The Compound and Friends - Investing Ideas From Jason Hsu, a Stock Market “As Good as It Gets”, Why the Fed Should Stop Talking

Episode Date: April 2, 2024

On this TCAF Tuesday, Downtown Josh Brown and Michael Batnick are joined by Jason Hsu, Chairman & Chief Investment Officer at Rayliant, to discuss international markets and how to invest in friendshoring. Then, at 43:54, hear an all-new episode of What Are Your Thoughts with Josh and Michael! They discuss Tesla, oil stocks, small caps breaking out, Jerome Powell, Trump's stock, and more! Thanks to YCharts for sponsoring this episode! Visit https://go.ycharts.com/2024-advisor-client-communication-survey?utm_source=WAYT to learn how YCharts’ proposal generation and customizable client collateral can boost your overall client satisfaction and increase retention rates. Buy your ticket for TCAF in LA: https://www.eventbrite.com/e/the-compound-and-friends-live-in-los-angeles-tickets-869393077097?utm-campaign=social&utm-content=attendeeshare&utm-medium=discovery&utm-term=listing&utm-source=cp&aff=ebdsshcopyurl Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews Linkedin: https://www.linkedin.com/company/the-compound-media/ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to The Compound and Friends. I am your host, downtown Josh Brown. Super excited to tell you about something that we're doing in Los Angeles. If you're from Southern California or you wanna make the trip, if you're in LA or any of the surrounding counties, we are coming April 30th.

That's a Tuesday night after work. We're recording a live episode of The Compound and Friends. I'm bringing Mike, I'm bringing Duncan and Nicole, and everyone's going to be there. And we're going to have some special guests. We're going to have food. We're going to have drinks. We're going to have music. It's going to be an amazing networking opportunity. Somebody told me there's not a lot of great get-togethers for people who love investing in Los Angeles. It's not like Boston or New York or Chicago, where you could like stumble, you know, into a tavern or walk down the street and go to a meetup. I understand LA is not built that way. We also know, however, we have a ton of fans there. And there are just people that are really into investing and trading.

And we decided we're going to do something that gives you all an excuse to get together, meet each other, and hang with us. So it's April 30th. There's a link in the description to this show where you can get your ticket. And we'll see you at the end of the month. It's going to be awesome. I can't wait to meet you. Okay.

Tonight's show is sponsored by YCharts, greatest sponsor in the world. Something really interesting. They did this advisor communication survey. They basically asked investors what percent, they wanted to find out what percentage of the investors responding to their survey contemplated switching financial advisors or actually switched last year. And the number was shockingly high. 75% said they either switched or thought about switching. And that's versus the prior year, which was at 48%. So the question becomes then what can advisors do to communicate better with their clients

based on that survey? And I think the right answer or one of the right answers is communication and materials. What are you using to demonstrate or to illustrate to clients exactly what you're doing for them? How are you showing them the portfolio and the strategies that you're including? And what are you doing to build reports and actually physically get material out to them? So Whitecharts has amazing tools for that. And they're going to give you a 20% discount if you sign up for a trial right now and tell them what are your thoughts sent you. So there's a link in the description to figure out how to do that. Pretty simple. YCharts professional is Liddy. Okay. Tonight's show is also Liddy. We have Jason Hsu. We were

in Colorado last week with Jason and we talked about China, emerging markets, AI, stocks, bonds, the usual. And Jason is super smart, had a lot to say, and we had a lot of fun. So you're going to love that. And right after, it's another What Are Your Thoughts with Michael and myself. And we tackle all of the biggest topics of the week. It's a great show. Thank you so much for listening. I'm going to send you there right now.

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 Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Thank you very much, guys. Welcome to the Compounded, friends.

This is the first of two tapings we'll be doing while we're here. You will hear this audio at some point in the future. And so we encourage you, if something we say is funny, feel free to laugh. If something we say is worthy of approval, feel free to clap. And if something we say is provocative, oohs and aahs would be perfectly fine with us. It'll all make it into the audio recording. So thank you so much for joining us. We did put this together on short notice

and we wish Barry all the best. I spoke to him this morning. He's fine. I know that because he went on three different tangents about three different unrelated subjects. So he's okay. But we are very, very fortunate to be joined by Jason Hsu today. Jason is a regular on our show. This is his third appearance with Michael and I.

We've known him for a very long time. I would consider Jason to be one of the most well-informed, one of the most, I think, pragmatic investors. and he is a global investor in every sense of the word traveling around the world giving perspective and gaining perspective from everyone he meets on every continent and so jason is a wealth of knowledge on the investing landscape let's give him a round of applause for joining us on short notice Okay. Jason, you are the founder, chairman, and CIO of Rayliant Global Advisors. It's an asset manager specializing in asset allocation and investment management across developed and emerging markets with 18 plus billion in assets under management. You're also an adjunct professor of finance at the UCLA Anderson School of Management.

Raylient was founded in 2016, and you are managing equity, fixed income, alts. You work with high net worth investors. You work with institutions. Your strategies involve behavioral finance, data science, quantitative methods, and you utilize both ETFs and SMAs. You're doing a lot. These days, you have to. These days you have to. So tell us a little bit about what it's like to be a global and international investor in 2024 and not just investing, but also building a business that's founded on those investments. Well, I can tell you historically, it's been really, really rough to be international, whether it's EM or it's developed markets, because it is hard to outperform the S&P and much harder the NASDAQ, right?

So international diversification hasn't worked. And so in 2024, where you're looking at sort of ultra-cheap valuation in EM, it seems like a good thing. But then you're also looking at the US, the AI narrative. It's hard to get advisors' attention to think about, well, maybe something might go wrong and that diversification is finally going to pay off. So I would say it's a great year to be out there because people are questioning evaluation. But boy, that's not an easy sell. Sure. One of the things that I love about having repeat champions on the show is we get to go back

a year, two years, and listen to what we were saying. And some things age better than others, obviously. Jason was on last February, and hard to believe the S&P 500 is up 27%. Jason was on actually just before the S&P crisis. The Nasdaq is up a lot more, up 44% since then. Womp womp, China's down 25%. Emerging markets are down 10%. And last time we were on together, Josh said something about, so in February 2023, you all remember, the market had bounced, whether it was positioning, people were offsides, whatever the story was. It was a long time ago. And Josh said something like, if we're going to have a soft landing, we're going to need

China to participate. That's going to be a key ingredient. And it's hard to believe that we got the soft landing and China could not possibly have had a rougher 12 months. And Michael said some things that didn't turn out to be true also. But Jason, expand on that. It was, I think, conventional wisdom at the time. China was a trouble spot economically for the whole world's economies. And it really seemed as though we were going to need a bounce there for U.S. industrials to work, let's say, and a lot of multinationals that make big sales into the region. We had this off landing anyway. So to Michael's point, what would be your explanation for how that was even possible? Yeah, I mean, first of all, you're absolutely right.

China isn't just supplying to US consumption, because if that's all it did, look, US consumption has been fine, right? China with its own domestic consumption is slowing way down. That's really impacted Korea and Taiwan, which export more to China now than to the US. So frankly, what we have was a very, very localized bull market, very localized expansionary market for the US that broadly the rest of the world didn't participate. Like if you talk to financial advisors outside of the US, 2023 was a horrible time. So when China sneezes, the world catches a cold is not true because China didn't sneeze,

they barfed. And if you look at companies in the US that have historically been sensitive to China, you think about like Freeport-McMoran or you think about Caterpillar, highly levered to China. Caterpillar stock looks like it just invented a new GPU. So how is it possible that the rest of the world, the United States, has been able to keep chugging along while China has been in their version of the great financial crisis? And this is why I think we need to be a little careful because I think a lot of the new wealth creation, a part of that is fundamental, but a big part of that was sentiment has reverted back to, let's just say, the pre-COVID mode, right? And things are expensive and becoming more expensive.

So it's not all fundamentally driven. And that's where I think one has to sort of question, you know, things have been great. Are we going to see fundamental catch-up? Are we going to see sort of sentiment getting disappointed by sort of future growth, not matching expectation? I think there's that risk. So if we were to get that catch up in overseas stocks relative to US, I think one possible catalyst would be a rally in Chinese equities

that draws in not just local Chinese investors, but the rest of the world re-engages with those markets. And to that point, today was, I think, the start of something that is maybe symbolically very important. And we'll see if it actually becomes important in the shorter or more intermediate term. China rolls out the welcome mat for US CEOs as it nods to its economic problems. That's a Wall Street Journal headline. The number two person in China, Li Cheng. Did I get it right? That's right. Okay. Li Cheng is meeting with Apple, Qualcomm, Micron, all the CEOs are there. And the message is, hey, let's do business again. The journalist noted this is the first time that Li has spoken at this forum since the year 2000. So tell us what you think this might potentially mean

for the rest of 2024. I mean, it's absolutely signaling, and this is what we desperately need. I mean, US and China are such twin engines of global growth. It's much better for the world when both engines are firing, and it's definitely no good when both are sort of gunning at each other. And so the fact that China is willing to extend this olive branch and say, look, we're in trouble, we need help. I think previously, China has this front that we're fine and we can be fine without the US. You know, that message shifting is a great signal for a little conciliation, improvement in a relationship. Sometimes you just have to

acknowledge you have a problem before you can fix it. Signals are really important in a place like China, where corporate executives make decisions based on what they think they're receiving as guidance from the government. They got rid of the head of their, the Chinese equivalent of the SEC. So they threw him out, probably right at the bottom of the Chinese stock market. That's a signal. This seems like it's another signal. And the thing that we need to repair here, foreign investment in China fell 8% last year. The decline in the first two months of this year is another 20%. The rhetoric has been getting worse, even if maybe the securities market has bottomed. But if we keep getting signals like this, that might lead to a tradable or investable situation in Chinese stocks for the first time in a while.

