The Compound and Friends - Stay Bullish on America With Nick Colas, Everyone’s Building AI Chips, Ringing the Bell

Episode Date: December 18, 2024

On this TCAF Tuesday, Josh Brown is joined by Nick Colas, co-founder of DataTrek Research, to discuss today's market vs the dot com bubble, U.S. Stocks compared to the rest of the world, top performing S&P financials, ROE machines, and more! Then, at 42:59, hear an all-new episode of What Are Your Thoughts with Josh and Michael Batnick! This episode is sponsored by Rocket Money! Cancel your unwanted subscriptions today by visiting: http://rocketmoney.com/compound Sign up for The Compound newsletter and never miss out: https://www.thecompoundnews.com/subscribe Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: LinkedIn: https://www.linkedin.com/company/the-compound-media/   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to the Compound and Friends. Tonight's show is brought to you by our friends at Rocket Money. Go to rocketmoney.com slash compound to learn more. I want to talk to you about what's happening on the show tonight because we have just packed this thing to the gills. I mean, there is just so much. I know I say this a lot. There is so much here.

It's crazy how much we covered. First things first, it's Nicholas and I. Jessica was a little bit under the weather, but we did, what did we learn? And Nick had some amazing info. We covered everything from US versus international. A lot of the data that they put out is just, I gotta tell you, I get everybody's stuff,

I get everybody's research. The data track stuff just hits different. And so I had a really great session with Nicholas and we covered a lot of ground. And then it's an all new edition of What Are Your Thoughts with Michael Batnick and I. We took a look at the fact that every one of Nvidia's customers, enterprise customers, is working on their own AI chips, like all of them. And many of them are working with Broadcom. And I guess the point of what we're trying to say is that the Nvidia story gets a little bit more complicated

going into 2025. It's not that anyone is like seriously competing with them on the GPU front. It's that the hyperscalers are finding lots of ways to use different types of chips to get around the GPU shortage. And all of a sudden, there are many legitimate ways to invest in the AI theme. Broadcom being an obvious example where the stock has already worked really well this year. But we just kind of take like this trip through chip land. And I think there's a lot of really great stuff in there.

Some signs at the top, we had to. The universe is not going to let us ignore these things forever. So we get into some of that. There's a mystery chart. Michael pitch is the worst stock I've ever seen in my life. It's endless and I want to throw you in there right now. So John Duncan, Daniel, take it away. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Bat Batnick and their cast mates are solely their own opinions and do not reflect the opinion of Red Holtz wealth management This podcast is for informational purposes only and should not be relied upon for any investment decisions

Clients of Red Holtz wealth management may maintain positions in the securities discussed in this podcast All right, all right welcome to an all- new edition of What Did We Learn? I'm your host, Josh Brown, and I'm here with Datatrek Research's Nick Kolis. Nick is a co-founder of Datatrek, which is a newsletter, the morning briefing newsletter, it goes out to over a thousand institutional and retail investors, and you guys are at it five days a week. Pretty remarkable. Okay. I would say that we're coming into the end of 2024.

We've all learned a lot of lessons. And today's show seems like it's really going to be about these are the biggest things that happened this year. And here are really the takeaways that you want to remember going into next year and all subsequent years. And I love doing shows like this toward the end of the year, especially when so many unexpected things took place. I would say that 2025, while it's a quote unquote normal year in the market for a lot of reasons. It's a year to remember forever. Just in terms of things that you it's they're hard to picture before they happen.

And then they happen and everyone says, Oh, here's the explanation for why this happened. This is one of those years. Would you agree with that, Nick? Yeah, totally. It feels like in some ways it is the coda on a very long piece of music where we say, aha, I got it now. Yeah. I want to start off with 10-year yields and their effect on the stock market because right at the top of the list of unexpected things, a lot of people have this assumption that rising rates are probably good because they mean the economy is growing, but they'll be negative for stock prices because

they could suppress the multiple the people are willing to pay on the earnings of stocks and there are all these like narratives that People have pulled from the history books or the latest macro research they've read this year seems like there's like a Very little rhyme or reason but maybe you have a different takeaway than than I do. Tell us about the effect of rates this year. Sure. Let's put up that first chart, which shows 10 year yields. And I've broken this down by quarter and I've overlaid the yields, which are in the blue line with how the S&P did and how Russell did and how the rest of world did. Basically, ACW XCTF. I love this chart. What were the price returns by quarter? So Q1 rates go

up the S&P rallies 10% Russell rest of worlds up five. Okay rates are going up people a little bit nervous so they crowd into large caps and you have a big tech move. Second quarters where things get a little bit weird because rates stay high in Q2 and the S&P still rallies up four and Russell rest of world's down negative four negative one. So market's saying, okay, I want to stay in large cap because I'm not sure where rates are going to go. Then you get a big relief in Q3 rates finally come down cool. So finally, the Russell outperforms rest of world outperforms they're up nine eight percent on the quarter S&P is only up six. So finally, the Russell outperforms rest of world outperforms. They're up nine, eight percent on the quarter.

S&P is only up six. So the risk on trade is back. But then we get this big rip in rates in Q4. And you see that the S&P continues to work. The Russell continues to work up five percent each rest of world down four and a half percent and basically flat X currency. And that's how you end up with a year where you have this crazy return on the S&P at 27% year to date.

The Russell's doing okay, up 16, rest of world's only up seven. And my takeaway from that data and that chart is that rest of world's kind of the stub equity of global equity markets, where the market looks at the rest of world as you need lower rates and a real pat on the back in terms of hoping for global economic growth

before rest of world stocks can really work. And otherwise they just get left in the shadows. Yeah, but there seems to be like a randomness to this, or maybe I'm not fully understanding. Could we put the chart up one more time? I wanna ask you. So the big takeaway here is that the S&P 500 worked in all four quarters,

whether rates were rising, holding high, falling, or again, rising. This was just like the consensus, no brainer trade almost to the point where you could say, don't worry about rates at all. Just by large caps was the consensus mentality. So I have that right? It was, but then look at Q3, the only quarter rates go down and everything else works better. Rest of world outperforms, Russell outperforms.

And it tells you that rates are the determining factor in how global equity investors think about where to put their money. If you're uncertain because rates are going up or rates are very high, you just buy one of the U S large caps. Rates are coming down, you say, aha, that gives me some confidence that global growth will be okay. Otherwise you're in large caps.

And that's what the message of the chart is. And in terms of next year, if you think rates are coming down next year, if you think 10 years you're gonna go back down below four and stay there, then rest of world might be an okay trade. Otherwise you gotta be super careful. Because what this chart says is, they're not going to work. They're not going to work anywhere near as well as US large caps, even small caps. Rest of world and small caps are more correlated than rest of

world and large caps. Is that also an accurate way to frame it? It has been this year. Yeah. Yeah. And probably because they share that driver of our rates going down or not. Yes. Now, they ran small caps were able to break away from rest of world and Q4 because we have the Trump trade going on. Yeah, fair explanation. And rest of world also gets hurt with the Trump trade. So that also makes sense. And to me, the real issue with Q4 has been the tremendous strength in the dollar, and just kills non US equity returns for US I mean, to me, the real issue with Q4 has been the tremendous strength in the dollar

and just kills non-US equity returns for US shareholders. If you own ACWX or IEUR or EFA or even anything, if you're in a currency other than the dollar, you got crushed this quarter. Yeah. Staying on the rates thing, one more question for you. Does the fact that our index is now dominated by rate insensitive companies that are in traditionally rate insensitive industries

account for why the year went the way it did? You think that's like a really simple way of thinking about it? It is. And I mean, the other fascinating thing about this year has been, we've had rates that are just structurally high, right? The 10 year just has four, a magnet around 4%.

It can't go down much more. And if it does, it goes back up. Rates in 2019 were like 2%. And the valuation on the S&P has gone from 19 to 22 times. So again, to your point, if you're looking at discounting cash flows, you have the discount rate and the growth rate, and the growth rate has ended up being the winner in this trade over the last five years. The growth rate of companies that are insensitive to rates and sensitive to economic growth has been overwhelmingly the powerful factor that drives valuations higher and discount rates matter much less.

Your second point here is that US stocks can keep outperforming even after having been outstanding long-term winners. Yes. What's the message here? So first table shows you just the change in weights for the US versus rest of world stocks and the global equity index. And over the last 10 years, the US has gained 14 points of market share. 10 years ago, US stocks were half of the global equity market. Now they're two thirds. Look at this. Fourteen points.

And then what I do is list below all the countries that have lost share, meaning they've underperformed the US and it's all of them except for China and Taiwan. They've kind of held their share. So they perform largely in line with the US market. But Japan down two points of weighting, UK down three, Switzerland off one and a half. The list just goes on and on. They're all negative. Every other country has lost share to the US. Every other country's underperformed over the last 10 years. Nick, I want to keep this chart

up and this table up and just really put a fine point on the message here. this is not an index committee somewhere in an office building in New York saying let's take Japanese equities down 2.4%. This is the collective buying and selling of institutions and regular investors all over the world. What we're looking at is the sum total of their decision-making. This is not something that's been orchestrated or constructed by an index company. This is what people have decided stocks are worth. Would be the way to say that? Yeah, it's a combination of things. Primarily, it's what you describe. It's the market saying the US is a better place for capital and generates better returns than the rest

of the world. And so we're going to give those stocks a higher valuation than the stocks in other parts. The other part a little bit is IPOs. There's been some IPOs over the last 10 years. And to the degree they end up in the US equity market versus another market, that also lifts the weighting. And that you see the combination of those two factors. I say it's 80% just raw performance and 20% capital wanting to list, wanting to be held in the US equity market versus rest of world. But it is dramatic to me that the US has just taken share

from every other country in the world, ex China and Taiwan, and it's persistent pervasive trend. And the question becomes, does the US go to 70% in the next five years? Does it go to 75? Does it go to 80? At what point does the rest of the world's equity market just not matter anymore?

