Is The Market Bubble Finally Imploding? | Jim Bianco
Summary
Market Dynamics: The current market is heavily driven by retail investors, with significant investments in AI and precious metals, leading to a retail-driven market environment not seen in decades.
AI and Valuation Concerns: There is a concentration bubble in AI stocks, with the top eight stocks dominating indices like the S&P 500 and NASDAQ 100, raising concerns about overvaluation and sustainability.
Economic Impact: AI sectors are significantly boosting capital expenditure and GDP growth, but concerns arise about the sustainability of this growth without broader economic support.
Investment Strategy: Investors are advised to be cautious with AI investments due to high valuations and the risk that not all companies will succeed, similar to the dot-com bubble era.
Precious Metals and Crypto: Precious metals like gold and silver are seeing historic highs, driven by retail investors seeking safe havens, while Bitcoin and Ethereum are experiencing shifts in investor focus.
Labor Market and Economic Growth: The U.S. labor market shows signs of stress with low population growth affecting job creation, potentially leading to wage inflation if economic stimulation continues.
Investment Outlook: The market is expected to continue its momentum in AI and precious metals in the short term, but investors should be prepared for potential corrections and consider realistic return expectations.
Alternative Assets: Discussions around the tokenization of securities and the role of blockchains like Ethereum and Solana highlight ongoing developments in the crypto space, with debates on decentralization and permissionless systems.
Transcript
This market is now more retaildriven than any market that we have seen in decades. I think we're going to take out $50 for the first time in silver's history and we're probably going to keep moving higher. It's go to 75 or 100. You've got half your investment in this AI space. We all cannot really escape it. We have to watch where this is going to go and whether or not we're going to get that bubble peak because we're all going to feel it. the momentum is precious metals and AI stocks. So, they probably will continue to be the best performers. I hate to say it until they don't. And when they don't, you'll know it. There's a thesis out there that the American economy is running on AI sectors, boosting capital expenditure spendings, boosting um the S&P 500 overall, and without the sector, uh everything would slow down. We'll examine this thesis today and what to do with our investments during this time with our valuations the way they are with Jim Bienko, our guest today. He is the president and founder of Bienko Research. Welcome back to the show, Jim. Always good to see you. Thanks for being here. Thanks for having me. Looking forward to the conversation. Yeah, looking forward to it as always. Let me start with a tweet that you've been making or I guess it's called X. I don't know how what's the verb you exed it. Anyway, so you you went you went on X. The AI boom bubble now has the S&P 500 and the NASDAQ 100 with the same eight larger stocks. These two indices are merging into the same thing. Yes, we know there's a concentration bubble. Is there a valuations bubble? Yes. And yes, there is a concentration bubble that you know the top eight stocks in both indices are the same. You could see that it's 37% of the S&P and it's nearly 70% of the NASDAQ 100. So, their correlations will be higher. Is there a valuation bubble to I would argue yes or at the very least these stocks are extremely overvalued. Now here's the problem. It's not that these stocks have particularly high valuation but I'll point out what people like Roger McName of Elevation Partners uh Sam Alman of Open AI have recently said not everybody can win. And what the market is doing is similar to what we saw in the late 1999 early 2000 period is that back then if you stuck.com on the name of your company it soared in valuation. Well not every.com can win. We found that out with famously pets.com which is kind of the poster child of that period. Same thing with AI right now. Not every AI company is going to win. So if you look at particular valuations you might say well this one is kind of high but not ridiculously high. Goldman Sachs has made that point but the problem is every single one of them is like that and not every single one of them can win. The last thought I'd give you on this is the Sam Alman's Jeff Bezos has made this comment within the last week as well too. Roger McMes they all say the same thing. They're not everybody can win. They're all overvalued, but I'm gonna win. Pity the for pity the other guy that's going to wind up losing when the bubble comes down. Well, good luck with that kind of thinking. Everybody thinks that yes, it's overvalued, but not me. Everybody else is overvalued and we'll have to see how that works out once we go over this over the top. Yeah. And take a look at this article that um is a good segue here. We have a Harvard economist by the name of Jason Ferman who uh who said according to this article unfortunately driven by investments in the data centers and information processing technology excluding these technologydriven or related categories. The economist calculated in a September 27th post on X that GDP growth would have been just 0.1% on an annualized basis. Now I'm not here to challenge his math. Let's just assume for the sake of conversation he's right. What does that mean? I think that explains, this is just my theory. I think that if that were correct, that explains a lot of the confusion as to why markets are the way they are with as yet the S&P at all-time highs with Bitcoin at all-time highs, which we'll talk about, yet the labor market is showing cracks. What do you think? Yeah, I think that he's well Jason Ferman used to be, you know, working in the Obama administration and his numbers are largely correct, but I would pose it that they're very misleading in ter at the same time. The first quarter we had a big negative number because of the inventory build around tariffs. So in the second quarter we had a rebound. So yes, because of that offsetting number that they look big. Now that I've said that that software and u software and information technology equipment has added 1% to GDP over the last three quarters. That is the highest level we've ever seen. The only comparable periods to this are the internet adoption in the late '9s which was a little bit less than the 1% we've seen and the PC adoption in the early 80s which was about8.9. So, this is something we've seen in the past that we have this tremendous build. Now, what's different about the AI build is it's stronger and shorter than we've seen before. This gets back to my other comment about AI being, you know, potentially every company's priced as winning. Well, I'll throw out a quick tangent. There's one company that's losing here, and that's Apple. And Apple is losing because they're not playing in the AI space. So, the marketplace has said, "Look, you've got no choice but to play this death match of try to outspend everybody else and win the AI race. If you don't win the race, you're going to be lost. If you don't participate like Apple, you're going to be lost." And so, yes, you're going to see these types of things having a big impact on the state of the economy. you're seeing it on electricity prices moving up because of the tremendous power needs that these companies have had. So yeah, it's somewhat misleading that to say that without it we wouldn't have any growth, but that's because of the inventory adjustment. And also remember we've done this in the past. we do have these themes especially within technology the uh internet adoption in the late '90s PC adoption in the early 80s where we've seen them have a big pull on GDP we're seeing that again okay so ultimately we know that data centers are driving a lot of the capex we know that tech is driving a lot of the valuations growth of the S&P do we do with this concentration bubble that you were talking about earlier well I think the first thing you need to understand is that everybody Everybody's involved with this bubble whether you want to be or not. Um to give you an example, Michael Kemblas over at JP Morgan has identified what he calls 45 AI and AI related stocks in the S&P 500. Since Chat GPT came online November 29, 2022, those 41 stocks have accounted for 71% of the gain in the S&P. The other 459 stocks have accounted for 29% of the gain in the S&P. So if you are an investor in the stock market and you own broad indices, those 41 stocks are 47% or now 45 to be exact, 45% of the S&P 