Description:
The FED – keeps rates unchanged SpaceX announcing IPO plans Investors cautious on CaprEx spending plans And our guest …
Transcript:
This episode is brought to you by our good friends at Interactive Brokers. And are you ready to take control of your financial future? Meet Portfolio Analyst from Interactive Brokers. The free all- in-one dashboard that lets you consolidate, track, and analyze all your financial accounts in one place. You don’t need an IBKR account to use it. Just connect your accounts and see your complete financial picture, investments, your performance, and allocation all in a single screen. Plus smarter. Yeah, you can be smarter and plan smarter with IBKR’s new tax and retirement planners built around the goals and market assumptions that are yours. Get deep portfolio insights and detailed risk assessments and compare performance against more than 300 benchmarks. Plus, manage with confidence thanks to GIP’s verified returns. Are you ready to get started? Sign up for portfolio analyst free for everyone at ibkr.comfreepa. Interactive brokers. The best informed investors. Choose interactive brokers. Remember sipc. The disciplined [music] investor is all about you, your money, and the markets. Sit back and get ready [music] for this edition of the disciplined investor podcast. This [music] episode of The Disciplined Investor is sponsored by Horowits & Company. If [music] you’re looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, [music] cultivating financial success. [music] >> The Fed keeps rates unchanged. SpaceX announcing IPO plans. Investors are cautious on capex spending plans for tech companies. And our guest today is the one and only Frank Kerio from Kurio Research. All this and much more on episode number 958 of the Disciplined Investor podcast. [music] [music] Hey there, it’s Andrew Horowitz. It’s chilly. The whole country is cold. [music] It’s cold here down in South Florida. Actually, this weekend 30° to wake up to that in South Florida when we’re talking about freezing temperatures. Of course, that causes all sorts of problems for the crops down here, the oranges, and we’re just not we’re just not used to it. I mean, it’s it’s pretty cold. That doesn’t uh at all compare to some of the cold that you’re do, you know, that you’re seeing out there, but okay. Okay. It’s going to pass. Stay indoors, stay safe, stay warm. It’s like anything else, whether it’s a weather event or a market event, usually things resolve and things get back to normal. That’s what we saw a little bit last week, right? A little bit of an event that happened after the earnings calls from the the tech companies where their capex was uh pretty uh significant. And we also saw maybe a postfed letdown in that they’re not going to just simply reduce rates and cut rates on a regular basis, but they’re going to look for data. And back, let’s start talking about that. Uh, if I didn’t introduce myself, I am Andrew Horowitis. I am the host of the disciplined investor and uh, of course the um, the co-host of DH Unplugged where John C. D’vorak and I get together each week and talk about things related to well markets, news, and everything in between. If you want to find out more about what we do, how we do it, go over to the disciplinedinvestor.com. I’ll give you more information on that in a second. But let’s focus in on the Fed, shall we? Let’s start the the show today with that because there was no change. Fed had no change in their statement. And they said things like in support of our goals, the committee decided to maintain the target range for the federal funds rate at again a range of 3 and a half to 3.75%. I still am in a quandry why we can’t just have a fixed rate. Just say it’s going to be, you know, 3.25% and be done with it. This range thing is pretty ridiculous. Obviously, it gives them a little bit of wiggle room when it comes to who pays what and what is paid. But there we are. The Fed also said that available indicators suggest the economy, the activity in the economy has been expanding at a solid pace. They said job gains have remained low and the unemployment rate has shown some signs of stabilization. At the same time, they they confirmed that inflation remains somewhat elevated. Now, two of the Fed voting parties dissented. Voting against the action was Steven Mirren and Christopher Waller, who preferred to lower their target range for the Fed fund rates by a quarter percent at the meeting. So, what else? What else do we have? We have um well, you have tariffs, right? Um, what do we have last week? We had we had Canada, we had issues with China, and we had more issues with well, Greenland’s finally over. And then we had the potential for um tariff increases on South Korea or increases, not potential, I guess. and and and even so the markets in South Korea, the Cosby hit an all-time high. The day that the announcement was made by increasing the tariffs because they weren’t living up to their end of the bargain on the plan and the framework that was being proposed, the market dipped 1% in the overnight hours, but picked up and ended up three and a half% higher after the president of South Korea said, “You know what? Hey, we’re going to stick to what we’re doing. Don’t worry about it.” a lot of those kinds of bluffer blustering and puffery that goes on that reverses pretty quickly. Few things I want to talk about today. I want to talk about the highly anticipated SpaceX IPO. It’s now actively in motion. We have multiple reputable sources that are telling us and confirming that the company is preferring somewhere around a mid June IPO. And this will be one of the largest, possibly the largest IPOs in history. They’re aiming for a valuation of $1.5 trillion dollar, which is nearly double the $800 billion valuation from the private secondary share sales that they did back way back way way way back in December. So, we’re talking about a month of time that this stock potential has doubled. a little absurd. I know there’s great things, right? There’s great things with this. Bank of America, Goldman Sachs, JP Morgan, Morgan Stanley, they are all the banks that are going to be running this thing and they’re going to run this hard. Now, the company’s looking to uh raise somewhere about $50 billion. So, there’s going to be about a I think about a three or 4% float on the deal. And this will be the largest capital raise in IPO history, surpassing the $29 billion that uh we saw in 2019 by Saudi Aramco. Remember that? Everybody’s like, “Oh, wow. That was a big one.” Now, Starland does have $ 8.5 million subscribers, hundred billion dollars or close to no, excuse me, 10 billion, not 100. No, 10. [clears throat] I don’t know why I was thinking 100 10 billion in annual recurring revenue. And SpaceX is is is planning to use the IPO proceeds to accelerate Starship development, build orbital data centers, which means data centers that are well, it’s they’re thinking about putting data centers and things on Mars, but right now we’re just going to get into space. Kind of interesting. And fund the Mars and Moonbased Alpha initiatives. What’s interesting about this right now is that Elon Musk is finally going to IPO this because he had long since wanted to keep this private due to a lot of the factors involved in what he could do, right? He has to give up some of the control here in theory, but why not? I mean, this has doubled in a month. So, capitalize and rugpull is what I see coming here. We also have to discuss today Tesla’s earnings. We could talk about Microsoft with with Frank and all, but we have to talk about that. I thought that while the earnings were okay on Tesla, there was this really moment when the revelation that the S and the Y are no longer going to be in production. And you can’t have sexy without an S or a Y. Right. Right. S or X. Sorry, let me let me correct that. It’s S or X, not S or Y. the X and the X. Still can’t have sexy without the S or the X. But the other thing that was really I thought huge was this spend that’s going to be taking place on chip manufacturing and warehouses for that and the change to really focus in from the production of the cars that are bringing in revenue, right? the S and the X to building humanoid robots and robo taxes. And we don’t even have any idea of the TAM or the potential revenue from the robots and and probably from the robo tax. Everybody’s all shot up and excited about the robo taxes, but we really we don’t have an idea really of what the reach is for that. But we’re going to get on all this. We’re going to talk to our guest about this. I want to make plenty of room for discussion because, you know, when Frank and I get together, there’s a lot to talk about. Not a lot of room for each other to talk cuz the other one is talking about what’s going on. But with the information flow from Frank is incredible. Of course, the show notes, everything that you want to find out about Frank and about what we’re doing here, you can go over to the disciplinedinvestor.com. And I mentioned that we have plenty of information on there, the strategy on there, you know, for clients. And I would encourage uh in these particular uncertain times, there’s no better time to get a second opinion on your