The Compound and Friends - Tradeable Lows, Nvidia’s Data Center Finance Deal, Surprise Comebacks for Schwab and Expedia

Episode Date: August 11, 2026

Join ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for another episode of What Are Your Thoughts as they discuss six major stocks that may be setting up for a bounce: Meta, Uber, Netflix, Disney, Nike, and Home Depot. Plus, Nvidia’s latest data center financing deal and the rise of compute as an investable asset class, why stocks like Schwab, Expedia, and Booking are hitting all-time highs despite fears that AI would disrupt their businesses, and the $1.5 billion rescue deal for United Wholesale Mortgage after a massive loss on interest-rate hedges.Josh makes the case for Expedia, Michael brings the Mystery Chart, and much more! This episode is sponsored by Betterment Advisor Solutions. Learn more at https://betterment.com/advisors  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 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

Yeah. Ladies and gentlemen, welcome to the very finest investing live stream anywhere in the world. My name is downtown Josh Brown. Here with me as always. My co-host, my colleague, Mr. Michael Batnik. Michael, say hello. Hello, hello. All right.

I don't know if you'll like the new intro. If you do, throw your bees up in the chat for the Duncan Hive, because that is the one and only legendary Duncan Hill, ladies and gentlemen. We are so excited to be here. we do the show every Tuesday, almost without fail at 5 p.m. Eastern. We're going to get to all of the biggest investing topics that are happening right now that people in the markets are talking about. We have takes on takes on takes. We have charts. We have data and we have a rock and live audience last week. I think we had 2,600 people show up for the live, which if it's not a record, it's pretty damn close. So let's say,

couple of quick helloes to the people on YouTube that are here for the live. I see Heather M-42 is back saying hi to Nicole. What about us? What about us? Let's see. ND says best part on the world. Yeah, I have to agree. Gary Walter getting excited for football season.

Yeah, us too. Alexis Sanchez says hello from Long Beach, California. Hi, Alexis. So happy you're here. All right. and all the usual gangsters are here. We appreciate you guys. We have a sponsor tonight.

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It's the platform built for segmenting, your book at dreamlining the smaller accounts. The onboarding experience is automated in a paper list. The portfolio management is streamlined the tax efficient. The client experience is consistent and modern. And the impact isn't just felt by your clients. It's felt across your entire practice. Imagine a back office that's humming, a team that's thriving in a service model ready to scale.

Betterment advisor solutions. Your biggest regret will be not doing it sooner. Learn more at betterment.com slash advisors. That's a 10 out of 10 ad read, Michael. Thank you so much. shout to Betterman Advisor Solutions. What's a tradable low? What is it when I say that term, what does it mean to you?

You know, I think, excuse me. Have you heard people say it? Tradable low? Of course. Okay. It's not my first or second rodeo. A tradable low to me represents a washout of sellers, an exhaustion of sellers, if you will, no more.

Anybody that wanted to sell the stock has already sold the stock. And usually, not always, but usually I prefer a tradable low to be a long process, not necessarily an event. I like a low. I like a balance and a retest that happens five to six weeks later. And from there, you get your tradable low. That's how I like it. But it's not right.

And it's not the same thing as like the low. It's not always. A tradable low is not always the final low. No. Sometimes you don't know this until time passes, right? But it could be a low on the way to a lower low, but a tradable low. Well, those are sorts of tradable lows. There's a one that I just described.

There's the puke, right, where you get like a 14% drop in two days on extreme volume or a 26% drop over four days on extreme volume. And those you could trade for a 50% bouts before eventually rolls. And then I like to trade that tradable low. There's all sorts. I agree. All shapes and sizes. I wanted to show you specifically some tradable lows.

Let me give you a definition. I guess this would be. a technician's definition of a tradable low. A price low that marks a genuine, I think you were saying this, marks a genuine shift in short-term supply and demand, evidenced by a reversal in price action, and ideally confirmed by other signals, rather than just a random dip within a larger downtrend.

So these are some of the things technicians would look for, and then we're going to look at some actual charts. Price structure, a clear, higher, low forming. Of course. Or a break above a prior swing high that confirms the low is in. So you'd see, as opposed to like, oh, it stopped going down for one day. Okay, there's one version of that. Volume, a volume spike or a capitulation style selling on the low itself,

which suggests real buyer stepped in to take out all those sellers. A momentum divergence, RSI or MACD, making a higher low while price makes an equal or lower low. That's a classic bullish divergence. One more. A retest that holds, which I think you just said. Love those. Right. Price comes back near the low, but doesn't break it, it holds.

Okay. I want to show you some stocks that I think have made tradable lows, and we'll get your take on it. And we're talking technicals more than we're talking fundamentals. But a lot of this stuff is coinciding with narrative shifts for these stocks. Here's meta. I'm getting very close to buying this and putting in a stop at 525, which I don't have annotated on the chart. But 525 is those early 2025 lows. I forget why they sold the stock down.

It then hit that same low in March of this year during the Iran stuff. And then it hit that level, I don't know, two days, three days. ago as people started to get nervous about their their KAPX bend. But for some reason, that 520, 525 area is where the buyers have stepped in three times. And I'm sort of starting to think with the stock, seemingly reversing off that level a day or so ago, we could be looking at a trade below in meta. And again, I'm not promising you, this is the bottom. I'm saying like trades have been made off of that level for a hundred points or so in the stock. What are you thoughts?

Okay. So I've, this, this, this chart is trading technically sound as they would say. I'm looking at a daily chart and I'm looking at 525 being the level. Charts on this being the level of resistance from March of 2024, then again in April 2024, then again in July 2024, and then finally in August 2024. So four times it found resistance and then it finally broke above and it caught that level again on the sell off in Liberation Day, bounce from there, again, that 525 level, and it bounced there again during the war in early March of this year, and again last week after it reported earnings.

