Prof G Markets - The Bitcoin Presidency & The Dawn of a New Robber Baron Era — ft. Josh Brown

Episode Date: November 14, 2024

Scott and Ed open the show with the Fed’s rate cut decision, the surge in the global cryptocurrency market, and Shopify’s third quarter earnings. Then Josh Brown returns to the show to identify how the financial landscape could evolve under Trump’s second term. He shares how he thinks hyperscalers, small-cap stocks, and crypto will be impacted and explains why traditional media may face struggles in a changing political environment. Finally, he provides a roadmap for navigating an era where wealth and influence will be paramount. Check out Prof G Markets in Spanish and Portuguese on Youtube.  Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Ready, set, grow. Go to constantcontact.ca and start your free trial today. Go to constantcontact.ca for your free trial. Constantcontact.ca. Support for this episode comes from AWS. AWS Generative AI gives you the tools to power your business forward with the security and speed of the world's most experienced cloud. Today's number, $2,100. That's how much Wicked Dolls are going for on the secondary market

after a misprinted URL leading to a porn site was discovered on their packaging. True story, Ray Bradbury wrote a book about Mitch McConnell having sex. Weird, right? It's called Something Wicked This Way Comes. That makes me happy. Ed, how are you? Como estas, dad? I'm doing very well. I'm excited you just

arrived in New York this morning, right? Yeah. Do I look like it? Do I look like I've been through fucking five time zones and done two hours of podcasts already? I mean, look at me. Jesus Christ. I look my age, which is really old. You look like perfection. How was the flight? It was fine.

I got up at dark hundred hours, took off at seven. Yeah, it was fine. All right, good. You seem in good spirits. I feel like- I'm delirious. Okay, you're delirious. It'll all catch up later.

Yeah, no, I feel pretty good. What's going on with you? I'm pretty good. I'm gonna come see you later this afternoon. I'm going to pretend to be your producer because I just want to go meet one of my favorite comedians who's podcast you're going on. I don't know if I can mention the name yet, but. I think you can. Why not?

Theo Von. And I don't know. I'm so not with it. I don't know who Theo Von is. Why do you like him? He's just hilarious. He has very eclectic, strange guests on. Not, not, not that you're either of those things. Yeah. I'm one of those things. He had Trump on. Oh, good.

But I forgot we're not allowed to mention him. Yeah. Um, I think it'll be a very interesting podcast. He's a very weird dude, so it'll be, it'll be a good dynamic. Yeah. I'm excited about it and I'm excited that- You sound excited. Honestly, and I'm also meeting with,

I'm meeting with Barry Diller tonight at the Carlisle Hotel. Gosh, can I be any whiter? I'm meeting with Barry Diller at the Carlisle. Love that. At the bowl? Where else would I meet? No, what do you mean? Yeah, we're meeting at the bowling alley. If I go to a hotel, I'm either like banging a pro

or I'm in the bar. You know what? That's how I can tell if the young man is a male escort is he returns my eye contact at the bar the four seasons. Oh, okay. Yeah. Well, should we get into some headlines? Yeah, that's a good segue to headlines

around business news at COVID. Let's talk about GDP. Don't worry, I'm used to this. The Federal Reserve cut interest rates by 25 basis points, as expected. In addition, Federal Reserve Chair Jerome Powell stated that he would not resign from his post if asked to do so by President-elect Trump. The value of the global cryptocurrency market has topped $3 trillion, with Bitcoin hitting a record high of $89,000. Crypto-related stocks also saw gains as the demand for digital assets surged

following the election. And finally, Shopify's third quarter revenue rose 26% from a year earlier, beating analyst expectations. That's its sixth consecutive quarter of greater than 25% revenue growth excluding logistics. The stock rose more than 25% following that earnings report. Scott, your thoughts starting with this Fed cut, but perhaps more importantly, this interaction between the reporter and Jerome Powell, who is pretty unequivocal. He would say no if he was asked to resign. I don't. I mean, I can't predict anything this guy's going to do when I say this guy, I mean, President Trump. But I think if there's anybody that you'd want to renew their contract, it would be Chairman Powell. What he has pulled off is just remarkable.

And you're gonna see very soon, you know, seven, 10, 30 days, President Trump start to take credit for this incredible economy. And this incredible economy has been brought to you and granted similar to the future, as William Gibson said, it's not evenly distributed. I think that's mostly because of tax and fiscal policy that shoves a ton of prosperity and opportunity into the 1%

into corporations and the shareholders of those corporations see above the 1%. But in terms of growth of the pie and our ability to keep inflation lower than any other nation, despite how bad it is, to create growth greater than any other nation, everybody was predicting a recession. We didn't have it. This guy pulled off a soft landing and hurricane winds.

He showed huge balls, raising interest rates 500 bips in 14 months, which was just unheard of. So this guy doesn't just get the gold medal, he gets everyone else's medal. So I don't understand why Trump would pick this fight, but we're projecting, maybe we're speculating. He hasn't picked that fight yet.

It seems like the media wants to pick a fight. So I think this might be a bit of a nothing burger. What are your thoughts? It's worth maybe just summarizing what the law actually says about this. So the president actually does have the power to remove a member of the board of governors of the Federal Reserve, and that is a position that J-Powell holds.

