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$MSFT $META $HOOD EARNINGS RELEASE | STOCK MARKET TALK
Recorded: July 30, 2025 Duration: 3:53:36Space Recording
Short Summary
In a dynamic discussion, key topics included the strategic partnership between Genius Sports and PMG Partners, SoFi's capital raise to enhance its home lending business, and the Fed's decision to maintain interest rates, signaling a stable economic environment that could foster growth in the crypto sector.
Full Transcription
Thank you. Thank you. All right.
Good afternoon, everyone.
Happy Wednesday.
Happy FOMC Day. We are obviously
starting a little bit early today because we are just, we'll call it four, just under four minutes
away from the Fed rate decision. Of course, everyone expecting a hold of the current interest
rate there. And then we'll have some discussion around it. And of course, when Jerome Powell
comes out for his speech and says good afternoon with
a purple tie on, we will bring that all live right here on Stocks on Spaces, working on
getting all of our panel and everything up here.
And yeah, we'll dive right into it.
Just a quick market update.
As we go into this, we are slightly green on the day.
The S&P is up 0.2%.
NASDAQ up right at 0.4%.
I see IWM is up 0.88, almost a percent up on IWM.
Dow is break even.
You have kind of a mixed bag across most of your MAG-7 stocks, some red, some green.
NVIDIA outperforming up 2%.
And then you have Tesla, Apple, Amazon all on the red side of things.
And yeah, we'll see. We'll see what happens. Trump is currently making some comments right now. He's
right out of the Trump playbook, as we say on this space, or at least I say on this space,
trying to big league pal just a little bit. So making a lot of comments around the rate cuts here. Several other things. India negotiations was mentioned just a few moments ago. But too
late pal needs to cut. According to him, he also did make the comment, I hear that the Fed will cut
in September. So that just came out of President Trump right there. I see we got Evan joining us
up here. Let me get you that co-host.
Trader Market News, how are you, sir?
If you're not able to speak right now.
I am doing well.
I'm looking forward to this.
Absolutely.
We've got a good panel coming up here as well.
We are two minutes away from this release,
so I don't really want to toss it to someone right away and get cut off with the
breaking news coming out evan is there any all right oh never mind i know ally is covering this
pretty closely so ally what are we expecting here there's nothing expected for this thing
um we know he's not going to cut i i do have my hey justin we're we're cutting race by 25 basis
points sweet ready to go i need to really make sure i don't send it out by accident i I won't. But we know it's going to be nothing here. There's no summary of economic projections.
Maybe we're watching for language that's changed. Obviously, we got Trump coming out saying, hey,
they're cutting in September. I just took 30 seconds, so it's a minute now. But how are you
doing? What are your thoughts here at second out? Yeah, no change is what I think. Maybe, yes, looking to see any change to the
press release, to the actual statement is something that we're going to continue to watch.
But I personally think that really it's the presser that's going to be the main thing here
that we want to keep an eye on, what is said by Jerome Powell when it comes to the various
economic data points that
we've been receiving. Obviously, we got solid GDP data this morning. However, under the hood,
there is some underlying weakness. And that's not just the GDP data, that's with inflation and jobs
as well. So any commentary from the Fed chair on any of those data points that's going to be closely
watched? Yeah. And we're going to have, we went live this time. We're going to have like 30 minutes to go
in and talk about it. We felt like this was a good time. We don't need to sit here for an hour
talking about, hey, are they going to cut rates by 25 basis points? We know they're not. We know
they're not. I thought the Powell comments were interesting. I also think the fact that we have
Jackson Hole in between now and the next meeting makes me also think, hey, if they want to change their policy, Jackson Hole is a time that has historically been used to do that.
So maybe they even hold off in some signaling today.
We'll see.
All right.
We are now here at 2 p.m. Eastern.
Fed leaves interest rate unchanged.
Bowman and Waller dissented in favor of a cut.
Those are the first two things I see
Nick Timmeros has a tweet out already
There we go
I guess there is something there that's interesting
That dissent, but even we kind of knew that
9-2 was the vote
With those two dissentees
I'm reading through this release here was the vote with those two dissentees.
I'm reading through this release here.
I would imagine markets shouldn't be moving off of this.
They pumped up a new high of date here.
Not a huge move by any means,
but they are pushing up just a little bit higher on this.
Growth of economic activity moderated in the first half of the year.
The struck out has continued to expand at a solid pace.
Uncertainty about the economic outlook remains elevated.
They removed the term has diminished in the middle of that as well.
So it's the only real changes that I see in any of this. Yes. So Allie, let's come back over to you first. And
first reactions here, we got what we expected, no cut, but we do have two people dissenting.
And just what are your thoughts around? I know you rushed into us. We
appreciate you, of course. But what are your thoughts here as we got the release?
Yeah, so Waller-Bowman dissenting is not a total surprise to me. We know these are two
Fed governors that have been potentially jockeying for this job as Fed chair from President Trump.
But again, I want to just keep reminding everyone that no matter who is ultimately elected as Fed chair from President Trump. But again, I want to just keep reminding everyone that no matter
who is ultimately elected as Fed chair, there are still other members of the FOMC and ultimately
the majority rules when it comes to the decision on interest rates. So even if we do get a more
dovish Fed chair, that doesn't automatically mean that we are going to see rate cuts.
Economic growth moderating in the first half of the year. Now, there's been a lot of talk about how tariffs have maybe artificially led to weakness, artificially led to some strength.
I'm looking at a note from Morgan Stanley, economist Michael Gapin. I'm a big fan of his.
And he wrote after this morning's GDP release that domestic demand was much softer than the
headline GDP. And we saw that as slowing to a 1.2% pace.
That's compared to 2.7% over the prior year. We also saw a 30% drop in imports after some of that
first quarter front loading, and that exaggerated some of the headline GDP numbers. So growth,
as we know, it's part of the Fed's dual mandate. They're continuing to be focused
on the growth side of the equation. The labor market remains strong. However, we did see Joltz data come in a little under what was
expected. 7.4 million job openings in June. That's down from 7.7 million. The hiring rate fell. So
softening demand for workers may be starting to creep in there. And then when it comes to inflation, in the previous CPI report, we did see some price jumps in apparel, footwear, furniture and bedding.
So there are signs that tariffs are starting to make their way through the economy, make their way through the system.
Economists have told us that this is going to take some time, likely in the back half of 2025 and maybe even potentially
2026 is when we're going to start to see some of that impact. So that's a big TBD factor for the Fed.
Even though they are data dependent, they are monitoring all of these developments in policy.
And I think there is some PTSD for what happened in 2022 and how we saw inflation really get out
of hand and out of control. And that's
something that the Fed really doesn't want to happen this time around. So not a lot of changes
here like we've been talking about in the actual decision. I think the more interesting part of the
equation, though, is going to be what Powell has asked about in that presser, how he responds.
is asked about in that presser, how he responds. Traders are still fully pricing in at least
one rate cut this year. Now earlier, that was at least two to three rate cuts at the start of the
year. So we are starting to get a little more conviction that maybe there is just one Fed rate
cut possible. But TBD, when that comes and how much the Fed decides to cut,
whether it's 25 basis points, whether it's that surprise jumbo 50 percent basis point cut that
we saw last year, I have a feeling if we do cut, it's just going to be in that 25 percent basis,
25 basis point range. But again, all things that everyone has their their mind on. And
also curious to dig into more of the commentary from the dissents as well.
I keep hearing this argument, Ali, about the inflation numbers are improving. They're going in the right direction. Why is the Fed not cutting, even though they're saying data dependent? What are your thoughts around that piece?
dependent. What are your thoughts around that piece? Yeah. And that is a question, right? I
mean, if you truly look at the data, the labor market seems solid, although there are those
cracks underneath the surface and you don't want to get into a situation where unemployment rises
unexpectedly. And then you do have CPI that's coming in stronger than expected. So yes, if
you're just looking at that picture there, it is telling you that the environment is a good continues to move. Now August 1st is
the deadline. That wasn't the case a few weeks ago. So there's still a lot of knowns within this
market. It's still to be determined whether or not tariffs are going to be a one-time price increase.
The textbook, as Drumpal said before, the textbook tells you that you can largely look through this
and that it will be a one-time increase, but we are in such a different economic environment and the effective tariff rate is
going to be so much higher than it was at the start of the year that we don't know whether
we're going to see that one-time increase. Will we have persistent inflation? And that's something
the president does not want to happen. I mean, that's one of the main reasons why he was elected, because a lot of Americans out there were feeling this pressure at the grocery store, pressure with egg prices. So he doesn't want that to happen. And I think in a lot of ways, he's hoping that these tariff revenues can offset any of those inflationary responses. But yeah, I mean, if you're just looking at the data and not listening
to anything else, it does seem like you could argue that a cut can happen now. But I do also
think that the Fed has maintained this stance that they believe they're in a position that they have
more time to wait, that the economy is solid, and that we haven't seen any big reversals on the consumer.
I will say, though, I've been digging through a lot of earnings reports and we're going to be
getting some more over the coming weeks when it comes to consumer specific companies,
especially those companies that are more exposed to lower income consumers.
And they are seeing some of that pressure. So I think this ultimately is a question of how
resilient the consumer can continue to be, because as soon as the consumer stops spending, as soon as the consumer stops pulling back, I think that's when we're going to see some of those cracks become a little more pronounced.
As you were mentioning tariffs, we did have an executive order signed implementing an additional 40 percent tariff on Brazil, bringing the total tariff to 50 percent.
Good time. I appreciate you,
Ali. Hope you'll hang out with us up here. Options, Mike, saw your hand go up. I want to go over to you next, and then we'll continue around the panel. Hey, Ant, long time. I was going to bring up that
the White House is trying to steal the thunder from the Fed here, signing, you know, raising
tariffs on Brazil, raising tariffs on copper here, and signing a executive order implementing a population address the
effects of copper imports. Also, where was the other one here? Said something else. United States
national security economy by suspending the de minimis exemption for commercial shipments
globally. So it looks like the administration is trying to take a little bit of the thunder out of
the Fed here and do their things right now. Listen, this was no surprise. The two dissents,
I thought, was the most interesting part of this, both Waller and Bowman. So it'll be interesting
how Powell addresses this in the conference call. But I think this is exactly what we thought we're
going to get. And the market here is almost no reaction. So it tells you it's all about the
conference call coming up here. And what is know, what is at this presser?
What's Powell going to say?
How does he react?
And does he hint at a September cut?
Trump out just before the announcement is saying, I was told we're getting a September cut.
So he continues to put his pressure on the Fed.
Yeah, interestingly, copper futures are currently down 10%.
They were down as much as 17% as soon as that news came out.
So that's HG, if anybody's wanting to follow along on that chart.
Appreciate that options, Mike.
Lou, I want to bring you into the conversation next and see what thoughts you have, maybe
around anything that Ali was mentioning there.
And of course, with the Fed rate decision here with two dissents.
Yeah, I'm just a little bummed out. I mean, this day's episode of the soap opera
between Powell and President Trump
is kind of just a nothing burger, right?
Like, I don't see anything yet.
I think Ali's absolutely right.
It all comes down to the presser.
I appreciate her comments too about,
look, this is hinging on the consumer
and then don't read too much into the headline GDP number
because that 3% growth
really needs to be backed out and leveled out with the one-time effects from Q1. So then you
get around 1.5% growth, which again, leads you to the Fed should be in a position to cut rates right
now. I just worry, similar to Allie, that what keeps Jerome Powell up at night is the fear of the late 70s
when the Fed was cutting rates and inflation reignited and took off. And that forces him and
the Fed to sit back and wait too long here. And this is a classic case of, in business,
you never have perfect information. If you wait around for perfect information, it's too late,
the decision's passed you. And I just worry that if Powell and everyone except the two dissenters, which again, Options Mike was pointing out,
this is the first time, I think, since 93, we've had a double dissent. If you wait and see,
you're waiting too long. You're trying to play catch up. The labor market is definitely showing
some signs of cooling. But again, it comes down to me, it's not about the cut, the next cut. I think it's really,
and this is what is keeping the Fed waiting for more data, is the market knows as soon as the
Fed starts cutting, they're going to keep cutting, right? So it's about the trajectory. It's not 25
basis points or 50. It's the expectation that's baked in there that once they start cutting again,
it's because they've got the all clear and they've got to normalize rates. So I still think I'll be paying attention to the Fed futures here. The Fed watch tool didn't really
move at all on the press release, but I think on the news conference, we could see a big move
in September. Right now, you got about, gosh, 60% betting on a cut here coming in September.
So I think that's the most likely odds
is it starts in September
and we get one more cut this year.
To your point, I was just attacking the FedWatch tool
and I was checking another spot as well.
It looks like it's jumped up to around 68% chance
of at least a 25 basis point for the September meeting and 65% chance by the December
meeting. That's what I'm seeing here. It is interesting, you know, that initial reaction
there. Lou, what are your thoughts around the two that descended? Do you think any of this is maybe
pandering for a potential job spot? Do you think that they are being genuine and saying, hey,
we definitely should be cutting rates
and we're not afraid to dissent away from Powell?
I can't speak for anyone,
but I can see how it can be perceived in both ways, right?
I think just as much as Jerome Powell
has cover to keep rates higher for longer,
I think the two dissenters also have cover to say like,
look, the data suggests it's okay to cut.
One thing I will point out,
and I'm starting to hear this talked about more, but not enough, and I don't know that it's bubbled up to the Fed, look, the data suggests it's okay to cut. One thing I will point out, and I'm starting
to hear this talked about more, but not enough. And I don't know that it's bubbled up to the Fed
level yet, is while everyone's so focused on inflation reigniting, no one's from the tariffs,
no one's talking about the counterbalance in AI being deflationary. You're starting to see layoffs
happen again, largely in the tech sector because of AI and inflation, I mean deflation. I think
that could be the variable here that comes in and mutes any impact from the tariffs and really
would justify cutting sooner than later. But again, to be determined, Q1 GDP had a full percentage
point of growth from AI investments. Looks like capital expenditures are up 40% year over year
in Q2.
So that AI deflationary factor, I think, is going to come in much more heavily in the back half of the year.
And that data-dependent piece that we always hear, and we'll hear that nine times, I'm sure.
I don't know what the over-under is from Powell, but what question would you ask?
Would you ask that same question of, okay, we're seeing inflation come down. Why are we not cutting? What's one question that you would ask, Powell, today if you were at the meeting? You haven't had an overwhelming convincing argument that the tariffs are inflationary. Lay out the data set.
Be transparent.
Show your work.
Going back to when I was in school, you had to do math and show all your work.
I think the Fed needs to do the same.
If you're really data dependent, give us all the data that you're looking at.
Articulate it and articulate how you're weighting it in your decision-making process.
I think you're not going to get an answer, but I think that's what needs to be answered
to really justify why they're staying on hold right now.
And I think he will be asked that, by the way.
He's been asked that in previous meetings,
but I do think he's going to be asked that today.
And also just interesting to look at the bond market
because the bond market has just been so stable.
Nothing seems to be
freaking out some of those bond traders. I mean, we saw the 10-year yield below 4.4%.
30-year yield is still below 4.9%. And it's just interesting considering how crazy those moves
were throughout the spring. And now everyone's not concerned anymore. We seem to be on a good path.
Everything needs to be chill. Stocks are at record highs, bond markets steady. And there's
been a lot of talk about whether or not sentiment's too high. And we're in this over euphoric
state in markets. But even there, a lot of strategists and sources that I speak with say,
no, we're not there yet. So and it it feels like the Fed too, has really taken a
backseat in a lot of these stories that are happening. It does seem to be focused on earnings,
AI potential, what we're seeing on the tech side of things. That seems to be the bigger driver here,
at least for investors, for markets at this current point. But of course, these things could change.
Hey, Allie, I'm curious because we were talking about it last time we were together about how much you pay attention to the bond market.
Now, do you when the Fed finally cuts, do you think there's a overreaction in the wrong way
again? Like we got the first time just from your source? Yeah. Yeah. I mean, everyone tells me that
that the bond market, if that the bond market starts to go wacky again, if we see this surge in rates, that is a way bigger
problem than whatever the Fed ultimately decides to do. And I have followed the bond market very
closely. I sort of fell into this around the spring because I noticed how crazy these levels
were. And everyone I spoke with said, yeah, the bond market was boring for 10 years. And now all
of a sudden it's not anymore. And there's that emergence of the bond vigilantes, whether or not they were coming back in full
force. And even around the deficit concerns, I mean, we saw a little bit of that reaction,
but now that there's some more certainty on that side, that seems to have calmed things down as
well. I think if the Fed comes out and really surprises and does something that markets were not expecting, were not already pricing in, we will see that reaction in bonds.
And we know that yields, once the 10-year gets to that level of 4.5%, 4.6%, that's when we see this start to weigh on U.S. equities.
So that is something that I am watching because when you have the dollar going down and you have yields
rising, this sort of divergence between the two, it seems like the sell America trade is no longer.
It seems like we're in this buy America trade right now, but we saw how quickly that shifted.
So I think, you know, always pay attention to the bond market because that has ripple effects.
And that's something that President Trump is paying attention to as well, especially that 10-year yield. Because remember, that's ultimately
why he pivoted on those reciprocal tariffs. He said specifically that he was watching the 10-year
yield, and then he backed off. So yeah, I've grown to really become very fascinated with the bond
market just because of the ripple effects and the tangible impact that you have when you see those moves starkly
to the upside. And it's not necessarily, it's really the rate of change that you have to look
out for. Not necessarily the exact level. That's at least what sources have told me. It's how
quickly that tends to happen. That's when you really can see some of that panic.
Preach. Larry, let's go ahead and bring you into the conversation, then we'll go over and hit Sam's hand.
Larry, what's your thoughts around the conversation so far?
Oh, I think Ali nailed it, talking about look at the bond market, look at the rate of change in yields, right?
They've been trading sideways.
I feel bad for people who've had to report on the Fed this entire year when you look at yields and they've just gone sideways.
He's literally done nothing the entire year.
There's been some spooking, sure.
But when you look at, I think Ali nailed it.
I come from a background, for those who don't see my profile or whatever.
I'm a CMT, but also a CPA.
So kind of a little analytical fundamental, but also just watching the technicals. And when you look at
the bond market, it's not nervous about anything at the moment, which that then to Ali's point
about sentiment, it being worried about nothing becomes the worry, which really just means that
volatility and risk is cheap. And when typically risk is cheap, you can then hedge risk, hedge
vol, which is currently what I'm doing, even though it's getting kicked in the face right
now. The VIX is super low, but the compression hasn't led to anything. And so I think what
Ali said is exactly right. Watch what the bond market does. It will tell you. Watch what credit
spreads do. It will tell you if there's something to be worried about. And this market news today didn't
do anything. And that's what was priced. It wasn't priced to do anything to the market.
And I don't necessarily think that in the short term, the Fed is the worry of the markets.
I don't think that when you look at any of the technicals, that's really what the focus is in the short term.
Because I think to what Lou was saying, when you look at kind of AI, not just from, I think a lot of people are focused on AI from a tech perspective, from a good point about jobs in the tech sector.
But if you look at things like utilities, look at XLU.
What's been the best performing sector in the S&P 500 the last things like utilities, look at XLU. What's been the best
performing sector in the S&P 500 the last 18 months? It's been XLU. It's been utilities.
Look at utilities on a relative basis. They've done really, really well. And if we can,
as a country, as a society, continue to figure out our grid system, our infrastructure system to make energy cheap and effective,
the Fed being able to keep interest rates higher is a net benefit, in my opinion, to society,
because it essentially signifies the fact that the economy is doing well. The other thing I would
say too is I see a lot of the fact that there was two people that dissented today. I think that speaks volumes to what AI is, because it's a technology that we don't fully
understand the impact of yet.
So people pricing in an expectation of what productivity can be, what margins can be for
the top line of these companies, right, is what I think is expanding on the market as we currently speak. And so
I think, to Ali's point, I just think you follow the bond market and it looks good right now. I
think bond yields are still trading sideways. There's nothing that's occurring here. The long
end of the curve, you can look at bonds TLT. It actually looks like it's bottoming, which it's
been doing that for a couple of weeks now. Actually, over a month, it's kind of been looking like it's bottoming. So I think slow and
steady down, slow and steady up is what one business is like to see. I'll put on my CPA hat
real quick. When rates change slowly, you can forecast, right? Because what happens when you
work in corporate strategy is you have your FP&A team, you have your corporate strategy team, and then you have your C-suite.
And when FP&A can forecast the debt load, the debt burden, those interest rate burdens
all in advance and keep those things in focus, then you can have those extreme cap expense
because you know what your debt you can finance at.
When we saw that crazy spike in 2022, one of the fastest raises in history for yields,
that's when the market said, uh-oh, what are we doing here? Because every company and every
analyst and every model had to reprice it. But I think last thing I'll just say is back to Ali's
point, focus on the bond market. Right now, we're in a smooth sailing market, which people hate to see. It feels crazy, but don't sell stocks
because things are smooth, buy volatility, right?
It's cheap. That's the value play.
The value play I don't think is selling stocks.
I think the value play is buying volatility.
So those are kind of my thoughts.
Good stuff, Ali, keep looking at the bond market.
That's where the clues are, I agree.
Yeah, thanks, Larry.
Appreciate it.
Sam, you've had your hand up over there.
Let's bring you into the conversation.
And we've got about seven minutes or so
until the press conference starts.
And I agree with the panel, Larry, Allie, and also Lou,
that it really comes to the rate of change
of the bond market.
I mean, obviously, the market's OK with the rate of change of the bond market.
I mean, obviously, the market's OK with the fact that bonds are around 4.5% for the 10-year.
They weren't OK with it before because the move index was spiking to the ceiling. So people listening don't know the move index is basically the VIX or measuring the volatility of the bond market.
