Chit Chat Stocks - Apple Sues OpenAI; Blowout Bank Earnings; Will Stripe Acquire PayPal? $PYPL $ADYEN

Episode Date: July 17, 2026

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (00:00) Introduction (01:55) ASML's Earnings (04:53) Adyen's Annual Report and Shareholder Questions (10:58) OpenAI's Legal Challenges and Hardware Developments (15:03) Bank earnings (24:56) Stripe, PayPal, and Payment Industry Dynamics (29:55) Tech Leadership on social media (35:05) Crypto, NFTs, and Regulatory Environment (40:01) Home Buying Trends and Market Reflections (49:58) Interest Rates, Inflation, and Demographics (55:01) Share issuance issue ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is presented by Interactive Brokers. Interactive Brokers is the best platform for global investors. From their one-of-a-kind market coverage to their best-in-class pricing, IBKR truly has it all. If you're serious about investing, head on over to IBKR.com. Welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined today, as always, by the one and only Brett Schaefer.

this is our weekly investing power hour episode where we talk all things financial markets we do these live on thursdays at 5 p.m eastern time usually but we're going a day early because i've got a flight so we've got a whole lot of news to talk earning season has officially kicked off we have a rumored acquisition of pain pal as people have been calling it since i think it's in like nearly a 90% drawdown but we will get to that and more before we do i want to give a reminder that if you enjoy these episodes please leave us a review it helps the show grow a lot of people do it and it really helps and it helps us maintain a free show so thank you thank you thank you if you're able to do that and check out brett's newsletter the emerging moat stock research

service it's a lot of great write-ups and great coverage on his personal portfolio but without further ado brett where do you want to kick things off well ryan we just started recording after the england argentina game so ryan uh if he seems a bit in shock it's kind of that post game come down uh no i will say congratulations to argentina but i feel sorry if you are an england fan that must be a tough life um i know we have some english listeners so yeah i wouldn't wish that upon my worst enemy yeah i can't imagine they they listen to our show live just given that it's probably uh middle of the night there but you know what they're still up so if you're up in england and and you're reading about that game feel free to tune in

to chat exactly we'll try we'll try to distract from that uh apologies if you're listening on friday morning and you just heard another mention of that tragic match for you guys but yeah we're get into earnings season have a little bank earnings they all seem to be doing fine the economy hasn't collapsed uh let's see buffett case study stripe going after paypal and more stuff in general from bubble watch as well as some listener questions ryan maybe asml earnings we kind of got everything all over the place this week sure yeah asml is kind of like one of the first big tech companies to report i think and they're they're always a little boring i guess in that like well i mean you saw some explosive growth from the company this time around but at

the end of the day it's pretty hard for them to ship like a surprisingly high amount of products because that you know it takes a while to manufacture these things so there's usually not any massive surprises with ASML's earnings. If you read the conference call, you can get into some of the technicalities behind what might be driving demand. But the only thing that really stood out to me was memory revenue. Memory revenue jumped 52% year over year for the first half of 2026 compared to a year ago. Let's see if I can find this quote from the management team. I don't think that should come as too much of a surprise given that you know these it's these memory companies are investing for capacity and they've outlined that so usually the demand is pretty

well telegraphed for asml but the ceo of asml said we anticipate our memory related net system sales to grow by over 75 this year which if you're a memory stock investor that tells you that all all the companies are investing for increased production so unless demand continues to outpace the supply you are going to see at least some supplies start to pick up other than that not too many surprises the only thing service revenue now accounts for 30 percent which is sort of a decade high it's historically been kind of in the 20s but again that was kind of slow on the product side as well so service revenue grew 32 year over year and they are they are operating at 54 gross margins during the quarter i put in parentheses here don't you think asml could hit

those 70 80 gross margins like the memory chip companies are if they wanted to if they wanted to kind of prioritize the short term that's fair yes but obviously with less competition they're able to kind of think longer term and want to maintain these relationships so uh or maintain their customer relationships not a ton to report here i mean it was a good quarter but the stock's trading near its all-time highs on a multiple i think it's around 60 times earnings at the moment So I don't know if there's anything too exciting to give investors here. The stock was flat after hours. Yeah, we have a $700 billion market cap, according to our friends at Fiscal AI, PE of 58.

With the backlog they're seeing, that's probably a fair number. Nothing too crazy, but I almost go every quarter. Yep, demand is high. Yep, they got a lot of stock backlog. Yep, their margins look pretty solid. nothing else much to say yeah and it's like even if revenue because revenue is pretty lumpy for them even if it's not what analysts are expecting people kind of shrug their shoulders because it's like okay they sold eight euv machines instead of 12 like it's more than that but we're unable

to deliver them i mean the euv side might might be around those numbers true um but it's there's so much lumpiness to it when you have a product that sells for such a high per unit value so yeah i feel like people just end up kind of shrugging their shoulders every single asml quarterly report uh let me just pull up the exact numbers on system sales so total euv system sales this quarter was around 16 duv around 75 so nice well hopefully one day they'll sell 70 ev machines and then whatever's next they'll sell 10 at a billion dollars a piece should do another topic here ryan i have a interesting case today i think is fascinating for earnings season it's not the buffett one i mentioned but i guess it's not necessarily a case study either it's more