Yeah. And there's additional signal, right? That's just sort of international signal trying to attract that global business and global capital. You've got to realize global capital is a fraction of the equities market. And the equities market's about, you know, give or take 12 trillion. So it's quite large, right? So global capital is actually a small part of it. A lot is domestic sentiment. I tell you, the domestic sentiment in China is probably weaker about China than the international sentiment, right? It's actually more negative domestically.

And so they've been signaling a lot domestically, and they also need foreigners to help with the signaling, right? When they see American dollars coming to China, the Chinese investors, the retail investors are that much more confident. So they actually need foreign capital more as signal than anything else. Domestically, they basically gone out and say, we are going to give you a government put, right? They basically said, we are going to make sure the index level doesn't fall below where it is right now. And that's really strong signaling. So with money just running out of China, with the equity markets down between 7% to 80%, depending on which one you're looking at, does that make you a little bit more optimistic that maybe all of this catastrophic bad news is at least 80% baked into the pie? I would say if you look at valuation level, they're probably at the cheapest they've ever

been. So it's baked into it. It's not just bad economic news. It's baked into things that are probably speculative and unlikely. So it's baking in maybe a hot war, not a bad relationship with the US. A invasion of Taiwan could cause that. It's baking in going back to days of cultural revolution and central planning rather than

just tighter regulation. So prices are probably reflecting a lot more negativity. Again, future growth is going to be as fast as before. Probably not, but just from a contrarian, bottom-fishing sort of psychology, it's probably undervalued. There are two major stories in the headlines that I think are emblematic of the difficulty for investors understanding the opportunity in China versus the risk. understanding the opportunity in China versus the risk. And I wanted to ask you if these need to be resolved before US and maybe even other foreign investors want to look at that stock market again. The first would be the TikTok situation. I'd love to hear what your thoughts are on how that might be resolved. But that's a $276 billion valuation. If that were publicly traded,

it would be one of the biggest NASDAQ, if it became a US company, it may not. We don't know how that will resolve itself, but that is now at the level where it's being debated in Congress. So that's one. Two, Apple, our largest company, struggling greatly in China.

Some of that because the phones are just too expensive, but some of that because the government has, again, signaled we don't want our employees using iPhones. So how do you feel about those two stories? How important is it that we get resolution on those fronts from an investing standpoint? Yeah. And I would say, you know, it's not just Apple and iPhone, right? It's Tesla and Tesla's EV, right? Tesla had the biggest market share, right? It was the leader, biggest brand. If you want to buy an EV, you buy a Tesla to signal your personal wealth. So I think there's a lot of the repairing of the relationship if we want American brands to continue to sort of thrive and be

successful in China. That's a huge market. And so I think both sides understand that. And certainly Apple is going to be lobbying and Tesla is going to be lobbying both DC and Beijing to repair our relationship. So I'm being optimistic. Beijing is clearly extending an olive branch. So, you know, God, your first question. On TikTok.

Secretly. Do you want to tell everyone your TikTok handle so they can follow you on there later? Or we could do that at the end. Okay, go ahead. So secretly, senior management at TikTok loves the fact that DC is applying pressure for them to spin off the US operations. Because if it's just up to Beijing, right?

Beijing would say, no, like, why would you do that, right? I think, you know, for the executives, if there's liquidity that could be had in this spinoff, so it can be properly listed in the US as one of the biggest sort of social media. You're saying Chinese executives would like this or US-based executives? Both. The Chinese executives are big shareholders, right? So they want some dollar liquidity. Oh, that's interesting.

Okay. If you had to guess, how do you think this is going to end up? I think it gets spun off. And with that spinning off, it becomes sort of a US company, public company, broadly held, and that'd be the resolution. So you don't think it'll get sold to a US buyer? You think it could actually become independent, US-based, and then go public? Yeah, I think that that's probably the most sensible route. It is awfully large. I know last time Microsoft was interested. I don't know if they're still at the table. So the way that US investors access Chinese equities, there's three different ways. There's the A shares, which are the mainland. There's H shares. And then there's

ADRs. I'm going to read something that you wrote. You said, despite all being Chinese companies, these different exchanges list very different types of firms. ADRs and H shares are disproportionately likely to be consumer tech firms. They also tend to be fewer but larger, whereas China A share are multitudinous. What is that word? Multitudinous, Michael. Thank you. But smaller cap in the China A shares have historically been less efficiently priced,

probably in part due to the higher level of retail trading. So talk about, you know, we think about, I don't know, whatever, indexes, VWO, IMG, whatever it is. But for people that are looking deeper than just the index level, what should they be thinking about? Yeah. And so first of all, definitely you want to access China, not through just the Hong Kong listed names.

Those might sound familiar, the Baobao, the Tencent, but they've gotten so big and in China, not through just the Hong Kong listed names. Those might sound familiar, the Baobao, the Tencent, but they've gotten so big and in some ways a bit of a target on the back. A lot of the interesting kind of mid-cap names that can grow to be much bigger, they're actually listed domestically as onshore A-shares. And in fact, if you look at the divergence in performance, the biggest buyer right now, because there are no more sellers and the buyers is basically all state-owned funds that are now supporting domestic shares.

All that buying is with the local listed shares, not the Hong Kong shares, in part because the currency differences, but also, you know, it's just easier to get in and out. Can we double-click on that? There's a buyback. How would you phrase it? It's a direct investment from the government into local Chinese shares trading on the A share market. Yeah. And so basically, just think of it, it's like the large shareholders jumping in to buy more shares because the shares are really cheap.

Okay. So how do Chinese officials think about the stock market? So I would say the Chinese officials, the way they look at a stock market is they really do think of it as a casino, something they like to change, right? Because it's all retail driven. A lot of retail trading is not based on any fundamental information. So when I spoke with the exchange officials in China, they say their biggest issue is not they need more money. Their biggest issue is they need long-term, disciplined, intelligent capital in their market. Do they have 401k type vehicles?

No, they don't have pension in their stock market. They don't have 401k in their stock market. Literally it's all brokerage driven, very leveraged trading. So they got mutual funds, which is a little bit longer, but even their mutual funds get turned over like four times a year. So, where are these people storing their money? Is it cash and real estate? Well, real estate is- Cash and real estate, it's absolutely cash

and real estate. So, if you look at their wallet, it's probably predominantly cash, and then for the higher net worth family, it's a lot of real estate. So they don't buy real estate to live in. There, they buy real estate like we might buy gold or Bitcoin, right? They don't buy it to live in. They buy it at just a store value. And then there's a tiny bit, which is the first two buckets. You can say that's controlled by mom. And the tiny bit is the gambling money. And that's what dad gets allocated. So thinking about the opportunity set in emerging markets, for US-based investors,

the S&P 500 has done amazing, obviously. That's not news to anybody. 13% a year for the last decade. That's a 235% total return. For US-based investors who have invested in emerging market stocks, 3.6% a year. So 235% versus 43%. It's a massive gap. However, when you look at emerging markets market cap compared to the rest of the world versus their economic footprint and their demographic footprint, there's a big disconnect. They are much smaller in the stock market than they are in terms of how much they contribute to the overall output and earnings and all that sort of stuff. So is that the opportunity? Yeah. So, Michael, this is a great question because I just put out a paper and I'm writing the part two of it.

So please go to my website, take a look, just Google under Jason Hsu and then look at the emerging market paper. Because this is something that I'm studying and trying to make sense of it. It is true that EM has contributed so much in terms of production and GDP, right? But its ability to extract a margin versus the US company, like the Amazon, right? The platform's ability to extract the margin is very asymmetric. Meaning even if they do a lot of the work, much of the value, the profit actually is taken by the brand, right? The iPhones or the platform, the Amazon. How might the world change for that to change? Because that

has to change for you to make money in emerging markets, right? Because if you just invest in manufacturing, and manufacturing has a margin of 2%, well, you're doing a lot of work, but just no one appreciates it. But I think the big demographic shift, right, where we are going to have the boomers retiring, they're going to consume more because they got a big 401k, they got money to spend, right? To contain the inflation in this country, either from our money printing or from the fact that fewer people are going to work, you're going to finally have to pay out for the labor force that's doing much of the work. So that shift in dynamics and pricing power is what's going to restore margin for emerging markets or

give them margin they never had. And finally, kind of that power for contributing so much to GDP will then be expressed in the value of the companies. Jason, what are you the most bullish on in it over, let's say, the intermediate to long term from an equity investing standpoint? So when you meet with investors all over the country, which I know you've recently been doing, what are you telling them your outlook is? And where would you be placing your bets right now as an allocator? Yeah. So for us, the biggest theme to explore is US friend-shoring.

That is not going away. That will be true probably for the next 10 years, regardless of which president, which party takes White House. So you got to think about what does friend-shoring mean? So friend-shororing is the idea that we're still going to have international partners in the supply chain, but there's going to be more political attention paid

to where we're locating these supply chain components. Correct. So it's going to be... So it's Mexico. Yep. Okay. So expand on that and what you think the opportunity is.

And so a lot of people go, okay, we're going to see a lot of sort of trade moving away from China. Absolutely true. And so the obvious French word, think of Mexico, right? Mexico is almost like Hong Kong to China as Mexico is to the US. It's a neighbor. It's comfortable, favorable tax treaty and trade treaties.

