Investment Strategy Shift: Bit Mine Immersion pivoted from Bitcoin mining to an Ethereum-focused treasury strategy, emphasizing an asset-light approach with minimal capital expenditure.
Financial System Transformation: Tom Lee discusses the potential rearchitecture of the US financial system, suggesting it could rival the tech sector in market cap if banks reduce reliance on traditional financial architecture.
Market Resilience: Despite various economic challenges, the market shows resilience, with significant gains in the S&P 500, indicating the early stages of a bull market.
AI and Market Dynamics: AI is identified as a critical driver of the global economy, influencing sectors like utilities and financials, and contributing to market gains despite some skepticism about its sustainability.
Ethereum's Potential: Ethereum is highlighted for its role in the stablecoin boom and potential to surpass Bitcoin's market value, driven by its utility in smart contracts and blockchain technology.
Granny Shots ETF: Tom Lee's Granny Shots ETF, focusing on long-term investment themes, has shown strong performance, emphasizing stocks tied to significant growth drivers like AI and millennial consumption.
Economic Indicators: The ISM manufacturing index's prolonged period below 50 suggests business caution, but potential policy stability and dovish Fed actions could lead to a market expansion.
Crypto Market Insights: Despite skepticism, crypto assets like Ethereum are gaining traction among younger investors, with institutional interest in crypto treasury strategies growing.
Transcript
How was uh Jackson Hole? >> It was good. I wasn't there for the Fed part. I was there for the uh alts part. >> The more traditional crypto part of Jackson Hole. >> The salt. Yeah. >> Oh, so they're doing salt assault Jackson now. >> It was Salt Wyoming. Yeah. It was Kraken and Skybridge both sponsoring. >> How was it? >> It was good. They had a lot of policy makers there and you know, so it was a good mix of like people building things and then the policy makers. >> Very cool. I heard you on with the Bankless guys. It was good. >> Yeah, I like those guys. >> It was good. >> They're not as good as you guys, of course. >> So, we'll talk about obviously Bit Miner later, but >> is it Bit Min or Bit Miner? >> Bit mine. >> Bit mine immersion. >> Bit mine immersion. Yeah. >> Where did that company come from? Was it did you start it or >> No, it was an existing uh Bitcoin mining company but it was very small company and it you know mining is not a great business and so they were open to kind of rethinking of their strategy. So the company uh was open to kind of pivoting to to one focused on Ethereum. >> So they went they went from a minor to a treasury. >> Yeah. So for so they have this originally was their thing was immersion mining. So they have liquid cooled miners but you know mining is a very competitive business because you don't necessarily win a block reward and you have all this capbacks whereas now they're essentially their treasury strategy is holding Ethereum is really asset light for them or capex light right there's almost no capital spending >> so it's a good pivot for them. I was saying this last week, Tom, are you getting bored of the market? I feel like we just say the same every week. Like nothing's happening. It's all just like is AI going to blow up or is it going to continue? Like >> I I mean I think there's a lot of clues coming that there's some really big things happening. >> Like I think one of the most >> who's coming for what? >> I think that one of the most interesting things is that the US financial system is about to get really rearchitected >> in a way that's like oil. Well, like imagine oil had all sudden these EMPs and stuff, but the one difference is that the financial system could become like as big as the tech sector in terms of market cap >> really >> like JP Morgan's PE could become a growth stock >> if if what? >> Well, if they become less reliant on two things, one is like the traditional financial architecture has a lot of um friction. Uh, right. Because there's so many intermediaries in everything that's done, including like how JP Morgan >> But Tom, aren't they the friction? >> Yeah. Why do they want to remove it? That's their rake. >> Well, but if they could make more rake, so remember there's like power laws like as soon as the banks get involved in an industry, they already have large share. So there's they have the ability to do power law in anything they do. And so like if they decide to go into like rearchitecting the bank, they one of their biggest sort of saves or value capture is is the staffing of the industry could drop a lot. You know, Jmore has 200,000 people. You know, >> they could make more money with 5,000. So I think that the financial industry could start to be trading like a tech sector multiple. >> Oh, I like that. >> That's a call. >> Right. So that's very exciting. >> Long in JP Morgan. I I'm >> into Goldman like the like J Morgan and Goldman and Morgan S they're going to be strong whatever they because they they have customer relationships that will follow them to whatever they do. >> So the metric for banks was tangible book that's like what they always say on TV and that's maybe that's not the metric anymore. >> Correct. It it might be it'll and even things like credit cost and net mar net interest margin it's going to change as a dynamic because like if JB Warren gets big in stable coins they might make more money from stable coins than deposits you know like they may they may be a very different company >> if uh I mean it's not out of the question to see a rerating like that because we're living through one in the utilities right now. >> Exactly. >> So it happens. So suddenly powers become a really important driver because of AI. Well, AI is converging onto the blockchain to create a crypto token economy. The financial system is the always the other side of that. Like it's >> so if there's a big AS story for tech, there's got to be a big crypto story for financials. >> Yeah. >> And that's that's why suddenly financials could become a huge percentage of the S&P. >> I like it. I like it. We'll take it. All right. We are headphones on. >> How far did we go? >> Where do not disturbs on our phones? Am I the only one that has that problem? Usually it's usually just me. >> All right. >> You love those claps. >> Episode 205. [Music] [Applause] [Music] Today's show is brought to you by Newberger Berman. Hi folks, let's talk about options for your portfolio's next move. Ultrashort funds made sense when rates were rising, but with the market expecting rate cuts, maybe time to look at the Newberger Burman short duration income ETF, NBSD. One of the fastest growing ETF options from the NB fixed income team. >> That's right. With lower yields likely ahead, NBSD could help mitigate reinvestment risk. Their experienced team keeps duration short and focuses on efficient income. Always search for the best value and fixed income. >> And it's not just about returns. NBSD manages risk with a mostly investment grade portfolio and limited interest rate sensitivity. >> The world's unpredictable, but your cash flows don't have to be. We believe NBSD is a compelling choice if you want your money working harder. As always, check the fine print and talk to your adviser. Learn more about NBSD, including important information about fees, risks, and performance at www.nb.com/NBSD. NBSD from Newberger Berman. Efficient income managed risk. An investor should consider the fund's investment objectives, risk, fees, and expenses carefully before investing. This and other important information can be found in the funds perspectus and if available summary perspectus which you can obtain by calling 877-628-2583. Please read the perspectus and if available the summary perspectus carefully before making an investment. Newberger Burman B LLC is a distributor of the fund and a member of F. Wow. 20. Can you imagine? We've done this 205 times. Tom, what do you think? >> It's always fresh. Super impressive. Keep it fresh. All right, ladies and gentlemen, welcome to the biggest and best investment podcast in the world. I am your host, Downtown Josh Brown. My co-host is with me as always. Y'all say hello to Mr. Michael Batnik. Hello fellow here. All right, we have a very special guest today. returning champion, fan favorite, literally the pinnacle of stock market analysis, macroeconomic, uh, foresight, somebody who needs no introduction, but I'm going to give you one anyway. Tom Lee is the CIO and portfolio manager at Funstrat Capital and co-founder head of research at Funstrat. Tom, welcome. >> Thank you. Can I say one thing? Um, a couple of weeks ago on Animal Spirits, Ben and I did a show and we titled it the dumb money and it was talking about all of the money piling into the treasury, the digital asset treasury companies. And then I listened to you on Bankless and it was a correction of the record. I know we're going to talk about Bit Mine immersion technology later in the show. Um, but I did say regarding you, I don't think, in fact, let me not caveat that. There hasn't been a single person who is commenting on the market over the last 10 years that's been more right than you. >> Oh, wow. >> That's true. >> Thank you. Thanks. >> I mean, do you think that there's anybody else? >> No. I think Tom's the goat right now. I >> slugging percentage on base, not a baseball guy, but all of those things. So, >> nobody would argue it. And but what's more impressive than your record of the things you've said and what's happened uh afterward, what's more impressive is how much that you've had to put up with along the way because >> No, because I remember 2011 and 2012 Tom Lee and you might have still been at JP Morgan. >> Yeah. Okay. And you were bullish and at that time being >> be everyone was like a little bit bullish. Not I shouldn't say that, but being like as bullish as you were in 2011 and 2012, it almost felt like uh you were a magnet for all of the anger and frustration that people had like uh but you stuck your neck out there and you obviously were proven right. I think we're I don't know 15 years of of 12% average annual returns. >> 14. >> Yeah, it's been extraordinary. >> Nobody was saying that. Even the bulls were saying things about like the new normal and like get used to three and 4% average annual returns going forward and they had all these reasons why valuation >> cape ratio >> cape ratio and uh you were one of the few people that was willing to be bullish the entire way >> all that you did you did um you also during crisis you would pop on uh CNBC or wherever you were and you would say yeah no this is uh this is volatile But the volatility won't last. And we still think A, B, C, D. And then as those things would play out, you'd have to do it again cuz it'd be another crisis. But I I do think that you are getting credit now. You're getting your due for having been the most right market commentator consistently right. Um, and uh, how's it feel? How's it feel to be a gangster? >> Uh, thank you. I didn't realize I was a gangster. I should carry like a machine gun. >> Yeah. No, you're like a you're like a markets gangster now. I feel like you're the guy. What do you think? >> Well, next time I come, I'll wear sunglasses. >> All right, fair enough. >> And grease back hair? >> No, but truly, how do you feel in the position that you're in now? Um, do you do you worry at all? This has been an amazing run. It's got to stop at some point or not the markets, but like just your career arc. How do you like what is it what is it like being Tom Lee right now? >> I'd sell I'd sell calls. No offense. >> Michael would hedge Michael would hedge you, but how how do you feel? Um well, you know, we are constantly reminded that we're wrong all the time with our clients. It's I'm in a very strange business because like research um and we have two essentially really three cohorts, but really it's primarily institutional investors and then non-institutional and uh and we service them and we provide research, but they never really say you've done a great job. >> Okay? because like their job is tough and they already have many people providing advice and so like we're just one of the many views and so we never really get >> Oh, they'll take the credit and you're just an input. >> Yeah. >> Okay. But that's fine. That's the business you're in. >> You're only as good as your last step. >> That's and that's another thing like cuz I was an equity analyst like it it's our next call that matters, not our previous set of calls. >> Oh man, what a hamster wheel that is. >> Yeah. >> Right. But it's fun and exciting because it keeps us grounded and that's why I I am so afraid to ever take a victory lap. >> Yeah, it's a it's a really good point and the reality of this business is that you could you could have somebody in the markets for a 400% run in the S&P and then there's a 20% draw down and it's stupid Tom Lee uh bull bullish right at the top. It's like no yes at the top but also for the 400% preceding the top. We've did we all forget? >> Yeah. >> But people do forget. They don't care. >> That Feb to April period happened this year. Like all of a sudden people are yelling at us saying like, "How did you let us sink ourselves and get caught in this tariff thing? You know, it's and the Fed's not going to save us." And we kept saying it's waterfall declines are V-shaped. But no one could really believe it. But now that we recovered, >> at least we're not getting yelled at. Are you surprised at the speed with which the markets recovered even if you so I know you remained bullish through that and it was the right it was the right call. Um but are you even you surprised at how fast we recovered? >> Um I mean yes and no. >> There are V's and there are V's. That one looks like the pandemic. >> Yeah. Well, yes. I mean that was a complete drying up of buying power and then a complete loss of confidence from the CEO level to everybody in the world because no one had an answer. So you could see why you'd have this huge air pocket. But I do know two things that markets are symmetric. So the faster your decline, the faster the bounce. That's >> always. >> Yeah. >> Chart has a great one about that. >> Yeah. Yeah. So we we showed that basically unless there's a recession, it's always a symmetric bounce. It's 1 point the ratio is like 1.4 to 1.7. So if it took 8 weeks to lose 20, you'll recover it back in 1.4 times that length. >> Oh, okay. So, in other words, it's always like a there's a symmetry. Why? So, why do so many people think V-shaped recoveries are anomalous when based on what you're saying, they're actually the norm. >> Uh, I think people don't study history. I think they study their own sensibilities. They're saying like, "Oh, well, if you lose confidence, it's going to take me this much longer to recover." That's why everyone says there's a K-shaped or square root. >> Uh, you No, you hear like U-shaped recovery a lot, too. Right. >> Correct. Like every letter but V. And >> and it's always a V. >> It's always a V. >> Tom, so you did the work. You've got 12 waterfall declines since 1929. Do you think that this is what we're going to see going forward? >> Yes. Actually, maybe >> what's a what's a waterfall decline? What's the definition of that? >> Oh, well, it's a term we coined um probably around the 12 period, but it's when the market has a high velocity decline. >> So like if you say >> so like a lightning fast selloff. >> Yeah. So the fastest decline to 10% or the fastest down 20. So rather than like dribbling lower when it just like the bottom falls out. >> Yeah. It's like you sprung a like this ship is just sank. >> All right. So here's 12 of these. And just for the listeners who aren't looking, we have dates in here like 82, 87, 2002, 2009, 2020, 2025 is now on the list officially. Yeah, >> that was a big one. That was 20% and it was like overnight. >> Yeah. Okay. >> And usually no retest at least in modern history. >> That's right. I mean it will look like a retest but no usually that's another thing people say there's always a retest. It might be true at the stock level because there's sellers that want to get out but at the index level it's actually rare. >> Yeah. I actually would say post in financial crisis there are no retests. >> Yeah. >> Like that that's it. If you don't if you don't nail that moment it's okay. You could still buy later but you're not getting two chances at the buying higher. >> You're buying higher and that and that might be okay for people. Um, all right. Let's talk about the resilience of the of the current stock market. Would love to just get your like 30,000 uh foot view of where we are. So, the S&P is working on a 10% gain for the year, give or take. Um, >> NASDAQ slightly better. >> Mhm. >> Right. Um, leadership coming from utilities, industrials, financials, communication services. >> Yeah. >> So, all the exactly what you'd expect. >> Huge semiconductor rally this year. And then what's not working? Uh energy materials, >> healthare. >> Uh and healthare. >> And healthcare. Okay. Where what do you make of the resilience of the market? Look at how much we've put up with already. Look at how many like big bad scary things we've been through. Um and we're still in a double digit gain for the year. So what do you think? >> Well, I'd say number one, just for people to place themselves like in history. So, if you had a fact pattern of two 20% gains and then the third year's up 10 already and maybe we'll be up 15 or 20 this year, then we're in a bull market. Like, so whatever >> mean then you have confirmation that it's a bull market. >> Yeah. Because that this never happens in a bare market. Three, like you can't have like a dead cap bounce that lasts 36 months. >> You can have bull markets in bare markets. >> Yeah. But then they should then place themselves in history. This is probably more of an early start of a bull market rather than late. >> It's amazing cuz there's nobody that you would talk to who would say we're early. >> But the push back is and there's lots of push back. You have people saying this feels like 2021 all over again. >> The spa boom, the new issues. >> Nvidia and Microsoft. We're talking to Todd's crypto. Talking to Todd Zone last week. Nvidia and Microsoft are almost bigger than energy, healthcare, staples, utilities. It feels like it doesn't make sense. But you're saying it does make sense. >> Uh yeah. I mean, I think that a lot of those comparisons then they don't realize, well, what's Nvidia's rank as an as net income contributor? I mean, they're almost the biggest, if not >> they don't understand the granny shot. >> Yes. >> Put this uh put this chart up. Uh the third time we've had a most hated rally since 2020. This is a term that needs to be retired, right? >> Yes. >> Okay. The hat the most hated rally because it's always the most hated rally. People just hate rallies. That's not everyone. Most people like it. The most vocal people just despise >> the people that sell definitely hate it. >> This one is >> this one has been particularly reviled I think because one the the speed of the recovery has been so fast. As you know many people rage sold in April because they're like look the economist told me 60% chance of recession. That's the same as a sell rating on the stock market and they went to cash. They couldn't redeploy it because there was no pullback. >> It was too fast. >> Too fast. >> Is that what creates a hated rally? that phenomenon like people don't get back in fast enough. >> Yeah. And I think it just shows you that people don't operate with independence. They operate with a with a bias. They think when something bounces, it's just dumb people buying and that prevents them from jumping on with the buy. I mean, think about Palanteer and Tesla. They Netflix, they were all like retail stocks. Like someone was telling me the first time that they try to buy Tesla institutionally, they had to bring in this like research firm from Oregon that wrote a report on Tesla. Okay, this is Jenison. Um >> and like that was the first time that research firm ever got called to go to New York to actually meet a hedge fund. >> Oh wow. Okay. >> So like >> you know all these all the really big churns come because someone recognizes it and it's not often like the crowd that recognizes it. >> Okay. So, the hated component of this, the hatred comes from a lot of people miss out. A lot of people can't bring themselves to buy something that's already recovered because they think they missed it. Um, and then you have people that missed all three like like Yeah. >> They they they never bought cuz they they've been waiting since 2020 for, you