So for whatever reason, this is not voodoo, this is not an opinion from Josh and mine. There has been a battle between buyers and sellers at that level. At that level, repeatedly. Yes. Now, is it a trade below? I would argue that this stock is in no man's land. You just got the trade of below because it got down to five. 23 or whatever and it ran to 600. So to me, the tradeable low is, is, uh, I think you just got it.

Like it could go high. I think what I'm saying something different. I agree with you. I think what I'm saying is like if it if you go long here, it's a no man's land. You're 100% right. I would not say like, oh, this stock's in a beautiful. It's not. It's a mess. Nowhere. It's nowhere. It's nowhere. But if you were to get long here, that's your 525 is like, wait a minute. It finished the week at 521. I'm out of here. Yeah. That's what I mean by a tradable low. Yes.

That's your key level of if it goes below there, you're out. It's over. Let's be clear. We're not saying like these are great setups. But I think that there is like a nice definition of risk right at right at that level. There is. I like it. If the buyers don't come in, what that tells you is sentiment has changed.

Like has gotten significantly worse. And it's pretty bad already. All right. Let's be Uber. This stock I am long. But forget about the fact that the blue line is like right where it stopped going down and it reversed off that. Of course, that's good. The stock acts like shit.

Let's be, let me stipulate. I'm showing you three years. I'm in this thing in the high 30s. So I'm fine. Nobody should get upset for me. I have, I have good gains in this stock personally. I do also think we're, we've seen a tradable low in the mid to high 60s.

And I think you could work. work off that level. Again, nobody would suggest this is in an up trend. It's very messy. But I think you could define your risk there. What do you think? Yeah, I actually love the setup because the stock, the stock has acted like shit for years. It's gone sideways since February 2024 while anything else in the growth universe, whether that's tech or anything, has gone way higher. So the stock's been acting like shit. But after it reported last week, great numbers, by the way, the stock gap down 6%. And that was it. And then it, And then it ripped from 67 up to 78 over the next four days.

I love the setup, but I actually think that this can make a run to new all-time highs. See Paul Breezy agrees with you. I'm seeing coiled spring. But my God, if this gets rejected again, then that 65 level will not hold. So I'm so stubborn. I saw it at 100 once. I need to see it back at 100. And I need it to go from there.

and I just, I will not. I know I'm right. I know the market. I know the market is wrong. I just can't prove it in real time. That's chutzpah. I know. I know.

I've never, I don't think I've ever said that ever about a stock, but good for you. I don't say that about every stock I buy. No, listen, you have conviction. I respect that. But it's got to go now. If it rolls over again, I just think we're going to be seeing the Nvidia robo taxis in London at the end of this year with Uber badges on it.

And it's just going to, people are going to stop with the bullshit. Next. I just, I can't help. All right. Netflix is another name I'm in. I've been averaging down. I'm actually, I might actually even be up in it. Not up in it, but, but way closer than I thought I'd be.

I added, I added on the down 10% morning after earning. So now I'm only down 16% not to brag. So I did the, I actually did the right thing with this and then I screwed myself. I sold it when the stuff with. the Warner Brothers bid started because I just said, all right, it's going to be dead money at best. And then the stock fell apart. And I said, look how smart I was for getting out. But then I bought back.

And I bought back too soon. Dude, the stock is a motherfucker. From February, it ran after like the WBD stuff cleared. It ramps is 75 to 110. And I thought it was the smartest man alive. Do you think that this is a, wait, put that back one more time. Is this a failed breakdown below the 200? I don't know.

To say obviously definitively, but I don't give any credence to the 200 week moving average. Okay. To be clear, this is not technically a screaming buy. No. But there is a world in which 70 is a very meaningful bottom. I mean, I can't like definitively say it for six months. And then we'll look and listen. All of the bad news is in this stock.

My opinion, I'm long. I'm biased, obviously. But the stop gap down on another 10% and it filled the gap in two or three weeks. There's no more sellers that are selling because of because of whatever like all the competition with YouTube and TikTok we know it's we know it's it's there. It's got to break down on more bad news. Now maybe the maybe it's just buyers a strike and it was over again. I don't know, but I think 50 50 chances this holds the slow holds all right going out

on a one. Let me show you Disney. I got a double bottom here at 90. I think you buy the stock. I think you buy the stock. It's going to it's going to reclaim the 50 days. any minute. And it's, look, it, it had been a ping pong ball between 100 and 120 over and over and over again for a while.

Years, years, years. For whatever reasons, this is a three-year chart. Something happens when it hits this like $90, $91 level where the buyers come back to it. Like, they won't, I don't think they're going to let this stock get back to $80 unless there's an economic catastrophe. Yeah, but guess what? Look at the cell is at 120. I'd rather buy this stuff away there. No, I agree.

I don't think as a tradeable bottom, though, does it look like there's anything there? Am I making it up? Am I looking at a cloud and telling you it looks like a Volkswagen? I just, I think you just got it. It just ran from 90 to 105. I think that was a trade.

All right. Let me show you Nike. No. Okay. Okay. No. This is going lower. No evidence.

Okay. Okay. Home Depot. All right, this is an inverse head and shoulders. Bottom. Yeah. So a head and shoulders or an inverse head and shoulders, according to the technicians, signifies a trend change. In this case, it's an inverse head and shoulders, meaning if you printed this out on a piece of paper and turned it upside down, you would definitively see a head and two shoulders. The shoulders, I'm reading about 3.30-ish. the right and then the head is

298 or whatever that that number is I could have gotten more granular but I'm just hamming egging it here because it's YouTube but it feels as though on this last shoulder the sellers just couldn't get excited enough to push it lower and now it's completely reversed another stock that's going to take out its 50 day

and I understand it's not a nice looking chart but is it a trade of a low? Yes and also look where interest rates are. They're at their multi-year highs. Interest rates can't hurt the stock anymore. That's in it. It's all in the price.

