The Compound and Friends - Socialist Mayors, AI vs Labor With Callie Cox, Falling Knife Stocks

Episode Date: August 5, 2025

On this TCAF Tuesday, Josh is joined by Garrett Baldwin to discuss the socioeconomic factors behind why the stock market is making record highs but young people are embracing socialism in their political choices. Then at 42:08, hear an all-new episode of What Are Your Thoughts with ⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠Michael Batnick ⁠⁠⁠⁠⁠ with a special appearance by Ritholtz Wealth Chief Market Strategist Callie Cox! This episode is sponsored by Public. Fund your account in five minutes or less by visiting https://public.com/WAYT   Sign up for ⁠⁠⁠⁠⁠The Compound Newsletter⁠⁠⁠⁠⁠ and never miss out! Instagram: ⁠⁠⁠⁠⁠https://instagram.com/thecompoundnews⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠https://twitter.com/thecompoundnews⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠https://www.linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠https://www.tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠ Public Disclosure: All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC. Alpha is an experimental AI tool powered by GPT-4. Its output may be inaccurate and is not investment advice. Public makes no guarantees about its accuracy or reliability—verify independently before use. *Rate as of 6/24/25. APY is variable and subject to change. 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, and I would love to tell you about tonight's sponsor, Public. Public is the investing platform for those who take it seriously. You can build multi-asset portfolio of stocks, bonds, options, crypto, and more. I have the public app on the home screen of my phone. Screen one, no swipes. And super easy. I use it for cash.

I use it to accumulate crypto. I use it for all different things, and it just, it works. I don't know how else to put it. If you want to find out more about how you can open a public account, go to public.com slash W-A-Y-T, as in what are your thoughts paid for by public investing? Full disclosures in podcast description. Tonight's show is a big one. I know I say that every week, but they're all big to me.

we talk to Garrett Baldwin about the roots of why with stocks hitting all-time highs, young people are choosing socialist mayoral candidates in cities all over the country. So it's kind of hard to understand how we go from, I don't know, millions of brokerage accounts being opened by young people to votes being cast for those who don't believe in capitalism. And Garrett's got some really good insight into what's happening. And we trace it back really 30 years. And it's a fascinating conversation.

So I want you to hear that. And then it's an all-new edition of What Are Your Thoughts with Michael Batnik and I? We're in the heart of earning season. We get into some of the big moves and reactions that caught our attention. We also play a new game. Which falling knife stock would you buy? And that was a fun one. And so I want you all to stick around.

The show is starting right now. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnik, 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 Rithold's wealth management may maintain positions in the securities discussed. in this podcast. Welcome back to live from The Compound. I am your host, downtown Josh Brown.

This summer's Democratic primary for the New York City mayoral race shocked the nation as a candidate who is an unabashed socialist, managed to capture the voters from the mainstream of the Democratic Party and win the nomination to run this fall. In New York City, my guest today says we need to look at the results of the last 15, 20, or 30 years' worth of monetary policy to try to understand why so many young people and even middle-aged people are willing to listen to an anti-capitalist message from political candidates, particularly in large U.S. cities. My guest today is Garrett Baldwin. Garrett is an economist, financial writer, and mathematician. He has an extended history of financial analysis, journalism,

public relations and consulting experience in hedge funds, private equity, blockchain, housing policy, supply chains, and public equity coverage. His substack blog, me and the money printer, has become one of my favorite reads this summer, and I'm so excited to be introducing him to you. Garrett, welcome back. How are you, sir? Josh, thanks so much. I say welcome on the show for the first time.

Yes, it is the first time. Thank you so much. I'm really excited to be here. It really is a great opportunity. to chat with you today. And I know that you're seeing the shock value up in New York. It's quite a time to be alive. That's one way of putting it. Let's start here with the stock market at new all-time record highs and tens of millions of new brokerage accounts having been opened by young people over the last five years, you would think people would be celebrating

capitalism, but that's not exactly what's going on. Give us your overview of what we need to be thinking about to understand this moment. Yeah, I think that one of the big challenges here, and I think, I want to just point out off the bat. Like, you can't just say, hey, Jerome Powell is the reason that Mandami is the, is the going to be mayor. But instead you have to really kind to do a little bit of an archaeology of federal reserve policy and monetary policy. And if people are anti-fed, you know, they'll start back. in 1913 and they'll start talking about Jekyll Island or they'll talk about coming off the gold standard in 1971 or the start of quantitative easing in 08 or what happened post-COVID.

I go back to 1993 and I think there were six things that happened in 1993 that really lead us to where we are now and I think the most important one. Candlebox. Pardon? Candlebox? No? Candlebox. Yeah.

Allison Chains. Is that a contributing factor? Wutang came out that year. Sorry for stopping your flow. Tell us why 93. Tell us. So 1993, you had the Clinton tax cap, which basically there was a lot of, you know, CEOs were paid in income and now all of a sudden they're going to be paid in stock and options because of the change in the policy. You had something called Executive Order 12-866, which put Al Gore in charge of supply-side policy. Bob Rubin joined the Economic Council. We know how that ended. Andrew Cuomo joined the H-U-D. He was obviously, you know, heavily involved in what happened with Fannie and Freddie. We had the first passive investing ETF ever with the spy. But the big one for me is Jackson Hole. Jackson Hole in 1993 is where the Fed really starts pushing the idea of inflation targeting. And what happened in 1993, there were three major deflationary events all transpiring at the same time.

You had the fall of the Berlin Wall. You had China's ascension into the global markets. And then you had the deflation of the Internet. And the Federal Reserve has, through that policy of 2% inflation targeting, helped contribute to the debase. of the dollar by roughly 55% since then, just on that alone. But if you look at what happened from the 1990s, just look at a very simple CPI chart. Since 1998, hospital services are up 200%. That's just from 1998 to 2018. The prices, right? CPI. The things that matter, technology goes down in price. The Federal Reserve's job then is to create this inflation. And ultimately, what we have seen is a dramatic amount of costs go through real assets. Housing goes up, food goes up,

electricity goes up, food and beverage goes up, but the price of a cell phone and a TV, all that stuff goes down. And the continued push on this, every time you see these markets, you know, have a significant sell-off, a significant drop, the central bank steps in, or we see accommodation policy to help prevent deflation and help prevent a debt spiral. And as a it ends up, we just end up pushing the markets higher. So at the same time, you have this entire system built on the back of constant inflation targeting, lots of leverage, asset prices continuing to rise, and a group of Americans who have never been able to partake in that asset price boom. And they look around, and I think the thing we were pointing out was there

was a $29 sandwich in New York. And everybody turns around and says, you know what? My house is up, my rents up. I went to college. I'm not able to get this job that I wanted. Let's burn it down. And they're looking at Mondami saying, hey, you know what? At least your rent's going to be frozen and your buses are going to be free. Now, we know what happens when the government runs grocery stores. It doesn't end well. But at the end of the day, you know, you have a generation of people who are looking around saying, I can't afford this. And I'm willing to just blow the whole thing up as a result. Yeah, I actually think it's multiple generations. I think, uh, so, You have a stat where you point out that post that 1993 moment, and as a result of one of the

changes that you mentioned, CEO to worker pay went from 100 to 1 to 400 to 1 in six years. So that's stock-based compensation, that revolution, where the whole economy became about the stock market. you don't mention directly the centricity of 401K as the nation's new retirement scheme and the sunsetting of all of the defined benefit plans and the and the kind of like the pensions and that kind of fading away and companies switching over but basically like sometime in the 90s we decided the stock the stock market is is the future. And I don't think this was deliberate, but the way it turned out is we now have

stock market Americans and everyone else. Stock market Americans work for companies that are publicly traded. They invest all of the money that's not in their house in the stock market. And many of them are being compensated via stock options. And they are living in their own world. They're able to afford things and plan for the future and not worry about retirement as much. And if you're not a stock market American, you're looking around. And it's what the fuck? How much does this cost? Right. Like, how am I supposed to live? And again, I don't think that was the exclusionary part of that was deliberate. But it's also undeniable. And I think that's really like this a summation of where all of this has gotten us. And for some people, it's great. Yep. Myself, my

clients, probably yourself. And for a lot of people, uh, it reminds me of, um, the Pink Floyd song. Uh, I think it's time. Yes. You, you've, no one told you when to run. You've missed the starting gun. Uh, I think if you went back in time and told people in 1995, dude, fund the 401k. Right. Right. Right. Right. You could have saved a lot of people, um, a lot of, uh, a lot of difficulty. I think it goes back to some other elements of this. I mean, look, we can talk about, you can talk about Treasury policy as well. And I've written about that extensively and like the impact of T-bills and how that's led more leverage in the financial markets. And basically, like we now live in an environment, Josh, where we're having these like one big significant event

a year in the financial system, like a significant one. Not just COVID, but the guilt crisis. You had the Archiego's event. You had what happened with Silicon Valley Bank. You then had had, you know, the Niki move last year, which for some reason, we don't even talk about that, which is crazy. You know, just the Niki falls the furthest 1987, and we don't even mention it. That was a year ago, like today. And the funny thing about this is every time that you see these flare-ups in the bond market, what happens? Two things are occurring at the same time every time. First, you have this accommodation that is, I don't want to use the word bailout, But the accommodation that comes, it might not be quantitative easing, but it's leading to quantitative easing outcomes.

Like the bank, the bank lending support was not QE, but it aimed to achieve the outcomes of what QE does. And the efforts on the yield, which is what, stifle volatility, stability and reintroduce stability, but stability, the outcome is the rich getting richer. Yes, because to, so if you, there's an article that I wrote. called the 1% pattern. And it basically is just about how the market will sell off. And then you have this period where there's no buying. Market pops. We get up to the 20-day moving average. And then funds sell right back into that. And then we get this big move down that happened April 7th. And people start talking about the Great Depression on April 7th. Well, two days later, we get a policy accommodation. And there's always a policy accommodation. And what does that accompany? Massive levels

of insider buying at the corporate level. The insiders have called the bottom of every single downturn since 2008, 2008, 11, 15, 18, 20, 22, 22, 23, 24, and now 25. And they're stepping in, and they're buying their own stocks, and they're benefiting from it. While everyone else who thinks that this stock market is some, like, beautiful wealth machine, they're panicking, and they're selling on April 7th. And then the president comes out and says, great day to buy. and everybody bites at the same time, the policy is accommodative,

and now of a sudden the market, you know, rips back to all-time highs within a period of two months. April 7th, to me, stands out because it's not really a policy accommodation. Sure. It's a softening of the rhetoric that had scared everyone starting at the end of March.