So we like Mexico a lot. But an interesting sort of way, what we like about Mexico is not that somehow Mexico will become a manufacturing powerhouse. It's that the proximity and the trade agreement Mexico has will mean it is the destination economy for all of the Chinese manufacturer, the Taiwanese manufacturer who used to have factories in China, and they're going to relocate to Mexico. And they're going to build infrastructure, and they're going to train labor force, they're going to move to top executive over there, and creating prosperity and jobs as a result of that. Would you invest in the consumer

companies that are traded in Mexico? Or how would you think about getting exposure to that idea? So I would say broadly right now, just get exposed to it in a more diversified basket, because you don't know who's going to be the winner. They're probably all going to win. Which one is going to express faster? Don't know. One of the areas that's gotten the most interest from equity investors over the last year has been India. And a lot of people are thinking about that as the anti-China. they seem to be at least on the surface um more business friendly recently um and it's a population of i think 1.4 billion okay close to china but they have also done things uh like for example they banned tiktok

and they didn't debate it and there were no cases. It was a stroke of a pen. They just decided, this is bad for our society. We're not going to allow it. And it was gone. So India also does have that capability too, which is reminiscent of some of the things China's done with Bitcoin. So could you speak a little bit to the opportunity for investing in India? Did we miss it? Is the rally over? Is it the beginning of something much bigger? Yeah. So first of all, I would say, I like India for the long run, but it would be a mistake to think India is the next China or like India is going to compete against China. Because if you just look at what they do and what they specialize in, they're not even in the same sphere, right? India doesn't do manufacturing,

right? If it did, it wouldn't have one of the world's top 20 port, whereas China has 13. Because if you're exporting, you need ports. India wouldn't have issues with infrastructure, stable electricity and water. What India excelled in is their most talented workforce, natural fluency in English, so obviously software development, and they'll continue down that path. They've grown just fine, now reaching about per capita GDP of 7,000, half of China, but they've gotten there through the other outsourcing route. And for them to build up manufacturing right now just doesn't make sense. And so India is going to continue to grow because they'd have that advantage in the language capability, the software development. And so I think India's going to do just fine, but don't think of India-

Do they benefit from friend-shoring or not really because it's not a big manufacturing hub? I say the benefit that they have from friend-shoring has already occurred, which is that thematic exuberance, a lot of manufacturers toss the money into it, hasn't really worked. I mean, Foxconn, the world's biggest contract manufacturer, put in a billion, add another billion, and they still can't produce the newer model iPhone there with reliable quality and labor practices an issue. So I think that wave is probably gone. If you got that pop, that's probably it. But that enormous population representing low-cost software development, low-cost training for AI, I think they'll take a different path forward. Jason, I'm curious to hear how your thoughts on valuations have evolved over the years. With respect to some of these emerging markets, they've been cheap for a long time and it just keeps getting worse. Does there need to be

a catalyst for these companies and these countries to enjoy a re-rating or can value just be enough? Can there just be enough of a margin of safety? Do we need something fundamentally to change for the narrative to shift? So I would say historically, it's always been a value trade. So, if you look at all the factors, like in the US, value factor is probably so-so as a factor. It's really growth and quality. But really, in emerging markets, the only factor that works reliably is value, right? When things are cheap, you buy it.

At some point, some catalyst happens. It'll rally a little bit before people get disappointed. But I would say there is a meaningful shift, and that may be the catalyst that everyone's waiting for to unlock the value of emerging markets. And that shift really is kind of the world aging and dependent more and more on the EM labor force in manufacturing, and allowing that labor force to finally have a better margin than what they historically have. So it's going to be the demographic shift, and it's delicate, right? Because some part of EM is also aging as well. So you got to be careful in terms

of how you select that. So that's one thing. And the other one is the world becoming more, say, bipolar than unipolar. So by that, I mean the world used to just surround the US. US has the pricing power, has the political sway. As it become a bit more bipolar, like China is trying to fight for influence, the resource-rich countries, Middle East, Africa, Latin, historically, there's one buyer who sets prices and sets order. Now you got two buyers competing for influence. You're going to see a lot more both stability and prosperity because of that competition. And that makes me like the resource-rich part of EM a lot better than how I liked them historically. I wanted to mention that I think a lot of the valuation disparity has been with us and has gotten worse, not because the situation

in developing markets has gotten worse, but because of the leaps that we've taken here in the United States with technology. I wanted to hear your opinion on the AI revolution, because once again, like wireless, like the internet, like a lot of technological revolutions that we've seen in our lifetimes, this looks like yet another example where U.S. companies are going to dominate and the international standard is going to be once again dictated by U.S. tech giants who create these standards. And then all other companies have to build their own software and solutions on top of that. It seems insurmountable here in 2024, but I'm also aware that we need to be humble and things change quickly. Is there a scenario in which United States does not dominate artificial intelligence in the 2020s decade in your mind? dominate artificial intelligence in the 2020s decade in your mind? Oh, there isn't.

I mean, I would say- There isn't? There isn't. Okay. The world's pretty happy with a approach where US is a scientist, right? We figure out what is impossible and make it possible. And then the rest of Asia is pretty comfortable. We can be great engineers. Once you tell us this is possible, then we just have to figure out, well, how do I make

it cheaper? And how do I operationalize it at 100 million units, not 20,000 units? And that's a really good sort of- It's symbiotic. We actually need both of those things to happen. Exactly. Josh, the greatest risk to emerging markets, especially emerging Asia, which is so engineering dominated, is if the science stops, then the engineering just becomes who can cost down fastest. And again, you wrote your margin. You actually need the scientific innovation to allow the engineering to capture some value. It's symbiotic.

I wanted to, as a follow up, ask, do you think it's a positive development, not just for the US, but for the world, that while the friend-shoring trend is taking place on a parallel track, we are getting more serious about building and manufacturing our own semiconductors? I think the pandemic was a wake-up call. We had car dealerships filled with half-finished cars because Taiwan and the supply chains couldn't get what we needed to finish them. And I think that nobody in this country politically wants to see ourselves in that situation again. Foxconn is building in Wisconsin and in Arizona. Intel is getting money to build in Ohio. It seems as though there's something in the works now that can't be stopped.

How do you think that that changes things from an investing perspective? So Josh, I have a different look on the topic. I think a lot of the bring manufacturing back to the US is a red herring, especially around election years. Really? Yeah. So kind of insider view into what TSMC, Towing Semiconductor, is doing.

Which, by the way, maybe the most important company in the world. Yeah. I would say. When they don't make semiconductors, we don't make cars, right? Or anything. Or anything, literally. Okay. So Towing Semiconductor has obviously started that massive build in Arizona.

So, Taiwan Semiconductor has obviously started that massive build in Arizona. And what they quickly discover was the cost advantage and the enormous production efficiency just cannot be realized because the top people in the US don't want to be in a clean room baking cookies. Literally, making semiconductors is exactly like baking cookies, just you need a PhD to do that well. Okay. But the top people in Taiwan all want to be an engineer. Why do you think that is?

And that's because there isn't the AI sort of laboratory. There isn't the things that pay top dollars for engineers in Taiwan. And so that's the best job. So you get the very best people who's willing to work at a below international price to do something that's as complicated as making chips. In the US, you just can't attract the top people because they want to work at Google. They want to do software. So can I push back on that? Apple is becoming renowned for its M1 and now M2 silicon. Amazon is talking about building its own AI chips. Of course, there are the Tensor chips being produced at Alphabet. So it's not as though U.S. companies aren't producing chips,

but you're arguing they are, but they're going to be produced outside of the U.S. because of the talent shortage that we have here. Again, from a design perspective, clearly our design, right, is still going to be superior in part because we control the standard. Yeah.

But once you operationalize and you actually need someone to make it really cheap, right, that's when it goes to Asia, it goes to Taiwan, Korea, and mainland China. And that leans on their very inexpensive and high-quality engineers, right?

And it just doesn't work when we try to operationalize it. Do you think we can't recruit those engineers to come and collaborate with our domestic workforce in a place like Arizona? It's been a challenge because what they've seen, like clearly, because that's sensible, right? Why don't we bring these top talent process engineers and train our lower tier engineers in Arizona and make them top tier? What they see is the engineers from Taiwan come over to Arizona and they instantly go, why am I paid so poorly? And the first thing

they want is maybe we should unionize and ask for a pay raise. And that again, just makes the margin go away. But we do have good Tex-Mex food. There's not no other reason to be here. We're the diamond backs. Okay. All right. I totally understand that point. So that is very out of consensus because I do think that there is a belief that we can do this here. And we have done this in prior generations. You think that some of this investment might turn out to look like malinvestment if enough time goes past and we just don't get up to speed with what TSMC does elsewhere. And this is kind of the narrative, right? Because we say, can we do it?

Of course we can do it. We invented how to do this, right? What we don't want to do, it's not we can't, is we don't want to do it very cheaply, right? Like this country is about you want brand. Brand gives you margin, right? In manufacturing, you just don't get brand and margin, right? Like even TSMC being most important. Their margin is kind of abysmal without the really cheap workforce, right? And so,

can we make semiconductors? Of course we can. Do we want to be making, you know, really cost-effective semiconductor for the world given our talent? Probably not. Jason, you mentioned earlier that Chinese investors have soured on their markets even more so maybe than we have. As you talk to advisors, where's the sentiment check at? Have they thrown in the towel? Are they getting ready? Are they tired of apologizing or defending to their clients? Where are advisors in terms of their allocations to EM? So I would say advisors, when it comes to allocation to EM, I think like you say, even assuming you're early, right? And you're early,

but being early and defending being early is very painful, right? You kind of almost want to window dress and just make it go away and give up. But again, as an advisor, I think it is your fiduciary responsibility to say, look, the US could have a pullback, right? It would be the easiest thing in the world to tell somebody, you know what? You're right. We're done with them. Why not? Why own anything other than Apple and Google, right?