portfolio. And yes, our portfolios have been doing great this year. There’s some good things that are happening internationally with commodities and all that. And maybe yours are too. But at the same time, you know, things happen. All of a sudden, investments go a little sideways. Markets go crazy. VIX pops to 20 like it did on Thursday. And all of a sudden, there’s a change. We’ve been riding along a wave for a long period of time here, folks. We know this. You know this of nothing matters. Just let’s push it in. Every dip is to be bought under all circumstances. There is no variation to that rule. That’s the theory that’s in the markets. That’s how we see it. But again, there’s no better time for a second opinion on your portfolio. Head over to the disciplinedinvestor.com and check it out. Now, before we get to our guest, I think it’s important to know and to bring this up again that Interactive Brokers has key competitive advantages for sophisticated and disciplined investors like you. IBKR’s margin loan rates, listen to this, are from just 4.14% to 5.14%. In fact, IBKR was rated one of the lowest margin fees by stockbrokers.com. Did you know that? I want you to compare IBKR’s clients low margin borrowing cost the other brokers like Schwab or Erade, Fidelity, Vanguard who charge hundreds of basis points above IBKR’s low rates. Listen, the best informed investors choose Interactive Brokers and Margin is only for experienced investors with a high risk tolerance. because you may lose more than your invest initial investment. Rates are subject to change. Get started today at ibkr.com/compare. That’s ibkr.com/compare. Interactive Brokers is a member of SIPC. Now, let’s bring in Frank. He’s an equity analyst with close to three plus decades of experience covering small and midcap stocks. He’s a newsletter. We actually have the link to his free trial of his newsletters over on the disciplinedinvestor.com for show notes episode number 958. He has been the editor of several wellrespected newsletters with major companies as well as one of the top performers with the street.com where he significantly outperformed the markets during his tenure. He was also a research analyst. Did you know this for Jim Kramer? He’s also host of the really great podcast called Wall Street Unplugged. Frank dives deep. This is what I like about him and why I bring him on. He goes deep into trends of some of the things that are happening right before our eyes and some of the things that are undiscovered, finding what I think is great opportunities for all of us. So, let’s bring him right on. Frank Kerszio. So, welcome back, Frank. How are you? >> I’m doing good. How you doing, buddy? >> Good. I know you’re just back from Vancouver, so you’re used to the cold. Although you live in in in well, I was going to say warm warm Florida, but it’s not as warm as it was. I was talking about that at the top of the show, how it’s going down to the 30s this weekend and you know, throughout the weekend it’s going to stay there and then uh into next week. But um how was Vancouver? >> It was nice. It was in the 30s there, right? So uh and I think we’re getting 19 degrees, so it’s pretty crazy. But uh you know uh but it was amazing because this is a mining conference that I’ve gone to pretty much for the past 10 years. Been covering the sector around 15. Have great contacts in it. Some of the biggest names in the industry and it really been a a a crap show for a while, right? And even last year it wasn’t really that good. This year it was insane. I mean it there was it took me 20 minutes to get my badge. There was it felt like there was a thousand people there. These people paid $2,500 each. It was jammed. It it was very very packed. standing room only in in a lot of the the speakers and presentations. Uh and good for them, right? I mean, they’re doing deals. They’re rocking and rolling. I mean, everything’s on fire. On fire is probably I’m not doing it justice by saying with silver like, you know, triple digits, gold. I mean, was it going up? >> Was this like a big like back in the days of, you know, major tech rallies and Bitcoin bros kind of thing that everybody was excited because the mining is just off to the races right now? >> It’s just off to the races. And I don’t think it’s for the reasons that that people are saying where, you know, you have high deficits. We’ve had high deficits since the 70s every single year, right? Just gets higher and higher no matter who’s in office. Uh, you know, you have this end of the world. I I think it’s more about the policies of Donald Trump where it’s more, you know, a little bit protectionism and, you know, you’re seeing demand in these sectors and you’re seeing rotation. You’re seeing uh, you know, you don’t have to worry about ddollarization or anything like that and craziness. you’re going to, you know, but you are definitely seeing a rotation where central banks are buying more gold, more silver, and and you’re seeing the retail investor come in. And the retail investor, as you know, >> is getting bigger. I think it’s what 20 25% of trading activity. I think I saw Morgan Stanley say a couple weeks ago. >> But the other thing, but but the thing that people, it’s interesting you mentioned that because the thing that I I believe that people don’t really understand is that 25% can act as a very big crowd and that doesn’t mean it’s 25% of the daily trading. the institutions can be sitting on the sidelines for a minute twiddling their thumbs not actually investing in silver at the moment and that 25% horde if you will right is is actively investing in it for one reason or another and moving things dramatically >> so that 25% is a big crowd that can you know especially if maybe even 10% could be a big crowd if it’s if they’re really going on momentum but let’s let’s talk about silver for a second because we know that so this renewed momentum um excitement And the you know the drivers of strength you talked about a few is it the idea that we have uncertainty is it idea you know the idea of deficits the dollar uh you know seeing a debasement and devaluization of the dollar but there’s some talk about the back back to the silver as a metal for industrial use and more importantly two things in particular one it’s the idea that silver is um you know used in semiconductor s and the more machines we have for AI that are being generated by various companies etc or the chips etc that silver is going to be used but two this this unproven idea that silver can be used in a mixture and compounding to create uh longevity of the lithium ion batteries that causes them not to have to be thrown out or extracted from a car after a certain period of time thereby making batteries pretty much um you know have have a much much much longer shelf life. So talk on those two topics. >> Uh I don’t know if it it’s so much. I mean it’s I the fundamentals that are taking place right now are different and that’s why people are so used to saying this is a cyclical market. Well it’s a cyclical market. You could base cycles on on whatever right the economy when it comes to these metals and commodities. It was the worst cycle we’ve seen I want to say in at least 40 years. And these are from people I’ve talked to have been in the industry for 40 years like the Rick Rules and you know the Cordaines and stuff like that. So uh you know Frank Gusters uh these these are all stars that have been in in this industry forever. And when you’re looking from 20112 through 2021 really I mean this is a market where gold went higher gold stocks and silver stocks got annihilated. Uh it it’s usually every 3 four years that’s a long period but now you could argue I wouldn’t call this a secular market but this cycle is going to be prolonged I think much longer than everyone believes. I came back from the conference. I saw these guys speak. A lot of them were like, “You should be taking profits.” In all fairness, they said that 6 months ago when silver was 70, it’s 60 and it’s, you know, well over 100 now. And, you know, gold was at least $1,200 less than where it is now. You know, well over 5,000. So, it’s different because the dynamics where you have the policies of the current administration with Donald Trump, that that’s significant, right? It’s more US-based. Okay? So, you know, it’s worrying other countries where you could just raise tariffs. Okay? Okay, we need alternatives. Okay, that that and that’s something that’s not going to change, right? So that’s something for the next three years that’s different than okay, we’re seeing our deficits go up to 40 trillion and all this stuff, right? Deficits continue to go higher, but also the AI trend is is very real. And now when you have an administration that’s saying, hey, these are critical metals, the rare earths, you’re looking at gold, you’re looking at silver, you’re looking at at uh copper especially, right? And then you’re looking at uranium. And not only are they critical metals, we’re understanding that if we’re going to grow and AI is this massive serious trend that I still feel like most people don’t understand how big this trend is that we’re going to need access to these metals without any interference where we could have, you know, 90% or