And when that thing spikes up, you saw that that was correlated with the April lows. Not saying that that caused the April lows, but I agree with you
guys that the volatility of the bond market is what causes the uncertainty in terms of where
inflation is going to be, where short-term rate is going to be, and so on. And that's why,
basically, you saw in April, the 10-year went all the way to 3.8% and then bounced all the way back to 4.5%, 4.6% in a very short period of time.
That really spooked the markets.
And that's a lot of money moving that entire market.
When you see that sort of thing, people kind of like stand still.
Oh, I'm not sure what to do because of the bond market.
Also, credit yields were expanding a little bit.
But they did tighten up a little bit.
But they did tighten up a little bit.
They continue to tighten up toward a much more calm phase, which for me seems like more
of a longer term bullish scenario.
If we started to see things turn south, start to see credit spreads widen, start to see
the bond market go down, or in other words, yields go back up again and so on at a fast
pace or even come down to this fast pace wouldn't necessarily be as bad.
But the dollar is coming down, bonds are going up slightly or at least bouncing off the lower
end of the range.
And inflation seems to not be as sticky as people perceive.
GDP, of course, bounced back from last quarter after contracting.
And that was mostly because of the front loading.
As we continue to see that, in addition to the effects of AI, we got a 3% print for GDP
in the second quarter.
And like Lou was saying, we have not accounted for the deflationary effects of AI. We got a 3% print for GDP in the second quarter. And like Lou was saying, we have not accounted for the deflationary effects of AI.
But also on top of that, the amount of jobs that it's going to create in addition to that
deflationary force as far as new skills that are required, people starting to take more
courses, people starting to go for higher education courses, people starting to hire
a specialty as an expert. Also, a lot of bringing a lot of manufacturing on-prem or domestically that we saw with Samsung doing.
They're building a plant in Texas, Arizona for the TSM manufacturing. We see a lot of that
happening, more jobs, lower inflation. That is a Goldilocks scenario, which is just beneficial
for risk assets.
Can't really predict what's going to happen in the short term. But overall, it's so hard to argue
a bearish narrative in the midst of all the fundamentals, in the midst of all the earnings
expectations being raised. Coming into the earnings season, earnings yields expectations
were on 3.9%. That was too low. Even Yardeni said that was too low. He even had charts proving it.
And look what we're happening now. We're getting some raises across the board. We're seeing about
80% of earnings beat. It looks like it's going to be a pretty good quarter. Again, not the short
term. Don't really know what's going to happen. But then we'll see a ramp up in terms of data
center for selling chips to China as we saw the chip export restrictions getting lifted.
We're selling chips to China as we saw the chip export restrictions getting lifted.
So that's an additional CapEx spend for a lot of companies outside the US in addition
to more data center expansion.
All this putting together, very hard to be bearish the market at this point.
Short term, again, I don't know.
I'll leave it to the experts.
Probably Larry, he has a pretty good signals over there.
But as far as the long term goes, I think we're going to continue to keep going up.
Appreciate those thoughts, sir.
Sam, sorry, I was trying to find the unmute button.
I was getting the conference ready.
What's up, Evan?
Yeah, go ahead.
Let's hit stock talk, too.
Insert, oh, I don't watch this type of thing.
But give us some thoughts.
Well, I mean, today's move shouldn't have been surprising to anyone.
I mean, if you check the FedWatch tool two days, 48 hours prior to any Fed meeting, it's never been wrong in like 20 years.
So the market knows what's going to happen 48 hours in advance.
It's sort of odd to me because there's like people with experience that still try to be contrarian about that.
Like when we have 2% odds of a cut, there's still people on Twitter that are like,
we might get a cut tomorrow.
Like, no, you're not going to get a cut.
Occasionally you have odds where it's like, and this is really occasional,
where 48 hours prior to a meeting you might have like a 70-30 or 60-40 split.
But even that is extremely rare.
So yeah, we knew what was going to happen today.
We knew there was going to be no cut.
We're probably going to get one in September,
although odds of that fell after this morning's GDP data from 80-some-odd percent to just under 70%.
So as of where we stand today, it looks like we're going to get one in September.
If data significantly improves and the market keeps rip roaring to the upside between now and then,
maybe those odds shift. But, you know, I just look at it the week before and know what's going to
happen. And that's what everyone should do. You shouldn't rely on people's predictions about
what's going to happen at a given meeting. You'll know the week before. But anyway,
outside of the rate cut stuff, you know the week before but uh anyway outside of the
rate cut stuff you know we talked yesterday about a lot of momentum stocks pulled back into their 21
emas which is you know i think a pretty reliable short-term momentum barometer but they pulled
back almost perfectly many of them just kissed it and touched it at the lows yesterday and then
today you had very aggressive bounces and almost all of those
market leaning momentum names to the upside, five, 10, in some cases, 15, 20% moves to the upside.
That's not bearish. And so, you know, the markets needed to do that into the end of this week. Now
we'll see post Powell commentary. If this move holds holds, obviously if we have like a big red flush
into end of day and those bounces get reversed,
then, you know, that'll be a different look.
But if this bounce today in the markets
and in the market leading momentum names holds
and at the end of the week,
you just get consolidation
and these things stay floating above their daily
nine and 21 EMAs.
I mean, that's not a market you can short.
So, I mean, I think some people feel that way, but it's the tricky market to short, and I don't
think a very high probability market to short. So, yeah, I mean, if this continues, then it
continues. And frankly, you know, I was looking at earnings reports. I'll talk a little bit about
Materion later when we get deeper into the conversation.
But I talked about Materion yesterday, had a great earnings reaction.
Illogical talk about Lending Club had a great earnings reaction.
There are stocks dripping 10%, 20% to the upside on earnings in really hot industries.
Nuclear stocks yesterday, which has been the hottest theme of the year, those stocks had
a big pullback yesterday.
Massive bounce for a lot of those names today in spite of the weakness on CCJ's earnings, which people thought would be a
big sell the news moment. That stock hasn't even given up the 9 EMA. I mean, these are not signs
of weakness. Across the board, you can go industry by industry, anecdote by anecdote, market leader
by market leader. The charts are pushing to the upside, defending, like they're not even
defending long-term supports. Like the S&P 500 won't even give up the 9 EMA. Like that's the
first line in the sand where you start saying, okay, maybe short-term momentum. It won't even
touch it. Right. And in one interpretation that gets presented as extension. And then the other interpretation that gets presented as like
enormous, unshortable strength. And it's often hard to make the distinction between those two
things. I think the best way you can do it is just by paying attention to the individual stocks that
you own, or the exposures that you have, because that's not only most relevant to each individual
investor, but it also gives you a better, sharper, more specific window on
what market action is looking like. And yesterday, the action was concerning because it put us at
the precipice of a breakdown. And then today, the market stepped in and saved their stock.
So I think everything looks pretty good right now. My colleagues and I remain squarely focused
on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.
Despite elevated uncertainty, the economy is in a solid position.
The unemployment rate remains low, and the labor market is at or near maximum employment.
Inflation has been running somewhat above our 2 percent longer-run objective.
In support of our goals, today the Federal Open Market Committee decided to leave our policy
interest rate unchanged. We believe that the current stance of monetary policy leaves us
well-positioned to respond in a timely way to potential economic developments.
I will have more to say about monetary policy after briefly reviewing economic developments.
Recent indicators suggest that growth of economic activity has moderated.
GDP rose at a 1.2 percent pace in the first half of this year, down from 2.5 percent last year.
Although the increase in the second quarter was stronger at 3 percent,
focusing on the first half of the year helps smooth through the volatility in the quarterly
figures related to the unusual swings in net exports.
The moderation in growth largely reflects a slowdown in consumer spending. In contrast,
business investment in equipment and intangibles picked up from last year's
pace.
Activity in the housing sector remains weak.
In the labor market, conditions have remained solid.
Payroll job gains averaged $150,000 per month over the past three months.
The unemployment rate at 4.1 percent remains low and has stayed in a narrow range over
the past year.
Wage growth has continued to moderate while still outpacing inflation.
Overall, a wide set of indicators suggests that conditions in the labor market are broadly
in balance and consistent with maximum employment.
Inflation has eased significantly from its highs in mid-2022, but remains somewhat elevated
relative to our 2 percent longer-run goal.
Estimates based on the Consumer Price Index and other data indicate that total PCE prices
rose 2.5 percent over the 12 months ending in June, and that, excluding the volatile
food and energy categories, core PCE prices rose 2.7%.
These readings are little changed from the beginning of the year,
although the underlying composition of price changes has shifted.
Services inflation has continued to ease,
while increased tariffs are pushing up prices in some categories of goods.
Near-term measures of inflation expectations have moved up on balance
over the course of this year
on news about tariffs, as reflected in both market-based and survey-based measures.
Beyond the next year or so, however, most measures of longer-term expectations remain
consistent with our 2% inflation goal. Our monetary policy actions are guided by our
dual mandate to promote maximum employment
and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal
funds rate at 4.25% to 4.5% and to continue reducing the size of our balance sheet.
We will continue to determine the appropriate stance of monetary policy based on the incoming
data, the evolving outlook, and the balance of risks.
Changes to government policies continue to evolve, and their effects on the economy remain
uncertain.
Higher tariffs have begun to show through more clearly to prices of some goods, but
their overall effects on economic activity and inflation remain to be seen.
A reasonable base case is that the effects on inflation could be short-lived,
reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.
Our obligation is to keep longer-term inflation expectations
well anchored and to prevent a one-time increase
in the price level from becoming an ongoing inflation problem.
For the time being, we're well positioned to learn more
about the likely course of the economy
and the evolving balance of risks
before adjusting our policy stance.
We see our current policy stance
as appropriate to guard against inflation risks. We see our current policy stance as appropriate to guard
against inflation risks. We're also attentive to risks on the employment side of our mandate.
In coming months, we will receive a good amount of data that will help inform our assessment of
the balance of risks and the appropriate setting of the federal funds rate.
At this meeting, the committee continued its discussions as part of our five-year review
of our monetary policy framework. We focused on potential revisions to our statement on
longer-run goals and monetary policy strategy, and are on track to wrap up any modifications
by late summer. The Fed has been assigned two goals for monetary policy, maximum employment
and stable prices.
We remain committed to supporting maximum employment, bringing inflation sustainably to our 2% goal,
and keeping longer-term inflation expectations well anchored.
Our success in delivering on these goals matters to all Americans.
We understand that our actions affect communities, families, and businesses across the country.
Everything we do is in service to our public mission.
We at the Fed will do everything we can to achieve our maximum employment and price stability goals.
Thank you. I look forward to your questions.
Thanks. Thanks, Chair Powell.
There's a lot of lean in the markets, not to mention out of the administration for a rate cut now in September.
Is that expectation unrealistic at this point?
So, as you know, today we decided to leave our policy rate where it's been,
which is where I would characterize as modestly restrictive.
Inflation is running a bit above 2%, as I mentioned, even excluding tariff effects.
The labor market's solid, historically low unemployment.
Financial conditions are accommodative, and the economy is not performing as a restrictive policy.
We're holding it back inappropriately.
So it seems to me and to almost the whole committee that the economy is not performing
as though restrictive policy is holding it back inappropriately and modestly restrictive
policy seems appropriate.
All that said, there's also downside risk to the labor market.
In coming months, we'll receive a good amount of data that will help inform our assessment
of the balance of risks in the appropriate setting
of the federal funds rate. Just to follow up, by coming months, does that include the possibility
you'll be getting essentially two rounds of jobs and inflation data between now and the September
meeting? Is that potentially adequate to make a decision to lower rates at that point? So you're
right. We do have, this is an intervening period
when we'll get two full rounds of employment and inflation data
before the time of the September meeting.
We have made no decisions about September.
We don't do that in advance.
We'll be taking that information into consideration
and all the other information we get
as we make our decision at the September meeting.
Steve.
Thank you, Mr. Chairman.
You took out the word or the notion that uncertainty has diminished from this statement.
Does that mean uncertainty has increased?
And I'm just wondering, the administration has struck several deals with large trading
partners where it seems like we now know what the rate is going to be. Does knowing that rate add to your certainty to change policy, or do you need to wait to see the economic effects?
So, essentially, the statement in our statement about uncertainty reflects what's gone on since the last meeting.
So, at the time of the last meeting, uncertainty had moved down a little bit,
but it was more or less even this time.
So we took out, you know, had diminished because it didn't diminish further.
So there's not really much in that.
And then your second question is, say again.
There have been several deals that have been struck,
and now we seem to have an idea of
what the tariff rates are going to be with some of our large trading partners. Does that not add
to the kind of certainty you might need, or is it you're waiting for the economic effects to show
themselves? No, I think we're still, so you're right, it's been a very dynamic time for these
trade negotiations and lots and lots of events in the intermediate period.
But we're still, you know, a ways away from seeing where things settle down.
We are clearly getting more and more information.
And, you know, I think at this point, people's estimates, our estimates, outside estimates
of the likely, you know, effective level of tariffs is not moving around that much at this point. But at the same time,
there are many uncertainties left to resolve. So yes, we are learning more and more. It doesn't
feel like we're very close to the end of that process. And that's not for us to judge. But
it feels like there's much more to come as well, looking ahead.
Neil. Hi, Mr. Chairman.
Neil Irwin with Axios.
This morning we got a GDP report in which final domestic private purchases decelerated
slowest pace since 22.
There was a weakness in the interest-sensitive sectors in residential investment, commercial
structures.
Are those not signs that monetary policy is a little too restrictive right now,
given current economic conditions?
So the GDP and PDFP numbers came in pretty much right where we expected them to come in.
You've got to look at the whole picture.
So certainly, as I mentioned in my opening remarks,
economic activity data, GDP, private domestic final purchases,
which we think is a narrower but
better signal for future, for where the economy is going, has come down to a little better than 1%,
1.2%, I think, in the case of GDP for the first half, whereas it was 2.5 last year. So that has
certainly come down. But if you look at the labor market, what you see is, by many, many statistics, the labor market is kind of still in balance.
It's things like quits, you know, job openings, and let alone the unemployment rate.
They're all very, by many measures, very similar to where they were a year ago.
So you do not see weakening in the labor market.
You do see a slowing in job creation, but also in a slowing in the supply of
workers. So you've got a labor market that's in balance, albeit partially because both demand and
supply for workers is coming down at the same pace. And that's why the unemployment rate has
remained roughly stable, which is why I said we do see downside risk in the labor market.
I mean, our two mandate variables, right, are inflation and maximum employment, stable prices and maximum employment, not so much growth.
So the labor market looks solid. Inflation is above target. And even if you look through the
tariff effects, we think it's still a bit above target. And that's why our stance is where it is.
But as I mentioned, you know, downside risks to the labor market are certainly apparent. So on labor, given the fluid labor
supply situation, is there a number for this jobs before you get on Friday that would look to you
like equilibrium job growth? You know, the main number you have to look at now is the unemployment
rate, because it's true that the, you know, demand for workers in the form of, let's call it,
just say payroll jobs, that number has come down, but so has the break-even number, kind of in tandem.
So, you know, as long as that puts the labor market in balance, the fact that it's getting into balance due to declines in both supply and demand, though, I think it is suggestive of downside risk.
So, of course, we'll be watching that carefully.
Colby.
Colby Smith with the New York Times.
Two of your colleagues called for a quarter point cut today, and I'm wondering what aspects
of their argument were most compelling to you and how you're weighing their views against
those on the committee who, as of the June forecast,
were in the camp of the Fed holding interest rate study for the remainder of the year.
And just in terms of the June SEP in particular,
is that still the best representation of where the core of the committee is?
So on the dissents, you know, what you want from everybody and also from a dissenter is a clear explanation
of what your thinking is and what are the arguments you're making.
And we had that today.
So I think basically this was quite a good meeting all around the table where people
thought carefully about this and put their positions out there.
As I mentioned, you know, the sort of the majority of the committee
was of the view that inflation is a bit above target, maximum employment is at target. That
calls for modestly restrictive, in my way of thinking, modestly restrictive stance of policy
for now. But we had two dissenters who I think, you know, you want that clear thinking and, you know, expression
of your thinking.
And we certainly had that today, I think all around the table.
In terms of, you asked about the June SEP, you know, I wouldn't, you're right, that's
what it says.
And that may well, I couldn't point to it six weeks later as expressing people's thought,
you really can't do that. We don't run an SEP, and I don't like to substitute in my own estimate of
what the SEP might be. We don't have one. So I'll just say that we haven't made any decisions
about September. We'll be monitoring all the incoming data and asking ourselves whether the
federal funds rate is in the right place. And just on the point about policy being
only modestly restrictive,
does that mean that there's actually not much scope to reduce rates
once the conditions for a cut are met,
barring a significant weakening of the labor market?
So let me say my own estimate is modestly restrictive,
and there are a range of views of what the neutral rate is at this moment for our economy,
and so others may say it's more restrictive or less restrictive even.
You know, we're going to be at some point when we return to moving toward a more neutral stance,
we'll be making that judgment as we go.
I don't think we have a preset course.
It's not so mechanical as saying, you know, we've derived with great confidence the neutral rate and that is our destination because really we understand that no one actually knows what the neutral rate is.
We know it by its works and that will be how the way the economy reacts over time to, you know, to slightly looser policy.
Nick.
Nick Tamarose, The Wall Street Journal. Chair Powell, my question is about what have you learned over the last few months about
the inflation generating and price pass-through process?
And just to drill down, the June CPI report showed evidence of tariff-induced goods inflation.
Now the tariff landscape is only starting to be settled with some of these more
recent deals. Given the lags between when tariffs are announced and when they show up in goods
prices, is two months a long enough horizon to evaluate the impact and be confident that tariffs
aren't impacting the broader inflation process? I think you have to think of this as still quite early days. And so I think
what we're seeing now is substantial amounts of tariff revenue being collected on the order of
30 billion a month, which is substantially higher than before. And the evidence seems to be mostly
not paid, paid only to a small extent through exporters lowering their price.
And companies or retailers, sort of people who are upstream, institutions that are upstream
from the consumer, are paying most of this for now.
Consumers are starting to show up in consumer prices, as you know, in the June report.
We expect to see more of that.
And we know from surveys that companies feel that they have every intention of putting this through to the consumer.
But, you know, the truth is they may not be able to in many cases.
So I think we're just going to have to watch and learn empirically how much of this and over what period of time.
I think we learned that the process will probably be slower than expected at the beginning, but we never
expected it to be fast. And we think we have a long way to go to really understand exactly
how we'll be. So that's how we're thinking of it right now. So if I could follow up,
is the reticence to look through core goods inflation being driven by the judgment
that during the pandemic expectations proved more
adaptive than anyone at the Fed expected? Is it being driven by uncertainty over how restrictive
policy is? You could argue we are a bit looking through goods inflation by not raising rates.
You know, we haven't reacted to new inflation, but I mean, I wouldn't insist upon that. But I don't think – I think the base case – as I said, a reasonable base case is that these are one-time price effects.
Of course, in the end, there will not be – this will not turn out to be inflation because we'll make sure that it's not.
We will, through our tools, make sure that this does not move from being a one-time price increase to serious inflation. We want to do that efficiently, though,
efficiently. And that means we want to do it, if you move too soon, you wind up maybe not getting
inflation all the way fixed and you have to come back. That's inefficient. If you move too late,
you might do unnecessary damage to the labor market. So there won't be in the end a big inflationary problem. What we're trying to do is accomplish
that in a way that is efficient. But in the end, there should be no doubt that we will do what we
need to do to keep inflation under control. Ideally, we do it efficiently.
it efficiently.
MICHAEL MCKEE FROM BLOOMBERG TELEVISION AND RADIO.
THE ONE BIG BILL, LEAVING ASIDE THE ADJECTIVES, DO YOU EXPECT IT TO ADD STIMULUS TO THE
ECONOMY IN 2026?
AND WOULD THAT BE AN ARGUMENT FOR REMAINING ON HOLD OR CUTTING BACK ON THE NUMBER OF
RATE CUTS YOU WOULD EXPECT FOR NEXT YEAR? on the number of rate cuts you would expect for next year? So, of course, let me just ritual disclaimer that we don't express any judgments or anything
light on fiscal legislation, or other legislation for that matter.
But I would say when you think that, you know, the biggest part of the bill was making permanent
existing law on taxes, I don't think we see it as particularly stimulative.
There should be some stimulative effect, but it shouldn't be significant over the next couple of years.
And to follow up, what do you, well, I don't want to put this in terms of you and the president,
so let me ask it this way.
it this way. Do you have concerns about the cost to the government of keeping rates elevated for
longer in terms of interest rate charges? We have a mandate, and that's maximum employment
and price stability. And it's not something we do to consider the cost to the government of our rate changes.
We have to be able to look at the goal variables Congress has given us,
use the tools they've given us to achieve those goals, and that's what we do.
We don't consider the fiscal needs of the federal government.
No advanced economy, Central Bank, does that.
And it wouldn't be good for, if we did do that,
it would be good neither for our credibility
nor for the credibility of U.S. fiscal policy.
So it's just not something we take into consideration.
Victoria.
Victoria Guido with Politico.
When it comes to the renovations of the Federal Reserve's headquarters that the administration
has been looking into, do you see their interest in that issue as being directly tied to the
President's push to get you to lower interest rates?
Not for me to say.
I will say we had a nice visit with the President.
It was an honor to host him.
It's not something that happens very often at the Federal Reserve to have the President
come over, let alone to visit a building.
But it was a good visit.
Are there any aspects of the project that they've raised that you see is making you reconsider any aspects of the project?
So, you know, we this project was hatched and conceived almost a decade ago now.
And we went through the very long process of clearing it through historic
preservation at the National Capital Planning Commission.
And a lot of back and forth there was very constructive.
We started out to do the work, and we were very well along on that work.
And I was quite pleased to have the president say multiple times that what he really wanted
to see was us getting this construction completed as soon as possible.
That is our focus. And that's what we're going to do.
