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STOCK MARKET TALK
Recorded: Aug. 18, 2025 Duration: 1:59:48Space Recording
Short Summary
In a market characterized by volatility, key trends are emerging in the crypto and tech sectors, with Bitcoin and Ethereum showing signs of growth, while strategic partnerships and shifts towards AI in software indicate a dynamic landscape ripe for investment.
Full Transcription
Thank you. what is up everyone welcome in happy monday august the 18th um If you opened your chart at 9.30 a.m. this morning when the opening bell rang,
your chart didn't go anywhere. We're in the same spot. Not a whole lot going on in the market.
Some things are notable, some things probably not. Not a whole lot of action on the actual price,
but a little consolidation day, not much news going on. We do have Trump and Zelensky,
We do have Trump and Zelensky, as well as European leaders in a multilateral meeting and speaking live right now.
It's being streamed.
They had a meeting earlier as well, just the two of them.
And we'll see what other things are going on in everyone's world and minds.
Obviously, Jackson Hole coming up on Friday.
The Fed meeting minutes will come out
on Wednesday, but your market update is basically flat. So you've got a completely flat QQQ right
at breakeven, SPY right at breakeven, the Dow pretty much there, just slightly red, and IWM
outperforming up a dollar, up 0.44% over in the small cap world. VIX was up a little bit earlier
today, has slowly tailed off throughout the day. Tesla is the outperformer, up a percent and a half.
NVIDIA also up 1%, while some other things like Meta down 2%, having a little bit of a rough day.
Microsoft in a downtrend, hanging out at the lows down 0.88. I did see crypto had a pullback today
as well. It's since bounced. Bitcoin got down into its 50-day, bounced down there. Ethereum,
Solana both down 2% to 3%. And yeah, that's all that really has stuck out to me today. I know
there's some individual names that have probably moved. Interested to see what people are thinking
about the market and what's going on today.
And Evan, anything from your end over there?
Anything that you've been watching on?
There was an Intel story a little bit earlier.
I'm sure you probably saw.
Yeah, Intel dumped off it though.
Yeah, Intel dumped off it.
So I was watching that lift,
waking up a little during power hour,
maybe question mark, we'll see.
Not horrible.
But no, I'm excited to hear what everyone has to say.
Not the craziest of days for me.
But, yeah, no, I'm excited for what people have to say.
Jackson Hole.
Wonderful, beautiful place.
Wyoming.
Great news.
Wonderful place to cut.
You know, you could cut the race there it's beautiful
i i envision a true social post with basically that exact comment you just made
in the next few days we'll see what happens um but yeah it's been a very very quiet day that
intel news so essentially uh trump administration according to sources going to take a 10 stake
using the grants from the chips act and uh like the market didn't like that a whole lot maybe
because it's not new money or something like that is it legal either way it needs to be asked is it
legal that's the next question well you can start with you can tackle that first option, Mike.
Is it legal?
Do we want it happening?
Those are two separate questions that are both very important.
I mean, I'm just asking the question.
The money's been appropriated with nothing.
There was nothing tied to it.
Is it really legal to say we're going to own 10% of your company now?
Now, I don't have a problem when the government steps in, takes a stake and it gives money and helps out but this is you know already
been done right i could make you the argument that should never been done the way it was that's a
different story i will say i still think intel is the biggest piece of you know what out there
as terms of a chip company they can't even make their own chips they have taiwan semi-making for
them so who well wants to use their foundry?
But sure, is it legal?
And do we really want a piece of this company?
Would be my next question.
Yeah, that's going to be interesting to watch continue to play out, of course.
Well, Evan, what do you call it?
The bend the knee trade?
Or other people have said kiss the ring. Listen, bend down to me they love me everybody thinks i'm the best
person ever you know everybody's here they love me the ceo came in he came down i gave him some
knee pads we had a great time big win great american day um options mike what else uh what
else can you even say about this market today? Not a whole
lot going on. Did you find any pockets of maybe strength that you said, hey, well, this is normal?
Are you saying, hey, there's just nothing to move the market for another three to five days,
maybe even until next week? I don't even think it's three to five days. So this morning when
I shot the video for members, I said it was a quick one. I said, I don't see think it's three to five days. So this morning when I shot the video for members, I said it was a quick one.
I said, I don't see any setups I like today.
And, you know, from a day trader, not from an investing, right?
From a day trader, when you come in and say, I don't like the setup here, it means that nothing just looks great.
The analyst action wasn't great today.
There's nothing wrong with the market here.
You know, we're still above the eight day.
We're barely budged anywhere today.
But I kind of figured the market was going to be completely focused on the White House today.
And, you know, what is going on over there or coming out of there and how this is playing out.
So, you know, I've made a couple of things.
I closed my Amazon call position today.
The last couple for a loss made a win overall.
I'm still in Google and I added some video calls for next week because there was a ton of flow on it.
It's going back to highs of the day.
If you're looking for things to do today, Tesla's highs of the day, not a lot of power, but highs of the day.
Amazon's rebounded highs of the day.
Coin and hood have had nice days coming back up.
But I think to your point, there's just not a lot of action here.
The market's waiting.
Now, I don't think the market's going to wait until Friday to do anything because, you know, markets very rarely sit for that long and do nothing.
Friday's going to be a big day for the markets.
The 10 o'clock Powell press conference is obviously going to be on everybody's mind.
But, you know, they play with names today like Open.
Open's just at highs of the day here or just off of it right now.
just at highs of the day here
just off of it right now.
We saw this little
Wolf WULF
had a nice little push today earlier
on Google taking a stake.
I don't
read anything into here. It's late summer
and you have this
whole drama theater going
on in the White House and the market wants to see if anything's
coming out of there.
So for me
little have some nvidia calls now out for next week uh i like having them for next week because
with earnings next week the iv will offset the theta decay so i can sit in it not worry about it
and still sitting on my google because i still think that's going to hit all-time highs i have
out to september on that and other than that, not much.
I do think crypto looks vulnerable.
I think if you look at the Bitcoin chart, it's starting to feel vulnerable here.
We couldn't hold this $120 break again, came back under it, run it to 21 day.
It just kind of feels like it just can't get going here. And I don't understand why Riot's having a big day and hot stuff,
but no, something doesn't feel exactly great about it.
So how's that for a recap?
And Intel? No, not with your money.
What about with Evan's money?
Well, you know, Evan always picks on me because I hate Apple,
but I'm still long Apple since over a month and a half ago, so it can't be hated that much.
Apple's had a good resting point.
Apple's had a good resting point, but then we're coming up to this iPhone event.
Good run up into it, dump after it.
That's the Apple story.
I don't think there's anything on that event
that's going to move the needle for them in terms of,
it's just another new phone, right?
We've seen this year after year.
Nothing bad about it, just a new phone,
a little bit faster, a little better.
But I don't think you're going to get any kind of AI story
out of Apple at this event.
The other interesting thing is, I'm sure you've looked at this option mike but under the
hood uh mostly buying today uh when when i look at you know like especially in nasdaq it looks like
mostly uh inflows versus outflows yeah i mean again we're not going anywhere um you know a
couple of people have used the word bubble in the last couple of days.
Altman was the first one to use it.
And then you had Dan Ives this morning use it.
And that, you know, that always starts to make little warning bells goes off in your head.
The problem is when you use the word bubble and we are in a bubble, I'm not convinced we are,
bubbles can go on for a lot longer than anybody thinks.
Right. So when you first hear that word and everybody said, oh, I want to short this market, you know, we're going into a bubble.
Well, you know, go back and look at how much higher we went before when people started talking about bubbles in the dot com blast off before we actually sold off and had that whole huge come down.
So, you know, I take everything with a grain of salt.
I think the high
of the year is not in, uh, I would love a dip. I don't know if we're going to get one here.
You can, there's just too much money looking for a home right now. And that makes it tough.
Very tough.
Very tough. Indeed. I saw Brian Lund up here. Um, I'll send another invite, get him back up here.
Logical, I saw you joined us back. Great to have you on this panel again.
What's going on in your world? I know small caps have been doing very well lately.
I'm interested to hear some of the updates from your point of view.
Yeah, it's actually a pretty interesting time. So it's been an interesting market too.
A pretty interesting time.
So it's been an interesting market too.
These last couple weeks in earnings, I'm glad they're over because they've been extremely
volatile.
As you've all seen, there's been names that are dropping 20, 25% on earnings on extreme
overreactions in my view.
You know, you miss something by 1%, even though you had already guided up.
I mean, or like the analysis, the consensus analysts, you know, estimates are way too,
you know, way too positive. So you miss something by 1%, even if you're like beating your old guy,
like it's ridiculous. But I think what it's done is it's given a lot of opportunity in this market.
What I did this entire earnings season was take advantage of this. A lot of my gains have been
realized this year, which means my tax bill is going to be kind of nasty. But, you know, when I have moments like
this in earnings, okay, I'm going to look through these earnings. Did this stock deserve to drop
20%? And if the report was underwhelming, I cut that stock and I said, you know what,
this is going to tread water. I can come back and revisit this name in 30 days once my tax loss period is over.
And in the meantime, I can go look around the market and see which names are down similarly 20%, 30% on what I thought are pretty good earnings.
There's a lot of examples of these.
A couple of names that I liked was the Shift 4.
And then you had the insider buy of $16 million. The last time the chairman, Jared Isaacman, bought this kind of amount was when the stock was at 67 bucks last year.
And the stock went to 130.
So he steps in at 84.
Stock's above 90 now.
That's kind of an example.
And I listened to the call.
I look at the earnings report and I think, I don't know.
Their numbers look pretty good to me.
I don't think it made sense for that to drop 30%. So, you know, I use this earning
season to my advantage while I did get hit here and there. You know, I basically looked at it as
like, okay, tax law selling on the underwhelming names, move those proceeds into something else
that got whacked for, in my view, not a good enough reason.
And then, you know, we march forward with a higher conviction, higher quality portfolio.
So that's kind of what I've been doing.
So a good amount of shuffling there, cutting the low quality, adding the higher quality.
Small caps, obviously looking great.
You know, I think you had a post the other day, Amp, about, I think the takeaway today was that, you know, Buffett bought home builders.
And I couldn't agree more with you. I think that was the real signal. Forget UNH. amp about i think the takeaway today was that you know buffett uh bought home builders and i
couldn't agree more with you i think that was the real signal forget unh um you know although i did
trade unh for uh you know a small quick gain as well as nova nordisk um i think the that's a real
tell uh and then you look at like the charts of all these home builders you look at you know
builders first source you look at all these other you know there's there's a ton of them um and those are starting to look good i mean
they're like you know getting above their 200 days they they're showing you know volume patterns of
accumulation you know rates are coming down and when it comes to a lot of these cyclicals timing
is extremely important and i think that you know while Buffett is not always the best timer, I mean, we've
seen what he did on the Oxy purchases back when he's down on that purchase, you know,
when he was buying in the 60s and went to the 40s.
I'm a lot more constructive on the housing sector because it's been so bombed out for
so long and the rates are coming down.
So, you know, housing, I like that theme.
And then, yeah, so housing is good, obviously, with lower rates, biotech's
obviously picking up really nicely lately, which is what I've been waiting to see.
Had a very big win with Syndax Pharmaceuticals, SNDX.
That one has been really nice since the earnings.
I still think there's good opportunity in Sarepta,
which has been in the middle of all this FDA drama. The stock is bombed out and you're getting
really accommodative comments from Vinay Prasad, who was like the boogeyman at the FDA. A lot of
clown show stuff happening there, but it seems like he's taking his, you know, foot off the gas
in terms of being, you know, an antagonizer for the space. So he basically, you know, when they
had this PGEN approval last week, what was more important and interesting than the approval was
Vinay's comments saying things like, this is, you know, one of those moments where you don't
necessarily need to have clinical randomized trials to
approve drugs. This is the exact, you know, this approval is basically to showcase that
philosophy. And that was just a really big change of tone. So if they're going to start being really
more accommodative for, you know, like the FDA is going to be more accommodative for these clinical
trials and approvals, then we might truly have a shift there.
