The Compound and Friends - Too Early to Get Off the Wave with Ryan Detrick and Sonu Varghese

Episode Date: June 26, 2026

On episode 248 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Ryan Detrick and Sonu Varghese⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to discuss: Alan Greenspan’s legacy, Fed transparency, AI bubble fears, Micron’s massive run, market rotation, small caps, inflation, gold, Bitcoin, and whether the bull market still has room to run. This episode is sponsored by Nuveen and ClearBridge Investments. Learn more about Nuveen’s comprehensive private markets platform at https://www.nuveen.com/en-us/insights/alternatives. Rising geopolitical tensions, continued market uncertainty, stocks backed by can offer more predictable cash flows as volatility increases. Visit https://www.clearbridge.com/ to learn more. Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 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

Who's winning in the World Cup? Because I have no idea. Maybe France. No, but like, where is this state, where do this standing? Because teams have been knocked out already, right? Yeah, about five or six have been knocked out. Okay. Wow, already?

Yeah. All right. So who's in, wow. Who's in contention for like to stay in the whole thing, do you think? I think it's several. Like, it's a round of 32. So you have 32 out of, what, 48 teams. Okay.

Still in the mix. Okay. But the ones that matter. It has Spain, France. Do they give you the locations of where, like, the final, final games are going to be? Yeah, the final's going to be here in Jersey, MetLife. Oh, boy. I'll be sure to get the hell out of here.

Yes, if it's anything like today. That's a tire thumper weather. Yeah. So last night, we ran around New York, had fun. We went to dinner. He goes back to the room. I'm working on stuff for the show and different things. You went straight to flash dances.

Yeah, exactly. What's that? Bro, I have friends that saw you there. Go on. That's an AI image of Josh. That's not the real Ryan. And he was talking, what you do last night. He was literally watching, like, soccer documentaries at midnight last night.

Okay, so, I mean, I was like, I thought I was kidding. I was serious. What were you watching? I mean, you really were, right? He's a man of culture. Exactly. He's a man of culture and taste. All right.

That's cool, that's cool, though, because it's not, what, how often does it come to New York? The last one I remember in New York was like in 2004 or something? 94. 94. 94. Okay. All right. All right.

It was the last time in the U.S. But then they do it everywhere in the U.S. Yes, usually, except Chicago, it feels like, because last time, 94 there was a game in Chicago. I think the opening game was in Chicago. This time not quite around. Do they base that on anything? No, I think the cities that bid for it.

Okay. You know, that are part of the bidding committee. I think that's how it works. All right. Well, I'm rooting for your team as the Netherlands, you said? Netherlands, yeah. Other than the U.S., obviously. Why do you like the Netherlands?

So I started watching soccer when I was 10. Neither here nor there. All right, let's set the show. Yeah. Yeah, any more talk about soccer, we're going to lose our last eight fans. We'll come on a brooms. All right. Thank you, big John.

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Visit newveen.com to learn more. Investing involves risk, principal losses as possible. Private market investments may not be suitable for all investors. This episode is sponsored by Clearbridge Investments. Amid rising geopolitical tensions and continued market uncertainty, investors are looking for stability. Even before recent developments in the Middle East, stocks backed by real assets were gaining momentum

and can offer more predictable cash flows as volatility increases. position your investment portfolio for wider equity participation with fundamentally driven Clearbridge active equity strategies. Clearbridge, a Franklin Templeton company, go to clearbridge.com to learn more. 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 Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment

decisions. Clients of Ridthold's wealth management may maintain positions in the securities discussed in this podcast. All right. All good? Everyone's good. Duncan, you okay? Yeah, I'm great. You good? Yeah. All right.

You got that microphone up there like you're in a recording studio. Like you're a backup center. Didn't mean to. Bring it down, bring it down to face level. All right, guys, we are in for a treat fan favorites. professional market commentators, strategists, economic experts. Ryan Dietrich and Sunou Vargas are back. Ryan is the chief market strategist at Carson Group,

an advisory firm with more than 60 billion in assets. Prior to Carson, Ryan spent more than a decade at Schaefer's investment research and six years at LPL Financial. Ryan also co-hosts a top investing podcast, facts versus feelings. Very confident in my assertion. Alongside Carson Group colleague, Sunoo. Snu is the chief macro strategist of Carson Group. 20 years of experience in the asset management industry.

Before joining Carson, he was a partner and director of research at Convex Capital Management, where he co-managed portfolios, advised clients, and led the research team. Boys, it is a pleasure to have you. Thank you for being here. Thank you. You. Have a pod? Yes?

All right. We are. All right. I'm co-host Michael Badnik, ladies and gentlemen. What's up? Good to see, everybody. All right. Alan Greenspan died this week.

I don't believe in this thing where when someone passes away, you're not supposed to say negative things about them. I actually think you should double down. Do you guys want to trash Alan Greenspan in any way or any opinions whatsoever on the legacy of Greenspan? It's a complicated legacy.

Oh, look at him. He's just getting warmed up. Do it. By the way, another thing on my bio there, I'm a third time offender of joining this podcast. Okay. This is my third time. This is your third.

That's the second. So thank you guys. The first one, though, is that birthday party you had with JC, remember? In February of 2004, we all went down to that dark basement. Oh, yeah, yeah. That was awesome.

Yeah, yeah. Sounds like you're talking very romantic all your voice. I've been told I have a face for radio. So I just, I go with it. So obviously he was well loved during the 90s. Market goes up. Everybody's happy. And then you look at what he did with the bubble and left interest rates maybe a little bit lower after the bubble.

And a lot of people now look back and say, maybe that contributed to the great financial crisis. Did it, did it, not? There's other factors to it, of course. But it's a complicated legacy. I looked. I know, I mean, we sent you guys a ton of charts, I know. but the one that shows the breakdown of all the returns. I mean, he was in charge of the Fed for 18 years, right?

He took over right before 87, good handoff from Volker, market crashes, gained 290% is 18 years, annualized. It's like, I've gone by memory here, like 7, 7 and a half percent. So standard, but he was the second longest tenured and second largest returns. Wait, hang on. He's not a mutual fund manager. Yeah, he doesn't get credit. He's not, but people, hey, and there's a financial podcast.

Yeah, I mean, that's true. But I mean, I guess, you know, so he was there a long time, did okay, but there's Stop telling me how much alpha he had. Wait a minute. Wait a minute. The reason I ask about the legacy is, well, we're going to put aside all the financial crisis stuff because it's ancient history. Although, interestingly, a lot of people don't know this, one of the Fed's primary responsibilities, people think the FOMC is the whole point of the Fed. They're actually a banking regulator.

I know. Sure. Okay. So putting that as a banking regulator where the chairman of the Fed, actively working against regulating. But we'll put all that aside. The legacy, really, to me, is an increased focused on asset prices at the Fed.

Some would argue that's where they should have gone because more and more of the economy is being driven by assets anyway. And I believe in that. But I think now we've been through several succeeding Fed chairs and the new Fed chair sort of is a little bit influenced by Greenspan, sort of a little bit Greenspan-esque.

He certainly wants to communicate less frequently. And he actually cited Greenspan recently just prior to his passing as somebody who inspired him. I'm curious, if you think as market participants, there's something that we should all sort of be aware of about this transition. What do you guys think? I think there's a myth that Greenspan didn't tell us what he wants to do. But he gave us a lot of, you know, a lot of speeches, for example. Apple on how he thought the economy works.