whatever uh taking place in China, we need to get them done here. So they’re taking stakes in actual companies which adds to this bullish thesis of these metals where now the biggest risk is getting these mines developed right the biggest risk is the funding part. Now you have the government coming in writing loans and then you have private equity that gives private equity opportunity saying okay we have the government backs stop here now we could go in usually permits take 10 12 years that’s going to accelerate the process this is a different market for commodities than we’re used to seeing and I think this is going to be prolonged at least for the next you know you can go into three four five more years even longer for this where maybe you’re going to see the pullbacks in gold silver I think a little par parabolic right now and could pull back 30% and still be up tremendously over the past 12 months but I think you going to see this prolonged where any pullback is going to be met by a buying opportunity for gold, silver, especially copper and uranium. >> It’s interesting because there has been that going on already where there’s a bit of a pullback here and there whether it’s because and in fact I think the CTFC changed their requirements on margin where it was a dollar amount now it’s a percentage deal which changed things because they were going to have to actually in theory they’d have to start increasing margin rates like daily by the kind of moves that we’re seeing. They’re not used to these kinds of moves. Uh, you know, we we saw this back when there was the cornering of the silver market back when by the Hunt brothers, remember that? Uh, you know, kind of trading places kind of story. But you talk about, and you said this several different times, the policies of Donald Trump. So, just give me a quick down and journey on what you’re talking about. uh the government taking stakes in companies uh putting these critical metals on on these lists where you’re saying okay these medals are critical it’s a threat to national security uh we need these medals because of AI and AI is going to run the future >> so what we do is by the way what we do is so now our policy is either use the brute force of the United States government to buy into companies or use the brute force of the military threat to take stuff that we want. Is that how kind of we work now? >> You know what it I guess. And for anyone listening to this podcast, No, no, but listen, if you want to go there, there’s a million podcasts in politics and you can have fun and hold up signs and run into people and get pissed off. You’re we have a job here, you and I. You have to make money on stocks. >> No, no, but I think people need to know what what the base policy is so we can understand what to do. Therefore, >> base policy is this is that the government is going to continue to take stakes in companies that they deem that these metals are critical and that we need these things and that includes, you know, more fabs and that’s why the Intel uh deal went in. Now, now you can hate this and say this is so different. This is socialist as an investor. >> I don’t I don’t like it only because I was told not to like it for years by our government. Our governments our governments for the last 50 years, I’ll say 20 years, have been all about, you know, the whole idea of state-owned industry is bad, right? that’s not capitalism and and how do we do such thing and we’re going to fight that and we’re going to go against that and we’re going to put tariffs against China because their trade isn’t unfair and we’re like okay well let’s just do that too. It’s very confusing to investors I think. >> I don’t think it’s very confusing at all to be honest with you really. >> I think you Yeah. Invest in the companies that the government’s investing in. It’s very simple. >> Okay. Well, that’s not confusing, but it’s confusing how they changed their tune is what I’m saying. >> Well, I mean and and more so, Frank, just one more thing and then I’ll let you talk about this. What happens in the next administration? Do they purge all that? >> And that’s a good question. You have a three-year runway for for this. And that could happen. And I think if that’s going to happen, the Democrats need to move way away from the left because >> uh you know, the policies that they have right now are just not supported to the point where, you know, if you don’t agree with their policies, they destroy your life, right? And that that’s that’s a bad that that you know, and you see that because you have Elon Musk who who’s a Democrat >> who went Republican. You have Joe Rogan. I mean, these these are huge, right? had, you know, the crypto community. >> President Trump is a Democrat. >> I mean, you had a crypto community Democrat and then they tried to shut down that industry, which Trump used to advantage. So, it depends what they want to do, but it’s the current policies that are never that people are never going to adopt what’s going on right now and they need to go more back to the middle if that happens. But that’s certainly a risk. That’s a risk for years from now. But right now, what Trump is doing is saying, “Okay, America first.” Uh, a lot of countries been taking advantage of us, which is a fact. you can look at the deals and all the deal flow and and you know we’re the biggest country in the world. We should be getting the best deals. People shouldn’t be taking advantage of us. And that’s why everybody’s kind of bending the knee to us and saying, “Okay, we’re not going to do this. We hate the US.” And all a sudden a deal works out. And again, if you listen to the media, they’re going to blame that on Trump and whatever. But the bottom line is >> we’ve said this for many years and we have been on your podcast even 161 17 and all this tariff nonsense and we always say use the greatest buying opportunity ever and you made a fortune listening to us. >> That’s going to continue to happen, right? And when we’re the biggest best country in the world with the biggest economy in the world, right, we could buy our goods anywhere and it it’s going to be more expensive if we go outside of China. Yes, it is. But they can’t sell their goods anywhere, right? And that’s that makes us very very powerful. And he’s using that as leverage, which is why you’re seeing, you know, gold, silver go high, a lot of countries buying, starting to get off the dollar and sell some of their dollar holdings. They can’t obviously get out of it completely and destroy their economies. Uh, so you know, with that and also again, politics aside, my job doesn’t make you money. If you’re looking at what they’re doing, look at the Intel deal and how much they’re up on already. Look at almost all these rare earth deals. It it cuts the tape. I don’t think it’s fair and I don’t like it politically, right? I don’t like it. I’m just saying that it eliminate it’s going to make these rare earth miners develop much more quickly, which they weren’t even on schedule. They weren’t even on the map to get developed in the next couple of years. And that’s huge because we need these metals and that’s going to make these companies go higher and higher. And I think the government next you’re going to see him taking stakes in uranium companies that are pro-American uh with mines here. You got UEC, you got Encore. Those are two that that I think have tremendous upside. They’re already have tremendous >> symbol. What’s the symbol on Encore? >> Encore is What is the symbol on Encore? >> So there’s Kamico, but that’s Canadian, right? >> No, yeah, it’s Canadian with with uh Yeah. So, Encore because I I don’t know if it trades. I think it might have um >> Let’s see. >> Yeah, seems >> I’ll look it up as you do it as a Encore. >> It’s so funny because I actually owned this for like 10 years and I just never looked at it. So, it’s EU uh is a symbol. >> EU. Yep. >> E. So, so what about you know one of my theories is that um and we just just started investing in this for clients by the way >> uh through our managed growth strategy uh TDIMG and uh the idea that quantum computing for this reason let me tell you the reason the thesis is that if you don’t have this under wraps and it actually comes into fruition if other places have it especially the black hats and the other guys out there that we don’t want to have this they can basically in a second de enrypt the entire Pentagon and rip right through all of our stuff. And therefore from a security standpoint, we need to have uh companies owned by and and not controlled but but pieces of uh so that the government can really have that protection. Thoughts? uh I think that trend is very very far out and if you’re believing in it then the biggest beneficiaries are going to be Broadcom AMD and Nvidia who have to supply the chips which are which are going to need even faster chips than are available today which you know Nvidia is the king of those that would be the best way to play it and the best in terms of riskreward profile but you know very far away from that and uh you know a lot of this stuff isn’t going to happen >> it’s actually a safe way to play it Frank >> a safe way to play it >> a safe way to play it >> a safe way to play it I mean