know, a re a return to the lows. Yeah. >> And they don't get it and then they don't get it again and they don't get it again. >> At that point, it's just like maybe stocks aren't for you. Yeah. And and not I'm not trying to be snarky, but a lot of the people say, "Well, American exceptionalism is over. That's why I'm buying Germany." are the people that hated every rally here. And so they're trying to now create an opportunity somewhere else. >> Let me ask you this. So you have some charts showing the equal weight PE for the S&P 500 >> and it's been in a range over the past six years. It's averaged 16.3 and right now it's 16.9. On the next chart, you've got all these different things, all these different things that we've experienced and that we've we've brushed aside the resiliency of the stock market. >> I like that eggs for the inflation cycle, >> inflation to the fastest Fed hikes to the tariffs and and you know, everything in between supply chain issues. Do you think that this is, and I'm sure it's both, more of a fundamental tailwind from the AI story and or a combination of between inflation and the length of the bull market and the and the psychology of the market, there is so much money willing waiting to be deployed on every single dip. Is that which which do you think is more responsible or is it both? Well, may I'll answer it by saying I'm I've started off my career as a stock analyst. Okay, so imagine we have a stock. Okay, let's call it, you know, XYZ. And we shot it full of holes. Like they should have been kill shots six times, right? Cuz every one of those was a kill shot for this bull market. And yet this thing, >> what what are the things? The inflation cycle >> for CO number one, >> fastest Fed hikes in history. >> Yeah. And then the bullwhip chain effect was number two. The fastest Fed hikes, well the fastest inflation cycle in history, the fastest Fed hikes in history, the Trump tariff shock and then US bombing Iran's nuclear. >> Each of those should have produced a bare market. >> Yeah. Should have killed the bull market or even killed the economy. >> So what does that tell you? >> Just like even like you don't even have to know market history. Just common sense. The United States is bombing an Iranian nuclear facility. Therefore, buy the spoos. >> Yeah. You never morning. Nobody would do it. >> If you asked me in January, I'd say, "Okay, we got a risk of a bare market." >> Right. And none of these things were uh has produced a sustainable. >> That's right. >> We've had like bare markets, but not a secular bare market. >> Yeah. So, let's say that this stock was 16 times and we shot it six times over 5 years, like just kill shots. >> Yeah. >> And it grew earnings every year. >> Yeah. >> We would say the PE has to go up a lot >> and it hasn't. >> It's actually lower. It's a cheaper market. >> It's incredible. So I don't think most people are looking at an equal weight market. >> Yeah. >> So that's number one. And if they are, they're not looking at the valuation. >> They're looking at Palunteer. >> Yeah. They're they're looking when people say there's only seven stocks going up, I think it's a false portrayal of the stock market. >> Uh there are seven very large stocks. >> Correct. But with big earnings. >> With big earnings. >> Yeah. Justifiably large. >> Yeah. And I'd say the reason it's not just seven because gr our granny shots doesn't is only equal weighted and it's beating the market this year and it only buys quality growth. >> So that ETF that strategy is not reliant on having a 10% slug of the biggest stock in the world. >> Yeah, it would hurt an ETF because Granny is an equal weight by nature. >> So I I agree with you. I I don't buy into the seven stock paradigm, but the thing that I probably believe that you would disagree with. I think the entire stock market return this year boils down to AI, capex. We're talking about utilities. Why did utilities get rerated? AI. Why are financials ripping? Because of all the activity on Wall Street related to capex, uh, and AI stuff, M&A, IPOs, it's all one. Um, industrials. Well, what the hell are they doing? They're building data centers. They're building gas transmission to power the data centers. The whole thing is AI. Correct. There's not a second thing happening. The GLP1 bull market's dead. Uh I don't know of another. Even like the the quote unquote the strong consumer consumer stocks looks like right now. Nike, Chipotle, Starbucks isn't doing much. Um, so like if there's one game in town, but it's affecting four of the biggest sectors in the market, it's a fairly fragile, or maybe I'm wrong, it's a fairly fragile thing to rest on. Like, oh my god, I hope this AI capex story holds up because if it doesn't, >> it's taking down everything with it. Do you disagree with that or you you're on the same page with me? >> Okay, so I'm going to 100% agree. >> All right, that AI >> We can close out. Let's do favorites. >> All right, go ahead. uh that AI is the most important driver of the global economy. Okay. But where I think people make a like a an inference mistake, okay, is that thematic a theme driving the global economy has been systematic to the global economy since capitalism. Yeah. There's always been an industrial revolution. >> Okay, fair. And even in the 80s, the retail sector was the best group for 20 years because boomers were entering the work, women were entering the workforce and there was a baby boomer thing on retail stock. So that was a single theme of demographics and like the internet boom was a singular thing of actually creating digital infrastructure. So like it's always been a story of the stock market. So the fact that the entirety of the market's gain this year is being fueled by earnings coming from this one theme >> actually does not fly in the face of financial history. It happens all the time. >> Yeah. So it's only a bubble if spending is not driving income growth. So margins should be shrinking or debt should be rising faster than revenue. And we don't have a leverage cycle yet. And we have margins expanding. So it's not even late cycle for AI. It's all AI. Uh Dean Christians at Sentiment Trader had a great tweet this morning. He said, "The internal conflict within the technology sector is remarkable with a significant number of stocks making new highs while other while others are making new lows as captured by what's called the high low the high uh high low logic index." He said, "Last week it surged to its second highest reading ever, underscoring how AI is creating winners and losers within the sector." So, in other words, in plain English, there are more all-time highs or 52 week highs and 52- week lows simultaneously than there have been over the last uh >> So, the index rises on increasing dispersion between new highs and new lows. >> So, the index is being driven by the larger stocks. There are stocks that are obviously winning, we know, but there stocks that are getting destroyed. semiconductors versus software. To me, that's what I see. >> Yeah, I think it makes sense because when when you're in a big cycle like this, the winners are easy to identify because they have visibility, but it doesn't mean the losers are dead Matt, but for now, you they're kind of untouchable. This should be a good stock picking environment. A lot of people are saying the weakness in the software sector can be attributed to uh the employment picture and just less hiring, weaker hiring. Um which makes sense. Businesses spend more on software when they have a higher headcount, >> right? Uh you need less seats or more seats from from an enterprise. >> So that's one part of it. The second part of it is disruption. >> What software is being disrupted right before our eyes by AI? And one of the poster children people site is uh the chart of salesforce.com CRM. Um Salesforce would say, "No, no, no, you don't understand. We're going to invent aic AI." The market doesn't think so. The market thinks that AI is going to be able to do a lot of things that people's employees can do, which means less demand for enterprise sales uh at Salesforce. Where do you fall in that debate? I I think it's more the latter is driving because you know we know creator the value that you pay for a creator now has dropped a lot because of AI whether it's content creator or >> software >> developer >> yeah people are writing their own apps internally now chat GBT fixing the code so >> on the margin if let's say it's only a 1% change in the demand of something that can cause 20% change in the price of something we know it's been chipped away >> okay So, so you think the uh weakness in the enterprise software space is somewhat warranted? >> Yeah. And you can probably see it in Silicon Valley, right? They're not in they're not funding SAS companies anymore. They're funding AI startups. >> They're funding tanks and drones, but that's a whole that's a whole other conversation. >> Do you think the next leg of the bull market comes from a broadening out? We saw something interesting yesterday. Duality Research posted a chart showing that um there has only been two days with better breadth and a bigger loss since 1996. So this was on Tuesday. The S&P was down 40 basis points. I think the equate was up 40 basis points, something like that. >> Uh do you think that that's what is going to drive the next like higher and expanding market? >> Yeah, I mean I I think that there's many reasons to argue market will expand because the Fed has been on hold all year. So you they're neither dovish or hawkish. But if they resume cutting, that's a it's a dovish cycle resuming. That's broadening. The ISM's been below 50 for 30 months now. >> Why does that matter? >> Well, it's a sign of business confidence. Like the CEOs of these companies, because now I'm chairman of a company, like there's no internal economist. You get your economic view from the Fed and from like Wall Street, right? And so if the if the economists are cautious, like companies are cautious. That's why the ISM's been suppressed. But that means you're not funding capex beyond demand. So expansionary expending hasn't taken place. That's a broadening. And then the third of course is that a AI agent AI we're kind of moving into the phase where it's we're seeing useful applications. That means companies are using AI to actually grow their business. That should be broadening opportunities. It's not just the >> where are they using agentic AI? Is that chat bots at like an e-commerce site where they're handling customer complaints via an agentic AI a uh like a an agent versus a human agent? Is that is that what we're talking about? >> I mean I I'd say even at Funstrat like we're finding a lot of ways now to use AI within the company to make it to run better. Whether it's identifying the source of like why people are having issues or what they don't understand about what we're saying or how to actually sort of clip things that we're saying to emphasize more information or even understanding like the source of inbound traffic like the inquiry. So it's this is the maybe even in the last couple months where I've said wow we're really benefiting from it >> now that would stop you from hiring a person to manually do those things. Yeah, I can share a story of a company, but I can't tell you the industry it's in because they asked me not to say, but they're a really big company, >> adult entertainment industry. >> No. No. >> Okay, say more. >> But they're really big and and use the supply chain and they said that they were like they kept they have a commodity that they got to hedge and they kept losing money on their hedging >> and then they were losing money on the supply chain because like they have to buy this commodity and they they have to package it and sell it. Then they brought in Palanteer and then they like just fed every one of their invoices and all the truck times and literally every trade they did for hedging and then it just spit out this like series of recommendations. Now they're making money that their hedging of their commodity is a huge profit maker and their operating margins have vast and then they said they have no idea what Palanteer did. It's like magic. >> Yeah. So >> and it was like just it wasn't like a bunch of consultants coming. It was like literally they just fed this into like a >> Can I ask you about Palunteer? So, uh, I listened to their conference call for the first time. I'm like ridiculously late to the Palunteer story. I sort of understood that it was a government contractor primarily that was now going to go into commercial and talk to corporations about how they can take their magic and apply it to every industry. And I love the story. The stock is uh $400 billion market cap. They're predicting $4 billion in revenue for this year. So, it's like everybody gets it. There's I don't know how much opportunity there is in the stock right now. Um, but it was remarkable the stats they put up on this call about adoption of people hiring Palunteer. Like, >> yeah, >> I think they added like a thousand corporate customers in a quarter or something crazy like that. Um, is that the kind of company that you think transforms American business to the point where you get that rerating in small caps and finally you get valuation expansion in midcaps because Palanteer or somebody like them comes in and completely transforms the company and Wall Street then gets shocked >> on on the next quarterly earnings report. >> Yeah. 100. Uh I I did speak to Palanteer cuz I I saw them at an event and this is what So even like our company which is only 33 employees but we of course have big asset management and we have tens of thousands of clients but I was like could you guys just drop in and like make us better? They're like let let like like just let us do it and >> can you do it for free? >> Yeah. But here's the thing. I my business partner a bit my mosaics says that you know he has this term called grifting. Palunteer eliminates grifting in your business model. >> Okay. Say more. >> What they mean is like they'll find where someone is taking money from you that you don't need in your operations or there's too many people in this movement of something and you don't need them or maybe internally you don't. >> Gifting is harsh. Well, I know, but it's >> inefficiency maybe would be a polite way of saying that. I mean, but that's like a millennial term. Like, because I'm not a mill, but you know, I mean, like they they're finding how to to get you from your revenue to your net income or even more revenue without >> they're the new efficiency expert >> and you don't have to be a better marketing. They're actually just saying this is how you should replplum your business. So, we have all of these magical companies that keep popping up out of nowhere um that are getting huge and pushing the valuation of the index to new highs. And this is a tired case that the bears have been making for 15 years, maybe eventually it'll prove out to be true. But when you see something like this, the EVA IBA of the S&P 500 or whatever metric you choose, in this case, that's what gainify is using at an all-time high, why doesn't this why doesn't this scare you? What are the bears misunderstanding? I >> I think if that if we said started at point A which is 2016 okay and every company was unchanged and their business strategy was exactly the same and they didn't have to do anything and face any stress in that nine years then I would be shorting that chart but look at what happened to all these companies. They had to deal with the six kill shots. We have like as you said AI revolution which is really an American story and maybe part China but nowhere else. So why shouldn't more value be coming into American businesses? So you know what I mean? Like >> so you're saying we're paying up for companies but shouldn't we? Haven't all of these companies gotten so much more impressive in the way that they handle like we don't even have recessions anymore? >> Yeah. And look at 2Q earnings that just passed 12% earnings growth. Like if someone said by >> you pay up for right, why wouldn't you pay up for companies that are this good at finding new ways to pull the profit >> and they're growing faster now 10 years in I might say that's a good horse, you Well, well, Tom, one of the one of like the central precepts of the macro uh like the macro commentator is that ultimately profit margins a are always too high and b are on the verge of mean reverting. >> Yeah. >> And then they never do. >> Uh which means companies of 2025 are better than companies of 2015 and way better than companies of 1985. >> Who would dispute that? >> Yeah. See, so >> the mean the profit margin mean reversion. People dispute that every day when they wake up. >> Yeah, mean reversion is too commonly used a word. Like it's proper in the fixed income world, but in the equity world, it's there's no such mean reversion. There's winners and losers, right? And remember in the S&P like those companies in 2016 out of the 500 in 10 years ago, I bet you 20% are gone. >> Well, that's the other thing. It's new. It's it's newer, younger, better, faster, stronger companies. >> Correct. >> Right. It's not the same. We're not tracking the same 500 companies over 10 years. >> If this was the Wilshshire 5000, I bet you it's been flat. >> Okay. All right. So, we have a collection of 500 companies that doesn't necessarily match the ones that we were looking at 10 years ago. Yeah. >> Okay. I think that's a strong argument. Um, do we want to do do we want to do do we want to do this one? >> Uh, all right. Let's move on to the economy. So, Tom, you mentioned earlier that the ISM manufact this one the ISM manufacturer has been below 50 for 28 months. Uh, >> do you care about this? >> Yeah. Why is this Why is this bullish? >> Well, because remember this is actually one where there's no one making up the answers. Like this is a survey that's sent and people respond if things are better, worse, or the same. So it's it doesn't have any political bias. It doesn't have any like >> but the answers are biased. No, like >> the people giving the answers are are not necessarily answering the question. So, but if they're answering it in a negative sense, that means that they're cautious. So, you can take their answer. Yeah. That's what you you don't want this to be like a heavily bullish. >> Correct. You never had a cycle peak when when you've had ISM below. By the way, this is the longest stretch since 1950. When you have this pervasive caution in business, we're nowhere near a cycle. >> So, imagine people imagine they turn bullish and they start spending money. You actually were talking to to to the bankless guys about this and this is an important point like everybody's bullish. No, they're not. >> They might feel that way if you're not bullish. >> Why why why do we have 25 months below a 50 reading on the ISM? Is it because people that answer this survey, what they hate the most is inflation. That's that would be my guess. >> And tariffs now. >> Well, that's like they hate tariffs because of inflation. Yeah. >> I think they hate inflation more than anything. So I think that that's why you get four straight years of below 50 ISM prints. >> Yeah. >> Okay. >> Now you remember when you are this far for Lauren interjected and then you flip positive you won't just go to 50 and then it's over. It'll we probably going to have four years of this staying above 50. I mean if you look at the history once it breaks above 50 it it's multiple years. This but this could be a record stretch above 50. This is bizarre. Talk through the chart that we're looking at. Like this is this most recent episode of the ISM below 50 and the stock market just relentlessly grinding is not typical. >> Yeah, I would say like maybe the people answering these surveys are just not terribly important to the economy anymore in the way that they once were. >> ISM is still more correlated with S&P earnings than services index >> because we're more of a manufacturing. Who are the people commenting for for for this survey? >> So it's members of the is institute of supply management. So it's basically the survey >> factory foreman like >> but but it also could be the Intel Nvidia purchasing manager. Although they get one vote, right? They get one survey. >> Okay. So tech is in here. >> Everything's in there. >> Okay. So you're saying that this is like a coiled spring. >> Yeah. >> Okay. And but when does when what makes this flip positive? cuz we're not going to we're not going to get 2% inflation unless something's really going wrong. >> So, what do these people need to to flip positive? >> I think we need policy stability, which could come next year, >> like from the White House. I mean, >> oh, this