Like that would be the easy thing. But we do know in the not too distant past, there was a whole decade where the S&P 500 went nowhere with two crashes in between and emerging market stocks were the hottest trade ever. Like it sounds inconceivable. It's so long ago, though, that we have new generations of financial advisors or allocators who literally have never seen that happen before. So do you think that that's a factor? Absolutely. It is absolutely a factor. We are all prisoners of our experience. And we tend to overvalue our experience as the most relevant and correct one.

And so if you're an advisor who's sort of had 40 years practicing wealth management, you're a little bit more aware of tail risk, crises that can happen. There's also no career risk with missing an EM rally. That's right. Not yet. Not yet. Yeah, that's a good point. So I think if you ask most of the advisors here, what would be a more painful conversation with your client?

The more painful conversation is the S&P does 13% a year for the next 10 years, and you're underweight versus there's a massive Asian equity rally and you missed it. I think most advisors would prefer to apologize for the second one. So I guess what changes that is maybe a decade of outperformance away from the US. Yeah. I mean, home country bias doesn't exist for no reason, right? I mean, just from a psychological perspective, it's so asymmetric. Like, Josh, you're exactly right, right? If you're wrong with the international stocks, fine. If you're wrong with domestic stocks, right, the heat is just much higher. Okay. I wanted to ask you just your thoughts on, so the Bitcoin ETF is one of the biggest stories of the year, and now we have 20 of them because obviously, how many? Nine. Okay. Nine Bitcoin ETFs like Tolkien, right? So, okay. But we have them and they're attracting a ton of assets

and advisors are getting a little bit more comfortable. Not crazy. Do you think that that opens the door to just maybe people getting more adventurous with their allocations overall? Or people just thinking bigger than 60-40 Treasuries, U.S. stocks? In a way, could the Bitcoin allocations just make people rethink the entire concept of how they're allocated? just make people rethink the entire concept of how they're allocated? So, I mean, my take on Bitcoin is it is a uncorrelated asset, but then there are many things that aren't correlated, right? So you got to have an uncorrelated asset that actually has a thesis for at least holding its value. It's not increasing its value. So I think it's easy for me to think of Bitcoin as a, yeah, it's a credible collectible, right? And there are not

that many credible collectibles other than really famous old masters. So I think Bitcoin sort of ascended to that level. And so it fits nicely in the alt, like liquid alt category. That's where you would put it into the alt bucket. Okay. Okay. Does that take the place of investments that otherwise would have gone into international stocks or EM? Are people thinking about private equity as a replacement for the international stock sleeve? Do you see any of that or hear people talking that way? No, I think maybe Bitcoin in a way, like if you invest in Bitcoin because you've lost faith in our Fed.

It is an emerging market. It's just not a nationality, right? If you kind of lost faith in the US Fed and our ability to balance our budget and we think we need a sort of non-central government controlled currency, then you might say, okay, well, Bitcoin or I'm looking at governments that don't have a record of printing money and that you need to look at sort of a lot of Asian emerging markets where, because they're such a big exporter, they have a lot of sort of reserved down the print currency You might say there's some correlation between accessing Bitcoin and so EM Asia, but beyond that I would say, you know most of the alts It's a different bucket. Well what we hear from a lot of Bitcoin evangelists that you have to think outside the US

Obviously the dollars are very strong reserve currency, but for people that can see, people in Turkey that can get their currency inflated away, is that actually true in the sense that people in emerging economies are turning to Bitcoin and other cryptocurrencies? Is that something that people say, or is it something that's actually true? It's actually true. You can, again, think of EM as kind of the tail of two cities, right? There's the part of EM that is always a basket case, or Latin, Eastern Europe, where the government has such bad habits, they just don't know how much they can print, and sometimes they don't care.

So that, to me, makes a lot of sense. Yes. I'd much rather have my money in that than in a currency that's going crazy. Yep. And so I would say that's a great replacement anywhere you feel like you sort of lost confidence in the kind of monetary regime. Jason, I want to tell the audience how they can follow you and where they could find more of your insights.

And how, by the way, how often are you writing these days? I know you're traveling a lot and running a company, but you're also a great investment thinker. How often are you putting out written stuff like what you did on demographics recently? Yeah, so longer pieces like demographics, broadly different sort of EM trade dynamics. I do that probably at least once a month. Okay. But I do a lot of posts. Yes. Probably not as often as you do, Josh. but I do comment very broadly on almost anything and everything. We'd love to have advisors to follow me, follow my firm, pick up the phone, call us. We're always happy to have a conversation if we can be helpful. Just like a lot of the speakers today, we want to give you a delightful experience. We want that client

servicing experience to be exceptional and it doesn't have to be talking about our products, right? Just broadly, how can we be helpful? So your insights can be found at Rayliant.com. And you are on social media, but you're somewhat selective of what you're doing on social media. I'm only on LinkedIn. I try X, my ability to keep anything under 150 characters is non-existent. I'm trying. It's a genetic defect. So LinkedIn is the right platform for you. Okay. Everyone follow Jason on LinkedIn and at orlean.com. We want to thank you so much for allowing us to ask you these questions and spend some time with you. We really appreciate everything you write. We appreciate everything that you've given our audience today. Thank you so much, Jason.

Thank you, Jason. Thanks, Michael. Thanks, Josh. Okay. Okay I figured out your game You guys in the live chat Like to hit it right at 5 on the dot Because you think that's the first person I'm going to see and shout out

But I actually go back to the beginning of the chat Because I'm from the old school So let me say hello to Drew Hickman. Roger is here, MD. John Luca Barletta, Ciao Belli. Ciao Bella? I don't know. Dave Wilson's here,

Tenzin. Got Jonathan from Uruguay, very cool. Cliff is in the house. All the regulars are here. Rachel, we miss you guys when we're not on the show. Believe me. Okay. It's a packed show.

I want to tell you very quickly about something that we're doing for all of you in California. So on April 30th, which is a Tuesday after work, we're coming and we're going to do a live recording of The Compound and Friends. We're going to have multiple special guests. We're going to have drinks, food, music. It's going to be indoor, outdoor. It's going to be so much fun. Somebody told me LA doesn't really have great networking events, at least on a regular basis for investors. This is for you. If you're into trading, investing, stocks, bonds,

if you work in wealth management, if you're just an individual investor, whatever your bag is, we want to meet you. We want to see you there. And you should meet some of your peers in the community. So there's a link to find out how you can get your ticket in the description. It'll be first come, first serve.

It's going to be off the chain. And we can't wait to meet you. That's at the end of this month, Tuesday, April 30th. Michael, who's our sponsor tonight? It's YCharts. Okay, tell me more. All right, Josh,

I have a question for you. YCharts just released the results of their latest advisor communication survey. What percentage of survey respondents do you think considered switching financial advisors in 2023? Guess. Maybe like half? No, you know that's way too high. Come on. 75%. But honestly, I love white charts. I hate surveys. I was surprised by that.

Come on. Did they only poll people that consider switching their advisors? Listen, a lot of people. Listen, be that as it may, I guess one of the reasons why people might lose their clients is because they don't communicate well. And I'm here to tell you that YCharts is critical,

vital, vital to client communication at our firm. Use it all the time. Can't do it without it. Yeah, we do. We do. All our decks. All right. There's an offer for professionals who want to see YChart's tools for proposals, report builder, scenario tool, et cetera.

A 20% off initial subscription if you tell them what are your thoughts sent you. Use the link in the notes below. All right. Look, man. We're getting this like everyone said, oh, we're due. We're due for a pullback. We need to cool off, blah, blah, blah. Well, here you go.

Now, what are you going to do with it? Are you going to assume this gets 80% worse or are you taking advantage of it? Because here it is. The first, I guess, real pullback of 2024. Yeah, we're at a 2% drawdown. Can't you feel the pain? The first real pullback. Are we even?

I don't even think we are, dude. Yeah, we are. Let's see. We are? No, we're not. No, we are not. Well, I don't know if what you're showing me is out of date. What is this?

This is not – not only is this not out of date, this is in date. This is live. It's been. So to Josh's point – hold on. Are we minus 1.98% from the high? Dude, it's literally at 0.8%. We are a whopping 0.8% below the all-time closing high. So I, sorry, I have to correct you.

This is not a correction. Chart back on. Well, I didn't say it's a correction. No, you did. You said, what are you going to do with the pullback? I said, cool off, pullback. You said, what are you going to do with the pullback? And I'm here to tell you, sir, it ain't a pullback.

So what we're looking at is this beautiful chart, this beautiful, delicious chart is showing that for 59 days, the S&P 500 has closed within 2% of an all-time high. Yeah, it's crazy. It's a hell of a streak going back to 1990. This is the 11th time. The 11th time we've had such a streak since 1990. So to me, what that chart signals is that are we due for a pullback? Sure. Are we overdue?

That's subjective. But if we do, if we do get a pullback, chill out. Chill out. Okay, fair. You might get the opportunity for that pullback this week. You have earnings starting at the end of the week. And you have March non-farm payroll. I actually don't think either of these

is going to be a negative shock to the market, but what the hell do I know? Crazier things have happened. We're going to preview the jobs report first. We don't have to spend a ton of time on this, but arguably this is a very critical data point for the Fed and for sentiment around the forward pace of rate cuts, if in fact we're ever going to get one.