you want to do it Yeah, you have D-Wave, your ion Q, you have um you have u Regetti and a few of these other guys that are out there. Plus, of course, some of the major names also that that kind of are doing this the even IBM for that matter, right, with with some of the systems. >> And remember the amount of power that’s going to be needed. We have a massive energy crisis right now. Uh more massive than than anybody believes uh other than the hyperscalers and and the White House. And this is why they’re taking stakes in companies because we need rare earths. We need the energy. We don’t have the energy. We’re modeling it. All the models are dead wrong. I’ve been studying this for three years are dead wrong. They’re modeling on large language models and we all know large language models is you know takes up much more energy compared to the normal Google search and they’re all modeling out for the next this isn’t modeling out for 105 years. We’re talking about three, four years, right? And what they’re not modeling out right now, and you could listen to last week of Meta’s call of agentic AI is here, right? It’s here. You you have bots doing everything for you. And when you have agentic AI, this is autonomous. This isn’t large language models where you put in a couple of prompts. That’s okay. That takes a lot more energy, but that’s what it’s being modeled on. And if you’re looking at a Gentic compared to large language models, it’s using probably 30 to 60 times more energy. Just to be I I need to stop you because this is a really important point here and I don’t want to gloss over this but basically what we have is the the the let me just kind of give a little bit and then I want you to fill in some of the blanks here. >> What we had first was Google search which is okay I’m interested in this recipe for this. Can you tell me this? And you get a billion results and you got to search through those to figure out what you want and then you had the sponsored. You had to kind of weed through those and then you figured out okay and then you have to look through 20 things. you are the person in charge of your own destiny after you get your basic information. >> Then we have these large language models which basically sucked up all this stuff. And by the way, uh I didn’t get my thank you letter from Google or Facebook or anybody else for utilizing my data, but anyway, you’re welcome. Um as is anybody else listening. They took all that and they then created this massive process to do what you did, bake it down into usable features and that’s where you just get that answer right in front of you. Right. Next stage is when the computers are able to actually think independently to a degree, not act, but at this point that’s called inference. Inference is kind of the next thing. We’re on the cusp of that right now. Some say we’re there, by the way. And inference is that next level of of AI which makes computing or makes makes uh the AI a smart a a um intelligent and I don’t I don’t want to call it sensient because it’s not but an intelligent uh being if you will. So it can actually do some thinking reasoning and all that. Your next level and the holy grail is agentics. Agentics is taking all of that the reasoning the thinking and all that and then making decisions almost on their own which you start thinking about Terminator. You start thinking Terminator. Um, scary. Yeah, but that’s where that’s what you’re talking about. You’re talking about that. So instead of using a ounce of water for a Google search and the cooling down of all the facilities and the large language model search, which is your open AI chat GBT using a cup of water or so of that into next inference, which is maybe a half a gallon to maybe three gallons of water for agentics kind of uh activity and action and all of that requires energy. So you think about the differential between all that you’re talking about something that is multiples and and and and actual you know factors above right I mean here’s the stats it’s 0.3 watt hours of electricity for a typical Google search you need 25 times more power for a single chat GPT query and then if you’re using aentic AI which is the next step and that’s what they’re modeling on they’re modeling the 25 times more power if you go to Agentic AI it’s 79 times times more power than large language models. Let’s put some numbers behind it really quick and make it simple. If you’re looking at Goldman Sachs and you’re looking at McKenzie, two comp wellrespected companies have forecasts. They’re forecasting anywhere from by 2030 around 100 125 gawatts of electricity. Gigawatts of electricity. If you model it based on agentic AI, >> is that per year? Is that per year? >> No, that’s by 2030. So that’s the the full capacity of what we’re going to need to support our requirements. So that’s what we’re going to need in that’s we’re going to need in facilities to pump out. >> Yes. To pump out. We have and this is just the AI, right? So this is to put in perspective. We have like 80 right now and they say it’s going to go to we’re going to need there’s estimates up to like 150 to 200. If you include a Gentic AI, it’s more like 327. And the difference between that is trillions, tens of trillions of dollars in spend. And we don’t have the capacity on the grid. And that’s why you’re seeing these deals by hyperscalers that I’ve never seen anything like it in my life. They’re going to open up Three Mile Island, which is 5 years away, >> and you that you hopefully you get state, local, federal approval, which is going to be very, very hard to do. After that, Microsoft is signing a 20 they sign a 20-year contract to lock in that energy for 20 years. You have Oaklo, it’s not generating revenue. They don’t have scalable. >> Amazon’s in there and then just there’s another deal done and pumping all sorts of money in. They’re banking on it’s still unproven by the way. >> They have they have no choice because there’s no energy out there. They need portable energy because there’s not enough on the grid. And this is where you see that’s why uranium is going through the roof, right? And you know, another alternative. So, you know, we need this energy. It’s why if you look at uh natural gas turbines, this is the first time it’s happened in history because I I hate alternative energy as an investment. You lose 99% of the time in alternative energy, right? Whenever you’re getting a subsidized, you lose. And we’ve seen that throughout the years. It’s not a long-term strategy. You could trade them all you want. I’m just saying buy them longterm. We just spent 10 trillion to build solar last 10 years, solar and wind, and it’s literally the same percentage as you know fossil fuels that we’re using over a 10-year period, but we wasted 10 trillion. Those are facts. >> Mhm. >> When you’re looking at solar, this is the first time, not solar panels, right? Because we’ve seen subsidies come down to those. When it comes to battery storage, solar companies for the first time are economical. These companies are going to be on fire pretty soon. And I’ve never recommended solar companies, but solar companies have focused on battery storage. Okay, Scholes is one of them. That that’s a good company. You can look up a symbol for that. This doing a lot of research on these things. Uh there’s not a lot of them, but those that are focusing, look at their numbers. They’re going to pay dividends. They’re buying back stock because it’s first time it’s economical. It’s cheaper than natural gas turbines when it comes to electricity because it’s disrupting the entire market. Electricity prices are going through the roof. I have great contacts that build these data centers for the hyperscalers. I got some that that are on the boards of electricity telling me the Microsoft deals that they’re signing are 15% increases over the next three years and they’re signing in 1 second. So >> some of these companies like if you look at the Invesco Solar ETF, it owns things like um First Solar, Nphase, GCL, Sunun. Are these not the names we’re talking about? You’re not talking about the generals because I mean F first Solar is just down. These are all down a lot. Yeah, they’re down a lot because so you know if you’re looking at at some of these companies, let me see if I can find uh just a short list for you guys. Uh let me see this way I can get because you know the research let me bring up the research. I didn’t I didn’t know I was going to go there in this interview but you know we go deep. We go deep. >> No we go deep and this is you know we don’t have all this stuff so you know which is cool but this is um so there’s two two companies I would definitely recommend and let me get to them right now. So uh you have Scholes which is one and next tracker is another one. So NXT. >> Yeah. So NXT is in the solar ETF but that’s you know >> Yeah. Look at NXT and I mean we recommended these companies in September and October and you know how bad solar is doing. Scholes is up 35%. Next track is up 33% for us. Those are two. >> So the differential here what you’re saying is that these solars have the capacity to actually also store >> battery storage. Yes they have battery storage technology and these are two of the leaders. So, next