I think this is going higher. Okay. I think I'm with you on that. This is the type of stock that I would pull the trigger on. I want to give in another minute, but I think it goes back to 400. I don't know what happens from there, but I'll take 50 points in a $300 stock. Yeah. All right.

Next? That's all I got. But yeah, which is your favorite of the six that I should? showed you. All right. So we did. I think it's Uber? That's crazy.

Or meta? No, not meta. Either Uber or Home Depot. Uber or Home Depot. Okay. And definitely not Nike. But it's at a crashing 200-A. I know.

80's been a lid on the stock. So we're not talking about names. We're not talking about best stocks in the market here. Like specifically, we're talking about tradable lows in very big stocks that have not been good stocks this year. Yeah. Um, okay. Actually, they've been bad stocks for many, many years. All right, let's talk about consumer stocks. Josh, a week or two ago, you went on a diatribe about if you want, if you had a legal pad and you wrote down like 10 things that you would want to see in the bull market, it's all happening. There was one thing missing that I want to bring to the party. Consumer discretionary stocks.

We've spoken over the past about how sometimes consumer discretionary stocks can be really noisy and not necessarily. be a read on the consumer. We've spoken about Dollar General and Chipotle and sweet greens and they might just be idiosyncratic to the particular company. And the earnings report or the stock might say nothing about the health of the consumer. It just might be a specific risk to the stock or the sector. There is nothing to do with anything. I think this particular ETF tells you a lot about the consumer. This is a small cap consumer discretionary. This chart comes from Alfonso de Pablo. And he is just... this chart is hitting a new all-time high. Now, why do I say that this actually is a read on the

consumer and the other stocks we've discussed aren't? Here's why. Look what's in this basket. You've got 21% of the portfolio in specialty retail. You've got another 21% in hotels, restaurants, and leisure. Then you've got 70% in household durables, Mohawk we mentioned last week. You've got 11% in diversified consumer services, automobile components, textiles, apparel, on luxury goods, distributors, broadline retail, leisure products, automobiles. I know it's a small piece. But this is a broad basket, a broad, broad basket of consumer stocks. And you want that to participate in a bull market.

And they're at all time highs. Small caps. It's so, I mean, it's, I'm looking at the charts solo, not comparing it to anything. I mean, it barely trades any volume. So the candles are crazy. Yeah, don't look at that. There's a lot of, there's a lot of guys. Gaps.

Look at the line. Doesn't matter. The gaps don't matter. This is a thinly trade stock. I'm looking at. I'm looking at the line. Or ETF, I should say. I didn't even know this existed.

Brinker CarMax, Etsy, Victoria's Secret, Mohawk, Lifetime, Pool Corp, Front Door, Caesars. These are consumer. These are consumer stocks. Like, these are the types of stocks. I don't want to own any of them individually. You know what? Like, these are the types of stocks you get, you get fucked up in. you know what I mean but as a basket right right confirming yeah as a as a theme I like I like what

you're showing me I'm saying I like I prefer the ETF than going long boot born or cheesecake factory like these are the types of stocks that you you blow you blow yourself up in holy shit because they surprise you dude look at cheesecake factory what in the world is happening what is happening to cheesecake are they in the AI are they in AI cheesecake look at the stock When was the last time you ate at the Cheesecake Factory? 30 years. Guys, the ticker is cake. This is unbelievable.

The menu is wild. There's literally... It's three feet long. It's 80 pages and every dish you've ever eaten is in there. And none of them done particularly well. No idea what's happening here. Chart went from 65 to a buck 15 in a couple of months. Huh.

Interesting. So much for the GLP one. Fear. What else they own? They own, oh, they own North Italia? Did they own

Rainforest Cafe? No, I think that was, I think Tillman Fertita owned that at one point. Okay. Remember that? In the source back in the day,

that was like, that made a huge splash on the scene. That was so nice. With the animatronic, uh, ape at the front. That was so late 90s. So late 90s.

Theme restaurants in the late 90s had like a, had a minute. Planet Hollywood. Huge. Dude, they opened the, they opened the supermodel cafe like the I forget what it was called it was a fashion themed

and it was all 90 pound women opening a restaurant I can't believe it didn't work I don't think anyone ever tasted the food that was part of this group it was like all like Naomi Campbell and maybe Elle McPherson I'm making this up but like all the 90 supermodels opened the supermodel cafe they're mostly gone

the Yankees one is still there though on 7th Avenue in the 50s. Have you ever been there? The New York Yankee Steakhouse. Go in the basement. Go in the basement. It's insane. They have a, it's called the vault.

The walls are lined with the actual framed contract of the most famous Yankees ever. And Yogi Berra's contract is on the wall. His dad signed it. Do you know why? Because he was 16 when the Yankees signed him. He couldn't legally sign him. his own contract. No kidding.

Did not know that. It's a wild. It's a wild team. All right. Anyway, I don't know how we got there. So you like the fact that this group of stocks is, I mean,

obviously, who wouldn't like that? I don't like it. I love it, too. Is this a, put the chart back. Is that breakout? Yeah. It's a relative. I mean, it's going.

Yeah. Son of a bitch. What the hell is cheesecake? I'm going to find out. I'll answer next week. All right. I'll play a video. clip for you guys. Settle in. Won't take long. I want you to see this. John.