Thanks, Mr. Chairman. Andrew Eckerman with the Washington Post.
What message do you take from the fact that inflation hit 2.1%
last September and has bounced higher since? Why do you think financial conditions are restrictive
and then neutral rates below 4% when inflation has stopped falling for almost a year?
So inflation, when you talk about these 12-month inflation measures, you're always battling
residual seasonality. So we'll have,
for example, two months of high inflation, sometimes early in the year, and then inflation
turns lower. And a lot of that may just be an artifact. So that's why we look at the 12-month
numbers. Look, I think inflation is most of the way back to 2%. There are things like the catch-up
inflation. So, for example, all the insurance costs that are now, they're only now going through inflation,
but they actually reflect inflationary pressures from two, three years ago.
So there's, that's got to go through.
In addition, now we have, you know, three or four tenths of inflation in core inflation from tariffs.
So, and we can't really separate that out.
We're not going to have a separate, you know, kind of inflation that isn't the out. We're not going to have a separate
kind of inflation that isn't the tariffs. We're always going to be dealing with all of inflation.
But the composition, as I mentioned, has really changed. And if you go back to the last couple
of years, it was all about services inflation, which was being very sticky. Now services inflation
is coming down nicely. Goods inflation was well behaved before, and now goods inflation is going up. So the story has really changed. That's partially because of
tariffs. It's also partially because we had restrictive policy in place, and we've seen
that the result of that gradually work its way through the services economy.
Okay. The other thing I wanted to ask is, are you comfortable BLS can continue performing
their mission effectively if they take an 8% reduction in headcount and authorized spending
as the administration's proposed? I'm not going to comment on the administration's proposal.
I do think, as I've said, I think that we're getting the data that we need to do our jobs.
And I think it's really important that good data helps not just the Fed, it helps the government, but it also helps the private sector.
You know, people in the economy, they use this data a lot, too.
So it's quite important for our economy and certainly for the Fed's work and other government agencies' work that we continue to get better at data.
That's what we've been doing for 100 years.
We've been getting better and better at data. That's what we've been doing for 100 years. We've been getting better and better and better.
It's very hard to accurately capture in real time the output of a 20-plus trillion dollar
economy.
And the United States has been a leader in that for 100 years, and we really need to
continue that, in my view.
Edward.
Thank you, Mr. Chairman.
Edward Lawrence from Fox Business.
How concerned are you with the data that we're showing coming in, showing no significant upward
trend in inflation over the past six months, that the wait-and-see approach for inflation
is actually giving companies cover to raise prices?
How concerned am I that the—say that again?
The wait-and-see approach is giving—
The wait-and-see approach. What do you mean by that?
For cutting rates. You're waiting to see if the tariffs will affect inflation.
So it's a wait-and-see approach.
Well, so that—you know, that would—that's where policy's restrictive.
When we start cutting, it'll go toward neutral.
Okay. This delay, though, where you're saying is a one-time price increase for tariffs,
which possibly could lead into bigger inflation or more inflation. Is that giving companies cover, though, to raise prices?
Well, what may be giving—it's not our policy stance. What may be giving—some companies will
certainly be taking advantage of the fact of the tariffs and all the discussion of how they're
going to—you know, companies will raise prices when and as they can. And so you saw it
famously in the first administration of President Trump during those tariffs. Washing machines were
tariffed, but dryers weren't. But what do you know? The price of dryers went up too, just like
washing machines. So companies will often just take, you know, cross the street in a group,
if you know what I mean. That'll happen. We don't see a lot of that. I mean, what we see now is
basically the very beginnings of whatever the effects turn out to be on goods inflation.
And, you know, I'll say again, they may be less than people estimate or more than people estimate.
They're not going to be zero. Consumers will pay some of
this. Businesses will pay some of this. Retailers will pay some of this. But, you know, we're just
going to have to see it through. And just to follow, if I could, some additional tariffs have
been in place since February, and things, you know, really haven't broken yet with the economy.
So how do you justify to somebody who's looking for a house, who's facing a 7 percent mortgage
and maybe can't afford those rates?
How do you justify that?
Well, so the housing is a special case, right?
We don't set mortgage rates at the Fed, right?
We set an overnight rate.
And the rates that go into mortgages are longer-term
rates, like treasury rates. It might be 30-year rates. It might be shorter than that, but it's
not the overnight Fed's rate. It's not that we don't have any effect. We do have an effect,
but we're not the main effect. There are other things, though, going on in the housing sector,
and one of those is just there's kind of a long-term housing shortage that we have. We
haven't built enough housing.
This is not something the Fed can help with.
But then that will be the case even after things normalize.
So I think the best thing that we can do for housing is to have 2 percent inflation and maximum employment.
And that's what we can contribute to housing.
There are lots of other jobs to do for the private sector and Congress,
but that's what we're trying to get to.
We've made a lot of progress toward that.
We have a very good labor market right now.
Inflation, we were very close to 2%.
We're seeing some goods inflation move us away, but so far not very far away.
Chris.
Hi, Chair Powell.
Thank you. Well, can you give us a little more about what kind of economic data
does the Fed need to see before you'll be ready to cut? I mean, do you need inflation back
nearly to target? Are there other things in the pricing that you look for? Do you need to see
weakening in the job market? What kind of things are you looking for?
I mean, ultimately, it could be any
of those things, right? But, you know, if you saw that the risks to the two goals were moving into
balance, if they were fully in balance, that would imply that you should move toward a more
neutral stance of policy. This is the special situation we're in, which is we have two-sided risk, risk to both of our goals. When we paused, inflation was above target and the
labor market was pretty good. So, you know, that was a time when policy was restrictive when we
paused. And to be restrictive is to be supporting a return to our inflation target,
right? So as the two targets get back into balance, you would think you'd move in a way
closer to neutral. And the next steps that we take are likely to be in that direction.
What will it take? It'll be the totality of the evidence. As I mentioned, there's quite a lot of
data coming in before the next meeting. Will it be dispositive of that? It's really hard to say. We don't make those
decisions right now, so we'll have to see. Well, I guess just in terms of inflation,
though, for example, some people would point to if it remains only in goods and it doesn't
bleed over to services, then maybe that's evidence that the tariff effect is going to be a temporary one-time thing.
Is that kind of thing affect your thinking, or do you just need to see the number come down closer to two?
We'll look at everything.
As I mentioned, a pretty reasonable base case is that this will be a one-time price increase.
And in the end, we'll make sure that
that's the case. We're just trying to do that efficiently. And efficiently means getting the
timing right. So we don't, again, if we go, if we cut rates too soon, maybe we didn't finish the job
with inflation. There's histories dotted with examples of that. If you cut too late, then maybe
you're doing unnecessary damage to the labor market. So we're trying to get that timing right.
And that's effectively what we're doing.
Claire.
Claire Jones, Financial Times.
Just a question on the dollar.
We've seen it decline quite heavily this year.
I was wondering if there's been any discussion about that at the
meetings and how, to what degree, that may be complicating your attempts to get inflation back
to target. Thank you. So, this goes back to the division of labor between the Fed and the Treasury,
as you, I'm sure, know. And, you know, the Treasury only speaks to the dollar.
speaks to the dollar.
It's not something that's been a topic of, you know,
major discussion at all at the Fed.
I wouldn't say it doesn't come up.
The transcripts, when they come out in a few years,
they'll probably reflect some mentions of the dollar,
but it would never be a major focus.
And just to follow on, if I may to Andrew's question,
I think the amount of imputed data in
CPI now is up to 35 percent. I mean, is there any discussion of that as well? Is there any
consideration of looking at alternative measures, data scraping and so on, in order to just
ensure you've got a good read on what's happening to prices in the U.S. economy? Thank you.
Yeah, so we're monitoring the situation. We do, of course, as you know, during the pandemic,
we looked at a whole lot of new kinds of data. People are looking at big data sets that you can
get from all sorts of places, and we do all of that. But we really need, the government data
really is the gold standard in data, and we need it to be good and be able to rely on it.
And we're not going to be able to substitute for that, but we'll have to make do with what we have.
But I certainly hope that we get what we need.
Jay O'Brien.
Hi, Mr. Chairman. Jay O'Brien, ABC News.
President Trump has obviously invoked your name a lot.
He has personally pressured you.
Are you concerned the way that conduct might impact the Fed's independence going forward?
I'll just say that I think that having an independent central bank has been an institutional arrangement
that has served the public well. And as long as it serves the public well,
it should continue and be respected. If it didn't serve the public well,
then it wouldn't be something that we should just automatically defend. But what it gives us,
and other central banks, what it gives you is the ability to make these very challenging decisions in ways that are focused on the data and the evolving outlook, the balance of risks and all the things we talk about, and not political factors.
And so governments all over the advanced economy world have chosen to put a little bit of distance between direct political control of those decisions and the decision makers.
So if you were not to have that, that would be a great temptation, of course,
to use interest rates to affect elections, for example.
And that's something that we don't want to do.
So I think that's pretty widely understood.
Certainly it is in Congress.
And, I mean, I think it's very important.
I'll just say that.
Maria, Eloisa.
Afternoon, Sir Powell.
Maria Eloisa Capurro from Bloomberg News.
You mentioned a slowdown in consumer spending,
and I wanted to see if you could walk us through what was the discussion with the committee around that.
We've seen delinquency rates rising for upper-income households.
How do you see that evolving in the next few months, and how much of a vulnerability that is for the economy going forward?
flow away? Consumer spending had been very, very strong for the last couple of years and had
repeatedly forecasters, not just us, had been forecasting it would slow down. And now maybe
it finally has. So I would say, you know, if you talk to credit card companies, for example,
they will tell you that the consumer's in solid shape and that spending is at a healthy level.
It's not growing rapidly, but it's at a healthy level.
And delinquencies are not a problem.
You mentioned high-end delinquencies.
I don't know what to make of that.
I read the same thing.
But so generally, and if you look at the banks and when the banks talk about in their earnings calls, the performance of credit has been good.
So essentially, you have a consumer that's in good shape and is spending, not at a rapid rate.
But it's true.
And it was, again, right in line with what we expected, the GDP data that we got this week.
So and I think it's still a little bit difficult to interpret because you have these
massive swings in net exports, which may also be affecting, you know, some of that can affect
consumer spending as well. Look, it's one of the data points that we pay most careful attention to.
And there's no question that it's slowed. And, you know, we're watching it closely,
but we also watch the labor market and the performance of inflation.
Those are our two variables that we're assigned to maximize.
And just to follow up on what my colleagues were asking about this sense,
Governor Waller said that the labor market is on edge, and he was pointing to weaknesses on the private sector.
I was wondering, you said that the main number to look at is the unemployment number overall,
but what was the discussion about the state of the private jobs market?
So I'm not going to talk about any individual's comments.
I wouldn't do that.
But look, I think what we know is that private sector job creation, certainly in the last report we'll see on Friday,
but had come down a bit. And if you take the QCW adjustment seriously, it may be even low,
maybe close to zero. But the unemployment rate was still low.
So what that's telling you is that demand for workers is slowing, but so is the supply.
So it's in balance, oddly enough.
You've got a very low unemployment rate, and it's kind of been there for a year as job creation has moved down.
But also we know that because of immigration policy, really, the flow into our labor forces is just a great deal slower. And those two things have slowed
more or less in tandem. If you look at things like I mentioned, quits,
look at wages, wages are gradually cooling. Look at vacancies to unemployment. Those things have
been pretty stable for, they haven't really moved a lot in a full year.
So I think if you take the totality of the labor market data, you've got a solid labor market.
But I think you have to see that there are downside risks.
You don't see weakening in the labor market, but I think you've got downside risks in a world where unemployment's being held down because both demand and supply are declining.
I think it's worth paying close attention to it, and we are.
Nancy.
Hi, Chair Powell.
Nancy Marshall-Gensler with Marketplace.
One more question on the lack of unanimity in today's decision, the two dissents.
Was there talk during the meeting? I
know you're not going to talk about exactly what individuals said, but in general, was there talk
during the meeting of cutting rates? And what was the case against that at the meeting?
Sure. So, you know, we have an economic go around where people talk about the economy,
and then the next, and to that's yesterday. And then today we have a monetary policy all the way around the table. Everyone gives their views.
So the discussion around policy was the majority view was still what it has been, which is that inflation is running above target.
Maximum employment is right at target.
That means policy should be a little bit restrictive, somewhat restrictive, because we want inflation to
move all the way back to its target.
So that's where people have been and still are.
Two of our members felt that the time had come to cut for the reasons that they're going
to express.
I won't tell you the reasons.
They'll issue some kind of a thing in the next day or so.
But that's the story.
And I would say, you know, well-argued, very thoughtfully argued all around the table, good arguments.
And, you know, it's a situation where – unusual situation.
The economy is in, you know, good shape.
But it's an unusual situation where you have risks to both your employment mandate and your inflation mandate.
That's the nature of a supply shock.
It's probably not surprising that there would be differences and different perspectives on that,
as well as different views of where the neutral rate is, so different views of how tight policy is.
So we have those.
I will say what you hope is that people, you know, explain their positions very thoughtfully and clearly.
And we absolutely had that today all the way around the table.
I would call it one of the better meetings I can recall from that standpoint.
And you said you're waiting to be confident inflation is heading toward your 2% target before you start cutting rates.
When you do get that confidence, would you be in favor of lowering rates right away?
It's not quite the way I would put it.
You know, I said that's why we think policy should be restrictive, is because, you know,
inflation is above target.
When we have risks to both goals, one of them is farther away from goal than the other, and that's inflation.
Maximum employment is that goal.
So that means policy should be tight because tight policy is what brings inflation down.
If you came to the view that the risks to the two were more in balance, that would imply that policy shouldn't be restrictive.
It should be more neutral, more, you know, a
neutral stance. And that would be somewhat lower than where we are now. No one knows exactly where
that is. So that's the framework I think I'd be taking. And, you know, we'll just have to see.
We're going to be obviously looking at a lot of data in the next cycle. It is one of the cycles
where we have two employment and two inflation reports,
and we'll see where that takes us.
Jeff Cox.
Thank you, Mr. Chairman, for taking the question.
Jeff Cox from CNBC.com.
A metric that you like to cite a lot is the final sales to private domestic purchasers.
That was down to a 1.2 percent gain in in second quarter from 1.9 percent in Q1, suggesting that there's some softening and underlying demand. I'm just wondering if you look
at that, you combine that with some of the housing numbers, the weakness that you acknowledged at the
top of your remarks that the housing market is, in fact, weak. And the inflation numbers from GDP today came down 2.1% for headline,
2.5% for core. I'm wondering how much more movement you would need to see from these data
points before you would be comfortable with cutting in, say, September. It's going to be the total.
Hard to answer that specifically. PDFP, I think, for the first half,
private domestic final purchases,
or final sales, as people call it,
was 1.6 on the first half.
GDP, I believe, was 1.2% for the whole half.
You mentioned the quarters.
So those are slower.
But GDP is bumpy quarter to quarter,
half to half, and often gets revised after the fact.
The labor market data we still continue to think is the best data we have on the economy,
and that shows a 4.1% unemployment rate. It shows wages still at a healthy level, but moving ever
closer to what we would regard as long-run sustainable, consistent with
longer-run productivity and 2 percent inflation. So the labor market is actually still quite solid.
Inflation is above target, even ignoring tariffs. It's a little bit above target and tariffs.
So we're watching all of that and, again, trying to do the right thing in what is a challenging situation because you're being pulled in two directions.
And you have to decide which of those it took to go in.
And actually, at some point, if they're sort of equally at risk, then you really want to be at a neutral policy stance, which we're not right now.
So it would be safe to say that if the data kind of stays in line with where it is right now that you wouldn't be comfortable with cutting in September?
I'm not going to say that, no.
I just think we're going to need to see the data.
And it can go in many different directions, the inflation data and the employment data.
And we're going to make a judgment based on all of the data and based on that balance
of risks analysis that I mentioned.
Greg, Rob for the live session.
Thanks, Chair Powell.
Greg Rob from MarketWatch.
The Treasury Secretary has said recently that it would be confusing for the markets if you
stayed on as a governor after
your term on the chair ends.
And I was wondering if you had any update for us on a decision on that front.
Sorry, I do not have any update for you.
Thanks very much, everyone.
All right.
My headphone reconnected here.
Well, there you have it.
Jerome Powell has spoken.
He is done.
Larry, if you're still up here on stage,
I would love to just come over to you and get kind of first reactions to what we just listened to there.
Yeah, I just think Powell is smarter than everyone else.
Honestly, I like Powell, so I don't –
I'm not one of those people that bashes him as much as others do.
I think he's fair to kind of just keep rates where they are.
The thing I'm contemplating right now is just, I was thinking about the 1993 was the last
time you had two people dissent.
And just thinking about that same year, the World Wide Web came out. And so this
disinflationary technology that set up the 90s was pretty insane. So I think that's the piece
that we don't understand. We can understand economic data compared to the past 20 years,
right, or 30 years since the internet's
really taken off. But I just think that's a wrinkle in all of this that we just don't know.
And it's hard because journalists and ourselves, right, being on a panel, whatever, you want to
talk like you know the future and you know what's going to occur. But we don't. The market sold off a little bit, which is fine. I mean, it's
like, who cares? Sold off a touch during that. But yeah, I think those corollaries are similar.
And so I think you have to trust the market. One thing I'll add to that is if you are worried
about the Fed cutting late, price will let you know. The bond market will let you know.
You can look at every single, I encourage you know. The bond market will let you know.
You can look at every single, I encourage you guys to do this this weekend, weekend homework.
Look at the 2000s, look at 2008s, look at 2022. None of those bear markets were from all-time highs. You had weeks to get out. You had weeks for the market to warn
you to get out. The only real crash that we've had where it's been within a couple of days is 1987,
and honestly, the tariff tantrum. But the tariff tantrum actually set up in advance. If you look at
early January, early February, if you look at sector rotation. So I would just say,
don't, kind of like what Stock Talk says,
like don't overthink this. The markets will give you plenty of clues and I will be on here
yelling at you guys when that time does come. The time just isn't now. So I'm not overthinking it.
The piece I'm overthinking is the internet effect versus this AI effect. And is that why
this is the second time we've had a dissent? And it just coincidentally happened
when the internet was taking off
and when AI was kind of taken off.
Those are kind of my thoughts.
That AI piece and internet piece, great, great poll there.
That was very interesting.
Stock talk, you were mentioned there.
I'm in the elevator right now,
but I don't know if you can hear me.
Can you hear me?
Yeah, I got you.
I had you.
I knew that was going to happen, man.
So whenever he goes in the elevator, he gets cut off from his penthouse suite.
I tried to count the floors one day.
Options Mike, your hand was up next.
Let's go over to you.
So I have a little different take.
I thought Powell today was off point.
I think he was rambling a bit, and I think he was aware he was desperately trying to defend himself against the administration.
He didn't come across as sharp as normal.
He definitely did not want to play his hands, and he did not.
They kept things very much the same.
I don't think we heard much out of him that we haven't heard before.
I would just simply say, and I'm a fan of Powell, though I do think they should have cut here. I mean, I do think
that they should be looking to cut 0.25 here at this point. I think he was off point today. I think
he was rambling a bit. He was off script. He was defensive. I think he knows he's fighting for
not just his life in the Fed, but also afterwards in his public life and everything here and
to me it kind of came across that way and i also think the questions were much more much tougher on
this time i think you know some of the the reporters were definitely going more after him
than normal i think they wanted to try to to get this um a little bit more confrontation going on
but overall market no change life fighting for his life with the market at all-time highs?
Seems like a bit of a stretch.
Well, I think he's fighting for, you know, not only to stay president of the Fed,
but how he'll be received afterwards when he comes out and for whatever he wants to do afterwards,
talking jobs and stuff like that is what I mean.
He doesn't want to come out looking, you know,
if he gets killed here by the president in public opinion, he's not going to have anywhere to go.
I think there is an argument there, Options Mike, that he's just, he's planning his legacy,
right?
He's trying to hold his legacy intact at this point.
But yeah, I also agree with the point.
Either way, he seemed a little bit more snooty maybe than normal but the questions were definitely more
aggressive i definitely heard that piece yeah i mean they were definitely much tougher questions
they were trying to get him to to stumble i think is really what it was they were trying to get him
to say something inflammatory or stumble uh sorry i was outside with i really want to hear what stock chart says on this because i love
uh what his thoughts are can you hear me yeah we got you now okay sorry yeah i don't know i was
disconnected i was out i'm walking late outside um so there might be some traffic sounds in the
background and stuff but um yeah i don't i don't know if I take, you know, either of those sides really on this.
I think the questions are getting better and more specific because we're nearing the end of the cycle.
Like, you know, sometimes it's hard to mark late cycle because sometimes you don't really know, right?
Like, you don't know whether maybe rates are going go higher maybe they're gonna come lower like there's a
pretty much a consensus market view at this point that we are at the end of the
cycle it's just a matter when the other end of the cycle starts the cutting the
in the easing side and whether that happens in September or whether that
happens in December like I just don't know if that makes a tremendous
amount of economic difference.
Now, if you're somebody that believes that in between September and December of this
year, we're going to have an apocalyptic labor print, and that's why it's important to cut
important to cut now versus December, then, you know, okay.
now versus December, then, you know, okay.
I mean, I guess you might, you know something that,
that we don't know and you, you could time that.
But as long as you don't believe that there's going to be
some sort of print in that exact time period
between September and December,
then the difference between a 0.25% change
in the federal funds rate has,
I mean, I would love for an economist to come up here
and tell me the tremendous economic value
that that has to change the course of the economy.
The reality is, is it won't change much of anything.
Now you will get some level of front running
the rate cycle, right?
Like people will assume that at this next 25 basis point cut,
a greater sequence of cuts is impending.
And you will see some short-term boost in loan activity and business activity as a consequence of that.
Probably a short-term boost in investment as well.