track NXT and SHLS. Those are two companies. And if you could see, look at those compared to the rest of the solar companies. These guys are going to be printing money for decades because now it’s actually cheap. Never thought I’d say that about solar. Again, I never really recommend solar by life, I don’t think. But these are two companies that were doing great on because when the dynamics change, the fundamentals change, you got to be willing to change. >> I think also the other thing is that even if um there is so much need for energy going to be in the future, assuming we we stay on the same trend and track, right? Assuming this all happens and all of a sudden it doesn’t be like one day somebody says gh forget the AI let’s move on to the next thing but assuming we go through this and it continues on the same trend of track there’s going to be a lot of energy needed and whether that is going to be completed by nuclear whether it’s going to be completed by some other who knows magic right you know fision fusion I don’t know whatever the fact of the matter is that this even as a complement to the other energy sources is going to be beneficial solar >> yeah beneficial absolutely I mean you just You have to find I mean when you see companies like Oaklo that that are signing contracts and this stock is absolutely through the roof whatever whatever the valuation >> we had this last year we had SMR in Oaklo for our clients last year I don’t even want to talk about how much money it was made it was absurd >> I mean and you know they’re signing deals right they got big backings by Peter Teal and stuff so so you know you’re looking at some of these companies what I love is is I was able to invest in Bloom Energy in in the 20s that’s a company that >> Oh remember that one. Yeah. Yeah. >> Yeah. So Bloom Energy has done well and this is they’re signing deals. They have great great technologies. So you know solid oxide fuel cells and this is actually like they have a model which they’re much far advanced where they they can produce this at scale now and now you’re seeing them get tons of contracts. They just signed two billion contact with American Electric Power. So >> there’s some of these names that are incredible. Anybody that owns megawws and this even goes for the Bitcoin miners. So Bitcoin miners that’s called tier one. What they’re doing is they’re transferring from tier one to tier three. Why would they do that? Because each megawatt tier one, which is Bitcoin mining, is roughly a million dollars. It’s 15 times more when you convert them over to tier three. And you have the biggest companies in the world with the deepest pockets that are in dire need of energy. So, if you have companies like that, uh, you’re going to do very well. DGX is one, Digip Power. They own a ton of electricity. We’ve been in this since a dollar. Uh, it’s three, went as high as six and came down a little bit. And this is a company that that’s in this transition pretty much ahead of most of these Bitcoin miners. Uh they’re sitting with a full capacity of 400 megawatts of power. Uh you know, and they’re going to convert a lot of this over. They own the actual power. They have these assets that are probably worth three times the price of the stock right now. This is what I’m looking for in in in terms of energy in the sector. Anyone that has megawatt megawatts is huge. >> All right. That’s good stuff. Love it. Love it. Um I want to continue on with this uh AI that I want to segue into. I want to talk about private credit uh because I have some things that I I I just some things that make you just go what’s going on there. Um and I want to talk about some of the earning season. But let’s let’s continue on with this this discussion this idea of are we in a bubble or not? Now we saw some earnings come out from various companies. Some are really good like Facebook is uh you know going back on their spend huge amounts of money they’re spending um but they’re making some some real u headway. One of the things that really was interesting in the conference call last week was the discussion about how they’re flattening and um streamlining their various teams where it could took uh you know maybe a team of 20 to do something for a while they’re flattening down to one and there’s a whole >> I don’t know if you’ve seen this whole undertone in the markets about u leaders and of of companies coming out and talking about and specifically pounding the pavement about that AI is not going to reduce headcount. Right? this whole idea, which makes no sense to me, but you know, I don’t know if they’re doing it just to make sure people don’t freak out, you know, and keep working. Keep working. What? Don’t worry about it. When we get the machine to do your job that you do exactly right now, don’t worry about it. We’re not going to fire you. Why would we do such a thing? No. No. You know, because if they did, then people would be like, “Uh, I’m gonna slow roll this. I’m not doing I’m gonna make this take 20 years to to to develop >> capex spending on companies. We’re talking about $60 billion now into open AI from a various bunch of players now. And also we saw the soft bank is possibly doing 30 billion which questionable whether that’s included in the 60 billion. U Microsoft is going to be spending. Microsoft got hit down about 12% after their earnings. People are getting very concerned about spending in some areas right the overspend. Do you think we’re at a point, an inflection point that where we were before was, “Oh my god, they’re spending. That’s great. We’ll ride the stock up.” Now it’s like, “Wait a minute. This spend is now a concern because we don’t know how much we’re going to recapture.” And the big question that came out last quarter or so with Open AI promising everybody and then the poster child of what was really going on, which was Oracle falling from from grace. Is that something or is that all just garbage? I think there’s good there’s massive separation that we’re seeing right so so when we look at this is why Microsoft got tanked Microsoft said this is the reason why it tanked purely they’re spending more money and their margins are going lower next year okay >> Meta on the other hand remember Meta they always used to increase spending and the market punished them they never punish them anymore because those guys spend money and they return more money on their investments than any anybody anything I’ve ever seen right I mean they bought uh >> you Instagram for two billion. Remember that? I don’t know if you remember that. They wanted it to to crucify uh Zuckerberg. >> Well, that’s what he was doing. >> Well, he was doing the he was doing the metaverse and he was like, “Okay, where’s the payoff here?” >> Not even the metaver. I’m talking about Instagram. He bought Instagram for two billion, [laughter] right? And they made fun of him and they said, “You should kick him off.” And he’s not a good CEO. That’s what is $800 billion asset at least now. I mean, it’s insane. I mean, these guys spend, they know what they’re doing. But for people who are saying this, and I think it’s a it’s a story and and and people just read stories without looking under the hood like we do, at least what I do. uh you know when it comes to fundamentals and stuff like that. I know you do it as well. But to tell me that this isn’t benefiting the companies, look at what they’re reporting. They’re reporting record profits across the board. This is the first time I know I’ve been doing this for a long time, 30 years. You’ve been doing it probably just a little bit longer. Uh have you ever seen a market at all-time highs where these companies are reporting profits at all-time highs and they’re actually laying off employees? Why do you think they’re doing that? Because AI is working. >> Yeah. Exactly. Exactly. >> Right. So, so for them to think about this and the Fed actually to come out last week and and Powell say, “Well, you know, just like regular, you know, technology and and you know, we see these trends where you lose some jobs and you gain some jobs.” I’m going to put this in simple terms. Doing this for 30 years, I’ve never seen a trend in my life where you can’t see the scalability. Okay? So, what does that mean? It means when you scale, you always want to scale. It’s great for business. Okay? So, you create the iPhone, you’re like, “Oh my god, this is a great product. We’re going to scale.” Well, you could see the scalability because only everyone who is alive could own an iPhone, right? So, you see the end of it. Okay, this is the amount of people. This is your total address of the market. You cannot see the end of the scalability for AI yet. Like it the productivity gains that you’ve seen are almost infinite. They keep going better and better and better. And that’s why you’re seeing these companies continue to increase their spending. They were spending 70 billion a year ago. Now they’re spending, you know, Meta came out and said we’re spending 125 billion on AI, 165 billion total. next year. That’s next year, >> right? So, so and you’re looking at probably up to 600 over 600 billion from the top six. You got the top four, which you guys probably know, but then you throw in, you know, Oracle