Let's take a look at this chart from Bloomberg very quickly. So this is the expectation for U.S. job growth. I think consensus is now 216,000 new jobs for the month of March. Here's Bank of America. The March jobs report on April 5th will be the main focus in the coming week. We expect an increase by 200,000 versus 275,000 in February. So that would be a little bit of a downshift if it hits the number, which of course it never does. One of the reasons we are calling for a slowdown in job growth is payrolls in the month of March have shown a tendency to be weak relative to February in recent years. So I mean, maybe the consensus

knows that and has adjusted accordingly. Maybe not. But that's the B of A view. That's just me. You like to do more hiring in February also? Totally. Okay. There's a couple of interesting things in here to look for. Average hourly earnings are going to be a big part of the story because that's got a direct feed into the inflation data. Expected to rise by 0.3% month over month or plus 4.1% year over year. The quits rate and posted wage growth from Indeed point to a moderation in year-over-year rates for

average hours worked. Average weekly hours should increase a little bit. Let's put up this next chart. So this is Bank of America. Again, this is their average hourly earnings year-over-year percentage change. So this is like the long-term that they're showing you back to January of 2008. So you can clearly see we have been cooling off in average hourly earnings on a year over year basis, but the pace of that cooling off seems to have stalled. Am I reading that right? You agree with that? Yes. No, it's trending in the right direction. And paradox, like why are we cheering this that we want lower real wage growth? Because this is a big component of what the Fed is focused on. 100%.

All right, we have one more. This is the real average hourly earnings year over year percentage change. Bank of America notes that's up 1.1% in February versus minus 1.2%, which was the pace last year. So again, yes, it's cooled off in real terms, in inflation-adjusted terms, but the pace of it cooling off has basically ground to a halt. And that's when they talk about sticky, that's like the textbook definition. Would you agree? Yeah, but wait. I don't know, Josh. I don't know that this has cooled off.

I mean, real wage growth was deeply negative for basically all of 22. So that was part of the problem. The pace of it has cooled off, not the actual number. A little bit. It's moderated. I'm trying to split hairs and talk about the rate versus the actual number. to split hairs and talk about the rate versus like the the actual number but the but and the reason why is because this is the whole debate now is the first rate cut june uh maybe now the hurdle is too high for to do it in june and if that's the case it's because of charts like what

we just went through uh give me this dan greenhouse tweet all right So it's not a correction or a pullback. I'm being silly. But Dan Greenhouse points something interesting out. The SPX rally may be pausing. Let's put this in perspective. S&P 500 is up 27% off the October low. Only five rallies in modern history have been comparable. Early 75, which is after a wicked bear market. Late 1982, which is right after the greatest bull market in history started. Early 99, after the long-term capital blow up was resolved. Mid 2009 off the low, generational low. And summer 2020 off the covid low so like this last burst that we this last 27

percent rally is up there with five of the greatest rallies of our lifetime i wasn't really aware of that were you yeah we did it because we did a chart on this couple months ago the recent rally it's remarkable it's remarkable and the fact you can't even sustain a, for goodness sakes, a 2% sell-off. And given what the tenure has done over the last couple of weeks and the dollar, the resilience and the fact that Apple is acting like crap and Tesla is acting like crap, the resilience of the stock market is remarkable. And I'm not mad. Yeah. Is this as good as it gets for the stock market i think it is last week it's about it's about how what could be better how could it be better let me show you some shit uh re wald at

oppenheimer one of our favorite technicians his note this weekend was speculative themes emerging and i thought this was a really timely note. And of course, it perfectly preceded what happened today, which was a lot of this stuff started to give signs that it wants to reverse. This is Ari. Our bullish composite reached 91% last week, marking the most optimism in this contra indicator since 2018. However, it's difficult to become too downbeat on the market when speculative themes are emerging higher from three-year declines. These include microcaps, ARK innovation, IPO index,

meme stock index. So overall, consolidation would be reasonable, but is not necessary. With the market overbought in a confirmed bull cycle, we expect bottom-up selection to outperform top-down timing. So he's saying like, yeah, there's like some emerging, there are some things emerging right now that haven't been part of the rally yet. And I'm going to show you some of this stuff. Wait, hang on to that point, to that point. So the reason, as good as it gets, this is a very slow grind higher. You're not seeing euphoric 1%, up 2%, up 3% days. We're not seeing that at all. It's a slow march higher. So the percentage of stocks at a 50-day high, right? So that really shows the enthusiasm. The percentage

of stocks at a 50-day high, right now it's 8%. It got as high as like 32% in the recent run-up. But that is nowhere near. That's not stretched at all. At all. So like earlier in the year, it was 60%. In 2020, when things were really nuts, it was 70%. So we are, it's a slow grind, which is good. You don't want things to be going crazy vertical. We're actually, and we're post that big bread thrust that we had been talking about in February.

Correct. And we're hanging on to those gains. It's not – the whole thing is not reversing. Put this next one up. This is Russell Microcaps. The top pain is absolute basis with the 200-day moving average. You could see that they are clearly breaking into maybe a new uptrend. Relative to the S&P 500 is the bottom pain,

and Ari Wald is showing that they are at least bottoming. I don't know about breaking out, but this is a multi-year downtrend that now looks to be resolving to the upside. One more. Here I'm showing you, this is also Ari's chart. Here is ARK, basing, potential breakout. Here's the Renaissance IPO index. Breakout point is now support. This one is already in a confirmed breakout. And the Roundhill meme stock index, which, as you can see, has completed a base. Maybe it's breaking out. I don't even know what's in that thing. maybe it's breaking out. I don't even know what's in that thing. So like these are areas of the market that have not been amongst the leadership group. They've been left for dead. So I don't know. Like when you see that, Mike, is that closer to an end or is that like just the next phase of something that's sustainable? What are your thoughts? I think it's a continuation. Okay. When you see the things that haven't participated start to participate, when everything is acting as well as it has, I mean, just look at the market today.

It was down, I don't know, over 1% at the lows, finished at the high, close to the highs of the day, the S&P down to 64 basis points. The market is remarkably resilient right now. It's not going to be this way forever. But for right now, it's hard to, what's the bear case right this second? So micro caps, meme stocks, and ARK stocks turning higher is not like, oh, there we go. So you don't see it that way. I don't see it that way. And Tesla obviously brought down ARK today. Yeah. Disaster today. Agreed. Ex-Tesla, though, a lot of those stocks, they're catching bids. It's interesting. I was looking at a couple of them. I should take a closer look because I'm not even sure what's

really in that. OK, let me show you this from Jeff. So Jeff DeGraff, also one of our favorite technicians, put this chart out last week. 90% advancers in the Russell 3000, which is – or in the S&P 500. What's an advancer? Is that just up on the day? Yeah. It looks like it's daily. So, I mean, this is – same idea of what Ari is saying. Sometimes, like, too much momentum. It might be too much in the short term, but it doesn't have to be the end of the rally. And Eric Boucher, who blasts these out

on behalf of Renaissance Macro, says, quote, Jeff has been flagging this excess high momentum chart for a few weeks now. The call is names in quartile one are extended and should have a decent pullback while names in quartile five could join the party with 90% advancers. You're seeing it breadth. So the important thing is extreme momentum is not bearish for the overall market. You have breadth expanding and small caps starting to outpace large caps. This is the broadening and it is not indicative of a top, even if it's like short term, maybe a reason to calm down. Yeah. So I think that's a fair way to phrase it. We go to anything else. Well, I guess, I guess what would,

what would make if, so if you're not worried about, you know, that level of extreme momentum, what would you be concerned with in terms of price here? Like what do you not want to see? I don't want to see stocks going vertical. They're not. It's a slow – Some are, but most – they're not all. Some are.

It's a slow grind higher. What's – even like NVIDIA cooled off. That's not going vertical, is it? Not to say. I don't think so. No. It's been sideways for the last two weeks. So what I would like to see, now that I get to choose, is the S&P just correct through time. Just go sideways for a couple of weeks. That'd be great. I think it'd be nice if we could all catch our breath. Yeah. You want to see stocks going like this. The minute they start doing that, the market gets fragile and unstable. And that's not what's happening right now.

They're not mooning. Right. Well, I guess my point was they did. They did in February and a little bit in early March. And then rather than reversing, they just kind of started to calm down a little bit. And now you have these new stocks that are rallying and the baton is being passed. Strength begets strength until it doesn't. I mean, that's not profound.

But as long as the market's going higher, hard to be bearish. You're up. What do you got? All right. We'll talk in that vein. Throw up this weekly chart of small caps. So a rough session today. This is a weekly chart.

But does this not look like a breakout in progress? This looks like a test that's going to be successful. Do you see that? You see two, you see 200 as the ceiling. What is this? The Russell two? Yeah. Yeah. Look at 200 on the IWM ETF. Look how many tests since, uh, since I guess, uh, the middle of what, 22? So what JC would say is resistance turned into support. If it gets back there, you buy the snot out of it. All right, Tom Lee. Buy the snot out of it. That's so JC.