White House is known for stability. Okay, I'm with you on that. What else? >> Okay. Or it doesn't get more unstable. Um, you get a Fed that's dovish. >> Okay, >> which is cutting. >> You're probably going to get that if not now at a minimum by May. >> But then you need this third thing to happen. you need the excess spread on interest products to fall. Like today, you know, if you're borrowing a for a mortgage, it's normally only been at 160 basis points above the 10ear or like 1.6%. So the tenure is at 42. The 30-year mortgage should be 58. >> But it's not. >> But it's like seven. So there's excess spread on mortgages. But as soon as those other two things happen, I bet you that spread drops. >> What is the source of that spread being so high? It's a It's actually hard to explain. Someone says that it's either banks worried about prepayment velocity. So, because they're they're going to charge so they charge an excess spread or it's uncertainty about the value of the collateral. Like, can home prices drop? So, you don't you have to charge a high rate because they're only putting 20% down. >> Wait, the spread is high because they know that if and when rates drop, people are just going to prepare. >> So, you lose money. Yeah. You're losing money >> or refinance. >> Yeah. So, the pre the velocity hurts you, right? the lenders don't want uh 10% of their customers saying here's all the money I'm refinancing lower. >> Yeah. So they'll make they want to make money on it for now on the current income. >> Okay. >> And then third is of course like the mortgage market doesn't have as much hedging and there's a QT and so like it's harder to get spreads moved out but for whatever reason it's unusually wide. It's like 50 or 60 year wides. >> Okay. So should that fall, which it sounds like you think would coincide with Fed funds rates coming down, that is what what what's the what's the meaning of that? Like what's the effect of that? >> I think the simple way to think of it is like I don't know, let's say there's 20 trillion of mortgage debt out there and like half is above that rate. That's 10 trillion times 1.6 percentage points. Like that's money in people's pockets. Plus, how many more people are going to get mortgages now that it's five? >> I actually think I actually think the Fed has not kept rates this high for this long in a really long time. And once they appreciably fall, I don't care how bad the economy is, I actually think you could see the biggest mortgage refinance boom we've ever seen, like outside of the pandemic. >> Yeah. So, think about how much money that drives housing recovery and liquidity and people starting to upgrade their homes. Remember like Home Depot said the upgrade projects keep getting pushed out. >> Yeah, that's what they're being pushed out for. >> Yeah. >> All right. Do you think that's the next bull market is uh a housing I don't want to say recovery cuz prices are okay. A housing activity recovery. >> Yeah. It's a re It's like a rethinking of shelter cuz people will want to own housing, but they're too expensive. Like maybe there'll be new kinds of smaller homes being built or demand for modular, but people will borrow money to get a home. >> Okay. All right. I like that idea. Tom, are you worried about the labor market at all? >> Uh, yeah. I mean, because it's we're not we know we're not tracking it correctly, Mark, because ADP probably tracks it correctly, but they don't seasonally adjust correctly. And then we know the BLS numbers are different. But overall, I think the job the labor market is softer. I also think there's a lot less hoarding. That's why there's no pricing power anymore. Right? Companies were holding on to employees. Now they're just letting them go. >> Okay. I want to ask you about the phenomenon that's been chronicled this year at the New York Times and other places about the difficulty of recent college graduates to get a job relative to history. Just anecdotally, you probably I know you've got a you've got a college-aged uh daughter. So do I. Just anecdotally, you're probably hearing tons of parents like, "I don't understand why my kid can't get a job. Like, why is it so hard right now? The economy seems to be good. The stock market's booming." I'm hearing this all over the place talking about business school kids, kids that should be hired. Um, A, are you seeing that anecdotally and B, what do you make of that data? Is it something that could get worse? Is it a blip? Like what what do you think's happening? >> Um, I I think it is a big problem. I mean, I think it's observable. Uh it's like too many things that could explain it because one >> the AI there's a yeah AI means there's a huge mismatch because most people aren't equipped to do the jobs that are going to be in the future available for AI. >> Second I think there was this over sampling of people pursuing like liberal arts uh degrees expecting a job. I mean, liberal arts education's good, but we we probably need we have a now a huge shortage in trade workers. Like massive massive shortage. Like it's to such a degree that AI robots are doing jobs that normally were trade jobs because there's a shortage. >> Yeah. >> So, it's really complicated. But I guess I advise my kids because I have three kids like age 20 all the way 28. Um that you know there's no linear careers anymore, right? It's a very different future. Um because AI >> meaning you might do one thing for eight years, take a break, and then do something totally new >> that we can't even conceive of yet. >> Yeah. And or you might be paid for something that you didn't go to college for. Like you may just be super creative and that's your your most virtuous skill, but that wasn't what you went to college for. >> What do you say to friends of yours who have kids in this position, cuz I'm sure they're all asking you for jobs. Like what do you what do you tell other parents who have kids that are like I don't understand this kid just graduated up why is this employer that he's talking to making them go on a fifth interview and dragging this out for 6 months cuz I'm hearing stories like that everywhere. >> Yeah. Well, you know, I think a lot of people in who who who work in the financial services industry are actually good have personal experience of what is happening to the rest of the country which is Wall Street got disrupted by AI a long time ago. Like that's why trading went electronic computers and research shrank what you need because you can just use so everybody who's worked on Wall Street in the last 20 years has already seen their lives disrupted and plenty of people survive but you had to have been adapting to it. >> Okay. So more adaptable kids. >> Yes. >> You might go to school for one thing but you might have to pivot and take an opportunity somewhere else. >> That's right. And then Okay. Some people will make money passively. >> Okay? >> You know what I mean? Like some people may make money because they bought stocks. I mean maybe people should just buy stocks early because but in 20 years >> you have to buy a lot of stocks to make money passively from them. The average dividend yield in the S&P is 1.6%. >> Yeah. But as you know like if when you look at people who bought basketball teams and like the compounded return, you actually did better just if they had put the same amount of money in the S&P. I mean they didn't get to go to like get court sites >> less fun better return. Okay. Um you I mean are we going to build a nation of are we going to build a nation of people who start investing earlier because it kind of like become everyone becomes aware of this idea like you have to own the capital. >> Yeah. It's like remember people used to say like oh buy a house when you're 20. Now maybe we should just say buy the stock market because now you get you can you're long the AI disruption through equities. invest in your own disruption. >> Yeah. >> Okay. Let's do this non-farm payrolls versus unemployment rate. Did were you one of these people that was up in arms when the um when uh the White House threw the the head of the BLS out of out of her job or were you one of the people that was like the data sucks anyway and we probably need a brand new way to collect it? What was your take on it? >> Uh I mean I'm a researcher. >> Yeah. >> And so if >> you like the BLS >> I like the BLS and it's like it's like me getting fired. And it happens to me all the time by a client because the market didn't do something they wanted, but I get blamed for it, you know. >> So, I empathize with the BLS. I I think that they're probably really well-meaning people want to get the right number, but they have incomplete information, but perhaps they should be making very clear the standard error because, you know, the known standard error is like hundreds of thousands and they never post it. But it's a known >> because if they were to post it, it would render the information worthless. You you're telling me we added 70,000 jobs last month, but the margin of error is 200,000 jobs. Then what did you say? >> Yeah. So I think they should have in every chart like a little those little circles on the line. So you know what the high low of a one of a one sigma error is. >> The data quality has been declining for 20 years. Um the lack of response to their surveys. Um maybe they need to rethink the whole thing. >> Yeah. And probably there's probably better ways to track the job market anyways. I agree. >> Cell phone tracking. >> Why? >> Cuz you could see who's going to the office or you could see if how many people are at Starbucks when they should be at the office. I mean, you mean like >> I mean I feel like payroll's like ADP does a good enough job. >> ADP is really accurate. It's like it's not 100% of the population, but yeah, it's very accurate. >> Tom, we've got uh we've got Powell tomorrow at Jackson Hole. What is the market pricing in in term of number of cuts? And how do you feel about what the market is pricing in? Are they right? And what do you think Powell's going to say? Let's throw his chart up while he tells us. >> Yeah. I I mean, the market's pricing in two cuts between now and your end. Uh I I would say to me two cuts makes sense if the Fed realizes real interest rates are too high because tariff inflation is transitory. And so they should look at the break evens and realize 4 and a half% Fed funds versus 2 and a half is 200 basis points extremely tight. If you if you don't even think you're going to hurt the job market, it's clearly hurting the job market. >> Do you But do you think rate more rate cuts all of a sudden rejuvenates the job market or not necessarily? >> I think that a dovish cycle is going to get the ISM back up. So I think it actually is expansionary. >> Okay. Um >> and of course on the housing it's very expansionary. >> Do you have expectations for the speech itself? And understand by the time people are listening to this it'll be Friday morning. >> Yeah. >> I don't know what time Jay Powell is speaking. You know >> this afternoon? >> Yeah. 10 a.m. >> Okay. >> Okay. So, make a prediction that could be instantly rendered uh uh incorrect. I'll make one, too, but I want to hear yours. >> Well, last year the S&P was up 2%. After his speech, >> I think we're going to I think we're going to rally tomorrow. >> Okay. >> Even if he's hawkish and exerts his independence, >> cuz it'll be over and people are waiting for it to be over. >> Yeah. Because we would expect him to exert his independence, but it doesn't have negative implications cuz he's already on hold. I don't think he's going to do like a highly politically charged thing. >> No. Wow. See, then then the market's going to go up even more. >> Yeah. >> Yeah. So, it's >> So, so the way that this was phrased, the way that this is being looked at is like it's Powell's last stand. That's how Baron's phrased it. like um ostensibly this is his last chance to give a Jackson Hole address as the Fed chair and he's being called a publicly like he's being on and people are like he's going to strike back he's going to do this like fiery speech about the independence of the Fed and why that's so important for America. I don't think he's going to do any of that. I think he's going to acknowledge the fact that the labor market is softening. I think he's going to signal that there's a rate cut coming in September and then he's going to deliver the rate cut. I just don't think that he wants more smoke. Uh I don't know. I could be dead wrong. Well, we're all going to find out together. >> Yeah. And he's a, you know, from what I've heard cuz I don't know him personally, you know, high integrity person. >> Yeah. >> You know, a really class act. So, you're right. It's more consistent with what you're saying. >> If he cares about the independence of the Fed, then ratcheting the the temperature up is not going to help him. >> Yeah. >> Okay. Um, what do you think of the irony that the jobless claims, oh, excuse me, the NFP numbers were actually trending in the right direction for a rate cut and then Trump gets mad that they're not showing enough jobs? >> Yeah, >> but wait a minute. I thought you want a rate cut. Let me get this straight. You want a rate cut and you want an explosively higher hiring number. How do those two things work together? I don't really get it. >> That's right. And also knowing in September there's a big revision come the annual revision which is probably going to make all those private previous job reports look even worse. >> Right. But that's good if you want a rate cut. >> Correct. >> Okay. Maybe they don't really care what they want. They just want the the attention. >> Yeah. Or and may you know I mean I'm just a fan of an independent Fed. I'd you know >> let the Fed do their job. >> Well I think those days are over. All right Tom. Let's do some crypto stuff. So uh because people love that. Just kidding. No they don't. Um, people, nobody owns crypto. And I know that's not true, but it's the people, it's the companies that are buying the crypto. It's you guys, it's Sailor, it's the people that are early adopters. There are still a lot of people who just feel like they missed it. They hate when we talk about it enough. Uh, Bank of America, they ask their clients, uh, do you guys own crypto? And 75% of them are at zero. So it is this weird thing where the price keeps going up. We we know some of the reasons why yet nobody seems to be owning it. >> Yes. I um we know crypto is a generational divide because if you did the survey with someone under age 30, it's probably like 50% own crypto. Um, but history shows pretty clearly it's people in their 20s and 30s that are driving all future change. Credit card spending shows their in their investment. >> The 75% doesn't matter. In other words, >> yeah. Or the 75% is going to flip to 75% own crypto. >> So, we had we had the chief legal officer and chief financial officer of Coinbase, which is arguably the most public-f facing successful crypto company. They spend 45 minutes with us on Monday. We put out the video. The video does far less views than what we typically put out on Mondays. I'm not mad about it. I thought it was an amazing uh interview. I'm really good at this. I don't know if you know. Michael >> and Michael knows crypto better than I do. And I thought we did a great job. I look at the comments and these are our fans. So, like that's fine. You know, we want to hear honest feedback. They don'ting care. They they just it's like, "Oh, these again talking about Coinbase." So, we had crypto people in the comments who hate Coinbase because it's centralizing crypto. That's fine. That's a minority. Like, people in traditional finance still do not want to hear about any success in crypto. And I think my answer to why that's the case, I think they look at the people who have made millions or billions of dollars in crypto as having done something illegitimate or lotteryesque. I don't think it captivates their hearts and souls. They don't look at it like look how smart these people are. And what's so funny is there are famous value investors who haven't outperformed the market in 15 years. If I put them on YouTube right now, the views would skyrocket. And you know the names I'm I'm thinking of. I'm not going to say them, >> but it's like, let me get this straight. This asset class has been the best performing asset class in the world for 10 years. And you don't want to give any credit to the people that saw it early and capitalized. You'd rather hear from somebody who can't who couldn't make money if if uh it hit them in the head because they were quote unquote doing it the right way. Yeah, >> I think that's what's going on. >> Yeah, it is. So imagine like if your neighbor one day discovered oil in his backyard and became like really rich. >> Oh, you would hate his hat for >> I agree with that. And then he then he's like becomes an oil evangelist. You'd be like, I hate oil. >> Enough with the oil. Shut up with the oil. >> Right. I hate you. I hate oil. Right. All right. So that you think >> and then imagine the oil did have some a lot of scammy parts to it. >> Yep. And >> Right. You'd be like enough of the oil. >> Well, that's right. That's the other thing. A lot of this money they view it as scam like um there's a lot of but let's talk I want to talk about this all right specifically with with Bit Emer Technologies >> the risk to any asset class the primary risk is leverage and leverage took down crypto in the last cycle a lot of bad actors talk about so you tweeted or Bitmine tweeted on August 18th that you guys held 1.5ish million ETH valued at $6.6 billion. Is this leverage? Where is this money coming from? And why are people who say that this is like the epicenter of the next catastrophe wrong? >> Okay. Um I assume you're meaning leverage of Bit like does Bitmine stock have leverage? just what what you guys are doing, what Sailor is doing, like is is there going to be >> the concept of the crypto treasury involves we're going to borrow money, use it to accumulate these coins where the supply is shrinking. Yes. And that's the >> that's the secret sauce. >> Okay. Will there be a margin call? Is that the risk? Talk about if you could let me do like a couple minute explanation here. >> Duncan, what do you think? We going to allow it? You good with it? >> I genuinely I'm genuinely fascinated by this. So, >> so M. So, on June 30th, Bitmine announced the transaction where I joined as chairman and then Mosaics, who's my partner in this became the digital consultant to help manage the treasury. So, essentially, we helped recast the company as an Ethereum treasury company. >> What was it prior? It was Tanning Lons. >> No, it was a Bitcoin mining company. >> Oh, was a minor. Okay. >> Bitcoin miner. >> Got it. And at that time there was a $250 million investment that we brought in, you know, Founders Fund and uh Stan Dra Miller and real people. >> And what we at that time there was $4 of Ethereum per share and the stock was $450. >> So no premium effectively almost no premium. >> Yeah. Okay. That's right. And then we've you used capital markets like brought institutional investors subsequently uh and then bought more Ethereum. So as >> sold them new shares of stock. >> That's right. Okay. That's right. And you know that includes Kathy Wood and Bill Miller. And so last week >> I don't remember you calling me but okay continue. We can talk about that later. >> Yes. Um but on and last week we there was an updated registration statement filed so you could calculate how much Ethereum was held per share and it was $35 per share. >> Okay. >> So the stock you had $4 of Ethereum per share on June 30th and then last week at the registration statement it it was now 35 and the stock was trading at like one and a half times because it stock was let's say 50 you know one and a half times its Ethereum held. But when you bought it on June 30th, it was trading at 0.2 times where the Ethereum would be in a month from a month later. >> Okay. >> Now, all of that was financed with equity, mainly institutional investors. There's the only debt on Bitmines's company is a million dollar loan that was originally there on June 30th. So, the company had a but everything it's first principle is it's literally straight clean equity. >> So, no leverage. It's cash to buy. cash to buy. >> So you guys call Den Miller, Kathy, it's like, "Hey, we're going to do this thing. We're going to use this stock as a vehicle to acquire ETH." >> Yeah. >> And we need to sell stock to you in order to facil to facilitate those purchases. Yeah. In other words, you're putting money into the company. We're issuing you shares in the company. We're going to take your money that you give us and we're going to buy Ethereum. Okay. So, nothing