But the president needs to have what is called a cause. What actually does that mean? What is a cause? This has been debated in the courts, but historically it has been interpreted as, quote, inefficiency, neglect of duty, or malfeasance in office. So this is only really viable if Trump can prove to a court that Jerome Powell did something really bad during his tenure, which would be really, really difficult. The other reason it would be difficult is that in the law, there's no reference of

the Fed chair itself. It only refers to members of the board of governance. So in sum, this would be a really complicated legal battle. I don't think it's a battle that Trump really cares enough about to go out and fight. But my prediction for this would be, Jerome Powell's term is up in 2026, so it's not that long. I think that Trump will let him serve out his term. And in the meanwhile, if anything goes wrong, Trump can always just say, I told you so, which is a position he loves to be in.

He can just say, you know, I tried to get rid of Jerome Powell. I didn't like him, but the deep state didn't let me. We'll see, but I agree with you. It's probably not the Hill he wants to die on crypto Crypto, you know, we call this election a lot of things. Inflation, immigration, incumbency. I've been calling it the testosterone election or the kids are not, not a right election or struggling young men election. Everyone wants to brand it.

You could safely brand it the crypto election. And that is crypto showed up. Trump flew into the storm, waving a big crypto pirate flag. It was a brilliant move because crypto is probably, just as Democrats were hoping that people focused on bodily autonomy would be one issue voters and some of them were, but I think there was a lot of overlap with people who were already gonna vote

for Harris. He went right after the bro-iest bro in brovilles in crypto and said, I'm your man. And there's a lot of people who've bet a lot emotionally and financially on crypto and probably think this is my man. And so this was a smart strategy on the industry. I wouldn't be surprised if it continues to go up.

If there's talk of creating a super fund backed by the government where the government puts a hundred billion dollars into Bitcoin, which could take the thing to God knows where. What would be also interesting is to look at micro strategy, which has sort of become a tracking stock. And Michael Saylor, who everyone thought was crazy, including me, oh, Jesus Christ.

In one year, MicroStrategy is up sevenfold. MicroStrategy is basically a levered Bitcoin bet at this point. In the last one month, it's up 73%. In the last six months, it's tripled. Jesus Christ, I know this guy and he told me to buy fucking Bitcoin at 18,000. He's been on the pod a couple of times.

We gotta get him on the pod, bright guy. Anyway, this is, it's interesting as a no coiner, I'm a little bit bummed. I have some consolation and that is, I still own my claims in FTX and FTX holds a bunch of coins. So as is the reason that the value of those claims has skyrocketed, so that's some Neosporin for me deciding that I didn't understand it,

so I wasn't gonna go into it. But this has been, this is arguably the crypto election. What are your thoughts? Well, I'd like to know if, do you think you're gonna change that? Are you gonna buy some Bitcoin at some point? Yeah, but one of my many flaws as an investor is I think, I always think things aren't cheap enough

or I'm always waiting for them to come down. And when I look at Bitcoin, it's an asset that is offered, I think it's been up, I don't know, 18 or 20% a year for the last 10 years, but it's highly volatile, which means in my view, at some point it's gonna be probably for a brief time back at 50, 40 or $30,000.

So I never liked to buy into strength. And that's a flaw of mine because sometimes you just never get the opportunity to buy. But I do think I keep telling myself the next time it looks like it's got a bit of a correction or a bit of a drawdown, I will buy some Bitcoin. I think you have to give it to this asset that it is now a legitimate asset.

Why do you say that? Because of the price or the institutions buying it. What do you think has changed? I think it has established credibility as a store of value because the genius in my mind of Bitcoin that the others don't have is that it has this incredible mechanism of trying to mine the coins and every incremental coin gets harder and harder and more expensive to mine and they say they're

going to stop mining coins at 21 million. And people, the markets seem to believe that. And because if you think about the incremental supply coming on the market of Bitcoin, it's less than the supply of incremental gold. It it's less than the supply of incremental gold. It's way less than the supply of incremental dollars. It's less than the incremental supply of oil. So this is an asset class that has wide adoption across institutional investors. It now has a regulatory framework or regulators that are going to be friendly

as opposed to policing it, but trying to create an operating system that supports it. And it has an administration running the world's largest economy that is now gonna, has basically blessed it and said that we wanna get, we wanna get off our heels on this thing and onto our toes. So I would argue this is as legitimate an asset class right now as a lot of other shit.

I just wouldn't be surprised if it hits $100,000 in the next 30 days. Having said that, I'm not buying right now is a lot of other shit. I just wouldn't be surprised if it, if it hits a hundred thousand dollars in the next 30 days, having said that I'm not buying right now. I always do this and a lot of times I'm wrong. I'm going to wait for a correction or a drawdown before getting in. How about you Ed? I feel these crypto conversations, we just always go in circles. I mean, it's just, we always have this conversation again, right? Like it plummets and everyone's shitting on it and then it comes back and the moral questioning.