I mean, you go back to 94, and I would say, you know, I think most people would fairly say that he panicked about inflation, raised rates in a hurry. And 95, 96, I think he gave time for productivity growth to pull inflation lower. He started to cut off. He blew up California, basically, when he did that in 94. And then in 99, actually, May of 99, he gives a speech saying that, yes, we've had really good years of growth, productivity growth, all of that. But the labor market is site.

I'm worried about inflation. What does he do? Starting August of 99, he starts raising rates. Yeah. Right? And I think he raised rates by 150, 175 basis points over the next 10 months, something like that. And then I think getting back to your point, I wonder if, you know, that was the start of like the Fed put. Yeah.

You know, when he started dropping rates after that. And then we got the housing bubble and all of that. I think 87 is the origin of the Fed put. Yeah. It's really the first time in modern history where, the chairman of the Fed specifically does something and then says that it has something to do with not allowing the stock market turmoil to spill over into the real economy. And it works. We don't get a recession in 87. We don't have any problems in the economy until like 90, 91

with nothing to do with the crash of 87, obviously. And I think that's then becomes this new thing where the market says, well, the Fed's not going to let things get too out of hand because we know they're paying attention to the markets now. So that's sort of like, to me, that's where that whole thing starts. And then it gets taken to extremes in modern times. Yeah, well, my favorite quote, I've got it here. If I turn out to be particularly clear,

you've probably misunderstood what I've said. And I think that's great because he talks a whole bunch. That's a lot. Yeah, the Greensman said, everyone kind of nods their heads. Oh, okay, that's pretty good. And there you go. And like you just said, I believe the most recent statement, 130 words.

That was one of the least we've ever seen outside of like a, panic cut, not panic, but a cut during COVID. Then you've got to go back to like Greenspan time. So again, and I know the image of the statement, everything's read it out and crossed out. I mean, that's apparently we're going back to some of that Greenspan period, being more to the point. Callie hates this. So our chief strategist, Callie Cox, wrote a piece this week about less transparency,

regardless of how you feel about the new Fed chair. Less is not more because it's more uncertainty in the markets and could lead to more volatility. I don't know if I agree with. I understand her point and it's a well-written piece. I just sort of feel like the volatility is going to be here with or without the transparency because how often they change their minds. I think you have all the, it's not just one person at the Fed making the decision. I think you could argue maybe in Greenspan's time he had a lot of power over the rest of the committee. Now you have 12 members. Yeah. 19 and about 12 vote. You know, Warsh's, and that's a difference between, you know, when Worse stays,

you're going back to the Greenspan era. No, Greenspan talked about the economy a lot. He talked about how he thinks about the economy a lot as well. Warsh doesn't want to say anything, apparently. We'll see how long that lasts. But the rest of them are out there talking about how they think about that. He wants to preserve the ability to react to higher frequency data, meaning more real time is one.

And two, he doesn't want to have to explain everything they do. Because if they have to change course or do nothing when people, People think they're going to do something. He doesn't want everything to be telegraphed in advance. And I'm not saying it's good or it's bad. I'm just saying that's going to be the more profound difference. He wants flexibility. Yeah, he wants flexibility.

I don't hate the idea that if I have to explain everything to you, I'm probably not going to do a good job. And the Fed maybe got too explaining in the post-financial crisis. The press conferences, I think, were a lot. the 12 members going out and making speeches for for a month in between FOMC meetings contradicting each other. That might be a lot. And I think he wants to just put an end to a lot of it. So a couple things. First off, it's a small world because I hired Cali at LPL many years ago.

So shout out to Cali. Okay. All right. You love Cali. I've worked for a long time. That's great. So did I might disagree on this one because we usually agree. I remember a time when the Fed just was there and it really wasn't that big of a deal. And now I'm with you, Josh, every time you turn around, there's a different Fed member giving their opinion on something.

And I'm like, whoa, I didn't know the person that's part of the Fed. And I know a guy like Sonu, he eats it up. He loves it all. And he keeps me in a job. It keeps me in a job. That's true, too. I mean, I could live with less Fed, I guess. I do have a CMT behind my name charter market technician.

We'll get into my charts and stuff. I mean, I'd much rather just follow what the market's doing than what some various Fed member is saying they think's going to happen when the Fed doesn't have the best track record sometimes. All right. Let's talk about the market. I have a question of you, boys. That and I just got finished recording a podcast with Derek Thompson, and the meat of the conversation was, is to say, bubble.

Ryan, what would you say to that question? First off, I think you guys are almost up to 500, right? Congratulations. You're close, right? Thank you. I've probably listened to 400, give or take. You guys are awesome. Thank you.

No, don't think it's bubble. I mean, I know there's parts of the market that feels that way. We can get into the meat of this. We will. We will. But the short answer is no. The reality is these bull markets last longer than you think. I mean, I came on with you guys in February, 2004.

I looked at what we said. The title of it was something along the lines of why 2012 will still be good for the Bulls. That wasn't popular. You read the comments on YouTube. Markets up 47% since then. We came on with you guys last July. I think you made a joke about our weight. You said, why to stay overweight?

I know what you were doing with that title. But nonetheless. It wasn't me. Duncan? I said, that's a good title. That's a good title. Why to stay overweight or ways to stay overweight or something, whatever it was. But we're up 17%.

Well, I listened to you. I stayed overweight. There you go on. Exactly. That we all have. And I think we're still in this area where, yes, there's going to be volatility. The market's growing. But reality is these bull markets last longer and you think.

This bull market just cracked the eighth longest since World War II. What in the world does that mean? Looking at the previous seven, right? The average length of those, this one's about three and a half years old, by the way, starting October 2022. The average length of those other seven was like, seven years. The shortest was like five years. I mean... What are you measuring this from the low of the previous bear market? Yes. And I know there's flaws. It's very unofficial. Well, down 20% you have to

pick a spot. No, but you're saying there's bull markets and when there's a 20% correction. Is that how you measure it? Technically, yes. That is exactly what we're using. And it's quantifiable. And it's quantifiable. And I get there's flaws with this stuff. I totally understand that. We had near bear markets in 2011, 2018. It's good enough. Last year. We get it. But the reality is, it's like a cruise ship. So I've described it. Right. Bull market's hard to stop. They're hard to turn around. And that's like a cruise ship. Once they get past that third year, they tend to keep going.

And this is something we've talked about for a while, and there's more to it than this. But just be aware, I mean, just literally, what are we in June? So let's say about 15 months ago, most European stocks just broke out to new highs from levels they're trading out in 2007. So to think that, okay, we were just a year or so of Europe finally doing something, is just going to end? No. I mean, we managed a lot of money.

Like, what makes I think so not a little different? Yes, we have a podcast. Oh, I have a present. Oh. You talk. I'm a present. I forgot to hear the end of this. I don't even know what's like about my present.

We could do presents. That was amazing. We could do presents. I got to hear the end of it. We talked about the podcast. Right. And managing money. Oh, yes.

