The Compound and Friends - It's Like Free Money

Episode Date: December 12, 2025

On episode 221 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Joe Weisenthal and Tracy Alloway to discuss: Dow 50,000, AI and the market, cash on the sidelines, the Fed's latest move, 10 years of Odd Lots, and much more! This episode is sponsored by Neuberger Berman and Apex Fintech Solutions. Learn more about NBSD and get important information at https://www.nb.com/nbsd. NBSD from Neuberger. Learn more at https://apexfintechsolutions.com/augmented-advice Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ NB Disclosure: Investors should consider the Fund’s investment objectives, risks, fees, and expenses carefully before investing. This and other important information can be found in the Fund’s prospectus, and, if available, summary prospectus, which you can obtain by calling 877.628.2583. Please read the prospectus, and, if available, the summary prospectus, carefully before making an investment. Neuberger Berman BD LLC, is the distributor of the Fund and a FINRA member. 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

Facts which are cool, but so that you don't stray from the mic, which you guys... Yeah. So, this is going to be amazing. The sound effects are critical. Michael and I have a plan for this episode. Okay. We're just going to let you guys do an odd lots and chill out. We're just going to sit back.

Can we just ask you questions? Yeah, that sounds great, actually. We're just, we're just going to hang and let you guys do what you do. Sick. How often are you in person at Bloomberg versus remote these days? Like, because you do a lot of shows. Joe is here all the time. I'm there basically every day.

Tracy's like four. Yeah, three or four, I would say. I usually go back on like either Mondays or Fridays. Three or four, what? Three or four days? In the office. Okay. Yeah.

It's not too bad. It's actually really nice having Monday and Friday episode free. Go back to where? Where do you go? Connecticut. Okay. Are you guys noticing like the city is busier? And obviously it's seasonal.

But Josh, our train today and our train is not porous, okay? We're from Merrick. These are people that come and work in the city. It was literally standing room only. In the aisles. The aisles were full. Totally. I've thought many times just generally, like, if there is a recession, you will not see any evidence of it in New York City right now.

Right now, New York City feels as busy as any time I can remember. Yeah. Not just post-pandemic, but period. But I will say, though, there's a noticeable difference between ridership on the subways on a Monday versus like a Tuesday. For sure. Like Tuesday, my train is totally crowded. Monday, it's totally empty. Well, we have, like, for a lot of people, we have a three-day in-person work week.

Yeah. Which has become an unofficial, it's like a thing. Yeah. I run into a lot of people who are going in Tuesday, Wednesday, Thursday from the suburbs. My wife and I went out to see a comedy show a couple months ago in the East Village. It was just random night. And we had a babysitter. So we were like, oh, let's get dinner afterwards.

And, like, we could not get a table. And I don't mean, like, at nice restaurants. I mean, even just, like, random little, like, divey Chinese places on a Friday night. Yeah. We just could not find a place to sit down anywhere. Where'd you go? We ended up finding a table at a bar at this place called Neruda, which is a Hawaiian restaurant. Oh, I know that place.

There's Hawaiian restaurants. Yeah, it's New York City. There's everything restaurants. There's two Hawaiian restaurants. There's a Hawaiian barbecue place close to you. New York can't have a recession unless there's a financial crisis. Yeah, it feels like a... Like New York because...

No, no, no. I think the country could have a recession very easily, but I'm saying New York, City? Like, what would it take for Broadway to be dark? COVID. What would it take? Right. Like, you need, you need, like, an actual crisis. I don't think, I don't think you have, like, just an economic slowdown and New York

empties out. No way. Yeah, I agree at that. Famous last words. Yeah, exactly. So, this is my crew. I don't know how many people work on Ivots. We have three producers. We have a skeleton crew today. We're missing Nicole. Yeah, we're missing John and Nicole. That's right. So you have three as well?

No, we have like 10. Oh, wow. I don't know. How many people? Well, we have Duncan, Daniel, Travis is in California, and John and Nicole. John's in Japan. Amazing. Well, I think our...

In Japan? Yes. Are you, like, recording in Japan or is that... We're expanding. We have strategically located him in Japan. We're looking for the best financial podcaster in Japan. John's going to find them. Well, what's your output?

How many shows... Compound Japan? How many shows a week do you do? In Japanese. On average, about three. Three. Yeah. And do you tape them all that week, or do you store any in the can?

I was just saying... Guys, those are booking numbers. We usually have, like, a huge backlog because we can't get them out. We record a number of Evergreen episodes where, like, we'll just... We have no idea when we're going to release because it's not about something

that's in the news, you know? So this is one of the toughest things about doing this, and I'm curious what you think. So we book this particular show out, as you know, three months in advance. Like, we're booking March right now, four months. I was surprised.

Yeah. Yeah. But we have very important guests. Like, you do. No, we have people whose schedules are like, you have to really have something out on the horizon. The hardest part is something happens. And you really wish you could talk to somebody that knows about it.

So why do you book so far in the... Can you, like, rip up the schedule if it's an emergency? I think this is what we're going to do from now on. Yeah. This is what I think. What we're going to do, people that are coming from out of town, we will put them on the calendar three months out. Yeah, that's fair.

People that are New Yorkers are almost going to be, like, slotted in a week before. Yeah. Like, we could have come in whenever, basically. Yes. Well, we had to get you from Connecticut. You know, we have, like, people who, like, we work for a long time, and it'll be months in advance. But, you know, like, something happens and, like, can we get someone tomorrow in and do a quick episode? So we mix it up. We have the most amazing showbooker of all time.

Her name is Nicole. Mm-hmm. That's good. And she is juggling the casting for, like, six different podcasts a week. Wow. And part of the main reason for booking people so far in advance is to just get it scheduled. I know. Yeah, I know. Because it's, no, it's good to just, like, especially anyone who's, like, a name and they're busy or they're coming out, just get it locked in.

And you know it doesn't matter what's going out at that time. People want to hear them. Yeah. Well, the other thing we do is if we know we're going to sit on an episode for a while, we remind the guest, like, not to say specific dates and things like, like, keep it kind of vague, like, you know, earlier this month or whatever. And then you can release it. Well, guess what? This is very live. Yeah, this is going up tomorrow, no matter what.

I'm so excited that we're sitting here today with you guys. Is this going up tomorrow? At all-time highs, all-time highs in the Dow. I love that. Russell 2000 joining the party, the S&P's right there. Equal weight, X-Mag 7, it's all happening, the Dow Jones is 48,700-something. We are less than 3% away from Dow 50,000.

Amazing. Is that an unbelievable number? Like an unbelievable number? So when you guys started odd lots 10 years ago, I bet you the Dow was 20. What do you think? It's probably right. We could probably look that up somehow.

Yeah, the Dow had 20,000. Where was the Dow? Are there church or the Dow going back 10 years? Does that, is that information exist online? Don't you work at Bloomberg. You should know this. Do you guys have Dow 50,000 guests prepared? No, we don't.

I would say even back when we started in 2015, people still hated the Dow. 17,500 a year. Holy shit. So in 10 years, the Dow has gone from 17. But it's what's so crazy is no one's talking about the proximity to 50K. It's almost like a given in people's minds. Whereas I remember approaching Dow 20,000. It was huge.

It was like a seesaw just under that level for months. And it was like, is it going to happen? Is it going to happen? Nope. We're not talking about Dow 50,000 yet. 2.7% away. Wake me up when it's Dow 100. That's my view.

Well, let's... That's coming. Yeah. Well, that's a double. Most stock market doubles all the time. I know. I know. Give it, give it two years.

Is that your 20-26 target? The problem is memories are short, and everyone's used to big numbers now. Yes. Like, everything is at a record high. Everything is, like, valued at $1 trillion or whatever, and so they stop having it. So Doug Bonaparte wrote something recently, our mutual friend, Doug, everything now costs $1,000, which I think is sort of accurate. And then I was going to say, like, every number that we talk about on Wall Street is now probably like in the trillions.

It's all trillions from now on. You know, it's really embarrassing. You know, it's really embarrassing. It's like, if I hear about a successful company or I just like, oh, so, David says, Zaslov, he's going to be a billionaire for this Warner Brothers. I'm like, what? He wasn't a billionaire already? What's been doing all this time?