I mean, I guess the thing that I'm thinking right now is, one, this was predictable. I mean, if Trump wins, this is an asset class that is predicated on hype and on internet personalities and in large part on con men in a lot of cases. Trump is sort of the Holy Trinity of all those things. So you couldn't create a better mascot for crypto and now he's also going to be president. So Bitcoin's rallying, I expect it will rally even more. I think that a hundred thousand as a price target over the next 30 days is completely reasonable. I could easily see that happening. Once he's in there, I think it's going to be a

different story because then we're going to have to start asking the actual questions. He's talking about this strategic Bitcoin reserve. Well, what would that actually look like? What is the function of that reserve? Can he get it through Congress, which he needs to do? We're going to see pro crypto regulation. What does that actually mean? Bitcoin is legal everywhere. There's nothing preventing anyone from owning Bitcoin. You can put it in your 401k. We have institutions that are creating these Bitcoin ETFs. Like the world is pretty pro Bitcoin in general. So what will Trump do that actually makes it more functional or makes it more valuable? Those are sort of the questions that we're going to have to eventually ask once we get to January 20th.

I could imagine, you know, a year from now, or probably even sooner, once he's actually in there and he's talking about how this will actually work from a regulatory perspective, suddenly things are going to get a lot less exciting. And I'll bet you'll start to see crypto prices start to moderate. But we have this conversation a lot, and we'll talk a bit more about it with Josh Brown in a moment. Moving on to Shopify, amazing quarter, revenue increased 26% year over year. I have one thought that I'll table for now, but I'll just first get your reactions to Shopify's earnings if you have any. The company is really well run. I would argue this is the most interesting company out of Canada. And I love the story of Shopify, that Amazon had this approach where we use massive capital

to offer consumers and our suppliers a better deal. The majority of the revenues at a very low price flowed through to the retailer on their third-party platform, which now makes up more revenue than their actual retail site where they take license to the inventory. And then over time, when they ended up with 50% share and you kind of had to be on the platform if you wanted to grow your e-commerce, which every company has to do,

they started raising the rents. And one of the ways they do that and capture more and more shareholder value is they own the data. If you're on the platform, you really don't know much about the end consumer. They own the packaging. Shopify zigged while everyone was agging and said,

no, we like customers. We want to, if you're a small company selling surfboards in Delray Beach, we're going to let you control your packaging. We're going to make it cheap and easy for you to have a really good looking website. We're basically going to democratize e-commerce. And then what they've kind of done, it almost feels cloud-like. They flipped on a lot of interesting tools, AI tools, that appeal to bigger brands.

And so it feels like it's kind of elegantly adopted this AI slash cloud feel to what is effectively a web services or infrastructure. It's not even web services, it's an e-commerce infrastructure company. In sum, more power to them, and a great company doing really well. What are your thoughts? Yeah, so I just have one point about investor relations, which I find quite interesting here.

So one of the things I talk about in this Gen Z talk that I've given to companies about how to better get through to Gen Z, one of the points is just that investor relations is very outdated right now. And as the demographics of your investor base change, i.e. the age, your strategy in investor relations needs to change as well.

And the reality is that the way IR works today is just not suited for a 25 year old brain. These earnings calls and these press releases, they're boring. They're complex. They lack quick insight. Companies just need to radically rethink the way they do investor relations. And my prediction has been, I think I've made it on this podcast, that we're going to see a massive surge in sort of quick TikTok style earnings updates where the CEO will get in front of the camera, sort of run through what happened over the quarter.

Maybe you throw in some visuals to make it more interesting. That's exactly what Shopify did this quarter. So the president got on the mic. It was like a three and a half minute summary. Here's what happened. They blasted it across social media channels. This is something that Spotify has been doing too. I think that's the way to do investor relations in 2024.

And I think we're gonna see a lot of public company CEOs follow suit because I think everyone's realizing, you know, these press releases, these earnings calls, these decks, they're just outdated. Yeah, so my third book, Post-Corona, number four New York Times bestseller, was basically the big theme in there. It was the word dispersion,

and that is Amazon effectively said, okay, we're gonna cut out malls and skip, leapfrog this part of the supply chain and disperse retail and get it closer to the consumer. Netflix kind of skipped fiber optic cable and went to net neutrality or skipped Comcast or Time Warner and said, I don't need to go through the cable company.

I'm gonna get my own information and I'm gonna use this free cable company called the internet. This is really, well, you're talking about the same thing and that is there is an infrastructure around managing your communications around shareholders. There's investor relations, there's barons, there's CNBC, there's

analysts, there's investment banks, there's the SEC, and then CEOs are going, fuck that, I'm gonna get a phone, I'm gonna practice my lines, and I'm gonna walk around my office and say this is what happened this quarter. And I'm gonna go straight to the end consumer, specifically the retail consumer, who oftentimes is willing to pay a price that may seem irrational in the short run. And I can boost my earnings calls, right? I can, to a certain extent, Jensen Huang, selling out arenas is dispersion. He's not trying to get on CNBC or in the Wall Street Journal. It's like, I'm going straight to the end investor and not yet, not the institutional investor.

I'm going straight to the retail investor. Yeah, I got not the institutional investor. I'm going straight to the retail investor. Yeah, I agree with you. I think you nailed this prediction. I think you're gonna see what's gonna be hilarious is you're gonna find some old mainline companies with CEOs who brighten up a room by leaving it, trying to do something fun and interesting. And it's just, it's gonna be an SNL sketch.