And I, but I do see, I do see your point, like a really great example of all of this. for me is the early 2023 bank panic revolving around Silicon Valley Bank and a couple of other banks that basically there was like

an internet driven run on these banks. But the end result is the FDIC, no act of Congress, no one votes on this. The FDIC just decides, remember when there was a $250,000 limit for us to ensure deposits? it turns out there is no limit. No one's deposits will be affected.

We're going to resolve three or four of these stupid banks. We'll punish a couple of crypto banks while we're at it. Who's going to stop us? Right. And then all of a sudden it's like, oh, why would I panic? The FDIC just said everyone's good. That's like a really odd. That's not the central bank.

That's the FDIC. But it's the same kind of idea where like if you're wealthy in this country, you're probably not going to get screwed around with. True. And you're going to have a case-shaped recovery every single time. And the thing about this is, you know, in the, there was this period of time where, I believe it was around the 7th or the 8th, where Janet E. Allen comes out and she says, she's still, she's still doing her tour.

And she's over in Australia and she is asked about inflation. And she blames supply chains, not the fact that they printed 40% of all dollars in existence after COVID. but she said, well, we had a number of hedge funds, leveraged hedge funds that were unwinding bond positions. And no one asks, wait, why are all these hedge funds loading up on the safe asset? And that's the one thing about this. It seems like every single crisis that we have is always around the safe haven asset. It's the guilt bonds. It's the 10-year treasury. And, you know, nobody nobody had the fourth you know the fourth right to forward thinking to say hey why why is this

basis trade there in the first place because you need 850 billion dollars to ensure that we keep yields suppressed um why are we doing all this stuff with the genius act in order to ensure that we have you know this buying on these short team two belts no one asks these questions and the reality is that yes you're i believe you're right you know this was not a similar type of policy um move that they did, say, post-COVID or during 2008. But it certainly was enough to provide that stability and get people to stop freaking out about all the unwinding that was happening and having all correlations go to one where bonds and stocks are falling at the exact same time. Is the genius of the Genius Act that by promoting this stable coin ecosystem, we're introducing

millions of new buyers for the T-bills that are supporting the stable coins and comprising the portfolios of the stable coin issuers? Is that what you're getting at? I think that's exactly what the end goal is here, right? To provide... Sounds like a win-win. It does, sure. But there was a period of time, and I don't remember, I don't know if you remember this, though, in like 2014. So I almost took a job with the USDA. And I went and I talked to them about it. And you know that like every, The most serious insider buying scandal is, you know, involving the lamp, involving the shades in the USDA. And people were giving out price signals ahead of it.

And that's, they're very sensitive. I don't even know about that one. Oh, it's a wild story. Basically, like, at some point in the 20s or 30s, before the farm prices would come out, they were, people were, like, moving the, the curtains up and down. In fact, and, like, the USDA is still, they're still, like, panicked about it. And I didn't want to take the job because one, I couldn't talk about markets anymore because I was going to be focusing on farm prices. But the other side of it was I said, well, you know,

what's my retirement? What's my retirement? You know, what kind of stocks can I own? And they said none. They said you basically have to invest in 30-year T-bills or 30-year treasury bonds. And there was a period of time where like the United States government, Obama wanted to create something called like the Maya RA where basically like they were going to create retirement accounts for everybody. But it was only in like long-term... long-term U.S. Treasury debt. So this, it's crazy, right? But the point of that is that like they're constantly looking for ways to ensure that

there is ample demand for the currency or for our debt. And they're getting more and more exotic with it each time. And Genius Act does that. The basis trade is a method to, you know, ensure that there's persistent demand at a time that China and other foreign countries are diversifying away from U.S. debt. Garrett, is it a conspiracy or is it just the system doing what's best to prolong the system? I think the thing that I always say is when you are looking at a system, judge it by its outcomes, right? So if the outcomes of the market are persistently to ensure stability and to bail themselves out, that's what the system's designed to do.

And I don't think that it's a conspiracy. I just think that people in Washington really are political animals. who are constantly looking to survive and advance. And once they're out of the Treasury Department or once they're out of the Fed, it's no longer their problem. We have data indicating that the number of millionaire households in this country is absolutely exploding in the current era. And it is not fair to say that the stock market is deliberately excluding the middle class or holding the middle class back from becoming the upper. middle class or the upper class. Like, that's happening all the time.

We just saw last week a situation where Figma, which is a software startup, a former software startup, now a software giant, this is a company that had a deal on the table to be acquired by Adobe for $20 billion. The UK regulators, antitrust regulators, said no. Adobe was forced to pay a billion dollar breakup fee. And now, three years later, Figma comes public. triples on its opening day. It's worth 71 billion. I was on the New York Stock Exchange when it opened on Thursday. And I was surrounded by what looked like thousands of Figma

employees, all of whom I'm guessing were very generously compensated with shares in Figma pre-IPO. I watched thousands of millionaires being created in real time three days ago. It's so hard for me And now I understand it's only thousands of people, not millions, but it's hard for me to square these two ideas, like young people have never thought of the economy as being less affordable. Right. But meanwhile, you've got armies of young people at thousands of companies who are compensated in stock and their networks, at least on paper, are rapidly advancing. So like, what is the, what is the tension between those two ideas or is it just different groups of

people and they don't necessarily have to overlap. I mean, I think, I think it's just different groups of people. And you go back to the fact that, you know, we, they're all college educated, I guess, the people that are on the floor of the exchange. But like college, but college education is a, is a unique thing as well, right? Because the colleges are, cost to tuition went up 180% between 98 and 2018. I did a piece for modern trader a couple of years ago where I was analyzing return on investment of colleges. And there's something called free op. And they basically go through like all of the, any university, any of the, any of the, any of the, any of the, any of the, any of the, uh, any of the degrees that you want to see. You, you could see your return on investment. Who, who does very

well, engineers, economists, people who studied like journalism at certain universities, the people who don't do well. Right. Business degrees. But the people who don't do well, gender studies, acting drama. There's a, I went to college in Chicago. Isn't that, isn't that intuitive? Right. Sure. But, but, but, but, but, but, but, but, but, but, but, but, but, I mean, I don't think that these things are even explained to people early on, right? So you can create a sense of being bitter about it. If you go to a university and you pay a half a million dollars in the return on investment of your university is negative $500,000 and you're in this level of debt, yes, you can make the argument that you did this to yourself. But the reality is the United States government won't let a kid an 18-year-old have a beer, but they'll give them $250,000, no questions asked, to go study at a university.

and now they're on the other side of this. And that's a serious issue that has not been addressed at the university level and certainly won't because of the incentives that are tied to it. And again, I think it really comes down to who you know, how you get into some of these places. There's one person down the street's making a million dollars and the other person's barely, you know, above water. And maybe there's 10 people who are barely above water and can't pay they rent. Well, guess what? Those 10 people have 10 more votes than that person making a million

dollars. And that's how you end up in the situation, I believe, like where you are in New York where you're seeing this in the boroughs. So walk me through this. If, in fact, Mamdani wins, which, you know, I don't, I don't have any edge on that. Sure. First, he won't be, he won't be the only socialist mayor of a major New York City, of a major U.S. city. So this is something that you see repeating itself all over the country. Talk a little bit about some of the other examples of this. Yeah, I mean, look, it happened in L.A. with Karen Bass. She's, you know, has praised Castro in her lifetime. You have the mayor in Chicago, and Chicago's a downright mess, you know, fiscally.

I think that city's relying on a bailout at some point, and they continually will demonize. It's funny, you know, I used to work and live in Chicago for a number of years. They wanted to go and create a a tax just on every single transaction at Cebo and CME, like basically to the point that the tax was more than the actual spread was. And they just said, you know what, screw you, we're going to move to, we're going to go to Kansas City. We're going to go to Miami. We don't need this. Or go to the cloud. Right, right. You don't need it. So, you know, this phenomenon, I think the issue is you're seeing it in these cities. And I think there's one important point that I didn't point out. You can go back to this concept of the cantalent effect, right? So whenever new capital is

created. It always benefits those who are nearest to it. Well, when capital is created, where does it go? It goes to our financial centers. It goes to New York. It goes to Chicago. It goes to these places where that money is going to be introduced into the system. And the benefits go to the shadow banks, to the hedge funds, to the private equity groups, to JPMorgan, all of these institutions. And what does that money end up doing? It goes into real assets. It drives up the price of real estate. It drives up, you know, costs of everything else. And everyone else who is in that ecosystem is now looking around going, why the hell did this sandwich just get to $29? And I don't, look, I'm not sitting here advocating for socialism. I'm the furthest from that in the world. But I think it's important

to take a step back and try to assess and understand the mindset of a person who would follow that type of political ideology. So let's try to do that. So let's try to do that. This is not the mayoral election. This is the Democratic primary, which is a subset of the very small subset of the people who will actually go to the polls to vote for the mayor. So even if you think directionally, it's like, you know, we don't really elect a lot of Republican anything in New York City, obviously. So he's sort of in poll position, just given like the popularity of Mayor Adams right now, or I should say the unpopularity of Mayor Adams right now. And Cuomo may or may not run again as an independent. We don't know what exactly what's going to take place. It'll be, I think it'll be wild no matter what.

But here we have somebody who's got 16,000 historical tweets, many of which are saying things like defund the police, which he doesn't say anymore, are talking about freezing prices, controlling rents, starting municipal supermarkets. which, you know, is kind of like a throwback to, one of them, to, to, you know, Moscow and and Soviet Russia. Can I, can I, can I just say one thing about that?

Because, look, the one thing I will say, if you have friends who are from Europe, or you have anyone who comes to the United States for the very first time, take them to a grocery store and watch their eyes. My friend from Switzerland just came over and he's like, he said, we went to a Wegman's. He's like, I've never seen anything like. this. There's just the abundance of food. It's one of the things that people who come here, the first time in the United States, noticed right away. And the ballet of a supermarket is unlike anything. You walk through a supermarket. All the boxes are taken care of. You have all these

reps who go around who are taking care of their little space. And it's a very slim margin business. And it's a 1% business. Right. Right. So then, all right, well, let's let me tell you, I mean, I've spent enough time in Buenos Aires to have, you know, been in an environment, where the government is heavily involved in the food in the food yeah it's not good there's shortages of everything and i have a very hard time believing that you know you're going to have this you're not you're going to have that type of ballet it's just going to be it's unfortunate and um you know it'll it'll be great for the first six weeks as as all of these programs are and then all of a sudden it will have decay because there won't be any profit incentive whatsoever to improve it to play

devil's advocate what's the big what is my this actually i'm not playing devil's advocate this is my actual opinion. Who gives a shit? Right. Let them open, let them open some, some lower cost, lower price supermarkets in areas that the people living there need them, quote unquote, need them. And let's see what happens. Why is it like, like of all the crazy shit we spend money on in New York City, is that really the biggest risk we're going to take? What we're not saying is that all the whole foods have to convert. Right. We're saying, I think they said there were 16 neighborhoods that are screaming out for affordable food.