Why do I know his name? Yeah, I thought he was a big deal. I thought he was a successful businessman, not even a billionaire yet. What is he doing all this time? What he's been wasting his time? Yeah. What he thought he was. Yeah.

All right. How are we looking? Yeah? All right, because you're out of time. Yeah. So whatever it looks like, that's what it looks like. You clicking for us today? Let's go, Daniel.

Daniel Power, ladies and gentlemen. Also, our visual arts guru creates all our logos and all our stuff. Take a bow. All right. You really, you really crushed that one, Daniel. Jesus Christ, I'm going to go home. Whoa, whoa, whoa, stop the clock. Here's a word from our sponsor.

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risks, fees, and expenses carefully before investing. This and other important information can be found in the fund's prospectus, and if available, summary prospectus, which you can obtain by calling 877-6-28, 2583. Please read the prospectus and, if available, the summary prospectus carefully before making an investment. Newberger-Berman BD LLC is the distributor of the fund and a FINRA member. This episode is sponsored by Apex FinTech Solutions. The time to compete for next-gen clients is now. Transforming your business for the future might seem like

something you can push off, but every year you wait, the further behind you fall. Eventually, you won't catch up. Augmented advice from Apex gives you the power to be what the next generation wants on your terms. It's a modern on-ramp to tailored advice using your brand, your personal touch, backed by Apex Innovation. Learn more at ApexFintech Solutions.com slash augmented advice. 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 Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Ladies and gentlemen, welcome to. one of the best invest in podcasts in the world, we are sitting with financial slash economic podcasting royalty, literally. Tracy Alloway, along with co-hosting Oddlots, writes about markets, finance, and the economy at Bloomberg. Tracy was the head of Bloomberg's Asia-Pacific News Desk and led the cross-asset markets team. I first met you, though, when you were at FT. That's right. I actually remember when we first met because I drink way too much Blue Moon

and ever since that night I cannot drink Blue Moon ever again. Why? How much did we drink? I can't remember. For obvious reasons. We were annihilated somewhere. Enough to never want it again. I have that reputation. I do turn it up. I turn it up. We turn it up. And

with Tracy old friend of mine super excited to have you here for the first time. I can't believe it's the first time. Wise and Dahl is an editor at Bloomberg, co-hosting their flagship markets program. What'd you miss? I did.

I know. I remember the origin story of what'd you miss, by the way, from your Twitter. From my tweets, yeah. Joe is also the co-host of the Oddlock podcast with Tracy Allaway. And let's give a round of applause for Joe. Thank you. Yes? All right.

Do you remember where we met? We've talked about this on there. Where did we meet? I probably met you at Business Insider, like, just visiting, no? Maybe, but the first time I think we met was at Michael Jordan Steakhouse. Oh, that could be. Remember that night? Do you remember there was like...

Oh, yeah, yeah, yeah, yeah. Yeah. 2010-ish, 2009. Yeah, yeah, yeah. What were you doing there? Well, we... I don't remember the crew... He's a big Michael Jordan Steakhouse fan.

I don't remember, like, what the pretense was, but it's like a crew of some of us. I do. Somebody sent emails, blind emails, to a whole group of the earliest financial blogger. of which you were one, I was one, and was like, hey, there's going to be this meetup, everyone's going to get together. And it was like, honestly,

I think I met like five or six people that still talked to to this day at that dinner. It was very bizarre. I think we had Campbell apartment first for drinks and then migrated upstairs to Jordan's Steakhouse.

Anyway, you enjoying all this? It's fun for you? I love history. All right. We have a lot to get to with you guys. The first thing is the aftermath of last night's Oracle. report. We were going to just look at the stock market reaction. So Oracle was in a huge drawdown

going into the number. And today fell 14 and a half percent. This is the worst, almost the worst day for Oracle going back to 2002. So it's a four-decade old company experiencing one of its worst days ever. It's 40 percent off its high. Largest drawdown since the dot-com bubble. and this is in the context of an overall stock market making record highs. Yeah. So that's the interesting part. Yeah. Is that this didn't bring down the rest of the market.

I think that's really interesting. The semis are at the high of the day right now. The stock market, as we just mentioned, all-time highs. The fact that this didn't kill the vibes is really interesting. The band played on. I've been thinking about this, which is the thing that we always say when we talk about the market this year, it's like, oh, the AI-led market. It's AI is holding up the entire market, a handful of big tech companies and everyone else is doing badly.

And yet, actually, you know, so you mentioned Oracle. Meta is not having a particularly good year, right? And so the stock market is not perhaps as reliant on a handful of these giants as maybe people perceive. And the fact that, like, Oracle can tank and it doesn't take down the market should, as you're implying, like, maybe it caused people to rethink a little bit about the story that we've been telling about 2025. But I do think that the sentiment has shifted a little bit. bit on AI companies or tech companies themselves, right? And actually, Josh, I was listening to one of your episodes. I think it was a couple weeks ago. And you actually, like, enunciated it very well, this idea that we've moved on from the moment where it's just about the narrative and people

throwing out big numbers into the air. And we're getting into the point where investors actually care about whether or not the revenue is coming in to back that investment up. There's this really interesting thing that happened this fall and it reminds me of crypto. You guys had Sam Bankman-Fried on notoriously and Matt Levine. What's in the box?

And Sam effectively explained his Ponzi scheme or some of the crypto not just, someone else's Ponzi scheme. Matt Levine goes, wait, wait, wait. But you could literally draw maybe not a price line, but a sentiment line. The day

before you aired that episode and the day after. And the day after started a new chapter in the crypto market, it was 20, 2002? Yep. Okay. Where people were just like, actually, I'm going to say this out loud. That sounds bullshity to me. Yeah. People finally felt comfortable, like almost like the emperor has no clothes. And I think the parallel there was like what happened on Brad Gersner's podcast with Sam Altman, different Sam. I'm not big fan on backing. people financially whose name is there Sam these days. But like...

You would back Sam Roe. Yeah, I was about to say... I would 100%. Sam Roe is an exception always, right? 100%. 100%. His first name's not by. It's not by Sam Roe.

All right. So I would 100%, but my point is something shifted, not suddenly, not gradually, but like... Yeah. He had a horrible podcast appearance of all things, not even on a news network. No.

Gersner's like a shareholder. He's an investor of the company. He's an investor of the company. He asked a question that couldn't really be answered in a good way. And I was wondering if you guys have felt that seismic shift in the moment that it happened. Well, these are the things that happen when your valuation is built on vibes, right? And I would say crypto is mostly built on vibes. And crypto actually does a really good job of adapting to the narrative. So, you know, it used to be an inflation hedge,

the new gold, and then it became a play on the Trump administration. It's reinvented itself so many every year. Yeah, really. And AI, you know, for most of this year, has been exactly like that. It hasn't necessarily transformed itself just yet, but it's certainly built on, again, that story that it's telling investors, which is at some point in the future, the trillions of dollars of revenue are going to be rolling it. The thing about that moment with Brad Gersner is when Brad asked that question, he thought, he almost certainly thought he was lobbying up a softball, right? He's an investor in opening. So he's like, okay, this is the question that everyone's curious about.

Not an ambush. It's not an ambush. It's not 60 minutes. And he's like, I'm going to, because I'm, he's like, I'm sure Sam has some stock answer ready for this one. And so he thought he was like just throwing up an alley-up. Yeah. And so the fact that it wasn't, and he was like, well, you want to sell the stock? What was the question?

You guys are making $1.3 trillion in commitments? So he said, yeah. So he said, you guys have $13 billion in revenue. How are you going to make a trillion dollars in capital spending? He's like, Brad, I'll buy your stock back. He's like, oh, well, you ought to short the stock. But there's two things. So one, I'm sure he thought that, like, he was giving him a very, just an opportunity to explain the bath.

And he didn't. I also think it's very, what's really interesting about this and you connect it to the stock market, which is that Open AI is a private company that is very important to the public stock. Oh, yeah. And so if you wanted to have a truly informed view on, say, InVIDIA or CoreWeave or any of these names, you would want to have some insight into the balance sheet and the P&L statement of a company like OpenAI. we're in this very weird situation in which there's so much riding on an opaque company and so we're looking for these like little

little crumbs that we get from podcasts etc. And that's the only thing we got is that. We said this in October. We did a live episode with Kramer. I know you guys did too, by the way. I enjoyed that. And I referred to OpenAI as like Kaiser Soze. Like in usual suspects, he doesn't show up until the end. Like he's like not in the market.