500. You've got half your investment in this AI space. You are tied in it. Well, I am tied in it. The economy is tied into it. we all cannot really escape it. So that's the first thing I would point out is this isn't just an what does it have to do with me? The answer is everything. It has every it it it impacts the economy. It impacts your investments. Um and so we have to watch where this is going to go and whether or not we're going to get that bubble peak because we're all going to feel it and we're all going to see it come out come down in the other side. And again, it's not that any particular company is insanely overvalued. It's that they're all priced at winning. And that's really the the message I have is that they all can't win, but they're all priced as if they are. Is the market pricing in much lower interest rates? Is why is that why everything is rallying right now? What's driving the everything rally? I'm talking about stocks, Bitcoin at all-time highs, gold at all-time highs, silver, precious metals. Yeah. Anything in particular that's lifting all boats? Yes. Retail investors. Retail investors in the retail investors in the month of September put up $100 billion of investment into the market. That was an all-time high for them to basically plow that much money in. This market is now more retail driven than any market that we have seen in decades. It is not hedge fund driven. It is not institutional investor driven. it is the retail investors at the side. And so they're going in fullon into the indices into AI and into and in and even some of them are even getting nervous about the current situation and they're going into precious metals like gold and silver. And so you're seeing that that tide is lifting all the boats. Now I'll push back on one thing. The one market that really hasn't been rallying a whole lot has been the bond market because the yield on the 10-year Treasury is about the same where it was in late April, early May. And here we now are approaching the middle of October and it hasn't gone anywhere else. And that's maybe because the retail investor is tangentially interested in the bond market. I mean, they're not avoiding it. It's not, you know, yields aren't going up, but it is definitely that's the big thing is this constant passive AI bid that I'm constant passive bid from retail investors going into the indices and like I just to go back to what I was saying earlier and I don't think a lot of people yes I'm buying VO or I'm buying IVV or SPY these are the S&P 500 index funds so I have a well- diversified portfolio no 45% of your portfolio is tied to AI is what's happening because of this concent concentration like of the likes we've never seen before. Take a look at my screen though. Let's go back to the real economy now. Uh the United States unemployment rate has now risen to 4.3%. It's now the highest since October 2021. Um this trend has been concerning the Fed. They've made this a reason to start pivoting and cutting rates. Does this trend concern you? Not yet. And you're right. It is 4.3, the highest since 2021. But in July of last year, it was 4.2 and it's been kind of hovering about 4.1 4.2 and it, you know, rounded upward in in August, the last number we've gotten to 4.3. Now, we don't have the September number. It's calculated. They just haven't put it out because of the government shutdown, and we don't know. But I think there's a bigger issue at play with the um labor market that people are really kind of acknowledging but not appreciating. And what they're acknowledging is the biggest driver of the labor market is the population growth of the country. What drives population growth of the country is net immigration. The border is closed, deportations are up, and this Congressional Budget Office that does these forecasts is saying that we are seeing possibly the lowest population growth in the country in 80 years this year. You have to go back to 1940s, 1950s to find the last time the population grew at 0.1%.1.5% which is what we're looking at. Why is that important? Because JP Paul himself said at his September press conference, there's an argument to be made that the break even rate on payrolls is now 0 to 25,000 job uh 50,000 jobs with the midpoint being 25,000 could be as low as zero. What does that mean? We create one job in the United States and that's enough because we got no population growth. We don't need that many jobs. So people look at 22,000 jobs being created in August, 29,000 over the last 3 months, and they say historically these are awful numbers and that historically this is means the economy is going into recession except you have an 80-year low in population growth. that the number of jobs you need according to JPAL is between 0 and 25,000. So the midpoint of that's uh 0 and 50,000. The midpoint being 25,000, we created 29. That's all we need. This is a different kind of environment because of this low population growth. So what I'm afraid of is we're looking at this data. We're saying historically this is bad. We have to cut rates. But then we say, "Yes, but there's slow population growth." And I'm like, "Go to the next step. It should be low and maybe these neighbors are okay. This is what we should expect." But instead, we're trying to stimulate the economy. The last thought I give you is if we don't have the population growth, we're not going to be turnurning out 150,000 jobs a month like we used to. And the reason is is that there's just not enough bodies to create have those jobs if we don't have the population growth. So, if we're going to keep stimulating the economy, saying we want to turn out 150,000 jobs, all we're going to do is produce wage inflation and CPI inflation, and that could wind up being wind up being bad for the bond market and producing higher interest rates. Okay. Uh what does this mean for the stock market? Now, Jamie Diamond, uh CEO of JP Morgan said that he's now more concerned or more worried than others regarding a correction. There's a 30% chance of a correction. Uh so if the market is pricing in 10% I would say it's more like 30%. I'm not saying next year because the timing of these things is almost impossible. He said in an interview with BBC the level of uncertainty should be higher in most people's minds than not than what I call normal. Um I'm not I'm not I'm not sure where he's getting 30% from, but I'll let you comment on what you think is a probability in your mind that's that's appropriate given that we've we're we're we're in a valuations perhaps valuations bubble. We're in a concentration bubble. uh you talked about the slowdown in the economy. Will this rally continue? Well, over the short term, I think it will continue. But I think you're right. When you look at valuation, the first thing everybody will say is it's not a timing tool. Okay? It isn't. But what it is is it's an expectations tool. So, if you're buying stocks at these valuations, and even if you take out the AI stocks, the market is still fully valued, if you want to use that term, maybe even slightly overvalued. You've got to expect that companies are going to t take the high end of Wall Street's estimate on earnings and beat that cuz otherwise if they don't they're going to disappoint and we're going to see a period of underperformance in the in the stock market. And so that's really where I think the concern is. Where's all the monstrous earnings projections coming from? They're really not out there. Now I know what the theory is. The theory is is that everybody's going to lose their job because they're all going to be replaced by a large language model and that's going to increase the margins on companies. I understand that argument. It might be true, but it ain't going to be true next year and it isn't going to be true in 27 or 28. It might be true in 2035. But at least for the near term, it's not. So that's where the problem comes in. So the momentum of all of that constant bid from retail will continue. But as I like to say, you know, hold on the stocks long enough and they might disappoint you because you're buying them and you have to expect monstrous earnings to justify these valuations or there's going to be a massive disappointment in it. Retail is also moving into alternative assets like precious metals and bitcoins. Let's talk about that first. Precious metals first, gold at 4,000, silver at near $50, historic all-time high for both metals. um what's driving this rally is the headline uh question I'm seeing all over the place on mainstream news and second what is going to continue what is going to make this rally continue if it were to continue. Um I'll let you answer both Jim. Yeah. So there's a story there's a narrative