and Alibaba, you know, 600 billion in a year they’re spending on this the >> Let’s put that in perspective, but people to be absolutely clear, that is a butt ton of money. Seriously, that is an absurd that is that is [clears throat] more than some GDPs of countries around the world. It is a huge amount of money. I think it’s 125 billion is the cancer the cancer market basically is 125 billion a year. So just to show how much how bigger this is, right? >> And by the way, this is also money that is not being th is not being put in for instant gratification, right? This is not like we’re buying stuff and it’s going to give us a um xfold benefit because of this or that. This is kind of this is the just an installment, right? This is an installment plan that’s maybe another bunch coming next year. >> Well, here here’s the biggest transition and this is something else I bet that that’s you know original thesis where everybody wants to get into AI, right? Like a year ago, two years ago, oh, we we need to get into AI. It’s the biggest thing ever. And now you’re what you’re seeing is companies saying, “Wait a minute, wait a minute. Okay, even if we create an AI department, you’re going to have Google come by and say, okay, hey, you guys are really good. We’re going to basically poach the whole and spend, you know, $10 million, which is like a penny to us, right? I mean these companies are generating 80 billion a quarter right now which Microsoft just generated right and they’ll poach everyone from you. So what they’re doing is they’re going to Google and they’re saying hey we want to use all your AI services and Google says even better you can use all cloud services. What we want is the APIs. We want the kings of the kingdom. We want access to all of your list which is hundreds of thousands sometimes millions sometimes hundreds of millions depending on a retailer and saying we’ll work with you. We’ll create models. You can use our whole entire AI system and every time a search comes up, it comes up immediately. You could use Gemini 3.5 and you’re seeing these deals. That’s the next wave where I think it’s an easy layup to make money in AI. Have you seen the chart of Wayfair? Have you seen the chart of Dollar Trees and Dollar Stores? Have you seen a chart of Gap? Gap. Have you seen that? All those have one thing in. They all sign deals with either Google or Open AI to run their AI services. And look at those charts of those stocks and how much they’re up. I mean, granted, you know, the market’s come down a little bit last week, but once they did that, they’re basically saying, “Okay, instead of competing, now we’re going to partner.” And it’s almost like the Nvidia thesis from 10 years ago that every no one loved to do in technology. I’m not partnering with anybody. I keep my own IP. And Nvidia said, “Look, we’re going to partner with everyone in the world, right? And build our own systems, not just the hardware, but the software around this, right? And that’s why they’re so big in 4 trillion whatever >> uh you know, market cap.” >> So, you’re seeing a lot of these companies like an Under Armour. You look at like crappy retailers that that that want to learn more business instead of these companies all these companies building their own AIS. They’re partnering with the hyperscalers which is making them much much bigger which is generating more money through their cloud and now they can offer services where hey okay uh now someone’s going to want something Etsy just to sign a deal. I bet you’re going to see Etsy stock go through the roof. Etsy, right? You’re like really Etsy. But now, if you look at the deals that they sign, any product that you’re going to list or that you go, it automatically it gives you a one-click buy to Etsy if it sells it. One click buy right here. Here’s how you buy it. Boom, in two seconds. No, the whole thing would be not only that, it would be, you know, that that um you have a party coming up and the system, you know, your birthday coming up, a 50th birthday for somebody and um you get presented with um you know, a very refined Etsy customized plaque, I don’t know, for somebody that comes up in your uh you know, your AI daily lookie. >> Yeah. >> And then you’re clicking like, yeah, that’s good. I’ll buy that. or or three or four different sites, by the way, that have similar ones that you could buy and check the prices. Like, for example, it’d be very nice to have a really good >> ride share comparison tool that can tell me Lyft or Uber so I don’t get ripped off by either of them when I order something. >> Yes, exactly. And listen, I’m not say I’m not saying that, oh my god, everything. I’m just saying AI is not even close to being a bubble. If it’s in a bubble, one, we have great contacts that build these data centers. Once we know this isn’t, you know, an ego thing. This is just a data thing, right? Look at look at how much these companies are spending. They’re increasing their spending means that this trend is going to continue for a while. Doesn’t mean all the stocks are going to go higher. If you look at >> Nvidia, Nvidia, Microsoft, even Meta after its move, all three of those stocks are down over the past three months with with Microsoft being down 22%. So people like this is going to blow up. I would say Microsoft down 22%. It’s kind of like a blowup, wouldn’t you? >> Yeah. So, you know, you’re gonna see this rotation. And the rotation, I think, is the layup is one, you’re seeing AMD do better, and and you know, catching up a little bit. Still not even near Nvidia, but you’re seeing that momentum. You’re seeing, you know, great out of Broadcom. So, so there’s just a separation. And as you go along this AI trend, look what’s happened to the memory companies, right? When you’re looking at at, you know, the Western Digitals, the Seagates, the Microns, like out of nowhere. Have you seen those charts? Holy cow, that’s the next stage. Oh my god, these prices going through the roof because of AI. You know, Oracle was late to the party. So it was Dell was a little bit late to the party and their stock did well and some of those are pulling back. So you’re going to see separation in this industry. It’s going to provide great buying opportunities. And for me that’s what I love because when anyone can throw a dart and make money, they don’t need us. >> We have to separate through this stuff. And you know we have amazing winners. I mean uh Celestica is one that that we just sold for uh I believe it’s a 500% gain. You know just having having great contacts in the industry saying there’s no switches. I’m like what the hell is a switch? And they were like, “Well, it’s like PVC pipe, right? Picture you don’t have PVC pipe. You can’t live in a house if you don’t have that.” >> So, they didn’t have there was a huge shortage. This is one company that got it right. And once they did, they had incredible pricing power. And you have the biggest companies in the world with the deepest pockets are like, I’ll order 5 million of those because we need them. >> And this is a company that went from 40 to basically 350. >> Uh, so that’s the the trends that I want to see. I love the energy part. I still think it’s money to be made. I love the retail part of partnering with some of these companies where it’s going to benefit them tremendously and it benefits obviously to Google because now they got access to these clients. They know everything that you’re going to do every minute for the rest of your life which is great that they could sell a fortune of advertisers which is why Meta and Google are absolutely crushing it and yeah there’s just different areas that are going to benefit as this trend continues to go on and it’s very very strong right now. >> So let me let me summarize a few things. Number one, follow this strategy. invest when governments are investing in something. That’s number one. >> Absolutely. >> Number two, AI is not in a bubble. Energy is going to be a big issue here. Look for companies that can supply that energy to the industry and to the world over the next number of years because it’s not going away. >> Hold that thought really quick. If you want >> to see when this bubble is going to end, there’s one company you look at, very simple, Taiwan Semi. They make all the chips for everyone. You looked at their last quarter, they raised they raised their kager, which is a compounded annual growth rate. Raised it by another 15% annually to 2029. So they’re expecting instead of 40, they’re expecting like 55 57%. Most companies would be happy with a 12% 15%. They raised it an extra 15%. These are the companies that this is the company that gets their orders first. So video calls and says we need a million chips, you know, all everyone, all the biggest chip companies, right? and then they deliver the chips to Nvidia. Nvidia delivers them to the customers. So you see this chain. That’s where it would happen first. If you see Taiwan semi come out and say, you know what, we’re not really seeing the spending as we saw the increase. That’s when you know maybe you should take some off the table. Until then, that’s the company you need to look at every year. >> And and by the way, this this doesn’t mean there’s not going to be