And obviously, biotechs are long duration assets. They do better in lower rate environments. So
that's obviously going to work. So I talked housing, I talked bios. I think the other
opportunity in the market is software. GitLab getting a lot of love lately. I saw there was a
ton of calls come in late last week. But there's a ton of names in that space that are bombed out.
They're trading extremely low.
This narrative that's taken hold is, you know, AI is going to wipe out all these companies.
I just don't believe that.
I've worked in this environment, corporate, you know, with softwares, blah, blah, blah,
for 10 plus years.
And I'll just say that those things are not getting phased out tonight, tomorrow.
But the stocks are trading like they are.
I think that those valuations are getting really favorable.
They're approaching the lows of their range.
And so I think it's worth taking a stab here.
And so I've made that a pretty nice bucket for myself.
And yeah, I think there's some good themes and good areas to get our performance and you know while the and his last comments i'll say on the market as a whole
um you know recently we talked about the breadth of the market kind of deteriorating you know
number of stocks below the 20 day was pretty low like 25 or something like that which typically
shows that breath is not, you know,
contributing to this market run. And so S&P is pushing higher, but breadth is deteriorating.
And then sometime like Tuesday, Wednesday last week, you had breadth expand. So there was really two scenarios in my mind, which was, look, these things are going to converge at some point,
either the S&P is going to roll over and catch up to breadth to the downside,
or breadth is going to pick up and it's going to catch up to the S&P to the upside.
And I think after we saw some of those days where, you know,
a lot of these individual names were bombed out and then they picked up to the upside,
that to me was back to, okay, there might have been a bit of a stealth pullback underneath the surface.
And so that's where, you know, I was willing to take more stabs.
I thought we'd roll over in the market, but we didn't.
The market stayed strong.
A lot of these names became even more attractive from a valuation perspective.
So it was worth getting back that long exposure as it was starting to turn back up.
So I think if you're an individual stock picker, you should be pretty excited because there
is a ton of opportunity in this market.
And I think we reset a lot of valuations and a lot of stock prices.
I mean, names are now back to their, I don't know, some of them are back to their April
lows and whatnot.
So I think you have to go do a little bit of work, but the opportunity set is much better than it was just a couple weeks ago so we should be
thankful for uh the earning season we just had even though it hurt um you got to look around
there's a lot of opportunity and you know markets like what flat today or slightly red i'm up 2.2
percent today i can't i can't be too upset and i think that speaks to uh that that breadth
expansion that I was
talking about, because I'm not long the S&P. I'm long individual names, and there's a lot
of opportunity right now. Some interesting things to unpack there. The rates, yeah. So
seeing Buffett buy home builders, of course, it could have been at any point during the last quarter, but what's your take on the rate situation?
Do you think, hey, September, we're gonna get this cut?
Maybe the data that, I mean, we've had a lot of exuberance
around the CPI report and then that held back off
after the PPI, do you still think we're gonna cut
in September and what's that look like going ahead?
Obviously, you know, it's always going to be
data dependent as they are. So there's not too much point in speculating because it could change
at any moment. But given the facts today, I still think we get the September cut. I think we've been
fairly restrictive long enough. I don't think we need to have rates where they are today. I mean,
if you recall, like last 15 years, we've basically been sitting at 0% rates. So, you know, sitting at 4.25, I'm not saying we go back to zero, but do we need to be
at 4.25? Can we bring it down to 3.5? Three, you know, I'm basically in the camp of we get three
cuts this year. Obviously, that can change in the data and I'm not counting on it. And which is why
I'm a stock picker first. And I'll listen to the price action to tell me what to do and where to have exposure.
But that makes sense to me.
I, you know, I think we got what, three cuts last year.
Three cuts.
Yeah.
We just got three cuts last year.
So, I mean, we're still, or what, yeah.
What is it?
Four cuts maybe?
I can't remember at this point, but we,
we definitely can bring it down.
So I'm in that camp that we should probably still bring it down.
Yeah. Well, we have the 50 basis point cut and then 225.
So yeah, basically four cuts if you're going by quarters.
Yeah, right.
The other thing you mentioned before I go over to Brian and Ryan, GitLab.
And it's software there for a little bit.
It was kind of getting beaten up.
It seems like it's starting to stabilize a little bit.
But you mentioned GitLab as well. Is this a buyout candidate?
What's the story around GitLab right now? Yeah, look, here's the thing. I understand the idea
that seat-based softwares are not going to be great under this new AI regime because
companies can reduce headcount. They can, you know, maybe have three software engineers instead of five,
given that they're way more productive now with the AI tools.
So, you know, I think that's probably why a lot of these software names have taken a hit.
That said, it's not like you don't need code repositories anymore.
If anything, you're going to need them even more so
because more code is going to be written from this point on than it was in the past because code now it's just become even more accessible
and more convenient to have code written.
So I don't think the amount of software from here decreases.
I think it actually, you know, increases and potentially exponentially.
So that's an interesting one because now imagine like small companies that never had the resources to have software engineers, all of a sudden they're going to have the ability
to write code and become more competent and capable. So I think a GitLab makes a ton of sense
because, you know, code, keeping code will make sense. But it's not, you know, I'm thinking of
software as a bucket approach. I have like exposure, a good amount of it, like maybe 30% of my portfolio.
But, you know, it's split across like five, six different names.
I never want to have like a point where I can have like a point of failure in my portfolio.
I like the diversified approach.
That said, GitLab is definitely on the higher side of my allocation as well as Okta.
I increased that GitLab specifically after seeing a lot of calls come in.
I saw a lot of September calls come in.
September 2nd is their earnings, so that's pretty interesting.
And if you think from a valuation perspective,
I know it's not the same as a Snowflake
because Snowflake is much more of a platform,
and they are a consumption model,
which is extremely important language there.
But they have basically the same
metrics and gitlab is trading at half the evaluation for example 27 top line growth 35
free cash flow margins that's happening in both those companies but one trade that double the
valuation and you know it does deserve to trade at a premium valuation but i just wonder
is it is premium mean double i i don't know if that's true. Yeah,
I could easily see a lot of these software names trading 50% higher from here, just based on like,
did we, you know, price in too much downside? And I think the valuations right now you're seeing in
software is basically reflecting a lot of the pessimism around that industry. And I don't know
is AI a problem? Is AI or problem? Or is that overcooked?
That's what I'm saying. I think it's overly pessimistic on that narrative. And I don't
think that these companies are worthless. Like the market is just sending them to their lows.
I don't think that that's the truth. And so there's, you know, I'm not saying that these
things should hit the new highs, but you know, are they at a point where they're becoming too
cheap and you just got to buy them? I think I'm in that camp.
So I think a lot of software is suffering from the same narrative.
I think the idea that, oh, you know what?
Are new entrants going to come in with these softwares, these new softwares that you can build on the fly?
Sure. But are you really going to, as a multibillion dollar organization, go with like this, you know, knockoff brand to trust your, you know,
multi-billion dollar operation with, or are you just going to spend an extra whatever it is,
50k a year on your contract to make sure that you're getting, you know, top of the line support
and scale with some of these big software companies that are entrenched at this point.
And so that's kind of where I'm looking at it from the software side is like,
I think that narrative is overblown. Like, yeah, sure. Some of the software is going to become a
commodity, but at the end of the day, they're still going to be used constantly. Yeah. I think
the competition fear is overblown. I don't think they're going to lose as much market share as
people think. But, you know, do they long-term have headwinds on the revenue side yeah because it's you know
especially the seat based ones if you have a consumption based model like a snowflake
you're probably going to do better and better from here on but if you have a seat based model
i don't know how that's going to translate how much you're going to get affected down the road
that said i don't think that's happening today. I think that's a little bit more of a medium to long-term problem.
And in the near term, you've kind of priced in a lot of downside on that narrative.
Appreciate that logical.
As always, feel free to anyone to jump into the conversation at any point.
Somebody says something you want to add to, debate, just say that you like it, that you're on board with that feel free to jump
in at any point i want to bring brian lund into the conversation here brian uh hope you had a
look like you had a great time out there in colorado hope it went well uh and i'm glad i
heard on the space the other night that you learned what trad fight means so that was uh
that was exciting how are you sir yeah i'm never too old to learn a new thing. I'm doing great. It was
really a fantastic week. And I have to tell everyone in the audience, if you've never been
to Colorado, you got to go. Forget about Canada. Forget about Switzerland. You get up into those
Rockies and it's something else and you don't need a passport to get there. So I would highly
recommend it. Last week, like I said, I was out, but I had my eye on the market. I did a little bit of trading,
had a really nice trade conclude in BMNR, which I had bought about 33 and got out between 65 and
69. So that made my vacation. I bought a couple names that really tanked hard during earnings.
And what I did is I, one of the things about being a trader, at least I think, is you have
to learn how to hack your personality, right?
And I have an ADHD personality and it's hard for me to focus on things for too long.
So one of the ways I hack my personality is I will take a very, very small position in something I'm interested in.
And something about having some skin in the game, even if it's just a little bit of skin, you know, like the sort of skin where if the company went to zero, it wouldn't matter.
Something about that focuses me.
So I bought a couple names last night or last week that tanked just to kind of
keep an eye on. And some of them I've added to today. So the first one was the trade desk,
which absolutely got murdered on earnings down 40%. So I bought a little starter position in
that last week and I added to it earlier today. These are names that have a very clear spot where
you know you're wrong.
Like if the trade desk goes back down below 50, I'm out. I don't care. I'm wrong on that one.
The other one that I bought a starter position on and added to today was Kava. I bought that down in the mid 60s and for the starter added today. Again, this is one where if it gets below 68, I'm gone. I'm out. And then the final
one was AI, which got murdered again, down 25%, bought a little bit at the lows after earnings.
And then today I added to it real clear spot, 1760-ish. It gets below there, I'm gone. So that's kind of what I'm doing, just get my feet
wet again. I did start a position in ASTS today. I also started, what else did I start in?
I think that's it. I have some Tesla from last week that I added to, but if I look at the market
right now, there is absolutely nothing wrong with this market.
You know, before I went on vacation, I was concerned about that big reversal day. You know,
we had the debate here with JC about whether it was a bearish engulfing or whatever. That was on
the 31st. We had that bar and then we dropped on August 1st. That two-day drop was a little
concerning to me and I wasn't really going to get too
involved, especially since I was going on vacation, until we could close above there. Well, not only
did we close above that day, the 31st, but we've now come back very orderly over the last four
trading days. We just kissed the eight-day on the Qs today. We were above support, which would be the high of that day on the 31st.
Same with the SPX.
IWM looks good.
So if I look at the market right now, today's a little bit of a boring day.
But there is nothing technically wrong with this market.
It looks picture perfect.
This is sort of market action that you would see in the CMT
manual. So like I said, I'm just kind of getting my feet wet, getting my head back into the market
and going from there. Hey, Brian, real quick, you mentioned Kava. What are your thoughts on
Sweetgreen? You know, it's interesting. I know that, so let's see. We had Sweetgreen and we had CMG that both got murdered when they had their earnings come out.
And I think a lot of people thought that the same thing would happen in Cava.
Starbucks and Instacart aren't looking to go to either the same kind of hiring space.
Yeah.
So I actually was trying to get a – I had a position I was trading in Cobb for a long time and I
actually just dumped it. I just got rid of it before earnings, fortunately, but I think sweet
greens is in the same position. Okay. So there's that big gap on earnings, right? You have a,
you're down 23% and you pull back a little bit and now we're in this little three day base.
this little three-day base. I figure you get long above 950 and you're out below 875. It's a very
easy spot to define your risk on. It's very easy to know when you're wrong. And the best part is
you just had earnings. You just had the big move. So the likelihood that you're going to wake up and
have a big gap down on this again is probably low so yeah i agree yeah so so if you're
if you're trading like i don't know what the i don't know what the fundamental story is like
i tell people i hate kava food i think it sucks you can get better mediterranean at your local
greek family restaurant but i don't care like if people want to buy the stock and it goes up
i'll buy it so i'm just looking at it from a technical standpoint to say okay where would
a smart spot be to get in?
