The Compound and Friends - How to invest in TikTok, the opportunity in Chinese tech stocks, What Are Your Thoughts with Michael Batnick, the best 90 days ever for diversified investors

Episode Date: July 31, 2020

This week Josh talks with Brendan Ahern, Chief Investment Officer of KraneShares, to find out how US investors can get involved with TikTok, the hottest social network on earth. They discuss the opportunity in Chinese internet stocks, the massive size and scale of Ant Financial, which will be coming public soon, and how US investors can stay updated on all of the biggest developments in China. You can subscribe to Brendan's daily morning note at ChinaLastNight.com to get up to speed. Michael Batnick joins for a new edition of What Are Your Thoughts to tackle the best 90 day period for diversified investors ever, the biggest earnings day of the year, the rally in gold and Bitcoin, when plumbers have stock tips and more! Leave us a rating and review if you like the show, it helps a lot! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

All right, all right. It's JB. We're back. We're going to cover a ton of stuff on the show this week, including the upcoming IPOs of two of the largest technology firms on Earth. Let's rock and roll. Welcome to The Compound Show with downtown Josh Brown. Josh is the CEO of Ritholtz Wealth Management. All opinions expressed by Josh or any podcast guest are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

Welcome to The Compound Show. I am downtown Josh Brown. If you have a son or a daughter at home, somewhere between the age of, let's say, eight years old and 18 years old, it's very likely that the ambient background noise in your home during the entirety of the pandemic period has sounded something like this. All right, that's enough. These staccato clicks and clacks of modern rap music have become something of a ubiquitous soundtrack to our lives over the last few months as the work from home situation has forced us into basically around the clock proximity with our children.

More to the point, it's forced us into close and nearly constant proximity with our children's phones. And this is the sound their phones are emitting all day and all night. I swear, I think I hear it in my sleep. That sound is the ascendance of a gigantic social media platform called TikTok. And its influence on pop culture

cannot possibly be overstated. I want to give you a sense of the magnitude of what we're talking about with a few statistics. TikTok now has over 800 million active users worldwide. The TikTok app has been downloaded over 2 billion times on the App Store and Google Play. The TikTok app is now available in over 140 countries, and it's been translated into 75 different languages. It's in the top 25 overall in 135 of these countries.

So it's a global phenomenon. 41% of TikTok users are aged between 16 and 24 years old. TikTok has been downloaded over 600 million times in India, which is around 30% of all TikTok global downloads. million active users in India, which represent about a third of all smartphone users in the country. So not only is it global, its penetration rates in some of the fastest growing and most populous countries is just enormous. Users spend an average of 52 minutes per day on the app. I would say that my kids are skewing that number higher. 52 minutes would be nice. I would guess it's probably 300 minutes. And if you add up that 52 minutes per day of use, that's about 37 billion viewing hours per year. 34% of TikTok users shoot at least one video per day. There are two lurkers for every TikToker who actually publishes a video. So being on the app doesn't require you to perform

or embarrass yourself with dance moves that you're not quite ready to execute. But it's more than two to one people that are just there to scroll through. There are over 40 different TikTok stars who have amassed more than 10 million followers. These are stars who emerged to fame on the platform itself. So I'm not talking about like J-Lo or Will Smith. These are TikTok stars. And just to give you a sense of how large an audience of 10 million or more followers is, how big that audience is, Tucker Carlson, his show on Fox News is said to be the most watched news show in history. It broke that record this summer. Tucker Carlson averages 4 million viewers per night.

So there are 40 different teenagers who command a viewing audience that's more than twice the size on their TikTok. And their videos are being watched all day long, not just during an hour of primetime TV. So the potential audience here is enormous because the show never ends. It's all day, all night. 90% of all TikTok users access the app on a daily basis. So if you have an app that almost every single person using it checks in once a day, you've got an engagement machine that is almost unprecedented. In less than 18 months, the number of US adult TikTok users grew by five and a half times. And it has the highest social media engagement rate per post of all of the major social media networks. So more people interact

with a TikTok post than they do with Instagram, Facebook, Twitter. In May of this year, TikTok was the number one most downloaded app globally ahead of Zoom video. It has doubled its monthly downloads from one year earlier. So when you think about everything I've just told you, you can say to yourself, okay, I think I should maybe be planning to hear a lot more of that clicking sound for a long time to come. On today's show, we're going to talk to Brendan Ahern, who's a friend of mine in the industry, about the rise of TikTok, when and how US investors will be able to invest in the company, and a lot more. After that, Michael Batten comes back for

another all-new edition of What Are Your Thoughts? We talk about the greatest 90-day period for diversified investors of all time. We talk about the rise of gold prices period for diversified investors of all time. We talk about the rise of gold prices, the fall of the US dollar, the restart of Major League Baseball, fingers crossed. We talk about when plumbers give out stock tips and the 170 stocks in the Russell 1000 that have already jumped over 100% since the lows in March. And we get into so much more. So stick around. Let's get it popping. Okay, I'm sitting here with Brendan Ahern, who is the Chief Investment Officer at Craneshares. And Brendan is a China equity market and economy expert. Brendan's got this incredible daily, I don't think it's called a newsletter. I guess it's kind of a blog post, but it comes to me via email.

But it's this daily message that's called China Last Night. And you could find it at chinalastnight.com. And this is how I keep abreast of everything that's happening in the Chinese stock market, which is rapidly becoming one of the most important markets in the world. If not to invest in, then at least to follow. So Brendan fills me in every day and it's really great. I think he's got over a thousand subscribers, but it should be 50,000 subscribers. At minimum, 50,000 people should be getting their updates on the Chinese market from Brendan. So Brendan, welcome to the compound show.

Thanks for being on today. Now it was great. Great to see you, Josh. First and foremost, hope you and the family are safe and healthy. Let's not waste any time with that. I live in a mad house. Everyone hates each other. It's going great. So I want to ask you about Ant Financial, which is going to be one of the largest financial services companies on the planet at its current rate. And then I want to ask you about TikTok, which is a name that many more people will be familiar with. And I think a lot of people are trying to figure out how they play it. It's pretty obvious that TikTok is going to be at least as big as Instagram globally, if it's not there already. So but let's let's start with let's start with China last night. And just very quickly, like,

what are you trying to do with that note each morning? Like, what goes into it? What do you leave out of it? And how do you come up with what you want to say? So in the early days of crane shares, we had an investor come in to, we got to know and invested with us. This is probably about four or five years ago. And he said, you know, Brendan, when I wake up in the morning, I really don't know what happened in China. And wouldn't it be great if someone kind of had a review of what happened last night in China? And I was like, man, Steve, that's a great idea. And he's like, no, you idiot.

I'm telling you to write me an email every day. And so starting four or five years ago, I started writing him an email. And, you know, it's a lot of work and the whole idea is just a very quick easy synopsis uh what happened with the markets economic data leverage a lot of our institutional brokers are giving us a lot of color overnight um you know they've got morning notes but but just something really concise, simple and easy that you can pound out and like read in five minutes, know what happened.

