The Compound and Friends - Entering Year Two of the Bull Market with Tom Lee

Episode Date: October 20, 2023

On episode 114 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Tom Lee to discuss: earnings, the liquidity starved bull market, economic indicators, the Fed's next move, housing, and much more! This episode is brought to you by Kraneshares. To learn more about their Global Luxury Index ETF (KLXY), visit: https://kraneshares.com/klxy/?adsource=wealthcast Sign up for a free 30 day trial of FS Insight at: https://bit.ly/thecompound-fsinsight Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Redholz Wealth Management. This podcast is for informational purposes only and should not be relied upon Today's episode of the Compound and Friends with Tom Lee is brought to you by Craneshare. compound, and friends with Tom Lee is brought to you by CraneShares. CraneShares has a global luxury index ETF, ticker is KLXY. Not to step on too much of the material of today's show, but Josh is in Las Vegas and oh my God, he'll see you have a story about luxury. I don't know what luxury is. This is like ultra luxury. I don't know, just crazy stuff. You know, the Fed could tighten rates all they want. People don't stop spending. The global luxury market is projected to reach $570 to $615 billion by 2030. Unbelievable. It's more than double its size in 2020. So KLXY gives you access to global luxury brands such as LVMH, Hermes, Ferrari, Pernod Ricard. I doubt I'm getting that right, but hey,

that one too. To learn more, hit the link in the show notes. Ladies and gentlemen, welcome to the Compound and Friends. With me today, Michael Batnick. I am actually, we're all remote, so let's start with that. So this is not the normal format that we tape the show, but we have a very special guest, fan favorite. You guys go crazy every time he comes on the show. And with good reason. Tom Lee is a managing partner and head of research at Fundstrat Global Advisors. Tom has over 25 years of experience in equity research and has been ranked by Institutional

Investor every year since 1998. Tom, welcome to the show. We're so happy to have you. Yeah, great to see you guys. Good to be back. Always a treat when you're here. I feel like you're here at a fairly momentous time. We have, I don't know, call it 10 weeks into the end of the year, give or take. Somehow it's already almost 2024. There's a lot going on right now. I wanted to, before we get into it, I wanted to mention that you are offering fans and viewers of this show a free 30-day trial of FS Insight. Let me just give people some idea of what's included in that. The trial provides access to all of Tom's recent notes, stock lists, Tom's daily macro minute videos, the FS Insight app, and a full library of research. This can be helpful as Tom shares references charts, recent market calls, granny shot stocks, and his different macro thesis reports. Tom, that's very generous of you. 30-day free trial for everybody?

Yeah. I mean, hopefully those will be productive 30 days for folks. Yeah. Well, I guess specifically over the next 30 days. Let's talk about what's going on right now. Michael, you have a heat map in front of us. What are we looking at here? Yeah, I do have a heat map. So it's Wednesday, October 18th, and it was a pretty bloody day on Wall Street. The S&P was down 1.3%. But before we get into today and zoom out and talk about where we are in relation to the market bottom in October 2022, Tom, we had Jeremy Grantham on the show a couple of weeks back, and he was a phenomenal guest. And he doesn't like the moniker being impermeable. And there's been... I'm sorry.

Excuse me. Impermeable. There's been many times over the course of his 60 year career on wall street where he was not bearish. Um, and I would imagine that similarly, you don't love the term cause I know people call you a permable. What do you say to people that call you that? I know it's not the truth, but I'd love to hear it in your own words. Uh, well, I mean, I think, uh, we've heard a lot of people use that word this year, especially. I think it ends up being a cheap shot. I think it's kind of reflective of someone's personal affront at the market, because I think the stock market has risen this year and most people's response is, oh, well, hey,

you know what? The guys who got it right, they're just permables. That's the only reason they got it right. And so I think people need to be, maybe look at their performance or their paper or the mirror and realize it's really a cheap shot to say that about somebody. And as you know, our work is evidence-based. It's kept us constructive for really most of the last, whatever, since 2009. I was going to say, it's hardly an insult because let's say you owned it. Let's say you said, yes, I am a perma bull. And here's what's happened since I've been perma bullish over the last, you know, whatever, however many years you want to use.

I know you don't love the term and people don't like to be called perma bullish over the last, you know, whatever, however many years you want to use. I know you don't love the term and people don't like to be called perma anything, but if you were going to be called something, perma bull would have been somebody who's been mostly right for the last decade and change. Yeah. And it's probably better than perma wrong. Yeah. Oh yeah. That's what they call me. For the last, for the last 10 years or 15 years, excuse me, the S&P has compounded at 13% and the NASDAQ 118%. So it's been a pretty good decade to be bullish, to say the least. All right. So Tom, as I said to the viewers, we're recording this on Wednesday, October 18th. And I think the story of the day was at a macro level, yields across every area of the curve pushing higher to new cycle highs,

stocks not responding very positively to that, to say the least. Where do you think we are? Where do you think we are today? Not to get too day-to-day, but where do you see things right now? Well, I mean, today's a reminder that the stock market is pretty uncertain, you know, and people hold positions very lightly. And I think, as you're correctly pointing out, interest rates is this sort of singular narrative at the moment. And I think people are really uncomfortable that rates are higher. You know, if you ask me my perspective, I mean, it's not great to see yields pushing up like this.

But at the same time, history shows that a period of rising interest rates does not mean P.E. goes down. At the same time, history shows that a period of rising interest rates does not mean PE goes down. And in fact, we've got a lot of periods in history that rates have risen continuously like this and stocks have done quite well. So I think it's uncomfortable short term, but I don't think it really changes the fact that stocks can do quite well. Yeah.

So take it a step back. It's been a year. A year ago this week, the stock market bottom. Josh, you have some thoughts on where we've come from? I guess I want to hear from Tom, really. It's not been a great start to the new bull market. If we say that the current one began at the bottom a year ago last week, what is true is that the S&P 500 is up about 22% from then. Most people still have not accepted that we're actually in a new bull market yet.

