The Compound and Friends - Unstoppable Buying, ETF Inflow Records, Apple at War, Circle’s IPO

Episode Date: May 27, 2025

On this TCAF Tuesday, hear an all-new episode of What Are Your Thoughts with ⁠⁠Downtown Josh Brown⁠⁠ and ⁠⁠Michael Batnick⁠⁠! They discuss the latest in market moves, BTFD, Circles IPO, and much more! This episode is sponsored by Betterment Advisor Solutions. Grow your RIA, your way by visiting: 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

Ladies and gentlemen, welcome to the compound and friends. It is Tuesday night. We have a huge show for you. Thanks to our sponsor, Betterment Advisor Solutions. More on Betterment Advisor Solutions in just one moment. Tonight's show is really about the tug of war that we're experiencing here. The market fell into this 20% correction, almost a full loan bear market, rallied all the way back. Today was another huge day. Dow up 700 points, S&P up almost 2%. We've pretty much gained

back everything that we'd lost as a result of the trade war. And now the investor class is kind of laughing at these trade war headlines. Record setting pace for ETF purchases this year. They're buying the dip faster and faster. And that push and pull is really interesting. And we've got some really great stuff in here about Apple. We talk about the latest conference board, confidence numbers. We take a look at that relentless bid into ETFs,

which I think is a really big story. And I think it's partially generational, partially based on the demography of the stock market. We look at the taco trade and a whole bunch of other stuff that I think you'll find fascinating. Thank you so much for joining us. We appreciate you, Duncan, John, Daniel, Travis. Send them in. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of

Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities are talking about this core weave. What the hell is this thing? By the way. We've only been talking about it for six weeks. No, but no, but what is, I mean, I don't mean what is the company. What is going on? It went up 21% today.

I think it's got to be some, knowing nothing, it's got to be some sort of thing with a very short float. Market structure type of thing. Squeeze out a fucking lot. Well, the report, well, Nvidia reports tomorrow. So CoreWeave is probably like a 2X Nvidia, if it's a good report, is my guess. I don't know, dude. It's wild. I love it. I love it You love it. This thing is nuts nuts, but it's in there It's in the news. There's like news on it, but I don't know what the news is. I Bought it on the IPO day at 38. I sold it at 40

Look at you. It's at 123 playing it like buff. I mean, there's no way I was holding on to this No way way All right. So there's a barons piece Barclays downgraded it to equal weight from overweight But he raised his price target from 70 to 100 What is this and I think and I think the stocks 115? Yeah, 120 What is this nonsense is right? I don't know. All right. Shout to all the pounders who are joining us live. What a day.

Dow did. What did the Dow do 700 today? Gain back everything from last week in one day. Beautiful deal with Europe. It looks like everybody's excited. All right. The usual gangsters are here. Simon E is here. Bu buying some core weave tomorrow.

Look out below. LOL, I know the feeling. Matthew Stavick, go Knicks. That's right. Michael Griffiths, trying to shout out some new people that we don't get to. Chris Landry is in the building. He's given a shout out to serve. Got in at six dollars.

I sold it today, Chris. I made a little bit of money, believe it or not. You know what you did, Josh? You made chicken salad out of chicken shit. I did. I boarded it at 19 and then I boarded at seven. That's hot. I don't have that.

That's cold. I don't care about the fundamentals. Yeah. Anyway, I'm gone. I'm out. All right. Uh, we have a sponsor tonight. Michael, tell everybody who the sponsor is. Damn right. We do. Today's show is brought to you by our sponsors at Betterment Advisor Solutions. Imagining a better future. That's the first step. Did I say future? Investing in that future. Yeah. With Betterment Advisor Solutions is the next,

whether you're launching your own practice, looking to streamline client onboarding, or just searching for efficient ways to scale your firm, Betterment Advisor Solutions is here to help. Listen up, they automate to make tax optimization simpler. They provide support to make administrative tasks easier. At Betterment Advisor Solutions, they're building innovative tech.

All for anyone who's ever said, I think I can do better Grow your RIA your way with betterment advisor solutions learn more at betterment comm slash advisors investing involves risk performance Not guaranteed. Let's get to the show Joshua. So we're We're back within a couple of percent of record highs last week was a tough week SMP did negative two point6 percent. I think the Nasdaq was about the same, but we gained it almost all back in one shot because the quote unquote bad news from Friday where Trump goes 50 percent tariffs on the EU, they're not negotiating, and I'm getting frustrated and it's time to play my

game the way I play it or whatever. The market sort of reacted to that. And then on Sunday of Memorial Day weekend, he's like, no, actually just spoke with the EU, spoke to Ursula. We're good now. We're going to pause that until July and we'll make a deal. So Europe gapped. I don't know if you saw the European opening.

So the European stocks take this more seriously than American stocks do, I think, at this point. But whatever. Look, this is now a joke. We talked about it a couple of weeks ago. We did a show called The Market is Laughing at the Tariffs. So I guess that's still the story. And we're laughing again.

And the 50% tariff just became zero. We're back to the baseline of 10%. And that was good enough today. And people are excited about Nvidia. Call buying for Nvidia going into the report is gangbusters. But let me just read this, okay? So this is the tug of war. On Friday, Trump said he's out of patience.

On Monday, he said JK. And then the European Commission president, Ursula von der Leyen said, oh, I spoke to Trump, it's good, don't worry. And then, and that's all within 48 hours. And then we got a conference board data dump on consumer confidence. You tell me if you understand this, the biggest jump in consumer confidence for the month of May in four years, mostly driven by an increase in future expectations. That's a component of the survey where they ask people how they feel about the economy

over the next six months, what Callie refers to as the vibes. That shot up by 18 points, the biggest monthly gain since May of 2009. The present conditions climb too. That's how Americans say they feel about the economy currently. That is now at the best level since November. What do you think? What's going on here? About which part? The conference board or just everything? Both. I'm framing it as a toggle war. And for every negative, you get a positive and it's like day to day, it's almost too easy. Well, you're right.

The market is laughing at the tariff noise because on Friday, after a V-shaped recovery, the bears had every chance to just take back a little bit. It would have been perfectly reasonable tariff announcement or not to just give back 4%, right? And on Friday, the VIX got as high as 25, which is nothing, close to 22. Bond yields were unchanged. Stock futures opened. I get the market opened, I don't know if it was down 1% or more, close to the highs of the day. They totally looked past this, and they were right. Now, to the conference board thing, what do I make of the numbers?