Yeah, I can't wait for that. Here at Joe's piping, we had just a, we had a blowout quarter. Here's my Uncle Vito to talk about our earnings. It's going to be really bad, actually. People are going to realize that this is the way to do it. And they're going to like throw these seven-year-old dudes in front of a phone and get them to record a TikTok and it's going to be awful. They'll be like, is it recording?

I see a red light. to record a TikTok and it's going to be awful. They'll be like, is it recording? I see a red light. We'll be right back after the break for our conversation with Josh Brown. And if you're enjoying the show so far and you haven't subscribed, be sure to give Profty Markets a follow wherever you get your podcasts. Support for Profty Markets comes from Glean. AI can do a lot for us and it has the potential to help everyone be more efficient at work. Now, that's easy to say, but when it comes to actually achieving it, you need a tool that's dedicated to understanding the inner workings of your company. You need to be able to see all the data, people, processes, and

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Support for PropG Markets comes from Pilot. If you're a small business owner, you might have heard about a new requirement called the BOI filing, where companies have to report who their owners are. You might also be hearing about fines of $591 per day for non-compliance or $10,000 and jail time if you knowingly misfile. Now the goal of all of this is to help reduce money laundering, but it definitely creates extra work for you. For most businesses, the deadline to complete it is January 1st, and while you could go to the government website and read all 23,000 words to figure it out, you could also let pilot.com file it for you for free.

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That's pilot.com slash propg. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see? For the longest time we have these images of somebody sitting crouched over their computer with a hoodie on just kind of typing away in the middle of the night and honestly that's not what it is anymore. That's Ian Mitchell, a banker turned fraud fighter. These days online scams

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And so once we understand the magnitude of this problem, we can protect people better. One challenge that fraud fighters like Ian face is that scam victims sometimes feel too ashamed to discuss what happened to them. But Ian says, one of our best defenses is simple. We need to talk to each other. We need to have those awkward conversations around what do you do if you have text messages you don't recognize? What do you do if you start getting asked to send information that's more sensitive?

Even my own father fell victim to a thank goodness a smaller dollar scam but he fell victim and we have these conversations all the time. So we are all at risk and we all need to work together to protect each other. Learn more about how to protect yourself at vox.com slash zelle. And when using digital payment platforms, remember to only send money to people you know and trust. Welcome back. Josh Brown, CEO and Co-Founder of Ritholtz Wealth Management Welcome back. Here's our conversation with Josh Brown, co-founder and CEO of Ritholtz Wealth Management. Josh, thank you very much for joining us. It's so great to be back.

So we're just off mic saying that you are a little less political than we are, which is what we need right now. But we're going to start with just the stock market's reaction to Trump's win. And I'd love to just get through all of your reactions and let's, let's root this in not being political. As you said just earlier, let's just sort of evaluate what is actually going to happen here, which I trust you to do. So, basically every U S index rallied on the wind. So the S&P broke 6,000,

the Dow had its biggest weekly jump in a year, the NASDAQ rose. I think we all expected that. I'm not sure what all of us expected that it would rise this much though. So my question to you to start off here, has this very broad rally, has any of it come as a surprise to you? And off here, has this very broad rally, has any of it come

as a surprise to you? And if not, why not? So this has been a very atypical election year for stocks. Normally there's this pattern where volatility comes in September and October heading into an election, especially one in which you think there's going to be something contentious or something undecided. And we had the opposite. In the 30 days leading into election day, we had not a single example of two back to

back negative days for the S&P 500. If you think back to the Wall Street consensus over the summer, it was, hey, everything's great right now, but look out. When we get closer to the election, volatility is going to spike. We actually went in with a VIX about 20. For those who are not fully aware of what the VIX is, it basically measures options activity, people who are buying puts, people who are selling calls, people who are preparing themselves for a market event within a 30 day window.

If you were really expecting a lot of volatility, you would have seen a higher VIX going into the election. The average is about 24 or 25 historically. So we had a below average VIX. We had no back to back daily sell offs in the S&P 500. And we basically had a rally that started sometime in the middle of August when it appeared that the negative payrolls data that scared everybody about a recession was a one-off due to the storm.

And as a result, it was very atypical versus what you would normally see. That was an interesting tell. The other thing I want to say about the backdrop here is record inflows to money market funds, record inflows to Treasury bond ETFs. We're talking about over six trillion dollars in money market funds, which is the investment account equivalent of cash, and we're talking about an environment where a lot of people were prepared for chaos and when that chaos didn't come they said, all right, well I have too much And we're talking about an environment where a lot of people were prepared for chaos. And when that chaos didn't come, they said, all right, well, I have too much cash.

What can I buy? So I don't think I was surprised. One of the interesting things historically about elections is it doesn't matter who wins. Investors exhale and they put money to work. They like the re-certainty, which I know is not a real word, but you go from, it's binary, it's flipping a switch. The Tuesday morning of election day, you have a lot of uncertainty sometimes, and then by Tuesday night, you have certainty, and we saw the same thing happen in 2016.

We saw a rally when Biden won. We have seen this throughout history, so it's not surprising at all to people who are students of the market. So it sounds like the certainty is one thing. And I would imagine in your view and probably in Wall Street's view, that also translates to this election or the result of this election was not contested. It was a clear winner and we didn't have issues with ballot boxes and fraud and any of these questions that would have caused some instability.