going around that there's a dollar debasement going on. That's totally false. There is no dollar debasement going on because gold is going up. They mean the dollar is being debased. Well, I don't see the dollar falling. I don't see risk markets like stocks and credit falling. I don't see interest rates surging. What I do think you're having happen is the precious metals markets as an asset class are tiny compared to the financial markets. There's probably a cohort of investors and probably at the retail side that are worried about valuation, AI, a lot of other things as well too, maybe even some politics in there. and they're looking for safe havens and they're starting to find their safe havens in either crypto and or precious metal. Well, it's only it doesn't take a lot of money relative to what it would take for stocks and bonds to move those markets higher. So, are there nervous people moving into uh into precious metals? Yes. Uh is that mean we have a dollar debasement? No, I don't see a dollar debasement right now. But that trend could continue with with the precious metals moving higher. You've saw that with crypto earlier this year and that has kind of been flattening out and I think that there is kind of a zero- sum game here between crypto and precious metals. Earlier this year, precious metals were kind of doing nothing. Crypto soared. We got to 120 on Bitcoin. It kind of stalls there. Makes a new high by $1,000. Everybody gets excited and then it doesn't follow through. But now that crypto is not following through, precious metals are moving. I think that that bid they compete with each other for that money and that's why they kind of take turns going up, but there isn't that broad-based dollar debasement or problem. The stock market's at an all-time high that is is is ne necessarily going to drive a lot more money into that space. Now, maybe that happens in the future. maybe next week, next month, next quarter, you know, the we get the 30% chance that Jamie Diamond is talking about, we get that correction and you could see, you know, an even bigger bid, but it isn't happening now. And those stocks, meaning, excuse me, crypto and precious metals are rallying without that dollar debasement, right? So, let's suppose I were invested in all all major asset classes, bonds, stocks, Bitcoin, and precious metals. And I'm thinking, well, I've I've seen gains in all of these things. Perhaps I could rotate into something else next year in 2026. What would that something else be, Jim, if I were to pursue that course of action? Or perhaps I should just hold onto my current holdings. What do you think? Well, first let's start with a basic question. What do you think you should get in terms of your investments? Now, the problem is a lot of people like, you know, 20 or 30% a year, which is completely unrealistic. And the reason they say that is because the stock market's returned them 20 or 30% a year for the last couple of years. A more realistic expectation based on the current valuations in the market. I've referred to it as the 456 market. Cash should return you around 4% which is exactly what it's been doing this year and I think it will. Uh bonds have been returning you about 5%. Uh actually over the last year they've been closer to six but that 5% is definitely in there. and stocks given the high valuation what should you expect stocks to return you over the next say 5 to 10 years about 6%. Now, the problem is when I say 456, getting back to that, oh, I owed I'm owed 20 or 30%. People go, boy, that's terrible. And I'm like, no, actually that's kind of average. That's what you should have been expecting all along and you've gotten comfortable with outsized gains in this market. And so if that's what your expectation is, then probably something like the bond market, which would offer you 5% yields with investment grade and give you a fraction of the volatility of the bond of the stock market, looks like a compelling investment. If your expectations are no, I think I want more. Well, then you're going to be rolling the dice on AI and you're going to be hoping that the AI trend continues and that you're going to pick somebody and there's we're going to still be in the everybody wins category. But when we get to the top on AI, we're going to start discriminating. Somebody's going to win, others are going to lose. You better hope that you have the right company. And if the argument is, how do you get to the everybody's going to win? Buy them all. That'sn't going to work because it didn't work in the AI. it didn't work in the internet bubble. You own the three or four companies that won. The rest of them went down 90%. You wound up losing 30 or 40% of your money by the end of the game. Um, and that's really where you got to be careful of with it. So, it really starts with what are your expectations? What do you think you should be getting? I would be arguing to you that five or 6% 4% on cash with no with no risk is a decent investment to be looking at, especially in an economy that's growing two or three. But the problem is everybody thinks they're owed a 20 or 30% gain. And that's really where it is. Because when people say, "Where should I invest?" The answer I hear I think I hear them say is, "What's going up 30% next year? What's going up 25% next year that I should be buying?" Not, you know, should I just be should I just take my 5% in the bond market and be happy with it? And I'm saying actually you should. That's not a bad investment. It's just that we've become spoiled to more than that. Psychologically speaking, I'm up a lot this year if I had been holding all throughout the year on on all these asset classes that I mentioned. So, I'm thinking, okay, well, I want a bit more, right? It it hurts me to take profits now and move into a low yielding lower yielding asset like a four four or 5% bond or CD when I could be getting 50% on gold. You know what I mean? or even 16% on the S&P, which is what it's up this year, or 23% or 30% on on Bitcoin. Um, so I'm thinking, all right, if I just hold on a little bit more, perhaps this FOMO phase is going to get me a bit more gains. Uh, but what you're saying is prudent. I how do I resolve this internal conflict? Jim, I think you really got to start to look at um, you know, what are your ex again, what are your expectations? Let's go back to April. Um, let's let's go back to April. There was a lot of people in the week after um uh liberation day when the stock market fell 15% that were really bothered by it. Were you bothered by it? If you were bothered by that 15% correction in um the stock market after liberation day, you've got too much risk. You shouldn't be you shouldn't be bothered by that. You shouldn't have to say I have to alter my life because the stock market had a bad week. Uh because it will. It always does and it always will. Um, so I think it really comes down to you've had a good run. I can't answer the question as to how much more risk you want to take, but if the answer is what do you think the stock market's going to deliver for you over the next several years, I'd say 5% might be a realistic number. I understand, like I said, I understand that people don't like that number, but that actually is not a bad number given the rel relative valuation numbers that we have. If you're, you know, you should recognize that what you've been in in is is an outsized period of gains. You've made a lot of money quickly in this market. You don't want to give it back. Um, yeah, as I even said, over the near- term, I don't see a reason for the stock market to correct over the near- term. So, at some point, you've got to make a decision on your on your side. Where do I think I've made enough outsized gains? I'd rather traffic back into normalized gains with less risk. And so that's really the question you have to ask. If it was me, I'd probably be doing it right now, but my risk profile might not match your risk profile. So that's really the question you have to ask yourself. One thing I'm considering, and some people are considering, is rotating into small caps and in the midcaps. The Russell 2000 has still been underperforming the S&P all year. In fact, it's been underperforming the S&P in the last five years, driven, of course, by um the MAG 7. The S&P has been outperforming, but perhaps it's time to look into small caps. What do you think? Well, they have a more realistic valuation, and one of the reasons you mentioned it. Why are they underperforming? Cuz they have no AI. AI is all meggaap companies right now. And that's what's driving the that's what's driving the buzz. Now, if you want to rotate into those companies, you're making a bet that the economy