Well, so they bought, right, they're not even waiting until the next day to buy the debt. They're like, oh, Trump spooked the futures with tariff bullshit, buying them right now. I know we're going to talk about this later. I'll save it for later. Kevin Gordon tweeted, consumer confidence up month over month in every income bracket in May. And I think a lot, we don't need to get into the numbers here per se, but I think a lot of this is just nothing more than a rebound.

I have no idea where this thing goes from here. I don't really care, to be honest, but I think that these numbers were so depressed, try it off, please. There was just a lot of pessimism, like a lot, a lot of pessimism in the face of hard data. And I think after a couple of weeks and months of digesting the nonsense, I think people are like, ah, all right, don't move over it. It's fine.

Like, is there a such thing as a correction that ends because people get bored? Like, is that a thing? Is that a thing now? Like we think about this, like we're in this like TikTok era where it's like scroll to the next thing quick, quick, quick. It's like, I can't watch more than nine seconds of something and I'm just out. Like what's next? Is that kind of what's happening here? Like I'm not, I can't focus on this tariff thing anymore.

I've been hearing about it for three months. It doesn't matter. Ben made a similar point this morning. Like the market can only digest one threat at once just because of our attention span. Like we can't focus on too many negatives. Well, what's the other, there's no other threat. It's just this. We went into this tariff thing like full speed ahead in January, the market was ready for

tax cuts, deregulation, acceleration in GDP, Fed caught it later in the year. There is no other threat. It's just this. Fed caught later in the year. There is no other threat outside outside of the normal talk Valuations a softening economy peak earnings like outside of the usual stuff. There is nothing Exogenous that is in our face. It's gonna take the market down Right like except like the usual threat like your politics like the general Alright, let me read this from Adam Parker right now. It feels like no one has strong conviction, bullish or bearish, about the stock market. He should go talk to a 27-year-old. Fundamentals might deteriorate from here.

Just look at Ross stores, missing earnings and pulling guidance on Thursday. Decker's Outdoors down over 20% on Friday on a reduced outlook. And Walmart, CFO, warning that tariffs will cause them to push up prices by 8% on some products in two weeks. But at the same time, there's hesitation to turn to bearish. Why? Retail flows are still strong. Momentum remains positive. Real optimism about AI.

Companies proving real productivity gains, input costs like energy and metals are down, and in aggregate, logistics costs should not be an impediment for most companies with prices at these levels in the second half. The dollar is also weaker. That helps US earnings. The top 100 US equities showed during the post-COVID era, they were relatively immune to rise in prices. At present, investors have generally now been conditioned to ignore President Trump, blah,

blah, blah, blah, blah. Wait, hold on. Can I just double-click on one thing as they say in Podcastland? There's hesitation to turn too bearish. People were so freaking bearish a month ago before the V. So I think people are only now not necessarily turning bullish, but I think Adam's right in the sense that people, how could you have conviction right here? I understand. I definitely don't. I understand having conviction to the downside. Like we earnings are going to probably continue

to come in a little bit lower expectations. I don't see, I don't understand having conviction to the upside. So he said, no investor we talked to on Friday thinks the U S will have a meaningful and sustained 50% tariff on European union goods. We tend to think, and many investors agree, the only tariff-related conversation that really matters is what the US does with China. And then he basically concludes by saying, taking it all in, even if macro headwinds persist, there's a growing view that S&P 500 earnings might end up being less impacted anyway.

So that's the thing. That's the big thing. That's the thing. If you are of the mind that the AI hype cycle is still being underappreciated and you don't understand that video's gonna earn, blow your faces away, then okay, fine. Maybe that's why you're super bullish.

But other than that, I don't see it. Here's some stuff I did over the weekend. I was talking about taking the bear trap theme further and talking about how you get out of a situation where you could potentially be forming a short-term top. These charts are not updated to incorporate today's price. Let's put up the first one. This is just the three indices made a lower high relative to the original high in February, all three of them at the same time.

And I think the point was like, we can get out of this. All you need is I had a great conversation with Tim Apple, I had a great conversation with Europe, and you're off to the races. I didn't predict that from Monday morning, but I literally said this could happen Monday morning at 5 AM. I forgot that it was a long weekend and the opening day was Tuesday this week, but that's like actually what happened. It happened on Monday.

The market wasn't open, but we got a barrage of tweets about how everything with Europe is fine. Put up the next chart. So, we were sitting on this 200 day moving average as support going into Friday after the quote unquote fake bad news. And you know, again, the big idea here is just like, look, there's a couple of get out of jail free cards here. One of them is that earnings continue to come in better than expected. Another one is all this tariff shit is fake and nobody believes it anymore. And then the third is unlimited buying by the retail investor, the individual investor.

And I honestly think that that's trumping pretty much everything at this point. This was a premature post by you. I'm surprised you wrote this. First of all, the gap didn't get filled, number one. Well, no, we were on the way to a gap till I didn't say it happened. Well, it does say it right there on the chart. I think you and I and everybody else would have been absolutely face melted if we just rocked it straight to new highs.

That's what it's doing right now. No, it's not. No, we did have a little... Try back on. We did have a little, try back on. We did have a little bit of a pullback. Dude, this is your fucking chart. I know, it's a 3% pullback. You literally wrote rollover,

so we had a little baby rollover. I know, but it's 3%. We made it back in one day. Which made perfect sense. What's the S&P up today percentage-wise? a 2% day 1.9% yeah I mean wild why easy here all right so here's why more important than any of this shit this is part of the big get out of jail free card the relentless bid into ETFs is relentlessly bidding here's a Wall Street Journal investors have plowed a record $437 billion

into US ETF so far this year, unfazed by the wildest markets since COVID. And if inflows maintain the current price, historically, they accelerate in the summer and fall months, it will mark the second straight record year for US ETF flows. Chart on, look at this shit. That's why. What is that? $260 billion into equity ETFs year to date. Another $140 billion into fixed income. Next chart. Vanguard S&P 500, this is VOO,

which is taking in, it looks like, more in dollars than any other ETF on the planet, 65 billion year to date. So we've had four months. Yeah, it's wild, it really is. Let me read this. No one fund benefited, Chardof, more from the surge than the ETF industry's new champ.

Vanguard Groups, S&P 500 ETF. The ultra cheap index fund has soaked up $65 billion in net inflows this year on the way to becoming the world's biggest ETF by assets. It took in about $116 billion last year. So it's going to break that at the current pace. And the guy from Vanguard, Greg Davis, the CIO said, during that period of tumult in early April, we saw a five to one buy to sell ratio. Investors have a tremendous amount of cash sitting on the sidelines.

I would love to know what it looks like historically. Five to one sounds crazy, but for Vanguard investors, is that crazy? I don't know. Well, if he's shouting out April specifically, it must be out of the norm. I'm not sure. I don't know. Can't scare these people.