But everybody else is so reliant, or a lot of other companies are so reliant on the every pronouncement of Sam Altman. And it's not long ago where proximity to Sam Altman was like the most bullish thing on earth. And now these stocks, they can't catch a bid. This is why we need tokenization. If Open AI stocks were a trade. So, all right, if Open AI was public, what do you guys think it would be down? Like if it's high, 40%. Let's put the high the day before the, the, you know.

the Gersner podcast. Where is it today from there? Down 40? At least. That's an interesting question. We are very good at this. 40 sounds... You know, I know they've reconstructed like open AI baskets, right?

Where they have these proxies. So I know it's like Nvidia and Corweave and a couple other companies that are perceived... Oracle. And then there's like the Google, the alphabet basket. That one is like Broadcom, which is doing phenomenally well. And a couple of these other ones that are seen as part of the alphabet universe. And I think, like, you can just look at that line and basically divert the alphabet basket and the Open AI basket basically diverged right after that interview. So we're talking about the market on an all-time high and just this narrative of its only AI that's leading the charge.

It's only five stocks. What a load of horseshit. Yeah. Like, literally. Wells Fargo hit an all-time high. Wells Fargo is ripping through its highs. So Microsoft, which is effectively another good example of a publicly traded stock that's linked to Open AI, right? Big investors, $10 billion.

They're eating a percentage of the losses. So Microsoft stock, it peaked in July, and the stock gets flat for a while. So it's this idea that it's just not just them. But I got to say on Wells Fargo, this is the problem, right, which is AI is so huge right now that it touches literally everything. And I'm sure there's an element of Wells Fargo that's like, we're going to fire all our workers and institute models and investors are getting excited about that. You couldn't be more right.

Like, some at the Hartford group today on the air. This is a 150-year-old-ish insurance company. Here's how old Hartford group is. Do you know why it's based in Hartford? Oh, that was an insurance capital. Do you know why? No. Okay, because you could stand on a roof and see the ships come in from England.

And are you familiar with the expression, someday my ship will come in. If you were in the insurance business and you were insuring cargoes, transatlantic, Hartford is the right place to stand on a building and literally like a widow's walk and actually see your ship come in that's how fucking old this company is why is it rallying right now

they spend more money more dollars of revenue than any other insurance company on technology you talk to an insurance agent who writes a lot of policies goes through Hartford is one of their carriers they make it the easiest

to get a quote back So like an insurance broker goes in, types their client situation. Hartford's tech. And the whole story with the Hartford group is that their AI investments are going to pay off before anyone else's. So you're exactly right. That's such a huge component of this rally in small caps and midcaps. The AI investments actually should lead to increased profitability next year. That's the hope, right?

Like people have been talking about this, like the next wave of the AI trade, so to speak, is at least in theory, the companies that will get much better operating leverage. We hope. Right, in theory. I mean, so, you know, obviously the financials, intuitively, there's a lot of opportunity. Because there was also that Open AI deal with thrive recently. And they're going to like, open AI is essentially going to be now a de facto equity holder in a bunch of companies that consume AI products.

But intuitively, that's got to be. Health care, drug discovery, all of that should speed up. these companies spend so much money. Accounting, um, law for, I mean, I don't, there's no like, all of these stodgy businesses. Wait, so we bullish on AI again? All of it. Absolutely. But all of these stodgy businesses like accounting and law firms where AI is already penetrating. There is, like, they're following the PE playbook with venture style investing, which is very unusual. I'm excited to see how that turns out. But there is so much opportunity. And you're going to see this. So these analysts are expecting this to show up in margins for all the rest of these companies. Yeah. Daniel.

So are the CEOs because they're putting out the press releases going, you know, You know, we're using cutting edge AI all the time. Fire chart 3A for me. Fire! I mean, that's not great, though. No. From a sentiment standpoint. Is that the cover?

This is the, this is today's cover of a person of the year issue of Time magazine. It is the architects of AI. They, they won it as a group. I won my bet on Kalshi. I had Jensen Wang winning. Nice. And I still got credit for it, even though he's part of a group. And this is that iconic lunch atop a skyscraper image from.

I don't know, 100 years ago, whatever. So, first of all, I can name almost everyone except for one person. Yeah, I can, I don't know who the guy on the far left is. Is that Anthropics CEO? That's Mark Zuckerberg. No, it's not. No, the Anthropics one is in the blue vest there on the right. It's Mark Zuckerberg.

It's Mark Zuckerberg. It is? So it's Mark Zuckerberg, Lisa Sue, Elon Moss, Jensen Wong, Sam Altman. I think that's the deep mind guy. That's the Ha, Ha, Ha, Suss. Yeah, the deep mind guy. That's the deep-bine guy that led to Gemini. And then Dario Amadee, and then she's the professor at Princeton, I believe.

You are a certified dork. Take a bow. Am I wrong on the last one? No, she whirled something. I'm embarrassed. World Labs. I don't know her name. I got to say Zuckerberg had a makeover recently.

I did a decent job. I did a decent job. Zuckerberg had a makeover recently. He looks pretty good. Look, they gave him the swag on the thing. Yeah, that's right. Wait, is this the first time they've done? a group as a person of the year.

No, they've done some goofy shit. Like one year they did you. Wait, wait, I was actually just going to say that. They put a mirror on the cover. No, no, no. That was a great call. Let's revisit that. What year was that?

That was 2004, I believe, or maybe 2005. But, like, that might have been one of the most vindic, given where media went. It was about social media. It was about the dawn of social media. It might have been 2006. So they said off from Lelboski? It was a YouTube-style image. Like, could, was there a better, like, think about, like,

Babe Ruth calling his shot and nail? it like what transpired over the next 20 years or 19 years since that in terms of seeing that was a great call we made fun of it at the time but they nailed it we did mock it but it's right it did turn out that that was the dawning of this era where people were going to be uploading photos and videos themselves relentlessly yes yeah they called it that's one the great it was maybe their best one ever i'm sure they've done other group oh they didn't they have a group cover of like the committee to save the world that's right now financial crisis yeah that one another one maybe not as held up well for various reasons.

Who was in that, like Geithner and... Larry Summers. Larry Summers. Robert Rubin. Oh, boy. And Epstein? In Epstein? What's not Epstein?

Larry Summers, Robert Rubin and... All right, can I read you... And Ellen Greenspan. Those were the three. Here's what Ed Yardin said about this cover. First of all, he doesn't like it, like me. He has a knee jerk, like an instinctual aversion to, oh, here we go again. There's some history here.

Jeff Bezos was named Person of the Year at the end of 1999. I remember that cover. His head was in a box. So it's the cover curse. The stock, right. The stock lost 90% of the next 18 months. Not great. I mean, it worked out okay.

Elon Musk was the person of the year in December of 2021. 2022 might have been one of the worst years of his life. I mean, comparably speaking. He bought Twitter shortly after. His personal reputation took a hit. and then he became the first person in history to lose $200 billion in net worth. So Yardinney's, yeah, no, I get it.

My Twitter was the low. His take is, the AI trade is turning into a game of thrones. In the past, the Mag 7 had their own kingdoms surrounded by big moats. They each had their unique monopolies. Now they are competing with one another threatening each other's kingdoms.

So that's what's changed. Wait, you said you don't like the cover? I don't love when something becomes so obvious. to everyone because it feels like doesn't mean everything's going to crash. It just feels like how much money could there be left to make?

You want something a little more interesting. I do, but it's not like it's Sports Illustrated for kids. Like it's, you know, it's like a, it's a worldly magazine, and AI is the thing. So, but I hear your point. You know, the other thing,

so, you know, there's the, everyone talks about the cover curse. The other famous curse is the new headquarter curse. And of course, we're like a few blocks away from the new J.P. Morgan headquarters, which is beautiful building.

but we're in the moment of some curses, apparently. You know, it's like, okay, the biggest bank, which is another stock that's like, that's basically an alter amount. In fairness, though, to J.P. Morgan, they didn't break ground this year. That, you know what I mean? They've been doing it forever.