You know, there's a tendency in our industry to look for mean reversion because I think people like the way people's minds work. They like when things add up to an equation. So they like if you add this and you take out this, this is the answer. And they want to believe also that there's some cyclicality to everything and that sometimes something's riding high and then it's low and then it's back high again. I think people like that kind of sing songy, this rhymes with that and you don't always get it. And there's really no mean reversion for international stock market indices by country.

It's not like a real thing that exists where if Germany outperforms France for 10 years, France will probably have a better 10 years after. That's obviously not how it works. Even though people would love to be able to tell a story where it does. If there is a mean reversion in country or international stock market indices, you may not live long enough to see it. So I think there's this assumption,

and there has been for a long time, that if you can just stick it out, we might go through another 10 year period where US large caps underperform the rest of the world, which is the 2000s decade experience. And people that have been justifying globally, global asset allocation, like they really need that to happen. They needed it to start happening five years ago, quite frankly.

Do you agree that that frustration exists out there and that the catch up period period, it might just be a year here or an 18-month span there. It might not be another 10-year stretch where international gives you that alpha or outperformance. What do you think? That's certainly been the history of the last 10 years. If you look at the S&P versus ACWX, the MSCI All Country World XUS index. There are very brief periods over the last 10 years, call it a matter of weeks, where rest of world stocks can outperform. Unfortunately, they tend to be when nothing's working. So for example, 2022, they didn't have big tech in rest of world. And so they outperform the S&P by a couple of hundred basis points because they didn't

have that big technical quotient. They fell less. They fell less. It's not a matter of making more money. It's a matter of losing less money, which is okay, valid trade from a relative standpoint. But I think you have to think, okay, capital markets ultimately measure how well a country performs in terms of getting a good return on capital from its companies. And the US has just done a better job over the last 10 years.

Maybe we can put up the next chart because I think it also fills in some of the gaps as to what the hell's happened here. So before you explain what's here, chart off for one second, John. The part two of this conversation is always, well, you guys have all the big tech stocks, you guys have all the big tech platform monopolies, and that's the reason why. And I think you're about to disprove that. Yes, in a very vivid fashion.

This is what this table shows. Proceed, proceed. So this table shows you the one year, five year, and 10 year compounded returns for the S&P 500 large cap sectors, tech, financials, discretionary, health care, are all there. Communications and real estate weren't around for 10 years, so there's NA's there.

And then it compares those one, five, and 10 year CAGRS versus MSCI Europe, Japan, emerging markets, all country XUS, the ACWX. And what I've done here is just code in green and red which sectors outperform over the relevant period, the rest of world market index. And it's a sea of green for people who are just listening to this on audio. Every single US sector except for energy has outperformed rest of world over the last 10 years. It's also true over the last five years excluding real estate, every single S&P sectors outperform

rest of world. And then over the most recent one year, healthcare staples and energy have underperformed, but every other sector has outperformed, whether it be on average, they all outperform. And even if you exclude tech, they all outperform every single period. So it isn't just tech, it is across the board judgment that US companies have better returns on capital, better competitive advantage, better earnings growth, and therefore they outperform. So for the listener, just as an example, let's keep this chart upside and quote

from it, over the last five years, the compound annual return for MSCI Europe is 6.65%. The compound annual return over the last five years for Japan is 5.3%. For EM, it's 4%. When you look at each sector of the US stock market, all of them have done better with the loan exception of real estate. Again, this is five years annual compounded returns. So tech is 23%. Okay, far and away.

But financials are 12. And consumer discretionary is 11. And healthcare is 11. And communications is almost 14. So it's remarkable, Chardof, it's remarkable the degree to which pretty much every sector of the US economy has had stocks beating up those international averages. And it's to your point, it's 10 years now of that sort of dominance. If somebody says why, I know you could write a book on the subject, but could you also distill it down to a couple of sentences?

Sure. The single most important thing is the dollar's reserve currency status because it allows- That's it? That's the most important. Well, I'll put it this way. It is the most common pushback against this table. I've shown this table to a lot of people who are bullish, who are bearish, and a lot of your, we were just in London last week to a lot of European investors and they say, that's great. The issue that they struggle with is,

how much is this due to just better, a better US system of business? And I would argue it's about 80%. 80% of it is the US does a better job at a private company level, a public company level of managing assets to generate good shareholder returns. There's an intense focus on that in the US market. And it's just cultural to the US.

It is not the same in Europe, not the same rest of the world. However, I would say in fairness, at least 20% of it is also the dollar's reserve currency status because it allows a lot of deficit spending. And the bears, and I talked to them as well, will look at this table and say, oh, it's all just deficit spending and it's all just the dollars reserve currency status allows us to have a stronger growing economy. And the pushback based on this chart is, okay, then explain to me why every single sector does better on average, and not by a little, by a lot.

That can't just be reserve currency status. It has to be endemic to our system. I think it's cultural. My perspective, I agree on the deficit point, but I think there's a mentality where in America, it doesn't feel as though there are any limits. We don't have this tallest poppy syndrome where if somebody becomes Jeff Bezos, everybody else wants to jail them or find a way to invalidate what they've built. And we celebrate, I mean, for the most part, we celebrate entrepreneurship

and we celebrate the most successful executives within limits, within reason. And then I just think rule of law obviously makes this a better place to invest capital than a lot of VM countries. You could say the same thing for Europe, but it just doesn't manifest itself in the same way. So it's obviously there are nuances here, but to your point, you can't have every sector for 10 years, so drastically outperform everything in these countries and say that it's a, it's a, some sort of like, um, it's some sort of a blip.

It's just been going on for too long and it's too pronounced. Yes. I mean, it goes back to that old Larry Summers quote. I think we talked about in a prior episode and he's got this quip, which is cruel, but accurate, which is Europe's a museum. Japan's a nursing home. China's a jail. So we're going to put your money and you know, I always ask clients, okay, well, how would you characterize the US?

And the most common answer is the US is a business. And that's what this data shows. The US is a business. We're here to take capital and do something with it. And that's what this data shows. The US is a business. We're here to take capital and do something with it. And that's what the numbers show. Yeah, I mean, there's no doubt about it. Okay. We want to talk about top 10 performing S&P 500 sectors. And I think it's really important to point out. This was a year where the financials were the leadership group. So every S&P large cap sector is up on the year.

Last year, three were down. This year, they're all up. But financials were the leaders. What does that tell you in terms of just this narrative about, oh, it's all tech? It's not. We've had some huge home runs across the market in all different areas. Yes.

And look, we've, we've liked tech most of the year and it was a dicey trade to recommend even eight months ago, because it just felt like how do these things work and the answer was first they were really cheap as an aggregate group. They were only cheap, only expensive to energy. They were cheaper than everything else. So they've had a nice financials. Yeah. Financials.

And the second thing is, you know, they finally got than everything else. So they've had a nice- Financials. Yeah, financials. And the second thing is, you know, they finally got the repricing or they're getting the repricing that I thought they would be getting, which is the economy's stable, these are well-run companies, things are fine. And they've lived through now, you know, a decade plus of stress tests and capital management. Then they've come out the other side very strong.

And as a result, they deserve a higher P multiple. I had no mentor in the business that covered cyclicals. And he said, cyclicals always get the P evaluation revaluation in the next cycle. They've got to live through a long period of time in the wilderness. If they do that, they can get a higher multiple in the next cycle.

And that's what's finally happening here. I want to show you my table and then we'll go to yours. 33% return year to date and the top 10 S&P 500 financials. You look at some of these names, this is not what a lot of people would have bet to be the biggest winners of the year. KKR is up 87.2% on the year. This is a $136 billion market cap company now. Synquity Financial, number two, up 76%. And some of the other names on the list, American Express had an amazing year. Progressive, which is insurance. Discover, which is credit cards. Bank of New York, Mellon. Goldman Sachs up 51% on the year. That's a re-rating. Cincinnati Financial Corp is a property and casualty insurance business up 48%, PayPal

up 47%, and Brown and Brown, which is an insurance brokerage, up 47%. Many of those names, Chardoff, many of those names, nobody really talks about on financial television. You don't see people on Reddit getting excited about these stocks. They're not Twitter stocks. But I think that speaks to how undervalued the financials were. And then finally having this catalyst this year of rates coming down and deregulation later in the year becoming a secondary catalyst.

And that's the formula. Financials are now the second largest sector in the S&P at 13%, trailing only tech, which is 33%. The median return for a stock in the S&P 500 year to date is 13.8%, but it's 29% for financial stocks in the S&P. That's a huge delta. Sean tells me, as of this morning, 66% of S&P financials are above their 200-day moving average. It's 65% for the S&P 500. So they're neck and neck with the overall market still, even after all that outperformance. Same median RSI. Financials and S&P are both at about 47%. So these stocks are, I mean, they're hanging high. They've done really well, and they're

staying up. This doesn't seem to be kind of a one and done bank rally, the type of thing that we've seen over the past few years. There seems to be kind of a one and done bank rally, the type of thing that we've seen over the past few years. There seems to be some follow through here. What do you think about that? Yeah, I think it's fair. And I think it's, you know, in the spirit of, you know, the show, it's, this is a very good sign for next year. How negative can you be on 25 when you've had this massive rally in the financials? And in part, because they're getting some respect finally, after being in the wilderness for so long. Let's put up Nick's table of the large cap sectors.