nothing magical other than it's Ethereum and it's not, you know, hey, we're going to do a transaction where we're going to buy, I don't know, uh, buildings. Yeah. Or something that's more >> Yeah. So, Ethereum number one, um, is where the stable coin boom is taking place, 60% of it. So, like this whole genius act, Bessant says stable coins are going to go from 2 and a half 250 billion to 4 trillion. That's an exponential demand growth for Ethereum. >> Replacing money market funds. >> Correct. and it's dollarization and all that. >> Um, Ethereum pays a 3% native yield if you stake it. >> So, the 6.6 billion held of Ethereum is over $200 million in net income right now. Gap the day the day we turn on staking, not only is there no debt on Bit Miner, it's going to pay you $200 million a year in dividends. >> And what do you do with that? Buy more Ether >> or we might just pay it out as cash dividends. >> Where does that 3% native yield come from? Is that gas fees that users are paying to use ETH? >> Well, it's called proof of stake. So, Ethereum doesn't have a proofof work model where you're competing for a block reward. It's saying if you hold ETH and you agree to stake it and validate transactions, you earn the staking fee which is 3%. >> Okay. So, that's so that's where that's coming from. >> Yeah. And then there's a power law work at force at work that if we get to 5% of Ethereum, we become a really benevolent staking entity. That's why we want to get to 5%. The distinction, one of the many distinctions between ETH and Bitcoin for people listening that don't care that much but care a little um is that the Ethereum Foundation and the Ethereum Wales are fairly coordinated. Yeah, >> they have made changes before in the protocol and they have changed ETH like successfully I would argue >> um to make it more useful to the community. Whereas Bitcoin, there was a one major fork where they created Bitcoin Cash, but other than that, it's probably too disperse for there to ever be any kind of coordinated action. >> That's right. >> Okay. So, this is not quite as decentralized as Bitcoin, but it's more useful for things like stable coins. >> Yeah. So, we're working with the Ethereum Foundation because we can explain to them what Wall Street's looking for. So, keep in mind that the Genius Act and then SEC's project crypto is the recognition that using blockchain makes Wall Street faster and more efficient. I've seen it at Bitmine cuz like when we get the cash, the minute it touches the blockchain, it moves much we have much better visibility and it's much easier to move, you know, to actually track the money. The wallets are all tracked and uh this is like 1971 because in 1971 the dollar went off the gold standard. >> Yeah. >> And everyone said, "Oh, I'll buy gold instead." But remember, the dollar suddenly became a fiat. >> Yeah. >> And Wall Street innovated because they said, "Now we have a dollar. Let's make sure we can move the dollars efficiently. >> You need to move bars of gold to match the movement of the dollar." >> So it created Wall Street came out of that single act in 1971. So now n 2025 project crypto from the SEC and Genius Act is saying Wall Street take advantage of this new technology to make Wall Street a tech industry but they're all choosing to do it or the majority are choosing to do it on Ethereum. Ethereum is smart contract platform and has what they call EVMs Ethereum Ethereum virtual machines. So you can do basically a lot of smart pro programs and contracts. That's where Robin Hood is doing their stable coins, the tokenized products on top of Ethereum, >> right? >> So that's >> Well, there's another L2 in the mix also for what Robin Hood's doing, but they basically want to turn stocks into into a tokenized thing. >> Um, which I would imagine the initial stages, you're doing that to attract more investor capital because people are really into it. But over the long term, if a large portion of the market goes that way, it's probably just in a more efficient system. get rid of DTC. >> Here's the risk. Let's just say that there's no margin call. It's it's clean. It's cash. Uh the risk potentially is that I think that you are responsible for the move in ETH, the crazy move of the last couple of weeks. Like you did that in my estimation. Uh you got people excited. Bit mine was a is a huge thing. You're raising tons of money. You're buying tons of ETH. If and when because at some point there'll be a pullback obviously like it's a risk asset. Um, if at some point there's a pullback, there's a geopolitical event, a macro event, whatever the case may be, risk off and ETH goes from 4,200 to 3,000 to 2 whatever. Uh, if you can't raise fresh capital because people just say like, I'm not this, it's a bare I'm not doing this. And you're not buying at the pace at which you were buying, would that like take the floor underneath away from ETH? Is that possible? >> Uh, yeah. I mean, keep in mind a couple of things because I can't tell you too much about the operations. We're not moving the price of ETH. I can assure you. >> No, but the announcement of you being involved got other people to buy ETH. >> Uhhuh. But I'm just saying like in a practical sense cuz when we're >> Yeah. Yeah. >> actually in the market, >> I don't think we've ever done an out bid. >> Okay. So, I can't explain what we're doing. You're cleaning up sellers, people that are selling. >> I have to be very I can't tell you how we're buying our, >> but we're buying, you know, ETH tokens, but we're not I'm we >> we got it. We got it. >> And secondly, just keep in mind, >> like we have a billion dollar buyback program in place and with this native yield from ETH, we could be buying back, >> buying back the shares, not more ETH, but the actual stock. >> That's right. Okay. >> So, like in other words, like we have an internal mechanism to protect shareholders, but shareholders have aren't being hurt in the sense that there's $35 of ETH. Well, last week $35 of ETH held per share supporting the stock price, which means we're not trading at a premium, especially considering the growth of that Ethereum held per share. It's growing like 50 cents a day or something. >> But if you're going to be at 5% of ETH, if that's the goal, don't you kind of want ETH to come in? Don't you want to buy at lower prices? >> Yeah, I would. I want to be stacking it lower. So, I'm going to say this has been a good environment for Bitine to see ETH kind of correct here. >> Pull back a little bit. Um, >> how big could ETH get? What how big how I hate the term market cap because it's not applicable. Your company has a market cap. ETH doesn't have a market cap. Has a market size. >> He has a network value. >> What is the What is the current value of all the ETH in the world? How big do you think it could get? Because working backwards, that's what the 5% stake in ETH, >> right? Okay. >> It's about five 480 billion right now of fully diluted network value. >> Okay. >> But >> is the supply contracting or not yet? >> Uh it's actually growing about 1% >> slower than Bitcoin's inflation rate. Okay. >> It's actually a third of Bitcoin's inflation rate. >> Okay. >> How big and how big do you think that could be? Well, I think that there is a very high probability, I'm going to say maybe even 50% that Ethereum's network value will flip bitcoins. >> Wow. >> Like when >> the flipping >> in a maybe in a couple years. >> People have been saying this for a long time. Yeah. >> How much bigger is Bitcoin now? Is it >> It's two 2.2 trillion right now. >> And ETH is what 400 billion? >> Yeah. >> Um >> are you But you're not an ETH maxi. You think >> I'm not I'm still a Bitcoin. I think Bitcoin is going to a million, but I'm saying like Ethereum's relative size, the ratio will actually be 1 one. >> Last thing for me on this topic, uh, when I dismissed a lot of these this group as dumb money, what I meant was the people that are funding these treasury companies thinking that they're going to get the premium on the value of their tokens the way that Sailor did, the way that you are going to. I don't think there could be 30 ETH treasury winners. I think you can do it if anyone can. Do you agree with that? >> Yeah, it's uh yeah, there's there's two things to ensure the differentiation. One is you need to have um liquidity in stock. Bit mine is the 10th most traded stock in the stock market. >> That's crazy. >> John chart 14. This is unbelievable. >> Let me see this. >> So you have the alchemy of 5% Bitcoin miner or BMR ranked number 10 by 5day average daily volume. This is unfreaking believable. >> Your stock is trading more volume than Alphabet, >> Broadcom, Micro, >> Micro. Wow, you flipped strategy already. That's pretty impressive. >> So, nobody else can do this. >> Correct. So, that's liquidity because that make institutions want liquidity. So, they know that Tom, we can buy 10 million shares, you're stuck, but we can get out if we lose, you know, we don't we're not stuck. We're not like a prison. Um, the second is the velocity. Cuz see, compared to an ETF, if you bought an Ethereum ETF on June 30th, you still only have $4 of ETH per share. We took your $4 and now it's 35. We're growing your ETH holdings. So, it's different than owning a closed end fund. We're actively growing your Ethereum per share. >> So, this is maybe a dumb question. Why wouldn't you do a secondary again? You think you wouldn't have buyers? Of course you would. >> Yeah, there's probably we there's enormous interest. Um we get >> but when you do a secondary it's not dilutive because you're putting the money right into ETH. >> Correct. So it's actually Michael >> it's not like a traditional secondary then. >> Yeah. Michael S explained it like >> don't say yield. Don't say yield. >> No no no. He's saying he's selling you know um a dollar's worth of Bitcoin but because of the multiple of the stock he's buying $3 of Bitcoin with it. That's what his mechanism is. when you raise capital and then you're buying it an asset instead of a building, you're actually improving your book value. >> Okay. >> And then Ethereum itself is only at, you know, 4,000ish, but if it flips, you know, I mean, like, so Ethereum has a lot of upside. Um, >> are there other tokens out there that this idea makes sense for? Is that something that you guys are thinking about? I think if if something is useful like because Ethereum has this whole story of like Wall Street going onto the blockchain that's makes it more useful but remember the AI world the agentic world where they when you have robots you have to now know proof of human or proof that this is a valid instruction sent to the robot you know they're going to have to build a token model which is right now most of that's happening on Ethereum so the AI world as you go to Agentic has to use tokens on a public chain and it looks like a lot of it's going to happen on Ethereum. >> Okay, if there are any viewers still with us, uh, we'll move. Is there anything else we want to say? >> No, no, it's enough. It's enough. Um, all right. We We can't get out of here without Granny >> without giving you your flowers, as the kids say about Granny Shots. What an absolute home run. $2.28 billion in assets. When did you launch this? Last week. >> Uh, November 2024. >> Unbelievable. Put put um let's just go through the slides really quickly. So, for people that aren't familiar, Granny Shots is Tom's sort of like thematic ETF. The term comes from a famous basketball player who used to shoot free throws underhand. And Tom kind of used that as like a metaphor for picking stocks that he thinks are an underhand layup. Not not layup, but like a free throw. >> Yes. Not that they're risk-f free or that things can't go wrong, but like he looks at these as like granny shots and and therefore the ticker is GRNY. Not promoting the ETF, just explaining it. Um, full disclaimers apply, but show us the holdings. So, these are like multiple themes inside of one thematic ETF. >> Correct. >> Okay. And these are the themes that you think are going to be the dominant themes. Therefore, these are the types of stocks that you want to be invested in. >> Yeah. So the idea is like these things are going to last 10 to 15 years. Just like you said, AI is a is a juggernaut of a theme like a story. It's not just 2025. It's going to be 2035 until 2035. >> If you put Bit Mine immersion stock into Granny Shots, does the universe implode? >> Is that how does that work? Is that like two versions of you coming together? >> It's like crossing the streams, right? Um >> all right. Here are the names. Uh hidden gem meta platforms. Nobody knows that. >> I'm just teasing you. Um, but you have but you have stocks in here that people would not associate with like the future thematically. >> Fair fairy eyes corporation which is a data provider. Caterpillar >> Goldman Sachs >> um what what else is in here that >> PayPal Progressive? That's a granny shot. >> Yeah, actually some >> Monster Beverage. >> By the way, there was a rebalance last week. So there's some removals. >> Okay. >> But yes. >> Okay. uh because we did our quarterly rebalance last week. But yes, those are the names. Um they they one of the themes that is in here is millennials and and so not everything is an AI story cuz like Monster is an example of a millennial. >> They love it. Correct. >> That's their Coca-Cola. >> Yeah. And and the idea is there's plenty of millennial stocks, but we wanted to have a stock that's tied to two themes. So Monster has to be tied to another theme. As you can see, it's tied to uh millennials and then style tilt or sorry, seasonality. So, the reason that matters is that a single theme won't always work at every month in a stock market. >> So, stocks that find themselves being relevant to multiple themes make it in. >> Yeah. So, it'll have like one thing pulling it if something's not pushing. >> What do you say to people who look at this list of holdings and say, "Oh, I get it. It's aing momentum fund." It's not that. You're saying >> it's not Yeah. There's more going on here than just these are the big winners over the last 12 months. >> That's right. If you pulled up the MTM, which I don't have here, it it doesn't look like the same list. >> Okay. So, Morning Star does a ranking quantitative. This is not opinion. Yeah. >> And you guys are crushing it. You're in the top You're in the second percentile the Well, last week, who cares? Uh, but year to date, second percentile out of three, 1392 different uh players. >> Yeah. >> I mean, it's a top 20 top 28. Now you got to stand a 1400. >> What's a what's a what's a bad market environment for this? Is it choppy market or a bare market? Like in what market does this not stay near the top of the rankings? >> It did see a draw down February to April. So a bare market caused this to underperform, but then the recovery or stabilization caused us to make up all the ground lost. >> Okay. So I I would say this is this is trying to find the 30 most important stocks in the S&P that are tied to the growth drivers. >> Okay. >> So it's kind of a bit more growth oriented. >> Can I pitch you uh can I pitch you a version of this that maybe you haven't considered? >> Yes. >> It's called Grandpa Shots. >> Okay. >> And it's like uh members only. We would get long. We get very long like brown loafers if there's a trade. classic rock books about World War II. Like we would just like Right. Who's with me on this? >> And smoking. You gota have to have smoking jackets. Things that you'd wear like >> Yeah. Just like things that are ju uh things that are just like >> New Balance sneakers. >> Yeah. Maybe it's not a great strategy. Maybe we want to short those things. Congratulations, dude. This is This is amazing uh to watch. >> And by the way, didn't we say not to do this? Great advice. >> I said don't do it. Great advice, but joking around. The reason I said don't do it is because when you have a bad month, when the strategy is a bad month, now this is like the thing that people use to beat you over the head with, but you never cared about that. >> Yeah, I'm okay with that. And we do record a video every week with our granny shot. So, people have full transparency like what's working, what's not? And I think that >> Do people tell you who they're pulling money from to put money into into this? >> Well, people always ask us what kind of bucket we're in. And at the moment, we're not on any of the wire major warehouse platforms yet cuz you need to be one year in. >> That's how you get to 5 billion. >> Yeah. >> Right. Cuz then if they approve you like UBS, Morgan Stanley, if they're like, all right, we'll put this in the growth bucket. Forget it. It's lights out. >> Yes. >> Cuz then it's cuz it's people like, well, I don't need to own uh S&P growth. I want to own this. >> Yeah. >> This resonates more with with me. >> Yeah. >> Right. >> And I think it's Yeah. So, we're, you know, we're we're just trying to find you the best sort of important theme drivers uh in the market. >> Dude, I love it. Congrats. It's amazing. >> Thanks. >> Uh we end the show these days with something called what are you looking forward to? And uh it could be career, it could be personal, it could be whatever. What are you uh what are you most looking forward to right now? >> Oh, I actually have something interesting going on cuz like usually you'll ask me and >> Sounds like you do. Uh, okay. Next, at the end of this month, I'm going to Seoul with my wife to the Freeze Art Festival. >> What is that? >> It's an art festival. Uh, it's the last year in Seoul, Korea. Like, Freeze has art festivals, I think, in Miami and a few other places. >> Okay. >> Uh, she likes art, but it's really We're going there to see friends. So, actually taking a little vacation. >> Is she Korean? >> She's Korean. >> Okay. So, how long you going to go for? uh August 29th. >> Okay. >> Then September 7th, I come back to Huntington Beach because >> Future Proof, >> my favorite conference is that you're coming. We're we're so excited. We're bringing like half the company there. >> It's amazing. So, what is Funstrat's presence at Future Proof uh going to be like? You're going to meet I don't know thousands of We're I think we'll be at 5,000 people this year, which is going to be bananas. >> We're bringing Mark Newton. >> Okay. We love Mark, >> head of technical strategy. We're bringing Sean >> Ferrell >> who's our digital guy. We're bringing all this like swag, you know, granny stuff. >> Oh, I love it. >> And you know, I'm going to be speaking, but it you guys do put on, you know, I think is one of the most important conferences and really one of the best conferences all year. So, this is like I'm very excited about it. >> Awesome. We're so happy. We're so happy to have you guys. And for those of you who are coming to uh Future Proof, Tom is going to be booking our slots to uh to hang out with him. So, uh you you're going to what whatever the activity is you want to do, Tom will commit to doing it. So, jump on the app. Make sure you uh make sure you book yourself time in the breakthroughs, too, uh to meet with Tom's team. Um all right. Uh what are you looking forward to? We've had a long week, you and I. >> Are you sick of me? >> I'm looking No, never. I'm looking forward to uh Nobody Too. The new Bab movie. Oh, >> did you did you watch the first one? >> No, I didn't see the first one. >> It's like John Wick but with Bob Oden Kirk, which sounds weird, but it's great. Weapons. >> Uh, yeah. >> Should I see that? >> Yeah, I loved >> But well, I like it. >> Yes. >> Should I see it in the theater? It doesn't matter. >> Yes. >> What else did you see recently? >> Uh, together. >> I'm a theater guy. >> Yeah. >> I I love movies. I love storytelling, you know. >> Together with uh Franco and his wife was excellent. Excellent is a stretch. It was very good. But weapons was truly a masterpiece. >> Second experience. >> Yeah. Yeah, it was great. People are going nuts about that. >> They they cr He crushed it. Yeah. >> All right, Duncan. What are you looking forward to? >> Uh, well, I just saw Daniel D. Lewis has a new movie coming out, so I'm excited about that. >> He unretired. >> Yeah, his Well, I mean, but he's he's the lead in it, but his son is directing it, I think. >> Overrated. Is it a horror movie? Daniel D. Lewis. Overrated. >> Uh, I think there's a supernatural element. I'm not sure exactly what it is, though. We watched the trailer. I'm still a little confused. >> All right, John, what do you got for us? Any trips? Any >> Not at the moment. >> All right. looking forward to making more content with us. All right, my man. >> All right. Um, guys, this has been a pleasure. Tom, thank you so much. I want to tell people that you have a special offer for Compound listeners. This is super nice of you. Exclusively for listeners of the Compound and Friends. Tom has provided a link for a 30-day free trial. Please visit funstrat.com/tom. That's funstrat.com/tom. You can also find a link in the description below. So, if you're an experienced self-directed investor looking for trusted insights to grow your wealth, Tom Lee's fund strat research is the place to go. You're going to get daily access uh access to his daily insights, market alerts, live webinars, and stuff. That's super nice of you. Thank you very much. Uh and compound listeners will most assuredly want to check that out. Uh that's it for us this week. We appreciate everybody. Thank you for listening. We'll talk to you soon. [Applause] [Music]