of a study. Someone did an academic study on this. Essentially what happens is that if you go long companies whose 10K language or annual report, I assume this applies to quarterly earnings as well. If you go long companies whose 10K language doesn't change and you short the ones that constantly change it you earn 22 a year so double the long-term market average what do you think makes sense intuitively we kind of see it quantitatively um people talk about it like literally changing the text not necessarily like the numbers are obviously changing every quarter so 10k is going to change or not it's the language not the numbers yes yeah that's interesting i mean that i guess i probably would have assumed that just because

there's less probably competition for those businesses that aren't changing their 10k language plus less need to move into new markets and create fluff i guess would be the the kind term to some of these companies that are changing their 10ks drastically yeah i agree and is there a way to do this on fiscal ai if not i'll send in a product request because i think that'd be nice if not this is a very easy thing to use one of the ai tools for the broad ones you just upload the this year's pdf last year's pdf of the annual report and just say where the change is in this document yeah i mean it depends how far you want to go back But Fiscal.ai has all the filings, so if you've got the self-serve API, you can just ask Claude or whatever, the connector.

Integrate it within that. Yeah, that makes sense. Just say, check the last five years of filings. Has the language changed for these companies? I'm not an enterprise API user, though, so unless you can do that as an individual. You can. You can do that as an individual. Claude, plug in.

I'll have to check it out. Brett, I'll have to put you on. the yeah that that makes sense to me it must be nice too if you're the ir department and you can just copy and paste last year's 10k and then change the numbers uh for some of these long running businesses that have had the same competitive threats for 15 or 20 years so probably saving time and money there too but yeah yeah definitely i think it's a nice not nice short thing you can do as a part of your investment process check if there's any large changes check if they consistently change and then just put that as part of your checklist

like all right it's not going to be the end of the world if they totally change this every year but if they do or don't you know that's a positive flag for management yeah it's easy especially once you've read a lot of sec filings over the years you've kind of built up that muscle it's easy to skip over the k's and q's but it's a good this is a good reminder of why reading the k's and q's is worthwhile for an investor even if even if they don't change that much catching the smallest changes can have bigger impacts but yeah at least read the important parts yeah not the uh risk factors yeah skip over that little section that's about 100 years out of date Yeah, I think the SEC should force companies to fit all of their risk factors into consolidated three pages maximum bullet points.

Three pages? We could maybe do 10. Well, depending on font, maybe standardized font. Yeah. Okay, this leads right into another not serious topic of the week, but I've been looking at Adyen. I may have shown you this screenshot or you may have read I told you about it but they had an annual meeting and they had an open mic for question for any shareholders and there was some interesting things to say about the recent acquisitions they've made

but I thought there was a hilarious shareholder who I'm guessing is a person from the United States think about this they came all the way maybe it's virtual but they went all the way to this annual meeting to ask this question I'm about to read here very much. He says, I have two questions. One question for Pricewaterhouse and one for the board. When I analyze and read the annual report, it has 233 pages. Of those 233 pages, about 114 of those pages are about sustainability and governance, which I think is fine. I imagine him saying that in quite an interesting tone. He continues, when I look at the financial review page, there's only half a page. My question is, would it be possible next year to expand that a little bit?

The financial review from maybe half a page to two. He went all the way to the annual meeting for that. And they basically said, yeah, we'll consider it. I would love, this is my ideal European vacation, is just going to every annual meeting and asking questions about their IR website not working and why they have 100 pages on environmental stuff that no one reads. I mean, it's absurd sometimes how long that section is. It just keeps skimming and skimming.

This is – I'll talk about the report in a second. This is maybe one of the things I like the most about Fiscal AI is I no longer have to go to European investor relations pages. You can just do the IR content in the terminal. It just makes it so much cleaner because it's standardized. I have gone to so many IR websites with just outright broken links, pages that make it impossible to find the latest quarterly report. So, yes, please, please, Europe, figure it out. Maybe that just serves as an ad for fiscal. Yeah, actually.

Yeah, maybe keep it up. It'll help us. We talked about this offline. But what's the point for a company like Adyen? 233 pages on sustainability and governance. I guess I just – it makes sense for a company that's like very impactful on the environment, like mining companies, stuff like that, describing what all they're doing. But a company that sells payments processing software, maybe some hardware, seems a little pointless. I think it's a whole scheme to get into the sustainability funds, who also had questions at the annual meeting.

I skipped those, but there was some actual meat talking about the change in management and the acquisitions, which was nice. So be able to go read that or read my update coming on Friday. I'm sure it helps with financing, getting whatever, sustainability bonds, stuff like that. But the sustainability premium, I don't even know if there ever really was one. It's gone. Add in is trading flat over the last five years. This is stocks down like 60%, if I'm not mistaken, from highs. So, you know, if you're I don't like it when companies pander to institutions to or try not pander, but try to fit within a certain bucket so they can have certain shareholders.

Like you will get the shareholders you deserve over the long run. So just talk about what you think is the most important on your annual report. Yeah, it's 100 pages too. Let's keep it to five and then just toss some other pages for investment analysis. That would be good. I would also understand it for a company that's trying to hide their financials. They don't want to talk about that. Maybe that's not the biggest bright spot for a company, like for certain companies.