Right. Okay. And why is that important for US investors to just be aware of the things that are happening in Hong Kong and Shanghai and on those exchanges? I think we, you know, we are coming to terms that technology has changed the media in such a dramatic way. If you're a journalist today, you get paid on how many people click your articles. With the death of subscription revenue, a lot of media is dependent upon their advertisers. So a lot of what we read as quote-unquote news is, in my opinion, is just basically placement ads. Journalists have no choice but to create hypothetic, sensationalistic, apocalyptic headlines because they're paid on how many people click their things. I think finding a balanced perspective on what's happening in China is very difficult. And there's no fact checkers politically. No one's saying, what are these numbers people are throwing around?

And I think China and the U.S. are very, very intertwined economically. And a lot of what I see coming out of, if it's DC or in the media, is just hypothetically false. It's not, you know, we as investors, everything we do, you know, you call it evidence-based investing. Well, where's the evidence-based journalism? And I try to just do something that's purely data-driven. It's not my opinion. It's just factually what's happening. Okay, so a lot of the things that people are saying about China and the trade war

and the Chinese economy, there's a slant to it, depending on who's saying it, where it's being published and who it's being written for. I mean, you know, one of the biggest, you know, for example, you know, they, you know, it gets thrown around. China steals $250 billion from the U S every year through corporate espionage. Well, $250 billion from the U.S. every year through corporate espionage. Well, $250 billion is bigger than that. That's like the market cap of Disney. I mean, if the Magic Kingdom disappeared every year, you'd say, like, what's going on? But I wasted a day to figure out where did that number come from? the NSA speaking at the AEI, which is a right wing think tank said that he felt the U S had intellectual property value worth 5 trillion and China stole 5% of it.

And that equals $250 billion. That number then the next year went into a U S security commission report and it's spoken as gospel today. That number is a figment of the guy's imagination. There's nothing factually about it. It's just totally absurd. Okay. So let's talk about the rise of China as a stock market opportunity. And I know there's some controversy about whether United States investors' capital should go into Chinese companies, given the fact that there is some adversity between Beijing and Washington.

And there are these trade issues that are real issues. And meanwhile, it's one of the hottest stock markets on Earth. It's one of the few stock markets that has gigantic technology companies. And I know there's controversy there as well. But they've kept out US tech giants. And as a result, they've nurtured their own homegrown technology scene. And those companies are every bit as dominant in China and across Asia, as American companies are in the US and Europe. So it's almost like this, these two parallel markets. And with every passing year, there's an increase in connection between how investors from one place can invest in the other.

And that's probably not going to go back the other way, right? Yeah, yeah. I mean, without question, these are some of the largest companies globally, and they're doing very, very well. We all focus on exports, imports, but China's, you know, 50% of the GDP is consumption. So a lot of the internet e-commerce plays are benefiting from that. And I think, you know, Josh, you know, 50% of the GDP of China is internal consumer demand. Okay. Service sector. Yeah. You know, one thing on, you know, you mentioned trade. Yeah, service sector. Yeah. You know, one thing on, you know, you mentioned trade.

Well, the definition of trade is something that's put on a boat. And so, you know, China imports like $130, $150 billion worth of goods from the U.S. But GM owns factories in China, Apple, Nike. When they produce a car or a shoe or an iPhone and it's manufactured in China and sold in China, it doesn't show up in any trade figure. It doesn't show up as trade. So U.S. multinationals. Because it didn't leave China. They didn't get to put on a boat. Now, all that revenue goes to Cupertino, goes to Detroit, but it doesn't show up in trade figures. So U.S. companies generated $376 billion

worth of revenue in China annually. That's from the New York Fed, not me. in China annually. That's from the New York Fed, not me. And that's where, you know, why do you stick a factory in China? Because you got 1.4 billion people could buy it as well as China is the gateway to Asia, 4 billion people. If you're the CEO, you put the factory in China because 4 billion people can buy the stuff that comes out of it versus 360 million people in the United States. I mean, I think that, I think there was an old paradigm where Nike went over to China and made Nike shoes, which would then be sent elsewhere, United States and elsewhere. And they saved a lot of money by doing so. And it was a very black and white cut and dry rationale. And the Chinese were basically buying fake Nikes. And that is not the state of play anymore. Now, you build things

closer to where your consumers are. And I think Tesla is a great modern example of that. Like, Elon Musk is betting, making a huge bet on Chinese consumers buying cars that were designed and conceived of in California. And most of the revenue will come back to America in the form of Tesla's revenue and profits. Yeah, yeah. I mean, certainly, you know, I think in Q2, GM will sell more cars in China than in the US. They were built in China, but all that money goes to Detroit. So this definition of trade is very outdated. And so if you take Chinese exports added to revenue generated from U.S. companies, there is no trade deficit. Right. Now, now, strategically, there are things that we have been making overseas. Specifically, we learned this year a lot of the components to

produce pharmaceuticals are happening offshore. And I think that that's a legitimate issue that US politicians have been raising. But I don't want to get into the weeds on that. But I just, it seems very obvious that we're now the number one and two economies in the world. It's likely that the Chinese economy will eclipse the U.S. economy in our lifetimes. It's probably better if there is fair trade. And we could argue till the cows come home about what's fair, what's not fair. It's never going to be perfect. And we're never going to all agree.

But I think that those are some of the reasons why U.S. investors, for example, have 80% plus of their equity exposure in United States stocks. And that hasn't hurt them in the last five years. They haven't missed anything. Oh, listen, diversification has hurt U.S. investors. But I think the risks in China come up a lot. But what about the reward? Whoever talks about the reward. So if you could go back 20 years, what stock would you buy, Josh? If I can go back 20 years? 20 years.

I don't know. I think Domino's Pizza is the right answer. It's the best name in the S&P 500 or something i think dominoes and google came out at the same time and dominoes has done better i read that somewhere well so i think most would say amazon or apple right all right fine uh but but um this little online chinese gaming company called netties has actually outperformed amazon and Apple over the last 20 years. And I don't think there's a person in the planet who would ever think that, but. Could you have bought, could, if you were a US investor 20 years ago though, could you have bought it? Yeah. Yeah. It's listed on NASDAQ. Okay. Very interesting. So, so the, so the Chinese internet economy looks

a lot like ours in terms of stock performance. Give us some sense of how big Chinese technology companies have grown within the overall Chinese stock market and how dominant they've become. So yeah, I mean, the size of China's retail sales is actually larger than here in the United States. The amount that they do online versus here in the US is like three to four X. I mean, they're growing online retail sales at a clip of like 30% a year. And it's not just it's e-commerce, it's because of mobile payments. It's because of this whole ecosystem where I'm kind of holding my phone up, you know, this is your wallet in China. Um, and, and we're, we're way behind them in that regard that they've adopted the technology in such a tremendous way.