Tom Lee Says It's Still Early | TCAF 205
Summary
Transcript
How was uh Jackson Hole? >> It was good. I wasn't there for the Fed part. I was there for the uh alts part. >> The more traditional crypto part of Jackson Hole. >> The salt. Yeah. >> Oh, so they're doing salt assault Jackson now. >> It was Salt Wyoming. Yeah. It was Kraken and Skybridge both sponsoring. >> How was it? >> It was good. They had a lot of policy makers there and you know, so it was a good mix of like people building things and then the policy makers. >> Very cool. I heard you on with the Bankless guys. It was good. >> Yeah, I like those guys. >> It was good. >> They're not as good as you guys, of course. >> So, we'll talk about obviously Bit Miner later, but >> is it Bit Min or Bit Miner? >> Bit mine. >> Bit mine immersion. >> Bit mine immersion. Yeah. >> Where did that company come from? Was it did you start it or >> No, it was an existing uh Bitcoin mining company but it was very small company and it you know mining is not a great business and so they were open to kind of rethinking of their strategy. So the company uh was open to kind of pivoting to to one focused on Ethereum. >> So they went they went from a minor to a treasury. >> Yeah. So for so they have this originally was their thing was immersion mining. So they have liquid cooled miners but you know mining is a very competitive business because you don't necessarily win a block reward and you have all this capbacks whereas now they're essentially their treasury strategy is holding Ethereum is really asset light for them or capex light right there's almost no capital spending >> so it's a good pivot for them. I was saying this last week, Tom, are you getting bored of the market? I feel like we just say the same every week. Like nothing's happening. It's all just like is AI going to blow up or is it going to continue? Like >> I I mean I think there's a lot of clues coming that there's some really big things happening. >> Like I think one of the most >> who's coming for what? >> I think that one of the most interesting things is that the US financial system is about to get really rearchitected >> in a way that's like oil. Well, like imagine oil had all sudden these EMPs and stuff, but the one difference is that the financial system could become like as big as the tech sector in terms of market cap >> really >> like JP Morgan's PE could become a growth stock >> if if what? >> Well, if they become less reliant on two things, one is like the traditional financial architecture has a lot of um friction. Uh, right. Because there's so many intermediaries in everything that's done, including like how JP Morgan >> But Tom, aren't they the friction? >> Yeah. Why do they want to remove it? That's their rake. >> Well, but if they could make more rake, so remember there's like power laws like as soon as the banks get involved in an industry, they already have large share. So there's they have the ability to do power law in anything they do. And so like if they decide to go into like rearchitecting the bank, they one of their biggest sort of saves or value capture is is the staffing of the industry could drop a lot. You know, Jmore has 200,000 people. You know, >> they could make more money with 5,000. So I think that the financial industry could start to be trading like a tech sector multiple. >> Oh, I like that. >> That's a call. >> Right. So that's very exciting. >> Long in JP Morgan. I I'm >> into Goldman like the like J Morgan and Goldman and Morgan S they're going to be strong whatever they because they they have customer relationships that will follow them to whatever they do. >> So the metric for banks was tangible book that's like what they always say on TV and that's maybe that's not the metric anymore. >> Correct. It it might be it'll and even things like credit cost and net mar net interest margin it's going to change as a dynamic because like if JB Warren gets big in stable coins they might make more money from stable coins than deposits you know like they may they may be a very different company >> if uh I mean it's not out of the question to see a rerating like that because we're living through one in the utilities right now. >> Exactly. >> So it happens. So suddenly powers become a really important driver because of AI. Well, AI is converging onto the blockchain to create a crypto token economy. The financial system is the always the other side of that. Like it's >> so if there's a big AS story for tech, there's got to be a big crypto story for financials. >> Yeah. >> And that's that's why suddenly financials could become a huge percentage of the S&P. >> I like it. I like it. We'll take it. All right. We are headphones on. >> How far did we go? >> Where do not disturbs on our phones? Am I the only one that has that problem? Usually it's usually just me. >> All right. >> You love those claps. >> Episode 205. [Music] [Applause] [Music] Today's show is brought to you by Newberger Berman. Hi folks, let's talk about options for your portfolio's next move. Ultrashort funds made sense when rates were rising, but with the market expecting rate cuts, maybe time to look at the Newberger Burman short duration income ETF, NBSD. One of the fastest growing ETF options from the NB fixed income team. >> That's right. With lower yields likely ahead, NBSD could help mitigate reinvestment risk. Their experienced team keeps duration short and focuses on efficient income. Always search for the best value and fixed income. >> And it's not just about returns. NBSD manages risk with a mostly investment grade portfolio and limited interest rate sensitivity. >> The world's unpredictable, but your cash flows don't have to be. We believe NBSD is a compelling choice if you want your money working harder. As always, check the fine print and talk to your adviser. Learn more about NBSD, including important information about fees, risks, and performance at www.nb.com/NBSD. NBSD from Newberger Berman. Efficient income managed risk. An investor should consider the fund's investment objectives, risk, fees, and expenses carefully before investing. This and other important information can be found in the funds perspectus and if available summary perspectus which you can obtain by calling 877-628-2583. Please read the perspectus and if available the summary perspectus carefully before making an investment. Newberger Burman B LLC is a distributor of the fund and a member of F. Wow. 20. Can you imagine? We've done this 205 times. Tom, what do you think? >> It's always fresh. Super impressive. Keep it fresh. All right, ladies and gentlemen, welcome to the biggest and best investment podcast in the world. I am your host, Downtown Josh Brown. My co-host is with me as always. Y'all say hello to Mr. Michael Batnik. Hello fellow here. All right, we have a very special guest today. returning champion, fan favorite, literally the pinnacle of stock market analysis, macroeconomic, uh, foresight, somebody who needs no introduction, but I'm going to give you one anyway. Tom Lee is the CIO and portfolio manager at Funstrat Capital and co-founder head of research at Funstrat. Tom, welcome. >> Thank you. Can I say one thing? Um, a couple of weeks ago on Animal Spirits, Ben and I did a show and we titled it the dumb money and it was talking about all of the money piling into the treasury, the digital asset treasury companies. And then I listened to you on Bankless and it was a correction of the record. I know we're going to talk about Bit Mine immersion technology later in the show. Um, but I did say regarding you, I don't think, in fact, let me not caveat that. There hasn't been a single person who is commenting on the market over the last 10 years that's been more right than you. >> Oh, wow. >> That's true. >> Thank you. Thanks. >> I mean, do you think that there's anybody else? >> No. I think Tom's the goat right now. I >> slugging percentage on base, not a baseball guy, but all of those things. So, >> nobody would argue it. And but what's more impressive than your record of the things you've said and what's happened uh afterward, what's more impressive is how much that you've had to put up with along the way because >> No, because I remember 2011 and 2012 Tom Lee and you might have still been at JP Morgan. >> Yeah. Okay. And you were bullish and at that time being >> be everyone was like a little bit bullish. Not I shouldn't say that, but being like as bullish as you were in 2011 and 2012, it almost felt like uh you were a magnet for all of the anger and frustration that people had like uh but you stuck your neck out there and you obviously were proven right. I think we're I don't know 15 years of of 12% average annual returns. >> 14. >> Yeah, it's been extraordinary. >> Nobody was saying that. Even the bulls were saying things about like the new normal and like get used to three and 4% average annual returns going forward and they had all these reasons why valuation >> cape ratio >> cape ratio and uh you were one of the few people that was willing to be bullish the entire way >> all that you did you did um you also during crisis you would pop on uh CNBC or wherever you were and you would say yeah no this is uh this is volatile But the volatility won't last. And we still think A, B, C, D. And then as those things would play out, you'd have to do it again cuz it'd be another crisis. But I I do think that you are getting credit now. You're getting your due for having been the most right market commentator consistently right. Um, and uh, how's it feel? How's it feel to be a gangster? >> Uh, thank you. I didn't realize I was a gangster. I should carry like a machine gun. >> Yeah. No, you're like a you're like a markets gangster now. I feel like you're the guy. What do you think? >> Well, next time I come, I'll wear sunglasses. >> All right, fair enough. >> And grease back hair? >> No, but truly, how do you feel in the position that you're in now? Um, do you do you worry at all? This has been an amazing run. It's got to stop at some point or not the markets, but like just your career arc. How do you like what is it what is it like being Tom Lee right now? >> I'd sell I'd sell calls. No offense. >> Michael would hedge Michael would hedge you, but how how do you feel? Um well, you know, we are constantly reminded that we're wrong all the time with our clients. It's I'm in a very strange business because like research um and we have two essentially really three cohorts, but really it's primarily institutional investors and then non-institutional and uh and we service them and we provide research, but they never really say you've done a great job. >> Okay? because like their job is tough and they already have many people providing advice and so like we're just one of the many views and so we never really get >> Oh, they'll take the credit and you're just an input. >> Yeah. >> Okay. But that's fine. That's the business you're in. >> You're only as good as your last step. >> That's and that's another thing like cuz I was an equity analyst like it it's our next call that matters, not our previous set of calls. >> Oh man, what a hamster wheel that is. >> Yeah. >> Right. But it's fun and exciting because it keeps us grounded and that's why I I am so afraid to ever take a victory lap. >> Yeah, it's a it's a really good point and the reality of this business is that you could you could have somebody in the markets for a 400% run in the S&P and then there's a 20% draw down and it's stupid Tom Lee uh bull bullish right at the top. It's like no yes at the top but also for the 400% preceding the top. We've did we all forget? >> Yeah. >> But people do forget. They don't care. >> That Feb to April period happened this year. Like all of a sudden people are yelling at us saying like, "How did you let us sink ourselves and get caught in this tariff thing? You know, it's and the Fed's not going to save us." And we kept saying it's waterfall declines are V-shaped. But no one could really believe it. But now that we recovered, >> at least we're not getting yelled at. Are you surprised at the speed with which the markets recovered even if you so I know you remained bullish through that and it was the right it was the right call. Um but are you even you surprised at how fast we recovered? >> Um I mean yes and no. >> There are V's and there are V's. That one looks like the pandemic. >> Yeah. Well, yes. I mean that was a complete drying up of buying power and then a complete loss of confidence from the CEO level to everybody in the world because no one had an answer. So you could see why you'd have this huge air pocket. But I do know two things that markets are symmetric. So the faster your decline, the faster the bounce. That's >> always. >> Yeah. >> Chart has a great one about that. >> Yeah. Yeah. So we we showed that basically unless there's a recession, it's always a symmetric bounce. It's 1 point the ratio is like 1.4 to 1.7. So if it took 8 weeks to lose 20, you'll recover it back in 1.4 times that length. >> Oh, okay. So, in other words, it's always like a there's a symmetry. Why? So, why do so many people think V-shaped recoveries are anomalous when based on what you're saying, they're actually the norm. >> Uh, I think people don't study history. I think they study their own sensibilities. They're saying like, "Oh, well, if you lose confidence, it's going to take me this much longer to recover." That's why everyone says there's a K-shaped or square root. >> Uh, you No, you hear like U-shaped recovery a lot, too. Right. >> Correct. Like every letter but V. And >> and it's always a V. >> It's always a V. >> Tom, so you did the work. You've got 12 waterfall declines since 1929. Do you think that this is what we're going to see going forward? >> Yes. Actually, maybe >> what's a what's a waterfall decline? What's the definition of that? >> Oh, well, it's a term we coined um probably around the 12 period, but it's when the market has a high velocity decline. >> So like if you say >> so like a lightning fast selloff. >> Yeah. So the fastest decline to 10% or the fastest down 20. So rather than like dribbling lower when it just like the bottom falls out. >> Yeah. It's like you sprung a like this ship is just sank. >> All right. So here's 12 of these. And just for the listeners who aren't looking, we have dates in here like 82, 87, 2002, 2009, 2020, 2025 is now on the list officially. Yeah, >> that was a big one. That was 20% and it was like overnight. >> Yeah. Okay. >> And usually no retest at least in modern history. >> That's right. I mean it will look like a retest but no usually that's another thing people say there's always a retest. It might be true at the stock level because there's sellers that want to get out but at the index level it's actually rare. >> Yeah. I actually would say post in financial crisis there are no retests. >> Yeah. >> Like that that's it. If you don't if you don't nail that moment it's okay. You could still buy later but you're not getting two chances at the buying higher. >> You're buying higher and that and that might be okay for people. Um, all right. Let's talk about the resilience of the of the current stock market. Would love to just get your like 30,000 uh foot view of where we are. So, the S&P is working on a 10% gain for the year, give or take. Um, >> NASDAQ slightly better. >> Mhm. >> Right. Um, leadership coming from utilities, industrials, financials, communication services. >> Yeah. >> So, all the exactly what you'd expect. >> Huge semiconductor rally this year. And then what's not working? Uh energy materials, >> healthare. >> Uh and healthare. >> And healthcare. Okay. Where what do you make of the resilience of the market? Look at how much we've put up with already. Look at how many like big bad scary things we've been through. Um and we're still in a double digit gain for the year. So what do you think? >> Well, I'd say number one, just for people to place themselves like in history. So, if you had a fact pattern of two 20% gains and then the third year's up 10 already and maybe we'll be up 15 or 20 this year, then we're in a bull market. Like, so whatever >> mean then you have confirmation that it's a bull market. >> Yeah. Because that this never happens in a bare market. Three, like you can't have like a dead cap bounce that lasts 36 months. >> You can have bull markets in bare markets. >> Yeah. But then they should then place themselves in history. This is probably more of an early start of a bull market rather than late. >> It's amazing cuz there's nobody that you would talk to who would say we're early. >> But the push back is and there's lots of push back. You have people saying this feels like 2021 all over again. >> The spa boom, the new issues. >> Nvidia and Microsoft. We're talking to Todd's crypto. Talking to Todd Zone last week. Nvidia and Microsoft are almost bigger than energy, healthcare, staples, utilities. It feels like it doesn't make sense. But you're saying it does make sense. >> Uh yeah. I mean, I think that a lot of those comparisons then they don't realize, well, what's Nvidia's rank as an as net income contributor? I mean, they're almost the biggest, if not >> they don't understand the granny shot. >> Yes. >> Put this uh put this chart up. Uh the third time we've had a most hated rally since 2020. This is a term that needs to be retired, right? >> Yes. >> Okay. The hat the most hated rally because it's always the most hated rally. People just hate rallies. That's not everyone. Most people like it. The most vocal people just despise >> the people that sell definitely hate it. >> This one is >> this one has been particularly reviled I think because one the the speed of the recovery has been so fast. As you know many people rage sold in April because they're like look the economist told me 60% chance of recession. That's the same as a sell rating on the stock market and they went to cash. They couldn't redeploy it because there was no pullback. >> It was too fast. >> Too fast. >> Is that what creates a hated rally? that phenomenon like people don't get back in fast enough. >> Yeah. And I think it just shows you that people don't operate with independence. They operate with a with a bias. They think when something bounces, it's just dumb people buying and that prevents them from jumping on with the buy. I mean, think about Palanteer and Tesla. They Netflix, they were all like retail stocks. Like someone was telling me the first time that they try to buy Tesla institutionally, they had to bring in this like research firm from Oregon that wrote a report on Tesla. Okay, this is Jenison. Um >> and like that was the first time that research firm ever got called to go to New York to actually meet a hedge fund. >> Oh wow. Okay. >> So like >> you know all these all the really big churns come because someone recognizes it and it's not often like the crowd that recognizes it. >> Okay. So, the hated component of this, the hatred comes from a lot of people miss out. A lot of people can't bring themselves to buy something that's already recovered because they think they missed it. Um, and then you have people that missed all three like like Yeah. >> They they they never bought cuz they they've been waiting since 2020 for, you know, a re a return to the lows. Yeah. >> And they don't get it and then they don't get it again and they don't get it again. >> At that point, it's just like maybe stocks aren't for you. Yeah. And and not I'm not trying to be snarky, but a lot of the people say, "Well, American exceptionalism is over. That's why I'm buying Germany." are the people that hated every rally here. And so they're trying to now create an opportunity somewhere else. >> Let me ask you this. So you have some charts showing the equal weight PE for the S&P 500 >> and it's been in a range over the past six years. It's averaged 16.3 and right now it's 16.9. On the next chart, you've got all these different things, all these different things that we've experienced and that we've we've brushed