I'm so excited about the present, which I forgot to give you guys. We managed a lot of money. Present. Yeah. You know, we, you know, we, no, no. We talk about the stuff, do it. But when you're managing real money, Carson just cracked $60 billion, like you said, and we managed a lot of that. And it's hard to manage money.

It's really hard. It's really hard to manage money. It's really hard to have an opinion. We try our best to do both. And I think what's the reality is we're not going to – people bash me a lot for being bullish. Who? Twitter. Still?

Oh, yes. I mean, any tweet I do. It's like the market's been down a little bit in June. The market's up 15 percent a year for 15 years. Trust me, I know. You've been bullish for a long time, credit. I mean, yeah. I mean, so new was one out there in 2023, saying there'd be no recession. And I saw the reasons to be bullish.

But anyway, and I see these things. And you see like that cover of the New Yorker with George Washington all hung over, all beat up, says red, white, and kind of blue. It's not like there's excitement. Bull markets are supposed to feel fun, you know, and this one, parts of it do. Oh, get us the present. So there is, we live in a bubble culture where everybody is so, everybody's dying to see bubbles everywhere. And there's some shit going on in the market That obviously

Smells bubbly Like we all we all we all could smell it I can't even talk It's so exciting Wait put a bit What do you got there Indiana Jones What is that a rucksack? What is that?

Oh my gosh Oh right Okay Let me say this is cute Let me say Oh What do you think? What do you think?

Oh I need one too I mean, there's a Carson logo there, but fine, but fine. I love it. Fax versus feelings is my favorite podcast the way you guys do. I love it. All right. We'll wear it next time you guys come.

You guys are busts us up for the camera. Love it. All right. All right. So how quickly we forget. You know what was a bubble? What's that? 2021.

21. Mm-hmm. So I'm glad that an email, an email reminded us. It's like, guys, we just lived through a bubble. In 2021, Apple, the best of the bunch, fell 30%. Google 44, Amazon 56, Invidia, 66, Netflix, 75, meta, 77, Ark, the poster child, 80, still in a gigantic drawdown. We just had a bubble that popped, and we, like, pretend that that didn't just happen. It was the whole cycle. It was the whole bubble cycle, including the busted IPOs, including the really bad ideas about other asset classes.

That happened. We had a whole thing. I just wrote a piece yesterday titled, tongue and cheek. Hang on. Nicole, put this in my Rolls-Royce. I brought a couple of size. Yours or Michaels?

I got, man. I got back. Okay, here, hold on to this. And actually, I'm eight more in my bag for the whole team, so, yes. There you go. Feel free and use it as a pillow. Sonny, what were you saying? I don't know.

No. I was saying I wrote the piece. It was tongue-in-cheek saying how I learned to stop worrying and love the bubble. Yeah, very good. Very doubt but strange Lovian. Okay. So, so it's not strange for us to have made the amount of progress in stocks that we have

because we had the whole boom bus cycle recently. People are anchored to 2009 as being the big one. And they, I guess they ignore all of the volatility along the way since then. And a full-blown bare market in 2022 for mostly in tech, but elsewhere also. Okay. So your view is this can continue, but I know that there are always things that you're watching for. And what would change your mind, I think, would be the big question. I'll go first.

So more of a technical point of view, right? 2021, yes, everyone's making money. We all have money from the government, day trading, gambling, all that stuff. It felt a little crazy. And then in the fourth quarter, 2021, consumer staples started to rally a lot. They outperformed. Low volatility led by a lot. lot in the fourth quarter. I remember this. And not, well, J.C. was talking about it. A few technicians

were talking about it. Most people were just having fun, making money. And then, yes, the war happened, and that, you know, obviously contributed to a lot of it. But still, I think the market was giving a warning sign that something was changing under the surface when you look at these trends and these technical things. And then you fast forward to right now, I mean, equal-way consumer staples, relative to the SB 500 just on Monday hit like the lowest number, the lowest level in a long time. So we're not seeing that. We're not seeing low vol. I assume he's got a lot of thoughts. Did the rally in Staples in, in 21, coincide with the beginning of the rise of interest

rates? It was before that. It was before that. So the market sort of knew that the Fed was going to have to do something. I think inflation is a problem and the Fed was late. Right. Okay. All right.

That's interesting. But there's no sign of anything like that right now. Let me offer one piece, let me offer one piece of evidence for why this. for why this might be a bubble. And for the record, I don't think this is a bubble. But if I would have point to one thing, maybe it would be this. So Micron reported yesterday, we'll get into the numbers, which were outstanding. Micron's market cap is about to pass meta.

Does that sound right? Like literally, they're both $1.3 billion. Well, this last quarter, they made more profits than Nvidia made a year ago. It's a good business. If you can get it, right? But I think it's actually, you know, I, think this can continue. I think there's unlike 2021, there's a real economy story here too. Right. There's a macroeconomic story here. You look at even within the GDP data, you look at

information technology equipment plus software. You know, that's almost 5% of the economy, 5% of GDP. A few years back, it was about 3%. That's a big increase for a relatively small piece of the economy. Here's what the bears would say, we stopped talking about the circular financing schemes with Nvidia because that was not a, that was not, didn't turn out to be a great bearish trade. However, things are only getting more circular with Amazon now doing deals with OpenAI. And it's like this click of 10 or 12 companies. Meanwhile, those 10 or 12 companies are turning over not only all of their cash flow, but at this point, most of their revenue to two companies.

One is in Taiwan and the other one is Micron. And basically... And a couple in South Korea. Right. So you have the 10 biggest companies in the world saying, here's all our fucking revenue for the next three years. We're giving you guaranteed deal. We're just going to give it to two or three companies

in the Far East for components that apparently are so critical that one of those companies is now the ninth largest stock in the world. But how is that a bare case? The bare case is microns incredible earnings and revenue growth are predominantly coming from them being a choke point and just raising prices. It's not volume. They're not making more.

They can't. It's inflation, right? Isn't that good? Well, 60% plus growth in average selling price. Are they going to do that next year? They said today, the year after? They said, we now expect supply demand conditions

for both DRAM and NAND to remain tight beyond calendar 2027. So last night they reported $41.5 billion dollars of revenue, up 74% quarter over quarter, 364% year over year. Very bullish if you're micron. So, chart kid showed the, since January 2025, the earnings, the forward 12 month forward earnings

is up 1440%. The stock is up 1,300%. Like, that sounds like in line with what you would expect. Investors pay up for growth. They're not going to pay up for, you're getting profit growth. And they're getting it. Yeah. But that the other side of the coin is inflation.

The question is, is it sustainable and or will companies ultimately figure out a way to do this and not pay as much for memory or not pay price increases from here? Will companies use their technological ingenuity to get around these bottlenecks in the future? The market is saying no right now. The market saying they can't. Mark it might be wrong. Back to Greenspan, right? December 5th, 1996 was the famous irrational exuberance speech, which apparently he came up with words rational exuberance in his bathtub. That's what that's what they said. But yeah,

the S&P 500 went up more than 100% the next three years. He was four years early. Exactly. NASDA went up over 300%. So I know people have heard this before, but it's good to remember that. Yeah, the market was overvalued then because he said it was and a lot of people thought it was. And that's right when I started. So I don't remember it exactly, but read a lot of the history books. And you look at the things now. I mean, again, we titled our outlook start of the year, writing the wave. Our mid-year outlook comes out in a couple weeks. It's still writing the wave. Creative, I know. But when we look at it, we still think it makes sense to have exposure. We're slightly overweight technology here.