And, um, it's totally changed society, you know, you know, you know, you know, I had, you know, this is a Chinese hundred dollar bill and you can't find places to spend it because people don't, they don't take cash. They don't take credit cards. It's all mobile payments. Right. So I think we, I think the pandemic has sped up the adoption of contactless payments and card not present transactions in the United States. But that's been the norm in many parts of Asia for a decade. Yeah. Yeah. And then the quarantine forced an older demographic to use these companies for the first time. Right. And there's no cure. There's no vaccine in China.

no cure. There's no vaccine in China. And so, so what we're seeing is in the month of, uh, month of June, you had online retail sales grew 30% year over year, offline, traditional retailing actually shrunk. So, so, so older people, people with preexisting conditions in China are still wary. Restaurants are way off. So, so, so, so I off. I think this is where China's a little bit of a guidepost to what's going to happen here. Hopefully, the quarantine, social distancing works. Things have benefited

e-commerce, internet, online gaming, mobile payments, social media. By the way, those stocks have gone up a ton, not just during the pandemic, but over the last two or three years. If you just look at the Chinese economy growing at 6%, and that's your gauge of what's going on, you're just as wrong as if you look at the US economy growing 2%. We have stocks going up 1000% while that that's happening so the real gauge the real gauge of what's happening with chinese stocks is chinese stocks not the gdp number that that gets reported yeah yeah yeah i mean i think there's an infatuation with gdp it's just like who cares yeah you know

you know it's it's a you know everyone wants to talk about exports imports i'm like who cares it's a domestic consumption led economy and you know we've been um you, we're coming up to our seven year anniversary and, you know, who would have thought a bunch of Chinese internet and e-commerce stocks could beat the S and P 500, but it's no different than why, why, why is the EM so bad? Well, well if half of MSCI emerging markets is financials, energy, industrials, utilities, materials, and real estate over the last 10 years, like it's not even done half

of the S and P 500 because it's a value. It's slow, low growth sectors. And we're in a growth geared market and coming out of this, you know, that could, that could persist. Okay. So when, when you invest in Chinese internet companies, um, one of the concerns that us investors have traditionally had is that there is a, it's almost like there's this shadow ownership or leadership of these companies where the government basically decides who gets to be the CEO now and what businesses they're allowed to enter. And there are people that almost think like the numbers being reported by the individual companies are being managed elsewhere. And I don't think that will ever shake that stigma.

But the opportunity in the stocks, I feel like at this point, should have overwhelmed that feeling. If you're trying to build a globally diversified portfolio, you can't ignore Tencent. You can't ignore Baidu and Alibaba and JD.com. They're too big and they're making too much money. Yeah. I mean, 46% of the Russell 3000 US companies make money in China. So if you've got a problem with China, sell your S&P 500. But yeah, these companies are definitely our version of FANG or US. And to not own them, I think you've left a lot of money on the table. And in terms of risk, if you just Google Alibaba IPO prospectus, on the very first page is the name Jay Clayton. When Jay Clayton worked in private practice, he helped bring Alibaba IPO prospectus on the very first page is the name Jay Clayton. You know, when Jay Clayton worked in private practice,

he helped bring Alibaba public, you know, now he's the head of the SEC. Like, um, you know, so, so, you know, there's some, there's some hypocrisy here and, uh, you know, ultimately I think these are great, great companies with a bright future ahead of them. And, you know, you know, I call it P E S G investing, you know, P for political. And to me, I'm like, dude, it's, you know, you know, you know, I call it P E S G investing, you know, P for political. And, and to me, I'm like, dude, it's, you know, you're, you're a fiduciary, you're paid to make money. And if your political opinion keeps you from buying something like

there's a consequence and, and, you know, you should be called out for it. And I think a lot of investors, you know, we have a huge home bias here in the U.S., but these are the equivalents. These are the global leaders, and there's a tremendous opportunity. So I also think part of what feeds into that stigma is that every year, it seems like, there's a Chinese company that lists in the United States that turns out to be a fraud. And Luckin Coffee is the most recent example. It was a very widely known example because the stock was red hot. And a lot of US investors got involved with buying it, trading it.

And they were basically cooking their books. And they got rid of the guy that was running it. And they really sell coffee. It's not like it was a smoke and mirrors company. But I would just say to that, yes, there is a propensity for sometimes Chinese actors to list companies in the United States without the best intentions or think they can get away with tricking us. Yes, that exists. But US companies have done that too. Well, own homegrown frauds. Yeah, yeah. I mean, I think, you know, you know, you know, ambition, you know, we all want our kids to have a better future, you'll pull pull

ourselves up from the bootstraps. And, you know, from ambition, to greed, to, you know, unlawful activity. You know, unfortunately, it happens globally. And I think they should throw this guy, the Luckin people in jail. I hope they do so. The real crazy thing about the Luckin fraud is that it's 2020. We have high frequency data. Our mobile phones are surveillance devices, and we as investors can buy that data. I mean, if it's where GPS tracking, mobile payments, all of that has a price. What Luckin did was they knew hedge funds were paying for that mobile payment data. And they paid people to go spend money to buy coffee, knowing that this data was being disseminated showing how many

transactions they were doing is very insidious. And the Chinese regulatory body is going after these guys and they should lock them up and throw away the key. Okay. The last thing on big picture China is that it's very clear they have ambitions to turn the Yuan into a global reserve currency. I'm not saying that I have a strong opinion on whether or not it will happen, but they really want their companies to be a big part of like, for example, the MSCI index. What percentage are,

what percentage are Chinese stocks of the MSCI world or the MSCI emerging markets index now? So within EM, it's 40%. But I think it's Chinese companies make up 700 of the just over 1300 stocks. So numerically, more than 50% of the stocks are Chinese. And that shows you that- That's in the EM index? That's in the EM. Over 700. India is like 86 stocks. Brazil is 55. No offense, but to talk about India, it's almost a waste of your time. Right. So now what about the MSCI World Index? How large is China

in terms of the percentage of market cap weighting? Only like 5%. Okay. So that's slow. That's happening more slowly. Yeah. Yeah. I mean, the Shanghai and Shenzhen names are only slowly being added to it. So when you add, the Chinese A shares only make up about 5% of EM, but we know, skating to where the puck is going, they're going to make up 20% in the EM, but we know, you know, skating to where the puck is going, they're going to make up 20% in the next three to five years. Uh, so that will bring China to over 50% of EM. Uh, the other thing is it's kind of, um, kind of in the, in the weeds, but you know,

MSCI Hong Kong is actually developed markets. If MSCI Hong Kong gets merged into MSCI China, uh, China's 60 to 80% of EM. Do you think that's going to happen? Maybe in my lifetime. Okay. Now, when you say the Shanghai Shenzhen names, you're talking about A shares that historically have only been available to mainland China investors. Now they have this connect where Hong Kong money can flow into those

stocks and vice versa. And that's, I think, had a big impact on valuations or not necessarily. You know, today in China, foreign investors bought a $1.1 billion of Chinese A shares. They represented 7% of trading in China, which is the highest day ever. It's probably, they probably do like 4%, you know, maybe 5%. So foreigners are very, very small percentage of the market. But I think to your point, Josh, that's going to change very meaningfully in the next several years. So if you're an investor in New York City or in London, and you call your broker and say, I want exposure to China, and they buy a mutual fund,

the mutual fund historically was buying like Chinese, the equivalent of ADRs that traded on the London exchange, or they were buying the largest Chinese stocks that trade on the New York Stock Exchange. I think now though, what could happen is or they were buying the largest Chinese stocks that trade on the New York Stock Exchange. I think now, though, what could happen is you could see more direct investments being made by large pools of capital like ETFs, like mutual funds. That seems to be where things are going, where they'll be able to trade on those local Chinese exchanges at some point. Do you think that's what's going to happen?

exchanges at some point. Do you think that's what's going to happen? Yeah. Yeah. I mean, I think, you know, you know, US because of the, you know, the dollar, you know, you know, none of us, you know, there's so many opportunities in the US, but you know, we never convert our currency and buy like, like, like, you know, like, why would we? And you contrast that with investors in Canada, like they're doing FX trades all day. And I think, you know, that could change pretty dramatically where, you know, there's lots of opportunities. You know, not nothing against U.S. equities. It's more of there's going to be more opportunities outside of the U.S. And as investors get more globally savvy, they'll have more access to making investments in the growth of the Chinese consumer, which I think is like what people want. investments in the growth of the Chinese consumer, which I think is what people want.