And then where would I know, okay, pretty much my theory is wrong and I'm out.
And then I just define my risk between those two.
I would say, hey guys, how are you?
It's been a while since I've been on the call.
I hope you guys have all been well.
But on the Cava front, I think, yes, the technical story may be different.
But looking, like you said, I don't know where the fundamentals lie.
I just feel that where they are now currently, they don't really have much pricing power at all,
which kind of sits them in a negative standpoint.
And then also with the competition, right?
There's obviously Chipotle.
There's obviously Sweetgreen.
And there's other companies within that space.
I don't think it's really a good long-term buy at all.
I know we're mostly looking for trades,
but I think Cava, where they sit,
is just not a stock you want to be in
unless you're trying to capture, again,
a little bit of upside after the large decline from their earnings. I did want to ask Logical on your Salesforce software talk,
where do you think that is in five years? Again, with AI, there's a lot of different implications
of where software is going to go.
But because I'm kind of on the same idea that there is still value in certain place, but it's just figuring out which company that is.
And I'm kind of just looking for that now, not sure where we are and when that kind of negativity reverses. But yeah, I think there is opportunity in software,
but I don't think it's everything.
I think it's very, very small, few positions and that's it.
Yeah, so my thoughts on that is,
yes, AI will be a headwind for a lot of these companies.
But, and again, the consumption ones
are gonna hold up the
best that said um you know you're asking five plus years out yeah it's gonna look very different five
plus years out i'm not looking to hold these things that long term definitely not uh i'm more
so saying that i don't think that the amount like the valuations that we're trading at today make a
ton of sense for the near term i don't think we're gonna see that kind of those issues show up on the next print for example I
don't think so and again the price you're paying is basically like the valuation is the is the
hedge isn't it like you're getting to get a cheaper multiple to go into the prints because then what's
the expectations of that multiple and because then what's the expectations
of that multiple?
And I think right now the expectations are not too high.
And then when you think about these software names, we haven't had the earnings season
for a lot of software names.
A lot of them report later, like Braze and GitLab, for example, they report next month.
Yes, they're a little bit off cycle based on their fiscal years and such. So
I think that could be the potential catalyst because you go into those prints and whatever
that valuation is headed into the print is basically taking into account specific
expectations for those numbers. Now, if those expectations deviate and it's business as usual,
then we'll probably find out that we priced in too much downside. So I think the upcoming earnings could be the catalyst. And again, like, could I be wrong?
Absolutely. But I think that you're basically being compensated for the risk with the lower
valuation. So without really seeing it in the numbers quite yet, all we've done is just price
in the downside. And so that's kind of what I'm thinking. No, I'm not long every single software stock.
Specifically, I'm long the ones that I am more comfortable
knowing the softwares.
Like I've mentioned GitLab, Okta,
which I don't think Okta is going anywhere.
I've mentioned Amplitude and Braze before.
I'm actually in a couple other ones just as a trade
because I feel like we
maybe um priced in like we had insane overreactions and now these stocks are extremely cheap
i'm looking at monday i'm looking at confluent um so i mean those are kind of more trades lower
conviction names smaller size but some of the other ones i think you know they're pretty high
quality businesses and like when i listen to the amplitude
call for example that stock was up 15 after earnings and it just gave back all of those
gains even though their net retention stabilized their revenues accelerated and i'm listening to
the call and i'm like what am i missing this is the call and the management team is energized
they're talking about how their ai agent product like their customers can't wait to get more hands on with it. And so, you know, I think a lot of
these companies are being written off as AI losers, but what's actually happening is they're
the ones that are implementing the AI in their products. So they're going to make your companies
have access to AI through their products. So they're kind of the facilitators of AI.
Like you can't just think about like, oh, I, you know,
I have AI, like, what does that mean?
Right? Like, what, what is it like you just,
you have ChatGPT, like that's not a product, right?
I mean, it is, but like,
it's not like doing what you need it to do.
Like someone still needs to like,
I don't know what the word is,
but like harness the power of AI
and then turn it into a tool that is useful.
Right? So I still think that that's, you know, yeah.
So we need to work through some of that noise and I think the valuations are
pretty good here. So it's worth a stab. Um, could I be wrong? Yes.
But, um, the valuations are favorable enough to take a swing.
Yeah. I like all those points.
And I would just say my next question just for you is going to more of what you were
talking about with the home builders.
I just bought a few contracts on Toll Brothers.
I kind of am in the same idea that with rate cuts and with the current landscape that we
could see a rise in the home builders and just more
activity in the in the in the home environment where do you see that area and what do you think
the effects are if we don't get a rate cut in September or if they signal on Friday that
they're kind of in a continued wait and see? Because I think that's my only negative aspect there
is just worried about Friday and the potential
if they come out and they say,
look, the data is kind of sticky on both sides of the mandate
and we're kind of continued in a wait and see approach.
And that obviously would put the probability
of a rate cut in September down.
Where do you see that currently?
And do you think that no rate cut completely removes that trade in the near term?
Yeah, so let me answer everything one by one here.
One thing I will say, though, by the way, is the Toll Brothers,
I'm not sure if I like that as my preferred home builder,
because from what I understand, they're more as my preferred home builder uh because from what i understand they're more of
a premium home builder so they're they're on the high end versus you know if you're looking at if
if like let's say the consumer is weakening or houses are still expensive blah blah blah and
resources are going up commodity prices are going up then you probably want to stay on the lower end
is where people that's where we're really like i would say structurally short on houses so like
long-term home builders are still needed there's like a 10 20 year tailwind for home builders um but in the
meantime they're still very cyclical businesses so agreed that you know you need to see momentum
on the rate cut front and yes momentum could be killed on this friday ultimately i don't like when
you're looking at the technicals on a lot of these names it looks like they've've bought them. They look like they're trying to head back into an uptrend.
I think the simplest thing to tell is like,
if he crushes the concept of,
you know,
rate cut this,
this Friday,
then obviously those,
a lot of those home builders are not are going to take a,
sorry.
Yeah.
Yeah.
I wanted to interject.
Do you really think after that PPI report,
and we know that's eventually going to show up in CPI and PCE
because it's going to work its way through,
I don't expect him to be dovish.
They may still do a rate cut in September of 0.25,
but I don't expect a dovish pal here.
I mean, do you?
Yeah, so look, can they delay these rate cuts? I mean, or sound less dovish? Yeah, so look, can they delay these rate cuts?
I mean, or sound less stuvish?
Yeah, sure.
I think I would probably just at that point refer to price action.
And if it's like a huge volume sell off stock chart, all of a sudden went from, hey, this
looks constructive to the momentum just got flushed out of this thing.
Big red candle to the downside, high volume, cut, slice through the moving averages. That's
probably the time to say, okay, I'm going to exit this for a small loss right now.
And then kind of revisit when things get a little better. You mentioned that you have a few
contracts in Toll Brothers. For me personally, I wouldn't want to be long, uh, via contracts.
Cause those are, it feels like a little bit binary in that scenario, but if you're sizing
the contract positions in a way where the amount, like the, the size of that contract
is your maximum downside that you would have taken in any scenario, even if you had shares,
like let's say, you know, you had a 5% position in shares, you're willing to take a 20% loss.
That's a 1% downside.
Then if you take that 1% and put it into, you know, contracts, then yeah, if you size the position correctly, then maybe that makes more sense.
So, yeah, I mean, that could work out too.
It just depends on how you're thinking about structuring the trade.
In the meantime, I'm, you know, I'm kind of starting to see the green lights.
We're getting closer to September. We're getting closer to September.
We're getting closer to the end of the year.
I still think that we should be cutting rates.
I don't necessarily – I don't know.
I'm not – yes, we had a hot PPI report.
The Fed is still going to be data dependent.
Are they going to be dovish?
Probably not, but I still think that rates are still too restrictive here,
and we're due for a cut or multiple.
Yeah, and you might get a cut,
right?
A 0.25,
but I mean,
you're not going to get,
I mean,
when I think of Mike real quick though,
what at the end of the day,
this guy,
you know,
if J pal doesn't cut,
he's out in May.
Right.
So he's out no matter what.
So that's a little bit.
Exactly.
And if he doesn't cut,
there'll be a shadow,
shadow fed chair for sure.
It's also irrelevant. It doesn't really matter. We're shadow shadow fed chair for sure it's also irrelevant it doesn't really
matter we're just getting to a point where like it's yeah soon it'll be september then it'll be
december and then it'll be may let me ask you this question honestly so for me i'm a little
older than a lot of the guys here so you know a a 4.75 or 4.5, whatever it is these days, I don't remember off the top of my head, rate is not that high.
Now, it's higher than we're used to over the last 20 years.
But you don't get a, you know, Trump wants a 1% rate.
You're not going to get that.
That's reserved for times of when, you know, the world's blowing up, right?
The Fed takes us down to under 1%, whatever.
So even if you cut 0.25 here and, you know, you get a 0.75 cut by the end of the year, which I think is fine.
I think it's possible.
We get three rate cuts of 0.25.
It doesn't really change all that much in my opinion.
I just want to say something, though.
Between all of the 2010s, we were sitting at a 0% rate and we were not in any dire –
We were coming out of it and they were slow to raise.
I mean, slow to raise were coming out of it and they were slow to raise i mean slow to raise six years of it and then as soon as they raised it in 2019 then we had covid and it went
back to zero and again i'm not talking about like let's go back to zero we don't need to do that
clearly our economy is strong enough um but yeah 4.25 definitely still feels like we can break it
done but you're not going to get much more than that. You're not going to get more than like a three-quarter point rate cut here in the next four or five months unless things go bad, unless the economy really starts to have problems.
But that would still alleviate, I feel like, some pressure on the economy because really the companies that need to borrow at this current level are more on the smaller cap side, right? Like the large cap companies are basically mostly debt free,
have a ton of free cash flow. So really the reason why we need cuts is more for the smaller,
smaller cap companies, a little bit of mid cap companies, right? And those are the companies
that have lagged for the last three, four years. We're not saying, okay, let's cut,
let's cut rates for the large cap MAG7 companies,
which have rallied the market to where we are today. I feel like the cuts are more for
the smaller cap companies that have clearly been hurt by borrowing.
And also the small caps are the ones that have the floating rate that, so whenever those cuts
come, then their interest expense comes down. So yeah, so I mean, look, or are we just going to
keep going into this world where it's going to keep
consolidating into the mega caps and there's five companies at the end of the
line? Yeah.
That's kind of what we're heading towards. So I agree.
Yeah. Anyway, I just wanted to bring it up because I know we're talking,
and it's a, it's a conversation, right? This is not, all right, you're right.
This is a conversation. I just don't think it's huge.
I agree with what you're saying too. It's like, look,
it's not like the home builders or the housing cyclicals are my biggest bet in
my portfolio. But at this point I've put like, you know, a solid percent,
like 20% or so. And, you know,
I'm willing to take whatever that risk is from here because to me it just
feels like you're, yes, you're trying to time the cycle and you know,
there could be issues with timing it.
But yeah, I don't know.
The technicals are shaping up.
The fundamentals are looking pretty good.
And also, you've got to think that they're probably sitting at trough sales, trough earnings.
So if the fundamentals are looking good, what happens when the fundamentals accelerate and all of a sudden you're sitting on a way cheaper multiple than you think you are?
good what happens when the fundamentals accelerate and all of a sudden you're sitting on a way cheaper
multiple than you think you are i i wanted to ask kind of continuing on this topic uh because mike
brought it up a little bit and logically mike i'd love to hear your perspective relating to
because right i think my biggest reason why the fed should cut is the labor market mortgage rates
etc but then mike brought up the point of the recent PPI report, inflation, everything else. And that's kind of why the Fed's been very much on hold recently, especially in
Fed speak. Do you think the PPI will really go into the CPI data? And then how long do you think
it'll persist? Because I mean, I do agree we could see it come into the CPI data, but I don't see it
persisting, right? And I don't think
it's 25 basis point. Persisting? I don't. But it's good. So companies are never going to not pass
that on, right? Because they have to make their profits. So it may take two months. It may not
show up next month, but within two months, that's going to show up and in PCE. PCE is where you're
going to see it too. So Mike, that's all coming from tariffs, right?