What's the message here? So this is just to speak to how much broader this market has been in 24 versus 23. So you look at the returns from last year by sector and obviously it was tech and comm services and discretionary, the tech heavy sectors, three sectors were down staples, utilities, energy, and the rest were kind of meh. And now this year in 24, you've got the best as we've been talking about the best performing group is financials. And then you've also got comm services and consumer discretionary, but tech's actually lagging the S&P by a little bit large. And there's no negative sectors to me, the most promising thing about this year is there's no sectors in the red.

Everything is up. So it's a very broad based rally, much healthier. I think we all recall like 23 was a big tech rally 24. Yeah. Big tech has definitely helped, but we have some real cyclical leadership as well. Look at industrials of 21%. How negative can you be for next year of industrial is up 21% on the year?

I think you also wanted to point out that not only is tech underperforming the S&P this year, which I think most people would be surprised to hear, the stocks within big tech have been less important in terms of driving the returns of the market, which is one of the things that you heard the bearer saying in 2023, the contribution of big tech. Let's put up this next table. Yeah, this is a rough breakdown of how much each big tech stock contributes to the S&P in point returns. So for example, last year, they contributed 20 of the S&P's 24 percentage points of gain

or 83%. This year, it's 68%. There are 18 points of the 26.5% return as of last Friday and 68%. So they're still important. And obviously, Nvidia is huge. Nvidia is eight points of the S&P this year. It kind of stands alone. Without that, the S&P would have done eight points worse, but even Big Tech as a whole, less important. And I think next year, you probably see this number down or below 50% as the rally continues. And as we've seen from this year,

other sectors begin to get some respect like financials. If this, so these are, so these are your, the biggest stocks in the market. It's Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, Meta. So it's Mag 7 writ large. If that were to decline from 68% of whatever market, I mean, we're assuming a rally next year, but hypothetically, the bull market continues into next year and that number goes

down from 68% to like 60% or 55% where what where would this where would the slack be picked up from if you had to guess because you need big stocks. Yeah you don't have to be mad seven to be trillion dollar market caps but they have to be big can't really be. be, you know, like a bio, a small cap biotech. Like it's got to come from somewhere with market cap already. Yeah, it can't be utilities. It can't be staples. It can't be energy is as much as those groups might work. No, it has to come from financials and industrials. That's where it has come from the chunky groups that are, you know, nine, 10% in the case of financials, 13% of the S&P. And that means the names on that list are like 30% of the S&P. Yeah. They're bigger than any sector. And you got lots of stocks in there too,

which is also important. They're not very concentrated in terms of the names. You have a lot of stocks could work out and make up for one giant stock if it's going to take its place. Do we want to talk about the third year of returns, calendar seasonality, and the NASDAQ? Let's just skim through that because I think there's a broad concern that we've had a pretty strong rally over the last couple of years, and how likely is it that we get a third year? And the short answer is, if you're looking at when the S&P rallies for two straight years, and it's up 20% in each year, that's pretty uncommon. It's about happened only about 9% of the time. And in the following year, the S&P

has continued to rally about 2 thirds of the time, and the average return is about 7%. And the bad years are recession years, 1937, 2000, or 1977. And excluding that, the returns can be quite good, 18 to 30%. So the message here is, don't be too worried that the last two years have been pretty positive, because the history shows that,

as we've talked about so often, price momentum is a super important factor in investing, and price momentum can take the market up for a third year in a row. I think this is a concern. What right do we have expecting a third annual rally after the incredible 2023 and 2024? I think a lot of people think that way. Again, getting back to people are always looking for mean reversion.

People are, you know, if the roulette wheel keeps hitting black, it's called the gambler's fallacy. It's our mind playing tricks on us, giving us this idea that like at a certain point it has to go the other way. And of course, we're not just gonna have endless annual rallies year after year forever, but a third year is not probabilistically something that is so completely off the charts

that we shouldn't expect it. No, exactly. And let's not forget 22 was a pretty horrible year. So on a three-year rolling basis, we're not all that far from unusual. And you have to take it all in sort of, you can pick your time frame and tell your story. But ultimately, what's important is earnings

continue to grow. The US economy continues to grow. We're exiting Q4 with a very strong economic run rate going into Q1. We've got deregulation to look forward to. We have continued good economy, and that feels all pretty good. And I'll tell you, the thing that I've been thinking a lot about recently is the same is not true in the rest of the world. So the European economy quite slow.

They're gonna be facing a lot of challenges with the new administration. Same with China, same with Japan. And so as you think about allocating capital for next year, it's also a matter of where do you think global equity allocators are gonna put their money? And the short answer is it has to be the US because nothing else really feels like it's gonna work.

I wanna ask you, the year 2000, NASDAQ comparison. This is coming up a lot because we just made a new milestone this past week. We hit a NASDAQ 20,000, we hit NASDAQ 19,000 in November. These milestones are now coming at us very quickly, which mathematically makes sense. But they also make people think, oh my God, I'm about to allocate capital during the next, you know, year 2000 tech bubble. Now, now people have been saying that every

year for 15 years. So that's worth pointing out to. But you want to talk a little bit about the comparison and why it's not really a great comparison. And I know we've done this before, but you have a new chart and I think people should see this. Let's put this up. This is the NASDAQ 1995 to 2000 versus the NASDAQ 2019 to present. And you've indexed the daily returns to 100 for the sake of clarity. Tell us what you see when you look at this chart. You've indexed the daily returns to 100 for the sake of clarity. Tell us what you see when you look at this chart. Yeah, so the chart, the blue line of the chart shows the 1995 to 2000 dot com bubble all

the way to the top and then the first year of the bursting. And then the orange line shows the current environment, the last five years. And what you see is that for the first couple of years, things look pretty similar. The NASDAQ doubled in the first half of this sequence. Fine. And then things began to get very different because you had this big rate shock in 2022 that really pulled the rug out from under the tech stocks. And the rally only began to reengage in 2023, where in the 1990s,

after long term capital blew up in 1998 and tech had a little bit of a problem. After that, the thing just ripped. On an index basis, the index goes from 200 to over 600. That is the kind of return that you got in a dot com bubble. From the five-year beginning point to the peak, you were up 570% on the NASDAQ. We don't look at anything like that now. And we look nothing like that now. We're just basically based on the new recent record, we're up about 200%.

So the comp is just not accurate from a price return basis. Anybody who thinks this is the nineties wasn't there because I was in the night there in the nineties and this feels nothing like it. The nineties were absolutely crazy. You had, I think, I think it and I feel is every day and they all doubled. If you add Bitcoin to the last five years, NASDAQ, I think you

could get close to that chart. You would have to decide on the waiting, but like if you market cap weighted Bitcoin as though it were a sector of NASDAQ stocks, you could get pretty close. We have tried doing that. We're still mucking around with

the numbers to see what the right fit is. But yes, I mean, the Bitcoin and in dollar terms, the trillion dollars. It's four trillion crypto. Yeah, that does feel more accurate as a comp. But maybe we're seeing a new asset class form. Who knows? Okay, let's get this next chart up, guys. So you're basically showing that the rise that we've seen is much more measured.

It's another way of looking at it. Yes. This is just year over year price returns and then ask that going back to the 1990s. It's pretty average. It is pretty average. And this goes back to our old saying a double is a bubble. The NASDAQ doubled from Feb. 99 to Feb. 2000. And that's when you knew the top was in.

The double is a bubble roll. And we haven't had one since. The closest we got was in 21. Pretty close, 80%. So, you know, another good warning sign. We're at 35 right now. It doesn't feel like the kind of super extended one year returns that you can call a bubble.

So it's a 12 month rolling double is what you'd be looking for to say, okay, this is it. And we haven't had that. Not even close. Okay, very important. The last thing we're gonna talk about today is the source of American exceptionalism. We did touch on this earlier in the show,

but tell us what this table represents because I found myself staring at the names in the middle section and the bottom section trying to picture any of these ever being treated the way we treat Apple and Nvidia and I just can't get myself there Nick. Yes so again this is calls back to the first point we were discussing which is what's different about the US market why is the US market working so much better and one way to think about it is just on a pure fundamental basis. And I'm a single stock analyst by background.

So ROE, return equity, is a really critical measure for me. A company's ROE is how well it performs in terms of taking shareholder capital and doing something with it. And the baseline number is like 10%. You gotta generate a 10% ROE to call yourself a value creating company. Anything more is great, but 10% is the standard.

And what I did was go back and look at the trailing 12 month ROE on the top five companies in the S&P, the top five companies in the MSCI EFA index, and the top five companies in the MSCI Emerging Markets index. And for the US, it's a strong story. The top five companies, Apple, Nvidia, Microsoft, Amazon, Alphabet, they're 29% of the S and P. They have an average ROE of 62%. This is a fantastic number. The worst number. Apple's return on equity is 165%.