People don't want to invest in the largest oil company in China that's controlled by the Chinese government. That's not interesting to US investors. But that's what the index used to look like. Well, that's it. I mean, that's where I always say it's not the SOEs, it's the sectors. SOEs are state-operated enterprises? Yeah, exactly. State owned, right. So those are banks and oil companies and utilities and phone companies. Yeah, yeah. State was in charge of.

Exactly. So I'm just like, listen, like pop the hood on any China or EM ETF and just look at the sector exposure. I mean, do you believe 50% of China works in banks? Well, that's how you're investing. You think 20% of EM people work in banks? I mean, you know, we want to own the growth part. And that's where, you know, we've been very focused on, you know, China, internet, domestic consumption. And then on, you know, we've kind of applied that thesis on the EM side as well. Okay. So let's talk about Ant Financial first, and then we'll kind of applied that thesis on the EM side as well. Okay.

So let's talk about Ant Financial first, and then we'll get into TikTok. So Ant Financial is going to bypass New York and London listings, which 10 years ago would have been out of the question. But they're basically going to do a Hong Kong listing. And I think there are some political reasons why they're choosing to go that route. So do you want to talk a little bit about how large Ant is going to be, what the company does, and why US investors should take notice? Yeah, I mean, this is a monster. This is the number one fintech unicorn globally.

In terms of mobile payments in China, they do about 3.8 trillion in mobile payments. Ant Group has 50% of that. 1.2 billion users, of which 900 million in China. Just to compare this, Ant's got 1.2 billion users, PayPal, 325 million. Uh, in Q, in Q1, uh, PayPal didn't even do, um, didn't even do, um, didn't even do 200 billion in mobile payments in Q1. Um, Ant did literally, it's like 1.7 trillion last year. I mean, now Alibaba does own a third of the company and they do mobile payment. They do wealth management. They actually did a robo with Vanguard.

They've signed up 200,000 clients in four months. They do financing, insurance. They do credit ratings on people because they know who pays on time. In terms of revenue, it's estimated last year they did about $4.2 billion. I'm sorry, $20 billion in revenue, about $4.2 billion in net income. So this company, it's not just that they're big, they're dominant, but they're actually profitable. I think one of the fun things about this- They're bigger than most financial services companies in Europe and the United States.

Yeah, yeah. I mean- They're not a developing market really anymore. The population is developing in their wealth and sophistication, but this company is world-class. Yeah, yeah. I mean, this is a $200 billion market cap company day one. How much can they raise in Hong Kong if that's where they list their IPO? So they're probably only going to sell about 5% to 10% of the company.

So we're talking about this would be the biggest IPO ever in Hong Kong, at least in recent memory. How does that compare to the Alibaba IPO? It's going to be a little bit smaller than Alibaba, but it's going to be pretty darn close. Jack Ma has said that he thinks Ant Group is bigger than Alibaba over the next several years. over the next several years. One little funny, I'll tell you a little antidote. So a few years ago, we had an investment committee. They kind of were reading China last night and eventually they called us and said,

we want to call your bluff. We think you're full of it. So I brought them. We met them in China. And our first meeting was 9 a.m. Monday morning in Beijing. We were going to see this company called Tianhong Asset Management, which is the mutual fund arm of Ant Financial. Tianhong is famous because it's got a money market fund that has $174 billion in it.

This is regular people's money guess guess how many users they have guess how many people own own that mutual fund money market money how many 600 million come on no i mean what is it what is it what does it invest does it buy does it buy treasury bonds it's like commercial paper commercial commercial paper. Um, and this is like, wait, this is like, if I'm a seller on Alibaba and I collect money from the people that bought stuff from me, I can on the app shift that money I've collected into this money market fund that you're talking about rather than put it into a bank. That's it. Exactly. Exactly. And that's how they got so big so fast. Exactly. Exactly. And that's how they got so big so fast.

Exactly. Exactly. That's exactly it, Josh. So we went to see Tianhong. So it's me, it's me and these four Americans and we're in our suits. And we walked up to the security desk. Now, mind you, this is 9am Monday morning in this Beijing office building. So we go up to the security desk, I pull out my wallet and, um, this woman immediately comes up and says, you're Brendan. Um, and I was like, Oh, well, like, how did you know? And she's like, come on, man. Like it's Monday morning in the lobby. And here's these five Americans wearing their suits. Yeah. We weren't that hard to pick out. Right. Yeah. But, but she said, you know, she said in reality in reality is um i could tell her you were americans because you all went for your wallets and and and your purse uh to pull out your id

and and in china you don't study your phone um in china you don't need a wallet you don't need a purse because the things that are in it are obsolete. And that, that, you know, everyone in China, all you carry is this, you know, your mobile phone and you put your driver's license on the back. Okay. Got it. All right. So, so, so you went and checked it out. And so like you, when you, when you think about the scale of, of Ant, I guess the next question is, is this a company that like Visa, like American Express, like MasterCard could transcend the borders of China and become a global financial services brand? I know there is probably some political hurdles to that happening,, is it inevitable that Ant becomes well known around the world? Like some of our banks are? I mean, in, um, you know, if you look at a New York cab

or many, you'll see they'll, they'll say Alipay because of Chinese tourists or Chinese tourists, you'll love to travel. Um, I think it'll be harder here, you know, just because, but, but in Asia, I think they'll do very, very well. Uh, I think it'd be harder to, you know, just because, but, but in Asia, I think they'll do very, very well. I think it'd be harder to compete. You know, it's more like, you know, I mean, look at Microsoft with Bing, right? Like, like, you know, it's like, you know, how do you come here and compete with these established players? It's really, really hard. But I, but I think in Asia they'll, they'll clean up. And that's a huge opportunity set.

That's like more than a third of the world's population. Yeah, 4 billion people. Yeah, so it's more than half. So it's not like they have to come to North America for our 300 to 400 million consumers. It's not that important. And might go through the hassle, right? Yeah, All right. So let's talk TikTok. So this is like the hottest technology company on earth right now, or social media company on earth right now. There is not a kid under the age of 21

that is not spending an enormous part of their day either watching TikTok or creating videos for TikTok or both. This is it. This is becoming as popular as any other app on our phones. It's dwarfed Twitter already. I think it's probably overtaken Snapchat. I'm not 100% sure about that. You'll tell me. It, and it's approaching, it's approaching Instagram levels of ubiquity amongst young people. So what's the story with this? And then I'm going to ask you how we can invest in it, but, but like, give me a sense of like how big TikTok has become. Um, 1.5 billion monthly users. So about, about just about half of that is TikTok. The other half is, is in, you know, in China, in Asia, just, you know, TikTok is the Western brand where ByteDance, you know, it's kind of a two tau is the name of the brand in China. So, so, so they've done, you know, in terms of global brands, they've done exceedingly well. Um,

you know, you're talking about a valuation based on the last raise, puts them over a hundred billion. Okay. Um, but, but let me stop. Let me stop you. The parent company is known as bite dance. Yes. The app in America started out as being called Musical.ly. And now, and then they changed TikTok a few years ago, but it's global. When you say the last valuation based on what the money they raised puts them at a hundred billion dollars, who are they raising money from? Who are the current shareholders in ByteDance? Private equity. Chinese as well as US. Asian private equity or US? And US.

