the cash flows are massive. And we know that in three years, the same amount of people or more who are using an iPhone will still be using an iPhone. And that is where the stock gets uh the the multiple in addition to its insane levels of profitability. >> Amen, brother and sister. That was great. Great stuff, Josh. Um uh I also want to share one. So the the stock got a huge pop yesterday because the 17 is tracking much stronger than the first two weeks of the 16. People are buying it. But throw up this chart from six colors. John, you can skip the gene tweet. >> Um all right. So we know that the iPhone revenue has been uh has plateaued. It just has. It's not growing at all. It's fine. It is what it is. But to your point, Josh, it's still there and the street doesn't care about it because a lot of the reason, and this is not breaking news here, uh the big reason why the margins are what they are, it's not the hardware, it's the software. And look at services. Look at the percent of the total profit. It's it's >> locked in. Locked in. >> Yeah, >> they know it. >> All right. Last thing, this is a hilarious uh jab. Birkshire blew its Apple stock investment. Yeah, sure they did. They may have left they may have left $50 billion on the table. >> What do they make a trillion dollars an hour? >> Yeah. Yeah. Greatest trade of all time dollars wise. All right. Uh what do you want to do on the on the Schiller P? >> Uh >> good. Me either. >> You know what? [ __ ] it. We're not doing it. Yeah. >> Okay. I want to get to this unemployment thing. >> Let's Let's do an amuse bouch just to set the table here. >> Dude, nobody knows what that word means. Um, it's that little thing on a spoon that the chef sends out to your table before you even order. >> Wow. >> Just to like get your >> slow clap. That was impressive. >> Just to get like just to get your like your pallet going. It's usually something. It's usually like some kind of like not a I don't want to say a sorbet. Sorbet. A sorbet. >> It's like cold. >> Yeah. There's There's often times there'll be like a cucumber involved or a little gaspacho. Sometimes has a dainty little drop of oil on the top of it. It's like this. It's like the sh It's It's like the chef It's like the chef showing you how swaggy shit's about to be. And uh I I like it. Yeah. Someone said Biff Grieel's micro greens on foam in a tiny spoon. You're >> goddamn right. >> Uh cook. >> All right. Here's the unemployment rate in the United States. Just to set the table. Historically low. So what I'm about to say is not intended to act like that's not the case. We are in a very healthy labor market. The thing is it is noticeably deteriorating for certain segments of the population who either are forced to switch jobs right now or want to. There are very few places for a lot of these people to go and the job search as New York Magazine puts it has become a humiliation ritual. Let's put this. Let's put this uh this I think this guess this is a magazine cover or this is the um or this is just the art that's accompanying their feature article this week. And this resonated so much with me here. The job search has become a humiliation ritual because I hear anecdotally so many people who are going through this right now and it's more than I can remember for a long time. So I won't read the whole thing but here's New York Magazine. Roughly 7.4 4 million Americans are now unemployed. As of August 2025, approximately 1.9 million Americans have been looking for work for 6 months or more, the highest share of what we call long-term unemployment since the pandemic years. And 6 months is typically the longest you can collect unemployment in most states. Unemployment numbers, of course, only paint part of the picture. even the employed for a variety of reasons may want or urgently need to acquire different jobs. So we we keep saying it's a lowf fire environment but a low hire environment also and I think that that's what this gets to the heart of many office this is uh New York Magers have historically been better paid and relatively shielded from poor working conditions but now the promise of upward mobility and identity through a job is starting to slowly dissolve leaving a generation of laptop workers that's who we're talking about knowledge sector workers who are not bosses Confronting a new hostile economic and cultural landscape. What sets this downturn apart from the panics and busts of the past is that now every layer of labor from hiring to firing is increasingly mediated by automations and algorithms that cannot hold the irreducible realities of human life. So you apply for a job, it's not even a person reading your resume. it's software and you don't even know why you're being weeded out or why you're not getting a return phone call and the answer increasingly is you are literally talking to AI. You and this is the humiliation ritual aspect of it and I believe it's acutely difficult for um the type of people that I'm hearing from these are recent graduates. Maybe they got their first job right out of school. Maybe they they didn't even get that. They're not in a great spot. A lot of them are trapped because there are less and less companies even willing to take a meeting, even willing to take an interview. Right now, companies from the top down are slowing down on hiring because there's so much uncertainty about what if we put all these people on and it turns out