But that's a one-time change. At some point, we're going to laugh at that in 12 months.
I said, I don't think it's persistent. There was two part question where he said,
is it going to show up? My answer is absolutely yes, it's going to show up. Is it persistent?
Probably not. And I think that's the main point, right? I think that what Powell was saying earlier
in the year when we were getting so much noise around the tariffs is because every day it's like 100% tariff, 60% tariff,
we're going to tariff this guy, we're not going to tariff them. And so I think that uncertainty
was more so the issue rather than because we didn't know where we're going to end up netting
out. Now that, you know, I think we're past peak tariff uncertainty, I would definitely say that.
It's the uncertainty that was the issue, because then they can't really make decisions. If it like okay it's a one-time price increase then yeah we could see how this is you know going
to get lapped in a few in a year right right but i think it's going to push inflation up shorter
term to the consumer the consumer showing signs of distress and the job market showing signs of
distress you're right about that so that's a that's a that's a reason yeah well no that's a
problem that's a fed for the fed that's a conundrum because if, no, that's a problem.
That's a Fed.
For the Fed, that's a conundrum because if inflation is going up, they don't want to cut rates to overheat it.
And if jobs are coming down, they want to cut rates.
And that puts them into a state of they're not sure what to do.
Yeah, but again, it's not persistent inflation, but it is a persistent decline in jobs.
But they are going to wait to make sure it's not persistent.
They're not going to just be, you know, this Fed is slow to act.
It always has been.
I think we're all clear on the idea that tariffs in general are not going to be inflationary. They're going to be more like leading to potential recession, more likely case than the alternative, which is key.
the alternative, which is he.
But again, this Fed, I mean, I was one of the first ones to say this Fed should have
been tapering long before they did and getting through, right? They were slow to act. This Fed
has been slow to act unless it's an emergency, in which case they've been great.
In a case of emergency, they are Johnny on the spot, but
they're slow to act. And it's not just Powell, though he's a big part of it, it's the rest
of the Fed members too. I don't know. You know, this is a great conversation because, you know
what, we could both be right. We could both be wrong. I have no idea. But it's just. Yeah.
No, no, I agree with that last point for sure. But I think it kind of goes into the point that
I feel like Logical and I are trying to make is if it is not persistent inflation, which we all
agree because it's tariff inflation, then what is the risk of cutting, right?
We say, okay, the risk of cutting is that inflation is going to persist.
But the whole notion is that inflation won't persist because it's tariff inflation, right?
And so that's where I feel like if people are worrying about those who say – it is a tax, right?
So it is going to get built in, so it's going to keep things at a higher rate.
But yes, it's not going to keep going up get built in so it's going to keep things at a higher rate but
yes it's not going to keep going up like in theory like a inflation i agree the function of
ppi passed through to cpi is consumer demand because or energy or energy like if you look
at the historical precedent for what you guys are talking about this idea of like
a hot ppi bleeding into a cpi the historical precedent
for it is actually very nuanced like there are many instances where a hot ppi did not follow
into a hot cpi either because of one of two reasons either because the ppi which covers
input costs and i'll break this down for people in the audience who are newbies who don't understand this. CPI is measuring final consumption prices, what the consumer is paying.
PPI is measuring overall input costs.
Now, that's very broad because input costs can be raw materials.
They can be intermediate goods.
They can be very, very specialized parts for manufacturing.
very, very specialized parts for manufacturing.
They can be wholesale, you know,
massive multimillion dollar unit inputs
where they're buying these huge batches of inputs
they need for things like mining or semiconductor production.
All of those count as inputs,
but all of those have very different pass-throughs
to the consumer.
Like when you have commodity,
when you have commodities hot,
like if oil price, oil is like what, 64 bucks right now. If oil was at 90 bucks, this would
be much more of a dangerous conversation because then you'd have the oil pass-through reflected
in the input costs, right? Because oil is an input for production. And you would also have that
immediately and directly pass-through into CPI numbers because CPI numbers also cover energy.
So it depends on where the overlaps are.
Now, to the point of what's going to happen first, is the consumer going to weaken or is inflation going to go up?
The tricky part about it is that's the dictation for pass through.
Because if you're a producer and your input costs have gone up, and I'm assuming these are non-commodity input costs.
If your non-commodity input costs have gone up as a producer, that means your specialized parts and intermediate goods.
You have two choices.
You either absorb the costs into your margin, right?
Or you pass them through the consumer.
Most businesses do some of both, right?
do some of both, right? They absorb a little bit, they pass a little bit on. But the factor that
They absorb a little bit.
They pass a little bit on.
dictates your ability to pass inflation onto the consumer is consumer demand. If consumer demand
is weak, you literally cannot pass through price because you'll destroy demand even further, right?
So that's the dictating factor here. And that's why I think people are
more focused on labor data than the inflation data, because in order to measure how this is
going to bleed into headline inflation numbers, you have to be certain that the consumer is going
to be strong enough over the next six to 12 months to allow producers to pass on those prices.
If the consumer is not strong enough, producers don't have a choice but to absorb those prices. And then you see lower margins on the corporate end, worse corporate earnings,
and then a backdrop where the economy's weak. And that's generally not good for stocks.
So that's the worst case scenario. The thing that makes the summary of everything I just said is
the domino that dictates inflation passed through the consumer is consumer demand itself.
And so that's what should be monitored in the next six to 12 months, in my opinion.
That's going to be the most important factor.
By the way, we do also have Palo Alto earnings coming up after the close today.
So probably start to shift more towards that way.
A couple other names, BHP, FN, I don't know, but it is really Palo Alto, Pan W,
which will be reporting earnings after the close.
Earnings Hub says those numbers will be out around 4.05 p.m. Eastern.
EPS around 73 cents, revenue around $2.5 billion there as well.
I think that's a good conversation on the Fed.
What's up, Sam?
What are you watching on Palo Alto?
Yeah, so I think the market's looking for some clarity as far as the acquisition for cyber arc um pretty expensive valuation i think it's like above 20 billion dollars uh palo alto is
basically the holistic platform for cyber security uh one of the only ones out there i mean you do
have your crowd tracks you do have zscaler and son of one but those are more on separate verticals
for cyber security but palo alto is basically they're going for the platformization model where they want
to be every company's only cybersecurity platform that they're using.
So that's why they added CyberArk onto there so they can continue to add more verticals
onto their entire horizontal platform.
They don't really have anything in platform access management.
So if they acquire CyberArk, which is the leader in that sector, then they might be able to add it on there and so on when it comes to data security.
So probably looking to find out a reason why this is a good buy.
Maybe there's any changes in the terms of why they're acquiring them as well.
I mean, as far as the company itself, Nikesh Arara, CEO, is going to execute as usual.
Coming into these earnings, the multiple isn't as crazy as it was probably a month back.
It was trading around 20 times EVNTM.
Today, it's more around 13%, 40% times because it had more than a 10% haircut.
I think it was maybe a 20% haircut from its all-time highs.
But we'll see.
I'm actually more interested in the market reaction of cybersecurity.
Cybersecurity has been taking quite a big hit lately when it comes to CrowdStrike.
Even though it already had an expense in multiple, all of the cybersecurity platform companies
across the board pretty much took a decent haircut, 15%, 20%.
So it's interesting to see how the market is going to react to this in terms of that,
and they're likely going to set the precedence for the other software earnings that are going to follow
even though of course earnings season is not over yet um i wish it was just so i could take a little
bit of a break but no it's not over yet we still got more coming like this i like this version of
earnings season when it's more one or two a day you kind of mellow out looking into this week there's even less like next week though you got
octa mongo db tuesday after close wednesday is actually a couple nvidia crowdstrike snowflake
dell marvell affirm ulta sentinel one on thursday i think there's some like middle ground here that
i enjoy but the uh the the nothingness of some weeks i don't love as much yeah i mean that's
when it gets pretty busy for me
because you get a lot of earnings,
which doesn't have a whole lot of coverage
as much as the mega cap stock.
So whatever it comes to a lot of the mega cap companies,
I mean, how much DDD really need to do
that you're going to uncover
that isn't already uncovered on Twitter?
So I like to project that one out.
There's a lot under the weeds
when it comes to those companies
because the
the going theme right now is that software is going to be cannibalized by ai which i think it
will happen eventually i just don't think it's going to happen to the point where the market's
selling all the software stocks off i know logical is pretty interesting octa seeing how they're
going to report they're basically the runner-up against cyberark when it comes to identity security
not exactly the same thing but they are under that entire
identity vertical so interested to see what's gonna happen that one next week but also crowd
strike of course then you have said no one there was a possible acquisition rumor going around where
palo alto was going to acquire said no one at a much cheaper valuation than uh cyber arc but it
wouldn't really add much to the platform other than just complimenting their existing endpoint security
client
MongoDB
good to be soon seeing that one go ahead
we have the Palo Alto one today
those ones are still a little bit
I don't even think most of those are this week
but PanW I think the other big story
of this week bullish down 10%
today
the big story of the week or the day so far is this whole Russia-Ukraine thing.
Is oil and energy moving at all?
I don't know if we talked about this.
This would be a good day for Kevin to be on here.
Up a little bit.
Nothing crazy.
Before we keep moving on, Stock Talk, NW.
I'm assuming that's a name that you have no thoughts on.
Well, I mean, I like that. You can say that in a name that you have no thoughts on. Well,
I mean,
yeah, you can say that in a better way,
but yeah.
Yeah.
I don't,
I don't own it.
I don't own it.
I haven't studied it in a while.
So yeah,
my commentary probably wouldn't be more than just a superficial commentary.
I'm sure there's people on this call that can touch on Pan W better than me.
Yeah. They should be coming out in about 10 minutes or so.
Less.
Was there any moves or anything you want to get in before the market close?
No, I didn't do anything today, but fantastic day for the portfolio.
I mean, I'm running 17 positions right now, 15.
We're green today.
It's pretty damn good on a day where Spy was flat,
slash slightly red.
I talked last week.
I mean, I've talked about genius sports a lot,
so I won't talk about that more,
but that sucks holding up well.
But I've added Penn Entertainment and Fubo TV
sort of to a, I don't want to call it a basket,
but they're kind of functioning as a basket.
Now, Fubo and Penn both did great today. Fubo
up 4%, Penn up 3%.
UUU here, which is another one
of our positions, ramping into the close
above 5%,
5.5% now.
Really decent volume into the close
on energy fuels.
But yeah, Fubo, Penn, and Genius
are sort of... Base's favorite lift
is lifting into the close as well.
Just want to give that one a mention.
Back through 16 on that one too.
16 calls in the money.
Yeah, all my calls are green now on that.
And it's funny because right after the earnings,
I think it went down 4% or 5%.
I was red on most of those calls, but they're all bright green now.
That's good to see on lift.
Like I think, I think Lyft's just a misunderstood stock.
I think if you get more AV news later in this year,
then maybe the stock gets hit a couple more times off that.
The rideshare stocks tend to get hit
whenever there's hype around the autonomous vehicle stuff.
But it remains, even after this, you know,
10, 15% move higher remains, I think,
very cheap first piers or its only pier, I should say um in uber so yeah i like that and fubo pen and genius are sort of functioning for me as a
exposure basket to this nfl and disney collision that's happening uh there's been a lot of
headlines over the last few weeks obviously nfl securing their nine percent stake in genius which
is where my interest started in this and And then in the last couple of weeks,
we've seen the Disney deal to put Red Zone and NFL Network
in six games on their broadcast.
Now they're integrating Hulu Live TV
into their Disney Plus app.
Fubo obviously controls a 30% stake in that Hulu Live TV.
I think Fubo's market cap is just totally off point.
1.3 billion, way too low.