So venture capital firms in the United States have gotten a piece of, right. Yeah. So they're investing in China full speed ahead. They're not waiting. Here's the irony. It's still politically acceptable. Is institutionally, U.S. pension plans, foundations, endowments, when everyone in the late 90s, early 2000s copied the Swenson, the Yale model of investing in alternatives, all that money went into the USP funds, all went into China in the early 2000s. If you go to a pension plan or if you call your college endowment, they love China because that

private equity became public equity and they've made huge amounts. I mean, we know a city pension plan has a 20% China allocation based on one private equity fund. I mean, it literally was a 1% position and now it's like 20. Right. Yeah. Steve Schwartzman at Blackstone, he's got like a school named after him in Beijing, like a leadership academy. Right. So private equity has been there for a long time. Yeah. But so now US venture capital firms have been able to invest in ByteDance. So they are participating in the frenzy happening with the TikTok app. Is TikTok successfully selling ads the way that Instagram does? And what does that business look like? Okay. So here's the crazy thing about ByteDance and TikTok. The company didn't exist until 2012. In 2015, it did 4 million in revenue,

advertising revenue. In 2019, it is private. So there's a little bit of an asterisk on these numbers. But what we've seen is that it did approximately just under $200 million in ad revenue in 2019. But in the month of May of this year, based on Google and the Apple Store, they did over $100 million in revenue in one month. That's insane. It's insane. Now, do they have to share that revenue with Google and Apple? So they do. Those guys take a bite. Apple takes a third of app revenue generally.

So if TikTok does 200, would you say 200 million in a month? Yeah, yeah. So Apple is taking 30% of that. Well, they're getting 100 million a month. Excuse me, 100 million a month. Okay. So Apple gets a third of that revenue. So if you're an investor in Apple, you are getting some small portion of the overall revenue piece from TikTok. Yeah. Yeah. Yeah. Now TikTok somehow has become a political issue. Um, you know, TikTok hired, uh, the CEO of TikTok is actually an American. He's a Disney executive. He did the Disney plus the streaming, uh, this guy

named Kevin Meyer. He led the Disney app. He did. He led the launch of Disney plus. Yeah. What a brilliant, what a brilliant move by ByteDance to, to put his face on it for, for the Western audience that might be concerned that it's, you know, I've heard it's Chinese mind control. It's cataloging every citizen in every country. I've heard it all. Maybe it is. What do I know? I mean, listen, if you know, I mean, to me, I'm probably a little jaded. But, you know, the Secretary of State of the United States is most concerned about teenagers lip syncing and dancing during a global pandemic. That's kind of I mean, I mean, this is a distraction technique.

And they also brought on a senior exec from Facebook. Their head, their head legal advisor is the ex head of Microsoft Intellectual Property. is uh the ex-head of microsoft intellectual property so so you know they've got you know they got some western faces there because i think they're very worried that they're going to have to break out bite dance and tiktok for political reasons you know the u.s government made um a chinese company on grinder the gay app that and they made them sell it so so what's interesting is these u.s private equity firms are saying, uh, you know, you should, you know, you should break them up because they want to buy it on the cheap. Uh, Tik TOK does bite dance has a problem with the little con the,

this little riff in India. Uh, India was a huge market. It's like something like 250 million users of Tik TOK in India and the Indian government just turned it off. That's unbelievable. Yeah, just turned it off. And so TikTok is very worried that the US government could do the same. What's not helping ByteDance and TikTok is this company is a real deal threat to Google, to Facebook. And the same is true in China. In China, this company is a real threat to some of the established players. Who are the established social media players in China

that would be threatened by TikTok? Is it like WeChat? More Baidu, Baidu, Momo, Weibo, you know, one, one in, you know, you know, a lot of the traditional retailers do advertising dollars and during the quarantine in China, and I think this is going to be true for Facebook and potentially Google is the traditional payers of advertising revenue are traditional retailers. So how much, why would they advertise during a quarantine? In China- No one's coming to the store.

Yeah, yeah. Users went up for Weibo and Momo. Revenue was down because of the lack of advertisers and because of ByteDance. ByteDance has some real enemies out there. And I would put Google and Facebook on that list as well. Okay. Is Instagram feeling pressure already from the popularity of TikTok in the United States? Are advertisers choosing between the two or not yet? Without question. I mean zuckerberg his uh his testimony in front of congress is going to be skewering bite dance okay he's gonna make he's gonna make it like what are you worried about me for look at these guys yeah yeah um so so he he he submitted his testimony uh was prepared by marks and it's a anti

China slugfest on going after bite dance and how these dancing teenagers are a national security threat. I mean, to me, it's just a joke. It's a distraction technique. Honestly, when I start doing choreography and routines on the app,

that will make it a national security threat. Okay, so if I'm a US investor and I say, all right, I see this massive opportunity for TikTok, it's going to rival Instagram. And if I had invested in Facebook as Instagram started to load ads, which was like probably a year or two after the acquisition, the growth in Facebook shares is just absolutely enormous. So I say, all right, I want some of that. I want to get in on that. Right now, there isn't any option because it's not public. So you could be in the venture capital funds that own a share of it,

but that's about it. Or you could be an employee getting stock options, which I don't even know if ByteDance is doing that. Probably not a big, all right. But they will come public eventually because they need to have that publicly traded currency and they need to become politically more important to a broader group of investors. Right? Once you come public, then all of a sudden you can't just be shut down because too much money is at stake, which I think Zuckerberg figured that out. Like a lot of, a lot of social networks have figured that out. Okay. So they will come public. Where do you think, I know they haven't said anything, where do you think they'll list and how soon do you think

funds or ETFs will be able to buy shares in it? So, so they're probably going to list in Hong Kong, just the political overhang. It's just too, you know, like it's just, you're probably going to list in Hong Kong just the political overhang. You're not going to bother. They might leave some money on the table. I think the NYSE and NASDAQ are the global standard. And unfortunately, Alibaba, when they went public, it was 300 million of fees went to these U.S. investment bankers. And living in the New York metropolitan area, I need that money to prop up my house price. But that's 200 million of fees go to Hong Kong instead of here. So it's going to be Hong Kong. We do have a fast track inclusion that we kind of realized seven years ago. You say we, so let's back up. We haven't even mentioned, we're not promoting, by the way, relax.