I just want to confirm that's kind of what you're getting out there with the certainty as well as the win. Yeah. And it's unclear that if she had won the popular vote and the electoral college, that we would have had the same amount of certainty as we had this time, because it's very unlikely that he would have placed a concession call to her within 24 hours. I think we can be pretty certain that he wouldn't have conceded. Yeah.

So it's, I mean, look, you really have to put your feelings aside. Stocks care about earnings and interest rates. And we already were rallying going into this election and we didn't know who would win. What does that tell you? What does that tell you? We were hearing it's a toss, a coin toss and the market was rallying anyway. So what, what the stock market really wants is not necessarily

Trump or Harris or this policy or that policy. The stock market part, I shouldn't anthropomorphize the stock market. People in the stock market want an answer and whatever the answer is we learn to live with it. We learn to make the best of it and that's what we got. Guys there was a five-week period in 2000 where we didn't know if the president was going to be George W. Bush or Al Gore. And I know it sounds weird, but the worst that Dow Jones did in that environment was negative 5%. We didn't get a concession speech in 2020 from Trump to Biden, and Trump wanted to litigate the election. And we had that chaotic, I don't know, 10 week

period into year end, eight week period into year end. And the S&P 500 actually rallied 12% from election night into the inauguration. Did you know that stocks went up on January 6th? I bet you didn't. Okay. So what I'm trying to get across to the listeners who aren't familiar with the history, stocks rallied after JFK was shot. We're not emotional on Wall Street about our policy wants and needs.

It's about earnings and interest rates. So here's the big picture. Earnings are rising and interest rates are falling. You don't need to know in advance who wins the White House in that environment. Josh, always good to see you. So I'm just, I think it's incredible how prescient the market has been. You said, you pointed out that it was rallying. I think it's because the markets correctly predicted and felt that Trump win and thought if corporate taxes are

going to go anywhere, they're going to go down and earnings are going to go up. Meanwhile, the credit markets see him as more inflationary and they started, the chief investment officer of Millennium was the first person to call me and say he's won. And I said, why do you say that? Because the tenure is spiking, the credit markets know he's about to be elected. Also, the markets are saying, as far as I can tell, that they don't believe the tariffs are going to be anywhere near as bad as he is threatening. Your thoughts on tariffs and if the market is getting it right, and if so, does that

or if these, if these tariffs goes through, I think would be disastrous for a lot of companies, but the market is saying it doesn't believe it. What are your thoughts? I don't know if I fully agree that the evidence supports this idea that the spike in yields is because of fear over inflation. It might be. I think we don't have enough. It might just be because of a higher expected economic growth scenario, but we're going to find out together.

The great thing about markets is that debates are irrelevant because there's a scoreboard and the scoreboard is what ends up happening to prices. Scott, I think you're right though. I think the markets did correctly price in that it was going to be clear in Trump's favor. And I think as evidence of that, this parallel story away from stocks and bonds with polymarket is really, to me, one of the biggest stories of this election cycle. And it look, it could have gotten it wrong, and I wouldn't be saying any of the things I'm about to say. But there is power in markets and people putting their money on the line, rather than taking polls. And until now, this has really been something they've had in Europe and not in the United States.

And this is the first election where people are really taking notice of PredictIt and really taking notice of PolyMarket and Caoshi and all of these prediction marketplaces. And I think what you're gonna see in the midterms is an almost slavish devotion to what these betting markets are saying. I think the betting markets were so incredibly accurate on a state by state basis that everyone who follows this stuff is now sitting up and giving these platforms a lot more respect.

If you remember the narrative the day before the election, people said, myself included, well, maybe we shouldn't put too much credence in a marketplace that's really just young men. Women are not betting on elections in any real numbers. This is dudes. So maybe they are over indexing to Trump because that's what they want to have happen. I thought that too. I don't think that today we talk to investors about our investment philosophy. We have a deck and one of the slides in our deck, um, is the concept of the jelly bean jar. The predictions are going to be much more accurate with thousands of people betting how many jelly beans are in the jar than one expert who happens to know

a lot about jars and or confection. This is not materially different. Now polymarkets got the user base overseas. We're not US hedge funds in there. There are not US retail people that are making investments in a prediction. So the one thing that you could have said is maybe that's where it's over indexing, where it's not picking up enough of the actual electorate. That will change.

So Polymarket, interestingly, is based in Soho in Manhattan, but all of its users are overseas. It sounds like a crypto exchange. But they will, I think you're going to see a lot of evolution in these betting platforms. And by the way, when they all agree, like it's a good sign for me, it's time to shut the sun, the shut the fuck up and pay attention to what the market is saying. It doesn't mean markets can't get things wrong.

I think what it means is it's probably a better system than somebody making phone calls to people's landlines. What trends do you see? I mean, so certain companies were obvious winners. It feels like Tesla was a big winner. You think? Yeah. $119 million to get a $15 billion pop in his wealth. He's added 30 billion to his net worth. Oh, it's not 30. There you go. 30X, that's the best trade of 2024, right? So what, after the sugar high or the obvious ones, like alternative energy is not doing well, oil and gas doing well, some smaller companies that supposedly are immune to tariffs doing really well, those exposed to tariffs are doing marginally, or I would say somewhat or modestly negative.