Char looks great too. So I remain long3 billion way too low char looks great too so i remain long
that name uh pen i will say fubo has uh has a mean stock stench for me not but now that i've
looked into it super yeah i don't care about that stuff if it makes sense it makes sense it was a
meme stock once upon a time but this year the story has been fantastic do you not see the 350
move in january of this year where the stock went from 150 to six in two days?
I mean, if you want to avoid those kind of moves
because you think it's a meme stock, go for it.
But that was one of the best trades of the year for me.
That was actually the first alert I put out this year
was Fubo at 150 and then it was like $6 literally the next week.
So that was a hell of a way to kick off the year.
But back in now and it's working well for us today,
pushing back over the nine and 21 emas it's really
a year long of consolidation for this name you know it has not traded like a shit code this year
i mean pull up the year-to-date chart on fubo you get the massive gap up uh at the start of the year
and then just beautiful very very well structured daily consolidation for the entire year and now
your weekly charts heading up into this pinch setup that i like to trade it pretty much hit the same setup over and over again but
the weekly pinch looks gorgeous i mean price is sitting right under a declining 200 moving day
moving average 921 pointing up 200 days sitting in 392 right now stocks at 378 a little bit of
a push into the end of the week you'll break that 200 week
and it's going to be explosive so yeah that that's i haven't listed it as a basket in my portfolio
but it's kind of acting like one but i have nothing to complain about stock picking wise with
my portfolio acting like this when markets are consolidating or slightly red i mean 15 out of
17 positions is that's that's stock picking right there for 15 out of 17 to be green.
So I'm happy with what I own.
I don't really have any concerns about anything right now.
LEU has been correcting pretty significantly from the top of the range.
It's back down to the 170s now.
I'm looking for that to come and test the 21 week at 162, which it may do this week.
And other than that, nothing really.
You, you, you, by the way, the daily consolidation is just gorgeous.
And today's move will push it close to the top of this range.
But over 1075, I mean, this thing just looks crazy over 1075.
That goes all the way back to you know 2014 2015 highs
you get over that and then i mean i don't want to get too hyperbolic but this thing could just go
nuts uh i imagine there's some more rare earth deals coming down the pipeline considering how
a lot of these names have acted in the last couple of weeks um you know really really clean
structural pullbacks and uh yeah i
think there's probably more news coming for that sector materion continues to act gorgeous materion
is actually traded so stress-free because um it hasn't like violated any structural levels at all
like it's ridden we got long uh right at the 200 day you know around 95 96
97 and stock pushed 10 on earnings and since then it's just rid the 90 in may all the way to 113
from the 90s and i mean all things being equal it looks like it's going way way higher as there's
been no sellers on this name like it's trading like a extremely thin stock uh which is interesting
because you know it's not a particularly small market cap it's a 2.3 billion dollar market cap
um but it's trading you know like a small cap in terms of the liquidity which is which i like
and there's really no downside volatility on that name either we also got long aurora last friday aur um that stock had some nice action today
we got a weekly close last week above the 50 week and today we're pushing back into the 200
this thing may consolidate slash be a little choppy here at the spot um but i still like
that's riding 921 ema support to the upside into that level. So that one looks good too.
Lift, you obviously mentioned, looks great.
Push through 16.
I expected that thing to be red today.
Maybe come back and test the breakout spot,
but it wanted to go even higher.
So cool with that.
But yeah, everything's working great.
You know, no new positions for me,
other than the ones I opened last week,
which I opened a couple last week.
Aurora, Penn.
What else did I open last week?
Yeah, that's it.
Aurora and Penn.
And the week before that, Fubo.
And UUU.
The week before that, Materion.
So, yeah, I've been making just progressive, slow ads on names that I like.
And I've been looking more at names that have lagged year to
date, as opposed to names that have run a lot year to date, because I'm in a lot of market
leading names already. So I don't need market leading exposure. You know, I have Robinhood,
I have Kratos, I have Nebius, you know, these are market leading names that are going to do well,
if the market continues to go up, the rest of my portfolio is concentrated in very, very specific
thematics that I'm trying to play, like the aerospace and defense thematic that i've talked about
um you know now this nfl and disney theme which i think is going to be way bigger than anyone
thinks uh the collision of those two two organizations is going to create an enormous
amount of value for the peripheral plays around them and uh so that's why i have exposure there
and then obviously when my nuclear plays
and uranium plays as well.
So yeah.
W big tick up.
What's the,
what are the numbers?
Palo Alto announces retirement of found of NERZUK founder and CTO.
Let's dig in.
Pan W fiscal.
Small bead on revenue 2.54 versus 2.5.
Nice.
73 cents on EPS is what was expected.
Let's see if we can find this.
The lock to sell $2.2 billion in senior notes
exceeding initial plans.
PennW, move up 2%.
It was a double beat.
95 cents EPS versus 88.
I was going to say, none of those things you just listed
sounds like the stock would be up, but there you go.
Yeah, the founder typically leaving wouldn't be super bullish,
but I guess them not being the CEO.
I'll take the announcers.
Yeah, expensive issuing debt.
No, no, sorry. The debt was...
That was block. XYZ.
Two separate headlines.
My ADHD
sometimes comes difficult.
Alright, well, we can circle
back on this pen W. There's something in this
report. Maybe it's forward guidance that the street
ended up liking, but stock is up 5% now salesforce also made a little acquisition forward guidance
i'm seeing they expect an 89 cents while she wanted 85 cents um next quarter revenue expected
around like 2.45 billion slightly above expectations as well so small beat on the forward guidance for Pan W, enough to send it higher.
Can you lift?
We'll keep an eye on this one.
Make sure there's not anything else I'm not seeing right away.
Full year forward guidance for Palo Alto was also above expectations.
The EPS forward guidance was more above than the revenue was,
but still pretty good.
All right.
I did see we were joined up here by Allie.
Hi, guys.
We got the music on in the background.
We're jamming.
I know.
I'm in a coffee shop today, so it's a little jamming here.
It's a good time.
I like to listen to music a lot.
The noise cancellation of these headphones are pretty good.
It doesn't get picked up that much.
But how are you doing?
Exactly.
Well, obviously, it is Jackson Hole Week.
It is Powell Week.
I feel like a lot of the conversations, a lot of the spaces earlier was spent talking about rate cuts and, you know, a stagflationary environment.
about rate cuts and you know a stagflationary environment what does Powell end up doing in
What does Powell end up doing in there?
there and all these questions people thinking Powell might not be so dovish might be more dovish
there are people even asking doesn't matter we'll see though the whole gambit but um
it is Powell week it's Jacksonville week what are you watching is that the thing really on
radar for you yeah I mean kind of a very boring day in markets today. And I think
really the only thing is Paulier this week. And of course, the big retailers, Lowe's, Target,
Walmart being a biggie on Thursday. And that's going to give us a good sense of
where the consumer stands in all of this. But all eyes on Paul. I do think in the short term,
it matters what he says, specifically when we talk about this rotation that we're seeing in the stock market right now. And that was really my main focus that I wanted to dive deeper into today, because we have seen some signs of life outside of big tech and lagging sectors like healthcare, home builders, small mid-cap stocks have played more of a larger role in the summer's move. And a big reason for that is the expectation of rate cuts and what we could see in the year ahead as well as into 2026.
So, you know, if you dig through all the Wall Street commentary, that is the sign of a healthier market dynamic.
You don't just want all the Midcap, big tech, mag seven players dominating this market.
And Scott Croner from Citi, he said that broader participation is framed as a two parallel path for the S&P 500.
So you have one path that's the AI fueled growth giants.
Then you have the other path that's driven by more traditional sectors tied to the economy.
And that is where you get that healthiest path forward,
that higher index level is a combination of the growth and tech leadership playing out
while these other areas of the market continue to be additive,
more so than they have been in the past.
So we can see these rate cuts and that can fuel this continued rotation, especially with earnings.
We definitely saw more market breadth as we look at earnings.
The bar was really set low after those April tariff announcements.
We were able to hurdle over that bar quite significantly.
And now we have earnings across the board that have been revised higher.
And that's leading to a lot of bullish optimism on the street when we look ahead to the year-end S&P and to 2026 as well. So it seems like we have those signs. Of course,
there are risks that if Powell comes out and surprises and really goes against market
expectations, that obviously will hurt the rest of 2000 and those small cap names pretty
significantly. And there's also that risk that in the back up of the year,
earnings could disappoint again.
And if that starts to happen,
you could see that way on equities.
So of course, there's a lot of risks in this market,
but it feels like we have this momentum
that can be sustained.
But we continue to see this from out of the rally.
Of course, it is thin in certain areas,
but we are starting to see that more and more.
And that is just fueling a lot of this optimism.
I was looking at the 52-week high list today, which obviously is not going to have as many names today versus yesterday or other ones.
But we had a Johnson & Johnson, a Celsius, a Reddit, a Unity.
One or two of those names have been on that list a little bit,
but a couple just that haven't.
So I watch that list a lot, and I've definitely seen that broadening out.
There have been the metas on there, the invidious trickling their way on,
but a lot of other names, a lot of big names that people care about
in different sectors.
It's been an interesting one.
A lot of the 13Fs, you're looking back on them.
It's important to note that those are from Q2
so June 30th or whatever
but we had Buffett buy-in
UNH and Holmes
and just all these different sectors coming up along with
the Mag-7 that got some love
yeah definitely seeing it
we got Kevin Green
joining us up here too
interesting
can you give us some insights on the Jackson Hole speeches from prior?
Like, what to expect?
Does he always do it in that, like, dark room?
Or does he ever do it outside?
Like, does he take Q&A on these, on the Jackson Holes?
What is this meeting normally like?
It was over to you, Allie.
Sorry.
Oh, hi. Sorry. And obviously, if we look back to last year, we got that jumbo 50 basis point cut.
There was a lot of volatility in shop around Jackson Hole.
Powell was speaking about the really downward impact of the labor market at that time. And
it is a little reminiscent to what we're going through today, where we had those massive downward
revisions, the job market is top of mind. However, what's differing is that it's much more complicated
today given where we stand with inflation. And there's different viewpoints on Wall Street when
it comes to what the Fed is going to prioritize, whether it's going to be the labor side of the
equation or the inflation side. For a long time, it felt like the labor side was really dominating
the commentary more recently. However, I do think given what we saw
with PPI, with CPI, that risk is more on our doorstep really in the short term than the labor
deceleration. So that seems to be maybe what Powell will start to talk about a little bit more.
And if that's the case, we might not see aggressive rate cuts. I think a 50 basis
per cut is now pretty much off of the table at this point. That's actually something that Deutsche
Bank said in a recent client note. So we're seeing that there's expectations that the Fed,
even if they do cut rates, is not going to be the same level of cuts than maybe we could have seen
even a week or two ago.
So inflation is going to be top of mind.
I think if he sticks to just talking about September,
that can maybe lead to a little less volatility on Wall Street.
But Powell is very careful about what he says.
He chooses his words very wisely.
He knows the impact that they all have.
And I think considering the dissents that we saw
in July as well, I think that's something that he's going to really focus in on. What is the
general viewpoint among the entire committee, not just a few voices that are the loudest? What is
everyone focused on at this point? Because there is that tension between both sides of the mandate. And so
the Fed is in a really difficult position, but we know from the past that Al comes out in Jackson
Hole and he does give a lot of that color and he does telegraph where he sees interest rates going.
And then from there, the markets can really recalibrate where they see the future path of policy. So, you know, I expect a lot of volatility.
I expect CHOP in the market. We could rally or, you know, we could see a significant pullback in
stocks depending on what he says. But I think the important thing to remember is that the
fundamental structural story is still in play when we look at earnings and how great really earnings have been. Of course,
NVIDIA is the last and the biggie set to report. And it'll be interesting to hear the commentary
from these big retailers, especially when it relates to the higher income versus lower income
consumer. We've seen consumer spending patterns be pretty resilient. Of course, there's cracks underneath the surface, but that's really where a lot of the market rally hinges on if consumers can keep spending,
because that's really the flywheel of successful earnings and profits and all that good stuff.