Right. Fuck it. Do it. I don't care. Sure. Sure. But there has to be a mechanism in place to make it, to make it sustainable. I think that that's the key thing.

Like, no doubt about it. I mean, you have food deserts all around the country. And I live in Baltimore. And, you know, people rely on like the dollar, the dollar general for food. That's, that's a problem. But at the end of the day, like, it's not going to be, my, my thesis is, yes, it'll be a big, it would be a big announcement. And then at the end of the day, you know, it's just going to be, there's not going to be a motive in place to keep this thing sustainable.

I think the extreme right, the performative Twitter active right, is rooting for these supermarkets to be robbed. That's really, like, that's what, what they really want to see is the supermarkets get looted so they can say, see, told you so these places are food deserts for a reason. They don't deserve to have nice things. Taxpayer support. All right. So that's, that's some ugliness. that I just want to get out of the way. No, no, no, I firmly agree with you.

I mean, you can see that already. I'm just viewing it from the perspective of, you know, the sustainability of the concept. So, no, you're right. Okay. It's wild that the same city that contains Wall Street could also contain so many people who think the best thing that could happen

is for all of that money and financial activity to be driven to Florida. What are people, when people pull the lever for somebody espousing the policies that Mamdani espouses what are they what are they thinking they like they can't actually believe that we should abolish all of this financial activity that has made New York City in many respects not all respects the envy of the world they can't actually think that that's going to make things more affordable sure or or give them cheaper apartments or a better quality of life can they

actually is it not drive it out but just tax it enough that it stays but that there's more money to distribute? Like, what do you think is going through these people's minds? I honestly think that at the end of the day, it's an ugly world in terms of how things have shifted. And I don't think it's just financial. And I'm not saying that all Mondami supporters think this way. But you've seen the rise of like the cheering of what happened with United Healthcare. And now most recently, you know, the murder in New York Blackstone, where people are legitimately saying, like, well, this is a, this is a company that exploits people and housing and things along those lines.

I think those people are still, I know that those events get amplified on social media. Sure. I think that's still fringe. Sure. It is. I don't think those are commonly held beliefs that the United Health CEO had it coming. But it certainly is, it certainly has trickled into the, into the world of the mainstream party. Elizabeth Warren said something along the lines of, you know, violence is never the answer.

but and, you know, then said something along the lines of people can only be pushed so far. And, you know, this is, this is where you get into these bigger and broader conversations that are uncomfortable. But the reality is that people look around. They see the economic policies that are, that are in play. They see that they're not getting ahead. And they, they view it through the lens of there's got to be something different. Let's just try something different. I agree with that. There were people and, you know, they were interviewing a woman in New York and they said to her, do you think that these are good ideas? Do you think that government run grocery stores and ideas?

She goes, no. And then she said, do you think that socialism would work in New York? And she said, no. And then they said, well, why did you vote for him? And she said, I just wanted to try something different. Which, you know, that and that, that's just a, that's just a human reaction of just, hey, let's try something different, even in the event that it ends up being worse. It's just, you know, people are throwing their hands up.

Garrett, part of me feels like this isn't, this is, it's a new version, but it's nothing new. Right. So the advent of the suburbs in, in, during the Cold War, in the 50s and 60s, the age of Eisenhower, there were very deliberate policy choices that were, were meant to push people, middle class people out of the cities into the suburbs. They built the suburbs. They built the interstate highway system. And one of the big ideas behind all of that investment and policy was that once you own

property, you're less susceptible to becoming a pinko. They wanted people to be property owners because renters are more susceptible to the message that capitalism is bad. I mean, this is like, this is well documented. It's not my theory. And they largely accomplished. this. And unfortunately, they did this along racial lines, which is a whole other conversation that we don't have time for, but important. But the cities having young people who are not

owners of anything that as a result have Marxist leanings, this is not like a 2025 phenomenon. Sure. It's just come roaring back, I think, because of the inflation. And so I want to get back to the Fed's culpability here. Right. I think missing the moment in 2020, 20 and 2021 and dismissing the rising costs of goods and services as being transitory is one of the all-time gaffs and the feds had many and and uh you know it's not 100% on Powell but he's the guy in the seat I really think that I really think that that's um the the proximate cause of the Mamdani phenomenon now it's not that long ago um that we had the highest rates of inflation in 50 years. I think you'd agree with that. No, I certainly agree. I think that some,

I think something fundamentally changed. Look, we had, we had post-2008, you had QE, you had the strong relationship between the influence of quantitative easing and the performance of the S&P 500 from 2008 to 2020. I think the social contract drastically changed after 2020. And once again, the idea that you have massive levels of inflation, that once again, like, you know, do you necessarily believe that, you know, that CPI calculation, there's something called the Chapwood Index, for example, which is a private inflation measurement. I don't know if they do it anymore, but they were measuring it post-COVID. And basically all the Chapwood Index does is they went into, they go into major cities and

they look at the price of the top 250 things that people buy. And the Chapwood Index shows that in the city of New York, the things that people buy have been increasing and compounding by at least 12% since 2017. I actually believe it. Right. So, you know, this is exactly the point is that you hear people saying, hey, you know, inflation's not as bad as it is, or it's the result of supply chains, or it's, you know, whatever the excuse is, there is no ownership for what the Fed does.

And the other thing that I think is really critical, there was a survey done. Only 6% of Americans actually understand what the Fed's job is. They actually understands the dual mandate. And then I would say that there's probably an even smaller percentage that would include you and I that know that the Fed is also responsible for providing a backstop to global markets with liquidity swaps and things along those lines to ensure the stability of the U.S. dollar internationally. So people don't know what the underlying thing is.

They don't understand monetary policy because monetary policy is, one, boring and two, complicated. And as a result of that, they're going to look around and they're going to blame their neighbor. They're going to blame somebody else. They're going to listen to somebody say, hey, this is corporate greed. It's only corporate greed. Yeah. I think the Fed does not have control over things like the availability of how many apartments are being built in a city. I think the Fed can't do anything about the housing supply or lack thereof in 2022 and

2023 when everybody wanted to buy a home. Like I do think that there are huge components to the cost of living that fall outside of the purview of monetary policy, at least directly. So there's one dimension of that that I think we should at least mention. I also think New York and Miami are extremely unique given to the financialization of the societies of those places. And when you put overnight interest rates at five and a half percent, you actually introduce a new wealth effect into these upper, let's say the top 20 percent of households. Now their cash is earning them more cash. So now they have cash balance

the cash they're holding in the bank or in money market funds in a brokerage account. It's like a geyser spitting out more cash. And that's the risk. portion, let alone what their stock portfolios are doing. And the middle class owns houses and cars. That's where their wealth is concentrated. The upper class owns the stock market and has a lot of cash. So higher rates from the Fed actually were counterproductive in Miami in New York. You're worried about the cost of, you're worried about housing affordability. you're giving people who have millions of dollars in cash millions more dollars. 100%.

So I don't even know if higher rates or the Fed being more aggressive is actually the answer to these price increases in the cost of living. Two things, two things to your point. One, there was a study that was done, I believe, by Freddie Mac, maybe it was Fannie, and it was a couple years ago. There are 25,000 regulatory bodies in the United States. States that oversee the zoning of housing. So municipal, local, state, county, federal, all the way up, 25,000. So there's your first issue. Secondly, I completely agree with you. There are things outside the feds control. And I've talked about executive order 128866, which basically Al Gore got put in charge of anything that was significant in the United States, you have to run through this lens of

like whether or not it was environmentally viable. And then when Obama got into it, then became it about, is this roadway or is this new big refinery, this big project, is it equitable? Like, it's, it kind of got a little, a little silly. But then you have, you know, the elements like passive investing. How many, how many stocks? How many ETFs are, is Tesla in? Like 500. And, you know, that, that provides a little, a floor of support for a lot of these equities.

So, you know, price discovery has long been out the window for me since at least 2008, but definitely post-2020. And if we look at this kind of broader environment, you know, it just, it goes back to the fact that a lot of this, a lot of capital has been pushed into the financial system over the last 15 years. And there is a direct relationship between the amount of quantitative support and easing that the Fed has done and the assets of the top 1%. Or the intentional policy-driven quelling of volatility. Correct. It's just, it's just, yeah. So we're, right, so here we are at 22 times earnings on the S&P 500.

Every sell-off is a V-shaped recovery, an opportunity for the rich to get richer and insiders to capitalize on the fears of lesser aware people. And do that over the course of 15 years and you end up where we are. And we'll have a, we'll have a communist running. The city that contains Wall Street. All right, Garrett, we've gone long. You've got a gigantic brain, and I love to pick it. I'd love to have you back sometime.

I want to tell people where they can get your insights on a... You're writing at a furious pace, by the way. What are you daily now? Yeah, so I write a lot. I write a morning piece. That's a market breakdown. So just real quick, just to give you a recap. Yeah.

I focus on three things at a very macro level. One is liquidity. And the way that I focus on that is Michael Howell's work and Posner's work, a lot of focus on the shadow banks and how that has been a real driver of equity markets for the better part of the last 15 years. And I highly recommend that. Then I focus on momentum. So momentum is basically a math equation of breakout stocks versus breakdown stocks. And when that goes negative, that reading, that's where I start to pay attention to what's something called the FNGD, which is an inverse ETF around, fang debt. And whenever this thing breaks out above its 20 and it's 50 day moving average,

be aware. Nothing really good happens when that happens. And then I start looking for the opportunity for like a short-term bottom or, you know, a reversion. I look at when the insiders step in and they buy. And those are the three major things that I focus on each day. Where can people, where can people subscribe? So me and the money printer is a daily free. And we have a paid letter called the Capital Wave Report, which covers those three specific things. I'm also on Theo Trade. I do a morning show on Theo Trade at 845 every day as well. So I stay very busy. I love the markets. I view the... Are you having fun? I love it. Yeah. I mean, again, the story of the world's told through markets. So that's why I do what I do. And I think

that's why you do what you do as well. 100%. It's been great talking with you. And we'll do it again sometime. Ladies and gentlemen, this has been Garrett Baldwin. Thank you so much for watching. Please go ahead and smash that. Like button, make sure you're subscribed to the channel or the audio podcast, and we will talk to you soon. o'clock Tuesday, you know what that means. It's time for an all new edition of what are your thoughts. First time viewers, first time listeners. My name is downtown Josh Brown.

My co-host's name is Michael Batnik. Michael say hello to the folks. Hello, folks. Can we explain the T-shirt? Because I'm loving it. All right. So I got an email a couple of weeks ago. Hey, why no Grand Rapids Hedge T-shirt?