corrections in between. >> Of course, you know, that’s markets go. Yeah. >> Let So that’s two things we said. you know, the urgent trend of looking at some of the things that are happening now into the future. Um, the capex spending, which is going to translate into revenue over time, the reality check that the AI is going to replace jobs. I think we kind of just for a second touched on that, didn’t get into it, but that’s okay. Um, and and um I want to uh talk about private credit and then finish up on earning season, a few different things that are going on. >> Private credit. All right. So, let’s let’s kind of discuss this for a second. What is private credit? Well, it’s what it’s what it sounds like. It’s private credit offering. So, it’ be like um it’d be like you lending money to me, Frank, right? That’s a private credit transaction. That’s a private loan. So, we’ve got this ma it’s gotten it’s gotten enormous. I think it went from like in the last five years went from like a trillion dollars like three to four trillion dollars of known private credit that’s out there right now. Um and the bank stepped back. they didn’t want to offer, you know, they they the rates weren’t what they wanted to uh lend at. Um the latest shift is in the way lending is getting done. And the question is, is private credit, which we’ve seen a breakdown, by the way, for example, last week was um Black Rockck TCP, which a publicly traded company, symbol TCPC, and it disclosed a 19% decline in net asset value for Q4. for Q4 2025. Right now it trades at about a 25% discount to NAV and the fund is down about 46%. This is Black Rockck by the way. This isn’t just like, you know, ABC ETF fund something or other, right? This Black Rockck, they would hopefully have good lending standards. That’s the issue that concerns me. The as big as this whole private credit environment got, we have a situation with did we once again step out of bounds when it came to lending standards? And is this something that could be pro? It doesn’t be problematic like a crash of the system, but is the private credit area something that is putting up antennas and kind of making you a little uncomfortable? It’s not making me uncomfortable because it’s easy to see this market and this market is a disaster. So, so you know this is the private credit markets exist because this is like, you know, they’re going to take on more risky loans, right? With the banks that won’t take on these loans, but the private even though when it comes to private equity and these companies, what they do is, you know, they’re leveraging. But when they leverage they’ll take these companies and these is private credit right so the hope is that you know we want to have a liquidity period which is a company going public or it gets taken over. Now, when you have these private equity funds, which is all about private credit, they usually have a pay period of 3, four, 5 years, and they’re sitting on assets on their books that are declining in value, right? So, when they’re declining in value, they can’t get them off the books. There’s no liquidity period in sight. And what it’s doing to investors is they’re sitting on this dead asset. So what they’re doing is I have someone that that’s one of the biggest in this industry. He’s been doing it for 30 years who’s starting funds in the consumer food space, which I love because I’m like consumer food, right? I love when people tell me idea like I’m like you’re crazy. And he’s like, look, they they’re sitting on companies that they bought that they’re selling for 10 cents on the dollar that they need to get off the balance sheet, right? >> One, they’re going to bring in money and then they could take that money and leverage it and go into another idea because it’s dead money. They don’t have that dry powder. And two, they have to get rid of this because their investors are really ticked off because they’re sitting on this as something that they used to be able to sell right away, right? And just, you know, take these companies private, fund them, leverage, and then repurpose them, and they IPO much higher price, right? And they make fortunes on it. That’s not happening now. So, it it’s big. We could see it though, which is really good. And there’s other companies and guys that I know who are very wealthy that that are saying, “Hey, you know what? We’re using this as an opportunity to buy these assets dirt cheap. It frees up money for these companies.” But I I’m never worried about something that you could see. It’s the things that you don’t see when you didn’t know. >> Well, that’s what I’m talking about. I mean, it seems like this is all of a sudden cropping up. We don’t see it because we can’t see it. That’s the problem. >> The [clears throat] private the private nature of this for Yeah. For for a while. Like I’ve been when I say a while, for like the last year, it’s really been bad because it’s this went on steroids after, you know, the government was pumping money like crazy. But now a lot of these things in 2021, 22, you’re looking at 25 26 27. What’s going on? Well, we’re sitting on these things and you’re seeing the value of these assets actually decline now, right? Where they were worth a lot more and they’re like, how what are we doing with these? We can’t sell them. We’re going to take, you know, so they want to get them off their balance sheets and there’s other funds that are taking this and rolling them up and creating spaxs and throwing out this business and you know, it’s just like, >> well, we’ll see what’s going to happen. I mean, specifically in home improvements, certain tech adjacent borrowers, e-commerce rollups, you know, these are the things that are kind of concerning me. And when I say concerning me, you know, I I have very little if no exposure to this for clients. But the question is what’s the knock-on effects in some of the other credit areas, you know, that’s something I mean the problem is more of aformational because I think we need to know and have clarity about the functionality of a market and the smooth running of a market in order to make good decisions. I mean that’s the bottom line there. And this is a part you know four trillion is not a small part of a you know small thing. It’s it’s a pretty good chunk. >> Yeah. And what makes me nervous, by the way, I is really housing like like the housing market, the fundamentals are deteriorating very very quickly right now. You’re seeing a ton of supply come in the market. People can’t sell the house. Last month, was it 16 17% of buyers who signed a contract canled their contract. I’d never seen that before. Right. And you’re seeing it because it’s not just the interest rates, which you could see, okay, they’re higher. It’s the insurance, it’s the taxes, it’s, you know, this massive inflation going on. people like >> the fact that your health insurance cost for me for example 1,300 a month for the crappiest insurance you could find. >> I know. And how how are you, you know, how do you see this huge economic growth and we can get away with tariffs and just manipulate different things and our exports are better now and we’re going to see a strong GDP number over 4% next quarter. How do you go longterm without housing as that catalyst which is one of the biggest drives of economic growth? Everybody, you know, you buy furniture, you buy everything, you know, and to me the housing market is is frozen right now and it’s getting worse. And that’s one of the things that does worry me. >> Let’s uh finish up on the area of um earnings and a few other things there. We saw some earnings come out. Banks pretty good. I mean banks and uh the major money centers generally speaking. Yield curve benefited them. Trading benefited them. Deal flow benefited them. It was just I mean I don’t know there was not a lot of holes there that I saw. there was some tick up in um as we would think this following discussion of private credit of um you know delinquencies on car and credit credit cards short-term revolvers etc. But um generally speaking, I didn’t find any major holes in the financial sector earning >> major holes. Uh let me put it to you this way. The four largest banks generated 117 billion in revenue and over 31 billion in profits. >> For the quarter, >> right? That’s what I’m saying. >> It is the greatest environment probably in the last 30 years for banks because we all know if interest rates go higher, they they do better. They have the net interest uh you know income, right? and and that was supposed to go down like two years ago. I was supposed to see rates much lower and they were all forecasting we’re going to see this lower. If you’re looking at at JP Morgan is forecasting next year to generate a hundred billion dollars in NII their net interest income and now what do you have? You have economy that’s doing well as well. So now they’re able to get the investment banking fees and fees on on bonds and and trading fees. It’s just every single line of their business. I feel like I’m looking at my or when they report like everything’s up 25% 25%. It’s it’s yeah, it was insane. Like the numbers they’re reporting are just insane. >> And usually when I say there was no major holes and all, we could always find something