They've been building that for 10 years. Actually, I have a funny story about that new building. Remind me to tell you after this report. Okay. What is there like a Freemason section in the building? Joe, I just got an email from somebody that works for us who said, that's Duncan, who said, Tell Joe Wisenthal I'm a huge fan, please.

That's right here. You want to tell him yourself? Thank you. Yeah, Duncan, he's right here. It wasn't from Duncan. Oh, okay. All right, so, Duncan is a fan. Oh, hey, was there a Federal Reserve meeting this week?

Oh, yeah. I, honestly, there was a lot going on this week, including the Odd Lots 10-year anniversary party, so I wasn't really in the right headspace, But I forgot about that, like, leading into things. Did anything happen? They cut rates by 25 basis points as expected. Yeah.

That's it. Nothing happened. No, no. They announced $40 billion per month of T-built purchases. That's the interesting thing. And a lot of people were actually caught off guard because the way they're doing it this time, it's not a steady purchasing. It's not like, you know, you buy $40 billion at the set time every month.

And there's like a schedule. They say they're going to ramp up purchases ahead of moments. where liquidity gets tight. So, for instance, the April tax date, that's when a bunch of tax revenue comes into U.S. Treasury, and because of that, bank reserves tend to get pretty scarce. So people are really interested. That sounds like a good idea. This is active liquidity management by the Fed.

Wait, we don't do that already? No. Well, not in this way. Is this longer dated bonds runoff because they mature, and instead of replacing them with the same maturity, they're opting to buy shorter terms? T-bills? Is that what they're doing? Well, I think they're doing T-bills because the main concern is in the funding market, right? It's this repo craziness. So they want to have overnight money slashing around and available? And banks are still refusing to use the

standing repo facility for some reason. And, you know, that's what it's there for, liquidity management, but they don't want to use it. The one other thing about the Fed decision there's notable, there were three dissents. And two of them, so the Kansas City Fed, President Jeff Schmidt and Chicago President Austin Goulsby both voted for no cut. Stephen Myron, there was the third dissent he voted for 50. But this is very important when we think about 2026 because we know Trump is going to appoint someone who presumably will come in with something of a mission to get lower rate. We're all assuming.

Kevin Hatchet. Kevin Hatchet. Kevin Hatchet is coming in to cut rates to zero as though it's COVID. I came up with that. The fact that there are, like, there are three dissents to this one, the two hawkish descent, means, like, he's going to have to do a sales job on the whole committee. And, you know, like Powell got the committee around because as recently as three weeks ago or two and a half weeks ago, odds of a rate cut for this meeting were less than 50%. Powell got the committee on board. And the market.

And the market. And so it's really shows like that whoever replaces Powell is hopefully for, hopefully has some clout within the committee. Otherwise, he's not going to be able to get what he wants. So Bloomberg Intelligence reported that yesterday was the most dovish presser since 2021. So you guys break it down. There's hawkish sentences of which they were very few. There are moderate hawkish sentences of which they were a little bit less. but Dovish and moderate Dovish

Most since 21 I also didn't listen to the call And as a matter of fact As a matter of fact Can we just cancel December Fed meetings We're all too busy in December I agree Who is time for this

It's AI Josh Christmas parties are more important They're reading the amount of the sentences That come off as moderate moderate dovish Dovish and hawkish Can I just say one thing about the market reaction So obviously a Dovish statement

From Jerome Powell was really good for stocks, as was an increased forecast for GDP next year, lower inflation, stable unemployment. That's a real, that's like the dream mix for equities, right? But the really interesting thing about Wednesday is you didn't see that same reaction in the junk bond market. So credit spreads on junk bonds actually blew out a little bit on Wednesday, which is really weird because in theory, that same mix that's good for equity should be good for corporate debt too. The one other thing, too, about, I hadn't seen this chart until you guys showed it, but you're thinking about what made this a particularly dovish cut is the opening paragraph of the statement said inflation has risen since our last meeting and remains elevated. So think about what that means.

The stock markets at all time highs. Inflation is above target as it's been for half a decade. It's rising and they're still cutting. So by implication, that is extremely dullish. But they have three mandates. One is keep unemployment in check. Two is moderate price increase. And all-time highs in the stock market.

And no, three is not be sent to Guantanamo by Donald Trump. Yeah, that's right. So to satisfy the third part of the mandate is very important. This was the spark for the stock market. Leasman was asked if AI was a factor, what's going on out there, when you get more growth without a decline in unemployment? And this is a Powell responded. And this is what sent the market higher.

Powell said, so the implication is higher productivity. Haven't heard that in a while. And some of that may be AI. Also, productivity has been structurally higher for several years now. So if you start to think about it as 2% a year, you could sustain more growth without more job creation, which is maybe not great for society, but it's great for the stock market. Everything is about AI now, even the entire U.S. economy. There was one estimate that I saw saying that 40% of U.S. GDP growth for this year came from AI.

That's insane. That's more than consumer spending. I don't know how. Oh, build up. It was the capital expense. It was direct. But, you know, an interesting, like, I believe to some extent that AI is contributing to greater productivity, it's probably true to some extent. Well, the other thing interesting to think about is like.

Ringing endorsement, show. Oh, do you believe it? I guess. I guess. But no, think about how tight the. labor market was in 2021 and 2020. Yeah, it was an emergency. Yeah, and for the first time in years and years and years, companies couldn't take for granted

that they put a help on it, sign in the window that they'd get it. So that forces companies to find productivity gains that they might not have. We can't find work. Oh, we're going to like, you know, you're going to place your food order on an iPad. Chiosks. Yeah. So it's possible, and I'm not totally sure, but it seems at least possible that some of the productivity growth that we're seeing now.

is the fruits that are being born from when all these companies were severely resource-constrained and had to find new ways to continue doing business. I think that's definitely true. But I also think there's this thing now, with every business owner I talk to, at least, they don't know to what extent AI is going to be, is going to enable them to stop putting people in seats. And the bigger the company, the less they know. Yeah. So they know that AI is.

helping their coders code and helping their white-collar employees bang through tasks like drafting emails and reading documents. They know that for sure. I don't think most companies are able to like calculate a dollar amount. But the further this goes, the more advanced it becomes, the easier it'll get to measure. And like when you hear people talk about efficiencies, AI job losses are the efficiencies. Like there's no other, there's no other efficiency. We don't need as many people to do what we do as we thought we did.

Well, the thing you always hear from the labor market optimists, I guess, is this idea that, well, we're going to lose some jobs, probably a lot of jobs, but they're going to be replaced with new jobs for the new golden age of AI-driven productivity gains, right? And I'm really curious. So many life coaches. Yeah, I'm very curious to see what those jobs actually are, right? Yeah, employment counselors. Yeah. What if it's not job loss? Like, what if it's just like people that got into a house and had a mortgage prior to 2022?

What if it's like, listen, if you were in the labor market, you're good. But the pool of labor is going to remain relatively constant because we just don't need to hire as many new people, especially on the entry. This is what college kids are faced with. And recent graduate unemployment looks like a recession. If the whole population was at that level, that's going away. That's going way higher. Yeah, for sure. You know, I think the, I'm not, this is not a forecast or anything like that, but one possible

thing that I've been thinking about and I've said a couple of times is, okay, in any corporation, if we've all seen the memos, you need to figure out how to use AI, right? Everyone, figure out a way. And so how do you establish if you're a middle manager that you are successfully implementing AI within your division? Well, you're like lay off 10% and say, oh, we're, you know, we're doing the same work with 90% of the, with 10% reduction. It's like the proof.

But it seems like, so, yeah, so you don't actually really do anything with AI. You just prove it by firing people. It's at least, at least seems possible to me that a number of companies will again find themselves short of labor, that actually they did not have AI-driven productivity gains, that these were layoffs because someone wanted to show that they were getting more lean. I also think Doge was like a sort of cultural thing where like every, lots of managers, like, we're going to do our own version of Doge and really serious an essay. Firing was in.