aside the resiliency of the stock market. >> I like that eggs for the inflation cycle, >> inflation to the fastest Fed hikes to the tariffs and and you know, everything in between supply chain issues. Do you think that this is, and I'm sure it's both, more of a fundamental tailwind from the AI story and or a combination of between inflation and the length of the bull market and the and the psychology of the market, there is so much money willing waiting to be deployed on every single dip. Is that which which do you think is more responsible or is it both? Well, may I'll answer it by saying I'm I've started off my career as a stock analyst. Okay, so imagine we have a stock. Okay, let's call it, you know, XYZ. And we shot it full of holes. Like they should have been kill shots six times, right? Cuz every one of those was a kill shot for this bull market. And yet this thing, >> what what are the things? The inflation cycle >> for CO number one, >> fastest Fed hikes in history. >> Yeah. And then the bullwhip chain effect was number two. The fastest Fed hikes, well the fastest inflation cycle in history, the fastest Fed hikes in history, the Trump tariff shock and then US bombing Iran's nuclear. >> Each of those should have produced a bare market. >> Yeah. Should have killed the bull market or even killed the economy. >> So what does that tell you? >> Just like even like you don't even have to know market history. Just common sense. The United States is bombing an Iranian nuclear facility. Therefore, buy the spoos. >> Yeah. You never morning. Nobody would do it. >> If you asked me in January, I'd say, "Okay, we got a risk of a bare market." >> Right. And none of these things were uh has produced a sustainable. >> That's right. >> We've had like bare markets, but not a secular bare market. >> Yeah. So, let's say that this stock was 16 times and we shot it six times over 5 years, like just kill shots. >> Yeah. >> And it grew earnings every year. >> Yeah. >> We would say the PE has to go up a lot >> and it hasn't. >> It's actually lower. It's a cheaper market. >> It's incredible. So I don't think most people are looking at an equal weight market. >> Yeah. >> So that's number one. And if they are, they're not looking at the valuation. >> They're looking at Palunteer. >> Yeah. They're they're looking when people say there's only seven stocks going up, I think it's a false portrayal of the stock market. >> Uh there are seven very large stocks. >> Correct. But with big earnings. >> With big earnings. >> Yeah. Justifiably large. >> Yeah. And I'd say the reason it's not just seven because gr our granny shots doesn't is only equal weighted and it's beating the market this year and it only buys quality growth. >> So that ETF that strategy is not reliant on having a 10% slug of the biggest stock in the world. >> Yeah, it would hurt an ETF because Granny is an equal weight by nature. >> So I I agree with you. I I don't buy into the seven stock paradigm, but the thing that I probably believe that you would disagree with. I think the entire stock market return this year boils down to AI, capex. We're talking about utilities. Why did utilities get rerated? AI. Why are financials ripping? Because of all the activity on Wall Street related to capex, uh, and AI stuff, M&A, IPOs, it's all one. Um, industrials. Well, what the hell are they doing? They're building data centers. They're building gas transmission to power the data centers. The whole thing is AI. Correct. There's not a second thing happening. The GLP1 bull market's dead. Uh I don't know of another. Even like the the quote unquote the strong consumer consumer stocks looks like right now. Nike, Chipotle, Starbucks isn't doing much. Um, so like if there's one game in town, but it's affecting four of the biggest sectors in the market, it's a fairly fragile, or maybe I'm wrong, it's a fairly fragile thing to rest on. Like, oh my god, I hope this AI capex story holds up because if it doesn't, >> it's taking down everything with it. Do you disagree with that or you you're on the same page with me? >> Okay, so I'm going to 100% agree. >> All right, that AI >> We can close out. Let's do favorites. >> All right, go ahead. uh that AI is the most important driver of the global economy. Okay. But where I think people make a like a an inference mistake, okay, is that thematic a theme driving the global economy has been systematic to the global economy since capitalism. Yeah. There's always been an industrial revolution. >> Okay, fair. And even in the 80s, the retail sector was the best group for 20 years because boomers were entering the work, women were entering the workforce and there was a baby boomer thing on retail stock. So that was a single theme of demographics and like the internet boom was a singular thing of actually creating digital infrastructure. So like it's always been a story of the stock market. So the fact that the entirety of the market's gain this year is being fueled by earnings coming from this one theme >> actually does not fly in the face of financial history. It happens all the time. >> Yeah. So it's only a bubble if spending is not driving income growth. So margins should be shrinking or debt should be rising faster than revenue. And we don't have a leverage cycle yet. And we have margins expanding. So it's not even late cycle for AI. It's all AI. Uh Dean Christians at Sentiment Trader had a great tweet this morning. He said, "The internal conflict within the technology sector is remarkable with a significant number of stocks making new highs while other while others are making new lows as captured by what's called the high low the high uh high low logic index." He said, "Last week it surged to its second highest reading ever, underscoring how AI is creating winners and losers within the sector." So, in other words, in plain English, there are more all-time highs or 52 week highs and 52- week lows simultaneously than there have been over the last uh >> So, the index rises on increasing dispersion between new highs and new lows. >> So, the index is being driven by the larger stocks. There are stocks that are obviously winning, we know, but there stocks that are getting destroyed. semiconductors versus software. To me, that's what I see. >> Yeah, I think it makes sense because when when you're in a big cycle like this, the winners are easy to identify because they have visibility, but it doesn't mean the losers are dead Matt, but for now, you they're kind of untouchable. This should be a good stock picking environment. A lot of people are saying the weakness in the software sector can be attributed to uh the employment picture and just less hiring, weaker hiring. Um which makes sense. Businesses spend more on software when they have a higher headcount, >> right? Uh you need less seats or more seats from from an enterprise. >> So that's one part of it. The second part of it is disruption. >> What software is being disrupted right before our eyes by AI? And one of the poster children people site is uh the chart of salesforce.com CRM. Um Salesforce would say, "No, no, no, you don't understand. We're going to invent aic AI." The market doesn't think so. The market thinks that AI is going to be able to do a lot of things that people's employees can do, which means less demand for enterprise sales uh at Salesforce. Where do you fall in that debate? I I think it's more the latter is driving because you know we know creator the value that you pay for a creator now has dropped a lot because of AI whether it's content creator or >> software >> developer >> yeah people are writing their own apps internally now chat GBT fixing the code so >> on the margin if let's say it's only a 1% change in the demand of something that can cause 20% change in the price of something we know it's been chipped away >> okay So, so you think the uh weakness in the enterprise software space is somewhat warranted? >> Yeah. And you can probably see it in Silicon Valley, right? They're not in they're not funding SAS companies anymore. They're funding AI startups. >> They're funding tanks and drones, but that's a whole that's a whole other conversation. >> Do you think the next leg of the bull market comes from a broadening out? We saw something interesting yesterday. Duality Research posted a chart showing that um there has only been two days with better breadth and a bigger loss since 1996. So this was on Tuesday. The S&P was down 40 basis points. I think the equate was up 40 basis points, something like that. >> Uh do you think that that's what is going to drive the next like higher and expanding market? >> Yeah, I mean I I think that there's many reasons to argue market will expand because the Fed has been on hold all year. So you they're neither dovish or hawkish. But if they resume cutting, that's a it's a dovish cycle resuming. That's broadening. The ISM's been below 50 for 30 months now. >> Why does that matter? >> Well, it's a sign of business confidence. Like the CEOs of these companies, because now I'm chairman of a company, like there's no internal economist. You get your economic view from the Fed and from like Wall Street, right? And so if the if the economists are cautious, like companies are cautious. That's why the ISM's been suppressed. But that means you're not funding capex beyond demand. So expansionary expending hasn't taken place. That's a broadening. And then the third of course is that a AI agent AI we're kind of moving into the phase where it's we're seeing useful applications. That means companies are using AI to actually grow their business. That should be broadening opportunities. It's not just the >> where are they using agentic AI? Is that chat bots at like an e-commerce site where they're handling customer complaints via an agentic AI a uh like a an agent versus a human agent? Is that is that what we're talking about? >> I mean I I'd say even at Funstrat like we're finding a lot of ways now to use AI within the company to make it to run better. Whether it's identifying the source of like why people are having issues or what they don't understand about what we're saying or how to actually sort of clip things that we're saying to emphasize more information or even understanding like the source of inbound traffic like the inquiry. So it's this is the maybe even in the last couple months where I've said wow we're really benefiting from it >> now that would stop you from hiring a person to manually do those things. Yeah, I can share a story of a company, but I can't tell you the industry it's in because they asked me not to say, but they're a really big company, >> adult entertainment industry. >> No. No. >> Okay, say more. >> But they're really big and and use the supply chain and they said that they were like they kept they have a commodity that they got to hedge and they kept losing money on their hedging >> and then they were losing money on the supply chain because like they have to buy this commodity and they they have to package it and sell it. Then they brought in Palanteer and then they like just fed every one of their invoices and all the truck times and literally every trade they did for hedging and then it just spit out this like series of recommendations. Now they're making money that their hedging of their commodity is a huge profit maker and their operating margins have vast and then they said they have no idea what Palanteer did. It's like magic. >> Yeah. So >> and it was like just it wasn't like a bunch of consultants coming. It was like literally they just fed this into like a >> Can I ask you about Palunteer? So, uh, I listened to their conference call for the first time. I'm like ridiculously late to the Palunteer story. I sort of understood that it was a government contractor primarily that was now going to go into commercial and talk to corporations about how they can take their magic and apply it to every industry. And I love the story. The stock is uh $400 billion market cap. They're predicting $4 billion in revenue for this year. So, it's like everybody gets it. There's I don't know how much opportunity there is in the stock right now. Um, but it was remarkable the stats they put up on this call about adoption of people hiring Palunteer. Like, >> yeah, >> I think they added like a thousand corporate customers in a quarter or something crazy like that. Um, is that the kind of company that you think transforms American business to the point where you get that rerating in small caps and finally you get valuation expansion in midcaps because Palanteer or somebody like them comes in and completely transforms the company and Wall Street then gets shocked >> on on the next quarterly earnings report. >> Yeah. 100. Uh I I did speak to Palanteer cuz I I saw them at an event and this is what So even like our company which is only 33 employees but we of course have big asset management and we have tens of thousands of clients but I was like could you guys just drop in and like make us better? They're like let let like like just let us do it and >> can you do it for free? >> Yeah. But here's the thing. I my business partner a bit my mosaics says that you know he has this term called grifting. Palunteer eliminates grifting in your business model. >> Okay. Say more. >> What they mean is like they'll find where someone is taking money from you that you don't need in your operations or there's too many people in this movement of something and you don't need them or maybe internally you don't. >> Gifting is harsh. Well, I know, but it's >> inefficiency maybe would be a polite way of saying that. I mean, but that's like a millennial term. Like, because I'm not a mill, but you know, I mean, like they they're finding how to to get you from your revenue to your net income or even more revenue without >> they're the new efficiency expert >> and you don't have to be a better marketing. They're actually just saying this is how you should replplum your business. So, we have all of these magical companies that keep popping up out of nowhere um that are getting huge and pushing the valuation of the index to new highs. And this is a tired case that the bears have been making for 15 years, maybe eventually it'll prove out to be true. But when you see something like this, the EVA IBA of the S&P 500 or whatever metric you choose, in this case, that's what gainify is using at an all-time high, why doesn't this why doesn't this scare you? What are the bears misunderstanding? I >> I think if that if we said started at point A which is 2016 okay and every company was unchanged and their business strategy was exactly the same and they didn't have to do anything and face any stress in that nine years then I would be shorting that chart but look at what happened to all these companies. They had to deal with the six kill shots. We have like as you said AI revolution which is really an American story and maybe part China but nowhere else. So why shouldn't more value be coming into American businesses? So you know what I mean? Like >> so you're saying we're paying up for companies but shouldn't we? Haven't all of these companies gotten so much more impressive in the way that they handle like we don't even have recessions anymore? >> Yeah. And look at 2Q earnings that just passed 12% earnings growth. Like if someone said by >> you pay up for right, why wouldn't you pay up for companies that are this good at finding new ways to pull the profit >> and they're growing faster now 10 years in I might say that's a good horse, you Well, well, Tom, one of the one of like the central precepts of the macro uh like the macro commentator is that ultimately profit margins a are always too high and b are on the verge of mean reverting. >> Yeah. >> And then they never do. >> Uh which means companies of 2025 are better than companies of 2015 and way better than companies of 1985. >> Who would dispute that? >> Yeah. See, so >> the mean the profit margin mean reversion. People dispute that every day when they wake up. >> Yeah, mean reversion is too commonly used a word. Like it's proper in the fixed income world, but in the equity world, it's there's no such mean reversion. There's winners and losers, right? And remember in the S&P like those companies in 2016 out of the 500 in 10 years ago, I bet you 20% are gone. >> Well, that's the other thing. It's new. It's it's newer, younger, better, faster, stronger companies. >> Correct. >> Right. It's not the same. We're not tracking the same 500 companies over 10 years. >> If this was the Wilshshire 5000, I bet you it's been flat. >> Okay. All right. So, we have a collection of 500 companies that doesn't necessarily match the ones that we were looking at 10 years ago. Yeah. >> Okay. I think that's a strong argument. Um, do we want to do do we want to do do we want to do this one? >> Uh, all right. Let's move on to the economy. So, Tom, you mentioned earlier that the ISM manufact this one the ISM manufacturer has been below 50 for 28 months. Uh, >> do you care about this? >> Yeah. Why is this Why is this bullish? >> Well, because remember this is actually one where there's no one making up the answers. Like this is a survey that's sent and people respond if things are better, worse, or the same. So it's it doesn't have any political bias. It doesn't have any like >> but the answers are biased. No, like >> the people giving the answers are are not necessarily answering the question. So, but if they're answering it in a negative sense, that means that they're cautious. So, you can take their answer. Yeah. That's what you you don't want this to be like a heavily bullish. >> Correct. You never had a cycle peak when when you've had ISM below. By the way, this is the longest stretch since 1950. When you have this pervasive caution in business, we're nowhere near a cycle. >> So, imagine people imagine they turn bullish and they start spending money. You actually were talking to to to the bankless guys about this and this is an important point like everybody's bullish. No, they're not. >> They might feel that way if you're not bullish. >> Why why why do we have 25 months below a 50 reading on the ISM? Is it because people that answer this survey, what they hate the most is inflation. That's that would be my guess. >> And tariffs now. >> Well, that's like they hate tariffs because of inflation. Yeah. >> I think they hate inflation more than anything. So I think that that's why you get four straight years of below 50 ISM prints. >> Yeah. >> Okay. >> Now you remember when you are this far for Lauren interjected and then you flip positive you won't just go to 50 and then it's over. It'll we probably going to have four years of this staying above 50. I mean if you look at the history once it breaks above 50 it it's multiple years. This but this could be a record stretch above 50. This is bizarre. Talk through the chart that we're looking at. Like this is this most recent episode of the ISM below 50 and the stock market just relentlessly grinding is not typical. >> Yeah, I would say like maybe the people answering these surveys are just not terribly important to the economy anymore in the way that they once were. >> ISM is still more correlated with S&P earnings than services index >> because we're more of a manufacturing. Who are the people commenting for for for this survey? >> So it's members of the is institute of supply management. So it's basically the survey >> factory foreman like >> but but it also could be the Intel Nvidia purchasing manager. Although they get one vote, right? They get one survey. >> Okay. So tech is in here. >> Everything's in there. >> Okay. So you're saying that this is like a coiled spring. >> Yeah. >> Okay. And but when does when what makes this flip positive? cuz we're not going to we're not going to get 2% inflation unless something's really going wrong. >> So, what do these people need to to flip positive? >> I think we need policy stability, which could come next year, >> like from the White House. I mean, >> oh, this White House is known for stability. Okay, I'm with you on that. What else? >> Okay. Or it doesn't get more unstable. Um, you get a Fed that's dovish. >> Okay, >> which is cutting. >> You're probably going to get that if not now at a minimum by May. >> But then you need this third thing to happen. you need the excess spread on interest products to fall. Like today, you know, if you're borrowing a for a mortgage, it's normally only been at 160 basis points above the 10ear or like 1.6%. So the tenure is at 42. The 30-year mortgage should be 58. >> But it's not. >> But it's like seven. So there's excess spread on mortgages. But as soon as those other two things happen, I bet you that spread drops. >> What is the source of that spread being so high? It's