So this is the gold standard for the entire universe. It's a, it is the reason. Look, Apple hasn't grown in very much, but Apple has a fantastic shareholder mentality. Yeah, which is why Buffett owns so much of it. Or used to. Right used to. Yeah, I mean, he saw a company that basically took every dollar of net income and bought back stock or paid dividends for 10 years in a row. Yeah, that's the magic of Apple. That's why the ROE is so huge. But the rest are great Nvidia 670% Microsoft 33%. Amazon always reinvest, but it's 15. Alphabet, 26. These are solid numbers. So fine.

US checks the box. The top five names in the MSCI IFA index, NOVA Nordisk, ASML, SAP, Nestle and AstraZeneca. Their weightings are only 8%. Their average ROE is only 39%. So these are very strong ROEs, but on average are not as good as the US. And these are top companies, they only have an 8% waiting in MSCI EFA. So now we begin to get, okay, a storyline about why S&P works so well.

The companies are just much better and the S&P owns a lot more of them. The ROEs are better. These are high multiple stocks though, right Nick? Yes. Especially in the countries they're from, they, they must stand out like a sore thumb. They absolutely do. And they also stand out because they're relatively rare.

Um, but this is important. Right. There aren't many of them, but this is an important point. They're not treated like European stocks by investors. They're treated like high ROE growth companies by investors, and they get multiples the way our large cap growth companies get higher multiples. And I think that that's really the signal that if things were to change in Europe, whether it's from a mentality standpoint or just the way the government is regulating companies,

there is the potential for higher multiples in Europe because this is evidence that global investors will pay up for SAP and ASML and Novo Nordisk because they look American. Yes. Okay. I think that's really like a very positive sign. If somebody were to take that idea and really run with it. Yeah. And the issue is you got to have more of them because there are only 8% of MSCI EFA. Yeah. So you need more of them like that. And then we go to emerging markets. Same thing. Top five names there MSCI emerging markets index, Taiwan, Sammy, 10 cent, Samsung, Alibaba HDFC, which is an Indian bank.

And they're the ROE's average out to 13%, which is much lower than the US. Now those names are 21% of the index. They're kind of the same as the 29% in the S&P of the top five names, but the ROE's are much lower. Taiwan Semi is strong at 24. Tencent's okay at 14, but Samsung 4%, Alibaba 7%, these are very low ROE businesses. And so their valuations are lower.

So another sort of fundamental way of thinking about why is the US doing so well? And a big part of it is the companies are better. Yeah, I wonder why those returns on equity are so much lower even than the European mega caps or large caps. Is there a simple way to understand that? No, because I was reading all these financials over the weekend and obviously they are very

different sets of companies. Novo stands out and the returns have been fantastic. ASML the same way. If I had to guess, it's a bit of a taxation. It's a little bit of shareholder mentality, but look, these are good numbers in Europe. There's nothing, there's not a number on this list for these top five companies that anybody should be embarrassed by. Yeah. If only they had 10 X the amount of those types of companies, it would be a, so if you

had to guess over the next five years, if this were to converge, does it converge with USROE falling or potentially the ROEs of more companies in Europe and the Middle East and the Far East getting better? Which direction do you think that goes or does it stay the same? My first assumption is it stays the same, that the gap is relatively constant because there's no net change. If there's any net change in policy, it's a net change positive in the US,

possibly the lower taxation, less regulation, which lifts margins and increases growth. The second thing, but you know, I spent a lot of time worrying about this because, and we travel to, when we travel to countries, we try to meet entrepreneurs and try to meet systems that are trying to encourage entrepreneurship. And there are some interesting efforts going on in France,

some interesting efforts going on in the UK in biotech research, but there's not enough structural change to make risk taking acceptable, to make entrepreneurship acceptable, to give companies a real shareholder focus. So I think the gap continues to be about where it is today. Hence your earlier point, if you're not investing in the US, where are you putting money? And

I think that sums it up nicely. I want to let people know, first of all, thank you so much, you and Jessica, for all the outstanding work you've done on this show all year. It's been a pleasure checking in with you guys each month and tackling these topics with you. I want people to know where they can go to get more Datatrek Research. They can go to datatrekresearch.com, of course. They can also follow your YouTube channel. You are youtube.com slash at Nick Kolas and Jessica Rabe. And you guys are pumping out video content on a pretty regular basis at this point.

Are you having fun doing it? Yeah, it's a lot of fun. All right. And the last thing I want to say is you will be our guest, Michael Batnick, myself, and you will be discussing all of these topics and more on an all new episode of The Compound and Friends live in person this Thursday. We haven't seen you in a while. We miss you.

I'll be there. You ready to rock? Absolutely. We have a lot of stuff we want to get to with you as the year wraps up. So couldn't think of a better person to have on the show. So guys, if you loved hearing from Nick today, get ready for even more at the end of this week.

All right, that's it from us. Please make sure you subscribe to the channel. Check out Nicholas and Jessica's channel. Check out datatrekresearch.com and we will see you soon. Okay, did you hear any of the new Snoop Dogg record, Trey and Snoop? No, how is it? I mean, you don't have to be a hip hop fan to appreciate that they are putting out music like this. It is amazing. Okay. They

have Sting on the album and playing guitar. It's a little polisi. They got the family of Tom Petty not only gave them the rights to Last Dance for Mary Jane, but sent them the original audio files of Tom Petty singing and playing harmonica and Dre uses both. This is I'm telling you, this is such a banger. OK, I do like the mishmash. It's I mean, it's it's Snoop is always Snoop and Dre is just incredible. And it's just it's like if you were if you were a 90s kid, it's amazing. We were listening to rap in the car the other day and la da da da da da came on

and Bob and goes, Nope, turn it off. The kids were in the car the other day and lot of it out of it out came on and Bob it goes nope turn it off the kids were in the backseat. Good luck with that Robin. I want to talk about Rocket Money. Rocket Money is a personal finance app that helps find and cancel your unwanted subscriptions and not just that. What else does it do? Not just that. Fill us in. It's like my personal you spent this you spent this much money last week okay so maybe like a CFO in your pocket maybe maybe tap the brakes, but it's all good because you spent that much the last week. So it's actually down. So you're good. Yeah. No, it's your personal safe. I love it.

There's a dashboard that shows you all of your expenses across all of your accounts that you connect to it. It's like having mission control. Don't you tell me descriptions. It's really cool. Guys, rock Money has over 5 million users and has saved a total of 500 million dollars in cancelled subscriptions, saving members up to $740 a year when they use all of the apps premium features. Cancel your unwanted subscriptions today. Check out rocketmoney.com slash compound and that that way, they'll know you came from us. And what could be better? Real quick, before, I know you have topic one tonight.

You have a drone theory? I'm working on a couple. What do you think is, what is going on? Literally. You know, I'm not bothered by this. You're not. I have hundreds of unidentified flying objects, terrifying New Jersey residents morning, noon, and night.

And Long Islanders. I'm too busy to be bothered by this. What's going on? These are car-sized military-grade, in some cases, flying craft that the government does not have a good answer for. Car-sized? Okay, now you have my attention. All right, so what's your theory?

My theory, well, so I get most of my news on this kind of stuff from Bethany Frankel. Skinny Girl Margarita, I'm not sure if you're familiar. Real Housewife, Bethany says, somebody called her from the Pentagon. This is true, I'm not even making this up. Bethany Frankel says, I have to share this with you even if you think I'm crazy. You already think I'm crazy.

My friend from the Pentagon called me and said he would never forgive himself if he didn't alert the people that he loves. Something, something, something radioactive material went missing and these drones are government and they're trying to find it. Okay.

Like the shit that we're- That checks out. Okay. You're cool with that? I buy it. I mean, I'm not cool with it, but what are you going to do? I guess I like it better than like, oh, it might be from Iran, which was what the shit they were saying last week.

I saw a few pictures and it looked like bare wood up there. Yeah. Guys in the chat, if you have a better theory than, uh, Bethany, Frankl by all means, let us know what the hell is going on. Are they looking for radiation? Are they looking for terror terrorists? Uh, are they, is it teenagers just having a laugh and, and teasing the media? What's what's what's happening?

Give us your, uh, give us your theory. All right, Michael, you're up first. Okay. So Jared Dillion tweeted, Trump rang the bell on the New York Stock Exchange today. Has there ever been a better metaphor? I thought that was pretty good. I mean, he's done it before. It was pretty good. He's done it before at much lower levels, but I get it. So, okay. So, all right. Before we get into the, before we set up this conversation about all the signs of, how about

this? I was going to say signs at the top. It's signs of the time. That's what it is. It's more a sign of the time than a sign of the top. When everybody, and you can look at all the historical data, everybody being bullish is not a good reason to be bearish. Now-

I like that framing because bull markets should produce bullish activity. Why would you expect anything else other than people being bullish in a bull market? As like a byproduct. What would you expect? Everyone's bearish. Right. That being said, let's get into it. All right. So, Balchunas tweeted, leverage shares is vanguarding the 2X single stock category with lower cost. Oh, for f**k sake. Aren't there enough of these already? Apparently not.

Apparently not, Josh. So, there is now competition to deliver more leverage or maybe equivalent leverage at a lower cost. Okay, sure. Why not? Yesterday, SoftBank CEO, because you know it's not a bull market until he shows up in size, Masayoshi- Wait, can we back up? Can we back up? What is the point? We're flying. No, but what is the point of the leverage shares vanguarding? So they're going to

do the same thing as the existing 2X NVIDIA ETF, but cheaper? Is that what you're saying? So now there's a war to the bottom in fees for these- Why? I have one question for you. Why aren't any of these son of a bitches sponsoring my show? All right. Masayoshi's son to announce. I might be bullish on these. That's all I'm saying.