But Adyen, they should be happy to review their financials. They're great. They're extremely profitable. They should brag about that. Yeah, let's see. We have a comment here that management should only have an ESG policy if they exploit a natural resource. If not, you don't need it. Yeah, I agree with that one, Tyler.

Second one here. Hey, guys, what is the bear case for Adyen? i i get a little scared looking at them full disclosure i am a shareholder at the moment because i can't find a bear case maybe the capital allocation is poor um from a capital returns efficiency standpoint but besides that i really really struggle which maybe it makes it a fat pitch but on the other hand you always get nervous when you don't understand the bear case except for well they're in payments and payment stocks are going down that seems to be what's happening yeah i think part of it is just the sector that they're in the other element they

have for a long time been sort of head-to-head competitors with stripe processing volume for adian has not grown at the same clip that stripe has reported now granted stripe can kind of report the figures they want and they can acquire processing volume too but i would say the two concerns would be stripe potentially pulling away again i don't know how much they're actually stealing volume from adian that's that's not happening it's just because stripe is tailored or uh concentrated in silicon valley and you have a lot of startup revenue kind of flowing through that i think that's temporary but again maybe if it continues you could be right there sorry just to follow along the but isn't startup revenue them

stripe pulling that in isn't that great for stripe let's just say there's a huge boom in silicon valley at the moment so there's more revenue for stripe to go after adyen has less market share in there in that area stripe is gonna have the ai startups and 80 of them are going to go bankrupt yeah the other part here is adian for a long time has got sort of pat on the back by the investment community for building everything from the ground up and not wanting to create sort of the patchwork that a lot of payments companies have become look at pfizer if you're If you want to see just a nest of crappy assets, Adyen has been starting to make some splashes in the acquisition world lately, which feels kind of like pulling away from their core strategy.

But again, I might be kind of reaching here for bear cases. I'm an Adyen shareholder as well, and I think this is an inflation-protected business. They grow with their customers. They have reportedly some of the highest authorization rates in the industry, and they have a unified, clean payments processing solution. Unified and global too. Let's get that marketing down. Unified, global, streamlined payments processing solution. But no, having it all unified under one roof, having it be clean software that's updated on a regular basis gives you the analytics you need as a business.

That stuff makes a big difference as opposed to feeling like you're working with some sort of legacy payments provider where the software is horrible and the integrations are poor. So I do think that makes a big difference. I like Adyen here. But, yeah, the sustainability page could probably be reduced. Pages could be reduced. And I think financial review could be expanded a little bit. I'm on board with this guy's comment. But whoever that shareholder is, we are with you in your activist campaign against ESG nonsense.

And then on those acquisitions, yeah, I can understand that. They, I think at face value, it kind of flies in what they've been saying historically. We don't do acquisitions, but they're not acquiring payment volume. They're acquiring capabilities in kind of a different part of the billing and payment supply chain. One of them is in the billing part, which, you know, is not necessarily like payments infrastructure. And then the other one is helping companies build loyalty programs. So I understand in that point where you're kind of acquiring product capabilities. But still, I mean, the company goes, we've never made an acquisition, we never will.

And then they acquire two companies out of the blue instead of buying back stock. So they're probably in a little bit of prove-it mode, but I kind of like the acquisitions, full disclosure. And I'll cover more detail, I guess, on Friday's newsletter. If you're a regular listener to Chit Chat Stocks, then you've probably heard us talk about interactive brokers. Here are two reasons why we think interactive brokers is better than any other brokerage platform.

One, they've got it all. Stocks, bonds, ETFs, options, crypto, you name it. 170 markets, 36 countries, 28 currencies. Two, best in class pricing. They have zero commissions on U.S. listed stocks and ETFs and offer margin rates up to 54% lower than the industry. Head on over to IBKR.com. Rates subject to change. Margin involves risk. Restrictions apply. Interactive Brokers is a member of SIPC. Yeah, let's shift gears. Oh, you know what I was going to talk about? I don't know why this came to mind, but do you remember the iBuying phase? Yes. I've been going through the home transaction process lately, and I've got to say— Can we officially congratulate you as a podcast for being a homeowner?

Not yet. Close. So good. Which, first of all, that's why. A lot of steps, yeah. There's a lot of steps. There's a lot of things that could go wrong in the process. I mean, these inspections are very thorough.

There's a lot of things that could go wrong with a home over multiple years of living in it. it was such a bad idea out of the gate i buy like you're getting the worst inventory like couldn't even make money in one of the best home buying markets maybe of all time which i think 2021 2022 rates were so low they couldn't even make money in that time it seems like such a horrendous idea looking back at it so anyway i just thought about that that's forever a knock to me on Zillow's management team. I pulled up Opendoor's stock right now. I guess that probably was a good short.