a It's actually hard to explain. Someone says that it's either banks worried about prepayment velocity. So, because they're they're going to charge so they charge an excess spread or it's uncertainty about the value of the collateral. Like, can home prices drop? So, you don't you have to charge a high rate because they're only putting 20% down. >> Wait, the spread is high because they know that if and when rates drop, people are just going to prepare. >> So, you lose money. Yeah. You're losing money >> or refinance. >> Yeah. So, the pre the velocity hurts you, right? the lenders don't want uh 10% of their customers saying here's all the money I'm refinancing lower. >> Yeah. So they'll make they want to make money on it for now on the current income. >> Okay. >> And then third is of course like the mortgage market doesn't have as much hedging and there's a QT and so like it's harder to get spreads moved out but for whatever reason it's unusually wide. It's like 50 or 60 year wides. >> Okay. So should that fall, which it sounds like you think would coincide with Fed funds rates coming down, that is what what what's the what's the meaning of that? Like what's the effect of that? >> I think the simple way to think of it is like I don't know, let's say there's 20 trillion of mortgage debt out there and like half is above that rate. That's 10 trillion times 1.6 percentage points. Like that's money in people's pockets. Plus, how many more people are going to get mortgages now that it's five? >> I actually think I actually think the Fed has not kept rates this high for this long in a really long time. And once they appreciably fall, I don't care how bad the economy is, I actually think you could see the biggest mortgage refinance boom we've ever seen, like outside of the pandemic. >> Yeah. So, think about how much money that drives housing recovery and liquidity and people starting to upgrade their homes. Remember like Home Depot said the upgrade projects keep getting pushed out. >> Yeah, that's what they're being pushed out for. >> Yeah. >> All right. Do you think that's the next bull market is uh a housing I don't want to say recovery cuz prices are okay. A housing activity recovery. >> Yeah. It's a re It's like a rethinking of shelter cuz people will want to own housing, but they're too expensive. Like maybe there'll be new kinds of smaller homes being built or demand for modular, but people will borrow money to get a home. >> Okay. All right. I like that idea. Tom, are you worried about the labor market at all? >> Uh, yeah. I mean, because it's we're not we know we're not tracking it correctly, Mark, because ADP probably tracks it correctly, but they don't seasonally adjust correctly. And then we know the BLS numbers are different. But overall, I think the job the labor market is softer. I also think there's a lot less hoarding. That's why there's no pricing power anymore. Right? Companies were holding on to employees. Now they're just letting them go. >> Okay. I want to ask you about the phenomenon that's been chronicled this year at the New York Times and other places about the difficulty of recent college graduates to get a job relative to history. Just anecdotally, you probably I know you've got a you've got a college-aged uh daughter. So do I. Just anecdotally, you're probably hearing tons of parents like, "I don't understand why my kid can't get a job. Like, why is it so hard right now? The economy seems to be good. The stock market's booming." I'm hearing this all over the place talking about business school kids, kids that should be hired. Um, A, are you seeing that anecdotally and B, what do you make of that data? Is it something that could get worse? Is it a blip? Like what what do you think's happening? >> Um, I I think it is a big problem. I mean, I think it's observable. Uh it's like too many things that could explain it because one >> the AI there's a yeah AI means there's a huge mismatch because most people aren't equipped to do the jobs that are going to be in the future available for AI. >> Second I think there was this over sampling of people pursuing like liberal arts uh degrees expecting a job. I mean, liberal arts education's good, but we we probably need we have a now a huge shortage in trade workers. Like massive massive shortage. Like it's to such a degree that AI robots are doing jobs that normally were trade jobs because there's a shortage. >> Yeah. >> So, it's really complicated. But I guess I advise my kids because I have three kids like age 20 all the way 28. Um that you know there's no linear careers anymore, right? It's a very different future. Um because AI >> meaning you might do one thing for eight years, take a break, and then do something totally new >> that we can't even conceive of yet. >> Yeah. And or you might be paid for something that you didn't go to college for. Like you may just be super creative and that's your your most virtuous skill, but that wasn't what you went to college for. >> What do you say to friends of yours who have kids in this position, cuz I'm sure they're all asking you for jobs. Like what do you what do you tell other parents who have kids that are like I don't understand this kid just graduated up why is this employer that he's talking to making them go on a fifth interview and dragging this out for 6 months cuz I'm hearing stories like that everywhere. >> Yeah. Well, you know, I think a lot of people in who who who work in the financial services industry are actually good have personal experience of what is happening to the rest of the country which is Wall Street got disrupted by AI a long time ago. Like that's why trading went electronic computers and research shrank what you need because you can just use so everybody who's worked on Wall Street in the last 20 years has already seen their lives disrupted and plenty of people survive but you had to have been adapting to it. >> Okay. So more adaptable kids. >> Yes. >> You might go to school for one thing but you might have to pivot and take an opportunity somewhere else. >> That's right. And then Okay. Some people will make money passively. >> Okay? >> You know what I mean? Like some people may make money because they bought stocks. I mean maybe people should just buy stocks early because but in 20 years >> you have to buy a lot of stocks to make money passively from them. The average dividend yield in the S&P is 1.6%. >> Yeah. But as you know like if when you look at people who bought basketball teams and like the compounded return, you actually did better just if they had put the same amount of money in the S&P. I mean they didn't get to go to like get court sites >> less fun better return. Okay. Um you I mean are we going to build a nation of are we going to build a nation of people who start investing earlier because it kind of like become everyone becomes aware of this idea like you have to own the capital. >> Yeah. It's like remember people used to say like oh buy a house when you're 20. Now maybe we should just say buy the stock market because now you get you can you're long the AI disruption through equities. invest in your own disruption. >> Yeah. >> Okay. Let's do this non-farm payrolls versus unemployment rate. Did were you one of these people that was up in arms when the um when uh the White House threw the the head of the BLS out of out of her job or were you one of the people that was like the data sucks anyway and we probably need a brand new way to collect it? What was your take on it? >> Uh I mean I'm a researcher. >> Yeah. >> And so if >> you like the BLS >> I like the BLS and it's like it's like me getting fired. And it happens to me all the time by a client because the market didn't do something they wanted, but I get blamed for it, you know. >> So, I empathize with the BLS. I I think that they're probably really well-meaning people want to get the right number, but they have incomplete information, but perhaps they should be making very clear the standard error because, you know, the known standard error is like hundreds of thousands and they never post it. But it's a known >> because if they were to post it, it would render the information worthless. You you're telling me we added 70,000 jobs last month, but the margin of error is 200,000 jobs. Then what did you say? >> Yeah. So I think they should have in every chart like a little those little circles on the line. So you know what the high low of a one of a one sigma error is. >> The data quality has been declining for 20 years. Um the lack of response to their surveys. Um maybe they need to rethink the whole thing. >> Yeah. And probably there's probably better ways to track the job market anyways. I agree. >> Cell phone tracking. >> Why? >> Cuz you could see who's going to the office or you could see if how many people are at Starbucks when they should be at the office. I mean, you mean like >> I mean I feel like payroll's like ADP does a good enough job. >> ADP is really accurate. It's like it's not 100% of the population, but yeah, it's very accurate. >> Tom, we've got uh we've got Powell tomorrow at Jackson Hole. What is the market pricing in in term of number of cuts? And how do you feel about what the market is pricing in? Are they right? And what do you think Powell's going to say? Let's throw his chart up while he tells us. >> Yeah. I I mean, the market's pricing in two cuts between now and your end. Uh I I would say to me two cuts makes sense if the Fed realizes real interest rates are too high because tariff inflation is transitory. And so they should look at the break evens and realize 4 and a half% Fed funds versus 2 and a half is 200 basis points extremely tight. If you if you don't even think you're going to hurt the job market, it's clearly hurting the job market. >> Do you But do you think rate more rate cuts all of a sudden rejuvenates the job market or not necessarily? >> I think that a dovish cycle is going to get the ISM back up. So I think it actually is expansionary. >> Okay. Um >> and of course on the housing it's very expansionary. >> Do you have expectations for the speech itself? And understand by the time people are listening to this it'll be Friday morning. >> Yeah. >> I don't know what time Jay Powell is speaking. You know >> this afternoon? >> Yeah. 10 a.m. >> Okay. >> Okay. So, make a prediction that could be instantly rendered uh uh incorrect. I'll make one, too, but I want to hear yours. >> Well, last year the S&P was up 2%. After his speech, >> I think we're going to I think we're going to rally tomorrow. >> Okay. >> Even if he's hawkish and exerts his independence, >> cuz it'll be over and people are waiting for it to be over. >> Yeah. Because we would expect him to exert his independence, but it doesn't have negative implications cuz he's already on hold. I don't think he's going to do like a highly politically charged thing. >> No. Wow. See, then then the market's going to go up even more. >> Yeah. >> Yeah. So, it's >> So, so the way that this was phrased, the way that this is being looked at is like it's Powell's last stand. That's how Baron's phrased it. like um ostensibly this is his last chance to give a Jackson Hole address as the Fed chair and he's being called a publicly like he's being on and people are like he's going to strike back he's going to do this like fiery speech about the independence of the Fed and why that's so important for America. I don't think he's going to do any of that. I think he's going to acknowledge the fact that the labor market is softening. I think he's going to signal that there's a rate cut coming in September and then he's going to deliver the rate cut. I just don't think that he wants more smoke. Uh I don't know. I could be dead wrong. Well, we're all going to find out together. >> Yeah. And he's a, you know, from what I've heard cuz I don't know him personally, you know, high integrity person. >> Yeah. >> You know, a really class act. So, you're right. It's more consistent with what you're saying. >> If he cares about the independence of the Fed, then ratcheting the the temperature up is not going to help him. >> Yeah. >> Okay. Um, what do you think of the irony that the jobless claims, oh, excuse me, the NFP numbers were actually trending in the right direction for a rate cut and then Trump gets mad that they're not showing enough jobs? >> Yeah, >> but wait a minute. I thought you want a rate cut. Let me get this straight. You want a rate cut and you want an explosively higher hiring number. How do those two things work together? I don't really get it. >> That's right. And also knowing in September there's a big revision come the annual revision which is probably going to make all those private previous job reports look even worse. >> Right. But that's good if you want a rate cut. >> Correct. >> Okay. Maybe they don't really care what they want. They just want the the attention. >> Yeah. Or and may you know I mean I'm just a fan of an independent Fed. I'd you know >> let the Fed do their job. >> Well I think those days are over. All right Tom. Let's do some crypto stuff. So uh because people love that. Just kidding. No they don't. Um, people, nobody owns crypto. And I know that's not true, but it's the people, it's the companies that are buying the crypto. It's you guys, it's Sailor, it's the people that are early adopters. There are still a lot of people who just feel like they missed it. They hate when we talk about it enough. Uh, Bank of America, they ask their clients, uh, do you guys own crypto? And 75% of them are at zero. So it is this weird thing where the price keeps going up. We we know some of the reasons why yet nobody seems to be owning it. >> Yes. I um we know crypto is a generational divide because if you did the survey with someone under age 30, it's probably like 50% own crypto. Um, but history shows pretty clearly it's people in their 20s and 30s that are driving all future change. Credit card spending shows their in their investment. >> The 75% doesn't matter. In other words, >> yeah. Or the 75% is going to flip to 75% own crypto. >> So, we had we had the chief legal officer and chief financial officer of Coinbase, which is arguably the most public-f facing successful crypto company. They spend 45 minutes with us on Monday. We put out the video. The video does far less views than what we typically put out on Mondays. I'm not mad about it. I thought it was an amazing uh interview. I'm really good at this. I don't know if you know. Michael >> and Michael knows crypto better than I do. And I thought we did a great job. I look at the comments and these are our fans. So, like that's fine. You know, we want to hear honest feedback. They don'ting care. They they just it's like, "Oh, these again talking about Coinbase." So, we had crypto people in the comments who hate Coinbase because it's centralizing crypto. That's fine. That's a minority. Like, people in traditional finance still do not want to hear about any success in crypto. And I think my answer to why that's the case, I think they look at the people who have made millions or billions of dollars in crypto as having done something illegitimate or lotteryesque. I don't think it captivates their hearts and souls. They don't look at it like look how smart these people are. And what's so funny is there are famous value investors who haven't outperformed the market in 15 years. If I put them on YouTube right now, the views would skyrocket. And you know the names I'm I'm thinking of. I'm not going to say them, >> but it's like, let me get this straight. This asset class has been the best performing asset class in the world for 10 years. And you don't want to give any credit to the people that saw it early and capitalized. You'd rather hear from somebody who can't who couldn't make money if if uh it hit them in the head because they were quote unquote doing it the right way. Yeah, >> I think that's what's going on. >> Yeah, it is. So imagine like if your neighbor one day discovered oil in his backyard and became like really rich. >> Oh, you would hate his hat for >> I agree with that. And then he then he's like becomes an oil evangelist. You'd be like, I hate oil. >> Enough with the oil. Shut up with the oil. >> Right. I hate you. I hate oil. Right. All right. So that you think >> and then imagine the oil did have some a lot of scammy parts to it. >> Yep. And >> Right. You'd be like enough of the oil. >> Well, that's right. That's the other thing. A lot of this money they view it as scam like um there's a lot of but let's talk I want to talk about this all right specifically with with Bit Emer Technologies >> the risk to any asset class the primary risk is leverage and leverage took down crypto in the last cycle a lot of bad actors talk about so you tweeted or Bitmine tweeted on August 18th that you guys held 1.5ish million ETH valued at $6.6 billion. Is this leverage? Where is this money coming from? And why are people who say that this is like the epicenter of the next catastrophe wrong? >> Okay. Um I assume you're meaning leverage of Bit like does Bitmine stock have leverage? just what what you guys are doing, what Sailor is doing, like is is there going to be >> the concept of the crypto treasury involves we're going to borrow money, use it to accumulate these coins where the supply is shrinking. Yes. And that's the >> that's the secret sauce. >> Okay. Will there be a margin call? Is that the risk? Talk about if you could let me do like a couple minute explanation here. >> Duncan, what do you think? We going to allow it? You good with it? >> I genuinely I'm genuinely fascinated by this. So, >> so M. So, on June 30th, Bitmine announced the transaction where I joined as chairman and then Mosaics, who's my partner in this became the digital consultant to help manage the treasury. So, essentially, we helped recast the company as an Ethereum treasury company. >> What was it prior? It was Tanning Lons. >> No, it was a Bitcoin mining company. >> Oh, was a minor. Okay. >> Bitcoin miner. >> Got it. And at that time there was a $250 million investment that we brought in, you know, Founders Fund and uh Stan Dra Miller and real people. >> And what we at that time there was $4 of Ethereum per share and the stock was $450. >> So no premium effectively almost no premium. >> Yeah. Okay. That's right. And then we've you used capital markets like brought institutional investors subsequently uh and then bought more Ethereum. So as >> sold them new shares of stock. >> That's right. Okay. That's right. And you know that includes Kathy Wood and Bill Miller. And so last week >> I don't remember you calling me but okay continue. We can talk about that later. >> Yes. Um but on and last week we there was an updated registration statement filed so you could calculate how much Ethereum was held per share and it was $35 per share. >> Okay. >> So the stock you had $4 of Ethereum per share on June 30th and then last week at the registration statement it it was now 35 and the stock was trading at like one and a half times because it stock was let's say 50 you know one and a half times its Ethereum held. But when you bought it on June 30th, it was trading at 0.2 times where the Ethereum would be in a month from a month later. >> Okay. >> Now, all of that was financed with equity, mainly institutional investors. There's the only debt on Bitmines's company is a million dollar loan that was originally there on June 30th. So, the company had a but everything it's first principle is it's literally straight clean equity. >> So, no leverage. It's cash to buy. cash to buy. >> So you guys call Den Miller, Kathy, it's like, "Hey, we're going to do this thing. We're going to use this stock as a vehicle to acquire ETH." >> Yeah. >> And we need to sell stock to you in order to facil to facilitate those purchases. Yeah. In other words, you're putting money into the company. We're issuing you shares in the company. We're going to take your money that you give us and we're going to buy Ethereum. Okay. So, nothing nothing magical other than it's Ethereum and it's not, you know, hey, we're going to do a transaction where we're going to buy, I don't know, uh, buildings. Yeah. Or something that's more >> Yeah. So, Ethereum number one, um, is where the stable coin boom is taking place, 60% of it. So, like this whole genius act, Bessant says stable coins are going to go from 2 and a half 250 billion to 4 trillion. That's an exponential demand growth for Ethereum. >> Replacing money market funds. >> Correct. and it's dollarization and all that. >> Um, Ethereum pays a 3% native yield if you stake it. >> So, the 6.6 billion held of Ethereum is over $200 million in net income right now. Gap the day the day we turn on staking, not only is there no debt on Bit Miner, it's