You know, to just say it's a bubble, maybe, but it's that bad. So I don't think the issue is that it's a bubble. Micron's 9.5 times earnings. Not anymore. It's way higher, but keep going. I don't think it is. It is. I don't think it is.

But either way, if it's 10, it's 11, I don't think the issue is that it's a bubble. I think the bigger question is, think about how. fast things are changing. And we have short memories. Like one year ago, there was a must-own stock. It wasn't Micron. You remember what it was? Everybody had to own it.

It was the consensus. Palantir? Palantir. Okay. How's that doing? It's not 50%. Right. It's down 100 points, 207, 107 in nine months.

And this happens all the time. The good news is the rotations in the market are powerful enough that we get bailed out because just as one group loses favor, another group rises to take its place. So the software stocks had been a drag on the market. Finanials are making up for it. And now they're all at 52-week highs. Can I show you, boys a chart? Yeah. Yeah. John, 19.2, please. All right. So, since 2018, any time the rest of the market outperformed the Mag 7, the market was in a deep drawdown. Right? Makes sense. Right. Right now. Now, over the last 27 days, the 493 are outperforming the Mag 7 by 18%.

That's a gigantic spread. In fact, it's the most that we've seen since 2018. And the market is basically at an all-time high. I cannot possibly think of a more bullish development that the Max 7 are absolutely breaking down. Microsoft looks like death. Microsoft relative to the spies is where it was in 2019. All of the outperformance of the last seven years. Goodbye.

the fact that the market is remaining as healthy as it is, with industrials ripping, with regional banks ripping, and the Mag 7 getting there, you know what, kicked in. I think it's fantastically bullish. You think rotations have been like the most important factor? I'd say momentum is actually doing really well, despite Mag 7 is not momentum. So you are seeing a lot of dispersion.

You know, microns 12% of the S&P 500 momentum index. But then this is where things could be stretched, right? You look at the excess performance of momentum, S&P FIRE, momentum over the S&P FIRE the last 12 months. You look at the last 40 years, it's at the 95th percent. That's stretched. Last three years, last three years, it's at the hundredth percent time. Right.

Right. So momentum is definitely a stretch, and that gets to, you know, now it can, you know, what stretch can continue staying stretched. I wonder if we've ever seen momentum this stretched where there was an actual justification from earnings growth. because I could picture other times when momentum was stretched, but the quality wasn't there. Like in this case, we're saying momentum is stretched,

and then we have a company like Micron go from a billion dollars to $24 billion in quarterly earnings. And it's like, oh, yeah, momentum is stretched because this is what these companies are doing. But then it gets back to your question as to how long can that profit growth case continue. Josh is so right, because I think when people hear the word momentum, it has a negative connotation. They think of junkies.

These dummies are just chasing. There's no fundamentals to justify it. They think of like Sam Altman launched a nuclear reactor company. That's what they think is momentum. And then you look and it's Corning, which has been in business for 150 years. And it's like it's Caterpillar,

one of the top momentum stocks in the market. It's a hundred-year-old company, Blue Chip, Dow stock. So when people hear momentum, the immediate assumption is this is going to be some freaky biotech stuff or it's all semiconductors and it just isn't. It's large caps too, right? It's one thing for small caps to increase 100, 200% in a few months.

But now you're seeing that with your microns and sandisks and, you know, SK. Heinex. By the way, I said micron was $1.3 billion. I'm obviously, I meant trillion. It's a trillion. Yeah, truly. Yeah, truly. Let me ask you guys this.

So I want to show you, so just to sober up a little bit, two charts, the first one from Warren Pyes, chart 13. So Warren shows, he says historically, semis were priced as a cyclical industry. As margins peaked, price of sales ratios would fall. Over the past year, though, seven multiples have exploded as margins hit all-time highs. Either the industry has become less cyclical

or it is a sign of exuberance. And it better well be the former because the next chart shows the evolution of the global fund manager survey that Bank of America does. And we've never seen anything like this. The top line. It's everyone says, not everyone, the most people have said long global semis are the most crowded trade.

There's nothing else on this list that's even close. I guess US growth stocks in 2020. But everybody, everybody, everybody is all the way in on this trade. And it's not just semis. He's mentioned industrials. We looked at all the constituents of every single sector. And I think there's a chart in there. But it looked at the, you know, weighted average.

How many of them are correlated with tech? Right. And even for industrials, you know, more than 40%, 50%, have a large correlation with tech. Same thing with utilities. Yeah, it's all one theme. Yeah, it's all. But then you get out into sectors like healthcare and there's zero. Right.

And healthcare looks great. Yeah, right. Right. That's the other, especially recently. Do you guys worry about crowded trades? Yes. I mean, I think, you know, I love looking at sentiment, right? If everybody's thinking alike, somebody isn't thinking, General Patton.

And so there is something there, but I do want to rewind for a second. You're talking about rotation. On Tuesday, S&P was down 1.4%. You had 285 stocks in the SP 500 were higher on Tuesday. Only five times going back over 20 years. Have we seen a day where the SEP was down more than 1%, but more stocks were up and down? So we all understand why.

That was the day tech was imploded, but other stuff did well. Just yesterday. We're recording this Thursday. Just yesterday. Wednesday, market was flat-ish down a tad. 315 stocks at the SP 500 were higher, right? And today, and we're not done doing this. Markets down a tad, at least S&P is, but there's still more stocks up.

So I think it's encouraging this rotation we're seeing. And I know everyone on TV says it. It's kind of boring. But for listeners, I think it's really a good thing because, yes, you get excited about the gains we've seen, the big IPOs, tech doing amazing, momentum's 99th percentile, this and that. But to still have a diverse portfolio and own things, like we've been saying for a while, and people didn't like it when we were saying it a month ago,

but industrials, financials kind of, you know, have like a paired trade or barbell trade. Yeah, you get your tech over here. own some other cyclical things over here. We have low volatility. Yeah. Nobody wants that shit. Yeah, nobody wants that. But given you a correlation point, so I own tech, I own industrials, I own utilities.

It's all tech. Yeah. It's all that high. Hey, Mr. Kramer, am I diversified? No, I'm not. No. It's one theme, right? And that's why when we started, you know, the year, we were writing on momentum.

We still are. But the more momentum gets stretched, we are more comfortable holding things like low ball. Well, I like that you're saying that. because this is where we are in the market. And Josh, you're going to love this one. Listed options on the Roundtill T-Rex, 2X, long DRAM, daily target ETF are now available.

So let me stop that one more time. The Boys at Round Hill launched the greatest ETF of all time, most successful launch of all time, maybe including IBIT, I don't know, whatever. DRAM, genius, launched it at the perfect time. It's now $20 billion assets, maybe more credit to them. So then they launched RAM. which is if some DRAM is good, 2X is better.

Why not? Okay. But now there's options on the 2S. I could buy calls on the 2X? Yes. What am I talking to you guys for? This sounds like South Korea. Guys, you could buy calls on the 2X DRAM.