is going to stay okay and interest rates are going to stay reasonable. And if that's the way you believe about the economy, then that would make more sense. The small cap companies tend to be more economically sensitive than the larger cap companies because larger cap companies can be kind of power through an econ economy or they're internationally based uh globally based and one particular economy may not hurt them as much as with other companies like you know Apple has a big presence in Apple in China but you know some small uh consumer products company in the Russell 2000 has no presence in China. So Apple might be able to survive a downturn in the US or a small consumer products company in the US is completely dependent on the economy for the US. So if you believe the economy is going to be okay, that might not be a a bad place to go. But again, if you were to rotate into those companies, what would you expect out of them? Again, I come back to my 56% number. That's largely what they've been delivering. and everybody's been disappointed because it's not the 20% that you've been seeing out of the mega caps because of AI. All right, Jim, uh let's finish off on alternative assets. So, let's go back to gold and silver. Let's go back to Bitcoin. Let me p let me ask you the question that you asked on X. What's next for silver? You showed a chart with silver historical prices. Uh it's only happened twice in history and both times of history is any president both times his uh gold uh silver rather silver did not stay at near 50 for very long. Is that what's going to happen next? That's a good question because in both cases it was a big it was a big massive spike up in silver and then a spike back down. Um it's hard to say. I mean, in looking at it, but right now, I would think that if I was to bet, I think the precious metals are going to continue to move higher. But here's the problem with the precious metals. They're very speculative right now more than usual. Buy them, make a lot of money, make a lot of money, make a lot of money, wake up, down 20 25%, lost a lot of money. And that's the risk you're going to face with these things um as you go forward in their speculative flows. But if you were to ask me the near-term flow, yeah, I think we're going to take out $50 for the first time in silver's history, and we're probably going to keep moving higher. It's go to 75 or 100. I don't know if I'd go that far that it's going to go there, but it it's going to keep moving up. But unfortunately, when you see these kind of parabolic moves, they parabolic in the other way when they go back down because everybody's sitting on huge profits and everybody's worried they don't want to lose those profits. So when everybody thinks this might be the top, it just doesn't sell off. It goes straight back down. And that's the risk you face with owning something that's very speculative like silver has become right now. Okay. A similar uh question could be asked about Bitcoin. Uh if you zoom out, which I'm going to do, it certainly looks like it's gone parabolic, although if you look at it from a lock scale, it's kind of just going up in a 45 degree angle. So nothing parabolic there. I I I wonder if Bitcoin is just following the NASDAQ still. I still think it is. Uh but if I was to put a nuance on the crypto space in general, what's happening is there's been a shift back towards ETH. Uh and uh you know, and why has there been a shift back towards ETH? Because the story there is stable coins, DeFi, um you know, uh those types of stories. Bitcoin doesn't have any of that, but ETH does. ETH does have is the majority of stable coins, Tether and USDC. ETH does have DeFi. We're talking about, you know, passing the Genius Act and that we're starting to look at potentially allowing for more payment rails, allowing for more um assets, real world assets being put on the blockchain. That's not going to be on the Bitcoin blockchain. It's going to be on another. Now, it might be on the Tron blockchain. It might be on Salana or it might be on ETH, but it's not going to be on Bitcoin. So what Bitcoin is is sitting there and looking at is there is that there's all this hype and promise about exciting things going on in the world of adoption of crypto but not Bitcoin. Bitcoin will just play the role of store value and that's really where it's been going right now while it's been holding that 120 115 to 125 range. So I think it's going to continue to do that with Bitcoin. I think that what you're going to see is you're going to see that adoption. We're going to be talking about stable coins. We're going to be talking about payment rails. We're going to be talking about real world assets coming on the crypto blockchains and all of that's going to be everywhere else. And that's why you've seen ETH now year to date outperforming Bitcoin. The um the SEC has um more or less green lit the tokenization of securities. So, we're going to see more um more stocks and real world assets like you said being put on the blockchain. A lot of um discussion around which chains will be used more for tokenizations. There's Salana, there's potentially ETH. Uh do you have any thoughts there? Yeah, I mean there, you know, I think the first of all, it's not the Bitcoin blockchain. You know, they've been pushing back against that. So, the big question is really between Salana and between ETH. And it really comes down to a question of um uh you know permissionless decentralization. How important is that? Now um you know for people that are big fans of Soul, I've been skeptical of Soul because I think it's too I think it's too centralized and I think because it's too centralized, it can be permissioned. It can be censored and that defeats the purpose of having crypto assets. Look, the reason we have the blockchain is no one can permission can censor it. No one can alter alter it. No one can block you from using it. But if we're going to go down that road and allow that and Circle is talking about blacklisting certain coins, then let's just go the whole way and let's just run all this stuff in a server at the US Department of Treasury and then they could pass rules about what we could buy and can't buy and when we can buy it and can't buy it. um you're fat, so you can't buy sugary drinks with your um tokenized assets or anything like that. That I mean, that's where we'd go with this um at at that point. Otherwise, if we want to go permissionless and decentralized, then we're going to start screaming that it's terrorism financing and illicit activities and everything else, but then no one can can permissionless. So, that's the big debate we're going to have. Now, I'm a purist and I think that the permissionless decentralized is more important than the speed of execution. And so, I would lean more towards ETH and less towards Soul. And I know the Soul types will scream at me that they're permissionless and decentralized, but I don't think they are as much as ETH is. And so, that's really where where the where the conversation has to go. How much of this do you want outside of the uh let other third parties like a government or central bank control this stuff for you? If the answer is none, then you want to be looking at something like ETH. If the answer is some, then like I said, let's just go the whole way and just let the Federal Reserve run it all off a server and let them decide what we can and can't do with our money. Jim, excellent. Thank you very much. Uh I will leave on one final question in uh 30 seconds or less. maybe sum up what you think will be the best performer for uh the last quarter into 2026. Um at this point I think you know I'll I'll contradict myself in that what's got the momentum and the momentum is precious metals and AI stocks. So that you know you said the last quarter that's two months to 3 months to four months. They probably will continue to be the best performers. I hate to say it until they don't and when they don't you'll know it. um at this point. Uh so, you know, I don't think that this is going to be a period where we're going to rotate out of an un out of an unto an unloved sector all of a sudden. It's a momentum play and you want to play the momentum, but it's a high-risisk play. Jim, I really appreciate your thoughts. Thank you very much. Where can we follow you, Jim? Um X Twitter at Biano Research, my YouTube channel at Biano Research, Jim Biano on LinkedIn. Those are the three that I usually traffic the most. All right, LinkedIn X and YouTube. We'll put the links down there. Please follow Jim. He's got a great uh uh medium for you to learn about macro. And uh as always, thank you for watching. We'll see you next time. Thank you, Jim.