Small cap sales are faster growing than the S&P 500. That surprised me. So he's looking at the S&P 500 sales growth. Oh, this is going out a year. OK, whatever. But either way, projected to do 5.5% next year. That's for the S&P. The Russell 2000, the positive earners, are projected to do 6.9% sales growth, which is

very nice. And then all of them are projected to do 7.4% sales growth. So it's not just the technicals are lining up, but fundamentals look good as well. And they're cheaper. Small caps, the Russell 2000 is trading at 10 times earnings or projected for 2025, I should say, excuse me. Positive earners are trading at a little bit higher, 13 times earnings versus 17 for the S&P 500. And then interestingly, nobody wants these pieces of garbage. This is from Bank of America. The Russell 2000 stocks represent just 3% of active portfolios, which is the half of the weight versus a decade ago.

That's pretty remarkable. And listen, I understand. These things have underperformed for so long that there's career risk here. So these things are lining up pretty nicely this is wild so people are just like not even it what does it take for people to get interested probably like two straight quarters of russell out performance well that sounds fair maybe right yeah half a year and then like and then like barons puts it on the cover and i do a tv segment about it and then all of a sudden everyone's like back into small caps is that how that goes yes yeah that's exactly how it goes you know you know the playbook yeah those that will start doing segments like pick your favorite small cap or like like like come to like come to school with your um

with your show and tell item like come come to the show with your favorite small cap name. You know what I mean? We'll get there. Oh, yeah. And that'll probably be the time to stop. Can we put that valuation slide back up? I think it's the middle one. Thanks, John.

Small caps, 10 times earnings. I don't really care if that's forward or backward. No, we're going out to next year. All right, fine. So small caps is selling at 10 times 2025's numbers. And the S&P is 16.9. Really? I thought it was higher.

Okay, either way, don't hold your breath for that valuation gap to close. It pretty much never does. True. Right? So that shouldn't be your expectation. True. Is the point that I would make. So all right. I want to talk about oil and gas. Let's do crude first. This is West Texas intermediate crude oil spot price. You can clearly see that we really haven't seen the kind of rally in crude prices that

we saw back during the inflation era. Look at 2022, by the way. And I know that's coming off a crazy low base. But still, that was when inflation was like, I don't know, 9% right around the time that crude was over 105. And now it's here at a comfortable, lukewarm 77. Now let's take a look at the stocks, though. So you have some supply issues.

You have increasing demand because of the economy. This is IEO. This is an ETF comprised of U.S. exploration and production companies. Look at this breakout. This is like, this is textbook. And maybe today got a little bit carried away, but whatever. I saw this, whoops.

Yeah, you want to be in these names right now. Let's do the XLE. This looks even crazier. This is Exxon Chevron and those types of names. I just looked at a chart of Exxon. I can't believe what I'm witnessing. Look at this, dude. These stocks are doing AI, but using oil, I think.

I don't know. Let's do some individual names. I almost bought this today. I just feel like I missed it. This is ConocoPhillips, 130. You've got a 50-day at 114, 200-day around the same, 115. And this is a stock that now wants to challenge the late 2022 high. And I think she's going to punch through. What do you think? You just said the five most bullish words in all of investing. What? I think I missed

it. I I missed it. I definitely missed it. That's why it's going to 150. It's going way higher. Here's Phillips 66. This is also in, by the way, ConocoPhillips is 18% of that IEO ETF. So that's why I didn't buy it, by the way. So if you're asking me like, why didn't Josh buy it?

Because I also feel like I own it already because I do. Phillips 66, PSX, holy shit. Look at this stock. Look at it. Look at this stock. Look at it. Look at it. I'm a liking. Don't just look at it. Buy it.

I can't. It was 140. It's 166. I think it was 130 at the start of the year. Huge run. Everything there looks great. Here's MPC. This is Marathon Petroleum.

No, you know what? This is the one. Gone. I'll buy this at 180. No, I won't. No, you know what? This is the one. Gone. I'll buy this at 180. No, I won't. No, you won't because it won't get there. 207. Goodbye.

Here's Diamondback Energy. Ticker is FANG. Get it because it's like a snake. 198. You'll never see this again, I guess. I don't know. I wish I – so I have some exposure to this via the ETF. But again, how did I not see this happening?

These are like obvious, obvious, obvious breakouts. So this trade was on fire today. Everything else was flat to down and these stocks were going absolutely nuts. I'm pretty sure I sold IEO at the lows in January. That's okay. It happens. What made you sell it? I was just getting rid of my losers. I was just- Do you remember when Nick Colas told us you never sell your oil stocks

because that is your only true hedge against an oil price spike that f**ks up the rest of the stock market? Remember he taught us that? Warren Pies is a big energy stocks are the best diversifier guy too. They really are because they almost uniformly will do exactly what crude does. So if you get a situation where the market sells off because the dollar's ripping, inflation, oil, those are going to be the thing that helps. And that's exactly how things played out today. And this isn't even an extreme move in oil. What do these stocks look like at 85 crude and 90? Like, these things are going to be en fuego. So never sell your oil. All right, you're up.

There was an article asking, hold on, I want to get this headline. There we go. A soft landing and is Powell the most successful Fed chief ever? Now, listen, this was obviously provocative, right? Like, get it. Got me. You got me. Joe Livornia, chief economist at SMBC. Was he at Deutsche Bank? Where was he? Yeah, he's been around. Joe Livornia's been around for a long time. Kudos to Powell. Kudos to Powell if he can achieve a soft landing. Volcker still heads the pantheon of central bankers, but Powell would eclipse Greenspan.

And I completely disagree. Why? I'll tell you why. And I was going to say this. I don't know how I feel. I was going to say this, but the great professor Jeremy Siegel said it better than I can. By the way, this guy is truly a goat among goats. I saw him being interviewed today by the head of the New York Fed, John Williams, who is a voting member, a powerful member of the FOMC. Jeremy Siegel killed the Fed and then turned to John. Who was interviewing who? John Williams. Siegel was being interviewed. Really? By a former Fed person? Not former, dude. The Fed chairman

of the Federal Reserve back in New York. Oh, and he went at the Fed? They're obviously friends because Jeremy went on this tirade and then goes to John and said, what do you think? So that guy's the best. It wasn't mean spirited.

They're friends. But here's what Jeremy Siegel, Professor Siegel had to say about the idea that Jay Powell nailed it. And I wrote this down. He said, giving Jay Powell the Nobel Prize would be like giving it to a drunk driver who hit a pedestrian, but was able to take him to the hospital to save his life. Right. And I've made this analogy that the Fed was driving 130 miles an hour.

They slammed on the brakes and happened to not get into a car crash. I'm sorry. Powell does not get credit for this. The economy is bigger than him. He tried to bring it to its knees and he couldn't. Why does he get credit for that? In pretty much every era, the Fed is always the firefighter and the arsonist. It's just they create the boom. That leads to the bust. Then they come and ride to the rescue and save us from the bust, which inevitably plants the seeds for the next boom. This is just the way monetary policy – I don't want to say that they do it on purpose, but they go too far in both directions. It's hard.

It's really, really hard. They're trying to steer the economy with a straight face. They're trying to control the actions of 7 billion people around the world. It's crazy. John Williams said exactly that because Professor Siegel said, I think one of the reasons they failed is they're using these inexcusably bad measures of inflation. And he's talking about owner's equivalent rent versus current measures. And John Williams said exactly what you just said. He's like, listen, we're trying to make sure that we get it right. We're trying to collect all of the evidence that we can. And of course, they're going to say that it is a hard job. Listen, it really is. But this idea that he now saved the economy, the economy thrived despite his best efforts to slow it down.

So I am sorry. No, he does not get credit for maybe achieving a soft landing. We did that, not him. Yeah, I think with – like if you're going to use anybody, I don't know, the Greens – you want to hold up Greenspan as like the comp because, look, Greenspan took over for the prior Federal Reserve chief in the summer of 1987. And within like six weeks of his tenure starting, the first thing that happens is the crash of 87, which has absolutely nothing to do with Fed policy whatsoever. But he's the guy.

He's in the seat. He has to figure out what to do. He immediately cuts rates all the way down, like overnight. There's the guy. He's in the seat. He has to figure out what to do. He immediately cuts rates all the way down, like overnight. There's no meeting. Like he has to react to this disaster. It's a 22% sell-off in the Dow Jones in one day. So he slashes rates and leaves them there. And this miraculous thing happens.

For the first time in American history, stock market crash does not spill over and cause a recession in the real economy. In fact, the economy is incredible, not only in 87, but also in 88, and stock market closes positive that year. So what has Alan Greenspan learned from that experience? According to my rabbi, Barry Ritholtz, the exact wrong lesson, which is no matter what happens, it's a nail and rate cuts are the hammer.

And so every problem could be fixed with rate cuts. And that is the tenure of Alan Greenspan in a nutshell. Everything that happened, let's take weights all the way down and leave them there. And he did it and did it and did it and did it until we got 1999. Because we have this thing in the market called the Greenspan put. And stock traders and investors and chief strategists and economists and banks, everybody got used to this idea. Don't worry, there's a put underneath the market because Greenspan is going to come in and bail us out. He did it when the ruble collapsed. He did it with the Thai bot.

He did it with Asian contagion and long-term capital blew up. And it's just this litany of things that Greenspan saved us with rate cuts. And then eventually, everyone just got too comfortable, took too much risk. And that's why we had one of the biggest crashes ever. just got too comfortable, took too much risk. And that's why we had one of the biggest crashes ever. And then, you know, of course, like Greenspan came out after the financial crisis and said, all right, maybe this doesn't always work. So he's a bad, he's not the paragon of FOMC responsibility. I don't think Powell is either, but I wouldn't even compare the two. His term, he was wildly popular, at least in the beginning.