So there's a lot that we need to keep track of, but I think just zooming out, no matter what we
hear from Powell on Friday, it's important
to remember that fundamentally, we seem to be in a good spot at this point. And you were just
talking about too, you're seeing the broadening playing out in real time. So we have this
broadening out of the rally on top of, you know, solid economic data so far, of course,
you could argue maybe the economic data is starting to waver a bit. And you mentioned
stagflation. And that's obviously a very scary word that the Fed takes very seriously.
But right now, it's not that doesn't seem like to be that great of a concern on Wall Street,
at least at this point. So yeah, yeah, I mean, I'm excited to hear what he has to say. And from
the past, we know that he comes out and he's usually swinging.
Yeah, I personally, I know this conversation was going on earlier, but if in this environment, if we're going into stagflation, I think the mandate of the jobs market on the other side
of inflation that you think is probably going to be transitory, I'm probably leaning towards
the job market and I think you should cut. I find it interesting, the arguments here, less of like a, hey,
we need to go into this full rate cutting cycle and blah, blah, blah. But the Fed themselves
describes the current policy as moderately restrictive. And it seems like an environment
where moderate policy wouldn't be too crazy of a thing and would make sense so what what is moderate versus
moderately restrictive i don't know but um this whole wait and see thing in a moderate moderately
restrictive thing feels like you wait and see at moderate so i don't know maybe there's some
thoughts about it so i i also don't know why it's like s SBO rate cutting cycle or no rate cuts at all.
I don't know.
It's an interesting place.
You think we are pretty locked in for a rate cut at the September meeting?
Obviously, it's going to change and can change with Jackson.
Yeah.
Kevin's take on this and just in general.
Yeah.
I think we are.
I think it would be a big shock to markets to see no rate cut in September.
I think after September is the big question mark, though. If we get that rate cut in September,
we're going to still have some of this data that is lagging. I agree with you. If we are entering
a period of stagflation, obviously the jobs picture takes precedent because what keeps the
economy growing, it's jobs. And the good thing is we haven't seen jobless claims really tip up
very aggressively. It feels like businesses are really wary to lay off workers because we've
learned from the past that when we do that, it's really difficult to hire those workers back.
So that is the one good thing is even though we're not seeing aggressive hiring, we are in this low fire, low hire environment. But as soon as that breaks,
if we do start to see layoffs, you're going to see that immediate impact on growth. And then
that's where the Fed is going to be in a very difficult situation. But I would also point to
the services side of inflation that seems to be hotter because
that's separate from tariffs, right? I mean, we saw goods inflation took up a little bit and really
the decelerations and services inflation has been able to offset some of the higher prices that
we've seen through growth. But that wasn't necessarily the case in the latest CPI and PPI
data last week. So if the services side is getting a little hotter,
that means something else is going on underneath the surface beyond just tariffs. And I think that
is really what's critical for the Fed is making sure that services inflation doesn't run away at
a time when we are dealing with tariff-induced inflation on the good side, even if it is
transitory, how that relates to the
services out of the equation, I think, is super important. So we're still going to have to see
other data points. I mean, one month in isolation is not enough to convince the Fed. And we still
have another CPI print, and we'll have, obviously, the labor market report that's going to be ahead
of this Fed decision. So all of that in aggregate is going to be ahead of this fed decision so all of that
in aggregate is going to be important for the fed to consider before it makes its next move
kevin i want to bring you into the conversation on this we're talking a little jackson hole
you know we've obviously we've had a couple different conversations here. And I know Mike was talking earlier.
He doesn't think Jackson Powell is going to give his role.
Rosie of, of a speech.
As some people want to Jackson hole, you know,
where's your kind of thoughts on what maybe what Ali was saying and what
we're watching for this week.
And there seems to be a lot of anticipation for this event.
You think we're going to actually get the outcome that people want, a definitive powell or you think we kind of get the data dependence still
well he's always going to say he's going to be dead dependent he's never going to veer away from
that um you know the reason why we kind of focus on this is because we have seen disconnects from
what the market has been pricing as far as you know or rate cuts and what he says during the
commentary of this meeting.
I think he would be a little bit more cautious because of the jobs report, the revisions,
rather than just being completely hawkish in his commentary.
I think he's going to be fairly balanced.
If they need to, I mean, he could theoretically tighten up,
tighten up the restriction on monetary policy by his commentary, if you'd like,
and try to back out expectations for September. But I find that very highly unlikely. You already
have two members that have dissented. You're going to get another one that's on there, and you have
pretty much maybe one or two that's still going to be on the fence. You don't want to start having
way too many dissents at this point in time. And you can make the case that maybe their thoughts are justified. You know,
Ali, and I kind of brought this up a couple of months ago. I mean, this is exactly what happened
last year. And everybody was like, oh, it's a political year. It's all politics. It's not all
politics for the cut last year. We had a massive revision this time last year, and then they went
in and started doing the cuts, right? We know seasonally that the June data set, the July data
set, the August data set are generally weak when it comes to the labor report just in general. In
September, we're going to see probably a pretty aggressive bounce back there as we have back to
school, we have government hiring that's going to be taking place as well across those states. And then you're getting prepared for this seasonal and holiday
period, right? So I think that's something to be mindful of. PPI, very volatile data set.
So I would not get hung up on just one report, even though it was an aggressive one. Yes,
we have to acknowledge it, but understand that it's very volatile. It's probably one of the
harder reports or data sets for analysts to even try to get right because of the variables that
kind of take place there. And in some respects, you know, outside of machinery, the machinery
portion was actually fairly aggressive. There were some portions within the PPI report on the
services side or that could be reflected as services, that
is a little bit concerning. And then you have the intermediate, non-processed or unprocessed
goods portion that saw a 2% jump on a month over month basis. That is concerning, but
it is one data set, it is one data point within this data set, and we don't have a trend yet,
and we don't know if it's going to translate into cpi if you kind of look at the
correlation about a 70 to 72 percent correlation between ppi and cpi um as far as the direction of
travel and that can take up to two months for it to actually be reflected so uh given that um if
you're kind of a statistician or if you do any type of modeling given that type of uh you know
dynamic if you are a Fed member,
you're going to still be cautious on even looking at that hot PPI print and say, yes,
this is it. The one caveat that you do have is if you're looking at ISM services prices,
which is a really, really strong leading indicator to sustained inflation, not just goods,
not just disruption, Black Sea or Suez
Canal, and we see a spike because of goods and logistics issues. But if you look at the ISM
services prices component, that's where you get a little bit concerned, because that actually does
lead CPI around four to five months. So once again, that sentiment data side, it's not,
that's not like boots on there.
That's not like actual numbers.
That's how purchasing managers feel.
But that would be your concerning one.
But I mean, it is elevated.
We haven't seen it in CPI yet.
So we have to just kind of be mindful of that.
I think at the end of the day, when you're kind of looking at this whole thing, the Fed
is going to be right.
Look, and what I mean by this is it's got to show up somewhere,
and that's all they care about. Where does this actually show up? You can't impose an aggressive
tax. You can't impose aggressive tariffs and not expect it to actually impact either margins from
businesses where they eat margins, margins go lower, and then you have earnings that are going
to be impacted. Consumers paying a little bit more, shipping and logistics, prices going higher, right? We're
going to have to see it somewhere. And right now, we just don't know where that's at. And so they
just want a little bit more time. I think 25 basis points in September is pretty much locked. I would
be very shocked if he really tries to get away from 25 in September. Even if we did not have this tariff situation this year, most people, even the most bearish of bearers when it comes to the economy, kind of would look at it and say, maybe a maintenance cut one or two this year seems appropriate just to make sure that you're ready to go in the event that something does happen.
Because the labor market, and if it does crack, the labor market's the hardest one to turn around
because that could take literally eight months, 12 months, even a year and a half in order to try
to recorrect that. So there is going to be a little bit of concern there. I think the Fed
understands that. Putting into question December, I still think 25 basis points is on the calendar for December as well. Are we going to get this extra 25 that the market really desires? I would say
don't bank on it. I wouldn't see 75 basis points for the remainder of this year unless we completely
see a fall off when it comes to the jobs number, job numbers just in general, or we do see a
significant uptick in inflation, which
I think tariffs are going to be inflationary. And then in my opinion, they will be deflationary at
some point, meaning that it will create and cause demand destruction over time. I'm a firm believer
of that. So we're going to be focusing on it, obviously. It probably will be a range-bound day
until we get his commentary, then we'll see the direction one way or another uh and we'll kind of go from there the trickiest part that
we have with this whole thing is if you look at bond volatility i posted this and i do got a jet
here in a second but if you look at bond volatility on the move index i posted this earlier this
morning i see a couple other people posting it later today but okay uh you see this like complete
breakout or this just complete destruction
when it comes to bond volatility. And that is conducive for equity markets moving higher. So
if you're looking for an indicator, you're basically just going to look at bond vol.
If you start seeing bond vol move up, then that's where you're going to see equity volatility creep
into the market. Same thing with credit spreads. We kind of talk about those ad nauseum here. So
that's what I'm kind
of going to be focusing on. Traditionally, volatility starts to creep up this week,
right? Last 15 years, pretty much every single time, vol actually creeps up higher this week.
It does not mean that the market has to break 5%, 8% to the downside. It just means vol
priced, the pricing in of uncertainty gets higher and higher.
And rightfully so, the economic data that we have kind of on the horizon here kind of
coincides with that. So, you know, PPI, I would take it, yes, it's concerning in some respects,
but we have seen very aggressive adjustments when it comes to PPI out of nowhere. So for instance, if you're looking at intermediate demand goods and you're looking at diesel prices, I believe diesel moved up like 10 percent or 14 percent month over month in PPI for the reported month that we just got.
Right. Which is very aggressive. But, you know, that move in the physical markets for diesel was like a month and
a half ago two months ago right so some of this stuff is just kind of residual
pricing dynamics that are now just being reflected in the data and that's also what makes it hard is
that a lot of this stuff is kind of rolling it's not all happening at the same time which the fed
would like to see which makes it a little bit difficult but at the end of the day risk assets
are still moving higher uh technically we're still in a really good trend here. And I
think until you see otherwise when it comes to the data very aggressively moving to the upside
when it comes to inflation and or labor market cracking significantly, I think you still have
to play to the upside, even though we're stretched in valuations and all the other things that we
could say, delinquency rates going higher, this, that, and the other, the market really is just moving on
liquidity, volatility, priced in low volatility, and the optimism of economic growth in the future.
I'm sorry, I do have one more thing to say. Stagflation. We just have to make sure that
we understand what that means because I think it is being misused lately. It's inflation going higher, labor market
potentially cracking and a slowing of economic growth, right? We're not seeing a slowing of
economic growth yet. Are we having the signs of potentially that happening? Maybe. But the slowing of economic growth, actually GDP coming in and either significantly decelerating or even contracting.
We're sitting at around two and a half percent.
That's going to be a very volatile data set.
But we have to keep in mind the economic growth component.
If we still have inflation moving up at a sustainable rate to the upside.
Let's say aggressive.
I don't think we're going to get back to 6% and 8%. But let's say that we have an inflation rate that's sitting at around 3% or so,
and you still have economic growth on a GDP standpoint at 2.7, let's say 3%.
Net-net, the Fed's going to live with that.
You know what I'm saying?
Right? If our economic
growth for whatever reason hits 3.2% and our inflation rate is sitting at 3%, net net, the
Fed is going to be okay with that. Right? So like, we have to understand that it's just because
inflation shows up doesn't mean that inflation is bad. Inflation is actually really good for
equity markets. If it's positive economic growth that's taking place along with it,
that's what we have to keep in our own little mandate where we talk about stagflation,
not only just looking at prices and labor, it's prices, labor, economic growth.
You need pretty much all three of the two of the three to kind of move to the downside
and prices remaining sticky in order to get stagflation.
We're not there yet.