We're not promoting ETFs. But Brendan's firm, Crane Shares, is the sponsor of several Chinese equity ETFs and tend to have a focus on technology equity ETFs. ETFs and tend to have a focus on technology equity ETFs. So when you say we have a fast track inclusion, so you don't wait six months after a Chinese technology company goes public, you'll include it into your index quicker. Yeah. Yeah. I mean, we listed a year before Alibaba went public and we were like, this is stupid if you have to wait six months to buy it. So we do, we buy it 10 days after the IPO. Um, and, and, you know, everyone says, Oh, these, uh, you know, your IPO ETFs will own it first. We'll get it before they do. So, okay. So if it lists in Hong Kong and you have a technology,

you have a, an ETF that focuses on Chinese technology, you have to own Ant Financial. an ETF that focuses on Chinese technology, you have to own Ant Financial. You have to own ByteDance. You have to be exposed to that because that's the opportunity set. So you guys will make the change to your index and then you'll add it to the fund itself. Yeah. I mean, we've always held US and Hong Kong, you know, Tencent and Meduon Dianping are two great, great companies listed in Hong Kong. You know, we own them today. When you do that, so Tencent is a pink sheet stock in the United States, even though it's like, I don't know what the valuation is. Is it hundreds of billions of dollars? I mean, you know, the TCEHY is an unsponsored ADR.

Right. Do the blue sky laws. If you live in Florida, you're actually not allowed to buy it. You don't need me to buy you that, you know, the pink sheet. We go into Hong Kong and buy 700.

That's what I'm asking you. So you'll buy it on the Hong Kong exchange. Oh yeah. Yeah. 100%. You're not buying the pink sheet version. No, no,

no, no. And ETS supposed to do something that you can't do yourself. So if ByteDance lists, exchange oh yeah yeah you're not buying the pink sheet version no no no okay and etf is supposed to do something that you can't do yourself so if fight dance lists will there be a u.s like a sponsored adr like tik is the ticker like will they do that or is it not even worth it to them at this point you know it's without rhyme or reason why there's some ADRs and not others. You know, Nestle is an unsponsored ADR. I mean, it's one of the largest, you know, it makes no sense.

I don't know. I don't really get it. Right. Well, the unsponsored ADR, the sponsored ADR basically has a brokerage firm that's willing to make a market in it. And they create a version of it for their customers, but it trades freely. Is that how that works? Yeah. I mean, I was told that, you know, the unsponsored just means a bank just goes and does it without the company's permission versus, you know, so, so the company delivers like the dividend to the sponsoring bank and an unsponsored, the bank gets the dividend, like a normal shareholder and then has to re-disseminate it.

Okay. All right. So, but TikTok, we think when it does go public, it'll trade in Hong Kong. And if you want to be an investor in it, you can buy it on the Hong Kong exchange directly, which is a little bit complex for US investors sometimes, or you can own it in an ETF structure. And okay. All right. So I think a lot of US investors are going to be very curious about that. So I really appreciate you coming on today and talking to us about Ant Financial and TikTok. And I think I'm going to be back with you because some of these Chinese growth companies are like, they're becoming major stories in the United States. People are fascinated,

terrified, and everything in between. So thanks so much for being on. I want everybody to go to China last night. And if you're interested in becoming a more educated global investor, put your email address in the box. It costs you nothing. And you'll get branded notes every morning. And even if you read it once a week, instead of every morning, you will be more knowledgeable about what's going on in one of the largest markets in the world. So Brendan, thanks so much, man. No, thank you, Josh. Hey guys, it's downtown Josh Brown back with another edition of what are your thoughts? I'm here with Michael Batnick. As always, we're going to play our favorite game. Michael has no idea what I'm going to ask him, and I have no idea what he wants to ask me about. Play along with us in the comments below. We love your participation. Let's get right into it. Okay, Mike, I want to ask you, I mean,

this is like obviously what I had to lead off with. Everybody's trading. So you had a really funny encounter with your plumber this past week. I read your post about it, but we didn't get to talk about it. So you have somebody in your house fixing something. He sees you looking at a screen with the stock market on it. Then what? He goes, you do stocks? So let me just set this up.

You do stocks? I do. It set this up. You do stocks? I do. It was probably, it was 8.30 at night. I'm writing a blog post titled, Why Everyone's Trading. And the angle that I was going for was all of the conditions could be in place with the free commissions, the Portnoy effect, the quarantine, the $600 stimulus. All of that could happen. But absent the most important

condition of stocks going absolutely apeshit, people wouldn't be trading. So I gave a list of 170 names in the Russell 1000 that have at least doubled from their low. So that was the original premise of the post. Okay. Wait, slow down. So there are 170 stocks in the Russell 1000 that have 100% plus gain on the year? No, no, no. From their bottom. Oh, from the low. All right.

Got it. From their respective low. Okay. So that was the post that I was working on, on why everyone's trading. And then literally this man walks into my office and says, you do stocks. So I turned to him and I say, what do you got? He takes out his phone. Wait, like you were ready for a lightning round at 8.30 at night? So excited.

He's so excited. He shows me his phone and he says, what do I do? I've got 130 grand in the market and I have absolutely no freaking clue what I'm doing. Right. And the names are exactly what you would suspect. Tesla, Nikola, I think Apple and Amazon. And I would guess that he started with 50 grand. I didn't ask, but.

All right. So you're making the point like, of course, everybody's trading. Why wouldn't you be trading? You have stocks like Wayfair that are up 835% since March. Tesla quadrupled. Wendy's up 211. Wendy's. quadrupled. Wendy's up 211. Wendy's. So the thing is, a lot of these names are, at this point, household items or brand names that are directly in our life. Peloton,

Slack, Chipotle. Everyone knows what these are. So these are the names you know, and they're going bananas. So this is, you know, it's not, it's not a mystery. This is why everyone's training. But I can't believe that I had like my very own shoeshine moment. And I told him, I was like, no offense, but I read him the quote and I was like, you're my shoeshine boy. And don't take this the wrong way. All right. Well, what's the quote? This was this, who said this Rockefeller? Joe Kennedy allegedly said this. Yeah. Something along the lines of when the shoeshine boy starts giving you stock tips, something, something, something at the end. Well, that's when you want to start selling because people are too excited about stocks. All right. So I was talking about this with Ben yesterday and he's like, you know, we've had anecdotes like this over the years. And I was like, not like this. We've had the Mila Kunis one. We've had the Aaron Rodgers VC one, the Mike Tyson

crypto brokerage or whatever. We've had all of that, but now it is everybody. All right. So I had that moment. I was like scrolling through podcasts in the investing category. I was looking for something in particular and I came across the Robinhood Snacks podcast. They call it Snacks. So I guess it's like meant to be like short, like short little vignettes about stocks, like or little like headlines and then like a snarky or a silly comment. No offense to Robinhood and the two young men

that are doing this podcast, but I wanted to blow my brains out. Like I wanted to log in and sell everything just like your experience because it was just the dopiest. Like it would be like they would name a ticker symbol. They would say like what the news story is. And then they would use like some like slang shit that like – not even millennials. Like Gen Z slang or like a lyric from a rap song to just like tell you what's

happening with it. And they did, I heard like three tickers and I was just like, who is this for? Like, cause I remember being 22 years old and starting to learn about the market. I didn't want to be pandered to with like nursery rhymes. Like I wanted the real shit. I wanted to read and listen to people that really were experienced and knew what they were talking about. I don't even understand who the audience is for that. And the joke's on me. They probably have 9 million subscribers.