AI could just do all this [ __ ] that the entry level kids used to do. Um, before I go further, what are your thoughts? >> All right. Um, yeah. >> You don't talk to as many people as I do, as you know. I'm like always out and about in the community. >> Excuse me. I've unfortunately I've sent a few of these emails. Don't tell me I don't talk to people. That's all literally all I do all day is talk to people. >> As a salt of the earth person though, I just I feel like I have a lot more of these conversations on the ground in the trenches than you do. >> You are the opposite of whatever that is. I don't even know what that is. All right. No, here here's my thoughts and and I I have I have lots of thoughts. I have competing thoughts. I I changed my mind on this. I go back and forth. There have been periods over the course of history where getting a job was extremely difficult. When I graduated during the GFC, young people were toast. It was really hard. And that has happened over and over and over again. And at some point, the labor markets cooled uh and people were able to to get absorbed into it. I also think that this time is different uh particularly for this young cohort because all of this grunt work is being automated and it it's it's scary like I am a I am a techno optimist. I think that technology has and does a lot of amazing things and that we we as in society always figures it out and we get to the other side and that's true but it doesn't mean that there's not a lot of people that are displaced in the meantime and so while society is not going to crumble and we're going to be better in the future we always are the people that are feeling the pain right now I don't know where they do or or or or what they turn to because these jobs are not coming back so for example uh a Bloomberg article today open AAI has more than a hundred investment exin investment bankers help it to train its artificial intelligence staff and how to build models as it looks to replace the hours of grunt work performed by junior bankers across the industry. And here's the the dark part. They're paying people 150 bucks an hour to write the code that's going to wipe out potentially tens of thousands of future jobs. And this is >> billions in salaries, >> right? They're paying >> wipe out billions in salaries. >> They're paying 150 bucks an hour to wipe out billions in salaries. So this is happening here obviously and it's going to happen in many industries and I think if you're not concerned like I don't know how could you how could >> wake up right if you're not concerned what what are you paying attention to um one of the first chap I think the first chapter in my new book was about just own the just own the damn robots was the name of it based on a blog post I wrote years ago 10 years ago probably >> um and I opened up that blog post and the chapter of the book with um with this excerpt from player piano by Kurt Vonagget. When I read that story this morning that you just referenced about OpenAI training its uh model on exinvestment bankers like how to do DCF, how to bring a company public, blah blah blah. >> Dark, right? the so this chapter there's a fictional character named Rudy and Rudy is a machinist who's worked in this factory for 40 years and they tell him he's retired but he has one last job to do his last job his last day of work he has to train this machine wrote this in the 50s I I want I want people to understand this he has to train this machine in his exact precise movements I think he's a lathe operator whatever that is I'm not I don't know but like the machine is recording. This is precomputer. It's a science fiction book. It didn't really happen. But the machine is mimicking what this man does with his physical movements. And when he's done training this machine, the the management people, the management class, they come to him and they say, "Okay, thank you so much. Your work is done here. You're off to the uh the RNR." And the RNR in that book is this community outside of town of former factory workers whose new job is I think it's like uh wrecks and reclamation or something like they basically like when a bridge breaks they have to they have to the worst jobs they have to pick up a dead animal on the side of the road like that's what happens to these people in player piano. And when I read things like that today, first of all, it's insane that Vonagget could picture that 70 years ago and it's happening right now. But I I also think um it's like a it's like some of these things we really do want to take these as signposts for what's to come. Now, I know there are very impassioned people on the other side of this in Silicon Valley like Mark Andre who have written very poignant essays about why AI will expand employment. And I tend to agree with that. But there's a gap in between the creation of the new jobs and the destruction of the old. And we don't know if that gap is one year or 10 years. And that is the thing that I think um is is front of mind for a lot of people. This is the Associated Press new survey. 