Firing was in. And it may be that sometime in 20, 26 or beyond, that we get a burst of catch-up hiring when companies realized, wait, these weren't, we really didn't have the productivity gains to justify these layoffs. You're saying you think that's the way it goes. I think it's possible. I think it's possible that companies might find themselves a short labor next year. This is one of the things that we learned from the pandemic experience or the pandemic like

really hit home. When you have these big disruptions, they say. set off, like, this extreme cycle in behavior where people, like, either can't hire enough, so the next year they want to hire more employees and build, like, a backlog, a safety net, basically. And then they find themselves bloated, and then they fire everyone. And then the next year, the same thing happens. It happened with a housing investment post-2008 as well, right? Yeah. Home builders are still scarred from 2008. And we've kind of been trapped in a cycle ever since. It's like a pendulum and it gets more extreme.

Tracey, why are globally yields rising? I don't know why I just said it like that. But why are, so we had the Fed cut yesterday. And yet, like the long end in particular, why is this happening? Daniel, try on please? No segue. He just goes right in. Let me say. Oh, good chart.

Yeah, what is this? What is it? We're looking at... I gotta say it's funny, though, it's like, oh, look at Japan. But it's important to note for viewers at home that that's on the left side of the scale. So what looks like the highest. is actually still far and away the lowest of the long end yield. But what is the story here?

Seriously. I mean, I think it's a mix of higher inflation and economic growth expectations. And even though everyone's talking about the U.S. stock market today, like the European stock market has had an amazing year. Yeah, yeah, exactly. So yields are following perceived economic growth and prosperity. There's so much that's happened over the last few years. But I think another big phenomenon that has nothing to do with AI is. is so we know that there is some kind quasi de-globalization happening,

at least in the specific sense that every country feels we have to have our own semiconductor fabs. Yeah. We have to start. Defense. Defense. So you have this combination. And when you reduce trade, that's anti-productivity, right? Because we can no longer outsource as much as we want.

So you have this anti-productivity phenomenon coupled with increased spending, because that's how you get all this of sufficiency. So you have more money coming. coming into a less productive system, I think there's good reason to think that inflation over the medium to long term will just be higher than it was due to just the combination of those two factors. And that's how you get the high, this is staying higher yields. It's nice that de-globalization is good for investors, but also the globalization story was also good for investors. It's always good for investors. Well, no, because like if you're in Europe right now, you don't want to see a repeat of the internet where four companies in the United

States are selling you everything AI related. Yeah. So the French are backing mistral and they're trying to foster all of these startups and the Germans are rearming, which I never thought I'd be so bullish to hear a phrase like, hey, look, the Germans are rearming again. But there are all these Eurocentric economic growth drivers now that did not exist even like two years ago. Yeah.

Yeah. And those stock markets, they look like, they look like our market or better in many cases. Joe would say capital H history, right? Like, it's an actual shift in world global history. Well, you remember, like... Trump has been a catalyst for, I think, waking up Europe. Yeah, he has. I mean, do you remember, like, after 2010, when the Euro crisis is like, when is Germany

going to spend some money? 15 years later, you got your answer. And then 15 years later, he's like, oh, my God, we've been waiting for this forever. Or it took was the second term of Donald Trump and a Russian invasion of Ukraine. And a war in their next door name. And it's funny. You guys, like, started your career. There's maybe not started, but austerity was the word, one of the words of the decade.

How did that go, the whole austerity thing? It wasn't great. Well, you know what I think about that time, which is very strange, is these days, 2025, the idea of austerity seems so alien, right? Either party, right? No one has any appetite for higher taxes. No one has any appetite for cutting spending anywhere, right? And this is the case in the U.S., and it's the case in Europe.

And it's really hard, like, wait, what were the political conditions in 20s? that actually elected leaders felt comfortable doing austerity because that seems like another world now. We had these two old codgers, Simpson and Bowles. Maybe they're still alive. I apologize, guys. They were doing this national tour with the deficit schick. And they were like folksy and old-timey.

They did a rap and they had puppets. They were rapping and they were... Rapping about the deficit. There were YouTube videos. So what was the... What was the zeitgeist? That was the zeitgeist. It was like, it was like popular post a financial crisis to say if we don't get serious about deficits going to happen again.

Thank God we didn't get serious about deficits because we haven't had a recession yet 15 years later. I think the crisis had a lot to do with it. Is there say more? Oh, well, what was I going to say? When you have a crisis, the natural instinct is let's cut back on spending. Yeah. Well, okay, what's remarkable about the Eurozone crisis is it wasn't just countries imposed. on their own people. It was also, you know, the European Union at that supernational level

imposing austerity on its members. The North against the South. And contrast that with the moment today where, you know, the EU is trying to hold on, but in general, it feels like everyone is going in their own little direction. It seems impossible to think that would happen now. One of the standout performers amongst European stocks rallying are like Italian banks, Greece is doing well Like tourism driven countries Are actually outperforming Industrial manufacturing

like countries like in the north And it's kind of interesting Where like the roles have sort of reversed I like the idea of Europe As like a tourist destination For people who want to look at like A non-capitalistic society You just go there and watch the French drink wine

At lunch and stuff like that Protest That's right Set things on fire Speaking of bubbles Is there a bubble? in money market funds, there is $8 trillion and going up every single day. It's really incredible when you consider the context and the backdrop of the stock market

and the fact, I mean, it's just... But what you're showing in the bottom pain is that money's not moving. Yields have come down from 5 and a third percent to 3 spot 8, 6 percent, and it doesn't matter. And it looks like it's going vertical, the institutional money market funds. I just think, you know, if you have money that you don't want to put it. into risky assets. If you don't want to put in the stock market, like,

then you just want liquidity, right? And you're still getting paid almost 4% for... You're still being inflation. Yeah, you're still meeting inflation or pretty close. Why are you, like, reaching a little bit for that extra 40 bips on...

It sounds like somebody's sitting on a lot of cash. Joe, come on, put it to work. Okay. Is that cash on the sidelines? Joe, put it to work. You guys, I don't know. I never...

Have we established whether that's a myth or not? It's a riddle. It can't be answered. This is absolutely cash on. the sidelines. You know, it's funny? It's like the... Yes, but if it comes into the stock market to buy, that means somebody had to sell stocks to that, which then goes into money market funds. There's all these people, I know, there's all these people that are like, there's no such

thing as cash on the side line. This is literal cash and it is actually on the sidelines. Now, the idea that for every buyer there's a seller is true, but also, guess what? The stock market goes up every day, and that's not every day. The stock market goes up guaranteed every single day. But it's... Can you promise me? Yes, of course. But it's positive some. Yeah.

And this is like the big, big difference between this and the prediction markets. I won't call it betting. Is that the individual gamblers, somebody wins, somebody loses. And eventually people are going to get tired of losing because you lose more than you win because the rake is so high. Not just a prediction markets, but in gambling markets, betting apps. Like, you are going to lose because the house, there's a rake in there. And eventually people would be like, this isn't fun anymore. Yeah.

This was one of the things I found really interesting when we did that episode with the sports better, this idea that like if you're actually good at sports betting. Nobody's actually good. Well, in theory, if you are, like the house actually cracks down on you and starts limiting the size of your bets. So all these guys are making new accounts constantly and starting out by making stupid bets so that they look bad and then making the big money. Can I say, this actually, I want to like rant a little bit about this. because... Turn on the TikTok camera.

No, you have all of these people, and they're these cynic, there's professional cynics on Twitter, and they're like, oh, the stock market's, like, rigged, and only, like, the big guys win, and we're creating these new assets, crypto and prediction markets and all this stuff. It's not rigged, like, old Wall Street and stuff.

But it's like... But, like, look, are there issues with the stock market, I suppose, but the U.S., like, real, like, legacy capital markets is probably the fairest, most democratic, legitimate market to have ever existed in history. You pay almost no spread. The scale of manipulation and insider trading is so marginal in the U.S. stock market. If you're really good at investing, they don't kick you off.