I love it. Larry Fink was in the Middle East last week saying there's $11 trillion still in money market funds. So like, I don't know, does 10% of that go into, what's the iShares1? VW? I don't know if I charted this, but if you look at money market funds as a percentage of total assets, you would be talking about it much differently. It's fairly normal.

It's not super duper duper elevated. Right. Well, right, because the total assets are elevated too. Yes, exactly. It's not elevated relative are elevated too. Yes, yes, exactly. It's not elevated relative to other assets. I asked Sean for this. So VOO is Vanguard's version of SPY for people that aren't aware of what we're talking about. I asked him for net flows versus total return because I really don't think the buyers give

a shit. And I think I'm right. So do you see what I'm doing here? The bars are the net flows into Vanguard and the total return is the red line. That's just like how the ETF is performing. They just don't care. It's trending up. There are a few weird months here and there. There's probably some seasonality, but this is monthly flows into VOO over the last three years

versus rolling monthly returns, and it's just coming. I don't know. You see anything in that chart worth pointing out, or it's pretty self-explanatory, right? It just it's relentless doesn't stop. It's the most spit. All right, you're up. Okay Bespoke tweeted by the dip is back The S&P has gained an average of zero point three one percent on the day after down days this year The strongest showing since 2020 and wouldn't you know we had that today?

So the average is now higher because mark was't you know, we had that today. So the average is now higher because market was down on Friday and we were up 1.87% today. And this is the picture of the market today from FinViz. It's bright green, not a whole lot of red. What is even down? I don't even know what's down.

What could that thing in- Varicine. Oh, Palantir had a negative day today, but like less than 1%. I don't even know what's down. What could that thing in- VeriSign. Oh, Palantir had a negative day today, but like less than 1%. The red is VeriSign. You had O'Reilly, I think, did AutoZone report, AutoZone was down 3.5%. Not a lot of red out there.

Very interesting thing about VeriSign, it's the utility of tech. It's just a, it's like web registration registration and it acts more like a utility than a tech stock. So it actually makes sense that that would be down on a big green day. You see this chart. It's been on the best stocks list since September, October. I haven't I haven't managed to say a word about it. I have great taste. Um, I never owned it, but that's like, uh, it's like a utility for the internet. All these names got many baby wreck. Although it was a wreckage, uh, after deep seek. Yeah, that was, yeah, that had that go. Yeah.

One of these days, my friend buyers will be punished, but, um, we're going to, we're going to talk about, we're going to talk about the tariff rhetoric losing juice. The New York Times has a piece out today called the taco trade. Taco stands for Trump always chickens out. So I mean, this is not me. This is nobody give a man to me. This is the New York Times, which also you probably hate if you hate that statement that I just made.

But this is what Jason Carrion, who writes for the Times had to say. Stock markets jumped on Tuesday with the S&P posting its biggest gain in weeks. The index rose 2%. Analysts attributed to President Trump delaying a proposed 50% tariff on Europe. They also talked about tacos, or rather the taco trade, which is short for Trump always chickens out, the tongue-in-cheek term coined by a Financial Times columnist. Who did that? Who was the FT columnist?

Do you know anything about it? I don't know. I'm telling you right now. Oh, it? Who is? I don't know. I'll tell you right now. Oh, Robert Armstrong. Oh, I like that guy. Oh, he's good. We've had him on the channel. He's the John authors of the FT. Yeah, he's good. So he coined this term, Mr. Trump makes tariff threats only to rebound

just as sharply when he relents and gives countries more time to negotiate deals. The market dropped on Friday. Wild threats by Trump are not unusual. Given the damage the US would do to itself with this tariff, he will probably not follow through and of course he did not. Toxo, taco is the new YOLO, I guess. Is that a good way to phrase it? No, I don't like it.

What do you think? You're not going to use it? No. I don't use that term chicken out. Yeah, right? Who says that? That's not don't use that term chicken out. Yeah, right. Who says that? That's not a, that's like an 80s term I feel like. Like people used to make like the chicken noise to each other.

Yeah. I was, you know, quote to me, I never did that. Never did that shit. I would have been way too embarrassed. All right. Did you read my comments at Politico? Money morning newsletter today? I read them in the doc.

What'd you think? I give good quote. I really, I give great quote. I really do. What? I do. I spoke to Sam Sautin over the weekend. So he was trying to write a piece about the markets, how the markets are pricing in the trade war. And I totally spun him. I was like, dude, let me help you. Nobody cares about the trade war in the stock market. It might be a little bit in the long bond, like the tax stuff, the tariff stuff. The stock market is not spending even 30 seconds on this anymore. Not anymore.

And I laid out like the earnings are outperforming and people are way more focused on that than they are about tariffs that may or may not happen this summer. And he changed to his credit, he realized he's missing the story. He changed what he wanted to write about. Before you quote yourself, before you quote yourself, can I give you something? Please. This is wild. So we've spoken about this a lot.

I've never seen it quantified. So I'm so glad that Savita did it. Mike Zucardi tagged this. So Savita says the US has a higher proportion of low income consumers than almost every other OECD nation, which I didn't know that. Kind of wild. But here's the upshot. Wait, the highest what? Proportion of low income consumers. I would guess that. Okay, I would not have. But here's what matters. But its contribution to total consumption is low. And its contribution to S&P 500 earnings has declined to an estimated 2%. Holy shit. So it's up to say, but just through the lens of the stock market and earnings, the low

income consumer does not have an impact. Doesn't exist. It's wild. It's not in the stock market. Like the companies that derive their earnings from serving that portion of the population. So when people talk about like delinquencies, delinquencies and inflation hurting the low-income consumer like obviously from a human element, but that's what we're talking about It doesn't matter to the stock market. I think it does eventually when the dots get connected and it and it turns out like all these wealthy people own these mortgage bonds and things that

Require the lower-income people to keep making their payments. I think that's where that connection becomes meaningful. But we are so far away, at least I think we are so far away from a situation where a, an S and P 500 financial, um, is like talking about impairment as a result of low income people not keeping up with their bills. Ally, which is the most exposed. Like this chart looks fine. I brought this to the show last week. We talked about. Looks great.

We talked about, who do we have on the show? We had Rich Bernstein on Thursday and we talked to him about that mortgage delinquency chart. It's like, okay, you could see it now the uptick But it's not exactly Telling you that the household balance sheet is in shreds. That's not what's happening Mm-hmm. It's just like a lot of these things are coming off of generational lows and normalizing right? I'm not signaling financial crisis. Give me quote. I don't know what it was. Oh, you're about to quote yourself. You love quoting yourself

Give me a quote. I don't know. What was it? Oh, you're about to quote yourself. You love quoting yourself. Well, this was the point I was trying to make. So this I'm going to quote Sam and then my quotes in here. I said the marginal buyer or seller of stocks is a 32 year old and they literally don't give a f**k.