What are they down? Yeah, they're way, way higher than they are right now. But their market cap is $4.6 billion. I have no idea what their financials look like, but Ryan, are you still structurally short psychologically if they don't change their business model? Hmm. Yeah. Psychologically, I am short the I buy in business model. I think it's got to be just extremely challenging. And there's so much friction involved. It's not like in theory. Yeah, you got all this data. You can earn this tiny spread and make it up in volume. But that's just not how real estate works is kind of what I'm learning. So, yes, I would say psychologically short. I think Redfin, they got into it, too, didn't they? Am I remembering that right?

Yes, but their actual business model is a little different. I think they're out of it now. Zillow got into it. I remember there was – It was Zillow, Redfin, and Opendoor. Maybe some others. Let me look this up. Who are the iBuying –

Companies. There's probably some others that totally busted without even going public. But let's – if we're going to stay within the Adyen and payment processing space, maybe we should talk about this giant rumor this week stripe going after paypal ryan do you have the do you have the companies is it is it who we thought they were oh yeah opendoor zillow redfin and offerpad which i've never heard of subscale they're still coming they're gonna take over the 100 trillion dollar tam okay stripe is going after paypal according to a rumor from possibly Reuters. They are combining with a PE firm, Advent, to find the capital to acquire or offer

PayPal an acquisition of $53 billion. There's $6 billion in last 12-month operating earnings for PayPal, pretty stagnant over the last few years. And apparently Block, Ryan's probably going to shake his head here, is trying to get in on the deal. I don't know why they can't help themselves. They really need to focus. They're not going to get the stock up, but they haven't. Okay. PayPal, I guess I have the notes here. Maybe you're not looking at them. They once had a market cap of $360 billion. I think it's quite astounding what happens in bubble periods. And really during that time, us included, forgot about valuation because i think it was trading at 60 times earnings something along those lines it's tough

and now we're trading you're going to get acquired at some 10 times earnings lever like for a levered buyout that is an extremely cheap multiple on gap earnings i'm sure that's whatever ebitda ev thing they're spinning it's probably like six or seven times yeah why block is even being mentioned in here oh god boggles the mind but merge cash app and venmo it's one of those things where it's like if paypal finds a way to right the ship get payment volume really growing again faster than inflation and they can find a way to be resilient to the mobile wallets this could look like a great acquisition i do not understand what the synergies are between stripe and paypal it's two totally

different payment infrastructures maybe well brain tree don't forget brain tree they're acquiring some volume there but that's what i think is beneficial for adyen is integration is always much harder than you think yes 100 paypal would be the first to tell you that look at look at their business they're they're a hodgepodge of acquisitions that don't communicate with one another at all it seems the brain tree potentially it's just an acquisition of customers here they could buy paypal to shut down braintree shift all of their customers off to stripe but i don't know in the long run is it better to just let them come to you over time i guess braintree is winning a lot of volume that's been basically propping up the payments

volume for first paypal lately it's the erosion of the core paypal button it would be way more evident if braintree wasn't increasing volume so maybe that part makes sense for stripe i guess i hadn't really considered that the but the what do you do about the core paypal button you acquire that and you basically just run it for cash put as little resources as you can onto it and just reinvest that cash elsewhere i mean that thing is it's it's just dying yeah it's it's It's, we talked to Adkin, if PayPal's worth $53 billion, Adian trades at, I think in euros it's 27, let's just say 30. And Stripe's at 150, might be 130.

I don't know why Adian's not worth twice what it is. On USD it's 31. the EV is lower since they seem to just hoard cash on the balance sheet yeah I would like if you're asking would I invest in a Stripe PayPal

or an Adyen at these prices 100% Adyen yeah if the prices were equal I mean I think Stripe's a really good business that's why they get so much attention but equal on what multiple yeah i'm saying it let's say they were both 30 times earnings i think i'd

probably rather own stripe oh yeah like no earnings well yeah i guess that's let's say they were similar all right let's just perfect world it was a you're buying the same business the same price whatever and they had mature margins i think i'd give the edge to to stripe purely just because i'm familiar with that platform and it seems really useful um i'm sure add-in feels that same way too for customers there but the paypal acquisition it has been a value trap for like five years is what it feels like it's had a dividend yield of not dividend let's go buyback yield which again not including not factoring in some of the stock comp here it has had a buyback yield of eight higher than six percent for almost five years

but and today prior to this it was it had a buyback yield of 17 percent this i just don't see them generating significantly more profit as a business on their own so i think the acquisition like they are potentially i could get behind this acquisition acquisition if i were stripe um investors which obviously we're not because it's privately traded but i would say kudos to stripe if they're able to integrate this and import customers over from brain tree i agree yeah it might be it might be a good price might be a solid price all right should we talk apple suing open ai it hasn't been a good week yeah for apple maybe a list because we're going to go deeper into this apple suing them there was a tweet from katie

miller sorry sorry you said bad week for apple i think you mean open ai open ai thank you tweet here from katie miller sorry katie i don't know what you do but your tweet went viral open ai's last 24 hours head of safety quits sued by the new york times top executive unexpectedly departs shuts down their browser tool after nine months sued by apple and caught selling product to china against sanctions not a great week for altman do you want to take us through what's happening here with apple because that might be the most meaty of the news yeah so i'll just read a couple headlines from from the news articles says apple filed a lawsuit in a california federal court accusing open ai of a coordinated pattern of misconduct involving the theft of sensitive trade secrets