They don't kick you off the Schwab platform or wherever you trade. Like, it is – and it's rare because if you look around other countries and including very developed the countries. I mean, go up north to Canada. Like, they always have frauds. Every time a company gets big, the entire, like, Vancouver stock exchange, these, like, Penny Annie junior gold miners that you have no idea. Like, US capital markets. Yeah, aim in the UK is another one, right? Yeah, aim in the UK. Do you want to apologize to your Canadian listeners? Oh, I can think of one in particular who's going to be upset. Luke Kawa, I'm so sorry. I apologize for Joe's behavior again.

Joe is cooking. But, like, seriously, like, U.S. Legacy, regulated capital markets are so good. And the fact that there are so many people sending this message, oh, it's all rigged, only the big guys. You hear as much of that, though, as we used to hear, I'm not on Twitter for six years, so I don't know. So smart. Is it the same level of distrust?

No. Because I feel like now it's all gambling and it's nihilistic. And it's like, yeah, I know it's rigged and I'm part of the rigging. I think the nihilism part is important, right? It's not that people, like, don't think that this is crazy behavior. It's that they all think they can make money off of it, despite it being crazy. And the rigging, here's what's so funny about the rigging stuff. The people who probably were complaining the loudest about how it's all unfair and it's the Jews, whatever it is.

What actually ended up happening is those are today's Robin Hood users. And 100% they're giving a penny to Citadel every time they trade. And you know what? They don't give a shit anymore. Nobody cares. This idea is like, oh, Citadel is. Came in for order flow. Okay, fine, Citadel gets a penny.

Do remember, Brad Katziyama? But that's the rigging. But that's crazy. Yes. So the HFT scare was like, that was a crazy moment, actually. So Brad was on TV arguing with the guy from Bads. It's like, it's rigged. You're taking a penny per trade. It's like, yeah?

It's a penny. Do you remember the Michael Lewis book on HFT? Did you read it? Yeah. There is a passage in there where he describes like a guy who's about to place a trade on his computer and he like hovers his arrow above the buy button. He almost got scammed for a penny. And then he claims the price, the price moved because he hovered his cursor on the button.

Oh, my God. Like, that's how outraged people were at that time. Can you believe it? The bid-ask spread grew by half a cent. All because of me. That's the... I mean, it's crazy because, like, people don't remember. But that was the rigging people.

That was what they were complaining about. Because, like, for a long time, there were no increments of stocks between 1-16th, right? That was, like, before decimalization. it was like fractions. So there was a period where like, first of all, the bid as spread was a minimum, whatever,

16th of a... Bro, I used to sell people stocks at 10 and a quarter. Yeah. We were making markets, nine and seven-eighths by 10 and 8th. You know,

it was like a really big deal that in the late 90s online, you could get a $10 commission. So I have no patience for these people worried about like, oh, I'm like, Citadel gets a penny here. You know, there was this whole category

of financial blogger back then whose whole shtick was, the markets are rigged, therefore, you should not invest. Well, zero hedge still exists. So, so guys, Vlad was on with us two weeks ago. Talking about prediction markets. Calci raised a billion dollars in new fund. They had an $11 billion evaluation, which is twice the value that it raised just two months ago.

They raised $300 million in October, which is insane. On Robin Hood's most recent call, the CFO said that prediction markets reached an annualized revenue run rate of $100 million within a year of the launch, which is their fastest in history in October volumes put the run rate at closer to $300 million. Here's my take on this. As I mentioned, I think the individual gamblers are going to get tired of this, right? 90% of the volume on CalShe in October was sports betting because the CFT said, okay, fine, you could do it now.

That allows them to preempt state laws. So that was the explosion. But Chris Deerks, this was a Bloomberg article actually, by you. your colleague. I want to give her credit. Lou Wang, she said, or hey, I apologize, why it's harder to tell gambling from investing nowadays. So in the article, they quoted Chris Deerks, a pro sports better who used to work for Druck and Miller, okay? So he works for a company called Novig, a sports focus prediction market company. Oh, Novig. Yeah, get it? Novic. Yeah. Oh, I actually didn't. Even I get it. I met, I met one, some Novig guys.

That one escaped you? Yeah. Okay. So he used to work for Citadel and Jane Street. And when it comes to betting, in his view, the deck is stacked differently. Quote, I don't want to compete against the smart people. I want to compete against the dumb people, he says. Same. What has the highest volume markets in Robin Hood is going to have the dumbest customers, and that's where I want to be. Yeah.

Well, this is the problem, though. Everyone thinks they're smarter than everyone else. This goes back to the idea that, like, no one thinks what they're doing is, like, actually going to pay off in the long run necessarily. It's all short-term bets, thinking that you're going to get out before everyone else. But the difference is you can. be dumb and still be profitable over time in the stock market because stocks are buying to go up. It's true.

Sports betting that ends tonight, they're not biased to go up. It's zero sum. You're not going to make money. So I think people are drunk on this spectacle right now. I do think that it can be a big market. So, for example, if you're a hedge fund and you want to bet that the Fed is going to lower interest rates and you say, okay, so I think that that's going to impact inflation this way and the dollar this way, why not just bet on their prediction markets?

But guess what? You could do that on CME. There's driven this for that. So I have a few thoughts. So one is, like, a good prediction market that could be very useful. It's like, all right, I would have a position on Tesla, but I want to hedge the exposure of, like, their car sales. So you could bet, like, you could bet the car sales. Great.

The problem is there's no volume on that market. Exactly. So there's no volume there. Today. Today. That could change. It could change. Absolutely.

But, like, as of today, this is not a useful instrument for institutions. Now, on this point, like, about what's going to happen is you have to keep. keep bringing in fish into the tank to feed the wheels. Eventually, people are going to lose money to your point, and then it's going to drop. And what I think is the real risk is because there's no insider trading laws or as such, or it's not the same, like you're, you would be very skeptical. You know, there was this incident, I think this week or last week there was a market on who are going to be the most search person on Google for the year. And someone like nailed all of the bets. And there's a speculation.

The speculation that they work at Google. But if you think that there are like insiders who like really know stuff, why would you ever participate in that market? Here's a more practical example. There's a bet right now who will win Warner Brothers. That's useful. Yeah, yeah. Right.

So Netflix or Paramount. If you're, let's say, so if you're a lawyer working on the deal, you owe a duty of care to your client. You obviously aren't going to bet that. But let's say you just talk to people that are involved in negotiations. and somebody says, David Ellison's so pissed he's going to walk away from the table.

I don't know. Is that insider trading if I bet it on Kalshi versus if I go in the stock market and try to express that using options on Netflix? I mean, I'm sure it is. They'll try to make a case on it.

Someone's going to be the example, I guess is what I would say there. But like, so a market, I mean, I agree. And I don't know how the law is ultimately going to shake out. I mean, the two things I'll say is, there will be a test case.

There will be a test case. There will be a test case. And I think that if, the prediction market companies should want there to be some regulation. Because, again, if you want to have random people participate in this, it would be nice for them to know that there aren't sharks who have all the inside information who are going to win every bet against them. But the other thing that I'll say, like,

that strikes me as potentially a very useful market. If that ever got, like, if these sort of like deal markets ever got to be liquid, it's like, okay, it's right today. It's at 65% Netflix, whatever, tomorrow, it's 65%. That could be a very useful instrument for trader. The election outcomes are very useful now. But it's the same idea because let's just say that Paramount wins the deal or loses the deal. Who is to say for sure how that's going to impact the stock?

Just bet on the outcome. That's right. They buy it on the outcome or hedge out the outcome. I do think that a few things. I do think that the prediction markets are going to grow. I do think that there will be liquidity. There's none right now. I tried to do a bet and I moved it from 60 cents to like 90 cents.

Like honestly, there's no liquidity there. And also, there's no way that it's going to, not real way. I would be very shocked if it does anything remotely approaching equity values or trading like that. Like the idea that it's going to migrate there seems far-fetched. I'm going to make a prediction that you could bet on, though. We will see the launch of a prediction market hedge fund. Well, this is what I was about to say, right?

So you're seeing financial institutions get into this space. So we had Cliff Asness on the podcast a while ago. they're exploring sports betting. The C&E is providing liquidity on one of these exchanges. The CME is doing these like kind of weird little contracts where you basically bet on the number going like up or down.