We have this big breaking news this afternoon about what's been happening when it comes to the AI infrastructure bill. This is news that was first out a little earlier today, but we can confirm that news at this point. Invidia working with some of the biggest names on Wall Street to secure financing for its customers. Joining right now with us to talk about all of this is Jensen Wong. He, of course, is Invitea's founder and CEO. David Solomon is the CEO of Goldman Sacks. Larry Fink is BlackRock CEO. John Gray is Blackstone's president. Vladimir Lazzack is Global Head of Digital Infrastructure at KKR. Jim Zelter is Apollo's president and Bruce Flat is Brookfield's CEO and gentlemen, welcome to all of you today. It's kind of amazing to get this group around

the table and Larry to have you joining us remotely too. But we have to start with this news. Jensen, this is a big deal and it's a big number. Half a trillion dollars more than that in terms of financing. We know this is an expensive build, but tell us a little bit about how this came together and what exactly it is. Well, first of all, I want to thank all of my partners for joining me here today. I think this is the first time this has ever happened before, and I can't imagine a more important time to do it. We're announcing six partnerships today. These partnerships are going to pull together independent long-term capital to fund and support AI infrastructure buildout.

Holy shit What a scene Holy cow I miss that It's like the Justice League I mean If you're like a Wall Street person That's Superman

Batman Wonder Woman Green Lantern Holy shit All in the same place Other than Larry Fink Who big-timed them I'm guessing he was on vacation

I'm sure he would have loved to have been there But like Man you got Diesal Sitting there With Jensen And then they got Who was there, Blackstone, Black Rock, Apollo. KKR, Brookfield.

KKR. Who? Brookfield. Brookfield property, right. Okay. I'm just looking at the chat. This is the type of thing that tells you it's the top. I mean, you could forgive somebody for saying that, and it might be.

I mean, I'll tell you in a year. I've heard way dumber top calls than that. Yeah, for sure. I mean, that's, yeah, I mean, sort of. I mean, oh, no blue owl. That's funny. Who else? I watched the whole thing,

super bullish for AI infrastructure. So that's what I think. And I'll tell you guys why I think it's actually bullish and not a top. Somebody's saying they're not putting their own money in. Well, yeah. It's all that. They're raising money, but also they're putting their reputation in,

which is as valuable as money. So I don't know if I agree with that. All right. What was your reaction? Did you watch? I watched the whole thing. It was 35 minutes. No,

I want to hear from you. Okay. So to me, this is my take. Jensen just checkmated the entire AI infrastructure story. He just effectively

with six partnerships but bringing them all together, basically compute is fungible. So it doesn't matter if somebody's going to run this LLM, that LLM, or if it's Gemini,

or if it's anthropos, it doesn't matter. Compute is compute. It is the scarce resource. We do not have enough of it, and nobody that knows anything about AI thinks we have enough of it. The only real debate was about the circular financing. Is it healthy for Nvidia to give a startup NeoCloud $5 billion, then that NeoCloud spends four of that $5 billion on Nvidia chips,

and Nvidia books it as revenue? Is that healthy? I think Jensen says to his CFO and maybe some other people at the firm, maybe some big investors, like, why is my stock price not moving for a year? Why is my multiple shrinking when my earnings are growing 80% every quarter? Like, what's going on? And they probably said, like, this is the thing that's going around on Wall Street. They're worried that you're running the Cisco Playbook.

Cisco, for people that weren't around back then, was doing some. circular financing deals, which was not illegal, was not a dirty word, but basically making sure that there were enough buyers beyond just AT&T and Verizon. There were all these competitive local exchange carriers building telecom assets and Cisco wanted to be the one to sell into them so they would help finance these transactions. And of course, when the market blew up and the financing disappeared, the whole, all the earnings blew up. Everybody understands that.

This sort of eliminates that from the conversation. These are companies that are capable of raising a combined trillion dollars with a year's notice. They will. They'll raise $500 billion. They'll figure out how to pay interest rates on the usage of this compute. It'll sort of look like mortgage finance or other asset-backed securities. The asset here is the factory. They're not like reinventing the wheel.

they're just treating compute the way electricity is treated or the way we treat cell phone towers or the way we treat cold storage for refrigerated goods that have to move to supermarkets. It's not the craziest thing on earth. So look at this like these are basically factories where we do data in and the financing should pay an interest rate and I bet we can line up investors who want to get a piece of that. So my thought was like, this is really smart. We put an end to the circular financing conversation. And now, you know, the bears will pivot to it's a private credit bubble.

But it's a lot more money and a lot more people funding this. It's not just Amazon, Oracle, alphabet, and meta. Now we're going to have effectively like 20 million investors helping to finance this Cappex build out. So I think it's a genius. the key thing that Jensen gets is Nvidia chips in every one of these data centers, as far as the I can see. So I think it's a checkmate for him. I think it's brilliant on the part of the Wall Street guys because they always need to come up with new products to sell to wealthy people.

And I think it puts the bears on their heels. Like, all right, I guess we can't say it's for companies financing their own revenue anymore. So that's my take. private credit is not so hot when 25 to 30% of that asset class is software names and if you like the floating rate nature of this without the duration what's more attractive than the good stuff this is the blue magic yeah the other thing that this does politically and this is why this is why you don't you don't fuck with these guys

they're so much smarter and so far ahead right of people the people mouthing off on Twitter, one of the fundamental potential negatives on all of the data center investments they've already made is that regular people are pissed. They're screaming. They're demonstrating. They're voting. They're showing up at town halls and deeply unpopular. Deeply unpopular. It's extremely unpopular because you know what it looks like from the outside looking in let me get this straight we had like this clear this clearing in the forest and basically like mark Zuckerberg is going to put cancer causing batteries in the in the midst of where we live or they're going to take our water or they're going to jack up our electricity bill

and none of that stuff is true or some of it is true and some of it's distorted but it doesn't matter the people hate it now if you flood their retirement accounts with exposure to data to center investments, you blunt the edge of some of that protest. Of course, what? People are going to protest their own investments? Yeah, I don't, I don't buy that. What part of it don't you buy? I think that's a stretch.