Is The Market Bubble Finally Imploding? | Jim Bianco
Summary
Transcript
This market is now more retaildriven than any market that we have seen in decades. I think we're going to take out $50 for the first time in silver's history and we're probably going to keep moving higher. It's go to 75 or 100. You've got half your investment in this AI space. We all cannot really escape it. We have to watch where this is going to go and whether or not we're going to get that bubble peak because we're all going to feel it. the momentum is precious metals and AI stocks. So, they probably will continue to be the best performers. I hate to say it until they don't. And when they don't, you'll know it. There's a thesis out there that the American economy is running on AI sectors, boosting capital expenditure spendings, boosting um the S&P 500 overall, and without the sector, uh everything would slow down. We'll examine this thesis today and what to do with our investments during this time with our valuations the way they are with Jim Bienko, our guest today. He is the president and founder of Bienko Research. Welcome back to the show, Jim. Always good to see you. Thanks for being here. Thanks for having me. Looking forward to the conversation. Yeah, looking forward to it as always. Let me start with a tweet that you've been making or I guess it's called X. I don't know how what's the verb you exed it. Anyway, so you you went you went on X. The AI boom bubble now has the S&P 500 and the NASDAQ 100 with the same eight larger stocks. These two indices are merging into the same thing. Yes, we know there's a concentration bubble. Is there a valuations bubble? Yes. And yes, there is a concentration bubble that you know the top eight stocks in both indices are the same. You could see that it's 37% of the S&P and it's nearly 70% of the NASDAQ 100. So, their correlations will be higher. Is there a valuation bubble to I would argue yes or at the very least these stocks are extremely overvalued. Now here's the problem. It's not that these stocks have particularly high valuation but I'll point out what people like Roger McName of Elevation Partners uh Sam Alman of Open AI have recently said not everybody can win. And what the market is doing is similar to what we saw in the late 1999 early 2000 period is that back then if you stuck.com on the name of your company it soared in valuation. Well not every.com can win. We found that out with famously pets.com which is kind of the poster child of that period. Same thing with AI right now. Not every AI company is going to win. So if you look at particular valuations you might say well this one is kind of high but not ridiculously high. Goldman Sachs has made that point but the problem is every single one of them is like that and not every single one of them can win. The last thought I'd give you on this is the Sam Alman's Jeff Bezos has made this comment within the last week as well too. Roger McMes they all say the same thing. They're not everybody can win. They're all overvalued, but I'm gonna win. Pity the for pity the other guy that's going to wind up losing when the bubble comes down. Well, good luck with that kind of thinking. Everybody thinks that yes, it's overvalued, but not me. Everybody else is overvalued and we'll have to see how that works out once we go over this over the top. Yeah. And take a look at this article that um is a good segue here. We have a Harvard economist by the name of Jason Ferman who uh who said according to this article unfortunately driven by investments in the data centers and information processing technology excluding these technologydriven or related categories. The economist calculated in a September 27th post on X that GDP growth would have been just 0.1% on an annualized basis. Now I'm not here to challenge his math. Let's just assume for the sake of conversation he's right. What does that mean? I think that explains, this is just my theory. I think that if that were correct, that explains a lot of the confusion as to why markets are the way they are with as yet the S&P at all-time highs with Bitcoin at all-time highs, which we'll talk about, yet the labor market is showing cracks. What do you think? Yeah, I think that he's well Jason Ferman used to be, you know, working in the Obama administration and his numbers are largely correct, but I would pose it that they're very misleading in ter at the same time. The first quarter we had a big negative number because of the inventory build around tariffs. So in the second quarter we had a rebound. So yes, because of that offsetting number that they look big. Now that I've said that that software and u software and information technology equipment has added 1% to GDP over the last three quarters. That is the highest level we've ever seen. The only comparable periods to this are the internet adoption in the late '9s which was a little bit less than the 1% we've seen and the PC adoption in the early 80s which was about8.9. So, this is something we've seen in the past that we have this tremendous build. Now, what's different about the AI build is it's stronger and shorter than we've seen before. This gets back to my other comment about AI being, you know, potentially every company's priced as winning. Well, I'll throw out a quick tangent. There's one company that's losing here, and that's Apple. And Apple is losing because they're not playing in the AI space. So, the marketplace has said, "Look, you've got no choice but to play this death match of try to outspend everybody else and win the AI race. If you don't win the race, you're going to be lost. If you don't participate like Apple, you're going to be lost." And so, yes, you're going to see these types of things having a big impact on the state of the economy. you're seeing it on electricity prices moving up because of the tremendous power needs that these companies have had. So yeah, it's somewhat misleading that to say that without it we wouldn't have any growth, but that's because of the inventory adjustment. And also remember we've done this in the past. we do have these themes especially within technology the uh internet adoption in the late '90s PC adoption in the early 80s where we've seen them have a big pull on GDP we're seeing that again okay so ultimately we know that data centers are driving a lot of the capex we know that tech is driving a lot of the valuations growth of the S&P do we do with this concentration bubble that you were talking about earlier well I think the first thing you need to understand is that everybody Everybody's involved with this bubble whether you want to be or not. Um to give you an example, Michael Kemblas over at JP Morgan has identified what he calls 45 AI and AI related stocks in the S&P 500. Since Chat GPT came online November 29, 2022, those 41 stocks have accounted for 71% of the gain in the S&P. The other 459 stocks have accounted for 29% of the gain in the S&P. So if you are an investor in the stock market and you own broad indices, those 41 stocks are 47% or now 45 to be exact, 45% of the S&P 500. You've got half your investment in this AI space. You are tied in it. Well, I am tied in it. The economy is tied into it. we all cannot really escape it. So that's the first thing I would point out is this isn't just an what does it have to do with me? The answer is everything. It has every it it it impacts the economy. It impacts your investments. Um and so we have to watch where this is going to go and whether or not we're going to get that bubble peak because we're all going to feel it and we're all going to see it come out come down in the other side. And again, it's not that any particular company is insanely overvalued. It's that they're all priced at winning. And that's really the the message I have is that they all can't win, but they're all priced as if they are. Is the market pricing in much lower interest rates? Is why is that why everything is rallying right now? What's driving the everything rally? I'm talking about stocks, Bitcoin at all-time highs, gold at all-time highs, silver, precious metals. Yeah. Anything in particular that's lifting all boats? Yes. Retail investors. Retail investors in the retail investors in the month of September put up $100 billion of investment into the market. That