They are reacting to market sell offs by adding more money to their ETFs and their investment accounts. Blah, blah, blah. The booming population of retail, and this is Sam, retail investing platforms like Robinhood, now home to 27 million investment accounts. Chicken Little forecasts about downturns have never materialized, gave rise to a class of investors who haven't adhered to conventional logic during market moving events to which I said, Moody's downgrade of the treasury, I'm buying Palantir. These

are all real F bombs I'm giving him. I'm serving F bombs all day long to the journalists that I talked to. I think the bottom line is we do have a confluence of things like strong ETF flows, better than expected earnings. Buybacks. Buybacks. We have a more resilient class of mega cap companies that are not as susceptible to every squiggle in the economy.

We have subscription based businesses versus transactional businesses. We have all these things. Services. Services of goods. And then like the biggest thing, the most important thing is, we have this demographic tailwind of people who understand long-term investing,

understand compounding, and literally don't even read the news and don't care. And they're not, they're just, oh, Moody's, I don't even know what that is. Here's another $4,000 for my VOO. And should I buy one time, two times levered or three? Yeah, maybe I'll double. Oh, there's bad news in the stock market.

Maybe I'll double it. Should I buy calls that expire next week or next afternoon? Hang on. Nicole is saying that they should have taken the over on my F-bombs. I actually think that these are asterisk F-bombs because I was just quoting something else. I'm not like actually saying them. I said them at another time and I'm just repeating what had already been said. Those are not F-bombs that are endemic to the content that we're doing tonight. Do you follow me on this?

Sure. What do you think? Asterisk or? Because there's like bets, there's money involved. Stop. I'm being dead serious. I'm being dead serious. I think I was minus 16. This is not a betting platform.

Okay. Do you agree that the demography of the stock market is underappreciated or starting to become more appreciated but still underappreciated by the market watchers? I don't know. It's hard to say. I don't know how to gauge their appreciation over or under. Do you think enough attention has been paid by the people who watch the market? I also think. To the fact that we have so many buyers who don't care. The demographic downwind from younger investors.

We were talking about this today. Robinhood, net deposits was a big number. Was it 57 billion over the last 12 months, 18 billion in the last quarter? It was real, but that's a drop in the bucket. That's not propping up in the market. But remember, we're not talking about the bulk of the money in the market. We're talking about at the margin. The daily buying and selling is a fraction of the money that never moves.

But if they're insta-buy, they're not the marginal anymore. They're just there. They're insensitive, so they're not the marginal buyer or seller. They're just there. I sort of feel like they get really bullish when the market falls. And the guy from Vanguard just told you they were five to one buyers versus sellers in April. But that's not, that's not the kids.

You don't think so? That's not, that's not, that's not kids with 401ks. No, I think, I don't think they're buying VOO. I think they're probably buying SPY or IVV. Okay. Could be wrong. I want to, are we good? Do you have anything else? Any more quotes of yourself?

I have more, but we'll do them another time. So last week with Rich, we were talking about, or he was talking about how there's too much liquidity and the next bear market is going to be a doozy for not really market reasons per se, but I just wanted to reframe that conversation a little bit. That was good, Joe. It was great because it's like, oh, even interest rates can slow us down. What could get this market to just chill? And I want to push back against that.

Let me lay out the case and then I'll hear yours, your thoughts. Let's throw this first chart up, John, please. So the 30-year Treasury rate and the S&P 500, I don't want to suggest that they're moving together at all, but it's just unusual to see them both at the upper end of their range. That is not what you would expect. You would expect Treasury bonds, particularly at the 10 year and longer, to act as some sort of governor for risk appetite. It ain't happening at all. Next chart please.

So it's like, oh, interest rates don't matter. Oh really? All right, look at this chart that that chart kid cooked up. So I had him look at the inside the S&P 500 since the first hiking cycle in March 2022. And if you look at the left-hand side, the bottom three deciles in terms of market cap are getting rocked. Only 15% of companies in the lowest market cap decile, only 15% are higher.

And we're talking about three years removed later, three years later. Same thing with the second decile and the third decile. They're up a little bit, but it's only a 50% win rate. So certainly, companies that are more exposed at a higher cost of capital are paying the penalty for higher interest rates. The next chart from Torso & Slock shows growth in total employment for the Mag 7. Apple, Microsoft, yeah, this is Mag 7, okay. What a coincidence. The Fed started hiking interest rates and boom.

You're telling me that people inside of the technology sector, employees aren't feeling higher interest rates? They sure are. Look at US- The workers. The workers. Yeah, I agree. Look at US existing home sales.

Look what happened when the Fed started to hike. Are you kidding me? Absolute ice age. And then finally, we have venture capital, particularly the mega rounds, the growth equity demolished, demolished since the feds started hiking. So it's very simple in my mind, chart off please. I think what happened was it was AI. In 2022, chat GBT hit the scene and the market bottomed a month later and we never looked

back. Had that not happened, we would be singing a much, much different tune about the impact of higher interest rates on the economy and the stock market and the fed's ability to maneuver the economy and the market. And we are looking at the market today and saying, oh, I guess interest rates don't matter.

They do matter. I think that you and I actually said that in real time. How many? You definitely did. You were the first to say it. We did a video, AI saved the stock market. It literally did. It literally did. Oh, I totally agree with your take, but I do want to, there's only one thing I disagree with, which is in your first chart. This is the 30-year treasury versus the S&P. I don't think what we're saying is that the absolute level of rates doesn't affect the stock market. I think we have a chronology disagreement because look at the end of 21 when it became apparent to

everyone interest rates are going to have to go up. That's when we start getting these emergency level inflation reports. But Josh, you're right. Look at 22. The stock market got killed. That's exactly right. So it's adjusted. So it's not about the level, it's the surprise.

And the big surprise for people who were riding the market up in 2021 was that there was going to be a vicious hiking cycle the next year. Nobody knew it. Some people thought it might be necessary. When it became obvious that it would be necessary, you had a legitimate, although not very long-lived bear market in the stock, in the S&P. And I do agree with you. The only reason we have enjoyed most of the gains over the last two years is that we got a tech cycle. All of it. We got a tech cycle.