I might flip bullish. $100 billion investment in US during visit with Trump. Of course, why not? Why would he not be doing this? Next chart from Bloomberg. Bearish bets flop. We're looking at the assets in leveraged long ETFs and the degree to which they exceed inverse products and it's a record, of course.

Not surprising. You've got Barron's going in, why the stock market could get another 20% in 2025. Now again, all of this is a sign of the time, not necessarily a sign of the top, but man, this would be poetic. We did extensively covered Hawk to a coin last week. Throw that in here. I know that's crypto and not stocks, but honestly, to the buyer of this shit, it's all the same thing.

It's all the same. So, you could throw that in here. What's missing? IPOs. Okay. That's a really big... We shouldn't just say it's like one more thing. What's missing? IPOs. Okay, that's a really big, we shouldn't just say it's like one more thing. That's way bigger than magazine covers.

That's a big thing, absolutely. All right, it's not that it's totally missing. It's that it's a trickle. IPO activity year to date is bigger this year than last year. We're saying like one every week. Yeah. Like covered on the networks.

All right, so we're not there, but it's coming. I think it's coming sooner than people think. We're not there yet. Maybe we'll check in with Aaron Dillon next episode and we'll get a rundown of what's on the runway. I just got his Christmas card in the mail, by the way. Me too. He looks good. Yeah. He's like cute when he puts on like that. They like went down to the Sears. It's adorable. All right. I want to ask you though, like, is there a specific thing

that where you just say, you know what? I don't trade on magazine covers. I don't do this stuff, but this is it for me. This is my off ramp. Is there like a specific thing? Not yet. No. Not that you've seen yet, but just something out there. Like what could happen? Do you want to like, is it, I don't know,

is it like Beyonce doing a trading newsletter or like is something like that? Yeah, like something, listen, Barron's covering the market in a bullish tone is not anything. No, that doesn't do it for me. That doesn't count. That's right, I agree. That doesn't count. I'm talking about, if you show me the stock market chart of Nvidia on the cover of Sports Illustrated for Kids, now I'm bearish. OK. Right?

Now I'm bearish. Like, yeah, like people talking about stocks, that like, what had to happen to get these people to the point where they think they should be doing stock market coverage? So how about this? I'm not getting any questions from friends. No, I agree with that. It doesn't feel like 2021.

Like, like, like, uh, in 21, I was getting SPAC questions. So we're going to get into later in the show, my, uh, my second topic, there's reasons to be bearish and it has nothing to do with sentiment. There's some real shit going on in the server. So we'll get that. All right. So, but Trump literally rang the bell. It's good. It's pretty good. And for those of you who are not aware why, why that's so funny, like,

so like they don't ring a bell at the top. Yeah. That's like, uh, that's like one of those age old aphorisms on wall street. Like nobody rings a bell at the top. Oh, maybe somebody just said, uh, all right. Uh, if the drones are somehow involved with the NASDAQ. What if they're just looking for alpha? It's been a tough year to find some. Look at you. All right.

That's pretty good. I want to talk. I'm going to do this deep dive into the chip world. Yeah, cook. I think this is going to be one of the biggest stories stockwise of 2025. So I wanted to use this opportunity to just walk everybody through a very big idea, which is for the last two years, Nvidia has had this AI dominance and this AI story to themselves. Like all roads lead to Nvidia is something that people said

and it was true nothing could happen in AI that Nvidia is not getting paid for to a certain extent that was true Nvidia is both the hardware and the software and nobody else doing that that was true and I'm a shareholder in video and I'm not bearish and I'm not I don't do YouTube financial advice so I'm not telling you to go out and sell your Nvidia, but we have to talk about it. The stock is in yet another correction, not a severe one. Chart on, please. This is a 13.6% drawdown off of the November highs.

It's nothing to get alarmed about. We've seen bigger drawdowns this year Notably the one in early August that was the bottom for the year was over 20 percent But the thing is Nvidia does not report earnings until February 26th which is a really long time from now and That's a lot of space for narratives to be created as the stock falls further from its record high. Would you agree that that's a fair statement? Absolutely. Can I just, I want to let you cook. I just have a quick question. Was that

chart, did you make that chart? That chart's an eyesore. That chart is a Shonda. I made it like- I know you did. Okay. Four seconds today. Why? What would you do? Definitely two pains? Yeah, this is an eyesore, but keep going. That's not, it's not important. What part of it bothers you? It's an eyesore. It's not, that's not how you showore, but keep going. That's not important. Keep going. What part of it bothers you? It's an eyesore. That's not how you show data, but keep going. Take it up with your research department because they let me do it.

All right, I have better looking charts. Here's six months in video. Yeah. Thanks to chart kid Matt. This is what charts are supposed to look like. Yes, I am aware. Josh, you know, if you divide in video by SMH, it's had a pretty severe pullback compared to its peers. Well, we're going to go there. So the stock is fine. It's up 162% year to date. The thing is,

those gains were front-end loaded this year. Nvidia Blackwell. So Blackwell is the next generation GPU. a product to go around. not like, Oh, well, I guess I'll check back in in 12 months. No way. That's not how it works. Okay. Here's AMD. The success of AMD is that they're not Mr. Right, but they're Mr. Right now is the best way I've seen it put like they have the chips and they are ready to do business immediately. And this has not been a great couple of months for AMD, uh, or a great couple of months for AMD or a great year for AMD, but they're in the game.

You know, I love this chart. I'm looking right now, I might buy it tomorrow. Think about how many people bought AMD at the start of this year because they thought they missed Nvidia and it just was a terrible, terrible trade. Well, it did go vertical. It did go vertical.

Actually, not for me, not to brag, I bought it and sold it into the verticality. You're lucky you got out. Not not to brag. I bought it and sold it into the into the the verticality and lucky that out What AMD has going for it is huge wins at Oracle Microsoft and Metta AMD's got this mi 300 which is now powering some of the biggest data centers in the world and the mi 325 is the next version which will come next year also Their CPU chip which they've been making for, I don't know, 30 years, it's called the Epic, that is the CPU of choice for the modern data center according to much of what they put out there themselves. But

they're claiming that they grew market share for the data center business 25% sequentially and 120 plus percent year over year. Last week Lisa Sue was named Time Magazine CEO of the Year. Look at that. Someday that might happen for me, Michael. Anyway the stock is not doing well but the company is. It's at a 40% drawdown. One thing I would say worth pointing out,

Lisa Sue was a keynote speaker on stage with Mark Benioff at Salesforce's Dreamforce event this September. And Mark Benioff owns Time Magazine. I don't know if you knew that. He does. So Lisa Sue, maybe like, I'll do your keynote. You put me on the cover. All right. Just kidding. Love you. Thank you. ARMS architecture is probably the company making it possible and they're getting paid a royalty for that. The ARM architecture allows for more customization, more power efficiency. You need both to do AI versus the traditional Intel x86 architecture. That competition explains why Intel looks like this.

Chart, please. Like death warmed over. This is because the hyperscalers are not just not buying chips from Intel, they're actually making their own CPUs. This is very bad for Intel, but I don't want to spend any time on that today. The next one I want to show you guys is Broadcom. This is the breakout story of the year. This is the stock that if you're an

active manager, growth manager, tech manager, and you're not in it, you just bought it up 40% last week because you literally cannot finish the year without having this stock in your portfolio. Michael, how familiar are you with Broadcom? We did this in the past. Who did they get bought by? Why did this happen with the symbol stuff? Okay. So Broadcom is actually like a six-way merger, but Broadcom in 2015 was acquired by Avago. They changed the name of the company to Broadcom, but for some reason left the old ticker symbol. Because it used to be BRCM. That was 2015. Yeah. Oh my God. So it's sorta, and they also brought a brocade very quickly after, cause it

was always BRCM and BRCD. I traded both of these stocks in the late nineties. Um, anyway, so Broadcom is the company. That's like, um, fitting into this vacuum where if you can't get a Blackwell chip for 12 months, well, we should probably be building our own shit anyway. Every hyperscaler is working with Broadcom. The CEO has an amazing relationship with all of these companies. He's been around forever.

He's like an MIT graduate from the 1970s and he's been working at semiconductors ever since. They're much more than a chip company, which I'll get into in a second. But let me give you an example. You heard Sam Altman at OpenAI make all these noises over the summer about how he needs to have his own chips. Well, guess who he's going to do that with? So OpenAI just hired all these Google engineers. Google was one of the first companies to build its own chips, the tensor processing units or TPUs. All of those engineers now work at

OpenAI and they are very comfortable working with Broadcom because Broadcom was Google's partner building those TPUs and that dates back like 10 years. So the OpenAI people now are heavily involved with Broadcom. This is why Broadcom keeps rallying by the way. So I want to show you some of the acquisitions that they've done to get them to this point. Let's put this graphic up. And then LSI Logic gets acquired. And then they merged with Broadcom and they take the Broadcom name. Then they buy Brocade, then they buy CA Technologies, which was like a $20 billion deal.