the complaint alleges that former apple employees now working at open ai took confidential information to assist in the development of open ai's hardware products first of all did you realize open ai had hardware products yes well they're in development yeah they acquired johnny i's company for six billion uh yeah okay i've been known for a while but they haven't released any correct nothing's but no they've just been a lot of rumors of uh that they're working on things okay well i i'll go on with the headline but i think that hardware would fail apple is seeking to stop these practices demanding that open ai destroy any proprietary materials and redesign its upcoming products to exclude apple's technology shortly after this sort of unrelated

elon musk called sam altman a scam artist on x side note totally unrelated elon musk recently lost a very public lawsuit to sam altman altman responded homeboy oh i've got a dog barking here in the background so apologies homeboy you are the one selling public market investors on short-term space data centers. My question for you, for your own investing, do you prefer if your executives just don't have social media at all? Compared to that, yeah, I'd prefer no social media. I was looking up Andy Jassy's, as you were talking, his bio is probably written by a publicist, lead Amazon, married, father of two kids, big sports fan, experienced Buffalo wing eater, Go Kraken.

He must be an owner of the Kraken. Or no, they own Climate Pledge Arena, I think, in Seattle there. I like that. And then he tweets about, great quarter. Nice to meet Prime Minister of India. We are excited about things ahead. That's better than Elon Musk and Altman, who are probably two of the most similar people out there. I wouldn't love it.

what about this other one i saw this week a company i don't own today but i've used to own i love the business model i think ryan likes the business model too did you see founder of airbnb brian chesky basically putting on a thread of ai slop about crypto assets and token stuff i don't even know i didn't read it because i within a few few sentences you could tell it his AI slop. He seems to tweet and I'm stealing this from our past guest buyback capital. He seems to talk a lot about things, but never about Airbnb's core business. Yeah, I hate it. I actually it's it's probably my biggest pet peeve with Airbnb. And it's why I am afraid to make it a larger position for my own portfolio. He strikes me as just outright distracted. And I know,

And maybe he's doing great work behind the scenes. Maybe it doesn't even matter. But between his AI stuff that he's working – he should be in founder mode. Like he should – they are not there yet. This isn't like jump off board and let the company run on its own and you just go join other companies' boards and talk about crypto. This is not – They're kind of there. They generated tons of cash. yeah but they're still like expedious got more volume than them the i mean they've got a chance to win a lot of market i mean if they're already there maybe i should be a little more cautious about my position i i the reason i say they're not already there is because i think they have a massive runway for reinvestment there's a ton of potential i just saying if i i don't think it's

in a fragile position as a business no i just think you've got this huge runway you've got a huge opportunity if you're airbnb and you've got your ceo founder seemingly a little distracted honestly i didn't even see this tweet storm but i'm pretty sure deleted quickly took it down anyways also like funny you know if you if you start talking about crypto and tokens like three years ago whatever but we're past that it seems like we're not seeing those press releases anymore from from mainstream companies you don't have to do that let's toot our own horn we were calling bs on those the entire time and people i respect it kept saying well it might be the future like yeah these these little monkey pictures it's gonna be the future but you're just doing that

the heads people simply were doing that to hedge their reputations yes they didn't want other people who were very into crypto to hate them the that that's honestly my belief the no one ever seemed to figure out the whole off-ramp thing still haven't it was the same question every time it's like you can use this new method for transferring assets in some way and it's like okay but i gotta buy groceries how do i get those assets to buy groceries it's like well we're not there yet you're gonna well you're gonna have to transfer them through the standard banking system and it's gonna cost you in fees okay so it's not worth it yeah vlad tenev i think is up to no good at robino doing things

around this what is this twitter it's gonna be bad audio okay vlad tenev he tweets a lot yeah all right he says if you're a builder looking to embed stock tokens or rwa do you know what that is no into your applications we want to hear from you so they're trying again with this crypto stuff this is what Chesky was tweeting about as well we don't even talk this AI sorry OpenAI Apple lawsuit

did we get sidetracked whatever they're poaching employees and they're taking a whole bunch of the ideas over from Apple Apple sued them I mean if there's non-competes or there's

intellectual property theft here that's you know that sucks for open ai i mean that's going to be i think a pretty clear cut case i would imagine but apple loves lawsuits and they're they're like nintendo in that way you do anything that breaks our rules and we're going to come down with you on you like the fist of god whatever that says forget capex on data centers apple will spend it on ip infringement lawsuits and i'm all for it uh if you're an apple shareholder that there's a chance that's more profitable the the open ai just seems to take the wrong well sam altman specifically seems to take the wrong turn every week a new wrong turn every week i

mean he took six wrong turns in the last 24 hours the i just i can't help but think open ai we won't be talking about them in 10 years despite having remarkable technology and pioneering an industry i just don't think it will be mentioned much in 10 years it'll either be a part of some other company maybe it's a part of microsoft whatever it somehow becomes you know a powers co-pilot or whatever but they've run the risk side of things so hot and there's a general public disdain for chat gpt across the board so i think they've lost trust with customers and probably lost trust with investors a lot over the last couple years too we're a comment here from tyler on the ceo ceos can only lose by being on social media my thesis

This can only be negatively impacted by a CEO being on there. You're probably right. Let's see. I was trying to look up on one of those prediction marketplaces the betting-ons of an open AI bankruptcy. If you're setting, you know, 0 cents to $1, whatever the, however it's priced, 0% to 100%, where would you buy, like, an open AI bankruptcy

within the next 12 months? Maybe we'll do three years. Three years. Make it a little easier. I would go 50-50. I think 50% by $0.50 on the dollar, that's not a bad bet. Yeah. Yeah, I would say it's probably a 50-50 chance.