I don't think the people that are protesting give a shit about exposure to this private asset class. Not all of the people, but some of the people, if all of a sudden, if all of a sudden, they say, oh, we don't own the AI, we don't own the compute, you do. We all do. Everyone in America is collecting a rent from all this, this, uh, supercomputing. It's not, this is not just Google and, and, and, and meta. It's you.

You all. I get it. I understand. I think it's a stretch. This, this chart from Koto is wild just to frame the amount of spending because it's such a big dollar. People are so mad at what I'm, people are so mad at what I'm saying. Yeah, that doesn't hold muster.

Uh, that's okay. You tried. Um, throw this chart from Koto. So this is hyperscalor capex compared to the defense discretionary budget. And yeah, $7333 billion is an incompetent amount of money. But when you reframe it next to the defense budget, it's, uh, huh, it's unbelievable, dude. It's really wild. Yeah.

And I'm going to tell you something and I'm going to tell you something. They're going forward. They're not going to raise 500 billion and not build it. Now, I do see a lot of, a lot of our, uh, friends in the. chat saying it's just a memorandum understanding anybody could sign a memorandum yeah that's true we'll see let's see the money get raised let's see the structure of products that they're going to create yeah we have no idea what this is going to look like yeah it's true it's true it's it that's it's right it's an mow you i can sign an mow you right now uh and and and not be bound by it but you have to

think that they've been sitting in a room coming up with ideas for how do we productize this? How do we get regular people access to it? Blah, blah, blah. Oh, it's going to happen. They're going to do it. Yeah, it's going to happen.

You want to bet against Larry Fink? Have fun. Not me. Find me some stuff Larry Fink has tried that he hasn't been able to do. What about against Jensen? Okay. I wish you luck.

So, Josh, for our next topic, I should have done the inverse of this. So what we're looking at here, Let me set the story. There are several stocks that are at or near all-time highs that got the shit kicked out of them in the spring because they were in the crosshairs of AI. Anything AI related. Schwab, of course, we'll get into all this. These stocks just got kneecapped.

And some of them recovered and are at or near all-time highs. So I have those charts. I didn't bring the stocks that have not recovered. A lot of the software names, even though they've been significantly. We're cherry-picking. Yeah, we're cherry-picking. Yeah. So like, like, S&P has not recovered.

Nor Moody's. A lot of the exchanges are not doing well. A lot of the software names have balanced but are still nowhere near their highs. All right. So let's look at the stocks that are actually not going to be blown to smithereens by AI. So chart on, please. Stocks that people have changed their minds on. So Snowflake fell 56%.

Yeah. And then rallied 170%. This Josh, Josh, you're all over this great call here. I bought it. I'm still holding it. and I bought it recently. I'm not up that much, but I'm not. No, I know.

You bought the breakout. I bought the breakout. And I'm not, I'm not a seller. I have a stop in, but I'm not taking that profit because I think, uh, Snowflake is going to be a very important part of the next five years of data center and and AI. So I'm sticking around. All right.

Schwab probably one of the most predictable bounces here. You traded this. So predictable that I bought it in. sold it. I wish I had as much conviction as Josh does, but Schwab fell 20% on the altruist news, which again, the Hazel News, which we said literally makes no sense. One has something to do with the other since has bounced 26% to a lot of time highs. Expedia and booking. I think these were the ones where it's like, oh, why do you need this bullshit? Like you could just code this and these sites are going to go away. Nope. We did Expedia on the air today. Sean and I wrote this up for best stocks in the

market last September. It got it got knocked off the list in January or February when they started to beat up these stocks. It got killed. It got absolutely killed. But now it's back on the list and it broke out. It's a fresh breakout. There is insane momentum for everything travel.

I didn't buy this one. I was choosing between this, Delta and Marriott. I bought the other two. I didn't buy Expedia. I probably should have bought all three. Expedia's going way higher. I don't know if I'm an idiot, but it's going higher. Next.

Travel is, the point is like, the popularity of travel amongst businesses and consumers right now supersedes any sort of disruption risk. Yes, very good point. Very good point. All right. What else we got? Oh, and then Palo Alto and Crowdstrike. I mean, Josh, you laughed at this at the time. We left.

We left heartily over and over and over again when they were selling off the cybersecurity stocks because of AI. disruption risk just the the concept of people vibe coding their own patches for for software security it's a like a literal it's a joke that tells itself um i didn't want to say i think crowd strike might be one of my biggest winners of all time in a very short period it came public in the summer of 2019 i bought it in 2020 during the pandemic i've held it ever since good for it is up 92 percent year to date. So it's got to be it might be it might be a 10 banger for you or close to it. I think it's I honestly think it's like one of the biggest winners I've ever had. It's um it's five year compounding at 29% a year, which is it's since inception since it's IPO

1,450%. Like they don't make these entries. Dude, this stock got creamed in the 22 sell off. It went from $75 to freaking 22. And you held on the whole way. I'll never sell it. So I now 10 times higher. The thing is I've been through huge drawdowns with it. But I just like I got to know George Kurtz. We've had him here on the show before.