They bought the security chip business from Symantec. And then the really big one was VMware. It was like a $30 billion deal and that put them in more heavily in software and in virtualization. And that's when they really transcended. And it wasn't just now it's everything. And that was a really important development. That was probably the signal to buy the stock, quite frankly, and I didn't. Fun fact, Hock Tan, who is the CEO,

was just named to Metta's board of directors in February. And Metta is now working with Broadcom. And I'll tell you who else in a second. I wanted to show you Marvell. Michael, I'm not sure if you're gonna love this chart or hate it because of the gaps. Forget the fundamentals, just purely on tacticals. Do you avoid stuff like this when you see multiple gaps

or not necessarily? No, so let's just speak about the recent gap. So I like that it tried to fill it and then buyer stepped in. So I like this quite a bit. And for a shorter timeframe, but I would just put a stop where that middle red candle is, like above 100. If it gets below there and into the gap now, but no, I don't mind this at all. So I'm showing you Marvell because they're starting to call this stock Baby Broadcom. I hate it.

Now you hate it. Marvell has doubled already this year. Bank of America just named it one of its top chip stocks for 2025 yesterday with $140 price target. What Marvell does is makes ASICs. So the sneaker company? Yes, that's exactly right. Basically these are application specific integrated circuits. If you can't afford GPUs, but you still need to pull off these workflows,

you're gonna use an application-specific integrated circuit to get around that problem. The application-specific integrated circuit is less flexible than a GPU and less powerful, but much more cost efficient for more narrow tasks. So what you started to see is the hyperscalers building their own versions of that. And Marvell is one of the biggest names in that business. And it's just a way to get around the shortage of GPUs or the incredible cost of GPUs.

And you're going to see a lot more of that in AI. And again, money being spent on that stuff is not being spent in NVIDIA and I think this is a really important thing for people to wrap their heads around. These are custom, like tailor-made chips for AWS, for Microsoft Azure. They are getting around these GPU shortages by using these types of chips. I want to show you Google. They're starting to talk about Google like an AI play again, which is nice. The quantum computing thing obviously was a shot in the arm too. That's why you got a new 52-week high here. Keep in mind that Google started

building its own TPUs 10 years ago, way before anybody was saying AI. The reason why is because as a cloud company, capacity is everything. Somebody working there asked a really interesting question. They said, what happens if every user wants to have a 30-second voice conversation with Google in a 24-hour period? What would that do to us? And the answer is they would literally need to double the amount of compute in their network,

which of course would be impossible. And that sent them down this road of trying to be more efficient and building their own chips. So TPUs are a really early example of that. And now they're being thought of as a company that very seriously is building some of the most important Trillium is the next version of the TPU which is coming out now And you see them really competing now with with not having to buy as many Nvidia chips

Apple Working with Broadcom just announced they've been working with them, but now They are coming out with a new chip called Baltra. That's a code name internally. That's going to be mass produced by 2026. Broadcom whipped on that news. Apple has been working exclusively with AWS chips. Apple is doing everything it can to avoid Nvidia. Apple has been training its search and a lot of its services and Siri on mostly AWS training

them chips. This announcement about the Broadcom partnership is really interesting. Apple showed up at AWS on the stage, their head of AI, talk about like how much they're using Amazon stuff too. Again, a lot of this is competition or potential competition for Nvidia as these companies work around that GPU shortage and find new ways to do the things that they want to do. So let me just, I'm done now. Let me give you my takeaways and then I want to hear what your thoughts are.

In 2023 and most of this year, it was Nvidia or nothing if you wanted to play AI. AMD was basically a redheaded stepchild. We showed you the stock didn't work. Super Micro turned out to be like a potential accounting fraud. Intel basically forgot to set its alarm, slept through the whole race. It was Nvidia or forget it. Now it's different. Broadcom is a trillion-dollar market cap.

It's one of the 10 most valuable companies in the world. Nvidia's top customers, Meta, Amazon, Google, Microsoft, every single one of them are in various stages to build their own custom AI chips to power their own data centers and their own devices. It's been in the works, but now it's literally happening. AMD has become a serious competitor, even though the stock price doesn't work. And then Nvidia is still the leadership name in the group, but it's just not going to be the only one.

And I doubt we're going to get through 2025 without people worrying more and more about competition. The earnings growth may not be enough to offset the potential for multiple contraction. So here's my question. Uh, chart on, if you had to guess Michael, is this number, the PE ratio on Nvidia higher or lower by this time next year, next December. So the trailing PE is 50, forward is 43. Are those numbers contracting by this time next year about the same or higher, if you

had to guess? Contracting. I think so too, dude. So then the question is how much do they contract and is the earnings growth enough to offset that contraction? If you tell me Nvidia has no competition I'll pay 50 times. If you tell me they're competing with their own customers by this time next year I'll pay 36 times. I'll pay 38 times. I don't know that I'd pay 50 times.

And that is where this whole thing is headed. And I think that's what sets this apart from the way things have been up until now. What are your thoughts? Well, well said and congrats on becoming a semiconductor analyst in 24 hours. That was impressive. Ben and I spoke with- Yeah, I'm an analyst. I'm an analyst now analyst in 24 hours. That was impressive. Ben and I spoke with- Yeah, I'm an analyst. I'm an analyst now.

Look at me. Ben and I spoke with VanEck yesterday, all about SMH, and they were making very similar arguments. So credit to you for getting to the same place. They were saying exactly what you said, that Nvidia is no longer the only game in town. And- Stole the best game in town.

Stole the best game in town. So I Still the best game in town. Still the best game in town. So I guess the question that I pose to them is, is it possible for the group to work if Nvidia is not working? Probably, I mean, probably not. Cause if Nvidia is not working, that means that everyone is slowing their spending. So I think there's a world where

some of these other chip companies are growing faster than they were, but in that world, Nvidia still has to be growing. Again, it doesn't mean the stock is going up. Well, I'm asking about the stocks. So I guess I was saying, can you imagine a world where Nvidia is down 30% on AMD and their competitors are making new highs? Could happen.

Well, we just saw it. So Broadcom, I mean, just look at the last three months of Broadcom, that's a coming out party for that stock. And Nvidia is not making new highs while that's happening. Nvidia popped, or Nvidia is flat since June. Nvidia's stock is fine. It's flat since June. I wanna emphasize, I think Nvidia is.

It's better than fine. I think it's fine. But you can't tell me that Broadcom could get to a trillion in market cap and none of that money came out of Nvidia. There's just no way. There's just no way. There's not enough people looking for allocations into semiconductors. So I do think that what we've set up is the situation where AMD is a real factor

and Broadcom is crushing it, helping all of Nvidia's customers build their own chips. And up until now, when you watch like Jensen Wang and Tim Cook and like Zuckerberg, they're all like, yeah, it's a big sandbox and we're all working together and blah, blah, blah. Does that ever last? Like, I just feel like by this time next year, semiconductors are one of the most brutal,

historically brutally competitive industries within tech. Always have been. I just don't think it's Kumbaya a year from now. Did you listen to Nadella with Brad Gersner and Bill Gurley? No. I understood about 8% of it, but it was interesting. I might get 9% of it. Anyway, I think this is going to become a new theme on Wall Street is like, all right,

what's another way to play AI but with a straight face now. Now that Broadcom has proven that, no, there's like a lot of room here for other players. And I can't believe I missed the run up in that stock. I mean, I own it through NASDAQ. At least you own it in video, dude. I never bought it in video, so. No, I'm fine, but I'm just, all right.

That's, all right, and that's my chip stick for 2025. Credit to you. That was impressive. OK. Let's talk about the bull market. So this is from the Loot Hold Group. I saw this tweet two weeks ago, I think. And things look a lot different now than they do when I grab this tweet. So here's a tweet. So they said, there's a stark difference between the 2000 bubble and today's eight bellwethers validating of the bull market. And on the right hand side, you see that the S&P 500 made a new high on March 24th in 2000.

But when it did so, the Dow Jones transports and the utilities and the financials, they were already crashing. Look at the advanced decline in the bottom right corner. Yeah, look at the advanced decline. Look at the equated. And if you look at where, look at the advanced decline, look at the equated. And if you look at where we were on December 6, it looks just nothing like this. And so, turn it off for a second. So Josh and I had spent a lot of 2023 and early 2024 talking about the narrowness of the market in terms of concentration.

But what we didn't see and why we weren't uber concerned was because it's not like the rest of the market was rolling over and it was only these giants that were carrying everything. The rest of the market was going sideways, not great, but we were making the case that it would be more likely for the rest of the market to catch up than for the giants to catch down. That's exactly what we saw. OK, but two weeks removed from that tweet, things now look very different and not in a good way. So let's go through.

I'm about to just throw a lot of charts at you. So just hold off on commentary if you way. So let's go through, I'm about to just throw a lot of charts at you, so just hold off on commentary if you can. So all right, this is Jake at Econopiq tweeted this today. This is the S&P 500 contribution over the past two weeks. So Broadcom has contributed 80 basis points of performance, Tesla 70, Amazon, Apple, Microsoft, Google, and Meta have contributed a total of, I don't know

what that says, 3.5% of the index. All other stocks outside of these seven names are down 2.9%. That's crazy. So this is not great. All right, next chart from Bespoke. What a start to the month. And when did they tweet this? A couple days ago.

The S&P is currently up 0.32% in December, yet there have been more decline than advances in the index on all nine trading days so far, longest streak since the aftermath of 9-11. So, breadth is bad and getting worse. Sentiment trader Jason Gepfer tweeted, this will be the S&P 500's ninth consecutive session with negative breadth. That's happened fewer than 20 times in 70 years, and on average, the S&P has been 12% of its highs during these streaks. Today marks the closest the S&P has been to its high.