Yeah, yeah, back. Thank you for the thoughts there, Kevin. We appreciate you always joining in. I want to bounce it off to Allie. Maybe Kevin could be here for a little bit. Allie,
if you had any thoughts on any pieces of what Kevin was saying there, which were interesting for you.
Or you want to build off of it? Yeah, I agree.
I think, yeah.
And looking at the bond volatility,
I think is super important
because we know once bonds start to go crazy,
that usually bleeds into US equities.
So looking at the bond market,
that's going to be your first sign,
whether something isn't working
or something is starting to crack. So completely agree with kevin on that point and yeah i also
think when it comes to stagflation it is a word that you can't just throw around willy-nilly
because it's it's there's multiple components at play here like i said before i don't think we're
There's multiple components at play here.
Like I said before, I don't think we're there right now.
I don't think this is a stagflationary environment.
And it's something that we had talked about even last year with the tariffs.
Is that going to automatically lead to stagflation?
And so far, with the exception of the latest data we saw last week, we haven't necessarily
seen that yet.
So data is volatile. A lot of it's backward looking. We still need to see a bit more in order to make a
determination when it comes to how these tariffs are really getting passed through. Now, we do know
from earnings calls that a lot of these businesses are absorbing a lot of these costs. So that,
you know, makes sense then given the PPI data and some of the sticky services side of the equation here.
But it just reminds me to not to just focus on these monthly data releases.
You need to take everything in totality, read the earnings transcripts, see how these companies are performing.
earnings transcripts, see how these companies are performing. I love earnings season because
it's four times a year that these companies have to tell us all they're doing, good or bad. It's
black and white. It's right on the key. Oftentimes that affects our stock price pretty immediately.
So look at everything in aggregate because that is going to tell you where things are going. We
know markets are leading indicators. And I think a lot of it has been priced into the market too at this point,
considering where we were at the April bottom, where we are now. So that I think is also a
reason why we continue to see these record highs despite some of the data that's disappointed.
So you just have to kind of keep reading through all of this information,
and it can be really overwhelming. But step by step, we're going to hear a lot this week with
Jerome Powell on Friday, but it's not going to end there. And I certainly think we're still going
to have to see a lot more data to really determine which way we're heading when it comes to both the
job market, inflation, and therefore the totality of the rate cuts that we could see. But I agree with Kevin that I would be surprised
considering the dissents that we saw, considering the commentary from other Fed officials,
the inflation data, the jobs data, everything inaccurate. I would be surprised in September
if we do not see a cut at this point, because we pretty much have markets still
pricing in with near 100% certainty that we're going to see that play out. But I would just
point to beyond September, what happens then? What happens in the months ahead and how do we finish
out 2025? Because we are in a very different spot than we were this time last year when we got that
jumbo 50 basis point cut.
We are now 100 basis points lower than when we were last year.
You know, all the data is a bit different, too.
So it's not a repeat of last September.
But I think you can look back to that and sort of take lessons and things to call out from that period of time to tell us where we could be headed now.
So yeah, I'm excited.
I think it's going to be a really big week
and set us up for a lot of interesting commentary
ahead as well.
Thank you, Allie, for that one.
We are past 430.
We probably are not going to have too much more news coming out here
at least on the stuff what's PanW
continue to do
it is
up 5% when I look at
earnings hub what earnings do we have tomorrow morning
Home Depot Medtronic
XPeng Viking
Home Depot is one that people will be watching
we will talk more on
that one
you got any questions any thoughts or anything like that before we go over to stock talk
i'm not really you look at the price action and the market's just waiting for something. Stock Talk will probably bring this up, but you look at the daily chart, NASDAQ, QPQ,
came straight down, basically touched the daily nine EMA and got bought right back up.
Kind of a nothing day, really.
Fair enough. Fair enough.
Fair enough.
All right, Stock Talk.
Any specific, before I ask you some questions that I have,
any things that are standing out for you the most today?
Any rants that you were predisposed to want to go on?
No, I mean, I already touched on mostly most of my positions, most of my recent positions.
Like I said, pretty unremarkable.
What do you think of this whole,
there's a hymns play that's coming on here.
There seems to be a lot of themes, news around this.
Eli Lilly, Novo Nordisk.
And then there's also like the Viking therapeutics.
I know you are a failed medical school student.
Do you have any thoughts that you want to add on this topic are you watching these glp ones at all
there's a lot of these also secondary markets oscar health like there's fin twit favorites
there's real names going on glp ones is this the theme the stock talk has any interest in
the stock talk has any interest in?
Not really, no.
I haven't looked at, like, healthcare for me
has not been a focus for quite a while.
Last time I had significant healthcare
and biotech exposure was probably like
two and a half, three years ago.
I just haven't needed that sector in order to perform.
You know, I think sometimes in markets
you come to these inflection points
where people think there's going to be like a big rotation into a weaker sector. I like don't
really believe in that as much as most market participants do. Like in bull markets, rotations
tend to be very short lived in my experience. And what I mean by that is like when rotational action starts,
it's usually when the broader market doesn't have a reason to go down, right? Like there's no,
there's no reason to sell the major indexes and the momentum leaders and the market leaders have
become extended. When you get into that very specific scenario,
extended market leaders and momentum leaders, indexes are still strong, no apparent macro or
micro reason to sell the indexes. Markets need to find a way to trend higher while those leading
names consolidate. And in moments like that, you tend to see the boring, and I'll put that in air quotes,
the boring industries like, you know, XLE, XLV, energy, healthcare, you know, some of your retail
names, some of your consumer staple names, like your Pepsis and your Cokes, you tend to see those
names put together, you know, a a week maybe a week and a half sometimes
maybe even a couple weeks of outperformance right and everyone gets into this mentality of like oh
there's a rotation happening in the markets the laggers are going to lead now i will say the money
this glp1 theme is a little bit different than some of this laggard one i know they've been it
is it is it is but i think health care in general you know has had its fits and starts you know it's not it's not like these sort of indexes like
look at xlv year to date right like xlv opened the year that that's the health care uh smb 500
health care atf for those that don't know but open the year like 135 rand like 150 and now it's
trading 135 again right so like has xlv been a good long this year it depends on what you owned
you know if you own the indexes no if you own if you just own xlv outright no it's not been good
along if you own some of the names in that index then maybe um but the point I'm making really is that it's not even really about GLP-1.
The point I'm making more so is why I haven't turned my eye to healthcare or to energy. And
it's because if you look at the index action, they haven't been bull market leaders. Not this
year, not last year, not the year before. Have they had, like I said said sometimes week-long periods three week-long periods where
while market leaders consolidate you have these runs in these names yeah of course and if you're
a well-timed trader you can take advantage of those but if you're if you're somebody that
manages a portfolio of positions like me in multiple different sectors i just don't ever
feel the need to rotate into healthcare or in data. Let me
Consumer staples so yeah, I just stay focused on the industries that I know well and that that that
Treat me well performance wise and stuff. I'm in has treated me very well this year
So I haven't felt the need to rotate yet and maybe that will come at some point
But right now I'm looking at the XLV index. I have no desire to get along on this thing
I mean probably goes up into the 208,
but that's not that big of a move.
And you look at XLE, I mean, sort of the same story,
not as bad of a performer year to date,
but I mean, you know,
you didn't make any money longing energy this year
if you started the year-long energy XLE.
I can't get myself a long XLE and a long-term portfolio.
It is not something that comes in and excites me,
although energy is good.
We need it.
We need more of it.
You can get more specific ways to get exposure, I think, to energy.
And I think in this market, you know,
you've seen how the fuel cell plays have done this year.
Look at Bloom Energy this year.
You look at the nuclear names have done this year, right?
So you can get energy exposure without having to get oil exposure or without having to get you know traditional like
nat gas oil exposure you don't have to get uh those types of exposures to be exposed to the
energy you have to pay for the the nuclear names i i my mind goes to like i would rather go in and
find another energy play but it's a fact that you need more energy.
The time to get long nuclear was mid last year or at the beginning of this year.
And if you miss both of those entries, yeah, the names are extended.
The valuations are stretched.
The charts are extended.
So yeah, your risk reward here for the nuclear plays, if you're not already in, of course it isn't as good as it was six months ago or 12 months ago but i do think there's staying power
for some of those names especially the commercially viable ones the pre-revenue ones different story
but in healthcare look i think there's some interesting opportunities in healthcare but i
think they're mostly concentrated in ai and you know automated surgical services and automated
hospital services i think that's where the real value is in healthcare if you're going to get long.
You know, Tempest AI has been performing very well these last couple weeks.
That chart looks great.
So I think you can get creative and you can get specific if you really want healthcare exposure.
It's just not, you know, an area where I look at it and I'm like, oh, I feel super compelled to get long because of GLP-1s.
And I'm like, oh, I feel super compelled to get long because of GLP-1s.
To me, the GLP-1 story has actually become more broadly competitive than it was eight months ago.
You know, eight months ago was really a duopoly.
And now it's seemingly, you know, shifting into a more competitive environment.
So I don't know.
It's not an exposure that I feel like you have to have to do well in the market.
Same thing with oil. Like, I don't feel like you have I feel like you have to have to do well in the market. Same thing with, with oil.
Like I don't feel like you have to have exposure to oil and that gas to do
well in this market.
And I don't think you've had to have exposure to either of those sectors for
years to do well.
That's fair. Let me, let me ask you a different question.
Sniper, Ali, and feel free to jump in on any of this going a different way.
There's been a couple of names that you've been a fan of that have been
running pretty well and you're getting some mainstream coverage in different way. There's been a couple names that you've been a fan of that have been running pretty well,
and you're getting some mainstream coverage in different areas.
Is it time to sell a Nebius or a Kratos?
Have they made their move?
No, no, no.
Those are core positions for me.
I have a lot of confidence in the 10-year plan for Nebius
and for Kratos.
What does Nebius do?
What actually even is Nebius?
What actually even, well, their data center name primarily is how people interpret them.
But I mean, I've talked about this many times.
To me, the real value is in their ability to be a cross section exposure for AI.
And what I mean by that is you cut apart the AI industry as if you were going to do a cross
section.
You're really looking at a couple of main areas.
You're looking at data centers, right?
Data center development and deployment, right?
So to enable the hardware that enables the software.
Then you're looking at AI data analysis and observability.
And then at the tail end of the AI theme, you're looking at physical AI, like robotics
and physical hardware systems
that are AI enabled. Nebius is one of the very few, well, was a mid cap company when we got
long. It's obviously now a large cap company. Got long at 2392 and it was like a 6 billion market
cap. Now it's like a whatever, 16 billion market cap. But it's one of the only mid slash newly
minted large cap companies, small large caps that that have that sort of cross-section exposure.
You have Tloka, right, which is their AI data business. You have ClickHouse, which they have
a 30% stake in, which is data observability. So you get the data exposure. Then you have AVRide,
which is their robotics business. So you get the robotics exposure. And then you have their core
data center business. So it's really a company doing a lot of things. Yeah, it's a company doing a lot of things, but doing a lot of things well.
Like, you know, it's one thing to have, it's one thing to have like a subsidiary that's
in robotics that doesn't do anything.
And it's a different thing to have a subsidiary in robotics that has like actively deployed
robots delivering food.
Like AV-Rad robots are all over LA, Dallas, New York.
So it's not like, oh, we have a robotics
company that's a subsidiary and they're working on some stuff. Like, no, they have robots that
are being deployed. Right. And same thing with Toloka. Like Toloka is a very small business,
but Bezos Ventures led the last round. You know, you look at ClickHouse was a small business a
year and a half ago. I would imagine now, I mean, they haven't done another round since the round
they did earlier this year, but in light of the OpenAI's most recent ago, I would imagine now, I mean, they haven't done another round since the round they did earlier this year.
But in light of the OpenAI's most recent round, I think ClickHouse is worth over 10 billion
easily.
And Nebius owns 30%.
And, you know, maybe, again, maybe there's a liquidity event for ClickHouse at some point
when they go public, but, and maybe Nebius sells out of that.
Who knows?
We'll cross that bridge when we get to it.