I'm not like in contact with them all the time. Every once in a while we text each other about like random stuff. We're not, you know, I don't really have any questions. I guess as a shareholder, I just assume they're. know what they're doing. He just continues to win. It's like unbelievable the extent to which he's made the case to the public that CrowdStrike will be the most trusted name in the AI age, just like it became the most trusted name before there was AI. They just, they are the platform of choice for the largest companies and organizations in the world. And I just, I can't imagine

the spend going down. What board of directors would approve a CEO, coming to the table and saying maybe let's spend less on cyber security what are you fucking crazy like what all right fine let's let's in the in the minutes let's make sure we all know that bob said that if i if that was bob's idea if i had to submit to you one group of stocks that will join this list of why did we sell those stocks that will hit an all-time high i would say moody's and s mp the rating agencies are not susceptible to a chatbot. No way. You know who we were talking about that told us that?

Ron Barron? Ron Barron was talking about MSCI, same category. Okay, same thing, same thing. You know what it is? It's not that AI can't come up with an index. It's that there is a standardization and a trust that's more important than like technology. It's like, like that's the gold standard of the people don't want. want an AI created benchmark or ratings on bonds or research like on allocation.

There's regulations here. You can't just replace it. These these bonds need to be rated. I think that's right. I think that's right. I like it. And they owned the data that quite frankly, the LLM is going to have to pay for in order to use.

Correct. They have the fuel that turns into knowledge. when a when an LLM absorbs it. So I do wonder, I do wonder. So the New York Times is saying to Open AI and Anthropic, hey, buddies, no, no, no, you got to pay us if you want to train in our data. I wonder if some of these data providers will go the route of Alex Karp, will heed his advice and say, I don't care what you're paying us.

You're not touching our data. Sorry, buddy. You're out. You're not getting it. If facts that says to open a. That's dangerous, though. That's dangerous, though. because a competitor will take the money.

And so right now... Well, what if they all band together? Facts up, Bloomberg, all these companies say, no, we're not doing it. So the New York Times, the New York Times lawsuit against, I think it's anthropic. It might be open the eye and I'm wrong, but I don't think I'm wrong. That's going to be a really important precedent setting, like groundbreaking outcome. Whatever happens there, whether it's a settlement or it like goes to a trial. Because as I've said here on this show, I had a front row seat for the first round.

to this. This whole information wants to be free. Google was able to build a $5 trillion company on free everything because they convinced book publishers, magazines, newspapers, data providers. No, no, no, we're just indexing it. They were a wolf and sheep's clothing. Yes, they indexed it and then they ran ads next to it. And then they became the go-to doorway to all of this information and we're able to muscle everybody else's businesses out of the way. That is not going to happen this time. It's too fresh in everyone's minds and memory. And I actually think the courts will rule with the providers of this intellectual property,

which is the data and the articles. And like, I don't think the courts are going to be like, yeah, go go screw them all over again. It worked out so great the first time. It's not going to happen. It's not going to happen. So I think a lot of these companies that look like they were about to get disrupted to zero, you forget the LLMs can't train on imaginary data. They do need to start with something somewhere.

And they're going to have to pay for it. So I like that idea. And it's really interesting to look at the 180s in these stocks that you're showing. Yeah. Because it was overnight. It was overnight. All right. The next stock is doing on 180 the other way.

What do we got? That's a segue to you, Josh. That was an alley-oop. You did that really well. Thank you. We have to talk about this because it touches so many of the things that we talk about on the show all the time. There's a company that UWM, it's a United Whale Mortgage, it surpassed Rocket to become the biggest supplier of mortgages in the United States. and they sort of built this, I want to be careful what I say here, so we don't get sued,

but also say I don't make a mistake. They sort of built this stranglehold on the independent mortgage broker industry where they became the provider of mortgage. Like let's say you know a guy who's a mortgage broker and they don't work at a big bank. They own their own mortgage company. Where do those people get their mortgages from? There's a few places. Rocket has a wholesale business, but really UWM became like, like the largest one.

And so I know people who own mortgage companies, but they need to have the mortgages wholesaled to them in order for them to retail them to you, the home buyer. Okay, that's United wholesale mortgage. So this guy, Matt Ishbio built it, and he is a Detroit native. He's in a blood feud with the Rocket founder, who is Dan Gilbert.

It's crazy how much they have in common and how much they hate each other. They're both Jewish guys from Detroit in the mortgage business. They both own NBA franchises. When Matt Isbia went to buy the Phoenix Suns, I think this is true. Every single owner in the league voted yes. Dan Gilbert, who owns the Cavs, voted no. So there was like real hatred here.

And maybe it was like business competition that crossed over and became personal. Whatever it is, Detroit ain't big enough for the both of them. Anyway, this thing came public in 2021 as a SPAC. I don't think it could have come public in any other era. It was one of those accidental IPOs that just sort of the timing was right because we were in an everything bubble, a junk bubble we called it, whatever you want to say. And I think the initial public offering was the biggest SPAC IPO ever. I think it was half this summer. 16 billion at what 16 okay 16 billion never before happened and it has been an absolute shit show

for everyone except the insiders including ishbia who's been able to sell billions of stock billions of dollars worth of stock the entire way down over six years let's put up the chart is from wall street journal who covered this story today gross i mean this just 26 this is so this is i guess they're showing the market cap? No, there's just a share price. It's just 26. If I showed you,

if I showed you a share price chart that goes back to the beginning, it's so much worse. Right. Suffice to say. And it started dropping the day it despacked and became this. And I don't think it even had an up month

at any point. Now, some of that is not the company's fault. The environment for housing has been horrible. Is this their fault? And mortgage rates never fell. They lost six. $600 million on an interest rate hedge.

$600 million. All right. This is the story of what's blown the company up. I guess they compete very close head-to-head with Rocket. Everything Rocket does, this company wants to do also. Rocket did a deal to buy a giant mortgage servicing portfolio called Mr. Cooper. Mr. Cooper, yeah. Yes.