I don't know. Why not? So I went to chat, GBT. I said, make me a t-shirt with a t-shirt with a title wave and the word Grand Rapids hedge over it. So we initially started out as a wave for the rapids. Yeah. We replaced it with the bush.

So now we've got a hedge, Grand Rapids. But why isn't Grand Rapids hedge for the people that don't know? All right. So Ben is a beta male. He doesn't give opinions. He 50-50s everything. He's on the one hand and on the other hand, we call it like Grand Rapids Hedge. When you say a lot and you say nothing, shout to Ben and Carlson.

It's a grand Rapids. Yeah. That too. That's awesome. It's so great. Does he have one? He does. He has one.

Yeah. All right. Guys, on tonight's show, as we do every week, we will go through the biggest events and happenings in the market right now. I'm super excited for today's show. We have a sponsor, but before we get to the sponsor, I want to let everybody know, August is Portfolio Review Month at Ridholz Wealth Management. To be very clear, listen to the giraffe, folks. Portfolio Review Month, basically, it's almost. impossible for us to find time to speak to, you know, as many people as we would like to

during the course of the year. Things get a little bit slower in the summer, but not really, to be honest, this summer. But we are carving on some time to talk to some of you who have been sitting on a portfolio for a long time, not really sure what's happening, not really getting advice or maybe getting advice, but not sure if that is good advice. And we want to give you an opportunity to reach out, talk to a CFP, and see if you could be doing things differently with your financial plan, with your portfolio. So now is the time. You can go ahead and hit the link that Nicole will put in the chat or the link that I believe will be in the show notes or in the video description. And we're standing by. We're ready to talk. Okay, we got a full

house in the chat tonight. Chris Hayes is here, Magnus, John Carlo, Cliff is here, Georgie, all the Regulars, also have some new folks and some new faces here that I would love to say hello to. Steve Z, MicroGX. Who else is in the house tonight? Michael Whitham, welcome. Good to see you, dude. H.32K, C-Bass 23. It's a veritable rogues gallery.

Doc, I see you. All right, everyone's, Jay Luther, everyone's good. All right. So, Public is the sponsor. I use the public app personally, so does Michael. It's on the home screen of my phone. Public is for people who take investing seriously. Do I have that right, Mike?

Deadly seriously. This is not a game. This is real business. Not funny business. This is serious stuff we're talking about. Look, you can do very basic stuff like a 4.1% APY on your cash with no fees or minimums. You can transfer a rollover IRA in from a 401k. You can open a brokerage account.

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Tell them Michael sent you. Paid for by public investing, full disclosures in podcast description. All right. We got a lot of housekeeping out of the way. I feel pretty good about that. Oh, who could it be? It appears we have a surprise. There she is.

Ladies and gentlemen, say hello to Callie Cox. Callie is the chief strategist at Ridholt's Wealth. And one of the finest investment bloggers currently in the game published something awesome this week that everybody read. and her site is called Optimistic Callie, which is perfect. If you know Callie, you know that's her jam. Welcome to the show. What's up? I want you to know that I literally pushed the doorbell.

Well, I mean, how else will you make it ring, right? I know, exactly. We don't have a ring cam, so we would have you in no matter what. It's awesome to have you here. So we're going to start with the earnings season, Callie, because this has been a pretty good one. Not unbelievable, but, like, better than expected. And a lot of, look, there's definitely punishment for companies that miss earnings.

I don't think that's, like, novel. I think that's pretty much the way it always is, but we always point it out. But by and large, at a headline level, this is a pretty good earning season. What do you think? Yeah, I think you have to hedge that a little bit, or Grand Rapids Hedge. I'll throw an ode to Michael's shirt there. Let's do it. By the way, has Ben a Grand Rapids Hedger?

is he just a research analyst, let's be honest. Okay, so this earning season, the bar was low heading in. I think, so Bloomberg estimates that we look at showed that S&P profits probably grew like 2.5%. If you think of the average over the past five years is like 7 or 8%, that's pretty darn low. But it's also a lower bar for companies to beat. And I know I've said this on what are your thoughts before, but the best recipe for market gains is when you have low expectations. And moderately good news.

That seems to be what we're getting right now. But I also think you have to look at it on a sector level because tech is performing in a whole different league than the rest of the market. On the profit side, but obviously on the breadth side as well. Seven of 11 sectors, though, had a year-over-year increase in profits. So it's not just tech that's got earnings growth. We all know the highest growth rates came from comm services and technology. financials were a standout. And I think if you asked most people, where do you think the lowest growth weights were?

They would nail it without even looking. Energy, materials, and staples. So it feels familiar. I don't know, Mike, what do you think? This is pretty much in line with the last few quarters that we've lived through. We were talking about stock market reactions. I think it was with Adam Parker talking about, was it with Adam who said like financials haven't really done too, too well after beating?

And part of the reason was because they had already done so. But I was looking today at some of the stocks that I own in the capital markets. CME on fire, ICE, on fire, NASDAQ. Do you sell on that, Josh? Yeah, no. I'm out. Unfortunately. S&P Global.

All of these names, and JPM Morgan is back near 50, all time high. The banks are acting fantastic. Callie, the beats are seeing a one-day out performance of 1.12% versus the S&P index on average. that's the highest since the third quarter of 2024. All right, not that amazing. In the tech sector, it's closer to 2% above the S&P. So that's good. When I mentioned the misses being punished,

misses are seeing a one-day underperformance of negative 5.7%. And we talked about this last week. It was minus 5.2%. So it's actually, it's getting worse. They are obliterating companies that, don't come in at least in line. Should we read more deeply into that? Or is that just, hey, this is what it is.

You got to do the number. I think it's a product of the low bar that we saw. If you're missing this low bar, then we have no patience for you. That's what investors are thinking. I do think last week changed a lot because heading into last week, I think that narrative of companies beating weren't necessarily performing that well past the index. and then companies that were missing were getting obliterated.

Last week we had like a third of S&P companies reporting, including I believe four of the MAG seven companies. So I think there was just like a sample size. There is a sample size thing that we needed to get across the line there. But I think what you can read into it is this. If you're missing the low bar, and to be clear, most sectors had quite a lower bar than what was expected, even like three, four months ago,

because of tariffs, because of everything that has happened since April. And look, if you can't make that low bar, then there's probably something seriously wrong. That's what's what's going through investors' heads. I mean, I want to say, too, technology, I was astounded at how little tech expectations have changed. So think about that 2.5% year-over-year bar at the beginning of the season. That came along with a 20% earnings growth expectation for tech. So you had really low bars and, like, the energy, consumer discretionaries and materials of the world. And if you can't meet that, something's wrong.

That's a good segue. Going into last week, the estimates for the MAG 7 was 4.5% year-over-year growth for this quarter. And at the end of last week, according to Chart Kid Matt, that number is doubled. It's now 9.08%. The MAG7 delivered. they didn't all get, they didn't, I mean, even Apple had a good earnings report. They didn't all get, you know, outside of Tesla, they didn't, you basically, if you're in these stocks, if you're in alphabet, if you're in Apple, we all understand the negative narratives around

what's going on with these companies, just in terms of where they're at, but like the numbers were the numbers and they were good. It was strong across the board. Yeah, and I want to clarify one thing. So that 4.5% that you mentioned was actually the blended like actuals versus estimates. estimated growth for the S&P. So MAG7 stocks that reported last week actually boosted the bar for the overall S&P 9, 4 percentage points, which is insane to think about.

I have three comments. Number one, a lot of the stocks that are getting hit are stocks that have had a monster bounce off the April lows. A lot of these stocks are up 40%, 70, double. So, all right, a stock like Netflix, for example, very good earnings. The stock is up a gazillion percent. It's now given back 14 percent kind of quietly. Good.

That's healthy. These stocks should not go up and up uninterrupted forever and ever and ever. And on Apple specifically, Apple had a beat pretty surprisingly strong numbers. The stock has been read for the last six days from the open to the close because it's not getting rewarded for what it did on the hardware side or anything. It's the open question. It's the AI story. I know we're going to talk about Apple later. But that's it.

And they're not in the game. And the market does not like that. Well, it's the AI story. So I think Apple is a funny example because, yes, Apple is getting hit for falling behind on the AI front. But Apple had a lot to say about tariffs in the post-earnings release commentary as well. I know they said that tariff costs were supposedly going to go up by, I guess, like, 300 million. Sorry, not tariff costs explicitly, but operating costs were going to go up by like 300 million through the end of the year. So I find that there's a little more dispersion when it comes to MagSep and companies.

there's a little bit more going on beneath the surface than AI. But, I mean, I think you bring up a good point. We've seen a really strong rally since April, and now investors are asking companies to prove it. Yeah, I think that's the perfect point. Like, when meta reports, the only tariff impact conceivably that you would see in a meta is maybe like an advertising pullback related to tariff, like, general uncertainty. But they're not manufacturing anything at scale.

It's not an important part of the company's business. Apple is very different than meta. Apple's got to make physical things in one part of the world, ship them to another. They have to source components from everywhere. So like the tariff conversation being heavily featured during the Apple call is exactly what I think people should have expected if they didn't because that's where that hits. You wrote about the AI CapEx spending versus. versus the human economy, which, so one is gangbusters and the other is slowing.

And I thought you did a really good job smashing those two themes together and giving people some food for thought. And we're going to roll through a couple of your charts. And I'd just love to have you comment as we go. Let's put up this first one. Robots are pulling the economy along this year. So this box that you have around 2025 is showing the yellow bar. is AI and tech investments, which for this year, 152 billion in AI-related spending,

which you could explain to us, and consumer spending, $77 billion. And obviously, consumer spending is, at least according to this, looking to be way down from the prior two years, and AI spending is mushrooming. So what's the takeaway from what you looked at here? So I think with this, you have to remember that there are two moving parts that we're watching in this chart. There is the AI spending, which I quantify, and the industry quantifies as spending on or business spending on information processing equipment, computers, and software. And look, that's a proxy, right? Like, there are probably a few line items here and there that you could throw into that AI line item.

But we'll just go with it, right? information processing and equipment and software. And consumer spending is a main component of GDP. In fact, it's 70% of GDP. It's a $16 trillion line item when you look at the components of what make up this economy. And what you're seeing here is that consumer spending has only grown by $77 billion this year. I mean, consumer spending has pretty much stalled out if you compare that to the $16 trillion base that we're talking about. And business investment in AI alone, again, that info processing equipment and software,

has grown by $152 billion. So you could take this two ways. You could say, okay, AI is propping up the economy. Clearly, it's adding more than this component of the economy that is so large and so dominant, especially over different periods in history. Or you could say consumer spending is really setting a low bar. It's stalling out. You know, it's basically not growing.

And that's why, you know, little line items like AI spending, little line items like AI spending are exceeding it. I think the latter is right. I think this is more a reflection of how poor or how stalled out consumer spending has been over the last two quarters. And look, AI CapEx is going gangbusters. Can it prop up the economy, though? I'm not so sure.