Maybe you'll see, you know, another jolt to this data center theme and this nuclear energy theme where a lot of government and private dollars are going
but that that's great that's that's all fine and dandy what really matters is is how do you land
the plane that's like what really matters in late cycle and that's why the questions are getting
more specific i think and they'll get more specific and the questions will get better as we get deeper
into this late stage part of the cycle because the data is going to get even more
meticulously viewed. You know, it matters more now. Like a soft, a relatively soft print 12
months ago matters much less than a relatively soft print now. Same thing goes for hot economic
data like the GDP this morning. So I think we're in a pretty like fine place in the markets. I
actually think in the middle of that speech, I don't think markets turned around
because of what Powell was saying.
I think it was because of that Bloomberg story
that came out, mid-Fed comments from Bloomberg economists
that said they think the PC print's gonna come out hot
tomorrow and it's gonna push September odds below 50%.
Now, if that happens, then yeah,
I think markets probably won't love that.
And you might see a little bit more corrective action.
But, you know, you zoom out and everything looks fine, both technically and on the macro level.
So, yeah, I thought it was fine.
I didn't think, you know, maybe Powell was a little more rambly than usual.
But I'm also a fan.
I think Larry said this earlier.
I'm also a fan of Powell, at least as a retrotition.
I think he's excellent.
So, yeah, I didn't think there was any big surprises in there
or anything to be concerned about.
I imagine we'll still get a cut at the September meeting.
But even if it gets pushed in December, I don't think it's a big deal.
Go ahead, Sam.
Yeah, I mean, I think uh when it comes to the journalists that are there on the
panel you know that they i don't i don't mean to be um assuming or stereotypical but you know they
some of them might want the ratings so they're going to try to trigger powell a little bit try
to get a little bit of uh get a little bit of a clash there, get some word out of it
so the story can be spin up, whatever it is.
That's the play.
Usually, most of the time, rating's good, means their job gets better and so on.
Anyways, that set aside, as far as rates go, I don't think it really matters whether we
get a rate cut in September or not.
I don't think that's necessarily going to shift the tone or anything.
I think it's more of the economic data continuing to curl down as far as productivity goes,
if it is curling down.
And as far as job numbers in terms of unemployment and so on going up, that's probably what the
market's looking for in terms of a change of trend or in terms of acceleration of a
trend.
When it comes to the Fed cutting, it's going to be a bit more reactive, but it's also going
to be whatever the market gives them, right? So if we saw the probability of a cut in September go from 57%
to 51%, regardless of whatever scenario it is, and you go into the meeting in September with a
possibly 95% chance of a cut by then a week before, then it's likely that they're going to cut.
And whether or not that happens, the Fed is going to do whatever the market gives them. I think during Jerome Powell's regime, it was less about trying to
surprise the market or spook the markets in whichever direction, and more about keeping
the volatility low as much as you can. I don't think this is the 1980s or even the 1970s when
we had Arthur Burns or anything like that. I don't think we're in that time period where these Fed presidents or the FOMC chair is
trying to do that sort of thing.
It's just trying to keep things stable, trying to keep employment at max, which he said it
was, and trying to keep inflation under control.
As far as we see it today, it looks like everything's under control.
If we do get a hot print tomorrow in terms of PCE, then, of course, that probability
will likely decrease for the rate cut to happen.
And if that continues to happen, it really depends on further data.
But if the market starts to price in, and this is also coming from a bond market perspective
in terms of the short ends of the curve, if those short ends start to come down and then
we start getting priced in a cut, the Fed is going to take the bait on that and they're going to cut.
That's likely going to happen.
And it was actually pretty interesting how Larry said that since 1993.
That was the first time and it did coincide with when the World Wide Web came out and you had two dissents.
That's actually pretty interesting because there's a lot of comparison between the 1990s into the dot-com bubble. And today, when it comes to a revolutionary age, I do think that we are probably more
in the beginning of the decade, like he had said, than toward the end of the decade, toward
the top.
One, valuations are not as egregious as they were back in the dot-com bubble, maybe on
a relative basis.
But as far as actual valuations go, like these are companies that are actually making money
and printing revenues, right?
In the 1990s, it was about who's throwing the biggest part
and who could sign up for the biggest raise.
So it was a bit different.
That was especially toward the end, right?
So today, you're actually continuing to see that acceleration.
And a lot of people, and I agree with you guys,
the problem is a lot of people waiting for that top, right?
But I'm starting to learn a lot, especially for you, Stock Talk, and a lot of the traders out
here is that the market will give you those warnings when it does happen. And we did see
that big bounce today. We'll see how today turns out. We still have $6.5 trillion of market cap
reporting after the close today. So this is definitely going to be a market mover and
will for sure set the tone probably for the rest of the week, excluding Apple and Amazon reporting tomorrow.
That's probably what the big tell sign is going to be.
I think we got we got FOMC set aside.
We already know that.
I don't know what's going to happen with the Pelosi trading thing.
Like that was actually a pretty funny story to spin a little bit.
But again, you know, a little bit humor set aside.
I think there's a pretty big reporting going on after the close today.
Also, congratulations to Robinhood being at the NASDAQ.
Yeah, I appreciate those thoughts, Sam.
Larry, anything that you want to add to those two pieces that we just heard there?
And the AI thing is very interesting to me in the comparison there.
No, I think, yeah, I just think that'll probably be like a good, if you're a journalist on here,
write about it. I think it's a good idea, a good topic to write about. Yeah, it just,
the market will let you know. Like I said, just go and look back at, people want to talk about
99 and 2000. Look at the price action in 2000.
Look how long price traded sideways before it broke down.
It gave you plenty of time to get out.
Look at 2008, price traded sideways.
We need a double top and then made new lows
before we went down an extra 30, 40%.
Look at 2022.
So look at COVID even. Credit spreads blew out before COVID even happened,
which is coincidental, maybe, but that's what happened. 2019, we traded sideways for several
weeks before that next leg dropped. I think from a price perspective, you'll have a lot
of information. Is the market extended here? Sure. Is this something
that could at least spook people? Sure. But to me, it's almost bullish that you're now adding a
catalyst to the wall of worry. Because what's a bull market need? Bull market needs people to get
amped up about something. Bull market needs, oh, two Fed chairs disagreed and blah, blah, blah.
We need that stuff. That is fuel, right? Because
that's people who are not currently buying. And if you're not currently buying, that almost
guarantees you're going to be a future buyer unless you're going to sit on cash for 20 years,
which people know that's a dumb idea. So I think the market just looks healthy. And even if we pull
back to 600 here on SPY, that would be beautiful to see, right? A breakout retest of SPY would be great to see, and everyone would love to see it.
So I don't think his comments set anything off.
Rambling, I mean, we're arguing semantics here, but I think someone asking about the
housing market, his answer was beautiful, right?
He has two mandates, right?
And if he executes those
two mandates, everything else will play out. It's not his fault that interest rates were
held as low as they were for as long as they were, and that my generation, I'm 30, my generation
is anchored to 3% interest rates, and we're pissed at our parents because our parents
have 1% interest rates locked in, and they our parents because our parents, you know, have 1%
interest rates locked in and they still think they have it easier than us, right? So, or had
it harder than us. So yeah, I just think the market looks fine here. I don't see, yeah, I didn't see
anything that's spooky in this moment. But yeah, that's kind of it. Just one thing I want to comment on before we go to the rest of the panel really quickly.
And I'll make more detailed comments as I usually do in the back half of the space.
But I know Evan hates when I say meetings were unremarkable.
So I do want to point out one question that was really good.
And I do think, I don't want to say it's remarkable because that might be hyperbolic.
But I think the only revealing question was an actually intelligent question for once from one of the reporters and i don't know who it was
i think maybe she was from the wall street journal but the reporter who asked him hey is your language
in phrasing today's federal funds rate as moderately restrictive, does that suggest that we're not far from the neutral rate?
I thought that was a very pointed and good question, especially to ask the Fed chair.
And his response, I thought, was telling because he sort of dodged the question. He just said,
that's the language I would use at this juncture. But we don't know, you know, how restrictive that rate will be six months from now. It seemed to imply. I'm not saying this is definitely what he was saying, but it seemed to imply that he's saying we need to see more weakness in the economy before I consider a lower neutral rate.
I think that's also a big unanswered question too, because, you know, I,
I don't know, 24 months ago, if you had asked people, they're probably like,
yeah, we're probably going to add somewhere near, you know,
two or 3% as the neutral rate whenever we do get there.
And then there's other people that think we're going to get back to like the
ZERP policy of the 20 years before that. So, I mean,
it's probably somewhere in between, but yeah,
I thought that that was a good question.
So I just wanted to highlight that.
But anyway, we can go to the rest of the panel.
So Kevin Green joined us up here.
Kevin, I wanted to see if, did you get a chance to listen in much to Powell there?
And I don't know if you had any comments around what you heard out of the Fed meeting today.
Yeah, I heard the majority of the comments.
I think he did a phenomenal job trying to kind of outline the Fed's decision making, also showing respect to the two members that have dissented.
Now, what I think he did, and maybe this is a different take because I just got up here, but what I think he did is not trying to get ahead of the rate cuts themselves, right, with the language,
really trying to outline some of the hurdles that they still have when it comes to inflation,
and then also balancing that out with the labor market statistics, which he's right. Labor market
still looks like it's for the most part intact. There was a little bit of a risk there, what,
about a month ago, when you saw initial claims starting to kind of inch up and creep up, but it seems like that's kind of
subsided for now. Continuing claims probably is one of the big areas that you want to still keep
your eye out on, but I think you did a good job with kind of formulating this decision today,
and then waiting for the September meeting, which we will have the SEP in that one, if I'm not mistaken.
Correct me if I'm wrong, but I believe so.
For that to be kind of that first cut and the two dissenters, I think, is the signal from the Fed that they're willing and open to cutting at that time if the data allows.
You know, obviously inflation is going to be kind of a little bit of a sticky issue, but it has been as aggressive.
And you can still make the case, in my opinion, that you could have at least one to two maintenance cuts this year, which is kind of what was being priced in already at the start of the year.
And what I believe should have been priced in at the start of the year.
And it seems like that's still going to be intact.
So I think you did a decent job, stayed out of the fray when it came to politics, stayed on message. I think the street
itself is just, we're just, you know, half of people say, hey, the economy is good. Why would
you cut? The other half is trying to get ahead of anything that could actually come up. And I think
the big risk that you have is a resurgence of inflation because of these one-time inflationary
pressures that we will see with tariffs, right? I think we all can agree that that's going to
happen, but we don't know how long that's going to last
within the system itself.
So I would still say September seems like the prime time
for that meeting.
It will get some updated economic data.
Once again, you get more data from the Fed as well.
So I think we're kind of holding up here.
And I think the market's actually holding up as well, right?
I mean, if you kind of think about it,
we've been anticipating tariffs,
we've been anticipating cuts pretty much all year.
And personally, I think the anticipation
of the first rate cut actually gives the market
a little bit more of a boost to the upside
because of that anticipation.
And then once we do get that cut,
I think that's when we probably will see
a little bit of turbulence.
So 25 basis points in the grand scheme of things
when it comes to lending, in my opinion,
it's not gonna make or break the bank
for the regular or average consumer
until they really start getting more aggressive with it
in 2026, which I think will be the case
where they'll probably cut at least four,
maybe even five times.
KG, Larry pointed something out to us that was interesting.
The first two dissenters we've had since basically the onset of the internet.
Did you take anything else away from that?
I know you mentioned that you thought Powell handled it well with respect there,
but is that a signal?
I mean, I know you kind of mentioned that there a little bit, but just the fact that there were two dissenters, does that change anything for you?
No, it doesn't. Actually, it's healthy.
If we could be more like the Bank of England and see a little bit more dynamics, more dynamic voting, I think that would give a little bit more transparency and confidence for the street, actually.
You know, the 93 situation, you know, rightfully so. I mean,
we saw what the boom was in 93. But I mean, there's been times as well in the past where
we have seen dissenters, like in the 80s or something like that, where we've had dissenters,
it was completely like the wrong decision. I don't think that's going to be the situation this time around here.
But I think it's actually very healthy that you kind of get a little bit more independent
thought instead of just group thought within the Fed because we have gone a very long time.
And what's actually very interesting about that, why you bring it up and why I feel like
it's good that we actually have this and maybe we will see more of this
is because you'll have members like Akash Kari, right?
Like back in the day,
Akash Kari would still vote with the majority
of the Fed governors,
but he would have just this completely pessimistic tone
about everything, right?
And you knew from his commentary
that he really wanted to kind of raise rates
a little bit more aggressively,
but like his voting record really didn't kind of signify.
So I think it's actually really good. I don't I don't take anything else from that.
I would also say, too, and I'm not trying to be cynical, but I obviously those two members are probably on the short list to potentially become Fed chair as well.
So I think that's also something that they are making that decision for themselves,
that they're trying to put themselves potentially at the top of that list. And we'll see how that
works out. But in the grand scheme of things, we're not in a financial crisis right now.
And if you started seeing dissenters during like a major financial crisis, I think that would
probably create a little bit more wall for the street.
But this was well telegraphed today. And I think it's kind of a nothing. But I think
the majority of us on here probably knew that we would see at least one dissenter within this.
I mean, Waller basically came out and said he was going to do so on Bloomberg. So I think it's
healthy, though. And this is, you know, if you look at I go back and if you look at the Bank of
England and you look at their vote tallies, they're all over the place, like all the time.
I don't want to say all over the place, but you have about two members that kind of flip flop.
And I think that's, once again, that's kind of healthy.
And I think it probably provides a little bit more of a better signal for the market and gets us a little bit more information as to how these individuals are thinking.
And then also, are we getting anybody to convince other members to change their vote as well?
I think that's a good thing.
So, yeah, if we were in a financial, if we were in an 08 crisis,
or if you saw a situation like this at the beginning of the regional bank crisis
before we knew the extent of that situation,
and you started seeing like dissents and things of that,
I think that probably would cause a little, you know, that would be a ball event.
But in this situation, we're holding up pretty well for now.
I think we're just, from a broader equity standpoint, I think we're just getting exhausted.
We got the summertime season kind of taking place as well, seeing a lot of negative divergences.
So, you know, even with the descents, I don't think it's a huge deal.
I think you're going to have to have something a lot bigger than that. And I think once again, it could also be utilized as a signal
for the market that, yeah, we might cut in September. And I think we will. Is it a make
or break if we don't cut in September? I don't think so. I think the market probably would be
a little bit upset about that, right? Maybe we get a 5%, 7% drawback on that, drawdown on that. But
until you actually see labor really cracking, I think the Fed's going to be really reluctant to go full speed and start doing like 50 basis point cuts.
Now, I think in 2026, it'll be a different story, though. That's just my opinion.
I think they will ratchet that bad boy up a little bit more with a minimum of four.
I would say five probably would be appropriate at that point
in time. That kind of also aligns with the new Fed chair as well, which most certainly would
probably go really hard when it comes to cuts. I don't think you'll get 300 basis points worth
of cuts like President Trump would like, but I think that you would see an aggressive timeline
for cuts. And the last thing too, look, whoever he puts in there,
we'll see if they're going to do a good job. I think Vesant actually showed a very good example here today. And it's probably something that you guys may have talked about, but didn't.
So we've gotten some treasury leases as far as the maturities that they're going to issue
out over the next three months. And the biggest concern that the market had under the radar was the fact that Scott Besson was going to listen
to President Trump and enact exactly what he wanted to do, which was basically kind of
literally flood the gates on T-bills until we actually get Fed rate cuts, which would not be
a good idea by any stretch of the imagination.
And in fact, when you get these Treasury announcements, they're basically doing the same thing that they did last three months.
There was nothing that materially changed.
I think that's also something that was a vol risk event that is actually kind of being pulled back here.
It just kind of shows that, yes, we hear rhetoric from the White House.
Yes, we know what we want to hear.
President Trump wants to see certain things,
but I think there's some people, not all,
but there's some people within his administration
or who he appoints that's still going to do the right thing.
And I think that's kind of reflected in the Treasury.
And I would hope that whoever he appoints for that chair
would also do the right thing and not just kind of blindly go by and do whatever
President Trump says, which, you know, once again, 300 base a point cut by the end of
this year would be ill-advised for anybody.
You know, so that's kind of how I look at it.
So I think that's also a pretty decent signal that we still have some pretty smart macro people that understand the rhetoric
but are going to do the right thing in order to not blow out yields and blow out treasury spreads.
It was interesting. As soon as the rate decision came out, we saw the futures FedWatch tool go up to as high as 68% chance of a cut.
It has now dropped below 45%, below 50%.
So right at 45%, 44% currently for a September rate cut.
Hamid, I saw you jumped up on stage.
We are going to talk a whole lot of earnings that we have coming down the pipe here in just a little bit.
But I did want to see if you had any thoughts around the Fed and the rate.
No, earnings, earnings, earnings.
No one cares about Powell anymore.
He didn't say anything.
What's your thoughts on earnings?
Evan, I need your, what was the one word that you thought he would say that he didn't?
I thought there was not much said there.
much said there. So I think that Powell is fine and I'm excited for his earnings.
So I think that Powell is fine.
And I'm excited for these earnings.
Well, Hamid, you're welcome to comment on Powell if you want and then, yeah, we'll start
jumping into earnings.
I feel like I don't fully understand the entire, like, you know, the Fed Reserve System,
its separation from the government. I mean, like the whole thing is over my head.
And I feel like it's over most people's heads.
They just don't admit it.
Like there's very few people who probably understand all of this.
As far as interest rates themselves go, it does seem like all the indicators have been there to justify lower interest rates.
indicators have been there to justify lower interest rates.
I don't know what he's talking about when he says inflation is still not at our target
number.
What does it need to be exactly?
Is he waiting for another 0.1% drop or what?
It just seems like based on the expectations that he and the Fed set out last year, interest
rates certainly should be lower already based on the inflation rates that we've seen.
But none of that, you know, to be completely honest and frank, makes much sense to me.
Like it just seems like very willy-nilly, very top economists think,
you know, interest rates should be lower. And other top economists think if we lower interest
rates now, it would be disaster because it's going to lead to more inflation. So I kind of
leave the macro stuff alone. And I'm like very much hyper focused on individual companies and to Evan's point, yes, earnings, earnings, earnings.
That's all I care about because company performance overrides macro events anyway, because, you
know, companies will always be valued based on what profits and revenue they can generate
and growth that they can generate.
So the macro stuff just affects high-level multiples, essentially, and usually on a short-term
basis.
Yeah, absolutely.
Let's rotate the conversation.
Let's talk about some earnings.
So, Hamid, what are you thinking for these meta earnings?
I know meta is amazing.
Yeah, no, it's funny because I think meta, I'm obviously heavily invested in meta.
I think that the stock has been sort of like going down a little bit
because I think a lot of investors have a lot of fear
about Mark Zuckerberg's massive spend on trying to build the best AI team
in the same way that he spent so much money on AR, VR
with very little to show for it.
I think investors are like, holy fuck, if he does that,
if he tries to do that with, uh, uh, with AI on top of AR VR spend, and this guy's like basically,
uh, throwing around 10, 10 to $20 billion a quarter, or it used to be $10 billion a quarter.
But if he starts accelerating that shit because of AI to $20 billion a quarter but if he starts accelerating that because of ai to 20 billion dollars a quarter what's that going to do to uh profitability i think that's the reason that the
stock is kind of suppressed to some degree but um meta has a has a shot at like really uh
surprising to the upside by a explaining exactly how much they're going to spend
A, explaining exactly how much they're going to spend, and hopefully those numbers will not be ridiculously high.
And B, if the AI and WhatsApp monetization, if AI is generating more revenue for them and WhatsApp monetization really beats on the top line, helps them beat on the top line and profitability, then all of a sudden, maybe the
extra spend will not be a big, big, big deal. So I'm hopeful that it'll be the latter, meaning like
AI is just going to beat on top line and bottom line because of just increased optimizations that
AI has been bringing. And then I think investors will be a lot more forgiving to
large AI spend. But if the numbers are just going to like sort of meet expectations as opposed to
beat them, and on top of that, Mark talks about how he's going to spend billions more on AI people,
then all of a sudden you might see the stock tank uh quite a bit so uh it'll be interesting
to see for sure i'm i'm very i'm very much going to be focused on meta earnings today so
i also want to hear yours and then uh stock talks take on robin hood and kevin always watches some
different earnings names i wonder if there's any there. And I know Sniper is also watching some stuff. So, Hamid, get your thoughts on HUD earnings.
Yeah, so HUD has a great shot at, like, beating on all the numbers
because their assets under management in this past quarter
must have just skyrocketed since,
you know, like the stock market has just gone up so much.
So assets under management should be at record highs.
The number of new accounts should be at record highs.
Number of gold subscribers should be at record highs.
They've added a ton of credit card subscribers.
So all their numbers should be like pointing in the right direction.
There's been a lot of crypto activity in the past several months.
So I suspect Robinhood is going to have a stellar quarter.
The question is how much of that is baked into their stock price at also record highs
right now.
So, you know, I'm always wary to speculate what happens to the stock price,
but Robinhood has a shot at like really surprising to the upside. But, you know, it's trading at a
very rich 28 times price sales and 80 times price earnings ratio. So if they don't beat fairly substantially,
you could have Robinhood also not do well after market.
But overall, I'm not worried about Robinhood.
I think like Meta is more of a high risk in terms of what Mark says and what
their numbers are.
I am curious what StockTalk thinks on robin hood actually yeah so you know i was obviously uh
me it was very very early robin hood but uh i got it at the start of last year um and it was
originally supposed to be a trade i got the 15 and 20 calls that expired in de and January of this year. I ended up exercising those and taking the stock.
My average cost was in 1974.
So it's been very good to me.
I mean, obviously, the stock's trading 100 plus now.
I have no intentions or desire to sell it.