If you look out over the next four years, are there any sectors that you think people aren't registering or haven't acknowledged how well or how poorly they're gonna do under a Trump administration? Yeah, so I think the biggest question is the hyperscalers. But I wanna get back to that in a second. The biggest reaction in the aftermath of the election, uh,

was in Bitcoin, the U S dollar, um, and small cap stocks. And if you look at the composition of the Russell 2000, the, the biggest winners within the Russell 2000 were regional and small banks. Um, that sort of makes sense to me. When you saw the 10-year yield explode, even though it's walked itself back a little bit, what that speaks to is higher net interest margins and just a bigger lending spread and a belief in a stronger economy.

Those stocks had been beaten up for like three years now. So relative to every other type of stock. So I understand that part of it. We saw huge rallies in industrial companies. I understand that part of it too. Um, oil services stocks are the most interesting to me. I have a personal ownership in a company called Baker Hughes that broke out in a massive way. Um, we also saw the travel stocks explode, which was really interesting.

Marriott, Delta, some of the bigger names in consumer discretionary or the travel companies. So the reaction was like really widespread. Notably, gold fell, which I found interesting. I don't have a theory as to why, but it diverged from Bitcoin. Gold has been a huge performer all year It's actually performed as well as the S&P 500 which doesn't happen every every day But gold fell in in the aftermath of the election result The other thing I would the other thing I would get back to is is the hyperscalers

It's unclear Whether or not JD Vance claiming that he's supportive of the work being done by Lena Kahn, who is a Biden appointee running the FTC. It's unclear if that JD Vance imprimatur is going to be enough to dissuade Trump from getting rid of everything related to Biden that he possibly can. She doesn't have a lot of friends on the right, obviously. And the only thing I can think of is JD Vance may be telling Trump, no, actually this is good.

We want to keep the pressure on these guys for the next four years. We want to give them another assailant out here that they can expend their time and energy fighting against. So that, that was kind of like an interesting idea. I don't know where the relationship between Zuckerberg and Trump stands. It was not great in the first term. I think we all know Bezos is not the CEO of Amazon, but still going to always be the first thing that Trump associates with Bezos.

So we don't know where they stand 100%. We know that there was dissatisfaction on the part of the Trump campaign with the treatment of search results on Google. It's an open question, how they'll be dealt with. The one thing I think people feel good about is that Tim Cook knows how to handle Donald Trump. Tim Cook went to the White House, he did the photo ops, he did all the things that he had to do, and Apple got itself an exclusion from the tariffs that would have really harmed

the making of phones overseas. I'm guessing Tim Cook has a playbook for this, and I'm guessing investors are willing to give him the benefit of the doubt that he will skate through another four years of Trump unskilled. One of the other winners, we were just mentioning there are small cap stocks. So the Russell 2000 jumped nearly 6% right after that was the biggest reaction. Biggest reaction. Um, I'd love to get your take on one, why exactly that's happening right now, and two, whether you think this will be a long-term trend.

Because what we've seen over the past several years is that kind of the rich get richer among the stock market at least. It's the big players, the mag sevens that have been ripping and the small cap stocks have been kind of left behind. I wonder if we're going to see a reversal of that trend. I won't bury the lead. It's not going to be a long term trend. The history of small caps versus large caps is one of oscillation.

They have these periods where small caps outperform followed by these very predictable periods where they underperform and then the cycle begins anew and that'll, and this will be no different. We saw a small caps rally in 2017 as part of the quote unquote Trump trade. There is an idea on the part of asset allocators that high tariffs represent an opportunity for smaller businesses that are more domestically focused. Famously, the S and P 500 derives, I think, double the revenue from overseas than the Russell 2000 does.

So there's an idea that these are companies that will largely be unharmed by tariffs and might even be helped if they've got onshore production. I don't really believe in that. I think that's people taking a narrative and forcing it into an investment strategy. And I think if we really have 20% tariffs around the world, 60% tariffs on China, I think small companies will be equally susceptible just as the larger cap companies are. So I don't think the infatuation with small caps will. Why? I, because I buy that narrative when I, when I heard it too.

I mean, if you're more domestically focused, if your supply chains aren't in America, you're not paying the tax. Why, why is that not compelling to you? Well, look at 2018 when the tariffs first went on, we had two in one year. We had two 20% little mini crashes in the S&P 500. And ask yourself, how did small caps do in those moments? They did not hold up. They were not a safe haven. And people were not making this calculation with their money. Oh, I'm going to sell S&P stocks and buy these little pieces of shit. It's just, it's not the way money managers

actually react with the dollars that are entrusted to them. So I don't, I, if we didn't see it, then we're not going to see it now. That's one too, who are the customers of small cap companies, large cap companies. So if, so large cap companies are struggling because of tariffs, they're going to spend less money and, uh, they're going to buy less products from the smaller publishers. So it's not going to play out that way, but I understand the rally. It's important to point out. So the Russell 2000 just takes the 2000 largest market cap small companies and it's a little

bit random of what's in there. The S and P 600 is a better index to follow. So it's just a competing version of small caps. They're all profitable to get into the S and P 600. So you have less little tiny biotech companies with no earnings. You have a higher amount of industrials and financials in that index. That's kind of, I think, what you want to watch. If you all of a sudden get into a tariff situation and you hear CEOs of those companies coming on conference calls and crowing about what a windfall they're getting because of tariffs, I'll be wrong. I'm telling you right now in November of 2024, that is not going to be what we're saying in November of 2025, that is not gonna be what we're saying in November of 2025.