I don't think you have a thriving U.S. economy without the consumer. It's not big enough. It's big enough to move the stock market, but $1.4 trillion is not successful. $16 trillion to your earlier point. No, and it's not $26 trillion, which is total GDP that we're talking about here. I mean, the stock market's different, right? The stock market's not the economy. You can work in expectations there.

You have a little bit of, I mean, you have a little bit of future prospects that's baked in. And look, with tech too, I mean, tech is the profitability golden child of the S&P 500. But valuations are still quite high, fairly high because we're baking in the AI story, which hasn't really rolled into profits yet. But, you know, it's, there's a bit of a back and forth between expectations and reality here that I think investors are still really trying to juggle and understand. New Loon in the chat is asking if you're factoring in the Sydney-Sweeney component to any of this. I don't know how much you've thought about that or not at all. Did Sidney-Sweeney do an ad for meta?

Sydney-Sweeney is going to do AI. Did I miss that? The jobs report, what did you guys, what did you guys think? 73,000 last month, and then they revised lower the prior two months or three months. What was the prior two months? So we're, I don't know, I don't know if like stall speed might be too much. I don't think it's, is it stall speed or is it just like way moderated down versus some of these months we were seeing before?

I like the precision of way moderated down, so let's go with that. Okay. Way moderate. I'm just kidding. So I would hesitate to say stall speed because stall speed, the standard that we're setting here is actually a lot lower because the labor supply, the workforce, the number of people out there employed or looking for a job is actually shrinking at the moment, which is not something you see often.

It's shrink for the labor supply has shrank for the past three months. This is immigration. This is the effect of- Mainly immigration, yeah, based on what we can see from the data. And, of course, boomers leaving the workforce, aging out of the workforce. You can't ignore the demographics. But the labor supply supply is shrinking. That means that there are fewer people out there needing and looking for jobs, which means that there are fewer positions out there that are needed or fewer hires that are needed to soak up

those unemployed, that unemployed population. So you have to remember that the game has changed a little bit for the job market. But that's not a healthy dynamic. I wouldn't consider shrinking labor supplies, something that I put in the thriving job market, Guys, pop her chart up, Callie, does it, just based on history, we're looking back to 1970. The title of this chart is hiring grinds to a halt. This is a three-month average of non-farm payrolls, which you peg at 35,000 jobs per month. Just looking at history, does it seem likely that this is all of a sudden going to bounce off that zero line? Or is that not historically what we usually see happen?

I don't know what turns us around, Josh. That's a really tough way to say, but... Housing. You think so? You give me 150 basis points. I'll give you more hiring. Yeah, well, too bad the Fed can't cut the 10 years. Here's what I would say.

Here's what I would say. That's the only thing. That's the only thing that, that, like, turns this on a dime is a housing boom. I don't know what else is big enough. Yeah, I mean, it's a good question. I mean, I think a rate cut, if I had to throw a, story in there. I think a rate cut is it. But more than one, it's preferably, it would probably have more than one. Yeah. Can you throw that chart back on? Even one can infuse

enough confidence in the economy to maybe give us a little bit of a spark. It's hard, though, because what we've seen underneath the surface too is that hiring has come down through a bunch of different sectors, especially on the private side. I mean, right now the only sector is really net hiring over the past three months have been education and health services and state the local government. So it's great if you're a nurse or a firefighter. But if you're in a white collar job, if you're in a manufacturer job, if you're in a trader transportation job, you've really been out of luck. So that's what I mean. All right. So if we look at, so there's no doubt the three month average is coming into the danger zone, into the red line.

But look what happened before it. So maybe an optimistic take on what we're seeing now is a normalization of an absolutely absurdly abnormal job market where anybody could get a job, where anybody could get a raise. Are we, is that a fair interpretation or is that too charitable? Chart off. I think it was a fair interpretation up until a few months ago. Hiring is so weak.

I think the, like the details that we've seen in the consumer confidence side with the labor differential have slipped below what is normal and like what is normal these days, hard to say, but I look back to the 2010. which was a pretty sluggish job market and we're even seeing some indicators drop below those points. So I think you have a point, Michael. I think about that a lot

because what we've seen over the past few years is slowing from a fiery hot job market. But from absolute levels and from the level of layoffs that we've seen this year, it is getting to a point where you should probably grit your teeth a little bit more about what's happening

in the job market. We got one more chart from Yale. Fewer employees, more robots. I'll just, I'll paraphrase what you said, and then you can react to it, is the robot economy cannibalizing the human economy? Hyperscalers are ramping up business spending, but keeping their headcount steady. So most of these kind of tech explosion, CAPX booms are accompanied by hiring more developers, and it seems like the only person trying to do that is Mark Zuckerberg by any means necessary.

in this particular boom, the head counts are not rising while KAPX is. And I'm just curious, like, what else would you add to that? Or what do people need to know about what you see happening there? Well, first of all, this is a chart that you see on social media. And you're like, oh, my God, robots are taking all over the world, AI overlords. Like, please save us. It's not that. It can seem like that at first glance.

But what I'm trying to get across here is the fact that, you know, for all of the spending, this KAP-X spending that we're seeing from the hyperscalers, it has to come out of one pocket or another. And if you think about business costs, so when we talk about where that money could come from, we have equity financing, debt financing, cost control, free cash flow, which is a derivative of cost control. But costs, I mean, wages are the biggest costs for most businesses. and what we've seen on the big tech side outside of 2021 has really been this control on the workforce, this control and the headcount. I don't think it was to eventually spend Buku's amount of money on AI, but I think it is one of the pockets that these tech companies are kind of fishing from in order to fund like $300 billion worth of Cappex spending.

And it's important for investors to remember this because it's really hard for companies to be the golden child of profitability, which is what tech is right now, but also these big, big spenders and these, you know, really ambitious future. The money has to come from somewhere. And they're not taking on massive amounts of debt, at least not directly. The private credit guys are in order to fund the data centers. But to your point, like, they have to spend the money from somewhere. If they're not spending it somewhere else, it's meaningful.

And I have to ask myself, I mean, do I think we live in a world where investors can swallow? smaller or even like standstill profit margins from big tech. I'm not so sure. Expectations are really high for that sector. So it's, this is my Grand Rapids Hedge. AI is a very compelling story. I don't think you can argue against that. But the profile of a company that has to almost pivot

to catch up to AI or to try to lead at the forefront of AI. It requires them to take money from somewhere, requires them to spend from somewhere. And that somewhere is still big question mark that some people might be ignored. Ooh. What? I just pulled up a stock that we had spoken about a while back that reminded me of this. Remember Accenture, Josh? We spoke about that.

They do like AI consulting and other sort of consulting. Not well. Holy mackle. The stock crashed. Yeah. I'm sure there's a story there. But wow. I was not expecting that.

The opposite of that is IBM, which is much better at what Accenture does. All right. Callie, we've kept you longer than I promised you. We would. I want to say thank you so much for joining us. For those of you who are not aware, Optimistic Callie is published, I think, at least weekly, probably multiple times per week, right? I can't promise that week. No promises. But check out Optimisticcalli.com. Callie, thank you so much for joining us. We really appreciate it. Great job this week. Yeah, I'm around whenever you need me. All right. Hi, Callie Cox. All right. Callie Cox, ladies and gentlemen. What'd you think of that idea that, you know, we're celebrating all this CAP-X spending. And it's obviously fueling industrials and electrification-related stocks and obviously software companies. But like the spending is coming from somewhere.

And we're basically, it's looking more and more like a hiring standstill in a lot of areas of corporate America. What do you think? Yeah, I'm not worried yet about where the cash is coming from because it's coming from their balance. primarily. But I saw that Google did a debt offering or Alphabet did a debt offering for the first time in a couple of years. Yeah. So yeah. And then Facebook was talking about the idea of maybe external finances for like a $30 billion expenditure. But listen, it's coming from them. They have all the cash. They can afford it. Yeah. So we're going to talk about Palance here in a little while. So I don't want to go too in depth on that. But when you hear them come out and say,

we're going to do $4.1 billion in revenue this year, and we now have 860-some-od commercial clients, non-government, all of those clients, what they would love to be able to do is spend the money on AI-related projects that will enable them to not hire the same amount of people they hired last year. You have to understand that's part of the goal. Without that. So, all right, last thing, before we move along, we got a July ISM, and just to put a bow on everything we've been talking about, there were not a lot of bright spots in the data, but in the

commentary, here's a, here's a sampling, quote, we continue to see strong demand driven by the build out of artificial intelligence-related data center capacity, semiconductor industry expansion fueled by national policy, and large-scale grid modernization projects. New orders for defense equipment also surged. Non-defense orders dropped. So, like, that's what people are spending money on, at least according to the manufacturer survey. And, yeah, well, we have, we have Nvidia, what does Nvidia report?

A few weeks? Yeah, they're always less. All right. That will, that will not matter. Okay. Let's talk about the state of the market. How would you describe the state of the market today? Giddy.

Giddy. I don't like the term bubble-licious because there are always bubbles, and I don't think the whole thing's a bubble. But I do think the way people are behaving, there's a giddiness. I mean, whatever, it's fine. It's understandable, given this rush that everyone's feeling coming off the April lows and, you know, seeing the market make new highs. but, like, that's, I think that's kind of the vibes. I don't know. What do you think?

I think there's a lot of optimism. A lot of it peripheral to the S&P 500 itself. It's like the, it's like the S&P's going up every single day. You know what I mean? But there's just a lot of, there's a lot of, yeah, getting this is a good word. So let's get to it. All right. The DGEN Dow, I don't think we've referenced this in a while.

Have we updated the components or these, what's the situation here, Josh? I don't think we've updated the components, but just at a glance. They still work. There's nothing. on here that I would take off, I don't think. I feel like, now we might be missed. No, I would take Reddit out of here. That's not a, that's not a Dgen stock, I don't think.

Well, no, no, no. It's part of the Dgen, uh, uh, ecosystem. You're right, you're right. You're right. You're right. You know what's missing? Uh, you don't have Joby on here. Yeah.

And I think Pallantir is an obvious miss. Oh, yeah. Oh, no, it's on here. It's on here. It's on here. I'm sorry. Um, do we have app, love it on? Yeah.

Wait, what's on there? Jovey? Where is it? No, we don't have Jobie. Oh, there it is. You're right. Okay. So Joby definitely, that's a DGend, especially after this week.

Either way, the individual tickers are less important, just the direction, because one ticker is not going to make or break this line. They're up 24% year to date. And if you look at where they are from the lows, they've almost doubled from the lows. So that's the key takeaway from that. We should have just, we should have just, we should have just, we should have just DTF this.