12 months, maybe not. I think they get – I just believe they just did a big financing round and they've got the partners to survive, but those partners aren't going to save them over and over. Amazon's not going to do circular deals forever. They're not going to sink cash Into OpenAI Three times I just don't I believe management will learn their lesson

If it doesn't go well the first time So Ryan's got his dogs barking That is loud, what's the dog's name? I don't think I've ever known He's still going, Murphy Is his name Podcast appearance

All right. Yeah, he's he's he really wants to get on and talk bank earnings, which that's our next topic. Let's see. Big banks this week seem like they're firing on all cylinders. Ryan has a quote here. Maybe I can just read it for him if the dog's going crazy. Jamie Dimon saying on the conference call is getting close to as good as it gets. We just don't know how long it's going to last. He always has those quotes just saying everything at once. and they have a very all the news the uh the financial media has a is kind of him talking and it's a very very serious look on his face he's saying something eloquent uh he's all he was also at a shipyard promoting their lending to a submarine company it was very funny he's all over

the place my shadow president uh but jb morgan earnings per share is booming seven dollars and $0.70 versus $5.50 a year ago. Wells Fargo up 25%. Citi up 50%. $3.15 a share. Bank of America up 34%. I mean, you got the investment banking business. The fees there are phenomenal.

The lending business for corporate bonds and things like that. And then it seems like the consumer, sorry to the perma bears, everything's still okay. Do you remember the last few years when people said they almost guaranteed we were already in a recession? Like at some points I would say like maybe I can understand those theories, but the people that would pound the table on that, just go back and look at what things people said. And once again, I think the economy is in fine shape. Yeah, I feel like you can – anyone can almost – no matter what – how the economy is doing, you can almost always convince yourself you're entering a recession. Like, yeah, you're right. Some people are down on their luck.

There's a lot of people that are struggling right now and incomes – you can find whatever supporting data you want, but these banks are – bank earnings would be completely contradictory to that. So that's a good point. Like the economy is so big, you can find some source of data, some survey out there. Remember that Michigan survey, the consumer confidence one that always gets posted? Apparently, they changed from in-person calls or phone calls to an online survey. And that psychologically changes the answers and the constituents that do it. So that's why it's way worse than usual. It was just a survey methodology error. yeah don't sell these dogs because of that is ridiculous as riot's dog goes again um yeah yeah it's a few hard rules in investing never never invest in apparel don't trust surveys don't uh maybe don't invest in restaurants maybe that that could apply be very skeptical and don't bet that the economy is going to shit every quarter sorry for swearing

yeah banks seem good yeah the investment banking side especially and I got a feeling it's only gonna I mean this quarter it's probably gonna be even better assuming they generate some big IPO fees the

yeah Jamie Diamond I don't know how he does it he seems to nail it every quarter he does a good job he's a good leader yeah i think i think he might be on my mount rushmore of ceos potentially and he has one of the hardest jobs too i think running a bank is more difficult than running like a consumer facing tech business or something like that so yeah he might be on my mount rushmore let's talk warner brothers and paramount not a whole lot well i think there's a decent amount

to discuss here but 12 u.s states are suing to block the purchase of warner brothers by paramount what is it paramount skydance i think is the full name here's a quote california and 11 other states have initiated legal action to stop the 110 billion dollar acquisition of warner brothers discovery by paramount skydance the lawsuit alleges that the merger would create a media behemoth with the power to raise prices and reduce content quality harming consumers and industry workers uh we'll come back to that in a second while the u.s department of justice previously cleared the deal the states are seeking to prevent the merger from closing until the judicial process concludes paramount has characterized the lawsuit as a distortion

of antitrust law news came out shortly after that paramount is considering a partial or full corporate exit from the state of california where their main studios and headquarters are so let me let me put it this way do you think paramount acquiring warner brothers will ruin your viewing experience as a consumer for content no i don't watch since i watched neither bingo it doesn't matter are they considering the competition from small investing podcast on spotify apple podcasts and youtube that a few thousand people listen to they should probably look into it yeah yeah i mean i say that in jest but there is so much competition in media these days anyone can become part of it it's the whole kind of point of the

modern world or not the point but yeah everyone's a competitor doesn't really matter and it just seems like spite from california right yeah yeah honestly i think at this point any merger by certain states will be sued to get blocked but let's i mean let's look at returns for just to support my what i'm about to say paramount and warner brothers both these businesses are not thriving unless i'm mistaken here yeah i don't think so no they're not It is one of the most intensely competitive industries and you look at streaming time spent by consumers. There's almost – you should almost be supporting it if you look at the market share of like YouTube and Netflix. Like you would think you want more formidable competition compared to those two. So whatever.