If we are not near some sort of a local top, like I know this should last a lot longer. There's a lot of enthusiasm here. So I have a, you know, theory that if we do see rotation, sustained rotation, not just week in or two weeks or anything. If you see a rotation for about six months, tech is not doing well. Let's say tech is flat for the rest of the year and your health care comes back.

Healthcare is outperforming, financials are performing, maybe even comm services to a degree. I think then the AI trade is done. It's sort of like even same thing. But what's the AI trade? This whole group of stops? Yes, this whole momentum, basically. If you take momentum, it's basically an AI trade right now.

But Nvidia's not working at all. Well, they're still up about what, 10%. It's not Micron. It's not working. I mean, yeah. It's sideways. But it's, you know, you have micron in there. You look at the momentum index.

It's micron. Alphabet, you could argue alphabet's not really working either. But then, you know, number five down the list list is lamb research. Right? And then you have sandisk. You have AMD. It's all those names. It's all those things.

Yeah. Terodyne. KLA. Application infrastructure. It's a very long list. Where does the puck go then? if these stocks take a break, if these stocks cool off,

and it's been a really long time since they have, but we're seeing the hyperscalers take a break now, and it's been about six months. So let's say these stocks take the second half of the year off. Where do people go? Small caps. I know you're watching the ratio. Yeah, they've already gone to small caps, I guess you could argue.

I don't think most people realize. It could be early. Yeah, I mean, Russell 2 is up 20% for the year, give or take. I might close an all-time high. At least S&P 600 is going to close an all-time high. I think today that they were doing this. Ryan, your technician.

I'm going to hold up my computer. That's IWM-SPI. Yeah. How's that looking? Yeah. On a relative basis, it's breaking out. Also, if you look at the SP-600, advanced decline line,

so it's a cumulative base. I mean, stocks going up or is down every single day. Just yesterday, on Wednesday, that closed an all-time high, along with price. The way I learned it a long time ago, breadth leads price. So we are seeing plenty of market breadth and small caps. Why is that?

Well, community banks are breaking out, like Josh, you just said. Regional banks are strong. Biotech's going crazy. Those are big components to small caps. So I think, again, it's all part of this, let's say, the AI, large cap takes a break. Yeah. I don't think that's crazy, you know?

No. And I think it's important. It'll be weird if it doesn't take a break. It'd be weird if it didn't. And you probably would want it to take a little bit of a break. But to see the leadership coming from these other areas. And again, it's more, I mean, if small caps are going up, again, call me old fashion, I think that's usually a good thing because they aren't a little more domestic by nature.

There's a lot more small caps in our large caps. That's why, again, with the portfolio, you should have a little bit of everything in there. Don't try to be a hero. We're still overweight equities. And overweight momentum to an extent. Overweight. Yeah. And overweight.

How many financial advisors work at Carson? We have over 600 financial advisors and I believe 44 states. How many do you guys, are you guys able to talk markets with on a given, like, let's say a monthly basis? Every Monday morning, we have a call with 150. So, all right. So their clients, so the advisors' clients are doing very well right now. Yes. Okay.

We're happy. What kinds of questions? Are you getting nervous questions from clients relayed by the advisor? Like, it's up so much. What do we do? The most recent question of the most popular one up with, like, last week was how do we get into SpaceX? Okay. Wow.

That makes sense. Okay. Are they still asking? Back in it as much as you want. Well, wait until Anthropic and opening icon. It's not done yet. Yeah. But the questions are still skepticism.

Well, it's not how much should I buy. Right. For the most part, or what do you think? I know Lizanne Saunders has said this before, and I'm going to say it as well. But, you know, I get to travel and present for advisors and clients, room full of people. You do your dog and pony show for 45 minutes and his 15 Q&A. I've never in the last couple of years been asked, hey, this is pretty good out there. How high is this going to go?

Now, when is it all right? The dollar is going to lose reserve currency status. Oh, my goodness. Look at all the debt we have. We can talk about that stuff, too. The interest rates, all that, the standard stuff you think, because that's what you see on, you know, TV or you're reading about. Again, it just comes back to, it doesn't feel like people are really enjoying. But wait, hold on.

But I think the point that you just made is really important. I don't think we're ever going back to that world where everybody is cheerleading. I think the way the media and social media and everything and attention works, it's never going to be everybody's all in. It's just never going to happen. So if that's what you're waiting for as your signal to, okay, now everybody's in, it's over. It doesn't work that way anymore. People will fight this the entire way.

Yeah. I think you get the other question, like, oh, is the dollar loo? using reserve status, should I buy gold? Right? So those are very common questions. But you could have gotten those 15 years ago. Yeah, yeah. No.

I think the bearishness comes its manifest in that sort of way. What do you guys make of the gold and silver unwind? This has been like violent. I think that's a sign of real yields going up. The Fed becoming or perceived to be more hawkish. You talk about whether they think they'll raise rates or not. But yeah, I think real yields going up, that's hit gold. And I would argue maybe even crypto for that matter.

I know gold ran into the war, but since the war started, officially, gold is downed quite a bit. I think it was an inflation story, and inflation picked up. Suddenly everyone was like, they priced out no more two rate cuts. And now they're pricing in rate hikes. I think that's a headwin for gold. So in our tactical models we run, we added some gold allocation on this, I think it was March 31st, 20203. Right after the regional bank crisis. We didn't look at it like, we looked like gold will do better than bonds.

That's kind of how we looked at it. So you got a 60-40 bucket. We're probably 68 to 69% equities and called 31, 32% other stuff. And we added some gold there. Obviously, it's worked really well. You took from the bond allocation to add to gold. Well, do you remember how we did it exactly? Yeah, we have a little bit of cash allocation.

So technically it's even, but we want a protection. We don't want to add duration. So long treasury. So we said, okay, what's another long duration asset that can protect the portfolio in a crisis? Gold. And I think we talked about this last year with you, just saying we thought rates would stay a little bit high. higher. I thought the economy do a little better. We've been saying this is an inflationary growth environment. Inflation might run 3, 3.5% this year, but the economy's going to do well. I mean,

some of this stuff's playing out. Now, we actually just sold some of our gold allocation in our tactical models for the first time. Again, since we added it way back a long time ago, and it's like gone straight down every day. And so new was one pound on the table saying, look at real yields here, going higher. You know, there's something going on here. And that goal's not going to like that. And that's clearly what has happened in a big way. Now I see gold. I think you cracked 4,000. People, we're starting to dog it a little bit. Maybe there's something there,

but it's still an area that makes sense from a strategic point of view to have a little bit. We do have it in a strategic portfolios a little bit, but we almost sold most of it out in our tactical portfolio.

I want to do one of your charts. John, can I have chart eight? You're showing IT equipment and software investment as a proportion of GDP is now larger than during the dot-com era peak. The charitable way of thinking about this

is that the portion of digital activity in the economy is significantly larger. So we shouldn't be surprised to see equipment and software investments be much higher than back then. But maybe it's not in absolute terms. It's in a proportion of GDP terms. So I don't know. How would you think about whether or not this, because that in and of itself makes me want to sell Dell, which is one of the best stocks of the year.

I don't know. How would you think about this? But it's basically investment spending. right, investment in information processing equipment, including things like chips, and then investment into software. Right. So all this is investment. And then, so within GDP, you have two sorts of investment, broadly speaking. You have business investment, which is part of mostly the stuff. Right. And then you have residential investment. During the housing bubble, you see that yellow line screaming all the way up to six and a half percent. Look at it's like half a McDonald's logo. Okay. You're hungry?