There's a lot of qualifiers and we'll get to those shortly. But the big thing is that we're still below the January 2022 high. And a majority of stocks still look like they're in their own individual bear markets. So the two standouts off the low of a year ago, tech and communications, one is up 49%, the other is up 44%. This is where a lot of S&P market cap lives, but it's mostly a magnificent seven story. And then there's another layer beneath those stocks that have done well. But a lot of people assume there would be a leadership switch when we bought them last October, start a new bull market. There wasn't. It's the same old names that have been rallying for a long time. So I wanted to get your perspective on that.

your perspective on that. Yeah. I mean, I think those are all fair observations. I mean, I guess I'm going to start with just pointing out that this would be one of the longest bear market head fakes, if ever, if we're 365 days into a rally like this, and so close to the prior highs, and so close to a Fed making a change. I think the stock market has been completely deprived of liquidity for the last year. If someone overlaid S&P price versus equity inflows, we know that everyone's been a seller of equities and the stock market has managed to actually produce gains. I think that that is probably the bigger test. And when we look at the sector weights, tech actually is coming out of an earnings recession now.

So I think the price move is now being supported by earnings. And I think the one group that's beginning to show signs of life is the financials, which, I mean, if you think about it, financials had the rug pulled out of them, you know, rates jumped and deposits fled. And they have whole to market losses and they have commercial real estate. And, you know, the group is starting to show signs of life. So to me, I think the bull market seems like it's actually getting stronger. And eventually, money comes back into equities. And I think that's what propels Mark.

The second year could be really quite impressive. But you're right. I think it's a miracle that we're up 22% despite huge, huge outflows. Tom, I'm glad you said that. Can't you make the case? So I'm looking at the equal weight index, for example. Tom, I'm glad you said that. Can you make the case? So I'm looking at the equal weight index, for example. The RRSP is flat going back to the spring of 2021. Well, okay. Can you make the argument that the fact that the market, now, of course, some stocks better than others,

have digested 500 plus basis points of Fed tightening, of them stepping away from the market, and the market hasn't completely fallen apart given everything that's been thrown at it, isn't that pretty remarkable? Yeah. I mean, to me, that's the unkillability, right? We've thrown a lot of things at businesses. We had the COVID shut down, and then we had the supply chain bullwhip effect. We've had, as you point out, a huge, I mean, just a massive jump in cost of debt and cost of capital and associate consumer shock. And we had an oil shock last year. And S&P earnings are still recovering.

I think it really speaks to how much better these companies have been and prepared for this cycle. And it's almost the same reason why, well, if that's what you've thrown at it, and this speaks to how much better these companies have been and prepared for this cycle. It's almost the same reason why, well, if that's what you've thrown at it and this is where PE shakes out, shouldn't PE be drifting higher from here? You mentioned the second year of the bull market, which if we're fortunate, we'll get one. I want to share something from Ari Wald. Ari is a technician at Oppenheimer, and he's talking about following

a major low, the second year is typically positive. So I think the thing to point out would be he has year two of bull markets after a major low positive in 19 out of 22 cycles, which is 86% of the time. There were three years where that was not true, 1932, 1947, and 1960. He also mentions, despite the fact this is a fairly weak first year of a bull market, it doesn't seem to matter to what the returns would be in year two or whether or not we would even have a year two of a bull market. How do you, how do you think about, oh, and by, and by the way, we have this, which Mike, which chart is this? You're looking at it. Okay. All right. So this, this just gives

you an idea of what year two typically looks like. And there's really no relationship between how strong or how weak the bounces off that low in year one. How do you think about going into a second year of the bull market? And what are some of the things that we should keep an eye on to feel confident that it's continuing? If I was to sort of think of it as how a skeptical investor is going to look at next year, I think there's so many things that flip from negative to positive. The first is really the trajectory of inflation. I mean, we've seen a huge drop in inflation in the past year. And yet when we talk to those skeptical, they're like, well, hey, the first, the drop from 10 to 3.5 was easy. But going from 3.5 to under 3 is going to be really hard work.

So inflation is sticky. I don't know. That's just someone's opinion. We'll see. We've done a lot of work on inflation. I mean, two-thirds of inflation is essentially housing and cars. And I sure don't think those are sticky. So I think next year that flips positive.

And the second is what the Fed will do. And there's two parts to that, because we know Fed has two tools they're using. One is actual rates. And I think they're going to be, well, I think the highest probability is that they've already finished hiking. And next year, that could be cuts if inflation tracks the way we think. But the second part is, there's a lot of people that think it's now the word of the Almighty that interest rates are higher for longer because the Fed has deemed it so. As you know, that's a communication tool. That's Fed's imagination of where rates need to be. Yeah, they could change their mind.

Exactly. Yet so many people take it set in stone, and that could be a huge surprise. I think rates, you know, Mark Newton thinks you could even be in the three and a half-ish next year on the 10-year yield, and that would be PE expanding. Yeah. 10-year yield, and that would be PE expanding. Yeah. And then other things that are positive next year is Europe is what broke, and China is what broke from monetary policy hikes, and they could be coming out of this as well. And on the geopolitical side, obviously, I don't know what's going to happen, but it

doesn't have to be widening and worsening next year. That's a little bit unknown. It doesn't have to be widening and worsening next year. That's a little bit unknown. And then fourth is investors, if the first three things happen, they're going to move money back into equity. So I think Ari's point is correct. Next year should be even stronger than this year for those reasons. All right, so getting back to the idea that this has not exactly been a rip-worn bull

market, which, again, we didn't even mention the regional bank disaster, which impacted the market for a whole 10 days, if that. So a couple of charts from Urien Timmer. He tweeted this at the end of September. If stocks entered a new bull market last October, you never know by looking at the small caps. In fact, this would be the weakest small cap start ever for new bowl, which is not good considering that small caps normally perform outperform, excuse me, on the way up. And then he also shows the S and P 500. The black line is the rally to date. The, the, the blue line is the

average. Um, do you, does it, how do you think about something like this? Uh, well, I think it's, you think about something like this? Well, I think there's two ways to think of, because the chart is correct. One is to say that, well, if it's not a sample, like so small caps aren't doing well, then this isn't a bull market. But I think the other way to view this is, well, small caps are really only benefiting if there are actually people buying stocks. So I think that their weak bounce is consistent with the idea that this has been a really liquidity-starved bull market. Michael, I don't remember all the specifics of 2009, but I do know when I was at JP Morgan, I think for the first two years, people had given me many reasons to argue why that wasn't even the start of a bull

market, that it was all a head fake. And it's very similar. People would have different charts about how like, oh, well, EM isn't doing this, or hey, your leadership is coming from the wrong groups, or hey, why are flows doing what they're doing? And I think in each case, people were arguing why the move from 2009 all the way through 2011 was actually not really a bull market. It really wasn't until maybe 2012 that people acknowledged that the bottom, in fact, was in.