But I'm just saying like that's where we are now, where it's like it became a game. I want to make three points. One, not every market top needs a retail frenzy mania, but that's what we have today. And in my opinion, every retail, I guess it's not opinion, throughout the course of history, every retail frenzy has ended badly. Oh, yeah. No, I don't care. I'm not even afraid. I said on my podcast last week, it's a bubble, whatever it is. Hang on. Right. Number two, it can pop if this is a bubble and it can be contained to these names. It doesn't have to drag down the entire market.

Agree. Right. So this is not like a sell everything thing. It's a, Hey doc, you signed Shopify, Spotify, and it's not even a commentary on the fundamentals of those companies. I have, I don't know anything about those fundamentals. The point is when stocks just indiscriminately, maybe it's not indiscriminate, but when a group of stocks just go vertical, that tells you all you need to know. And the third point was, we spoke about this after your podcast last week, which is excellent on SPACs. You made a really insightful point that people think that it's retail that ends this thing, that it's a bubble and there's nobody left to buy. But what actually happens is that Wall Street responds to the demand with excess supply,

and that's how it ends. And that's sort of where we are today. So the stocks that you named as being up 170%, like Zoom, Roku, Beyond Meat, Zillow, DocuSign, I mean, we could go down this huge list. What will happen is that Wall Street will furnish more versions of those things. And they'll say, this is the next Zoom. This is the next Grubhub. This is the next Roku. And they will force feed us like they force feed geese in order to turn their livers into foie gras. They will f***ing drown us in supply.

And it's supply that puts the top in to these types of retail frenzies. So I absolutely think that that will be the case now. And I think the boom in SPACs, just these piles of cash that aren't even a company yet, that is the sign that we're getting extremely close. And ultimately, there become so many new issues and secondaries and more shares available that we just, we drown in them. They saturate, they soak up all the demand and then you'll get an oversupply and that's when things tip. So we'll get there. There's only so many plumbers. All right. So sticking with this, on Thursday, we've got Facebook, Apple, Amazon, and Google all reporting earnings. These companies represent $5 trillion in market cap. I think they're 40% of the NASDAQ 100. They're expected to do $115 billion in

revenue. Two more stats I want to give before I ask your thoughts. So we've got, according to facts, that a quarter of all S&P 500 companies have reported as of Friday, a 42% blended earnings decline, which is obviously awful. If that stood, it would be the worst decline since Q4 2008. However, as we know, it's all about expectations. And according to JP Morgan, 80% of companies have beat expectations. What's sort of wild about going into this is that these companies have pulled back these four names, but barely. They're all still within 5% of their all-time high. So I don't even know what I'm asking you, but we got them on Thursday. What do you think? Let's unpack that. First of all, it's nice that we have Super Tuesday now every earnings quarter. We have this moment where it's almost like it's the only day that matters for large cap growth stocks.

It's all the names at once. But the second thing is the 42% decline in earnings that are expected for the quarter matches up very nicely with the 35% decline in GDP. So it's almost – the symmetry is almost perfect. And much like nobody's going to get worked up about the decline in GDP, regardless of what it is, because we're already so far into the new quarter that we know it was temporary for most areas of the economy. People are going to treat this quarter's worth of earnings in the same way. Expectations are going to be the only thing that matters. And then you're going to hear analysts ask questions of CEOs. CEOs can't answer. And then you're going to hear analysts ask questions of CEOs. CEOs can't answer. Like they literally, all they can do is say cautiously optimistic because how are you asking somebody what the fourth quarter is going to be like? We don't know if another 2 million people are going to be infected between now and next

week. We really don't know. So CEOs are going to say, well, we're planning for the worst, hoping for the best. It's all nonsense is my point. Well, Lizanne Saunders did a post over at Schwab. She said that nearly half of S&P 500 companies already withdrew full year earnings guidance. Yeah, why would they keep it? It would be madness.

Imagine – just think about it as a private company. Forget you have 5 million public shareholders. Let's say these guys were sitting in a room with the six shareholders that own the company. Would they be like, yeah, here's what's going to happen in the fourth quarter? No. They would be like, look, here's the deal. I don't know anything. I can only tell you what I'm preparing for. So it's obvious that what's happening in the overall market is about sentiment, not about fundamentals. And I don't see why that would change just because we get last quarter's earnings and maybe updated guidance about next quarter. But if you're a seasoned CEO or CFO, you're not giving anybody real guidance or anything

that you're saying forward-looking is so wrapped in caveats that it's to my to my earlier point, it's basically meaningless. What do you got? I want to ask you about the US dollar. So the dollar versus the index hit a two year low over the last week. The dollar versus the euro has been the real highlight of what's happening in Forex this summer. It just appears that, oh, and as a backdrop, the United States as a country is on its way toward joining a fairly exclusive club. We're going to be 101% debt to GDP by the end of 2020 based on current projections. So Japan has gotten there. Italy has gotten there. We are on our way. And so that sell-off in the dollar, I think, is going to be one of the biggest drivers of asset class returns in the second half of this year. It's a radically different environment

than what we've had for most of the last four years, where the dollar has been very strong. And I think there are big implications, but what do you think? There are absolutely big implications. So dollar has been strong for years now. I think it really started going nuts in 14, 15, and we've sort of plateaued. But yeah, it's been strong. So it's certainly been a detractor for US investors in foreign and international stocks, obviously, having an enormous impact on commodities, gold and silver in particular. How is it affecting Bitcoin? I mean, maybe that's tied together. So yeah, I think that- Well, hold on. Let's back up. Gold just hit

an all-time high, decisively got above 1900, I think close to 2000 today. And that's the highest level in nine years. And the flows, Jason Zweig did a big post over the weekend, the flows into gold ETFs are enormous again. So that's a mega trend and that's being driven to a large extent by deficits in the dollar. For sure. So that's probably what drove it. And then what's driving it now is just the piling on. So Balchun has said that GLD, SLV, and IAU were all in either the top five or top 10 in weekly flow. So he said it's gone from strength to just a full-on frenzy. Okay. Now, when you look at the price of gold versus 2011, the previous peak, so we're back at that level. But then you look at the mining stocks, they're not even close. They're not even close. Well, because they probably fell. Did they fall 90%? I think maybe the junior miners might

have, but they're annualized returns. Any way you want to slice it, there's a ton of ground that could potentially be made up by the mining stocks if the price of gold is at least steady in the high 1900s, 2000. So Newmont, for example, fell 78%. From peak to trough. When did they bottom in 15? That's the only mining stock in the S&P 500, gold mining stock. Well, yeah. So gold mining stocks as a percentage of the S&P are less than 1%. No, it's probably like one basis point, literally. As tiny as you could be is my point. By the way, GDX fell 81%. Well, let's be clear though. GDX is made up of international

gold miners, many of which trade on US exchanges. But I think that's why in the S&P, there's not a larger concentration in gold stocks because think about a lot of the mining giants, they're just not US companies. I feel like the dollar is like the ultimate story. Gold too, but why is the dollar falling? Is it deficits? Is it how we're handling the virus? Is it investors forward looking on the economy? It's all of those things. Dude, the election. We might have an election where the incumbent loses and doesn't concede. That should be bullish for the dollar. No. All right. So sticking with this, I wanted to ask you about, there was a chart from Bank of America,

So sticking with this, I wanted to ask you about, there was a chart from Bank of America, highest 90-day return ever. I'm sorry, this goes back to 1992. Highest return over a 90-day period for an equally weighted portfolio of bonds, stocks, bills, and gold. It looks like it's, I mean, and it's not even close. You could say that it's coming off the lows and yeah, 09 was the second highest, but we've dwarfed that. It looks like close to 20%. The previous high was 13 or 14. Wait, for what period of time? 90 days. Over the last 90 days has been the best performance for a diverse- An equal weighted portfolio of stocks, bonds, gold, and cash, a quarter in each. So, okay, got it. So if you did a quarter in each of the four major asset classes, you've just seen the best 90 days ever. Which is interesting because we know cash is zero.