But he turned into the horse and the donkey, right? The horse in the beginning, the donkey in the end. Throw this chart up, John, please. So Gallup does a survey where they're asking, do you have confidence in the Federal Reserve chairperson to do the right thing for the US economy? And look at this. Greenspan started super hot. And of course, the survey doesn't go back to the inception of his term,

but he ended it on a sour note. And Powell was- Mike, he caused the greatest housing collapse since the Great Depression. He single-handedly took rates up. He did 17 straight rate hikes between 2003 and 2006. And even when mortgage hedge funds started to explode, literally explode, he persisted in ever higher rates. And he was watching the same dumbass indicators that they watch today. You know what he was worried about hilariously? Iron ore prices in the emerging markets like that there was no

justification for rates to have been as tight as they were in 07 none other than if you were looking at like commodity prices in asia and so he wrote us right off the cliff and you know again he he was the arsonist and then bernanke had to be the next firefighter because by then we were done with Greenspan. Turns out people don't like that. Believe it or not. People don't like when you blow up the economy. Anyway, Powell was – go ahead. I have a solution.

How about it's an algorithm and everyone shuts the fuck up and we don't have 12 people making speeches every 15 minutes about – I'm thinking about rate cuts i'm not thinking about them i'm a little bit toward neutral like how about we just stop that whole game and we just let the two-year lead the way and there's some sort of algorithm that factors in unemployment and we use actual like ai and data to figure out prices we don't call people on the phone and ask them how much they could rent their attic out for to a crackhead. And we actually figure out what is shelter costs

in the real economy in real time, not from six months ago. And what's employment? And what's the dollar? Why are crackheads catching strays on this show? But you know what I mean? What year is this that this is how we're capturing data? And why is there a man fiddling with the knobs like the shower is too cold or too hot?

No, we need it. We need it. What do we need? People need somebody to be controlling the ship. Yes, but can they just pretend and use data? That's all I'm asking. They are using data. What are you talking about? They're using data. Come on. No, they I'm asking. They are using data. What are you talking about?

They're using data. Come on. No, they're really not. They're using intuition and instinct. Dude, that's horseshit. You might not like their conclusions, but they're not— I don't know. Dude, stop.

I'm going to give you one more chance to say that the Fed is not using their intuition and making shit up. They're looking at data. Yes, they are. Of course they are. The speeches. The speeches are the problem. The dot plot is the problem.

I agree. Because it's nonsensical. And it's not their fault. This is the job that they're there to do. And this is the job people have given them. They didn't invent this stuff. But like, and it changes over time. Like a lot of people don't even understand this.

There's no reason why there's a press conference after every rate decision bernanke started it during the financial crisis because it was essential to communicate with markets so we wouldn't have an echo panic and rather than stopping it they doubled down on it now it's like a now it's like a media event. I don't think it helps anybody, this relentless focus on interest rates. There's no doubt. Who do we have on the show that was telling us in the 1980s, they would just do the rate hike and then send a letter out two weeks later and let people know that they did it? Was it Sembalist? Yeah, maybe. You're so right. We're doing it because we started doing it. We just never stopped. I know. Because I remember a time when Greenspan spoke twice a year.

They had Humphrey Hawkins testimony in Congress. And he would answer the senators' questions. And then six months later, he would answer to the House of Representatives. And then that was it. The speeches weren't even in English. He was speaking Martian. Look it up. Look it up. Look it up.

You couldn't listen to Greenspan speak for even five minutes and understand a single thing he was trying to communicate. It really is a joke. And that was the point. Who's it for? And you know, it's for hedge funds. It's for high frequency traders who immediately look at the statement,

compare it to the old statement, see what words have been replaced, and they trade off that. That's who it's for. I mean, I guess. It's not helping anyone. Well, it employs a lot of reporters, to be fair. But the reporters have always been following this stuff,

and they can do the job differently. There doesn't have to be 12 speeches. You know what I mean? They can follow the data the same There doesn't have to be 12 speeches. You know what I mean? Like they can follow the data the same way the rest of us can. Anyway, I wish there were less talking and I wish there were less emphasis on rates. And I wish there was less movement in general in both directions on rates. 0% seems extreme. 500 basis point hikes seems extreme. All of it's extreme. And that's why we

get these extreme outcomes. And it's unnecessary. A lot of it feels very, very unnecessary. So that's all I want to say on that. Trump's publicly traded now, I guess. Trump did an IPO. I know this was a SPAC that merged with his Truth Social. And it's a new form of meme stock. It's the Wild West is back. But this is now like a politically oriented meme stock. So if you love Donald Trump and your main concern is making sure he has enough money, you buy this thing. And eventually he'll sell the stock. And he might be like, I think he has a net worth now of like $5 billion on paper because this thing

is worth eight or 9 billion. Do I have any of these details right? Or am I just making this up? So William Cohen wrote a post on this today. I didn't get to read the whole thing, but his shares as of the writing were worth $5 billion. $5 billion, yeah. He owns 58% of the stock. So the gist of the article- Chart on. I did not have a chance.

Oh my gosh. Yeah, it's pretty volatile. Which I did not have a chance to read was, can he sell some of the stock to finance some of his campaign? Yeah, he will. What do you think he some of his campaign? Yeah, he will. What do you think he's not going to? Oh, somebody said, oh, there's like rules against that.

I almost fell off my chair laughing. What are you, what are you new to earth? So that's, that's, look, the big story two weeks ago was, oh, now he's in trouble. They're going to confiscate his building. They're going to take away his golf course. No, they're not. It's another rabbit from the hat.

He'll be fine. He'll sell a billion dollars worth of this thing, or he'll securitize it. And so whatever money he has to pay to a court or whatever, it'll come from his fans. This is just another way that they can transfer money directly to him. And it has nothing to do with campaign finance. It's like a workaround. So Cohen says, since he is deemed to be an affiliate of the controlled company, and there's a lot of quotes in here, according to the merger perspective, Trump would be restricted to selling only a small amount of his stock, limited to the greater of 1% of the total, whatever. But even 1% is $87 million if the market would take it. And that's not a lot.

I know. The mainstream media was running with the story last week that if he didn't come up with $400 million the next day, they were going to start padlocking all this shit. Nope. Not really. All right. So this stock is up 196% year to date. It's up 267% over the last year. No, but wait, but wait, but wait, but wait. But DJ, I'm looking at DJT. Is that the right ticker? Yeah.

Didn't it just start trading? No. It was a SPAC before this. It was like DWA or something. It was Truth Social. It was like DWA or something. It was Truth Social. This is a merger between Truth Social and this publicly traded SPAC that bought it.

They bought it. They converted it. The new ticker symbol is DJT. You feel me? But didn't that just start trading a couple days ago last week? No? No. DJT. It was trading as a SPAC until the merger closed. I don't care about that. But it was trading as a SPAC until the merger closed.

I don't care about that, but it was trading as a whatever, as a shell company. It looked like a SPAC. It looked like a SPAC. It was like a $12 price. Well, not that this matters at all for anything, but the company did $5 million in revenue and lost $50 million last year. Oh, no, $4 million in revenue. Oh, what are you going to do, analysis on this now?

Yeah, I know it doesn't matter. I'm just saying. Do you think anyone pushing the buy button- Oh, so Truth Social app made $4 million in revenue. Price to sales revenue? Made $4 million in revenue during the nine months of 2023 and lost $50 million. It's not a bad business. No, that should be worth $9 billion. Why wouldn't it? Okay, next. Why not?

No, that should be worth $9 billion. Why wouldn't it? Okay, next. Why not? All right. This is interesting. So there was a great sub stack by a guy named Rob Wilson. It's called Consumer EQ. I want to read what Rob wrote.

Do you remember in May 2023 when Target CEO Brian Cornell called out the company's challenge with retail shrink? We spoke about this. He blamed organized retail crime for fueling $500 million or more and stolen and lost merchandise. Now, that was a big story. Yes. That sort of kind of disappeared? Yes. Well, did it disappear?

Yeah, the organized retail theft. You don't hear about that. It just sort of came and went. Has organized retail theft become an issue for retailers? Absolutely. went. Has organized retail theft become an issue for retailers? Absolutely. But what was left unsaid by Mr. Cornell's remarks almost a year ago was what may be just a significant driver of inventory shrink at Target and elsewhere, the recent rollout and increasing prevalence of self-checkout. So this guy, Rob Wilson, pulled comments from some of the retailers.

So here's Dollar General a couple of weeks ago. We have begun immediately converting some or all self-checkout registers to assisted checkout options in approximately 9,000 stores. That's a lot of stores. This is intended to drive traffic first to our staff registers with assisted checkout options available as second or third options to reduce lines during high volume times. Then he says it gets better. Over the first half of the year, we plan to completely remove self-checkout for more than 300 of our highest shrink stores. Why, Rob Wilson asks. Quote, we believe, this is from Dollar General CEO,

we believe these actions have the potential to have a material and positive impact on shrink as we move into the back half of the year and into 2025. That's wild. So what are we talking about here? When you go to a self-checkout, who's checking you? Oh, I have 10 items and I'm paying for eight. So they're basically doing away with this. They should. Well, it's one of the stupidest things I've ever seen. If you go to any store with self-checkout as an option, pretty much there's almost always somebody that works there standing there watching you do it anyway. So maybe it's one cashier watching four people at the self-checkout.

But out of the four people who are simultaneously checking themselves out, two of them need some sort of assistance. They scan the item. You don't do it. I put it on the left or the right. Oops, I put it on the wrong side. How do I do a credit card? Wait, I push debit card. Wait, I need a receipt.