Like people came to us and said, somebody came to us and said, were you guys serious? Because I'll, I'll, I'll, I'll, I'll, build that right now. Yeah, we cannot get conscious launch this. All right, here's something. So I'm all of Inviti, by the way. I guess you're allergic to money, Mike. Yeah, I'm all out of Invidia. You're out.

I sold a little. Is this because I gave you permission to sell last week? Thank you. I needed that. I'm all out. I sold a little bit last week, a little bit more at the end of the week and the rest of it today. All right. This chart helped push me over the ledge.

Turn on, please. This is from our friend Todd, Sown, Estratigis. All right. So what we're looking at for the listeners is this. It's a line chart of Nvidia and its weight in the SEP 500, which is now about 8% versus the weight of the industrials. And I mean all of the industrials, every single one of them. We keep saying that we keep saying how crazy it is, but this is so insane. Wait a minute.

So for people that can't see the chart, how many billion dollars is Nvidia's market cap away from being bigger than the entire industrial sector? right there. It's right there. It's less, it's one percent. It's like one percent. It's like five billion dollars. So let, may I remind you, these are, these are not small names. Trod off, please, for a second. These are the top 10 names in the XLI, GE Aerospace, RTX, Caterpillar, Uber, GE, Vernova, Boeing, Eden, Honeywell, Union Pacific, and Deere. Those are just the top 10. It just can't be. It just, it can't be. It can't be this. And I'm long, in video and I'm not planning to sell it right now but um it makes no sense and I and you can't even argue that it's in part due to the fact that the industrials are cheap because they aren't right

it's not like you're talking about heavily discounted stocks in the industrial sector at least in the health care sector you sort of can make the case that those stocks are all selling at depressed valuations now they're caught up in the tariff shit dude be that as it may it's still crazy. Yeah, no, no, I'm with you. I'm with you. So these of the top 10 names in an admittedly depressed health care sector. Eli Lilly, Johnson & Johnson, Abbey, Abbott Labs, United Health, Merck, Thermo Fisher, Intuitive Surgical, Amgen, and Boston Scientific. Come on. What? One of those, one of these is wrong. Uh, so, but in the case of health care, that could be wrong because those stocks are way too depressed.

Like, those stocks are too heavily discounted. In the case of industrials, what are we talking about? Is it how many companies from the S&P 500 industrials could be 80 stocks? How many? How many do you say? 50? I don't know. I don't either.

It sounds wrong. All right. So that's some stuff on the public markets. Let's go to private markets. Wait, so you looked at that and said, I got to, I got to sell this. I got to sober up a little bit. Yeah. I mean, I was, I was, you know, I had one foot out the door anyway, mentally.

All right. In private world, Open AI just did a funding round at $300 billion. I think they were at least some of the growth. Why not? Some of the growth numbers are truly outstanding. So, you know, this is what happens in what everybody's calling the biggest technological revolution of our lifetime. Literally everybody's saying it. Tim Apple, well, maybe not to an Apple, but they're all saying it.

Anything here, Josh? Can I keep going. I'm using Open AI 100 times a day. but I'm paying one subscription price. It's like 20 bucks, right? 20 bucks a month? Yeah, so I'm not, I'm not sure if that's going to be

the long run business model for that company. I feel like it should cost at least as much as Spotify, not to give them any ideas. Maybe it should cost way more, just given the value that I'm getting from it. And you already know what I'm not using when I'm using chat GPT. Right.

I am looking for, I saw the, it doesn't matter. I don't know if the numbers here handy. But they're, oh, here it is. Okay. Open AI's annual recurring revenue has soared to $13 billion, up from $10 billion in June. That's people like me that can now not live without it.

Same. I started paying the last few months, up 30% since June. Not bad. Okay, this is a really good one from Dave Notting, a bit wonky, but I still think it's, it's important. So Dave said, actually, let me just read this for a sec. So a title financial group put out their ETF industry highlights of the week and key metrics at a glance. So one year open to close ratio is over five, which is- What does that mean? Open to close?

For every closed ETF, there are five that open, okay? I'll throw this out. No. I'll let you cook and then I'll tell you why it's not anything. Dave said, Nodig said, we've crossed the five to one open to close barrier. I think we've only seen that one or two times before. It's literally launch it. We'll fix it live land.

And then there's some other stuff in here just about the industry assets. But why is that garbage? Because it used to cost a lot to keep a zombie ETF trading on the public markets. And now maybe because of AI or maybe because of streamlined compliance or whatever, the cost of letting one of these things just live, even with $50 million sitting in it, you never know when a sector or a strategy or a theme is all of a solid. sudden going to get hot. Fair. And it's like roulette. If you're Pacer ETFs or like a second tier ETF issuer, you've got all these products

out there, all of a sudden one of them could just explode. Like why not? It's like roulette. Keep the chips on all the squares. I don't see this as an indicator anymore the way it used to be. However, by the way, you mentioned second tier. Baltunis calls them indie issuers and they are on fire. So you might say that.

So I'll see what you just said, and I'll raise you this. Dotuna's tweeted, new finally for a 2X Figma ETF. The stock that just had its IPO today with a $250%, 250% pop, which is the most ever, by the way, for an IPO, that was over $500 million. So throw that into how crazy is this? Well, you had to sell that. Yeah, yeah, you had a second. All right, Robin reported last week, equity, notional volumes are up 112% year over year. Of course, some of that is price, but up 25% quote over quarter.

Order options contracts are up 32% year over year. So people are just going wild. And I want you to throw up this transaction-based revenue. The second, Robin, a chart, please. Look how much freaking money they're making from options. This is Robin Hood's transaction revenue up 65% year-over-year to $539 million. And what's the options? That's the neon.

Oh, shit. And green, for example, is equities. And we know that that's just payment for. orderful because there are no transactions there. But my God, are the options profitable? So, right, green is not stock trading commissions. That's, that's, that's, that's P-FIF. And then, um, what's the top gray other?

What do you think's in there? It's tiny, but, uh, maybe some, I don't know, is that like, margin balances. Yeah, I'm sure. Margin loans. Probably rolls up into it. All right. Goldman, from Goldman Sachs, we spoke about this last week with Adam, I think.

Speculative trading hits record high. I mean, obviously, uh, You know, just across the board. Call option activity has surged to its highs since 2021. IPO SPAC issuance is at a multi-year high. Even ARC, even ARC. Bautunas tweeted, how back are we? You ask, we are so back that ARC just took an $800 million in one day.

It's the biggest. God bless her. It's the biggest one-day inflow ever. She's doing good. She's doing good again, though. This is like her, this is her market. Yeah. So we mentioned, we mentioned Figma.

Vlad Bastian tweeted a chart. of the market cap of the top 100 information technology stocks with their forward PE and Figma, of course, at the IPO price was number one. And then just to put a ball on this all the way on the other side of the market are insiders who are not participating. They are not buying. Next chart, please. So Bloomberg ran a story. I didn't have time to read it yet, but I pulled the chart. Insider buying dries up. Insider buy trails, sales by the most since July 20. 24. So that's the market. That's where we are. So maybe take a beat. So to sum up, Robin Hood-esque, arc-esque activity is back at highs. People are doing the most

speculative things they can think of to do. And corporate insiders are using this as an opportunity to sell. Or at least not buy. Yeah. And like Figma is not even getting the market cap it's getting because it's Figma. They're getting it because the scarcity of IPOs and people just love, you know what IPOs are for people in their 20s? Do you have any idea how big the baseball card pack breaking thing is on the internet? Do you know about this at all? Not as well as you, but yes. All right. My friend's kid, he's out of college now, just barely out of college now. He's doing these auctions on the internet with like a sealed pack of baseball cards and he's doing a pack break. And people can bid on this thing before he opens it. And then he

opens it and wherever the highest bid is, you can kind of see like did people overestimate or underestimate how valuable the cards in there might be. But now it's at another level where they're taking loose baseball cards. Some of them are like $20,000 cards. They're repackaging them and resealing them and starting all over again. Like, as a scam or? No, it's not a scam. People just want to bet on pack breaks. Tech IPOs are pack breaks.

Like, in other words, everyone put in their allocation at Robin Hood. They got one share. That was like the meme last week. Like, oh, thanks Robin Hood for my one share. That's a pack break. You don't, nobody has any fucking idea what Figma is going to be worth on its first day of trading. Or it's second. No idea.

Here's my evidence. They priced the IPO at like 20-something. Then they raised it to 30-something. Then they open it and it goes to 100. Because people have no idea what these things are worth. I'm so glad you said that. Nobody has any idea. I made this analogy.

It's like drafting NFL quarterbacks. They want to get it right. The bankers don't want to fuck the companies. If they get that reputation, who would hire them? People like, oh, this for their rich clients. Like, no, they want to price it right. But who could see the future? Who could possibly.

Who could possibly. Now, there are some telltale signs that a deal is going to be great. One of them is they keep the share amount. They keep the share count, you know, relatively low. You know, people are looking for companies that don't have a lot of debt. They're looking for companies that have explosive growth rates. They're looking for companies that use a lot of AI stuff in their prospecti. Like, there are some indicators.

But in the end, in the end, it's a, but it's a pack break. So the same people that are willing to bet. on a resealed package of baseball cards. And by the way, the way that works is, you're guaranteed 45% of your money back. So no matter what cards are in there, you're not going to take a total loss. If you bid $2,000 on a pack

and there aren't any special cards in there, you're guaranteed to get at least like a grand back. Anyway, that's what this activity is. It's lottery-esque. You're putting in an allocation for Figma, not because you have any clue of where they're going to put the stock when it opens, but because, oh, my God, imagine if it figmas.

Josh, there's another aspect to this. The day that it IPOs is very important. It came public on Thursday and an all-time high. What if it came public on Friday? On a day that people didn't want to buy stocks. On a tariff day. I got one more. I got one more on this and we can move on.

This is an amazing story. I love it so much. Fenwick and West is a law firm that did all or most of the legal work for Figma, not just for the deal, but prior to, and they handled all the going public stuff for the company, right? They made a very big bet. They said, let's get equity in this client and not just take our, I don't know, God, can you imagine $3,000 an hour legal fees? They took equity, I don't want to say instead, but in lieu of some of the money that they ordinarily would have gotten. Talk about speculative. They took the ultimate bet on a client.

Fenwick, I think, was paid the equivalent of $30 million worth of Figma shares for the right to do that. Those shares, as of July 31st, were worth... It says right here. It says 900,000 shares. $900,000 times $85. That's $71 million for where it is right now. bad. Can you imagine? Like, what, like, what an amazing, what an amazing decision. This is a law firm. So pretty, uh, pretty, pretty impressive. Um, all right, I have nothing more other than to say that I agree with you. Things have, we are so all the way back. Yeah. And things have gotten absolutely crazy. They could get crazier, though. Oh, yeah. Because I've seen it. There's no laws. I know.