And then two points on that. You mentioned the potential head fake. I remember, I don't know, I think it was the fall of last year. There had never been a bear market rally that retraces 50% of the previous loss and then went on to make new lows. I think Ryan Dietrich was tweeting that, Yuri and Tim, a lot of people were talking about that. And nobody believed that October 2022 was the bottom. Josh and I were in a room full of people. Raise your hand if you think a recession is coming. Every hand went up. Raise your hand if you think October was the bottom. No hands went up. Nobody believed that that rally was anything other than a bear in disguise. And so even though we haven't gotten the outperformance that you've

seen from small caps historically, well, it makes sense. These are the companies that are most sensitive to interest rate hikes. The S&P, 90% of the debt is long-term sense. These are the companies that are most sensitive to interest rate hikes. The S&P, 90% of the debt is long-term fixed. These companies have a lot of debt that's maturing over the next one, two, three years. So it does make sense that they're not outperforming to the way that they did in the past. One thing I want to mention, which I think is pretty interesting in terms of the current market environment, in terms of small caps perhaps behaving the way that you would expect, given where interest rates are, and Thomas, you mentioned, given the fact that equities have had persistent outflows.

If you look at the ARK Innovation ETF, which is a proxy for Goldman Sachs Unprofitable Tech Index, if you look at that divided by the Qs, that actually hit a new cycle low today, which is pretty remarkable considering the beating that's already taken. Yeah. I mean, that chart sort of speaks to, I'm looking at it now, I mean, it kind of speaks to me of many things. One is it shows you investors aren't embracing innovation either, speculative growth or speculative ideas. aren't embracing innovation either. Speculative growth or speculative ideas. You know, crypto kind of falls in that same category as well. But, you know, it has been a narrow market. I mean, it's kind of hard not to acknowledge that. But the things that have

outperformed to me have been logical leaders, too. So I don't know if I would say in 12 months too. So I don't know if I would say in 12 months, the ARK fund won't find a bid. But I think in this environment of caution by companies and consumers and businesses, to me, it's understandable why it's been a narrow market. Maybe investors are hiding out in some of the high-quality, predictable names. Apple is pretty insulated from any and all exogenous impacts. But you've got a chart here, the plurality of clients bear since 2021. And let's be honest, for good reason. That's right. I think if someone was just a narrative-based investor, they could list a wall of worry and a reason to be skeptical. And as you know, I mean, I think, you know, there's many people are saying that this is

one of the most dangerous or worst macro environments they've seen in their lifetime. But I think we need some perspective. The one thing that makes looking at markets difficult is even if someone says that they're using their lifetime to look at the stock market, they're really not going back that far. I mean, let's say that the median age of a portfolio manager is in their mid-30s. And if you look at mutual funds, I think the median tenure of a lead fund manager is like nine years. That just means most people don't have that many cycles to look back upon.

And even if someone said, hey, look, I'm 70 years old. I've been doing this for 50 years. You know, if you go back 50 years, you're only going back to the 70s. So not a lot of folks actually have a living history of the entire history of the stock market. And things were pretty bad in the early, you know, in the early 1900s. And, and equity still did fine. How much do you use other investors or portfolio managers as a contrary signal? Is that like very important to your work or not important at all? It's actually very important, Josh. On the Fundstrat side, you know, we're communicating with hundreds of you guys just eloquently described, I mean, nobody really thinks things have changed since October of last year.

So I think many people are still in this view of, you know, we're in the midst of a pretty severe crisis. And I think so many actually have used the Fed adage, you know, don't fight the Fed. So as the Fed has pushed rates here, they aren't even going to turn constructive until the Fed is two cuts into a cutting cycle. Yeah. It's kind of weird to not wanting to get bullish until after the Fed already thinks it's gone too far with tightening and is starting to cut. It seems like, wait, you're bullish because the Fed might have to cut. Have you stopped to consider what might make the Fed think they need to cut?

Maybe that won't be bullish at that time whenever that is. But I do hear a lot of people, well, there's no cuts on the table for this year. All right. Does that necessarily have to be bad? Yes, that's right. And I think maybe the corollary I would just point out is I think many are viewing this as a classic business cycle of an overheated economy that the Fed has to break. I know the economy was running hot on inflation, but when we look at capital spending as a percentage of GDP or residential investment

as a percentage of GDP, typically the two sort of cycle levers, we weren't really overheated yet. In fact, as you know, there's a lot of aging infrastructure in the US and there's onshoring. So these are things that are actually enduring drivers. So I don't think the Fed was trying to break the business cycle as much as they were trying to slow inflation. Tom, Josh asked you about potential contrarian indicators. And a classic one is looking at how much investors have allocated to cash as a percentage of

their overall portfolio. And Bank of America is showing that that number is now at 15%. It's not quite as high as it was in February 2009. Things aren't quite that dire. In March 2020, that number got up to 15%. But I would argue that this chart is not meaningless, but maybe without the context of where rates are today, wouldn't you say that investors hiding out in cash, despite the great year that's been 2023, has been a rational decision? Yes and no. First of all, that's a great chart. And I kind of agree with the idea that,

look, if the cash stays in cash, then it doesn't mean anything. But if the cash is going to move back into stocks, it's a huge signal. I think people feel comfortable owning cash because they can earn 5% guaranteed this year, whereas they lost money in stocks last year. But they've had a huge opportunity cost this year because, hey, I'm a genius. I'm earning 5%, and the S&P is up 13%. So they've given up 8%. And the Nasdaq's up. Yeah. Well, risk-adjusted, they would say. Yes. And as you know, nobody really lives on risk-adjusted returns. They live on absolute.

Only in pitch decks do people live on risk-adjusted returns. They live on absolute. Only in pitch decks do people live on risk-adjusted returns. Yes, that's right. And over the next five years, you can do a lot of calculations, but it shows that when you look at a starting level of 5%, stocks have still managed to produce around 11% annual return. So someone who's saying, I want to be guaranteed 5% basically for the next five years, they're going to underperform equity markets by 600 basis points per year just for that certainty. So I think it feels good now, but it's not going to feel good

in five years. Tom, this has been a really challenging market environment, economic environment, despite the gains that we've seen. And I think this chart illustrates that idea really well. We're looking at the Bank of America Global Fund Manager Survey. And what this chart is showing for people that are listening is a rolling one-year return for the S&P 500 overlaid with the net percentage of respondents that are expecting a stronger economy. And just eyeballing where we are today, I don't know that there's ever been a bigger gap between what investors are expecting in terms of a stronger economy. That number is at negative 50. 35.