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Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. you get your podcasts. Published by Capital Client Group, Inc. Support for this show is brought to you by Nissan Kicks. It's never too late to try new things, and it's never too late to reinvent yourself. The all-new reimagined Nissan Kicks is the city-sized crossover vehicle that's been completely revamped for urban adventure. From the design and styling to the performance, all the way to features like the Bose Personal Plus Sound System, you can get closer to everything

you love about city life in the all-new reimagined Nissan Kicks. Learn more at www.nisonusa.com slash 2025 dash Kicks. Available feature, Bose is a registered trademark of the Bose Corporation. Available feature, Bose is a registered trademark of the Bose Corporation. Support for this episode comes from AWS. AWS Generative AI gives you the tools to power your business forward with the security and speed of the world's most experienced cloud. We're back with ProfitG Markets. I just want to pivot to crypto, which we briefly mentioned there. Bitcoin has hit an all-time high. It broke past $80,000 for the first time ever over the weekend.

The expectation is just laxer, looser, nicer regulation. But Trump has also spoken about building this national strategic Bitcoin stockpile. That's exactly the words he used when he gets into office. And with my, from my conversations with crypto bulls, that's really what they seem to be most focused on. Your view on Bitcoin right now and is this huge rally warranted, do you think? I don't know if it's warranted because I don't know how to judge where the price should be. There are no cash flows.

So I can't say, oh, here it's cheap, here it's expensive. I try to avoid doing that. The only question that matters with Bitcoin is are more people going to want to own it or less people six months from today? Nothing else really matters. And when you think of it on that basis, what schmuck would have sold it at 70,000

after on the heels of that electoral outcome? Selling it to do what? Like literally, what are you doing with the money? I hope you're eating with it because we basically have a Bitcoin president coming into power who has largely been financed by Bitcoin billionaires. They have his full attention and just instinctively, he doesn't have to understand anything about how blockchain works. All he has to understand is there are rules and these people are against the rules. Well, I'm with the people who are against the rules because they're rich and they flatter me and they're going to support me in the midterms. They got rid of Sherrod Brown in Ohio. He's just the

senior person on the Senate Banking Committee. They threw him out. It didn't even cost that much. I think it was like 20, $30 million. So he's not stupid. He understands that he should be listening to the crypto people and he's going to. And I think the tacit support on Wall Street and amongst institutions, Larry Fink at BlackRock,

that's gonna turn into full-fledged order for the age of digital assets. And if the government decides, they have 211,000 Bitcoins right now, federal government, if they decide that this is a new reserve asset, well, what do you think central banks all over the world are going to have to do? What do you think foreign treasuries are going to have to do? They're going to have to pretty much fall in line.

If we start stockpiling Bitcoin, that's of course what everyone else is going to start doing. But then they'll start getting rid of their dollars, right? Maybe. I think the bigger thing to think about, right? At this point in time, who would sell it? Who would sell it right now? Understanding that this might be a thing that the federal government decides

they want to buy more of. So the people within the Trump campaign are saying a million Bitcoin. I have no idea if that's realistic. If it is, uh, the price is not going to be the price is not going to be sub $100,000 for very much longer. And I think everyone understands that. I also want you guys to think about the chase, because if and when Bitcoin breaks $100,000, every asset allocator in the United States that's ignored it or avoided it or talked or talked down about it really is going to be forced to rethink whether or not they should do what

the US government is now doing. So this is one of the most incredible stories in the history of markets. Three years ago, they were arresting people for dealing in crypto. And now the U S government may end up becoming one of the biggest regular purchasers of, of, of crypto. And, uh, I don't think anyone in the fall of 2022, when they were arresting, uh, Sam Bankman freed, could have pictured a one 80 to this extent taking place just a couple of years later, distinctive Trump's presidency.

Are there any sectors you would stay away from where you think that these things are overvalued or they're gonna face macro headwinds? If Elon Musk weren't in a position to pull his chair up to the desk in the Oval Office, which, so I'm telling people that I think we're going into a new robber baron age. The parallels between what's happening now and the late 1800s should not be lost on

anyone. We're probably going into a robber baron age where very very smart very wealthy people have the most influence. Their influence is going to trump the evangelicals, no pun intended, or maybe pun intended. Their influence is going to Trump the evangelicals, no pun intended, or maybe pun intended, their influence is going to Trump the anti-China wing of, of Republican politics. They are, I think, going to be at the center of all of the decision-making going forward. I would have ordinarily answered your question, Scott, by saying solar and EVs. But again, Elon Musk owns a solar business and an EV business.