And we keep acting like 2022 didn't happen. And we keep acting like the first quarter of 2025 didn't happen. Oh, these, these kids are going to be punished one day. Dumb ass. In 2022, Amazon, 2022, it's like not a million years ago, Amazon had a 56% drawdown. 56. I just picked up Amazon and Google. Google fell 44%, okay, in 2022. And just the first quarter, Amazon and Google each fell 30% after getting cut in half. Invest, investors have been punished.

It hasn't been one way up all easy money. For who? The thing is, it's been a really long time and we had two back-to-back years of 20% gains. And this year, we had a correction that went on for about four weeks. It hasn't been a long time, dude. It just happened in the first quarter.

Amazon fell 30% in the first quarter. Yeah, yeah. And how much did Nvidia fall? I feel like it didn't happen just because of the COVID. No, I'm talking about annual, but I'm talking about like calendar returns. Yeah, 23 and 24 were great years. Not just great. They erased all of the pain of 22 and then some. I'm just tired of old people

yelling at young people. They'll have their comeuppance. They have been having it. This hasn't been a straight up line, it just hasn't. Yeah, the young people also, they're taking their lumps in places that you're not aware of. If they are employee shareholders of venture-backed companies,

which increasingly young people are, that hurts. A lot of them probably thought they would have had an exit by now. A lot of them were on Zillow picking out the house they were about to buy with their stock option. Companies cannot go public at the same rate that they were. Valuations are getting smashed down. Last week there was an IPO. We talked about it for a second.

What did I tell you it was called? I don't remember. I never heard of it. MNTN. This is actually an interesting business and I'm gonna start following it. So MNTN is a company that enables small businesses to buy television commercial airtime

via a really easy technology platform. Like you submit your 30 second video to the platform, the AI makes suggestions of like what networks and what shows that ad might work well in based on the demographic. And it's like a way that you don't have to like call NBC and say, hello, I'd like to run a commercial. MNTN will help you run TV ads.

So what's a really, what's the point? The point is the last private round they did was at 2 billion and change. And they came public at a billion dollar valuation. Yeah. Well, circle, which we're going to discuss later. So now everybody was everybody was clapping on the floor. And, you know, I was applauding. I think it's great. But my point is it's not like young people in the markets haven't taken their lumps or paid the price or lived through anything. They have and they are. Can you imagine somebody who put 10% of their portfolio in NFTs? You think

that person hasn't undergone a correction? So I agree with you. I think the old people want to see like a two-year bear market because that's their experience. We don't do anything for two years anymore. I just watched the final- We had a two-year bear market. 2022 was two years. It legitimately was. No, it literally was. All right. I don't know. Didn't feel like the market bottomed in October 2023 was two years. But go ahead. Didn't feel that way. I don't know. I just watched the last season of Last of Us. It lasted seven episodes. No spoilers. Yeah, that was weird. No spoilers. But here's a spoiler. It was seven episodes. Why'd they do that? Is it a mini series now? But this

is my point. We don't do anything that takes two years anymore mission impossible was like two so long you saw in the theater yeah I saw it last night I think I'm out we'll talk about that another time I think I'm out of that all right let's move on David Solomon is like back he's so hot right now he was in the dog house oh Oh, they thought he was done. So to recap, before we get to the numbers here, David Solomon is the CEO of Goldman Sachs. He won a power struggle.

It was either gonna be him or Harvey Schwartz. Solomon got the job. Harvey ended up at Carlisle, Harvey's a friend of the show. Harvey ended up at Carlisle. Harvey's a friend of the show. He's good. David Solomon got the gig from Lloyd Blankfein when Blankfein retired. David Solomon was doing fine. They were double and tripling down on some of the consumer stuff they were trying to do. They were trying to turn Goldman into more of a household brand. They did a credit card with Apple.

They launched Marcus, which was like an online bank slash robo advisor. And they were sort of flirting with Main Street stuff and it all went terribly wrong. And the stock paid the price for it. I think Goldman got cut in half. And what happened was all these Goldman Sachs partners who have a lot of sway internally were not liking the bonuses that they were getting and they were calling the press. Like they were. $7 million, how dare you?

Like they were doing these three martini lunches with Charlie Gasparino at Pietro's and talking shit. And so every day the New York Post had another story, you know, trashing David Solomon, Goldman's and Shambles, why are we in the consumer business? What happened to the profit sharing pool? Why is this guy in the Hamptons DJing a COVID party when the stock prices, you know, so it was really ugly.

And then here's the news that we just got. I guess this is like the inside baseball from the Wall Street Journal. I wanted to share this with you. So David Solomon went to the board of directors and told them he was going to start outing the naysayers who were talking. Rule number one at Goldman is you don't talk to the press. He was gonna start outing the people who were responsible for all this negativity and getting rid of them.

Why didn't he just fire them? He did. Here, let me read this. Solomon was going through a brutal stretch in 22 and 23. The consumer lending expansion was generating billions in losses, hurting Goldman stock, money-making partners were leaving, Solomon had taken flack for his attention grabbing side gig DJing.

Solomon told Goldman's board he was going to take action, pushing out troublemakers who he said were undermining him with their leaks. The board told Solomon he had their support. By last year, long time executives who had openly criticized his strategy were gone. The departure sent a message inside Goldman. No one is safe if they go up against the CEO and Solomon who is now 63 years old has cemented control for the foreseeable future.

This year, he got a 26% raise and an $80 million bonus to stay for the next five years. So look how quickly things turned with the stock price and the fundamentals. Let's put, let's do some charts. This is a five-year price performance of Goldman Sachs. the five-year price performance of Goldman Sachs, Rockin and Rollin recently made a new high at the end of 24 and is still hanging in there. Stock has annualized at 30% a year for the past five years. No company fires its CEO if the stock price is annualizing at 30% a year, right? Right.

Okay. That's why. Earnings hit $14.12 for Q1, which is up from $11.58 a year earlier. Net revenue, $15 billion, 6% year over year, 9% over last quarter. Return on equity, 16.9%. Nice. Yeah. Asset management and wealth management on fire, net revenues 3.68 billion, authorized up to 40 billion in common stock. So like they're back.