Wait, I need a bag, and I put the wrong thing in the bag. You go into CVS, and you can't buy NyQuil. You can't buy NyQuil. So then the one cashier has to come out from behind the counter, fix you. There's seven people in line. It's dumb. We need people at the cash register. But anyway, but it's just interesting that a big reason for shrinkage, yeah, retail theft, it's not fake. It's a real thing, but it's checkouts. It's a self-checkout. It's a huge part of it. Yeah. So people are just getting away with stuff at the self-checkout. I think that's half of the story, though.

I do think retail theft rings are still a huge story. It's just that probably Target is not the epicenter of that. It's probably more department stores because they're going on Meta Marketplace and eBay. And they're selling like very expensive stuff. So it's probably two different stories that we all kind of bundle into one. There's a third one. Another part of the article was that he said like

more inventory goes out the back door than the front door. Meaning a lot of this is also employee theft is a huge problem too. So that's a whole other thing. Did you hear that Amazon said today they have decided to give up on their just walk out program? This is true. So this is what customers could just walk out of the grocery store without a formal checkout process. Instead, they're switching to something called dash carts, where customers scan products as they toss them in their cart. So if you've ever been to one of these Amazon stores,

and I think I have. I've been to one in an airport. Maybe I was with you. It was one on 42nd Street by Brian Park. I went in with Chris. It was annoying. It was like a pileup at the door because people felt weird walking out without ringing something up. Listen, it's not necessary. We had a major innovation. People don't know this. Do you know who invented the modern supermarket? Ben Franklin.

Close. Piggly Wiggly. So there was this guy, Clarence Saunders, in Alabama. And in the 1920s, he was the first person to have this realization. We don't need a clerk behind the counter reaching for the items that you stand there and order. Let's put all the items on shelves. And then we'll have a clerk at the very end by the front door. And this is the invention of the supermarket.

And he went public. And actually, it was the Amazon.com of the 1920s. It was a stock that went up and up and up. And he opened hundreds of Piggly Wigglies across the South. And that was like a huge innovation because the way it used to be was everybody waits on one line. There's an old man wearing a vest and those sleeve roller up things.

And he would like with a stick, knock down a box of oatmeal for you. And then so what else would you like that? Like that was how you bought groceries. And Clarence Saunders said, no, no, no, that put it on the shelves and let people pick their own stuff. And when they're done, they could go to the front and we have registers. That was enough innovation. It worked fine. We don't need more innovation to buy groceries. There's no, nobody's being helped by this. Do you think that in 10 years, this sort of self, the checkout list stores will be back? I do. I think this was just too

early. We weren't ready for 10 years. the earth will be an icy gray ball of dust. No, that's you. You will be an icy gray ball of dust. Well, for sure. For sure. Maybe before then. Okay. All right.

Anything else? You're going to make the case tonight. I'm really excited for this. I'm going to make the case for a stock that I own. I think my thesis was, listen, people don't stop eating pizza. You're making money on this thing, dude. People don't stop eating pizza. I'm up 35%.

Not to brag. No big deal. All right. So the stock is Domino's. This is when I bought it. Now, shut off, please, for a second. Josh, remember a couple of weeks ago, I whacked my losers. I sold like PayPal and Zoom.

I'm like, I just don't want to. I don't want to. And I said, but there are times when I break my rules. There are times when I break my rules. I broke my rule with Domino's. I broke it again with Hershey. So they're not rules? They're not rules. They're soft rules. They're guidelines. If I buy a stock that's down 50% and it's like a PayPal, I'm not sticking around. You know what

I mean? Like if I lose 8%, I'm gone. I like this rule though. But if I buy a stock like Hershey down 50% or Domino's down 50%, if it falls another 15%, I'm buying more. So there's a difference. If I have the opportunity to invest in a company like this, I'm doing it. All right. So with that said, on their recent earnings call, Domino's provided long-term guidance, projecting over 7% annual global retail sales growth. You know what's the largest pizza store in the world? Yeah. Yeah.

People like pizza, it turns out. All right. Let's do some charts, please. So the stock pulled forward a lot of growth. Next one. As did a lot of other companies during the pandemic. The comps became impossible. Back up.

Back up. Did you buy it? The red circle is where you bought it? That's where I bought it. Not to brag. Yeah, no big deal. Next chart. So the stock got whacked, rightfully so. The comps were impossible. And so the stock fell more than 50%. They're buying back a ton of shares. Next chart, please. Very shareholder friendly. It's got almost a 4% shareholder yield.

This chart, for people that are listening, this is the shares outstanding decreasing from 56 million down to 34 million between 2015 and 2024. So over a decade, they've shrunk the float by like 40%, which is super meaningful because the earnings have less shares to be distributed amongst. So your share, if you don't sell, then your share of the company's earnings grows substantially when a company is doing that. Very well said, Josh. And technically, the stock is acting phenomenally. There you go. And are you going to get a new high? I think so. Do you think there'll be some traffic uh, you think there'll be some traffic though, uh, up at that five 50 level? Yeah. And that's, and that's totally fine. Um, and then lastly, it's not just, uh, it's acting

very well relative to its peer group. So this next chart is dominoes versus an ETF that owns a bunch of restaurants. John Charlton, please. Did I put that in there? I thought I did. Maybe I didn't. Yeah, last chart. All right, I guess we don't have it. But what I was showing is DPZ divided by a ticker EATS. And it's breaking out relative to that as well.

So the fundamentals are lining up. Technically, it's lining up. The cheese is lining up. The toppings, it's all lining up. So wait a minute. Why did you buy this thing? $350? I bought it on June 15th after the first gap up. I bought it at like $330, something like that. $330. Okay. It's approaching $500 and you would pull the trigger here?

You're making the case? Domino's right here? Well, we're going to make the case. I mean, is this the best price that you're going to you're gonna get probably not but yeah you could buy it in the next week or two okay all right i like it we're gonna we will we will follow um i have a mystery chart for you before we get out of here i don't think this one's gonna be very difficult this is i'm showing you a technical look yeah shout out to YCharts. I left the price in. Is this Tesla? Look at you. Look at you. Don't need any clues.

I think this is one of the biggest storylines in the market right now. And it is just not getting that much attention. But the losses here are starting to become staggering. And not just in absolute terms, because in real life, professionals aren't measured just in absolute terms. They're also measured in relative terms. In absolute terms,

the stock is now in a 59% drawdown from its record high. But in relative terms, believe it or not, it's like so much worse. There's almost no large cap tech stock you could have been in where you wouldn't have made in this same time period, 30 to 50%. So we have some more post-reveal charts here or just one. I don't even know what we have anymore. I don't even know what I'm doing anymore, Mike. Look at this. This was $1.239 trillion market cap. Now $525.

And we have another one, John. I forgot. All right. So pay attention. You could see the low here is right at the end of 2022. And I think that low is probably tax law selling as that horrific year comes to a close. This is a stock that just absolutely crushed people in the bear market of 22. Totally understandable, of course. It prints that low, and then it has a nice rebound.

So that's about 118 or so, rips back up to 250. It's been selling off ever since. It's been going down for a full year now and i think that that i think that level is not 118 i think it's like 108 or 110 that level is in sight uh you know it's it's not that far from 164 to 110 i don't wish that on on the longs here i'm not like rooting for that i don't i don't short stocks don't buy puts. I don't bet against people and root for downside. But that is probably going to be a buying opportunity. I don't believe things were that horrendous at Tesla that that level wouldn't hold. But I'm afraid to buy this thing right now before it gets there because it just looks so much like a falling knife. What do you think? There's a big fat gap at 145 that looks like it's probably going to get

filled. And Dan Ives called this an unmitigated disaster. He's still long-term bullish. But I agree with you that at some point, if you have a multi-horizon and all that sort of stuff, blah, blah, blah, there's going to be a really, really nice buying opportunity. This thing always recovers. Like one time in the future, it won't. But it just always does. This is the proximate cause for the sell-off today. And again, it's been going down for what feels like forever.

They reported last month's sales, and they were way worse than expected. They built 433,000 cars. They reported 387,000 sales, and that's down from the 484,000 cars they delivered in the last quarter of 2023. This is a quarterly sales number for their vehicles, and it way fell short. This is a quarterly sales number for their vehicles, and it way fell short. I'm curious to see how the stock acts over the next few days. It did close at the highs of the day. If it doesn't take out today's lows, then maybe all the bad news is baked in.

But I don't want to make that bet. We'll see. I didn't make this chart, but I looked at short interest, and it is the highest it's been since 2020. So if you remember in 2019, there was just massive short interest in Tesla. It was like 25%, right? It was crazy. And they all got unwound, those guys. And maybe it's different people, or maybe it's the same people revenge trading it.

But the amount of not counting options, just looking at short interest in the stock. It's still nothing. It's 3%. It's nothing relative to 2019, but it's higher than it was last year, and it's climbing. That's all I'm saying. Yeah, yeah. And, you know, anytime there's a stock cut in half in a bull market, it's going to attract short interest. So I'm not surprised at all. Yeah, yeah.

So, all right. We're going to follow that one as well. Hey, everybody. Did you know tomorrow is Wednesday, which means an all-new edition of Animal Spirits with Michael and Ben, my personal favorite podcast? Well, it's true. Listen on the podcast app of your choice. Thursday, we have an all new Ask the Compound with Ben and Duncan. Friday, brand new Compound and Friends with Michael and myself. And Saturday, a new Jill on Money. So keep it locked on the Compound all week.

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