Well, that's more extreme than both the tech bubble. Yes, but it was a relative movement, the delta, right? How fast did it go up? And I think the green line going up as fast as it is right now, that's the key rather than the level of it. Okay. If we see... And I think it continues.

Going back to the point, even connecting the markets, will this continue? Yes. I think once earning season comes out, you know, during like July, these hyperscalers will tell us, oh, we're spending even more on this stuff. Could this green line match the peak of that residential? bubble, which was, it looks, six and a half percent of GDP was residential housing in,

what is that? 2005? 2006, 2005, yeah. Could, could this conceivably get there? Maybe. I mean, what's not included here is data centers, construction related to data centers. That's not included in this? That's not in this.

So what is this? This is IT equipment, computers, things like that. Oh, this is just buying servers. Yeah, and then software, too. So the construction of the data center is not. Separate. You add that we are starting to get closer. So, don't you think it's remarkable that the economy has been as resilient as it is with the yellow line residential spending absolutely in an ice age?

Like, what if we get a little bit of a comeback in housing? Well, that's the goal with, you know, keeping rates low. I guess Warsh talked about it, right? He says, you know, he thinks rates are tight if you look at the housing market. Yeah. I mean, they're definitely restrictive. They're restrictive. Of at least transactions.

I want to do another chart of yours. Chart 11? This is interesting. I imagine you guys have an emerging markets allocation, equity allocation. What you're showing here is emerging market earnings forecasts have risen even faster than in the United States. That's Bloomberg. So what's the tale of this chart? What are we learning from this?

Oh, it's same memory chips. Just how global. How global it is. PSMC. It's that AI trade. You surprised to see emerging market stocks doing what they're doing this year? No, once you break it down, most of it is driven by South Korea and Taiwan. Okay.

India's struggling. We're getting a lot of lift from, again, the AI CAPEX team is taken over EM stocks. Yeah, I'll say this. Like two years ago, I would be a little surprised because, you know, I used to think of emerging markets in the old days, like a lot of commodity-based things. The commodities done pretty well, but clearly it's been more of the AI trade. John, we kind of hinted this. I don't know the number, but the one about the June Swoon. We sent that chart to you, the June Swoon. It's incredible when you think about June historically, isn't that great of a month? Okay, we all know that

during a midterm year. It's the worst month of the year. Okay, that's fine. And it's a second half of June when the trouble happens. And sure enough, right on Q, I mean, like right on Q, this is happening. And you guys should mention July. Sonia just mentioned July. earnings, you know, stock traders, Almanach, Mr. Hirsch, there we go. Jeff Hirsch, been all over this. He says, you know, this June Swoon is actually a good thing because you get some selling, you get some weakness out of the way, and then you get into July. Now, you can pick a reason why. I think it's because of earnings. The last 20 years, July has been by far the best month. I think it's higher either 12 or 13 of the past years or 13 of the 14, 13 of the 14 past

years. Whatever it is, we get to earnings season in July. You get this little June swing in the late July, then you get your higher movement. Like Sonu said, and we've been thinking, we're probably going to get more good news on earnings. I mean, it says what it is. I mean, I know the historic beats we just had three months ago. I love to have to apologize. It is what it is. Yes.

It's just like, you know, but those are. A record earnings. It is what it is. How dare you say it should be healthy. And then profit margins. I don't know if we mentioned the margins on Micron when we started this conversation, but was 84% or 85%? They said next quarter to be 84%.

That's unheard of. Dude, the revenue, the revenue is 41 billion. The operating expenses are like $2 billion. Yeah. Yeah. But, yeah. But obviously, it's more expensive. But that's, it's unbelievable what is happening with this business.

There's, I mean, we've never seen anything like this. A year ago. Yeah. No, I'm sorry. Back in April, I asked Chartkin, hey, this is like wild shit. Show me Micron's earnings over the last 12 months. At in April of 2026, in March of the year prior, earnings were $9 a share. and then they were 86

and that was three months ago and now they were 132. Like we've never seen something I've never seen anything like this. It's a step function, right? What did you make of how much stock they're going to buy back and I think they retired

a big chunk of debt? They had like $14 billion in debt. They bought back $5 billion of it. I mean, at least, I guess that the answer is not only these companies seeing record results, they seem to be being somewhat responsible with it.

I don't know if a buyback is the smartest than I don't think they did any buybacks recently, but they were asked on the call. No, they authorized a new one. NVIDIA announced a dividend increased last time. So they were asked a lot about their capital, about their capital program. Remember, I don't know why I just thought about this, but Commander Zero and Blood Diamond, I'm sure you guys are very familiar with that movie.

He just had so many diamonds he didn't have to do with all of them. It's sort of like, what do these companies do with all the cash that they're producing? They have no idea what to do with it. It's almost ridiculous to buy back the stock. But one of the analysts were saying, just buy back 10% of the float. Like, just do it now. Like, why not? It's only some of them, too.

Most of them, actually, if I had a chart in there showing equity supply, that's actually a reverse. We're net equity supply is now positive. Let's talk about this. Here we go. What are we looking at as? This is from the Fed, equity issuance. Is this a headwind? It's got to be.

I don't know if it's a headwind, but you're, you know, you're increasing supply. So for the first time in 26 years. Well, 2021 was positive. That was the IPO boom. Boom. Yes. All right, but we've basically been in a situation where floats have been shrinking. Yeah.

Companies have been buying back stock. For about two decades. They've been borrowing to buy back stock. So buybacks are dead. John, go to chart. My God, you boys. We got a lot of charts. And this is going to increase because Q2, you know, SpaceX and, you know.

This is a crazy visualization. It is. It's going to go higher. John, 26. Yeah, it's going to go higher. So Bloomberg did a chart, big text, but disappearing buybacks. Alphabet, Meta, Microsoft, and Amazon. The only one that is buying back shares.

right now or Microsoft, and you've got to figure that that's probably going to zero two. How is this not a headwind? They were buying back a lot of the stock. Guys, Microsoft is in a 35% trydown. Of course. You can argue it already is. We've talked a lot about the Mag 7, how much is underperformed. I mean, Google just had, you know, $80 billion.

That same week that SpaceX came and raised $75 billion. They raised $80 billion in equity. S.K. Hynix is going to do a $29 billion, I guess, re-IPO here in this. the United States. Yes. Right. So they have a publicly traded company in Korea. They're going to issue like $30 billion worth of stock here.

So that, no, not ADRs, a listing here. Oh, really? Wow. Yeah. I can't wait to trade options on the double. Because they already have, I think they already have ADRs. This is like we're listing. I forget if it's the New York stock shares in NASDAQ, but they are going to drop another

30 billion worth of memory stock on U.S. investors. Like, I think it's imminent. So we went from the stock market to shrinking. everyone's grabbing for whatever equity exists out there. Now the flows have reversed. We're growing the pie of available shares. That was a real cash on the sidelines. The cash on the sidelines was cash with corporations,

especially the big mega-cap tech companies. That was a cash on the sidelines. So what did they do with the cash bought equity? Now you think about that cash is no longer. It's going to data centers. So there is a real economy thing happening. They're spending it, investing. That money is going to other companies.

that's their profits, right? But you're losing, you know. Is that supply responsible in part? I know it's new. Responsible in part for what could be a continued shrink of the multiple that investors are willing to pay? Like, theoretically, there's more shares they could buy they can invest in. Why would they pay up for just a small handful of companies?