47% of US adults are not very or not at all confident they could find a good job if they wanted to. An increase from 37% when the question was last asked in October 2023. So basically in two years time we went from half the country feeling very confident that they could find a job to just uh 30 uh oh I'm saying it backwards but 47% of US adults don't think that they can get it. You want to take a guess what direction that goes. >> Yeah. >> Okay. So, I I think these things are they're notable and we're documenting in the real real time as we do the show and we're not doing it to like scare people, but like I really feel like people need to wake up. >> I think you're think I think you're going to start to hear a lot about universal basic basic income as a result of this in a couple years. And I I agree with you agreeing with Andre. Yeah, in 10 years, 20 years, we'll be great. the economy will be humming as a result of all this uh technology but in between now and then it's going to be ugly for a lot of for millions of people. >> The optimist the optimist right now is not saying creation of new jobs. The optimist now is saying 4 day work week. >> Great. Okay. Maybe maybe that's the silver lining. Uh last thing on this seasonal hiring job seekers have now overtaken job postings for the first time since the pandemic. Yeah, but that that's sort of always the case. No, more people looking for jobs than there are open jobs. >> Well, so there's two layers to this. No, it's not always the case. We had uh two job openings for every person looking for a job in 2021. >> The recent history that was the aberration. >> Okay. Seasonal searches for holiday jobs were up 27% year-over-year at the end of September, 50% above 2023 levels. In contrast, seasonal job postings only increased by 2.7% compared to last year. What that means is there are going to be a lot less people who rely on these seasonal jobs getting them. The percentage of seasonal job postings explicitly mentioning urgent hiring is down significantly from 10% in 2021 to 2% in in September 25. All right, just keep keep it in the back of your head. testing. Um, many employers are taking a cautious approach to hiring in Q4 2025. 45% expecting to maintain their current workforce. This is the highest number of employers saying they're holding steady since early 2022. Um, and there's a lot more, but this is the reality. Now, I don't know when this cracks and finally hits the headline employment numbers, but I am telling you the Fed is going to be reacting much quicker as these job numbers start to come out than they have been throughout the balance of this year because I don't think they're going to have the same choice that they think they have right now. Right now, they think they're striking a balance. I don't think that they're going to have that luxury. I don't know if it's the next report or the one after, but this is going to go from a luxury of waiting to cut to a necessity. And I think it's going to happen quick. What do you think about that? >> I I there's so much nuance in here because if it's only happening at the entry level position at the 20 22 to 25 age bracket, I don't know how they react to it and I don't know how Fed cuts help. >> They don't. But that's the tool that they they they're holding a hammer. Yeah, >> they're holding a hammer. They don't they're not also holding uh you know five other there's there's limited things that they can do. They can they can buy bonds and they can lower interest rates. >> I would be surprised I'd be pretty surprised if in two years from now we were like huh remember we were worried about AI taking young people's job and it just never happened. It could I I obviously we all hope that happens. I'd be I'd be pretty surprised if we don't see it in the data. I think the thing that's going to surprise us is the opposite direction of what you just said, >> which is >> white collar mass layoffs. >> I think they're going to come they're going to forget about seasonal Christmas workers [ __ ] that it's gonna it's going to be uh cons we just heard Accenture >> Accenture just said they're getting rid of 11,000 people after getting rid of 10,000 people >> earlier in the year >> and explicitly they're saying we will hire other people >> they have to be ready to upscale for AI the people we're letting go of we don't think that they can >> yeah that's the cons that's the consulting firm to Fortune 500 >> I want to clarify something that I just said when I said that's the nightmare scenario. I don't mean specifically white collar workers losing their job. What I mean is this. If you see unemployment tick up in a meaningful way up to 5% up to 5 and a half% simultaneously you see corporate profits at an all-time high and the stock market an all-time high that is a very dangerous cocktail that like and I think that's a there's a very there's a decent chance that happens. >> Well, this is why you're you're going to get Mayor uh Cheay Guavara in a month. It's it's exactly this >> politically that is dangerous. Um, I I agree. Okay. Uh, enough good news. >> Yeah. So, >> you make the case and then I have a mystery chart and we'll bounce. >> Good news. Good news. I thought I was on mystery chart duty this week. So, I don't have a make the case, but I will quickly make the case for a stock. >> Why did you think that? It clearly said that you weren't. >> Um, dude, I was I had a busy week. All right. Layoff. So, I will quickly make the case for a stock that has had a very nice a very healthy uptrend with a very healthy pullback. A stock that you own. A stock that uh that I followed you into. Thank you for the recommendation. The stock is toast. I think it is set up nicely going into earnings. Elevation. Expectations are low. What did you sell