My prediction is that this deal will go through and it would probably be beneficial to consumers, if anything. Why would they merge to reduced content quality? That was a part of the antitrust deal. uh i again this seems like spite because people are leaving uh the the movie slash media industry at least the legacy industry is leaving california yeah probably okay do what are some listener listener questions yeah let's go for them all right this one personal finance blocking and tackling here this is a very lame question but what short-term assets do you Invest your cash position in within IBKR.

You can apply this to other brokerages as well. I have a NAB of less than $100,000, so I do not get a good rate for my idle cash. For myself, if I want short-term, I usually, and I should honestly, we should be sponsored by BlackRock because I toss out their treasury ETFs. The iShares zero to three month treasury bond ETF is SGOV.

I believe the expense ratio is 0.1%. I like that one. Long-term bonds, TLT, although that's a little bit of a different investment. That's not idle cash. That's the way I go about it. But I know you can directly buy treasury bonds. I would just do that.

I think SGOV, the short-term treasury ETF, makes it simple. But honestly, I try to be fully invested. for the most part yeah uh same i'm in a bit of a particular like unique situation with uh the recent home transaction but i would say i either have stocks and sort of fully invested as much as i can be or i just have it in a high yield cash account i'm not that most of the time i'm fully invested so i usually just leave it in cash but i think i would if i were looking if i were bearish or i was looking for an alternative to cash it'd be some sort of short-term treasury etf question for you i guess by the way you mentioned blackrock they crossed

15 trillion dollars in aum this uh this quarter so kudos to them do uh do you think treasury rates let's go call it 10-year federal funds rate what is the 10-year let's look Do you think it will be higher or lower in five years? It currently yields 4.55%. Oh, God. It feels just like a solid number to me. Five years? So you would say it's the same.

Yeah, that's cheating. No, I am going to go with the take that it will be lower because we're going to be on the other side of the massive CapEx boom. And I think AI long-term is deflationary. And then we have an aging population. So outside of the healthcare inflation, most other things will go down in price. Then the optimist comes into play, as I like to mention, every quarter and prices go to zero. But honestly, automation and things like that is generally, I think, deflationary long term. So I would say lower by a smidge. I would be surprised if it's significantly higher. Yeah, it's always hard to see it in the short term. But if you zoom out 30 years, the automation has been deflationary. And that's probably why rates have been so low. And people constantly look at it and they say, well, that was the last 20 years, last 10 years was abnormal. And this is – we're not even back to the long-run average, but I think honestly it's sort of a different era, if you will. Last thing on that, we've never had an inverted population pyramid.

Japan is a good example here. They have had like the opposite issue of inflation where they had to try to stimulate the economy as they've gotten an aging society. I would take that as a case study. as what could happen if the United States starts becoming older, I guess, if current birth rates continue. Yeah. I do always find it a little peculiar that people just – anytime a population declines, people say this is the beginning of the end. Like it can always – it can't always grow again. Yeah, true. South Korea has had a rebound.

All those day traders getting rich. um but they've ever been to japan it's nice like they have a population collapse it's fine yeah um okay another listener question it feels like appetite for classic blue chips may be at an all-time low take intercontinental exchange since the end of 2021 it grew operating cash flow by 65 share count is the same share price is also the same as the end of 2021 now what's the multiple compression caution people against copying it uh copying to 2021 that was a time of irrational exuberance in markets so you could probably find endless charts where revenue and cash flow have doubled over the last five years

and the stock hasn't changed. And that doesn't necessarily mean you get good returns from here. Add in, right? Yeah. And the New York Stock Exchange, yeah, I think they're going to be just fine. Although, watch out for the Texas Stock Exchange. Just recently started operating, apparently. Yeah, wow.

Look at this multiple compression. EV to EBIT might not be proper. PE is similar. It's 18.5. Yeah, the New York Stock Exchange was cheap. Maybe it's one we cover going forward. Yeah, I do. I could see myself owning shares. I like stock exchange business models. They're very insulated, huge network effect, and it's not too expensive. Nope, not at the moment. What do you think is an appropriate multiple for a business like New York Stock Exchange?

20 to 30, depending on what rates are, depending on how well they're run, depending on how well you like management. This is one that I immediately go, it's another example of this, maybe in Amazon. I think, well, if I was 30 years older, I would love this. But I'm looking for more, it's a false, but I'm looking for more growth. the moment instead of yield i agree and it's not you can still get obviously good returns maybe we're being a little greedy here but it i just think there's a lot of invest investment

opportunities out there where you can get true true 10 baggers potentially um over five to ten years similar risk too yeah and it doesn't strike me as if you have a lower risk tolerance nyc i think at 18 times earnings seems like probably a pretty good investment side note there there has been a lot of discussion about them potentially being disrupted by prediction markets did you know the parent company of the new york stock exchange has committed nearly two billion dollars to pulling market yeah not a bad move could be a long-term competitor could be a nice asset to own uh that's tough yeah it's kind of not tough it's uh potentially disruptive yeah i just i feel like going back to the comment though i think he's right there are so many