And that's the S&P. But either way, there's a huge gap between what people are expecting the economy to do and what the market has done over the previous year. And usually you would expect that sentiment follows performance, right? The stock market went up, people expect the economy to strengthen, and markets down, people get bearish. There is a very unusual dynamic that's at work here. Yeah. I mean, look, if we kind of looked at it as a living history document, because this reading's been bearish since July 2022, the economy has vastly outperformed anyone's expectations. I think most people had a very simplified view that, hey, look, the Fed raises rates, the economy's going to crash. I don't know if you guys remember, the PMIs and CEO confidence collapsed earlier than anything because they got the message from the Fed. Logically, S&P is just the aggregate results of 500 companies.

All these companies got cautious. They're not getting tripped up. I mean, a recession is really a sudden change in business conditions that catch companies by surprise. They all braced for something that never happened. And now I think you have to build inventory and expand. So I want to follow up on that. You know, we always talk about the unemployment rate as a lagging indicator, like notoriously so. But actually, if you had one economic variable to focus on and you based all of your expectations for stocks on it, you could have done way worse

than just looking at unemployment. So sure, it lags, but that was the signal. Nobody is not working. Unemployment refuses to tick higher. And that tells you that things are pretty okay across the board. And if you just focused on that and tuned out things like PMIs, et cetera, you largely got the story right. For how much longer could that continue? Like at a certain point, things will turn down. The job market will look great, you know, right until it doesn't. But I guess I wonder if you think that's as much of a lagging indicator as it used to be. I mean, I understand why people call it a lagging indicator because, you know, when, when they look at the impulses of wages or wage expectations, people tend to think, oh, well, wages go up and that drives inflation. But we know wages really lag, and they're actually just trying to catch up to inflation.

But I do think the reason employment is a good metric, as you're saying, Josh, now, is that I think there is an underestimation of the supply side of employment, that we could actually keep unemployment rates this low for a while while still adding jobs, because we know a combination of participation rate rising, which means more people coming into the workforce. So we can still keep adding jobs and not really get an overheated employment economy. And then there is this huge supply shock because of the number of migrants that have come into the US in the past year that aren't yet working. And I think eventually that actually kind of adds another pool of workers. So I think that we might be pinning unemployment rates low for a long time. And as you're pointing out, that would actually

be good for the economy because it means people are making money. Tom, I'd love to get your take on retail sales and the continuing strength of the economy. I was saying on Animal Spurs yesterday with Ben that I have a tough time getting bearish when the market goes down on good news. When good news is bearish, I'd rather that than the inverse. I'm not excited when the stock market goes up because we get bad news and then the Fed's going to back off. I don't think that leads to sustainable gains.

So how do you think about the market selling off on good news? Do you think that investors are rightfully paying attention to the hire for longer story? Or do you think that they're missing it, that good news is good news any way you slice it? I mean, I'm in your camp. You know, good news is good news any way you slice it? I mean, I'm in your camp. You know, good news is good news. I think when markets react the way they did to retail sales, it does show you how data-dependent the world's become. You know, like, so reflexively fearful that the Fed is going to panic

and then start to hike again. I mean, I still hear people saying the Fed has to go even higher. I mean, that's from a lot of our clients, you know, even thinking like rates hitting over 6%. But I, you know, I actually personally don't understand how retail sales was as strong as it was in September. You know, I don't know if it's just an imperfect measurement or, but it was strong. The one thing that people are saying, like the Fed has to keep going, or the thing that makes people continue to say that is less data, more anecdotal. I'm going to share an anecdote with you from Las Vegas, where I am right now.

This is a true story. I'm looking at Caesar's Palace. They have a Nobu hotel within a hotel. You're a fan of Nobu? Yes? Yeah, great food. Listen to... Okay.

All right. So I was hanging out with my friend Joe Fahmy last night and he shows me... This is the package they're offering. You stay at Nobu. You have 12 guests. You're in the Nobu Sky Villa,

which is the top of the hotel. It's like 15,000 square feet. Something ridiculous. You get a chauffeured Rolls Royce for the top of the hotel. It's like 15,000 square feet, something ridiculous. You get a chauffeured Rolls Royce for the entirety of your stay. You get spa package for six people, two tickets to Adele. And then I forget what the other thing was. Maybe it's the sphere, maybe 12 people, whatever it is. The totality of that package.

How many nights? Which is four nights. This is for the Grand Prix, the F1. Oh, so you're like in the paddock. You get to be like, see all the cars. Okay. That's $5 million. Like they're not even joking.

It says it on the website. Who the fuck has $5 million to do that? Like, or who would do just the fact that that exists and that's available. Who the fuck has $5 million to do that? Or who would do that? Just the fact that that exists and that's available, that's why people are like, the Fed's not done yet. And that's an extreme. But there are stories like that everywhere. And it seems really weird to me that we could be this far into a rate hiking cycle and those stories persist.

And there are apparently people out there doing things like that. And I think that's where we get a lot of that the Fed can't be done yet. It's almost like sarcasm. It is. Well, yeah. I didn't, I'm not gonna get the number exactly right. But if you look at the flow of funds, household net worth in America is $150 trillion, let's say. Right. And the US economy is $25 trillion. The interest earned on $150 trillion is $7.5 trillion. Right? I mean, if you do whatever.

Right? I mean, if you do whatever. That's crazy. So, you know, capitalism could cease in America, and there's enough wealth in America that we still have a robust economy. Yeah, the government's going broke, but we're all making trillions. Yeah. I think that this is a—that's a very—you know, globally, the US is 40% of all net worth. China and Japan are the next two. So those three countries have accumulated over $220 trillion of wealth. So that's why there are

a lot of rich people out there. Incidentally, I think 76 trillion of that U S is going to be inherited by millennials over the next 20 years, whose risk preference is vastly different than the baby boomer. So I, I think that that is shaping the economy. It's really shaping the financial economy. I mean, that's one reason why someone should be, you know, quote unquote, perma bullish, because that's going to support equities and corporations to, to support all that, you know, the main, you know, the way people want to consume that extra wealth. Uh, I'm not sure how many people can do $5 million Nobu, um, packages.