I think there's a shot that Robinhood becomes
the financial ecosystem company for this entire new generation that's going to inherit
trillions of dollars in wealth over the next decade. That's going to be a mega trend,
this inheritance mega trend. And I think Robinhood is going to be the chosen destination for a lot of
that capital. I also think they've executed extremely well across the board in new products.
Although from my standpoint, I wish they would add a little bit more professional trading products and better charting tools and better watchlist tools for active traders like myself.
I would move all my assets over there if they did that.
I've said that before.
Vlad or anyone at the Robinhood team is listening.
Photocopy Weeble's watchlist feature and put it in Robinhood and I'll move all my money.
But anyway, yeah, I think they've executed well. I think they've expanded their potential TAM into
areas that people probably didn't think they would this quickly. I think their move in Europe
with tokenization, although it's an early move and that industry is very young and there's plenty of
regulatory hurdles and they'll take years and years before tokenization of assets, especially internationally is a mainstream thing.
But I do think it's a smart step to sort of increase this democratization of assets. I think
in a way they're really living up to the original mission of the company still, you know, and that's impressive to me. This idea of
like democratizing access to investing for everyone with any amount of money is, I think,
and it's hard and noble thing. Obviously, they're in it to make money and, you know, it's a for-profit
company, so I'm not saying they're charity or anything, but I like what they're doing and I
think they have a good chance to be a much larger company.
And so I have no intentions to sell, even though I am up a lot, obviously, on the shares.
As of today's close, I'm up 434% from my 1974 cost basis.
Do I think the stock has room to go down?
Yeah.
Do I think it's a little expensive?
Yeah.
I mean, you know, most of these stocks are, you know,
you look at the Robin Hoods, the Palantir's, like, you know, Tesla, when it went on its 10X run over
the last five years, it's generally, and maybe Nvidia as an exception, because there's a lot
of Nvidia people who love Nvidia who justify it's where it trades today, fundamentally. But
you look a lot of these like ultra hot, ultra performing stocks over the last decade.
There wasn't really many times when you would have looked at them and said they were fundamentally cheap.
Yet many of them went much, much higher.
And obviously, many of them went much, much lower, too.
I'm not saying that's a winning strategy 10 times out of 10.
But you do have Palantir's and Robinhood's and some of these market-leading retail stocks that have held up in spite of what happened in April.
Robinhood went down a lot in April, right back to $100 plus now, new highs.
So Palantir, same thing.
It's been through many corrective phases in the last five years, and it's still at new highs.
So there are some of these stocks that will defy gravity and will continue to be expensive and will continue to sort of operate at the bleeding edge of these new industries. And
it opens up room for speculation, right? It's really hard to imagine what their future products
might do. And so people speculate on these names, but it also means during corrections that they go
down a lot. So yeah, I love Robinhood's company, no intentions to sell. Do I think the stock could go down on subpar results? Absolutely.
The stock has gone up 700% in very short order. So yeah, there is room for high expectations
to be disappointed. That's always going to be the case with these types of stocks, but
I have zero plans to sell. And in the next big market correction or crash or whatever it happens and Robinhood falls to whatever, 50, 60, 40 bucks, I would probably just buy more.
So it's one of those positions for me.
It's one of my seven core positions in my portfolio.
It's one of the highest weightings in my portfolio.
I think right now it's sitting at like a number three weighting for me.
But, yeah, love Robinhood.
I expect good results, like Amit said as well.
I do think the stock obviously could go down
on underwhelming results,
but it's not a short-term play for me.
It's not a trade.
I don't have short-term options expiring next week.
I just have shares with a $19 cost
and I have no intention to sell them.
So yeah, love Robinhood.
Yeah, love Robinhood, hoping for good results.
Hoping for good results.
Let's see what happens.
Let's see what happens.
Just about four minutes until those releases.
Several other names coming out.
Hamid, were there any other names that you were watching this afternoon?
I know Arm, Qualcomm, Grab, Lamb Research,
some other names that are reporting this afternoon.
You didn't say Microsoft.
Yeah, Microsoft is probably the biggest on that list.
It's not on my portfolio.
Microsoft is not in my portfolio, but of course, it is going to be a big indicator of tech revenue in general.
So that should be interesting.
You know, obviously, tomorrow we have Apple and Amazon that I'm looking forward to.
Again, both of those are also not in my portfolio, but it does help set the tone.
And because of how much weight these companies have on the S&P 500, it'll determine whether
or not the entire market is up or down if these companies move in a particular direction.
So those are the big ones.
Evan, do you have any thoughts around Robinhood
that you wanted to share?
I know that you're...
Yeah, I don't know, we'll see.
I am waiting for the numbers.
I am looking forward to it. I am in New York City right now for something. So I'll be a little delayed today. Not much for me.
all right it's under three minutes here now until the close we did uh pull up off the lows a little
bit across the market qqq the nasdaq's actually green believe it or not um just barely but
slightly green slightly red on the smp do we hold the nine on spy i was just gonna bring that up
stock talk if you saw that that's so funny that you mentioned that. We came down and basically sat on top of the daily nine EMA on SPY,
and we have now pushed back away from it.
QQQ did not quite, I mean, if we push up hard enough,
it'll probably touch the bottom of that wick,
but stopped just short on QQQ.
But yeah, basically held the nine on the entire S&P.
Wow.
I mean, I'm not saying it's not going to break at some point, but geez.
That's got to be, I mean,'m not saying it's not going to break at some point but geez that's got to be i mean when's the last streak like is this one of the longest above nine ema streets
let's see i i'd have to look at that but i know we haven't closed below it since like the end of
june june 20th so this is the 27th day that we've closed above record, right?
Yeah, it'd probably be a good tweet.
Probably research that and see if I can find what the best streak was before
that. But yeah, 27 days closing above the daily nine.
27 trading days
40 calendar days
alright
just getting prepared for these number releases here
we got a minute to the bell
StockSniper
I'll give you a minute here do you have any just outlier type
of numbers that you notice i know you always run the numbers on implied moves and stuff
so um to be honest i'm i'm pretty sick today um i just know that there's a lot of names
reporting so i came to kind of help out with the numbers uh i got a bunch of stuff posted um yeah
there's there's a couple of pretty big implied moves, but nothing that's ridiculous. But we got Qualcomm coming out literally in one minute from now. But with Meta, it's just a $36 implied move or 5.27%. But we should be expecting Qualcomm numbers coming like any second now
long silence okay market is closing up here.
Stop missing.
I was stuck changing the title
and I was muted.
Yeah, sorry about that.
Alright, title's changed. We are closing
here we are on full earnings
watch.
I've got so many charts pulled up here really honestly oh well you can get
a bit it's Robin Hood Microsoft meta everything else I'm sorry love you all
fall come arm secondary for me I'm not seeing anything out just yet. We did close officially green on the NASDAQ, red by 0.13% on the S&P.
We got Qualcomm. Hang on.
EPS was $2.77, which would be the expectation of $272 cents revenue also a small beat 10.4
welcome on 10.3 on wall com
welcome unchanged here pushing up a little bit now unchanged here
the calm before the storm are get excited on days like this.
Alcom does see fourth quarter revenue at 10.3 to 11.1,
basically in line with the estimate.
Come on. Come on.
Tick tock, tick tock. long silence here trying to kill some space on it yeah by the way they all report at 405 so yeah we got all coming out right now. Qualcomm is down three and a half percent now. Sprouts Farmers Market
just reported it's moving up looks like a double beat.
So meta, Microsoft, hood, all 405?
I believe so.
That's what the estimate shows me.
Yeah, straight up calm before the storm here.
Earnings sub shows all three at 405.
All right, Microsoft has reacted up here.
We'll see if it's a real reaction.
It's up 3%.
In queue, other things reacting as well.
Microsoft reporting up 4.5%, 5% now.
Come on, numbers.
76.4 billion.
76.4 billion.
73.89 was the estimate.
3.65 EPS.
Cloud Revenue, 29.88 versus 29.1.
Another beat over there.
Microsoft up almost 5%.
Let's see.
Oh, that's going to pump.
Azure and other cloud services are up 39%.
Wow.
Did you say Azure cloud was up 39%?
Yeah, that's what I'm seeing here.
What's the estimate on that?
I don't know if that's year over year or what that is,
but Azure and other cloud services
up 39% is what it says.
Intelligent cloud revenue was $29.9
billion.
Dude, they've been raised by $3 billion too.
Okay, with the actual intelligent
cloud revenue wasn't a big beat, but the growth estimate
was 34%. They posted 39%.
That's nice wow
wow those are great numbers for microsoft there you go there's your blowout and the video it's
getting a little kick up on that as well microsoft beats eps by 10 over 10 beats revenue by three
roughly 3 billion beats cloud growth by over 5%.
That's a big, big beat.
Yep, Microsoft now up 6% trading 5.45 per share.
Arm Holdings is out, EPS was a beat, no EPS was in line.
Cells were a miss on Arm, Arm is down 4%.
were a miss on arm arm is down
there was some arm put flow somebody was
I think somebody was talking about some arm put flow a couple days
on these spaces that could be mistaken
but that is interesting
there Robin Hood up about
2% I don't see those numbers
yet though
Meta just pushed up
4% wow if they both just blow out though. Meta just pushed up 4%.
Wow.
If they both just blow out and we just...
If Microsoft and Meta blow out,
then we're just going to soar.
Hold on. I've got to look at the
breakdown on this microsoft cloud because
this looks really good yeah the the top like the top line numbers look okay here's meta meta eps
7.14 estimate was 5.89 oh wow revenue 47.5 billion estimate 44.83 billion. Meta seeds third quarter revenue
47 to 50 billion. The estimate
was 46.
Total revenue to be in the range
47.50
for third quarter.
Meta's numbers are nuts.
Those are huge.
Holy shit.
Yeah, those are crazy numbers from Meta.
That is a huge beat on Meta.
We're making...
How much is the beat for Meta on the bottom?
So 7.14 versus 5.89 is what I see.
All the numbers are the earnings earnings
feed on earnings hub calm yeah unless they had that good a business which they
could have that's it that would lead to me to say that there might have been just a one-time adjustment but
who knows same meta is up seven percent 744 per share right here Evan did you have HUD's numbers yeah EPS 42 cents being expectations of 31 revenue 989 the expectation of nine
delayed around their gold subscribers at 3.9 million six billion deposits in July I
have to dig in a little deeper but now what's this meta thing I saw right here. Oh my god, Meta is blowing it out.
What's the stock doing right now?
It's 2026 expense growth rate to exceed 2025 rate is what they just said.
Expense, CapEx, 66 to $72 billion.
Meta up $43.
Yeah, 8%. Top dollars is nuts.
Robinhood's up 3%.
QQQ just took out the all-time high.
SPY's fully recovered from the Powell drop, too, retesting the day's highs here.
Yeah.
Robinhood's now up 3.3% as well.
This is insane. I'm digging into this. Wow.
Those are great numbers from the big three for today.
Big beat for meta and arrays.
Yeah, those are all good numbers.
Operating income 20.4 versus 17.24.
Holy shit.
Hood also beat revenue by 8%, EPS by 23%.
So Hood is also reporting.
I'm seeing the EPS compare at 31, 42 versus 31, so I'm seeing an even bigger
beat than that. What do you have the compare at?
On earnings hub,
we have it at 34 cents estimate.
Yeah, I just hit my newsfeed
at 31 estimate, but I don't know.
Estimates vary depending on the pool of
Right, right.
But yeah.
But a huge beat nonetheless.
It's pretty incredible.
Basically almost a billion dollar quarter for Robinhood.
What was the total on that?
I'm pulling it up on earnings.
$989 million in revenue beat by 8.2% of our expected to have $914 million.
And then EPS, $0.42 versus $0.34.
They had the $1 billion quarter for the first time like q4 of last year right
uh yeah yeah i see it here that was largely due to crypto uh like they had a 350 million dollar revenue from crypto which was unusually high i think zuckerberg is deserves credit for
maybe being far and away the best meg seven CEO in the last couple of years
100% I mean after his whole metaverse moment, which was so dumb and like he the stock rightfully got punished for it And he rightfully took criticism for it. I feel like he really went back
like
Self-reflected rethought it
Like and just executed brilliantly like I don't
own meta but so yeah I usually I usually talk my book up here on these spaces I
don't own the stock but he is executed unbelievably well I think he deserves a
lot of credit like this is I think really fine management in it especially
in a scenario where he's entering sort of trying to edge into the hardware market with the smart glasses thing.
You know, Oculus was never really a big business, not just for Facebook, but just generally speaking, was never really a multibillion dollar behemoth of a business.
It was relatively a niche product.
Yeah, you sold, you know, whatever, tens of millions of units, but it just didn't make
a difference to Facebook's bottom line.
Now he's trying to expand that hardware initiative while at the same time fighting off social
media competition that's frankly strengthening.
I mean, you look at Reddit's numbers, you look at X's numbers, social media competition
is strengthening.
You would think just off basic math that Meta's market share would be a threat, and they are defending it remarkably well.
And I don't even think this is just from a usage standpoint that they're defending market share well.
I think he's finding ways to fine-tune the business for efficiency, which, yeah, there might be some one-time accelerants on this beat for this quarter.
But generally speaking, Meta has posted some impressive EPS beats in the last 20 or 25 quarters and I think that's a product of good
management frankly the ability to shift and adapt a business and continue to
drive margins in spite of a new competitive environments new products
being introduced new capital investments especially right you look at the capital
investment curve for the mag 7 in the last three years, it's the
most exponential it has ever been, right?
People think these companies spend a lot of money, and they do, right?
Like Amazon spends billions and billions of dollars, like just flippantly all the time
on logistical improvement and infrastructural investment.
And most of these big multi-trillion dollar companies do.
But people don't understand the difference in magnitude of capital investment that these guys have, the switch they've turned on since ChatGPT versus prior to that.
I mean, just go look at the data.
It's like dumbfounding.
You know, these guys are four to five X-ing capital investment now over the next 10 years.
That's a big step. So when you're doing all these
things at once, introducing new products, especially hardware products, battling a
strengthening competitive environment, and while all at the same time, not just increasing your
capital investment, but exponentially increasing it, it is hard to float margins, really hard
in that environment. And the only way you do it is excellent management. So
Zuckerberg deserves, I think, a pat on the back for what he's done with his company in the last
few years, especially. By the way, I'm glancing over the report and I don't see any one-time
activities affecting those numbers. I think that it was just, they crushed it, that their
ad impressions was up, but their revenue per ad impression was also up.
So the combination of the two was, I think, what drove it.
I read a good piece from Stifle.
They've been big or stifle or whatever you want to pronounce it.
I read a piece from them on Meta like three weeks ago.
And it was a very specific analyst commentary piece and it was on
targeted layoffs and they were talking about how zuckerberg made these targeted layoffs that were
like i think it was like 11 of the workforce i can't remember when it was it was 23 or 24 or
maybe late 24 i don't remember there was a headline about it both yeah yeah both but yeah so they were
talking about them and they were like yeah at face at face value, it just looks like a 10% workforce trim. But they talked about how the layoffs were very specifically targeted at a underperformers and be overpaid employees. And they were able to trim off a ton of operational costs in just two rounds of layoffs. And he talked about how it led to, or not Zuckerberg,
but the analyst talked about how it led to reassignment of internal tasks to both senior
software engineers and senior level employees, but also to AI. And they talked about how the handoff that Microsoft initiated. So people,
a lot of people don't know this. When Microsoft basically got white label rights effectively to
ChatGPT with their investment, I mean, it's a little bit more complicated than that, but for
all intents and purposes, white label rights for ChatGPT's technology, their immediate thought was,
or Microsoft's management thought he was a very smart guy, was, yo, we need to find a way to make this an enterprise product because that's where the real money is going to be made.
It's not going to be high-level labor to AI,
which a year ago was still considered relatively early stage. It's still considered early stage,
but this was considered a very risky move when Microsoft was making this pivot to enterprise AI
products. And Satya proved that it wasn't. He was on a podcast two months ago, I think,
he said something like, what, a quarter of the coding now at Microsoft?
I think he said a quarter or a third. I can't remember.
But he said some crazy number percentage of the coding now is being done autonomously.
And I mean, not fully autonomously, they're being prompted, but, you know, is being done without the input of human labor.
the input of human labor like if you extrapolate that right just be be
conservative you don't have to be crazy and say okay within two years of the in
of the mass introduction of LLM's one of the biggest tech companies in the world
is already potting off anywhere from 15 to 30 percent whatever the number he
said was I don't remember the exact number so that's why I'm giving you a range but a material amount
of their workforce to AI in five years when all of these agents are 10 times more capable what
does that number look like and what do the margins look like as a consequence of that and like at
what point and maybe now I'm really extrapolating going out 10 or 15 or 20 years here. But at what point did these megalithic, these massive multi-trillion dollar tech companies
just become lean operations?
Like, can you imagine if Meta could run a network of social media with a small team?
What would the profitability look like?
Like, 100%, that's right.
I mean, it would look insane.
Like, we would be laughing at the EPS numbers today, right?
You're talking about the potential for, like, I don't want to say, like, $100 per quarter EPS.
But, like, that's the type of potential you unlock when you extrapolate these things and think about things.
And people wonder why the market is just relentlessly going up since this ai theme
frankly speaking if you really want to simplify it and take out all the macro noise and take out
all the fundamental noise and take out all the p ratios if you really want to simplify it it is
because i think the market believes and i believe, that within the next decade, there is going to be economy-transforming levels of efficiency that are introduced by autonomously produced softwares and autonomously functioning softwares that just do things without the input of human labor.
labor. Like that's never been done before. And I think that's where the people who are repeatedly
Like, that's never been done before.
comparing this to the dot com bubble, I think that's where they the comparison loses me.
Because in the dot com era, yes, the Internet changed the world. And yes, it increased efficiency.
And yes, it did all these things. And yes, many of those companies are actually still standing
today and much bigger now. But the immediate product in that era, if you rewind it right back to being inside the dot-com bubble,
the immediate product was not overwhelmingly useful, right?
You had a bunch of web pages and a lot of them swelled to multi-billion dollar market caps
just because they got the right URL and called themselves whatever, the right website.
You saw a lot of that, but there was no yield. And some people will look at AI and say, well,
there's no yield, right? Like the ROI on LLMs is terrible. And that's missing the forest for
the trees. That's a perfect example of that. Because everyone's focused on the inception level product right like
everyone thinks chat gpt is ai that's what that's the mistake that that laymen make when they're
trying to understand or extrapolate what ai is going to do they're like well it's just a glorified
search engine yeah it's useful i mean to be honest most people have no idea how to use llms which is
why they're underwhelmed by them,
but that's an entirely separate point.
But even the people who do know how to use them,
some of them are, I think, understating what the technology is.
But LLMs are not AI.
AI is the promise of automating everything.
That's what it is.
It's not like this, like, oh, how much better is my chat GPT
going to get? Like next year, will it be able to solve this math equation correctly finally?
Like that's what people are focused on. That's like a dumb thing to focus on.
It's like a very, like, it's just like a micro view when you should be taking a macro view on it.
Like, what is the consequence of all of this investment?
Like this trillions of dollars investment that's going into it. Yeah, the ROI right now sucks. No one like starting an LLM and charging $20 a month for the premium version is not a is not a
fruitful business today and won't be a fruitful business in 10 years. In fact, I think it'll be
an even less fruitful business in 10 years when LLMs are widely commoditized. So that's not the
goal. If anyone thinks that's theized. So that's not the goal.
If anyone thinks that's the goal and that's what all this money is getting invested for,
you're flat out wrong.
And the CEOs of these companies would tell you that themselves if you ask them.
The goal is when will the real world's applications come
and how promising will they really be to drive efficiency?
And if they can do the things that we purport they'll be able to do,
like automating entire factory floors with one piece of software and 50 robots,
automating transportation globally so that you don't need drivers, automating everything,
automating mechanized production, automating tooling, like different parts of this are further down the road
than others, obviously. But this is what is coming eventually. And the only debate that should be
being had is when, you know, and that, and that's really, that, that part is debate worthy because
I don't know when either. I don't know if the, I don't know if this stuff's going to take five decades or two, but it is coming. It is coming.
And the numbers from these guys tell you that, these megatech companies tell you that,
the market attitude towards these emerging themes in energy and in robotics, that tells you that
too, right? This isn't one year or six months of froth in these robotics and energy
names. This is five years of repeated bids under these names through corrections, through market,
through tariff tantrums, through inflation tantrums, through, you know, three 10% corrections
in the same year through 2022, where everything dragged down to the bottom. Year on year on year,
these stocks have gone higher and higher and higher and higher. That's the market telling
you something, I think. And yeah, we'll see. We'll see where we are in 10 years. But I think
there's a reason why this bid is under this. And I'm very impressed by Meta's results. And we do
have Brad up here, who can probably speak to the results wonderfully and provide some details. So
Brad, I don't know if you want to provide any color or commentary on any of the earnings today,
but would love to throw the mic over to you.
Yeah. First of all, well said. Thank you. Thank you for the thank you for the shout out.
But wow. What a quarter. I mean, I think that last quarter was like a three or four percent beat.
Everyone was super excited about guidance was ahead of expectations for the first time in a few quarters.
They raised OpEx and CapEx guides pretty, or just CapEx, I'm sorry, last quarter,
which kind of was shrugged off and forgiven because it's no longer for meta,
or the metaverse and avatars, but it's now for core AI and making ads better
and making engagement better and all the things that makes meta results better.
And wow, what a quarter.
So 6% beat versus their own estimates, 7% beat versus guidance.
Daily active users, 1.5% ahead of expectations.
They are still somehow growing daily active users at a 6% clip with half of the planet on their apps.