But for now, they own 30% of that business too.
So yeah, it's one thing to say, there's a lot of small and mid-cap companies out there that are in a lot of that. Who knows? We'll cross that bridge when we get to it. But for now, they own 30% of that business too. So yeah, it's one thing to say there's a lot of small and mid-cap companies
out there that are in a lot of things, right? And generally, people look at that as like sort of a
scammy, you know, sort of, you know, what's the term I'm looking for?
D3 making it sticker AI, SimSara making it sticker ai simsara making it sticker out yeah like uh like god there's the
word the word slipping my mind that i'm looking for gimmick gimmick gimmick yeah yeah yeah people
people see that as sort of gimmicky right like oh you're in everything or like these small cap
companies that do prs every time a theme is hot i agree that stuff is gimmicky but nebius
isn't like that nebius has real businesses in these areas. These are real businesses. Like, you can make an argument AVRide is a market-leading robotics business. You could genuinely make an argument for that. You could also make an argument that ClickHouse is the leader in global data observability. I mean, OpenAI and SpaceX are working with them. Those are the two biggest private companies on planet Earth are both working with them for data observability. So you can make these arguments. I would make these arguments. I'd be on Nebius'
side of these arguments, but Nebius is not a shit gun. It's not. A lot of its peers in the
data center space are. Nebius is not. They have a ton of top level talent. They have a ton of
execution prowess. They've done very, very, very well with their subsidiaries in the past 18 months.
So no, I'm not considering selling Nebius. I'm not considering selling Kratos for a lot of the
same reasons. Kratos is, in my view, far and away the best mid-cap exposure to defense on the
markets. And it's not even close. To me, it's not even close. Is this Russia-Ukraine stuff
wrapping up a risk at all? No, I don't think so.
I think defense spending is still going to go up in Europe.
I think it's not...
I know for a fact it's going up in the U.S.
because we already passed the bill.
We know it's going up in Europe because they're committed to 5%.
A lot of those weapons are going to come from the United States.
They're not going to get to 5%.
They won't get to 5%, but they're going to go up.
Even if they don't get to 5%, let's say they get to, I don't know,
an average of 2.8%.
That's still double what it is right now you know if they get to an average of
three and a half percent i think b of a did a note three weeks ago said they think they'll get to
europe we'll get to three and a half percent within the next five years that's a huge jump
from today if you get an average of three and five percent from all nato members that's a huge
jump that's that's hundreds of billions of dollars makes drones specifically right they do drones specifically so actually on Kratos's last call
they actually took a shot at Andrew over this topic um the CEO Kratos did but he didn't directly
mention Andrew but he was like hey there's a lot of companies out there that you know have a lot
of sex appeal they're doing a lot of PowerPoint presentations. They're talking about all the concepts they have.
But in reality, Kratos' Valkyrie drone is mission tested.
It is deployed in several areas.
They've tested it with all U.S. deployment platforms.
So, like, it's a real problem. Has it been tested in Ukraine?
I don't know for sure.
But I don't want to say yes if it hasn't been.
What's the one where you'd want to see it tested right now.
It's been tested by all branches of the United States military.
Okay.
And that's legit.
Like that,
you don't do that.
You don't get to that point without a real product,
you know?
So the Valkyrie system for Kratos is impressive,
but Kratos has tons of deep multi-year experience of all of these
industries.
You're talking about like autonomous defense, radar detection, drone neutralizing weapons.
Like, I don't know if people have seen those drone neutralizing weapons that people have.
They look like these rifles and you shoot them at a drone, neutralizes the electronic connection.
The drone falls out of the sky.
Like all of these things, Kratos is helping enable the technology behind them.
Kratos is helping enable the technology behind them.
Radar and microwave, that's been one of their biggest growing industries.
You look at munitions and precision guidance systems,
like the precision guidance systems and all these new autonomous systems,
Kratos is building those.
They are just very, very decorated in terms of their expertise,
like compared to the primes.
Like Kratos is a young prime in the making.
You know, that's, that's always been my thesis on Kratos.
And I still believe that it's a young prime in the making. And I think you'll look back in 15 years and it'll be a much, much, much bigger company
than it is today.
What do you think happens to the Lockheeds, the Raytheons?
Do the primes get smaller?
They'll do well.
Do they stay around?
So you think it's just more?
Maybe they get a little smaller, but you know, Ions? Do the primes get smaller? Do they stay around? So you think it's just more? Maybe they get a little smaller,
but I don't think the primes are going anywhere.
The primes have deep, multi-decade experience.
Why is this in general a sector
that you want to be allocated to,
this defense area?
Is it just one that you kind of understand and know?
Why this over MedTech?
I mean, I really built my aerospace and defense basket
like a couple of years ago
around Kratos, Huntington, Mercury Systems, which I don't own anymore.
Why don't you own Honeywell?
Join me in Honeywell.
Water's wet.
Water's warm.
I'm just not interested in names that are that big.
The water's wet?
The water might be wet, but the water is warm, and she's splitting up.
Water's wet.
I was going to say, that's not the phrase.
But yeah, the water's warm, is what you meant to say.
But yeah, no, I'm not interested in the big names.
But yeah, I built the basket a couple of years ago.
My thinking really, and the reason I wanted exposure, was that a couple of reasons.
First of all, the commitment from the Trump administration coming in, that was that maybe
they'd look to decrease defense spending.
That obviously was not true. And we've gone the opposite way. Defense spending has only gone up.
We did $155 billion supplementary package to an already trillion dollar defense budget
in the last bill. And then you look at what's happening in Europe and they're looking to
increase their defense spending. You look at what's happening in Africa and the Middle East,
where pretty much every country in those areas is increasing their defense spending.
Southeast Asia is on the rise. They're looking at building more powerful militaries as well.
I just don't think weapons are going anywhere. In fact, I think the world is becoming more inclined to use them.
If you look at the geopolitical conflicts in the last five years, we've seen a lot of them, right?
You know, you've seen conflicts in pretty much every part of the world except for North America in the last five years, we've seen a lot of them, right? You know, you've seen conflicts in pretty much every part of the world
except for North America in the last five years.
And that, I think, probably continues.
You continue to see these micro-conflicts.
But even more than the idea that defense budgets aren't going anywhere
and war isn't going anywhere, which are pretty safe assumptions,
underneath the surface there's a bigger trend happening,
which is that war is changing,
right? You know, the modern warfare of the Afghanistan-Iraq war era, the war on terror,
right, which is really the modern era of warfare. If you look at modern warfare and the war on
terror, like tanks, deployed troops, you know, units with small arms going into clear areas.
That's, I mean, that's changing, right?
I mean, warfare is becoming more drone-based, more software-based, more robotics-based, autonomous systems, you know, anti-drone weapons.
I'm not saying fighter jets and tanks are important.
They are important.
They're probably more important when you're talking about warfare between two sovereign nations. But in these specialized sort of operational warfare settings, you're at companies like AeroVironment. Why was AeroVironment able to capture such a large portion of North American market share while not being a
prime? Well, the answer is, is that the primes neglected these sort of new age defense technologies.
Now, I'm not saying Lockheed Martin, General Dynamics, and Northrop Grumman are incapable
of making drones. They're not. But they didn't position themselves well to do it.
And as a consequence of that, you created a vacuum for aerovironment and Kratos and BWX technologies and a lot of these other mid-cap defense companies that have very, very specialized products and protocols, largely centered around new warfare specifically, right? Not around legacy systems.
Like Kratos is not building tanks or small arms. Neither is AeroVironment, neither is
VWX Technologies, neither are Mercury Systems or any of these companies that I've talked about,
these mid-cap companies. These guys are building very specific industry niche platforms that will be deployed more readily in the next generation of
modern warfare. And if you look at next gen warfare and ask yourself, okay, are the primes in good
position to secure these contracts? Maybe they are, but they will still have to subcontract out
in a lot of these cases to these five, six, seven, eight, nine, $10 billion companies that are specialized, right? And I mean, I even talked about this with Huntington. This isn't so
much relevant to modern warfare, but it is relevant to the renewed shipbuilding enthusiasm
in the United States. I've talked about this many times before. Go look at any general dynamics
shipbuilding contract and look at the subcontractor. It's always Huntington every single time because
they offer very specific expertise and production services and shipbuilding that General Dynamics needs to fulfill these contracts.
Same thing goes for Lockheed's last drone contract, which was, I think, in 2021 or 2022.
I don't remember, but they had Aero Vireman subcontracted on it.
And so, yeah, I just think there's several multi-billion dollar opportunities for
these guys and securing a couple of them can really transform the outlook. I mean, that's
where all the enthusiasm in Kratos has come from, right? Like the Pegasus program, the Valkyrie
program. There are smart analysts on the street that think they have a high likelihood of either
winning these programs outright to the tune of multi-billion dollar opportunities or being subcontracted on
them and winning you know multiple billion dollars that way so yeah i i continue to love
mid-cap rail space and defense even though those names have been some of the best performers
for me this year i don't feel a reason to sell them like i look at the huntington chart it still
looks fantastic i look at the kratos chart it still looks fantastic is kratos a bit extended
yeah sure maybe needs to come down a little bit but But, you know, I'm sitting on like a sub-$25 cost basis on it.
It's a $70 stock.
Like, I'm not worried if it pulls that back a little bit, you know.
In fact, I'll view that as an opportunity if it pulls back significantly.
But, yeah, I love mid-cap aerospace and defense,
especially hyper-specialized mid-cap aerospace and defense where you have,
you know, again again these very very specific
next-gen military industries that are being catered to that have been frankly neglected by the primes
in the last five years and you know the primes will catch up as they always do they have the
money and the capital and the networking know-how and the industry experience to get into these
industries when and if they want to but it will will take some time. And in the meanwhile,
you will see subcontracting tailwinds for a lot of these guys.
And even when Lockheed and, you know,
these guys get to the point of having these programs at the scale they want
them to be, then there'll still be, you know, a niche opportunity,
a carryover opportunity from what these guys have already secured.
So yeah, I like it a lot.
You know, continue to like it.
No desire to sell those names.
Those were some good deep dives all around.
I know we got a three-minute hard cutoff here,
so I don't think we got time for another topic.
I do definitely want to say if you're enjoying this
you should make sure you're following the speakers up here
make sure you're following the host of the spaces
as well Stockton Spaces has been going
on for years now and
if you just enjoy live free content
coming from us make sure you are
following the host of the spaces but
we do got three minutes left
we are going to have a stock picking show
coming up after
this week. Stock picks for the week. Always going on the Wolf channel. It's a fun time.
The person who won this last week was up 28% over the last week on their two picks.
Second place was up like three, four percent. So safe to say there was a winner this past week.
You find out who that was, but yeah, no, no, I appreciate everyone. If you guys have any things you want to get out here
at the end, Ali, we appreciate you, Kevin.
Obviously, Stock Talk.
But yeah, it's a good day.
Let's hope Apple, Lyft, Intel
are green tomorrow.
And then Evan will have a good spaces.
I think there's still oil risk out there
going out in the next two weeks.
It's still in downturn, but but it's down at 57 or so.
See if some buyers actually step in.
I still think that there's geopolitical risk that's on the horizon.
More than what was being perceived today.
That's all I got.
Appreciate you, Kevin.
Yeah, quiet, quiet week.
All eyes on Fed and those retail earnings.
So I'm sure we'll have a lot more to talk about later this week.
Yeah, feel free to jump back on.
We'll be live again tomorrow, 3 p.m. Eastern, same time, same place.
Hope you guys come back and join us again.
Have a great one, team.
For sure.
Thanks, guys.
Take care.
All right, everyone.
This is recorded as always.
You can catch the full recording as soon as I close it out here.
And I'm jumping over to that Wolf Financial account
to open up our stock picks for the week.
As Evan alluded to, somebody with a 44%. That's just from last Tuesday open until today's close. It's an amazing job.
Tune in over there. You'll see who it was and you'll see what everyone's picking for
the coming week with all this chop going on, retail names coming up and all that. Appreciate it. Thank you.