And so it looks like United Wholesale was like, oh, no, no, no. Also, we're going to do that. And they tried to buy this thing called Two Harbors. And let me just quote this so I don't screw it up. UWM took on a hedge that was betting mortgage rates would fall. Okay, fine. They took a $600 million loss. They took that hedge because they were trying to.

to do this acquisition. How is that a hedge? I don't know. All right. So listen, he had agreed in December to buy a real estate investment trust focused on mortgage servicing called Two Harbors. The $1.3 billion stock deal fell apart in March when two harbors spurned UWM and opted for a cash offer from another suitor.

So the target pulled out. Mortgage companies often make hedges against their portfolios of mortgages, which change in value with interest rates. However, UWM had paid to hedge a portfolio that the company never actually acquired, much to the confusion of some investors and analysts. They shouldn't have presumed, said one guy. Okay. Ishbia likely stuck with the pursuit of two harbors, quote, partly because he didn't want to lose.

It's like a guy like that. It's like an athlete, like a mindset, like I won't lose. Okay. So now they're suing two harbors for breach of contract for $500 million. That'll play out. Isbiyah has shown a willingness to spend his own money along with his brother who runs private equity firm. He bought the Sons in 2023.

He has pledged shares of UWM for personal loans, which he has previously said he barely used. He's like a big risk guy. My friend who's in the mortgage business. They bought the Sons in cash. So the franchise is not in danger of being taken away from him. They bought the Sons in cash, but then he's pledging his shares for other things.

I don't think the Sons is the problem. here. The problem is they had to return to Oak Tree for distressed financing. So we won't get into all the ins and outs of, but Oak Tree is taking preferred stock with a 10% cash dividend. They're putting somebody on the board. Well, here's the important part. Here's the important part. Isaiah Thomas, who nearly ruined my franchise, the Knicks, is also mixed up is a, is a fucking board member of this company because Matt H. P. was a fan of his growing up in Detroit. So Isaiah Thomas, see ya. I'm guessing he's off the board.

Was your favorite part of the last dance, Michael Jordan thing? I. When he was trashing Isaiah Thomas again. I met the criteria. That's a great name. I hate Isaiah Thomas so much. All right.

This is my take. I have a few takeaways. This was the biggest of the SPAC. Not the most well known. Most well known is the most, the most well known is still the Chimov stuff. Would you agree with that? Which is the most well-known SPAC?

Was it Open Door? Virgin. Virgin was a big one. Open door. And SOFI. Was Draf Kings a SPAC? I don't think so. Maybe.

So-Fi is like sort of the last man standing. It's like one of the only post-SPACs that's got any kind of like standing or legitimacy. Somehow, nothing to do with Chimov because he was gone relatively quickly. But this is like just another one. It's just unbelievable how horrible that crop of 2021 IPOs were. Spack or no SPAC, just in every IPO. It's one after another. And I did want to get Airbnb.

Everything came to market. John's got some images of this. They did a huge investigation of this company. I think it was the first one. This was April of 2024. So more than two years ago, if you were along the stock and you read this, you were out of this stock. Because they had, and this is way before this $600 billion loss. What these guys accurately captured was just like the culture and how crazy everything around this company was.

Like all these RICO lawsuits and like schemes to defraud and just there was. much smoke around this thing years ago and the guys at hunterbrook like um sam coppelman uh they investigated it they wrote it up they took a lot of shit for having done it but they got you out of the stock credit to them way before credit to them so um and we you know we're not going to delve into the details here it's it's not what we do on the show but uh wow what a what a what a horrible ride it's it's been in this name okay i think we're done there Go ahead. We're going to make the case.

We had to skip this last week, right? Or the week before? I can't remember. What was the last time we did this? I made the case last week for floored decor or two weeks ago? I don't know. Whatever. All right.

What are we doing today? Oh, all right. Let's do Helping. I'm saying buy the dip. This is, I think it's still on best stocks of the market. I'll have to double check, but it is in our, portfolio strategy that seeks to capture market leaders and momentum, which we call Porterhouse. And so full disclosure, we own this for ourselves and for clients through Porterhouse.

Okay. And it's not a recommendation for anyone to buy or sell, et cetera. Our whole disclaimer is linked in the show notes. We've been talking about travel for a long time. As I mentioned earlier in the show, it is the best slice of the consumer situation. right now. Hilton is interesting because it's part of a trio of names that's been on the best stocks list. Marriott's on there, which I also owned. I bought that recently. I bought the dip in Marriott. It's working. I think Hilton's the next one to bounce. This company's

been around for 100 years. 1919. Do you know that? Founded by Conrad Hilton, who is the great grandfather of Paris Hilton. They don't own anything. This is a marketing and points business, just like Marriott. Yeah. 85% of the hotels are owned by franchises or developers. They keep a few hotels that they use to test new concepts in and just to like kind of keep their hand at it. But the way to think about this business is they run commercials, they manage the points, the loyalty programs, et cetera.

and they pick locations and they design things, but they don't sit with the real estate. That's somebody else's problem. It's a great, great business. Their sub-brands are like Waldorf Astoria, the Conrad Hotels, they own LXR, Nomad, Signia, Canopy, the Curio Collection,

graduate, which is where you stay when you visit your kid in college, I learned recently. Double Trees, Hilton Gardens. They have all these sub-brands, Basically, think about this like a marketing company that deals in the travel space. Compounding at 22% over 10 years. Wow. Annual compounding, which is really high.