So this is primarily stocks, gold, and bonds. Right. It's a shame because I keep listening to all these guys that are telling me to short everything and go to cash. I'm sorry. I think something has to give though, because I would love, maybe we should do this. Maybe we should look at what happens after. I would love to know what the next 90 day period looks like after the top 10 or the top five 90 day periods like this. I would just be very curious. We should do the work. My suspicion is that bonds went out, but I'm just making that up. I'd love to know for sure. I want to talk about baseball and not because of the sport out, but I'm just making that up. I'd love to know for sure. I want to talk about

baseball and not because of the sport itself, but because of what it signifies. I actually think that what happens in the next two weeks with major league baseball and the decisions that are made are some of the most important decisions for the reopening of the U S economy in the second half of the year. Um, that, that we're going to say, like, I think it's, I think, pun intended, it's the whole ballgame. Here's what I want to ask you about. So baseball restarted and four days later, they had the Marlins outbreak. So there were 14 players on the Marlins that contracted COVID at some point in the course of playing.

So now they were playing at Philadelphia. So they don't leave the city. There's the whole team quarantine awaiting more tests. Now the Yankees are supposed to go to Philadelphia yesterday and play. So that gets postponed. And then whoever was supposed to play the Marlins, I think maybe Baltimore, that game doesn't happen. So now you have this chain reaction, but the commissioner did not cancel the season. He's like, look, we were planning for this. We have a protocol. We're going to watch this play out. We're going to see what happens, how many players contracted, how many negative tests, and then we're going to try to play

through this. That's what every school, university, government employee, like that's what everyone should be watching because if it works, if baseball can kind of plow through this and then there's no more infections and they can contain it, I think it's a really important signifier to every other segment of the economy. segment of the economy, not just the upcoming NFL season, but like the real economy, like, hey, we can contain this thing when it sparks and we can plow through and we can get kids back in school. I think it's super important. But what do you think? You said it all. I agree. I got nothing left.

That's it. I did the whole thing. You're not. Wait. So you're not. I know you're not like a huge baseball fan. I'm going to repeat what you said. I agree with you. I agree with everything you just said. You're not watching any of it. Like, you're not dying wait. So you're not – I know you're not like a huge baseball fan. I'm going to repeat what you said. I agree with you.

I agree with everything you just said. You're not watching any of it? Like you're not dying to watch sports? Not baseball. Don't care. Really? All right. Don't care.

Not even like throwing a Yankee game just out of curiosity? You're not missing anything. It's weird as hell. All right. There was an article in the New York Times about what's going on in Manhattan. So you and I went last week or the week before, and there's not much going on. We were there on Thursday, last week. Yeah.

Midtown Manhattan is full of tourists, which obviously aren't there, and it's full of people going to offices. Very few people live in Midtown Manhattan. From what I understand, if you're in places where people live, you wouldn't even know that there's a quarantine, aside from the fact that obviously there's restaurants outside. So that's where there's mass. But it's busy. Where people live, it's busy. Midtown Manhattan is a ghost town.

Yeah. So this article, this reporter spoke to a hot dog vendor who used to sell 400 hot dogs a day. He's now selling 10. Listen to the stat. Rockefeller Station Subway. Okay. Last year at this time. It's like 50th and 6th Avenue. Yeah. Iteller Station subway. Okay. Last year at this time. It's like 50th and 6th Avenue.

Yeah. It's right by Radio City. It's right in the heart of this. Last year, there were 62,000 MetroCard swipes on a day. This year, it's down to 8,000, which is an 87% decrease. 87%. So my question to you is this, what do you think is in bigger trouble in Manhattan specifically? Commercial real estate? Yes. Or residential? Or residential? I think they're inextricably linked, but I would, if you ask me, you have to have a portfolio of one or the other right now, I'll take the residential. I can't imagine things ever going back to the way they are, not because we're going to live in fear of viruses, but because we've just proved, we've just proven that the knowledge economy does not require anywhere near

the amount and the cost of office space in places like Manhattan. We know Google, Google just told its employees they're staying home till next July. That includes huge amounts of people working in Google's offices in Manhattan. They have like a city block in Manhattan. Yeah, yeah. Yeah, they do. Let me ask you this. Do you think that, and I'm not talking about 30 years from now, do you think that in major

metropolitan cities, San Francisco, New York, that home prices peaked, whatever, a year ago, and they're going to stay there. We're not going to surpass that peak for three, five years. Do you think that's reasonable? I mean, if people aren't going to the office, why do they need to be in the city? I think culture will come back. I think restaurants will come back and Broadway and concerts and sporting events. And I think there will always be an appetite on the part of young people to live in downtown areas and be somewhat near work. And I still think that major companies are going to have a presence in cities. No doubt. No doubt. But my question is, let's say that there's a 12% decline in home prices. Do you think we will see new all-time

highs in the next five years? If there is, it'll just be driven by inflation and devaluation of currencies. It won't be driven by there's this uptick in demand. It's just never going to happen again. And we might have overbuilt luxury and high-end apartments. I mean, we definitely did. So that's already an issue. They were building, apartments. I mean, we definitely did. So that's already an issue. They were building, they were throwing up towers just to sell empty apartments to Chinese millionaires who were trying to get their money out of the country. Like they weren't even building some of these things for people to actually live in. They were building these safe deposit boxes in the sky for oligarchs and all of that's over, or at least for the foreseeable future. So I think we're over office-based and we're over-apartmented in places like New York City.

And yeah, I'm comfortable saying you've seen a peak for many, many years to come, to answer your question. Let us know what you guys think, though, most importantly. We love your feedback. Go ahead. Jump down in the comments. Tell us your thoughts on these topics. Do I need a toupee? No. And stop calling Mike bald. I think he knows like i think he's no no i'm okay with being called bald this person said i look strange and no and it was no offense no offense but you look

strange i i think you're beautiful even though you like you even though you look like a grown-up version of your baby i still think you're beautiful. All right, listen, let us know what your thoughts are. Ex-Michael or my personal appearance. We do our best. We're trying our best. Go ahead and subscribe to the channel if you haven't already. Tell your friends we're blowing up. We want them to be a part of this. Give us a like if you like this video. If you don't, that's okay too. You can keep it to yourself. No one will be mad and we will see you very soon. That's okay too. You can keep it to yourself. No one will be mad.

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