The two most similar periods were 1961 and 1966. We're going to keep going because there's more charts. Again, this is from Jason today. Breaking, the Dow Jones Industrial Average is on track for its ninth consecutive down day, the first since 1978. So this is real shit. Nine down days, the first time since 1978.

Joshua's a baby. This is the first time in history dating to 1896, the Dow sank for nine straight days while holding more than 5% above its 200 day moving average or within 5% of its all time high. So we brought a few charts of our own. I asked ChartKit to show this to me. How many days in a row has the RRSP closed lower than the open?

And this was yesterday, so now it's 12, OK? So now we're at a record, going back to the inception of the Equated Basket, goes back to 2003. And I was talking with Ben today that if you look at some sectors, specifically the value-related sectors, materials, health care, and energy relative to the S&P, this is a full blown. I don't want to be hysterical, but they're crashing. Like materials, health care care and energy relative to the S&P. This is a full-blown. I don't want to be hysterical But they're crashing like materials health care and energy relative to the market are crashing Ryan Dietrich today

So so what okay, so what does all this mean is it's like much to do about nothing We're getting a Fed cut tomorrow is all it's gonna be erased I don't know we'll say but so Ryan did the work Ryan Dietrich said he said What happens when you have a streak this long of more decliners and advances? Ryan's data goes back to 1990. And if you look out a month, three, six, and a year later, nothing with nothing. In fact, it's actually pretty green.

There's a lot of green here. So 1990 to today, this sort of bad breath has not really meant anything. I'll end it again. I'll give the final word to Jason, who says 1990. So he quoted Brian, not to dunk or to be disrespectful, but just to bring the data back a little bit longer. He said 1990 is a convenient starting point. I know that's when Bloomberg data begins. So he looks from 1957 to 1989.

And if you look one week, two weeks later, one month, two months, three months. It's not great In fact, there's a lot more red than green now if you go out three months six months twelve months It's a little bit cleaner a little healthier But in the short term this sort of bad breath has been bad from 1957 to 1989 and not so bad from 1992 today So I guess the answer is inconclusive. We will find out what this means, but it is notable for sure So I guess the answer is inconclusive. We will find out what this means, but it is notable for sure. Breath sucks right now.

Did Ryan Dietrich clap back at that starting point, cherry pick comment from Jason? Well, I don't think it was trying to be disrespectful. I didn't see Ryan's response. I don't know Jason at all. Is he the kind of person that's always trying to make like there is meaning, or that's not his shit? No, I don't think this is mean-spirited.

Does he follow you on Twitter I don't I hope so I do shout him out quite a bit yeah I never spoke to him personally he has great he has great data can we go back to charts really quick a lot of charts in there no there's like a couple that I just had follow-up questions on. Yeah. All right. Like this is so odd to me. This is not difficult.

These stocks have done shit all year. All this is is like retail tax loss related selling. Why are you laughing? These are the worst stocks in the market. Can you think of a healthcare stock not named Lily that actually went up this year? The energy stocks are negative this year. Materials. Of course these stocks are being sold on December 17th.

Totally unshopped into me. Go back one more. Nope. One more. One more. All right. No, I don't know where it is. Which one? Window dressing. All right. So there's two things about active managers. The ones that run 1940 act open and mutual funds, they close out their fiscal year in October. So this is not tax related selling, but window dressing doesn't take place in October. It takes place in December.

Window dressing is a very real phenomenon. If your performance this year is not great, the least you could do is not look like you were a idiot. And this is a very human thing and there's nothing wrong with it. I'm not criticizing anyone but I talk to people who have run actively managed portfolios and I know this is real. You get rid of the stuff that makes you look really stupid. What makes you look really stupid this year?

Pfizer is a great example, a piece of s*** that I've been wrong on all year. If I were running an actively managed mutual fund, it's okay. I own Pfizer. I might want to own a little bit less of it as the year closes out, unless I think something's going to change in January, which, spoiler alert, it's not. Window dressing, while not as powerful as the impulse to engage in tax loss selling in October is still very powerful. And it does produce this effect where the first two weeks of December is people throwing in the towel and stuff that didn't work.

The good news is typically that gets reversed in that Christmas to New Year's week, not because buyers come in, but because there's no more sellers left. So I think I can explain why the market is barely down, but we've got all that under the surface selling. You've got a big chunk of the market that made people look and feel stupid, and they want out of these stocks. Now they also want to chase Apple because they have no choice. It's a massive weighting in the market.

It's in a meltup. It's a 92 RSI. It's the most expensive stock in the market, almost overbought stock in the market on that measure. People have no choice though. They have to own more of it because it will not stop going up. You look at your portfolio, manage money professionally. You have like, I don't know,

300 stocks in your portfolio, you're fighting with the S&P 500. The easiest decision in the world is add to Apple, get rid of the stuff that makes you look like a punk. And you're seeing, I don't know, 10,000 PMs do that. And it's not just mutual funds. Imagine you work at a family office. Imagine like the family that invented the corn dog and they're a billion dollar family and you're their portfolio, in-house portfolio manager.

You have one client and you're aggravating your client by missing the run on Apple and Broadcom. You know what you're doing at the end of this year. You're window dressing. Of course you are. You don't want your client to see that you're overweight all these stocks that went down this year. You lose your job. No one's going to replace that pay. I mean, that's not… I get that and I think that's part of it, but you don't think your client is smart enough to say, oh, you own Apple now, how come you're down on the year? No, I don't.

All right. So I think that- Have you talked to many very wealthy investors? Do most of them pay that close of attention? I think this is part of the story, but it's not like this is the only year where that dynamic is in place in the market. This is a pretty extreme move. If you're a really sophisticated investor, you don't have somebody on salary, on your payroll that's picking stocks for you. There's no way.

You might have somebody allocating to other managers. If you're a super sophisticated family office, you don't have like an in-house stock picker because you're not insane. But the smaller family offices, the less sophisticated, they literally have that. I know they do because I know these people. So it's not just mutual funds. It's big money. All right, so wait, hold on.

We're getting. That's what's taking place. Well, OK. Well, that's part of it. Yeah. But so does this. That's even better than my drone theory. Do you think that this is good?

By the way, your name is hilarious. I just noticed that, Drone in Montana. Do you think that this is going to get resolved very quickly with a rate cut or January comes around? I wouldn't be surprised if these names start to catch a bid. Yeah. Lucy's going to pull the football away from Charlie Brown once again. And you're going to see, I think, you're going to see Trump come in and start announcing all this shit and these stocks are gonna start going up and If you threw in the towel on something that was didn't work this year

I'm thinking about energy and actually my mystery chart at the end of the show I think fits pretty well with this idea. I Actually think energy is gonna have a good year next year. Okay So I am a little bit those are the stocks. Okay. So, I am a little bit less- But those are the stocks they're selling. I am a little bit more- I'm paying attention to this. Am I overly concerned? No, I'm not, but I'm not quite as dismissive as I think you are. I'm not totally dismissive.

It could get way worse. It could- Look, I pay attention to internals. I'm like you in that regard. You respect internals. I do respect. I know. I do pay attention. The thing is sick that I am. I'm more likely if you come to me and you say, Josh, only 20% of the S and P or above the 200 day, that's when I'm putting more money in it yeah cuz I don't care you ever see that you ever see the scene at casino when Pesci explains to the banker

yes right I'll come back with yeah he's like he's like I'm gonna put you in the hospital and and I'll go to jail yeah and 20 years later right about the time they let it out I'll come right back and do it again, because I don't know any better. That's how, so don't you internals me, because I'm going to act way different than you think I am when the internals get washed out. Worth following, I agree, these are really good charts. Can I show you some good stocks?

Let's do it. Fintechs this year, this was the year of the Fintech comeback. Financials were the best sector and tech was the second best. You put them together, it's like a Reese's peanut butter cup. I do love Reese's. It's financials and tech. You know you have stocks that you watch and you're mad at yourself because you were watching them and you were writing them and you just never bought.

To me, that's Robinhood. I've been watching that stock for forever. So many of those. I have so many of those. I know. You know that I've always said the biggest problem with me is I don't trust in my own intelligence. Trust your intuition. Come on. Let's do Robinhood. Put this up. This is since inception. I just wanted to give you the whole narrative.

So this came public as the hottest stock in a bubble. Like 2021 was a legit market bubble and this was the bell of the ball, right? Because this was at the epicenter of so many of the bubble trends. And it had insane user growth and it just had this amazing story and it was a horrible IPO. If you were drunk, if you were drunk out of the stock market in 2021, Robin, it was your bar. Yeah, and you were probably bullish on the name and it just collapsed. I think if they had come public a year earlier, it probably would have been $150 stock before it topped.

It didn't have that long. The SPACs were already collapsing when this thing came out. All right. Anyway, it's been a long road, but I love that. That's a four year base. Put that back up. Look at the consolidation and the basic. I mean, this is so bullish.

How is this not going to 50 at least? Oh wait, this is one of those charts where like it hides the fact that there was a nasty shakeout in the summer. Like there was a few bumps. I know, but look how quickly it came back, dude. I know, I should have bought. This stock is going higher, mark my words. And you know it is because neither Michael and I own it and we both know what's going

up. I refuse, I just, I won't. But I did buy Block, put up SQ. I followed you right into one year. You followed me into this. This is a one year technical. I think we did this as a make the case on the show. This is a legit breakout. Yeah. And holding. And holding. And holding it. We traced. This hit my list again, best stocks in the market. And for a variety of reasons, it's been like a recurring player on that list. So Josh, if you zoom out, if you zoom out a little bit further, 90 is the key level that was acting as prior resistance.