First came public in 1946, taken private in 07 during the real estate bubble, came back in 2013 as a transformed company. Here's a picture of what it looked like when they came public again. You see they're all in the robes. I was clever. I don't know if Paris Hilton was there. I would imagine they probably weren't interested in going there. Anyway, travel stocks have been incredible. This stock is right now in a dip,

but the fundamentals are unbelievable, and I think it will join Marriott and Expedia and Delta in finding buyers right here at this critical level. Put it back up. Here's a one-year technical chart. This is it. I think 315, you've got this rising 200 day. It's falling right into that level.

This is exactly what Marriott looked like when we talked about it the other day. 30768 is the 200 day. I would just say 305. I would watch it on a closing weekly basis on Friday. If this thing finishes the week below 305, I'm wrong. There's nothing here to get the hell out. If it bounces from these levels, I don't see why it couldn't. and get back to those old highs.

Let me show you a five year. The bigger picture is the stock is going up. Yeah. So that's my make the case. As far as fundamentals, like, you could look up the last earnings report yourself. It was unbelievable. They have 9,453 properties. 1.4 million rooms, 144 countries.

Hilton Honors membership is up 15% year over year. they have 260 million Hilton honors members all over the world. Revenue was up. Earnings were up. Rev PAR, which is revenue per available room, was healthy. They're building. They're growing. And travel is not going to all of a sudden fall apart.

Can I tell you something? I know people have been predicting that. So we went to book a vacation for December and I looked at a couple of islands and I couldn't get in. Like for December. Yeah, too late. You missed the boat. December.

I know. It's unbelievable. Travel is so strong. They cannot build in the right locations. They cannot build festive. Anyway, that's my make the case. I like that. One year chart one more time.

Would you buy this dip? Yeah. Will you buy this tip? I mean, I own the stock. Will you accept this rose? Oh, you're, well, I know you own the stock through Porterhouse, but would you, would you overload? No, I'm not going to do that.

You don't have that feeling that I'm going to be right here? I don't want to mess with, I don't want to like overlap and I don't want to be buying and selling stocks we own, you know, I don't want to do that. But I like it. Okay. I've got to mess with your chart. And this is a sub-industry group, I suppose, whatever. I think that's the right way to describe it.

Try on, please. This is an ETF. And that July 20, that July low was, was the definition of a tradable bottom. Did not undercut the previous low. I mean, that was a tradable bottom of, if there ever was one. And of course, I didn't trade. it. Sub industry group. What else are you getting me? So it got caught up in the AI is going to kill everything. And that's the only claim I

to give you. And it got it got hit pretty damn good. I mean, look at that. Look at that decline. And we spoke a lot about this. All right. Give me three guesses. Go ahead. Okay. I think you're only going to need two. Broker dealers? Uh, no, you're on the right track. I'm on the right track You're in the right sector That's your last hit I'm in the right sector So it's finance

It's not the real sector This actually is finance It's in finance Oh private equity Yeah I got it Oh look at me Alternative Asset Managers ETF

Pretty good right Pretty good That's interesting That's a low That's a trade of That's more a tradable low. That might be the low. I was right but wrong. I thought that this is going

to blow over all of the smoke and I bought it and I sold it at the low. So credit to me. I want to say this. I was very open to the idea that they were going to be a... I was. I was very open to the idea that there were going to be a lot of blowups in private credit

specifically, more so than private equity. But not on necessarily a data center basis. I just thought generally there's way too much activity in that arena for there not to be some problems. There will be.

And there are. There will be. I told you yesterday about a restaurant chain that filed Chapter 11. Believe you me, there's private credit money in that chain. Who did I tell you it was? Brooklyn Diner and,

whatever the hell it is. It's just that it's not proving to be systemic. And it won't prove to be systemic until a major privately held software business literally runs out of money. Does that seem to be imminent right now? Does that appear to be the case or a data center? People say there's no demand anymore for data.

Like it just, it doesn't feel imminent in any way, shape, or form. What are you looking at? But didn't, didn't Vista have a big, blow up like didn't they have like parts it was auto parts we haven't seen like I think there was something else I think there was something else we haven't seen like we orgs where people are like oh it was a SaaS business that went under no there was one there was a there was a big one whatever we haven't seen anything since and I'm very shocked because the journalists are dying for more they wanted so

bad they could taste it so as soon as it happens look look there are people that are very much on this beat. And I'm not willing to say it's not going to happen and that they're definitely wrong. The equity market thinks they're wrong right now. That's number one. And number two, it is not on the front page.

It's not even on the 10th page. So whatever is going on, the market has decided we do not care about that story anymore. We're not reacting to it. And it could change. It could change. But it's just

I'm not going to spend time on it thinking about it, reading about it, because I'm not seeing any evidence that anybody else is either. And that's just the way I roll. All right, what a show. I think we did a lot, right? Yeah, we hit it all. All right.

Hey, guys, let me let you know about a couple things. Number one, thank you so much for those of you who joined this for the live. We really appreciate it. Number two, tomorrow is Wednesday, which means you're getting a brand new episode of Animal Spirits with Michael and Ben. Always great. Ben and Duncan will then return with a live show that we do just like this one where they are taking audience questions. But if you want your question answered on the show and it could be a question about finance, economics, personal finance, paying bills, investing, whatever, you want to send an email to ask the compound show.

at gmail.com. They have gotten thousands of questions over the years. And if they use your question on the show, they're going to send you some compound swag. So that's Duncan and Ben, ask the compound, make sure to check that out. Michael and I will be back at the end of the week with the compound and friends.

We're going to have a lot of fun this week. We've been having unbelievable guests all summer, and we really appreciate how much love that you guys are showing the show. if you haven't yet hit the like button right here right now and you're watching us live go ahead and do that all right that's all we have to say thank you so much for joining us we'll see you soon