Possibly. I mean, you know, then you think about like EPS, right? Yeah. What happens to EPS? I mean, you know, if the number of shares. are going up. Less earnings per share. Less earnings per share.

Very good at math. Yeah, exactly. All right, let me show you guys this. So a couple of weeks ago, we showed a chart the amount of market cap coming between SpaceX, Open Eye, and Anthropic is more than all of the combined from 97 to the top. And that was a true IPO mania. John, chart 23, if you will. So Chart Kid looked at the aggregate IPO proceeds.

So not market cap adjusted, but the amount of money that actually came to the market, because we're talking about supply, right? So how much money do these companies actually raise as a percentage of the market cap at the beginning of the year? And we are not through, we have not seen Open AIA anthropic, but we are like one-tenth of where we were in the 90s mania. So 0.18% of the SP500 market cap at the beginning of the year has come up. come through new issuance. Now, if you look at the market cap adjusted, next chart, please, it looks a little bit more like what you would suspect, right? It looks a little bit higher.

And if we get open-a-anthropic, it is going to approach the 90s. Like, let's just be real. Then you see 99-2000 in there with the highest bars. So it's good to approach it. But I think you do have to adjust. Yeah. Or normalize it. Yeah, what we call it dominator blindness, right?

If it talks about the numerator, let's talk with the nominators. But that's the question. It's like, can the market support? So you don't seem to be particularly concerned about the growth in issuance. It sounds like you see it as, you guys, it sounds as though you see it as, okay, fine, but the money being raised from all of this is going right into the real economy. That's the positive way to think about it. And profits, yeah.

Okay. And it goes back to, you know, we've sort of thrown the towel in on timing it. It could be a bubble, maybe five years from now, who knows, We may look back in the spirit and say it's a bubble. But right now, investing, it's like that's meaningless. Also, a lot of the people that are negative about this are the same people who said, I don't like financial engineering. True.

Well, this is the opposite. Now, now we're robbing from the stock market to create jobs. You don't like this either? You know what's so maddening about this? Right now, we're living through history as investors and it's really fun and exciting. And it feels like we should know what's going to happen next, doesn't it? Like, doesn't it feel like, wait, how do you, how do you four guys not know that this is a bubble? Morgan Stanley just said that Tesla's revenue can hit $3.4 trillion by 2040.

How do you guys not know it's a bubble? And I'm sorry, future listener in five years, but I don't know. Yeah, no, we've thrown the towel. Like, we can't time it. So then that's why we like, we want to ride that wave with momentum. But also the more momentum keeps going up like this, we want to increase the size of our diversifiers too. Do you worry about inflation? Yes.

Flatening yield curve. Always. He's always standing. I don't mean generally if you worry about it. I mean right now, do you see that? If you're not worried about issuance of equity, which I totally get the argument, is this the real thing to be focused on? Do you think?

We do. At the start of the year, we were thinking inflation was broadening out. Sony who looks at 178 core components or components of the core PCE. This is before the war started. And we were seeing things broadening. now. And then the war obviously started, and inflation did what it did. But you still look at Core PC, and it's still trending higher, right? It's not just about services. It's not just about goods. There's an AI bottleneck that's also pushing things higher. Let's do that chart, John,

it's 29. That's like micron's margin expansion is Apple's inflation. Yeah. All right, so Apple had a horrendous day today. Right there. Yes, it did. Yeah. Apple fell six seven, right? What, six or seven percent? Six percent. Apple fell six percent. It's the biggest, one of the biggest stocks in the world fell six That's a lot of market cap. That's directly related to them. Keep this chart up. That's directly related to them telling the public, hey, prices are going up for a consumer technology. What do you think that the price would rise on that?

So what is this exactly? This is the personal consumption expenditures index for computer software accessories. Things like your tokens and stuff would be represented here. So this is the growing profit margin of the companies that are selling chips. It's the same coin. It's just the other side of that coin. And Apple's customer is going to pay for it. Yeah.

But that's inflation. That's inflation. I mean, there's real as inflation debts. It's like one company's margin expansion and somebody else's inflation. Okay. And this all comes up. Is it alarmist to like look at that and say, oh boy, or look at what Apple said or is there a mitigating factor? What do you think?

To me, there's mitigating factors. I mean, it strikes you when you look at that. I mean, I'm kind of a simple person. I like to look at two things into the day that I think will help me understand what's going on the market. First is advanced the Klein lines. Second are the credits markets, right? Advanced the Klein lines are literally like hitting all-time high as time we're doing this on small caps, on mid-caps, S&P 500 is close. The New York Stock Exchange, common stock only, is very close at an all-time high. You tend to hit new highs in market breadth, and the market peaks on average about 11

months later. Now, listen, it's average. I can give you a time. It was shorter. Give you time. It was longer. So we have that. And you look at credit spreads. I mean, credit spreads on triple B spreads and investment grade corporate spreads. There's not a lot of fear. I say there's a monster. under the bed. Credit market's going to know it. That doesn't mean some of these industries aren't going to get over the top and have big implosions. But big picture, those are the things I think we need to focus on. And to me, those matter more. And at the start of the year, I mean, again, getting back to kind of we talk about this stuff, we create content, but we also manage money. At start of the year, we positioned our portfolios for a higher inflationary

world. We added managed futures. That's been a very dirty word for a couple years because they haven't worked at all. Managed futures down really well in this environment. I know gold's come back, but we had gold for a while. We did sell gold before it really started to break down. Yeah. We had less bond exposures we talked about. And you know, it does well. And inflation's kind of high stocks. And I get it. We can pick some years that hasn't happened. But historically, stocks do okay in a higher inflationary world. So those are where we are. But then Sony like kind of build on this, we don't think the Fed is going to cut. I know everybody kind of jumped on that bandwagon. Start of the year, we said we didn't think the Fed, I meant to say hike. At the start of the year,

we think the Fed was going to cut. Because the question was, how many times is the Fed going to cut? It wasn't like when. It was how many times? Everyone kind of had that walked in. It was one or two. And we went against that. We said, well, they might come up. It's going to be harder than the market thinks. Unfortunately, that's played out. Now we're the, I'd say, 180 of that, where now it's like

how many times are they going to hike? And again, Sonu's saying they probably aren't going to, and why is that again? I know the dot plot shows the, you know, the hawkish pivot, but count the votes, not the dots. Crude oil just fell from 120 to 70. So if that was the urgent reason to hike, you don't know, do it with that anymore.

I think core services, excluding housing, is running hot, right? I was looking at the numbers today. It was up in May, 0.5%, which is 6% annualized. Last three months, core services outside of housing is running at 4% annualized. I think the Fed has an inflation problem, to be clear. I think they have an inflation problem, but I don't think they're going to cut, which means policy, or I don't think they're going to hike, sorry, which means policy is actually getting easier.