was an all-time high for them to basically plow that much money in. This market is now more retail driven than any market that we have seen in decades. It is not hedge fund driven. It is not institutional investor driven. it is the retail investors at the side. And so they're going in fullon into the indices into AI and into and in and even some of them are even getting nervous about the current situation and they're going into precious metals like gold and silver. And so you're seeing that that tide is lifting all the boats. Now I'll push back on one thing. The one market that really hasn't been rallying a whole lot has been the bond market because the yield on the 10-year Treasury is about the same where it was in late April, early May. And here we now are approaching the middle of October and it hasn't gone anywhere else. And that's maybe because the retail investor is tangentially interested in the bond market. I mean, they're not avoiding it. It's not, you know, yields aren't going up, but it is definitely that's the big thing is this constant passive AI bid that I'm constant passive bid from retail investors going into the indices and like I just to go back to what I was saying earlier and I don't think a lot of people yes I'm buying VO or I'm buying IVV or SPY these are the S&P 500 index funds so I have a well- diversified portfolio no 45% of your portfolio is tied to AI is what's happening because of this concent concentration like of the likes we've never seen before. Take a look at my screen though. Let's go back to the real economy now. Uh the United States unemployment rate has now risen to 4.3%. It's now the highest since October 2021. Um this trend has been concerning the Fed. They've made this a reason to start pivoting and cutting rates. Does this trend concern you? Not yet. And you're right. It is 4.3, the highest since 2021. But in July of last year, it was 4.2 and it's been kind of hovering about 4.1 4.2 and it, you know, rounded upward in in August, the last number we've gotten to 4.3. Now, we don't have the September number. It's calculated. They just haven't put it out because of the government shutdown, and we don't know. But I think there's a bigger issue at play with the um labor market that people are really kind of acknowledging but not appreciating. And what they're acknowledging is the biggest driver of the labor market is the population growth of the country. What drives population growth of the country is net immigration. The border is closed, deportations are up, and this Congressional Budget Office that does these forecasts is saying that we are seeing possibly the lowest population growth in the country in 80 years this year. You have to go back to 1940s, 1950s to find the last time the population grew at 0.1%.1.5% which is what we're looking at. Why is that important? Because JP Paul himself said at his September press conference, there's an argument to be made that the break even rate on payrolls is now 0 to 25,000 job uh 50,000 jobs with the midpoint being 25,000 could be as low as zero. What does that mean? We create one job in the United States and that's enough because we got no population growth. We don't need that many jobs. So people look at 22,000 jobs being created in August, 29,000 over the last 3 months, and they say historically these are awful numbers and that historically this is means the economy is going into recession except you have an 80-year low in population growth. that the number of jobs you need according to JPAL is between 0 and 25,000. So the midpoint of that's uh 0 and 50,000. The midpoint being 25,000, we created 29. That's all we need. This is a different kind of environment because of this low population growth. So what I'm afraid of is we're looking at this data. We're saying historically this is bad. We have to cut rates. But then we say, "Yes, but there's slow population growth." And I'm like, "Go to the next step. It should be low and maybe these neighbors are okay. This is what we should expect." But instead, we're trying to stimulate the economy. The last thought I give you is if we don't have the population growth, we're not going to be turnurning out 150,000 jobs a month like we used to. And the reason is is that there's just not enough bodies to create have those jobs if we don't have the population growth. So, if we're going to keep stimulating the economy, saying we want to turn out 150,000 jobs, all we're going to do is produce wage inflation and CPI inflation, and that could wind up being wind up being bad for the bond market and producing higher interest rates. Okay. Uh what does this mean for the stock market? Now, Jamie Diamond, uh CEO of JP Morgan said that he's now more concerned or more worried than others regarding a correction. There's a 30% chance of a correction. Uh so if the market is pricing in 10% I would say it's more like 30%. I'm not saying next year because the timing of these things is almost impossible. He said in an interview with BBC the level of uncertainty should be higher in most people's minds than not than what I call normal. Um I'm not I'm not I'm not sure where he's getting 30% from, but I'll let you comment on what you think is a probability in your mind that's that's appropriate given that we've we're we're we're in a valuations perhaps valuations bubble. We're in a concentration bubble. uh you talked about the slowdown in the economy. Will this rally continue? Well, over the short term, I think it will continue. But I think you're right. When you look at valuation, the first thing everybody will say is it's not a timing tool. Okay? It isn't. But what it is is it's an expectations tool. So, if you're buying stocks at these valuations, and even if you take out the AI stocks, the market is still fully valued, if you want to use that term, maybe even slightly overvalued. You've got to expect that companies are going to t take the high end of Wall Street's estimate on earnings and beat that cuz otherwise if they don't they're going to disappoint and we're going to see a period of underperformance in the in the stock market. And so that's really where I think the concern is. Where's all the monstrous earnings projections coming from? They're really not out there. Now I know what the theory is. The theory is is that everybody's going to lose their job because they're all going to be replaced by a large language model and that's going to increase the margins on companies. I understand that argument. It might be true, but it ain't going to be true next year and it isn't going to be true in 27 or 28. It might be true in 2035. But at least for the near term, it's not. So that's where the problem comes in. So the momentum of all of that constant bid from retail will continue. But as I like to say, you know, hold on the stocks long enough and they might disappoint you because you're buying them and you have to expect monstrous earnings to justify these valuations or there's going to be a massive disappointment in it. Retail is also moving into alternative assets like precious metals and bitcoins. Let's talk about that first. Precious metals first, gold at 4,000, silver at near $50, historic all-time high for both metals. um what's driving this rally is the headline uh question I'm seeing all over the place on mainstream news and second what is going to continue what is going to make this rally continue if it were to continue. Um I'll let you answer both Jim. Yeah. So there's a story there's a narrative going around that there's a dollar debasement going on. That's totally false. There is no dollar debasement going on because gold is going up. They mean the dollar is being debased. Well, I don't see the dollar falling. I don't see risk markets like stocks and credit falling. I don't see interest rates surging. What I do think you're having happen is the precious metals markets as an asset class are tiny compared to the financial markets. There's probably a cohort of investors and probably at the retail side that are worried about valuation, AI, a lot of other things as well too, maybe even some politics in there. and they're looking for safe havens and they're starting to find their safe havens in either crypto and or precious metal. Well, it's only it doesn't take a lot of money relative to what it would