The stock is back, DeSalle's back. And I think the instructive part of this, tell me what your takeaway is for me. It's like, it's so easy to look at a stock price and come up with a narrative where it's just going to keep going up or down. 100%. We have to remind ourselves like nothing lasts forever. No trend, no narrative. Like even Tesla, like the narrative on Tesla is

No one will ever buy a car from this jerk again because everyone's mad at him Dude, he's back. He's returned to office Yeah, what a stock price the stock price is ripping because they know they know Heat the narrative has changed now. He's back He's innovating at Tesla again. He's not running around the White House with Trump. You can't ever get so positive or so negative in response to, I don't know. What do you think? I think that they did a lot of damage to their brand equity. That was real. That was a horrendous misstep. Goldman. I'm pretty sure we spoke about it in

real time. What are they doing? Goldman is like the creme de la creme. They're going down market like that's not Goldman and They fixed it. They cleaned it up. They got rid of it. And I guess all's well that ends well When you're a new CEO and Solomon is 63. So let's say at the time he's taking the company over his late 50s, but he was an insider though Yeah, but he's a Gen X. He's a young Gen X. Like he wants to do something different. They, you know, they want to make their mark on the-

No, he's an old Gen X. Old Gen X. Old, is he old? Yeah. He's 63. What was Blankfein though? Was Blankfein a boomer? He's a young boomer, I guess.

Okay, fine. So it's Gen X, the first GenX CEO at Goldman. But he wanted to make his mark, I get it. He wanted to make his mark. Like, you know, they all kind of want to put their stamp on this is what we're doing with Goldman. I totally understand that. It was wrong.

It just didn't work. All right. Let's talk about Circle's potential IPO. Not potential, I'm sorry. Circle's IPO, they're going public on around June 4th I believe. There was talks that maybe they were sniffing around Coinbase or Ripple for an acquisition. So before we get to Circle proper, I just want to talk about the state of the IPO market. This is from Jeff Richards, excuse me. All right, he says the last 20 IPOs, we're up 55%, six are over 100%. So back, I mean, these are real numbers.

Like these are- Would you have guessed that? I wouldn't have. I don't know. I knew that it was healthier, but no, that's real shit. So the story with circle is somebody, let's give some of these names before we go to circle though, because it's really interesting. Um, MNTN, which we talked about five seconds ago, which one is that the boner pills or is that something else? Oh, that's, that's uh, the virtual

digital virtual Physical therapy, right? Etoro is more crypto shit. Coreweave is like Nvidia's. Hang on. E-Toro is not crypto shit. It's like Robinhood. Right.

So Robinhood is crypto shit. Yeah. Well, dude, you wouldn't describe Robinhood as crypto shit. It's brokerage platform. Sortages do. No, it's a brokerage platform. Service Titan, which I also think is a really interesting business. I was there the day that came public.

That's like software for landscapers and pool companies, service companies. It's like Toast. You know how I'm invested in Toast? Yeah. It's like the software company for restaurants. Service Titan is sort of the same thing, but for like people that have services business. Really interesting story founded by two brothers. I think they were immigrants or their dad was an immigrant to this country. It's worth reading.

Ingram Micro is a private equity catch and release. Clavio we had that one back out from Intel. Clavio is a big one, Instacart Arm. So the average of the last 20, it's basically a billion dollar IPO size at an $8.5 billion valuation. That's great. A 55% return is phenomenal. So the mission statement from Circle is to increase global economic prosperity through the frictionless exchange of value. And their whole business is this thing called USDC, which is the second biggest stable coin

behind Tether. There's about $60 billion in AUM, I guess they call it. And there's no yield, as far as I can tell. And so their business model is clipping the coupons of short-term treasuries. Why would somebody put money into a stable coin with no yield? Explain what the purpose of this in the ecosystem is. Once you are in crypto, once you are on the rails, you are on the rails. There's no like outside of this, there's no like crypto to dollars. You'd have to go from Coinbase back to JP Morgan, wherever you want to go. If you are in crypto, you are a crypto native or you are a crypto whatever, and you've

got, I don't know, whatever, $30,000 in Bitcoin, and you want to sell five because you want to take profits, well, then you're going to go into a stable coin. If you were in like real crypto, not crypto ECS. Because that's where you go. There is no cash. You go from Bitcoin to a stable coin, and then you want to get back in whatever whatever and As far so also like the ability to just transact seamlessly frictionlessly instantly without any fees Like it makes sense. It makes sense that this is the future of the financial rails USDC the which is the circle stable coin that we're talking about is

smaller than Tether. But my understanding is because they are the house solution at Coinbase, it's growing way faster than assets going into Tether. There's also been a ton of allegations that Tether is up to some shady shit, that it's the preferred- Since day one. Yeah, forever. Okay. Here's the offering.

New York Stock Exchange, which I found interesting, not NASDAQ. 24 million shares priced between 24 and 26. I'm sure that's going higher. They want to raise 624 million. JP Morgan is the lead. Citi and Goldman as well. Ticker CRCL. It's a $6 billion market cap, a six and change,

if they get that valuation, that many shares, which I think is also pretty impressive. I don't think this happens if Bitcoin's not 111,000, Trump's not president, and Coinbase is not one of the biggest companies in finance right now. Like you needed all those dominoes to fall for people to be excited to invest in a stable coin company. Right? Yeah. Okay.

And that's how they make money is they're holding cash that people have no expectations on. It's one for one. And they're earning a yield on it. It's one for one backed by dollars. So let's stop these two charts. So this is the market cap. It's just the amount of dollars in the system. Got drained during the crypto pullback.

Apocalypse. But look at this revenue. It's pretty wild. So in 2022, it was $735 million. And two years later, it's- Hold on. $735 million. And two years later, it's... Hold on. $735 million in revenue, just clipping bond interest off of cash deposits?

What a business. And then two years later, boom, $1.6 billion. Kai'sha's stupid question. Are Schwab and Fidelity asleep? Why would neither of them have bought this company out? They're afraid of the regulatory? I would assume, yeah. Is that what it is?

Because that's the business they're in. They're in the same business. Fidelity is a very conservative business. Schwab is in this business. I'll hold your cash and we'll earn on it. There was no chance with the Gensler, the way that he was behaving. They could have done this in January.

They probably should have, honestly. Now this is another off ramp away from TradFi with tons of money in it. They could have controlled it. So I would guess the biggest risk to a company like this is interest rates. If the Fed cuts twice, that's directly less money. They actually list that as their second biggest risk. So in every company that goes public has to file what's called an S1. And the S1 is a document by lawyers for lawyers.

Basically it's just don't sue us. We have no control over the price and here are the biggest risks that you're taking if you buy the stock. And they exaggerate. They'll put in 700 different risks just because when the lawsuits start after the first quarter where the company misses expectations, they're like, we told you this was the risk. Number one, regulatory uncertainty. I would argue that risk is pretty much gone.

But I get why they would put that at number one. Potential legal challenges, blah, blah, blah. Interest rate sensitivity too. Circles revenue is heavily reliant on interest income from reserves backing USDC. Fluctuations in rates can significantly impact profitability, make the company vulnerable to macroeconomic changes. Okay, that's a risk factor for every publicly traded financial institution, crypto or otherwise. Number three, market volatility.