I can't imagine anyone. I, I've met like a couple of billionaires in my life. I don't think they would do it. So I'm trying to think here. All right. Here's the scenario where you do that. You're a really big F1 fan and you somehow have 50 million in the bank and it's the Saudis who just told you, you have six months to live. It's the Saudis with oil money. Yeah. That's who does it. Yeah. No, of course. Yeah, of course. You want to do some of Tom's charts? Let's get into these. Hold on, Tom, before we get into some of the stuff that you put in here for the year end, just one more thing. The leading economic index, the leading economic indicator index has been negative for quite a long time. I don't know if it's a record, but it is something. And then when you juxtapose that, I wish I made the chart of this. When you juxtapose that with the Citigroup Economic Surprise Index. How do we square? What the hell is happening?

Yes. Now, the LEIs is comprised of weekly hours of manufacturing, initial claims, new orders from ISM, permits, and of course, the stock price itself, the S&P, and then the yield curve. We know all those financial market components have been negative. I mean, the ISM has been negative, but we know that that's because people just got cautious. It's not because business has turned down. And I think that LEIs are kind of flawed in this cycle for the same reason that it's not a business cycle. I'm making an observation that maybe we'll regret, but I think that we're fighting an inflation cycle, and that's why the LEIs have turned down the way they are. It's not all hard data data is what I'm saying.

Yeah. And there's been a huge chasm between soft data, which has been persistently negative, and hard data, which is reality, right? Facts versus feelings. Facts have been outperforming feelings for a long time. And I think a large component of that is the inflation. So you've got a chart up here. Talk us through this. Yeah, well, I really wanted to highlight where inflation has sat. This is core CPI. Since 1982, for instance, which is the end of that inflation war, it's actually averaged 2.8%. And that's 80 basis points above what the Fed has said is the inflation target of two. I mean, I think that this really just speaks to, like, let's say that you're the central bank and you're trying to get to normal conditions.

But if you're defining normal conditions as 2%, it's actually almost never existed in the last 100 years. We have recency bias from the post-grade financial crisis period where you had extremely disinflationary CPIs routinely. And so we all think that's normal. 50 basis points, 1%. I think that's, you know, people, to your point from earlier, people can't pull the lens back far enough because maybe they haven't been around that long. That's right. And we have a chart that's at the end of the deck I sent you that shows, if you look at

the five-year growth rate of people age 30 to 50, overlaid with core inflation, and it shows that if you look at rolling core CPI, it should have been turning down on Q like in the mid-80s and bottoming around the mid-2000s. But that's because of the growth rate of people age 30 to 50 was the nadir at that time. And now that it's turning up because of millennials and Gen Z, I don't know. I mean, not that the Fed wants to make changes, but it would argue that you should really set a range for inflation of 2% to 3%, not 2%. Tom, not that we're in a position to spike the football, but given that the economy is still accelerating with retail sales and jobs numbers strong and wages, most importantly, cooling, wage growth coming down, and inflation going in the right direction.

Is it premature to say that we already experienced a soft landing? Now, that's not to say that we can't have a recession. But is it a stretch to say that we just lived through a soft landing or we're living through it right now? Yes. And in fact, it's possible to even say that with retrospect, maybe the recession already happened in 2022, because we did have two quarters of negative GDP. And that is why the curve had inverted. So it's possible to also say that the curve wasn't wrong. It's just that people are looking forward

for the recession, but that negative, you know, that speed bump in growth had already taken place. I mean, GDP hasn't even resembled a recession at all in the last couple of quarters. And now earnings are turning up. And as you know, the reason earnings were negative in the first two quarters this year was really because of basic materials, energy, and healthcare. So you still had the majority of sectors posting positive earnings growth. I have so much trouble with the concept of a recession where we add 200,000 jobs a month. I have so much trouble with why people are even using the R word until we see some uptick in jobless claims or something. It definitely wasn't around last year.

Do you have a stealth recession? What the hell do we even call that? When I was at this CNBC summit in May, and there were a lot of CEOs there, do you know what they all call that? Several people called it a recession of the mind, that the media said we have a recession. And they didn't want to counter that, but they didn't see a recession. Are you surprised, given that obviously Fed funds rates are a very blunt tool? It's not surgical in terms of different areas of the economy that they can impact. The epicenter where people are feeling it most are new homebuyers, which of course is

a very small fraction of existing homeowners, unfortunately. But we just had a new cycle high today. 30-year rates hit 8%. But we just hit a new cycle high today. 30-year rates hit 8%. Are you surprised that with mortgage purchase application index at a 40-year low, whatever it is, that the housing market has essentially frozen over, at least certainly the existing home sales market, and that nothing really has materially broken? Yeah. I mean, I'm going to explain it in a way that I think kind of makes sense. The monetary policy, as you say, transmit through a mortgage, if the housing market was overheated, it would have collapsed.

And you'd have a ton of foreclosures and you'd have a lot of people, like in 08, having two or three homes and speculative bubble burst. But as you know, housing hadn't really become that overheated because there was a supply shortage already structurally. And in fact, the opposite's happening where the mortgage rate is now overshooting relative to where it should be, because that's what that chart shows, that the historical spread of a 30-year mortgage to a 10-year yield should be 1.68% or so. So the prevailing 10-year mortgage, 30-year mortgage, sorry, should be 6.6% right now. And it hit 8% today.

That 120 basis point of higher mortgage rate of 8% is showing you that issuers are so uncertain about where rates could be that they're charging almost usury rates to borrow money. But the Fed not buying $40 billion worth of mortgage bonds a month is certainly helping to spread wide and know. Yeah. Oh, yeah. And that's a good point.