Dude, Novik. Novic is a sports focus prediction market company. Like they're there. So the one thing I will say and this actually gets back to... One of these Twitter know-it-alls though that you guys hang out with is going to launch. That's right. They're going to say I am so good... It's actually to make me and Tracy. I'm so good at knowing

how everything in the world is going to turn out. that I'm willing to charge people 2% and 20% to find out. So I'm going to do it. So here's something that I think will actually be interesting. And it actually gets back to the first thing that we were talking about with Open AI, which is, I suspect that we're going to see a greater maturation and more liquidity in various, whether they're tokens or contract markets relating to private companies. So that the, because a prediction market can be structured as de facto equity, right?

He's like, is Open AI going to have a $55 billion, or whatever, sorry, $550 billion valuation as of X date or something? And you can start betting that. And then the more narrowly you specify the contract, the more that line essentially starts to look like Open AI stock, et cetera. And so I do think like this idea that I've been thinking about a lot is I think the difference between a private company and a public company, which used to be a very binary thing, it's going to look. more like a spectrum of degrees of publicness where the spectrum is going to be, on the one hand, you're going to have highly liquid companies with a high degree of transparency. And on the other end, you're going to have illiquid companies with very, very moderate or very little transparency.

And everything would just fall into the spectrum, but it'll all be tradable. Well, let's go there right now because there is a private company that is changing hands on a daily basis in the private markets, and that's SpaceX. Yeah. There are probably dozens at this point of SPVs or venture funds that bought it from somebody who bought it from somebody. That stock is everywhere. I know lots of people who are invested in SpaceX who have nothing to do with the venture world. It's like sort of exactly what you're describing.

It's this combination of public-private. I think we're going to say the same thing, which is like the problem with all this opakness is you can't tell relationships within the capital stack to each other. So, like, again, like, you're only seeing a slice, potentially, of what's going on with that company. And you don't know what else is going on behind the curtains. Well, the other thing I was going to say, we did an episode with the president of perplexity. And he was talking about how they have to be sort of discriminating. You know, people always want to invest in these companies. But they do not want to let an investor in who is really not actually interested in the company,

but just interested in creating a vehicle such that private investors can trade and get access to perplexion. That's what happened when Vlad announced tokenized private companies. Yeah. There was a blowback. Yeah.

And they sort of stopped talking about it. Yeah. Because I think a lot of people who are executives at privately held companies. Yeah. Don't you dare list my company. Number one, you're misleading people. They think they're investing in it.

And meanwhile, they're buying... NFTs. Yeah, they're buying like a facsimile of a stock certificate. They're buying a company that owns a company that owns a company that owns a company that owns a share.

A shadow of a company. So guys, also this week, SpaceX said they're moving ahead with plans for an IPO. They want to raise more than 30 billion. This will obviously be the biggest deal of all time. Yeah, 1.5 trillion at valuation,

I think they're aiming for it. Saudi Aramco raised $29 billion, which I think was the record holder, and this will leapfrog over that. Is there that, much money in the market for these companies, like in public markets? So I want to do a prediction market with you guys, though. Does this happen in 26?

Just the IPO or the IPO plus the valuation, you just said? No. Oh. Just the IPA's, no, no parties. Give me the bet. Yes or no? What do you think? I'm going to go.

How much would you put on? Hold on. Where is the yes and the no? I would say the no is 50. Okay, 50. Okay. The company is saying we're doing it. I should point out, the company is saying that they're doing it.

So the yes is 60. Yeah. I'll buy no for 40 cents. Okay. Elon owns 40% of this. If it goes public at a $1.5 trillion dollar valuation. Sam Rowe would say that's a lot of money. So here's my next question, though.

Isn't Tesla the loser? Because right now, the only way to invest directly in Elon Musk for 99% of the population is Tesla. And now I'm giving you diet Tesla. Like I'm giving you an alternative. Space Tesla. Well, now you could have space Tesla. Wait, aren't they going to merge? Well, when one gets into trouble, the other one will buy it.

Yes, of course. We understand how that works. But isn't that interesting? Now, two Elon vehicles, do they, does the enthusiasm cancel itself out across those two market caps? I never heard of that. It's a good question. Yeah, hadn't thought about that. I'm very clever.

I mean, on one serious note, one serious note. I think it's going to go public. I'm going to take the yes. Yeah, so, I mean. $420 per share? 420, anyone? Come on. It has to.

It almost has to. On a serious note, you could see why it's seizing, the company seizing this particular moment, which is like government spending is just not in vogue, like we were talking about earlier. And so this idea of private companies stepping in to perform government functions or things that were done by government bureaucracies or whatever earlier, you're seeing that with NASA, right? Like, SpaceX is kind of like the only game in town. He has Starlink revenue, which is not dependent purely on, although governments are big customers, is a commercial business there that could be a monster business as more people trust it, especially if it's publicly traded. This is the replacement of public services, public entities with private capital.

And I think that's going to be like a really big trend. Can I read you something from one of Bloomberg articles about SpaceX? They expect to use some of the funds raised in an IPO to. develop space-based data centers. Well, of course. Including purchasing the chips required to run them. Space chips? Guess what?

Like, we laugh. Like, that's going to happen. Like, Gavin Baker was saying that with Patrick, that there are going to be data centers in space that use the dark side of the moon to cool the liquids or something. I don't know. It's way over my head. I mean, we can't even figure out how to...

I don't know why, but I'm in. We can't even figure out how to, like, reliably cool data centers on Earth, though, right? Exactly. You got to go to airspace. They're not building a data center in space. They're going to drag one up from fucking Idaho into orbit. They're going to... I think the idea is that you're using the sun's rays to power it, which is free.

I mean, once you build it, and then... And then you just turn your back to the sun. And then space is very cold, so it'll be self-cooling at the same time. So, I mean... I'm short. Okay, let's... It's obviously something we should all invest in it. I think in the next 10 years, I do not think that there will be a data center in space.

Oh, I do. You think so? I would bet yes, yeah. Okay, that's good. All right. Data center in space. We'll revisit this. You would bet that based on what?

Just because they're saying it? Yeah. Oh, I would have no idea which way to bet. Your faith in Elon Musk is that it? Don't just do it. If he's saying he's going to do it, he's probably going to try it. I genuinely believe that there will be data centers in space. All right.

That's good. Now, is it outer space. Now, that's, I don't know where outer space begins, but. All right, we got a couple more things to bang through with you guys. Um, put, Daniel, can I please have chart 12? I just, we don't spend a million hours on this. This is from Chart Kid, Matt. We were going to segue from prediction markets into this.

All right. So this is, this is from Chart Kid Matt, who is obviously a part of the compound also runs a charting service for financial advisors called Exhibit A. And he is showing that in 18 of the last 26 years, the stock market actually outperformed the, the average of all of the Wall Street strategists. So 70% of the time, actually, strategists aren't bullish enough. Doesn't that fly in the face of this narrative that Wall Street's always bullish and always pumping up? It turns out it's the opposite. And I've never seen it displayed that way. What do you think about this?

It's a cool shirt. I mean, it's a great chart. Wait, I have a question. Are those, are the estimates based on like the macro analysts looking at the S&P 500? The strategist. The guys that have stock market targets. So this is key. Because I think if you're a corporate analyst looking at a specific company, the bias generally is pretty bullish.

And I'm kind of amazed that you still hear so many people saying great quarter on calls. I guess it's like a joke. It's a joke between them now, right? But I think the macro strategist, like, you're kind of biased to try to find the non-obvious story. That's right. Yeah. You want to make a name for yourself. The next chart is even better.

Daniel, chart 13. So this shows it by year. So the y-axis is the what actually happened for the year We will send you these guys Yeah, yeah, thank you. And the X axis, so like 2003 strikes me as something really interesting They expected a 25% gain And they were right, like credit to them for not throwing in the towel

After three really shitty years Where's 2003? Top right. Oh, yeah, okay, there it is. It's like 2008 as an example, listen, nobody could see the future But they expected a 7% return right down the fairway And actually it fell 40% Very close, though.

I just, I think it's an interesting, so because we're in strategist target season. We have one more on this, chart 14. The greatest, the happiest time of year, macro outlook season. And I read all this shit still. And I know better, and I still read it. Because I find it helpful to just hear what people think, right? Yeah, yeah, yeah. And that's why they write it.