Crypto is known for its volatility. I would argue that is the basis of the popularity of crypto. Number four, dependence on key partners. All right, this one's big for me. This is what kept me from being interested in CoreWeave, by the way. I don't love investing in businesses that are built on other people's businesses. And I know that's a little bit naive because to some extent, everybody relies on everybody. This one seems acute.

Circle's business model relies on everybody. This one seems acute. I don't know what percentage of the money coming into USDC is coming from Coinbase. I guarantee you it's a lot and it's growing faster than other sources. Because what else is there? Who else is funneling money into USDC right now? Who are their other key customers? I don't know. Probably Kraken. I don't want to crack. Kraken?

Maybe. I have no idea. Is that important? I have no idea. All right. In other words, what if Coinbase introduces its own stablecoin? I'm sure they already have one and I just don't know about it. And what if people just decide, Coke and Pepsi, I don't care, direct my money into this? Or what if somebody says, okay, new feature, here's a stable coin and we're actually gonna pay five basis points.

I think that's why they're coming to market at four times earnings. Because people understand that risk? I would assume and others, it's not gonna, I don't know what the next product is. Well, here's fifth risk, competitive landscape. The digital asset space is highly competitive. Numerous players offering similar services.

It's a token backed by a dollar. Like, I think that we spoke about this. One of the things that you shouldn't say is there's no moat. Right? Like, if you invest in a company that you had said that about five years ago, maybe it's anecdotal, but like competitive landscape. That's one of the things people, including myself, have consistently gotten wrong. Yeah.

They said Netflix had no vote. Netflix, right. Yeah. And I've said that shit too. And I was dead wrong. By the way, I was dead, dead, dead wrong on Coinbase. My argument was if we're really going to get ETFs, then why the hell would anybody transact in coins? Wrong.

Concentrated voting here. So public investors, if they buy the stock of Circle, they're buying the A class, which is one vote per share. That's what's being sold. The three founders control the B shares, which are not currently being sold to the public. They have 30% of the vote because those B shares are five votes per share. I like that. The founders retain, they don't have total control. They can be outvoted by the A class.

It's just very unlikely if they have a 30% voting interest. It's hard to picture the rest of the shareholders. And you know what, if you, if you don't like it, you can sell a stock. That's not like a giant risk to me. Net income of 156 million on revenue of 1.68 billion in 2024. That's versus net income of 268 million on 1.45 billion in revenue the previous year. So net income is falling, I guess, because it yields on the money. There's levels that they could pull on the expenses. All right.

Here's my bottom line. I actually think stable coins are the most useful, maybe only useful thing to come out of all this crypto stuff over 16 years of this now. They actually... That's a little bit dismissive. It's a new asset class. That's not nothing.

No, I think that this is the most useful part of everything that's been launched. This is the actual thing that works and is needed. If you come out of Bitcoin with a huge gain, you need to go into something else or else it's going into the traditional finance sector and a lot of the people that are in Bitcoin are there for a reason. They don't want, so this thing actually does its job and it's actually useful. I don't know about a company based around it, but I guess we're all going to find out together. I think, I don't know, can you tell me why somebody, if somebody has the choice, if they're on Kraken or Coinbase or anywhere, why would they direct money into Circle versus Tether or another product?

I don't know. I don't want to make things up. There might be a yield component. I really, I don't know. Yeah, that's the answer. I don't know, I don't want to make things up. There might be a yield component, I really, I don't know. Yeah, that's the answer, I don't know. All right, you buying the IPO if it opens roughly high 20s where they're pricing it? I'm not, there are too many other things for me to invest in right now. Too many fish in the sea. All right, guys, let us know if you're buying.

We want to see in the chat and let's get a little bit of the gauge of whether or not people are bullish on this thing. All right. I'm going to make the case. We wrote up, Sean and I wrote up Snowflake for best stocks in the market at CNBC Pro. One of the poster childs of the excess in 2021. So funny. We were talking about that 2021, 2022 come up and this was it.

This was it. A quick recap. Snowflake came public in September 2020, about a year before the top. Was it 100 billion? It was they raised 3.36 billion, $120 per share. The stock opened at $300 per share. So I think it was worth 100 something billion out of the gate. Nuts.

Oh, 75 billion right out of the gate. That was a multiple of 75 times it's projected for your revenue. Revenue. Your revenue. Revenue. Your revenue. It was the first time I can remember seeing Berkshire Hathaway on the holders list of a hot new issue. Everyone was like Berkshire sold it way lower than 300. They're out of it. But if you thought that was the top, this is what's interesting, If you thought 300 was the top on IPO day, it went to 400. A year later, the stock topped, Snowflake topped in September of 21 or November of 21

at 402 and that was it. Then the stock collapsed 70% to a low of 107. When do you think it made that low? Probably around June of 2022. Last September. Oh, my bad. Okay. So in other words, it came public September of 2020, bottom September of 2024. It had a three-year period where if you held it, you actually lost money.

A funny thing happened though. The CEO stepped back. The main CEO was super popular guy in Silicon Valley, very well respected. But when you have a stock price collapse from 400 to 100, nobody cares. He promoted the company's head of AI to become the new CEO. I forget the guy. I don't promoted the company's head of AI to become the new CEO. I forget the guy. I don't know the guy's name. And they started to put together a few quarters in a row of 25% growth and surprising the street.

Like the estimates got pessimistic enough that they started to beat them, which is why Sean and I chose to write this name up. It hit the best stocks in the market list last week, made a new year high. It's still 50% below its all-time high, but it's a double off the lows. And the argument we're making is like, professionals don't care if it's 100% off its lows. So long as the fundamentals are improving at a faster rate than the expectations, the stock has room. So we have a chart of this.

I don't know if we did a chart. Doesn't matter. Oh, here it is. I think this is pretty obvious. That 175 level is sort of meaningful. So if you're playing this as a trader, I don't know, that's where I would pivot off of. And if you're a little bit more of a long-term investor,

wait for that 200 day to start rising a little bit and maybe use that on a weekly closing basis. What do you think about this as an entry? Here's what I would do. If I was looking at it long enough. Wait three days. I would see how, if it gets into the gap, see how it behaves at the gap. If it doesn't get into the gap over the next three or four days, it's going way higher. That's

what we said. Low volume pullback to see how it handles that, that, that, uh, the bottom of that, uh, rally. Yeah. But this looks good. Fundamentals. Um, you're going to, you're going to be hearing more about this name as an AI story than you have previously, because again, the guy running the company started out on the AI side of the business. And now, here are two things Sean Paul that I thought were important. The first is they have over 600 companies paying them more than a million dollars each That reminded me of CrowdStrike, which I now have I think a double or more in the stock. Oh, I'm high today, right? Yeah Gross margins are expanding so they're not at full year profitability yet. That's why this is not in the S&P

But that's where they're driving toward and they'll get there and, and when they do, this'll be an S&P component, because market cap wise, it's too big. But the other one, and I love this stat, Snowflake's net revenue retention rate hit 124% this quarter. Net revenue retention means the existing customers, not only are they staying, they're upping how much they're spending with Snowflake.