Yeah. And I mean, liquidity, I mean, nobody really, long-term bonds are kind of a hot potato in general when the Fed says hire for longer and they're doing QT. But I think the point I'd add to that is that next year, if they're done hiking and inflation's cooling, mortgage rates could drop huge. And that would be, again, a catalyst for the economy. Yeah, just getting back to the idea of just the chasms in so many charts in the spread between the 30-year and the 10-year and the chart that we mentioned earlier. I can't remember which one were there. Oh, the gap between people expecting a stronger economy or a weaker economy

in this case and stock market performance. Here's another one from Ed Yardeni. S&P 500 forward earnings, and we'll get to earnings season in a second. S&P 500 forward earnings, and we'll get to earnings season in a second, S&P 500 forward earnings and leading economic indicators. It's a yearly percent change. And it's very unusual to see forward earnings ticking higher with, again, I know, Tom, you already discussed the LEI, but just no budge. Just very odd. Very, very odd market dynamics that we're dealing with.

Yeah. I mean, look, this almost comes back to academic versus reality, right? Because the earnings are delivered and curated and companies living and working that. And the LEI is this supposed leading indicator, but it's supposed to be a business cycle indicator. supposed leading indicator, but it's supposed to be a business cycle indicator. But because sentiment in a tightening cycle can get cautious, it's showing that gap. I mean, I don't want to, I can't speak to conclusively, but to me, when those gaps close, I don't know, unless earnings collapse, isn't that mean people have to turn pretty bullish pretty soon? You know, like CEOs, I mean, that's how you close the gap. perhaps, doesn't that mean people have to turn pretty bullish pretty soon? Like CEOs? I mean, that's how you close the gap.

I agree. At some point, they're going to have to capitulate and just say, we're no longer operating under the assumption that we're a quarter away from a recession or in a recession. We're going to operate as normal from now on. Yeah, who knows? I might sign office lease and suddenly the office market isn't as dire as it was. Again, there's something I don't know how to model, and we've been trying to, because we can't really get good data. But I do think that there is an economic effect from the nearly 2 million additional migrants coming to the U.S.

migrants coming to the US? Because if you think of it as an institutional population, I don't know if there's one worker for every 20, that's additional demand for services that have to be built around. And there's a consumption model. And then there's also transfer payments. So I actually think that is adding to the resilience, but it's incredibly hard to get data on that. Yeah. I think what's interesting is that it's probably a big relief to the hospitality industry and the restaurant industry and the hotels and some of the industries that are really competing hard for workers still and have not been able to fill spots. And they've specifically mentioned things like lack of immigration during the height of the pandemic. We had no illegal immigration or legal immigration or any immigration of any kind.

And they were faced with this weird mix of unlimited consumer demand and not enough people to staff their facilities. So ironically, that could be the thing that cools off labor costs in the area where they're probably the most overheated. Yeah. And that would be a pretty good elixir, you know, because you'd have demand growth, but without the wage pressures. So Tom, we're underway in earning season. It's early.

Netflix reported after the bell. Stock is having a hell of a pop. I think it's up 11%. Wow. What have you seen? What have you seen? Oh, 12%. There we go.

What have you seen so far from what we've seen? I guess primarily through financials at this point, but what's top of mind through earnings season? You know, it's, I mean, I would say it's better than better than expected. You know, 81% are beating. Okay. So we've only had 43 report out of 500, but the average surprise is 8%. What's a typical number of companies beating each quarter?

It's like 73 or 75%. Yeah, so it's in the low 70s. And the magnitude is typically two or three. So we have above average number of beating, but then the magnitude is even greater. It's 8%. And it's coming from groups like discretionary and financials. Financials are beating by an average of 13%. I mean, so I don't know.

When I hear people say there's an earnings recession or it's just they're better than expected, these are far better than expected. And even 65% are beating on top line, which, again, is pretty impressive. line, which, again, is pretty impressive. And discretionary is tracking for 6.8% revenue growth. And financials, the ones that have reported 9% revenue growth, I mean, those are outright good numbers. I know financials is a very large category. But I'm looking at some of these names. And it's really not pretty.

BlackRock looks absolutely horrendous. Bank of America, not great. Morgan Stanley, the bottom fell out today. So stocks have not reacted particularly well, at least the ones that I just mentioned. Yes. Although to me, I'd almost consider financials a group that looked like tech last year. Because financials haven't been great this year. And they've had deposit flight. And they've had to deal with an inverted curve and commercial real estate and rising delinquencies. Nobody's bullish on financials. Yeah, so that's the moment.

Unless you can actually break them, they're probably great stocks next year. People talk a lot about ISM and global manufacturing PMIs. Walk us through this chart that we're looking at. That's two different PMIs. That's the ISM manufacturing, which really is still an incredibly important series. And then the other line is the S&P market PMI for the U.S. And I think that as I look at that, I've seen both look like they've bottomed pretty conclusively because, you know, they're not back above 50, but they've made a move into the 46 level back towards 49 and a consistent improvement. That's important for… They mirror each other pretty well.

Yeah. So there was some divergence, but they're now both tracking higher. And it's kind of what you said, Josh. Well, we're at the point where businesses may have to start expanding and ordering again. I mean, and that means China's factories turn on again and, you know, supply chains start moving again and freight rates start to improve. And this historically since 1950. So we don't show you the full history. When the PMIs are rising from below 47, which is where we are, industrial stocks, again, since 1950, have an average of 22% gain and they have a win ratio of 95%. So it's a reason why XLI and the industrials are a group that we like.

It's our second favorite group. And I was speaking to Mark Newton, our technical strategist about this today. He thinks industrials really could be one of the breakout groups next year. That would be very interesting in light of what we're seeing today. I mean, JB Hunt, which is an industrial, it's a freight hauler, one of the worst earnings reports I've ever seen. I mean, really bad. Like they missed by 30% or something. It's not been a great place to be since, let's say, midsummer.

And they were leading. They were leading. And most of those stocks have since been hammered. So if there is an opportunity in industrials, the good news is you're not buying them at the highs. Yeah. And for an example of transport, the real-time data, whether you're looking at rates or the rejection rates, they have been warning for some time how bad things were going to be. So Tom, this idea that we were talking about this earlier, that investors would like to wait for the dust to settle to see when the Fed is going to maybe give a single-sum language to the effect that they are done and that perhaps cuts are on the horizon, which again, be careful what you wish for. Why is that not the right

posturing for investors? Well, most of the time, and that's maybe the wrong word, but when I hear people talk about, hey, what should stocks do either when the Fed's done or when inflation is defeated or I don't know if you guys remember when post-pandemic, almost everybody tells you that every recovery is K-shaped or square root. It's never robust, right? Everyone always thinks that when the crisis ends, it's like nuclear fallout or fallout in the dust and nothing recovers for many years before the first green shoots pop up. But when we look back in the 80s, when inflation was defeated, the stock market didn't have a V-shaped recovery. It literally had a vertical move. Yeah. 82, 83, 84. Yes, exactly, Josh. In fact, the stock market raised all of its bear market losses from 79, from actually 76 or something to 82 within 50 trading days. In fact, it made an all-time high.