businesses that seem to be trading at mid-teens, high-teens earnings multiples that have been considered very high quality and durable for 15, 20 years. Out there right now, it's almost like drowning in opportunities. True. Yeah, I agree. I agree. I find a lot of opportunities at the moment it's harder to find what for me what to buy what to not buy um yeah all right listener question when do you track circle or just real quick when we did that fallen angels or falling knives episode there were 20 companies that we walked through and i could have seen myself maybe not all of them but i probably could have seen myself buying 15 out of the 20 and being comfortable with them in my portfolio and i mean that was only a snippet of of the companies that are down

you look at the sap 500 there's a lot of market darlings in air quotes down 45 50 year to date and make sure to check whether it's trading at 15 times earnings or still at 30 times earnings because there's some things like a ferrari that are still a little expensive uh okay we have a question do you track circle stock i don't i believe ryan doesn't but for the listener here i would recommend going to our friend travis hoyum at asymmetric investing he covers them quite well i like reading his reports on circle ryan let's talk bubble watch slash just funny news from the week uh this is a mad libs headline fia the buzzy shopping app co-founded by bill gates's daughter is claiming credit for online sales

that didn't actually drive a Bloomberg investigation found. Had it all and still went to fraud. I'm going to share... Are you talking about 30 under 30 star? Yeah, that's true, yeah. Did you see their Series A announcement, which they raised $35 million.

I would think Bill would be able to do that. What, from that dad? Yeah, no, no. This is the, it looks like a music festival announcement. I'm going to read off maybe all of these names. Here's the investors. One, Khloe Kardashian. Two, Alex Earl.

Jessica Alba. Priyanka Chopra Jonas. Sydney Sweeney. Paris Hilton. Mindy Kaling. Ashley Graham. I'm saying this wrong probably. Halsey.

Karlie Kloss. I don't know who a lot of these people are going down, but then it gets good. Vlad Tanev. Robin Hood. The Chainsmokers, Olivia Colpo. The Chainsmokers. I know who the Chainsmokers are.

Let's see. Shaboosie, Sahil Bloom. I know who that is. Gunna. Who could have seen the signs of this? Gunna on there. Yeah. Oh, my gosh.

Do you know what the business does? It was supposed to. Yeah, it's actually a check. You know what cookies are now, right? They were cookie stuffing. So they were pretending to be attributable to sales for e-commerce when it wasn't them. Yeah. The 30 under 30 doesn't miss.

It really doesn't. If you want to be on Fraud Watch, check that list every year. That's a bummer. Did you see the Oracle of Omaha, Great Uncle Warren, had some words about Gates today? Yeah. He's like, I've had some bad friends. Not as bad as that. Yeah.

Leave it there. I love – yeah. When they do his charity announcements, they make it as a press release for immediate release. I'm giving my shares to my children. um okay here's the last thing before we get out of here there was a very fascinating article in the wall street journal about blockbuster stock sales threatening to overwhelm the bull market i have a chart here and it's the a chart of the annual issuance of u.s stock i'll maybe share it but you can see a significant bump in 2020 and 2021 coinciding with that other boom and bust cycle

if we look at this last chart here this is 2026 but remember this is 2026 year to date so historically it's been around 200 to 300 billion dollars in the 21st century 2020 2021 or 2021 it got up to 540 billion dollars and year to date 2026 we're already at 345 roughly billion dollars and u.s stock issuance uh the quote here to surpass 2021 2022 on pace yes to surpass uh let's i mean there was a lot of good data from this it says overall u.s companies will issue a net 500 billion dollars of equities including buybacks over the next year compared with a net reduction of 1 trillion dollars in recent years so we're going that's a 1.5 trillion dollar swing from capital returns to capital raising.

I think this is interesting. It's probably why the hyperscalers... It's interesting because the hyperscalers... Is interesting a kind word for saying toppy? It feels toppy. Yeah, there's a classic Howard Marks quote in here where he says nothing. He says,

It's difficult to predict when rising stock sales and slowing buybacks might weigh on stocks. Just as important, he says, they are unlikely to be enough by themselves to end a bull market always ride that fence howard yeah that was really one-sided comment the uh he's he does a very good job of saying a lot while not uh taking any sides the i would i find that chart pretty concerning but it's not like i don't necessarily find it surprising you see all the news about ipos and equity raises and what google just did for example anthropic might be about too later

this year usually have some idea that this is happening even if you don't have the hard numbers so yeah more support that times are good at the moment and it's probably i i'm guessing why the mag 7 hasn't maybe it's lagging what it used to they used to be buyback machines that's like Amazon. And then you had index fund flows. You had earnings growth. It's kind of hard to bet against that momentum. And now there's some issuance working in the opposite direction. Yeah. All right. I think that's going to do it. We're in the heart of earnings season. So good luck to all our listeners this Q2 earnings season. I'm going to sign things off here. Thank you, everyone, for listening. We want to remind you that Brett and I are not financial advisors.

Anything we say or discuss here on Chit Chat Stocks is not formal advice or recommendation. We may buy, sell, or hold any of the securities discussed in this podcast. Thank you again, everyone, for tuning in. We'll see you next time.