I know they can. You've seen. We saw it in 21. I was honestly, this doesn't feel that crazy. I'm saying there's a there's a lot of speculation but it doesn't feel it doesn't feel like all the way bonkers 21 was way nutser if we get like if we get like 10 more figmas you know or we get a super phigma like you know what I'm saying like if we get a figma but where it's like instead of 70 billion it's like 700 billion all right so that's a good segue to Palantir yes all right um okay is Alex Carp the new Elon Musk? There's similarities. I listen to the call as well.

Elon Musk is not hot right now. Alex Karp is very galvanizing. He's messianic. He's, look, I think what people love about him is he's delivering. I don't think he could have the same level of swagger if his results were just whatever. His results were insane. Did you listen? Did he hear Dan Ives?

Oh, Dan's like one of my favorite human beings in the world. I texted him a picture of his question. Dan said, like, I'm sorry also that the haters are unsatisfied. This is on a quarterly conference call. I love him so much. Alex Carp and Dan I was were trolling the haters of which. Well, one of the things the haters said was that the business model where they don't hire direct salespeople was not going to work. And Dan Ives asked him a question about that, like the decision to continue down this road.

And look, Dan, say whatever you want. has been bullish on Palantir since it came public and has never changed his tune and he's been really, really right on the stock. Let's go through some of the highlights here so people understand the extent of what's happening. And then we'll talk about the valuation. Q2 2025 revenue hit a billion dollars for the first time. That's a 48% year-for-year number. It's just it's incredible. And 14% over the prior quarter. It's being drawn. driven by not just government contracts, which I think is a lot of people look at Palantir and they're like, all right, great. So the Army and the CIA, no, dude, commercial client revenue

growth was up 90 something percent versus only 50 percent for government spending growth. So Palantir is now has like almost 900 customers. They'll have a thousand customers or more. In that vein, so they said during the second quarter, they closed 100 because that was my impression too. I was very near run on this company. They closed 157 deals of at least $1 million. Sixty-six were $5 million and 42 were at least $10 million. Yeah. Chart off. And it reminds me a lot of CrowdStrike. Like they highlight without using some of the names, they highlight like a large U.S. wireless

carrier or phone company. You can imagine it's either T-Mobile, AT&T, or Verizon, but like talking about the way that they're building these, building these KYC tools for banks where you can open an account in seconds that normally would have taken nine days worth of human processing of information, like the breadth of the business and the amount of verticals that they're selling into now, I think is really what captures people's imagination. They're basically becoming the business AI layer. that they claim is substantially stronger than just a plain LLM.

And they talk about it in terms of ontology, meaning like learning and understanding mistakes that an LLM would make that a human never would and building accordingly. Because, you know, you can't make a, you know, ha, ha, ha, stupid AI. You can't do that with some of the projects that they're working on. So net dollar retention up 128 percent, operating cash flow for the first six months of the year,

$849 million. They're projecting $4 billion of full year revenue or more. And let's do this rule of 40 thing really quickly. Wait, hang on. Before we get through Rule 40, he said that he was going to 10x that shit in five years, did he say? He said 10x revenue in five years. All right.

So $40 billion. They spoke a lot about the rule of 40. And it's the first thing that they have in their deck. So let's go through a few of these charts. All right, this is impossible to see, but this is a very important metric for enterprise software companies. And what you're looking at is on one axis, it is, let me just pull this up. It's the margin and the revenue, right?

So a good company will have over 40, and they are so far off the charts, it's insanity. Yeah. And Rule of 40 is about like revenue growth and margins and just the ability to, to, you know, CrowdStrike talks about this a lot. I think like Service Now Workday, like the types of companies that are selling enterprise software are the ones that you'll most frequently hear this rule of 40 idea and why it's so important. It's how they think of themselves, profitable growth.

And Palantir score, it just, they're playing, it looks like they're playing a different sport entirely just based on this dot plot. It's really impressive. The next one compares them to the top. 25 market cap companies globally. And the only one that best them on this metric is Nvidia. Some of the gray bars are circles are meta, Broadcom, Microsoft, MasterCard, Google. I mean, they are executing. So they've got, and then the next one shows the growth of the rule of 40. So the valuation, yeah. 94%. 94%. 40 is considered good. But the valuation is

sorry to interrupt you. Bob Sacramento in the chat says, I prefer the rule of 69. I just, I didn't think you would see it. So I wanted to just surface that for you. I. So do I. Yeah. Me and Bob, me and Bob both. Okay. Let's do this valuation stuff really quickly. Chart on. Great job on this one. Sean. Now, what is this? That's the market reaction. Yeah, I mean, needless to say, record high. We're going to do Palantir versus everyone else. Yeah. All right. This is the thing. All right. So it's a $400 billion market cap on $4 billion in annual revenue. Granted, he said he wants to 10x revenue in the next five years.

And let's say he can actually do it. Obviously can't have a recession. That'll probably hurt his chances of getting there. But even if he comes close, maybe in that scenario, you could understand the $400 billion, but not if it goes to $800 billion, right? Right. Palantir's market cap at $407 billion. Home Depot is $385 billion. Coca-Cola, $297 billion. Salesforce, $240 billion. So this company is now worth one and a half sales forces. McDonald's $215 billion. Nike, $110 billion. Seems a bit, a bit rich. But I guess to Dan's point at the Alex's points, that's what people have been saying for the last, you know, three. $300 billion market cap. Good for them.

They're executing. Oh, 100%. It didn't make more sense at a $250 billion market cap. Right. It's such a great point, which is why just use charts, throw everything else in the garbage. But that's another conversation. Put up this next one. I asked Sean to just quantify the company's fundamental performance because, I mean, it really

is epic. On the left side, less impressive, just like. on the surface, but the growth rates are really still are. No, the market isn't dumb. Like, obviously they've galvanized the share base and the business is executing. So, you know, this is what it is. Look at this revenue quarterly year-over-year revenue in Q4 of 2023, which might have been their first quarter as probably traded company or I don't know, 20%.

It's accelerating. It's at 48%. It's the fastest pace of quarterly year-over-year revenue growth that, they've reported so far. And it's AI. It's AI. That's that AI. That's that.

All right. We have, we have AMD numbers. Let's get that in here. Maybe this will make you feel good or bad about having sold Nvidia. Oh, look at their gaming segment revenue. Yeah.

Everyone's very excited about the gaming center. No, but dude, it's up 69% year over year. Nice. As of this, as of this conversation, AMD is off 4% in the post market, but the stock has been ripping all year, or at least since

April, I should say. It was a $75 stock that ran to $180. Oh, yeah, you know, this gets back to the conversation we have with Callie. I mean, I don't own the stock, and it's easy for me to say this doesn't bother me, but just as an objective observer, all right, the stock went from freaking 75 to 180, and it's given back a few bucks, big deal. These numbers aren't that impressive on the surface. I don't know the story well enough to say anything negative, but I guess they beat on revenue

by, I don't know, looks like $200 million. And earnings per share was in line, $0.48. I guess revenue up 32% year-over-year is impressive. Gross margin fell to 40% from 49 year-over-year. and data segment revenue was up 14%. Does that sound like blow me away numbers? No. Not really, right?

I guess that's why this isn't in video. All right, and we got a report from Toast, which for longtime viewers, listeners know this is one of my names. Stock is not really reacting in the post. It's down 71 cents. But it looks like Toast was good. A.R. Up 31% year over year to $2 billion.

that's for the quarter. So this is becoming a pretty big company. That's, if you can do the math, you're talking about an $8 billion annual run rate with a, what's the market cap? $27 billion market cap. So not bad. Gross payment volume, up 23%.

I doubt the whole restaurant sector is growing its spends. So you can see them making big inroads. And we don't have to go through the rest. Oh, this one's good, though. Total locations of 24% year over year. They now have 148,000 restaurant clients. When I first started buying the stock in the teens,

they had like 60,000. So they are just rapidly, and there's only, I think it's 600,000 restaurants in the country or 700,000. Like, it's not that big of a number. A lot of people would guess it's in the millions and it just isn't. So if they're at 148, they have now crossed over to the point where, like, they are the category

king. And they're not the only player out there, but, like, some of the legacy players, like, micros, which I think, uh, Oracle owns and, uh, Clovers out there. But I think this is like, this is the, the Uber of, of, uh, of restaurant payments. So, uh, I don't know, I got to spend some more time on this overnight. but it looks like a good report. So for those who have followed me into the stock over the years, here we are. Looking pretty good.

I would say so, yes. All right, let's play a game to catch a falling knife. I'm going to run through about five charts for us, Josh. I'm going to run through the charts, and then we'll reset and I'll get your thoughts, okay? Well, we're going to pick one each or force rank them? Yeah. All right, let's go through the charts. So first we have Lulu Lemon, the stock peaked in the beginning at the beginning of

$2,0.511 is now $197. I brought you UPS, which has just been going pretty much straight down from 232 in 2020 to 87 today. I brought you sweet green, which is a bit of a newer issue, peaked at 44, not even a year ago, and it is now down to 12. That's pretty bad. You know, I owned this for 15 minutes. Oh, I didn't know that. All right.

I brought you Enface Energy, a stock that I owned for a cup of coffee. My bad, I made the case for that on this show. It is 330. It was a piqued at 336. It's now, it's now 32. Oh, my God. And then we couldn't not do United Health. Stock was 625 bucks yesterday, basically.

It is now $251. So I will say first that I, the only falling knife I would catch is like the bluest. of blue chip type of names, stocks that are going straight down. These are, these are ugly. So if you have to- Two of them are in the Dow Jones.

UPS. UPS. United Health and UPS are DOW 30 components now. UPS does not belong with the Dow. Holy shit. Holy shit. Is Amazon in the Dow now? Yeah.

So you don't need UPS. It's a UPS is an e-commerce thing at this point. So what do you think? would you take a flyer in any of these? Yeah, I would take a flyer in UPS. I would wait until they get kicked out of the Dow and I would buy it. They figured out that Amazon

is literally the worst customer they could ever have. And in January, they announced a substantial restructuring plan where they are going to minimize their business with Amazon to, I don't want to say the bare minimum, but substantially lower.

They had become extremely reliant on Amazon. for UPS means high volumes of packages and extraordinarily low profitability on each delivery. And it just, it's, they're much better off doing things like small and midsize business or international. So they are trying to transition the business. The problem is the company has to shrink to do it. So, dude, it's almost like stock market participants aren't stupid. I'm looking at the free cash flow of UPS.

And it was 10, it was over $10 billion in 2020. and now it's $3.5 billion, and it's just kind of straight down. Do you know they just reaffirmed the dividend end and then they're going to pay it out of negative cash flow? That's not great. But I don't think if you're UPS, I really don't think you can cut the dividend end.