And I think that's because of the AI stuff. So you need your data clean, organized, unified. You can't do anything AI if your data is not in good shape. And that's kind of what Snowflake's business is. So if they can get closer and closer to profitability, I think the stock can stay in this area. So that's our make the case. What do you think? I do like it. Bullish?

Bullish. How many shares can I put you down for? Not yet. Not yet. No, go to make the case. I like it. Okay. Mystery chart. I sent this to you, John, over the weekend. Okay, here we go. I forgot what it looked like. All right, Josh, so would you buy this stock? Or would you buy this chart, excuse me? Does this look bullish? No. Okay.

I hate charts like this. It's just sloppy, range-bound, right? This is a ratio chart? Yeah. Okay, is it two stocks, two ETFs? What is it? It's a company versus the index. Versus its own sector?

Versus the S&P. Okay. And so what you could see is that over the last five years you would have been no better off owning this versus the index. No better off or you'd be down. Well, yeah, whatever. Same diff, flat to down.

Okay, I'm gonna say Apple. Love it, great call. Look at that. Really good guess. Yeah, this, I mean, this thing is just. I mean, this is a really big story. I think that it's not being discussed. This company is not growing anymore.

No, they hit the, it's a replacement cycle business. They hit it, everyone said it would happen. It did. And it happened. And it did. And we were speaking it's a replacement cycle business. They hit it. Everyone said it would happen. It did happen. And it's it. And we were speaking about this a lot last year as it made that run, right? It was like, it was like the anti deep seat. Like they were not in the business and they were getting the premium. They were getting the benefit for that. But it, but the multiple never did it make sense. Like why was Apple trading at 35 times next year is aware for however high it got up to I'm gonna tell you worse way worse than Their failure to be at the forefront of AI so far

they're getting their ass handed to them in court over this antitrust stuff they lost to fortnight and This is crazy. It's actually crazy. I don't even think people know that this is going on Epic games sued Apple because Apple would not allow Epic games to sell things in game and bypass the app store. And Apple basically said, these are our terms and conditions. If you wanna have an app in our app store, we take a 30% cut of whatever your sales are

if it's an in-app purchase. This applies to every app you can think of. You want a Spotify subscription using the Apple app store, Spotify is going to take a chunk of that money and give it to Apple, even though they compete because of Apple Music. This is just the rules. And Epic said, we don't think that's, we don't think that

that's fair. And they took him to court and it's been going on for years and Epic Games, which is the parent company of Fortnite won. And a judge said, Apple has to allow Fortnite players to be able to buy things from Epic Games in-game that goes around the payment mechanism of the App Store. And Apple refused to allow Fortnite to have an app in its App Store. And that is against the judge's order. So after the court case, Epic Games resubmitted its Fortnite app to Apple. Apple took five days and said, f*** you, no Fortnite.

Now, most of the gamers don't care because they're on Xbox, they're on PlayStation, and that's how they access it. But people do, like, it's a big deal and the judge wrote this like fire and brimstone missive back to Apple. Like what gives you the right to defy a court order? You have to reinstate the game and give it permission to. So Apple losing that for the first time ever jeopardizes this cash machine they have. They had a stronghold on every app that wants to reach Apple users and now they might not.

So no shit. The app store is their crown jewel. It is the highest margin component. Everything else that they do is hardware and every business line from AirPods to the watch to the iMac to the iPad to the phone. They're all massive, amazing businesses, but guess what? They're not growing. And not to mention the threat from OpenAI and IVE, whatever the hell they're building, if they build the next generation of whatever user products we're going to do, that's not at the stock price. And so Apple is the best company in the world, but it's not growing and it might still make money, shareholder yield and all that. They're going to buy back a ton of stock.

They're going to pay the dividend. But is Apple going to outperform the S&P over the next five years, over the next 10 years? I'd be not surprised. You know what's so crazy? It's still a 30 multiple. Like you can't even come out and say, there, there's so much pessimism around an apple. I'm going to buy it. There's none.

There's not. And, and, and, and it hasn't up-formed over the last five years. What's to think it will over the next? Yeah. Um, and then they have the China stuff and they want to pivot some of the, they only make one product. They only make one hardware product that matters in America. They make the Mac Pro, not the MacBook Pro, not the laptop.

The desktop highest end computer is made in Houston. And Trump is like, hey, don't shift the iPhone from China to India, because that's not what we talked about. shift the iPhone from China to India, because that's not what we talked about. Make the iPhone here. People look at each other like, no way. Cannot make an iPhone here. Yeah.

Maybe you could make more of the computers here, I don't know. I would be the last person that would know. But, so they are sitting, so Apple is sitting at this confluence of the absolute worst things, worries about consumer demand staying up, worries about tariffs, worries about China versus US. How about not being an AI and being threatened by it potentially? Failing to implement consumer AI in a meaningful way, no AI on the phones in China, all the Chinese made phones have AI,

and Apple is trying to compete in China without it. Like, and then losing in court, something that could literally jeopardize their profit margins from the greatest services business in the history of the world. That's where Apple is right now. And it's not great. That's not great. It's not great politically, geopolitically. It's all it's and it's all and

it's expensive. So, so other than that, other than that, bye bye bye. Yeah. The setup is nice. All right, guys. That's it from us this week. We, we, we appreciate everybody who came out for the live. You guys are hilarious looking at your comments. Literally, we have the best audience on YouTube. Thank you so much. To those of you listening in Podcastland on Spotify and Apple podcasts, we appreciate you. We love you too. Please make sure to listen to an all new edition

of Animal Spirits tomorrow morning. That's right. Michael and Ben. Yeah. Yeah. And then we'll have the usual slate of content here on YouTube across the compound and the Ritholt cinematic universe. We'll do Ask the Compound. We'll do the Compound and Friends and you guys are going to love it. Okay. That's it. Thank you so much. We'll talk to you soon. Good night. Whether you're just getting started as an investor or you're managing a Good night. visit riddholtzwealth.com. Don't forget to check us out at youtube.com slash the compound RWM.

Make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.