I'm not sure if they're signing up dogs or if that alien invasion that someone was talking about in a few months,
if some people got here early, but they continue to somehow find people to post mid-single-digit daily active
user growth at this kind of scale, which is just absolutely insane. Not to mention a 53% family of
apps EBIT margin. That's what their margin profile would look like right now if they weren't spending
like crazy on Reality Labs. So just insane, insane margins,
great beats. And two other things I want to mention before I pass it back, just this was
not FX driven. So a lot of times when we see large beats with dozens and dozens of analysts
with their eyes on it, that doesn't happen very often. It's somewhat rare because we do have all
this access to all data. We do have all these channel checks and these surveys that come out throughout the quarter.
We do have investor conferences where they give us hints on how things are going.
But this was not FX favorability driven.
FX neutral growth was in line with gap revenue growth.
So this was outperformance.
And I'm interested, or fundamental outperformance.
I'm interested to see if this is WhatsApp ramping really quickly or way more quickly than anyone imagined in terms of them adding ad load. Because I know threads is probably
not. I don't really think that's going to be material to results for a while. But the other
thing I want to mention is the raises to OPEX and CAPEX guidance were virtually unnoticeable. They
narrowed the OPEX range. That's all they did. So the midpoint went up a little bit, but not much.
CAPEX, they raised by a billion dollars. I talk about a billion dollars casually. That's a lot of money. I'd like to have a billion dollars. But for Meta,
it's really not. It's really, compared to what we've seen over the last several quarters,
it's really quite modest. And I mean, we've all seen the headlines on them paying $100 million
comp packages to these elite engineers from Apple and OpenAI and Anthropic and everywhere else.
So to see this vast outperformance,
to see a Q3 revenue guide 6% ahead of expectations
and not to see that also equate to expense growth skyrocketing.
So they're clearly not just buying a ton more GPUs
and finding people or developers to rent them to,
which they don't really do anyway.
But a lot of people think they're going to get into public cloud computing,
but remains to be seen.
And that's kind of an aside.
But right now, the important thing is, what a quarter. and it's going to be a victory lap for Zuck. So
congratulations to him. Congratulations. I'm sure a lot of people in this group own shares like I do.
And it is time to have a smile on your face. This was phenomenal. And people who are speaking on
this panel know I will tear quarters apart when they are bad, but this does not deserve to be teared apart at all.
This deserves to be praised and really well done.
Is there a single blemish that you see anywhere in there, Brad?
I mean, you could say raising expense guidance for the year is a bit of a blemish, but I
don't really think so, especially when you're raising top line by such a large margin for Q3,
which probably means Q4 estimates for revenue are going to rise, which probably means profit
estimates paired with this massive EPSP we just got are still going to rise, which is why people
would be, that's the reason you'd be upset about rising expenses because we get less profit and
that's what drives share price appreciation. But because of this vast top line outperformance and
the fixed cost leverage it's going to provide, I don't think so. I have to listen to the call. I'm sure there's going to
be way more detail and way more information shared, and there's never a perfect quarter,
so there's always going to be something that I can pick at. But just from the presser right now,
really good. Let me check on one more thing and then get back to you. But I should mute the mic
for now and pass it over to other people. Well, one thing, first of all, I agree with everything Brad is saying.
One of the things to point out here on Meta's top line number is that they beat the expectations by roughly $3 billion.
And the incremental dollar of revenue, you know, when they're having an extra dollar of revenue, that's like 90%
goes to the bottom line profits, right?
So that $3 billion is what translated to the extra $1.40 or whatever it is EPS beat that
they had, which crushed their EPS by 21%.
So when you hear sort of like Meta or Mark Zuckerberg recruiting these AI engineers with
$100 million bonuses,
citing bonuses and things. I was super worried about what that's going to do to their sort of
expenses. But when you have $3 billion of extra revenue, which has 90% margin, so like,
let's say $2.7 billion of extra profits, you take a few hundred million of that and spread it around these top
AI researchers who could like incrementally grow your top line revenue over the coming
three to five years or 10 years. That actually seems like a freaking brilliant investment now.
You know, who cares that he's paying so much for these guys now? Like, it's just like if you can be using AI to really crush your numbers and generate more revenue and better products down the line, that could have just a continued accelerated growth, just like Stock Talk was talking about.
So super exciting to see that.
And I agree that Mark Zuckerberg has been
crushing it with a very, very focused effort. Now, contrast that to Sundar at Google. It's like
all over the place, not a great, you know, cohesive strategy. I'm also a Google shareholder,
but I'm just frustrated with Sundar in particular. But yeah, Google is also a great company. It's
just that if it had a Mark Zuckerberg,
I think it would be a much better company.
I think, and then well said,
no disagreements there.
Founder-led is important.
The only other thing I was looking at
when you asked me to pick apart
something from the quarter,
there was, so in the alt data
that we've seen from sell-side analysts
during the quarter,
there has been some concern
about cost per impression
kind of falling a little bit.
We didn't know if that's because WhatsApp is kind of growing and CPMs for WhatsApp are
lower, cost per million, cost per thousand impressions, I'm sorry, is a bit lower than
it is for Instagram and Meta naturally as they scale that.
But so average price per ad grew 9%.
It was supposed to grow 7% year over year.
Impressions grew by 11%.
It was also supposed to grow 7% year over year.
So more impressions, better pricing.
Yeah, I'll keep looking for things that are wrong, as I always do,
but it is encouragingly hard to find things to pick at.
Brad, did you have any thoughts on Microsoft as well?
I mean, that is kind of stilling the light here up almost 10% here in the after hours
and all-time highs, but Microsoft seems like they blew it out as well.
Yeah, apologies.
I haven't gotten to that report yet, so I should probably hit you with an I don't know.
So, yeah, sorry about that.
No, you're good.
I know you have your systematic approach over there.
I was looking over at HUD as well.
HUD has reversed its gains, just went slightly red here
in the after hours.
Talk, talk.
Sorry, I'm back. What was the question?
I didn't even ask you a question yet.
Oh, you did? No, I was just going to was the question? I didn't even ask you a question yet. Oh, you did?
No, I was just jumping over to you.
I know as we're pulling through these earnings a little bit here,
I didn't know if you had anything that you wanted to jump into
or if you had any other thoughts on the earnings before we transitioned.
Yeah, we can touch on, I mean, I don't have any thoughts on the earnings.
We can touch on some of the other stocks we touched on yesterday
that did very beautifully for us today. So, you know, why don't we any thoughts on the earnings. We can touch on some of the other stocks we touched on yesterday.
That did very beautifully for us today.
So, you know, why don't we talk about that?
I spent, I don't know, what was it, 15 minutes on yesterday's spaces talking to you guys about a new position, about Materion, MTRN,
and they had earnings this morning.
And we talked about it just yesterday on these spaces in the afternoon which gave you guys an opportunity i guess to get in if you were interested but
materion was up 10 today very nice move for that stock in fact far out of its atr um
which was nice to see it's always good to see see when you take a position, it goes up right away.
That makes things easier, makes life easier.
But for those that missed my comments on it,
you can go back and listen to the recording yesterday.
If you want to hear all my comments on it,
all of our spaces are recorded.
I'm generally in the second hour of the space.
I also posted it on my page, the clip. I'll pin it at the top
so you guys can go listen to that if you missed it. But yeah, material was up 10% today. I remain
long. I didn't sell into today's move. I generally don't, like I'm not like a day trader or overnight
trader, so I don't sell stuff on the first few days of owning it, but made a really nice move today. You know, considering where the other strategic rare
metals assets are trading in this market, I just think there's an enormous amount of room for this
stock still. You know, you don't generally look at these types of names on a sales basis, sales multiple basis.
But with these rare metals and a lot of the thematic stocks in the market over the last year or so, you kind of have to because there are some names in those groups that don't have revenue at
all. You know, you look at like the small modular reactor plays, for example, in the nuclear theme,
they don't have revenue at all. So in some cases you kind of have to loosen your way of comparing peers in these spaces. But as I mentioned yesterday on, on these spaces,
MTRN trades at 1.1 times sales. It's the only producer end to end producer of beryllium,
which is a rare earth metal in the Western hemisphere. The only one, not the only publicly
traded one, the only one, um one um they own about 80 of the global
beryllium market which is a niche market but it's relevant not only because it's a rare metal and
there's a lot of protective policy being tossed around right now from the executive on um protecting
u.s rare metals and even providing grants and government level investments to rare metals.
We saw what happened to MP Materials in the last couple of months as that stock went 200% higher on the investment from the U.S. government.
Rare Earth assets are just trading at a premium right now and deservedly so because of where government policy stands. And this stock, even after today's
10% move higher, is still not trading anywhere near peers. And they're in control of a rare
earth metal, basically like literally globally in control of a rare earth metal that is highly
relevant to a lot of the hottest thematics in the market right now nuclear reactors and nuclear weapons beryllium it's a critical in fact for
small modular reactors is mission critical for many designs you look at
satellites satellite mirrors and space telescopes beryllium. You look at aerospace and defense, precision munitions, beryllium.
You look at fighter jet mainframes, beryllium.
Beryllium.
Thank you, Brad.
You're welcome, sir.
But yeah, ultra hot thematics in the market that are receiving market premium currently,
and it is a key mineral.
And if there is unexpected growth in the brilliant market in the next three years,
there is only one beneficiary and that's material.
And, you know, they posted a nice top and bottom line beat today.
That's again, the interquarter earnings aren't really the thesis behind the position at all.
I just think it's a mispriced, strategically relevant rare metals asset in an environment
where rare metals assets are trading at record valuations, like all-time record valuations.
So yeah, it's pretty simple. That's why we took the position. Like I said,
markets sort of realized that today. I think following the earnings, their CEO was making,
I think, some good points on the call about beryllium and why they are the only way to play it.
And yeah, so I remain long on that name.
I have no plans to sell anytime soon.
You know, I think I'll probably come back and maybe retest the move after this breakout.
Stocks tend to do that after a breakout, so don't be surprised if you see a red in the next week or so.
But, you know, on any significant pullback, I'd probably actually add to the position. So
yeah, I liked what I heard on the call. I liked the thesis going into it. I was kind of unsure
what the financials would look like. They're tariff exposed. So I thought there might be
some tariff headwinds. In the previous quarter, they were talking about a potential 15 cent EPS
headwind. They seemed to renege on that in this call. They said they aren't as worried
about it because the softness of tariff policy, obviously, since then. So yeah, I think it looks
great. So that was a great mover today. And then the other big mover for us today was obviously
Genius Sports, which I spent a lot of time talking about not only on on spaces, but on Twitter as well. And obviously, in our
community over the last month or so, I took a position around 960 that stock traded around 1160
today. I have $10 calls across pretty much all the expirations on the chain that are up pretty
substantially as well. And now, you know, buck 50 or so in the money on those 10 calls as well. But I haven't
sold any of that either. You know, I think Genius is in pole vault position now. And I think today's
partnership that was announced this morning is material. And I think that that's why the stock
finally started making that move today. They announced a partnership this morning.
Genius did.
A lot of people thought the strength today
was because of the data that came out
about casino names last night and this morning.
There were two reports out from Stiefel at Evercore
that casino activity is surprising to the upside.
There was a lot of negativity on casino estimates
going into this quarter.
And now a lot of analysts, casino estimates going into this quarter, and now a lot of
analysts more and more on the street are warming up to inflections to the upside.
Evercore has a proprietary set of casino floor data they look at, and Stiefel has a set
of proprietary digital gaming data they look at in the northeastern United States.
So both of those sets of data saying big inflection coming in
gaming. And so you saw a nice bid under gaming stocks in general today, but obviously not
as much of a bid as you saw under Genius, which outperformed all of them. It was up,
stock was up about almost 11% today as of the close, almost 14% as of the highs of the day.
But they signed a deal this morning with PMG, uh, which is, uh, PMG partners and they, uh,
PMG partners covers, um, marketing clientele for, uh, Nike.
And that's a big deal for genius because genius is the, obviously, as I've mentioned before,
and people can, if you're interested in the thesis on genius, just search from stock talk
weekly in your search bar and type in the handle G-E-N-I, and you'll see my long-form tweet that I put out about a month ago when we took the position.
But if you want to read the thesis, go there, because I'm not going to go over the Premier League, the PGA Tour, NCAA postseason, March
Madness, like all highly bet on sports, right?
Some of the most highly bet on sports.
In the case of the NFL, obviously, number one most bet on sport globally in terms of
dollar input.
And then PGA Tour is huge at peak season, as is college football.
So and as is March football. So, uh, and as is March madness,
obviously. So their ability now they can connect using their fan hub platform, which is a data
driven platform that allows advertisers to algorithmically target fans of specific teams
and specific leagues for products that are directly related to sports or in Nike's
case to people who like sports. And so Genius has done a very good job of this. They did this with
NextGenStats as well, which was their full stat profile platform they created for the NFL.
And it was so good that the NFL just replaced all of their
internal stat software with next gen stats. Now you see it on ES, like anytime there's an NFL
broadcast showing stats, it's actually genius sports platform. These are the NFL completely
pawned off the entire statistics of the league to genius, which was a huge move. And they only did it because
the NextGen platform was superior for live sports betting feeds and live ESPN feeds and all live
feeds of all kinds than the NFL's internal software. And with FanHub, they've done a very,
very similar thing. They've gone to these advertisers who like to target fans of sports
leagues specifically, advertisers like Nike, and said, hey, you can algorithmically target
sports fans for very specific products. And they even have overlays to show which products
are most popular amongst fans of which leagues and which teams. So it's highly specialized marketing data that they're providing through
FanHub to now providing to Nike through a partnership with PMG Partners, which is
monumental. I mean, keep in mind, Genius is the exclusive data provider of not only all of these
leagues, exclusive through 2029 at least, with the Premier League, they're through 2032.
They're a 2.5 billion market cap. Okay. And they are
effectively in my view, and this was the reason I initiated the position more of a software company
than they are sports betting company. And I think that's why the company's mispriced and the stock
is mispriced. I mean, you're talking about in the sports betting division, you know, a potential to post 38 to 40% growth through 2029, like with visibility. And like the stocks just
misprice. And I think the market will realize that, you know, we have earnings coming up.
Today's move, I think in reaction to the PMG partners news news was appropriate. Honestly,
I think if the market hadn't turned around end of day, it would have closed up 15%. It was up almost 15% as of the morning.
Still closed up 11%.
But I don't even think the market fully appreciated this PMG Partners news this morning.
The Nike deal is significant.
And now you have a potential where the NFL makes another choice to exercise early in either late 26 or early 27.
Because a lot of stuff I'm going to go over here.
But when I initiated the position, part of the reason I initiated it outside of the chart looking beautiful
and all these other reasons I mentioned was the NFL did an early exercise on the warrants in the company.
So I'm going to put this in layman's terms for people in the
audience that may not understand the way these sort of deals work. But with these exclusive
rights deals, you don't really ever have an incentive if you're the intaking party,
which is in case the NFL and the larger party, you don't really have an incentive to exercise early unless you want whatever the reward is for exercise.
Right. Like in genius's case, they secured the exclusive NFL contract by saying, hey, at each extension, we will give you exercisable warrants to increase your stake in the company.
And for anybody that knows anything about the NFL, the NFL doesn't like
doing business with outside parties unless they have a stake. It's just like NFL protocol. They
want to own a piece if they're going to give you NFL league business. And so the NFL in the original
deal said, okay, we're going to exercise this deal in four-year segments with an NFL option to exercise. Genius does not have the option to
extend. It's an NFL option to extend. And at each exercise segment, right, at each four-year segment,
we take an additional lot of warrants, okay? So as the NFL extends the agreement,
their equity stake in the company also increases. That's effectively the deal,
right? So the NFL's deal, exclusive rights deal with Jenny, wasn't supposed to expire until the
end of next year, okay? The end of 2026. But, and this was the day before I got into the position,
the NFL came out surprisingly and said,
hey, we don't want to wait till the end of 2026.
We want the warrants now.
And so they raised their stake early
from a 6.8% stake in the company
to a greater than 9% stake in the company,
or almost 9% stake in the company through early warrant exercise, which is extremely unnecessary and rare and suggests that
the NFL is either bullish on their product or the company or both. And so, yeah, that's kind of the
thesis here. And that's why I haven't sold any. And I I think the stock is going much higher I'm not saying it's going to
skyrocket on earnings or anything I know people
like to have crazy expectations about things I say
I'm not saying it's going to go up
you know 50% tomorrow
but yeah I do think the stock is going to go
much higher and so
yeah I'm staying long
but I thought today's news was substantial
for them and
they have a chance
to do what sport radar did and for people that aren't familiar with sport radar sports sport
radar is the competitor to genius the only competitor it's a duopoly the sports data
business it's a duopoly between them but if you look at sport radar stock this year it's done
well and it's actually gotten a lot of analyst commentary um i haven't looked at the stock in a while so let's pull the chart here
so the thing's up 68 year to date sport radar okay and by compete comparison right let's pull this up
wow it's lagging now
okay Wow, it's lagging now. Okay.
Give me a second.
All right, I don't know why it's lagging.
Can you tell me how much Genius Sports is up here today?
Amp, if you're here.
Okay, 28%.
Okay, perfect.
I don't know why it wasn't loading.
Anyway, but yeah, so Genius Sports is obviously significantly lagging sport radar and performance but here's the reason why sport radar has done
this so well this year and if you go if i don't know some of you might have um
analyst research you can search through but if you search sport radar you'll see a lot of
analyst comments including from tier one shops like jp morgan and this stock had no analyst
coverage prior to something they did
late last year, which is they secured an extension with the NBA and the MLB, or maybe it was the NHL.
I can't remember. It was one of those two. It was the NBA and one of those other leagues.
And as a result of that, they were able to provide multi-year guidance for the first time.
And when they did that and they provided a five
year visibility guide, Wall Street loved it. And everyone jumped on the stock. You know, you had
JP Morgan in May raising the price target to 26. It was like a monster note back in February of
this year. You had Stiefel coming out and they were like overlooked software stock priced as a
sports betting stock. Kind of exactly what I'm saying about Genius Now. But yeah, you had steeple coming out and they were like overlooked software stock priced as a sports betting stock kind of exactly what what i'm saying about genius now but um yeah you had
all this great commentary and the stock just skyrocketed and went higher and higher and higher
and you know 70 year to date genius is their peer but genius for many years was priced at a discount to Sport Radar because people felt that the NFL partnership
was fleeting, right?
People felt that, hey, every other U.S. major league, the NHL, the NBA, the MLB, they're
all with Sport Radar.
So why would the NFL not want to join Sport Radar?
They're a bigger company.
They have more infrastructure.
So the market believed that genius would lose the NFL exclusivity deal at the end of 2026.
The early exercise a month ago changed that. That's the NFL reiterating their confidence and
saying, no, we're not going to switch to sport radar. We actually want to, we want more of a
stake in your company and we want to extend our deal through the 2029, sorry, 2030 Super Bowl.
So that gives you runway.
That gives them the ability to maybe start providing a three-year visibility to the street,
and that's how you start getting strong you know, strong handed commentary from Wall Street.
And so, yeah, that's that's on Genius and Materion.
Go, you know, you guys can listen to the recording later and rewind if you're interested in either of those names.
But that's my rambling on those two names.
Outside of those two names, you know, I'm in a lot of less fundamentally interesting stuff, a lot of momentum stuff, a lot of thematic stuff that I'm managing more tightly and more at the hip.
You know, I'm a very strict risk manager when it comes to the more speculative stuff that I'm in.
But those two positions are, I think, not as speculative and I think have strong theses behind them.
But, yeah, the rest of my portfolio, you know, I have exposure to data center. I have exposure to the nuclear thematic. I have exposure to big tech with Amazon and Tesla. And I have exposure to the Bitcoin, all the themes I want, rare metals, nuclear, data center, big tech, aerospace and defense.
You know, I've whittled down my aerospace and defense profile now pretty substantially.
You know, at the open of the year, I was nine or eight, eight stocks long on aerospace and defense.
I'm now just two stocks long on aerospace and defense.
If you want to group Embraer jets in that,
Embraer jets had a monster day today, as we found out that they were exempt to the Brazil tariff.
Stock had been struggling recently on those Brazil tariffs. So that thing had a monster day today, ripped 10%, as we found out, both airplanes and orange juice, funnily enough,
we're going to be exempt from the Brazil tariffs. But if you want to count Embraer in the aerospace
basket, because they the aerospace basket,
because they are aerospace name, then yeah, but you know, it's more defense focused than in that.
It's just Kratos and Huntington Ingalls, just those two names left in my aerospace and defense
basket. And as I've mentioned before, this is how I operate really a throw a lot of darts and then
whittle down my exposure baskets into only the best performing and market leading names. And so that's kind of
where I'm at. By the end of the quarter, I'll be down to probably one to two positions in all
of my baskets. And so I like to run a very, very tight ship into the end of the year. Like,
I may even be at a sub 10 position count by end of year, you know, and I try to give insights into my process here.
But for people that have been following along, like, you know, there was a point at this year where I was at a 24 position count, you know, which is very, very high for me.
I traditionally never go that high, but there was a point at this year where I was at a 24 position count. I like to keep it in the ballpark of 10 to 15. But I kind of am seeing
a vision for my portfolio this year where I have about seven high conviction stocks currently.
And I have maybe one or two that could fall into that higher conviction basket.
And so it wouldn't surprise me if by the end of Q4 this year, I'm down to eight positions in the portfolio and then, you know, re-rev the engine up for new opportunities next year and sort of reposition
some of my available buying power, see what works in the next year, what doesn't, kind
of configure the basket and go from there.
But very, very happy with my performance.
I mean, even after pullback in some of these momentum names this year. Portfolio closed today up like 142% year
to date versus 9% for the S&P 500 or 8.5 or whatever it was as of the close today.
So yeah, I'm very happy with my performance, happy with the way the portfolio is holding up.