it? Expectations are low. They just announced another partnership with AMX. I think the stock is set up nicely into earnings. >> I bought more uh last week. >> Okay. >> I bought a I bought a >> I had a buy I had a uh >> a 35 you got filled. >> Yeah, I got a 35 on the nose. I had a um I had a buy in like a GTC forever and we got it. >> Okay. and bought a bunch more and uh I'm an investor. I'm not trading it. >> All right. If it goes down to I'll buy more. >> Mystery chart. This is a name that you and I have both traded on and off. I am not currently invested in it. That'll be one of my clues. It's one of the most fascinating stocks. >> Oh, good stock. I like this one. >> It's one of the most fascinating stocks in the market to me. So, here are my clues. This company cannot grow. It is a one or two% annual grower, >> but it's in one of the highest tech areas of the market. >> Is it Zoom? >> Look at you. I only had to give you two out of three clues. >> All right, let me >> I think I'm about to buy this, doc. What do you think? >> This um I'm looking. I'm looking. I'm looking. Oh, I do like the setup. I really do. >> I think it's inflecting. I think it's inflecting. >> All right. I really like it. >> Do you know? >> Do you So, we pay Zoom. We're a corporate customer. Yes, we use them. Our our employees are not allowed to call or text clients from their personal cell phones. So, all of our employees have a Zoom phone number that they can use for calls or texts. This is an industry regulation. Um, some of the big firms paid billion dollar fines over this during the pandemic. Um, Zoom had just announced they now have 10 million corporate um, phone customers, Zoom phones. Um, so people look at this business and they think it's just the video calls. They don't understand that when companies say, "No, we're going Teams only." The salespeople at these companies revolt. This is in the transcripts. >> Teams only. >> And they say, >> they say, "All of my potential customers want Zoom. Why are you making me do this as Teams?" And the comp, you know what the company says? All right, fine. Get an enterprise license for Zoom. We'll use that, too. >> They have the best product on the market. >> I know it's Google Meet. I know it's uh Slack Huddle from Salesforce. I know it's Microsoft Teams. Zoom has the best easiest to use product on the market and I think long-term that wins. The problem is how do you monetize it? It's a very competitive market and it's hard. So, they're going into other areas of enterprise software and they're winning. And they they said that they just got two Fortune 15 customers. I don't know which companies they are as enterprise clients. So the the problem here is the growth rate. The good news is it's like 18 times earnings. You're not paying a tech. >> You're not paying for growth here. And they have 8 billion dollars in cash. They could do an acquisition. They could buy back a ton more stock. And the best part, the reason this stock crashed the way we showed it to you guys, um, employee stock options just out of control because the problem is they recruited all this talent like everyone else. So they say to somebody, you come work here, give you $200,000 base salary, we'll give you $100,000 of stock. The stock collapses, the employees like, what the [ __ ] I just lost my hundred grand in stock. They topped all those employees off. They said, "Okay, topped up." They said, "Okay, here's more stock." And it got out of control. And the CFO just said on a call, "We are listening to Wall Street and Wall Street is telling us we have to be more chased with our stock option uh excesses. And now you could even have a float shrink situation on your hand because they've gotten way more disciplined. So, um the stock is stabil, the company is stabilized, they're not growing. That's why it's so cheap. If they find a way to grow, it's I think it's a $100 stock. >> I 5% growth. >> Can I tell you my best part? There's a big ass gap at $96 and I bet it gets filled. >> Yeah, it's got to get to it's got to get to 96. >> Of course. Well, yeah. I think it's that I think I think it's going there. I like I like >> I don't have I don't own this stock. Uh full Nobody's expecting anything out of this business. Nobody. I think I want to be in it before the next earnings call because that could be the inflection point. >> Yeah, I might join you. It's uh it's in it's in a month. I like it. >> I'm really gonna make the case. >> You're good. You're good. >> I feel like if I were your if I were your broker, I would you I would just have your money spinning night. >> I'll uh I'll take 11 shares. Yeah, why not? >> All right, guys. That's it from us. I know we ran long, but there was so much to get to. Thank you so much for watching. Thank you for those who showed up in uh in the live chat. We love it. We have so much fun with you guys. I want to mention tomorrow is an all new edition of Animal Spirits with Michael and Ben. We're gonna do Ask the Compound with Duncan and Ben. And then at the end of the week again, uh Shenali Basak making her first appearance on The Compound and Friends. She is amazing. You guys will agree with me once you uh get a chance to see that show. She will not disappoint. And we're going to have a very in-depth conversation on some of the biggest topics happening on the street right now. Keep it locked on the compound. We love you. We'll talk to you soon. [Music]