going to pay you $200 million a year in dividends. >> And what do you do with that? Buy more Ether >> or we might just pay it out as cash dividends. >> Where does that 3% native yield come from? Is that gas fees that users are paying to use ETH? >> Well, it's called proof of stake. So, Ethereum doesn't have a proofof work model where you're competing for a block reward. It's saying if you hold ETH and you agree to stake it and validate transactions, you earn the staking fee which is 3%. >> Okay. So, that's so that's where that's coming from. >> Yeah. And then there's a power law work at force at work that if we get to 5% of Ethereum, we become a really benevolent staking entity. That's why we want to get to 5%. The distinction, one of the many distinctions between ETH and Bitcoin for people listening that don't care that much but care a little um is that the Ethereum Foundation and the Ethereum Wales are fairly coordinated. Yeah, >> they have made changes before in the protocol and they have changed ETH like successfully I would argue >> um to make it more useful to the community. Whereas Bitcoin, there was a one major fork where they created Bitcoin Cash, but other than that, it's probably too disperse for there to ever be any kind of coordinated action. >> That's right. >> Okay. So, this is not quite as decentralized as Bitcoin, but it's more useful for things like stable coins. >> Yeah. So, we're working with the Ethereum Foundation because we can explain to them what Wall Street's looking for. So, keep in mind that the Genius Act and then SEC's project crypto is the recognition that using blockchain makes Wall Street faster and more efficient. I've seen it at Bitmine cuz like when we get the cash, the minute it touches the blockchain, it moves much we have much better visibility and it's much easier to move, you know, to actually track the money. The wallets are all tracked and uh this is like 1971 because in 1971 the dollar went off the gold standard. >> Yeah. >> And everyone said, "Oh, I'll buy gold instead." But remember, the dollar suddenly became a fiat. >> Yeah. >> And Wall Street innovated because they said, "Now we have a dollar. Let's make sure we can move the dollars efficiently. >> You need to move bars of gold to match the movement of the dollar." >> So it created Wall Street came out of that single act in 1971. So now n 2025 project crypto from the SEC and Genius Act is saying Wall Street take advantage of this new technology to make Wall Street a tech industry but they're all choosing to do it or the majority are choosing to do it on Ethereum. Ethereum is smart contract platform and has what they call EVMs Ethereum Ethereum virtual machines. So you can do basically a lot of smart pro programs and contracts. That's where Robin Hood is doing their stable coins, the tokenized products on top of Ethereum, >> right? >> So that's >> Well, there's another L2 in the mix also for what Robin Hood's doing, but they basically want to turn stocks into into a tokenized thing. >> Um, which I would imagine the initial stages, you're doing that to attract more investor capital because people are really into it. But over the long term, if a large portion of the market goes that way, it's probably just in a more efficient system. get rid of DTC. >> Here's the risk. Let's just say that there's no margin call. It's it's clean. It's cash. Uh the risk potentially is that I think that you are responsible for the move in ETH, the crazy move of the last couple of weeks. Like you did that in my estimation. Uh you got people excited. Bit mine was a is a huge thing. You're raising tons of money. You're buying tons of ETH. If and when because at some point there'll be a pullback obviously like it's a risk asset. Um, if at some point there's a pullback, there's a geopolitical event, a macro event, whatever the case may be, risk off and ETH goes from 4,200 to 3,000 to 2 whatever. Uh, if you can't raise fresh capital because people just say like, I'm not this, it's a bare I'm not doing this. And you're not buying at the pace at which you were buying, would that like take the floor underneath away from ETH? Is that possible? >> Uh, yeah. I mean, keep in mind a couple of things because I can't tell you too much about the operations. We're not moving the price of ETH. I can assure you. >> No, but the announcement of you being involved got other people to buy ETH. >> Uhhuh. But I'm just saying like in a practical sense cuz when we're >> Yeah. Yeah. >> actually in the market, >> I don't think we've ever done an out bid. >> Okay. So, I can't explain what we're doing. You're cleaning up sellers, people that are selling. >> I have to be very I can't tell you how we're buying our, >> but we're buying, you know, ETH tokens, but we're not I'm we >> we got it. We got it. >> And secondly, just keep in mind, >> like we have a billion dollar buyback program in place and with this native yield from ETH, we could be buying back, >> buying back the shares, not more ETH, but the actual stock. >> That's right. Okay. >> So, like in other words, like we have an internal mechanism to protect shareholders, but shareholders have aren't being hurt in the sense that there's $35 of ETH. Well, last week $35 of ETH held per share supporting the stock price, which means we're not trading at a premium, especially considering the growth of that Ethereum held per share. It's growing like 50 cents a day or something. >> But if you're going to be at 5% of ETH, if that's the goal, don't you kind of want ETH to come in? Don't you want to buy at lower prices? >> Yeah, I would. I want to be stacking it lower. So, I'm going to say this has been a good environment for Bitine to see ETH kind of correct here. >> Pull back a little bit. Um, >> how big could ETH get? What how big how I hate the term market cap because it's not applicable. Your company has a market cap. ETH doesn't have a market cap. Has a market size. >> He has a network value. >> What is the What is the current value of all the ETH in the world? How big do you think it could get? Because working backwards, that's what the 5% stake in ETH, >> right? Okay. >> It's about five 480 billion right now of fully diluted network value. >> Okay. >> But >> is the supply contracting or not yet? >> Uh it's actually growing about 1% >> slower than Bitcoin's inflation rate. Okay. >> It's actually a third of Bitcoin's inflation rate. >> Okay. >> How big and how big do you think that could be? Well, I think that there is a very high probability, I'm going to say maybe even 50% that Ethereum's network value will flip bitcoins. >> Wow. >> Like when >> the flipping >> in a maybe in a couple years. >> People have been saying this for a long time. Yeah. >> How much bigger is Bitcoin now? Is it >> It's two 2.2 trillion right now. >> And ETH is what 400 billion? >> Yeah. >> Um >> are you But you're not an ETH maxi. You think >> I'm not I'm still a Bitcoin. I think Bitcoin is going to a million, but I'm saying like Ethereum's relative size, the ratio will actually be 1 one. >> Last thing for me on this topic, uh, when I dismissed a lot of these this group as dumb money, what I meant was the people that are funding these treasury companies thinking that they're going to get the premium on the value of their tokens the way that Sailor did, the way that you are going to. I don't think there could be 30 ETH treasury winners. I think you can do it if anyone can. Do you agree with that? >> Yeah, it's uh yeah, there's there's two things to ensure the differentiation. One is you need to have um liquidity in stock. Bit mine is the 10th most traded stock in the stock market. >> That's crazy. >> John chart 14. This is unbelievable. >> Let me see this. >> So you have the alchemy of 5% Bitcoin miner or BMR ranked number 10 by 5day average daily volume. This is unfreaking believable. >> Your stock is trading more volume than Alphabet, >> Broadcom, Micro, >> Micro. Wow, you flipped strategy already. That's pretty impressive. >> So, nobody else can do this. >> Correct. So, that's liquidity because that make institutions want liquidity. So, they know that Tom, we can buy 10 million shares, you're stuck, but we can get out if we lose, you know, we don't we're not stuck. We're not like a prison. Um, the second is the velocity. Cuz see, compared to an ETF, if you bought an Ethereum ETF on June 30th, you still only have $4 of ETH per share. We took your $4 and now it's 35. We're growing your ETH holdings. So, it's different than owning a closed end fund. We're actively growing your Ethereum per share. >> So, this is maybe a dumb question. Why wouldn't you do a secondary again? You think you wouldn't have buyers? Of course you would. >> Yeah, there's probably we there's enormous interest. Um we get >> but when you do a secondary it's not dilutive because you're putting the money right into ETH. >> Correct. So it's actually Michael >> it's not like a traditional secondary then. >> Yeah. Michael S explained it like >> don't say yield. Don't say yield. >> No no no. He's saying he's selling you know um a dollar's worth of Bitcoin but because of the multiple of the stock he's buying $3 of Bitcoin with it. That's what his mechanism is. when you raise capital and then you're buying it an asset instead of a building, you're actually improving your book value. >> Okay. >> And then Ethereum itself is only at, you know, 4,000ish, but if it flips, you know, I mean, like, so Ethereum has a lot of upside. Um, >> are there other tokens out there that this idea makes sense for? Is that something that you guys are thinking about? I think if if something is useful like because Ethereum has this whole story of like Wall Street going onto the blockchain that's makes it more useful but remember the AI world the agentic world where they when you have robots you have to now know proof of human or proof that this is a valid instruction sent to the robot you know they're going to have to build a token model which is right now most of that's happening on Ethereum so the AI world as you go to Agentic has to use tokens on a public chain and it looks like a lot of it's going to happen on Ethereum. >> Okay, if there are any viewers still with us, uh, we'll move. Is there anything else we want to say? >> No, no, it's enough. It's enough. Um, all right. We We can't get out of here without Granny >> without giving you your flowers, as the kids say about Granny Shots. What an absolute home run. $2.28 billion in assets. When did you launch this? Last week. >> Uh, November 2024. >> Unbelievable. Put put um let's just go through the slides really quickly. So, for people that aren't familiar, Granny Shots is Tom's sort of like thematic ETF. The term comes from a famous basketball player who used to shoot free throws underhand. And Tom kind of used that as like a metaphor for picking stocks that he thinks are an underhand layup. Not not layup, but like a free throw. >> Yes. Not that they're risk-f free or that things can't go wrong, but like he looks at these as like granny shots and and therefore the ticker is GRNY. Not promoting the ETF, just explaining it. Um, full disclaimers apply, but show us the holdings. So, these are like multiple themes inside of one thematic ETF. >> Correct. >> Okay. And these are the themes that you think are going to be the dominant themes. Therefore, these are the types of stocks that you want to be invested in. >> Yeah. So the idea is like these things are going to last 10 to 15 years. Just like you said, AI is a is a juggernaut of a theme like a story. It's not just 2025. It's going to be 2035 until 2035. >> If you put Bit Mine immersion stock into Granny Shots, does the universe implode? >> Is that how does that work? Is that like two versions of you coming together? >> It's like crossing the streams, right? Um >> all right. Here are the names. Uh hidden gem meta platforms. Nobody knows that. >> I'm just teasing you. Um, but you have but you have stocks in here that people would not associate with like the future thematically. >> Fair fairy eyes corporation which is a data provider. Caterpillar >> Goldman Sachs >> um what what else is in here that >> PayPal Progressive? That's a granny shot. >> Yeah, actually some >> Monster Beverage. >> By the way, there was a rebalance last week. So there's some removals. >> Okay. >> But yes. >> Okay. uh because we did our quarterly rebalance last week. But yes, those are the names. Um they they one of the themes that is in here is millennials and and so not everything is an AI story cuz like Monster is an example of a millennial. >> They love it. Correct. >> That's their Coca-Cola. >> Yeah. And and the idea is there's plenty of millennial stocks, but we wanted to have a stock that's tied to two themes. So Monster has to be tied to another theme. As you can see, it's tied to uh millennials and then style tilt or sorry, seasonality. So, the reason that matters is that a single theme won't always work at every month in a stock market. >> So, stocks that find themselves being relevant to multiple themes make it in. >> Yeah. So, it'll have like one thing pulling it if something's not pushing. >> What do you say to people who look at this list of holdings and say, "Oh, I get it. It's aing momentum fund." It's not that. You're saying >> it's not Yeah. There's more going on here than just these are the big winners over the last 12 months. >> That's right. If you pulled up the MTM, which I don't have here, it it doesn't look like the same list. >> Okay. So, Morning Star does a ranking quantitative. This is not opinion. Yeah. >> And you guys are crushing it. You're in the top You're in the second percentile the Well, last week, who cares? Uh, but year to date, second percentile out of three, 1392 different uh players. >> Yeah. >> I mean, it's a top 20 top 28. Now you got to stand a 1400. >> What's a what's a what's a bad market environment for this? Is it choppy market or a bare market? Like in what market does this not stay near the top of the rankings? >> It did see a draw down February to April. So a bare market caused this to underperform, but then the recovery or stabilization caused us to make up all the ground lost. >> Okay. So I I would say this is this is trying to find the 30 most important stocks in the S&P that are tied to the growth drivers. >> Okay. >> So it's kind of a bit more growth oriented. >> Can I pitch you uh can I pitch you a version of this that maybe you haven't considered? >> Yes. >> It's called Grandpa Shots. >> Okay. >> And it's like uh members only. We would get long. We get very long like brown loafers if there's a trade. classic rock books about World War II. Like we would just like Right. Who's with me on this? >> And smoking. You gota have to have smoking jackets. Things that you'd wear like >> Yeah. Just like things that are ju uh things that are just like >> New Balance sneakers. >> Yeah. Maybe it's not a great strategy. Maybe we want to short those things. Congratulations, dude. This is This is amazing uh to watch. >> And by the way, didn't we say not to do this? Great advice. >> I said don't do it. Great advice, but joking around. The reason I said don't do it is because when you have a bad month, when the strategy is a bad month, now this is like the thing that people use to beat you over the head with, but you never cared about that. >> Yeah, I'm okay with that. And we do record a video every week with our granny shot. So, people have full transparency like what's working, what's not? And I think that >> Do people tell you who they're pulling money from to put money into into this? >> Well, people always ask us what kind of bucket we're in. And at the moment, we're not on any of the wire major warehouse platforms yet cuz you need to be one year in. >> That's how you get to 5 billion. >> Yeah. >> Right. Cuz then if they approve you like UBS, Morgan Stanley, if they're like, all right, we'll put this in the growth bucket. Forget it. It's lights out. >> Yes. >> Cuz then it's cuz it's people like, well, I don't need to own uh S&P growth. I want to own this. >> Yeah. >> This resonates more with with me. >> Yeah. >> Right. >> And I think it's Yeah. So, we're, you know, we're we're just trying to find you the best sort of important theme drivers uh in the market. >> Dude, I love it. Congrats. It's amazing. >> Thanks. >> Uh we end the show these days with something called what are you looking forward to? And uh it could be career, it could be personal, it could be whatever. What are you uh what are you most looking forward to right now? >> Oh, I actually have something interesting going on cuz like usually you'll ask me and >> Sounds like you do. Uh, okay. Next, at the end of this month, I'm going to Seoul with my wife to the Freeze Art Festival. >> What is that? >> It's an art festival. Uh, it's the last year in Seoul, Korea. Like, Freeze has art festivals, I think, in Miami and a few other places. >> Okay. >> Uh, she likes art, but it's really We're going there to see friends. So, actually taking a little vacation. >> Is she Korean? >> She's Korean. >> Okay. So, how long you going to go for? uh August 29th. >> Okay. >> Then September 7th, I come back to Huntington Beach because >> Future Proof, >> my favorite conference is that you're coming. We're we're so excited. We're bringing like half the company there. >> It's amazing. So, what is Funstrat's presence at Future Proof uh going to be like? You're going to meet I don't know thousands of We're I think we'll be at 5,000 people this year, which is going to be bananas. >> We're bringing Mark Newton. >> Okay. We love Mark, >> head of technical strategy. We're bringing Sean >> Ferrell >> who's our digital guy. We're bringing all this like swag, you know, granny stuff. >> Oh, I love it. >> And you know, I'm going to be speaking, but it you guys do put on, you know, I think is one of the most important conferences and really one of the best conferences all year. So, this is like I'm very excited about it. >> Awesome. We're so happy. We're so happy to have you guys. And for those of you who are coming to uh Future Proof, Tom is going to be booking our slots to uh to hang out with him. So, uh you you're going to what whatever the activity is you want to do, Tom will commit to doing it. So, jump on the app. Make sure you uh make sure you book yourself time in the breakthroughs, too, uh to meet with Tom's team. Um all right. Uh what are you looking forward to? We've had a long week, you and I. >> Are you sick of me? >> I'm looking No, never. I'm looking forward to uh Nobody Too. The new Bab movie. Oh, >> did you did you watch the first one? >> No, I didn't see the first one. >> It's like John Wick but with Bob Oden Kirk, which sounds weird, but it's great. Weapons. >> Uh, yeah. >> Should I see that? >> Yeah, I loved >> But well, I like it. >> Yes. >> Should I see it in the theater? It doesn't matter. >> Yes. >> What else did you see recently? >> Uh, together. >> I'm a theater guy. >> Yeah. >> I I love movies. I love storytelling, you know. >> Together with uh Franco and his wife was excellent. Excellent is a stretch. It was very good. But weapons was truly a masterpiece. >> Second experience. >> Yeah. Yeah, it was great. People are going nuts about that. >> They they cr He crushed it. Yeah. >> All right, Duncan. What are you looking forward to? >> Uh, well, I just saw Daniel D. Lewis has a new movie coming out, so I'm excited about that. >> He unretired. >> Yeah, his Well, I mean, but he's he's the lead in it, but his son is directing it, I think. >> Overrated. Is it a horror movie? Daniel D. Lewis. Overrated. >> Uh, I think there's a supernatural element. I'm not sure exactly what it is, though. We watched the trailer. I'm still a little confused. >> All right, John, what do you got for us? Any trips? Any >> Not at the moment. >> All right. looking forward to making more content with us. All right, my man. >> All right. Um, guys, this has been a pleasure. Tom, thank you so much. I want to tell people that you have a special offer for Compound listeners. This is super nice of you. Exclusively for listeners of the Compound and Friends. Tom has provided a link for a 30-day free trial. Please visit funstrat.com/tom. That's funstrat.com/tom. You can also find a link in the description below. So, if you're an experienced self-directed investor looking for trusted insights to grow your wealth, Tom Lee's fund strat research is the place to go. You're going to get daily access uh access to his daily insights, market alerts, live webinars, and stuff. That's super nice of you. Thank you very much. Uh and compound listeners will most assuredly want to check that out. Uh that's it for us this week. We appreciate everybody. Thank you for listening. We'll talk to you soon. [Applause] [Music]