Even with this couple of days of momentum stalling, nothing really broke down or fell
out of order. We talked yesterday a lot about the precipice that markets
came into yesterday with the cells into the 21 EMA. Looks like Microsoft and Meta might have
given this rebound some legs. If you look at the close today on SPY, not only did we stick save
the 9 EMA, which is beautiful action, 27 sessions in a row, like I mentioned earlier, but you also
have us coming and retesting the top of
that previous range before this big jump we had, which is a nice look.
So not a lot to be scratching your head about right now in this market.
A lot of stuff's working.
I think if you're smart with your stock picking and you put in the work, you know, I wake
up every morning and I put in the work every single day without fail, tired, sleepy, sick. If you do that, I think you'll be gravy and, you know, you'll be
able to perform fine in this market, even if we do get a pullback. I think a pullback into the 21
EMA down to 625, 626, totally reasonable for the major indexes. Where are we going to get it right
now? I don't know.
But I think people shouldn't be surprised if we get a peel back into the 620s for SPY. It's healthy.
You should let it happen. There'll probably be some opportunities that present themselves if
they do. Only way I'll start getting concerned in the short or immediate term is that we see a
really breakdown below that. And conditions as I see them right now aren't in favor of that.
below that. And conditions as I see them right now aren't in favor of that. It might even be a
crazy thing to say that maybe the pain trade is still higher, even though it feels like everyone's
long and feels like everyone's at the edge of their speculation. The pain trade may still even
be higher based on how these markets are acting. I mean, I saw somebody today say, hey, the fade
intraday today in the indexes was bearish.
And I was like, I don't know if I see it that way.
You know, you bleed into the nine and rebound right away and then you get a nice bump after hours on good data from the biggest companies in the world.
I don't know. I mean, I'm going to keep dancing until the music is playing, as I always say, you know.
I'm going to keep dancing until the music is playing, as I always say.
And at the end of the day, when the music does stop, yes, it'll be brutal this time, probably as it always is.
But April was brutal.
And most of you in the audience sat through that.
So if you can sit down through a 20, 25 percent drawdown in the major indexes, 40, 50, 60% drawdowns in individual names, in some cases,
even worse than that in April. And you can live through that and your portfolio can live through
that. You'll be all right. You'll be all right, no matter what happens. And that's, I think,
you know, I talked, this is the last thing I'll sort of say on this big rant, but
I talked a lot about retail deserving credit for the last five years.
It was a couple of spaces ago. I don't know, 10 spaces ago. And I really stand by that because
one thing that retail has proven is that not only are they going to be willing dip buyers and in
most cases, profitable dip buyers on a lot of their favorite names like robin odin palantir and so on and so on but that the stocks themselves have had staying power over five years correction correction
you know gone higher and higher but the actual traders themselves have had staying power too
the traders and investors themselves like Like look at Robinhood's
numbers. Like people are still opening new accounts. The new accounts are, yeah, sure.
Some blow up, but like the net numbers are still going up and up and up. Democratization is
increasing and increasing and increasing. And before you know it, every baby in America is
going to have a Robinhood account or whatever brokerage they decide to use for that so um yeah it's the overall attitude right now is pretty rosy and goldilocks
like sometimes that means they're lulling you to sleep before they stab you in the back but
until i have something to worry about it's going to be tough to worry and yesterday we were at the
precipice of worrying like i mentioned with those 21 EMA kisses. And then today the market bought them up
right at that spot. So yeah, we'll see what happens. But I, I remain pretty rosy about
this market and pretty content with everything I own. So yep. Can't, can't say much much other than that honestly brad i saw you just put out a uh snapshot of hood have you dove into those numbers
uh not not super closely i i think uh you know it's similar with sofi yes yesterday and i know
so if i had a a nice little pop and kind of gave it back and then there was that shelf offering
that they they issued today.
But, I mean, we've – and StockSoc's been talking – just talked about it.
Something similar.
But, I mean, for the last three months, we've seen – I mean, SoFi's gone from – it's more than doubled.
I haven't looked at Robinson's chart, but I'm sure – I think it's outperformed SoFi during that period of time.
So 100% returns in three months.
At some point – I mean, not at some point, but I mean, as that
happens, it naturally raises the bar for what outperformance will be rewarded and how sharply
you need to beat. And I mean, we talked about last week, the theme of this earning season
versus last earning season shifting from better than feared to did you beat by enough? And I think
for Robinhood, I mean, maybe there's a buy side number from some analysts that
they wanted larger outperformance or something.
But for bulls, looking over a multi-year horizon, this looks really good.
I mean, almost a billion dollars in revenue, almost 100 million in outperformance.
I think it was like a 7% top line beat.
Profitability way better than expected.
So I mean, it's a very fun part of the cycle for them right now.
So, I mean, it's a very fun part of the cycle for them right now, and they are clearly taking advantage and doing so admirably.
And they are clearly taking advantage and doing so admirably.
So, I know we all want to see stocks go up a million percent every single time they report good numbers,
but I think most of the world expected them to report elite numbers right now, and they did.
So, for the fundamental long-term investor perspective, I don't think frustration is really warranted when there's been three months of just
up and to the right. And I think this is just nothing to worry about, nothing to be overly
concerned about. I do need to listen to the call and read the presentation. So I'll add more context
in the article tonight. But from a headline number point of view, and I'm not even a shareholder or
a bull of Robinhood. So I think I have a pretty objective point of view here. It looks pretty damn good. Definitely make sure you're following Brad and check out all the stuff
he puts out, some really good stuff, especially deep diving into some of these earnings reports.
Brad, you mentioned SoFi there. It's funny that Stock Talk was mentioning the 21 EMA,
the exact low of SoFi today was the daily 21 EMA. SoFi dropping that offering yesterday.
Did you have any thoughts around that? I mean, it seemed like everything's going rosy.
Was this the time to do it? Do they need to raise the cash?
So I have that. My answer to that is more so based on following these companies for a long
time and getting to know CEO or getting to know CEOs and how they perform and and building trust over or through proof of concept and through excellent results on
on them being responsible capital allocators and and for Anthony Noto specifically we've had
uniformly positive signs of him being highly capable of of allocating capital in a way that's
very positive for shareholders so um while I never liked dilution I I do I do understand why they're
doing this while the stock is red hot.
And I also think that there are probably two most likely reasons for this raise.
The first one, I'm sure people have been seeing others speculate about a crypto transaction or big purchase in that space because they are reentering the crypto brokerage space.
purchase in that space because they are reentering the crypto brokerage space and they do have plans
to do a lot more in that space besides just offering transacting Bitcoin and meme coins
and stuff like that. But creating the capital to make a purchase like that without sacrificing
your capital ratio so you don't have to pull back on lending does make some sense. And the other
thing is they had a pretty big coming out quarter for their home lending business, 92% year-over-year growth.
We are supposedly gearing up for rate cuts. I know probability for September fell, but I think
it's a pretty safe bet still that over the next 12 to 18 months, the federal funds rate falls,
and we get probably more than one cut. So really strong momentum before that tailwind's added
to the overall equation. you do need um you do
need liquidity to run to to massively grow a home lending business i mean it's not like giving 15
grand to someone for a personal loan you could be giving several hundred thousand dollars to somebody
for a mortgage or not giving but but loaning um so to create a capital cushion to give them
uh the opportunity and the flexibility to really lean into this when the when the backdrop is is productive for them to be leaning into it and to do so at what they think is very high returns,
which they've talked about in the past, home lending just being an extremely exciting opportunity
for them. They've had to fix the back-end servicing because it was just taking way too
long for people to get loans and it was taking too long for customer service and just the NPS
score is pretty low. So they had to buy something, buy Wyndham Capital,
and they integrated and fixed all that. But right now, it's all integrated. They own the entire
backend. Service quality has risen a lot, and now they are ready to step on the gas pedal. So if
they need a billion and a half dollars to do that, I mean, it always sucks to get deluded as
shareholders. But I do trust leadership in this this situation and that trust is based on following
them for several several years and seeing them over and over again oh my dog's about to lose
his mind so i'm going to pass it over to you but i think i got the point across
yeah i appreciate that rundown brad and good job is used to crazy dogs barking in the back
yeah this is the dog friendly show actually just in case no one was on board with that
um no it is funny though because so far
yesterday when that came out obviously and there's kind of a somewhat of a cult following around that
stock but it seemed like a lot of people were upset but i saw i saw several posts and people
defending uh you know i was with noroy mr crossroads and some of those guys you know kind
of defending that the the ceo saying you know, we trust in this.
This is why we invest in SoFi.
We believe in the leadership as much as the company.
And to Brad's point, it looks like the market agrees with everything
that we just said because I see a big dip that got instantly bought
off of a 21 daily moving average on SoFi today that, yeah, it's going to be rad if you look at the actual performance,
but if you look at the actual daily candle and see what it did today,
it made a low in the morning and then just pushed its way up the entire day,
closed at the highs of the day.
So I think that goes to the point as well a little bit there.
And Stock Talk, I think we got you back up here.
Yeah.
That 21 EMA on the daily that you keep mentioning, we talked about yesterday, I think it was
Rocket Lab and ASTS, some of these other names similar to that, these high-flying names that
are what you could say outperformers or have been hot stocks, at least in this run.
And like you kind of mentioned, I see a lot of 21
daily moving averages that are bouncing. I even noticed it on, if you look at the Dow and the IWM
today, 21 daily moving average bounce held at least even IWM a little bit weaker than the rest,
but still held there. We'll see. I mean, after hours, IWM doesn't look great, but the Dow held
it. A lot of other names held it. And then you mentioned this yesterday.
We didn't get to it. And obviously, if anybody has anything else they want to cover, we are.
We're just on free time here. But you mentioned if something does lose that 21 daily, you know, moving average or the whatever EMA, how ugly can get.
I was doing this exercise last night based on your comments,
and I came across Netflix's chart.
And sure enough, as soon as it lost that 21,
it got underneath it and it got stuck underneath it,
tried to peek back above it,
and just got absolutely wrecked after the earnings right below it.
Yeah, yeah.
I mean, you know, a lot of people think technical analysis is like
some kind of voodoo that requires you to be like, you know, have to go to school for six months to
do it. It's no such thing. Technical analysis is a very valuable tool for both traders and
investors because it helps you time your buys and your sells more efficiently.
And net net, even if you're not active, like if you're not that active, like let's say
you make, I don't know, 10 total buys and sells every month across all of your positions
and that includes trims and dip ads.
Okay.
That's very, very conservative for somebody that monitors
their portfolio every day even if you are are active that minimally doing so effectively at
the right prices can make an enormous amount of performance difference i know people that own the
same stocks as me or or people are members of our community who buy the exact same stocks as me every year.
They've been members of our community for years and they still underperform me because they don't know how to read a chart.
That's the honest truth.
Like that's that is the differentiating factor.
Like even if I told you everything I was going to buy before I bought it and told you how long I was going to hold it, you know, if you don't know how to read a chart, you're not going to manage it as well as I do, period.
And this idea that it's like some kind of erroneous thing to learn
or that it's going to add noise to your process
or that it's going to like somehow make you a worse trader investor
is nonsense, absolute nonsense.
And I'm not saying you need a chart to make money.
I know great investors who have made great money in the markets over decades have no idea how to read a chart.
But that's not my point. My point is not that you make money. My point is that you will make more
money. That's the point. And this is shown perfectly by people who don't know how to read a chart and just buy stuff in random places.
And then they wonder why they're down 14% on their ad in two days. You know, it doesn't matter
what the market conditions are. If you know how to read the basics of support and resistance,
the absolute bare bones basics that you can learn in literally two hours.
Knowing how to do that is going to prevent you from buying stocks at random places.
You know, people like I know investors were like, oh, the stock's down 3% today.
Good spot for an average in.
I'm an average in DCA investor, so it doesn't really matter where I buy it. Right.
I don't try to time markets.
I hear that all the time.
That is literally a stupid thing to say.
You don't care about your money. You don't want to make your buys as efficient as possible. Of course you do. You should want to. I see people who buy on a 21 EMA forfeit and the
stock goes 23% lower. And they're like, well, it doesn't matter because I'm a DCA investor.
Really? You just burnt capital. Buying 1,000 shares at four when you could have bought you know 1500 shares
at 320 or whatever like that that's inefficient it is not smart there's no justification like
no one could ever with any amount of justification about being whatever you want like
your long-term short-term no matter what you are there's no justification for not
knowing how to read a chart period end of story and to the point of the 21 ema like that's a line
on a chart that anyone can just turn on like no analysis required just turn on your daily 21 ema
and your daily chart and go through 20 charts and tell me if it's an imaginary line.
Go through any 20 charts.
Pick 20 random stocks.
In fact, for people who don't know basic technical analysis,
do that tonight.
Do that tonight.
Go pick 20 and try to pick liquid stocks that move.
Please don't just like try to make a point and pick some random industrial oil and gas name that never moves.
Pick stocks that are liquid and move and have some volatility and pull up the daily 21 EMA and go through 20 charts and tell me if it's imaginary.
I guarantee you, I guarantee you, you're going to come back and be like, holy shit, what the fuck?
That's surprising to me. And the reason why is because people are looking at these levels.
people are looking at these levels.
Thousands of technically literate traders and investors, millions, I don't know why I said thousands,
millions of technically literate traders and investors all over the world are looking at the 200-day moving average
and the daily 21 EMA and the 100-week moving average.
These major, major technical areas that have been in literature and in discussion for decades
are being watched
by institutions too. People think it's just retail traders that are looking at moving averages.
You know how many institutions look at the 100 and 200 simple moving averages on the daily chart?
Anyone worth their salt. So it matters and it will make you better, a better performer,
no matter what your style is so stop
being lazy and do it spend a weekend and learn how to read a chart and you'll notice patterns
and things like this like the 21 ema no one came to me and was like hey you should pay attention
to the 21 ema when it comes to momentum and strength but i am a 21 i am a sub 21 EMA seller and a above 21 EMA buyer by principle. And it's not prevented me ever
from staying in stocks or getting shaken out of stocks. In fact, I'll bring up a great example
of this. You know, people like when I bring up examples, let's bring up Nebius Corp. Okay. NBIS.
Okay. This is a core position for me. We opened this position this year. Okay.
This year. It's not a multi-year position. Open this in late May at 2392. Okay. For those of you
that are following along in the audience, pull up your daily chart on Nebius Corp and go back
to late May, May, uh, and, or sorry, early, and look where it was under the 200-day moving average,
where the stock was trading between 23 and 25. That's where we entered. 921 EMA were pointing
up. Stock was wedged under the 200-day moving average. That's my bread and butter technical
setup. I like to hit stocks that look like that. So we it there at 2392 what proceeded to happen well that friday two days later news was announced that click house was raising at a six billion
dollar valuation nebius owns a third of click house so what happened the stock gapped up it
went from 25 to 28 two days later after we bought it right right? Ripped through the 200-day moving average. Now, whoever's looking at the chart, put your 21 EMA on. Turn it on. Look at the stock
from 2392, where we bought it, all the way to the 55 area where the highs are.
where the highs are. Did the stock ever, even once, forfeit the 21 EMA? No. It tried in June,
came down to 34.72. It touched the 21 EMA to the penny and bounced from 34 to 55
in four sessions off a 21 EMA retest. What happened after that?
Well, in mid-June, it came back down and tested the 21 EMA again.
What happened?
45 lows, came back, was 55 four sessions later.
Is it magic?
It's just something that everybody's looking at.
And buyers are waiting to buy at those spots.
So why wouldn't
you buy at the same spots? Why would you just randomly buy? Oh, this is a stock I like. It's
down 3%. I'm going to DCA. That is like, that's like expert level idiot, idiot. Like that's like
insanely stupid. Don't do that. Don't buy stuff randomly. Like look at a chart and do not pull up a million
indicators. You do not need RSI and MACD and Bollinger bands and Fibonacci retracements and
goodness knows what other people use. I don't look at anything except the price and the moving
averages. I never have and I never will. I could have somebody come to my house right now and give
me a 20 hour dissertation on their favorite indicator. I wouldn't touch it. I
wouldn't even turn it on. I wouldn't even test it because I've never needed it. I've never needed
it. Year after year after year, I outperform the markets, and I don't need any of this stuff.
It's just not necessary. People overcomplicate everything in markets. They do this fundamentally,
and they also do this technically. People love to overcomplicate. in markets. They do this fundamentally and they also do this technically.
People love to overcomplicate.
90% of Twitter is just garbage people who underperform the markets and overcomplicate
everything.
That's like most of financial Twitter, unfortunately.
There's some quality, but you have to know where to look.
But you don't need to be a genius to do any of this.
This is very, very, these are like the bare bones basics of position management,
being basically technically literate, understanding what you own and finding efficient places to trim
and add, not random places to trim and add. So take my advice or don't take my advice,
but either way, go do that exercise tonight and you will be you will discover a new magic wonderland of very basic price action analysis, which will dramatically improve everything you do in the markets in the blink of an eye.
And it's really that simple.
And I'll die on that hill, like really die on that hill.
I'll die on that hill with bombs falling on me.
I will die on the hill like like really die on that hill. Like I'll die on that hill with bombs falling on me. I will die on the hill.
Like no one could convince me otherwise.
That's after trading for 12 years and for the last eight every day, right?
The first four years when I was young, when I was like 18, 19, 20, 21, I wasn't trading
every day. I didn't have a lot of capital back then. But for the last eight years, I've been
every day.
I didn't have a lot of capital back then.
But for the last eight years, I've been looking at the markets every day.
looking at the markets every day. I've been looking at hundreds of charts every month.
And there are things that I know to be true by virtue of experience that I do not let other
people talk me out of or convince me out of. There are aspects of my process that I know to
be true because they have yielded me alpha in bear markets and bull markets and choppy markets
and euphoric markets and all types of markets alike.
These things that I talk about on these spaces, these points of process, these rules, these
protocols, these data points that I look at, that's what have yielded me results.
That's what have yielded me results. So I listen to results, not to opinions.
So I listen to results, not to opinions.
And my perspective on portfolio management is informed by the results that my portfolio management delivers, not by my theories on portfolio management.
Like, I'm a simple guy. When I hedge, I buy naked puts.
When I look at charts, I look at the daily weekly and monthly I never
have ever or not I'm not I've never looked at a sub timeframe for the daily
but I don't look at anything under the daily I might glance at a 15-minute
chart at the opening to you know see what happens or something but I've never
needed to look at a chart of the daily I've never needed a technical indicator
under than other than the moving averages which you don't even really
need them they just help you see price easier,
which is why they're a useful tool. Price and moving averages, sorry, price and volume on the
charts. Nothing under the daily. I don't really care about trailing PE ratios. I think it's funny
that the market is obsessed with them.
Like these are all super simple things.
I don't have any complicated butterfly strategies or spread strategies.
All the options I ever buy are naked.
If I do buy them, they never exceed 10 to 12 percent weighting my portfolio.
80 to 90 percent of my wealth is always in common stock um i only enter stocks
when they have either a quality thematic or quality catalyst behind them to inform price
in the short term um i don't sell high conviction positions no matter what happens in the market
even if the market crashes uh what else i mean i could go on and on but these are just all like basic bare bones rules
and protocols that i just like don't violate i don't care how i feel or how greedy or like
none of it matters like it's just protocol it's like hey i'm not buying this because of x y and
z or i'm not selling this because of x y and, and Z. That's it. And over time, you'll get more clarity on like what those protocols are. It's going to be
different from person to person. I'm not telling anyone to trade and invest exactly like I do.
But over time, through experience, through losing and through making money, you will notate things,
patterns that appear either in the data or in your personal behavior or your personal management of the positions, patterns that yield you quality return versus power that, you know, does it, that loses you money.
Is that it?
That's that simple.
You do more of the stuff that makes you money and you do less of the stuff that loses you money.
If you would put that on a sticky note, it would probably help most of you more than most of the stuff you hear.
But yeah, what we do in the markets is not hard.
And frankly, you know, you always hear people say it's not simple, but it is easy or it's not easy but it is simple
like learning the basics of chart reading is both it's both easy and simple so like why i was gonna
say that it's it's that's probably the easiest part and even if you're an investor like wouldn't
you say the same thing like if you if you're just an investor shouldn't you have i mean take a little
bit of time to learn to read a chart yeah and and And I'm not reeling on investors. Brad and Hamid are up here. I respect
Brad and Hamid both a ton. They're amazing stock pickers, both of those guys. Nothing against them,
but they're longer-term minded guys. And I'm not knocking them by saying this. I'm just saying
I know plenty of people like that who are amazing investors who have made great money in the markets
but still don't know how to read a chart.
Like, there's just no – it doesn't make sense to me.
Like, it doesn't make cognitive sense to me.
Like, why not?
Like, why not learn how to – like, it's not hard.
If it was hard – like, if it required you to go get a CMT, I get it, right?
Like, okay, you don't have the time to do that or, like, it's not that valuable to you so you don't want to go do it. Like, but you don't have the time to do that or like it's not that valuable valuable
to you so you don't want to go do it like but you don't have to do that like when i was 19 i taught
myself basic price action by like just asking friends and reading a couple of like small pieces
of material in a weekend i was 19 years old like I wasn't experienced or even all that intelligent at that time, I don't think.
And I learned it in a weekend.
The basics.
Like, there's just no excuse.
There's no excuse.
And it's your own money, right?
It's like, I just don't see you need to be flipping for it.
And people often use time frame as an excuse to be less efficient on their activity.
And I think it's a poor excuse.
Like just because you're going to be in the markets for 10 years, it doesn't mean your buys and sells don't matter.
They absolutely do.
Compounded performance on a 10% better buy can make a lot of difference if it's a sizable position, you know, or in many cases, a really ideal buy might get you a 20 or
30% advantage on cost advantage on shares, which compounded is significant. So yeah,
it doesn't matter where you are. You could be a scalper for all I care. You could be a five
minute scalper and it matters. I mean, it matters more than, but like, you know, the slower, the shorter time frame you get, the more it matters,
but like it matters to investors and traders of all, of all kinds. Like I heard one guy say like
Warren Buffett didn't know technical analysis. And I laughed and I was like, you don't think
that there are people at Birchard Hathaway that know TA?