They don't consider themselves to be Nostradamus. No, they don't. And I think it's useful. And I think, you know, like, it's good to put a number. and most people are just, they want to see the thinking behind it, right? Like, I don't think you're going to, like, dump your macro straight. Like, oh, you said it was going to be up 9%, it was up 18%. But you want to see, like, what was their reasoning?

How did they work through this? How did they, bottom, what are their... Yeah, I read Playboy for the articles. Don't forget, don't forget, the clients want to know what the banks think. Yeah, obviously. Like, we're giving you all this money to invest for us or we're trading with you. Yeah. Like, what's your view?

And speaking of Canada, what is Scotia Bank's problem? All right, wait, so let's say. Hold on, dude. They're at 6378. Isn't the S&P higher? Come on. So let's set this up. This is Wall Street Strategist, 2026, S&P 500 targets.

The average target from next year, 7,512, which implies from yesterday's close, about a 10% return. It's like magic, about a 10% return for the S&P. Give a take. Which relative to recent years is actually on the bullish side. Yeah. Two years ago, I think the call for 20% return. 23 was flat.

Yeah. And, of course, we went up 30%. So, I don't know. I find it's interesting to just see where people's heads are at. Can you just pause for a second? It's insane that, like, we have this thing in America that buy and large, like, that's like 10% year after year after year. It's just like free money.

No, I'm not getting jinxed the top. I have been saying this. The returns of the market in America have really been extraordinary. Did you see the bank on that chart that's like bang on 10%? Oh, there was one? It's UBS. Amazing. Of course it was.

It's a shortcut. Yeah. Can I tell you that 10 years in podcasting, you're kind of like The Simpsons. Like this. We're still funny though, right? No, still funny. We're the Simpsons except we're still funny. No, but just like think about most, most of the financial podcasts that exist today were started

in the last 24 months. Most of those will not be here in 24 months. Okay, that we know. But you guys have longevity that very, because I'm trying to think of what shows. We're Lindy. They were, Michael and Ben were. early. They were 2017. And I felt late.

And he felt late. The only ones who I know where before you is Patrick and Barry. And that's probably about it. Wait, was Barry, Barry Masters in Business? Yeah, that was before us. Yeah, yeah, yeah. Although, wasn't it a radio show for a while? Yeah.

Although, I guess it doesn't really matter. But it did. It started before. Asterisk in the record book. No, Barry, Barry was definitely around. Well, you guys are incredible. And I listen to, I don't listen to every single episode. No one does. But any time it pops up in my feed, I never

turn it off because it's always good. That's very kind. So I don't know. I really feel that way. You guys are, you guys are like two of my favorite people and getting to listen to the two of you and your guest selection, I would say, probably you guys, Meb and Patrick to this day,

the best guest selection. Like, you guys talk to people I've never heard of and I'm doing this shit 30 years. And you talk to amazing people and I'm like, where do they find this person? That's the most satisfying part of the job, actually. You know, one of the things you know, it's always fun to have a big name.

It's always fun to land. Fastness. I love those guys. It's great to chat with them. But there's literally nothing more satisfying than finding that person no one has heard of. And it's like, oh, that person's amazing.

Like, that is, that's the dream when we find those people. The thing that I'm quite proud of, actually, is that we built the podcast on exactly that. On finding the experts are the best person to talk about exactly, you know, a topic

that was in the news. we didn't you know now we get the big names but when we started we definitely didn't it was you know mostly people that never heard of but you know what else you guys do you make people famous because there are a lot of people who are now considered the it guest on a topic that I heard for the first time on your show wasn't the flexport guy yeah yeah you guys were the first to put him on yes uh you know the great analyst covers invidia stacy was gone yeah he was I heard him on odd lots a year before he was on CNBC. He's great.

But you guys have done that with a lot of, like, category people who are now, like, the go-to. But I think you guys have contributed to their- We've had people testify in front of Congress and stuff like that as experts. Guests call in, talk to the White House during the Biden administration. Who's the worst guest you've ever had? Tracy, you go first. She's going to answer. I'm not going to name a specific name.

But you have that person in your head. Where's O's Perlman? Pull it out of her. I was just thinking the same thing. We need a mentalist in here to pull it out of it. Here's a thing. It's someone who didn't end up coming on the show. So we're obliged.

I know. We have one of those. Yeah, we have one of those. Bands for life. One person, no, well, one person can't, we really can't say. We're not, don't try to ask us more questions because we actually made an agreement. There was a incident not that long ago in which we had a guest who was very reluctant to do podcasts. and they're sort of like not sold on the premise of podcast,

but they're a PR person, so I convinced them, oh, Joe and Tracy are cool, whatever. And, uh, they came on.

It's an older, so it's an older person. We're not going to say anything. No clues. No clues. Okay. No clues. Okay.

Because we made an agreement, um, that we were, uh, and the person, uh, heard our intro and was not thrilled and walked out of the studio. Oh,

that like, jokey, talking thing that you guys do, they were, they were in the room. Because we always do the intro. with the person in the room. And they're like,

Jerome Powell. I say, Carl Icon is that sensitive? They basically said nope and got up and woke up. This is not what I signed up for. Oh, shit. That's, so we never had it quite that bad.

We had somebody that we invited and they said yes and then blew us off or, and then we had one person. I'm not going to say the person's name either, who was so obnoxious, cynical that I basically said, I don't care if this person literally invents cold fusion to me. tomorrow, that person will never be in a room with us. So we've had like, but it's very rare. Most people are so happy to just be part of the conversation.

You know, we had one episode. It was actually, so people have asked us, did we, did you ever have an episode that you didn't air? And there's been a few. But there was one and it, sorry. Kanye West. There's been a few. Not many, but there's been a couple.

But this one sort of has a happy ending because there was, um, got, someone came on. It was not, it was just like not a good, it was not a good conversation. We didn't know what to do about it. So I sent an email to the guys like, look, I really appreciate you coming in. I don't think, like, the conversation totally worked. It's something that was just off about the whole thing. I don't think our listeners are going to like the vibe. I think we're just going to shelve this one.

And he responded. He's like, thank you. I know I sort of whipped. He's like, I was not on my A&A. Yeah, we had one of those. And he's like, thank you for not airing it. It was actually so it's a positive. We aired it.

Now, you know what? We had somebody who's such a nice person and they were a huge fan of the show. and I think they got really, like, nervously excited sitting here. Yeah, that happens. And I felt really bad for my still press publish. I want to congratulate you guys, though, on 10 years. It's super cool. What is next in the Odd Lots universe?

What can your fans and our fans look forward to? Honestly, I think it's more of the same. It's basically having, like, great, interesting, engaging conversations with the perfect guest. That's it. It's a very simple premise. You do it better than anyone. Thank you so much.

We're friends, but we're fans, and we're just, we're so happy for you. Round of applause for Joe and Tracy. You hear the audience? We can't get it up. Hey, can we show this picture, though? Daniel, chart 18, please. So this is you guys on Instagram. And, I mean, you guys look great.

You're like a brand. That's a great photo. It's a great photo. It's a hot, that's a real, this is a real camera taking these. We had a cake, yeah. It makes so much of a different. when a real camera is really does it really does it elevates i know it's like oh it's like what it's like what are the names of the dress that's our team by the way you know i just wanted to say carmeregas

dash bennett and kill brooks did it it's a five-person operation only me and tracy tend to get all the attention for obvious reasons it really is a team efforts i'm glad that we have that picture that's really awesome and that they because they the one the articles about us and stuff it never mentions their name i always feel bad about it that's that's i mean that's that's that's super fly to acknowledge to acknowledge everyone That's a part of it. And you guys, I mean, work a little bit harder. You might get six people helping on the team. Who knows?

All right. Everybody, if you are not subscribed to Oddlats and you like this show, I'm pretty sure you'll like that show. Most of you are subscribed to both. So it's just, it's an amazing thing. And here's to another 10 years. Thank you. Absolutely. All right.

We'll be back in 10 years on the counter. Yeah, that's right. Guys, thank you so much for watching. Thank you for listening. Like button. Bye, Budin. Thanks to the crew. We'll talk to you soon.

That's the warm up. I wanted to give you the same. All right, now let's start.