They're basically going to run at home. odd, that's good for the economy. I think that's good for now. I'll look at this chart. Guys, 33. An inflationary period is not necessarily bad for stocks unless the Fed gets really hawkish in a hurry. So the point that you're making, the pace. Yes.

We could survive a hike every few months and a few meetings without one. Yeah. We can't do another 50, 50. Oh my God. Now they're doing 75. Now they do 75 again. Obviously, we ran that experiment. It doesn't go well.

You don't think that that pushes. going to come to shove and we're going to have to do that. At some point, it could. The further they fall behind the curve, if inflation stays elevated, then I think when they're trying to catch up, then we have a problem, like 2022. Right now, if they went, let's say 25, 25, let's say they hike 25 in July. I think the market has a little bit of a, you know, turbulence, but I think market gets over it because all the hyperscaleors say we are still going to spend two and a half percent of GDP

on this stuff. That's what matters for profits. I think it's okay. But let's say get into 2027, inflation is still elevated. Suddenly they're like, oh, oh, we've, you know, we've had two. We've had three percent inflation for seven years now. We got a hike. I think then it becomes a problem.

I think then the Fed could potentially kill the bull market. Okay. We've done a lot of charts. Now we're scraping the bottom of the barrel. Let's just hang out. What do you guys want to talk about? John, if you please. Soccer?

No, no, no. Can I scrape the bottom of the barrel? That's good stuff. 34, sir. Fire. Can you tell a story of what just, what just happened here with Bitcoin. All right.

I'm showing you Bitcoin versus regional banks. Regional banks are the hottest trade in the market right now. That's not memory, right? Aside from memory, these stocks are breaking out. We wrote about this today. To me, there's signal in regional banks. These companies are extremely reliant on people paying their bills, regular people.

There's no capital markets in, in these. stocks. These companies are doing home equity lines of credit, doing credit cards, doing auto loans, they're doing small business loans, middle market credit. But like the lifeblood of the economy, when these stocks are breaking out, it's very hard to make a macro doom case. Okay. I'm juxtaposing that with whatever the hell is going on in Bitcoin, not because there's any real relationship other than they both purport to be the financial system. All of a sudden, Bitcoin just like fell through a trapdoor in January. Nobody seems to have a great reason why.

I do. You have a good one? Yeah. Okay. Well, I'd love to hear what it is. It's this. What's that? Bitcoin gold?

It's software. Oh, Bitcoin's trading like software. Bitcoin is software? Yeah. All right. The other one I heard is people needed to. liquidate digital assets to buy SpaceX and eventually. I know it's not, it's not, it's not maybe the most satisfying answer.

It's software. It's code. It's trading like the biggest, like a gigantic software stock. Good enough for you. Yeah. I think I mean, I think you have real yields going up. Same reason gold has come down. Well, there's not too.

The whole debasement trade, right? So Bitcoin was gold. Now it's not gold. Now it's software. It was both. Like that. It was both. All right.

Well, I'll change you on a regional bank. Community banks, so even smaller. They're breaking out. I'm going to talk about this a little bit ago. I looked at that today. But it's like, you know, I'm with you, Josh. I mean, I like to look at the big macro picture to tell stories. We're storytellers into the day to a degree.

And when community banks are doing what they're doing, regional banks do what they're doing, and the large caps are probably, larger banks are probably going to follow now is what it looks like. I know Bank of America has done it. Some other ones have struggled, yes. But those are, those just bigger picture positives. It's just what it is what it is.

I mean, we've remember older, older listeners, you know, 2006, 2007, financials were breaking down. They were weak. Yes, the market was hitting new highs. The advanced decline light had already peaked and rolled over. And then everything fell apart with the GFC. Well, we're not seeing financials breaking down. We're seeing smaller financial stocks do well. So it doesn't mean you can't have a... JP Morgan made an all-time record high today. Yeah, and he got a tour of the office. And you guys, you've probably seen it. It's amazing office. And they went over to the new JP Morgan. Yeah, what you think? It was great. Yeah, it's pretty cool. I think I'll take my kids there tomorrow.

Guys, look, one more, Microsoft and Bitcoin. Yeah. There you go. They're very. They're very very similar. Or to do IGV, yeah, exactly. But to your point about community banks, I think part of that is you mentioned consumers. It's a labor market. The labor market is doing okay. I would argue it's doing, I was arguing at the start of the year that it was better than headline payrolls are suggesting.

And now here we are over the last three months. It's doing well. One number for you. Today we got personal consumption data. Last three months, nominal consumption, eight and a half percent annualized pace. Eight and a half percent annualized place. the last three months. We live in a nominal world.

And even real. Even real that's high. Real is, most of it is inflation. Real is 2.1%. Oh, never mind. Yeah. So a lot of it is inflation, but people are still spending.

But how big could the economy be, to Josh's point, if regional banks are breaking out? And industrials. Yeah. Industrial. It's like a very tough environment to say. And small caps.

We're at the end of something. You know, I'm going to change gears for a second. I don't know if we had to statute of limitations, but congrats to you, I was watching you. I was living through you because I was a Bengal fan. We're terrible, you know, and I know a different sport. I get it.

But it was really cool to watch that. Yeah, that's true. We'll see. We'll talk football next time. But, I mean, may be better. But anyway, but congrats. It's fun to see that. Thank you.

I was rude. I don't like, I don't like that. Who's your favorite? Who's your favorite neck? Oh, gee. Gotta like Jalen Brunson. Yeah. I mean, as a Xavier guy, the Big East connection.

Yes, I guess you have to say. I was to say, as a lover of sports, he does not give anyone any reason to dislike that I can think of. He's got to have near universal approval. What was, I mean, you remember it. The quote, they said, how did you drop to being a second round player? Oh, what did they miss about you? Yeah, what they missed?

He said everything. Everything. That was the coolest, like, that was so cool. That was really cool. And he's right. I mean, he's the champ. But congrats, guys. All right, we'll take that.

There's a connection. Netherlands and the next, the orange. The orange came from the house of orange, Netherlands. No shit. Oh, the Knickerbockers. New York. Oh, oh. You know what a Knickerbocker is?

We did this already. I still forget. Do you? You told me last time. You don't know, still. All right. You know what your problem is? Nature problem is.

Guys, I will say, you know, this is the third one I've done. Thank you. I mean, every time we come on, our Facts versus Feelings podcast gets a huge bump. We really appreciate it. We love having you. This is an honor to do this again. And you know what? You guys are pros.

I love running into you on the speaking circuit. I love listening to your shows. And we just really appreciate you guys coming by and doing ours. So thank you so much for being here. Let's tell people, let's tell people about the podcast. So you guys are, what's your cany? of facts versus feelings. Facts versus feelings

come out every Wednesday morning. There's another podcast comes out Wednesday morning. Listen to that one first. Listen to us second. Animal spirits. We just follow what you guys do. It seems to work.

But yeah, we talk about all this stuff we just talked about, facts versus feelings. And it's a lot of fun to do all this stuff. We have guests once in a while. Usually just Sonu and I talking about everything going on out there. You guys are enough.

Just like Animal Spirits. Michael and Ben are enough. All right. We really appreciate you guys. Thank you for having. So much love and respect. Congratulations on all your success. of Carson. Thank you for being here. And hey, everybody, thank you for watching. Thank you for

listening. We'll see you next week. Thank you guys.