It's now looking at support. And so I should probably be buying more of this. Looks really good. Look at that 50 day ramp too. That just happened in the last couple of months. Yeah, it's working. So I think what will happen now is it'll spend some time consolidating, but it's probably going to 100.

And that 200 day is now going to get a little bit steeper. So this is yet another fit. And this is like, they have a Bitcoin treasury inside of this. They do payments. They have a huge merchant payment gateway business. They have peer to peer. It's like a cash app. It's run by an actual wizard. Well, look at this guy. This is unbelievable. Like 20 years ago, I would not have bought a stock where this is the CEO. Oh my God. I mean this is the now part of me is like oh he like he literally looks like he slept on the street last night but then part of me is like do you know what kind of balls it would take to show up at a crypto conference looking like this and then miss earnings? No way. No way. Even I don't care how much ayahuasca, nobody's that crazy.

So I predict that this is a harbinger. This is like, this guy's got the cojones to put up a Grain Earnings number the next time he reports. I'm hearing some people in the chat, not big fans of Jack Dorsey. Kam Rackham is being a little bit diplomatic, quote, I fucking hate him, okay. Quote, I hate him. Okay.

I'm not his biggest fan. Rachel says, oh no, Jack, Rachel. Oh yes. Remember when Jack tweeted about hyperinflation? That was cool. Good call. Somebody's like, is he on drugs? No, probably not.

Probably not. Anyway, this is the CEO. So now you understand the degree to which I don't care because I'm long the stock. I think I have one more. Do I have any more here? Oh, this is the Al Michael stock. Oh, PayPal. You gave this to Al, right?

No, I gave him eBay. Oh, eBay. Bye, man. No, eBay is good. eBay looks fine. This is on the best stocks in the market list also, and it's been almost all summer and fall. If you had no idea what this company did, Michael, you would buy this chart no matter

what, right? I would, but I bought it in the spring and I got bored. Whoops. But I'm just saying, if I covered up the ticker and I didn't say this is PayPal, this is automatic. Do you see that retest of the rising 50 day? Sick, right like tech like literally textbook. Look where the buyers came in. I think they take this one to triple digits What do you think? Yes, I agree. Okay. Oh, I have one more This is coming from our friend Steve Straza at SoFi This is an insider by Steve is not at SoFi. To be fair.

The chart is SoFi at All-Star charts. Let me quote Straza. The standout insider move today comes from Eric Schopenhauer, an executive VP at SoFi. Schopenhauer made a bold statement by purchasing 30,599 SoFi shares, an investment worth $500,000. That's not bullshit. That's a lot of money for what is he? Executive VP. This adds weight to the vision of CEO Anthony Noto, who demonstrated his confidence with

a $10 million insider buy between March of 2022 and May of 2024. The stock has officially left the station, completing a classic, put it up, bottoming formation, now surging high with authority, prices breaking out of a tight continuation pattern in the direction of the underlying trend. So good. Here's my question to you. Is Straza better at this than JC? Yes.

He is, right? I was just teasing. No, I don't want, we're going to get that. We're going to get that text at some point. Is Straza better at this than JC? Yes. He is, right? I'm just teasing. We're going to get that text at some point. Straza is really good at this. I'll tell you why. They're both great. You can't have a conversation with JC about insider buying

or fundamentals. He's like, well, what does that mean? I've never heard of that. He does it just to piss people off. Strasser will at least look at the fundamentals and try to connect why the technicals are working. The stock looks so good. I can't imagine who's buying here except for professional traders.

Strasser, we like you. JC, we love you. Don't get mad. All right. You're up. Okay. Where are we going next? Oh, yeah. you. Don't get mad. All right, you're up. Okay, where are we going next? Oh, okay, okay. So we have a Fed rate cut tomorrow in all likelihood.

And Value Stock EEC skated. A Fed cut right now has tequila shot at 3 a.m. energy. And I think that Value Stock EEC is looking at this through the lens of the stock market, to which I would nod my head and say, we're cutting rates. Why are we doing that? Now, the Federal Reserve does not

care about the stock market to the extent that we do. And Connor Sen had a more sober take speaking about to beat the tequila shot analogy to death. So at Bloomberg, Connor wrote, it's not clear why investors are so confident the Fed's job is nearly done with the unemployment rate back near its highest level of the year and the outlook for residential construction darkening. The reality is that downside risks to employment and even inflation are more pressing than the upside risks heading into 2025 despite the stock market hitting new records. All it would take is one soft job support to push the

unemployment rate to a new cycle high and convince investors that the labor market remains an area of concern. And I agree with both of these takes. I think that Connor's right that if there is one bad report and the unemployment rate hits a new cycle high, stocks will get corrected in about two weeks or less. I think that's true. On the surface, I agree with Value Stock Geek. Seriously, you're watching Broadcom add $300 billion in market cap and we'll do another rate cut.

I totally get that. It's very surface though. Here's Neil Dutta basically agreeing with what you and Conor have to say and you know his notes are short and sharp and to the point. The subject line is my concern dial has gone up a bit. Neil says today, two years ago back in 2022, I recall the consensus was largely on the recession train for the coming year. I took the other side. Even though labor markets were fine today, the consensus is fairly sanguine on growth next year.

However, labor markets have been cooling. I see myself more on the more cautious side of the consensus at present heading into tomorrow's FOMC. Most have coalesced around the idea of a cut in December with a signal to pause. I'm not so sure. The main risk right now isn't that the Fed pauses, but that the pause is fairly short-lived. Yeah, what if they can't pause because the labor market continues to deteriorate? Nobody's talking about that.

Not really. No, because the stock market is front and center. Yeah. I guess we're going to have the... I don't want to spend any more time on the Fed because we're going to get the number on Wednesday and then we're going to chop it up on the compound and friends the next day. Yeah. Why don't we go right to make the case?

Okay. So this is lazy. So apologies, but hear me out. It's Moderna. I'm making the case for Moderna and it's a tepid case. Such a piece of shit. It's such a piece of garbage. So this was the, I would say this in Zoom with the two poster child.

This is so much worse. Poster children of the pandemic, Moderna and Zoom. Chart on, please. So this maniacal stock was, of course, the COVID vaccine stock, and it peaked at a market cap of $195 billion, which was like 900 times sales or something hilarious. It has since dropped 91%. It's down to $15.7 billion. Next chart, please. So here's the decline. You know, pretty, pretty gross. This is worse than getting COVID. Getting, if I would rather you tell me Josh, bad news, you have COVID versus Josh, bad news, you own Moderna. I'm

telling you this actually can be worse than the disease. I was looking through the earnings calls because LOL and of course, they are in cost cutting mode because their cash cow is now behind them. So they've got continued efficiency gains in the third quarter, reducing SG&I by 36%. So you put all this together with the fact that the stock was just booted from the NASDAQ 100. And there's my ding, ding, ding. And I don't know if it's being too cute. I don't own the stock. I'm probably not gonna buy it, let's be honest. But I-

You know how bad this stock is? I don't even believe that he's French. I think he's faking a French accent. I think the whole thing is bullshit. So anyway- I don't think Wall Street believes a word out of his mouth. Honestly, the credibility here is like effectively zero. It may not even be his fault. But by this time, if you go back and listen to the stuff he was saying in 2022 about all the other

things that Moderna was working on, by this time there should have been, there should be a Zika virus vaccine in the works. There should be all these things. They said they were gonna use MRNA technology to cure or prevent, I don't even think he's French. I'm not convinced. We need to find out what's really going on. Before I can get published on this topic. We'll revisit this either 100% higher or 50% lower.

Yeah. It seems binary. Yeah. He might be from New Jersey. This guy. What's his name? Steven Boncell? Guys, I'm kidding, by the way.

I'm just joking around. All right. I have a mystery chart for you. You're going to get this one. Here are the clues. You're allowed to know what the orange line is. It's the S&P 500. It's like basically three months back to the middle of September.

The purple line is a sector ETF, excuse me, an industry ETF and the sector it's in is industrials. What is that chart? Home builders? Look at you. I've never been more proud. How did you know? I guessed. I mean, it's a really good guess.

You could have guessed airlines. You could have guessed any. Industrials is so broad. You could have guessed airlines. You could have guessed any, industrials is so broad. You could have guessed anything. Well, thank you. I happen to know that these names are acting like duty. So there you go. It's not great.

What's going on with the home builders? I think, look, I want to show you this one other chart. It's not just about rates, guys. So look, all right. So look what I'm showing you. The 30-year mortgage rate peaked on October 26th, right? As soon as it peaked, we had this huge rally in the purple line, which is the XHB Home Builders ETF. Look how far that rally ran. Now, still sort of have rates coming down, but the stock prices aren't rallying anymore.

What do you think that's about? Is it like too short term to read any meaning into it? Or is there a consumer demand destruction story going on here? It's very simple. Chart off. Window dressing. That's it? It just solves everything?

I don't know. It's a plug. Hey, guys. Did dressing. That's it. It just solves everything. I don't know. It's a plug. Hey guys, did you know? Positioning, positioning. Hey everybody. Did you know tomorrow is Wednesday, which means an all new edition of Animal Spirits starring Michael and Ben.

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