There are.
You don't think there's people at every hedge fund on earth that there's not technical analysis departments?
Of course there are.
Of course there are.
Because these people aren't idiots.
They don't want to buy a knife in the middle.
I saw somebody the other day, I'm not going to say it, but a really big account tweet a buy on a stock that had just broken below its 21 ema on monday and he learned to buy on the
stock it's once a stock breaks below its 21 ema and it has distance from the 50 day 50 simple
i call that no man's land it is the worst place to buy a stock.
Because let's say the 50-day moving average is 30% below the 21 EMA, which it often is, 20 or 30% below.
That opens up 20 or 30% of range where you don't know where price is going to go or find support.
And that can open up for a brutal journey for a couple of quarters if you
time your buys incorrectly. So I saw this guy alerted, and he didn't post a chart,
alerted this buy, and the stock proceeded to go down 12% the day after, and then another 15%
the day after that. That matters whether you're an investor or a trader.
Okay. Being down 20 some odd percent in two days on a position doesn't matter whether you're
an investor or a trader. That hurts either way. And that hurts your performance either way.
And your net return, even if you don't care about posting, even if you're one of those people that
doesn't share your performance, who cares? It doesn't matter. You care, right?
Because it's your ROI on your money.
You should care.
So yeah, if you're buying stocks in no man's land, selling stocks at support, I can't tell
you how many times I see that.
Stocks sells into like the 200-day moving average.
It's like, oh, I'm done.
This thing has been annoying me.
Like, you're going to sell now?
You're going to sell now with stocks retesting the 200-day moving average that it's found support at for the last 12 years?
You're going to sell at that point?
Like, it's stuff like that that I see, and I'm just like, it grinds my gears.
It's not even my own money, but it grinds my gears.
I'm like, why?
Like, what are you doing?
You're throwing away money.
Like, it boils my blood to see it because it's just so easy to avoid. It's so easy to avoid. And, you know, still you have people who are like, I've never needed a chart, man. I've done just fine. Like, yeah, no shit. You've done just fine. Dude, markets have gone up in a straight line for 30 years. Of course, you've done fine. Everyone's going to do fine. If you're long, you're fine. We know that, right?
So that's not the debate here.
The debate isn't whether you should be in the market or not.
We all agree universally that you should be in the market.
Okay, cool.
Capisce?
We've gotten that part settled.
Now that you know you should be in the market, don't you want to be as efficient with your
money as possible?
I think the answer for every one of that is yes.
So learn how to read a chart.
That's simple.
It's like, you're going to be here, so might as well make the most of it.
You know, you're going to be fucking sitting here on these spaces every day.
And thousands of you come in here.
We have literally 7,000 plus listeners on the spaces every single day.
I imagine most of you are looking at your portfolio at least once a day as well.
If you're sitting here and listening to spaces for two hours.
If you're doing that, you have time to learn how to read a chart, period. I don't care how busy you are.
I don't care if you have a full-time job. If you're looking at your portfolio every day
for more than five minutes, you have time to read a chart. Chart reading isn't something that takes
you hours. Once you're experienced, I'm at the point where somebody could show me a chart for
three seconds and I'll tell you if I'm interested. you don't need to sit down with it and take it to to a coffee date or something
just look at it oh cool above all the moving averages finding nice support here oh nice week
and a half ago it caught a bounce off the 90 ma cool stock looks supported by the market
buyers are stepping in cumulative volume profile all right'll get long. I like the theme as well. Nice. Take a stab.
Works, it works.
Like, I don't know.
Not rocket science might have to go in my bio because I say that like 60 times a space.
But it's really not rocket science.
Like, it is so easy.
So easy.
So do it.
it. You know, don't be, don't be the person that just like doesn't know something about the
You know, don't be the person that just like doesn't know something about the markets.
markets. And by the way, I don't want to bash a long-term investors too much here. Cause I'm a
long-term investor too. This goes for the technical guys too. This goes for the technical guys out
there who only know how to read charts and who don't know anything about industries and competition and margin growth and how businesses
develop and, you know, these sort of things that matter to analyzing companies.
They don't know anything about that stuff.
They don't even know how to read a balance sheet, right?
I think that's probably the best analogy is the chart reading guys who don't know how
to read balance sheets and the balance sheet reading guys who don't know how to read charts, both of them are wrong.
They're both wrong.
They're both stuck in their ways and in this myopic point of view because they think it's going to add noise to their process when it's not.
It's going to do the opposite.
It's going to refine their process.
Better stock picking, the best stock picking, and I'm going to toot my own horn here, but I consider myself an elite stock picker.
Year after year after year, we pick the best performing stocks.
But elite stock pickers do both.
Elite stock pickers say, yeah, this is a nice chart and it's in a nice theme and it has a nice catalyst and it has a right balance sheet and it's growing and et cetera,
et cetera, et cetera.
That's elite stock picking.
That's how you get the best stocks.
You know, I see fundamental guys buying shitty charts.
They get trapped in a 30% drawdown for two years.
I see technical guys buying great charts on a company that's, you know, trading at 500
times sales or whatever and getting buried on the next earnings report.
You see it on both sides, mistakes on both sides as a result of a lack of context.
And the funny thing about that lack of context is it's not intentional. It's an intentional lack
of context. Like it's an intentional ignorance, a willful ignorance. It's people saying,
no, I don't need to know that.
I do just fine without it.
It's like that Karen attitude.
It's stupid.
It is fucking stupid.
I will die on that hill.
It's stupid.
You're throwing money away.
Don't throw money away.
Stock Talk Weekly, 2024.
Don't throw money away.
God, wow, I don't even know the year.
Don't throw money away.
2024.
I probably said it in 2024, too, we don't even know the year. Don't throw money away. 2024. I probably said it in 2024 too, knowing my rants.
I probably had a Stocks on Spaces rant in 2024
where I said this exact same thing worth it.
Yeah, it makes sense though, and it's worth hitting again.
The only thing I would push back on is like,
I'm not a huge balance sheet guy,
but I have smart friends like Hamid and Brad and others that I get to just pick their brains on all the time.
Yeah, that works too. I mean, if you have people you trust and people that yield you
good results, you know, I have very select people I listen to when it comes to stocks
because, you know, I have very select people that have consistently given me good opinions
on stocks. But yeah, if you have people that you trust given me good opinions on stocks.
But yeah, if you have people that you trust that do well for you,
yeah, that's a great source of alpha.
But learn how to read a balance sheet, Amp.
Yeah, that too.
You know what?
This weekend I'm going to send you some basics to read on balance sheet reading.
Yeah.
It's a good skill to have.
So the point you're making is it rings true just for me and for anybody else. basics to read on balance sheet reading. It's a good skill to have.
The point you're making is it rings true just for me
and for anybody else.
I've learned charts. I've learned trading.
I've learned market mechanics.
The next step in my journey is
to learn how to understand these balance sheets
better, like 100%.
You can't stop. That's one thing that
you've mentioned on this very space
many times is, hey, it's a journey, right?
You didn't start out at 18, 20 years old, 22 years old, and just learn everything the first year, learn everything the second year, third year.
It's like you constantly get better and grow as you're on this journey and path to trading, to financial freedom, whatever your goal is.
Yeah, I make mistakes still all the time and learn stuff all the time.
Like, you know, I come up here and preach from a position of confidence and experience
because I have consistently outperformed the markets.
And I do feel like I can help people get to that point.
But that position of confidence and experience also comes with being humbled by lessons constantly, too.
Like there are stocks sometimes where, you know, I look at them and go, you know, checks all my boxes and I'm confident and I size into them and I end up being wrong.
And that happens, too.
But, you know, the difference, I think, between traders that can defend performance in situations like that versus the traders that blow up accounts
in situations like that is the ability to admit that you're wrong and the ability to pivot.
And like fluidity of opinion is very important in markets. Like this is sort of another concept
I've talked about before, but there's this tendency to demonize the changing of opinion
in markets. Like there's this tendency, especially from the retail
crowd to say like, well, you liked this stock three weeks ago. Why don't you like it anymore?
Like you're a flip flopper or you're an idiot or, you know, or you liked the stock four quarters
ago and now you said something negative about it. Like what the hell happened? Like that's a stupid
take. Like your, your opinion is supposed to be fluid.
You know, data is going to change and your opinion should change with it if the data changes, you know, in the other direction. So, yeah, fluidity of opinion is very important.
The ability to pivot, admit when you're wrong, the ability to take losses, the ability to, you know, stare down volatility in your highest conviction stocks and hold through them, you know, like Nebbius and Centrist and Robinhood for me and these stocks that have carried my portfolio.
Like if I just got scared out when they were down five or 10 percent on a day, like I'm I wouldn't have won on any of them.
You know, I did. I wouldn't have been able to sit through them more than doubling, tripling.
Like in order to sit through that move and benefit from it and see the ROI from a stock tripling while you're holding it and not selling into the strength, that requires a tremendous amount of confidence and conviction.
An extraordinary amount.
You know, you don't get shaken out on the downward
volatility and you don't become a seller to strength on the upside. That's hard to do,
especially if you have a sizable position. If you have a six or seven figure position in a stock
and the stock's just ripping in front of you, it's hard not to sell. The difference between
the people that sell that stock for a 20% gain and the people who are still holding it three years later when it's 450% higher, the difference between those
two people is confidence. That's it. That is the main differentiation between those two investors.
One of them knows what he owns better than the other guy. He has more context.
There's two things right here that really stick.
If you flew by the 21 EMA thing earlier, the pivot thing, being fluid with your opinions, I think is probably one of the most important things that I've heard given out on these spaces.
Literally, you have to be able to do that.
You have to be fluid and be able to update and change your position as data changes.
I think that's huge.
And StockTalk, I want to ask you, where do you find that balance between conviction and
pivoting your opinion on a stock?
Did something fundamentally change here?
Did something technically change here in the chart?
Where do you kind of find that balance between, okay, well, I'm convicted in owning XYZ stock, not XYZ,
because that's actually a ticker now, whatever, you know what I mean? Whatever stock is out there,
I'm convicted in holding this stock, but also I want to be fluid with my thought process. I want
to be able to pivot if something does change. So where's that line and balance look like for you?
Where's where's that line and balance look like for you?
Yeah, I think that's a great question.
I think, you know.
It depends on the purpose of the position for me, right?
Like, you know, some people have like trading accounts, investing accounts like I don't have that.
I have the vast majority of my assets in a single taxable account.
It's because I'm in the markets full time.
I want all my buying power and margin
available in the same place. That's important to me. So it's going to vary from different person
to person, depending on your financial goals or whatever. But for me, most of my assets are in
one place. And in that account, I have investments, right? Stocks that I've owned and have no plan to
sell and have compounded their gains. And I also have positions that are
not investments that I don't want to hold for 10 years, but that I'm just looking for upside on.
Right. And the distinction between those two types of positions, my longer term,
higher conviction position and the shorter term trading positions is really where the meat of the
distinction in the management, as you're referring to the meat of the distinction in the management,
as you're referring to, is. The distinction in the management is in the distinction of the
purpose of the position, right? Like, for example, if Nebius, which is one of my core positions,
if that breaks down below the 21 EMA, am I going to sell it? No, of course not. I'm not going to
sell a long-term position because it broke down below the 21 EMA.
Even in spite of that whole speech I just gave about how important the 21 EMA is.
If I saw Nebbius fall below the 21 EMA, what I would think is, OK, the stock's probably going down more.
And my next thought would be, where is it going down to? Right.
In most cases, a 21 EMA forfeit leads to air to the 50-day.
It doesn't always that way, but just generally speaking.
So let's say I saw room to the 50-day after that.
I'd say, okay, I will be a willing dip buyer at the 50-day if it confirms support.
So let's say over the next three weeks, it falls after that 21 EMA for but all the way down into the 50.
OK, and then we get a green candle where it bounces off the 50.
That's where I would be a buyer. That's called confirmation of support.
That's where I would be a dip buyer on that name.
OK, so that's an example for how I would manage a high conviction position.
Now, let's say it was a low conviction position. Let's say it's stock X, okay?
And that's a ticker.
Don't go by stock X.
But let's just say, okay, stock X.
Stock X forfeits the 21 EMA.
Stock X is not a high conviction position for me.
It is not a long-term position for me.
I do not have a deep cost basis advantage on stock X, right?
Unlike Nebius.
Well, that means the management of stock X's risk is going to be different than the management of the risk on the higher conviction position, right? So on forfeit of the 21 EMA, what do I do with stock X? I say, okay, the stock is forfeited the 21 EMA intraday. I will give it until the close to recover. If it does not recover the 21 EMA,
it has violated my point of risk and I'm out of the trade.
Simple.
That's the difference.
Yeah, I think that's a great rundown.
And when I think about it,
I think about nobody's batting a thousand percent, right?
Nobody's going to be right.
And even if you have everything lined up, like Stock Talk,
I know this happens to you all the time.
Not all the time, but often.
You have a position that you look at, everything lines up,
you've got your confluence, and the position just doesn't work out
for whatever reason.
Something changes, something goes wrong, who knows what it is, news, something.
And you're not going to bat 1,000%.
And so you have to pivot on that, right?
Yeah, of course.
Yeah, you pivot on it.
And you, like, performance is about this.
Performance is about being right in size and being wrong in less size.
That's it.
That's the whole game.
You have to be right in bigger size than you have to be wrong
it's not about being right more often than you're wrong in fact i would say most great
stock pickers are right maybe 60 of the time maybe elite one 70 of the time and i'm talking
about in terms of timing position sizing conviction entry trims exits i'm talking about
mastering the trade.
Elite stock pickers at best, maybe 70% of the time are right.
But they're right in size on the ones that they're convicted on.
And that's what matters, right?
Like I was right in size on Robinhood.
I was right in size on Centris.
I was right in size on Nebius.
I was right in size on Tesla. I was right in size on Nebius. I was right in size on Tesla. I was right in size
on Amazon. Those are like the five best performing stocks of the last 15 years for me, right?
There's many along the way that I bought and sold and have helped accelerate performance,
but the real compounded dollar returns in the portfolio have come from five to 10 stocks
that I held for long periods
of time because they were high conviction positions. The stuff that I got dropped out
of on the middle, like, okay, maybe there's, maybe there's stocks along the way that I got
stopped out of or, or, or cut due to risk violations that ended up going much higher.
In fact, there's a lot of them. The one I sold earlier this year, talent energy, I sold it for
like a 50% gain. That stock's like $330. Now it's like doubled since I sold it. Okay. TLN talent energy.
Am I mad about that? No. Am I a bit sour? Like, Oh, I could have held it a bit longer. Yeah. But
there's opportunity costs involved. There's other things I did with that money in the meantime
that were profitable, right? There's all of these other factors you have to consider. So at worst, those sort of things are something I'll look back on a week later and be like, ah, shucks, shouldn't have sold, right?
But in most cases, a year later, I don't even remember.
I don't remember the stuff that I sold too early or too late or whatever.
All I remember is the compounded positions that are still in the portfolio, like the
Teslas, which Tesla, I'm up like 2,400%.
I bought in 2016.
You know, Amazon, I'm up like whatever, 900% on shares.
Robinhood, I'm up 500% on shares.
Centris Energy, I'm up like that.
That's what I see when I look at my portfolio.
I don't see the hundred other names that I've traded over the past decade that have come and gone, many of which are exponentially higher from where I sold them.
Do I look at that and go, oh, my God, the opportunity I've given up?
No, no.
I instead look and say, wow, I planted a lot of great seeds in a lot of great companies and I have great cost basis on them and I'll hold these stocks for decades.
Like, that's what I think.
And that's where the money's made, you know.
So, yeah, you have to pivot when you have to remember and constantly remind yourself of why you bought the stock.
And this is something that not enough people do.
And I think even to an extent, experienced investors don't do this enough.
Like, if you have a portfolio of stocks, you should constantly be going through them and
reminding yourself, why did I buy this in the first place? Like, what was my original thesis?
Remind yourself, revisit it, and then ask yourself, like, should I still own it here?
Like, is the reason I bought it still valid? You know, maybe you bought a stock because it was
undervalued versus its peers. Okay, and maybe that stock is tripled now. Is it still undervalued
versus peers? You know, maybe you look at it and say, okay, you know what,
it's not undervalued versus peers anymore, but I've been listening to the last few earnings calls
and this new narrative has emerged about this new investment they're making or whatever.
Well, good. Now you have a new thesis, but in some cases you're going to look at that and say,
yeah, you know, it's not undervalued versus peers. And honestly, there's not a lot going on. I haven't seen many catalysts. I don't really
like the theme as much anymore. I'm not sure the market cares about the industry as much.
Like maybe I should just lock up profits and move on. That's going to be the conclusion you come to
sometimes. But the point is the process that yields those conclusions is very
simple. It's the dynamically simple process of scrolling through the things you own and saying,
why did I buy it originally? Why do I still own it? And are the reasons still valid?
That's it. And this will make your life a million times easier, guys and gals.
Like, I know some of you out there, you know, you're chasing every ball you see on Twitter.
You end up buying 20 stocks.
You feel overwhelmed.
You're up on some of them, down on some of them.
You get stressed out.
I get it.
You know, I've been there.
Every new trader and investor has been there. But if you want to get to a point of
serenity and be able to be chill and calm during volatility like I am and like Hamid is and like,
you know, other experienced traders and investors that come on these spaces where we're all sort of
even keel most of the time. If you want to get to that point of serenity in the markets,
you have to know what you own. You have to. It's the first and only step.
You have to go through it. And when I say know what you own, I don't mean it in the flippant,
cliche way that it gets used. I mean, really know what you own. Like know the businesses inside and
out. Know the charts inside and out. Know the areas of support. Know the previous commentary
on earnings calls. Know what the expectations are for growth, have an understanding of all these things so that when changes in the data arise, you can navigate those changes in data with confidence
and clarity as opposed to being confused, right? I can't count how many times I see people on
Twitter who might own a stock who they see a piece of news and their first question is,
what does this mean? Is this good or bad? Is the stock going to go up or down? If you find yourself being a person that asks those sort of
questions to me or to other people you might follow on Twitter or to other more experienced
traders and investors, if you're always asking those sort of questions, the hard truth you might
have to face is you probably don't know what you want. And you're probably buying stuff just because somebody mentioned it.
And that's okay in a bull market.
In a bull market, you know, you'd probably feel pretty lucky doing that, right?
And, you know, if this bull market rages on, you'll probably continue to feel pretty lucky doing that.
And that's okay.
If you really don't want to listen to me, that's fine. But I strongly encourage the people who do fit that description,
who are always confused when new news comes out or earnings comes out.
If you fit that description, do the work.
Do the work.
Spend some time.
Go through a few earnings reports.
Go through the numbers.
Go to Earnings Hub, which we all use.
Pull up a chart of the reports and the EPS and the growth and study it and say, okay, do I like what I'm seeing?
Do I like what I'm seeing in all the data sets?
Not just in the chart, but in the chart and the earnings growth and the recent numbers and the commentary.
Do I like the whole picture?
And if you do, buy it and see what happens.
But, yeah, I know we ran a little over here like
45 minutes over we've been doing so we've been doing a lot of runovers lately huh hour runovers
but yeah i don't know how much people like it your fault or my fault yeah it's my fault
i keep prodding you though i just i love throwing out the topics here and you know just getting a
little additional context and a lot of things.
Meta is at $780 a share, by the way.
It's now at 12%. Oh, my God.
Wow.
Yeah, I mean, that was a fantastic quarter.
So can't blame people for bidding that stock up.
But I'm going to take a shower and head to the gym.
So I guess we'll wrap things up.
But as always, appreciate all of you guys for listening to my long hour-long rants i i don't
know i still am always humbled and surprised by how many of you sit through uh and listen to these
but thank you guys for tuning in uh we will be back as usual same time same place tomorrow
um and yeah just stay frosty out there you know i know I know I'm long-winded when I talk about
this stuff because I have a lot to say and I've been through a lot in the markets up and down and
try to bestow those lessons on you guys as best as possible but at the end of the day just care
you know care about your money care about the money you're allocating,
care about getting better, care about learning more. And like, just don't be lazy and don't be ignorant and don't be complacent. And remind yourself that you are being those things. If you
tune into these every day and you scroll your Twitter feed every day, but you're spending all
that time doing that and not spending any time improving your skills.
And you should be doing both.
So anyway, we'll see you tomorrow.
There it is tomorrow afternoon, 3 p.m. Power Hour,
Eastern Time, of course.
And after the close, we have Amazon, Apple, Coinbase,
MSTR, Reddit, Net, Roku.
A lot of names reporting tomorrow, obviously.
Amazon, Apple, Coin.
Probably the biggest ones there.
MSTR, maybe.
We are closing this out with Meta up 12% here.
It's unreal.
Microsoft still up 7.6%.
NVIDIA is up 1.4%.
New all-time high there as well, 181.8%.
Also noticed Amazon is up almost 3% here in After Hours
with some of the read-through from these other earnings.
That's a big sympathy move.
Big sympathy move.
Yeah.
Wow.
Yeah, Amazon's at 236, 237 a share, we'll call it. Yeah, 3% move here basically on Amazon
reading through. I mean, it has to be a read through on some of the ad stuff. It has to be.
But either way, that's where we're at. I'm going to close this out. We'll become a recording. We
had some really great speakers on today. Make sure you give them all a follow. Of course,
you can listen back to the entire thing. There was some really great speakers on today. Make sure you give them all a follow. Of course, you can listen back to the entire thing. There was some really great commentary around
macro and the Fed in the first hour and a half, basically two hours of the show.
Some really great commentary around the earnings, of course, and then a lot of great knowledge
there from Stock Talk the last hour. Appreciate everyone that tuned in. We'll see you guys
tomorrow afternoon. Thank you.