So what it tells you is that the market's relief when inflation is vanquished is so great. And every chart you show, amount of money in treasuries, amount of money sitting on the sidelines, the psychology of, oh, I'm happy earning 5%. I'm, you know, a genius. That all switches to, you know what, if inflation's dead and it doesn't come back for 50 years, what should the multiple be? And I think no matter where the 10-year is, PEs are going to go up a lot.

So the market has this remarkable ability. And when I say the market, it's all of us, All of our collective, the wisdom of the crowds generally prevails. And you could see that in so many different examples. One example that you provide is that equities tend to bottom 11 to 12 months on average before earnings per share does. Can you talk about that phenomenon? It's really remarkable. Yes.

That's an example of leading versus hard, right? Because let's say that we know a company has fallen on hard times and it's going to take 12 months before they can even turn things around. We know everyone's already been selling. And so the selling will happen way before the event, which is, let's say, the bottom in earnings. And as this chart shows, since 1920, stocks bottomed 12 months before earnings bottomed. And it really ties into the adage, that's why stocks bottom on bad news, because we know the news will be bad for the next 12 months, but does it mean you have to keep selling if you've already started to sell? I mean, that's why it ties what you guys are saying about the Fed. Well, if we know that they're near the end of the cycle and inflation is about to break, why do we have to wait for the CPI print to be the conclusive one when we know the trajectory

might already be quite attractive? Right. And is that not what happened this time around? Stocks bottomed in October. We're looking at a chart of operating earnings for the S&P 500. Did stocks not bottom before earnings did? That's exactly right. So if October 2022 was the bottom and the actual second quarter EPS bottom, second quarter 2023 was the bottom, that means they

bottomed nine months before earnings bottomed. I can't believe that we've made it 50 minutes without talking about technology and the magnificence of it. In fact, I'm sort of sick of talking about it, so I'm glad that we made it this far. I'm sure the audience is sick of hearing about it. But Tom, you've got this wild, wild chart showing that the potential, I don't want to say you're predicting this, but the potential for technology to become, well, you do say likely, 50% of the S&P 500. What are we looking at here? You do say likely. 50% of the S&P 500. What are we looking at here?

That chart is the top half is the gap between the population growth rate and the growth rate of labor supply. And so when the histogram is above zero, you're entering a period of labor shortage. Think about it intuitively. If the population is growing and you don't have enough workers, then you have to supply workers that aren't human. In the past, that was industrial demand and technology demand because those are capital-based units of human labor. In 1948 to 1967, we had a long period of labor shortage and technology stocks went parabolic as well as technology spend.

And the second era in the U.S. was 1991 to 99. We had structural labor shortage and tech stocks went parabolic. I didn't realize that we did. Yeah, that's right. So most people think 91 to 99 was an era of innovation, which was correct, but it was born out of necessity because there was actual structure labor shortage. And look, you know, for us who worked in the 90s, because I'm a, you know, it was a great labor market because there was a shortage of workers. And now we're entering a third period of labor shortage, which we're seeing today pretty evidently, but that's been in place since 2018, I'm sorry, 2015. And you can see that that almost marks the exact point

that technology stocks went parabolic here. But this period of labor shortage could last all the way through the 20, well past the 2030s. If this happens, people's brains are going to melt. If tech becomes 50% of the S&P, well, what shrinks to accommodate that is really the thing. Probably financials. I think we'reinks to accommodate that is really the thing. Probably financials. I think we're going to lose a couple thousand regional banks.

Yeah. I think the U.S. becomes the global labor supplier. So I think it's a really big balance because the shortage is even greater outside the U.S. It's 80 million worker shortage just by the end of this decade. And so to me, that is going to speak to the S&P being a rising share of the MSC at Acqui. So it's ready to have to invent our way out of this. Yes. In other words. So Tom, we zoomed in earlier in terms of where we are, where we came from looking at 2022. But if we zoom out, like all the way out, and we look at secular bull markets, and this chart is from Brian Belsky, you've got overlaid 1982 to 2000, greatest bull market of all time in the United States, at least. You have 1948 to

1968. And then you've got 2009 to today. Are we still, I mean, I think I know what you're going to say, but are we still in a secular bull market? Yes. I mean, I think the chart before just highlighted, there's a case to be made for why US growth will be accelerating. And that's because the world is now going to be buying technology products from the US because of a persistent labor shortage. I mean, that is the equivalent of a huge increase in the addressable market for US tech products

because it's replacing workers. I think we should see markets really strengthen the next 10 years. This is a little bit of a chart crime. Why? I'm going to break Belsky's chops about this. Because the 1982 to 2000 bull market doesn't start from the 1975 low right uh 48 to 68 that so why are we starting this one in 09 it should start in 2013 when we broke the previous cycle high yeah good point like like we don't start the bear market count from the low of the

prior or the bull market count from the low of the prior, the bull market count from the low of the prior bear market. It's a little bit crimey, but I like the message. So- Tom, before we let you get out of here with some granny shots, what would you say? It's very easy to be bearish, right? Like all of us see the risks. They're not hiding in plain sight.

They're very evident. What would you say to the person who has been persistently bearish, who can't seem to wrap their arms around the fact that all of the bad news is more or less discounted at the price? They're not geniuses because they're worrying. What would you say to that person to try and change their mentality? I know it's very difficult because it's more of a personality trait than anything, but if you had to give it your best shot, what would you say to somebody? That's a great question. I just have to remember this was 2009 to 2012. People hated that bull market and they could argue for all reasons why it was a head fake or artificial. And I think that

the only answer I can give is the stock market has taken a lot of gut punches, and it's risen. I mean, it's hard to say, but I just say the market's not making it up. It's up 20%. Well, that's what I would say is look at the score. Look at the score. Don't worry what I think. Look at the scoreboard. That's usually how I would answer that.