And I just don't think it's going to be as simple as we're for oil and we hate alternative energy sources. I just, I don't think it'll go that way. So I'm not sure about any industry in particular, other than media. about any industry in particular other than media media companies are well and truly fucked for the foreseeable future these fantasies that all of a sudden we're gonna have mergers and

and and Warner Brothers is gonna be able to find a deal and You know Netflix is gonna start buying Lionsgate and none of that's gonna happen Because I don't think any traditional media companies will have paid, uh, enough fealty to Donald Trump personally. We know he's willing to weaponize these agencies, uh, against people who he views as being against him. So I, I, like, if I were trying to think of an industry, this is smaller than a sector, you have sectors and then you have industries or sub industries. If I were trying

to think of a sub industry that could possibly be the most flat on its back right now in terms of what's about to happen, I would say traditional and or mainstream media. Um, this is not going to be a repeat of 2016 where everybody subscribes in the New York times. I think there is just a, a fatigue about anti-Trump news. I, in 2016, everybody wanted to subscribe to the Washington post and the times because they wanted to fight back and they were, and they wanted to hear every outrageous story and they wanted to be armed with information.

I have to tell you guys, as somebody who walks outside of my door and talks to people, nobody wants that this time. Don't you think with Trump though, being seen as sort of anti-regulation or not emboldening, probably they have to see the DOJ, even if they lead, leave Lina Conn in position. Don't you see a lot of mergers and consolidation coming down in media, given the stressors you're talking about?

Where are they? They've been on hold. They've been on hold for a while. And it's unclear who is going to acquire these assets. Well, you don't see a Warner Brothers doing a stock deal for some of the other smaller players or something like that? I think they would have liked to have merged with Paramount, but they're not in a financial position where their own shareholders would think it makes sense.

So, and, and who is big enough, who is big enough to absorb the $40 billion in debt sitting on the books at Warner Brothers? Almost no one. So they, they have, I think, done a good job at repaying debt because I think that number was closer to 60 at one point. But that's not necessarily going to change the calculus for who wants to own that stock. You don't have the growth. You've got hit or miss box office. Look, I love $8 stocks.

Okay, I would love to say that's the buy. It's so hated. It's so it's, it's like, it's been so ostracized from people's portfolios that it almost might as well not exist. Normally, that's a great setup. I just think this fantasy where the Republicans are going to allow I just think this fantasy where the Republicans are going to allow $3 trillion in M&A, which is what we had in 2021. This year, we're about $1.6 trillion in M&A. So this fantasy that next year, we're going back to $3 trillion and all these media companies are going to find dance partners, I don't think it's going to work out. I reserve the right to change my mind, but for right now, I just can't see, I don't think it's going to work out. I reserve the rights to change my mind, but for right now, I just can't picture it. I do want to just go back to this robber baron era that you just brought up,

um, which I totally agree with. Um, I think it would be a very good bet to bet on Donald Trump's friends right now. Do you have any larger economic concerns about this though? Well, I think we've had periods before where business interests had outside influence on the White House. I really don't think it's a new concept in American history. And I think of it as kind of a pendulum. And it could be a while before it swings away. I think of it as kind of a pendulum and it could be a while before it swings away. I think the next four years what you're going to see is the rich get richer. I think you're going to see an explosion in demand for people who do what we do, which is wealth management.

I think more people are going to come into the wealth management industry looking for help than have ever come before. Keep in mind, this is coinciding with a just gigantic wealth transfer from the boomers to Gen X and millennials. And I really think that we're just in an era where smart people are going to stop worrying about all the headlines every day and all the outrage and every stupid joke that every stand-up comic tells in front of a mic. If that's how you plan to spend the next four years, I just would say just maybe rethink it.

Spend the next four years, put your head down, make fucking money, focus on how you can improve your own life, and the pendulum will swing back. And if you're horrified by some of the things like the overturning of Roe v Wade, or the way we're going to see very cruel deportations of immigrants, like if you're horrified by those things, and rightly you should be, the wealthier you are, the more opportunity you will have to do something about it. Screaming on Twitter, crying into a TikTok, all that does is make the people on the other side feel even more emboldened. They love the whining and crying. They're feeding on it. It's their energy source. So if you are virulently anti-Trump, and I know people who are, of course,

I live in New York, if that's what you're about, my advice is arm yourself with money. It is the only way to make change. You don't have to like that what I'm saying is true. You just have to accept it because everyone else has. Josh Brown is a co-founder and CEO of Ritholz Wealth Management, a New York city-based investment advisory firm managing more than 4 billion in assets. Five, five, five, five. Bio's outdated.

Five billion in assets. Did I get tariffed? Wait, hold on. Wait, I just got an update. It's 5.2 in assets for individuals, corporate retirement plans and foundations. Josh, these are always hugely popular segments with us. We really appreciate your time. I love chatting with you guys.

Thank you so much for having me. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss, Mia Silverio is our research lead, Jessica Lang is our research associate, Drew Burrows is our technical director, and Catherine Dillon is our executive producer.

Thank you for listening to ProfG Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on Markets on Monday. You held me in kind reunion As the world turns And the dark flies In love, love, love, love Support for this show is brought to you by Nissan Kicks. It's never too late to try new things, and it's never too late to reinvent yourself.

The all-new reimagined Nissan Kicks is the city-sized crossover vehicle that's been completely revamped for urban adventure. From the design and styling to the performance, all the way to features like the Bose Personal Plus Sound System, you can get closer to everything you love about city life in the all-new, reimagined Nissan Kicks. Learn more at www.nisonusa.com slash 2025 dash kicks. Available feature, Bose is a registered trademark of the Bose Corporation. Support for this episode comes from AWS.

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