take for stocks and bonds to move those markets higher. So, are there nervous people moving into uh into precious metals? Yes. Uh is that mean we have a dollar debasement? No, I don't see a dollar debasement right now. But that trend could continue with with the precious metals moving higher. You've saw that with crypto earlier this year and that has kind of been flattening out and I think that there is kind of a zero- sum game here between crypto and precious metals. Earlier this year, precious metals were kind of doing nothing. Crypto soared. We got to 120 on Bitcoin. It kind of stalls there. Makes a new high by $1,000. Everybody gets excited and then it doesn't follow through. But now that crypto is not following through, precious metals are moving. I think that that bid they compete with each other for that money and that's why they kind of take turns going up, but there isn't that broad-based dollar debasement or problem. The stock market's at an all-time high that is is is ne necessarily going to drive a lot more money into that space. Now, maybe that happens in the future. maybe next week, next month, next quarter, you know, the we get the 30% chance that Jamie Diamond is talking about, we get that correction and you could see, you know, an even bigger bid, but it isn't happening now. And those stocks, meaning, excuse me, crypto and precious metals are rallying without that dollar debasement, right? So, let's suppose I were invested in all all major asset classes, bonds, stocks, Bitcoin, and precious metals. And I'm thinking, well, I've I've seen gains in all of these things. Perhaps I could rotate into something else next year in 2026. What would that something else be, Jim, if I were to pursue that course of action? Or perhaps I should just hold onto my current holdings. What do you think? Well, first let's start with a basic question. What do you think you should get in terms of your investments? Now, the problem is a lot of people like, you know, 20 or 30% a year, which is completely unrealistic. And the reason they say that is because the stock market's returned them 20 or 30% a year for the last couple of years. A more realistic expectation based on the current valuations in the market. I've referred to it as the 456 market. Cash should return you around 4% which is exactly what it's been doing this year and I think it will. Uh bonds have been returning you about 5%. Uh actually over the last year they've been closer to six but that 5% is definitely in there. and stocks given the high valuation what should you expect stocks to return you over the next say 5 to 10 years about 6%. Now, the problem is when I say 456, getting back to that, oh, I owed I'm owed 20 or 30%. People go, boy, that's terrible. And I'm like, no, actually that's kind of average. That's what you should have been expecting all along and you've gotten comfortable with outsized gains in this market. And so if that's what your expectation is, then probably something like the bond market, which would offer you 5% yields with investment grade and give you a fraction of the volatility of the bond of the stock market, looks like a compelling investment. If your expectations are no, I think I want more. Well, then you're going to be rolling the dice on AI and you're going to be hoping that the AI trend continues and that you're going to pick somebody and there's we're going to still be in the everybody wins category. But when we get to the top on AI, we're going to start discriminating. Somebody's going to win, others are going to lose. You better hope that you have the right company. And if the argument is, how do you get to the everybody's going to win? Buy them all. That'sn't going to work because it didn't work in the AI. it didn't work in the internet bubble. You own the three or four companies that won. The rest of them went down 90%. You wound up losing 30 or 40% of your money by the end of the game. Um, and that's really where you got to be careful of with it. So, it really starts with what are your expectations? What do you think you should be getting? I would be arguing to you that five or 6% 4% on cash with no with no risk is a decent investment to be looking at, especially in an economy that's growing two or three. But the problem is everybody thinks they're owed a 20 or 30% gain. And that's really where it is. Because when people say, "Where should I invest?" The answer I hear I think I hear them say is, "What's going up 30% next year? What's going up 25% next year that I should be buying?" Not, you know, should I just be should I just take my 5% in the bond market and be happy with it? And I'm saying actually you should. That's not a bad investment. It's just that we've become spoiled to more than that. Psychologically speaking, I'm up a lot this year if I had been holding all throughout the year on on all these asset classes that I mentioned. So, I'm thinking, okay, well, I want a bit more, right? It it hurts me to take profits now and move into a low yielding lower yielding asset like a four four or 5% bond or CD when I could be getting 50% on gold. You know what I mean? or even 16% on the S&P, which is what it's up this year, or 23% or 30% on on Bitcoin. Um, so I'm thinking, all right, if I just hold on a little bit more, perhaps this FOMO phase is going to get me a bit more gains. Uh, but what you're saying is prudent. I how do I resolve this internal conflict? Jim, I think you really got to start to look at um, you know, what are your ex again, what are your expectations? Let's go back to April. Um, let's let's go back to April. There was a lot of people in the week after um uh liberation day when the stock market fell 15% that were really bothered by it. Were you bothered by it? If you were bothered by that 15% correction in um the stock market after liberation day, you've got too much risk. You shouldn't be you shouldn't be bothered by that. You shouldn't have to say I have to alter my life because the stock market had a bad week. Uh because it will. It always does and it always will. Um, so I think it really comes down to you've had a good run. I can't answer the question as to how much more risk you want to take, but if the answer is what do you think the stock market's going to deliver for you over the next several years, I'd say 5% might be a realistic number. I understand, like I said, I understand that people don't like that number, but that actually is not a bad number given the rel relative valuation numbers that we have. If you're, you know, you should recognize that what you've been in in is is an outsized period of gains. You've made a lot of money quickly in this market. You don't want to give it back. Um, yeah, as I even said, over the near- term, I don't see a reason for the stock market to correct over the near- term. So, at some point, you've got to make a decision on your on your side. Where do I think I've made enough outsized gains? I'd rather traffic back into normalized gains with less risk. And so that's really the question you have to ask. If it was me, I'd probably be doing it right now, but my risk profile might not match your risk profile. So that's really the question you have to ask yourself. One thing I'm considering, and some people are considering, is rotating into small caps and in the midcaps. The Russell 2000 has still been underperforming the S&P all year. In fact, it's been underperforming the S&P in the last five years, driven, of course, by um the MAG 7. The S&P has been outperforming, but perhaps it's time to look into small caps. What do you think? Well, they have a more realistic valuation, and one of the reasons you mentioned it. Why are they underperforming? Cuz they have no AI. AI is all meggaap companies right now. And that's what's driving the that's what's driving the buzz. Now, if you want to rotate into those companies, you're making a bet that the economy is going to stay okay and interest rates are going to stay reasonable. And if that's the way you believe about the economy, then that would make more sense. The small cap companies tend to be more economically sensitive than the larger cap companies because larger cap companies can be kind of power through an econ economy or they're internationally based uh globally based and one particular economy may not