And a corollary to that is Pfizer. Like, Pfizer got to the point where the dividend was like 6% or 7% and they refused to cut it. Because I think these companies know, like unless it's an emergency like GE, or whatever, like, even Schwab. I think Schwab never cut his dividend. Like, these companies, they intuitively know that's game over.

That's where you lose your whole shareholder base forever when you do that. And I think they get a lot of pressure from institutional shareholders that intimate to them. Like, if you guys cut your dividend, I am definitely selling. And so UPS wants to soldier on. I think I would buy that one, though, just not right this second. I want one more really nasty news announcement to come out. Maybe they get kicked out of the end. So Lulu is getting their lunch eating by Allo.

Is that the story? Yeah, I wouldn't. And everyone else? The truth is the quality of the clothing is not as good as it used to be when you talk to their customers. Talk to women who their entire wardrobe was Lulu three years ago. Now it's Allo. Yeah. They will tell you that they are much more willing to buy Viori or Allo, even though the prices are

higher than trust Lulu. And I don't know how you turn that around. It seems like it's a really tough thing to do. Lulu is the gap 20 years later. Yeah, that's tough. The gap has spent 20 years basically bleeding relevance still to this day. And that's what this reminds me of. So I wouldn't buy that way.

There. What about Sweet Green? Operational issues. They're just not good at running this business. At Sweet Green? Yeah. So not. And I think they get f***ing.

up with prices and tariffs and... And also, it's a lunch spot, and who's, you know, it's an office stuff thing. Yeah, that didn't matter, though. In 2024, I was in the stock. It was one of the hottest stocks in the market. And they had a really great story to tell about how robotics would ultimately take over the preparation of salads and on and on and on. But they're just, they're not executing.

They're not hitting their numbers. They're guiding lower. they're not marketing well it's a it's a tough story I don't need that in my life and face I still don't know what they do United I'd buy United if I had to buy one of these I didn't even know who number two is

all fine all right so fine would you put United up against UPS at today's prices between now and the end of the year the reason why I would be more inclined to buy United is because this went straight down where you could make the case that whatever is driving the price

action isn't overreaction. You can make the case just based on how violent it is. Whereas UPS, it's just a slow bleed, which is matching the free cash flow and is nothing but lower highs and it is just the cleanest downtrend. So to me, I draw a distinction between a falling knife, which is something that's going straight down, which is the other four versus UPS, which is like a slow bleed. To me, that's just heinous. Yeah, we don't have, we don't have Nike in here. Because Nike is not a knife. There's no way. It's just not.

Look at the truck. It's still a little. I know it popped after its earnings, but it's still knify. No, it's not. It's not. All right. No. All right.

It's gross. All right. Let's revisit these in the winter. We'll see how they did. Okay. My bet would be UPS. Even though I think there's another leg lower, I think United Health might have permanent impairment to their business model.

UPS has already acknowledged that and is actively trying to turn to a different It doesn't matter, who cares? All right, Apple, what will Apple do to find growth in the second half is the question. So let's put up this chart. The last quarter they reported last week was actually not bad. Phone demand was high.

I have a friend who was in the cell phone business and he pointed out that they're talking about switching from titanium back to aluminum which means more broken phones

which means a faster replacement cycle with titanium the only stuff that breaks is the screen or the battery to force people

to upgrade and nobody's upgrading for a better camera because the cameras at this point are like sci-fi they're so good

chat GPT is better than AI series so no one's going to upgrade for Apple's AI so how do you get people to buy iPhones faster and not hold on to an iPhone for five years, make them break easier.

So I know that's a really cynical take, but it also happens to be true. So if they actually go through with this and go back to aluminum, you will know the reason why. They need the phones to break. Another thing they can do, though, is triple the size of their ad business. It's $7 billion a year right now. That shocked me, by the way. That number shocked me.

I had no idea. It should be way higher. It should be way higher. Amazon decided to focus on its ad business and within a few years became the third largest advertising platform on Earth. There's no reason Apple can't do this.

And they're already in the business. It would not be from a standing start. Think about all the opportunities Apple has to put ads in front of you. Your eyes never take themselves away from their screens. So that's a thing. But wait, it would it be on the phone?

You don't want ads popping up on your phone. No, and within their services. business within their services business. Apple has a huge opportunity in advertising. We'll just, we'll leave it at that. We won't go deeper. But like, just look at Netflix. They said in calendar 2025, their ad business will double.

Half of Netflix's subscribers are now in the ad supported tier. Michael, that took three years. And this is a chart from a really good piece by Julia Alexander at Puck. but just the gist of it is if Apple decides they want to talk about advertising to Wall Street and get really seriously focused there, that's a good answer to the question of where will Apple find growth because they're basically, they're in it, but they're not trying that hard. And it could be way bigger and globally.

And I just thought that was an interesting idea. And we'll see if they actually do it. What are your thoughts? I think in the short term, the stock is so relatively depressed to its peers and just the sentiment, nobody's bullish on Apple, then I think it wouldn't take much to change sentiment, again, the stock to pop. Problem is, they really do need a growth tension because the stock is not cheap. And that's like the bigger overhang.

So they need either an AI play, which is, I think, seeming increasingly unlikely. I guess they can make an announcement surprise us. Or they go in, they lean into what you're talking about. And if they were to go from $7 billion to $20 billion, that would be significant, even for them. There's no ad supported tier for Apple TV. Right. You're telling me, if they launched an ad-supported tier, they wouldn't pick up millions and millions of more subs who just don't want to pay the full freight for, like, this is not new. Everyone's already done this.

In fact, Amazon now defaults you. Amazon Prime members are defaulted to the ad-supported tier, and you have to pay a premium to have no ads. Paramount is showing you ads. Yeah, they want to show you ads. Yeah, Netflix is showing you ads. Like, Peacock is showing you ads. Hulu is showing you ads. What are you waiting for?

Ad support at Apple TV. Do it. Do it. Picardy Cola. Just make it happen. All right. Anyway, we're in to make the case. Okay.

I pitched this on CNBC today. It's a really interesting story, so I wanted to rehash it. And we almost never talk about high dividend payers in this section. But I have one for you. Ooh, the stock looks sweet. Okay. Dominion Energy is a utility that's become a growth company. If I asked you, what is the capital of the internet geographically?

What place in the world? You would probably say something like Menlo Park or Cupertino or San Jose. Or you'd say like somewhere in Asia. But the truth is, it's in Virginia. It's in a place called Loudoun County. This is where AOL was based. 30 years ago when they invented

the consumer internet and that's where the first data centers were built to service AOL and then ultimately Yahoo and now Google and Amazon and Microsoft Azure

this is Loudoun County is called Data Center Alley it is the largest cluster of data centers on the planet all in one place the Wall Street Journal

says 70% Listen to this number. 7.0% of the entire world's internet traffic passes through this Northern Virginia data center cluster every day. Like, it's an unbelievable thing. If you happen to be the local utility that is covering Loudoun County

in northern Virginia, it's like discovering oil in your backyard. So that's exactly what's happened here. All of this AI CapEx shit that we talk about night and day involves electrification and spending on the grid and blah, blah, blah, blah, blah. And Dominion is the company benefiting more so than any other company in that area. So it's a boring, sleepy utility that realizes it's in the middle of a gold mine. And what's happening going forward, because everything I just told you is in the stock,

What's happening going forward is they, in July, formally proposed a rate increase to their regulator. The regulators will respond in September. This is called the rate case. And if they win their rate case, meaning it's a regulated business, they'll be able to charge more. And the reason why they need to charge more, they've explained, is CAPEX and spending related to this opportunity with all the data centers. So basically, you've got a stock technically breaking out above $6,000. It's a 4.42% dividend. It's not just electricity in Virginia.

It's also natural gas in South Carolina and a whole bunch of other stuff, building one of the most massive offshore wind projects in the world off the Virginia coast. And you got a shareholder base that is largely there for the dividend yield, but now all of a sudden you've got a lot of growth tied to this AI story.

And the AI story doesn't end anytime, the amount of electricity need. I feel like it's forever. I love it. Yeah. So I like the story. I wanted to pitch it to you. Let's put this chart up.

Last but not least. You know how I love these golden crosses. Like, what the hell else do you need to see? Today we broke above resistance dating back to last October. You got that 50 day rising above that 200 day, which will be rising soon. And not crazy overbought. So this is. is, uh, this is, I think my, one of my better make the cases this year.

I like it. If you are bullish on AI and why wouldn't you be, the cap-ex is not slowing down, but you're like, but $4 trillion, like, you know, I get it. We all get it. It's $4 trillion. There, this is a, this is a, uh, maybe a safer, less, less risk way to play it. I like it. Yeah.

Look, look, I'm saying $50 is the pivot point. Um, 50, 50, uh, 50, uh, 50. has been support for a while. So, like, if you're wrong, you risk 11 points. I really don't think it'll get there. I mean, it certainly could. There's, like, a market-wide event. Yeah, I like it.

So long as it stays about 50, you're getting a 4.5% yield, and I think the story stays intact. You can stay long. Okay, I like it. It's not going to double. It's a utility. Yeah, I like it. All right.

I bought a chart. The first chart is, Daniel, if you would. All right. This is the revenue. the quarterly revenue since the beginning of 2019. You could see that it's more than doubled. This is a company's quarterly revenue? Yes.

Okay, there's only a handful of companies this could be at this dollar amount. That's correct. Okay. Okay. It is significant. It is not a small company. And the next chart shows it over the same time period. You've gotten more larger swings, slightly larger return, but really nothing to speak of.

The orange line is the SP 500. So 2019 to today, that's, you know, it's a long amount of time. Oh, so this is the share price versus the S&P. Yeah. And the chart before was the revenue. Ooh. I want to say, I'm just, I'm looking at 2021 as my clue. I don't think it's a Mag 7 because it didn't.

Oh, wait a minute. 2022. It did crash. And it bottomed on every other Mac 7. It doesn't make sense. Is it meta? No. Is it Microsoft?

No. Maybe go fuck yourself. I don't know. It's Amazon. It's Amazon. Why didn't I know that? Oh, 176 billion should have been the tell for me. But it's just kind of wild.

Like the company's not not working. You know, the business has grown over the last six plus years. Dude, the chat all guessed. Everybody guessed. Everybody guessed Amazon except for me. But it's hard. The stock business is not. It's no easy, no easy thing.

I think that's my key to shut up for the night. Hey, guys, thank you so much for joining us on the live. It was great to see so many familiar avatars. We miss you guys when we're not here. We really appreciate it for those of you listening to us out in podcast land. Hey, a review goes a long way. It's a signal to the algorithm at Spotify and Apple that what we're doing is high quality. And this is how you support the show.

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