in the financials. I I couldn’t see much if if anything. >> The loan the loan loss provisions for every bank have gone down. >> You think they would go up? They’ve gone down other than than I think it was JP Morgan because they had they took over like you know Goldman’s credit card and stuff like that. That went down as well. Yes. >> So So then we have um industrials. Look at Caterpillar for example. And I mean obviously they they benefit on the mining and construction to a degree. Um and industrials did did pretty well as well. I mean we’re even seeing starting to see um energy start to tick up a little bit here as prices come up. We starting to see you know benefits. I mean yeah some of the consumer areas, restaurants, things like that still, you know, maybe better than expected. I mean we saw the cruise lines come out last week. Royal Caribbean. Wow. You know uh guiding up guiding up. Um, so >> notice how they’re guiding up while Las Vegas Sands Vegas is getting crushed. I mean, >> crushed. >> Right. >> Right. >> Mhm. >> Crushed. >> I mean, I don’t know if you you went on vacation lately. I mean, you go to these hotels. >> Always. >> You walk in and they’re like, “Oh, by the way, it’s, you know, $50 a night extra for what?” Um, for whatever, just just because we’re charging you that >> because you asked me the question. Now it’s 75. [laughter] >> Yeah. It’s like, it’s for your car. I don’t have a car. Uh, it’s for the refrigerator. I don’t have a refrigerator in the room. >> Right. >> No, no, it is nickel and dime. It’s gotten terrible. Then you don’t get service. You don’t get maid service unless you beg, right? Um I was just in Mexico. Mexico was fine, but you know, and you got waters, >> Airbnb, Verbbo fees. I mean, what are they up 20%? It’s insane, right? So, cruises makes sense from a family makes sense. That’s why >> Oh, yeah. You know, going to like a a Disney trying to stay on a Disney property. I think we did some number. It was like five grand minimum >> for a week with a family of four. >> That’s without the tickets. >> Right. Right. Right. Tech. Now, we’re talking about tech. I mean, we talked about the capex and the opportunity there. Pretty good. Uh we don’t think we need to beat that one. 74% of companies as is usually the case beat EPS earnings and outlooks relatively good. A lot of guide higher. Interesting. We’re seeing some some weakness in the the the the SAS companies, right? The the CRM, the Service Now’s the AI, >> right? Well, you know, which they should be utilizing AI. But this goes right back against my entire thesis of AI. So when does Salesforce not do well? Salesforce should be tracking employment. It’s a simple simple strategy, right? To look at this. The more people that are working, the more people using Salesforce, the more people are paying for Salesforce, etc. You know, there there’s some corporate contracts with unlimited, but you know what I’m saying, right? The enterprise contracts. >> But what’s interesting is Salesforce has been even with that giant deal they got last week, a $5 billion government deal. Do you see that stock still cratered? Service Now not doing well. I think there is >> service now snowflake uh >> writing on the wall though that AI is going I’m not going to stop my belief in this until I see something otherwise but AI is going to take jobs and that’s okay maybe they’ll be placed somewhere else it’s also going to change the education system in the future people don’t necessarily need to I hate hate to say what I’m about to say but think you [laughter] know it’s a different situation where you have you know if you need to have automated division vision on something, you know, where you have a you have something and you just and it automatically tells you what the tip should be. You don’t have to do multiplication of what my 15 18 20% should be, which by the way, somebody put a 30% suggested tip in front of me last week. I was very aggravated, let’s just say that. >> Oh, they they just all Oh, the best is when I went to Disney. I went to Disney and ate uh there was a conference next to uh what is it? What is it? The Disney area that has all the restaurants and stuff like that. >> Oh, uh downtown Orlando. Downtown Disney. Yeah, basically. So, so I went there and we got tacos for for three for a couple of my workers and the guy’s like gives me the tip thing and it’s like, you know, it says 15, 20% whatever. And he’s like over my shoulder. I’m like, “What the hell?” So, I gave him like, you know, I think I gave him 15%. Then I found out, you know, how much it cost? $250 for tacos. >> How was that? >> Because because they charged us uh 20% gratuitity, which he didn’t tell me about. >> Oh. >> And if I And then he put the tip in my face and said, “Here, 15 20%.” >> That’s your bad. That’s your bad, Frank. >> Yeah, that that’s my fault. The first thing was just a credit card with the tip. It didn’t even say like, you know. >> Oh, that’s a new thing, too, right? They just give you that that blank like what I order. I don’t know. Whatever. [clears throat] >> Quick thing before I go. What you mentioned, if you’re thinking about buying these software companies, one, you might be better because you’re looking at the very very expensive with with Snowflake is like trading like 100 times forward earnings. You got Service Now trading at like 30, but Salesforce is 17 if you want to try on that one. However, before you do, go and do some research on anthropic. We took Gemini 3.5 right now is the best, right? based on you know these private leaderboards. Anthropic is by far the best when it comes to coding, operating computers, complex tasks, right? So these software developers, this is like financial analysts, consultants, accountants, you know, this is what the CRM systems, right? And very very expensive. I mean Salesforce.com is crazy expensive. Anthropic could do this for you now. It does it for you now. >> What does what does what for you? Wait, wait, back. >> The coding. You don’t need to know how to code anymore. >> Yeah, that’s like lovable. Have you tried lovable.ai? >> No. My son was in my office. He said, “Check this out.” He put some prompts in. He said, “Look, I need a website that does this. It has a form on it. That and I’m like, you’ve got to be kidding me.” >> Yeah. >> Like in an instant. I’m like, “That is beautiful.” >> There’s someone that did three prompts and created a video game. It was like snowflakes coming down. They were jumping over the snow. Three prompts. That’s, you know, the coding that it took it would take to do something like that. You could just go in and do. By the way, Grock, the the the app, if you haven’t done this, people, you want to have fun, >> download the Gro Gro act, Grock app. G R O K, that’s Elon Musk Xi. >> The imagery and imagination where you take an image and you just put it into there and it makes it do something and then you put a prompt like have these people jump up and down, spin around. It literally takes I’m not kidding. A image, one image, an image that can turn it into an whatever you tell it to do and within less than a minute it does this. It’s that’s unbelievable. >> It’s unbelievable industry. That’s why they’re all worried. >> You realize that my computer take jobs >> our computers in our office. I have a of a mac daddy of a of a laptop with and other computers. Do you know how long it would take to generate that kind of uh 5 10 second clip? And you do that stuff. You create that. Do >> you know how long that would take? Do you know how long that would take? >> It’s unbelievable. Unbelievable. >> Yeah, that’s cool. >> Unbelievable. My good friend Frank Kerio. Kersio research. Uh you can find him at kursier research.com. He has um some free offerings for sample newsletters, all sorts of things. Check it out. We’ll have the links information on the show notes page of episode number 958 on the disciplinedinvestor.com. Frank Kurzio, always wonderful being with you. Always love coming on the podcast. Always open for you, man. I’ll be there for you. Thanks, buddy. Appreciate it. >> All right. Thanks. And thanks everybody for listening. We’re going to end the show right there. Ran a little bit over. Of course, when Frank and I talk, we do not stop. And uh thank you for joining me [music] this week and every week. I’ll see you again real soon. This podcast is intended forformational purposes only and does not constitute [music] personalized investment advice. Investing involves risk, including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any [music] guests and may not necessarily reflect those of Horowits and Company, Inc., an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horowits a company is properly registered or is excluded from registration requirements. Any mention of thirdparty companies, products, or services is provided forformational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial adviser before making any investment decisions. Please visit our website for additional information, disclosures, as well as a copy of our form CRS. Advertisements are not related to the host or affiliates and are not considered [music] recommendations by the host of the show or any affiliates of Horowitz Company. [music] >> [music]