Can we explain to people what i know what they are can we explain to people what granny shots are i feel like this is an apple cider what is what is no this is becoming a thing that tom is becoming known for this is like becoming your like your calling card so to speak tell tell us what this is about yes we, it's called Grady Shots because of the way Rick Barry shoots, has shot his free throws in the NBA. He was shot underhanded. Yeah. You know, it didn't look great,

but he had one of the highest free throw percentages. Yeah. He looked like a grandmother heaving a basketball up. Right, I got it. That's right. And so we're trying to find stocks that may not be sexy, but actually give you the highest chance of actually outperforming the market. And it's a very holistic process.

We start by developing seven portfolios, seven things that we think are important to markets from everything from AI to seasonal portfolios. And then the stocks that screen across those most consistently become our granny shots. So we're basically saying, hey, take the seven most important things in the market. And then the stocks that appear most often become granny shots because they're hitting all the right buttons. Do those things change from one year to the next? Yeah, so we rebalance every quarter. Yeah, and we do, Josh. So sometimes it's the PMIs that we're focused on, or we added inflation protection this year.

Okay. And we rebalance every quarter. We had our webinar today, and we added six stocks. But granny shots have outperformed the S&P every year since 2019. This year, granny shots are up 19% even with today's close and that's versus 12% for the S&P and outperformed seven of the last 10 months. So it's- But you have to own them all though. Well, yes.

You don't know which ones are going to carry the weight. That's right. So what we introduced this year was what we call super grannies. So every month, Mark, Newton, and I sit down and try to find the most five timely super grannies. Okay. And they're outperforming grannies by another 500 basis points this year. Why would anybody choose a granny if they could buy a super grant? Yeah.

So it's like a, it's like, it's a granny with a superhero cape, you know? Okay. Uh, hit us. You got a couple. We'll, we'll preface this. This is not financial advice. That's right. Tom is not telling you to go out and buy these stocks.

advice. So Tom is not telling you to go out and buy these stocks. Tom is mentioning these stocks so that you can get a glimpse of how Fundstrat thinks about these ideas. Okay. You're covered now. So our super grannies that we highlighted today, so it's fresh off the presses, is NVIDIA, is NVIDIA, Arista Networks, Cadence Design Systems, Meta, and Everest Group. Everest Group is insurance. And we actually added insurance as a seasonally attractive group today. So how does NVIDIA make the list?

Well, NVIDIA actually scores on several of our portfolios. It's a style tilt. So it actually is a pure growth. So we're recommending growth and cyclical growth. It's a millennial story because of its role in both automation and digital money and AI and autonomous driving. Video games. Yeah. And it's a big player in machine learning AI,

which fits our global labor shortage theme. So NVIDIA appears in three of our style tilts. And then it's an IBD rank number one, which is important to us. It's trading above its 20-day and above the 20 days above its 200-day. And Mark Newton subjectively using his DeMarc and other Elliott Wave and other methods deems it actually one of the most attractive stocks technically. So that's why NVIDIA is on that list. Okay. Arista Networks. So I've been trading in and out of this stock. I probably shouldn't have sold it.

But this is an AI story as well. This is the communications needed internally in all of these cloud computing facilities. It's great if you have GPUs, but if they're not talking to each other, you have nothing. That's exactly right. And it's not super expensive. It's one of the smaller market cap names. It's only $60 billion. But from our quantitative metric, which Tireless can, our data scientists put together, it's the number three ranked stock in the S&P universe. So it's pretty attractive. Looks great, technically. Yeah. The stock looks amazing.

Yes. What's Everest 3? So Everest Group, e.g., by the way, it actually popped up this time only because it is a seasonal story, seasonality, because multi-holdings insurance popped up in this rebalance. And it's actually highly correlated to PMIs. So, we do an analysis of stocks that actually highly correlated to PMIs. So we do an analysis of stocks that are correlated to rising PMIs. It's not super strong on the tireless Ken's quant model, but it is above its 20 day and 200 day and the 20 days above the 200 day. And Mark Newton actually really likes the chart here. So again, that's a story that

the preponderance of evidence actually makes it one of the most attractive stocks to own, even though, you know, it's, and it's in a group that actually is starting to perform well, but, you know, I never would have said I'd be buying insurance stocks. So Tom, I want to, I want to thank you for being so generous with your time today. And we do have a link, anyone that wants to check out your stuff, they're going to have an opportunity to do that in a trial. And if you've ever been curious what it's like to get Tom's research, this is your opportunity. So we're going to include a link in the show notes. We'll include a link on YouTube as well.

And I would suggest anybody that's curious avail themselves of that opportunity. I want to end with favorites and we're going to let you get out of here. Do you have anything for the crowd in terms of watching, listening, reading, anything people should be made aware of? You know, all I can say is this year, I did make it a point to try to catch as many concerts as possible. So I'm, I watched the Eagles in Denver and, and then this weekend I'm watching U2. I don't know. Was you guys talking about stocks or just other things? Yeah, no, you nailed it. So I'm going to see U2 tomorrow and I didn't realize they're doing Akhtang Baby. It's a 30th anniversary. It's one of their best records.

They're doing the whole thing. Oh, wow. So it's a whole playlist. Yeah. Nice. They're going to play the whole album and then they do some other stuff. I'm so excited. I'm going later tonight. My favorite, I wanted to mention Reptile on Netflix. Really good old school murder mystery. People think it's Justin Timberlake's movie, but Benicio Del Toro is in. It's his movie.

And he's in every scene and he just eats it up. And, uh, really liked seeing Alicia Silverstone acting again too. Yeah. I feel like she hasn't been in anything in a long time. Uh, Michael,

before we get out of here, you got a favorite for us? Uh, two quick ones. One, Mario Gabriel at, uh, the generalist wrote a piece on a 24.

If you're a movie fan, that's a must read. It was, it was excellent. Very, very well done. And Josh, I want to give you a shout for recommending

The Fall of the House of Usher. I watched two episodes last night and I can't wait to watch two more tonight. It's so good. It's so good, right? Holy moly. Tom, you like Edgar Allan Poe? You like horror at all? I do. I love being scared. You got to watch The Fall of the House of Usher on

Netflix. It's excellent. Okay. It's a new series. You'll love it. All right. Hey, Tom, thanks so much for your time today. We really appreciate it. To all the listeners, thank you so much for listening.

Check out Tom's site if you want to learn more about Funstrat. And of course, if you like the show, make sure to leave us a rating and review. We will see you next week. you