hurt them as much as with other companies like you know Apple has a big presence in Apple in China but you know some small uh consumer products company in the Russell 2000 has no presence in China. So Apple might be able to survive a downturn in the US or a small consumer products company in the US is completely dependent on the economy for the US. So if you believe the economy is going to be okay, that might not be a a bad place to go. But again, if you were to rotate into those companies, what would you expect out of them? Again, I come back to my 56% number. That's largely what they've been delivering. and everybody's been disappointed because it's not the 20% that you've been seeing out of the mega caps because of AI. All right, Jim, uh let's finish off on alternative assets. So, let's go back to gold and silver. Let's go back to Bitcoin. Let me p let me ask you the question that you asked on X. What's next for silver? You showed a chart with silver historical prices. Uh it's only happened twice in history and both times of history is any president both times his uh gold uh silver rather silver did not stay at near 50 for very long. Is that what's going to happen next? That's a good question because in both cases it was a big it was a big massive spike up in silver and then a spike back down. Um it's hard to say. I mean, in looking at it, but right now, I would think that if I was to bet, I think the precious metals are going to continue to move higher. But here's the problem with the precious metals. They're very speculative right now more than usual. Buy them, make a lot of money, make a lot of money, make a lot of money, wake up, down 20 25%, lost a lot of money. And that's the risk you're going to face with these things um as you go forward in their speculative flows. But if you were to ask me the near-term flow, yeah, I think we're going to take out $50 for the first time in silver's history, and we're probably going to keep moving higher. It's go to 75 or 100. I don't know if I'd go that far that it's going to go there, but it it's going to keep moving up. But unfortunately, when you see these kind of parabolic moves, they parabolic in the other way when they go back down because everybody's sitting on huge profits and everybody's worried they don't want to lose those profits. So when everybody thinks this might be the top, it just doesn't sell off. It goes straight back down. And that's the risk you face with owning something that's very speculative like silver has become right now. Okay. A similar uh question could be asked about Bitcoin. Uh if you zoom out, which I'm going to do, it certainly looks like it's gone parabolic, although if you look at it from a lock scale, it's kind of just going up in a 45 degree angle. So nothing parabolic there. I I I wonder if Bitcoin is just following the NASDAQ still. I still think it is. Uh but if I was to put a nuance on the crypto space in general, what's happening is there's been a shift back towards ETH. Uh and uh you know, and why has there been a shift back towards ETH? Because the story there is stable coins, DeFi, um you know, uh those types of stories. Bitcoin doesn't have any of that, but ETH does. ETH does have is the majority of stable coins, Tether and USDC. ETH does have DeFi. We're talking about, you know, passing the Genius Act and that we're starting to look at potentially allowing for more payment rails, allowing for more um assets, real world assets being put on the blockchain. That's not going to be on the Bitcoin blockchain. It's going to be on another. Now, it might be on the Tron blockchain. It might be on Salana or it might be on ETH, but it's not going to be on Bitcoin. So what Bitcoin is is sitting there and looking at is there is that there's all this hype and promise about exciting things going on in the world of adoption of crypto but not Bitcoin. Bitcoin will just play the role of store value and that's really where it's been going right now while it's been holding that 120 115 to 125 range. So I think it's going to continue to do that with Bitcoin. I think that what you're going to see is you're going to see that adoption. We're going to be talking about stable coins. We're going to be talking about payment rails. We're going to be talking about real world assets coming on the crypto blockchains and all of that's going to be everywhere else. And that's why you've seen ETH now year to date outperforming Bitcoin. The um the SEC has um more or less green lit the tokenization of securities. So, we're going to see more um more stocks and real world assets like you said being put on the blockchain. A lot of um discussion around which chains will be used more for tokenizations. There's Salana, there's potentially ETH. Uh do you have any thoughts there? Yeah, I mean there, you know, I think the first of all, it's not the Bitcoin blockchain. You know, they've been pushing back against that. So, the big question is really between Salana and between ETH. And it really comes down to a question of um uh you know permissionless decentralization. How important is that? Now um you know for people that are big fans of Soul, I've been skeptical of Soul because I think it's too I think it's too centralized and I think because it's too centralized, it can be permissioned. It can be censored and that defeats the purpose of having crypto assets. Look, the reason we have the blockchain is no one can permission can censor it. No one can alter alter it. No one can block you from using it. But if we're going to go down that road and allow that and Circle is talking about blacklisting certain coins, then let's just go the whole way and let's just run all this stuff in a server at the US Department of Treasury and then they could pass rules about what we could buy and can't buy and when we can buy it and can't buy it. um you're fat, so you can't buy sugary drinks with your um tokenized assets or anything like that. That I mean, that's where we'd go with this um at at that point. Otherwise, if we want to go permissionless and decentralized, then we're going to start screaming that it's terrorism financing and illicit activities and everything else, but then no one can can permissionless. So, that's the big debate we're going to have. Now, I'm a purist and I think that the permissionless decentralized is more important than the speed of execution. And so, I would lean more towards ETH and less towards Soul. And I know the Soul types will scream at me that they're permissionless and decentralized, but I don't think they are as much as ETH is. And so, that's really where where the where the conversation has to go. How much of this do you want outside of the uh let other third parties like a government or central bank control this stuff for you? If the answer is none, then you want to be looking at something like ETH. If the answer is some, then like I said, let's just go the whole way and just let the Federal Reserve run it all off a server and let them decide what we can and can't do with our money. Jim, excellent. Thank you very much. Uh I will leave on one final question in uh 30 seconds or less. maybe sum up what you think will be the best performer for uh the last quarter into 2026. Um at this point I think you know I'll I'll contradict myself in that what's got the momentum and the momentum is precious metals and AI stocks. So that you know you said the last quarter that's two months to 3 months to four months. They probably will continue to be the best performers. I hate to say it until they don't and when they don't you'll know it. um at this point. Uh so, you know, I don't think that this is going to be a period where we're going to rotate out of an un out of an unto an unloved sector all of a sudden. It's a momentum play and you want to play the momentum, but it's a high-risisk play. Jim, I really appreciate your thoughts. Thank you very much. Where can we follow you, Jim? Um X Twitter at Biano Research, my YouTube channel at Biano Research, Jim Biano on LinkedIn. Those are the three that I usually traffic the most. All right, LinkedIn X and YouTube. We'll put the links down there. Please follow Jim. He's got a great uh uh medium for you to learn about macro. And uh as always, thank you for watching. We'll see you next time. Thank you, Jim.